Real Estate News

Due to Cobb County’s penchant for property development over the past few decades, without any observance to the impact on private lakes and streams, many home owners are facing larger costs and sooner than normal requirements to dredge the lakes adjoining their properties or within their subdivisions…with some dredging costs ranging from $50,000 to over $1 million, this cost is normally borne by the homeowners themselves.

Other counties around the state of Georgia charge about $3.65 per home per month. It’s possible that Cobb will charge based on the amount of space the house and driveway takes and could cost more than $3.65/month.

Critics argue it’s a tax on people without responsibility for help to people with the responsibility and also the fund may become a slush fund for other expenses and not earmarked and reserved for the cleanup or dredging of lakes or streams in Cobb and it’s not getting to the root cause of the problems, only throwing money at a problem that will continue to exist.

My opinion: Cobb County has allowed the expansion and building of residential developments and enlarged drainage systems all over the county and helped alter the flow of water and caused damage to homeowner’s property. (They did that in our subdivision which resulted in driveways washing out and repair of street collapse…not sure how many others experience the wrath of new development.) The county needs to step up and take more responsibility for the damage they helped create. But I think they will step up by taxing current residents for their misbehavior, and not giving up their salaries after approving developments and not knowing storm water management.

Source: Marietta Daily Journal – April 27, 2014

4-23-2014: US News and Word Report ranking of Georgia High Schools in 2014

A recent January 2014 Atlanta Business Chronicle report I saw had some average SAT scores for the 2013 Cobb County High Schools:

Walton – 1741
Pope – 1680
Wheeler – 1651
Lassiter – 1636
Kennesaw Mountain – 1571
Harrison – 1570
Kell – 1507
Allatoona – 1485
Hillgrove – 1479
Sprayberry – 1452
North Cobb – 1439
Oakwood – 1423
Campbell – 1405
McEachern – 1338
South Cobb – 1307
Pebblebrook – 1283
Osborne – 1232

Any questions on where real estate seems to be gaining or dropping in value?

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

5-17-2016: Is President Obama really paying any attention to his cabinet performance, or just wanting to bitch about politics? For the third consecutive fiscal year, we determined that HUD did not comply with IPERA. Specific areas of noncompliance for fiscal year 2015 were related to HUD’s failure to (1) conduct an annual risk assessment in accordance with the Office of Management and Budget (OMB) guidance and (2) meet its annual improper payment reduction target. Additionally, we noted some issues concerning (1) the completeness and accuracy of HUD’s improper payment data reporting, including payment recapture audit plans, and (2) the reasonableness of HUD’s improper payment estimate for its Rental Housing Assistance Programs.

3-31-1015: The HUD-OIG is required to annually audit the consolidated financial statements of the U.S. Department of Housing and Urban Development (HUD) and the stand alone financial statements of Federal Housing Administration (FHA) and the Government National Mortgage Administration (Ginnie Mae). However, they still can’t get a straight answer from FHA or HUD…

2-19-2015: Hidalgo HUD Officials Charged with Conspiracy to Commit Bribery and Embezzlement.

Facilities Director Sentenced for Bribery in Connection with Building Contracts

HUD Subsidized More Than 106,000 Noncompliant Households

1-9-2015: Office of Inspector General semi-annual report on HUD operations – September 2014 – recommended almost $2 Billion could have been put to a better use in Fiscal Year 2014 and less than $100 Million in restitution and court judgments.

HUD OIG audited HUD’s oversight of its Home Equity Conversion Mortgage (HECM) program to determine whether HUD had effective controls to ensure that HECM loan borrowers complied with residency requirements when concurrently participating in the Housing Choice Voucher program. As many as 136 of 159 borrowers reviewed were not living in the properties associated with their loans because they were receiving rental assistance under the Housing Choice Voucher program for a different address at the same time. As a result, 121 insured loans should be declared in default and due and payable to reduce the potential risk of loss to HUD’s insurance fund.

12-10-2014: The HUD OIG performed their annual audit of the consolidated financial statements of the U.S. Department of Housing and Urban Development (HUD). HUD’s interim assessment disclosed 11 findings. The most significant findings relate to (1) CPD’s formula grant accounting not in compliance with GAAP, (2) continued weaknesses in PIH’s cash management process, (3) lack of validation of grant accrual estimates, and (4) HUD’s continued financial management system weaknesses. The findings have root causes stemming from weaknesses in HUD’s internal controls which have been identified and reported in previous years. These weaknesses are due to HUD’s inability to establish a compliant control environment, implement adequate systems, recognize required changes, and identify appropriate accounting principles and policies.

11-21-2014: Audit of the Federal Housing Administration’s Financial Statements for Fiscal Years 2014 and 2013 found some deficiencies. The audit disclosed one material weakness, two significant deficiencies in internal controls, and one instance of noncompliance with applicable laws and regulations.

8-20-2014: The Goshen Housing Authority, Goshen, IN, failed to follow HUD’s Section 8 program and failed to ensure that 46 program units, including 19 that materially failed, complied with HUD’s housing quality standards.

8-11-2014: HUD did not always bill lenders for FHA single-family loans that had an indemnification agreement and a loss to HUD…There were a total of 486 loans with losses of $37.1 million from January 2004 to February 2014 that had enforceable indemnification agreements and losses to HUD but were not billed…but should have been. Bottom line: Taxpayers lost!

6-17-2014: HUD OIG Semi-Annual Report to Congress on the use of federal housing $, the cost of bad mortgages, and other findings.

Purpose: Its statutory mission is detecting and preventing fraud, waste, and abuse and promoting the effectiveness and efficiency of government operations.

Implement 4 initiatives over the next 5 years to help accomplish the strategic plan:

First, – the Civil Fraud Division will continue to target additional large Federal Housing Administration lenders and servicers alleged to have fraudulently contributed to the ongoing mortgage crises & will increase efforts to target potential grant and contract fraud within HUD’s programs and operations.

Second – improve inspections and evaluations using advanced program assessment techniques and employ multidisciplinary teams using a variety of methods – i.e., continued waste and abuse but now reports are easier to read?

Third – improve information technology infrastructure and develop a more robust data mining capability to better identify non-obvious relationships to more quickly detect trends, patterns and weaknesses to deter fraud, waste, abuse, and mismanagement within the Department and its programs and before they become systemic or national problems.

Lastly – become more proactive and renew our fraud prevention efforts – inform the Department, industry, and stakeholders of fraud schemes and areas of weaknesses we
have encountered.

Source: Reports from the Office of Inspector General, Department of Housing and Urban Development

9-30-2014: Four people convicted of embezzling $230,000 in Marietta City Section 8 program funds (see more info below) were sentenced to various lengths of prison sentences and various amounts of restitution amounting to a total over $590,000…Now that’s payback with interest! Source: MDJ, 9-30-2014, B1.

5-18-2014: There is further evidence of economic logic to combine Marietta’s 9 Section 8 housing with the Marietta Housing Authority (MHA). Not only will there be reduction of duplicate of effort, but the 9 employees assigned to handle 950 cases can be replaced by 2 people in the MHA. MDJ-5/8/14-B1.

A recent article in the Marietta Daily Journal (4-3-2014, Page A1) about two former Marietta Department of Development Services employees accused of embezzling $230,000 raised m curiosity of the success and cost of the program.

Note: If you want to see some other Government shenanigans and employees/developers/others committing fraud or embezzling our Federal Government for Government housing issues, this HUD OIG Semi-Annual Report to the US Congress is interesting reading.

Section 8 Housing involves the housing choice voucher program a federal government program for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. Since housing assistance is provided on behalf of the family or individual, participants are able to find their own housing, including single-family homes, townhouses and apartments.

Housing choice vouchers are administered locally by public housing agencies (PHAs). The PHAs receive federal funds from the U.S. Department of Housing and Urban Development (HUD) to administer the voucher program.

The voucher varies in amount and may require the resident to pay for part of the rent or under certain circumstances, if authorized by the PHA, a family may use its voucher to purchase a modest home.

HUD OIG recommends The Summit Bradford Apartments in Tulsa, OK repay $177,000 in misused funds for Section 8 funds it may have received Section 8 subsidies for vacant units.

The Management of the Housing Authority of the City of Nixon, Nixon, TX, Did Not Exercise Adequate Oversight and Allowed Ineligible and Unsupported Costs

First, let me disclose that I am not a CPA nor a tax expert – please consult with a licensed tax expert and tax adviser.

11-20-2014: If you have to sell your home or it is foreclosed upon, then the difference between the net proceeds from the sale of the property and the net amount due on the balance of your mortgage is considered income and will be taxed unless the Mortgage Forgiveness Debt Relief Act of 2007 (MFDRA), which expired December 31, 2013 is extended to apply to all affected homeowners in 2014.

Since 1997, single tax filers are allowed to deduct the gain (sales price less purchase price and major improvements/additions/expenditures) up to $250,000 (up to $500,000 if married) on the sale of your “primary” personal residence provided they lived at the residence in any portion of 2 of the past 5 years. (See IRS Publication 523 for ideas to discuss with a tax adviser.)

Home office deduction: If you’ve been using a home office deduction, you will need to pay income taxes on the cumulative amount you’ve deducted in the past and the tax is effective in the year you sold the home.

Home Buyer tax credit recapture: Effective for years 2008-2010, there were two types of tax credits for home purchase, one refundable ($7,500) and another non refundable ($8,000) with occupancy time limitations. – See IRS Form 5405 and consult with a tax adviser).

At least for the remainder of 2013, the mortgage debt forgiveness (normally taxed) from short sale/foreclosure on your personal residence will remain non-taxable. No telling if this relief will be extended into 2014, but hey – it’s an election year and certain votes are still for sale or long term rental!

Source: WSJ 6-22-2013, Page B9

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Home Owners Protection Act (HPA) requires mortgage servicers to drop MI coverage once loan reaches 78% of the original value, but no sooner – unless they agree and it’s entirely up to them.

So tell me, if they don’t, then how does that protect or is it favorable to historically responsible (i.e., excellent payment history) homeowners?

In 2008, US Congress passed the Housing and Economic Recovery Act (HERA) that gave authority to a newly created government agency – the Federal Housing Finance Agency (FHFA) to take control of Fannie Mae and Freddie Mac. They did take control and under the control agreement, Fannie and Freddie were to pay a 10% dividend to the federal government every year. During the first few lean years, they had to borrow $ from the US Treasury (in exchange for preferred stock and other liabilities). But in 2012, the US Treasury did something even more sinister, they made the 10% into 100% and made it permanent. Recently, the total dividend payments back to the US Treasury so far has exceeded the total amount of money to bailout and loan these two GSEs.

So the real question is – Does the US Government have any real intention of giving up this money maker/federal cash cow soon? (i.e., wanna buy some swamp land in Arizona?)

Source: WSJ, 2-28-2014, A14

If you want to finish your basement and think that will double your home value or increase price equal to the above basement square footage…..think again.

If you think basement space will be appraised for the same value as main or above ground floor value, then you will probably be disappointed.

So what’s it worth on an appraisal? – That all depends on the appraiser, appraisal rules, the vicinity of the property, and lots of other factors…

But this is what I’ve seen on some recent appraisals from former clients….

Unfinished basement space: $5-10/square foot

Finished basement space: $8-25/square foot

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

They got hacked the other day in a “Denial of Service Attack” ..

Ellie Mae is a leading provider of software solutions for the residential mortgage industry to process mortgage loans.

They host the Ellie Mae Network, an integrated network that allows mortgage professionals to conduct electronic business transactions with the mortgage lenders and settlement service providers they work with to process and fund loans.

Ellie Mae estimates >20% of all mortgage originations in the U.S. flow through their Encompass mortgage management software and the Ellie Mae Network.

Source: https://www.elliemae.com/about-us/company-overview/

There are at least 14 common types of insurance you can get for a home:

(1) Homeowner’s Insurance(Renter’s insurance if buying a condo or renting) is what most people think about when buying a home to protect the homeowner from damage to structure and contents caused by fires, floods, liability of someone getting hut on your property and pluming leaks. Evaluate insurance providers and coverage at www.ambest.com.

(2) Mortgage Insurance: Insures the lender for the % above 80% loan value of the subject property. It can run anywhere from below $100 to close to $20/month – just depending on the risk and amount above 80%. Make sure you factor in this cost if you place <20% down on your next home purchase. (3) Lender’s Title Insurance: Insurance that protects the legal and financial interests of the lender on a real property. In case there’s a legal fight regarding ownership or other challenge to the property’s title, this insurance provide the legal assistance to fight any claim and if claim results in loss of property, the lender’s loan amount outstanding is reimbursed by the title insurance company.

(3) Owner’s Title Insurance: This is an optional insurance normally offered at closing (and in some cases, I believe can be purchased within a limited time after closing but usually at a higher cost).

(4) Renter’s Insurance (for Condo Home Ownership): if you buy a condominium, the condo HOA will carry a policy to cover the rebuild of the condo itself, but only up to a minimum standard and may not include the upgrades to flooring, kitchen, bathrooms, etc, that you made to the place or cover the loss of your contents. Therefore, you should carry an equivalent to renters insurance for condos that includes rebuilding the unit to your specifications.
Note: Experts recommend H)-6 policy designed to cover not only property loss, but personal injury inside your condominium unit or caused by the operation of your unit.

(5) Flood Insurance: Generally, your lender will check to see if your property is located in a federally specified flood zone and from that investigation will determine if you do or do not need to carry flood insurance. If you do need it, the next step is an flood elevation survey to determine if your dwelling lies inside or outside the flood zone and may require private or government flood insurance to protect the lender’s investment in case of flood loss. Existing federal laws have changed and in some cases, this insurance can cost thousands of $ instead of hundreds of $ it used to cost. Visit https://www.floodsmart.gov/floodsmart/ to review information, potential coverages, and providers.

(6) Home Warranty (Home Maintenance Insurance): This type of insurance is just peace of mind that in case you have something go wrong and need a plumber, electrician, HVAC tech, or other home appliance service tech in a rush, then you have a “one-stop-shop” to call to get assistance. There’s usually a rice call fee as a deductible and perhaps a $ limit on how far a repair can go before you have to pay the difference, but many emergency calls are handled quite inexpensively. Note: These warranties can be extended to appliances such as washer, dryer, secondary refrigerators, etc., which can be covered for an additional expense. Visit my blog post on residential home warranties to review potential some warranty companies and coverages.

(7) Termite/Wood Infestation Insurance: In Georgia, pest control experts say there are three types of homes: those that “had” termites; those that “have” termites, or those that “will have” termites. Termites aren’t the only wood boring or destroying insects (e.g., powder post beetles and others). In order to help prevent you from getting any of these pests, there a two basic types of protection: liquid or bait system. The two types of coverage can be: retreatment only or repair/retreatment. Pros and cons of both are too long for this post, but some level of protection from them is encouraged. It can run from several hundred to $1,000+ cost for establishing protection and another $200 or so per year to maintain protection. Visit Georgia Pest Control Association website for more information and identify licensed pest control companies in the State of Georgia.

(8) Major Foundation and Structural Insurance on New Homes: This type of coverage is only available for a brief period (i.e., 10 years) on new homes and normally handled by just a small group of insurers like the 2-10 Warranty Company. The warranty can be purchased and provided by a builder or you could purchase it directly under certain circumstances. It only protects you for any defaults or problems with the structural quality of foundations or overall structure of the building. But you normally have to go before an arbitrator and it may cost several hundred dollars to submit a claim…so you need to have an expert investigation to determine the fault lies with the builder before you present your case.

(9) Mortgage Payoff Insurance: This insurance pays the mortgage upon your death. But unless you have someone that could benefit from this immediate payment of mortgage, why would you want to do it? Life insurance is best to leave with a person and let them decide if they want to keep the house or continue the mortgage and make that financial decision themselves.

(10) Stucco Warranty (Stucco Insurance): If you have a company complete the repairs and guarantee their workmanship, you are insuring against future issues with what they repaired with an option to renew that guarantee next year by having them reinspect and determine if other repairs are necessary.

(11) Appliance Extended Warranties: If you purchase an appliance, then the the store, manufacturer, or a 3rd party vendor normally offers additional parts & labor warranties for several years for an additional nominal fee. I am not sure they are always worth purchasing, but you can research reviews on appliance performance and determine yourself if you don’t have first hand experience on the subject.

(12) Mortgage Life Insurance: This insurance covers the payoff of the mortgage balance in certain cases of death and may be used under certain cases of incapacitating diseases or disorders. The amount of coverage changes over the life of your loan based on your “eligible” mortgage balance.

(13) Security Insurance (Home alarm and personal safety): You can have a security system installed that not only alarms you of intruders but is monitored by an alarm center to notify police, fire, or emergency responders in case of trouble. Some systems now alert you via the internet and you can monitor the interior of your home online from your work computer. Sometimes they offer a minimal discount on homeowner’s insurance, but the main benefit is peace of mind that your family and authorities can be notified immediately of a break-in or other distressful situation.

(14) Radon Gas Insurance: If you have a Radon Gas inspection and the results reveal high levels of Radon Gas, which usually requires remediation (which normally means digging under foundation, installing a PVC pipe running to the exterior with a fan inside which emits the radon gas outside), it may normally cost around $1,000-2,000.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.