Video Summary

What is FHA mortgage insurance?  FHA mortgage insurance is a program that’s backed by the federal government wherein they insure the higher percentage portion of your mortgage to whatever lender happens to give you the loan.  So the FHA insurance ensures that the lender will not suffer loss for monies that they lend and I believe it’s above 80 percent of the loan to value.  So if you have $100,000 piece of property and that you got an FHA loan for $100,000, the FHA insurance would insure the first $20,000 of the loan.  So if you went into default and you owed $90,000, FHA insurance would then pay the lender $10,000 of the outstanding debt if they foreclosed and had to take back the property or up to $10,000 of the loss of the lender.

Now FHA mortgage insurance is not for the benefit of the borrower.  It’s for the benefit of the lender.  That’s who it insures.  The only benefit that the borrower has is they can borrow 97 to 100 percent of whatever the purchase price is or the appraised price of the property that they’re purchasing.

So if you have any questions about getting an FHA loan, well give me a call at 727-847-2288.

Video Summary

How is an FHA mortgage funded?  Well an FHA mortgage is funded the same way as any other conventional loan.  The only difference between an FHA mortgage and a conventional mortgage is the FHA provides insurance to who the lender is.  And so there’s extra paperwork.  So the money still comes from whatever lender wishes to lend you the money.  And in this day and age of high finance, once you get a mortgage from let’s say Bank of America, SunTrust, Wells Fargo, Regions or any of the other large lending institutions, they usually will sell the loan to the secondary market which is called Fannie Mae and Freddie Mac. And they only retain the servicing rights so that when you make your payment you’re paying Bank of America and that’s fine, however, they really don’t own the loan.  They’re merely servicing it for the secondary market, which is Freddie Mac and Fannie Mae, which sells bonds so that they can fund these mortgages which is high financing done in the billions of dollars and that’s what keeps the money available for our mortgage market.  But FHA mortgages are funded the same way as any other ones are.  They just have insurance and you have to pay a little bit extra for the mortgage insurance since you’re getting a high percentage loan to value.

So if you have any questions about your mortgage, FHA mortgage or otherwise, give me a call at 727-847-2288.

Video Summary

I’m going to do something a little different. This is going be an update on flood insurance legislation. I usually do not read; however, this is so comprehensive or has a long list of items, I have to refer to a report that I have, so you have to pardon me if I read this, but sort of give you an update, I think it’s timely as to where we are as far as flood insurance is concerned.  Here are some of the highlights. It caps the annual flood insurance increases to 18 percent for properties built after 1975 and if you went ahead and had to pay an outrageous premium before 1975, you can see about applying for a refund.

There is grandfathering, which is reinstating, which means if you built your house, or the house was built pursuant to the FEMA guidelines, well then it’s grandfathered in and you’ll keep getting the same flood insurance premium. The grandfathering now stays with the property, so that if you sell the property, it doesn’t necessarily mean that you have to have a new, that it triggers any change, so even if you sell the property, the flood insurance rating or whatever stays the same. Residential policy holders will incur a $50.00 surcharge annually and for businesses and second homes, the surcharge is $250.00. Next, FEMA will strive to reach a goal where the premium is no greater than one percent of the coverage of the property. So, if you had a $200,000.00 house, then your premium, they’re trying to keep it at $2,000.00. They have gone back under the Act now that the substantial improvement issue, you’re up to 50 percent guideline under the Act, they were rolling that back to 35 percent, but now it’s 50 percent. The established ombudsman under flood insurance or someone you can contact to try and answer your questions about that, unfortunately, I don’t have the number or how to get in touch with them and I don’t even know if that’s been established yet or not. They also are going to make arrangements so flood insurance can be paid in monthly payments and if you appeal your flood designation to FEMA and you win, well, FEMA will reimburse your premium. They are trying to set up a regulatory framework that’ll encourage other insurers to come in and write flood insurance and this will be basically for residential coverages, this won’t be for, apply to second homes or commercial properties.

They also changed what they mean by flood and then they have different types of coverages that you can obtain.  You can get a standard coverage, a preferred coverage, a customized coverage and a supplemental coverage. I’m not gonna go through what all each one of these coverages are, it’s enough to know that you can see about getting your coverages customized and you can see how much the premium difference there is. It allows surplus lines agent to send the contract out for endorsement for surplus lined companies without making a diligent effort to find coverage with the primary insurer. It prohibits state-created increases for hurricanes under the hurricane fund.  I’m not sure just what they mean by that.

Allows Florida Insurance Commissioner to provide for any federally required certifications and the bill is effective upon becoming law. Hopefully that gives you enough to know that there have been some changes. I suggest that if you have questions, hopefully your insurance agent is aware of all these changes, so if you speak to them, they will be able to bring you up to date as to what effect of your coverage’s.  If you want some of this material or whatever, if you contact me, I’ll be glad to send you a copy of this synopsis on the paper I’m reading from, which it’s a newsletter that I received from the Real Property Probate and Trust Law section of the Florida Bar.

My phone number is 727-847-2288.  Thank you.

Video Summary

What do you need to know before buying a house on the short sale? Well first off, let’s talk about buying a house. If you’re a buyer, there’s no difference between buying a house on a short sale then it is buying a regular house because a short sale only means that the lender, which is the seller’s obligation to pay off, is receiving less than the full amount of the loan.

So therefore, they are short on the payoff and that is a situation between the seller and their lender. So there is no difference between buying a house in a short sale than there is from just buying a house whenever the cash deal other than the practical problems of how long it takes for the lender to approve the transaction.

So you don’t know whether you’re going to have a deal or not and it may take a considerable amount of time before you hear from the lender. So you need to have a great deal of patience as far as that’s concerned before you know whether you actually have a deal or not.

One of the other things that I strongly recommend is doing a lot of due diligence and suggest you do that in advance although you may not have a deal, is to determine how, if there’s any problems with the house. Make sure there are no sinkholes or other problems and that the seller has the obligation of disclosing to you any matters that may material effect the value of the property, which are not readily observable.

However, that representation isn’t any better than the person who gives it so if it’s false or they didn’t do a good job on it, you can sue them. But if they’re on a short sale, they probably don’t have any money, so you come up with an empty remedy since you don’t want to spend a lot of money with lawyers suing someone that doesn’t have any money.

So it’s really important that you do a lot of due diligence to make sure that there is no defects with the house such as sinkholes, the roof isn’t leaking or going to have to be replaced, the air conditioning system, make sure you’re not in a flood plain where you’re going to have to pay a lot of flood insurance. All of these things need to be checked out in advance whenever you’re buying a house on a short sale.

But basically as far as the buyer is concerned, you have a contract between the buyer and the seller and the seller is the ones with the problem trying to get the lender to take less than the amount that is owed. So if you have anymore questions and need any representation in purchasing a house, give me a call it’s (727) 847-2288.  Thank you.

Video Summary

What is the impact on the new federal flood insurance act on the value of waterfront homes?  You can break these down into two homes; one, homes that have been built in recent years which have been elevated and presently comply with the flood insurance and FEMA guidelines as far as the elevation of their finished floor elevation. The new flood insurance law should not impact your flood insurance premium that much. It may go up some, but there’s not going to be a dramatic impact. The other classification of homes are older homes that were built and either were built pursuant to the old FEMA guidelines, or were built before flood insurance was mandatory, and the finished floor elevation is below the present requirements of FEMA.

With these homes, they are going to, as I understand, grandfather the owners in. So, if you own it, well, you’re premium should stay the same for the first year, and they’re going to phase in the new premium over the next four years. However, if you want to sell your property, whenever someone buys it they’re not going to be able to take advantage of the grandfathered premium, and they’re going to have to pay the new flood insurance premium, and this may cause the cost of flood insurance to be prohibitive. So, that would then limit your market as far as selling to people to cash purchasers on the one hand, and if people don’t have enough money to pay cash for the house, well then you’re in a position to consider doing owner financing. Another alternative, although it may take quite a bit of work and a lot of extra money, is to contact FEMA to see if you can take advantage of the program they have whereby they will pay to reconstruct your house and have it elevated so it is not subject to flooding. Now, whether your home qualifies or not, that would remain to be seen, but there is a program and some funds available to do that.

If you have any questions about selling your home – and I don’t know everything about the new flood insurance act, and Congress is still playing with it – you can give me a call at 727-847-2288. Thank you.