Real Estate News

This post provides information about the Metro Atlanta Area Counties’ rules on filing different types of Homestead Exemptions and will be updated with new or updated information from time to time.

A  homestead exemption is an annual small reduction from your normal property taxes.  You don’t automaticaly get the exemption as the homeowner. You must apply to the Tax Commissioner in your county for the exemption only once, but usually before a certain time limit each year (i.e., April 1st) in the year after you bought the property.

Usually, local government authorities will decide how much revenue they need to collect during the next fiscal year.  This time limit for filing exemptions is arbitrarily set in order to get all calculations updated and information into the local government so they can decide how much property tax they need charge each property and then prepare the tax bill for those receipts (taking into consideration that some payments will not be made on foreclosures that year and others will not be eligible for exemptions since they are investors).

Many of the Metro Atlanta Counties offer a discount or elimination of school system portion (usually about 65%) of the annual property taxes when at least one of the homeowners reaches age 62.  However, this discount isn’t automatic, must also be applied for, and may have certain restrictions such as income.  Consult your county’s Tax Commissioner’s website or office for details.

Counties often offer other discounts for people with disabilities, veterans, or surviving spouse of public service professionals like police and fire fighters.

• Basic Homestead
• School Tax
• Disability
• State Veteran’s Disability
• State > 65 years of age (income limit)
• State > 65 years of age (no income limit)
• Surviving spouse of firefighter or peace officer

Cobb County Tax Commissioner

Cherokee County Tax Commissioner

Dekalb County Tax Commissioner

Fulton County Tax Commissioner

Gwinnett County Tax Commissioner

This post is not referring to Mortgage Insurance to payoff of your mortgage in case of your death (which protects the lender), but it relates to the other way you can protect the lender from some losses.

Update 3-29-2015: Real Estate Insider: Mortgage insurance? You must be kidding. No, here’s another explanation of how it helps reduce the risk to the lender and interest rates charged to consumers and allows them to purchase homes.

Since lenders have traditionally taken a risk losing some portion of the loan upon property foreclosure, lenders normally charge the borrower insurance on the portion above 80% of of original loan value. This insurance is referred to as (Private) Mortgage Insurance (PMI) or Mortgage Insurance Premium (MIP) on FHA loans.

Typically, PMI is charged to the Buyer on a monthly basis and by Federal Law makes it allowable until your current loan balance reaches 78% of the original loan balance. As of April 1, 2013, all FHA loans afterward “never” drop MIP unless you refinance into a non FHA loan.

Lenders currently are proposing up front one time payment of PMI instead of charging monthly premiums. However, my guess is that it’s more than most people really want to cough up (i.e., depending on how long they plan to live in the property) and if PMI is still deductible, you can’t deduct more than the allowable annual PMI amount. I don’t know when PMI will be removed as eligible deduction, but I imagine sooner than later. Consult with your CPA/Tax Preparer/or www.irs.gov for current rules.

In fact, I just heard the up front one time PMI charge availability on Ray Lucia’s program today (4-9-2013).

Crystal Ball says:  I can see lenders and insurers get together and increase the coverage to anything over 75% LTV and justify it by saying the losses over the mortgage meltdown were huge and this protects the insurers and the lenders even more – but the consumer will pay for the extra insurance.

Here is the Mortgage Insurance Industry Association website.

Regardless of the recent news of Fannie Mae turning some profit, the fact that these two GSEs have cot the US taxpayers at least $100 Billion since the real estate crash, these other numbers don’t make me feel good either:

• Former Fannie Mae Franklin Raines made $91 million from 1998 thru 2003;

• Top five (5) Fannie Mae executive earned $34 million in compensation;

• Top executives at Freddie Mac earned $35 million in 2006;

• In 2009 (after the downturn in mortgage business), the top five (5) executives at Fannie Mae made $19 million, collectively. The CEO earned $6 million;

• From 2001 through 2006, Fannie Mae spent $123 million to lobby Congress (second highest total lobbying expenses in the US);

• Alt-A loans accounted for 9% of Fannie Mae’s business but represented 40% of credit losses in 2009;

• Losses as of 5-10-2010 have amounted to $146 billion – the ceiling of debt losses back by the Federal Government (i.e., taxpayers) had been raised to (and expected to reach) $400 billion;

• Both Fannie and Freddie were delisted from the New York Stock Exchange;

• Armando Falcon (former head of Fannie’s and Freddie’s Federal regulator) said they had a culture of arrogance and greed and the failure of management that caused their collapse;

• By June 2010, 5.1 million homeowners will own a home worth 75% or less of the mortgage amount Broker’s Blog 2-3-2010; and

• Fannie, Freddie, and the FHA now comprise 90% of mortgages.

No prosecutions, investigations, or correction of this mismanagement:

PRICELESS!

As a side note (per WSJ 4-9-2010-page 4B) – Robert Rubin (former Treasury Secretary under Clinton and former Chairman of the Board at Citigroup) said that everyone in the industry failed to see this crises…

Does that give you faith and confidence in the entire financial and regulatory system?

UPDATE 8-9-2010:  Per the 8-6-2010 WSJ page A2, loans acquired since the beginning of 2009 have performed better than in the past due to “tighter lending standards” by Fannie and Freddie….well a little late don’t you think?  DUH! (Oh and Fannie and Freddie have required $146 billion since 2008 to cover losses on loans they purchased.)

…Again, it all depends –

5-2-2015: Rent or buy a home? 10 points to ponder

2-16-2015: This lousy calculation ignores the interest you pay in excess of any tax benefit; also ignores the thousand$ in HOA fee; and ignores the cost of extra utilities, furnishing, repairing, maintaining, or updating the home; and furthermore, assume s a high 5% annual return on home price when historically it’s been 3%.

1-30-2014: Survey says…>35 year-olds leaning toward buying v. rental – could be marriage, kids, privacy, and stability of employment?

Here’s a recent article favoring buying v. Renting.

If you need to remain mobile and can transfer to another city for employment within the next 2+ years, you may be better off renting.

If you have recently lost a house, you nor your credit may be ready for another plunge, especially since home prices are also plunging – even though it’s being hyped as the best time to buy a home.

If you plan on staying in place, starting a family, or otherwise pretty stable at location or vicinity for at least 3-4+ years, then owning a home may be of benefit to you.  But if the boss plans to move the company to the other side of town, or another state/town, your commute will change drastically and you now enjoy life less.

Think about your lifestyle and commute – there are many expenses involved with buying, selling, and owning real estate and it locks you in a specific location.   Yes, you may miss good price appreciation, but these days it appears it’s all more relative about the local market than what your friends, family, or coworkers are experiencing.

Here is an article that pushes buy over rent, but offers good points toward buying – http://www.mercurynews.com/breaking-news/ci_17735719?nclick_check=1

Another article stressing buy v. rent, but based on their number and assumption of continued tax detectability of interest and taxes and sale of home for a specific price and no increases in some expenses like homeowner’s insurance (which has jumped about 20% since last year):  http://www.nytimes.com/interactive/business/buy-rent-calculator.html

Another article favors economics of buying v.renting now. Source: http://money.cnn.com/2012/03/21/real_estate/homes-buy-rent/?source=cnn_bin

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.

Are we satisfied with the progress of employment growth?

How about employment losses?

Since the economy sank and the chase was on for illegal immigrants, there seemed to be an exodus of illegal immigrants from the US.  So where “did” all the jobs go?  Are they still there and just not filled?  Will they be filled again with US citizens or illegal immigrants?

What would you prefer?

Since Obamacare will require unemployed US citizens to pay for Obamacare, even with a voucher, will Obamacare require the insurance of illegal immigrants once they return to work?

Either part time or off shore to avoid the impact of Obamacare.

Per an Associated Press article in the 12-29-2010 MDJ (A1), since sales in international markets were growing twice as fast as US domestic sales, demand overseas creates jobs overseas.  Reportedly 1.4 million jobs overseas compared with about 1 million here in the US.

This has resulted in all but 4 of the top 500 US corporations reported profit for 2010 and half the revenue for S&P 500 companies came from outside the US.

Also, it seems that the production of many products moved to overseas facilities aren’t returning to the US.

China became the world’s second largest economy.

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.

Basically, non-judicial foreclosure means that the financial institution can initiate foreclosure on a real property if periodic mortgage payments are not made on time or within the terms of the mortgage agreement with a borrower and given a period of notification, may sell that real property to highest bidder on courthouse steps or foreclose the loan.

In judicial foreclosures, the lender must approach the governing court in the county and go through the legal steps of acquiring the property and thereby extending the total time a property turns over.

As you can guess, the time it take to process a foreclosure through the court system will take longer, but how much longer???? (i.e., New York may take >1,050 days.)

Also, according to Lender Processing Services (LPS), current foreclosure inventory in judicial foreclosure states is three (3) times that of non-judicial foreclosure states.

LPS also recorded about 1.6 million properties =>90 days delinquent but still not in the foreclosure process.

Whether or not banks make errors on foreclosing on mortgages, and unfortunately some people lose jobs they can’t regain their prior income, it’s a safe bet that the process drags on longer in judicial foreclosure states than non-judicial foreclosure states if someone just isn’t paying their mortgage on time.

And the next question: Do the majority of homes under judicial foreclosure result in “zombie” homes prior to foreclosure?

Source: WSJ, 1-5-2013 – Opinion Section

11-20-2013 Note: Just got word from an HVAC technician I know that R-22 freon cost about $30-35/lb and R410A cost about $40-45/lb…or the new Freon is 30% more expensive than the old…

We’ve seen a change in HVAC refrigerants over the past several years – R-22 and R-410A…but what’s the big deal? The cost of course.

As you can guess, the newer refrigerant is much more expensive and not just the fact it’s new, but it may not be covered in your home warranty insurance and you may get some sticker shock replenishing your leaking (closed and different materials used to connect refrigerant lines produce leaks? ) HVAC system. And don’t think about just replacing your R-22 with the new R-410A – they both have different chemical properties so if your HVAC A/C needs replacement, unless you find another matching old A/C compressor, you will probably need to switch to a new R-410A compatible HVAC A/C condenser/compressor unit which means a whole new HVAC system – i.e., more expensive.

I heard somewhere the R-22 was supposed to be produced through 2020, but I’ve heard a much shorter time frame like 2016. So as it gets closer to the end for R-22,it will force most people into a newer HVAC systems.

Sometime near the beginning of 2010, the Environmental Protection Agency (EPA) banned the manufacture of equipment using R-22 Freon since it was determined to be more detrimental to the Earth’s ozone layer. And even though several systems remain that use that Freon, the R-22 systems aren’t being manufactured and supply will eventually run out.

Other potential expenses could include:

• R-22 parts may no longer be available;
• R-410A parts may not be used with R-22 parts & may require system replacement;
• R-22 refrigerant may be in short supply as the production falls, and raise price
• homeowners may wait to see if replacement parts are available and delay repairs
• the newer R-410A refrigerant systems will be more expensive
• recent options have included “refrigerant-less” systems, which may be even more expensive.

The Federal Reserve (12 regional banks who loan to other FDIC member banks) regulates US monetary and credit policies such as interest rates, amount of money available for banks, and rate of repayment from banks).

The two ways banks borrow money and provide liquidity to other banks to loan out is through (a) discount rate (what the federal reserve charges) and (b) the federal funds rate that other member banks charge and the federal open market committee (includes the federal reserve) sets.

The federal reserve also sets a “target” rate for federal funds that banks try to meet.

So is all this related to mortgages or real estate? No, not directly, but it has an impact on liquidity of banks to loan money for mortgages.  It also means the Federal Reserve has alot of control and power removed from our hands!

Source: Realty Times, August 21, 2007

Update 3-16-2016: Taking Title to Real Property is a Critical Decision. Do you want tenants in common or joint tenancy or something else? Oh, and be sure to consult with a real estate attorney in your local jurisdiction for discussion of meanings and legal ramifications.

I have enough knowledge about at least two forms of title (i.e., ownership) you report your ownership of your home to be dangerous.

But before I go any further, you just ought to consult with a licensed real estate attorney for true benefits and disadvantages.

Two major forms of real property title (ownership) are:

Tenants in Common – If two or more own the property, the deceased’s interest in the property must be probated in accordance with State and Local laws and the deceased wills.

Joint Tenancy (with right of survivorship) – If any one party who owns the property dies, their proportionate share automatically reverts to the other owner(s)without the need to run the property through probate court. This now brings up the subject of a will should one exist.

But there are some situations where we have to dig further – here are just a few:

In the case of a Joint Tenancy situation, does a will matter in the disposition of real property or does the property revert to remaining owner(s)in equal proportion(s)?

Also, what happens if one owner places liens on their ownership portion or files bankruptcy? (Can property be sold to pay liens?)

Can one joint tenant force the sale of the property?

What happens if all joint tenant owners died at the same time or at different times in the same catastrophic event?

Can one joint tenant change their ownership to Tenant in Common and force the property through probate and subject to the terms in the deceased’s will?

Again, consult with a real estate attorney to get answers to these questions and more!

3-18-2015: FHFA watchdog: Another Freddie, Fannie bailout could happen

1-22-2015: In November 2014, the FHFA began a joint venture to ensure credit availability and reduce exposure to taxpayers by ensuring that Fannie Mae and Freddie Mac (GSEs) begin to merge into a single entity of Common Securitization Solutions. Jointly owned by both GSEs, it’s limited liability company – it’s objective is design and merge both GSEs into one GSE bond through the Common Securitization Platform. Source: http://www.housingwire.com/articles/32596-here-are-the-fhfa-2015-scorecard-guidelines-for-the-gses

12-18-2013: Mel Watt was elected to replace DeMarco as FHFA Director…FHFA decided to investigate impact of dropping maximum loan limit for Fannie & Freddie to $400,000.

10-25-2013: FHFA stands to get $4 Billion from JP Morgan in the $13B settlement announced this week. I bet they will move to new offices soon and get some new furniture…

6-12-2013: Recent information released by the FHFA indicated home price increases were driven more by lower mortgage interest rates and not broad based economic improvement. Also, should the mortgage interest rates rise to the 6% range (which is entirely possible at this time), then incomes would need to rise, home prices would need to fall by 25%,or loosened lending standards, or a combination of all three. Source: WSJ, April 10, 2013, p.A11.

5-6-2013: Mel Watt (Rep NC) (who according the a 10-31-13 A14 WSJ article has limited knowledge of derivatives/financial management/oversight – which are requirements of FHFA director under the 2008 Housing and Economic Recovery Act) was nominated to replace Edward DeMarco as FHFA Director. Source: http://www.mortgagenewsdaily.com/05012013_fhfa_watt.asp

3-27-2012: FHFA now will allow some homeowners, who are >= 90 days delinquent on loans held by Fannie/Freddie, omit any required paperwork to qualify for loan modification as long as they can make three on-time mortgage payments. Source: http://www.chicagobusiness.com/article/20130327/NEWS12/130329794/u-s-eases-mortgage-rules-for-troubled-borrowers

3-25-2013: Who will lead the FHFA and transition from Fannie/Freddie when DeMarco leaves? Rep. Mel Watt, who I think is a decent man, was named as a possibility to manage the direction of a $10 Trillon mortgage market.

3-22-13:  FHFA tightened their mortgage standards effective 1-31-2013 including the suspension of  large upfront revere mortgage withdrawals and instead will use Home Equity Conversion Mortgage Saver that allows a lower withdrawal.  FHA would probably also tighten their withdrawals since they expected losses of about $3 Billion in revere mortgage related lending.  Source:  WSJ, 12-19-2012, A2..

10-18-12:  Falling mortgage interest rates are BIG reason Fannie & Freddie are performing loan modifications – approximately 1.6 million since 2009.  Most of them in the past year.  Source: http://www.homefinder.com/news/real-estate/2012/10/18/fhfa-record-low-mortgage-rates-help-harp-refinances-surge-in-august/