Tri-City Area and Real Estate Blog

A rural economic development revolving fund has been established to loan money for local economic development projects in the Tri-Cities.

Benton PUD has established the fund and the Benton-Franklin Council of Governments is accepting applications.

The goal of the program is to support projects that create jobs, retain business, add or upgrade nonelectrical infrastructure, health and safety facilities or emergency service in a qualifying rural area, or improve energy or water efficiency.

Benton OUD met the criteria for a public utility tax credit equal to 50 percent of contributors made to an electric utility rural economic development revolving fund and designated $50,000 to it. That means it will get the maximum tax credit of $25,000 for the fiscal year.

Loans can be valued from $5,000 to $35,000 with interest rates of 2 percent below to 2 percent above the prime interest rate.

Applicants must provide proof they are a Benton PUD customer and that the project is located within the PUD service area, as well as other requirements. For more information call the council at 943-9185.

New permanent limits on the maximum mortgage amount insured by the Federal Housing Administration will take effect Thursday.

In the Tri-Cities and many other markets in Washington, the limit on a one-family home will increase 35.4 percent from $200,160 to $271,050, according to the U.S. Department of Housing and Urban Development.

Higher-cost markets such as Seattle will have higher limits.

This is the first time since January 2007 that permanent FHA limits have been raised nationwide, according to HUD. The new limits replace the temporary ones that went into effect with the economic stimulus act passed earlier in 2008.

Through the first 11 months of 2008, FHA insured 27,855 mortgage in the state with a value of nearly $6.4 billion. It’s the third best year since FHA’s creation in the 1930’s, HUD said.

What is a Power of Attorney and how is it created?

A power of attorney authorizes a person to act on behalf of another person. It is a ‘durable’ power of attorney if the grant of authority survives the disability or incapacity of the principal who granted the power. The following are some requirements for an effective Power of Attorney (POA) are:

• It must be a written instrument,
• It must designate the person who will act as the Attorney in Fact or agent,
• It must be signed by an adult principal,
• It must be acknowledged by a Notary under the laws of Washington or any other state.

How long does a POA last?

Unless a specific time limit is imposed in the written instrument, a POA does not expire during the lifetime of the Principal.

What authority will the Attorney in Fact have to act on behalf of the Principal?

All acts done by an Attorney in Fact or agent pursuant to a POA during any period of disability or incapacity of the principal have the same effect and inure to the benefit of and bind the principal and the principal’s successors in interest as if the principal were not disabled or incapacitated.

What acts may an Attorney in Fact perform on behalf of the Principal pursuant to the POA?

In general, an Attorney in Fact acting under a POA may do any lawful act that the Principal may do. The Durable Power of Attorney Act state many specific acts which may be performed on behalf of the Principal including the right to invest money, demand payments, commerce or defend litigation, execute documents including deeds, contracts and mortgages. An Attorney in Fact may only make gifts from the Principal’s property if the POA specifically grants such power.

When do the powers granted under a POA terminate?

• The POA terminates upon the death of the Principal.
• A principal may, in writing, revoke the POA at any time. The POA may require that a revocation is only effective by an instrument recorded with the County Clerk’s Office.
• If a person executed a POA granting authority to a spouse, the POA automatically terminated upon a divorce of the parties.
• If a POA has been revoked, the revocation is not effective as to a third party replying upon the power until that third party receives actual notice of the revocation of the POA.
• The bankruptcy of a principal does not terminate the power of the Attorney in Fact under a POA.

Must a POA be recorded with the County Clerk?

No, except in real estate transaction. In a real estate transaction, the POA will usually be recorded in the office of the County Clerk to evidence the authority of the person executing the deed, deed of trust, assignment, release or other instruments which must itself be recorded.

What duty does an Attorney in Fact owe to the principal?

An Attorney in Fact, acting under a POA, is a fiduciary to the principal and has a duty to inform the principal and to account for actions taken pursuant to the POA. This includes a duty to account for all property coming into the hands of the Attorney in Fact and all disbursements made on behalf of the principal. An Attorney in Fact has a duty to maintain records and to keep segregated funds belonging to the principal.

What are the common problems with using a POA?

If the POA is not properly prepared, executed and acknowledged, it will not confer any lawful authority to act on behalf of the Principal.

Since the POA terminates upon death, a title company may wish to be provided evidence the Principal is still alive at the time of the closing and execution of the deed or mortgage.

In the key housing sector, the combination of low-interest rates, improved affordability and the reduction in new construction should be helpful in the effort to work down the huge inventory of 4.2 million unsold properties nationwide, that are now on the market. It is also notable that consumers are receiving a massive cash-flow increase of tens of billions monthly as a result of the collapse of oil and gasoline prices. This increased cash-flow serves as a counter-balance to the effects of the ongoing recession.

Interest rates here in the Tri-cities are dropping and it’s time to consider buying a home!!  It was recently announced that financial industry lobbyists are urging the treasury Department to take steps to lower mortgage rates in an effort to stabilize the housing market.

Under the proposal, Treasury would seek to lower the rate on a 30-year mortgage to 4.5 percent. That’s about one percentage point below the current rate of 5.6 percent. Treasury would do so by purchasing mortgage-backed securities from Fannie Mae and Freddie Mac.

Treasury is strongly considering the proposal and could announce a decision as early as Monday. In recent weeks, a diverse set of industry groups from real estate agents to carpet makers have called on lawmakers and the incoming administration to subsidize lower mortgage rates and beef up tax credits to help stimulate housing demand.

The National Association of Realtors has been pushing a plan under which the federal government would spend $50 billion to lower mortgage rates. It says doing so would yield about 500,000 more home sales.

The National Association of Home Builders is leading a new “Fix Housing First’ coalition to push for aid to the ailing housing sector, including a tax credit of up to $22,000 for anyone who buys a home before the end of 2009. The goal is to drive mortgage rates so low that home prices not only stop falling but begin to rebound.

While the plan, if enacted, will help anybody looking to buy or sell a home, or refinance out of an expensive mortgage, it may not help those whose credit is so damaged that banks don’t want to lend to them. It may change the number of borrowers seeking loans but it won’t change the qualifications for who gets those loans.

More homeowners facing foreclosure are turning to short sales as a way of getting out of a troubling financial situation and with the shaky real estate market, more banks are accepting short sales from troubled borrowers.

At the beginning of November, there were about 1,600 homes on the market in the Tri-Cities and about 30 of those are seeking bank approval for short sale. With the average cost of foreclosure around $38,000, the short sale is one way banks can cut their losses, and it’s a growing trend that was relatively rare a few years ago.

A short sale occurs when a homeowner sells a home for less than its current mortgage. The bank or mortgage company agrees to discount the loan balance due to economic or financial hardship of the mortgage holder. The homeowner sells the mortgaged property for less than the outstanding balance of the loan and turns over the proceeds of the sale to the lender. In some cases, but not always, the lender writes off the remaining portion of the debt.

Although Benton and Franklin counties didn’t see big spikes in the real estate prices before the nationwide bubble burst, the area is seeing a slowdown. While sales are slow, notice of trustee sales, the first step in the foreclosures prices are up 5.5 percent for the year.

Unfortunately, many homeowners facing foreclosure aren’t aware of the options available to them and if they file bankruptcy, reasonable options they did have disappear. To make matters worse, more homeowners than ever will likely face foreclosure in 2009.

Existing home sales prices plunged 18.5 percent in the West region in September, according to the National Association of Realtors, driven by rising foreclosures and distressed sales, like short sales, which represent 35 percent to 40 percent of total sales nationwide, and as many as half the homes are in California, Nevada and other former bubble regions.

Whatever the reasons for pursuing foreclosure, homeowners needs to be careful and make sure they know and understand all of their options. In June, a new state law went into effect that was intended to protect homeowners facing foreclosure from equity skimming and foreclosure rescue scams. The law, proposed by Attorney General Rob McKenna, requires those buying ‘distressed’ homes to provide homeowners with a written contract completely describing the terms of the sale – and giving the homeowner the right to cancel the transaction for up to five days following the sale.

Because licensed real estate professionals are not exempted from the law, as they are in similar statutes in other states, the Realtors may have to limit their involvement in distressed sales, or face unanticipated liabilities. Homeowners can receive up to $100,000 in damages for violations of the law. Normally, real estate buyers and sellers have different goals, so under the law, foreclosure or short sale buyers could be sued if they later resell the property at a profit. That fear is keeping real estate investors who delve in the foreclosure market at bay. But the law likely will help homeowners facing foreclosure receive better advice. Realtors, by law, are not allowed to negotiate short sales.