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Consumers may prowl for homes in 2012: Fannie Mae
Consumers may prowl for homes in 2012: Fannie Mae
• April 9, 2012 • 9:26am
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Dallas-Fort Worth Fails to Escape Housing Crisis
Filed under: News, Economy, Home Equity
Even as the Dallas-Fort Worth area pumps itself up for the excitement of the Super Bowl, it also is experiencing a housing crisis mega-bummer: Distressed home sales hit a new high in Dallas-Fort Worth in 2010, creeping into a record 16 percent of total properties sold by agents in this north Texas area. Dallas-Fort Worth had previously been the exception, a pocket of home-value stability in a nation bogged down by sagging house prices.
Sales of distressed homes — that is, short sales, or homes sold due to foreclosure— have grown steadily in north Texas, according to the gurus at Texas A&M University’s Real Estate Center. In 2003, only 5.7 percent of homes sold through real estate agents in the north Texas multiple listing service were “distressed transactions.” Now, Dallas Realtors say the real number is actually much higher.
Not all distress or short home sales are identified in the MLS, and if a real estate agent was not involved in the transaction, it will not be included in statistics. The median price of distressed homes sold in the Dallas-Fort Worth area last year was $57.20 per square foot, compared to $81.52 for non distressed houses.
Dallas broker Alicia Trevino says she thinks the numbers are much higher. The Dallas area has seen a dramatic increase in the last few months of distressed properties for sale or properties that are about to be distressed.
“We still have thousands of homes that are going to come up on the market, homes that were held in moratorium last fall because of the Robo-signing crisis,” says Trevino, who retooled
herself about a year ago to focus on luxury short sales in the venerable Park Cities area. “The existing home market is going to be hurt by the continued saturation of those distressed properties.”
National figures indicate that between 36 and 47 percent of all homes sold across the U.S. were distressed properties, and some experts go as high as 50 percent, making 2010 a banner year for distressed home sales. Consumers are seeing more real estate auctions than ever before. Banks often polish up then hand over their distressed properties to auction houses for quick liquidation sales. Investors are getting great deals out there at these auctions — some as low as 50 percent off the homes’ last listing price. Still, says Trevino, she doesn’t understand why sellers don’t just lower home prices and sell the properties before they get to the bank.
If Dallas/Fort Worth distressed sales are at 16 percent — or even 20 percent — of all local real estate transactions, that is still far below the national norm. While the Dallas market is not robust, it has not suffered as much as other bubble markets, nor has it lost as much in values. In fact, one recent report by the Real Estate Center indicated home values have actually risen in Dallas 1.2 percent, even when shadowed by all the distress. Texas law limits homeowners to how much they can borrow against their home, so far fewer owners are under water with huge home equity loans. And the market is extremely segmented. Certain higher income neighborhoods saw a flurry of real estate activity in December, and local experts think the spring market will be hopping.
Trevino thinks the existing home market is still going to be hurt by the continued saturation of distressed properties, but says that shouldn’t keep buyers away from the beach, so to speak. I think, she says, the next 12 months are going to be the final push. Even if you take a $100,000 bath on your home, think of it as moving equity if you can move up into a bigger home or blue chip real estate. And if interest rates start to creep higher, she thinks buyers will come out of the woodwork.
“I think we will have a great spring market,” says Dallas appraiser D.W. Skelton. “The sellers have gotten more realistic and dropped prices, and I think buyers are finally ready.”
For more insight on mortgages and refinancing see these AOL Real Estate guides:
- Mortgage Jargon in Simple Terms
- How to Get a Low Mortgage Rate
- When to Refinance
- Four Ways to Benefit From a Cash-In Refinance
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.
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Source: http://realestate.aol.com/blog/2011/02/02/dallas-fort-worth-fails-to-escape-housing-crisis/
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Is a 15-Year Mortgage Right For You?
By Jeff BrownAlthough the 15-year mortgage is invariably cheaper than the 30-year variety, it often gets little respect because of its larger monthly payments. Not so today. The 15-year deal is, in fact, quite appealing, offering substantial savings through rock-bottom rates.
Among the ideal candidates are homeowners who have plenty of equity and want to refinance at a lower rate. For them, the higher-principal payment on the 15-year deal may be easy to bear, allowing the borrower to focus on the low, low interest rate.
A BankingMyWay.com survey shows the average 15-year mortgage charging a scant 3.164 percent, versus 3.788 percent on the average 30-year loan.
The 15-year loan generally charges half to three-quarters of a percentage point less than the longer-term loan. But when the rates are this low, that margin is especially beneficial because it is bigger in relation to the overall rate.
At 3.164 percent, the 15-year loan charges 16.5 percent less than the 30-year deal. In June 2007, before the financial crisis, the 15-year charged 6.4 percent and the 30-year 6.73 percent. The 15-year, therefore, charged only about 5 percent less.
When the difference is very small, as in 2007, the 15-year loan does not provide enough savings to offset the big disadvantage: the larger monthly payment required to pay off the debt, or principal, in 15 years instead of 30. But today’s large margin relative to the overall loan rate can tip the balance in favor of the 15-year deal, so long as the payment is affordable.
At 3.164 percent, you would pay just under $700 a month for every $100,000 borrowed. While that is significantly more than the $465 you would pay to borrow for 30 years at 3.788 percent, the 15-year deal would dramatically cut interest charges over the life of the loan — to $25,729 versus $67,500 for the 30-year deal.
This makes 15-year loans especially attractive as a refinancing option for homeowners whose debt is not terribly large — people who have owned their homes for a number of years, for example.
In fact, financial experts generally recommend that in a refinancing, the borrower keep the term on the new loan to no longer than the time remaining on the old one. Otherwise, the savings from a lower rate will be offset by additional years of interest payments.
Is there a downside to the 15-year deal? As mentioned above, you’d pay about $235 more a month for every $100,000 borrowed. That’s not really money out of your pocket because it is a principal payment that reduces your debt. In other words, you would build equity in your home faster.
That $235 could go to other purposes, though. If you found an investment that could return more than the interest rate on the loan, it might make sense to invest instead. Payments toward mortgage principal can be thought of as a fixed-income investment with a yield equal to the mortgage rate. These days, earning more than 3 percent on a guaranteed investment is not bad, but someday it could look stingy.
More from TheStreet:
New Peer-To-Peer Trend: Direct Home Loans
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10 Cities Poised for Greatness In 2012
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Source: http://realestate.aol.com/blog/2012/06/19/is-a-15-year-mortgage-right-for-you/
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‘Mortgage Prof’: 5 Reasons Banks Would Rather Foreclose
Filed under: News, Advice, Economy, Financing, Refinancing, Selling, Credit
“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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Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find homes for rent in your area.
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Has HAMP Gotten Any Better at Helping Distressed Homeowners?
Filed under: News, Financing, Election 2012
Before the housing bubble burst, Anthony Ugaro lived across from a country club in Bloomfield, N.J. “I was playing golf every day. I thought I was a duke,” he said. But the good life began to unravel for Ugaro, 65, when the military veteran lost his job at an electronics company in 2009. Soon after, he was diagnosed with heart disease, which hampered his ability to work and to keep up with mortgage payments.
Suddenly facing foreclosure, Ugaro twice ignored his doctor’s advice and took on part-time jobs to make ends meet. His wife, Judy, currently works three jobs, he said, and they have exhausted $55,000 in savings, all to stay afloat.
The Ugaros (pictured above) are the kind of homeowners that the government was trying to help with its flagship housing aid program. But three years later, after repeated efforts to work with their lender through the Home Affordable Modification Program, they’ve joined millions of others who’ve had their HAMP applications denied, for reasons many of them find hard to understand. And the Ugaros have just about given up hope.
‘We Can’t Help You’
Ugaro said he first applied for a mortgage modification under HAMP about a year ago. Wells Fargo told him that his household did not earn enough monthly income to qualify, he said, so Ugaro, who has six stents in his heart, got a part-time job as a crosswalk guard that he said paid $324 a month.
He then reapplied for a modification, but said he was confounded by the bank’s response: “They said, ‘Now you’re making too much. We can’t help you.’
“I could see why Jesse James robbed banks,” said Ugaro, who finally stopped paying his mortgage two months ago and is now trying to sell his home in a short sale.
He is one of an estimated 2.8 million distressed borrowers who have been denied a permanent modification under HAMP, according to the Government Accountability Office. By many accounts, HAMP has not been adequately implemented by mortgage servicers.
The Ugaros’ story is a reflection of the still-marred HAMP application process more than three years after the program’s inception — both in the the way it’s so far failed to help many homeowners like them and the way it’s showing some improvement.
Overseen by the Treasury Department and funded by the Troubled Asset Relief Fund, HAMP was launched in 2009 to provide relief to a wide swath of homeowners facing foreclosure in the wake of the housing bust. The program is designed to lower monthly mortgage payments for distressed borrowers by either reducing interest rates, delaying payments, slashing loan balances or using some combination of the three.
The results of a ProPublica questionnaire in the summer of 2010 suggested that many distressed borrowers have had experiences similar to the Ugaros’ in attempting to qualify for HAMP. Two-thirds of respondents to the questionnaire who indicated that they were denied HAMP modifications said that they were given “different or conflicting reasons” for why they didn’t qualify.
Alys Cohen, a staff attorney at the National Consumer Law Center, said widespread mishandling of applications has plagued HAMP since it’s launch in spring 2009. While many HAMP denials are merited, many others are a result of mortgage servicers’ mistakes, and those servicers aren’t subject to fines for flouting HAMP guidelines, Cohen said.
“Until people can protect themselves directly in real time, servicers are not going to follow the rules,” and relief to homeowners will not flow as it should, she said.
Since the Obama administration introduced HAMP — which had reduced monthly mortgage payments by a median amount of $534.98 as of April 2012 — only about 1 in 4 applicants have received a permanent modification.
According to the Government Accountability Office, 2.8 million have had their applications denied or their trial modification canceled. To date, a little more than 1 million have received a permanent modification — but the program was aiming to have helped 3 to 4 times that.
Despite Rejections, Glimmers of Improvement
Despite a record of bungling HAMP applications, servicers still appear to have made strides in implementing the program over the last two years. Ironically, the Ugaros’ experience points to some of them.
Anthony Ugaro, who worked at an Army hospital during the Vietnam War, said that he only had to wait eight weeks for written denials to his applications from Wells Fargo. That’s a big improvement from ProPublica’s finding that homeowners waited an average of 14 months to learn if they’d qualified for HAMP. (Two-thirds of those ultimately rejected said that they never received written denials, according to the ProPublica survey.) A servicer is required to send a rejected borrower a written denial under HAMP program guidelines.
The Treasury Department’s most recent Making Home Affordable Program Performance report, released monthly, showed that servicers have, indeed, made progress in using HAMP, particularly in the area of income calculation.
For example, the Treasury found that more than 1 in 4 calculations of a borrower’s income performed by Wells Fargo when evaluating HAMP applications was at least 5 percent off the mark in the first quarter of 2011. Now, just 1 in 50 are off by that much.
Wrongly Denied?
Could the Ugaros have been mistakenly denied a HAMP modification? That’s unclear. But the couple does appear to meet all the main eligibility requirements of HAMP.
Their home is their primary residence, their mortgage was originated before 2009 and they owe less than $729,750 on their mortgage. (They owe about $230,000.) Anthony’s layoff and heart disease diagnosis also qualifies as a hardship.
They seem to qualify for a HAMP modification financially, too. The Treasury’s latest performance report said that the average household’s median mortgage payment before receiving a permanent modification equaled 45.4 percent of the household’s monthly income. When they applied, the Ugaros’ $2,400 monthly mortgage payment was between 50 and 60 percent of their $4,300 monthly household income.
If anything, the Ugaros would appear to have not been making enough money to qualify, but they were told the opposite for their second denial — that they made too much. That makes Wells Fargo’s decision on their applications difficult to digest for the couple.
A Wells Fargo representative told AOL Real Estate that the Ugaros’ income was, in fact, not a factor in denying them a modification, but didn’t offer further explanation.
“We are attempting to reach the Ugaros to discuss their current situation and will try to work with them on potential options for assistance,” said Vickee J. Adams, vice president of external communications at Wells Fargo.
Calculated income is just one factor included in a “net present value test,” which can make or break a modification for HAMP applicants. The test evaluates whether or not a mortgage’s investor — which often is not actually the mortgage’s servicer — is likely to make more money through a loan modification. (Mortgage investors can include hedge funds, institutions, pension funds and mutual funds, among other entities.)
If the test determines that a modification will save an investor money, then it must perform the modification. Otherwise, a servicer may choose not to. A failure by lenders to either correctly enter or calculate the test numbers has resulted in a substantial number of improper HAMP denials, according to the Office of the Special Inspector General for the Troubled Asset Relief Program and the Government Accountability Office.
Little Recourse for Rejected Borrowers
People denied HAMP modifications can call 1-888-996-HOPE and ask to speak to “MHA Help,” and “depending on the circumstances,” this may require a servicer “to re-solicit or re-evaluate impacted borrowers,” the Treasury Department told AOL Real Estate.
But Cohen said that only a small minority of aggrieved HAMP applicants know about the option and pursue it. She also said that even if the Treasury Department determines that a borrower was wrongly denied a modification, it has trouble holding a servicer’s feet to the fire. It cannot impose fines on lenders for breaching HAMP guidelines.
What the Treasury can do is nudge lenders in the right direction by withholding or reducing financial incentives. It withheld nearly $200 million from Bank of America and JPMorgan Chase, before releasing those funds as part of the “robo-signing” settlement. But that approach hasn’t cut it, Cohen said.
“To date, enforcement by the Treasury of HAMP guidelines has been abysmal,” she said.
The Consumer Finance Protection Bureau could potentially create rules and penalties that would impose more discipline on servicers, she said. In fact, the agency, which was created in 2011 as part of the Dodd-Frank Act, is in the process of crafting such rules right now.
A CFPB spokesperson told AOL Real Estate that the agency intends to enact a “means for a consumer to appeal denials for loan modifications programs.”
But Cohen wonders if such a rule will offer enough protection.
“The bottom line is, if those rules are not directly usable by the homeowner when they’re in foreclosure, they will have limited value.”
See also:
Principal Reduction: Is Debt Forgiveness Fair?
High-End Homeowners Racing to Sell Before Tax Cuts End
Michigan Man Buys County’s Entire Foreclosure Stock
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Find out how to calculate mortgage payments.
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Mortgage Rates Stay Low, But Homebuyers Aren’t Budging
Filed under: News, Economy, Financing, Refinancing
WASHINGTON — The average rate on the 30-year fixed mortgage fell to 4 percent this week, nearly matching the all-time low hit just one month ago.
Freddie Mac said Thursday that the rate on the 30-year loan dropped from 4.10 percent last week. Four weeks ago, it dropped to 3.94 percent — the lowest rate ever, according to the National Bureau of Economic Research.
The average rate on the 15-year fixed mortgage fell to 3.31 percent from 3.38 percent. Four weeks ago, it too hit a record low of 3.26 percent.
Mortgage rates tend to track the yield on the 10-year Treasury note. They yield fell this week after investors shifted money out of stocks and into the safety of Treasurys on fears that Europe’s debt crisis could worsen.
The Federal Reserve is also shifting more money into longer-term Treasurys to try to force mortgage rates lower. Treasury yields fall when buying activity increases.
Less Home Buying Than Expected
Federal Reserve Chairman Ben Bernanke said Wednesday that low rates have failed to spur the increase in home buying or mortgage refinancing that government officials had expected.
High unemployment and declining wages have made it harder for many people to qualify for loans. Many Americans don’t want to sink money into a home that could lose value over the next three to four years. And most homeowners who can afford to refinance already have.
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The number of Americans who bought previously occupied homes fell in September and is on pace to match last year’s dismal figures — the worst in 13 years.
Sales of new homes rose last month after four straight monthly declines. But the increase was largely because builders cut their prices. And it followed a peak buying season that was the worst on records going back nearly 50 years.
A Run on Refinancing
The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.
Rates have been below 5 percent for all but two weeks in the past year. Just five years ago they were closer to 6.5 percent. Ten years ago, they were above 8 percent.
The average rate on the five-year adjustable loan fell to 2.96 percent from 3.08 percent. That matches a record low hit four weeks ago.
The average rate on the one-year adjustable loan declined to 2.88 percent from 2.90 percent. It fell last month to 2.81 percent, the lowest on records dating to 1984.
The average rates don’t 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 the 30-year fixed mortgage fell from 0.8 to 0.7. The average fee on the 15-year fixed loan was unchanged at 0.7. The average fees on the five-year adjustable loan one-year adjustable loan were also unchanged at 0.6.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
Copyright 2011 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:
Open Houses of the Week: Hobnob With the 1 Percent
Where Are the Real Home Bargains? Not Where You Think!
Mortgage Giant Asks Taxpayers for Another $6 Billion
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Source: http://realestate.aol.com/blog/2011/11/04/mortgage-rates-stay-low-but-buyers-arent-budging/
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How Refinancing a Mortgage Can Affect Your Credit
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
More on AOL Real Estate:
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Find homes for sale in your area.
Find foreclosures in your area.
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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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Pending Homes Sales: Outlook Brightest in Nearly 2 Years
Filed under: News, Economy, Selling
WASHINGTON — The number of Americans who signed contracts to buy homes rose in January to the highest level in nearly two years, supporting the view that the housing market is gradually coming back.
The National Association of Realtors said Monday that its index of sales agreements rose 2 percent last month to a reading of 97. That’s the highest reading since April 2010, the last month that buyers could qualify for a federal home-buying tax credit and the last time the reading was above 100.
A reading of 100 is considered healthy.
The Realtors’ group also released revised data for 2011. That lowered November’s initial 19-month high of 100.1 to 96.9. But contracts have been markedly up since the summer when some feared a second recession loomed.
Contract signings typically indicate where the housing market is headed. There’s a one- to two-month lag between a signed contract and a completed deal.
A sale isn’t final until a mortgage is closed. One-third of Realtors complain that they’ve had at least one contract scuttled in January, December, November and October, according to the Realtors’ group. That’s up from 18 percent of Realtors in September.
Nonetheless, the gain in signed contracts supports other evidence of improvement in the housing market.
Pierre Ellis, an economist at Decision Economics, said home sales and building is in the midst of “ongoing general, but gentle, progress.”
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Builders are growing more optimistic after seeing more people express interest in buying this year. Sales of previously occupied homes are at their highest level since May 2010. More first-time buyers are making purchases. And the supply of homes fell last month to its lowest point in nearly seven years, which could push home prices higher.
Homes are the most affordable they’ve been in decades. And mortgage rates have never been cheaper.
Much of the optimism has come because hiring has picked up. More jobs are critical to a housing rebound.
“Easier mortgage lending criteria, very low rates and the improving labor market are all contributing to the beginnings of a real upturn in home sales, if not yet prices,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Sales may also be rising because of an April deadline for higher mortgage application fees for Fannie Mae and Freddie Mac-backed home loans. The government-controlled mortgage buyers own or guarantee about half of all U.S. mortgages and 90 percent of new loans, and have been telling customers to submit their applications now.
Analysts caution that the damage from the housing bust is deep and the industry is years away from fully recovering.
Potential buyers are holding off for a number of reasons. High unemployment and weak job growth have deterred many potential buyers. Loans are harder to come by. Lenders are requiring bigger down payments and strong credit scores to qualify.
Even those with good credit and stable finances are hesitant to buy out of concern home prices will keep falling.
Also see:
New Home Sales Dip, But Beat Expectations
30-Year Mortgage Rate Up, But Still Under 4%
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Source: http://realestate.aol.com/blog/2012/02/27/pending-homes-sales-outlook-brightest-in-nearly-2-years/
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DIY Party Decorations For Frugal Festive Fun
Why spend a ton of money to make a festive scene when you can create DIY party decorations with a personal touch for way less cost?
DIY Party Decorations With Tissue Paper
Tissue paper is easy to find anywhere, comes in every color you can think of, and makes great party decorations! Plus you can use any leftovers to wrap gifts. These decorations can be made for any kind of party, all year round, just by changing up the color theme.
The post DIY Party Decorations For Frugal Festive Fun appeared first on DailyPerk.
Source: http://dailyperk.perkstreet.com/diy-party-decorations/
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Underwater Mortgages Keeping Housing Market Afloat?
Filed under: News, Financing, Foreclosures
The more than 20 percent of U.S. homeowners stuck with “underwater” mortgages may be in a rough spot — but, believe it or not, that may be giving a boost to the housing market.
Though negative equity is forcing millions to stay put in homes that are worth less than their mortgages, it means fewer properties are going up for sale — and that’s driving up the prices of homes that are already on the market, according to a recent report by the analytics firm CoreLogic. The price increases could help spark a recovery by luring in more homebuyers keen on purchasing assets likely to appreciate in value, experts say.
“One of the reasons that inventory has fallen is because negative equity means that people aren’t putting their homes on the market because they’re underwater,” said Jed Kolko, chief economist of listing service Trulia. “Buyers are chasing a smaller number of homes and, therefore, are more likely to bid up prices.”
Of course, that’s not much consolation for Christy Mannering (pictured above with her family).
She’s been dying to move from her home in Bear, Del., since November 2007, when it was robbed.
“I was immediately like, ‘I want to get out of this neighborhood,’ ” said Mannering, who is a Web developer at the University of Delaware and also runs the blog Scrink.com.
But nearly five years later — and after the housing bust demolished national home prices — she’s still there, stuck in a mortgage that now costs $25,000 more than her home, and forced to continue living in a neighborhood that she considers dangerous.
Still, Mannering’s quandary, bizarrely, may spell hope for the real estate market in the short term.
“Paradoxically, as the flow of REOs [bank-owned properties] has slowed over the last 18 months, negative equity has become a positive force in real estate markets by restricting supply in the face of increasing demand,” wrote CoreLogic’s Sam Khater in the firm’s June MarketPulse report.
There’s also another market trend at play: Data show that fewer bank-owned homes are flowing onto the market, as lenders proceed cautiously with foreclosures in the wake of the “robo-signing” settlement and ramp up efforts to resolve distressed mortgages through loan modifications and short sales.
Both market influences have acted together to push down for-sale home supply to its lowest level since the housing bust, the CoreLogic report said.
That’s played a role in fueling a recent price recovery, experts say. CoreLogic’s Home Price Index, which was in line with some other indices, showed that home prices rose consecutively in March and April, something that “will rebuild confidence in many local markets,” Kolko said.
The difference between a market recovery nursed by price increases that are artificially propped up by a large number of underwater homes versus one that kicks into gear only after absorbing a pent-up supply of homes (the homes currently trapped by underwater mortgages) is “like whether you take a Band-Aid off quickly or slowly,” he said.
Negative equity is “not permanently reducing inventory,” he said. When homeowners are finally able to sell their properties for more, a larger number of them might flow onto the market, which would depress home values.
Mannering couldn’t care less about the effect of her family’s underwater mortgage on home prices — she just wants to come up for air. She has pursued a loan modification tirelessly, in an effort to give her family some financial breathing room.
“Currently, we are with Bank of America,” she said. “At first, we spoke to them, and they told us to call back in 60 to 90 days because they were too busy with other customers. We also spoke to someone there who told us to start missing payments and look into modifying our home-to-loan value ratio — but, again, that ruins your credit.”
Her fingers crossed, Mannering is on the hunt for lenders who may allow her to refinance under the Home Affordable Refinance Program, which allows some homeowners who are current on their mortgages to refinance Fannie Mae- or Freddie Mac-guaranteed loans to lower rates. But she and her husband must grapple with whether lowering their mortgage rate by a percentage point or two is worth the $5,000 in closing costs.
“Our situation may be helping other people in the market,” she said. “But it’s not helping us, and I have a funny feeling there is a high percentage of people in the very same sinking boat as we are in.”
See also:
Should Underwater Homeowners Just Walk Away?
Occupy D.C. Protesters Fail to Block Eviction
Extreme Home Makeovers: From Sorry to Stunning
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Source: http://realestate.aol.com/blog/2012/06/13/underwater-mortgages-keeping-housing-market-afloat/
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Fannie and Freddie Freeze Foreclosures for the Holidays
Filed under: News, Foreclosures
By Fannie Mae, Freddie Mac, and other mortgage providers have a Christmas present for struggling homeowners: They won’t get thrown out of their houses homes during the holiday season.
Fannie Mae and Freddie Mac will not foreclose on any homeowners between December 19 and January 2, according to statements on their web sites. Private mortgage providers, such as
“The holidays are meant for families to spend time together,” Terry Edwards, executive vice president at Fannie Mae, said in a statement.
That holiday spirit will only go so far. During the holidays, Fannie Mae and Freddie Mac acknowledged that they will
Read the full story at The Huffington Post.
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Also see:
Should You List Your Home During the Holidays?
5 Ways to Nab Autumn Buyers Before They Hibernate
Family Wrongly Booted From Home Returns To Wreckage
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‘Project X’ Copycat Revelers Allegedly Wreck $500,000 Home
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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Source: http://realestate.aol.com/blog/2012/03/15/project-x-copycat-revelers-allegedly-wreck-500-000-home/
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House of the Day: Living Large at the Jersey Shore
Thought Snooki and her partners cornered the market on conspicuous consumption? Then you haven’t seen this Jersey Shore mansion. With 22 rooms, a 15-car-garage and 650 feet of beachfront (provided Hurricane Irene didn’t do any re-landscaping), the place gives the reality-TV cast a run for their booze-soaked bills.
Located in Mantoloking, an uber-ritzy community “down the shore,” the home, listed at $16 million, has eight bedrooms, five bathrooms, and stunning views from multiple porches and decks, as well as a brick patio, pool and 200-foot dock.
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Robert Schwartz of Van Sciver Realtors has the listing.
Click on the pictures below to see some other mouth-watering residences in Mantoloking, N.J.:
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Got a tip for House of the Day? Know of an exceptional or unusual property currently listed for sale? Please email ann.brenoff@huffingtonpost.com with your suggestions and be sure to include links to listing details and photos. (Due to the volume of response, we unfortunately are unable to respond to each submission.)
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Young Real Estate Investor: Where to Stash Extra Cash?
Filed under: Advice, Investing, Refinancing
Andy Buman, 29, got interested in real estate a few years ago while working in construction. Since then, he has purchased two bank-owned single-family homes near Omaha, Neb., as rentals, and last fall bought a primary residence for himself and his fiancée, Valerie (both pictured at left). He has managed to save $20,000 in cash, and is looking for the smartest way to apply it.
Buman, an Iowa State graduate who now manages a call center, comes from a family of strivers. His great-grandfather emigrated from Germany and started the farm in Harlan, Iowa, where Buman grew up — and where his uncles and grandfather still raise 2,000 head of cattle and 1,000 acres of corn. (His dad went into banking.)
From the outset, Buman focused his real estate interests on a few small towns surrounding a retail distribution warehouse and a trucking center, about 25 miles from Omaha. The Omaha/Council Bluffs, Iowa metropolitan area had an unemployment rate of 4.9 percent in June, which explains how Buman managed to rent both homes five hours after listing them.
“There’s a lot of employment — services, farming, cattle, railroads, stores — it’s not hard to get a job here,” says Buman. “A lot of employees want to be close to work and the cost of living in these little towns is next to nothing.”
His first purchase was a two-bedroom, 900-square-foot home for $24,000. He invested $5,000 in repairs, rented it for $550 a month, and has already paid off the mortgage. Buman followed up with a four-bedroom 1,500-square-foot home. He paid $34,500, invested $7,000 in repairs and rented it for $700 a month. The home still has a mortgage balance of $16,500 at 5.5 percent.
Last fall, Buman and his college sweetheart, who are marrying later this month, bought a three-bedroom ranch 10 minutes from Omaha for $185,000. It’s close to family, and to the University of Nebraska Medical Center, where Valerie begins her residency next spring.
The home has a 30-year, fixed-rate mortgage at 4.25 percent, and a balance of $168,000. When the balance on the loan falls below $148,000, the couple can stop paying mortgage insurance, which costs $94 a month.
Buman’s question: With his extra $20,000, should he pay off the mortgage on the rental property? Pay down the single-family home to eliminate the mortgage insurance payment? Or consider another option?
See the full story at Daily Finance.
Also see:
College Town Real Estate Investments Score High Marks
Low Refi Rates Are Great, But Not for Everyone
5 Reasons Why Real Estate Deals Collapse
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Source: http://realestate.aol.com/blog/2011/09/08/young-real-estate-investor-where-to-stash-extra-cash/
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Why Your Next Home Should Be Prefab
Filed under: Design, News, Economy
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.
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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Source: http://realestate.aol.com/blog/2012/03/21/why-your-next-home-should-be-prefab/
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HARP Now Expected to Reach Twice as Many Homeowners
Filed under: News, Refinancing
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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Paul Ryan Favors Dissolving Fannie Mae, Freddie Mac
Filed under: News, Financing, Election 2012
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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Source: http://realestate.aol.com/blog/2012/08/14/paul-ryan-favors-dissolving-fannie-mae-freddie-mac/
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Hurricane Isaac: Tips for Protecting Your Home Against Damage
As Tropical Storm Isaac threatens to accelerate into a Category 2 hurricane targeting the Gulf Coast, it’s a reminder to homeowners in areas exposed to such destructive storms that they should always have measures in place to protect their homes from such severe weather.
Analytics firm CoreLogic said Isaac alone threatens nearly 270,000 homes worth a total of $36 billion, most of them in already storm-battered New Orleans.
Batten Down The Hatches
In the event that a hurricane does hit, make sure your property is ready to weather the storm by following these tips from ACE Private Risk Services.
o. Wash out all your rain gutters and exterior drains to avoid water backups. Water in gutters may not just spill over onto the ground — it could back up and cause water to seep into a home’s walls.
o. Install a battery backup system for your water pump to guard against flooding and interior damage. “When these storms come through, power lines are knocked down,” said Dale Tomlinson of ACE. “So it’s important that you do have a battery backup to keep that [pump] going while there’s water coming.” Having a backup generator is also a way to ensure that necessary equipment can continue to function in the event of a blackout.
o. Reinforce your windows with shutters, add heavy-duty hinges and deadbolts to doors, and make sure that roof sheathing can withstand strong winds. If wind bursts into your home, the risk of structural damage to the home’s roof and doors increases substantially. “The internal partitions of your home are not built to withstand positive and negative pressures from the exterior,” Tomlinson said.
o. Trim trees whose branches could fall and cause damage, and be sure to clear all items that could become projectiles during a storm. “Move any outdoor furniture that could become debris that would either float or cause damage,” Tomlinson said.
Make Sure You’re Covered
In order to safeguard your home’s value, you should make sure that you have homeowners insurance, flood insurance, and, in some cases, wind insurance.
Homeowners insurance usually covers wind damage and other hurricane-related losses. However, in some coastal areas especially prone to hurricanes, wind coverage may not be part of a policy, and you may have to purchase wind insurance from a different carrier. There is usually a deductible amount for named-storm wind damage, such as 2 percent of the value of the home, Tomlinson said.
Flood insurance covers water damage and can be obtained through the government’s National Flood Insurance Program. The government insurance, which has a $2,000 deductible for high-risk areas, may cover up to $250,000 in property damage and $100,000 in damage to personal belongings, depending on the premium you choose to pay. To receive coverage for damage beyond those two amounts, you can sign up for a supplementary policy with a private insurance company like ACE.
To make sure that you get the most protection out of your policy, you should be sure to take inventory of and document your belongings and property before the onset of a storm.
Use Know Your Stuff, a free insurance software provided by the Insurance Information Institute, to help efficiently take inventory and store records of your belongings. Doing so will enable you to speed the claims process and maximize your settlement if some of your possessions are damaged.
Filing a Claim
If your home sustains damage and you have insurance to cover it, you may contact your service provider to file a claim. To do this, you must provide evidence of the damage to your home and possessions by taking photographs of the property damage and making a list of damaged items with their date of purchase, value and, ideally, receipts.
When you and your insurer agree on the amount of damages, you should receive payment.
See also:
Underground Real Estate Boom: Bomb Shelter Sales on the Rise
Earthquake Preparedness: Are You Ready?
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Dallas-Fort Worth Fails to Escape Housing Crisis
Filed under: News, Economy, Home Equity
Even as the Dallas-Fort Worth area pumps itself up for the excitement of the Super Bowl, it also is experiencing a housing crisis mega-bummer: Distressed home sales hit a new high in Dallas-Fort Worth in 2010, creeping into a record 16 percent of total properties sold by agents in this north Texas area. Dallas-Fort Worth had previously been the exception, a pocket of home-value stability in a nation bogged down by sagging house prices.
Sales of distressed homes — that is, short sales, or homes sold due to foreclosure— have grown steadily in north Texas, according to the gurus at Texas A&M University’s Real Estate Center. In 2003, only 5.7 percent of homes sold through real estate agents in the north Texas multiple listing service were “distressed transactions.” Now, Dallas Realtors say the real number is actually much higher.
Not all distress or short home sales are identified in the MLS, and if a real estate agent was not involved in the transaction, it will not be included in statistics. The median price of distressed homes sold in the Dallas-Fort Worth area last year was $57.20 per square foot, compared to $81.52 for non distressed houses.
Dallas broker Alicia Trevino says she thinks the numbers are much higher. The Dallas area has seen a dramatic increase in the last few months of distressed properties for sale or properties that are about to be distressed.
“We still have thousands of homes that are going to come up on the market, homes that were held in moratorium last fall because of the Robo-signing crisis,” says Trevino, who retooled
herself about a year ago to focus on luxury short sales in the venerable Park Cities area. “The existing home market is going to be hurt by the continued saturation of those distressed properties.”
National figures indicate that between 36 and 47 percent of all homes sold across the U.S. were distressed properties, and some experts go as high as 50 percent, making 2010 a banner year for distressed home sales. Consumers are seeing more real estate auctions than ever before. Banks often polish up then hand over their distressed properties to auction houses for quick liquidation sales. Investors are getting great deals out there at these auctions — some as low as 50 percent off the homes’ last listing price. Still, says Trevino, she doesn’t understand why sellers don’t just lower home prices and sell the properties before they get to the bank.
If Dallas/Fort Worth distressed sales are at 16 percent — or even 20 percent — of all local real estate transactions, that is still far below the national norm. While the Dallas market is not robust, it has not suffered as much as other bubble markets, nor has it lost as much in values. In fact, one recent report by the Real Estate Center indicated home values have actually risen in Dallas 1.2 percent, even when shadowed by all the distress. Texas law limits homeowners to how much they can borrow against their home, so far fewer owners are under water with huge home equity loans. And the market is extremely segmented. Certain higher income neighborhoods saw a flurry of real estate activity in December, and local experts think the spring market will be hopping.
Trevino thinks the existing home market is still going to be hurt by the continued saturation of distressed properties, but says that shouldn’t keep buyers away from the beach, so to speak. I think, she says, the next 12 months are going to be the final push. Even if you take a $100,000 bath on your home, think of it as moving equity if you can move up into a bigger home or blue chip real estate. And if interest rates start to creep higher, she thinks buyers will come out of the woodwork.
“I think we will have a great spring market,” says Dallas appraiser D.W. Skelton. “The sellers have gotten more realistic and dropped prices, and I think buyers are finally ready.”
For more insight on mortgages and refinancing see these AOL Real Estate guides:
- Mortgage Jargon in Simple Terms
- How to Get a Low Mortgage Rate
- When to Refinance
- Four Ways to Benefit From a Cash-In Refinance
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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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Miami-Dade Condo Market: Sales Increase as Inventory Drops
Condos sales declined 9% over the past year in Miami-Dade … Inventory is down by 30%. That said though, interestingly enough, condos selling between $300,000 and $999,999 have shown a 32% increase … (Spring 2011 through Spring 2012).  And in the $1 million plus range  there was an 11% increase in sales. As far as distressed property is concerned, 4% of the condos currently on the […]
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Foreclosure Victims Plan Protests Across U.S.
Filed under: News, Economy, Financing, Foreclosures, Home Equity, Refinancing, Selling
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.
Find foreclosures in your area.
Find rentals 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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Where Are the Real Home Bargains? Not Where You Think!
Filed under: News, Advice, Buying, Financing, Foreclosures, How To, Investing, Renting, Selling
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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More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
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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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Vacant House Targeted by Squatters, Scammers and Thieves
Filed under: News, Advice, Foreclosures
Empty houses — those either awaiting foreclosure or where the owners have moved out for other reasons — might as well have a “kick me” sign on them. Actually, make that “vandalize me” sign. They are frequently the targets of squatters who move in illegally, scammers who claim they own them and rent them out to unsuspecting tenants, or just plain old garden variety thieves who break in and steal the valuables right down to the copper plumbing and refrigerator.
Or, in the case of one Suffolk County house, all three. According to a story on ABCLocal News, the Bay Shore home of Richard and Lisa Scott slipped into foreclosure in 2009. The Scotts said they gave their lender, Bank of America, three short sale offers that went nowhere fast, with the bank citing incomplete paperwork that the Scotts and their agent insist was delivered. The Scotts, meanwhile, moved out to rebuild their lives in the South.
Shortly thereafter, Scott’s brother reported driving by and seeing a squatter living in the house, with the air conditioner running and lights blazing. Once the squatter was removed, someone ran a scam ad on Craigslist and leased out the house, collecting $4,000 from the unsuspecting tenant. And then, to add insult to injury, with the squatter and tenant gone, vandals broke into the house and stripped it bare, leaving holes punched in the walls and stealing the copper plumbing, the appliances, even the kitchen sink.
According to the report, BofA is now trying to hasten the foreclosure process.
As for those who may be forced to leave a home vacant, here are some tips to make sure this doesn’t happen to you.
1. Try not to move out.
Vacant homes have increasingly been targeted by squatters. The bank can’t force you out of your home until they foreclose. Until then, you own it — no matter how many missed payments you have. If you must leave, consider renting it out. Let the tenant know you are pursuing a short sale and that the home may be foreclosed on, but that you are giving them a discount in the fair market rent in exchange for maintaining the property.
2. Notify the local police and utilities that the home is going to be vacant.
Utility companies make it possible for squatters to set up shop. By presenting a doctored up lease agreement and some sort of “proof” of ID, anyone can get an account established and the electricity turned on in your home. By calling and putting it in writing that the house is going to be vacant, you are at least alerting the utilities — which likely won’t make a whit of difference.
3) Let your neighbors know.
Nobody feels good about saying they are losing their home. But with it happening to so many, no one will be surprised. If the neighbors know that the house will be empty, they can keep an eye on it and report any suspicious activity to you and the police. In exchange, maybe you want to hire their kid to keep the grass cut and the yard tidy.
4) Stop thinking this isn’t really your problem.
Yes, you fully expect that the bank is going to foreclose on you and are saying to yourself, “Why should I care?” Look at the Scotts’ example. They were sickened to return to their house — which they still own and are still responsible for — and find the damage.
Also see:
Realtors’ Latest Challenge: A Surge of Squatters
Woman Faces Foreclosure on Home She Bought for $1
Protesters ‘Liberate’ Foreclosed Homes
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
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Tips for Choosing Home Builders
If you have decided to build your next home, congratulations! You will have plenty of crucial decisions to make within the upcoming months from where to build your home to what colour to paint the master bedroom walls. The first decision to make, of course, is what builder to hire. There are dozens of different home builders […]
Source: http://www.brothernwla.org/tips-for-choosing-home-builders/
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The New Homeless: Living Behind the Wheel
Filed under: News, Foreclosures, Lifestyle, Other, Renting
During the Great Depression, people who were forced to live in their cars were known as “Ford families.” Today, they go by the far more impersonal name of the “vehicular homeless,” and you can count 45-year-old Carey Fuller and her two daughters, 8 and 17, among them.
The Fullers (pictured above) became homeless in April 2004 when Carey lost her job in the financial services sector in Seattle. With the job loss came a move from a three-bedroom apartment into a two-bedroom — but that wasn’t enough to cut expenses. Seeing what was waiting for her around the corner, Fuller took her final bit of income, a tax refund, and used it to buy an RV that she and her girls could live in. After a while, even gas and maintenance on the Winnebago became more than she could afford, so she traded down for a minivan. Fuller takes whatever work she can find, often landing part-time jobs. She also blogs about her life as a homeless mother living in a van.
As the economy continues to circle the drain and the number of foreclosures rises, more and more people are following in Fuller’s tracks. Some cities, like Venice and Palo Alto in California, have even created parking areas for people who live in their vehicles.
“Cars are the new homeless shelters,” says Joel John Roberts, CEO of PATH (People Assisting the Homeless) Partners, the largest services provider for the homeless in Los Angeles County. Car and van dwellers don’t show up in U.S. Census Bureau data because census workers don’t knock on car windows, Roberts says.
How They Got There
How did so many families wind up sleeping in cars, vans and RVs? In most cases, they were hit with a job loss or health crisis that cost them their home. The move from roof to backseat is often swifter than expected, and in the case of those whose homes have been foreclosed, there is often a sense of disbelief that the actual day of eviction will come. Departures are often fast and furious, with things thrown into a van. Often, the newly evicted don’t travel far; they camp out in the neighborhood where they lived. They quickly learn which public parks leave their restrooms unlocked and that joining the local YMCA provides access to a shower.
In some cases, it’s divorce, not unemployment, that puts people in their cars at night. Rudy Salinas, director of outreach for PATH, recalls finding a man living in his car in a supermarket parking lot a few months ago. The man had a stack of neatly dry-cleaned uniforms next to him, which he wore to work each day. But at night, separated from his wife and unable to support two households, he slept in the market’s parking lot.
Salinas said that PATH did its own census of the homeless population in Hollywood, Calif. They counted 748 people without homes; 151 of them were car dwellers.
“In my 19 years of doing outreach, I have never seen such a spike in numbers like the one in the past 18 months,” he says.
Carey Fuller, the single mother in Seattle, advocates for the homeless while being homeless herself. She says that she parks “anywhere I can” at night, picking spots near foreclosed homes to avoid police detection. Her daughters do their homework in the school library and they do laundry in public laundromats. Meals are taken at church soup kitchens or purchased in convenience marts that have microwaves to heat things up. She lives on an inconsistent child support payment of $150 a month and $500 a month in food stamps for the three of them. Showers are taken at the community pool; on weekends, they hang out at the library where there are many free events.
She gave up trying to use the overtaxed housing assistance system, because of the long waiting lists for apartments.
Is she just a job away from being able to rent an apartment? Fuller says it isn’t as simple as that. Landlords discriminate against the vehicular homeless, she says, and demand to see a current rental history. After sleeping in the car for nearly eight years, she doesn’t have one.
She’s been doing this for so long that it’s become a way of life.
“My life feels normal to me,” she said, “We live just like every other family except we sleep in the minivan.”
A New Community
Car and van dwellers have formed a community of their own, often exchanging survival tips online. Fuller has taught people how to make a “coffee can cooker” on Facebook.
For a long while, the Wal-Mart Stores chain was known for its tacit willingness to let RV-ers use its parking lots overnight. In the evening, the campers served as a de facto security force, making sure that no one did anything to give the police reason to come calling. In the morning, the campers frequented the store, often buying their day’s food and supplies there. Gradually, more and more Walmarts became less hospitable to the community. Word quickly spread among the van dwellers about which ones you could park safely in without getting in trouble.
Warm climates tend to draw those living in their vehicles, for the obvious reasons. Southern California, Florida, Arizona and Nevada are popular among the displaced, although many people initially try to stay close to the spot where they fell. They want to keep their kids in the same school, stay close to family and friends. And they lack the money for gas to crisscross the country without direction or purpose.
Salinas tells of the single mother who works at a minimum-wage job and has her 5-year-old son sleep in her sister’s Section 8 apartment. She herself sleeps in the car out in front of the apartment each night, fearing that her presence inside would violate her sister’s HUD-landlord agreement, which limits the number of adults allowed. She doesn’t want to cause her sister to become homeless too, Salinas said. It’s not illegal to sleep in your car, by the way, unless a municipality makes it so.
As for today’s “Ford families,” it’s not without some irony to give them the moniker. Although Henry Ford did help a small number of distressed families by giving them loans and some land to work, he also laid off thousands more. And he deeply angered many with public comments about how the unemployed should do more to find work for themselves.
Also see:
Detroit Mom Offers to Trade Her House for a Car
Protesters ‘Liberate’ Foreclosed Homes
Squatting: Social Menace or Economic Necessity?
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More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find rentals in your area.
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Source: http://realestate.aol.com/blog/2011/11/23/the-new-homeless-living-behind-the-wheel/
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Thinking About Investing in Real Estate? Take 5 Tips From a Pro
Filed under: News, Buying, How To, Investing
With home prices and mortgage rates surfing the bottom of the real estate trough, it’s no surprise that folks with money to spend are jumping into the investment market. According to a recent study by Move.com, real estate investors are buying three houses for every one house bought by someone for their personal use. And it’s a trend that’s likely to continue for the foreseeable future. So AOL Real Estate invited the experts from BiggerPockets blog to help our readers understand the opportunities–and pitfalls–around real estate investing. In this column, veteran investor Michael Zuber explains what he would do if he were starting out today.
The very first thing I would do is get down on my knees and thank my lucky stars to be beginning my investment career at absolutely the best time of our lifetime. Remember, fortunes are made by investing at depressed levels and at the bottom or near bottom of cycles.
Step One: Analyze Your Market & Learn What Deals Really Are
The next thing I would do is get off my butt and start doing my basic homework. I would go out and see no less than 50 and probably 100 properties in my investment area of choice. I am not kidding! I would immediately build a spreadsheet with data on no less than 100 properties. Things like Prices, Expected Rents, Repair Budgets, etc. This would give me the basis or foundation to understand what is a good deal, what is a bad deal and what is a great deal.
Step Two: Establish Your Deal Selection Criteria
After I have built my basic understanding of the market I would decide on what criteria I want to use to decide on what is and isn’t a good deal. I recommend every investor pick one metric that is easily transferable between property types. For me that metric is “yield,” or my expected return on all cash outlaid to secure and rehab a property. Today I personally look for expected yields in excess of 20% in my market.
Step Three: Start to Make Offers
After understanding my market and deciding on my criteria for identifying a great deal I would start making offers on properties that met my criteria. I would hold fast to my criteria and not let bidding wars drive up prices. In fact, you should only expect to get 1 out of every 10 properties you make an offer on. If your success rate is higher than that I believe you are offering too much on your properties.
By following this strategy I am convinced I could secure four investment properties with government-backed loans inside of 90 days and secure 10 properties inside my first year. Every property I bought would have a 30-year fixed interest rate and I would be a very happy man.
As an Alternative: Find Passive Real Estate Investment Opportunities
Now if my market didn’t offer these types of returns or I didn’t have the time to devote to learning a new market I would still find away to participate. I would find an investor with a proven track record, a simple-to-understand process and become a passive investor. This would insure a decent return with a lot less headaches, reduced risks and still give me the upside I want.
In the end if I were starting today I would not let this investment cycle pass me by. I would become a very active investor in my market and if my market didn’t offer returns I would find a way to be a passive investor in another market that offered great returns.
Michael Zuber is an active buy-and-hold real estate investor who still has a full-time job. Michael is not an agent or broker, and simply uses the internet and agent relationships to drive his business. He currently averages at least one deal a month and has developed laser focus on his 5-step process. You can learn more about the process and past deals at www.wealthbuildingpro.com. This post originally appeared at BiggerPockets.com.
See also:
Tempted to Invest in Real Estate? Read This First
College Town Real Estate Investments Score High Marks
Young Real Estate Investor: Where to Stash That Extra Cash?
More from BiggerPockets:
Deciding When to Sell Your Rental Property
Are Home Inspections Necessary for Real Estate Investors?
More on AOL Real Estate:
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.
Photo: Images of Money, flickr
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Satisfying Services from Verizon
People who want to make sure that they are working with best mobile phone providers are now welcome to seek help using the internet. You can find lots of comments and feedbacks about different mobile phone providers in your country which are reliable and perfect for your needs. When you are located at United States […]
Source: http://www.brothernwla.org/satisfying-services-from-verizon/
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5 Foreclosure Flip Tips From the ‘Flip Men’
Filed under: News, Advice, Foreclosures, Investing, Lifestyle
AOL Real Estate asked Utah-based real estate investors Doug Clark and Mike Bard, whose show “Flip Men” premieres this week on Spike TV, for tips on how to flip a foreclosed home. Here’s what they had to say to novice investors:
1. Pick a property that is well within your means.
Don’t allow yourself to get too overextended on the property. Way too often, we have seen people show up at a foreclosure auction and then after one bad deal, their own house is in foreclosure. Everything will take more time and money then you anticipate, so don’t bite off more then you can chew.
2. Prepare to break in.
Foreclosed homes don’t come with keys or contracts. It is up to you to find a way in. Our favorite methods are: Slip the lock with a credit card, lift a window, lift the garage, put your hand through a doggy door and unlock the door from within, climb on the roof and look for an open window.
Get creative and have fun with this step! If you want a set of keys to your new property you need to make your own or call a locksmith and pay $150 to get the job done. Make sure you research the local laws regarding abandoned property. You may have to store any items you find in the house for a period of time before they are yours. Former owners almost never come back for their items, so it’s not out of the question to find cash, furniture, collectibles, firearms and even vehicles.
3. Check everything.
Most foreclosures were abandoned. These homes have many issues, so check all the systems thoroughly. The last thing you want is to find out that the roof is bad or the furnace needs to be replaced the day before closing.
A great tip: Speak to the neighbors. You would not believe how much they know about the houses around them. Don’t avoid disclosing bad news with the house, because the people you sell to will notice everything. Budget for contingency items because they are always there, especially in foreclosures.
4. Tour other houses for sale.
Take an afternoon and tour two or three homes similar to the one you hope to flip. This is your direct competition, so view it that way. How is the curb appeal, paint colors, smell, clutter, layout, backyard, etc. This is especially important if you are new to the business and don’t have the same reference points that a professional flipper does.
5. Price aggressively.
It’s easy to overprice a listing, it’s difficult to under-price one. If you under-price the property, you will get a lot of attention and showings fast, and people will compete for the house. Set the price to move. If you are not getting showings and no one is calling to see the house, then it is priced too high. If you are getting a lot of attention and people are walking through but no offers are being made, then the price is right, but there is something wrong with the house. Call the agent for details and don’t be afraid to ask why the buyers are passing on your house.
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Also see:
Mansion or Meth House? Flip Men Want to Know
Viewpoint: Feeling Guilty About Buying a Foreclosure?
‘Mortgage Prof’: 5 Reasons Banks Would Rather Foreclose
Tempted to Invest in Real Estate? Read This First
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More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
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Source: http://realestate.aol.com/blog/2011/10/25/5-foreclosure-flip-tips-from-the-flip-men/
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Viewpoint: Where’s Housing in the ‘Occupy’ Protests?
Filed under: News, Economy, Foreclosures, Credit
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
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
See celebrity real estate.
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Source: http://realestate.aol.com/blog/2011/10/05/viewpoint-wheres-housing-in-the-occupy-protests/
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Hurricane Isaac: Tips for Protecting Your Home Against Damage
As Tropical Storm Isaac threatens to accelerate into a Category 2 hurricane targeting the Gulf Coast, it’s a reminder to homeowners in areas exposed to such destructive storms that they should always have measures in place to protect their homes from such severe weather.
Analytics firm CoreLogic said Isaac alone threatens nearly 270,000 homes worth a total of $36 billion, most of them in already storm-battered New Orleans.
Batten Down The Hatches
In the event that a hurricane does hit, make sure your property is ready to weather the storm by following these tips from ACE Private Risk Services.
o. Wash out all your rain gutters and exterior drains to avoid water backups. Water in gutters may not just spill over onto the ground — it could back up and cause water to seep into a home’s walls.
o. Install a battery backup system for your water pump to guard against flooding and interior damage. “When these storms come through, power lines are knocked down,” said Dale Tomlinson of ACE. “So it’s important that you do have a battery backup to keep that [pump] going while there’s water coming.” Having a backup generator is also a way to ensure that necessary equipment can continue to function in the event of a blackout.
o. Reinforce your windows with shutters, add heavy-duty hinges and deadbolts to doors, and make sure that roof sheathing can withstand strong winds. If wind bursts into your home, the risk of structural damage to the home’s roof and doors increases substantially. “The internal partitions of your home are not built to withstand positive and negative pressures from the exterior,” Tomlinson said.
o. Trim trees whose branches could fall and cause damage, and be sure to clear all items that could become projectiles during a storm. “Move any outdoor furniture that could become debris that would either float or cause damage,” Tomlinson said.
Make Sure You’re Covered
In order to safeguard your home’s value, you should make sure that you have homeowners insurance, flood insurance, and, in some cases, wind insurance.
Homeowners insurance usually covers wind damage and other hurricane-related losses. However, in some coastal areas especially prone to hurricanes, wind coverage may not be part of a policy, and you may have to purchase wind insurance from a different carrier. There is usually a deductible amount for named-storm wind damage, such as 2 percent of the value of the home, Tomlinson said.
Flood insurance covers water damage and can be obtained through the government’s National Flood Insurance Program. The government insurance, which has a $2,000 deductible for high-risk areas, may cover up to $250,000 in property damage and $100,000 in damage to personal belongings, depending on the premium you choose to pay. To receive coverage for damage beyond those two amounts, you can sign up for a supplementary policy with a private insurance company like ACE.
To make sure that you get the most protection out of your policy, you should be sure to take inventory of and document your belongings and property before the onset of a storm.
Use Know Your Stuff, a free insurance software provided by the Insurance Information Institute, to help efficiently take inventory and store records of your belongings. Doing so will enable you to speed the claims process and maximize your settlement if some of your possessions are damaged.
Filing a Claim
If your home sustains damage and you have insurance to cover it, you may contact your service provider to file a claim. To do this, you must provide evidence of the damage to your home and possessions by taking photographs of the property damage and making a list of damaged items with their date of purchase, value and, ideally, receipts.
When you and your insurer agree on the amount of damages, you should receive payment.
See also:
Underground Real Estate Boom: Bomb Shelter Sales on the Rise
Earthquake Preparedness: Are You Ready?
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Find homes for sale in your area.
Find foreclosures in your area.
See celebrity real estate.
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Mortgage Rates Drop to Record Lows for 6th Straight Week
Filed under: News, Financing, Refinancing
By Marcy Gordon
WASHINGTON — Average U.S. rates on 30-year and 15-year fixed mortgages this week fell to fresh record lows for the sixth straight week. Cheap mortgages continue to help boost prospects for home sales this year.
Mortgage buyer Freddie Mac says the average rate on the 30-year loan dropped to 3.67 percent. That’s down sharply from 3.75 percent last week and the lowest since long-term mortgages began in the 1950s.
The 15-year mortgage, a popular refinancing option, declined to 2.94 percent. That’s down from 2.97 percent last week.
Rates on the 30-year loan have been below 4 percent since early December. The low rates are a key reason the housing industry is showing modest signs of a recovery this year.
A drop in rates could also 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.
A Federal Reserve survey issued Wednesday showed the economy growing moderately in most regions of the country this spring as companies continued hiring. Manufacturing and home sales improved in most of the Fed’s 12 regional districts, as did residential and commercial construction.
In April, sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence in the market, breaking ground on more homes and requesting more permits to build single-family homes later this year.
Mortgage applications rose by 1.3 percent during the week ended June 1, the Mortgage Bankers Association reported Wednesday, mainly because more people applied to refinance their homes. Applications to buy a home actually fell for the fourth straight week.
A better job market also has made more people open to buying a home. But a dismal jobs report for May from the government last Friday fanned fears that the economy is sputtering.
U.S. employers created only 69,000 jobs in May, the fewest in a year, and the unemployment rate ticked up.
The Labor Department also said the economy created far fewer jobs in the previous two months than first thought. It revised those figures downward to show 49,000 fewer jobs created. The unemployment rate rose to 8.2 percent in May from 8.1 percent in April, the first increase in 11 months.
The pace of home sales remains well below healthy levels. Economists say it could be years before the market is fully healed.
Many people are 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.
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note, which fell last week to a 66-year low. 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.
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, down from 0.8 last week. The fee for 15-year loans also was unchanged at 0.7 point.
The average rate on one-year adjustable rate mortgages rose to 2.79 percent from 2.75 percent last week. The fee for one-year adjustable rate loans was steady at 0.4.
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.
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See also:
Housing Prices and Existing-Home Sales Rise in April
Senator’s Mortgage Trouble Highlights Positive Housing Trend
Follow us on Twitter at @AOLRealEstate or connect with AOL Real Estate on Facebook.
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Source: http://realestate.aol.com/blog/2012/06/07/mortgage-rates-drop-to-record-lows-for-6th-straight-week/
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Refis Soar on Falling Rates
Filed under: Financing, Refinancing
Mortgage applications increased 10.3 percent this past week as more homeowners refinanced existing mortgages or took advantage of lower interest rates to buy homes.
The Mortgage Bankers Association said its market composite index — a measure of loan application volume — increased 10.3 percent on a seasonally adjusted basis from a week earlier.
On an unadjusted basis, the index grew 9.9 percent from the previous week. Meanwhile, refinancing activity soared with the index that measures refinance loans jumping 12.1 percent from the previous week. The seasonally adjusted purchase index also rose 4.8 percent.
“Treasury rates dropped last week, as renewed turmoil in Europe once again led to a flight to quality, and 30-year mortgage rates dropped to their second lowest level of the year,” said Mike Fratantoni, MBA’s vice president of research and economics. “Refinance applications jumped more than 12 percent to their highest level in a month and some lenders experienced even larger increases. As has been the case all year, many refinance applicants are opting to de-leverage by choosing 15-year mortgages.”
Read the full story at HousingWire.
Also see:
Open Houses of the Week: Hobnob With the 1 Percent
Where Are the Real Home Bargains? Not Where You Think!
Viewpoint: Obama’s Drop-in-the-Bucket Idea for Housing
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Credit Score Catch-22: Mortgage Shopping Can Raise Your Rate
Filed under: News, Advice, How To, Credit
It’s a Catch-22 if ever there was one. The very process of shopping around for a low interest rate on a mortgage can adversely impact your credit score and cost you your eligibility for the cheaper loan you’re seeking.
Each time a lender does what is known as a “hard pull” on your credit report, their action actually shaves a few points off your score. A lower credit score means a higher mortgage rate. (You can check your own score 500 times a day and it won’t matter. A hard pull is when a third party checks your score with the intent of extending you credit.)
With lenders tightening the noose, credit scores have become a matter of great concern for home buyers struggling to qualify for loans. Getting a favorable loan rate can mean saving hundreds of thousands of dollars over the course of the loan, so the idea that just in the course of loan-shopping you are doing yourself financial damage is logic-defying. But it’s true.
The one break you can get is to do all your loan shopping within a two-week window. All checks done within this period will count as one — and drop your credit score by just two to five points. But step outside that window, and each hard pull of your credit will cost you two to five points. Shop among eight lenders and you could see your scores drop by 40 points — a drop that takes at least six months to recover from.
Tracy Becker, a national credit-score specialist located in New York’s Hudson Valley and founder of the 20-year-old North Shore Advisory, offers these tips:
1. Don’t open or close any credit accounts for three months prior to applying for a loan.
Yes, you read that right: Closing a credit account hurts just as much as opening a new one. Even the act of ending your car lease will cost you up to 60 points on your credit score.
Somewhere, some place, some analyst determined that one of the symptoms of a person about to go into default was that they began to close credit accounts. Well, duh. Isn’t that what you’re supposed to do when you find yourself overextended? Apparently the credit scorekeepers lump the financially solvent in with the defaulters’ profile. So if your car lease is about to expire, extend it for three months while you loan shop, says Becker. And don’t apply to increase your credit limits on any cards or take out any new ones.
2. Don’t apply for a loan until you have a signed contract to buy a house and then do an intense day of loan-shopping.
The idea is to have all your hard pulls done within the 14-day window. One obvious problem is that not all home deals come to fruition. Estimates are that about 35 percent of open escrows fall apart. That means that those 35 percent of buyers will likely be back out there looking for another home and another home loan. And when they find it, their earlier efforts could work against them. The one glimmer of reasonableness here is that if you return within 90 days to the initial lender you approached, they will consider the credit score they pulled on that first go-round.
Becker had a client about a year ago who wanted to refinance his Long Island home. Not knowing the rules, he shopped for a loan about 30 times over a five-month period. He also went shopping for a car loan, got a credit card limit increase and was looking for a student loan for his daughter. The result: His credit score dropped 40 points and he couldn’t get the mortgage loan he wanted, at a cost to him of an extra $600 a month.
Another of her clients had a credit score of 722 when he started looking to refinance his home. But he went out and bought a car, dropping his score by four points. Once under the credit threshold of 720, the refi application was denied. “Ultimately he paid down some balances and got back the extra points, but it was a lot of stress, a lot of paperwork and two-and-a-half months to get the loan he wanted,” says Becker.
3. Don’t let your balances exceed more than 10 percent of your available credit for at least three months, and pay your bills on time.
Getting a home loan these days is hard for everyone, and near impossible for those who have bad credit. Becker says to keep your balances below 10 percent of your available credit for at least three months prior to applying. That means if you have a credit card with a ceiling of $10,000, don’t let the balance exceed $1,000. And since the credit reporting bureaus don’t update their sites daily, you need to allow for a three-month delay.
FICO last month released information about how easily even a single unpaid bill can wreak havoc with your credit score. If you have a score of 780 and are 30 days late on your mortgage, your score will drop to 670 and it will take you three years to recover it. (Obviously, the F in FICO doesn’t stand for Forgiveness.)
Credit consultant and head of New Start Financial Corp. Wayne Sanford — a.k.a. “Wayne the Credit Guy” — says that credit scores are just part of the equation.
He recently worked with a Texas family trying to buy a $330,000 home in Plano. The couple was ready to put $150,000 on the purchase and had scores of 690 and 740 between them. Yet the loan was flagged because a well-known national furniture store had marked their account as having a “consumer dispute.” It was a computer error; the account had never been disputed and had in fact been paid in full on time and was closed. Nevertheless, it held up their loan and they almost lost their house deal.
Sanford advises running regular checks on your credit–which, by the way, won’t impact your scores.
For more on credit scores and related topics, see these AOL Real Estate guides:
- How to Keep Your Credit Score Stable
- Disputing Credit Report Errors
- How to Get a Home Loan With Bad Credit
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.
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Housing Market Looking Up Across the Country
Filed under: News, Economy, Election 2012
Many consumers across the country have been struggling with the housing market, either because they want to buy and can’t get a mortgage, or because they want to sell but home values aren’t high enough to cover their underwater mortgages. However, new trends in the market may be helpful to both buyers and sellers.
During the month of August, the number of existing-home sales rose appreciably on both a monthly and year-over-year basis, as did the average price for this type of property, according to new housing-market data from the National Association of Realtors. For buyers, the sales of existing homes — which includes single-family units, condominiums, townhouses and co-ops — climbed 7.8 percent on a seasonally-adjusted basis to 4.82 million, up from July’s 4.47 million. It was also a more significant increase of 9.3 percent from the 4.41 million observed during August 2011.
Meanwhile, the median price for those properties climbed in August as well, rising 9.5 percent year-over-year to $187,400, the report said. It was the sixth consecutive month of annual increases, the first time that has happened since the period between December 2005 and May 2006, prior to the housing bubble’s burst. Further, the increase seen last month was the largest since January 2006, when median prices climbed 10.2 percent.
These trends are encouraging to experts, who believe that there will be continual improvements in the housing market over the next several months at least, the report said. In fact, many believe that the increase in prices and sales could have mutually beneficial effects on each other at least through the end of next year.
“Total sales this year will be 8 to 10 percent above 2011, but some buyers are frustrated with mortgage availability,” said Moe Veissi, president of the NAR and broker-owner of Miami-based Veissi and Associates Inc. “If most of the financially qualified buyers could obtain financing, home sales would be about 10 to 15 percent stronger, and the related economic activity would create several hundred thousand jobs over the period of a year.”
The Federal Reserve Board already has committed to keeping interest rates, particularly on mortgages, at around their current low levels for some time, and as a consequence, that could encourage more people who are thinking about buying to look into how affordable the process might be for them.
See more on Credit.com:
How a Mortgage Can Help (or Hurt) Your Credit
Homeowners Are Refinancing Again … Again
What QE3 Could Mean for Homebuyers
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Source: http://realestate.aol.com/blog/2012/09/24/housing-market-looking-up-across-the-country/
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Your Facebook Status: Foreclosed
Filed under: News, Economy, Financing, Foreclosures, Other, Credit
Foreclosure via Facebook? With roughly 4 million foreclosures in the pipeline in this country, some legal experts say it’s just a matter of time until lenders win the right to serve foreclosure documents through the giant social network.
That day has already come for one couple in Australia. When they defaulted on a six-figure loan and couldn’t be found via a physical address or email, the lender’s enterprising lawyers located them on Facebook. The lawyers were able to verify the couple’s identities by matching up their names and birthdates — and, of course, the fact that they had “friended” each other.
Australian courts upheld the lender’s right to send foreclose notices via Facebook, citing the fact that the couple didn’t enable privacy protections on their Facebook accounts and were frequent enough visitors to the site that they would “reasonably receive notice as a result.”
While Marc Rotenberg, president of the Electronic Privacy Information Center in Washington, says he is unaware of Facebook being used in the U.S. to deliver legal notifications, but “it’s bound to happen,” he said. “The real concern the courts have is whether it’s a fair notice that the person actually receives.” According to Bloomberg BusinessWeek, courts in New Zealand, Canada and the U.K. already have adopted the Australian example to avoid having cases stall when people can’t be located and served in person.
“There are people who exist only online,” Joseph DeMarco, co-chair of the American Bar Association’s criminal justice cyber crime committee, told the publication. The ability to serve documents by social-media networks would be useful, he said.
Facebook has taken heat before about its policies protecting the personal data of its 694 million users worldwide. Following the case in Australia, which happened in 2008, company spokesman Barry Schnitt said the company was pleased to see the Australian court validate Facebook as a reliable, secure and private communication medium. (Facebook did not respond to messages left by AOL.)
Is it appropriate to use social networks to find people and deliver legal papers to them via the network?
“No one likes to receive a legal service,” said Rotenberg. Legal service, after all, usually isn’t good news: Someone wants you for something. And yes, he adds, “There are going to be privacy concerns, but in some respects they’re almost inescapable.”
Email, by contrast, is generally not considered by courts to be a safe or reliable way to deliver legal notices. We get too much email, much of it winds up in spam and we don’t always open everything in our in-boxes. Legal notices delivered this way can easily be discounted with a simple “I didn’t see the email.”
But Facebook, said Rotenberg, is different. If you don’t have thousands of friends and you regularly post status updates indicating that you are active on the site, you lose the excuse that you likely overlooked the notice. Of course not everyone with a Facebook page visits the site regularly, but save it for the judge whether you’re one of them.
Bottom line: It’s probably going to be determined to be legal, just not likely to be popular. And should use of Facebook as an electronic process-server escalate as a norm, you can expect it would have some adverse impact on the site’s participation levels. In the meantime, if you don’t want the banks to find you, the best defense is enabling your privacy settings on Facebook and be mindful of the personal data you post.
For more on mortgages and related topics see these AOL Real Estate guides:
- How to Buy Foreclosures
- Spot Foreclosure Scammers Before They Spot You
- Foreclosure: What it Means for Renters
- Foreclosure Help: What a Housing Counselor Can Do
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
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Source: http://realestate.aol.com/blog/2011/06/17/your-facebook-status-foreclosed/
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$1 Million Parcel of Land Can Be Yours for $350
Filed under: News, Buying, Investing
The economic downturn has caused pain for countless American homeowners and wreaked havoc on businesses small and large. But there’s one segment of the population that just continues to do better and better: real estate investors. For proof, look no further than the latest real-estate reality programming, “Flip Men,” in which two tough guys buy foreclosed properties at auction, sight unseen, in the hope of finding a gem among the crystal (crystal meth, that is).
But you don’t have to be a TV star to pick up property for pennies on the dollar. Consider Tuesday’s tax foreclosure auction in Ann Arbor, Mich. According to Washtenaw County Treasurer Catherine McClary, as little as $350 — the minimum opening bid — could land you a choice parcel worth about $1 million. “I don’t know where you can buy acres and acres of land for single family homes for $350,” McClary told Ann Arbor.com. (That’s one of the 21 available parcels pictured above.)
While bidders in Michigan have to show up in person if they want to take advantage of the “last chance” prices, most municipal foreclosure auctions have moved off the courthouse steps and onto the Web. Last year, foreclosure-plagued Florida, for instance, became the first state to to turn to cyber-auctions to process distressed property sales, making it possible for potential buyers anywhere to get a piece of the action. That may be one reason why foreign buyers accounted for 31 percent of all Florida home sales through March of this year, according to a Fox Business report.
McClary’s auction is for properties foreclosed on for back taxes, but with so many homeowners in distress, property auctions of all kinds are enjoying a spike in popularity these days. Take a gander at these luxury homes, for instance, all upward of $1 million (in some cases way upwards) and all soon to be or recently on the block:
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Also see:
5 Foreclosure Flip Tips From the ‘Flip Men’
Luxury Homes on Auction Block in Bid to Buy Some Buzz
Tempted to Invest in Real Estate? Read This First
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Source: http://realestate.aol.com/blog/2011/11/01/1-million-parcel-of-land-can-be-yours-for-350/
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Who Walks Away From a Mortgage? Not Whom You’d Expect
Filed under: News, Home Equity, Refinancing, Selling
Peter Safronoff drives a Hyundai and lives in a rental bungalow in Encinitas, Calif., a beach community north of San Diego. At 63, it’s not the golden-years lifestyle the financial consultant planned on, but it’s the one he has.
“I live in a beautiful place, in more modest circumstances,” he says, “but at least I know I won’t go bankrupt now.”
That’s because last November, Safronoff walked away from his 1,600-square-foot home near San Diego, which he bought for $400,000 in 2005 with a 10% down payment. Like so many American homeowners, he lost his job in the financial crisis and watched the value of his house plunge. Unable to modify his loan — and unwilling to push himself into complete financial ruin to keep his condo — he made a strategic decision to pack his bags and leave the keys for the bank.
Homeowners like Safronoff keep the lending industry awake at night.
A report released in April by FICO, a credit-scoring and analytics company, offered tools to mortgage lenders to spot potential defaulters. They weren’t who you might think: FICO’s red flags included people with high credit ratings who were up to date on credit card and auto payments. As a financially savvy businessman with a credit score above 800 until very recently, Safronoff fits the profile.
His story follows a familiar trajectory. He bought his home in a boom market. When the economy turned, he lost his six-figure income, the value of his home plunged and his homeowner fees doubled. Relying on his $1,500 social security income and savings, Safronoff (pictured) found himself struggling to keep up with his monthly payments, which had ballooned to more than $3,700. Still, he never missed a payment. As he dug further into his savings, he was unable to qualify for refinancing, and his attempts to get a loan modification failed. Hundreds of faxes and many loan servicers later, he was at the end of his rope.
Safronoff says that while his attempts to find a solution met a dead end, he doesn’t besmirch his lender, a national company. Still frustrated, however, he looked for other options and found YouWalkAway.com, an agency specializing in foreclosure planning or strategic defaults.
He is not alone. A study from the University of Chicago’s Booth School of Business reported that 35% of mortgage defaults in September 2010 were strategic, compared with 26% in March 2009.
Jon Maddux, CEO of YouWalkAway.com, says his business mirrors that growth. Business is up 10% this year — and had 40% annual growth in 2010 — as more and more homeowners view walking away as a financially prudent decision.
Maddux says that his first wave of customers, in 2008, were much different than the ones he sees today. “In 2008 people were very saddened and in distress. They felt they had to save the house at all costs,” he says. “But now people who were holding on really can’t hold on any longer. We’re seeing people who called three years ago call back.”
Home Prices Expected to Keep Falling
The news for homeowners continues to get worse. A Zillow study this week reported that home prices have experienced the biggest quarterly drop since 2008 and may not hit bottom until 2012. Today, prices are down nearly 30% from the peak in 2006, and the number of negative-equity, or underwater, homes has hit a new high. Two million homes are in foreclosure, Zillow reported, with another 1.5 million seriously delinquent.
Ellen Harnick, a senior policy counsel at the Center for Responsible Lending, suggests that part of the reason that strategic defaults are occurring is that continued unemployment and the lengthy process for loan modification are leaving more people with fewer options.
“Studies have shown that negative equity is necessary but insufficient. People who walk away have had some other event, so that it’s not a choice but a lack of options,” she says. “For primary residents, you have to live somewhere. Most people will continue to pay mortgages as long as they can.”
Some help could come for homeowners in proposed legislation for the Housing Opportunity and Mortgage Equity Act, which would allow any homeowner with a loan backed by Fannie Mae or Freddie Mac to refinance at the current rate, regardless of home value, income or credit rating.
What Is the Real Cost of Walking Away?
Public debate has centered on two issues: the ethical or moral question of walking away from a contract and the systemic risk to the housing market. Vocal critics of strategic defaults, such as economist Luigi Zingales at the University of Chicago, argue that walking away hurts market efficiency, increases mortgage prices, damages the community, and depresses the overall housing market. Add to that the damage of a broken promise.
But others, including University of Arizona law professor Brent White, say the question of whether to default strategically comes down to contract law. In White’s view, the lender-lendee contract “explicitly sets out the consequences of breach.” He argues that the agreement allows for a walk-away, provided the goods in question are returned. In other words, sending the keys back to the bank is part of the contract.
The possibility of walking away is a flashpoint for homeowners and lenders alike. Until recently, the only time planned foreclosures occurred were after major life-altering events: divorce, medical emergency, or business failure. In the last two years, the term “strategic default” has gained traction to describe walking away from a loan–also “jingle mail,” from the sound of metal house keys clanking in an envelope.
For underwater homeowners, strategic default is one way to preserve remaining wealth, says Augustine Diji, a former real estate broker and founder of the website The Strategic Default Monitor.
Safronoff says that his decision to walk away was painful financially and emotionally. But it came down to economics and the relief he stood to gain as opposed to “sit in the house and freak out.” He didn’t see the process as ethically questionable because he says that he had tried all other options and saw this as a business decision.
The major penalty for strategically defaulting is the substantial hit of 150 or more points to a credit score. That means higher interest rates, more restrictive terms on credit and other difficulties obtaining financing. It could be hard to qualify for rental properties as well. In some states, lenders who sell a foreclosed property for less than the amount owed on the mortgage can pursue the defaulter for the difference, according to the FICO report.
The trend toward defaults underscores that credit may not be the king it once was.
“People’s perceptions of credit are changing as we speak,” Diji says. “There was a time when credit meant so much, and your score gave you so many benefits. Today, defaults throw that upside down.”
Nicholas Carroll, blogger and author of “Walk Away From Your Debt,” says the dot-com crash in the Silicon Valley in 2000-2001 foreshadowed the current wave of strategic defaulters. Looking back, he says, “people who walked away were back on their feet much sooner than people who tried to hang on.” He adds that cash — rather than a home — is increasingly the new nest egg.
With peace of mind today, Safronoff is focused on rebuilding his financial life and reconstructing his credit. He doesn’t regret walking away from his house but does not endorse it for other homeowners either.
“It was the right decision for me,” he says, “but for others it may not be right. There is no simple answer.”
Catherine New is a reporter with the Huffington Post Media Group.
For more on foreclosure and related topics see these AOL Real Estate guides:
- Stop Foreclosure Rescue Scammers Before They Scam You
- Foreclosure Help: What a Housing Counselor Can Do
- How to Buy Foreclosures
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.
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Source: http://realestate.aol.com/blog/2011/05/11/who-walks-away-from-a-mortgage-not-who-youd-expect/
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Viewpoint: Why No New Houses May Be a Good Thing
Filed under: News, Economy, Foreclosures, Home Equity, Selling
The news that 2011 may go down as the worst year in the past 50 for construction of new homes brought out many a weeping violin. Sorry, the strings on mine must have popped.
Yes, I understand that construction jobs — the ones that are created when builders build new homes — are a good thing for the economy. But the dark cloud of no new houses being built may have a silver lining: No new homes means less competition for existing homeowners trying to sell.
Have we forgotten the economic rule of supply and demand? When the supply is smaller (no more new houses), the demand increases (for existing houses). When the demand increases — especially coupled with record-low interest loans — home values increase. Equity builds in existing homes, fewer people are upside down on their loans. People feel like they can spend again. Remember the old adage about land, how they aren’t making any more of it? Now apply it to houses.
Without the option of shiny new faucets and developers promising low-interest adjustable rate loans that got so many people in financial trouble in the first place, what exists of the homebuying public will be forced to focus its attention on the resale market. Surely with so many short sales and foreclosures out there — not to mention desperate sellers who just need to move — people can find something to their liking.
And stimulating sales of the comatose existing-home market also is a job stimulant, albeit different jobs. It creates work for home inspectors, termite-treaters, appraisers, real estate agents and others in the home transaction pipeline.
And what do new homeowners do if not immediately rush out to call contractors and remodelers? They visit Home Depot, shop for new couches and carpets, put in a swimming pool or refinish the kitchen cabinets. The first impulse of a new homeowner is to put their stamp on the house, making it theirs. Whether it’s as simple as slapping up a new color of paint or putting up a ceiling fan, they spend money on their new baby. And that stimulates the economy.
Don’t believe me? In 2009, new homeowners (those who have owned for two years or less) spent an average of $10,465 on home improvements, compared to $8,532 spent by those who have owned longer, says a Joint Center for Housing Studies report.
Inventory levels are flush in the resale market. Homes stay on the market for ages. Maybe the key to leaving the recession in our rear-view mirror has been in moving the excess housing market all along instead of worrying about how to create more of it.
Your thoughts, readers?
(The photo at top shows a housing development in Rio Vista, Calif., where work was halted in 2008.)
Also see:
Viewpoint: What’s Behind Banks’ Big Foreclosure Push?
Viewpoint: Hey Mr. President, How About Housing?
Million-Dollar Foreclosures, Just Bring Your Checkbook
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International Buyers Eyeing Miami
We were in Key West for a few days earlier this summer, and I was struck by the number of different languages we overheard,  just strolling the length of Duval Street … Most were international visitors/ tourists but some were ’International Locals’ who lived elsewhere in Florida and were vacationing in Key West. Florida is home to increasing numbers of international residents -  from almost every corner of the globe. […]
Source: http://feedproxy.google.com/~r/MiamiRealEstateCafe/~3/g9CXGeSFoV0/
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‘Project X’ Copycat Revelers Allegedly Wreck $500,000 Home
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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Living on a Prayer: Church Foreclosures Skyrocket
Filed under: News, Foreclosures
By Rich Smith
The Bible tells us that “it is easier for a camel to go through the eye of a needle, than for a rich man to enter the kingdom of God.” Foreclosing on his pastor probably doesn’t make the trick any easier.
There’s a new development in the housing crisis: Foreclosures are hitting houses of worship.
According to a report from Reuters, 2011 was a record year for foreclosures on church buildings. Prior to the Great Recession, bank seizures of houses of worship were rarer than atheists in foxholes, with only a handful of foreclosures occurring in the decade prior to 2008.
That all changed when the mortgage crisis hit.
Just as homeowners in the 1990s and early 2000s rushed to take advantage of rising house values and fatter wallets to spend lavishly on real estate, the real estate bubble encouraged irrational exuberance in the pews. Congregations took out loans to refurbish and enlarge their church buildings. Unfortunately, these loans were not the 30-year fixed mortgages that most of us are familiar with. Instead, churches took out commercial loans — five-year loans with balloon payments at the end.
The usual procedure was to refinance loans when their balloon payments came due. Problem is, loans predicated on the inflated real estate assessments that prevailed before 2007, once reassessed for possible refis in 2010 and 2011, were found to lack sufficient principal. Banks began turning down refinancing applications, and churches were told to either pay off their loans (i.e., make the balloon payment) or go into foreclosure.
Result: From 2010 to present, bank foreclosures on church buildings have skyrocketed — 270 foreclosures since 2010; a record 138 foreclosure sales in 2011 alone.
Forgive Them, Father
Loan officers asked about this trend are, not surprisingly, chagrined. As one banker named in the Reuters piece complained: “It is not the practice of the Bank to [use] foreclosure in the absence of good cause. We trust the community will not rush to judgment without full knowledge of all the facts.”
Better pray for a miracle, then. It might make all the economic sense in the world to foreclose on a debtor that’s unable to pay its bills. If a debtor can’t pay, the logical thing to do is foreclose, resell the property, and try to get back at least part of the money lent. But when a bank does this to a church, it’s playing with fire (and brimstone).
Whatever fate may await foreclosing bankers in the afterlife, the perils in the here and now are clear. Foreclose on a family home, and you’ve made a handful of people angry. Foreclose on a church, though, and you’ve taken your PR nightmare wholesale. In one step, you’ve won your bank the ill will of hundreds of congregants — or more. People who will, in all likelihood, spend the rest of their mortal lives regaling friends, neighbors, and other potential banking clients with the story of how they “will never bank with XYZ bank again — those guys foreclosed on my church!”
And it gets worse. Say a bank feels it has no choice but to foreclose on a church. What’s it supposed to do with the property? Houses are no picnic to sell these days: Who’s going to buy a house of worship out of foreclosure?
A Silver Lining
Depending on square footage and nearby foot-traffic patterns, a slightly used church might make an appealing location for, say, a new Starbucks. McMansion shoppers might be another target demographic for the used church market, if the churches aren’t too small.
But as it turns out, Reuters reports that there is one bit of good news for the banks. Financial institutions foreclosing on delinquent church buildings have so far been able to resell most of their inventory to other congregations.
Just as in the housing market, where foreclosures and falling prices created opportunities for new buyers to purchase starter homes, congregations that used to squeeze into a rented school gymnasiums or other temporary quarters are finding opportunities to buy starter churches on the cheap.
As William Cowper once observed: “God moves in a mysterious way, his wonders to perform.”
Motley Fool contributor Rich Smith does not own shares of any companies named above. The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of and writing covered calls on Starbucks.
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See also:
Strategic Default: Would Half of Homeowners Walk Away?
Short Sales: The Long and Short of Them
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U.S. Construction Spending Hit 2.5-Year High in May
WASHINGTON, July 2 (Reuters) – U.S. construction spending rose to its highest level in nearly two and a half years in May as investment in residential and federal government projects surged, a rare dose of good news for the flagging economic recovery.
Construction spending increased 0.9 percent to an annual rate of $830 billion, the highest level since December 2009, the Commerce Department said on Monday. That followed an upwardly revised 0.6 percent rise in April.
Economists polled by Reuters had expected construction spending to rise 0.2 percent after a previously reported 0.3 percent gain in April.
In a reversal of fortunes, housing has become one of the few bright spots in the economy, whose recovery has slowed in recent months as the debt crisis in Europe and an unclear fiscal policy path at home create a cloud of uncertainty for businesses and households.
The gain in construction spending in May was driven by a 1.6 percent rise in private construction outlays. Spending on residential projects jumped 3 percent to the highest level since January 2009.
Private nonresidential construction spending rose 0.4 percent to the highest level since October 2009. Investment in multifamily residential projects surged 6.3 percent, while outlays for single-family buildings increased 1.8 percent.
Residential construction is expected to contribute to growth this year for the first time since 2005.
Spending on public sector construction dipped 0.4 percent to $269.6 billion, down for the fifth month. However, outlays on federal government projects jumped 5.6 percent, the largest gain since December, almost reversing the prior month’s drop.
Spending on state and local government projects dropped 1.0 percent, falling for a fifth straight month.
Copyright 2012 Thomson Reuters. Click for Restrictions.
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5 Cheap Home Security Tricks to Keep Your House Safe
Filed under: News, Advice, How To
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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Wells Fargo to Pay $175 Million to Settle Case of Race Discrimination in Mortgage Lending
WASHINGTON — Wells Fargo & Co has agreed to pay $125 million to resolve allegations it discriminated against certain borrowers on the basis of race and national origin in its mortgage lending, the U.S. government said on Thursday.
Wells Fargo also agreed to contribute $50 million to help those buyers making down payments or improving their homes in some metropolitan areas around the country, including Baltimore, Chicago, Cleveland, Los Angeles, New York, Philadelphia and Washington. The government identified those areas needing the most help in recovering from the housing crisis.
The settlement, which needs approval from a judge, would end the investigation into whether the fourth-largest U.S. bank between 2004 and 2009 knowingly targeted minorities for risky mortgages that came with higher costs, according to documents filed in the U.S. District Court for the District of Columbia.
“An applicant’s creditworthiness, and not the color of his or her skin, should determine what borrowers pay and what loans they qualify for,” Deputy Attorney General James Cole said in a press conference. “Put simply, there is no place for discriminatory lending in the marketplace, and it will not be tolerated.”
Wells Fargo in May said it could face civil charges under laws that prohibit discrimination against minority homebuyers. At the time, the lender said in a securities filing it believed the charges should not be brought and said it was seeking to show the department that it is in compliance with fair lending laws.
The government investigation found that loans submitted to Wells Fargo by mortgage brokers had varied interest rates, fees, and costs based only on race and not correlated to the borrowers’ creditworthiness, according to the court document.
The Obama administration has mounted a campaign to closely monitor banks in order to ensure loan discrimination practices that were a part of the housing bust and led to record defaults are eliminated.
Wells Fargo said it is settling the matter “solely for the purpose of avoiding contested litigation with the DOJ, and to instead devote its resources to continuing to provide fair credit services and choices to eligible consumers, and important and meaningful assistance to borrowers in distressed U.S. real estate markets.”
The bank said the settlement also resolves pending litigation filed in 2009 by the State of Illinois on behalf of borrowers, and resolves an investigative complaint filed in 2010 by the Pennsylvania Human Relations Commission.
The Justice Department looked at more than 34,000 loans made to borrowers in 36 different states and Washington, D.C., in assessing the penalty.
The disclosure came after Bank of America Corp’s Countrywide Financial unit agreed in December to pay a record $335 million to settle similar charges.
Last year, San Francisco-based Wells Fargo received an $85 million penalty from the Federal Reserve Board over charges it steered borrowers into high-cost loans. The Fed ordered Wells to compensate certain borrowers between $1,000 and $20,000.
Previously, the cities of Baltimore and Memphis filed separate suits alleging Wells Fargo engaged in “reverse redlining,” or intentionally targeting minority communities for predatory mortgage loans, leading to high foreclosures in minority neighborhoods.
In the agreement announced Thursday, Wells will pay $4.5 million of the $50 million to Baltimore, plus another $3 million for local housing and foreclosure initiatives. In return, the city will drop its suit.
In May, Memphis agreed to drop its suit after Wells Fargo agreed to contribute $7.5 million toward local homeowner and economic development initiatives. The bank also set a $425 million mortgage lending goal in the Memphis area, including $125 million in loans for low- and moderate-income borrowers.
The bank said the Justice Department claims are primarily related to mortgages priced and sold to borrowers by independent mortgage brokers.
As of July 13, the bank said it will voluntarily stop making mortgage loans through independent brokers. These loans account for 5 percent of the mortgages it makes. The company said it stopped originating subprime loans through brokers in 2007 and ended all subprime home lending in 2008. The bank said it will work to ensure existing applications are processed and closed.
The Wells Fargo case was initially referred to the Justice Department in 2009 by the Office of the Comptroller of the Currency, overseeing the nation’s largest banks, and was taken the civil rights division.
The victims of the discrimination will be compensated, according to the Justice Department. Wells Fargo will be required to conduct new monitoring programs to ensure fair lending standards are in place in the future.
Copyright 2012 Thomson Reuters. Click for Restrictions.
See also:
Housing Discrimination: Disability-Related Complaints Soar
Banks’ Paperwork Foul-Up Cost Atlanta Woman Her Home
‘This Is Crazy’: Company Snatches Condos from Owners
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