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November 2009

Foreclosures moving up the food chain

This article is by Stan Humphries, chief economist for zillow.com.

Recently, there’s been a fair bit of anecdotal discussion around the assertion that foreclosures, once a problem just for the sub-prime segment of mortgages, have been moving up-market. That is, people are suggesting that we’re seeing more foreclosures in the mid- to high-end segments of the market. 

Turns out, there’s a lot of truth to this idea. In 2006, at the height of the real estate bubble, homes in the bottom one-third of home values made up almost 55% of all foreclosures. Homes in the middle one-third of home values made up almost 29% of foreclosures and homes in the top one-third represented just 16% of foreclosures. In the accompanying chart, you can see the dramatic changes in the distribution of home values among foreclosed homes. In July 2009, the bottom one-third made up 35% of foreclosures, compared to 35% and 30% for the middle and top one-thirds, respectively. Those are shocking numbers: Thirty percent of foreclosures are homes in the top tier of local home values. That means that top-tier homes make up almost twice the proportion of foreclosures as they did just three years ago. 

High delinquency rates in Prime, Alt-A and Option ARM mortgage products and declining cure rates (the rate at which borrowers resolve their delinquency status) are resulting in many more foreclosures among borrowers outside of the sub-prime mortgage market (and in higher priced segments of the market). Amherst Securities Group recently provided some data showing the higher delinquency rates for these products and the strong relationship between increased negative equity and decreased probability of resolving delinquency status (see their Exhibit 9, which shows, of borrowers who are 30 days delinquent, the percentage who become 60 days delinquent by their current loan-to-value ratios, where values greater than 100 indicate negative equity). As of the end of the second quarter of this year, Zillow estimated that 23% of single-family homes with mortgages are underwater on their mortgages, so expect cure rates to stay lower than they would be otherwise. 

Methodology
Looking at the distribution of foreclosures by home value can be significantly distorted by the variances in home values across the country. For example, it might appear that high-end homes as a percentage of all foreclosures is quite high nationally, but the reality is simply that areas with lots of foreclosures happen to be areas where home prices are higher. In order to better isolate the distribution of foreclosures by price segment without introducing the geographic variability of home prices, we have examined home prices while controlling for the local price level of all homes. 

Specifically, from all homes in the Zillow database with valuations (~70 million), Zillow computed the ratio between the current house value and the current level of the Zillow Home Value Index for the county in which the home is located. We then computed the 33rd and 66th percentiles of this ratio and assigned all homes to three price tiers: bottom (homes where the ratio was less than the 33rd percentile), middle (homes where the ratio was between the 33rd and 66th percentiles) and top (homes where the ratio was greater than the 66th percentile). We then extracted all foreclosures since 2000 and computed, by month, the percentage of foreclosures in the month represented by homes in each price tier. 

11:22 AM - Nov. 26, 2009 - comments {0} - post comment

Overcoming fear of foreclosure

This article is by Consumer Credit Counseling Service:

Foreclosure numbers continue to rise and many homeowners are at an increased risk of losing their home. While foreclosure can be prevented, many homeowners remain confused or afraid to confront their mortgage problems and take action to help save their home. “Fear often prevents many consumers from seeking help,” said Michelle Jones, senior vice president of counseling for Consumer Credit Counseling Service (CCCS) of Greater Atlanta, Inc. “Overcoming these fears can mean the difference between staying in your home and losing it.”

CCCS counselors address some of the common fears homeowners have about seeking help:

Fear: Homeowners are afraid to let the mortgage company know they are having a problem because they think it will speed up the foreclosure process.

Contacting your lender is an important first step if you want to save your home from foreclosure. It provides you with an opportunity to explain why you have fallen behind on your payments and what steps you are taking to get back on track. Lenders have a financial interest in keeping you in your home and may be willing to alter the terms of your loan or devise a repayment plan.

Fear: Homeowners believe that if their mortgage company has already turned them down for a loan modification, there is no point in contacting a counseling agency.

Many homeowners are turned down for a loan modification because the information they provide to their lender indicates that their expenses exceed their income or that they have not provided accurate documentation and information about their loan. In other cases, the lender may have made a processing error or the investor who owns the loan will not modify loans in accordance with the Making Home Affordable program.

A housing counselor may be able to suggest alternatives that better suit your current financial situation or help you make adjustments that make you a better candidate for a loan modification with your lender.

Fear: Homeowners fear being judged by others for seeking help.

These are challenging financial times. While it may feel like you are the only one struggling, the reality is that many of your friends and neighbors are also finding it difficult to stay afloat. By seeking help, you will not only increase your chances of avoiding foreclosure, you may also serve as an inspiration to others.

Fear: Homeowners think it is better to use all of their financial resources before seeking help.

Many homeowners try to ride out the financial storm, using their savings and depleting their retirement accounts before seeking help. By the time they do seek help, they are in an even more desperate financial situation and they have spent the resources that may have given them more options in dealing with their mortgage crisis.

Fear: Homeowners facing foreclosure fear that their situation is hopeless.

For homeowners facing foreclosure, the feelings of hopelessness and despair can be overwhelming. While for some, seeking help may mean saving their home, it is inevitable that some homeowners will end up in foreclosure. A certified housing counselor can help homeowners work through the foreclosure and build a new path for long term financial success.

Fear: Companies claiming they can save your home charge large, up-front fees.

You can receive counseling from a reputable, nonprofit housing counseling agency at no charge. While there are unscrupulous businesses looking to take advantage of homeowners, there are also many HUD-approved housing counseling agencies that offer help for struggling consumers.

1:10 PM - Nov. 24, 2009 - comments {0} - post comment

Retirement could be a long way away

This article is by bankrate.com

A new study released by Bankrate, Inc. shows that the vast majority of working Americans plan to work as long as they can during retirement age, showing a redefinition of how Americans view traditional retirement plans. The poll, conducted by Princeton Survey Research Associates International, is included in the new Bankrate Financial Literacy series on Retirement Income. 

Among the findings:

-75% of Americans plan to work as long as they can during retirement age. 39% plan to work because they enjoy work while almost one-third plan to work because they’ll need the money;

-Although so many Americans plan on working through retirement age, only 15% of retirees polled are currently employed compared to 84% who are not;

-55% of retirees worry about money and wish they had saved more compared to only 38% who think they have enough money to retire without worry;

-The financial crisis has affected many people’s plans to retire with only 31% expecting to retire on time as planned while 40% plan on postponing their retirement plans;

-53% of Americans made no changes to their investments due to the financial crisis compared to 14% who went with a more conservative investment approach;

-Almost 40% of Americans are investing for retirement on their own with 16% using an asset allocation plan, 15% picking mutual funds based upon performance, and 8% with a target date fund. Twenty-seven percent use a financial adviser for decisions while 18% don’t invest in a retirement plan and 9% don’t utilize any strategies;

-Due to a lack of pension plans like today’s workforce, 26% of retirees polled are relying solely on Social Security for their income. 

“This poll offers an interesting insight into Americans’ views of employment and retirement,” said Julie Bandy, editor in chief at Bankrate.com. “Seventy-five percent of today’s generation plan to work as long as possible, a far cry from that of previous generations. Falling home values and losses in retirement accounts are forcing many Americans to re-evaluate their retirement needs. “ 

12:55 PM - Nov. 22, 2009 - comments {0} - post comment

Teaching your kids financial responsibility

If the current economic recession has taught us anything, it's that financial education and responsibility are critical in today's fast-paced, wired world. All too often, however, children grow up immune to the financial world around them. As a result, they're often ill equipped to manage their own finances when they become adults and leave home.

With the economy in the news almost daily, now's a perfect time to start educating your children about how to manage money more responsibly. The tips below can help you get started.

1. Give an Allowance

If your children don't have money of their own, it's hard for them to really grasp the value of it. So if you don't pay your children allowance, consider starting. You don't need to pay a lot–a little goes a long way. The most important thing is that your children learn the value of completing even small chores around the house to earn their own money.

2. Make a Plan and Set Guidelines

Before you start giving your children an allowance, sit down with them and set some expectations. Discuss the specific chores and timelines for completing those chores, as well as the amount of money they'll earn for each chore and when they'll be paid. This helps instill a strong work ethic in children as well as drive home the message that money is earned, not given.

3. Save for the Future

As part of your financial discussion, consider implementing a savings rule for your children. For example, make a rule to save half or one-third of their allowance. You can go with them to the bank to establish a savings account in their name and then take them to make their deposits. Or, if your children are still young, you can set up a special savings bank. Let your children decorate a jar or can to give it some personality and then have them deposit a portion of their money in that special bank whenever they receive their allowance.

4. Educate on Interest

Talk to kids about savings accounts and the value of interest. If you start a savings bank at home, offer to pay your kids a small amount of interest on their savings. Once a month, sit down with your kids and count how much they have deposited, how much interest they have earned, and how much they have as a result. Compare the amounts each month, so your children can see the benefits not only of saving, but also the benefits of compounding interest.

5. Save for a Big Purchase

The next time your child shows you an expensive toy or big-ticket item that he or she wants, consider striking a deal where the child saves up for half of the cost. For instance, consider a "match plan" in which you match every dollar your child saves for the item. This will not only teach the value of saving, but also help your child learn to budget and plan for expenses–which is a lesson that can pay off in the future when your child becomes a credit-card-carrying adult.

6. Take Your Children Shopping

Take your children grocery shopping with you. As you go down your shopping list, have your children help you compare the prices of the different brands, sales, and quantities per package. You can also have your children try to keep a running tally and make a guess of what the total cost will be.

7. Set Them Free to Shop

Once your children have a sense of money matters, you may want to take the lesson up a notch. For instance, when your children need new school clothes, you try giving them the money and putting them in charge of what to buy. Then, as they shop, help them compare the prices and number of items they can purchase within their budget. You could even purchase a Visa gift card with a specific dollar value on it. That will help your children not only learn about the value of a dollar and making smart purchases, but it will also introduce them to the credit card system, in which money may not seem real because it's unseen. In today's electronic financial world, this lesson will become more and more important as your children get older.

8. Teach by Example

Remember, children are always watching. So if you educate them on saving for purchases and budgeting but make rash decisions on big-ticket items yourself, you may find them learning a different lesson than you intend. So make sure you follow your own rules when it comes to spending, saving, and fiscal responsibility. You may even want to consider discussing your donations to help your children understand the importance of supporting charities.

9. Be Consistent

Teaching children about money isn't something that can be done in a short period of time. Children are always re-experiencing their environments and testing their boundaries. So make sure that once you implement an allowance, savings, and budgeting plan that you stick with it. Over time, you may decide to raise your child's allowance or change the terms of their savings. But those shouldn't be quick decisions. Instead, if you and your child want to revisit the financial plans or to add a new element, take the time to sit down, write out what the changes will be, discuss how this will impact the child's level of responsibility, and make sure you end the conversation with agreement on what will happen going forward. Then, be consistent; don't waiver.

At times your child may beg for an exception. But by being consistent, your children will be much better prepared to deal with the real financial world that they'll face when they grow up.

3:01 PM - Nov. 20, 2009 - comments {0} - post comment

Creating the perfect home office

These days, more and more people are working all or part of the time from home, making a home office a necessity. Here are some tips for creating the perfect home office.

• Closets are great for storage. Not only can they house filing cabinets, but they are also perfect for storing the items you don't need to access on a regular basis. This helps to maximize the actual workspace of your office.
• Shelving is one of the most versatile options for storage. Shelves can be purchased cheaply and come in a variety of sizes. They are easily installed and take up zero floor space.
• Don't forget about your garage. When it comes to older files or anything that is rarely accessed, a garage can provide ample storage space. Word to the wise, however, the garage can be a dirty place. Plan accordingly by storing paper items in boxes and wrapping equipment in protective plastic.
• Visit a store that's dedicated to home organization. Nowadays it seems like nearly every mall has a store of this kind. You'd be surprised at some of the inexpensive, space-saving storage options available.

2:49 PM - Nov. 18, 2009 - comments {0} - post comment

Waiting really could cost you

 Low interest rates this year have lulled many people into believing that home loan rates in the 5.00% and lower range are "normal". This is not the case and if you are in the position where you could refinance or are considering buying a home, complacency is not your friend.

Stimulus provided by the Obama administration has been instrumental in creating the environment that has lowered rates, increased home sales and assisted distressed homeowners.

Uncle Sam Lends a Temporary Hand
Tick tock, tick tock. Just as summer turned to fall on September 22nd, deadlines await two programs that supplied the heat directed at the housing markets.

Government programs in the housing and interest rate arenas are slated to end in coming months. The time to take advantage of these programs is now. Stimulus programs from Washington have led to incentives for first time home buyers (FTHB), artificially low interest rates, and typically unallowable refinance transactions.

Infinite stimulus for the housing sector is not in the cards nor is it reasonable to expect. Deadlines are approaching. Whether you want to buy a home or need to refinance one, do not procrastinate. The best path is to investigate options now before you may find that none are available to you.

First Time Home buyer Alert
If you are a FTHB who wants to take advantage of the tax credit, think two words. GET BUSY. The tax credit of up to $8,000 is set to expire November 30th. While there is talk that this program may be extended, nothing is certain and millions of FTHBs have already taken advantage of the credit. With real estate closings taking as long as 60-90 days, according the National Association of Realtors, you need to get under contract shortly if you want to take advantage of the tax credit.

Home prices are down significantly across the country from their high points the past few years. However, median home prices in August were up 7.8% from their low point earlier this year. If you have been waiting for home prices to decline further, perhaps you should not. Great opportunities are available but many real estate agents report multiple contracts being offered on hot properties. If you wait, you may be disappointed.

Check with your mortgage professional to see if he or she can accommodate you if you go under contract in the next two weeks. Many lenders will still be able to help you but only if you have all your paperwork in order.

Rates Are Great – NOW!
Interest rates dipped in late September to near the lowest points ever recorded. As reported by Freddie Mac, rates for conforming loans approached 5.00% for a 30 year fixed rate and below 4.50% for a 15 year fixed rate with additional fees paid to obtain these rates. Rates for FHA, VA, and USDA Guaranteed loans typically offer slightly higher rates.

There is one reason that home loan rates are as low as they are. Last November the Federal Reserve announced a program to purchase up to $1.25 Trillion in mortgage backed securities. This effort lowered rates to the lowest level of all time and has kept rates, according to Freddie Mac, below 5.50% this year compared to rates as high as 6.48% last year for a 30 year fixed rate.

This program was slated to end December 31st of this year but in September's Federal Open Market Committee meeting, it was announced that the program will be extended to the end of the first quarter of 2010. However, the amount the Fed will purchase will not change.

Peter Hooper, chief economist at Deutsche Bank, told Bloomberg that a sudden end to the Fed purchases could cause rates to rise by a half to one percentage point. If you delay your financing, you could well see rates that are significantly higher than what is available today.

Upside Down – Refinance to 125% of Value
Even if you owe up to 125% more on your mortgage than your home is worth, you may be able to refinance. For example, if your home is worth $200,000 but you owe more than that, qualifying homeowners can now refinance up to $250,000.

The Making Home Affordable program was initially structured to accommodate homeowners with a new loan to 105% of their home's value. This has recently been increased to 125%. There are requirements to qualify including whether your loan is currently owned by either Fannie Mae or Freddie Mac. You can find out if your loan is held by either agency by going to the Loan Lookup section of the Making Home Affordable web site.

According to First American Core Logic, more than 15.2 million homes had negative equity in June of this year. This represents nearly 33% of all mortgaged properties across the country. Where in the past, being upside down on your loan would have precluded your ability to seek relief, you now may have an opportunity.

What Now?
With incredibly low interest rates and current stimulus programs available to help many, explore the options that may best suit you but do so quickly. However, just as you wouldn't go out Trick or Treating on November 1st, options that exist today may not be available to you should you wait.

2:52 PM - Nov. 16, 2009 - comments {0} - post comment

Travel Speak

For many people, insurance can seem like a foreign language that only those fluent in ‘insurance speak’ can understand. To master the art of insurance appreciation however, you don’t need instruction from RosettaStone or Berlitz, just a little help from InsureMyTrip.com. 

“Travel insurance like all insurance is complex,” explains Jim Grace, President and CEO of InsureMyTrip.com, “but a fundamental understanding of industry terms and phrases that commonly cause confusion, can clear up some of the mystery. At InsureMyTrip.com, one of our key goals is to help travelers understand travel insurance, and that means starting with the basics.” These are the top 10 travel insurance terms that every consumer should know as they prepare to purchase trip protection for their upcoming travels: 

1. A.M. Best Ratings – Industry watchdog A.M. Best rates and assesses insurance companies’ financial strength and ability to meet their obligations to policyholders. InsureMyTrip.com features a user-friendly monitoring tool for consumers to check the A.M. Best Ratings of all the leading U.S. travel insurance companies before you purchase coverage.

2. Unforeseen – means not anticipated or expected and occurring after the effective date of the policy.

3. Primary - This section of the policy will pay first, before any other collectible insurance.

4. Secondary - This section of the policy will pay you after any other Primary collectible insurance has paid the claim and the Primary policies’ limits have been exhausted.

5. First Trip Payment Date - This is the date that money first exchanged hands for the trip you want to insure. This is the date the check is written, not the date it is cashed.

6. Pre-existing Medical Condition Waiver - Many policies have a pre-existing medical exclusion, meaning that coverage is not available for pre-existing medical conditions. A Pre-existing Medical Condition Waiver essentially deletes that exclusion and extends your policy to cover pre-existing condition-related risks. To be eligible for a Pre-Existing Medical Condition Waiver, the majority of travel insurance policies require that you purchase your policy within 10 to 21 days of your first trip payment date and insure for the full amount of your non-refundable travel arrangements.

7. Look Back Period - This is the number of days that the insurance company will ‘look back’ from the date the insurance was purchased to see if your claim is related to a pre-existing medical condition. The Look Back Period varies by company and plan and does not apply if you qualified for the Pre-existing Medical Condition Waiver offered by many plans.

8. Cancel For Any Reason – This is an optional benefit that empowers travelers to cancel trips for any reason including sudden unemployment, schedule conflicts, even bad weather, up to two days prior to departure. Cancel For Any Reason policies vary by company and must be purchased within 10-21 days of your first trip payment date.

9. Financial Default – This is a benefit that is part of Trip Cancellation/Interruption coverage. This protection applies if the airline, cruise line, or tour operator goes out of business and you are unable to travel as a result or suffer financial loss. Since this coverage is time sensitive, you must purchase a policy within 10 – 21 days (varies by company) of your first trip payment date. All of the plans that contain this benefit have a 7-30 day waiting period from the time of purchase before becoming effective. Typically, if you purchase travel insurance directly through a travel supplier such as an airline, cruise line, or tour operator, you cannot protect yourself should that travel supplier go bankrupt or become financially insolvent, so it is always best to purchase your travel insurance protection from a third-party source.

10. Travel agent vs. Tour Operator - A Travel Agent is someone who books flights, cruises and tours. A Tour Operator is a company which specializes in the organizing and operation of pre-planned vacations which are usually sold to the public through travel agents. 

2:18 PM - Nov. 14, 2009 - comments {0} - post comment

Roofing 101

This article is by Tim Gentry, technical director of DaVinci Roofscapes:

Replacing a roof is a major investment for any homeowner. When considering such a significant home improvement project, it makes sense that consumers will have questions.

“Thoroughly researching roofing options should be a priority for any homeowner considering a new roof,” says Tim Gentry, technical director of DaVinci Roofscapes®. “Many aspects should be considered, including a product’s warranty, style and durability. A homeowner should ask the question ‘what will this roof do for me’ before making a decision.”

According to Gentry, who served 20 years as a roofing installer and has been in the industry for 40 years, a roof should be carefully selected to complement a home’s design and geographic weather conditions. It should also provide long-term comfort and safety for those who live in the home. Some of the most frequent questions Gentry receives from homeowners nationwide include the following:

Q: What are the pros and cons of different roofing materials?

A: Three-tab asphalt shingles are relatively easy to install, inexpensive and look good on ordinary homes. However, they can be a poor environmental choice because they go to a landfill after 20 years, they perform only moderately well, and they don’t add any special design appeal to a home.

Real wood shingles or shakes look good on some styles of homes and are moderately priced, however they have little or no resistance to fire or impact unless specially treated. They also attract insects, have relatively poor long-term performance and are generally considered a poor use of our natural resources.

Real slate shingles also provide a good look on some styles of homes and can be considered very long-lasting when installed properly. However, they are very expensive and extremely heavy. During installation you can have a significant amount of waste from cracking and breaking of slate tiles.

Metal roofs are perfect for some very specific home designs. They have a unique look to them, are lightweight and snow can easily slide off of them. Watch out when it rains or hails though … these roofs are noisy on the inside of the home during storms.

Synthetic roofing tiles provide a high-performance option for homeowners. The tiles come in a variety of styles, including slate and shake, are lightweight and have long-term durability. These tiles are moderately priced and a good environmental choice. While the look complements many home styles, synthetic roofing tiles are moderately priced, so they’re not affordable for everyone.

Q: What are the life spans of different roofing materials?

A: Generally, real wood will wear out the fastest, followed by three-tab asphalt shingles. You can maybe get 15-20 years out of each of these. Some metal roofs can last up to 50 years, depending on their warranty. Synthetic roofing tiles last up to 50 years and require minimal maintenance attention. Real slate also lasts many years on a home … some slate can last up to 100 years!

Q: Why would I consider synthetic roofing materials over traditional asphalt products?

A: Aesthetics and durability. Typical asphalt shingles look ordinary. Consider this: when you look at many homes, especially those with steep roofs, almost half of what you see is the roof. When selecting a roof, think about curb appeal and resale value. Synthetic tiles make an ordinary home look extraordinary. Additionally, they give the homeowner peace-of-mind because these roofing tiles will perform exceptionally well against fire, impact, wind and other weather conditions.

Q: What is the synthetic roofing material made of?

At DaVinci, we use an engineered polymer, which is impregnated with fire retardant and state of the art advanced UV stabilizers specifically formulated for the tough conditions tiles are exposed to in all climates throughout the year. Our roof tiles use only 100% pure virgin resin in order to assure consistency, and are 100% recyclable.

Q: Do roofing tiles become more brittle over time?

A: That depends on the kind of roofing tiles. Asphalt and real wood roofing materials do become more brittle toward the end of their life cycles. DaVinci tiles do not have that problem. The engineered polymer used in DaVinci synthetic tiles changes very little over time or when subjected to extreme temperature and weather conditions. Third party independent extended life testing has shown minimal degradation of the material’s performance qualities.

Q: Which roofing tiles are consistent with their colors and won’t fade over time?

A: Most synthetic roofing tiles have their color blended completely throughout their tiles. These products won’t fade over time because UV protection has been built into each tile. When exposed to continual sunlight and UV rays, many other products, such as metal and asphalt roofing, will indeed fade over time, losing their original sharpness of color.

2:40 PM - Nov. 12, 2009 - comments {0} - post comment

Where are all the bank owned homes?

This article is by Rick Sharga of RealtyTrac, Inc.

Certain things in life are simply meant to be mysteries. There are ages-old philosophical questions that have kept philosophers busy for millennia: What is the sound of one hand clapping? If a tree falls in the forest and no one is there, does it still make a sound? Other mysteries hang heavy with intrigue: What really happened to Amelia Earhart? And who really kidnapped the Lindbergh baby? And still others simply defy logic: If Denny’s is open 24 hours a day, 365 days a year, why are there locks on the doors?

Now we can add another question to the list of ongoing mysteries: With foreclosure activity breaking records nearly every month, where are all the REOs?

It’s a fair question. In normal market situations, a bank will repossess a home and usually process it through to a listing agent to put on the MLS within 30 days. In a relatively short period of time, virtually every marketable REO property finds itself listed for sale on the local MLS. Today, that’s simply not the case; it’s likely that between 450,000 and 500,000 properties repossessed over the past year are still not on the market. And with buyers hungry for housing bargains, and agents and brokers chomping at the bit ready to sell the properties, it begs for a reasonable answer.

Lenders and servicers admit that it’s taking longer to process REOs than it has in the past, and they offer a number of legitimate reasons:

-Many of the properties have title issues that need to be resolved.

-Many of the properties are in states of utter disrepair.

-A number of states have strict redemption-rights periods, which prevents the lender from reselling the property.

-A few states have extended the length of eviction proceedings.

-The sheer volume of REO activity has created a “pig in the python” phenomena, (to put this in perspective, there will be roughly 10 times the number of REOs this year as in the last “normal” year, 2005).

What else could be slowing things down? A popular theory is that many banks are holding the properties off the market in order to defer losses. There is some accounting logic to this theory, as in most cases, banks aren’t required to adjust asset prices until the actual resale of the property. Another idea is that the industry is holding back the inventory to create leverage with the government in order to force the creation of a “toxic bank” or RTC-like entity that would buy the distressed assets at 50 to 60 cents on the dollar rather than the 30 to 35 cents available on the market today. This theory suggests that, seeing the threat of a massive inventory of distressed homes being released all at once, the government would “blink” rather than risk another housing market meltdown.

Whatever the reason—process issues or conspiracies—we’re going to continue to see record-breaking numbers of REOs for at least the next year, and we’ll all be watching to see when these sought-after homes finally make their way to the market.

2:37 PM - Nov. 10, 2009 - comments {0} - post comment

Best tools of 2009

This article is by Front Range Inspection:

		The first one is called the quick point gun, it is a gun that speeds up the delivery of mortar for repointing/tuckpointing the mortar on brick homes and chimneys. This is a very useful tool for the professional handy man, fix and flipper or anyone looking to upgrade the appearance of a brick wall. Click here for pricing and a short video on its use.
		This one simplifies the leveling challenge, sometimes it is hard to get a cabinet or picture level while paying attention to making the first marks. This little gadget helps you keep your eyes on the prize. It can also be attached to a 48 inch level modernizing your old and trusted friend. Click here for pricing and here for a short video.
		This tool is more for the professional or that tool junkie that needs all the new tools. This little gem lets you look behind all kinds of things (walls, inspection covers, hatches, siding, plumbing and more). Plus you can take pictures with an on board digital camera so you can defer evaluation and diagnosis to your chosen expert confidant. Range in price from $150 to $300 depending on make and extensions needed. This is the best unit I have seen. Clicking here will take you to a website with different models and pricing.
		Keep in mind the holiday season is just around the corner.

2:32 PM - Nov. 8, 2009 - comments {0} - post comment

Home affordability

The 2009 Coldwell Banker® Home Price Comparison Index (HPCI) recently released found a price gap of more than $2 million between the most expensive and most affordable U.S. housing markets.

In the annual comparison of similar 2,200-square foot homes in 310 U.S. housing markets, La Jolla, Calif. led the list as the most expensive real estate market in the country with an average home price of $2,125,000. Grayling, Mich., also known as the “canoe capital of the world,” ranked as the most affordable market in America, where a similarly sized home costs $112,675.

La Jolla was joined on the most expensive list by 13 other California markets while Grayling was one of 20 Midwest communities on the most affordable list. Internationally, Singapore was the most expensive market for the same type of home, $1.9 million U.S. dollars, compared with Salinas, Ecuador, which at $69,375 U.S. dollars was the most affordable studied international market.

Differing from most housing reports that compare median prices, the annual Coldwell Banker HPCI, provides an apples-to-apples comparison of similar 2,200 square foot, four-bedroom, two-and-a-half bath homes in the United States, Puerto Rico, Canada and a sampling of countries/territories outside of North America where Coldwell Banker Real Estate has a presence.

”While price differentials are interesting to compare, I am most intrigued with the affordability levels now seen across much of the nation,” says Jim Gillespie, president and chief executive officer of Coldwell Banker Real Estate LLC. “The four-bedroom, two-and-a-half bath home is one we deem ‘aspirational’ and usually purchased by move-up buyers experiencing lifestyle changes. Thirty percent of the markets show this type of home to be below $200,000, illustrating the opportunity to take advantage of price declines, interest rate levels and increased selection of homes. Encouraging these move-up buyers back into the market is a crucial next step toward helping to rejuvenate the housing industry and the overall U.S. economy.”

A “Snapshot” of U.S. Home Affordability

Offering a “snapshot” of affordability across the United States, the Coldwell Banker HPCI evaluates average home values for select 2,200 square foot single-family homes with four bedrooms, two-and-one-half baths. The cumulative average sales price of the four-bedroom homes surveyed in the 310 U.S. markets (including one in Puerto Rico) covered in the Coldwell Banker HPCI is $363,460.

Through the comprehensive HPCI section on the Coldwell Banker website (http://hpci.coldwellbanker.com), prospective homebuyers and sellers can calculate what similar homes may be worth in other areas and gather preliminary intelligence about the affordability of housing from one market to another.

2009 Coldwell Banker HPCI – Highlights and Top Market Lists
Affordable and Attractive: In addition to Grayling, Mich., the following are interesting tidbits about the other nine most affordable U.S. markets:

-Akron, Ohio ($121,885), won the All-American City award three times and is birthplace to the ice cream cone
-Fayetteville, N.C. ($130,875), a historic city known for its strong military ties
-Canton, Ohio ($131,867), birthplace of American professional football and home to the NFL Pro Football Hall of Fame
-Detroit, Michigan ($132,000), America’s automotive manufacturing and Motown music hub
-Arlington, Texas ($138,775), home to the Dallas Cowboys’ new stadium which will host the 2011 Super Bowl XLV, and the Texas Rangers’ Ballpark
-Macon, Ga. ($139,007), hometown to many legendary soul and blues acts like Otis Redding, and home of the Georgia Music Hall of Fame
-Eau Claire, Wis. ($141,270), which has been named one of the 100 Best Communities for Young People by America’s Promise in the past
-Port Charlotte, Fla. ($142,750), which is minutes away from the Gulf of Mexico and setting to some of the country’s best sunset views
-Wichita, Kans. ($144,625), home to more than 30 museums and a haven for art-lovers, theatre-goers and golfers alike

Low Cost to Homeownership: In total, there are 84 U.S. markets in which the sample home price averages under $200,000. The monthly mortgage cost for homes in this price range could average less than $600, and down payments could amount to less than $4,000.

Luxury Living: La Jolla, Calif. heads the list as the most expensive real estate market in the country ($2,125,000), beating out its California neighbor Beverly Hills, where the average home costs $1,981,750. Greenwich, Conn., whose average price of $1,519,250 places it as the most expensive market on the East coast, followed by Boston at No. 7 overall. In total, 11 U.S. markets exceeded the $1 million average price for the surveyed home. Note: Manhattan in New York City was not included in the study because of the lack of comparable single-family homes.

On Average: The overall national average price of homes in the 2009 Coldwell Banker HPCI is $363,401.

Canadian Prices Reach Record Levels: Canada’s brief market downturn is over, with record prices now seen throughout the resurgent market. Vancouver, BC leads the hot-again west coast at $1.17 million U.S. dollars for the studied home, nearly double that of nearby Burnaby BC at $611,243. Boomtown Fort McMurray at $593,340 surpasses Calgary as Alberta’s most expensive market. Canada’s largest city, Toronto, Ontario comes in at $766,643, while Charlottetown PEI remains the country’s most affordable market, priced at $147,560 U.S. dollars.

Most Expensive Internationally: The most expensive market outside the United States is Singapore, where an HPCI subject home averages $1.9 million U.S. dollars, ten percent lower than La Jolla. Coldwell Banker Real Estate compared a total of 57 markets in 29 countries outside of the United States, with those international home prices averaging $487,844 in U.S. dollars.

The top 10 most expensive and most affordable surveyed U.S. markets overall in 2009 are:

Rank   Most Expensive   2009 Avg. Sales Price   Most Affordable   2009 Avg. Sales Price

1            La Jolla, Calif.              $2,125,000             Grayling, Mich.              $112,675

2           Beverly Hills, Calif.       $1,981,750             Akron, Ohio                    $121,885

3            Greenwich, Conn.         $1,519,250             Fayetteville, N.C.           $130,875

4           Palo Alto, Calif.              $1,489,726             Canton, Ohio                  $131,867

5            Santa Monica, Calif.    $1,460,912             Detroit, Mich.                 $132,000

6            San Francisco, Calif.    $1,363,250           Arlington, Texas             $138,775

7            Boston, Mass.                 $1,337,578           Macon, Ga.                       $139,007

8            Newport Beach, Calif.   $1,315,505           Eau Claire, Wis.               $141,270

9            Palos Verdes, Calif.        $1,237,041           Port Charlotte, Fla.         $142,750

10          San Mateo, Calif.            $1,090,000          Wichita, Kans.                 $144,625

2:16 PM - Nov. 6, 2009 - comments {1} - post comment

When is a foreclosure not a foreclosure?

This article is by George W. Mantor who is known as “The Real Estate Professor” for his wealth building formula, Lx2+(U²)xTFP=$? and consumer education efforts.


 

The latest chapter in the mortgage meltdown is being written in court, as one by one, judges are putting a halt to foreclosures. The latest was a recent Kansas Supreme Court case. In Landmark National Bank v. Kesler, the court held that a nominee company called MERS had no standing to bring a foreclosure action.

Nor was Kansas the first. In August 2008, Federal Judge for the U.S. Bankruptcy Court for the District of Nevada ruled MERS had no standing. ”Indeed, the evidence is to the contrary, the Note has been sold, and the named nominee no longer has any interest in the Note.”

In September of 2008, A California Judge ruling against MERS concluded, “There is no evidence before the court as to who is the present owner of the Note. The holder of the Note must join in the motion.”

On March 19, 2009, the Supreme Court of Arkansas determined that MERS was not the true beneficiary because the Note had been sold. Alabama and Florida have made similar rulings.

In each case, the reason stems from a fundamental misstep in the handling of Notes and Trust Deeds that runs contrary to established court policies which require that the real parties identify themselves to the court. Each of these cases involved MERS and, in each case, the courts’ rationales were almost identical.

First, a little background. Over the last 40 years, mortgage lending has evolved from a bank holding the mortgage to the mortgage being bundled and sold as part of an investment pool, usually in the form of a bond.

As a registered security, the Note is a negotiable instrument, like money or a cashier’s check, and under securities law that Note must be given to the investor. In this case, mortgage backed securities, (MBS) were bundled together in a pool and shipped to…well, we don’t really know.

One of the impediments to an MBS is the need to file assignments for the beneficiaries in each county each time the mortgage is resold. And apparently, no one holds them for very long because most have been passed around several times.

In order to avoid the logistical nightmare of trying to maintain a public chain of title, the biggest lenders joined MERS, Mortgage Electronic Registration Systems, Inc.

MERS was created with the sole intent of evading the recording fees due to the county in which the security is located.

In so doing, in my opinion, they also destroyed the age-old practice of making a public record of information concerning real property in general, and legal interest specifically. The chain of title is a vital record produced to resolve many a dispute.

Now, that’s gone. I believe, erased simply so they themselves, MERS, could siphon off the recording fees for themselves. They sold their business model to lenders as a better way to track mortgages that were being sold and resold all over the world.

But, as there often is with a BIG IDEA, there were also unintended consequences. Only now are they coming to light. Until MERS was challenged in a foreclosure proceeding, no one had taken a look at the law.

The law, according to a Nevada Judge, is that for purposes of foreclosure, both the Note and the Deed of Trust must be assigned. When the Note is split from the Deed of Trust, the Note becomes unsecured. A person holding only a Note lacks the power to foreclose because it lacks the security.

MERS lost track of the Notes. In some cases, according to my research, they deliberately destroyed them.

Every thing was fine until the economy contracted. MERS began foreclosing on delinquent home loans and then one day; someone said “show me the Note.”

In reviewing the judge’s rulings in the above matters, several key points have been determined:

• MERS is not the beneficiary of the Notes and has no skin in the game. It did not lend any money, collect any payments or do anything more than track the sale of the securities.

• Judicial procedure requires that parties identify themselves and prove their standing.

• Splitting the Note and Trust Deed leaves no party with standing to foreclose. The true holder of the Note, the security, paid the lender so the lender is covered. The true holder of the Note was insured by AIG so they are covered. AIG and the banks were bailed out by taxpayers. So, unless the American tax payer can produce a “blue-ink” original Note, no one has standing to foreclose.

• Allowing a foreclosure to proceed without the original Note places the homeowner in double jeopardy. If the original Note were to surface, the holder of the Note would be entitled to payment, but from whom? The borrower is still on the hook.

MERS currently holds 50 to 60 million loans so this is no small matter. And, just because they have lost repeatedly doesn’t mean they will give up. They will keep right on foreclosing in hopes that the homeowner won’t fight back and, in most cases, they won’t be stopped.

2:12 PM - Nov. 4, 2009 - comments {0} - post comment

Sell your home to yourself

This article is from Lifetime Products:

As you look around your home, it’s hard not to notice all the minor flaws. Maybe you want to move to something bigger and better, but your realtor thinks you’re better off staying put for a while. You don’t have to wait out the market in a house that makes you cringe. Instead, real estate expert and author Loren Keim offers a few simple tips to help you turn a flawed house back into your (temporary) dream home: 

Honey Do It Now- As you walk through your home, you’re bound to see little things that have been on the “honey do” list for years: the dripping faucet, broken closet shelves, ugly caulk in the bathtub. Set aside one weekend to tackle all these minor repairs; the house will instantly seem newer, and when it does come time to sell, you’ll already have these things completed. 

Treat Your Windows- Send those dated mini blinds packing. New curtains, drapes and modern blinds may be the quickest, easiest and least expensive method of changing the entire look of a room. Old or worn window treatments can make a room look drab and dated, but a bold new style or color can instantly update a room. 

Splash of Color- A home can be completely transformed by the addition of the right colors. A fresh coat of white paint on the ceiling brightens a room and gives the illusion of height, while bold wall colors drastically change the look of an entire space. Paint wall and door trim in a contrasting color to make it stand out, or match the wall color to blend into the background. Beware: dark colors generally make rooms feel smaller and liberal applications of wallpaper tend to make a home look old. 

The Grass Is Greener- Most realtors will tell you that beautiful lawns help sell homes because they make an entire house look new and fresh. Give your lawn an inexpensive makeover by trimming bushes and trees, weeding the garden and planting colorful flowers. Additionally, remove any large plants that hide the home’s facade and add new mulch to flower beds to really make the exterior pop. 

Spread Out- A major reason people move is for more storage space. However, you can add hundreds of square feet of storage to your current property with an outdoor shed from Lifetime Products. These sheds are weather-resistant, lockable, ventilated and they cost a mere fraction of what you’d spend on a home addition. They also have decorative shutters and a wood grain finish, so they’ll look great in your newly-manicured lawn. 

2:04 PM - Nov. 2, 2009 - comments {1} - post comment

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