financial

Apache is functioning normally

The Consumer Financial Protection Bureau (CFPB) issued guidance this week for debt collectors seeking to foreclose on homes with mortgages past the statute of limitations, also known as “zombie mortgages.”

The guidance comes in the form of an advisory opinion pertaining to the Fair Debt Collection Practices Act (FDCPA) and implementation of Regulation F. The guidance notes that a covered debt collector “who brings or threatens to bring a state court foreclosure action to collect a time-barred mortgage debt may violate the [FDCPA] and its implementing regulation.”

Time-barred debt refers to debt in which the statute of limitations has expired. The CFPB is issuing this guidance due to an uptick in reports of debt collectors attempting to act on these mortgages.

“Some debt collectors, who sat silent for a decade, are now pursuing homeowners on zombie mortgages inflated with interest and fees,” said CFPB Director Rohit Chopra in an accompanying announcement. “We are making clear that threatening to sue to collect on expired zombie mortgage debt is illegal.”

This latest guidance stems from the actions of predatory mortgage lenders observed in the run-up to the 2007-08 financial crisis, where some homebuyers were entered into mortgages they could not repay, the CFPB said.

“In the case of [this] advisory opinion, the CFPB is focusing on ‘piggyback’ mortgages,” the Bureau said. “Generally, this piggyback mortgage product, known as an 80/20 loan, involved a first lien loan for 80% of the value of the home and a second lien loan for the remaining 20% of the home’s valuation.”

Lenders generally did not pursue homeowners on debts related to the second mortgages, opting instead to sell the debts to debt collectors for “pennies on the dollar,” the Bureau said.

“Now, over a decade later, and often without any intervening communication with homeowners who were able to save their homes, some of these debt collectors are demanding the mortgage balance, interest, and fees, and threatening foreclosures on families who do not or cannot pay,” the Bureau said.

Debt collectors who are now attempting to collect on these mortgages may be in violation of the FDCPA, and the advisory opinion is designed to remind debt collectors under CFPB’s jurisdiction that FDCPA and Regulation F bar them from attempting to collect a time-barred debt; and that this applies even if the collector is not aware that the debt they’re seeking to collect on is time-barred.

In appropriate instances, the CFPB says it will coordinate with state attorneys general to take action against institutions that are believed to be in violation of the FDCPA and Regulation F. The Bureau says it will be “monitoring the debt collection market for violations related to time-barred mortgages as well as to time-barred non-mortgage debt.”

In an event announcing the guidance, Director Chopra was joined by New York State Attorney General Letitia James, representatives from the congressional offices of Sen. Chuck Schumer and Rep. Hakeem Jeffries, and an impacted New York mortgage-holder.

“Brooklyn is my home and it’s a beautiful borough,” James said. “But it’s also one of the national epicenters of this zombie second mortgage crisis. This issue is of great concern to me personally and to my office.”

Director Chopra also emphasized the intent of the new guidance in his own remarks.

“Debt collectors subject to this law cannot use — or threaten to use — judicial processes, such as foreclosure actions to collect the debt,” Chopra said. “And in most states, foreclosure actions are indeed subject to a statute of limitations, like here in New York. This means that for many zombie mortgages, the statutes of limitations have passed.”

Chopra reiterated that when a debt collector threatens, or actually sues, to collect a time-barred debt, including threatening the borrower with foreclosure, they may be breaking the law.

“Debt collectors do not get to claim ignorance of the law or ignorance of the debt’s age if the statute of limitations has expired,” he said.

Source: housingwire.com

Apache is functioning normally

“That’s assuming we don’t keep improving from that $20 million,” Ghamsari said. 

Blend is also confident in its growing customer base. Despite the mortgage industry suffering from thinning margins, some of Blend’s mortgage customers are growing their market share, and the firm’s non-mortgage customers are rapidly growing — positive signs for the company, Ghamsari emphasized.

However, getting acquired by another firm is not in the cards, according to the CEO.

“We feel very confident in our customer base and our product set, and our revenue base and our balance sheet.”

Read on to learn more about Blend’s priorities, its focus on improving mortgage companies’ business, and the firm’s plan to cut down costs.

This interview has been condensed and lightly edited for clarity.

Connie Kim: Blend is focused on being a platform company, but the firm’s major customers are mortgage lenders right now. How is Blend navigating to overcome the time needed for customers to see the value of the new platform?

Nima Ghamsari: First and foremost, our mortgage business is by far my biggest focus. We have got to make sure those people are successful. We still have over 200 people working on a mortgage suite of software – building more features and rolling out existing features. What we’re saying is, we want to keep investing. We also want to build for the future.

The Blend Builder (platform) is taking all these components of income, identity, assets, credit decisioning, everything and saying we want to make that drag and drop. And we want to make all the configurations, because that will enable us to move faster and build more products. I want us to be able to enable our customers to take some of the things that we don’t want to build and be able to build it themselves over time. 

I also want to eventually have third parties to be able to add more capabilities to that platform to get more vendors and partners into that ecosystem so that they can help our customers benefit. I get called by vendors and third parties all the time who want to be better integrated with our customer base. This (Blend Builder) will enable that to happen faster; I think it’s just going to add speed to the industry as a whole.

This is not just for consumer banking. I know our mortgage suite will be on Blend Builder. So this will be re-platforming as a company. 

Kim: How do you bridge the gap between now and the future when customers see the value of the Blend Builder platform?

Ghamsari: One, I would say that (Blend Builder platform) is a pretty meaningful part of our revenue base already. Navy Federal is a big mortgage home equity customer of ours, but now they also signed on to the deposit account side on the Blend Builder platform. We have a lot of non-mortgage customers.

Just from a purely financial perspective, as of last quarter at $350 million in the balance sheet, we have $225 million debt that’s due in the second half of 2026. So we have over three years before that debt is due. 

I’ll be the first to admit that we were probably doing too many things a year ago, so all those too many things that didn’t directly help our mortgage customer base, or help us re-platform, I’ve cut all of those things out. That plus the combination of our customer base today and the strength or balance sheet, we don’t foresee any issues given the three-and-a-half year time horizon.

Kim: Following up on the balance sheet — particularly the $350 million liquidity — Blend’s operating cash burn was about $190 million last year. I’ve heard an analyst say that it gives less than two years of runway. What is your perspective is on this?

Ghamsari: We’ve told the street (Wall Street) that we will get our operating losses – through cost cuts and through revenue growth – to $20 million a quarter by the end of this year. And $80 million a year off of a $350 million balance sheet is four-plus years to get that.

But that’s assuming we don’t keep improving from that $20 million. What we’ve also told the street is we will improve that net operating loss throughout this year sequentially. And so we don’t intend to stop when we get to $20 million given the investment we want to make in re-platforming. It’s the right thing to do at this instant. 

Kim: A lot of investors are mentioning the loss – the $796 million loss that Blend incurred last year. An analyst even mentioned Blend being an acquisition target. Is an acquisition in the cards for Blend?

Ghamsari: Obviously we hear from people all the time, and if there are ever serious offers made, I’m required as a fiduciary to take it to the board. But the board and I, we feel very confident in our customer base and our product set — and our revenue base and our balance sheet. So it’s not something that’s top of mind for me right now.

Kim: Before Blend went public, the company raised about $665 million over its lifetime. Is another round of funding in the cards for Blend?

Ghamsari: We have nothing planned as of now. The strength of the balance sheet is good. Markets are so low right now; it would just be very expensive to raise money. We are focused on building the company and getting the cash burn down so we can then drive the outcomes that we think are possible.

Kim: What factors do you see as being crucial for the company to post profitability?

Ghamsari: We have to make sure that we are growing our customer base. One thing that’s been encouraging for me is I’ve seen some of our customers grow market share in this time already. 

And we successfully show that the non-mortgage consumer businesses – which is actually a really fast-growing part of our business – can continue to grow at the rate that has been growing, and then we get some continued improvements in the cost structure. That will show how do we get the net losses to zero and then positive in the next two relatively medium-term time horizons.

Kim: What are some of the risks you monitor externally and internally?

Ghamsari: I obviously pay attention to macro. Inflation, we look at what the Fed does, the job market every month. We look at our own application volumes internally, because that’s an indicator for loan closings.

We have some other conditions monitoring internally, [such as] what is the health of our customer base? How much are they using our product? One thing we’re monitoring very actively is, what functionality are our customers able to benefit from today? And what are they not benefiting from? How do we put together a roadmap in front of them?

If they’re not getting the benefits from Blend, there’s only two outcomes – they are in a tight market environment or they are just not getting full value from the product. So they’re going to want lower pricing or go to a competitor that’s cheaper. So we’ve got to pay really close attention to that.

One of the things I want to do is, I want to be out there more, making sure our customers know how much we’re investing. I think before you and I talked, you probably wouldn’t have guessed that we had 220-plus people working on our mortgage product today.

Because so much of our marketing and marketing effort is public-facing, we’re so unknown in consumer banking. People don’t realize how much we’re investing in the mortgage product and how valuable Blend Builder is going to be to them in the long term.

Source: housingwire.com

Apache is functioning normally

Last week, I went running with my friend Mac. As we ran, we talked. Mac asked me how it felt to be out of debt, to actually be saving money. Like many of my friends, he’s watched my financial turnaround with interest.

“It feels great,” I said. “I should have learned from you and Pam earlier.” Mac and Pam have always made smart financial choices. They’re not misers, but they’re thrifty, carefully choosing where they spend.

“I’m glad you’ve finally seen the light,” Mac said, and though he didn’t say anything further, I could tell what he was thinking.

Over the past couple of years, many of my friends have told me, “I can’t believe you write about personal finance.” To be honest, I can’t believe it either. For years, I was the poster boy for poor financial choices.

Once, Kris and I were riding to an Independence Day rodeo with Mac and Pam. We were talking about something expensive (let’s say computers, because I can’t remember exactly), and I said, “I just got a bonus at work. Now I can buy that new iBook I’ve been wanting.”

Pam turned around to look at me in disbelief. “But J.D., just last week you were complaining about how broke you are. How can you afford to buy a computer? Aren’t you in debt?”

At the time, I was angry. Who was Pam to tell me how to spend my money? In retrospect, she was absolutely right. Now I recognize that this conversation was a turning point in my attitude toward money. I gained a glimmer of insight that day. I started to see how others perceived my spending habits. I was living paycheck-to-paycheck by choice. I was earning enough to save money, but I had nothing saved, nothing to show for my efforts but a lot of toys.

Tightening the belt
As the economy worsens, I see the effects everywhere. “This reminds me of the early eighties,” I told Kris last Saturday as we drove to dinner at her sister’s house. “That was a rough time for my family. The pervasive gloom and the constant bad news feel exactly the same right now. It’s eerie.”

Over homemade beef stew, Kris and I talked with Tiffany about the recession. Business is slumping at my family’s box factory. It’s slumping everywhere. When Kris and I meet with contractors for our upcoming home projects, they’re all eager to start as soon as possible. Three of my friends have lost their jobs, and several others are worried they might be next. Nearly everyone we know is looking for ways to save money.

We talked about how belt-tightening is hard for some. Kris and I are fortunate because we’ve been pursuing a policy of thrift for several years. We’ve already cut back, and have identified areas where we could cut back even more. (Dining out, for example.) For other people, though, it’s not as easy. Some don’t have room to cut back — and others who could do so cannot see their own bad habits.

Fumbling in the dark
“I have a friend who complains about how tight his budget is,” Kris said, “but his family shops at Whole Foods. He just signed a long-term contract at a gym. He drives an SUV and bought a hot tub. Whenever I suggest that he exercise at home or forgo the latest gadget, he laughs at the idea. He says he’s tightening his belt and trying to start saving, but from the outside, that’s not how it looks. If you’re committed to buying all of your groceries at Whole Foods, you’re going to have to cut back in other areas. You can’t have it all.“

“Yeah,” said Tiffany. “Our society has become used to getting everything it wants. It’s used to instant gratification. Now that things are tight, it seems like people don’t know how to choose. What’s more important? Eating organic or sending the kids to summer camp?”

“You can’t have everything you want at once,” Kris said. “That’s a quick way to get in over your head. And you can’t have the best of everything. You have to choose what’s important to you and make sacrifices elsewhere. I’ve learned that when I can save money in areas that are less important to me, it doesn’t feel like a sacrifice — it feels like a victory. Food is important to me, but I’m not willing to pay full-price for new clothes.”

Tiffany nodded. “It’s hard to listen to the complaints when you can see inconsistencies. It’s one thing if the person really is cutting back as far as possible and they still can’t make it, but it’s another when the behavior isn’t consistent with the talk. I think we may all need to adjust our expectations of what we deserve to have.”

“That’s true,” I said, but I was remembering my conversation with Mac and Pam on our drive to the rodeo. “It can be frustrating to watch others struggle. Like my brother, for example. At the same time, I try not to be judgmental. I’ve been there. It feels different from the other side. Sometimes when you’re making poor choices, you’re not even aware of it. Or if you are aware of it, you don’t know how to stop. I see my friends who are struggling, and I want to help, but I’m afraid to offer unsolicited advice. I used to resent it, and I’m afraid they will too.”

“Each person has to come to it on their own,” said Kris. “You can’t force them to see. It’s like when Michael gave you a copy of Your Money or Your Life. He was trying to tell you he could see what you were doing, but you weren’t ready to listen. You took the book from him and put it on the bookshelf for a year or two. But eventually, when you were ready, you picked it up and you read it. Then it made a difference.”

Learning to see
As we ate our dessert of rice krispie treats, I thought of my friend Gillian, the woman who is very good at spending money, but not so good at saving it. Gillian is still living the same lifestyle, unable to cut back on cable television or the housekeeper or her cell phone — and still wondering why she struggles to make ends meet. She can’t see how her choices affect her financial situation.

Not so long ago, I was in this position myself. With the help of friends, I was able to open my eyes. I began to see how even small choices I made had a big impact. As I learned more about money, as I learned more about my own behavior, everything started to make sense. I made changes in my life. I sacrificed some of the things I wanted. I worked hard to boost my income. Today, as the national economy crumbles around me, I feel relatively secure.

The road ahead looks rough, at least for a little ways. I encourage you to do what you can to tighten your belt. And if you know you have a decent income but still feel pinched, don’t be afraid to ask for advice. Sometimes a friend or family member can see things about your habits that you can’t.

Source: getrichslowly.org

Apache is functioning normally

Because life insurance is a vital purchase for the protection of your family, it’s important that you make the best decision for your policy. There are hundreds of different companies and policy types to choose from, how are you supposed to know which ones fit your needs? We are here to help. One of the popular options for life insurance is AARP, but how does the company stack up against its competition?

The AARP life insurance plan might seem like the best choice.

Sadly, the senior citizen group misses the mark when it comes to cheap life insurance.

You have to be a member of AARP to purchase one of their policies, and group members will ALWAYS get better prices on products, right? Not so fast.

History of AARP

If you want to look at the beginning of AARP, you have to go all the way back to 1958. It all started with Dr. Ethel Percy Andrus, who was a form principal.

AARP actually started as the National Retired Teachers Association, which Dr. Andrus had established in 1947 to help retired teachers get adequate health insurance.

The NRTA received tons and tons of requests for assistance with health insurance, even though those people weren’t retired teachers. This showed Dr. Andrus and others the need for insurance help for seniors.

They have changed a lot, but they say they have stuck to their three main principles:

  • Promote independence, dignity and purpose for older persons
  • Enhance the quality of life for older persons
  • Encourage older people, “to serve, not to be served

Now, this is how AARP got started, but what about today? If you haven’t heard of the company, then you haven’t watched TV or checked your mail in the past 50 years.

Just because they are well-known, doesn’t make them an automatic slamdunk.

Developed by New York Life Insurance Company one of the leading life insurance companies in the United States, the AARP plans try and offer several benefits to protect policyholders and families. But the price isn’t worth the protection

As far as the quality of New York Life Insurance Company, they are a great carrier, but their prices are far from great. I remember helping one customer save 50% on their monthly premiums.

You have to do some groundwork to select the right one that meets your needs as well as compliments any other policies, trusts or other benefits you are leaving behind to your loved ones. Make sure before you make your final life insurance purchase decision that you obtain quotes from numerous companies, such as Banner Life Insurance company or American General Life Insurance company to make sure that you are getting the best policy for your needs.

Guidelines and policies are different among each carrier in the marketplace. And with hundreds of different companies your rates could be all over the board and your time would be spent pouring over the many options. We have all the data you need for low cost term life insurance policies directly to you. Don’t waste your time talking on the phone with agents and answering the same questions repeatedly.

AARP Life Insurance Company Financial Strength

Due to its extremely large amount of reserves, New York Life Insurance Company is considered to be strong and financially stable. It also has a great reputation for paying out its policy holder’s claims. For these reasons, the company has been given positive ratings from the insurer rating companies. These ratings include the following:

  • AA+ from Standard & Poor’s – Very Strong
  • A++ from A.M. Best – Superior
  • AAA from Fitch – Exceptionally Strong
  • Aaa from Moody’s – Exceptional

New York Life Insurance Company is not an accredited member of the BBB (Better Business Bureau. However, the BBB has given the insurer a grade of B+. This is on an overall grade scale of A+ to F. Throughout the past three years; there have been 93 total complaints that were closed with the Better Business Bureau. Of those, 33 were closed within the past year.

Here’s a quick rundown on the type of policies that AARP offers:

AARP Level Benefit Term

This plan lasts for a specific length and offers as much as $50,000 in protection in case you are lost. This policy lasts until you are 80 years old and the premiums begin cheap, but they slowly increase over time. There is no physical exam  and you only have to answer three simple questions.

One of the biggest advantages to this plan is that it doesn’t require you to go through the medical exam to get life insurance coverage. A lot of seniors seeking life insurance have poor health or have several pre-existing health conditions, such as diabetes, that can prevent them from getting coverage if they have to go through the medical underwriting.

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There are several pitfalls to these types of plans as well. The first is that any policy that doesn’t require a medical exam to be approved is going to be more expensive than one that does. We suggest avoiding no exam policies unless you know that you won’t be accepted for traditional coverage with an exam.

Extra Protection Term

Extra Protection Term is similar to the LEvel Term Policy, it gives more protection. You can buy up to $100,000 (double the previous policy).

This is an excellent option because most applicants need more life insurance coverage than the basic plan offers. It’s important that you get enough coverage to provide for your loved ones if anything tragic were to happen to you.

Permanent AARP Insurance

Their whole life allows you to get protection from $10,000 – $100,000 and is guaranteed for any applicant who is between 50 and 75.

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An added bonus is you can add your spouse if they are between 45 and 74.

This is a great option for anyone that wants permanent life insurance protection. If you don’t want to every have to worry about losing coverage, or having to buy another policy, the permanent AARP plan is perfect for you. Although, these policies will cost more than a simple term life insurance policy.

Guaranteed

As with the permanent life insurance, this offer coverage that will last a lifetime with up to $15,000 in coverage. Also, there is no exam and no premium increase. There is a mortality risk charge.

Once you’ve picked your plan, you can apply for the policy through the website or by mail.

One of the unique features of being an AARP member is the Young Start Program. This lets you get insurance coverage for your children or grandchildren as well.

Other Coverage Products Offered Through AARP Life Insurance Company

In addition to the term and permanent life insurance coverage that is offered via New York Life Insurance Company for AARP members, there are also over insurance products that AARP members can take advantage of – typically at a nice discount in premium.

One of the other key products that AARP members can obtain via New York Life is annuities. These financial vehicles can offer a lifetime stream of retirement income – which can help to relieve the fear of outliving one’s savings. Today, as people are living longer than ever before, outliving retirement income is a concern. But, with a retirement annuity through AARP’s plan, that is no longer a worry.

Fixed immediate annuities that offer lifetime income with a cash refund are available to AARP members who are between the ages of 50 and 89. Lifetime income annuities with a ten-year guarantee are available to those AARP members who are between the ages of 50 and 85. Both of these annuity options allow the receipt of guaranteed monthly income payments for life. These annuities may be purchased using funds from savings and CDs, or even with money from an IRA or a 401(k).

The (Few) Advantages of AARP

So far, everything seems pretty negative about AARP, and for the most part, it is. But there are a few good things about buying life insurance through the membership group.

One of those is how quick the application can be. They have a simplified application process.

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Also, with tier plans, you aren’t going to pay drastically higher rates if you smoke. This is rare, but AARP doesn’t drastically jack up your premiums if you smoke.

One other unique benefit of AARP is they won’t check criminal records. Just about every other carrier is going to look for any severe criminal activity, with AARP they won’t look into your past.

Sure, all of these things are great, but are they worth it?

You can get a fast policy which won’t cost you for being a smoker, but it’s still going to be noticeably more expensive.

Even with the member “discount,” they still aren’t the cheapest choice.

We have many carriers that cater to people over 60 years-old seeking affordable life insurance coverage. With over 60+ of the best life insurance companies at our disposal, a good majority of them will come in better priced than what you can get with AARP. In fact, we’ve replaced several policies from AARP clients that were floored on how much less they could obtain a policy.

Talk with one of our professionals today to see if you can put more money back into your pocket.

Just like when you’re buying anything else, you probably shouldn’t go with the first option you price out. Going with the first insurance policy you find will cost you every month.

If you currently have an AARP policy, don’t worry, you aren’t locked into the policy. We can easily help you find a cheaper policy.

The more experience that a company has with insuring people over the age of 50, the better rates that you’re going to get. You shouldn’t have to pay ridiculous premiums every month to get life insurance coverage. Let us help you find the perfect policy to fit your needs.

If you have any questions about getting life insurance or about AARP life insurance policies, please contact us today. We would be happy to answer those questions and connect you with the perfect plan.

As a retired applicant, you might be wondering about your life insurance needs or how much you’ll spend on your coverage.

Don’t let any confusion or price keep you from getting life insurance. We would love to connect you with a cheap policy to protect your family.
Not only can we answer your questions about AARP and any insurance coverage needs.

Source: goodfinancialcents.com

Apache is functioning normally

Subpoenas have been served to 15 mortgage lenders throughout the country with “significant claim rates” against the FHA mortgage insurance program.

HUD wants the companies to provide documentation and data related to the large number of failed loans that resulted in claims being paid out by the FHA mortgage insurance fund, which as we all know, is on life support.

“The goal of this initiative is to determine why there is such a high rate of defaults and claims with these companies and whether there is wrongdoing involved,” said HUD Inspector General Kenneth M. Donohue, in a statement.

“We aren’t making any accusations at this time, we have no evidence of wrongdoing, but we will aggressively pursue indicators of fraud.”

The lenders were identified via an analysis of loan data focused on companies with a high number of claims, “certain loan underwriting volume,” and a high ratio of defaults/claims compared to the national average.

“The FHA market share has skyrocketed,” Donohue said. “Our job is oversight. We work for the American taxpayer. Each loan on this list will be thoroughly examined and we will track down the reasons why it failed.”

“Once we determine the causes, we will look to see whether there is a need for further review or remedial action. We want to send a message to the industry that as the mortgage landscape has shifted we are watching very carefully and that we are poised to take action against bad performers.”

The move is part of a larger initiative to remove bad players from the FHA system; back in December, Lend America was forced to shut its doors after an FHA suspension.

The following companies were served subpoenas today:

First Tennessee Bank N.A., Memphis, TN
Alethes LLC, Lakeway, TX
Security Atlantic Mortgage Co., Edison, NJ
Pine State Mortgage Corporation, Atlanta, GA
Birmingham Bancorp Mortgage Corporation, West Bloomfield, MI
Alacrity Financial Services, LLC, Southlake, TX
Assurity Financial Services, LLC, Englewood, CO
D and R Mortgage Corporation, Farmington, MI
Webster Bank, Cheshire, CT
Mac-Clair Mortgage Corporation, Flint, MI
Americare Investment Group, Inc., Arlington, TX
1st Advantage Mortgage, Lombard, IL
American Sterling Bank, Independence, MO
Sterling National Mortgage Company Inc., Great Neck, NY
Dell Franklin Financial LLC, Columbia, MD

Source: thetruthaboutmortgage.com

Apache is functioning normally

People often use the terms “pending offer” and “contingent offer” interchangeably, but there is actually a difference when you are talking about real estate.

When a property is said to be contingent, that means the seller accepted an offer that is contingent on particular conditions requested by the buyer. These conditions could involve anything from an inspection to financing.

If, however, you see a house on the market switch to pending, there’s a different status involved. The seller has accepted an offer, and all contingencies have either been waived or addressed.

Yes, the distinction may be subtle. However, the bottom line is, neither status actually means a property is sold. If you have found your dream home and it says “contingent” or “pending,” there is still a chance you could snag it.

Contingent Offers vs. Pending Offers

Here’s a closer look at the difference between contingent and pending offers.

What is a Contingent Offer?

When a home’s status switches to contingent, it means contingencies stand in the way before the deal is done. If closing on a home is a race, then buyers still have miles ahead of them when they enter the contingency process.

There are many types of contingencies buyers can include in their offer that make it easier for them to back out of a real estate deal, but these are some of the most common:

•   Financing contingency. The buyers put some money or the promise of a mortgage behind their offer, right? This condition ensures that if the buyers aren’t approved for a mortgage, they’re not on the hook for finding cash to buy the property.

Some buyers choose to have a preapproval letter in hand to make the financing contingency move faster.

Recommended: How Does Mortgage Servicing Work?

•   Inspection contingency. A home inspector is paid to search the property top to bottom to uncover any issues. With a home inspection report in hand, buyers can ask the sellers to solve the issues or give them a credit against the purchase price of the home.

With this contingency, buyers can also walk away from a deal based on the findings of the inspection. Alternatively, if both parties don’t come to an agreement on repairs or credits, they can terminate the deal.

•   Appraisal contingency. In order to secure financing for a home, it must be professionally appraised for the value of the offer or more. If the home appraises for less than the offer, the buyer can either make up the difference in cash, negotiate with the seller for a lower offer, or walk away from the deal.

•   Home sale contingency. If buyers need to sell their existing home to help finance the purchase of a new home, they may include a home sale contingency in the offer. That means if an offer on their home falls through, they’re no longer on the hook to buy the home they made an offer on.

Contingencies are in place to protect buyers and sellers in the event of snags throughout the negotiation process.

Prospective buyers can include as many contingencies as they like in an offer, and if the sellers agree, the buyers will need to work through each one before they make it to closing.

For people salivating over a hot property that looks taken, contingencies may signal opportunities for a deal to fall through. If you have your heart set on a home that’s contingent, you can hold out hope. Thanks to contingencies, there’s a chance the existing offer will fall through.

Recommended: What Is a Mortgage Contingency?

What is a Pending Offer?

Just because a home is pending doesn’t mean the deal is done. A home often enters pending status once buyer contingencies are cleared, but it can also enter pending status immediately if a buyer makes an offer without contingencies.

A pending home sale may still fall through, but the buyer and seller have worked through most of the contingencies. For a pending sale to fall through, there likely has been an unexpected issue with the inspection or financing.

In fact, a pending home is still on the market. The listing agent and seller can choose to continue showing the home and even accept other offers, even if its status is pending. However, this is largely up to the sellers and their agents.

Recommended: First-Time Homebuyer Guide

Can Pending and Contingent Homes Take Other Offers?

If a home is contingent and the buyers are still working through the inspection, financing, or selling their current home, a competing buyer can make a backup offer on the property. If the initial offer falls through for any reason, the seller can take the other buyer up on their offer.

It’s up to the sellers whether they will accept a backup offer or not, but if the buyer loves the property, it can’t hurt to ask.

In many markets, a home with pending status means it’s not open to additional offers, but the deal isn’t sealed. It’s not over till it’s over, so the buyers could still back out based on their contingencies, as outlined above.

(A home could be marked “pending, taking backups,” indicating that the seller is still showing the house and accepting backup offers.)

When a home is pending or contingent, it’s not against the law for another buyer to ask for a tour, express interest in the home, or even make a competing offer. But compared with a home that is not under contract, it is less likely that a competing buyer will get the property.

While you may make offers on these properties, buyers don’t get your hopes up. Depending on how close the buyer and seller are to closing, it’s not legally possible for the seller to accept another offer.

Additionally, the closer a home gets to closing, the more complicated competing offers can be. This is when a seasoned real estate agent may come in handy. They will understand the market, process, and legalities better than most first-time buyers do and how to navigate a hot housing market.

Recommended: Guide to Buying, Selling, and Updating Your Home

The Takeaway

Contingent vs. pending: Though some use the words interchangeably, the two statuses are different. A contingent deal may have a long way to go, as buyers firm up financing, await an appraisal, or sell their current home. A pending property is nearer to closing, but the deal still isn’t final.

Buyers eyeing a dream property may hold out hope that contingent or pending deals fall through. In that case, having everything set up for a backup offer could pay off.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

Apache is functioning normally

This is a guest-post from Tim Ellis, author of Seattle Bubble, a blog and forum dedicated to discussing real estate market conditions in the Seattle area. Tim is a long-time GRS reader. During my last trip to Europe, he shared a controversial article on renting vs. buying.

Given the fact that loses twenty percent of its value the moment you drive it off the lot. Buying a home (used or new) is similar. Even if home prices begin to appreciate regularly again, agent fees, excise taxes, staging, seller concessions, and other random costs add up quickly when you try to sell your home, sucking away about ten percent of the sale price.

There really is no way to know what neighborhood will work best for you until you’ve spent a good amount of time actually living in the area. Consider all the variables at play:

  • What’s the commute like to your work?
  • How convenient is shopping?
  • Is there enough entertainment nearby?
  • Does the neighborhood feel safe?
  • Do you like the neighborhood vibe?
  • Are there sources of noise at odd hours?

Wouldn’t you prefer to rent for a while and learn the area rather than buy right away only to learn after a few months that you’d rather live across town, but you’re stuck for at least a few years (or worse, like Ben) until the value of your home rises enough to offset the selling costs?

Give Yourself Time to Find Out What Works For You

Don’t be tempted to take shortcuts when it comes to a decision as important as where you will live. You might think that you can do sufficient research online or get advice from people who do live in an area so you can make an informed decision from afar. Think again.

Above is a little map I made based on a recent forum thread on LinkedIn started by a simple question:

I have some friends who are relocating to the Seattle area. They will be working in downtown Seattle, have kids and about a $650K housing budget. Looking for thoughts on best cities to live in the Seattle area for education, school districts, quality of life, etc. Any ideas would be appreciated!

Each pin on the map represents an answer to this question that was offered by one of the commenters. Believe it or not, the Seattle area is somewhere under that mass of purple. Good luck making any sort of informed decision based on that mess!

The only person that can really know if you’ll like living in a given neighborhood is you. Buying a home is a major financial commitment, and rushing into a purchase before you’ve had time to get to know the area is a recipe for disaster. If you find yourself planning a major move, find a nice rental and take your time learning the ups and downs of your new hometown before you buy a new home. You’ll be glad you did.

Source: getrichslowly.org