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Real Estate Resources
Welcome to the AAOA Forum, where we discuss the the topics our members want to hear and want to talk about. We like to take an active roll in the online community to help our members learn and help educate landlords new and old. We encourage you to participate and join in our discussions. Thanks.
What Happens When Reverse Mortgage Isn`t Repaid?
In a recent column, we addressed the possibility of using an Individual Retirement Account to purchase investment real estate.We pointed out that one of the challenges was that an IRA-leveraged loan is made to the IRA or plan, not to an individual, and that rules preclude an owner from using his or her personal credit to influence the loan. These IRA loans are known as “nonrecourse” loans, wherein the lender can seek relief from the secured property only in the event of default and foreclosure. The owner’s other assets, such as stocks, bonds and insurance policies, cannot be claimed.
Reverse mortgages also contain a “nonrecourse” component. The U.S. Department of Housing and Urban Development’s Home Equity Conversion Mortgage (HECM) program, the nation’s most popular reverse mortgage with a market share of at least 85-90 percent, often is marketed with the statement, “the senior can never owe more on her HECM loan than her house is worth at the time the loan is paid back.”
FHA recently announced that the nonrecourse description in all its reverse mortgages may not be fully accurate in all circumstances. For example, this remote circumstance can occur when the children of the senior want to keep the home after the parent has died or moved out and the debt on the home has exceeded the home’s value.
According to HUD, nonrecourse means that although a borrower will always owe the entire loan balance, if the borrower (or estate) does not pay the balance when due, the mortgagee’s remedy is limited to foreclosure. The borrower will not be personally liable for any deficiency resulting from the foreclosure. While the home must be sold or foreclosed to satisfy the debt, no assets — other than the home — will be used to repay the debt.
At any time the borrower (or estate) may sell the property for the lesser of the full debt or the appraised value. If the loan is due and payable, the borrower (or estate) may sell the property for at least the lesser of the full debt or 95 percent of appraised value. However, the borrower (or estate) may not retain the home without paying the entire loan balance, which could mean putting you out of pocket to keep Mom’s home.
“HUD felt it was a good time for the clarity because of the popularity of the program and because some homes were dipping in value,” said Sarah Hulbert, president of Senior Financial Corp., a reverse mortgage lender. “The number of times this situation could happen is probably relatively few, but it’s best for all parties involved to have a clear understanding of the process.”
The move is timely for another reason. In a separate study, HUD revealed that 2008 will be viewed as a turning point in the history of the HECM program because annual origination volume exceeded 100,000 loans for the first time. The decade-long rise in home prices, coupled with relatively low interest rates since 2000, have increased consumer demand for the product. In addition, lender interest in supplying reverse mortgages has increased since 2006, the year in which HECM loans were first packaged into mortgage-backed securities, the report found.
Questions regarding HUD’s efforts to clarify the nonrecourse definition will undoubtedly come from adult children wondering why Mom paid mortgage insurance so that her debt would not surpass the value of her property.
“The mortgage insurance was put in place to insure the value of the home at the time of the payoff,” Hulbert said. “That payoff occurs when the senior leaves the home. If the family wants to keep the property and more is owed on it than its value at the time, it’s up to the family to work that out with the lender.”
That work-out process might involve the lender accepting a sum less than the remaining debt on the home. This is known as a short sale. According to HUD, if a borrower (or estate) elects to follow the short-sale procedures, such sale of the property by the borrower (or the borrower’s estate) must be an arm’s-length transaction. HUD defines an arm’s-length transaction as being between two unrelated parties and must be characterized by a selling price and other conditions that would prevail in an open market environment.
Launched in 1989 as a limited pilot program, HECM volume has now exceeded 390,000 loans. More than 50 percent of the loans occurred in the 24 months proceeding March 2008.
To get even more valuable advice from Tom, visit his Second Home Center.
What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story. Copyright 2008 Tom Kelly
Posted by Kim Ezzell on 10.30.2008. CLICK to Leave a Comment »
Filed under: AAOA Forum, Financing
AAOA`s GREAT PUMPKIN CONTEST: WIN $25!
One of our staff members grew this baby in their backyard.
Be the first to guess how much this overgrown jack-o-latern weighs and win a $25 gift certificate (your choice: Target, Starbucks, Staples, Olive Garden, Office Max).
Please use the comments section below to enter your guess.
ONLY ONE GUESS PER COMMENT. 10 GUESS LIMIT PER PERSON.
CONTEST RULES
BY COMMENTING BELOW, YOU ARE ACKNOWLEDGING THAT YOU HAVE READ THESE RULES
1. There can be only one winner per contest. Our winner is determined as the first person to guess the correct answer. If no one guesses the exact answer, the winner will be the first to enter the closest guess WITHOUT GOING OVER.
2. You must place guesses in the comments section of THIS blog entry. Do not call or email - it doesn’t count.
3. Each comment can only contain one possible answer. Comments with more than one guess will be disqualified. You can comment up to TEN times.
4. We have designated the correct answer in advance. That is the only answer that will be accepted. Competing answers that fit some or all of the clues will not be considered. It is in the sole discretion of the blog editor to determine the winner.
5. You cannot cheat. If you cheat, you will be disqualified. Cheating is any device you come up with that gives you an unfair advantage over other participants. This includes, but is not limited to, loading your comments with piles of data that may also include the correct answer buried inside, like every number between 1 and 1,000, or use of some superstatistical computer or program, any form of hacking, spying or other devious means. It is solely up to the discretion of the blog editor to determine if you cheated.
6. We must be able to mail you your prize. Once you have been identified as a winner, we will contact you via email to obtain your mailing address. If we cannot contact you, or you do not provide the address or other information required by law within thirty days of request, the prize will be forfeited. No other winner will be chosen.
7. If you knew the answer before this posting, or are an AAOA insider, you are disqualified.
8. If your guess gets caught in the spam filter, or is otherwise lost in Internet limbo, that guess is disqualified. Check the comment section to insure that your guess landed on the page.
9. This contest will terminate Monday, November 3rd at 11:59 p.m MST.
10. This contest is void anywhere and under any circumstances that it is illegal.
11. This contest is terminated if computer or Internet glitches render it impossible.
American Apartment Owners Association offers discounts on products and services related to your commercial housing investment, including real estate forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
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Posted by Kim Ezzell on 10.30.2008. 3 Comments »
Filed under: AAOA Forum
How to Protect Your Property From Bats
by Michael Koski
Bat infestations are more common than one might think, especially with bats continued displacement as their natural territories diminish. Fortunately there are simple steps property owners and managers can take to lessen the likelihood of a bat invasion.
Bats in the property may also increase property owners and managers exposure to litigation. Imagine the disputes that could arise after a tenant wakes up to discover their sleeping child has shared a room with a bat, or a group of curious kids play with a bat they find on the property and it tests positive for rabies. Find out more about your legal liability for bats.
There are steps you can take to protect your property from these nocturnal interlopers. Adopting these fairly simple maintenance routines or adding them to your existing ones can reduce the possibility of becoming host to a colony of bats.
· Bats can squeeze through very small openings. Depending on the species they may only need only a 1/2” by 1” opening - so sealing off any entry points is the key to keeping them out.
· Check the chimneys to make sure the screens covering the openings are in good condition. Check the surrounding flashing for any gaps. This is a common entry point for bats.
· Inspect and repair any loose shingles.
· Inspect the area where the building meets the roof (fascia, soffits) for any gaps. Caulk or spray foam as needed.
· Make sure your attic vents have screens and they are in good condition.
· Visually inspect the area above the windows for cracks or gaps. Caulk as needed.
Have a bat problem? Bat exclusion is a job best handled by a professional and time is of the essence. It is imperative that you consult a professional at the first sign of bats- by the time you notice your first bat, there could be dozens more that have taken up residence. The longer the bats are present, the more damage they will do and the more difficult it may prove to remove them.
Online Resources and Bat Information: www.GetBatsOut.com, www.batcon.org (Bat Conservation International), www.cdc.gov/rabies About the Author: Michael Koski is an author, Bat Exclusion Professional and owner of Get Bats Out- a nationwide bat exclusion company. Get Bats Out specializes in commercial and residential bat exclusion and guano clean up. His book,The Home Owner’s Essential Guide to Bat Removal is available on his website at www.getbatsout.com. He can be reached at 877-264-2287 for any and all bat questions. Did you know that bats are not blind? Find out more in Fast Bat Facts. American Apartment Owners Association offers discounts on products and services related to your commercial housing investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org. To subscribe to our blog, click here.
Posted by Kim Ezzell on 10.30.2008. 1 Comment »
Filed under: AAOA Forum
A Landlord`s Freakiest Legal Nightmare
Focus on Liability Management and Preventative Maintenance: Bats
by Michael Koski
Here’s a maintenance issue you might not have considered - preventing bat infestation!
Bat infestations are more common than one might think, especially with bats continued displacement as their natural territories diminish. Fortunately there are simple steps property owners and managers can take to lessen the likelihood of a bat invasion.
Bats are incredibly useful animals, arguably one of the most beneficial species on earth, but they can cause horrific damage to your property. Their droppings, or guano, are surprisingly caustic, known to actually eat away at wood and drywall. The accumulation of urine and guano will eventually saturate most building materials and severely devalue any structure they accumulate in.
Bats in the property may also increase property owners and managers exposure to litigation. Imagine the disputes that could arise after a tenant wakes up to discover their sleeping child has shared a room with a bat, or a group of curious kids play with a bat they find on the property and it tests positive for rabies. Recently in Stevensville, Montana ninety or so elementary school kids had to be given anti-rabies vaccinations after handling a rabid bat, ironically brought in by a parent. The cost of the treatment for these children? It could possibly exceed $150,000 (the cost of a series of rabies vaccinations varies, but currently averages around $2,000 to $3,500). Knowing what steps to take to prevent a bat infestation and how to handle the situation, should it ever occur, will save you time, money and can reduce your overall exposure to liability.
The much maligned and misunderstood bat definitely gets a bad rap. They have a notorious reputation but are actually extremely beneficial and relatively harmless. Their best feature? They eat bugs, and lots of them. A colony of 500 bats can eat two to four million bugs a night in the summer- that’s millions of crop destroying beetles and moths and millions of potentially West Nile Virus carrying mosquitoes taken out of circulation. If it weren’t for bats, we could potentially have plague like numbers of bugs to contend with. Bats also act as pollinators and some species of plants, like bananas, figs and avocados rely heavily on pollination by bats. Sadly, the numbers of these valuable creatures are declining due to pesticides, disease, misinformation, unfortunate human interaction and a reduction of natural bat habitats.
As wonderful as bats are for our planet, humans and bats should not share the same living space. Rabies, although rare, is carried by bats. It is estimated that up to 2% of bats in the general bat population are rabid. This percentage greatly increases to 10 – 15% in bats encountered by people. The most likely place a human will come in contact with a bat is on the ground, and a bat on the ground is exhibiting unusual behavior- it is quite possibly sick or dying. It is important to note that it is possible to be exposed to the rabies virus simply by handling a rabid bat- you do not necessarily need to be bitten. Bats found on the ground, dead or alive, should not be handled. Given the severity of the consequence of contracting rabies (certain death once symptoms appear), every effort should be made to limit interaction between bats and people. Histoplasmosis is a disease contracted by inhaling the spores from the fungus Histoplasma capsulatum, which grows and feeds on accumulating bat guano. It infects the lungs and occasionally the eyes, causing a fever and a prolonged cough. Severe cases can necessitate the removal of an infected lung and each year several people die from the disease. Since bats are such voracious bug eaters, they produce a lot of guano. It is not something you want building up in your property. Bat mites are another unsettling issue caused by bats living in close proximity to people. Often mistaken for bed bugs, these blood sucking parasites carried by bats cause splotchy, itchy red bites, infest bedding and carpets and are just plain disgusting. The only way to get rid of the mites is to get rid of the bats. It is extremely frustrating (and expensive!) to exterminate the property, clean the carpets and bedding, only to have the mites return again and again. Repeat infestations of what are thought to be bed bugs is a good indicator that bats are living somewhere in the building.
There are steps you can take to protect your property from these nocturnal interlopers. Adopting these fairly simple maintenance routines or adding them to your existing ones can reduce the possibility of becoming host to a colony of bats. Click here for find out how to protect your property.
Bat exclusion is a job best handled by a professional and time is of the essence. It is imperative that you consult a professional at the first sign of bats- by the time you notice your first bat, there could be dozens more that have taken up residence. The longer the bats are present, the more damage they will do and the more difficult it may prove to remove them. Although it might be tempting to call your local exterminator or “critter catcher”, that may prove to be a costly and time consuming mistake. An exterminator may try to eliminate the bats by poisoning and killing them. Aside from being unethical (and possible illegal) all this does is clear the way for more bats to move in. Bat exclusion experts are trained to deal with the multiple issues that are unique and specific to dealing with bats. They can give you advice on dealing with your insurance company, facilitate guano removal and remediation and are familiar with state and local laws pertaining to bat exclusion (some bats, like the Indiana bat, are federally protected and laws vary state by state as to when the bats can be removed). Unlike most pest control companies bat exclusion experts offer warranties against re-infestation and are knowledgeable of construction techniques and safety issues pertaining to bat removal.
For instance, Get Bats Out, a bat exclusion company, is compliant with OSHA safety regulations and carries full insurance for risks related to bat removal (like ladder and roof work), and all their technicians have received pre-rabies shots. Like most maintenance issues, working to prevent the problem is easier than dealing with it once it has established itself. But if you find yourself hosting these wonderful winged creatures don’t hesitate to get professional advice. Taking care of the problem early on will save time, money and make everyone’s lives (bats included) much more pleasant.
Do you know how long bats live? Find out that and more in Fast Bat Facts.
Online Resources and Bat Information: www.GetBatsOut.com, www.batcon.org (Bat Conservation International), www.cdc.gov/rabies
About the Author: Michael Koski is an author, Bat Exclusion Professional and owner of Get Bats Out- a nationwide bat exclusion company. Get Bats Out specializes in commercial and residential bat exclusion and guano clean up. His book,The Home Owner’s Essential Guide to Bat Removal is available on his website at www.getbatsout.com. He can be reached at 877-264-2287 for any and all bat questions.
American Apartment Owners Association offers discounts on products and services related to your commercial housing investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
To subscribe to our blog, click here.
Posted by Kim Ezzell on 10.30.2008. 2 Comments »
Filed under: AAOA Forum
Fast Bat Facts
by Michael Koski
The bat is the only mammal capable of actual flight.
A bat can eat up to 1,200 bugs an hour.
Bats are social animals, preferring to live in a group in their chosen roost.
Smallest Bat: The endangered Bumblebee bat- it’s wingspan is only 6 inches.
Largest Bat: The endangered Flying Fox- its wingspan is up to 7 feet.
Bats you are most likely to encounter in North America: The Little Brown bat, the Big Brown bat, the Mexican Freetail bat or the endangered Indiana bat.
Bats can be found just about everywhere in the world, except extreme deserts and polar areas.
Bats can live up to 30 years.
Mother bats usually have one baby, or “pup” a year.
Bats use Echolocation, a type of high frequency sonar, to hunt prey.
Bats are not blind.
There are about 1,100 know species of bats on Earth.
Their numbers are in decline and many bats species are on the endangered list.
About the Author: Michael Koski is an author, Bat Exclusion Professional and owner of Get Bats Out- a nationwide bat exclusion company. Get Bats Out specializes in commercial and residential bat exclusion and guano clean up. His book,The Home Owner’s Essential Guide to Bat Removal is available on his website at www.getbatsout.com. He can be reached at 877-264-2287 for any and all bat questions.
Learn more about your legal liability for bat infestations.
Find out how to protect your property from bats.
American Apartment Owners Association offers discounts on products and services related to your commercial housing investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
To subscribe to our blog, click here.
Posted by Kim Ezzell on 10.30.2008. 2 Comments »
Filed under: AAOA Forum
18 Reasons to Reject a Tenant Application
18 Legal (and Businesslike) Reasons to Reject an Applicant by Robert Cain 
Many landlords believe that they cannot reject any applicant for any reason, that they have to accept the first one to come along with the money or risk the grief of a lawsuit.
Not so.There are numerous legitimate, businesslike reasons to reject a prospective tenant.
1. Unsatisfactory references from landlords, employers and/or personal references. These could include reports of repeated disturbance of their neighbors’ peaceful enjoyment of their homes; reports of gambling, prostitution, drug dealing or drug manufacturing; damage to the property beyond normal wear and tear; reports of violence or threats to landlords or neighbors; allowing people not listed on the lease or rental agreement to live in the property; failure to give proper notice when vacating the property; or a landlord who would not rent to them again.
Posted by Kim Ezzell on 10.27.2008. 3 Comments »
Filed under: AAOA Forum, Credit Screening
Bicycle Commuter Provision Included in `Bailout Bill`
by Louisa May
A transportation fringe benefit to bicycle commuters is tucked neatly into the Emergency Economic Stabilization Act that was signed into law October 3, 2008.
Keep scrolling, you’ll find it ( House Resolution 1424, Section 211, for you die-hard readers of legislation).
The passing of this act into law is a big win for cyclists who commute to work, offering tax fairness, and the financial benefit might give more people an incentive to try it.
Effective January 1, 2009, employers can offer transportation fringe benefits to employees who bike to work, just as they extend benefits to employees who commute by car or transit. Under the new law, for employees who regularly commute to work by bicycle, employers may offset the cost of bike purchase, improvement, repair, and storage at a rate of $20.00 per month per employee.
Posted by Kim Ezzell on 10.27.2008. CLICK to Leave a Comment »
Filed under: AAOA Forum, Going Green
Should I Buy Earthquake Insurance?
by Bill and Kevin Burnett, Inman News Q: I read your column on earthquake preparedness. And although I don’t think our 11-year-old house needs structural changes, I was wondering if you have any advice on whether to buy earthquake insurance. We are new to the area, so we have no experience or feel for it. A: Your question is a little far afield for our do-it-yourself column. But it’s a subject we’ve had to consider over the years, and, as you mention, we have addressed earthquake preparedness from a structural perspective. We’re both 40-plus-year residents of the San Francisco Bay Area — earthquake country — and have lived through our share of shakers. We’ve seen pictures rattle and chandeliers swing. We’ve owned homes and income property and have had to grapple with the same question: to insure or not to insure against the Big One. Here’s our take today.
Posted by Kim Ezzell on 10.27.2008. CLICK to Leave a Comment »
Filed under: AAOA Forum, Insurance
Lease-Options: The Good, The Bad, The Ugly
by Tara-Nicholle Nelson, Inman News
Q: I owned a home for eight years, but borrowed heavily against it, took a subprime loan and recently lost it through foreclosure. My credit is shot from the foreclosure, but I have found another home I would like to buy.
The seller will agree to do a lease-option, and I think it sounds like a great way to buy. What are the pros and cons of a lease-option that I should know about? Are there any pitfalls I need to beware of?
A: A lease-option arrangement may present a great opportunity for someone who has just gone through a foreclosure to immediately regain some of the benefits of homeownership. Before you enter such an arrangement, though, I’d urge you to cultivate order and clarity in your financial and life plans, and take several steps to protect your pre-purchase investment in the property.
Posted by Kim Ezzell on 10.27.2008. CLICK to Leave a Comment »
Filed under: AAOA Forum, Financing
Ian Boden`s Staunton Grocery - A Cooler Shade of Green
by Louisa May
Ian Boden’s Staunton Grocery restaurant in Staunton, Virginia is the future of food.
This chef and owner has put together more than just a great menu using fresh, locally grown, seasonal fruits and vegetables. He’s created a model green business.
He admits that being ecologically responsible is more expensive and time consuming, but he is firm in his belief that “it’s a worthy investment, and I wouldn’t do it any other way.”
Posted by Kim Ezzell on 10.23.2008. CLICK to Leave a Comment »
Filed under: AAOA Forum, Going Green