New Maryland bill to limit cost of condo resale package

Maryland law requires the seller to provide specific information pertaining to the resale of property within a Homeowner’s Association (HOA) or a property designated under a condominium regime.

Typically, this information is produced by the management for the HOA or condominium, and the HOA or condominium charges the seller a fee for the production and delivery of the information.

It is the belief of some Maryland legislators that the fees being charged are excessive and, as such, these legislators are seeking to limit the amount that may be charged.

Before the Maryland legislature are bills S229/HB412, which would limit the fee a condominium council of unit owners or HOA may charge an owner (seller) for providing this legally required information to a prospective homebuyer.

The current law calls for a "reasonable fee," but it is left undefined so many organizations have simply been using the requirement as a way to profit – charging upwards of $400 to $500.

There's currently a proposal to limit the fee to $50. Hearings on the legislation continue and we will keep you apprised of the final bill.

UPDATE: The Senate passed SB 229.  They amended HOA’s out of the bill, thus making it applicable only to Condo Associations; and they upped the fee that could be charged from $50 to $100.  The House Committee then amended the bill further, but the Senate committee refused to concur with those amendments and so the bill died when the clock ran out at midnight.

Maximum VA loan county limits for 2014 released

The Department of Veterans Affairs Loan Guaranty Program recently published county "limits" to be used for VA Loans effective January 1, 2014.

Please note, these limits do not reflect a maximum amount that an eligible veteran is permitted to borrow, but rather, reflects the VA’s maximum guaranty amount for a particular county.

The maximum VA guaranty amount for loans over $144,000 is twenty-five (25%) percent of the 2014 VA limit. For example, an eligible veteran may borrow up to $692,500 to purchase a property in Washington, DC (2014 VA limit), with the VA guaranteeing twenty-five percent (25%) of the loan amount, or approximately $173,125.00. These amounts have decreased dramatically in most area of the DC Metro Area compared to the 2013 VA limits.

The limits listed below are for some counties in Maryland and Virginia, as well as for the District of Columbia. To get a complete list of the county limits for 2014, please click here. [Please note, if your county is not listed on the county limits chart on the VA website, the 2014 limit is $417,000.]

State County 2014 VA Limit
DC District of Columbia $692,500
MD Anne Arundel $500,000
MD Frederick $692,500
MD Howard $500,000
MD Montgomery $692,500
MD Prince George's $692,500
VA Alexandria $692,500
VA Arlington $692,500
VA Fairfax $692,500
VA Falls Church $692,500
VA Fauquier $692,500
VA Loudoun $692,500
VA Manassas $692,500
VA Prince William $692,500

Fannie Mae, Freddie Mac conforming loan limits for 2014 released

The Federal Housing Finance Agency (FHFA) published today the maximum conforming loan limits, which is the ceiling on loans eligible for backing by Fannie Mae and Freddie Mac.

The limits listed below are for some counties in Maryland and Virginia, as well as for the District of Columbia. To get a complete list of the county limits for 2014, please click here.

State County 2014 Conforming Loan Limit
DC District of Columbia $625,500
MD Anne Arundel $494,500
MD Frederick $625,500
MD Howard $494,500
MD Montgomery $625,500
MD Prince George's $625,500
VA Alexandria $625,500
VA Arlington $625,500
VA Fairfax $625,500
VA Falls Church $625,500
VA Fauquier $625,500
VA Loudoun $625,500
VA Manassas $625,500
VA Prince William $625,500

New law will eliminate subordination agreement requirements for some Maryland residential refinances

A homeowner who wants to refinance his or her first mortgage when there are two mortgages on the property is typically required to obtain a subordination agreement for the existing second mortgage.

This is because without such an agreement, when the existing first mortgage is paid off, the existing second mortgage would move up to "first lien" position, which would mean that the refinance first mortgage would end up in "second lien" position, which would not be okay with the refinance lender.

A subordination agreement is an agreement from the existing second mortgage-holder that they will be in second place, behind the refinance first mortgage. 

There is a new law in Maryland that will go into effect on October 1, 2013 that will eliminate the need to obtain a subordination agreement for a second mortgage for certain residential refinances. If the requirements of the law are satisfied, upon recordation, a refinance first mortgage will automatically have the same priority as the existing first mortgage that it replaces.

The requirements are:

  1. The interest rate for the refinance first mortgage must be lower than the interest rate for the existing first mortgage;
  2. The principal amount secured by the refinance first mortgage must be no more than the unpaid outstanding principal balance of the existing first mortgage plus an amount to pay closing costs of up to $5,000;
  3. The principal amount secured by the existing second mortgage must be no more than $150,000; and
  4. The refinance first mortgage must contain in bold or capital letters specific language that is set forth in the law.

Virginia already has a similar law.

Big change for Maryland refinances involving non-principal residences

Until recently, Maryland treated refinances of principal residences and other properties differently.

A borrower refinancing a principal residence paid recordation taxes on the difference between the outstanding principal balance of the existing loan and the face amount of the new loan. However, for non-primary residences (and for commercial property) a borrower paid recordation taxes on the full amount of the new loan.

A new law removes that distinction. All refinances are treated the same, with recordation tax assessed only on the difference between the outstanding principal balance of the existing loan and the face amount of the new loan. The law is effective for all mortgages recorded on or after July 1, 2013.
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