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Fed Report: Housing Meltdown Hit Middle Class Hardest
A report recently released by the Federal Reserve offers new figures that capture the full scope of the housing bust’s devastating impact on household wealth.
Median family net worth plunged by close to 40 percent during the economic crisis, the report found. The study shows that the real estate market’s collapse was largely responsible for the decrease: Family median income before taxes fell 7.7 percent and non-housing assets also depreciated in value. But the Fed said plummeting home prices issued the largest blow to families’ net worth.
“Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices,” the report said.
The report also said that the recession hit the U.S. middle class hardest, since much of their wealth was concentrated in their homes.
National Association of Home Builders CEO Jerry Howard says its findings suggest that the housing slump remains one of the largest roadblocks to an economic recovery. In fact, the report is a call to action for the U.S. government, he says, which should do more to revive the real estate market.
“In [government] conservatorship [Fannie Mae and Freddie Mac] are as close to being dead in the water as you can possibly be,” he said. “In these current climates, the access to mortgage credit is so restricted that it is an impediment to the recovery, not just because people can’t get it, but people are afraid to apply for it because it is such a burdensome and intimidating process right now.
Howard believes that lenders, many of whom service mortgages that conform to Fannie Mae and Freddie Mac-dictated requirements, should perform more “holistic” evaluations of mortgage applicants. But other experts see current mortgage requirements as appropriate, given the lax standards of the housing boom, which Howard admits made it “much, much too easy for people.”
The government’s failure to do more to jumpstart the housing market betrays its 50-year history of championing homeownership, Howard says.
“For most baby boomers, from the time that they entered the job market, they were encouraged to build your … nest egg around housing.”
See also:
How to Get Your Mortgage Above Water
Underwater Mortgages Keeping Housing Market Afloat?
Should Underwater Homeowners Just Walk Away?
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5 signs that it’s a good time to sell
5 signs that it’s a good time to sell
Why desperate homeowners could find relief this year
Traditionally, most homes have sold during the spring months. In the current volatile housing market, the time of year is not the most reliable predictor of the best time to sell.
Homes certainly show better in spring than they do on a dark and dreary winter day. Lately, however, weather patterns are hard to predict.
The weather has some effect on home sales. It can slow things down if incessant rain keeps sellers from being able to prepare their homes for sale. However, a bigger influence on the housing market is the overall economic situation and its impact on buyers’ psyche.
Normally, the home-sale market ramps up in March or April and stays busy until the beginning of July when the market tends to slow down for the summer. The 2011 home sales went counter to this. The market was active at the beginning of the year, but stalled in April. If you waited until spring to sell last year, you would have missed the best selling opportunity of the first half of 2011.
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The early slowdown was partially due to the expiration of the homebuyer stimulus package. The homebuyer tax credit program accelerated home purchases creating a mini bubble in 2010 that was followed by a significant slowdown in home sales.
Negative economic news played a big part in the sluggish home sales during most of last year. The stock market was unpredictable, and the earthquake in Japan had repercussions for many industries. Plus, Greece was on the brink of bankruptcy, and the future of the European Union was in doubt.
Bad economic news and massive uncertainty lowers consumer confidence. Buyers need to have jobs, but they also need to feel confident in their future to take on a major purchase like a house.
HOUSE HUNTING TIP: The best time to sell is when consumer confidence is on the upswing; interest rates are low; unemployment is decreasing; the economic news is mild; and there are more buyers in your local market niche than there are sellers. A high-demand, low-inventory market gives sellers an edge.
The Conference Board Consumer Confidence Index fell in March 2012 to 70.2 (1985=100), down from 71.6 in February, when it was up sharply.
Lynn Franco, director of The Conference Board Consumer Research Center, attributed the improvement in consumer confidence in February to less pessimism about current business and employment conditions and more optimism about the short-term outlook for the economy and job prospects despite a rise in gas prices. Franco said the moderate decline seen in March was “due solely to a less favorable short-term outlook.”
Interest rates are currently at historic lows and are expected to stay low for the rest of the year. Even with low rates, buyers have had difficulty qualifying due to rigid mortgage approval underwriting.
Capital Economics, an analytics firm, expects the housing crisis to end this year partially due to lenders loosening credit. According to Capital Economics, one indicator of loosening is that banks are now lending 82 percent of loan-to-value (LTV), compared with a low of 74 percent LTV reached in mid-2010. This means qualified buyers need less cash to buy, which should lead to more sales this year, although higher home prices are not expected.
These positive indicators combined with a drop in homes for sale at the end of 2011 and a decrease in unemployment may provide an opportunity for sellers in spring 2012, provided their homes are priced right for the market. A major surprise on the economic front could change the picture.
THE CLOSING: Regardless of the economic indicators, the best time to sell is when the time is right for you.
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Los Angeles Sues U.S. Bank, Calls It a ‘Slumlord’
Filed under: News, Foreclosures
By Jonathan Stempel
The city of Los Angeles has sued U.S. Bank, accusing a unit of the fifth-largest U.S. commercial bank of becoming one of its biggest slumlords and blighting the city by allowing hundreds of foreclosed homes to fall into disrepair.
Monday’s civil lawsuit by the office of Los Angeles City Attorney Carmen Trutanich alleges that U.S. Bank has taken title to more than 1,500 foreclosed residential properties in the city in its role as trustee for various mortgage-backed securities trusts.
Los Angeles said that at least since July 2008, U.S. Bank has “disregarded virtually every one of its legal duties and responsibilities as owner, resulting in the creation and maintenance of an alarming number of vacant nuisance properties and substandard occupied housing units.”
It said the bank has ignored repeated demands that it comply with the law, causing hundreds of homes to become uninhabitable or “public nuisances,” and resulting in illegal evictions of hundreds of tenants from the second most-populous U.S. city.
Los Angeles said that it is seeking a civil fine of $2,500 a day for each violation by what it called “one of the largest slumlords in the city.” It estimated the bank’s potential liability to be in the “hundreds of millions of dollars.”
Thomas Joyce, a spokesman for Minneapolis-based U.S. Bank, said it is the mortgage servicers, not the trustee, who have the responsibility to maintain foreclosed properties, and that “we intend to bring them into” the lawsuit.
Joyce also said the city only recently agreed to detail which homes needed better upkeep, and that the bank will “stand ready” to address property-specific and general foreclosure concerns as it has done in other cities.
Other Cities’ Lawsuits
Other large U.S. cities have also sued over mortgage industry practices that they allege contributed to urban blight.
Wells Fargo & Co, the nation’s largest mortgage lender, in May settled a lawsuit by Memphis, Tenn., and on July 12 it settled a similar case involving Baltimore.
The Baltimore accord was reached in connection with the San Francisco-based bank’s $175 million settlement with the federal government over allegations that it overcharged black and Hispanic borrowers on mortgages, contributing to higher foreclosures.
Wells Fargo was one of five big servicers to join February’s $25 billion U.S. settlement over foreclosure abuses.
The National Fair Housing Alliance filed discrimination complaints with the federal government in April against both U.S. Bank and Wells Fargo, accusing them of doing a better job maintaining foreclosed homes in white neighborhoods than in minority neighborhoods.
According to the 2010 census, Los Angeles had 1.41 million housing units, of which about 95,000 were vacant. The city’s population was about 3.79 million.
Shares of U.S. Bancorp were down 9 cents at $32.69 in morning trading on the New York Stock Exchange.
The case is People v. U.S. Bank NA et al, Superior Court of California, Los Angeles County, No. BC488436.
Copyright 2012 Thomson Reuters. Click for restrictions.
See also:
Middle Class May Be Richer Than It Thinks, Economist Says
90% of Bank-Owned Homes Held Off Market, Estimates Suggest
Underwater Mortgages Keeping Housing Market Afloat?
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Source: http://realestate.aol.com/blog/2012/07/17/los-angeles-sues-us-bank-calls-it-a-slumlord/
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Real Estate Investing: Learn What the Pros Know
There were plenty of people to blame for the housing bubble — our politicians, the big banks, average American homeowners, and of course, the investors and the speculators. Many acted like the market would keep climbing forever, ignoring the reality that was staring us in the face all along — fundamentals matter.
I mention this because I’m here to talk to you about real estate investing, and to do so without reminding you about the dangers of ignoring the fundamentals would be remiss of me.
For over six years now I’ve run an online real estate investing community called BiggerPockets.com where I’ve heard thousands of stories of success and failure. I’ve seen new investors who’ve been wildly successful and some very experienced ones make truly poor decisions. The main reasons that people fail is that they either don’t fully understand the fundamentals of what they are doing or they ignore them.
Real estate investors are now responsible for purchasing a significant portion of homes on the U.S. market. This trend will increase as we continue to struggle as a nation.
What does that mean for you?
Real estate investing isn’t for everyone; there are plenty of other investment vehicles that people can and should explore. But there are few other strategies that will allow someone as much control over their financial future as real estate investing.
Many new, starry-eyed investors are seduced by the hope of getting rich quickly through real estate. And while some will, most won’t. Like anything else, sustained success in real estate investing comes from hard work.
With education, effort, time, planning and, hopefully, the support of your friends and family, you can become extremely successful in real estate, and my goal is to help you to do just that.
Each week, Bigger Pockets will bring AOL Real Estate readers insights from a wide range of experts. My hope is that these men and women who spend their days in the trenches of real estate will be able to give you the tools you need to become a successful real estate investor.
More From Bigger Pockets:
- Are You Getting Ready to Get Ready to Invest in Real Estate?
- Make Sure You Know ALL the Costs to Flip that House
- The Real Estate Investor’s Realtor: What Should You Expect?
Also See:
College Town Real Estate Investments Score High Marks
Top 10 Towns for Working Toward Home Ownership
Will Baby Boomers Rock the Housing Market?
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.
Joshua Dorkin is the founder and CEO of BiggerPockets.com, the country’s premier real estate investing community. He has been investing in real estate for more than 10 years and built BiggerPockets to change the way real estate investors do business.
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Source: http://realestate.aol.com/blog/2011/09/16/real-estate-investing-learn-what-the-pros-know/
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Home Equity Line Adds New Option to Refinancing
Filed under: Home Equity
If you’re looking to refinance your mortgage but you also need some extra cash, there may be a few options out there you haven’t considered. Today’s re-fi rates are low, but to get the best deal overall, your best bet may be to refinance your principal loan at the lowest rate you can find and then to apply for a home equity line for the cash. That way, with today’s low home equity rates, you’ll
If you’re looking to refinance your mortgage but you also need some extra cash, there may be a few options out there you haven’t considered. Today’s re-fi rates are low, but to get the best deal overall, your best bet may be to refinance your principal loan at the lowest rate you can find and then to apply for a home equity line for the cash.
That way, with today’s low home equity rates, you’ll get the best interest rates for both portions of your financing.
The other main option is a cash-out refinance, in which the borrower takes additional cash above the loan amount. But that usually means an additional 0.5 percent or more in interest, which can add up to thousands of dollars over the course of a 30-year loan. Instead, simply refinance the balance of your mortgage, and then apply for a home equity line for the rest.
Right now, home equity rates are at prime or prime plus 0.5 percent to 1.0 percent, a lot better than almost any other kind of loan out there, including personal loans and credit card debt.
Cash-out refinancing is not a real option for homeowners who are underwater and need to borrow more than 80 percent of the value of their home. And while there are 95 percent loan-to-value mortgages out there, you can’t be living in a declining market such as Arizona, California, Florida, Michigan and Nevada. Also, if your credit score is below 680, you’ll need to turn to the FHA for the refinance if you want anything more than a 90 percent loan-to-value mortgage.
Generally in today’s market, even if you don’t live in a declining market, you probably won’t be able to get an equity line if it means going above 90 percent loan-to-value. And even that could be difficult, unless you have a credit score over 760. Therefore, home equity lines are a better choice for smaller projects, like making needed repairs on your home.
Also, think twice before paying off credit card debt with a home equity line. While you may be paying a high price for credit card debt, transferring credit card debt to an equity line means you are exchanging unsecured debt (debt that is not guaranteed by an asset) for secured debt (in this case debt that is secured by your home). That means, if for some reason you can’t make the payment on your equity line, the lender has the right to foreclose on your home. You can learn more about how equity lines work in the Federal Reserve’s pamphlet “What you should know about Home Equity Lines of Credit.”
Millions of people put their homes at risk because they used the equity in their homes as a piggy bank and borrowed to levels that are now higher than what their homes are worth. Some have walked away from these homes because the combined mortgage and equity line is higher than what the home’s value is expected to be for 10 or 20 years.
But if you need the cash, and it will put you in a better position financially, you’re better off choosing an home equity line than a cash-out refinance.
Lita Epstein has written more than 25 books including The Complete Idiot’s Guide to Personal Bankruptcy and The Complete Idiot’s Guide to Improving Your Credit Score.
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Source: http://realestate.aol.com/blog/2010/12/09/home-equity-line-adds-new-option-to-refinancing/
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Experts Expect to See Broad Improvements, Home Prices to Rise in 2013
Experts Expect to See Broad Improvements, Home Prices to Rise in 2013
The Urban Land Institute released its Real Estate Consensus Forecast Wednesday morning, and overall, the 38 real estate economists and analysts surveyed projected broad improvements for the economy.
With signs of improvement in the housing sector already emerging, participants expect to see housing starts nearly double by 2014 and project home prices will begin to rise in 2013.
The average home price, which has declined somewhere between 1.8 percent and 4.1 percent over each of the past three years, according to FHFA data, is expected to stabilize in 2012, followed by a 2 percent increase in 2013, and a 3.5 percent increase in 2014.
Single-family housing starts are expected to rise from 428,600 starts in 2011 to 500,000 in 2012, and jump to 800,000 in 2014.
The unemployment rate is expected to continue falling, with the rate dropping to 8 percent by the end of 2012, 7.5 percent by the end of 2013, and 6.9 percent by the end of 2014.
GDP is expected to grow by 2.5 percent in 2012 and grow to 3.2 percent in 2014.
But, with the improving economy is inflation and higher interest rates. These rising rates will increase costs for investors, and those surveyed do not expect substantial increases in real estate capitalization rates for institutional-quality investments (NCREIF cap rates), which are expected to remain steady at 6 percent in 2012 and 2013 and then rise slightly to 6.2 percent in 2014.
By property type, National Council of Real Estate Investment Fiduciaries (NCREIF) total returns in 2012 are expected to be strongest for apartments (12.1 percent), followed by industrial (11.5 percent), office (10.8 percent), and retail (10 percent).
Click here to read the rest of this article…
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Home Equity Loan Equals Affordable Education
Filed under: Home Equity
After 18 years, Kate Hoy of Phoenix was sick of her career as sales representative for company that sold electrical and mechanical components. She was ready for change. But the single mother didn’t have a spouse’s second income to help her through a transition period. So to help explore the options, Hoy, 48, took out a home equity line of credit (HELOC) for $50,000 while she still had a steady income. Unlike a traditional home
After 18 years, Kate Hoy of Phoenix was sick of her career as sales representative for company that sold electrical and mechanical components. She was ready for change.
But the single mother didn’t have a spouse’s second income to help her through a transition period. So to help explore the options, Hoy, 48, took out a home equity line of credit (HELOC) for $50,000 while she still had a steady income. Unlike a traditional home equity loan, which is a one-time lump sum loan usually at a fixed rate, a HELOC is tapped only when bills are paid, like the line of credit on a credit card. With a HELOC, the interest rate fluctuates month to month.
What also made a HELOC attractive to Hoy was she was able to finance her life change without knowing exactly where she was headed. Most school loans were not an option due to Hoy’s income at the time she opened her HELOC.
She soon began attending night classes at Scottsdale Community College. The film program caught her interest, and she became a full-time student in fall 2005, graduating with a motion picture and television associate’s degree in 2008.
“I opted to go to school full-time, and the loan made it possible,” says Hoy. “I couldn’t have made a better decision.”
Now Hoy is a multimedia video producer for Arizona Department of Health Services E-Learning Team and building her own production business on the side.
Despite the housing slump, home equity loans remain a popular option for paying education costs, since the interest is tax deductible and “the rates are unbelievably low,” says Hoy, whose rate adjusts monthly between 3 percent and 4 percent. Still, some families are not comfortable putting their home at risk to foot the bill for college or grad school.
Another concern is that the interest rates on most home equity loans and lines of credit are higher than the rates on federal loan programs such as a Stafford or PLUS loan. However, home equity rates are generally lower than those on most private education loans.
Lastly, using a home equity loan to pay for college will lower a student’s eligibility for financial aid, since proceeds from a home equity loan that aren’t used for tuition will be factored into the need-analysis formula. Opening a home equity line of credit eliminates this concern because the line of credit is tapped only when paying bills.
As with any other loan for education, it is important to reconsider all costs. Hoy has 10 years to repay her HELOC, which she says is currently tapped out. Though her current income hasn’t yet caught up to what it was in her previous career, she is confident she will be able to pay off the loan with her new vocation. But the educational experience her home equity loan provided is priceless.
“I had never gone to school full-time before, I had always worked,” says Hoy, clearly pleased by her accomplishment. “It was awesome.”
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Source: http://realestate.aol.com/blog/2010/12/09/home-equity-loan-equals-affordable-education/
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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
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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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Require 20% Down on a House? Hong Kong Tried That
Filed under: News, Buying, Credit
As U.S. regulators fool with the idea that homebuyers should put 20 percent down on home purchases, they need only look across the sea to see what happen when a similar plan was put in place in Hong Kong recently: Sales at 10 of the island-nation’s largest home developments fell almost 60 percent the week after the government raised the minimum down payments and deposits for foreign buyers.
Anyone need further proof that requiring $60,000 cash to buy a $300,000 house is going to further dent buyer enthusiasm? At least in Hong Kong, the measure was intended to slow the pace of sales — something we surely don’t need more of here. The Hong Kong government has made several attempts to curb the inflation of home values, including raising mortgage interest rates. This most recent measure was aimed specifically at foreign buyers; about a third of luxury home transactions in the first quarter of this year came from overseas or mainland China.
But the results do provide a good indicator of what the U.S. housing market can expect if the 20 percent rule — part of the 376 pages of proposed changes known as the Qualified Residential Mortgages package or QRM — kicks in: Buyers go away.
The proposal made this spring by a group of federal agencies would require a 20 percent down payment, limit to one-third a borrower’s debt payment and extend the most-favorable loan rates to only those with excellent credit. Regulators reason that if borrowers had to put down 20 percent of the home’s value, they would have more “skin in the game” and be less likely to walk away from the loan.Perhaps what they didn’t reason was that just fewer people would be able to buy a house. Public reaction to the 20 percent down requirement was swift, and negative; public comment was extended to Aug. 1.
“If we require 20 percent down payments to get a loan, we will ensure broad swaths of working- and middle-class people will not be able to get a loan,” John Taylor, chief executive of the National Community Reinvestment Coalition, told the Washington Post. The NCRC advocates an extension of credit to low- and moderate-income borrowers.
The QRM is an overreaction to the mortgage crisis caused primarily by toxic loans — the so-called “liar loans” and optional adjustable rate mortgages that put people into homes they couldn’t afford, said David Berenbaum, Chief Program Officer for the NCRC. The default rate for 30-year fixed rate loans has been less than one percent, regardless of the size of the down payment. And of all the loans written in 2009, only 30.5 percent would have met the new proposed standards.
| Yes. | |
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| That’s still not enough. |
For more insight on mortgages these AOL Real Estate guides:
- Mortgage Jargon in Simple Terms
- How to Get a Low Mortgage Rate
- Want a Mortgage? Don’t Make These 8 Mistakes
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/2011/06/14/require-20-down-on-a-house-hong-kong-tried-that/
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Low Interest Rates No Help to Housing Market
With unemployment high, markets on a hair trigger and the memory of Washington debt-ceiling gridlock still fresh, many Americans are reluctant to put their money toward any venture that could be less than fully secure.
Despite efforts on the part of the White House and the Federal Reserve to encourage borrowing and spending, many consumers and investors are less than eager to take the kinds of risks that could stimulate economic growth — even as the economy risks entering a new recession. With businesses hesitant to hire workers, and with consumers hesitant to make big purchases, fears about the state of the economy could make the economy worse.
Last week, the Fed announced it would be keeping interest rates near zero through the middle of 2013, a policy meant to spur borrowing and keep the economy from slowing to a standstill. But many consumers remain skittish about taking on new debt, especially if they already have loans to pay off, the New York Times reports.
In the housing market, the low rates appear to have resulted in few new mortgage refinancings so far, according to NPR. The housing sector has been plagued by falling home prices for the last five years, and its recovery is seen as a precondition to the broader economic recovery.
Read the full story at The Huffington Post.
For more insight on mortgages and refinancing see these AOL Real Estate guides:
- Mortgage Jargon in Simple Terms
- Refinancing Do’s and Don’ts
- Time to Refinance? 4 Questions to Ask
- 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.
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Source: http://realestate.aol.com/blog/2011/08/16/low-interest-rates-no-help-to-housing-market/
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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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Arthur Livingston, Thought Dead by Bank, Very Alive and Frustrated
Rumors of Arthur Livingston’s demise have been greatly exaggerated — and they’re taking a toll on the South Carolina man’s credit rating.
Bank of America, Livingston’s bank of choice for the past 14 years, mistakenly declared him dead to the three major credit bureaus in May 2009, TV station WIS in Columbia, S.C., reports. As a result, Livingston has been stonewalled by lenders — who refuse to loan money to the deceased — and his dream of building a new home stymied by a 2½-year-old error.
Livingston said Bank of America promised to resolve the issue within 30 days of his complaint. It’s been more than three months now and the problem has yet to be resolved, he told WIS.
“I spend every free minute I have either sending a message, calling, faxing or just, you know, wondering if it is going to be resolved today,” he told the station.
While Livingston’s case is an extreme example, credit report errors are a very common — and costly — problem for Americans looking for a line of credit.
According to the U.S. Public Interest Research Group, one in four reports can have an error serious enough to hurt one’s chances of getting new credit. This is especially troublesome for prospective homebuyers today as mortgage lenders have, since the housing bubble burst, drastically raised the bar on qualifying for a loan.
Tips to Avoid a Costly Credit Report Error
The most basic step to protecting your credit score is regularly checking in with the three major credit bureaus. And contrary to a slew of popular commercials claiming to provide free credit reports, the only federally endorsed credit reporting site out there is annualcreditreport.com.
Once an error is identified, be prepared to maneuver through an entirely different bureaucracy. “Thousands of [dispute] letters get thrown out,” Glamis Haro, a lending manager at a New York credit union, told AOL Real Estate.
To ensure that your complaint isn’t lost to the void, Haro suggests sending any correspondence with the credit bureaus by certified mail with a return receipt request.
Under the Fair Credit Reporting Act, the bureaus are required to respond to your complaint within 30 days of receipt.
In Livingston’s case, however, because Bank of America has yet to correct the error on their end, his options remain limited. Bank of America told WIS that the issue is under investigation, but resolution has yet to be reached.
See also:
How to Dispute Credit Report Errors
Bank of America Plaza to Sell at Foreclosure Auction
80 Cent ‘Typo’ Almost Cost Man Home
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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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Cheap Colleges That May Surprise You: Good Degrees in Reach
Cheap colleges aren’t exactly a dime a dozen. With 94% of parents saying they expect their kids to go to college in a recent Pew Research poll, you’d think everyone out there would be looking for cheap colleges to send their kids to.
The post Cheap Colleges That May Surprise You: Good Degrees in Reach appeared first on DailyPerk.
Source: http://dailyperk.perkstreet.com/cheap-colleges/
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Case-Shiller: Why the Sky Isn’t Falling
Filed under: Buying, Economy, Financing, Selling, Credit
Count me among the unpanicked over the Standard & Poor’s/Case-Shiller monthly housing index that shows housing values have dipped past a low set during the Great Recession. I’m not even getting goosebumps over the chilling words “housing double-dip.”
Nope. For the 70 million home-owning Americans who don’t have a need to sell their homes at the moment, this is not the end of the world. Yes, they can thank their lucky stars that they still have jobs and didn’t get ensnared in a toxic mortgage. And yes, they can feel for their friends and family who weren’t so fortunate — or, if they are feeling less charitable, weren’t as smart as they. But for the bulk of Americans, this is a problem that, well, doesn’t hit that close to home.
Want perspective? Of the 75 million owner-occupied homes in the U.S., about 5 million were sold in the past year, which means that there were tens of millions of home owners who were content to stay put, paying their bills and living obliviously to the drops in home prices. Of those five million sales last year, about one third were distressed sales.
Currently, there are 3.87 million homes on the market. In April, distressed homes were 37 percent of sales (24 percent foreclosures and 13 percent short sales). And 7 percent of new listings were foreclosures, but they’ve been entering the pipeline at a steady pace and selling quickly at bargain prices, says the National Association of Realtors.
Of course, scary Case-Shiller numbers are nothing new. Since last June, when a yearlong rebound in prices began to sputter out, the index has recorded losses every month. If there’s a bright spot, it’s that in the last quarterly report, all 20 cities tracked showed declines; in the most recent index, two of the 20 actually showed month-over-month improvement.
And for the record, the experts back in December offered the same explanations as did the experts commenting on this week’s report: The large number of foreclosures on the market and the expiration of the federal homebuyer tax credit are pushing prices down.
I’d throw in an even larger reason that the experts gloss over: Lenders aren’t lending money to even qualified buyers. They have imposed unrealistic standards for those applying for mortgages and then wonder where all the buyers are. Maybe they should look for them under the mountains of paperwork that they keep demanding and misplacing. Seriously, has anyone tried to get so much as a refinance lately?
NAR says, albeit more politely than I do, that “the recovery is uneven, held back by unnecessarily tight credit.” The association projects that “if the lending community simply returned to the safe, sound standards that were in place a decade ago (before the lax standards that led to the unprecedented boom-and-bust cycle), home sales would rise 15 to 20 percent over current projections.” Now wouldn’t that be nice?
These AOL Real Estate guides can help, no matter whether you choose to buy or sell:
- First-Time Homebuyer’s Guide
- How to Shop for Your First Home
- How to Price a Home to Sell Fast
- How to Get a Low Mortgage Rate
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/2011/06/02/case-shiller-the-sky-isnt-falling/
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Require 20% Down on a House? Hong Kong Tried That
Filed under: News, Buying, Credit
As U.S. regulators fool with the idea that homebuyers should put 20 percent down on home purchases, they need only look across the sea to see what happen when a similar plan was put in place in Hong Kong recently: Sales at 10 of the island-nation’s largest home developments fell almost 60 percent the week after the government raised the minimum down payments and deposits for foreign buyers.
Anyone need further proof that requiring $60,000 cash to buy a $300,000 house is going to further dent buyer enthusiasm? At least in Hong Kong, the measure was intended to slow the pace of sales — something we surely don’t need more of here. The Hong Kong government has made several attempts to curb the inflation of home values, including raising mortgage interest rates. This most recent measure was aimed specifically at foreign buyers; about a third of luxury home transactions in the first quarter of this year came from overseas or mainland China.
But the results do provide a good indicator of what the U.S. housing market can expect if the 20 percent rule — part of the 376 pages of proposed changes known as the Qualified Residential Mortgages package or QRM — kicks in: Buyers go away.
The proposal made this spring by a group of federal agencies would require a 20 percent down payment, limit to one-third a borrower’s debt payment and extend the most-favorable loan rates to only those with excellent credit. Regulators reason that if borrowers had to put down 20 percent of the home’s value, they would have more “skin in the game” and be less likely to walk away from the loan.Perhaps what they didn’t reason was that just fewer people would be able to buy a house. Public reaction to the 20 percent down requirement was swift, and negative; public comment was extended to Aug. 1.
“If we require 20 percent down payments to get a loan, we will ensure broad swaths of working- and middle-class people will not be able to get a loan,” John Taylor, chief executive of the National Community Reinvestment Coalition, told the Washington Post. The NCRC advocates an extension of credit to low- and moderate-income borrowers.
The QRM is an overreaction to the mortgage crisis caused primarily by toxic loans — the so-called “liar loans” and optional adjustable rate mortgages that put people into homes they couldn’t afford, said David Berenbaum, Chief Program Officer for the NCRC. The default rate for 30-year fixed rate loans has been less than one percent, regardless of the size of the down payment. And of all the loans written in 2009, only 30.5 percent would have met the new proposed standards.
| Yes. | |
|---|---|
| No. | |
| That’s still not enough. |
For more insight on mortgages these AOL Real Estate guides:
- Mortgage Jargon in Simple Terms
- How to Get a Low Mortgage Rate
- Want a Mortgage? Don’t Make These 8 Mistakes
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/2011/06/14/require-20-down-on-a-house-hong-kong-tried-that/
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Court Blasts BofA for Reneging on Homeowner’s Mortgage Makeover
Filed under: News, Foreclosures
By Samantha Henry
A New Jersey appeals court blasted Bank of America this week, chastising the company for the way it handled the case of a woman the court found to be making a good faith effort to hang on to her foreclosed home.
In upholding a lower court decision, the New Jersey Superior Court’s appellate division questioned why the lender had approached Sylvia Ficco in October 2009 with a written offer to modify the mortgage payments on her Morris County home. The lender accepted her checks, and then tried to foreclose on the property, sending her a warning that the mortgage modification offer had been sent in error.
“We confess some puzzlement at why a mortgage company would continue foreclosure proceedings against a debtor who, unlike many, is actually paying her mortgage,” the appellate judges wrote in a copy of the decision issued Thursday.
A message left Friday for the plaintiff’s attorney, Jeanette J. O’Donnell, was not returned.
Court papers show that Bank of America division BAC Home Loan Servicing L.P., formerly Countrywide Home Loans Inc., had sent Ficco a letter in October 2009, offering her a three- month “loan modification” trial after she defaulted on a nearly $600,000 home loan. The letter said she would be able to join the modification program permanently if she met the requirements and paid on time, according to court papers. She was qualified for the program in March 2010, according to court papers, and started making payments on her $591,913 mortgage.
However, the bank later claimed that the trial offer had been sent in error, and that Ficco wasn’t meant to be permanently accepted into the program.
The appeals court chided the company for its practices, questioning why it had sent the offer, accepted Ficco’s payments, and then reneged on the deal.
Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.
See also:
Why Millions May Be Leaving Mortgage Assistance on the Table
Those Mortgages Blamed for Housing Crisis? They’re Back
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Find homes for sale in your area.
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Source: http://realestate.aol.com/blog/2012/06/25/court-blasts-bofa-for-reneging-on-homeowners-mortgage-mod/
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Mortgage Points Can Be a Good Idea in Today’s Market
“Should I pay points, or not?”
It’s one of the first questions a mortgage borrower faces, and many simply reject the extra payment as an excessive cost with uncertain benefits. But in today’s market, points can make good sense.
The new Consumer Financial Protection Bureau has issued proposed rules to make it easier to weigh the pros and cons of points. Likely to take effect early in 2013, the rules would allow lenders to continue offering loans with points, reversing a ban in the Dodd-Frank financial reform act of 2010.
Points are upfront interest payments that buy the borrower a lower mortgage rate and, consequently, a lower monthly payment, with each point equal to 1 percent of the loan amount. At first glance, the borrower’s decision looks simple: If you will have the loan long enough for the lower payment to offset the cost of the points, paying points makes sense.
But loan terms are often hard to fathom, borrowers may not know how long they’ll have the loan, and many don’t want to shell out thousands more when they’re already making big down payments and facing other charges.
In recent years, the no-points option has often paid off, because many borrowers refinanced after just a few years to benefit from falling mortgage rates. They didn’t have their previous loans long enough for a lower payment to offset the cost of the points.
Now things are different. Mortgage rates are so low there is little chance they will fall enough to make refinancing pay, so anyone borrowing today is likely to keep the mortgage until the home is sold or the mortgage is paid off.
Also, even with the recent rebound in the housing market — and a possibly sustainable turnaround — the market is coming off a low base caused by the housing crash. That means that it remains hazardous to buy a home unless you plan to keep it for many years; it may well take five, eight or even 10 years for appreciation to offset a broker’s commission and other buying and selling fees. Owning a home for only three or four years could be a money-loser, and if you therefore plan to own it longer, paying points could be profitable.
Having a Clear Choice
The CFPB proposal would require lenders to offer no-point options alongside mortgages with points, to make apples-to-apples comparisons easier.
Because lenders use a hodgepodge of terms to describe points, the proposed rules would require that, regardless of the lender’s terminology, points result in a lower mortgage rate. (Critics say that some lenders have used confusing jargon to get people to pay upfront fees that produced no benefit.)
Use BankingMyWay’s Mortgage Points Calculator to judge the potential savings from paying points. It shows how much savings can be realized by paying points if the mortgage is kept for a given number of years. It’s worth running the calculation several times to see, for example, how changing the number of years in the home would affect potential savings.
Just because something was part of a Dodd-Frank ban, and caused many homeowners pain in the housing bubble, doesn’t mean that it can’t be your gain as a homeowner — the CFPB is minding the store. At least it’s worth pointing out that points don’t have to be a dirty word in the homebuying process.
See more on TheStreet.com:
10 DIY Projects for Your Basement
10 DIY Projects for Your New Home
10 Home Improvements You’re Wasting Time and Money On
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Source: http://realestate.aol.com/blog/2012/08/23/mortgage-points-can-be-a-good-idea-in-todays-market/
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Alma Rodriguez joins Ancira Ford-Mercury
Werner Johnson, General Manager of Ancira Ford-Mercury of Eagle Pass, is pleased to announce the new addition to the Ancira team, Alma Rodriguez, who has over 6 years in the automotive industry and now is the new Parts Counter Representative.  ”I’m looking for great things ahead!” This is to show…
Source: http://feedproxy.google.com/~r/EaglePassBusinessJournal/~3/ZFFJpKS_ctM/
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Home Prices Up Quarterly and Yearly, Report Says
Filed under: News, Buying, Economy
Home prices grew from the previous rolling quarter and year-over-year in May, making it the first time in two years that both indicators have risen in the same period, asset valuation firm Clear Capital said.
The firm published its home data index market report, showing that the West, South and Northeast saw both quarterly and yearly price gains.
Truckee, Calif.-based Clear Capital uses rolling quarters to study home prices. It compares the most recent four months to the previous three months to give users a more timely look at market prices.
Read more on this story at HousingWire.
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Source: http://realestate.aol.com/blog/2012/06/05/home-prices-up-quarterly-and-yearly-clear-capital/
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5 Things That Can Derail Your Home Sale
Filed under: News, Advice, Home Improvement
If you’re selling a home, you know the drill: Declutter, add a fresh coat of paint, clear out all your family photos and personal items.
That’s just for starters.
Once that’s done, you might want to take care of some things that could really turn buyers off and derail your hopes of unloading your home. And we bet you never would have thought of them.
Jessica Edwards, a Coldwell Banker real estate consumer specialist, offers her inside tips on what a seller should always — or never — do to make certain that buyers take the bait.
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How Fannie Mae Is Making It Harder to Get a Home Loan
One of the nation’s two large government-sponsored backers of home loans recently revealed that it would tighten some of its lending restrictions for certain consumers.
The company announced that it would change the requirements for both new borrowers and those who are refinancing existing home loans. Now the maximum loan-to-value ratios that it will allow is just 90 percent, down from as much as 97 percent in the past, and certain loans will require higher credit scores to be backed by the government-sponsored mortgage giant, based on Fannie Mae data compiled by Bloomberg Businessweek.
In particular, the tighter mortgage requirements mandate that borrowers of adjustable-rate loans, who were not cleared by the company’s Desktop Underwriter software program, will need credit ratings of 640, up from the current 620, the report said. Further, lenders will no longer be able to grant loans for those whose ratings are 40 points below other requirements based on their judgment of other factors.
And on top of everything else, an expert noted that the company will also likely begin asking self-employed borrowers for more tax information in the future, the report said. Now, Fannie Mae will need to see two years of tax returns for both them and their businesses to verify their income. This change may be related to a software update the company applied to its underwriting program.
Undermining the Market?
“This can knock a decent portion of borrowers out of the picture who had a rough year in business two years ago,” Matt Hackett, underwriting manager at New York lender Equity Now Inc., told the news agency. “You’d be surprised how much of an effect this has.”
Fannie Mae and Freddie Mac, both of which are now run by the federal government, back about two-thirds of all new home loans, the report said. Experts believe these tighter restrictions will be significantly problematic to the housing market.
The real estate industry is still largely in recovery mode after the crash observed a few years ago, though there have been some improvements in recent months. Currently, housing affordability is at or near all-time highs thanks to low interest rates and prices, though prices are expected to rise over the remaining few months of the year.
See more on Credit.com:
10 Mistakes New Homebuyers Make
Can You Have Too Much Credit?
What’s Really in Your Credit Report?
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Source: http://realestate.aol.com/blog/2012/08/27/how-fannie-mae-is-making-it-harder-to-get-a-home-loan/
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Is Your Home Earthquake Proof?
Filed under: News, Home Improvement
In the wake of last week’s devastating earthquake and tsunami in Japan, prospective home buyers may be asking themselves what about a house makes it more able to weather a natural disaster.
There isn’t a huge difference in the way residential homes are built in Japan compared to in the U.S., although the Japanese are more likely to invest in special earthquake engineering, particularly in commercial and higher-end residential buildings.
Home builders in both Japan and the U.S. use a lot of wood-frame construction, which is flexible and tends to ride out a quake fairly well, said Heidi Faison, outreach director at the Pacific Earthquake Engineering Research Center in Berkeley, Calif. But wood frame structures do have potential vulnerabilities in two key areas: the foundation and the wall that supports a crawl space, which is called a cripple wall.
She recommends home buyers hire an engineer to make sure the wood frame is bolted to the foundation. If a house has a crawl space underneath it or you need to climb a few steps to get up to the first floor, it likely is supported by a cripple wall, which can buckle in an earthquake. If you’re in an earthquake-prone location, that space needs to be filled in with a solid material.
Gary Ehrlick, a structural engineer and program manager for Structural Codes & Standards at the National Association of Home Builders, outlines some other house features to consider:
o. Look at the garage, if the house has one. A large garage door opening or a lot of big windows on the first floor, that can create a soft story — an open space without enough support to withstand violent shaking.
o. Brick veneer can present a major hazard if it’s not attached well. Brick was a problem in the 6.3 magnitude temblor that struck New Zealand last month. “It doesn’t create as much of a hazard inside, but outside it can injure or kill,” he said.
o. Houses built on a slope are often an issue. They need to be tied back well with footings. Also make sure the slope is stable. Liquefaction — where saturated soil becomes liquid — can be a problem and can occur when a building is located near a lake or river. In an earthquake, liquefaction can cause the ground to behave like quicksand, as seen in New Zealand and in the 1989 earthquake in Loma Prieta in the mountains of Santa Cruz, Calif.
These are all important things to look for in a house. But they only address hazards caused by the shaking of the earth.
In Japan, most of the damage was actually inflicted by the subsequent tsunami, just as most of the destruction in the San Francisco quake of 1906 was caused by fires that ripped through the city after gas lines were ruptured.
A disaster’s chain of events makes the preparation scenario a bit more complicated.
There is a growing interest in designing homes better able to survive a tsunami. The basic idea in tsunami design, as in flood-resistant construction is to get some of your structure up above the expected level of water, said Gary Ehrlick.
“In commercial structures they talk about vertical evacuation zones.” Under this theory, the first floor, built out of concrete or steel, is strong enough to withstand the pressure of the water. The “zone of refuge” occupies the upper floors.
Another concept that came out of the earthquake/tsunami that leveled Banda Aceh, Indonesia, on Boxing Check out our gallery of Day in 2004 is a house where the first floor allows the wave to wash through it, destroying the walls but preserving the foundation. This would be a concrete frame with columns or wall segments in each corner of the house. The walls are panels made out of something light, like bamboo or wood. After a disaster, such panels would be easy to replace.
Check out our photo gallery of a tsunami-resistant home designed by Kazunori Fujimoto Architect & Associates:
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Source: http://realestate.aol.com/blog/2011/03/18/is-your-home-earthquake-proof/
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Home Prices May Withstand Foreclosure Wave
At best, an increase in foreclosures takes a double-edged sword to the housing market. On the one hand, it means we may be inching toward stabilization, as shadow inventory begins to move through the pipeline. On the other, it spells more stress for beleaguered homeowners and puts downward pressure on home prices.
Housing economists predict that the next wave of foreclosures is about to hit, following the recent settlement between government and lenders in the “robo-signing” scandal. No doubt it will still cause pain to hard-pressed borrowers. But in a break from the past, it may avoid depressing home prices.
“There are countervailing strengths,” said Mark Fleming, chief economist at CoreLogic, an analytics firm. “We could very well see increasing prices in some markets this year, even though they have significant shadow inventories.” The “shadow inventory” is the overhang of homes expected to move through foreclosure that are not yet listed on the market.
A report from CoreLogic released today said that completed foreclosures edged down from 71,000 in January to 65,000 in February, and that the number of homes in a state of foreclosure has shrunk by 115,000 homes from February 2011 to 1.4 million homes in February 2012.
Despite the slight month-over-month drop, foreclosure activity has remained relatively steady recently, but economists predict that it will rise in the coming months because of the resolution of an investigation into illegal foreclosures between the government and major mortgage servicers.
Fleming told AOL Real Estate that the housing market may feel the impact of the robo-signing settlement during the summer, after the five banks involved in the settlement implement government-approved foreclosure practices.
“All of this will result in more foreclosure pain in the short term as some of the foreclosures that should have happened last year instead happen this year,” Daren Blomquist, vice president of online foreclosure marketplace RealtyTrac, said in February. The economist predicts that completed foreclosures will jump by 25 percent in 2012, totaling 1 million.
But since the market must eventually absorb the excess supply of foreclosed homes, breaking the foreclosure logjam isn’t necessarily a bad thing. “I would like to see the pace increase, because that means we’ll be able to work off the inventory faster,” Fleming said. And the downward pressure on prices that’s caused by an increase in foreclosures may be mitigated by improvements observed lately in other sectors of the market, as well as the economy as a whole, he says.
Home sales have risen by 13 percent in the previous six months, according to Capital Economics, while the delinquency rate saw a year-over-year 14 percent drop as of February, according to Lender Processing Services. Homebuilder optimism is measured at a five-year high, and real estate agents’ optimism reportedly more than doubled in the first quarter of 2012, against the backdrop of positive market indicators.
If the positive trends continue, Fleming said, the market could begin to stabilize as early as this year.
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A recent report provided one of the most hopeful signs of recovery for the housing market yet. John Burns Real Estate Consulting found that home prices actually have risen marginally since January. The company says that its gauge of the market, the Burns Home Value Index, eliminates a three-month lag time that distorts other indices by recording contract signings of home purchases, not closings.
Its finding conflicts with most other indices, though, such as the Standard & Poor’s/Case-Shiller home-price index, which showed a drop in home prices in January.
Follow Teke Wiggin on Twitter (@tkwiggin), follow @AOLRealEstate, or connect with AOL Real Estate on Facebook.
See also:
HARP 2.0: Do You Now Qualify for Mortgage Relief?
Netizens Deride Foreclosure Settlement
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Source: http://realestate.aol.com/blog/2012/03/30/home-prices-may-withstand-foreclosure-wave/
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Arthur Livingston, Thought Dead by Bank, Very Alive and Frustrated
Rumors of Arthur Livingston’s demise have been greatly exaggerated — and they’re taking a toll on the South Carolina man’s credit rating.
Bank of America, Livingston’s bank of choice for the past 14 years, mistakenly declared him dead to the three major credit bureaus in May 2009, TV station WIS in Columbia, S.C., reports. As a result, Livingston has been stonewalled by lenders — who refuse to loan money to the deceased — and his dream of building a new home stymied by a 2½-year-old error.
Livingston said Bank of America promised to resolve the issue within 30 days of his complaint. It’s been more than three months now and the problem has yet to be resolved, he told WIS.
“I spend every free minute I have either sending a message, calling, faxing or just, you know, wondering if it is going to be resolved today,” he told the station.
While Livingston’s case is an extreme example, credit report errors are a very common — and costly — problem for Americans looking for a line of credit.
According to the U.S. Public Interest Research Group, one in four reports can have an error serious enough to hurt one’s chances of getting new credit. This is especially troublesome for prospective homebuyers today as mortgage lenders have, since the housing bubble burst, drastically raised the bar on qualifying for a loan.
Tips to Avoid a Costly Credit Report Error
The most basic step to protecting your credit score is regularly checking in with the three major credit bureaus. And contrary to a slew of popular commercials claiming to provide free credit reports, the only federally endorsed credit reporting site out there is annualcreditreport.com.
Once an error is identified, be prepared to maneuver through an entirely different bureaucracy. “Thousands of [dispute] letters get thrown out,” Glamis Haro, a lending manager at a New York credit union, told AOL Real Estate.
To ensure that your complaint isn’t lost to the void, Haro suggests sending any correspondence with the credit bureaus by certified mail with a return receipt request.
Under the Fair Credit Reporting Act, the bureaus are required to respond to your complaint within 30 days of receipt.
In Livingston’s case, however, because Bank of America has yet to correct the error on their end, his options remain limited. Bank of America told WIS that the issue is under investigation, but resolution has yet to be reached.
See also:
How to Dispute Credit Report Errors
Bank of America Plaza to Sell at Foreclosure Auction
80 Cent ‘Typo’ Almost Cost Man Home
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Home Mortgage Debt Declining At Rapid Pace
It appears that low interest rates, refinancing and other government measures aimed at reducing mortgage debt are working. The latest report from the Bureau of Economic Analysis (BEA) finds that total U.S. home mortgage debt during the first three months of 2011 is $10.3 trillion, compared with $11 trillion in mid-2008. Even better news, Americans […]
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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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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:
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.
Follow us on Twitter at @AOLRealEstate or connect with AOL Real Estate on Facebook.
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Source: http://realestate.aol.com/blog/2012/09/27/how-refinancing-a-mortgage-can-affect-your-credit/
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Beware the Latest Mortgage-Relief Scam!
Like debt consolidation scams, homeowners who are struggling to stave off foreclosure have been prime targets for scams in the recent years. Now, the Better Business Bureau is warning consumers of yet another new twist on mortgage relief scams. The BBB reported that homeowners have been receiving official-looking letters from out-of-state law firms that invites […]
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You Can Still Get a Home Equity Line of Credit
Filed under: Home Equity
Not long ago, homes worked like giant credit cards. Home Equity Lines of Credit (HELOCs) helped borrowers cash in on the equity in the homes. You can still get a HELOC today, though the business is much smaller, with home prices down about 40 percent from their peak and banks tightening their lending standards. The volume of new HELOCs created in November was just $4.9 billion. That’s less a quarter of the HELOCs created two
Not long ago, homes worked like giant credit cards. Home Equity Lines of Credit (HELOCs) helped borrowers cash in on the equity in the homes.
You can still get a HELOC today, though the business is much smaller, with home prices down about 40 percent from their peak and banks tightening their lending standards.
The volume of new HELOCs created in November was just $4.9 billion. That’s less a quarter of the HELOCs created two years before, in November 2007, according to a recent report from credit tracker Equifax.
So banks are still creating billions of dollars in new HELOCs every month for borrowers who use them for purposes from an alternative to automobile financing to a credit line for small business.
HELOC interest rates now hover around 5 percent. That’s down from over 7 percent two years ago and is much better than the rates offered by many credit cards, according to Bankrate.com.
The new HELOCs are also smaller, averaging $80,724 in November 2009. That’s down from $80,724 two year before, according to Equifax. Banks also require strong credit to get a HELOC. Only borrowers with credit scores 820 and higher qualified for HELOCs over $100,000 in 2009. A credit score over 800 was needed to get a line over $80,000, compared to just 700 back in 2007.
The places where borrowers use HELOCs has also changed with falling property values. Borrowers Pennsylvania made up 8 percent of the market for new HELOCs in 2009, putting a state largely ignored by housing boom on par with the real estate gold rush state of Florida, which also had 8 percent of the HELOC market in 2009, and ahead of California, which had 7 percent.
Common sense should also limit the size of a credit line.
“Since many economists believe home prices have further to fall, don’t borrow the maximum you can,” said Amanda Gengler, writer for Money Magazine in a PBS interview.
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Source: http://realestate.aol.com/blog/2010/12/09/you-can-still-get-a-home-equity-line-of-credit/
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Home equity loan defaults soar
Filed under: Home Equity
NEW YORK (Fortune) — One of the last sources of ready cash for homeowners looking to get money from their house appears to be shutting down and the results aren’t likely to be pretty for the economy.
More From FORTUNE
Betting against the BoA – Countrywide deal
Countrywide: From bad to worse
NEW YORK (Fortune) — One of the last sources of ready cash for homeowners looking to get money from their house appears to be shutting down and the results aren’t likely to be pretty for the economy.
More From FORTUNE
Last week, buried deep in the ugly details of Countrywide Financial Corp.’s earnings release, was the news that its $32.4 billion portfolio of prime HELOCs — home equity lines of credit — had begun to rapidly deteriorate. The reeling Calabasas, Ca.-lender was forced to take a $704 million charge related to homeowners’ inability to pay back equity they extracted from their homes.
The structure of these loans appears to spell trouble for Countrywide and other home lenders with big home equity loan books. According to an overlooked Moody’s Investors Services note that came out last Wednesday, once a certain threshold of losses is achieved in a home equity loan securitization pool, the bond holder is paid off ahead of the lender.
What’s worse is that it’s difficult to see how large a lender’s exposure is to home equity loans. Known as rapid amortization, this risk is treated as a contingent liability for Countrywide and other home equity loan lenders and is carried off balance sheet, until deterioration occurs and the lender goes on the hook for the loans. Countrywide is the nation’s biggest home equity lender, with around 9% of the market.
In the short-term, this is just another blow for a investors in the financial sector. Longer-term however, it looks like a lot of ready cash is getting taken away from homeowners, at least in California. Coupled with rising unemployment, this could pose a major headache for already strapped homeowners.
To head off more defaults, Countywide sent out letters to 122,000 homeowners last week informing them that their home equity credit lines were shut down since their estimated home values had dropped below their loan amounts.
Right behind Countrywide was Chase Home Lending, which notified borrowers in Los Angeles, Imperial and Orange Counties that they could tap their credit lines for no more than 70% of the value of their house. Previously, the limit had been 90%.
The Calculated Risk blog, which specializes in real estate and mortgage finance issues, has estimated that mortgage equity withdrawals for the fourth quarter totaled $145 billion. If tightening lending standards are put rapidly into place for home equity loans, it is not inconceivable that $50 billion or more of spending power is instantly removed from the economy.
In other words, at least one-third of the recently passed $150 billion stimulus package is already canceled out.
(C) 2008 Cable News Network. A Time Warner Company. All Rights Reserved.
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Source: http://realestate.aol.com/blog/2008/02/05/home-equity-loan-defaults-soar/
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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:
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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Source: http://realestate.aol.com/blog/2012/09/27/how-refinancing-a-mortgage-can-affect-your-credit/
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30-Year Mortgage Rate Again Nears Record Low
Filed under: News, Buying, Refinancing
WASHINGTON — The average rate on the 30-year fixed mortgage dropped near its all-time low this week, making homebuying and refinancing a bargain for those who can qualify. Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan fell to 3.88 percent from 3.98 percent. That’s just above the rate of 3.87 percent reached in February, the lowest since long-term mortgages began in the 1950s.
The 15-year mortgage, a popular option for refinancing, plunged to a fresh low of 3.11 percent from 3.21 percent last week. The previous record of 3.13 percent was hit last month.
Mortgage rates are lower because they tend to track the yield on the 10-year Treasury note. Last week’s disappointing report on March job growth led more investors to sell stocks and buy Treasurys, which are considered safer investments. As demand for Treasurys increases, the yield falls.
Yet the low rates are unlikely to draw in many more people looking to buy a home or to refinance their mortgage.
Waiting, As Home Prices Keep Falling
Some would-be buyers are still skeptical about purchasing a home with prices still falling. Home appraisals that are higher or lower than the sales price have scuttled a rising number of home contracts. Many Americans are struggling with damaged credit and unstable finances.
And mortgage rates have been below 4 percent for all but one week since early December, leaving some potential buyers and refinancers unimpressed by new record lows.
“The rates have been very attractive for some time,” said Bill Armstrong, vice president of Mackintosh Realtors in Damascus, Md. “Rates going a little higher or lower is not going to have much of an impact.”
Still, the mild winter has helped lift expectations for the housing market after four years of sluggish sales.
January and February made up the best winter for re-sales in five years, when the housing crisis began. And builders in February requested the most permits to construct homes in more than three years.
Fewer Apply
Applications for new mortgages have fallen over the past month, according to the Mortgage Bankers Association. But there has been a sharp rise in the average mortgage size, suggesting an appetite for bigger loans. The average size of mortgage applications has increased by $20,000 since December, to about $235,000 last month.
Home prices continue to fall. Prices tend to lag sales and millions of foreclosures and short sales — when a lender accepts less than what is owed on a mortgage – remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.
To calculate the average rates, Freddie Mac surveys lenders across the country on just Monday through Wednesday of each week.
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 fees for the 30-year and 15-year fixed loans were unchanged at 0.7.
For the five-year adjustable loan, the average rate fell to 2.85 percent from 2.86 percent, and the average fee fell to 0.7 from 0.8.
The average on the one-year adjustable loan rose to 2.80 percent from 2.78 percent, and the average fee was unchanged at 0.6.<
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:
Homebuying: 5 Key Steps to Your 1st Real Estate Purchase
Banks Neglect REO Homes in Minority Areas, Study Says
Home Costs: 4 Crucial Questions Reveal Hidden Expenses
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Source: http://realestate.aol.com/blog/2012/04/13/30-year-mortgage-again-nears-record-low/
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Those Mortgages Blamed for Housing Crisis? They’re Back
Filed under: News, Financing, Investing
The so-called “liar loan” mortgages often associated with the toxic subprime loans of the boom years are tiptoeing their way back into the housing market.
But, believe it or not, the latest crop of “stated-income” loans may represent a step forward for today’s sluggish market.
California based mortgage company Rancho Financial recently began originating loans that do not require applicants to submit pay stubs or tax returns, HousingWire reports. Stated-income loans proliferated during the housing boom, and acquired a stigma and became widely known as “liar loans” after lenders started shedding other requirements from loan applicants, along with pay stubs and tax returns.
But Rancho Financial’s loans seem to be a far cry from the toxic mortgages that blew up during the financial crisis.
Rancho only lends to well-heeled borrowers, originating loans that currently average about $500,000, the company told HousingWire. Some of the loans are jumbo loans, high-interest mortgages whose amounts exceed the threshold of those that government-sponsored investors such as Fannie Mae, Freddie Mac and the FHA are permitted to back.
But just because the government isn’t willing to guarantee jumbo loans, doesn’t mean they’re necessarily subpar. In Rancho’s case, most borrowers must make a 30 percent down payment and have a credit score of at least 740, a two-year history of self-employment, a 12-month reserve and a business license or letter from a certified public accountant, HousingWire reported.
“The down payment and credit standards, among others, more than offsets the no-doc risk,” said Mark A. Calabria, director of financial regulation studies at the politically conservative think tank, the Cato Institute. “So in general, this is a good thing. More loans should help housing demand and are not a risk to the taxpayer.”
Mortgages of this strain may fill a gaping hole in the real estate market that has lingered ever since the housing meltdown, according to Jack Guttentag, an emeritus professor of finance at the University of Pennsylvania’s Wharton School who offers mortgage advice on his website, mtgprofessor.com.
“This is an attempt to deal with a serious void in the market, which is the part of the market that is devoted to self-employed borrowers,” he said, adding that stated-income loans, by not requiring paystubs or tax returns, make it easier for self-employed borrowers to acquire mortgages. And by originating many jumbo loans, they are also satisfying pent-up demand among well-paid entrepreneurs and freelancers, as well as other affluent borrowers who want big loans to buy pricey homes.
So why haven’t more companies taken the plunge into stated-income loans already? Experts say that most investors remain haunted by the memory of toxic subprime loans, many of which did not require borrowers to submit pay stubs and tax returns.
Rancho’s market play, therefore, marks the arrival of some daring investors. Well, make that one daring investor: Rancho told HousingWire that it sells its loans to a single portfolio investor, whom it would not identify.
“They are really creaming the market in my view,” Guttentag said. “It’s amazing that there aren’t more of them out there. Not many investors out there have the appetite to acquire this kind of paper, but they ought to.”
Rancho declined to provide comment for this story.
See also:
Why Millions May Be Leaving Mortgage Assistance on the Table
Home Affordability: How Much House (or Apartment) Can I Handle?
Home Costs: 4 Crucial Questions Reveal Hidden Expenses
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Open Houses of the Week: Feb. 18-19
There’s nothing quite like the lure of an open house sign. Granted, you might not be in the neighborhood (or tax bracket) for many of these outstanding properties, but there’s still plenty to admire — even from the comfort of your swivel chair.
From coast to coast, and everything in-between, we lay down the welcome mat at some of the most enticing open houses in the nation. So wipe your feet at the door and scroll right on through.
Los Angeles
Open house: Sun., Feb. 19
Location: Los Angeles
Price: $7.595 million
Property details: Despite being located above the always-glittering Sunset Strip, this stunning, 8,644-square-foot Mediterranean villa will transport you to the peaceful hills of southern Italy. The gorgeous home boasts a natural setting and ocean panoramas from almost every room, and features intimate terraces. Outside, you can enjoy an outdoor entertainment area and pool, perfect for soaking up the California rays. Inside, you’ll find five bedrooms, eight bathrooms, a theater, library, gourmet kitchen, and even a dance studio! No doubt, this stunning home will make you want for nothing.
See inside this property.
See more Los Angeles homes for sale.
Chicago
Open house: Sun., Feb. 19
Location: Chicago
Price: $1.299 million
Property details: Though this beautiful, two-story contemporary residence is situated on happening Michigan Avenue, it is “remarkably quiet” and private. Located in a historic building overlooking Grant Park, the stunning home features three spacious bedrooms, four bathrooms, a gourmet kitchen and a formal dining room that’s perfect for entertaining large parties. We love the glossy hardwood floors and soaring, 14-foot-ceilings.
See more Chicago homes for sale.
Dallas
Open house: Sun., Feb. 19
Location: Dallas, Texas
Price: $799,000
Property details: Described as a “hidden jewel,” this exquisite, 4,364-square-foot home is a true rare find: a fusion of the old and new. Flanked by lush, beautiful greenery, the five-bedroom, five-bathroom home boasts modern luxuries with traditional features like wrought-iron decor throughout and a handsome wooden staircase. We love the huge deck surrounding the saltwater pool and spa.
See inside this property.
See more Dallas homes for sale.
New York
Open House: Sun., Feb. 19
Location: Queens
Price: $1.6 million
Property description: This charmingly pretty, five-bedroom, three-bathroom home in New York City’s borough of Queens is set on a lovely, high lot with a gentle slope. The picture-perfect home boasts a beautiful sun room, wooden floors, a fireplace, plenty of windows (so you can admire your sprawling lawn and trees), plus a stunning deck with (more) great nature views. We love the splashes of color throughout this home in the Jamaica neighborhood, and its elegant center hall. Perfect for growing families!
See more New York City homes for sale
Salt Lake City
Open house: Sun., Feb. 18
Location: Salt Lake City
Price: $299,900
Property description: This quaint, California-style bungalow is located on beautifully tree-lined South Douglas Street. It boasts red oak hardwood flooring throughout, brushed nickel fixtures and a massive backyard that’s professionally landscaped with a large natural stone patio (hot tub included!). But it’s not just a pretty face — this home features an incredible eco-friendly gourmet kitchen with custom Lyptus cabinetry, Cesarstone quartz countertops, Grohe fixtures, and top-of-the-line appliances including the Thermador DualFuel Range. Perfect for those who like a home that’s easy on the eyes and the earth.
See more Salt Lake City homes for sale.
Orono, Minn.
Open house: Sun., Feb. 19
Location: Orono
Price: $1.649 million
Property description: This beautiful home, situated on the picturesque Lake Minnetonka peninsula, boasts a timeless coastal design with an open floor plan and panoramic waterfront views from every single room. A hundred feet of lakeshore flanking two sides of the property offer unmatched sunrise and sunset vistas. Boasting 4,125 square feet, four bedrooms and two bathrooms, the home is spacious yet cozy.
See more Orono homes for sale.
San Francisco
Open house: Sun., Feb. 26
Location: San Francisco
Price: $375,000
Property description: This gorgeous second-floor co-op offers the best of both worlds: It’s nestled in a leafy, tree-lined area, yet it’s centrally located. In fact, it’s just steps away from the hottest restaurants, bars and some world-class entertainment, including Yoshi’s Jazz Club, Davies Symphony Hall, and the opera house. Offering two bedrooms and one bathroom, with a spacious, west-facing deck (perfect for outdoor entertaining and parties!), this home is perfect for couples or young professionals who want to be close to the action.
See inside this property.
See more San Francisco homes for sale
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Source: http://realestate.aol.com/blog/2012/02/17/open-houses-of-the-week-feb-17-19/
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Obama: Mortgage Help Coming for Military, FHA Borrowers
Filed under: News, Foreclosures, Refinancing
WASHINGTON — President Barack Obama is aiming mortgage relief at members of the military as well as homeowners with government-insured loans, the administration’s latest efforts to address a persistent housing crisis.
In his first full news conference of the year Tuesday, Obama was to announce plans to let borrowers with mortgages insured by the Federal Housing Administration refinance at lower rates, saving the average homeowner more than $1,000 a year. Obama also was detailing an agreement with major lenders to compensate service members and veterans who were wrongfully foreclosed upon or denied lower interest rates.
A senior administration official described Obama’s proposals to The Associated Press, ahead of the announcement, on the condition of anonymity.
The efforts Obama is announcing do not require congressional approval and are limited in comparison with the vast expansion of government assistance to homeowners that he asked Congress to approve last month. That $5 billion to $10 billion plan would make it easier for more borrowers with burdensome mortgages to refinance their loans.
Lower Refinancing Fee
Under the housing plans that Obama was to announce Tuesday, FHA-insured borrowers would be able to refinance their loans at half the fee that the FHA currently charges. FHA borrowers who want to refinance now must pay a fee of 1.15 percent of their balance every year. Officials say those fees make refinancing unappealing to many borrowers. The new plan will reduce that charge to 0.55 percent.
With mortgage rates at about 4 percent, the administration estimates a typical FHA borrower with $175,000 still owed on a home could reduce monthly payments to $915 a month and save $100 a month more than the borrower would have under current FHA fees.
Though 2 million to 3 million borrowers would be eligible, the administration official would not speculate how many would actually seek to benefit from the program. The FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. The loans typically go to homeowners who do not have enough equity to qualify for standard mortgages. It is the largest insurer of mortgages in the world.
Review of Vets’ Foreclosures
For service members and veterans, Obama will announce that major lenders will review foreclosures to determine whether they were done properly. If wrongly foreclosed upon, service members and veterans would be paid their lost equity and also be entitled to an additional $116,785 in compensation. That was a figure reached through an agreement with major lenders by the federal government and 49 state attorneys general.
Under the agreement, the lenders also would compensate service members who lost value in their homes when they were forced to sell them due to a military reassignment.
Obama is holding the news conference in the midst of a modestly improving economy. But international challenges as well as a stubbornly depressed housing market remain threats to the current recovery and to his presidency.
Obama has not held a full news conference since November. The White House scheduled this one on the same day as the 10-state Super Tuesday Republican presidential nominating contests. While aides insisted the timing was coincidental, it follows a pattern of Obama seeking the limelight when the attention is on the GOP.
The news conference comes amid a new sense of optimism at the White House. Obama’s public approval ratings have inched up close to 50 percent. The president recently won an extension of a payroll tax cut that was a main element of his jobs plan for 2012. Economic signals suggest a recovery that is taking hold.
Still, he will probably face questions about the pace of the recovery. The unemployment rate in January was 8.3 percent, the highest it has been in an election year since the Great Depression. With rising gasoline prices threatening to slow the economy, Obama has also faced attacks from Republicans over his energy policy.
Iran’s nuclear ambitions will also command attention in the aftermath of his meeting Monday with Israeli Prime Minister Benjamin Netanyahu. Tension over Iran has already contributed to higher oil prices, and Israel’s threats of pre-emptive military strikes to prevent Tehran from building a nuclear bomb have dominated Washington discourse for weeks.
Other developments in the Middle East, where turmoil has soured some of the promise of last year’s Arab Spring, are also likely to be addressed. Syria’s bloody crackdown on protesters has increased pressure on Obama to intervene. Republican Sen. John McCain on Monday urged the United States to launch airstrikes against Syrian President Bashar Assad’s regime to force him out of power.
Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.
Also see:
Only 5% of Underwater Homes May Qualify for Write-Downs
REO to Rental: Fannie Mae Dips Further Into Foreclosure Pool
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Source: http://realestate.aol.com/blog/2012/03/06/obama-mortgage-help-coming-for-military-fha-borrowers/
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Arthur Livingston, Thought Dead by Bank, Very Alive and Frustrated
Rumors of Arthur Livingston’s demise have been greatly exaggerated — and they’re taking a toll on the South Carolina man’s credit rating.
Bank of America, Livingston’s bank of choice for the past 14 years, mistakenly declared him dead to the three major credit bureaus in May 2009, TV station WIS in Columbia, S.C., reports. As a result, Livingston has been stonewalled by lenders — who refuse to loan money to the deceased — and his dream of building a new home stymied by a 2½-year-old error.
Livingston said Bank of America promised to resolve the issue within 30 days of his complaint. It’s been more than three months now and the problem has yet to be resolved, he told WIS.
“I spend every free minute I have either sending a message, calling, faxing or just, you know, wondering if it is going to be resolved today,” he told the station.
While Livingston’s case is an extreme example, credit report errors are a very common — and costly — problem for Americans looking for a line of credit.
According to the U.S. Public Interest Research Group, one in four reports can have an error serious enough to hurt one’s chances of getting new credit. This is especially troublesome for prospective homebuyers today as mortgage lenders have, since the housing bubble burst, drastically raised the bar on qualifying for a loan.
Tips to Avoid a Costly Credit Report Error
The most basic step to protecting your credit score is regularly checking in with the three major credit bureaus. And contrary to a slew of popular commercials claiming to provide free credit reports, the only federally endorsed credit reporting site out there is annualcreditreport.com.
Once an error is identified, be prepared to maneuver through an entirely different bureaucracy. “Thousands of [dispute] letters get thrown out,” Glamis Haro, a lending manager at a New York credit union, told AOL Real Estate.
To ensure that your complaint isn’t lost to the void, Haro suggests sending any correspondence with the credit bureaus by certified mail with a return receipt request.
Under the Fair Credit Reporting Act, the bureaus are required to respond to your complaint within 30 days of receipt.
In Livingston’s case, however, because Bank of America has yet to correct the error on their end, his options remain limited. Bank of America told WIS that the issue is under investigation, but resolution has yet to be reached.
See also:
How to Dispute Credit Report Errors
Bank of America Plaza to Sell at Foreclosure Auction
80 Cent ‘Typo’ Almost Cost Man Home
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10 Cities Getting Slammed by Foreclosures
Filed under: Foreclosures
Foreclosures have increased 14% between the second and third quarter of 2011, following five straight quarters where the number of foreclosures has gone down. This increase could dampen the recovery of the American housing market and harm economic recovery for cities where foreclosures rose significantly. Based on data recently released by RealtyTrac, 24/7 Wall St. has identified the 10 metropolitan regions where foreclosures increased by more than 30%.
The housing crisis that began half a decade ago is the cause of most of the foreclosures, even today. The bubble did not burst at the same time across the country. Many of the cities on this list were among the first to be hit. Eight out of the 10 metropolitan areas listed reached a peak median home value in the first quarter of 2006, after which they started declining. Most regions peaked toward the end of 2006, into 2007. This means the regions listed here have been declining longer than the rest of the country.
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Because home values have been dropping in these areas longer than most other markets, they have generally also fallen further. In half of the regions on this list house prices have declined 50% or more since their peak. Home values in the Cape Coral-Fort Myers area, where foreclosures increased over 35%, have dropped by nearly 60% since the beginning of 2006, the seventh-greatest decline among any region in the U.S.
With a few exceptions, most of the cities listed are full of financially distressed and underwater homeowners – those whose homes are worth less than their mortgages. Six of the cities on this list are among the 20 cities with the largest portion of underwater homeowners. In the case of Fairfield-Vallejo, Florida, 53% of homes are in this position.
24/7 Wall St. used a RealtyTrac’s press release on quarterly rates to identify the 10 cities where foreclosures had increased the most between the second and third quarter of 2011. To illustrate other economic factors at play in these regions, we used unemployment rates from the Bureau of Labor Statistics and home price changes and median family incomes from Fiserv. Finally, 24/7 Wall St. also looked data from Corelogic on the cities with the highest percent of homes with underwater mortgages.
Most of these cities have high unemployment rates, low median family income and falling home values. These three forces combined suggest that foreclosures are likely to get even worse in these areas before they get better.
Click through the gallery to see the 10 cities where foreclosure rates are skyrocketing.
Also see:
‘Mortgage Prof’: 5 Reasons Banks Would Rather Foreclose
The Mortgage Fix That Can Save the Economy
5 Foreclosure Flip Tips From the ‘Flip Men’
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Source: http://realestate.aol.com/blog/2011/11/11/ten-cities-getting-slammed-by-foreclosures/
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The Benefits of New Homes for Sale
There are a few things just as frustrating as looking for a new home: dating, car shopping and job searching. When it comes time to look for a new place to live, the options seem endless and nothing seems to fit your budget, needs and wants. It would be wonderful to go home hunting if […]
Source: http://www.brothernwla.org/the-benefits-of-new-homes-for-sale/
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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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More Than 30% of Mortgage Borrowers Still Underwater
Filed under: News, Financing, Foreclosures, Home Equity
By Les Christie @CNNMoney
NEW YORK — Despite rising home prices, more than 30 percent of borrowers, or close to 16 million homeowners, were underwater on their mortgage during the first quarter, according to Zillow.
The percentage of borrowers who owed more on their home than it was worth increased to 31.4 percent during the quarter, up slightly from 31.1 percent three months earlier, according to Zillow. In the year-ago period, 32.4 percent of all borrowers had negative equity on their loan.
The uptick in underwater homeowners occurred even though home prices have slowly started recovering. On Wednesday, the Federal Housing Finance Agency reported that national home prices rose a modest 0.6 percent during the first quarter, the first price gain since 2007.
Nevertheless, the percentages of homeowners who were underwater on their homes remained high as delays in the processing of foreclosures kept many delinquent borrowers on the balance sheets, said Zillow. Once a bank repossesses a home, the mortgage holder’s negative equity is no longer considered part of the tally.
Most underwater borrowers, however, do not lose their homes. Nine out of 10 underwater borrowers are current on their mortgage payments and continue to make payments on time, Zillow said. Only one-tenth of these borrowers are seriously late on payments, by 90 days or more.
“[It’s] important to note that negative equity remains only a paper loss for the vast majority of underwater homeowners,” said Stan Humphries, Zillow’s chief economist. “As home values slowly increase and these homeowners continue to pay down their principal, they will surface again.”
Negative equity is still a big risk, however, since it makes homeowners more vulnerable to financial setbacks, such as a medical emergency, job loss or other unexpected expense. If they don’t have their home’s equity to fall back on, it increases their chances of spiraling down into foreclosure.
Having a high percentage of underwater homeowners is also bad for the economy because it can trap borrowers in their homes and prevent them from pursuing employment opportunities elsewhere, according to Humphries. That can make it more difficult for them to advance their careers and for companies to find skilled workers.
Where homeowners are struggling to stay afloat: Of the 30 large metro areas covered by the Zillow report, Las Vegas has, by far, the highest percentage of underwater borrowers at 71 percent. Home prices there are down a whopping 62 percent from peak, according to the S&P/Case-Shiller home price index. A quarter of Vegas borrowers owe more than double what their homes are worth.
Other big markets where more than half of borrowers are underwater include Phoenix (55.5 percent), Atlanta (55.2 percent), Orlando, Fla. (53.8 percent), Riverside, Calif. (53.4 percent), and Sacramento, Calif. (51.2 percent).
Cities with fewer foreclosures, including Pittsburgh, New York, Boston and San Jose, Calif., all had less than 25 percent of borrowers underwater.
Read more on CNNMoney:
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Gary Malin: How to Make Living With a Roommate a Successful Experience
Editor’s Note: Gary Malin (pictured at left) is the president of Citi Habitats, one of New York City’s largest and most successful residential real estate brokerages. He is also a licensed attorney and a member of the Real Estate Board of New York.
Sharing an apartment is a necessity for many people, especially those who are just entering the housing market for the first time on an “entry-level” salary. In these tough economic times, sharing costs with a roommate is a great way to help cut expenses. And living with someone can be a lot of fun and a great bonding experience: Many roommates remain lifelong friends well after their living arrangement is over.
But the success of a roommate relationship is dependent upon two factors — factors that I cannot stress enough — namely, compromise and communication.
1. Do you really want a roommate?
First and foremost, if you are considering a roommate purely for financial reasons, you may be able to afford an apartment on your own — if you are willing to make the required tradeoffs. For example, if you are willing to move farther from the city center — and live in a walk-up building instead of a luxury doorman tower — there is a much better chance that you will be able to find a rental property that fits your budget. It all comes down to your priorities. What is more important to you: privacy, space and independence, or living in a prime neighborhood in a more luxurious building (along with the potential camaraderie of having a roommate)? The decision is yours.
2. Keep it equal.
If you choose to enter a roommate situation, there are a few things you can do to increase the chances of the experience being positive. While it’s not always possible, it helps to start the apartment search on “equal footing,” meaning that both parties are moving into the apartment at the same time. This scenario helps avoid the feeling that the apartment belongs “more” to the first person who got there, which can cause instant tension.
While it may seem cold, it also helps for both roommates to be in similar financial situations. It can cause problems if one party feels they cannot “keep up” with the other or if one roommate feels the other is “pulling them down” (by being late with bills, rent, etc.). What happens if one roommate wants to hire a cleaning service or spring for the premium cable package, and the other can’t afford it? In roommate situations, a similar financial status equals a better chance of success.
It’s also always a good idea for both roommates to sign the apartment lease. This way, both parties have equal rights (and financial responsibility) for the space. In many cases, apartments with two bedrooms will have a larger “master bedroom” (which may include an en-suite bath and/or larger closet space) and a smaller second bedroom. The equitable solution is that the person who sleeps in the larger room pays a larger portion of the rent. Exactly what percentage more should be discussed prior to signing the lease.
3. Communication is key.
Outline your expectations for the new living situation as soon as possible. Be clear as to your expectations up front and don’t hold back — it’s better to discuss these issues prior to the move-in date rather than six months into a lease. What are your thoughts on visitors, the division of chores and sharing personal items or food? Everyone has a different idea of what an ideal roommate should be. Do you want a joined-at-the-hip best friend with whom you share everything, or a nearly invisible roommate who works an opposite schedule and locks the cabinet where their food is stored?
Also keep in mind that there is no better way to kill a friendship than by living together. The reason? People who are friends often take liberties with each other that they wouldn’t dream of taking with strangers or acquaintances. As the saying goes, “You only hurt the ones you love.” It’s often best to live with someone whom you are not emotionally invested in.
4. Don’t go to bed angry.
We’ve all heard this gem of advice when talking about tips for a happy marriage, but it applies to roommates, too. Do not let little annoyances build up. If something bothers you about the other person’s behavior, my best advice is to address it immediately.
It also helps to use a little basic psychology. The “I message” is a powerful and proven tool to help diffuse tense situations. For example, saying “I was disappointed when I came home and saw all the dishes still in the sink” makes the other party react much less defensively than “you never washed all the dishes from last night — it’s still a mess!” Using “I” implies you are responsible for how you feel instead of placing blame on the other person by using the subject “you.”
5. Don’t sweat the small stuff.
As I stated earlier, compromise is a main component of successful roommate relationships. Will your roommate drive you crazy sometimes? I can almost guarantee it. When things are not going so smoothly (and this will happen) remember to put the situation in perspective. In some circumstances, it’s simply not worth the stress. While I 100 percent advocate expressing any issues with your roommate quickly and directly, remember to pick your battles.
With proper planning and a focus on open communication, living with a roommate can be a rewarding experience. It will help you learn valuable skills in dealing with people that transfer to all aspects of life. In fact, I still look back fondly at many experiences I shared with roommates over the years, and I sincerely hope my advice helps you achieve the same result.
Click on the images below to see listings from Citi Habitats.
See also:
6 Steps to Finding the Right Apartment Rental
War Vet Accuses Pacifist Landlady of Discrimination
U.K.’s Speed Roommating Finds a Place in New York
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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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‘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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Mortgage Rates Hit Another Record Low
By Martin Crutsinger
WASHINGTON — Average U.S. rates for 30-year and 15-year fixed mortgages fell to fresh record lows this week, offering more incentive for Americans to buy or refinance homes.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan fell to 3.84 percent, the lowest since long-term mortgages began in the 1950s. That’s below the previous record rate of 3.87 percent reached in February.
The 15-year mortgage, a popular option for refinancing, dropped to 3.07 percent, also a record. The previous record of 3.11 percent was hit three weeks ago.
Cheaper mortgage rates haven’t done much to boost home sales. Rates have been below 4 percent for all but one week since early December. Yet sales of both previously occupied homes and new homes fell in March.
Analysts suspect some of that weakness reflected a warm winter, which pulled sales that would normally occur during the spring buying season into January and February.
Still, many potential buyers can’t qualify for loans or afford higher down payments required by banks. Home prices in many cities continue to fall, making those that can afford to buy uneasy about entering the market. And many who can afford to buy or refinance have already taken advantage of lower rates.
Mortgage rates are lower because they tend to track the yield on the 10-year Treasury note. Mixed news on the U.S. economy and Europe’s debt crisis have led investors to buy more Treasurys, which are considered safe investments. As demand for Treasurys increases, the yield falls.
To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average rage 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 0.8 last week, up from 0.7 the previous week. The fee on 15-year loans was 0.7, the same as last week.
The average on one-year adjustable rate loans also dropped to a record low of 2.7 percent last week, down from 2.74 percent last week. The fee on one-year adjustable rate mortgages was 0.6, unchanged from last week.
Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.
See also:
Home Sales See Best 1st Quarter in 5 Years, Realtors Report
Buying a Home Won’t Get Much Cheaper
Avoiding Foreclosure: More and Better Options Available Now
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Source: http://realestate.aol.com/blog/2012/05/03/mortgage-rates-hit-another-record-low/
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What a Homebuyer Should Know Before Closing
Filed under: News, Advice, Buying, How To
By Leonard BaronIt’s hardly page-turning literature, but there are many reasons why you should read these documents before making any property purchase:
o. Title abstract
o. Title insurance policy and schedule of exclusions
o. Plat or a survey while you walk the property boundaries
o. Homeowners’ association documents (bylaws, board of directors minutes, etc.)
What if you inspected a foreclosure, and everything about it looked great, especially the two parking spaces on the side of the house? Everything was so perfect you didn’t look at the county plat or take the time to have a survey done – you simply rushed to buy it. Then, a week after closing, you show up and there’s a fence closing off the parking spaces you thought were part of your land – turns out they weren’t. The neighbor let the previous owner use those spaces because they were friends. You? You’re out of luck.
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Or, what if you bought a house and the previous owner had given a recorded easement to the neighbor to use your driveway? In this case your neighbor – whom you might like now, but who knows about the future – has the absolute right to park in your driveway, drive across it and work on his car in it.
Or, what if there was a significant restriction on your property, recorded in the property chain of title? Perhaps you’re required to clip your trees so they don’t block the neighbor’s view, or there’s a height restriction on new construction.
Or, maybe someone else owns the subsurface (oil, water, minerals, natural gas) rights to your land and has the right to drill for them from an adjacent property?
Or, perhaps the parking spaces you received in your new condominium garage were also given to another unit?
These are all real situations that occur on real properties. In fact, I’ve either read about or personally been apprised of each one of these issues within the past two years.
The hard truth is: In almost every circumstance listed, the potential for trouble would have surfaced if the new owners had read important documents before purchasing their property. You may decide you can live with a restriction, but wouldn’t you like to know about it before you make the decision to purchase?
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When you buy a property through a multiple listing service transaction, the escrow company will generally provide you with documents relating to the legal rights and responsibilities that come along with your purchase. It may also provide a plat of the property showing its boundaries (or in some areas you may need to have a survey done).
The title insurance company will provide an insurance policy stating that the seller has the right to sell it to you – with some exclusions to the policy. That’s the Schedule of Exclusions, and you need to read and review the issues noted on it. You should also fully review all of homeowners’ association documents.
You, as the buyer, will generally receive all these documents in an inch-thick packet of papers after you are going into escrow. Read them. Get together with your real estate sales professional, title insurance officer and, if necessary, your lawyer. Protect yourself.
You are making one of the most expensive and complicated purchases you will ever make. A little reading, review and research will go a long way toward reducing the chances of something going wrong.
Related:
How to Vet an Investment Property
Buying? Use This Checklist to Avoid Surprises
Demystifying HOA Fees and Special Assessments
Leonard Baron, MBA, CPA, is a San Diego State University Lecturer, a guest blogger on Zillow.com, the author of several books including “Real Estate Ownership, Investment and Due Diligence 101“, and loves kicking the tires of a good piece of dirt! See more at ProfessorBaron.com.
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.
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Source: http://realestate.aol.com/blog/2012/07/03/what-a-homebuyer-should-know-before-closing/
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