See you in 2012!

We’re coming to the end of another wonderful year. It has been such an extraordinary pleasure to work with each of you in 2011, and I am looking forward to what next year will bring for us. I have never been more sure that this company is built on quality, not quantity, than when I [...]

Source: http://www.hassonblog.com/2011/12/see-you-in-2012/

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Locking In Peace of Mind

 

WITH mortgage rates inching higher, some borrowers might want to consider a lock-in agreement, which freezes the terms of a loan while it is being processed, potentially saving borrowers thousands of dollars over the life of the mortgage.

This guarantee may be especially important for those who are refinancing, where even a quarter of a percentage point could skew a borrower’s calculations and make a refinancing less financially desirable, said Keith T. Gumbinger, a vice president of HSH.com a financial publisher in Pompton Plains, N.J.

Rates for the 30-year fixed-rate mortgage averaged 3.95 percent nationwide in March, up from 3.89 percent in February, according to Freddie Mac, though that is still significantly lower than the 4.84 average rate in March 2011. The average rate was 3.98 percent on Thursday, versus 3.99 percent the week before.

“We expect fixed-rate mortgages to gradually move higher over the next six months to about 4.25 to 4.5 percent as the country’s economic condition improves,” said Frank Nothaft, Freddie Mac’s vice president and chief economist. “This would be a move from the all-time record low rates we’ve experienced over the last few months but still at historically low levels.”

Rate lock-ins can provide buyers with some peace of mind, not to mention one less thing to think about in an otherwise onerous application process.

Lenders typically will give loan rate guarantee agreements when a borrower has a purchase agreement, but a few will provide them to those who are preapproved for a mortgage, said Rick Allen, the chief operating officer of Mortgage Marvel, an online site.

While shopping for a mortgage lender, Mr. Allen suggests inquiring about loan locks, too. “Get a copy of the rate lock agreement,” he said, noting that this would help borrowers better understand how the process works.

The cost of reserving an interest rate depends both on the duration of the lock and the amount of the loan. “The longer the lock, the more costly it is,” said Mark Lazar, an owner of Allied Financial Mortgage in River Edge, N.J. Most locks are for 30, 45 or 60 days, but some lenders will go as long as six months.

Most lenders offer some version of a free lock, Mr. Gumbinger said, though it may be only for 30 days. Others charge points — or fractions thereof — based on the loan size, which could amount to several hundred dollars. (A point is equal to 1 percent of the loan amount.) Sometimes these charges are refundable at closing, Mr. Gumbinger said.

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Joe Paterno’s Real Estate Transfer: Suspicious or Not?

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Why would former Penn State football coach Joe Paterno transfer ownership of his house, worth $594,484, to his wife for $1 in July, unless he knew that he was about to be drawn into the college’s sex-abuse scandal, with potential civil lawsuits and damages heading upfield toward him?

While his lawyer told The New York Times that the ownership transfer was nothing more than a step in a long-term financial estate plan, the move raised some eyebrows. Was the sale an attempt by Paterno to shield assets, fearing that some jury down the road might take him to the cleaners? And by transferring his home to his wife, Sue Paterno, did the coach who once walked on water just sink deeper into the dark hole of public scorn?

AOL Real Estate spoke to several estate lawyers and heard pretty much the same thing: Joe Pa probably didn’t do anything fishy, at least when it came to giving his wife the house for $1 plus “love and affection.” The couple (pictured at left) had previously held joint ownership of the property, for which they paid $58,000 in 1969.

David Shulman, an attorney in Fort Lauderdale, Fla., whose practice focuses on trusts and estates, says there’s no obvious reason to link the home transfer with an attempt to protect assets or do an end-run around prospective creditors. In Pennsylvania, Shulman noted, as long as the property is held jointly — as Paterno’s was — it can’t be subject to the creditors of just one of the spouses. And since Sue Paterno hasn’t been linked at all to the sex-abuse scandal, she has no liability or exposure.

“I haven’t seen the documents,” Shulman said, “but from what’s been made public, it just doesn’t make any sense that this was an attempt to protect assets.”

Then what was Paterno up to? Shulman said the 84-year-old Paterno’s decision to transfer the house more likely had something to do with age-related issues, such as Medicaid and tax planning. To qualify for Medicaid-covered nursing home care, for example, a recipient must “spend down” to a certain level. And people are constantly looking to protect their assets from taxes to ensure that their heirs inherit as much as possible.

Since Paterno has good insurance and a degree of wealth, he probably didn’t do it for Medicaid purposes. Far more likely it was done as an estate planning move to avoid probate, said Shulman. “It is a fairly typical thing for people of means to want to protect their assets for their children or whoever will inherit them,” he said.

Paterno, who was fired as the football coach at Penn State, has been harshly criticized by many for not taking more aggressive steps after a suspected sexual assault of a child by one of his former top assistants was reported to him. And if the reaction to the house transfer is any indication, it’s a safe bet that the burgeoning scandal will cast suspicion on everything else the coach does.

[Correction: An earlier version of this post incorrectly referred to Paterno as Joe Pop; his nickname is Joe Pa.]

Also see:
Taking a Tax Loss When Property Value Declines
Happy End of the Road for RVers: Assisted Living on Wheels

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30-Year Mortgage Rate Falls to Another Record Low: 3.66%

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By Marcy Gordon

WASHINGTON — The average U.S. rate on a 30-year fixed mortgage fell this week to a record low for the seventh time in eight weeks. Cheap mortgages have helped drive a modest recovery in the weak housing market this year.

Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan dropped to 3.66 percent. That’s down from 3.71 percent last week and the lowest since long-term mortgages began in the 1950s.

The average rate on the 15-year mortgage, a popular refinancing option, declined to 2.95 percent. That’s down from 2.98 percent last week and just above the record 2.94 percent reached two weeks ago.

The rate on the 30-year loan has been below 4 percent since December.


30 Year Vs. 15 Year Mortgage


Low rates could provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.

Still, the pace of home sales remains well below healthy levels. Sales of previously occupied homes dipped in May to a seasonally adjusted annual rate of 4.55 million, although they are up from the same month last year.

Many people are still having difficulty qualifying for home loans or can’t afford larger down payments required by banks. Some would-be home buyers are holding off because they fear that home prices could keep falling.

The U.S. economy is growing only modestly and job creation slowed sharply in April and May. U.S. employers created only 69,000 jobs in May, the fewest in a year.

Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

And the yield will likely fall even lower now that the Federal Reserve has said it will continue selling short-term Treasurys and using the proceeds to buy longer-term Treasurys. That goal of the program is to drive long-term interest rates lower to encourage more borrowing and spending.

To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans was 0.6 point, down from 0.7.

The average rate on one-year adjustable rate mortgages fell to 2.74 percent from 2.78 percent last week. The fee for one-year adjustable rate loans was unchanged at 0.5 point.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

See also:
5 Things That Can Derail Your Home Sale
Home Affordability: How Much House (or Apartment) Can I Handle?
Home Costs: 4 Crucial Questions Reveal Hidden Expenses

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When It Comes to Mortgages, Women Don’t Shop Enough

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There’s a surprising new finding that says women get lousier mortgage rates than men, but not because of gender discrimination. It’s because instead of shopping around for cheaper loans, they rely on the recommendations of friends.

To recap: When it comes to mortgages, women don’t shop enough.

The report published in the Journal of Real Estate Finance and Economics set out to explain why women were 32 percent more likely to get a subprime mortgage than men in a 2006 study. According to a team of researchers led by Florida Atlantic University’s Ping Cheng, the answer wasn’t discrimination because of gender or even income disparities.

Women pay higher rates because they are more likely to listen to friends’ recommendations, whereas men are more likely to shop around for the best deal.

“Our empirical test confirms that search effort is rewarded in marketplace, and suggests that gender disparity in mortgage rates may be addressed by policies aimed at improving women’s financial literacy and search skills,” the report summarizes.

It makes sense to Daily Finance columnist Laura Rowley. “It’s not surprising, because mortgage shopping can be incredibly complex, so we look to people we can trust to help make the decision,” says Rowley. “But this is one area where you don’t want to get by with a little help from your friends.”

Instead, she advises, call two mortgage brokers and a direct lender, preferably a local small or mid-size bank, and try the following script: “Hi, my name is ____ and I’m in the market to buy a $____ house, and I’m going to put down ____ percent. I’m getting three written estimates, and then I’m going to choose. Can you email me a cost-estimate worksheet stating all the fees and the interest rate?”

Be sure to get the estimates on the same day, as rates can change quickly. Also, don’t ask for rates and fees by phone; unscrupulous brokers will simply low-ball their estimate to get you in the door, says Rowley.

For more tips on shopping for a mortgage, see these AOL Real Estate guides:

How Much Can You Afford [Video]
How to Get a Low Mortgage Rate

Mortgage Jargon in Simple Terms

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1 in 4 Spend More Than Half of Income on Housing, Study Says

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home affordabilityIn the wake of the housing bust, almost 1 in 4 working families spend more than half their income on housing costs, according to a new study.

The study by the Center for Housing Policy found that both homeowners and renters continue to struggle with housing costs since the market tanked in 2008. Between 2008 and 2010, renters saw their median income decline even as housing costs rose, while homeowners’ loss of income outpaced a modest drop in housing costs. Experts typically warn against using more than 30 percent of pretax income toward housing costs. (Read more about debt-to-income ratio here.)

In 2010, the latest year in which data was available, there were 10.6 million households with more than half their income going toward housing, including utilities. A total of 23.6 percent of working households fell into that precarious category — up 1.8 percentage points from 2008. (The study defines working households as those that make less than 120 percent of an area’s median income and work at least 20 hours a week.)

With prospective buyers finding it harder to qualify for a mortgage and job security remaining a top concern for many families, rental demand has surged in past years, driving up costs. For homebuyers who purchased risky loans with little equity at stake during the boom years, high interest and sliding home values have pushed thousands underwater, with insufficient savings to escape the cycle.

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“The data show that homeowners have been hit hard by the housing crisis in more ways than just lost equity,” said Jeffrey Lubell, executive director at the Center for Housing Policy, in a statement. “Many working homeowners have been laid off or had their hours cut.”

Homeowners felt the pinch of diminishing salaries more acutely than renters, dropping to a median of $41,413 in 2010, down from $43,570 in 2008. Working renters, on the other hand, typically make less, with a median income of $30,229 in 2010.

Unsurprisingly, the groups that were most at risk of having a severe housing cost burden made less than 80 percent of their area’s median income, whereas wealthier households held steady over the 2-year period.

Where Housing Hurts Most

Between 2008 and 2010, affordability has significantly declined in 24 states. The five states with the highest share of households spending more than half their incomes on housing were California (34 percent), Florida (33 percent), New Jersey (32 percent), Hawaii (30 percent) and Nevada (29 percent).

With several experts predicting that the $25 billion mortgage settlement with the nation’s largest banks will lead to more foreclosures at the start of 2012, both renters and owners should brace for more price fluctuation in their local markets, at least in the short term.

That said, the group most affected by the price confusion are those who bought during the height of the housing bubble, prior to 2008. For those entering the market today, however, sinking prices and near-record low mortgage rates places home affordability at a 20-year high.

Also see:
Black Borrowers Face Higher Hurdles in Lending, Study Shows

How the Foreclosure Settlement Could Affect You

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How to Estimate the Cost of Buying a House

 

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Source: http://realestate.aol.com/blog/2012/02/27/1-in-4-spend-more-than-half-their-income-on-housing-study/

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Viewpoint: Where’s Housing in the ‘Occupy’ Protests?

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Did the voices of the housing crisis just get swallowed up by the anti-Wall Street protests? Marches, sit-ins and confrontations with police – all part of the Occupy Wall St. movement that organizers say was birthed organically and fed through social media outlets — are happening in major cities across the country. Without question, windows across America have opened and, just like in the movie “Network,” people are shouting “I’m mad as hell and I’m not going to take it anymore!”

The only problem is that homeowners caught in the foreclosure crisis also stuck their heads out those windows and save for a fleeting few seconds, the take-to-the-streets protests have ignored them in favor of taking corporate greed to task. Nowhere on the main Occupy Wall St. website is housing even mentioned. (Pictured above are protesters in Los Angeles.)

Before you accuse us of wearing blinders, it’s worth noting that just a few weeks ago, a coalition of community groups called The New Bottom Line organized a nationwide 10-city protest aimed at stopping foreclosures, demanding that banks reduce principal loan amounts of all underwater mortgages and that Wall Street stop hoarding the trillions of dollars it got in stimulus money and start funding small business’ efforts to create jobs. Hallelujah to that, we say.

Seeing commonality with the Occupy Wall St. troops, The New Bottom Line demonstrators have joined forces with the faster-spreading Occupiers. The New Bottom Line co-director Tracy Van Slyke says that the excitement generated by the larger protests taking place will transfer energy — over time — to relief for housing. Let’s hope so. The millions of displaced families who lost their homes to foreclosures deserve a voice shouting on their behalf.

Where The New Bottom Line had been focused on the housing struggles facing the lower and middle class, Occupy appeals to a younger demographic — those hard hit by rising unemployment and emotionally about as far away from losing a family home to foreclosure as you can likely be.

About all they have in common is anger, which ultimately may be enough.

Also see:
Foreclosed Homeowner ‘Booby-Traps’ Home

Realtors’ Latest Challenge: A Surge of Squatters
Foreclosure Rescue Scammers Busier — and Trickier — Than Ever

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Source: http://realestate.aol.com/blog/2011/10/05/viewpoint-wheres-housing-in-the-occupy-protests/

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Loan Thaw? Average Mortgage Up by $20,000, Study Says

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By Kerri Panchuk

The average loan size that lenders issued to borrowers in the past three months grew by $20,000, suggesting a thawing in mortgage lending, Capital Economics said Wednesday.

While the report, which was released by Capital Economics analysts Paul Dales, Paul Diggle and Amna Asaf, stopped short of calling the good news a full lending recovery, Dales said, “it may be an early sign that buyer confidence is improving.”

In 2012, the average amount of a mortgage went from around $215,000 to $235,000. The higher loan amounts are not the only positive economic indicator highlighted by the research firm.

Capital Economics reported a 20 percent drop in visible home inventory over the past 18 months, resulting in a situation where a months’ supply of unsold homes is now at a level where existing home sales can support current prices. At the same time, Capital Economics believes there are currently 3.9 million homes in the nation’s shadow inventory.

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Even though employment numbers fell below the average analyst’s expectation of 200,000 new jobs in March, Capital Economics is more optimistic with the current three-month new jobs average sitting at 212,000 positions.

“We are not too alarmed by the 120,000 rise in payroll employment in March, which was exactly half the 240,000 gain in February,” Dales wrote. “Just as the unusually mild weather meant that employment grew at a faster rate than the underlying trend in the previous few months, it may now be growing at a slower rate than the underlying trend.”

Even though mortgage rates grew slightly in March, Capital Economics said the uptick will have little effect on housing activity since prices still remain affordable and undervalued.

The researchers believes there are signs in the market of a price bottom, but said significant home price gains are not expected in the near term since tighter lending restrictions are prohibiting a boom in real estate activity.

Read more on HousingWire:
Fannie, Freddie and the FHA Lead Surge in Multifamily Lending
Mortgage Applications Fall 2.4% as Purchases, Refinances Decline
RealtyTrac: Foreclosure Filings Fall to 4Q 2007 Level

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How to Shop for a Home Loan

 

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Where Are the Real Home Bargains? Not Where You Think!

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What if you could buy a house for $25,000 in a neighborhood that wasn’t a battle-scarred slum and rent it out for $750 a month as soon as the ink was dry on the deal? Where are these deals that let you recapture your investment in just three years and from then on enjoy a steady monthly income from the property?

If you said Phoenix, Las Vegas or south Florida, you’d be wrong says Paul Habibi, a principal of Habibi Properties and real estate professor at UCLA Anderson School of Management.

Here’s a hint to the place Habibi thinks is the hottest investment around.

Yep, Habibi is humming “Kansas City” right along with Wilbert Harrison, Fats Domino and the 50 or so other recording artists who covered that tune. As for a real estate investment, Habibi says Kansas City, Mo., is ripe for the picking.

Habibi’s approach to real estate deals is not for novice investors, but it is for those who can tolerate some risk and buy into a statistician’s mind. He’s developed a matrix that filters the top 30 MSAs (metropolitan statistical areas) through their projected growth rates (increasing population is good), unemployment (the lower, the better), and whether the city has a diversified job platform (Silicon Valley won’t get his money).

He also rejects places where other investors have already scooped up the bargains (forget Florida and Las Vegas). Phoenix, popular with many investors, also fails his litmus test. It was built as a retirement community and lacks a job infrastructure for future growth, he says. And those Texas cities that everyone bandies about — Dallas, Austin, San Antonio — while their prices have remained flat and they seem to have escaped relatively unscathed from the recession, there are so many investors already there that they’re tripping over one another.

Kansas City is just about perfect, said Habibi, whose company recently concluded its first phase of buying 32 single-family homes there in “C-level” neighborhoods for a price point of $25,000 each, spent $5,000 to $10,000 on repairs and now rents them out for about $750 each. He expects to double or triple his holdings in Kansas City with his second investment fund, for which there is a minimum buy-in of $100,000 for accredited investors to participate.

Kansas City’s population grew at a faster-than-national average pace from 2000 to 2010. With an unemployment rate of 8.7 percent, it falls below the national level of unemployment of 9.1 percent. The city has a diversified industry base that includes Sprint Nextel Corporation, Hallmark Cards, the Fort Leavenworth military base, UPS and a Ford assembly plant. Google has selected the city for its ultra high-speed broadband network project. Plus Kansas City has a business-friendly reputation for encouraging retention of companies.

Habibi discourages individual investors without much experience or tolerance for risk to try to fly solo. He credits much of his success from having an infrastructure in place — people to scout and inspect the homes, screen for tenants, manage the properties on-site and swiftly deal with eviction issues.

For those who don’t want to listen to the expert, click on the images below of some homes for sale in the Kansas City area that are worth checking out:

See other homes for sale in the Kansas City area at AOL Real Estate.

Also see:
College Town Real Estate Investments Score High Marks

Upside Down on Your First House? Just Buy a Second One!
Viewpoint: Why No New Houses May Be a Good Thing

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Source: http://realestate.aol.com/blog/2011/11/02/where-are-the-real-home-bargains-not-where-you-think/

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BarterQuest How-to: Trade Smart at the Best Bartering Site

If you’re into bartering, chances are you’ve discovered BarterQuest a relatively new site that helps folks trade one product or service for another — like eBay but without cash. BarterQuest also makes multi-party trades easy, so you don’t have to find that one person looking for the exact thing you have, you can do three way (or more) swaps.

Read more…

The post BarterQuest How-to: Trade Smart at the Best Bartering Site appeared first on DailyPerk.

Source: http://dailyperk.perkstreet.com/barterquest/

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Paul Ryan Favors Dissolving Fannie Mae, Freddie Mac

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Paul Ryan Fannie Mae Freddie MacBy Jon Prior

A Mitt Romney administration plan for a future housing finance system likely shuns any form of a government guarantee, based on the Republican presidential candidate’s choice of Rep. Paul Ryan as a running mate.

The Republican congressman from Wisconsin, who heads the House Budget Committee, released a plan that was passed by the House last year to slash spending across nearly every sector of the government, excluding the military. Ryan’s plan has received renewed attention after Romney, the Republicans’ presumptive presidential nominee, announced Saturday that Ryan was his pick for vice president. Democrats are looking to target specifics from the Romney campaign while Republicans are hoping to recharge their base.

Romney’s selection of Ryan also gives markets much needed insight into how the former governor of Massachusetts would proceed with a long-anticipated reform of the government-sponsored enterprises. The long-term outlook of the Ryan plan involves a complete wind-down of Fannie Mae and Freddie Mac and an end to their bailouts — which have cost $188 billion so far.

The Ryan budget would “privatize the business of government-owned housing giants, Fannie Mae and Freddie Mac, so they no longer expose taxpayers to trillions of dollars’ worth of risk.”

Read the rest of this story at HousingWire.

See also:
Freddie Mac Posts $1.2 Billion Net Income in 2nd Quarter
High-End Homeowners Racing to Sell Before Tax Cuts End
Michigan Man Buys County’s Entire Foreclosure Stock

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Inside Look: A Presidential Pad

 

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Mortgage Principal Reduction on Freddie Mac Loans?

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By Jon Prior

Freddie Mac CEO Charles “Ed” Haldeman gave a strong signal Friday that new incentives from the Treasury Department may be enough to start principal reduction on mortgages backed by the government-sponsored enterprises.

In January, the Treasury said it would triple incentive payments to mortgage investors who allow principal reduction in Home Affordable Modification Program workouts. The payouts ranged between six and 21 cents to the investors for each dollar forgiven under HAMP, but that will grow to between 18 and 63 cents.

“I have to say recently the Treasury sweetened the program and tremendously increased the incentive payments in their offer to us,” Haldeman said at HousingWire’s REThink Symposium. “We will reevaluate that to see what may be in our economic best interest. If there are very large incentive payments — which could be 50 percent of what you could write down — it may be in our economic self-interest to participate in that.”

There are currently 11.1 million borrowers who owe more on their mortgage than the house is worth, according to CoreLogic. Of that, estimates show roughly 3.3 million of those mortgages belong to Fannie and Freddie.

The GSEs and their regulator, the Federal Housing Finance Agency, long shunned principal reduction. Their biggest fear is moral hazard — that borrowers who are still current on their underwater loan would strategically default in order to get principal written down.

“We thought principal reduction could have unintended, secondary consequences on other borrowers seeking the same kind of reduction,” Haldeman said.

One previous analysis showed the GSEs would take significant credit losses if a wide-scale program was put in place. A new analysis from the FHFA, which would cover the new HAMP incentives, is expected to be released in the coming weeks.

NPR and ProPublica reported Friday that the analysis will show a reversal, that principal reduction will work for the GSEs under the new version of HAMP.

“As we complete the review, the public should understand that Fannie Mae and Freddie Mac continue to offer a broad array of assistance to troubled borrowers and have continued to implement HARP 2.0 to enhance refinancing opportunities for underwater borrowers,” FHFA said in a statement.

Treasury Secretary Timothy Geithner told a House panel this week he and FHFA Acting Director Edward DeMarco were working out their differences.

Haldeman, who announced in October that he would leave his post at Freddie, said the principal reduction verdict will ultimately reside with DeMarco, but he isn’t operating on his own.

“At the end of the day, we are in conservatorship, and he is the conservator. But the way it works on a day-to-day basis is that it’s a very close collaboration. It is extremely rare that I had a different point of view than Ed DeMarco,” Haldeman said.

Read more on HousingWire:
Fannie and Freddie could reverse course on principal reductions
N
egative equity gap nears $4 trillion
B
ofaA offers distressed homeowners a chance to stay in homes

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U.S. Mortgage Rates Rise With Improving Job Market

 

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Source: http://realestate.aol.com/blog/2012/03/26/freddie-mac-principal-reductions-may-be-headed-homeowners-way/

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Home Equity Line Adds New Option to Refinancing

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If you’re looking to refinance your mortgage but you also need some extra cash, there may be a few options out there you haven’t considered. Today’s re-fi rates are low, but to get the best deal overall, your best bet may be to refinance your principal loan at the lowest rate you can find and then to apply for a home equity line for the cash. That way, with today’s low home equity rates, you’ll

If you’re looking to refinance your mortgage but you also need some extra cash, there may be a few options out there you haven’t considered. Today’s re-fi rates are low, but to get the best deal overall, your best bet may be to refinance your principal loan at the lowest rate you can find and then to apply for a home equity line for the cash.

That way, with today’s low home equity rates, you’ll get the best interest rates for both portions of your financing.

The other main option is a cash-out refinance, in which the borrower takes additional cash above the loan amount. But that usually means an additional 0.5 percent or more in interest, which can add up to thousands of dollars over the course of a 30-year loan. Instead, simply refinance the balance of your mortgage, and then apply for a home equity line for the rest.

Right now, home equity rates are at prime or prime plus 0.5 percent to 1.0 percent, a lot better than almost any other kind of loan out there, including personal loans and credit card debt.

Cash-out refinancing is not a real option for homeowners who are underwater and need to borrow more than 80 percent of the value of their home. And while there are 95 percent loan-to-value mortgages out there, you can’t be living in a declining market such as Arizona, California, Florida, Michigan and Nevada. Also, if your credit score is below 680, you’ll need to turn to the FHA for the refinance if you want anything more than a 90 percent loan-to-value mortgage.

Generally in today’s market, even if you don’t live in a declining market, you probably won’t be able to get an equity line if it means going above 90 percent loan-to-value. And even that could be difficult, unless you have a credit score over 760. Therefore, home equity lines are a better choice for smaller projects, like making needed repairs on your home.

Also, think twice before paying off credit card debt with a home equity line. While you may be paying a high price for credit card debt, transferring credit card debt to an equity line means you are exchanging unsecured debt (debt that is not guaranteed by an asset) for secured debt (in this case debt that is secured by your home). That means, if for some reason you can’t make the payment on your equity line, the lender has the right to foreclose on your home. You can learn more about how equity lines work in the Federal Reserve’s pamphlet “What you should know about Home Equity Lines of Credit.”

Millions of people put their homes at risk because they used the equity in their homes as a piggy bank and borrowed to levels that are now higher than what their homes are worth. Some have walked away from these homes because the combined mortgage and equity line is higher than what the home’s value is expected to be for 10 or 20 years.

But if you need the cash, and it will put you in a better position financially, you’re better off choosing an home equity line than a cash-out refinance.

Lita Epstein has written more than 25 books including The Complete Idiot’s Guide to Personal Bankruptcy and The Complete Idiot’s Guide to Improving Your Credit Score.

 

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Robo-signing settlement may boost short sales

The government’s $25 billion settlement with the nation’s five biggest mortgage servicers over so-called “robo-signing” practices could boost short sales, as loan servicers will receive credit when they approve sales that include forgiveness of a portion of underwater homeowners’ debt.

Although the settlement is only expected to help a fraction of homeowners who owe more their properties are worth — perhaps one in 20, according to one estimate — it will also help bring certainty back to housing markets by removing some of the obstacles that have been keeping homes stuck in the foreclosure pipeline.

Announced last month, detailed terms of the agreement between mortgage servicers and a coalition of state attorneys general and federal agencies were filed today.

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Broadly, the settlement calls for mortgage servicers to pay $5 billion in fines and commit to a minimum of $17 billion in homeowner relief, including principal reductions. Another $3 billion is earmarked for helping underwater borrowers refinance.

“We will see an increase in short sales, because lenders and loan servicers will get the same credit for doing a short sale, as if they did a loan modification or principal reduction,” said Rick Sharga, executive vice president of Carrington Mortgage Holdings LLC.

The Wall Street Journal reported Sunday that the structure of mortgage write-downs was a major point of contention in the year-long negotiations leading to the settlement.

Allowing debt forgiveness on approved short sales to count against the required $17 billion in principal reductions helped secure a settlement that will reach more borrowers, the paper said. Loan servicers will also get partial credit even when it’s investors, rather than the banks themselves, taking the loss, the Journal said.

A researcher at the Brookings Institution told the Journal that the settlement could help about 5 percent of underwater borrowers, or about 500,000 homeowners.

“We will probably see a short-term increase in forcelosure activity, because the servicers and lenders at last have a sense of certainty about what they can and cant do,” Sharga told Inman News. Part of that increase will also be among loans that don’t meet the criteria of the agreement.

For loan servicers to get credit for a principal reduction, a loan must be at least 30 days delinquent, have a pre-modification loan-to-value (LTV) ratio of at least 100 percent, satisfy specified debt-to-income ratios (DTIs), according to ananalysis of the settlement by the lawfirm K&L Gates. At least 85 of occupied properties must have had an outstanding principal balance at or below the highest Fannie Mae and Fanni Freddie conforming loan limit cap as of January 1, 2010.

Because servicers won’t get 100 percent credit for all types of relief that are provided, the actual amount of relief provided could total as much as 32 billion, state attorneys general said in announcing the settlement.

“In terms of the overall housing market , our position is this will have very little effect on anything,” Sharga said. “Consumer advocates don’t think it went far enough, and people who look at housing markets realize that the number of properties and the amount of money involved won’t have a measurable effect on markets.”

Federal housing officials addressed those and other concerns today.

“This agreement does not — and is not intended to — solve or resolve all the issues and abuses related to the housing crisis,”  officials with the Department of Housing and Urban Development blogged today. “This agreement is very narrow as to what it releases banks from.  This settlement is intended to address the servicing aspect of the crisis, which did not cause the housing crisis.”

The settlement doesn’t prevent the government from punishing wrongful securitization conduct that will be the focus of the new Residential Mortgage-Backed Securities Working Group, HUD noted. State and federal authorities can also pursue criminal enforcement actions related to conduct by servicers, including civil rights, fair housing, fair lending and other violations.

Also, if the remaining six to 14 loan servicers sign on to the settlement, it would grow to about $30 billion with more than $45 billion in benefit to homeowners, HUD said.

Cade Holleman, executive director of the Irvine, Calif.-based National Association of Women REO Brokerages, said the day is fast approaching when brokers and agents who have concentrated heavily in real-estate owned properties will have to diversify.

Short sales, refinancings, and loan modifications are each “pulling REO inventory out of the game,” he said.

“You’ve got to keep your eye on that process,” Holleman said.”You can no longer be 80 percent REO,” but must diversify into short sales and property management.

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Case-Shiller: Why the Sky Isn’t Falling

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case shillerCount me among the unpanicked over the Standard & Poor’s/Case-Shiller monthly housing index that shows housing values have dipped past a low set during the Great Recession. I’m not even getting goosebumps over the chilling words “housing double-dip.”

Nope. For the 70 million home-owning Americans who don’t have a need to sell their homes at the moment, this is not the end of the world. Yes, they can thank their lucky stars that they still have jobs and didn’t get ensnared in a toxic mortgage. And yes, they can feel for their friends and family who weren’t so fortunate — or, if they are feeling less charitable, weren’t as smart as they. But for the bulk of Americans, this is a problem that, well, doesn’t hit that close to home.

Want perspective? Of the 75 million owner-occupied homes in the U.S., about 5 million were sold in the past year, which means that there were tens of millions of home owners who were content to stay put, paying their bills and living obliviously to the drops in home prices. Of those five million sales last year, about one third were distressed sales.

Currently, there are 3.87 million homes on the market. In April, distressed homes were 37 percent of sales (24 percent foreclosures and 13 percent short sales). And 7 percent of new listings were foreclosures, but they’ve been entering the pipeline at a steady pace and selling quickly at bargain prices, says the National Association of Realtors.

Of course, scary Case-Shiller numbers are nothing new. Since last June, when a yearlong rebound in prices began to sputter out, the index has recorded losses every month. If there’s a bright spot, it’s that in the last quarterly report, all 20 cities tracked showed declines; in the most recent index, two of the 20 actually showed month-over-month improvement.

And for the record, the experts back in December offered the same explanations as did the experts commenting on this week’s report: The large number of foreclosures on the market and the expiration of the federal homebuyer tax credit are pushing prices down.

I’d throw in an even larger reason that the experts gloss over: Lenders aren’t lending money to even qualified buyers. They have imposed unrealistic standards for those applying for mortgages and then wonder where all the buyers are. Maybe they should look for them under the mountains of paperwork that they keep demanding and misplacing. Seriously, has anyone tried to get so much as a refinance lately?

NAR says, albeit more politely than I do, that “the recovery is uneven, held back by unnecessarily tight credit.” The association projects that “if the lending community simply returned to the safe, sound standards that were in place a decade ago (before the lax standards that led to the unprecedented boom-and-bust cycle), home sales would rise 15 to 20 percent over current projections.” Now wouldn’t that be nice?


Home Prices Drop to Record Low

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5 Cheap Home Security Tricks to Keep Your House Safe

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By Lisa Kaplan Gordon

You don’t have to install a pricey or crazy security system to feel safer in your home. Here are some low- and no-cost ways to keep burglars at bay.

1. Don’t Sleep Alone

If you’re sleeping solo these days, take your car’s remote control to bed with you. If you hear suspicious noises, push the remote’s “panic” button and let the alarm scare away intruders.

2. Fake It

Pretend you’re home watching “Downton Abbey” and deter burglars with FakeTV ($34), a small gizmo that glows and flashes like the flicker of a television set. FakeTV uses the same energy as a nightlight, and has a built-in light sensor and timer, which turns it on at dusk and off when you wish.

3. Slippery When Wet

In the U.K., they slather “anti-climb” paint, which never dries, on downspouts, gutters, and anything they don’t want an intruder to shimmy up. It doesn’t seem to be available in the U.S. yet. But it’s a wild idea.

4. Footsteps in the Snow

Virgin snow is a sure sign that no one’s home. If you’re away after a snowstorm, ask a neighbor’s kid to tromp around your yard, creating footprints that will fool a burglar into thinking you’re around but just haven’t gotten around to shoveling your snow yet.

5. Parked Car

Also, ask a neighbor to occasionally park their car in front of your house, making it look like you’re entertaining visitors. And ask them to remove any fliers that may be wedged into your door or mailbox. Burglars sometimes case a home by planting a flier and checking to see if someone retrieves it.

This story was originally published on HouseLogic.

See more on HouseLogic:
6 Household Hacks Inspired by MacGyver
Want to Add Sconce Lighting?
Fragrant Plants That Will Keep Your Home Smelling Good

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10 DIY Projects That Even Renters Can Do

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By Scott Gamm

NEW YORK — Even though mortgage rates are at historically low levels, it’s the rental market in many areas across the U.S. that is really heating up. Obtaining a mortgage is undoubtedly a strenuous process on the heels of tightened credit standards. Add to that the fact that many Americans simply can’t afford a new home, the number of Americans still jobless or just getting by — and many consumers are finding it easier, or necessary, to rent, which explains why the average rent nationally is at its highest level since 2007, according to researchers at Reis.

Testifying on Capitol Hill in the aftermath of the housing crash, Treasury Secretary Timothy Geithner spoke words that previously might have been considered political suicide: Geithner suggested that homeownership should no longer be considered a singular measure of the American Dream — and maybe every American shouldn’t own a home.

Welcome to the post-housing bubble renter’s society. Geithner didn’t mention it, but his words implied that the do-it-yourself projects associated with the American Dream of home ownership should be applicable to the growing ranks of renters across the nation.

When renting, it doesn’t make sense to complete a major renovation, like flooring, new windows or a new kitchen. Throughout the duration of your lease, however, there are some easy and inexpensive projects you can do yourself to spruce up your rental. MainStreet asked design pros to weigh in on the top DIY projects for renters.

Replacing a Showerhead

If you’ve ever thought the weak water pressure in your shower has nothing to do with the low-flow showerhead installed by the building to minimize their water bill, think again. Chances are the showerhead in your rental needs to be replaced — whether or not it’s because the landlord installed a low-flow head. You, and your hair, will be very happy if you complete this project, and thankfully, this isn’t a lengthy or costly job.

First off, it’s helpful to know the types of showerheads so you can easily narrow your choices when selecting one at a home improvement store.

“There are two main categories of showerheads to choose from: fixed or handheld. But within these categories is a wealth of options — from rainshowers to multi-setting versions,” said Andrea Conroy, director of retail marketing at Moen.

And as for the actual installation of your new showerhead, here’s what Controy suggests:

1. Unscrew the existing showerhead from the shower arm, using a crescent wrench if necessary.

2. Remove any old thread seal tape and apply new by wrapping the tape around the shower arm threads two to three times.

3. By hand, screw the new showerhead onto the shower arm. Use the wrench to tighten the new showerhead. If installing a handheld version, first screw the handheld bracket to the shower arm and tighten with a wrench. Then, attach the hose and handheld shower to the handheld bracket.

Choosing the Right Paint Color

Any time you move into a new place, chances are you’ll be painting the kitchen, bedrooms and living room. When choosing what color to paint your rental, there’s a “science” behind different colors.

“Blue colors elicit feelings of tranquility and confidence. This is the least appetizing color, so it should not be the main color in a kitchen,” advises Chris Ring, v.p. of ProTect Painters.

“Yellow enhances concentration, speeds metabolism, and is perfect for kitchens and bathrooms,” Ring advises.

Pink colors are on the tranquilizing end of the color mood scale, making a pink shade an appropriate choice for bedrooms.

For this and other painting tips below, do keep in mind that even if you are a Michaelangelo, you may have to repaint the walls to white when you move out, and/or take the risk of a landlord trying to claim part of a security deposit as a result of a custom paint job. As such, it’s best to ask for a landlord’s approval to paint and agree to terms before undertaking the project.

Painting the Bathroom

Painting a tiny bathroom makes for a challenge, especially when trying to paint around the sink, mirror and shower.

“Before painting, wash all the walls to remove any mildew with mildew remover or bleach and water,” advises Joe Kowalski, training manager at Glidden.

And for your bathroom painting job, Kowalski adds these recommendations:

  • For walls, use either a semi-gloss or eggshell finish; both provide dirt and moisture resistance.
  • For the ceiling, paint with an eggshell finish is advised.
  • Paint that includes primer provides extra adhesion over a glossy surface.

More Storage Is Better

Whether you’re sidestepping into your small studio rental or fortunate enough to be renting a place with enough closet space, tips for maximizing your rental’s storage space always come in handy.

Janet Lee, author of Living In A Nutshell, shares these tips:

1. Place a removable, peel-and-stick wall decal on a bare surface (whether it’s on a wall or the back of a door.)
2. Rub the surface of the sticker with a squeegee to ensure that the decal lays smoothly against the wall.
3. Add a hook onto the decal and apply pressure to ensure damage-free hanging.
4. Wait one hour before hanging hats, jackets, backpacks and other apparel.

Hiding Your Lamp Cord

Cords can make your rental a cluttered mess as well as an electrical hazard for children. Lee offers these easy steps for making the cord “disappear”:

1. Use a hand drill to create a hole in the bottom of a metal gelatin mold.
2. Run a pre-wired pendant cord through the hole of the mold.
3. Insert a light bulb into the end of the cord.
4. Affix cords to wall in decorative loops using clear cord clips for damage-free hanging.

Read the rest of this story at TheStreet.com.

More from TheStreet:
Kids Off to College? Time to Sell Your Home
10 DIY Projects for Your New Home
10 Home Improvements You’re Wasting Time and Money On

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Obama: Mortgage Help Coming for Military, FHA Borrowers

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WASHINGTON — President Barack Obama is aiming mortgage relief at members of the military as well as homeowners with government-insured loans, the administration’s latest efforts to address a persistent housing crisis.

In his first full news conference of the year Tuesday, Obama was to announce plans to let borrowers with mortgages insured by the Federal Housing Administration refinance at lower rates, saving the average homeowner more than $1,000 a year. Obama also was detailing an agreement with major lenders to compensate service members and veterans who were wrongfully foreclosed upon or denied lower interest rates.

A senior administration official described Obama’s proposals to The Associated Press, ahead of the announcement, on the condition of anonymity.

The efforts Obama is announcing do not require congressional approval and are limited in comparison with the vast expansion of government assistance to homeowners that he asked Congress to approve last month. That $5 billion to $10 billion plan would make it easier for more borrowers with burdensome mortgages to refinance their loans.

Lower Refinancing Fee

Under the housing plans that Obama was to announce Tuesday, FHA-insured borrowers would be able to refinance their loans at half the fee that the FHA currently charges. FHA borrowers who want to refinance now must pay a fee of 1.15 percent of their balance every year. Officials say those fees make refinancing unappealing to many borrowers. The new plan will reduce that charge to 0.55 percent.

With mortgage rates at about 4 percent, the administration estimates a typical FHA borrower with $175,000 still owed on a home could reduce monthly payments to $915 a month and save $100 a month more than the borrower would have under current FHA fees.

Though 2 million to 3 million borrowers would be eligible, the administration official would not speculate how many would actually seek to benefit from the program. The FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. The loans typically go to homeowners who do not have enough equity to qualify for standard mortgages. It is the largest insurer of mortgages in the world.

Review of Vets’ Foreclosures

For service members and veterans, Obama will announce that major lenders will review foreclosures to determine whether they were done properly. If wrongly foreclosed upon, service members and veterans would be paid their lost equity and also be entitled to an additional $116,785 in compensation. That was a figure reached through an agreement with major lenders by the federal government and 49 state attorneys general.

Under the agreement, the lenders also would compensate service members who lost value in their homes when they were forced to sell them due to a military reassignment.

Obama is holding the news conference in the midst of a modestly improving economy. But international challenges as well as a stubbornly depressed housing market remain threats to the current recovery and to his presidency.

Obama has not held a full news conference since November. The White House scheduled this one on the same day as the 10-state Super Tuesday Republican presidential nominating contests. While aides insisted the timing was coincidental, it follows a pattern of Obama seeking the limelight when the attention is on the GOP.

The news conference comes amid a new sense of optimism at the White House. Obama’s public approval ratings have inched up close to 50 percent. The president recently won an extension of a payroll tax cut that was a main element of his jobs plan for 2012. Economic signals suggest a recovery that is taking hold.

Still, he will probably face questions about the pace of the recovery. The unemployment rate in January was 8.3 percent, the highest it has been in an election year since the Great Depression. With rising gasoline prices threatening to slow the economy, Obama has also faced attacks from Republicans over his energy policy.

Iran’s nuclear ambitions will also command attention in the aftermath of his meeting Monday with Israeli Prime Minister Benjamin Netanyahu. Tension over Iran has already contributed to higher oil prices, and Israel’s threats of pre-emptive military strikes to prevent Tehran from building a nuclear bomb have dominated Washington discourse for weeks.

Other developments in the Middle East, where turmoil has soured some of the promise of last year’s Arab Spring, are also likely to be addressed. Syria’s bloody crackdown on protesters has increased pressure on Obama to intervene. Republican Sen. John McCain on Monday urged the United States to launch airstrikes against Syrian President Bashar Assad’s regime to force him out of power.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

Also see:
Only 5% of Underwater Homes May Qualify for Write-Downs
REO to Rental: Fannie Mae Dips Further Into Foreclosure Pool


Obama's Address Centers on Economic Fairness

 

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More Americans Consider Strategic Default on Mortgages an Acceptable Option

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After years of economic turmoil faced by millions of Americans, a large number of consumers now have new attitudes toward the kinds of financial missteps that can land borrowers in credit trouble, including strategic defaults.

A sizable amount of Americans now consider it socially acceptable to have a low credit score or strategically default on their outstanding mortgage balances, according to new data compiled by JZ Analytics as part of a poll for ID Analytics. In all, 36 percent of those polled said they believe it’s acceptable to have a poor credit score these days, accounting for 77 million people across the country if the data is extrapolated out.

More interesting, however, is that many consumers have seen their attitudes toward intentionally falling behind on underwater mortgages change drastically in the last few years, the report said. A total of 32 percent of those polled — 68 million people nationwide — say homeowners should be able to strategically default on their mortgages without facing any consequences whatsoever for doing so.

Further, 13 percent, or 28 million Americans, say they would likely strategically default, the report said. Another 17 percent, or 36 million residents, say they know people who have already done so.

“Our research into the consumer opinion of the economic crisis of 2008 found alarming results,” said John Zogby, a senior analyst at JZ Analytics and creator of the Zogby Poll. “What jumped out is how many Americans feel it is acceptable for homeowners to walk away from a mortgage and go into foreclosure. If Americans carry on with that mindset, it will continue to cause problems as the economy undergoes a slow recovery.”

Another area in which consumers have more relaxed attitudes toward certain aspects of their credit rating is whether they would exaggerate their standing to obtain new lines of credit, the report said. In all, 17 percent of those polled said they would do so, making up some 36 million Americans.

Finally, another 35 percent of respondents — 75 million Americans in all — said they are now more afraid of being victimized by identity theft than they were five years ago, the report said.

Identity theft and account mismanagement can lead to serious damage to a borrower’s credit score, and therefore all financial documents, including credit reports, should be monitored closely as often as possible.

See more on Credit.com:
How Often Does Your Credit Report Change?
5 Reasons Why Your Credit Score May Not Matter
The Ultimate Credit Report Cheat Sheet

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Mortgage Principal Reduction on Freddie Mac Loans?

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By Jon Prior

Freddie Mac CEO Charles “Ed” Haldeman gave a strong signal Friday that new incentives from the Treasury Department may be enough to start principal reduction on mortgages backed by the government-sponsored enterprises.

In January, the Treasury said it would triple incentive payments to mortgage investors who allow principal reduction in Home Affordable Modification Program workouts. The payouts ranged between six and 21 cents to the investors for each dollar forgiven under HAMP, but that will grow to between 18 and 63 cents.

“I have to say recently the Treasury sweetened the program and tremendously increased the incentive payments in their offer to us,” Haldeman said at HousingWire’s REThink Symposium. “We will reevaluate that to see what may be in our economic best interest. If there are very large incentive payments — which could be 50 percent of what you could write down — it may be in our economic self-interest to participate in that.”

There are currently 11.1 million borrowers who owe more on their mortgage than the house is worth, according to CoreLogic. Of that, estimates show roughly 3.3 million of those mortgages belong to Fannie and Freddie.

The GSEs and their regulator, the Federal Housing Finance Agency, long shunned principal reduction. Their biggest fear is moral hazard — that borrowers who are still current on their underwater loan would strategically default in order to get principal written down.

“We thought principal reduction could have unintended, secondary consequences on other borrowers seeking the same kind of reduction,” Haldeman said.

One previous analysis showed the GSEs would take significant credit losses if a wide-scale program was put in place. A new analysis from the FHFA, which would cover the new HAMP incentives, is expected to be released in the coming weeks.

NPR and ProPublica reported Friday that the analysis will show a reversal, that principal reduction will work for the GSEs under the new version of HAMP.

“As we complete the review, the public should understand that Fannie Mae and Freddie Mac continue to offer a broad array of assistance to troubled borrowers and have continued to implement HARP 2.0 to enhance refinancing opportunities for underwater borrowers,” FHFA said in a statement.

Treasury Secretary Timothy Geithner told a House panel this week he and FHFA Acting Director Edward DeMarco were working out their differences.

Haldeman, who announced in October that he would leave his post at Freddie, said the principal reduction verdict will ultimately reside with DeMarco, but he isn’t operating on his own.

“At the end of the day, we are in conservatorship, and he is the conservator. But the way it works on a day-to-day basis is that it’s a very close collaboration. It is extremely rare that I had a different point of view than Ed DeMarco,” Haldeman said.

Read more on HousingWire:
Fannie and Freddie could reverse course on principal reductions
N
egative equity gap nears $4 trillion
B
ofaA offers distressed homeowners a chance to stay in homes

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U.S. Mortgage Rates Rise With Improving Job Market

 

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‘Housing’ Swings Don’t Matter as Much as What’s Happening in Your Own Neighborhood

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By Jeff Brown, BankingMyWay

NEW YORK — New data from Zillow.com shows that the housing market really has hit bottom. Cue the applause. Signal the all clear. Get Warren Buffett to pile on and say something encouraging about the U.S. economy. Then head back to reality, and eye the headlines about the housing market’s inevitable recovery with caution, especially if you are a prospective homebuyer. Conditions can vary widely from one neighborhood to the next.

The question isn’t ever whether the market has bottomed when it comes to housing — that’s good for journalists and economists and TV pundits, but near-useless, or at least dubious, for those involved in or contemplating real estate transactions. The relevant question is whether the market has bottomed in your neighborhood.

All politics are local — all real estate, too. So local, in fact, that the outlook for your metro area can matter less than the outlook for your five-digit ZIP Code (and vice versa: improving home values in a specific ZIP Code don’t imply that an overall metro area is on the mend, too). And sometimes, improvement within a ZIP Code doesn’t mean the home in that ZIP Code you are interested in — or looking to sell — is in the improving part of the “code.”

As Zillow puts it in the details of calling a bottom in the housing market, “The recovery is a highly local process.” Still the headlines won’t ever say, “(Highly Local) Housing Market Hits Bottom.”

This isn’t to say the news on housing isn’t good, especially for some of the most underwater markets:

“The United States has hit a bottom in housing values, and a majority of metros that the Zillow Real Estate Market Reports cover have also experienced their bottom,” Zillow’s recent report states. “Some metros showed signs of a healthy pick-up in appreciation, such as Phoenix and Miami with a V-shaped recovery. Others are undergoing more of a soft landing and are currently coasting in positive value growth territory.”

Zillow compares home prices from June 2011 to June 2012 in 167 metropolitan areas, with breakdowns by ZIP Code. While the results are encouraging overall, some ZIP Code and metro areas continue to fare poorly. Zillow uses red to show where prices have fallen and green for where they’ve gone up. In addition to the year-over-year maps, there are maps showing price trends in the most recent quarter and month. Using these visual aids, one can see, for example, that a positive trend over the past year has not been reversed in recent months.

So how can one make use of the data? By zeroing in on individual ZIP Code, prospective buyers can assess the risk that a home bought today might be worth less in a year or two — a good reason to postpone a purchase. There’s no way of knowing for sure, but if prices have been holding steady or begun to rise, the area is a better bet than if they are continuing to fall.

Similarly, signs of an upturn might encourage sellers to get off the sidelines and list their properties. If the market warms, there are likely to be more buyers willing to move quickly before prices rise even more. Of course, a prospective seller who’s not in a hurry might be wise to wait for prices to go even higher.

Still, it’s important to keep data in perspective. Like most surveys of this type, Zillow calculates average prices of homes sold in a given area during a given period. If only a small number of homes sell, the results can be skewed by just a few sales with especially high or low prices. Don’t put too much stock into a trend that’s only evident for the past month or quarter, as there may not have been enough sales to guarantee a statistically significant result.

The ideal survey would look at prices of individual homes that have changed hands more than once, but not many homes sell more than once in a 12-month period, so average prices for the area are generally the best data available.

People using the data should also keep in mind that a ZIP Code-level look is really not detailed enough, as a given ZIP Code will have many neighborhoods quite different from one another. Before making a final decision to buy or sell, look carefully at comparable homes that have sold, or are on the market, in the same neighborhood.

So when you read the next headline calling a bottom in the U.S. housing market, it would be best to ignore it as anything other than a way to re-frame the debate and begin the real detailed work of answering the more important question: Does that call apply to your neighborhood?

See more at TheStreet.com:
Kids Off to College? Time to Sell Your Home
10 DIY Projects for Your New Home
10 Home Improvements You’re Wasting Time and Money On

More on AOL Real Estate:
Find out how to
calculate mortgage payments.
Find
homes for sale in your area.
Find
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Source: http://realestate.aol.com/blog/2012/08/01/housing-swings-dont-matter-as-much-as-whats-happening-in-you/

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HARP Now Expected to Reach Twice as Many Homeowners

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By Jon Prior

The expanded Home Affordable Refinance Program will likely reach more underwater borrowers than its architects originally thought.

“We said we would double the number from what we’ve already done under HARP, which would mean we’d do another 900,000 under the expanded program. I think we’re actually trending above that now,” said Andrew Bon Salle, head of the Fannie Mae underwriting and pricing group, in an interview.

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The Federal Housing Finance Agency eased HARP eligibility requirements last year for Fannie Mae and Freddie Mac mortgages. It reduced upfront fees, eased buyback risk and eliminated the 125 percent loan-to-value ratio ceiling. Most banks implemented the changes in March.

Read more on this story at HousingWire.

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Source: http://realestate.aol.com/blog/2012/06/25/harp-architects-expect-to-reach-1-million-more-homeowners/

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Renting is Easy

There are times when we need an extra space for our need. However, we do not have enough money to buy a new place. This way we need to rent place. Of course, there are many things that we need to consider when we are renting a place. Often we encounter that renting a place [...]

Source: http://www.brothernwla.org/renting-is-easy/

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Mortgage Points: When It’s Smart to Pay More Upfront

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Mortgage points
Pay more now for a chance to save much more later? That’s the idea behind paying “points” on a mortgage loan. But it doesn’t necessarily make sense for every homeowner.

Mortgage points provide an opportunity for borrowers to lower their monthly mortgage payments by paying a lump sum at a loan’s closing in exchange for a lower mortgage interest rate over the course of a loan.

Mortgage points are a smart option for borrowers who plan to stay in the same mortgage and not refinance for a relatively long period of time. But points are not recommended for borrowers who are likely to relocate or refinance in the not-so-distant future.

Borrowers pay points in order to lower their mortgage interest rates by a certain amount. The cost of one point is equal to one percent of the mortgage amount. In the case of a 30-year fixed-rate mortgage, paying one point will typically lower your interest rate by somewhere around one eighth of a percent, according to Tim Dwyer, chief executive officer of Entitle Direct, a title insurance company.

So if borrower A paid one point on a $200,000 mortgage with what would have been a 4 percent interest rate, she would lower her interest rate to 3.875 percent (4 percent — 1/8th percent) for the cost of $2,000.

A good way of looking at points is to view them as an investment that “yields a return for the longer you stay in your house,” mortgage expert Jack Guttentag writes.

If Borrower A stays in the same mortgage for only a few years before selling her home or refinancing, she may end up not saving enough in monthly payments to justify paying the $2,000 upfront. But if she stays in the mortgage for a longer period of time, she eventually breaks even on her investment and enjoys saving money every month from there on out.

“If the points are reasonable, I want to pay that upfront and enjoy the interest rate savings over 10 years because I know I’m not going to refinance,” Dwyer says. But if “you’re a young couple” and “you know you’re going to have more babies, you know you’re going to be moving out,” then you should avoid paying points.

Banks may offer 10 or more point combinations on any given loan, Guttentag writes, and borrowers often don’t end up selecting the option that aligns most with their interests, simply out of ignorance. You can use a point calculator to find out how long it would take to break even using different point combinations.

In a perfect world, borrowers would pay points only if it benefited them in the long run. But, in fact, many borrowers pay points out of necessity. Why?

Lenders will only allow borrowers’ monthly mortgage payments to equal up to a certain percentage of their monthly income. Often they will only approve loans for borrowers whose monthly mortgage payments would not exceed 28 percent of a borrower’s monthly income.

Paying points allows a borrower who otherwise wouldn’t qualify for a loan because of income limitations to lower his or her monthly payment to the extent that the bank is willing to make the loan.

Some banks offer “negative points,” a rebate paid by lenders toward a borrower’s closing costs. “Negative points” lower closing costs for a mortgage, but raise its monthly interest rate. They can be a good option for borrowers who are hard-pressed to cover closing costs with zero points or who intend on moving or refinancing in a few years.

Follow Teke Wiggin on Twitter (@tkwiggin), follow @AOLRealEstate, or connect with AOL Real Estate on Facebook.

What Are Mortgage Points

See also:
Mortgage Jargon in Simple Terms
Real Estate Terms and What They Mean
Don’t Be Surprised by Expenses of Homeownship

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Source: http://realestate.aol.com/blog/2012/05/16/mortgage-points-pay-more-upfront-to-lower-your-interest-rate/

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Where to Snag Beach Homes on the Cheap

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We’re combining two of our favorite things: Summer vacations and discount houses using
RealtyTrac‘s recent list of the 10 best beach towns for buying foreclosures.

RealtyTrac’s ranking is based on the size of the discount that homebuyers can get in purchasing a foreclosure — compared to other residential properties in the same region. And ultimately, that could be the easiest way to choose between destinations like Marco Island, Fla., and Honolulu.

So if you’re thinking of owning your own little piece of a beach paradise, this could be your cheapest way in.

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Source: http://realestate.aol.com/blog/2012/06/14/where-to-snag-beach-homes-on-the-cheap/

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How Refinancing a Mortgage Can Affect Your Credit

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refinancing mortgage can affect creditBy Gerri Detweiler

It hardly seems possible that mortgage rates can get much lower, but they have. Homeowners are taking notice and refinancing their mortgages. Freddie Mac reports that 30-year fixed-rate mortgages have reached an all-time record low at 3.4 percent for the week ending Sept. 27, down from last week’s 3.49 percent.

So if you’re on the fence because you are afraid that refinancing (again) will hurt your credit, relax.

“It will neither help nor hurt your score in the short-term,” insists Anthony Sprauve, director of public relations for myFICO.com. “Any impact will be minimal and brief. The true impact will be how you manage the new mortgage over time.”

While that makes refinancing sound like a no-brainer, there are a couple of potential traps you’ll want to watch out for.

Why the Calendar Is Critical

The first is the impact of shopping for a new loan on your credit scores. Each time you apply for credit, that sparks an “inquiry” into your credit history. “The typical additional inquiry can be expected to lower a credit score by five points or less,” says Barry Paperno, a credit scoring industry veteran and manager of the Credit.com forums.

But in the case of mortgage loan inquiries, “you can incur any number over a focused period of time, such as 14 or 45 days, and they will only count as one inquiry,” Paperno explains. “Also, while on your credit report for two years, inquiries are counted for only the first year by the credit scoring models.”

Steve Ely, CEO of eCredable.com agrees, adding: “Like most things in the science of credit scoring, the thicker your credit file, the smaller the impact on your credit score.”

The take-away? If you are going to shop for a new lower-rate home loan, it’s a good idea to do so in a relatively short period of time.

The other risk when you refinance? A missed mortgage payment. This trap isn’t common, but if you’re affected, you can see a significant drop on your scores.

It works like this: You are approved for a new loan to pay off the current loan. Your loan officer tells you that you can skip this month’s payment on your current loan because the new loan will take care of it. That’s true — provided the loan closes and funds on time. But if the payment from the new lender arrives more than 30 days after your current payment to your “old” lender is due, that lender may consider that last payment late. And one late payment can really hurt your scores.

So keep an eye on the calendar, and if it looks like you might be cutting it close, talk with your lender and loan officer about making that mortgage payment to keep your good credit intact.

If all goes smoothly, though, your credit report should list the old loan as paid in full with a zero balance. Pay the new loan on time and your credit will be just fine. Not to mention your budget.

See more on Credit.com:
How Much Will One Late Payment Hurt Your Credit Score?
When is Debt Consolidation Legitimate?
The Ultimate Credit Report Cheat Sheet

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Source: http://realestate.aol.com/blog/2012/09/27/how-refinancing-a-mortgage-can-affect-your-credit/

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Pigeon Forge Cabin Rentals: A Warm and Homely Experience

Our staff had a vacation break two months ago. We went to this beautiful place with the most spectacular view of mountains and natural surroundings. We stayed in a special cabin that was very nice and I personally felt a warm and homely feeling. We rented four cabins at Pigeon Forge Cabin Rentals from Bear Camp [...]

Source: http://www.brothernwla.org/pigeon-forge-cabin-rentals-a-warm-and-homely-experience/

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Americans More Confident About Personal Finances

They may not be hopeful that the U.S. economy will rebound any time soon, but most Americans are optimistic about the future of their own personal finances. A newly released national survey conducted by KRC Research for the Certified Financial Planner (CFP) Board of Standards, Inc. finds that 83 percent of the 1,011 adults polled [...]

Source: http://feedproxy.google.com/~r/TruthfulLendingDotCom/~3/_IoLIckZHow/

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Open Houses of the Week: Feb. 18-19

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Open housesThere’s nothing quite like the lure of an open house sign. Granted, you might not be in the neighborhood (or tax bracket) for many of these outstanding properties, but there’s still plenty to admire — even from the comfort of your swivel chair.

From coast to coast, and everything in-between, we lay down the welcome mat at some of the most enticing open houses in the nation. So wipe your feet at the door and scroll right on through.

Open Houses for Feb. 18-19


Los Angeles

Open house: Sun., Feb. 19
Location: Los Angeles
Price: $7.595 million
Property details: Despite being located above the always-glittering Sunset Strip, this stunning, 8,644-square-foot Mediterranean villa will transport you to the peaceful hills of southern Italy. The gorgeous home boasts a natural setting and ocean panoramas from almost every room, and features intimate terraces. Outside, you can enjoy an outdoor entertainment area and pool, perfect for soaking up the California rays. Inside, you’ll find five bedrooms, eight bathrooms, a theater, library, gourmet kitchen, and even a dance studio! No doubt, this stunning home will make you want for nothing.

See inside this property.

See more Los Angeles homes for sale.

Chicago

Open house: Sun., Feb. 19
Location: Chicago
Price: $1.299 million
Property details: Though this beautiful, two-story contemporary residence is situated on happening Michigan Avenue, it is “remarkably quiet” and private. Located in a historic building overlooking Grant Park, the stunning home features three spacious bedrooms, four bathrooms, a gourmet kitchen and a formal dining room that’s perfect for entertaining large parties. We love the glossy hardwood floors and soaring, 14-foot-ceilings.

See inside this property.

See more Chicago homes for sale.

Dallas

Open house: Sun., Feb. 19
Location: Dallas, Texas
Price: $799,000
Property details: Described as a “hidden jewel,” this exquisite, 4,364-square-foot home is a true rare find: a fusion of the old and new. Flanked by lush, beautiful greenery, the five-bedroom, five-bathroom home boasts modern luxuries with traditional features like wrought-iron decor throughout and a handsome wooden staircase. We love the huge deck surrounding the saltwater pool and spa.

See inside this property.

See more Dallas homes for sale.

New York

Open House: Sun., Feb. 19
Location: Queens
Price: $1.6 million
Property description: This charmingly pretty, five-bedroom, three-bathroom home in New York City’s borough of Queens is set on a lovely, high lot with a gentle slope. The picture-perfect home boasts a beautiful sun room, wooden floors, a fireplace, plenty of windows (so you can admire your sprawling lawn and trees), plus a stunning deck with (more) great nature views. We love the splashes of color throughout this home in the Jamaica neighborhood, and its elegant center hall. Perfect for growing families!

See inside this property.

See more New York City homes for sale

Salt Lake City

Open house: Sun., Feb. 18
Location: Salt Lake City
Price: $299,900
Property description: This quaint, California-style bungalow is located on beautifully tree-lined South Douglas Street. It boasts red oak hardwood flooring throughout, brushed nickel fixtures and a massive backyard that’s professionally landscaped with a large natural stone patio (hot tub included!). But it’s not just a pretty face — this home features an incredible eco-friendly gourmet kitchen with custom Lyptus cabinetry, Cesarstone quartz countertops, Grohe fixtures, and top-of-the-line appliances including the Thermador DualFuel Range. Perfect for those who like a home that’s easy on the eyes and the earth.

See inside this property.

See more Salt Lake City homes for sale.

Orono, Minn.

Open house: Sun., Feb. 19
Location: Orono
Price: $1.649 million
Property description: This beautiful home, situated on the picturesque Lake Minnetonka peninsula, boasts a timeless coastal design with an open floor plan and panoramic waterfront views from every single room. A hundred feet of lakeshore flanking two sides of the property offer unmatched sunrise and sunset vistas. Boasting 4,125 square feet, four bedrooms and two bathrooms, the home is spacious yet cozy.

See inside this property.

See more Orono homes for sale.

Sneak peek for next weekend:

San Francisco

Open house: Sun., Feb. 26
Location: San Francisco
Price: $375,000
Property description: This gorgeous second-floor co-op offers the best of both worlds: It’s nestled in a leafy, tree-lined area, yet it’s centrally located. In fact, it’s just steps away from the hottest restaurants, bars and some world-class entertainment, including Yoshi’s Jazz Club, Davies Symphony Hall, and the opera house. Offering two bedrooms and one bathroom, with a spacious, west-facing deck (perfect for outdoor entertaining and parties!), this home is perfect for couples or young professionals who want to be close to the action.

See inside this property.

See more San Francisco homes for sale

More great AOL Real Estate galleries:
Buy a Decent Home for Less Than $10,000

Midcentury Modern Homes: The Cool That’s Still Hot
Million-Dollar Foreclosures

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Source: http://realestate.aol.com/blog/2012/02/17/open-houses-of-the-week-feb-17-19/

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Home Equity Lending’s Uptick: Why It’s Good News for Homeowners and the Economy

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home equity lendingBy Jeff Brown

Terrific news! Home equity lending is increasing!

OK, maybe it’s not a world-changing event. But an uptick in home equity loans is more evidence that the housing market is strengthening. And it gives another loan option to homeowners who still do have equity despite the plunge in home prices after the financial collapse.

Whether a home equity loan is a good idea is, well, open to question.

Credit-data firm Equifax reported Monday that in August total balances for home equity installment loans increased for the first time since November 2007. It was just a smidgeon — a rise of 0.3 percent — but any gain is good.

Installment loans carry a fixed rate for the life of the loan, like a car loan or fixed-rate mortgage. You borrow a sum and make payments for a number of years. Another type of home equity loan, the home equity line of credit, or HELOC, carries a variable rate that can change monthly and works like a credit card, letting you borrow what you want, up to the credit limit, with monthly payments dependent on your outstanding balance and the current loan rate.

“The residential real estate market finally seems to be finding solid ground,” said Equifax Chief Economist Amy Crews Cutts. “We’re seeing signs that the contraction in mortgage debt is slowing and delinquencies continue to trend down at the same time that mortgage rates set new record lows on almost a weekly basis. The environment has been set for growth for a while — now it looks like it may finally be happening.”

Despite the uptick, Equifax said the total number of installment loans is 43 percent below the August 2007 level, at 4.4 million versus 7.7 million. Balances are down 49 percent from their peak in September 2007, at $143 billion compared with $278 billion.

And although mortgage rates are at 50-year lows, with the average 30-year fixed-rate loan going for 3.4 percent, installment loan rates are comparatively pricey. According to the BankingMyWay.com survey, the three-year installment loan averages about 5.5 percent, and the 15-year deal nearly 6.7 percent.

Like mortgages, the installment loans were crushed in the credit crunch. Fewer homeowners qualified because of financial setbacks such as lost jobs, and many “underwater” homeowners, owing more on their mortgages than their homes were worth, had no equity to support a home equity loan. Also, in a default, the home equity lender is second in line behind the mortgage lender, making it very difficult for the lender to recover what is owed in a foreclosure. Lenders therefore became very conservative about home equity loans.

While more homeowners are getting installment loans now, the comparatively high interest rates are an issue. Anyone wishing to borrow a large sum might do better with a cash-out refinancing, getting a new mortgage larger than the balance on the old one, and benefiting from today’s low mortgage rates. An installment loan might be preferable to a mortgage if the loan will be relatively small, because the fees are likely to be much lower.

Similarly, one borrowing for a new-vehicle purchase might do better with an auto loan, as they are averaging 4 percent to 4.5 percent, with dealers occasionally going even lower. Keep in mind, though, that for most taxpayers the interest on home equity loans is tax deductible, while interest on auto loans is not.

For most people, home-equity loans are cheaper than credit card debt, which, like car loans, is not tax deductible. But the homeowner looking for a financial safety net should also look into a HELOC. Many of those start about 3 percent, though they might charge 5 percent to 6 percent after the first few months, depending on the borrower’s credit rating.

That’s a lot cheaper than a credit card, and there typically is little or no startup fee with a HELOC. But because there’s no telling how high the rate could go in the future, the HELOC is best for borrowers who will be able to pay off their balances fairly soon.

See more on TheStreet.com:
10 Best Cities for Bringing Up Baby
The Poorest Counties in Every State in America
What Would You Give Up to Buy Your Dream Home?

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Source: http://realestate.aol.com/blog/2012/10/04/home-equity-lendings-uptick-why-its-good-news-for-homeowners/

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Foreclosure Victims Plan Protests Across U.S.

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Victims of the foreclosure mess and housing crisis are taking to the streets — literally. Street demonstrations are being planned in 10 cities, and in the crowd at the first one you are going to see Dixie Mitchell, a 74-year-old cancer survivor who refinanced her paid-off home to help one of the foster kids in her care — and is now losing it in a foreclosure.

Mitchell (pictured at left), who along with her 76-year-old husband raised eight biological children and 50 foster children in this house, says that she intends to make her voice heard loud and clear as she marches in front of bank offices in Seattle on Sept. 21. The march is the first in a 10-city rollout of protests organized by The New Bottom Line, a coalition of community groups that challenges big banks’ role in the housing crisis.

Mitchell’s story is particularly heart-wrenching: She and her husband were doing just fine living in the house they’ve owned for 44 years until he suffered a stroke that left him paralyzed and cost him his job. The house was fully paid off in the mid-1980s, but they borrowed against it to make roof and kitchen repairs. The straw that broke the camel’s back came in 2005, when Mitchell needed to hire a lawyer, at a cost of $20,000, in an effort to keep a 3-year-old boy who had been in her care since he was an infant.

She was advised by the bank to refinance her house to get the cash. She took out an adjustable rate loan that would reset in two years, at which point, Mitchell says, the lender told her that she would be able to refinance into another 30-year-fixed rate loan. But the original loan was bundled and sold multiple times to different lenders. It reset to a higher rate right around the time her husband suffered a massive stroke, and she quickly fell behind in her payments. Without his earnings, her monthly income is just $2,200 in Social Security and her monthly mortgage is $2,568.

Mitchell filed for bankruptcy, tried getting assistance from every social service agency she could think of, spent two years trying to get a loan modification and even offered to rent out rooms to boarders if the bank would just let her keep her house.

“My husband wants to die at home, at our home,” she says. Her home is set to be auctioned on Oct. 28 and she has no place to go.

Why is she going to participate in the demonstration?

“I need them [the bank] to look me in the eye and tell me why they think it’s better to put people out in the street,” she said. “They haven’t done their share to help. They don’t even give you a chance … all they do is lose your paperwork and make you send it over and over again. Each time you talk to somebody, you get a different answer.”

Those are sentiments shared by many.

LeeAnn Hall, executive director of Alliance for a Just Society and one of the organizational members of The New Bottom Line, said the Seattle area protests will be staged both in downtown Seattle and at the annual policy summit meeting of the Association of Washington Business, a statewide chamber of commerce. The meeting is being held in Suncadia, a mountain resort near Cle Elum, Wash. The governor is expected to attend the meeting and Hall said that the group hopes to engage her.

Subsequent demonstrations are planned across the country in Boston, Chicago, Denver, Los Angeles, New York City, San Francisco and other locations.

The New Bottom Line said that it is targeting “big banks that bankrupted the country and drained wealth from American families.” The direct actions primarily target JPMorgan Chase, Bank of America and Wells Fargo, and include taking over bank buildings, meetings of corporate officials, civil disobedience, prayer vigils and mass mobilizations.

“We are struggling with less and less, while the big banks profit more and more,” said George Goehl, executive director of National People’s Action, another organizational member of The New Bottom Line. “The big banks have done nothing but dodge taxes, throw people out of their homes and choke small business, all the while draining our wealth to pad their bottom line. It’s time for JPMorgan Chase, Bank of America and Wells Fargo to pay us back.”

According to a press statement, the group’s goals are that banks:

o. Pay their fair share of taxes — their statutorily required 35 percent corporate income tax and not “game” the system through off-shore tax shelters and loopholes.

o. Stabilize the housing market and revitalize the economy by reducing principal for all underwater homeowners to current-market value. “This would end the foreclosure crisis, reset the housing market, pump billions of dollars back into the economy and create one million jobs a year,” the group says.

o. Invest in American jobs by using their trillions of dollars in cash reserves to invest in small businesses — the main source of jobs in the U.S. — and other job-generating investments.

Also see:
Viewpoint: What’s Behind Banks’ Big Foreclosure Push?

101-Year-Old Foreclosure Victim to Get Home Back

Woman Faces Foreclosure on Home She Bought for $1

More on AOL Real Estate:
Find out how to
calculate mortgage payments.
Find
homes for sale in your area.
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Source: http://realestate.aol.com/blog/2011/09/19/foreclosure-victims-plan-protests-across-u-s/

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House of the Day: Luxury by Lake Tahoe

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This $6.785 million residence, located in the luxurious Martis Camp community of North Lake Tahoe, Calif., boasts four bedrooms, 5&frac12; baths, and an incredible array of cutting-edge amenities — including a home iPad interface system and hydronic heating throughout the flooring.

The master suite, which offers commanding views of majestic arboreal wilderness, includes a fireplace and spa-inspired bath. The lower level features a recreation-media room, complete with a surround-sound system and a bar, as well as a 1,000-bottle wine cellar and an exercise den. Moveable glass walls divide the living room from an outdoor patio and walk-out terrace, which offer extensive outdoor entertaining space including a spa, fire pit, dining area and landscaped lawn. Furnishings throughout are a combination of the rustic and the ultramodern.

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As if this all weren’t enough, Martis Camp residency offers several extra layers of luxury, including an 18-hole golf course, and a family recreation center with swimming, bowling, basketball, cinema and art. Finally, the community includes 26 miles of private trails for hiking, snowshoeing and cross-country skiing.

Brian Hull of Martis Camp has the listing.

Click on the images below to see more homes for sale near Lake Tahoe, Calif.

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Those Mortgages Blamed for Housing Crisis? They’re Back

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liar loans home mortgageThe so-called “liar loan” mortgages often associated with the toxic subprime loans of the boom years are tiptoeing their way back into the housing market.

But, believe it or not, the latest crop of “stated-income” loans may represent a step forward for today’s sluggish market.

California based mortgage company Rancho Financial recently began originating loans that do not require applicants to submit pay stubs or tax returns, HousingWire reports. Stated-income loans proliferated during the housing boom, and acquired a stigma and became widely known as “liar loans” after lenders started shedding other requirements from loan applicants, along with pay stubs and tax returns.

But Rancho Financial’s loans seem to be a far cry from the toxic mortgages that blew up during the financial crisis.

Rancho only lends to well-heeled borrowers, originating loans that currently average about $500,000, the company told HousingWire. Some of the loans are jumbo loans, high-interest mortgages whose amounts exceed the threshold of those that government-sponsored investors such as Fannie Mae, Freddie Mac and the FHA are permitted to back.

But just because the government isn’t willing to guarantee jumbo loans, doesn’t mean they’re necessarily subpar. In Rancho’s case, most borrowers must make a 30 percent down payment and have a credit score of at least 740, a two-year history of self-employment, a 12-month reserve and a business license or letter from a certified public accountant, HousingWire reported.

“The down payment and credit standards, among others, more than offsets the no-doc risk,” said Mark A. Calabria, director of financial regulation studies at the politically conservative think tank, the Cato Institute. “So in general, this is a good thing. More loans should help housing demand and are not a risk to the taxpayer.”

Mortgages of this strain may fill a gaping hole in the real estate market that has lingered ever since the housing meltdown, according to Jack Guttentag, an emeritus professor of finance at the University of Pennsylvania’s Wharton School who offers mortgage advice on his website, mtgprofessor.com.

“This is an attempt to deal with a serious void in the market, which is the part of the market that is devoted to self-employed borrowers,” he said, adding that stated-income loans, by not requiring paystubs or tax returns, make it easier for self-employed borrowers to acquire mortgages. And by originating many jumbo loans, they are also satisfying pent-up demand among well-paid entrepreneurs and freelancers, as well as other affluent borrowers who want big loans to buy pricey homes.

So why haven’t more companies taken the plunge into stated-income loans already? Experts say that most investors remain haunted by the memory of toxic subprime loans, many of which did not require borrowers to submit pay stubs and tax returns.

Rancho’s market play, therefore, marks the arrival of some daring investors. Well, make that one daring investor: Rancho told HousingWire that it sells its loans to a single portfolio investor, whom it would not identify.

“They are really creaming the market in my view,” Guttentag said. “It’s amazing that there aren’t more of them out there. Not many investors out there have the appetite to acquire this kind of paper, but they ought to.”

Rancho declined to provide comment for this story.

See also:
Why Millions May Be Leaving Mortgage Assistance on the Table
Home Affordability: How Much House (or Apartment) Can I Handle?
Home Costs: 4 Crucial Questions Reveal Hidden Expenses

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Los Angeles Sues U.S. Bank, Calls It a ‘Slumlord’

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By Jonathan Stempel

The city of Los Angeles has sued U.S. Bank, accusing a unit of the fifth-largest U.S. commercial bank of becoming one of its biggest slumlords and blighting the city by allowing hundreds of foreclosed homes to fall into disrepair.

Monday’s civil lawsuit by the office of Los Angeles City Attorney Carmen Trutanich alleges that U.S. Bank has taken title to more than 1,500 foreclosed residential properties in the city in its role as trustee for various mortgage-backed securities trusts.

Los Angeles said that at least since July 2008, U.S. Bank has “disregarded virtually every one of its legal duties and responsibilities as owner, resulting in the creation and maintenance of an alarming number of vacant nuisance properties and substandard occupied housing units.”

It said the bank has ignored repeated demands that it comply with the law, causing hundreds of homes to become uninhabitable or “public nuisances,” and resulting in illegal evictions of hundreds of tenants from the second most-populous U.S. city.

Los Angeles said that it is seeking a civil fine of $2,500 a day for each violation by what it called “one of the largest slumlords in the city.” It estimated the bank’s potential liability to be in the “hundreds of millions of dollars.”

Thomas Joyce, a spokesman for Minneapolis-based U.S. Bank, said it is the mortgage servicers, not the trustee, who have the responsibility to maintain foreclosed properties, and that “we intend to bring them into” the lawsuit.

Joyce also said the city only recently agreed to detail which homes needed better upkeep, and that the bank will “stand ready” to address property-specific and general foreclosure concerns as it has done in other cities.

Other Cities’ Lawsuits

Other large U.S. cities have also sued over mortgage industry practices that they allege contributed to urban blight.

Wells Fargo & Co, the nation’s largest mortgage lender, in May settled a lawsuit by Memphis, Tenn., and on July 12 it settled a similar case involving Baltimore.

The Baltimore accord was reached in connection with the San Francisco-based bank’s $175 million settlement with the federal government over allegations that it overcharged black and Hispanic borrowers on mortgages, contributing to higher foreclosures.

Wells Fargo was one of five big servicers to join February’s $25 billion U.S. settlement over foreclosure abuses.

The National Fair Housing Alliance filed discrimination complaints with the federal government in April against both U.S. Bank and Wells Fargo, accusing them of doing a better job maintaining foreclosed homes in white neighborhoods than in minority neighborhoods.

According to the 2010 census, Los Angeles had 1.41 million housing units, of which about 95,000 were vacant. The city’s population was about 3.79 million.

Shares of U.S. Bancorp were down 9 cents at $32.69 in morning trading on the New York Stock Exchange.

The case is People v. U.S. Bank NA et al, Superior Court of California, Los Angeles County, No. BC488436.

Copyright 2012 Thomson Reuters. Click for restrictions.

See also:
Middle Class May Be Richer Than It Thinks, Economist Says

90% of Bank-Owned Homes Held Off Market, Estimates Suggest
Underwater Mortgages Keeping Housing Market Afloat?

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How to Spend Less on Gas

A commercial currently showing on television features a man at a gas pump who puts his wallet into a suction tube in order to pay for his fuel.  With gas prices running, on average, one dollar more per gallon than a year ago, many people are feeling the pressure on their budgets.  There are some [...]

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‘Housing’ Swings Don’t Matter as Much as What’s Happening in Your Own Neighborhood

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By Jeff Brown, BankingMyWay

NEW YORK — New data from Zillow.com shows that the housing market really has hit bottom. Cue the applause. Signal the all clear. Get Warren Buffett to pile on and say something encouraging about the U.S. economy. Then head back to reality, and eye the headlines about the housing market’s inevitable recovery with caution, especially if you are a prospective homebuyer. Conditions can vary widely from one neighborhood to the next.

The question isn’t ever whether the market has bottomed when it comes to housing — that’s good for journalists and economists and TV pundits, but near-useless, or at least dubious, for those involved in or contemplating real estate transactions. The relevant question is whether the market has bottomed in your neighborhood.

All politics are local — all real estate, too. So local, in fact, that the outlook for your metro area can matter less than the outlook for your five-digit ZIP Code (and vice versa: improving home values in a specific ZIP Code don’t imply that an overall metro area is on the mend, too). And sometimes, improvement within a ZIP Code doesn’t mean the home in that ZIP Code you are interested in — or looking to sell — is in the improving part of the “code.”

As Zillow puts it in the details of calling a bottom in the housing market, “The recovery is a highly local process.” Still the headlines won’t ever say, “(Highly Local) Housing Market Hits Bottom.”

This isn’t to say the news on housing isn’t good, especially for some of the most underwater markets:

“The United States has hit a bottom in housing values, and a majority of metros that the Zillow Real Estate Market Reports cover have also experienced their bottom,” Zillow’s recent report states. “Some metros showed signs of a healthy pick-up in appreciation, such as Phoenix and Miami with a V-shaped recovery. Others are undergoing more of a soft landing and are currently coasting in positive value growth territory.”

Zillow compares home prices from June 2011 to June 2012 in 167 metropolitan areas, with breakdowns by ZIP Code. While the results are encouraging overall, some ZIP Code and metro areas continue to fare poorly. Zillow uses red to show where prices have fallen and green for where they’ve gone up. In addition to the year-over-year maps, there are maps showing price trends in the most recent quarter and month. Using these visual aids, one can see, for example, that a positive trend over the past year has not been reversed in recent months.

So how can one make use of the data? By zeroing in on individual ZIP Code, prospective buyers can assess the risk that a home bought today might be worth less in a year or two — a good reason to postpone a purchase. There’s no way of knowing for sure, but if prices have been holding steady or begun to rise, the area is a better bet than if they are continuing to fall.

Similarly, signs of an upturn might encourage sellers to get off the sidelines and list their properties. If the market warms, there are likely to be more buyers willing to move quickly before prices rise even more. Of course, a prospective seller who’s not in a hurry might be wise to wait for prices to go even higher.

Still, it’s important to keep data in perspective. Like most surveys of this type, Zillow calculates average prices of homes sold in a given area during a given period. If only a small number of homes sell, the results can be skewed by just a few sales with especially high or low prices. Don’t put too much stock into a trend that’s only evident for the past month or quarter, as there may not have been enough sales to guarantee a statistically significant result.

The ideal survey would look at prices of individual homes that have changed hands more than once, but not many homes sell more than once in a 12-month period, so average prices for the area are generally the best data available.

People using the data should also keep in mind that a ZIP Code-level look is really not detailed enough, as a given ZIP Code will have many neighborhoods quite different from one another. Before making a final decision to buy or sell, look carefully at comparable homes that have sold, or are on the market, in the same neighborhood.

So when you read the next headline calling a bottom in the U.S. housing market, it would be best to ignore it as anything other than a way to re-frame the debate and begin the real detailed work of answering the more important question: Does that call apply to your neighborhood?

See more at TheStreet.com:
Kids Off to College? Time to Sell Your Home
10 DIY Projects for Your New Home
10 Home Improvements You’re Wasting Time and Money On

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How to Spend Less on Gas

A commercial currently showing on television features a man at a gas pump who puts his wallet into a suction tube in order to pay for his fuel.  With gas prices running, on average, one dollar more per gallon than a year ago, many people are feeling the pressure on their budgets.  There are some [...]

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6 Ways to Get a Great Mortgage Deal

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mortgage great dealBy Ismat Sarah Mangla,
Money Magazine

Finding an affordable house is no longer a problem but qualifying for a mortgage can be. Here are six tips to getting a mortgage and a good rate.

1. Put your credit on ice.

The higher your credit score, the lower your rate: The best rates go to those with a 760 or more, says credit-score expert John Ulzheimer.

So keep that plastic in your wallet (and don’t apply for new cards or other loans) for at least three months before you go loan shopping. One large balance — even if it’s paid off at the end of the month — can ding your score by 20 points or more.

2. Ask for time.

Most sales contracts give you only 10 days to nab a loan or the seller can move on. Negotiate for an additional five to 10 days to give you some room to shop around.

3. Get at least six quotes.

Rates on a 30-year fixed conforming loan can vary at least as much as a quarter of a percentage point. Get quotes from national lenders at mortgagemarvel.com and find out what your local credit union or regional bank is offering as well. Inquire about fees; while lenders aren’t required to give you a good-faith estimate of closing costs (which average 2 percent of the loan balance) until you actually apply, some will provide it if you ask.

4. Match the lock period to the loan.

You now need 60 days or more to close a loan, says Wharton professor and mortgage expert Jack Guttentag of mtgprofessor.com, and getting an extension on a lock will cost at least a couple of hundred dollars. Ask your lender how long it’s taking to close loans like yours — and don’t lock for less.

Understanding Adjustable Rate Mortgages

5. Opt for an ARM.

If you know you’re not going to be in a house for more than seven years, adjustable-rate mortgages can mean big savings, says Guttentag. The monthly payment on a $300,000, seven-year ARM at the recent rate of 3.23 percent is $1,302, vs. $1,455 for a 30-year fixed at 4.13 percent.

6. Talk to a broker.

Those who need a jumbo loan or have an unusual situation (say, you’re self-employed) will get the best deal from a mortgage broker who has access to and experience with a lot of lenders. Find a fee-only one at upfrontmortgagebrokers.org.

Read more on CNNMoney:
Best deal on remodeling
America’s cleanest cities
It’s safe to sell your home again

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‘Project X’ Copycat Revelers Allegedly Wreck $500,000 Home

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It didn’t take long before the carnage in the hit house-party movie “Project X” spilled onto the real real estate market.

Thirteen teenagers are being questioned for their possible involvement in a wild house party that will cost the builder nearly $100,000 in repairs, reports KHOU in Houston, Texas.

“It’s devastating. This is a new home that was ready to sell,” said private investigator Mark Stephens, who was hired by the homebuilder to observe the property. Stephens estimates the home to be worth $500,000.

A tour of the once pristine, 4,000-square-foot-home today reveals gaping holes in the walls, heaps of broken glass and liquor bottles strewn across the property.

Stephens told KHOU that the night after the property was vandalized, he returned to the neighborhood in the hope of catching the culprits in the act. Just down the street, in another vacant home, he came upon a group of teenagers throwing another massive party.

Police took 13 teenagers into custody, with two minors being young enough to be released back to their parents.

Stephens said that when he asked the teens why they broke into the home, they simply said “Project X.”

Yet this isn’t the first time the riotous teen flick reportedly has inspired copycat revelry. Another party in Houston turned deadly after an unidentified teen was shot multiple times at an illegal party in another vacant home, ABC News reports. The party, which drew between 500 to 1,000 high school and college-age students, was shut down by police, but the gunman reportedly escaped on foot.

Idle Hands, Empty Homes

An underlying problem in these and other cases of home vandalism is the glut of vacant homes sitting idle on the market. As foreclosures have flooded local real estate inventories, vacant properties have attracted all manner of blight, lowering property values and putting more financial stress on already struggling neighborhoods.

And the vacancy problem could continue to rise. Despite a new report that shows a 13 percent drop in completed foreclosures in the first month of this year, as compared to January 2011, there are signs that foreclosures could soon rise. With the $25 billion mortgage settlement finally underway, experts expect foreclosure activity to increase through 2012, as banks begin to clear a massive backlog of disputed foreclosures. One in every 637 homes received a foreclosure filing in February, according to RealtyTrac.

In Houston, where both wild parties took place, one in every 689 homes received a foreclosure notice in February — up nearly 10 percent from the previous month.

Also see:
Renters Beware: Fraudsters Still Lurking on Craigslist

‘Home Alone’ House Sells for $1.6 Million

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‘Mortgage Prof’: 5 Reasons Banks Would Rather Foreclose

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“Why won’t the bank just reduce the amount of my loan instead of taking my home and then selling it to someone else for way less than I would have been happy to pay?” It’s a question that gets asked repeatedly these days, especially by people who are facing foreclosure or are upside down on their mortgages.

For the answer, we turned to Jack Guttentag, the Mortgage Professor and Inman columnist.

Guttentag believes that lenders have been too stingy when it comes to reducing loan balances. Private lenders have offered loan reductions only sparingly, he says, and Fannie Mae and Freddie Mac not at all.

Here’s the professor’s take on why homeowners can’t catch a break on loan reductions.

1. The buck stops there.

The decisions to reduce principal loan amounts are made by the firms that service mortgages — the same folks who brought the country the robo-signing scandal. As servicing firms, anything they decide must be in the financial interest of their client — that’s your lender, not you. If they depart from customary practice — and writing down loan balances is a departure from customary practice — the buck stops with them, Guttentag says. In other words, who’s going to take the risk of reducing Joe Homeowner’s loan amount and then have to explain it to the boss? To take Nancy Reagan out of context: They just say no.

2. Banks are in the business of making money.

No lender is going to write down the balance of a loan in default just because you owe more than the home is worth. Truth is, there is no benefit to the lender to helping Joe Homeowner keep his house instead of selling it to the next guy. Plus, to help Joe would eliminate the possibility that the bank could also get a deficiency judgment against him. Banks are in this for the squeeze and think of Joe as just the orange. Nothing personal, of course.

3. In this economy, you will likely default anyway.

Sure, you want to believe that the economy is going to turn around and the value of your home will again rise to what you paid for it. After all, hasn’t listening to a fairy tale been a surefire way to fall asleep?

From the lender’s standpoint, the only reason to write down a loan balance is that it will reduce the chance that you will default. And evidence has shown that people who are heavily underwater — that’s deep in negative equity territory — are more likely to default than those who aren’t. Truth is, negative equity discourages people from making their mortgage payments. They figure: Why keep throwing good money after bad?

4. Banks are short-staffed and the staff they do have is untrained.

Most interactions between mortgage borrowers and servicers are handled by computers or relatively unskilled employees, says Guttentag. Borrowers in serious trouble are referred to a smaller number of more skilled and specialized employees, but until you enter the red zone, you are likely to encounter frustration.

Guttentag says that at the onset of the mortgage crisis, servicers were caught short-handed and the sheer volume of foreclosures in the pipeline hasn’t allowed them to catch their breath.

5. Mortgage insurance works against you.

When mortgages carrying mortgage insurance go to foreclosure, banks are protected up to the maximum coverage of the policy, which generally is enough to cover all or most of the loss. This discourages modifications, says Guttentag. Why would a bank do a modification for $15,000 if the $40,000 foreclosure cost is going to be paid by the mortgage insurer? Even if the insurance coverage falls short of the foreclosure cost, the shortfall has to exceed the modification cost before modification becomes financially more attractive.

So there you have it. A five-point plan for keeping homeowners on the hook for that hefty loan balance.

Also see:
Viewpoint: Where’s Housing in the ‘Occupy’ Protests?

Mortgage Mod Hell: Trapped Between Lenders, Collectors
The Mortgage Fix That Can Save the Economy

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May 2012 San Diego Events

May 4
28th Annual Old Town Cinco de Mayo
Old Town comes alive with a celebration of art, culture, and history of the 1800’s.  Ride in a horse drawn stagecoach, enjoy music, carnival rides and
games, car show, chalk art, riding and roping show, Mexican wrestling, and
other activities.  Visit museums and specialty shops, and dine on delicious
food and drink. Free.
Time:  Fri.  5:00 pm – 10:00 pm / Sat. 11:00 am – 10:00 pm / Sun. 11:00 am – 5:00 pm
Location:  Old Town State Historical Park, San Diego Ave.
For more information visit www.fiestaoldtown.com


May 5
The Salvation Army 3rd Annual Spring Fling Festival
This festival will feature dozens of local crafters in indoor and outdoor booths.  There will also be live musical entertainment and a fun carnival zone for the kids.  A special feature will be the Silent Auction featuring donations from many
San Diego businesses. 
Time:  9:00 am – 3:00 pm
Location:  The Salvation Army, 4170 Balboa Ave., Clairemont
For more information visit www.sandiegocitadel.com


May 5-6
Escondido Renaissance Faire
Travel back to the 16th century and the glories of the reign of Elizabeth the First.  Activities include several of Will Shakespeare’s new plays, battle pageants, music in the streets, jugglers and hundreds of costumed re-enactors performing in this giant outdoor play.  There is an admission fee, which covers all entertainment.
Time:  10:00 am – 6:00 pm
Location:  Felicita County Park, 742 Clarence Lane, Escondido

For more information visit www.goldcoastfestivals.com/Escondido.html


May 6
16th Annual Festival Cinco de Mayo – Chula Vista
Festival guests will receive a true cultural experience as they sway with Mexican dancers, peruse the work of local artisans and taste authentic south of the border cuisine.  Tune in for a Mariachi Band Battle at one of the two festival stages in addition to the popular Kids Fun Zone.  Come join the 30,000 community members who enjoy this celebration of Hispanic culture.
Time:  11:00 am – 7:00 pm
Location:  Downtown Chula Vista, Third Avenue
For more information visit http://www.thirdavenuevillage.com


May 6
Carlsbad Spring Village Faire
The largest one day fair in California.  Features hundreds of exhibitors with a little of everything such as arts and crafts, antiques, clothing, a large variety of food stands serving International foods, and children’s rides. 
Time:  8:00 am – 5:00 pm
Location:  Carlsbad Village
For more information visit www.kennedyfaires.com/carlsbad


May 11-13
11th Annual Gator by the Bay
A family event featuring Zydeco and Cajun bands, Blues bands and community musical groups performing on multiple stages.  Enjoy Cajun and Creole food, cooking demonstrations, strolling entertainers, dance lessons, and more.

Time:  Refer to website for schedule
Location:  Spanish Landing Park at Harbor Island – Harbor Drive – San Diego Bay
For more information visit www.gatorbythebay.com


May 12
Asian Cultural Festival of San Diego
Enjoy musical performances, costumed dancing, martial arts, craft-making, merchandise booths, cultural exhibits and cooking demonstration. There will be a food court, picnic area, and a kid’s area.
Time:  10:00 am – 6:00 pm
Location:  Liberty Station – NTC Park, near Cushing & Roosevelt Rds, Point Loma

For more information visit www.asianculturalfestivalsd.com


May 13
4th Annual Mother’s Day Fancy Dress Swim
Fundraiser for World Swims Against Malaria.  Mothers will “dip” in the ocean wearing their Mother’s Day finest.  A five dollar donation is all that is needed for this World Swim Against Malaria.

Time:  10:00 am – 11:00 am
Location:  Oceanside Pier, Oceanside
For more information visit www.onesandiego.org/


May 16-20
Ocean Beach: Beach Ball Festival
An outdoor live music, action sports, and microbrew festival.  Lots of food, merchandise, beach volleyball games, a big ferris wheel, a waterslide, mechanical bull rides and a human hauler contest.

Time:  Wed.-Fri. 12:00 pm – 10:00 pm / Sat. 10:00 am – 10:00 pm / Sun. 10:00 am – 5:00 pm
Location:  Ocean Beach: Saratoga Park, Veterans Plaza, Lifeguard & Municipal Pier Parking Lots

For more information visit www.oceanbeachsandiego.com


May 19
24th Annual Tierrasanta Patriot’s Day
Celebrate Armed Forces Day with a delicious BBQ dinner under a shaded canopy while listening to pleasant music.  There will be  a beer & wine garden, game area for kids, raffles, dancing, plus a fireworks show.

Time:  4:00 pm – 9:00 pm
Location:  Tierrasanta Recreation Center, 11220 Clairemont Mesa Blvd., Tierrasanta

For more information call 858-268-0044


May 19-20
7th Annual Encinitas Sports Festival
Join 300 of your closest friends and family for two days of sports and fun in Encinitas. The City becomes a sports destination the weekend before Memorial Day and you don’t want to miss it.  Triathlons, Duathlon, Bike Tours, 5K Run, Kids and Family 1K Walk/Run, Moonlight Beach Paddle & Swim, and a 2-day sports expo.
Time:  Refer to website for schedule
Location:  Encinitas – various locations, refer to website
For more information visit www.encinitasrace.com/esff.html


May 20
Annual North Park Festival of the Arts
An explosion of arts, culture and entertainment with live entertainment, specialty booths, food court, beer garden, Kid’s Art Beat, and tons more! 

Time:  10:00 am – 6:00 pm
Location:  North Park – University Ave. & 30th St.
For more information visit www.northparkfestivalofarts.com


May 20
26th Annual Navy’s Original Bay Bridge Run/Walk
A running and walking event across the Coronado Bay Bridge is a rare opportunity, and now is the time to do it!  The route begins downtown and proceeds across the bridge to the Coronado Island to Tidelands Park, concluding with fun festivities.
Time:  7:00 am – 12:00 pm
Location:  Bayfront Hilton Parking Lot, One Park Blvd., San Diego
For more information visit www.mwrtoday.com


May 20
19th Annual Sicilian Festival
Celebrate Sicilian-Italian American heritage and enjoy delicious cuisine from local restaurants in a festive setting in Little Italy.  Music, beer, wine, dancing, ethnic art & craft items to browse.  Free.

Time:  10:00 am – 6:00 pm
Location:  Little Italy, Downtown San Diego
For more information visit www.sicilianfesta.com


May 20
Escondido Street Faire
This faire will feature live entertainment as well as over 600 booths showcasing arts & crafts, unique clothing, and international foods.  Children’s rides, rock climbing wall, and more!

Time:  10:00 am – 6:00 pm
Location:  Downtown Escondido, Grand Ave. between Center City Pkwy and lvy.
For more information visit www.kennedyfaires.com/escondido


May 26
Santee Street Fair
Live bands, entertainment, food, arts & crafts, vendor booths, beer garden.  In just three years the Santee Street Fair has become one of the best events in town.  Over 300 food and vendor booths, 3 stages of live music and entertainment, and fun rides.
Time:  10:00 am – 7:00 pm
Location:  Santee Town Center – behind Santee Trolley Square, Mission Gorge Rd., Santee
For more information visit www.santeestreetfair.com



May 27
Annual Ethnic Food Fair
A cultural food festival at Balboa Park will be offering a delicious assortment of ethnic foods along with entertaining costumed performances.  Free.

Time:  10:00 am – 5:00 pm
Location:  Balboa Park, House of Pacific Relations International Cottages
For more information visit www.sdhpr.org


May 27
Vista Strawberry Festival
Strawberries will be the main event along with a 5K Fun Run and Kids Runs, as well as 200+ vendors at our street fair, carnival rides, a Strawberry Pie Eating contest, Strawberry Idol, Ms. Strawberry Shortcake, and much more!  Free admission.
Time:  7:00 am – 4:00 pm
Location:  Downtown Vista, 127 Main St., Downtown Vista
For more information visit www.vvba.org

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Home Equity Line Adds New Option to Refinancing

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If you’re looking to refinance your mortgage but you also need some extra cash, there may be a few options out there you haven’t considered. Today’s re-fi rates are low, but to get the best deal overall, your best bet may be to refinance your principal loan at the lowest rate you can find and then to apply for a home equity line for the cash. That way, with today’s low home equity rates, you’ll

If you’re looking to refinance your mortgage but you also need some extra cash, there may be a few options out there you haven’t considered. Today’s re-fi rates are low, but to get the best deal overall, your best bet may be to refinance your principal loan at the lowest rate you can find and then to apply for a home equity line for the cash.

That way, with today’s low home equity rates, you’ll get the best interest rates for both portions of your financing.

The other main option is a cash-out refinance, in which the borrower takes additional cash above the loan amount. But that usually means an additional 0.5 percent or more in interest, which can add up to thousands of dollars over the course of a 30-year loan. Instead, simply refinance the balance of your mortgage, and then apply for a home equity line for the rest.

Right now, home equity rates are at prime or prime plus 0.5 percent to 1.0 percent, a lot better than almost any other kind of loan out there, including personal loans and credit card debt.

Cash-out refinancing is not a real option for homeowners who are underwater and need to borrow more than 80 percent of the value of their home. And while there are 95 percent loan-to-value mortgages out there, you can’t be living in a declining market such as Arizona, California, Florida, Michigan and Nevada. Also, if your credit score is below 680, you’ll need to turn to the FHA for the refinance if you want anything more than a 90 percent loan-to-value mortgage.

Generally in today’s market, even if you don’t live in a declining market, you probably won’t be able to get an equity line if it means going above 90 percent loan-to-value. And even that could be difficult, unless you have a credit score over 760. Therefore, home equity lines are a better choice for smaller projects, like making needed repairs on your home.

Also, think twice before paying off credit card debt with a home equity line. While you may be paying a high price for credit card debt, transferring credit card debt to an equity line means you are exchanging unsecured debt (debt that is not guaranteed by an asset) for secured debt (in this case debt that is secured by your home). That means, if for some reason you can’t make the payment on your equity line, the lender has the right to foreclose on your home. You can learn more about how equity lines work in the Federal Reserve’s pamphlet “What you should know about Home Equity Lines of Credit.”

Millions of people put their homes at risk because they used the equity in their homes as a piggy bank and borrowed to levels that are now higher than what their homes are worth. Some have walked away from these homes because the combined mortgage and equity line is higher than what the home’s value is expected to be for 10 or 20 years.

But if you need the cash, and it will put you in a better position financially, you’re better off choosing an home equity line than a cash-out refinance.

Lita Epstein has written more than 25 books including The Complete Idiot’s Guide to Personal Bankruptcy and The Complete Idiot’s Guide to Improving Your Credit Score.

 

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Source: http://realestate.aol.com/blog/2010/12/09/home-equity-line-adds-new-option-to-refinancing/

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Xeriscaping: 6 Steps to a Natural, Low Maintenance Lawn

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Xeriscaping, or waterless landscaping (or smart-scaping or native-plant landscaping — whew!), is a great way to save time and money on maintenance for your lawn. By using native plant species and paying close attention to sun exposure, you will rarely have to water your lawn yourself. A well-made xeriscape does the work for you.

Creating a habitat using native plants can be livable and enjoyable. Grasses, trees and bushes alien to your natural climate tend to be your landscape’s biggest water-suckers. By planting a native habitat in your yard, you will conserve water, create an eco-friendly space and perhaps find yourself living side-by-side with the beauty inherent to the land on which you live.

Here are six steps to get you started on creating a native, easy-to-maintain and beautiful lawn with xeriscaping.

1. Seek out plant species native to the area. Local nurseries and landscape architects are great resources when deciding what to plant in your yard.

2. Look for natural drainage patterns. This will help you to avoid erosion as well as help you highlight visually interesting valleys, crests and plateaus in your landscape.

3. Pay attention to sun patterns. Take note of which areas get the most sun and will subsequently require more water or more drought-resistant species of plants.

4. Use well-aerated soil. It’s high in organic materials through added compost and conserves water. Many plant species (other than most cacti) will appreciate a wet, dense soil.

5. Consider alternatives to grass and turf. Use stones, brick, mulch, sand or native grasses in place of turf. You will find that it needs far less water and maintenance.

6. Learn how to properly irrigate. By replacing crude hoses and sprinkler systems with modern irrigation methods, such as drip irrigation (which limits waste by dripping small amounts of water directly to each plant), a yard can thrive with limited or zero water-waste.

See also:
Solar Ready Roofs: California’s New Homebuilding Standard

A Castle Made of Car Parts and Other Junkyard Finds

Apple Unveils ‘Mothership’ Campus That Braces for Disaster

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Eagles shutout Laredo United South 21-0

By: Ricardo E. Calderon The Eagle Pass High School Eagles shutout the Laredo United South High School Panthers 21-0 on Thursday, October 4, 2012, at the Laredo United Independent School District Student Activity Complex in an important District 29-5A game. The Eagles improve to 1-1 in District 29-5A standings and…

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Why Your Next Home Should Be Prefab

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While picking up some prescriptions recently, my local pharmacist, who knows I write about home construction, asked me if I had any suggestions for how he should build his new house. Since I’m a big advocate for prefab, I suggested that he consider building his house modular. His response shocked me: “I wouldn’t want to build modular — it would upset my neighbors and bring down the neighborhood.” I thought that type of thinking about prefab was ancient history, but his response was clear evidence that it is not.

After having written several books on the subject — filled with evidence of the beauty and diversity of prefab — I thought we had moved past the bias that prefab is synonymous with double-wides.

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Prefab Options

Prefabricated construction includes all types of buildings that are either partially or completely built in a factory. Modular construction is one of the most common types of prefab. Large boxes are built in a factory and then taken by flatbed truck to a site and lifted with a crane into place. A house can be built with one box or 36 boxes.

Another common type of prefab is panelized construction. Large exterior wall sections of the house are built in the factory and put together on site like a jigsaw puzzle. A similar method is building with structural insulated panels, known as SIPs, which are like sandwiches of oriented strand board, or OSB, fused together with insulation in between. Other types of prefab include concrete panels, prefabricated timber frames and even some log cabins. The savings varies with prefab, depending on the size of the house, location and type of construction.

With all that I’ve learned over the years, I would never consider building a house on-site. The feedback that I get from my readers, when they have acquired some knowledge of prefab, is that they’ve become believers — and wouldn’t consider the on-site option either.

Environmental Impact

My preference for prefab comes from years of investigating the best ways to build a house.

As an environmentalist, there are many reasons to prefer prefab. Much of the on-site construction debris goes into a dumpster — the homeowner is paying for the debris, dumper and tipping charges.

In a factory, wood cutoffs are sorted and used for other houses. Many of the cutoffs from materials, such as drywall and metal, are returned to the manufacturer for recycling. Materials are shipped in bulk to the factories, so they cost less and shipping charges are reduced.

Prefab houses are built in an environment where the wood is protected from the elements and has less chance of developing mold and rot. And it and won’t twist and buckle, creating thermal bridges where air will infiltrate. Furthermore, prefab houses are built by professionals under the watchful eyes of supervisors who are checking the work all along the process.

These advantages are all in addition to the shorter construction time and financial savings associated with building prefab.

Prefab Homes

Cost Advantages

Several years ago the Structural Building Components Industry compared the construction of a site-built house to a panelized one in a study called “Framing the American Dream.” The panelized house took substantially fewer hours to build, used less lumber, created far less scrap and cost 16 percent less in labor and materials. Another study from a coalition of Philadelphia building experts, titled “Going Mod,” found a $32 savings per square foot using modular rather than site-built construction.

Over the years that I have been writing books on prefab, I have became more and more conscious of the importance of building houses with healthier environments and increased energy efficiency. Heating and cooling houses currently accounts for about 40 percent of the energy used in this country. With the environmental and political ramifications of acquiring energy from fossil fuel, I thought there must be a way to build houses that require less.

I have also been influenced by the recent power outages in the Northeast. Twice in the last six months, it took Connecticut Light and Power almost a week to restore power to my neighborhood. I began to consider how wonderful it would have been to be somewhat independent of the grid (the power utility) and be able to sustain at least some of the energy in our house during those outages. Through my research I’ve found numerous ways of limiting the need for energy in the home and several ways to create energy without the need for fossil fuel.

These options would make the house more comfortable and save on energy costs. According to a report last week by McGraw-Hill Construction, the green housing market is growing rapidly, having tripled since 2008. Green homes, which comprised 17 percent of new residential construction last year, are expected to increase by 29 percent to 38 percent of the market by 2016.

Prefab to Prefabulous

About a year ago I decided to write a book profiling prefabricated houses that require minimal energy. I thought it would probably be difficult to find enough of these houses in this country. To my delight, I found more than I could possibly include in one book.

The houses I found are varied in style, location and method of construction — but they are all smaller, very energy and water efficient, with healthy environments, and with a more sustainable use of materials. The result of this search is “Prefabulous + Almost Off the Grid: Your Path to Building an Energy-Independent Home.” (It’s scheduled for released by Abrams in October and is available for pre-order this week.)

I hope you will send in your questions and follow this blog to learn more about the advantages of prefab and environmentally friendly and energy efficient home construction.

Sheri Koones is an award-winning author of five books on home construction, with the last several focusing on prefabricated construction. Her most recent book is “Prefabulous + Sustainable.” Her latest work, “Prefabulous + Almost Off the Grid,” will be released in October 2012 by Abrams.

See also:
WATCH: The Pros and Cons of Buying a New-Construction Home
Don’t Be Surprised by Costs of Homeownership

Homebuyer’s Remorse: How to Avoid and Cure

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Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
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Buy the Vacant Foreclosure Next Door? Even With the Money, It’s Not Always So Easy

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Lisa Cocuzza buying foreclosure

What would you do if the vacant foreclosure next door was falling into disrepair and threatening your own home’s value? If you’re like Homosassa, Fla., resident Lisa Cocuzza, you’d try to buy it and fix it up.

That was Cocuzza’s plan five years ago when a for-sale sign went up at a vacant foreclosure across the street. Worried that the property would continue to deteriorate and soon blight her neighborhood, she offered to pay its full asking price of $69,000. But three days before the deal was to close, she said, it fell through because of problem involving the lenders who owned the home.

This seems to be a typical story line for homeowners across the country — many of whom are growing so desperate to preserve their neighborhoods that they’re willing to buy the foreclosure next door — only to fail. The foreclosures then tend to continue to sit empty and chip away at the surrounding homes’ values.

An estimated 1.5 million homes in the U.S. are bank-owned or in some stage of foreclosure, according to online foreclosure marketplace RealtyTrac. But the complications of buying one can make them difficult, even impossible, for an average homebuyer to purchase.

In Cocuzza’s case, there was more than one mortgage on the foreclosed home that she was trying to buy. A second financial institution had a $14,000 lien, or claim, on the home, which meant that this unpaid debt would have to be tacked onto the $69,000 asking price. This didn’t come to light until Cocuzza was about to close on her purchase. That’s when she found out she’d have to pay $83,000 for the home — an amount she couldn’t afford, she said.

Ever since that deal fell through five years ago, Cocuzza said, the home has remained vacant and hasn’t been re-listed for sale. She’s continued to do what she can to keep the property from total disarray, she said. She clips bushes, pulls weeds and has hung a bird feeder and wind chimes.

“I kind of go over there if I see any trash that might have blown into the yard,” said Cocuzza. “I put out little decorations and keep it up as best I can.”

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Other homeowners who have tried to buy foreclosures in their neighborhoods have faced other costly surprises.

A homebuyer in Taylorsville, Utah, lost the chance to buy a dilapidated foreclosure in his neighborhood because the bank wouldn’t negotiate on needed repairs, said Darnell DeBrule, an employee at Deseret First Credit Union of Salt Lake City. The buyer was DeBrule’s client.

DeBrule said the buyer “feared an investor would purchase the property as-is and have little-to-no concern regarding its effect on the neighborhood as a whole,” so the buyer offered to pay the full asking price for the foreclosure, as well as an inspection. That’s when things went south.

The inspection found the home to be badly contaminated with hazardous chemicals used to make the street drug, methamphetamine. When the buyer suggested splitting the cost of rehabilitating the home, the bank shut down the deal, DeBrule said.

Related: Vacant Homes Plague Neighbors as Lenders Drag Feet

The bank said it was “not putting in a dime” and now would only accept a cash offer, DeBrule recalled. That meant the buyer, who was planning on taking out a mortgage to buy the home, could no longer afford it. And it left the door open for a cash-rich investor to swoop in and snap it up.

Banks mostly prefer offers from investors anyway, said Marty Boardman, chief financial officer of Rising Sun Capital Group, a home investor based in Nevada. That’s because they have deeper pockets and are more capable of paying in cash — and cash deals, which carry fewer contingencies, are more likely to close, he said.

Their competitive advantage can be frustrating to homeowners like DeBrule’s client, since “investors don’t necessarily care about neighborhood vitality,” said Douglas Robinson, a spokesman for NeighborWorks America, which rehabs foreclosures and sells or rents them to low-income Americans.

Along with stiff competition from investors, those who want to buy foreclosures in their neighborhoods sometimes encounter another — surprising — hurdle: just finding a home’s true owner.

Mark Hankins, of Land O’ Lakes, Fla., wanted to create a neighborhood trust to buy a nearby home that’s languished in foreclosure purgatory for two years, but public records on it proved a dead end, he said. Six financial institutions have been involved in foreclosure proceedings on the property since JPMorgan Chase initiated foreclosure on it in 2009, the records show, and the law firm that manages the trust in possession of the home no longer exists.

“If somebody diligent wanted to make an offer to the current beneficial owner,” Hankins said, “nobody has any idea how to contact them to make the offer.”

And you’d think that if anybody could find the owner, Hankins could. He’s a foreclosure attorney who wrote a book about how to cope with debt.

In the success story of Lori Hiscock, though, it’s easy to see why some homeowners like Hankins would like to take foreclosures under their wings. Hiscock bought a foreclosure around the corner from her home in Granger, Ind.

The home had begun to show signs of decay more than a year ago, and someone had “put a black Christmas tree on the front porch and wrote ‘bah humbug,’ ” Hiscock said.

Though Hiscock doesn’t consider herself an investor, she bought the home in cash in June and spent $15,000 to rehab it. Neighbors were worried about the home being rented out after it sold, Hiscock said. But they warmed to the idea once they realized the owner lived nearby.

“We love the neighborhood, and we love the home, and we got to pick our new neighbors,” Hiscock said.

The entire neighborhood may benefit from Hiscock’s move. In one broad stroke, she removed an eyesore, fought off blight that threatened the home and propped up home values.

It also didn’t hurt that Hiscock was a savvy and desirable buyer: She works as a loan officer, and she had the money to buy the home without a mortgage.

“I wouldn’t have realized that making a cash offer, using a Realtor experienced in foreclosure sales, and making the offer without it being subject to any inspections would have made a difference,” she said, “if I didn’t know this process so well.”

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See also:
Coffee Shop Owner in Hot Water After Rehabbing City Grounds
Tenant Installs Surveillance, Now Faces Eviction
Snakes, Alligators and Other Exotic Animals Found Inside Brooklyn Apartment

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Source: http://realestate.aol.com/blog/2012/10/11/buy-the-vacant-foreclosure-next-door-even-with-the-money-its/

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Where to Snag Beach Homes on the Cheap

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We’re combining two of our favorite things: Summer vacations and discount houses using
RealtyTrac‘s recent list of the 10 best beach towns for buying foreclosures.

RealtyTrac’s ranking is based on the size of the discount that homebuyers can get in purchasing a foreclosure — compared to other residential properties in the same region. And ultimately, that could be the easiest way to choose between destinations like Marco Island, Fla., and Honolulu.

So if you’re thinking of owning your own little piece of a beach paradise, this could be your cheapest way in.

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