Homebuyers today can potentially save several times more money in interest costs than buyers who took out a mortgage in early April and claimed an $8,000 homebuyer tax credit. Yet buyers, who rushed to meet the April 30 deadline for the federal tax credits, appear much less eager to borrow at the lowest interest rates in 60 years.

Mortgage applications for home purchases are 42 percent below the pace seen in April, according to the Mortgage Bankers Association. Home resales dropped 27.2 percent in July from June, according to a report Tuesday from the National Association of Realtors. Someone taking out a $240,000 mortgage today at a 4.42 percent interest rate could save $33,287 in interest costs over the life of a 30-year loan. That’s four times the $8,000 credit used by a first-time homebuyer who financed at 5.21 percent in early April.

So why aren’t more people buying now? Timing offers one explanation. Buyers earlier this year, not knowing rates would drop, took the best deal available to them at the time. That soaked up future demand, which more optimistic forecasts hold should return as lower rates persuade buyers to get off the fence. Because few people stay in a home or keep a mortgage for 30 years, the time needed for monthly mortgage savings to match the $8,000 credit is another consideration, said Cameron Findlay, chief economist of LendingTree.com. On a $240,000 mortgage, a buyer would need to stay put for almost six years for monthly mortgage-payment savings to match the upfront credit. Studies in behavioral finance support the idea that people will go for a payout upfront versus a payout spread over a long period that is worth more. Uncertainty leads to stagnation Given the choice between a 10 percent pay raise when inflation is 12 percent or a 4 percent raise when inflation is 2 percent, respondents almost always go for the bigger raise, even though it means they will lose ground, said Greg Salsbury, an executive vice president with Jackson National Life Distributors in Denver.

Rather than seizing opportunities, many people also tend to freeze up when there is too much uncertainty. “Unemployment, the deficit and the overall economy are impacting people’s decisions disproportionately,” Salsbury said. “There are a lot of things in play.” Some mortgage brokers and bankers argue against complicated explanations about why buyers are missing in action. “The majority of my borrowers used the $8,000 tax credit toward the down payment, and the seller paid closing costs,” said Marilyn McConnell, a mortgage adviser with Cherry Creek Mortgage. Lower interest rates don’t help those buyers who can’t come up with the needed down payment or who are trapped in a home they can’t sell without taking a loss. Deflationary expectations Selling at a loss is psychologically hard, even if you realize the lower payment on the next property will make up for it over time, said Denver resident Shanti Klemm. “We’d love to buy a new home, but we have to sell first. It’s a Catch-22,” said Klemm, who estimates her family will lose $25,000 by selling its condo. Another more worrisome explanation is that consumers expect further declines in interest rates or home prices. A survey from real-estate website Zillow.com found that a third of homeowners thought home values in their area had more room to fall. If prices are headed lower, the rational thing to do is to wait for the better bargain. But deflationary expectations, like inflationary ones, become self-reinforcing. During the housing boom, people bought homes because they worried that prices would rise the longer they waited. Flip that around, and people may now be waiting to buy because they expect prices to go lower.

This article is sourced to Aldo Svaldi via The Denver Post asvaldi@denverpost.com

A contractor and a building inspector have been indicted on homicide charges in connection with shoddy ventilation work that led to the 2008 carbon-monoxide poisoning of a Denver family at an Aspen-area vacation home.

Marlin Brown, owner of Roaring Fork Plumbing & Heating, and now- retired City of Aspen building inspector Erik Peltonen were each indicted on four felony charges of criminally negligent homicide. The two, as well as Brian Pawl, a Pitkin County building inspector, also face misdemeanor counts of reckless endangerment. The indictments were announced Sunday.

The charges follow a Pitkin County grand jury investigation into the deaths of the four-member Lofgren family, who had won a Thanksgiving 2008 stay at the house.

Assistant Deputy District Attorney Arnold Mordkin said Brown installed the boiler and venting system at the $8.95 million home on Popcorn Lane, east of Aspen. Peltonen, a city employee working for Pitkin County, inspected the home.

Pitkin County sheriff’s investigators concluded that dislodged venting pipes for the boiler that handled hot water and the driveway-snowmelt system flooded the home with “extreme levels” of carbon monoxide as the family slept.

According to police reports, 8 feet of exhaust pipe was unattached between the boiler and the vent outlet. Deputy Brad Gibson wrote in a report that it did not appear the PVC exhaust pipe had ever been glued together.

Gibson also reported that several experts who investigated the scene did not find any carbon-monoxide detectors, even though a 2005 inspection report mandated the installation of the alarms.

One boiler specialist, Mark Passamaneck, told investigators he thought the installer of the leaking boiler was “reckless” and the installation “was not done to a reasonable community standard,” Gibson wrote.

Gibson also toured the home with Brown, who worked on the home sporadically from 2004 to 2005. Brown told Gibson he could not remember if he used glue to seal the joints of boiler exhaust pipes.

Still, Pitkin County Sheriff Bob Braudis in January 2009 said the evidence did not support negligent homicide charges. He forwarded his investigation to Mordkin, who asked a judge to empanel a grand jury, which convened in July 2009. A week shy of a year later, the 12-member grand jury made its decision.

Brown and Peltonen were arrested and released on $11,000 bond. Pawl was released on a summons to appear. The three will make their next court appearance Aug. 16.

“This took a long time,” Mordkin said. “This is a very serious situation, and you don’t want to rush and you don’t want to make mistakes.”

Denver investment banker Parker Lofgren, 39, his wife, Caroline, 42, and their children, 10-year-old Owen and 8-year-old Sophie, were found dead by friends in the home’s master bedroom the day after Thanksgiving 2008.

Picture Source: ABC News - http://abcnews.go.com/US/story?id=6376209&page=2

The Lofgrens had won a stay at the house as part of a fundraiser at Denver’s St. Anne’s Episcopal School. The house was owned by Jonathan and Carla Thomas, whose children also went to St. Anne’s.

The home’s master bedroom was above a utility closet that housed the leaking boiler. The children, who had apparently awakened in the middle of the night, were found on the floor of the bedroom. Both parents were in bed, with Owen near his father and Sophie near her mother.

Relatives of the Lofgren family said they were grateful for the indictments.

“We feel their deaths were absolutely preventable and we are not surprised with this outcome,” said Hildy Feuerbach, Caroline’s older sister. “I think the negligence there was just shocking. . . . It’s a tragedy that could have been averted if the people involved had done their jobs with reasonable care.”

Mordkin said the home, which was for sale for $8.95 million, had been approved for residency by county inspectors in 2005 or 2006, roughly a year after it was built.

At some point, the building-inspection process broke down, Mordkin said.

“That is our contention,” he said. “Once the house is inspected, it is not the building inspector’s job to make sure somebody does not do something stupid. That would be very unfair.”

Messages left for Brown at his Glenwood Springs shop were not returned. A woman answering the phone at Peltonen’s Basalt home said he, on advice from his lawyer, could not comment. Pawl could not be reached.

Pitkin County Commissioner Michael Owsley said Pawl and Peltonen, the latter of whom he has known for more than 40 years, are “some of the most outstanding employees we have.”

“These guys are dedicated public servants who woke up every day thinking about public safety,” Owsley said. “I’m sure they are devastated and their families are devastated. The Lofgren tragedy was bad enough, and this, as far as I’m concerned, makes this an even greater tragedy.”

Pitkin County attorney John Ely said he needs direction from the county commissioners on how to proceed in terms of defending the county’s employees.

“This is something totally outside the box,” said Ely, noting a lack of legal precedent or protocol.

The Lofgren deaths, as well as the January 2009 carbon-monoxide poisoning death of University of Denver student Lauren Johnson, prompted Colorado lawmakers in March 2009 to pass a law requiring carbon-monoxide detectors in most homes. The odorless gas kills as many as 500 Americans a year, primarily from poorly maintained furnaces and gas stoves, according to the federal Centers for Disease Control and Prevention.

The Lofgren family, in a statement, said the criminal charges and pending civil action “will send a clear message to contractors, and building inspectors and even manufacturers of heating equipment to ensure that such senseless carbon-monoxide deaths are prevented in the future.”

It just goes to show that whether it is a old run-down 2 bd – 1ba home that you have a rental or a multi-million dollar home in Aspen, you can never be too safe.  Especially with the deadly carbon monoxide issue!

This Post was archived directly from the Denver Post – To contact the author please see attached:

Jason Blevins: 303-954-1374 or jblevins@denverpost.com

As a person that is always renovating, flipping and evaluating real estate I thought this article would be helpful for some that may not know what they are getting into when buying a home.

If you’re in the market for an older home, keep your eyes open for a few building materials that have come to be known as historic failures.  Replacing them with materials that meet today’s standards can be an expensive proposition.

These five building practices are among those I recommend educating yourself about before buying an older home here in Denver.

Single-strand aluminum wire

Many thousands of houses were built between 1964 and 1976 using single-strand interior aluminum wire. The wire was developed as an alternative to copper as its costs rose – and its availability fell – during the Vietnam War.

Aluminum doesn’t conduct electricity as well as copper, so a larger gauge must be used to conduct the same amount as copper. Because of specific properties of aluminum, however, the connections between the wire and a light switch or outlet can arc, causing a spark that can burn the connection point and eventually start a fire.

Fires are rare, but the possible hazard is enough to warrant repair or mitigation.

The aluminum wire can be replaced with copper, or special connectors can be installed between the aluminum wire and every outlet or light switch. Detailed information can be found at :

http://www.inspectapedia.com/aluminum/aluminum.htm

Masonite Woodruf roofing

Originally produced as an alternative to natural wood-shake roofs, Masonite Woodruf roofing was installed on many homes throughout the 1980s and 1990s. The shingles have the look of cedar shake but were developed to be much more stable and long-lasting.

Picture Source: InspectAPedia.com http://www.inspectapedia.com/roof/Masonite_Roof.htm

Unfortunately, water penetration can cause shingles or whole sections of the roof to lift, curl or swell. The surface is dangerous to walk on because it can have a loose, powdery coating from the deteriorating Masonite.

These problems have led to a class- action lawsuit, now that has been settled in early 2009. Information about this settlement can be obtained at :

http://www.inspectapedia.com/roof/Masonite_Roof.htm

T-Lock Roofing

A discontinued roofing product called “T-LOCK” currently covers thousands of Colorado and Midwest homes. You can see the pictures here of several roofs with the T-LOCK roofing system – your home may have this roofing system – it has a very distinctive look and pattern to it.

The T-Lock roofing material is no longer manufactured and is not available for repairs. If your home has this system and you have any damage… it can’t be repaired.  Since it can’t be repaired, homeowners can file a claim to get a replacement cost roof through their insurance company (if the roof has any proven hail or wind damage). 

Polybutylene supply pipe

Polybutylene pipe was installed as water supply pipe in as many as 20,000 to 30,000 metro Denver homes between 1978 and 1997. This iron-gray plastic pipe replaced copper and, in older homes, galvanized steel as the main plumbing supply pipe.

Sections of pipe were joined together with special crimped couplers that sprang leaks at an alarming rate.

It was found that chemicals, including chlorine commonly added to the water supply, can erode the plastic, causing the joints to leak.

This pipe cannot be repaired but must be replaced. Estimates for removal and replacement can range from $5,000 to $10,000 or more, depending on the size of the house.

Class-action settlements have occurred. Information about them can be obtained in several ways: Spencer vs. Duncan, http://spencerclass.com/english.htm

Federal Pacific electric panels

These panels, also called “Stab-Lok” panels, were popular with builders in the late 1960s and 1970s and are in thousands of metro Denver homes. They are widely considered to be unsafe. The breakers in them often will not trip, leading to overheating and, in some cases, fires.

In extensive testing by the U.S. Consumer Product Safety Commission, the circuit breakers had a failure rate of approximately 25 percent.

The industry views them as obsolete, possibly dangerous, and recommends replacing them. Replacement cost is usually between $1,000 and $1,600.

Asbestos insulation

Asbestos was considered invaluable to manufacturers because it added strength and insulation properties to building materials. They used it in wall and ceiling insulation, floors and siding, and as an insulated wrapping on ductwork and pipes until 1972. Builders used those products in houses through 1978.

The mineral has since been found to cause serious health issues. When disturbed and floating in the air, asbestos fibers can be breathed in and can eventually cause lung cancer. The only safe way to deal with them is to remove or contain them.

Removal is costly and has to comply with approved Environmental Protection Agency methods. If asbestos is contained, it cannot come loose and float in the air. Ductwork and pipes can be wrapped or even painted with a special coating. Siding can be painted or covered with new siding, and floors can be left alone, sealed or covered over with another floor.

This article is archived from the Denver Post and was written by Alan Gould.  Alan Gould is a home inspector with U.S. Inspect. He can be reached at agould@usinspect.com.

5280 Magazine has an annual guide to the hottest ‘hoods in town (look closely, there are some surprises in there).

 PLUS: The changing definition of “location, location, location,” four things to do when looking for a Realtor, and why now is (perhaps) the best time to buy in a generation.
This article was written By Luc Hatlestad

In normal years, assessing Denver’s hottest neighborhoods is pretty predictable business. Of course, 2010 is, and 2009 was, anything but normal. As the Mile High City—and the nation—begins the slow recovery from the housing crisis, many of the city’s most desirable neighborhoods have seen marked corrections. That’s not a bad thing, per se, as these communities (think East Wash Park, University Park, and Country Club) are still highly sought after, even if the sales data aren’t quite as rosy as they’ve been in the past. The good news, though, is that the benefactors of these micro-market corrections are, mostly, the areas around the city’s classic neighborhoods—and the long-term effect of this phenomenon will be to expand Denver’s overall livability. Whether you’re buying, selling, or staying put this year, these are the places to be in Denver right now.

Belcaro

One of the few neighborhoods in this exclusive part of town where prices actually appreciated in the past year. This lush oasis (think ranch-style homes and quiet streets that don’t conform to the city’s grid) in central Denver draws a higher-end dweller—primarily families and empty-nesters with the taste and income for the finer things. Still, Belcaro offers relative bargains to luxury-market homebuyers, although sellers should be patient: Listed homes spent 183 days on market (DOM) last year, compared to a citywide average of 97.
Average sale price $845,000
+8% over 2009

Washington Park West

This slightly hipper, grittier alternative to Wash Park East (average sale price: $654,000) has all the access to its neighbor’s amenities, but at a far lower cost. This primarily residential neighborhood is surrounded by numerous retail districts, whether new (Pearl Street, north of I-25) or revitalizing (South Broadway). Lately, more young couples and families have been landing in the area to take advantage of its leafy streets, reasonably priced housing that hasn’t been as overwhelmed by scrapes and duplexes as have some of its neighbors, and, of course, the neighborhood’s biggest draw, Wash Park itself, which teems with activity even during the chilly winter months.
Average sale price $395,000
+1% over 2009

Berkeley West/Regis

The Highland boom spreads north and west as Denverites take advantage of the area’s easy access to I-70 and the mountains, along with the ongoing development of the Tennyson Street corridor. The Regis University campus, the funky-cool old-school Lakeside Amusement Park, and lots of green space and architecturally interesting new or remodeled homes make these adjacent ‘hoods most attractive to couples and young families who might be priced out of Highland but still want to be close to the action of Highlands Square and the 32nd Avenue and Zuni intersection.
Average sale price (Berkeley) $283,000, +8% over 2009
Average sale price (Regis) $212,000, +11% over 2009

Park Hill East

The low prices and proximity to City Park, bike trails, and the rest of Park Hill have made this neighborhood of well-kept, single-family Tudors and bungalows an attractive, affordable alternative to other east-side areas such as Hale and Hilltop. PHE is dotted with small shopping districts and a variety of quaint restaurants serving Italian, Thai, soul food, breakfast—you name it. With quick access to shopping in Stapleton, this neighborhood will appeal to anyone looking for an entry- or mid-level home that’s bound to appreciate over the next several years.
Average sale price $204,000
+5% over 2009

Sunnyside East

We’ve been touting this neighborhood for years as an up-and-comer, and it’s finally arriving as a focal point for homebuyers who want to get in on the northwest Denver boom. True, it’s a bit grittier than its more expensive neighbors, but it lures cutting-edge types who are willing to endure the “refinement” process rather than wait until everything has been upgraded (and potentially overpriced). Sunnyside’s unusually affordable homes—lots of modest bungalows—mean inventory is low, so buyers must be prepared to act fast.
Average sale price $181,000
+13% over 2009

Sloan’s Lake West

Between the burgeoning Edgewater commercial district, Sloan’s Lake East, and Highland, the area around Denver’s biggest lake is fast becoming the go-to ‘hood for people who want quiet surroundings with easy access to downtown, northwest Denver’s shopping and nightlife, or quick mountain getaways. The lake itself—which not long ago was a place to avoid after dark—has become a landing spot for joggers, boaters, and water skiers, and the sleepy surrounding streets make the neighborhood attractive to families with children.
Average sale price $341,000
+9% over 2009

Jefferson Park

This cozy enclave still has a rich Latino heritage and provides a lower-cost option—with equal access to northwest Denver’s amenities and striking views of downtown—than the more established Highland neighborhood to the north. The Speer and I-25 borders funnel traffic around the area rather than through it, which makes the streets surprisingly quiet, day and night, and many of the modest homes are ripe for remodeling or flipping. Despite the area’s proximity to Invesco, the chaos is minimal on football Sundays thanks to a well-run traffic-management plan, and JP’s average of 46 DOM shows how quickly its properties are moving.
Average sale price $260,000
+9% over 2009

Congress Park South

Along with its neighbor Congress Park North, this was one of the few areas in central Denver where values appreciated last year. One of downtown Denver’s first “suburbs,” CPS is now one of the oldest and most desirable and vibrant neighborhoods in the city, with many remodeled Victorian-era homes. It has become a vortex around which couples, families young and old, hipsters, and yuppie singletons revolve. The ‘hood is also near the quietly luxurious Cheesman Park and Denver Botanic Gardens, giving the whole area a neighborly, walkable—yet still urban—feel.
Average sale price $445,000
+9% over 2009

Hot…Or Not?

Why some typically reliable neighborhoods had a rough year.

When we started to rate Denver’s best neighborhoods in 2010, we found the usual suspects in some unusual and unfamiliar situations. Homes in Highland East, Central, and West, for example, dropped in value across the board (from 4 to 11 percent), as did houses in Cheesman Park (down 5 percent from 2009), Country Club (-1 percent), University Park (-15 percent), and Wash Park East (-3 percent). And Cherry Creek, Denver’s answer to Beverly Hills, saw its average sale price plummet by 14 percent—with an average DOM of 218, more than twice the citywide rate.

Fear not: This doesn’t mean these tony areas are hitting the skids; they’re merely going through a more pronounced correction, and their numbers appear more alarming because their prices were so high to begin with and thus have farther to fall. (Even with the downturn, the average sale price in Cherry Creek is $834,000, and the glut of unfinished scrapes is skewing prices all over town.)

The precipitous correction in some parts of Denver belies the more rational one happening in the overall market. Lon Welsh of Your Castle Real Estate cites Hilltop—$803,000 average sale price, down 3 percent from 2009; 198 DOM—as an area where overspeculation warped the numbers. “They have more than 20 houses on the market that are 2,500 square feet or more and cost up to $3 million,” he says. “People are buying the smaller homes in the area, but because they’re only selling the Chevys instead of the Cadillacs, the average prices come down more steeply.”

The rules for renovating pre-1978 homes are changing and failure to comply can carry stiff penalties.  If you’re a rehabber, flipper, or landlord this may affect your business.

The US Environmental Protection Agency (EPA) has new lead paint laws going into effect on April 22, 2010. The new lead paint laws require any renovation work performed on houses built before 1978 to be performed by a certified contractor. Obviously his new law is causing some serious moans and groans from both home owners and contractors. Contractors will be required to provide home owners the Renovate Right Brochure which contains useful information about the new law.

Lead Renovation, Repair and Painting Law

The new lead paint laws that goes into effect on April 22 involves training and certification of remodelers, safe work-site practices, verification and record keeping. It’s very important to understand that the new law pertains to projects on any house built before 1978 with a few exceptions as follows:

• The home or child occupied facility was built after 1978.
• The repairs are minor, with interior work disturbing less than six sq. ft. or exteriors disturbing less than 20 sq. ft.
• The homeowner may also opt out by signing a waiver if there are no children under age six frequently visiting the property, no one in the home is pregnant, or the property is not a child-occupied facility.
• If the house or components test lead free by a Certified Risk Assessor, Lead Inspector, or Certified Renovator.

What Does The New Law Mean To You?

Renovation Project

You’re probably wondering what this new law might mean to you and your next remodeling project. The obvious answer is a healthier home for you, your family and people that perform renovations to your home. The other obvious answer is an increased cost for contractors to adhere to the new rules which ultimately means an increased cost to you.

Over the last few months I’ve heard several small contractors say they will steer clear of and avoid older home renovations. A significant amount of small replacement window contractors will most likely go out of business and stop providing inexpensive window replacement services. While we think the new law is important in protecting public safety we also know it will result in much higher prices for consumers and less competition for consumers.

If you hire a contractor to do a renovation in your home that was built prior to 1978 be sure you hire a certified contractor. You should ask to see your contractors RRP certification prior to hiring them. Contractors performing work without the certification face penalties of $37,500 per day!

New Law Will Take Time To Work Effectively

With over 38 million homes containing lead paint in the US no one can argue the importance of good lead paint laws. However, from the few meetings and conversations I’ve had it’s clear to me that this is going to take some time before it’s very effective. Most of the literature and training has left contractors confused, upset and frustrated. However, with time these new laws will become part of everyday routines for contractors and ultimately help save lives. We certainly hope the EPA works quickly to fill in the blanks and help contractors implement this new law.

The U.S. dollar, the Swiss franc, the future of China, Acme Brick, and why Buffett always starts from a “position of fear.”

This is part seven of the transcript and video of Warren Buffett’s ‘Ask Warren’ appearance on CNBC’s Squawk Box on Monday, March 1, 2010.

The world’s second-richest person called on Washington policymakers to adopt fundamental reforms on such costs to address what he called a “national emergency.”

He said health care eats up 17 percent of U.S. gross domestic product, at a time when many other countries pay only nine or 10 percent of GDP but have more doctors, nurses and hospital beds per capita.

“It’s like a tapeworm eating at our economic body,” Buffett said on CNBC television.

“If it was a choice today between Plan A, which is what we’ve got, or Plan B, which is the Senate bill, I would vote for the Senate bill,” he said. “But I would much rather see a Plan C that really attacks costs, and I think that’s what the American public wants to see.”

Rising costs, Buffett said, are holding back an economy that faced an “economic Pearl Harbor” in late 2008 when capital markets seized up.

While he said “we got past Pearl Harbor” and “we will win the war,” he said the recovery remains slow, including in many businesses at his insurance and investment company Berkshire Hathaway Inc (BRKa.N) (BRKb.N).

Absent a major outside shock, “we will continue moving upward, but not at a very fast rate,” he said.

Buffett gave U.S. President Barack Obama “high marks” for helping the country rebound. Yet he said improved conditions may not make stocks more attractive to investors.

“My enthusiasm for stocks is in direct proportion to how far they go down,” he said. “Stocks are a lot less attractive now than they were a year ago.”

PRAISES GOLDMAN CEO

Buffett spoke two days after Berkshire published its annual report, including Buffett’s widely read shareholder letter.

Full-year profit at the Omaha, Nebraska-based company rose 61 percent. Berkshire has about 80 operating businesses that sell things from car insurance, carpeting and ice cream to industrial components, paint and underwear.

“There’s a few businesses that have really had a fair amount of bounce,” while others show no improvement, Buffett said. “It’s getting better, but at a very, very slow pace.”

A $26.5 billion takeover last month of Burlington Northern Santa Fe Corp, the second-largest U.S. railroad and Buffett’s biggest acquisition ever, cost Berkshire the last of its “triple-A” credit ratings.

While Berkshire raised about half of the $15.9 billion of cash used for the takeover in credit markets, Buffett said the downgrades perhaps cost the company no more than a few hundredths of a percentage point in extra yield on its debt.

“I think we deserve a quadruple-A” rating, he joked. Such a rating does not exist.

Buffett offered praise for Goldman Sachs Group Inc (GS.N) and Chief Executive Lloyd Blankfein, which advised on the takeover. Berkshire owns $5 billion of Goldman preferred shares and warrants to buy an equal amount of stock. The warrants are in the money because Goldman stock has risen.

Goldman still receives much criticism over the extent to which it may have contributed to the recent financial crisis, and the debt crisis now afflicting Greece.

Berkshire acquired the Goldman securities in September 2008, and Buffett said it was the right decision.

“It’s a very, very strong, well-run business,” he said. On Blankfein, he said, “You cannot find a better manager.”

If you are a landlord in Colorado you MUST READ this and RESPOND! 

Colorado State legislature will consider the Rent Control bill in House Local Government Committee this week and we must stop it! Rent control clearly violates the spirit of the Fifth Amendment to the U.S. Constitution, which prohibits private property from being taken for public use without just compensation.

House Bill 1017 gives governmental entities the upper hand, an unlevel playing field. This bill adversely affects private property rights because if this bill passes, rent controls will be imposed by local governments.

PLEASE PLACE YOUR CALL OR SEND YOUR EMAIL TODAY as the bill is being heard Thursday, Feb 11th. Contact your state representative right away and vote NO on the bill!

Sue Schafer repschafer@comcast.net 303-866-5522

Rep. John Soper johnsoper@comcast.net 303-866-2931

Rep.  Edward Vigil Edward.vigil.house@state.co.us 303-866-2916

LEARN MORE ABOUT THE BILL>>

FHA Suspends 90 Day Seasoning Requirement for Flipping!

May 1, 2003 HUD imposed a 90 Day Title Seasoning requirement for all new FHA loans. This was their big idea to help protect the consumers from the Big Bad Flippers. It only took 6 years and a housing market crash to show the elitists the errors of their ways. Now they need our help to fix their mess.

They finally came to their senses and temporarily suspended title 24 CFR §203.37a(b)(2), which is the 90 Day Title Seasoning Requirement. This is only a temporary suspension. Starting February 1, 2010 and expiring on 1/31/2011, First time Home Buyers who apply for an FHA loan will not have the 90 Day Title Seasoning Requirement. However, as an investor you will still need to follow a few guidelines in order to Resell (Flip) our Short Sales / REO’s and Flips to First Time Home Buyers who are applying for an FHA loan.

See HUD’s Press Release: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories
/2010/HUDNo.10-011

Guidelines Investors Must Follow:
(read FHA ’s official release for all the details at: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf)

1. All Transactions must be Arms-Length.
   1. The Seller Holds Title.
   2. bLLC’s corporations or trusts that are servicing as the sellers were established and are operated in accordance with applicable state and federal laws.
   3. No pattern of previous flipping activity exists for the subject property within a 12 month period.
   4. The Property was Marketed openly and fairly.
      1. Assignment of Contracts may be Red Flagged.
2. In cases which the sales price is 20% or more over and above the seller’s acquisition cost, the waiver will only apply if the lender:
   1. Justify increased Value
      1. My require a second appraisal
      2. Proof of work performed
   2. Independent Property Inspection
3. 3. The waiver is limited to forward mortgages, and does not apply to Home Equity Conversion Mortgages (HECM) for Purchase Program.

This is a HUGE change and it will make it ten times easier for investors to resell Short Sales and Rehabs without having to find buyers who can qualify for conventional financing. FHA is the #1 lender to first time home buyers and let’s face it, our resell market is the first time homebuyers. It has just been difficult for us to resell to first time homebuyers over the last several years because of the title seasoning rules. The lenders who did not have those title seasoning rules had such lending requirements, primarily the down payments, that eliminated about 75% of the first time homebuyers from buying from us, unless we held onto the properties for so long that our holding cost eat up most of our profits and we risked those vacant properties becoming vandalized before the title seasoning time frames had passed.

For now anyways, investors can get back to what they do best, fix either financial problems or structural problems in a timely manner and resell those properties for a profit. Everyone wins this way. The banks will have less foreclosures, the sellers will be able to get out of their problems, properties that need extensive work can be bought the traditional way and the biggest winner of all will be the first time home buyers who need FHA financing will now be able to buy completely renovated properties that will last for many years before they need maintenance or repairs again and the economy, especially the housing markets will start to see a recovery.

For the first time in more than 30 years, California has announced that it will be re-assessing the property values to account for properties that have experienced deflated values (see California to Use Deflation in Assessing Property Taxes).
I think we can hear the communal sigh of relief even all the way over here in Denver!

Finally, some good news for California residents and investors! In the last couple years I have worked with many clients pursue real estate investments in the Golden State, regardless of high LLC taxes, sliding property values and devastating forest fires. In fact, California is one of the top states in which we have clients.

We are always happy to hear that governments and other municipalities are taking into consideration the state of the economy. But, this resonates with us even more. I am proud of our California clients and their boldness to purchase a Real Estate IRA – it’s time they received a break!

Go boldly, California investors. The tide may be turning!