An REO lender cannot require a buyer to purchase title insurance from any particular title insurance company.  This title pertains to transactions involving a federally-related mortgage loan for one-to-four residential units as defined under the Real Estate Settlement Procedures Act (RESPA)(12 U.S.C. section 2608).  Although this is a well-established rule under RESPA, it bears repeating given the recent upsurge in REO transactions.

REO transactions are not exempt from RESPA requirements.  If an REO lender chooses the title insurance company, as is often the case, it cannot require directly or indirectly, as a condition to selling the property, that the buyer purchase the title insurance policy.  An REO lender that violates this RESPA requirement can be, among other things, held liable to the buyer in the amount equal to three times all charges made for such title insurance.  Moreover, anyone who believes that RESPA has been violated may file a complaint (and may request confidentiality) to the U.S. Department of Housing and Urban Development (HUD).  For more information about filing a RESPA complaint, go to http://qa.car.org.

It may be time to think about buying a home. Some housing experts believe the recovery of the housing market is dependent upon first-time home buyers.  When houses are affordable for first-time buyers, the supply of available homes dwindles, bringing the supply and demand into alignment, which generally leads to an increase in median home prices.  First-time buyers also have the benefit of not relying on their current home to sell prior to purchasing a new one.  As first-time buyers purchase homes, the sellers of those homes also are able to move up, further shrinking the supply of available homes.

Some home buyers may be reluctant to purchase a home while prices continue to decline.  One study, “The Changing Prospects for Building Home Equity,” predicts that buyers in 33 of the 100 largest metropolitan areas may see a decline in their home value by 2012.  It is important to note though that over the long term, most homes increase in net value.  The study also was conducted before the government’s most-recent efforts to lower borrowing costs for home buyers.

Credit scores continue to be an important factor in determining not only a borrower’s eligibility, but also the interest rate offered by the bank.  Most financial institutions offer the best mortgage rates to borrowers with FICO scores above 720.  John Ulzheimer, president of consumer education for credit.com, recommends borrowers stop using credit cards and pay down debt balances several months before applying for a loan.  Ulzheimer also states that the credit scoring system may penalize borrowers using their lines of credit frequently, even if balances always are paid in full.  Consumers can check their three credit reports for free at annualcreditreport.com.

Good credit doesn’t mean simply paying bills on time; it also can mean job stability.  Most lenders require borrowers to have worked for the same employer for at least one year, possibly longer before they will approve the home loan application.  For self-employed individuals, most lenders will want at least two years of tax returns before approving a conventional loan.

The services of a REALTOR® should be used in every real estate transaction.  REALTORS® can provide an overview of current market conditions, coordinate home tours, and assist with making offers and counteroffers, as well as help with the myriad of details involved in every real estate transaction.

The Internal Revenue Service (IRS) is “subordinating” federal tax liens and allowing primary mortgage holders to take precedence when a mortgage is refinanced or the home is sold.  The new IRS program allows homeowners to refinance or sell a home without first having to pay any federal tax liens.  However, the IRS is not forgiving the debt and homeowners must pay any back taxes owed.

With the exception of cash transactions, investment activity in commercial real estate sectors is nearly at a standstill because commercial lending has essentially halted, while job losses are curtailing the demand for space, according to the latest COMMERCIAL REAL ESTATE OUTLOOK” of the National Association of Realtors®.

Office rent is likely to contract in 2009 as erosion in the job market curtails demand for space.  Vacancy rates are projected to increase to 16.4 percent in the third quarter of 2009 from 13.4 percent in the third quarter of 2008. 

The industrial sector has been holding up fairly well based on the strength of exports, but the global economic slowdown will take a toll.  Vacancy rates in the industrial sector are forecast to rise to 12.1 percent in the third quarter of 2009 from 10.7 percent in the third quarter of 2008.