Archive for April, 2009

St Paul Announces Heroes Duplex Incentive

said on April 10th, 2009 categorized under: Buying A Duplex

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US Army helmet - Vietnam eraNot to be outdone by either the federal government’s $8000 first time home buyer tax credit, nor the state of California’s $10,000 new home buyer tax credit, later this month the cities of Minneapolis and St Paul will unveil a plan providing $8 million worth of federal tax credits to first time home buyers who purchase homes in either city. 

St Paul’s Housing and Redevelopment Authority went a step further on Wednesday, however, when they offered “heroes”, such as teachers, fire fighters, veterans, EMTs, paramedics, health care workers and certain public sector employees up to $15,000 in down-payment assistance, closing costs or reduced principal.

St Paul will spend $500,000 to provide loans to approximately 33 heroes.

Loans provided through the program would have a 0 percent interest rate, and no periodic payments. Rather, the loan would be paid back when the property is sold or the homeowner moves out.

It gets better yet. Loans would be completely forgiven if the buyer lives in the home as their main residence for more than 10 years.

Sounds like a nice way to say “thanks” to people who do so much for us.

How to Charge Application Fees For Your Minneapolis Duplex

said on April 9th, 2009 categorized under: Legal Stuff

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rental applicationOne of the best ways for a landlord to reduce the risk of having non-paying tenants is to run a credit report through a company like ASP Screening when they fill out the rental application.

Screening companies usually charge a fee in the $20-25 range for this service. So can the landlord pass this fee along to the applicant? Yes.

The city of Minneapolis does require the landlord to follow some guidelines before charging an application fee, however.

First, the landlord can only screen one tenant at a time.  If she has multiple applicants, she must complete the screening process for one, and accept or decline that person before moving on to the next. She may not take a fee from all applicants, running all of their credit histories, then select the “best”.

Second, the landlord’s application must include a place for the prospective tenant to provide an address where the fee may be returned. It must also disclose the name of the screening company the landlord intends to use.

Of course, applicants would likely appreciate knowing the necessary criteria before applying to rent a Minneapolis duplex. The city thinks so too, and requires landlords to provide it, in writing, before taking the application fee.

Should the landlord choose to reject an applicant, she must provide a written explanation within 14 days, naming the afore-mentioned criteria that were not met. She must also provide the name and contact information of the screening company she used in the process.

So what if she turns down the applicant for a reason not detailed in the credit report? The application fee must be refunded.

As always, any violation of this protocol can result in the revocation of the landlord’s rental license.

Sprinkles of Hope In Minneapolis Duplex Market

said on April 7th, 2009 categorized under: Twin Cities Real Est

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Farm boy sitting on a wooden fence in late afternoon dusk.If you’re sitting on a fence somewhere, you may not have noticed it’s starting to rain. It’s just a drop here and there, but with any luck, we’ll get a good soaking soon.

I’m speaking metaphorically, of course. The rain I’m talking about is the sprinkling of positive headlines in the national media about the real estate market.

Amidst the doom and gloom in recent weeks, you may have also noticed, “Pending Home Sales Rise In February”, “Mortgage Rates Fall, Set Yet Another Record” and then, this morning, MSNBC posted a link to an article in Business Week announcing “Signs of Life Emerging in Housing Sector“.

The article details trends in several of the most depressed real estate markets in the nation, where due to bargain prices, historically low interest rates and the $8,000 first time home buyer tax credit, investors and first time home buyers are beginning to scoop up properties.

But then, if you’ve been paying attention to weekly reports from the Minneapolis Area Association of Realtors, you’ve already felt a drop or two of rain. And today’s weekly activity report from the organization is no exception.

For the week ending March 28, the number of new listings coming on the market continued to drop; down 12.2 percent from the same week in 2008. Meanwhile, pending sales were up a staggering 28.2 percent over last year.

The report goes on to explain that the average number of Days on Market Until Sale has dropped to 150 days, which is 9 percent lower than last year.

And get this: for the first time the market reported its first upward year-over-year move in the Percent of Original List Price Received at Sale, which was up by 0.6 percent.

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House Eyes Minneapolis Duplex Mortgage Reform

said on April 6th, 2009 categorized under: Financing

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One hand handcuffed to a piggy bankThe Washington Post reported Saturday that Congress is introducing legislation to help reform the mortgage market. The thinking is had stricter standards been in place, neither the housing boom nor its demise would have been as big.

Authored by Reps. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, Melvin Watt (D- N.C>) and Brad Miller (D- N.C.), the Mortgage Reform and Anti-Predatory Lending Act of 2009 9 (H.R. 1728) is expected to reach the Senate for consideration by May.

If passed, the bill would:

  • Prohibit loan officers from being paid any fees that are tied to the type or interest rate of the mortgage. During the boom, mortgage brokers were often paid more if they originated exotic loans such as interest-only, payment option and no-documentation loans with small down payments.
  • Create mandatory minimum standards for all loans.  Regulations would encourage lenders to originate loans that are more traditional: at 30-year fixed rates, with full documentation. Homeowners who refinance would have to be able to pass a “net tangible benefit” test, proving the loan they are refinancing into is better than the one they’re in.
  • Allow people who get mortgages not in keeping with the above to immediately cancel their entire loan contract; requiring the lender to refund all payments and fees.
  • Six-month notice before the reset of hybrid adjustable rate mortgages. A hybrid mortgage is one with a fixed rate for a defined period of time that resets after the expiration of the intial term.

While in theory, many of these ideas seem solid, it’s important to remember possible pitfalls.

The “stated income” or no-documentation loans so many are blaming for the housing crisis originated as a means for people who are self-employed to get financing. Most entrepreneurs legally take many tax deductions, which creates the appearance on their tax returns that they make very little, which may or may not be the case.

In today’s lending environment, many self-employed people are finding it difficult to obtain financing.

The bill also fails to clarify whether it will prohibit refinancing for the purposes of debt consolidation. Should a Minneapolis duplex owner fall onto some sort of financial hardship, will he be able to refinance his residence to solve the issue? Even if prevailing interest rates are higher than those on his existing mortgage?

As always, write your Congressional representative and make your voice heard.

Fannie Mae Makes Nice To Minneapolis Duplex Investors

said on April 3rd, 2009 categorized under: Financing

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Ten percent of red colorOne of the reasons today’s real estate market is so challenging for investors is the 20 to 25 percent down payment most lenders require to be willing to finance a property.

It seems the government sponsored entity (GSE)  Fannie Mae recognizes this. And to that end, they have created a new investment property financing program through Fannie Mae HomePath.

This program allows investors to buy properties owned by Fannie Mae due to foreclosure with just a 10 percent down payment. What’s more, Fannie Mae will not require the buyer to obtain an appraisal or pay mortgage insurance premiums.

Not every property, nor every Fannie Mae owned property is eligible;  only those appearing on Fannie’s 10 percent down list are.

It’s encouraging to see Fannie Mae doing what they can to stimulate their sector of the housing market.  Remember, these are the same folks who also recently relaxed the number of  investor’s loans they will back from one to ten.

If historical trends hold, the other GSE, Freddie Mac will create a similar program, making another small sector of the market a little more investor friendly.

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condemnationWe’ve all seen them: orange, yellow, pink, blue–  brightly colored pieces of copier paper boldly attached to the doors or windows of countless duplexes and homes in the Minneapolis area.

What do they mean? Well, unless you park your car and get out to look, we usually haven’t a clue.  We only know it must be bad.  After all, this is Minnesota. We don’t usually like to draw attention to ourselves.

So what are they?

According to the city of Minneapolis, they’re notices placed on buildings as a result of city housing inspections. Each color has its own specific meaning and level of alarm.

Bright Orange – Condemnation.  The building is condemned and residents must move by the date on the placard.

It’s also important to know the water department also uses bright orange stickers to notify occupants that the water will be shut off due to payment delinquency if not paid by a specified time.

Faint Yellow -Warning:  Do Not Occupy.  The building is hazardous and tenants have to move by the date on the sticker.

Bright Yellow- Notice.  This notice states if necessary improvements haven’t been made by the date mentioned on the sticker, the property may be condemned. Occupants may have to move if the repairs aren’t completed in time.

Gold Yellow – Unlawful Occupancy. This notice offers an explanation of the specific reason it was posted in the middle of the page. Reasons may include: too many people living in the property, too many units, no rental licencse or non-conforming units in the building.

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