Philadelphia Mortgage Stars

Filed under: News, Economy, Foreclosures

WASHINGTON — Government-controlled mortgage giant Freddie Mac has requested $6 billion in additional aid after posting a wider loss in the third quarter.

Freddie Mac said Thursday that it lost $6 billion, or $1.86 per share, in the July-September quarter. That compares with a loss of $4.1 billion, or $1.25 a share, in the same quarter of 2010.

The government rescued McLean, Va.-based Freddie Mac and sibling company Fannie Mae in September 2008 after massive losses on risky mortgages threatened to topple them. Since then, a federal regulator has controlled their financial decisions.

Taxpayers have spent about $169 billion to rescue Fannie and Freddie, the most expensive bailout of the 2008 financial crisis. The government estimates that it will cost at least $51 billion more to support the companies through 2014, and as much as $142 billion in the most extreme case.

Freddie and Washington-based Fannie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past year.

The two mortgage giants buy home loans from banks and other lenders, package them into bonds with a guarantee against default, and then sell them to investors around the world. When property values drop, homeowners default – either because they are unable to afford the payments or because they owe more than the property is worth. Because of the guarantees, Fannie and Freddie must pay for the losses.

Fewer foreclosures and delays in foreclosure processing because of a yearlong government investigation into mortgage lending practices have reduced the companies’ projected losses.

Fannie and Freddie are required to pay 10 percent dividends on the government money they receive. Freddie paid $1.6 billion in dividends to the Treasury Department in the July-September quarter.

Pressure continues on the government to eliminate Fannie and Freddie and reduce taxpayers’ exposure to risk. The Treasury Department put forward a plan in February to slowly dissolve Fannie and Freddie, although that process could take years. Abolishing Fannie and Freddie would transform how homes are bought and redefine who can afford them.

Copyright 2011 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

Also see: Watchdog: Fannie, Freddie Knew of Robo-Signing in 2003 Is ‘Occupy’ Ready to Move Into Foreclosed Homes? Victims of Robo-Signing: Fight the Machine!

%Gallery-137999% More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Find rentals in your area.

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Source: http://realestate.aol.com/blog/2011/11/03/freddie-mac-asks-taxpayers-for-another-6-billion/

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Filed under: News, Refinancing

WASHINGTON — Mortgage rates have reached their lowest levels in six decades, making this the best time in most Americans’ lives to buy or refinance a home. For people who qualify, today’s rates could save thousands of dollars a year.

Yet most people can’t take advantage. Half of would-be buyers say they’ll never save enough for the 20 percent down payment now usually required. And shrunken home values have erased much of the equity that people need to refinance.

“Low rates are great, but the real issue is that the pool of people who can get a loan or refinance is small,” said Greg McBride, Bankrate.com’s senior financial analyst. #mini_module { width: 265px; height:220px; border: none; float:left; margin:10px; font-size:12px;} #mini_module img {border:none; width: 265px; height:131px; border: none; margin:0px; } #mini_module .mini_title { margin: 0px; padding:0px; width:265px; height:131px;} #mini_module .mini_main { margin: 0px; padding:0px; width:265px; height:85px; background: transparent url(http://www.aolcdn.com/travel/bg-short)} #mini_module .mini_item {padding:12px 0px; margin: 0px 20px; border-bottom:1px dotted #CCCCCC;} #mini_module a { color: #49A3CA; text-decoration:none; } #mini_module a:hover { color: #F98419; text-decoration:underline;}

This week, the average rate on a 30-year fixed mortgage fell to 4.12 percent. It’s the lowest for a 30-year fixed loan since mortgage buyer Freddie Mac began tracking rates in 1971. The last time rates were cheaper was in 1951, when most long-term home loans lasted just 20 or 25 years.

The average on the 15-year fixed loan, a popular refinancing option, dropped to 3.33 percent this week. That’s also an all-time low, according to most economists.

Record-low rates have done little to energize depressed home sales. The average rate on the 30-year fixed loan has been below 5 percent for all but two weeks this year. Yet sales of previously occupied homes are on pace for their weakest year since 1997.

Too many would-be buyers can’t come up with a down payment, don’t have a job, lack enough income or are burdened by large debt loads.

Mortgage rates are low largely because investors are worried about the U.S. economy. As a result, they’re moving their money out of stocks and into U.S. Treasurys. Mortgage rates tend to track the yield on the 10-year Treasury note, which touched an all-time low this week.

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

Consider a homeowner who owes $250,000 and is paying 5.09 percent on a 30-year fixed mortgage. That was the average rate on a 30-year fixed loan being offered in January 2010. Refinancing the loan at 4.12 percent could save him or her roughly $2,000 a year.

But many homeowners with good jobs and stable finances have already refinanced in the past year. The average rate on the 30-year fixed loan fell to 4.17 percent last November, and to 4.15 percent last month. Both were previous lows.

Homeowners typically pay a few thousand dollars in closing costs when they refinance. To refinance again, most experts say, rates would need to fall an additional 1 percentage point to make it worthwhile.

Still, plenty of people could benefit from the low rates. More than 75 percent of homeowners with a government-backed mortgage are paying rates above 5 percent.

But most can’t qualify. Mike Anderson, a mortgage broker in Baton Rouge, La., said he’s turning away roughly 40 percent of customers seeking home loans and refinancing.

“I’ve never had to turn down so many loans upfront,” Anderson said.

Banks are insisting that applicants have higher credit scores and make 20 percent down payments if they are a first-time buyer.

Roughly 40 percent of U.S. households have the necessary credit scores above 700 to get a prime mortgage rate, according to an Associated Press analysis of Fair Isaac Corp., or FICO, data.

But just half of potential buyers say they can save enough for a down payment, particularly one as high as 20 percent, according to a survey by the National Foundation for Credit Counseling.

Another problem is that nearly a third of homeowners either have less than 5 percent equity in their home or are “underwater” – that is, they owe more on their mortgage than their home is worth — according to the real estate research firm CoreLogic.

As a result, they can’t afford a down payment on a bigger home and can’t refinance because of lender-imposed limits and the cost of extra fees. The low rates now being offered don’t include such fees, which many borrowers must pay to get the rates. Those fees, known as points, make a mortgage rate, in effect, higher than it’s advertised.

One point is equal to 1 percent of the loan amount. The average such fee for the 30-year loan held steady this week at 0.7 point. For the 15-year fixed loan and for five- and one-year adjustable-rate loans, the average fee was 0.6 point.

Lack of equity is what’s keeping Don Meadows from refinancing. He owes $247,000 on a house in Orlando, Fla., and is paying 7 percent on a 30-year fixed loan. His monthly payment is $1,840.

If Meadows, 40, a sales manager, could refinance at today’s rates, he could save more than $400 a month.

But he has no equity in his home. He bought it two years ago for $274,000. It’s now worth $170,000.

“I couldn’t (refinance) even if I wanted to,” Meadows said. “Now, we just have to ride it out.”

Copyright 2011 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

For more insight on mortgages, see 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. See celebrity real estate.

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Filed under: News, Foreclosures

California expanded its $2 billion program to help homeowners avoid foreclosure to those with second homes as well.

The California Housing Finance Agency established the four Keep Your Home programs using money from the Treasury Department’s $7.6 billion Hardest Hit Fund. Before, borrowers were restricted from modifications, unemployment funds, relocation assistance and even principal reductions if they had a second home.

Officials eliminated the exclusion, because they said many homeowners are co-signers on a second home or are underwater on their first property.

Other changes to the programs include allowing borrowers to take advantage of principal reduction offers even if they completed a cash-out refinance in the past, which many Californians did during the boom.

Read the full story at HousingWire.

See also: How Much Down Payment Do Homebuyers Need? No-Money-Down Mortgage Can Still Be Found in Small Towns New Credit Score Will Tell Lenders More About You Viewpoint: Obama’s Drop-in-the-Bucket Idea for Housing

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/2011/11/11/second-home-owners-eligible-for-mortgage-help/

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Filed under: News, Credit

By Jon Prior

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

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

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

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

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

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

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

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

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

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

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

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

Read more on HousingWire: Fannie and Freddie could reverse course on principal reductions Negative equity gap nears $4 trillion BofaA offers distressed homeowners a chance to stay in 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. See celebrity real estate.

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Filed under: News, Economy, Financing

WASHINGTON — Congressional bargainers have agreed to increase the size of mortgages insured by the Federal Housing Administration in a compromise being hailed by the housing industry but criticized by conservatives.

Under the deal by House and Senate negotiators, the FHA would be able to insure mortgages worth up to $729,750 in the most expensive regions of the U.S. for the next two years. The ceiling had been raised to that level during the financial crisis, but by law it dipped down to $625,500 on Oct. 1.

However, in a bow to conservatives, the bargainers would not increase the current $625,500 limit on mortgages that can be backed in expensive communities by Fannie Mae and Freddie Mac, the government-controlled mortgage giants, and by the Veterans Affairs Department.

Realtors and home builders had lobbied hard to raise the loan limits for all four entities, arguing that the last thing the country’s stubbornly weak housing market needs is stricter limits on government-backed mortgages. They were backed by members of Congress of both parties from areas where housing costs are high, like Southern California and New York.

“We’d have liked broader language, but the FHA is still an important part of the puzzle,” Jamie Gregory, a lobbyist with the National Association of Realtors, said Tuesday.

‘Beyond Ridiculous’

Conservatives and a majority of House Republicans oppose the increase, saying the government should reduce its involvement in subsidizing housing in hopes that the private market would step up.

In a written statement, the president of the conservative Club for Growth called increasing FHA’s loan limits “beyond ridiculous” and said his group would note how lawmakers vote on the issue when they rate members of Congress seeking re-election. He said raising the limits does the opposite of reducing the federal role in housing markets — something that many conservatives and the Obama administration say they want to strengthen the private market and protect federal taxpayers.

It has so far cost the government about $170 billion to rescue Fannie and Freddie, which nearly collapsed in 2008 because of risky loans in their portfolios.

The size of loans that federal agencies can back is based on a formula that includes a region’s median housing cost. More than a fifth of the country’s roughly 3,100 counties would be affected by the higher FHA loan limits.

Helping Buyers With Small Down Payments

FHA insurance is often used by buyers who put down small down payments. The agency has insured more than 40 million homes since it was established in 1934, and last year three quarters of those it insured were first-time buyers.

“It’s good news for the more than 600 counties that faced loan limit decline,” said Robert Dietz, an economist for the National Association of Home Builders. “FHA is important for first-time homebuyers, so that will help support housing demand.”

The provision was included in a bill financing the departments of Housing and Urban Affairs, Commerce, Justice, Transportation and several other agencies for the rest of the government’s fiscal year, which began Oct. 1. It would also keep all other federal agencies functioning through Dec. 16 as lawmakers continue working on permanent spending bills.

The Democratic-run Senate had voted to increase the loan limits in its housing bill, but the version approved by the Republican-led House left the ceilings alone.

The House and Senate are expected to approve the overall compromise legislation later this week.

Also see: Fannie, Freddie Execs Score $100 Million in Bonuses Community Rescues Vet From Foreclosure After TV Story Airs

%Gallery-139176% 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/2011/11/16/fha-mortgage-loan-limits-to-rise-again/

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

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Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

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Filed under: Home Equity

You may not realize that if you want to tap the equity in your home you have two types of loans to choose from: an equity line of credit or equity loan. The most popular is the home equity line of credit. It’s commonly a variable-rate interest line of credit on which you pay just the interest over a term of 10 or 15 years. At the end of the term you have what is

You may not realize that if you want to tap the equity in your home you have two types of loans to choose from: an equity line of credit or equity loan.

The most popular is the home equity line of credit. It’s commonly a variable-rate interest line of credit on which you pay just the interest over a term of 10 or 15 years. At the end of the term you have what is called a balloon payment that you can either pay off with cash or refinance into a new loan or line of credit. You also can pay off and reuse this credit throughout the life of the loan.

The more traditional type of equity loan is a fixed-rate second mortgage on which you pay both interest and principal, with the intent of repaying the loan in full at the end of the loan’s term. That can be 10, 15 or 20 years. When the loan is paid off you cannot reuse if for another project. instead you apply for a new loan. Interest rates on these types of loans are usually higher because they are guaranteed fixed-rate loans.

Traditional second mortgages are more commonly used for a onetime project, such as an addition to your home. The advantage is that your payment on this loan includes principal and interest, so you know the loan will be paid off at the end of the term and you won’t be stuck with a balloon payment.

You can avoid a balloon payment with an equity line of credit — as long as you pay both principal and interest through the life of the loan and the principal amount you choose to pay will be enough to pay down the loan in full.

The costs for an equity line of credit or an equity loan are similar to those for a first mortgage. Sometimes banks offer to pay some of these costs for you as part of a promotion. But, either way, when tapping equity in your home someone will have to pay:

• A fee for a property appraisal to estimate the value of your home;
• An application fee and credit check;
• Points, if required.
• Closing costs, including fees for attorneys, title search, mortgage preparation and filing, property and title insurance and taxes.

Before you even consider taking out an equity line or a loan, be sure you know how you’ll pay it back. You put your home at risk when you tap it’s equity because the house is collateral for the loan. If you don’t make your payments on time the bank can foreclose on the property. That’s why it’s best to think twice if you’re tapping the equity loan to pay off unsecured debt, such as credit cards. While a credit card company can’t foreclose on your house, a company holding your mortgage can.

Also, if you use an equity line of credit with a variable-rate loan, remember that interest can go up and probably will in the next few years, as the economy recovers and the Federal Reserve again worries about inflation.

When the Federal Reserve starts raising interest rates, the interest rate on a variable-rate equity line of credit will increase. Be sure you can pay the higher interest rate even before you take the loan, so you don’t put your home at risk.

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/tapping-your-homes-equity-line-or-loan/

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The average price per square foot has gone up 9.6% on Single Family Homes in Coral Gables from October 2011 to now. That’s a good sign for the Gables Market. If you would like to sell your house, call the Restivo Team today. We will give you a FREE home valuation. We know we can [...]

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Filed under: News, Economy, Home Equity

Even as the Dallas-Fort Worth area pumps itself up for the excitement of the Super Bowl, it also is experiencing a housing crisis mega-bummer: Distressed home sales hit a new high in Dallas-Fort Worth in 2010, creeping into a record 16 percent of total properties sold by agents in this north Texas area. Dallas-Fort Worth had previously been the exception, a pocket of home-value stability in a nation bogged down by sagging house prices.

Sales of distressed homes — that is, short sales, or homes sold due to foreclosure– have grown steadily in north Texas, according to the gurus at Texas A&M University’s Real Estate Center. In 2003, only 5.7 percent of homes sold through real estate agents in the north Texas multiple listing service were “distressed transactions.” Now, Dallas Realtors say the real number is actually much higher.

Not all distress or short home sales are identified in the MLS, and if a real estate agent was not involved in the transaction, it will not be included in statistics. The median price of distressed homes sold in the Dallas-Fort Worth area last year was $57.20 per square foot, compared to $81.52 for non distressed houses.

Dallas broker Alicia Trevino says she thinks the numbers are much higher. The Dallas area has seen a dramatic increase in the last few months of distressed properties for sale or properties that are about to be distressed.

“We still have thousands of homes that are going to come up on the market, homes that were held in moratorium last fall because of the Robo-signing crisis,” says Trevino, who retooled #mini_module {width:265px;height:220px;border:none;float:left;margin:10px;font-size:12px;} #mini_module img {border:none;width:265px;height:131px;border:none;margin:0px;} #mini_module .mini_title {margin:0px;padding:0px;width:265px;height:131px;} #mini_module .mini_main {margin:0px;padding:0px;width:265px;height:85px;background: transparent url(http://www.aolcdn.com/travel/bg-short)} #mini_module .mini_item {padding:12px 0px;margin:0px 20px;border-bottom:1px dotted #CCCCCC;} #mini_module a {color:#49A3CA;text-decoration:none;} #mini_module a:hover {color:#F98419;text-decoration:underline;} See photos of homes for sale in your area and across the country on AOL Real Estate

herself about a year ago to focus on luxury short sales in the venerable Park Cities area. “The existing home market is going to be hurt by the continued saturation of those distressed properties.”

National figures indicate that between 36 and 47 percent of all homes sold across the U.S. were distressed properties, and some experts go as high as 50 percent, making 2010 a banner year for distressed home sales. Consumers are seeing more real estate auctions than ever before. Banks often polish up then hand over their distressed properties to auction houses for quick liquidation sales. Investors are getting great deals out there at these auctions — some as low as 50 percent off the homes’ last listing price. Still, says Trevino, she doesn’t understand why sellers don’t just lower home prices and sell the properties before they get to the bank.

If Dallas/Fort Worth distressed sales are at 16 percent — or even 20 percent — of all local real estate transactions, that is still far below the national norm. While the Dallas market is not robust, it has not suffered as much as other bubble markets, nor has it lost as much in values. In fact, one recent report by the Real Estate Center indicated home values have actually risen in Dallas 1.2 percent, even when shadowed by all the distress. Texas law limits homeowners to how much they can borrow against their home, so far fewer owners are under water with huge home equity loans. And the market is extremely segmented. Certain higher income neighborhoods saw a flurry of real estate activity in December, and local experts think the spring market will be hopping.

Trevino thinks the existing home market is still going to be hurt by the continued saturation of distressed properties, but says that shouldn’t keep buyers away from the beach, so to speak. I think, she says, the next 12 months are going to be the final push. Even if you take a $100,000 bath on your home, think of it as moving equity if you can move up into a bigger home or blue chip real estate. And if interest rates start to creep higher, she thinks buyers will come out of the woodwork.

“I think we will have a great spring market,” says Dallas appraiser D.W. Skelton. “The sellers have gotten more realistic and dropped prices, and I think buyers are finally ready.”

For more insight on mortgages and refinancing see these AOL Real Estate guides:

• Mortgage Jargon in Simple Terms
• How to Get a Low Mortgage Rate
• When to Refinance
• Four Ways to Benefit From a Cash-In Refinance

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Get property tax help from our experts.

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Source: http://realestate.aol.com/blog/2011/02/02/dallas-fort-worth-fails-to-escape-housing-crisis/

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

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Filed under: News, Foreclosures

If you’re teetering on the edge of foreclosure, you may have a much better chance of finding your footing than in years past. Servicers of delinquent or at-risk mortgages appear poised to ramp up their use of alternatives to foreclosure this year, an industry shift that could enable many more homeowners to hold onto their homes through “home retention actions.”

Failing that, if mortgage borrowers have to give up their homes, they might at least find an option that’s preferable to foreclosure.

The analytics firm CoreLogic recently reported that completed foreclosures and the foreclosure inventory in March 2012 have dropped from last year; that indicates banks increasing use of alternatives to foreclosure, a CoreLogic analyst says. The data release showed that the foreclosure inventory had fallen from 1.5 million in March 2011 to 1.4 million in March 2012. The drop came even as foreclosures have stalled in the last year. (Stalled foreclosures would normally increase inventory if everything else were equal.) Completed foreclosures in first quarter of 2012 numbered 198,000, down from 232,000 in first quarter 2011, according to the CoreLogic news release.

“Compared to a year ago, the number of completed foreclosures has slowed,” Anand Nallathambi, chief executive officer of CoreLogic, said in a statement. “Since the foreclosure inventory is also coming down, this suggests that loan modifications, short sales, deeds-in-lieu are increasingly being used as an alternative to foreclosures to clear distressed assets in our communities.”

Short Sales Are Heating Up

The short sale is one tactic that banks are using more often to resolve at-risk and delinquent mortgages. In short sales, homeowners sell their homes for less than their mortgages are worth, resulting in losses for banks.

But a short sale is preferable to a foreclosure for both a mortgage-owner and a borrower: It enables a borrower to mitigate damage to his or her credit score, and allows a bank to limit the loss it might incur from a foreclosure. (For more details see AOL Real Estate’s short sale guide.)

“Banks have put many foreclosures on hold over the past year and a half while waiting for the robo-signing settlement,” says chief economist of listing service Trulia Jed Kolko, referring to the settlement over foreclosure abuses that was finally reached between major mortgage servicers and 49 states in February. And short sales have been increasing, relative to foreclosures, for months now, he says.

Short sales grew at a rapid annual pace last year, according to foreclosure marketplace RealtyTrac. Pre-foreclosure sales, which encompass short sales, rose 33 percent from January 2011 to January 2012. In fact, Bloomberg reports that short sales actually surpassed foreclosure sales in January 2012, citing data from Lender Processing Services (which works with major banks and others in the mortgage industry).

Word on the street corroborates the finding, Zillow chief economist Stan Humphries says: “Anecdotally, we do hear that they’re stepping up short sales quite aggressively.”

The trend seems likely to accelerate: Twin mortgage guarantors Fannie Mae and Freddie Mac announced timelines in April that require servicers of their mortgages, to respond to short sale inquiries from homeowners within a month, or otherwise face penalties.

And Bank of America recently said that it now intends to approve or reject short sales within 20 days. Both timelines, if adopted, would streamline a process that has been known to drag on for many months, often only to end in rejection.

The timelines may spur an increase in short sales by, Humphries says, reducing “a lot of the uncertainty that has occurred here before, where your experience in heading down that path is highly variable.”

Loan Modifications Set to Soar

“Home retention actions,” also have ticked up recently, rising slightly in the last two quarters of 2011, according to the Office of the Comptroller of the Currency. Like short sales, retention actions are used to stave off foreclosure. And they also seem poised to increase in coming months.

One home retention action, the loan modification, is a method that market observers are watching closely: Possible industry developments may precipitate a wave of them.

For one, the Obama administration recently tripled the subsidies that are offered under the Home Affordable Modification Program, which provides loan modifications to delinquent or distressed homeowners. Experts say that may incentivize banks, private investors and even mortgage guarantors Fannie Mae and Freddie Mac (all of whom have put up some resistance to HAMP modifications in the past) to participate in the program.

Among other qualifications: To be eligible for HAMP, you must prove a financial hardship, be at-risk or delinquent on your loan, and have enough monthly income to support a modified payment. (See the rest of the requirements by visiting makinghomeaffordable.gov.)

Then there’s the mammoth sum of principal reductions, which often are a part of loan modifications, that the nation’s five biggest servicers are compelled to perform in the next three years: The banks may forgive well over $30 billion in mortgage debt in order to satisfy credits that they agreed to pay — in the form of principal reduction — as part of the robo-signing settlement.

We should see “an uptick in principal reductions and loan modifications there” for mortgages backed by the five banks involved in the settlement, Humphries says.

Bank of America, one of the banks that agreed to the settlement, has said it will reduce about 200,000 mortgages by an average of $100,000 each.

If you think you may qualify for a loan modification under the settlement, contact your lender or visit nationalmortgagesettlement.com for more information. But keep in mind: Mortgages guaranteed by Fannie Mae and Freddie Mac (which underwrite about 60 percent of U.S. mortgages, as well as mortgages insured by the FHA) are not eligible for modifications under the settlement.

Another possible development could also boost the number of loan modifications in 2012. The Federal Housing Finance Agency may approve principal reduction as a home retention action for Fannie Mae and Freddie Mac-backed loans. Increasing pressure from policymakers, and a recent study that found that this strategy would save the mortgage giants money, may pressure the FHFA to finally give permission to the twin mortgage guarantors to allow servicers of its mortgages, typically banks, to reduce principal on mortgages.

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. See celebrity real estate.

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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

%Gallery-135214% 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/2011/10/18/mortgage-prof-why-banks-foreclose-instead-of-settling-for-les/

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

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

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Filed under: Credit

If you have a credit score at 620 — generally considered the dividing line between good and bad credit — boosting it by 20 points could save you thousands of dollars on your mortgage. And there are simple ways to do this in a short time. An analysis of about 300,000 loan requests received through Zillow.com in September revealed that a homeowner who raises his or her credit score to 640 points may benefit from adSetType('F'); htmlAdWH('93301391', '215', '35'); adSetType('');

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If you have a credit score at 620 — generally considered the dividing line between good and bad credit — boosting it by 20 points could save you thousands of dollars on your mortgage. And there are simple ways to do this in a short time.

An analysis of about 300,000 loan requests received through Zillow.com in September revealed that a homeowner who raises his or her credit score to 640 points may benefit from a 0.10 percent reduction in their annual percentage rate, or APR.

For a $300,000 home loan with a conventional 20 percent down, this yields a savings of $10,000 in interest costs over the life of a 30-year fixed-rate loan.

What about those with credit scores under 620? Without enough loan requests in that segment, Zillow was unable to generate any findings for those deemed to be in the “bad credit” zone. (According to Fico.com, this is an estimated 29.3 percent of all Americans.)

“People with scores under 620 should not expect the same conventional rates,” says Jason Biro, author and founder of the nonprofit, Saving Your American Dream. “Lenders are now looking at entire credit history, such as a bankruptcy or foreclosure, and credit worthiness, not just your score.”

However, Biro says that those falling within the threshold of 620 to 719 should keep working on their credit scores to benefit from lower interest rates. Here’s what you can do to easily boost your score 20 points within a few months:

1. Pull your credit report. Obtain a free copy of credit report from annualcreditreport.com, which you are entitled to each year by federal law. Request a copy from each of the three repositories (Experian, TransUnion, and Equifax) and review them for accuracy.

2. Dispute discrepancies on your credit report. By e-mail or mail, you can appeal any inaccuracies on your report with the repository. According to Biro, if you don’t get a response from the agency within 45 days, the law requires that this information be removed from your credit file.

3. Pay your bills on time and don’t use more than 30 percent of existing credit. Gail Cunningham, vice president of public relations at the National Foundation for Credit Counseling, says 65 percent of your score depends on paying bills on time and the amount of available credit. She suggests using less than 30 percent of your existing lines of credit to see an immediate jump in your score and being diligent about timely bill paying (all you need to cover is the minimum payment required by the due date).

4. Request a score improvement analysis. Another option is to get a score improvement analysis, says Biro, in which mortgage brokers or credit counselors can use credit software to see what you should do first — whether it’s paying down debt to closing down accounts — to bump up your credit score the fastest.

While these tips are what can make the biggest impact in a short amount of time, they won’t magically discharge your credit woes overnight, experts say.

Once the errors are corrected, you’ve reduced your debt or made other necessary adjustments, the improvements should only take a month or so to be reflected in your credit score. However, start to finish, Cunningham recommends beginning the process about three months before you’d like to apply for a loan or refinance your mortgage.

But the good news, she says, is that the lower your credit score, the faster you will see improvement.

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Source: http://realestate.aol.com/blog/2010/12/09/raising-credit-score-reduces-mortgage-costs/

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Here’s a new video we just did explaining Balloon mortgages. Give it a quick view, it’s very short and informative! If you prefer to read a more detailed version, you can find that at Balloon Mortgage Explained.

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Some Bank of America borrowers may be in for principal reductions in amounts exceeding $100,000, according to the latest developments in the settlement the bank and four other large servicers made with state and federal regulators.

Of the five servicers participating in the settlement, BofA is set to pay the largest portion of the total $25 billion settlement. The bank will pay $3.24 billion to the government and $8.58 billion to borrowers.

Of BofA’s total, $1 billion is part of a separate settlement regarding loan origination issues for Countrywide, which BofA acquired in 2008.

While the other four servicers in the national settlement are being required to diminish principal so underwater borrowers have loan-to-value ratios of 120 percent or less, BofA will be reducing principal for about 200,000 homeowners to fall in line with current market values.

For some deeply underwater borrowers, this may result in reductions of more than $100,000.

The expanded principal reductions may prevent BofA from paying $850 million in penalties, according to the Wall Street Journal.

Fitch Ratings responded to the news stating that the 200,000 principal reductions will be “neutral to negative for some RMBS bondholders and potentially beneficial for the bank.”

Fitch suggests the loans most likely to qualify for the extended principal reductions will be those originated between 2005 and 2007.

“Because the bank has already reserved for penalties, any reversals could help BAC’s income going forward,” Fitch stated. “While the agreement will help the bank reduce the amount of penalties it owes over time, the aggregate best case benefit is moderate from a financial perspective.”

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Filed under: News, Advice, Buying, Economy, Lifestyle

Pearl and Bud Crispell hit the road in their RV the day after they retired in 1976. And for decades, that’s where they stayed, living in their 40-foot motor home and traversing the country at will.

But, as is the eventual story of all road warriors, the day came when they hit the proverbial dead end. Unable to manage some aspects of their life and care, living on fixed incomes and not wanting to become a burden to friends and relatives, the Crispells pulled in to the country’s only assisted-living RV Park, the Escapees Care Center in Livingston, Texas. The nonprofit adult day care and residency program, featured in a Columbia University News 21 profile, bills itself as a refuge for RVers whose travels are permanently ended because of age or temporarily interrupted because of an illness.

For a monthly fee of $824 per person, or $1,236 a couple, residents get a spot to park their wheeled homes; three meals a day, every day; two loads of laundry service a week; light housekeeping of their unit; transportation to medical appointments; and access to registered nurses on call 40 hours a week.

The Care Center also functions as a land-based community hub for the residents, providing daily activities, concerts, and a place to socialize. Not to mention a chance to get behind the wheel again: Last Father’s Day, residents competed in blind golf cart races. The drivers had to be legally blind or wear a blindfold while their sighted navigators yelled directions around an obstacle course of parking cones.

At 93 and 90, Pearl, a retired nurse, and Bud, a former IBM engineer, are not without age-related health issues. But her mind is “sharper than my husband wishes it was,” Pearl says. And she has no desire to trade the small confines of their RV for a bigger “land-based residence,” as Escapees call conventional houses. “We didn’t retire to entertain our family,” she says.

Right now the center’s 35 sites are all occupied, by vehicles ranging from minivans to 40-footers. Each unit has its own fresh water supply and a private septic system. While a few residents are in their 90s, most are in the mid- to late 80s, says Robert Brinton, the facility’s executive director and on-site manager. The center doesn’t have a waiting list or immediate plans to expand. Openings occur and there just always seems to be someone who wants it, he said.

%Gallery-137634% Brinton himself joined the Escapees RV Club in 2000 precisely because it has the Care Center. The 60,000-member strong club is founded on the “caring and sharing” principle, which appealed to him, Brinton says. Member donations built the Care Center, which has no mortgage and is thus able to keep expenses low.

The trend toward the “village” approach to aging in place is growing, says Nancy Thompson, senior media relations manager for AARP. She defines it as “co-housing” with a self-selected group of people who build a community together. It allows people to stay in their homes by providing easy access to services, especially transportation. Villages like this “are springing up all over the country,” she said.

Other co-housing units –also known as affinity communities — exist based on other shared commonalities. In Burbank, CA., the Burbank Senior Arts Colony is home to retired artists, musicians, actors and writers. The high-end Rainbow Vision in Santa Fe, N.M., is home to gay, lesbian, bisexual and transgender residents. In addition to its assisted living, it has a cabaret, an award-winning restaurant and a spa, reports AARP.

An AARP story notes that “With 3 million GLBT older Americans — a figure projected to nearly double by 2030 — and typically no adult children to care for them, such communities are expected to multiply.”

To watch a News 21 video featuring the Crispells, click here.

Also see: Baby Boomers Launch Remodeling Boom Rent Your Way to Retirement With a ‘Rental Mortgage’ Gay Housing Project Slated for Palm Springs

%Gallery-114282% More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Find rentals in your area.

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Source: http://realestate.aol.com/blog/2011/10/28/happy-end-of-the-road-for-rvers-assisted-living-on-wheels/

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Filed under: News, Financing

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. #mini_module_blank { width: 269px; height:206px; border: none; float:left; margin:10px; font-size:12px;} #mini_module_blank img {border:none; width: 265px; height:131px; border: none; margin:0px; } #mini_module_blank .mini_main { margin: 0px; padding:0px; width:269px; height:206px; background: transparent url(http://www.aolcdn.com/travel/zing-background-no-photo)} #mini_module_blank .mini_item_header {padding:12px 0px; margin: 0px 20px; font-size:16px;} #mini_module_blank .mini_item {padding:8px 0px; margin: 0px 20px; border-bottom:1px dotted #CCCCCC;} #mini_module_blank a { color: #49A3CA; text-decoration:none; } #mini_module_blank a:hover { color: #F98419; text-decoration:underline;}

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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Filed under: News, Advice, Economy, Financing, Foreclosures, Refinancing

Let’s hold off blaring the triumphant trumpets just yet for President Obama’s plan to allow holders of underwater loans to refinance at a lower rate through revisions in the Home Affordable Refinance Program.

What this change does is amend the loan-to-value ratio in a refinance. By removing the cap on how upside-down you can be, it will allow more people to avail themselves of the lower interest rates out there. You still will owe more than your house is worth, but you can pay less for the privilege.

Here’s what the proposed plan doesn’t do:

1. Reach many people.

The only homeowners who will qualify are those who are current on their underwater loans and have loans that are backed by Fannie Mae and Freddie Mac. (No jumbo loan holders or those with mortgages backed by the FHA or the USDA.) That’s an estimated 800,000 homeowners who can avail themselves of this. To put things in perspective, most experts say there are between 8 million and 9 million people in the foreclosure pipeline — and some put that number as high as 11 million. So 800,000 is hardly a game-changing number.

It is, perhaps somewhat ironically, about the same number of homeowners that HARP has helped to date. When the program was announced in 2009, we were told it would help 4 to 5 million underwater borrowers. To date, just 838,000 homeowners have been able to refinance through HARP. So even if this new tweak doubles the number of people helped, it’s still just a fraction of the number of people in trouble.

2. Reach the people who need it the most.

To qualify, you can have missed only one mortgage payment in the previous year and none in the past six months. The group being targeted here are those who are potential strategic defaulters — folks who go to sleep at night calculating whether it makes financial sense for them to just walk away. They have demonstrated that they can afford the loan because they are current on their payments.

The people who are not being helped here are the ones who can’t afford their mortgages anymore. These are the people at risk of losing their homes because of job loss, income reduction, illness, divorce or adjustable rate loan resets.

So to recap: If you are heading for foreclosure because you choose to be, this could change your mind. If you have no choice in heading for foreclosure, tough noogies to you.

3. Reduce anyone’s principal loan amount.

If your house is worth $200,000 and your loan amount is $250,000, you will still owe the bank $250,000 — just at a lower interest rate than what you originally signed up for. The underlying assumption here is that the housing market will recover sufficiently so that in a few years you will no longer be upside down on your loan — or if that doesn’t turn out to be the case, Obama won’t be running for re-election anymore and you become the next guy’s problem.

4. Help the unemployed.

The days of stated income — or no doc — loans are long gone. Consider them something you’ll tell your grandkids about, along with cell phones without cameras. To qualify here, you’ll need pay stubs, W-2s, tax returns and other documentation. And of course if you don’t have a job, you won’t likely be able to refinance your home into a lower-rate loan.

Here’s a little salt in the wound: Many long-term unemployed keep themselves afloat by working multiple freelance jobs. This puts them in the self-employed category — and even if they’ve managed to stay current on their mortgage, qualifying for the HARP relief would prove difficult because of their fluctuating income.

So the bank would rather keep them at a higher interest rate and wait for them to stumble than let them refinance into a lower interest rate. The fact that they have been making their payments faithfully doesn’t matter. The tweaks to HARP don’t tweak in the direction of the unemployed.

5. Pump more money into the economy.

The underlying logic behind this measure is that the money that those 800,000 lucky homeowners aren’t spending on their mortgage each month is money they’ll spend on other things — eating out, traveling, shopping — and that such spending is good for the economy.

Sorry, but this one has me laughing all the way to the credit union, which is where I suspect most of those homeowners will be headed too. First of all, their numbers are just too thin to make a statistical difference. This isn’t a “jump-start the economy” measure by a long shot. At best, it will allow a proverbial handful of homeowners to splurge on the occasional Friday night pizza, assuming there is enough left over from the “windfall” savings after they pay their health insurance and grocery bills.

Also see: Obama’s Refinance Plan Explained The Mortgage Fix That Can Save the Economy Republican Candidates: Short on Housing Policy, Long on Houses

%Gallery-135214% More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area.

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Source: http://realestate.aol.com/blog/2011/10/24/viewpoint-obamas-drop-in-the-bucket-idea-for-housing/

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Filed under: News, Advice, Home Equity, Investing

While paying down the mortgage is undoubtedly one of the largest financial burdens many Americans have to contend with, it’s certainly not the only long-term investment homeowners need to consider. This is particularly true for homeowners nearing their 60s, for whom financial investments made today can have a lasting impact on their post-retirement income. Our sister site, DailyFinance, addresses this issue in the latest entry of their “Ask the Expert” video series with Regina Lewis.

For 57-year-old Ed, a homeowner nearing the end of his fixed-rate mortgage, the decision to pay off his debt early or begin investing his money elsewhere can make a real difference in just how far his savings will take him. Read his full question, and Regina’s video response, below.

Ed asks: I am 57 years old with a couple more years to work before I retire. I currently have an equity mortgage on my home with $30,000. The house payment is less than $100 a month. I pay $1,100 a month toward the loan. Here is my question. Should I be paying minimal on my mortgage and putting the rest in my 401(k) and hopefully make money on that money, or would you pay the house off by continuing to pay the accelerated payment to get it paid off as quickly as possible? What is my smartest move? I think I know, but want to hear a professional’s point of view. For more expert advice from Regina Lewis, visit DailyFinance.

And to ask the DailyFinance team your own personal finance question, add your comments here.

For more insight on mortgages and refinancing see these AOL Real Estate guides:

• Mortgage Jargon in Simple Terms
• How to Get a Low Mortgage Rate
• When to Refinance
• Four Ways to Benefit From a Cash-In Refinance

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area.

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Source: http://realestate.aol.com/blog/2011/07/13/watch-when-to-pay-off-the-mortgage-early/

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Filed under: News, Advice

Seventeen-year-old Scottsdale, Ariz., resident Caitlin “Caitie” Hemmerle is up to her eyeballs in debt, including owing $600,000 in mortgage loans and another $100,000 in car loans and credit cards.

How did this happen? Easy. Caitie is a victim of child identity theft, a practice that is growing for one simple reason: Nobody bothers to monitor their kids’ credit and ID.In Caitie’s case, the details of which can be seen in the “Today” show video below, investigators determined that her Social Security number was stolen when she was just 3 years old. The scammers went on a shopping spree undetected for years — a buying jag that included taking out at least three mortgages, refinancing twice, buying cars and opening at least 42 credit card or charge accounts in her name.

“Children’s Social Security numbers are uniquely valuable because they’re essentially a clean slate for an identity thief,” says Jamie May, chief investigator with AllClear ID, an identity protection company. “A thief can pair a child’s Social Security number with any name, date of birth or address and create a new identity.”

Caitie’s dad discovered the problem when he signed her up for a free child scan with AllClear ID. The results were startling. The family filed a police report, and AllClear worked to repair Caitie’s credit. All but one account has been removed from her record.

“The best advice to parents is to check for misuse of their child’s information early, before they run into problems like Caitlin’s,” May says.

UPDATE: Caitlin’s case is unusual inasmuch as it was a high dollar amount of debt charged in her name. More typically, the amount is around $50,000, said May. Caitlin’s stolen identity was not discovered for many years, allowing the debt to increase. AllClear found that her Social Security number had been used by eight different people.

The Scottsdale Police Department did not return AOL’s call for comment on this case. May said AllClear turned over its files to the police in August of 2010, more than a year ago.

The problem of stolen IDs is widespread, said May. She said that a complete ID can be bought from various websites for as little as $30.

Children’s information can be stolen from numerous sources. Attacks range from sophisticated cyber-hacks to simple theft of computers, school records, hospital records or other physical equipment containing large amounts of child data.

Visit msnbc.com for breaking news, world news, and news about the economy

And, as the “Today” video points out, when lenders check credit, they frequently don’t match up the Social Security number with the name of the applicant. UPDATE: May says there is no mechanism in place for lenders to do this. All a lender can determine is whether the Social Security number is a valid one.

Here are some things you can do to protect your child from the dangers of identity theft:

o. Monitor the mail. If pre-approved credit offers or other unsolicited financial offers start showing up, it’s an indication that your child has an open credit file.

o. Teach your children not share personal information online, including on social networking sites.

o. Never use your child’s name or Social Security number to open an account for yourself.

o. Check your child’s credit early. Complicated cases could take years to resolve and interfere with their ability to get college loans.

Also see: Child Identity Theft Takes Advantage of Unused Social Security Numbers Three Ways to Protect Your Child Against Identity Theft Child Identity Theft and Other Scams

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Finds homes for rent in your area.

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Source: http://realestate.aol.com/blog/2011/10/14/teenager-owes-600-000-in-mortgage-loans-after-id-theft/

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Filed under: Home Equity

Many of the people losing their homes to foreclosure today find themselves in this situation because they used their home as a piggy bank: tapping their home equity beyond what they could truly afford to carry. If you’re thinking of tapping into the equity in your home, be sure you can afford to make the payments. Remember you put your home at risk when you take an equity line. Your home becomes collateral; and if

Many of the people losing their homes to foreclosure today find themselves in this situation because they used their home as a piggy bank: tapping their home equity beyond what they could truly afford to carry. If you’re thinking of tapping into the equity in your home, be sure you can afford to make the payments.

Remember you put your home at risk when you take an equity line. Your home becomes collateral; and if you can’t make the payments, you could lose your home.

Also, given the uncertainty in the housing marketplace, don’t even think about taking a loan that would be above 80 percent of the market value of your home. That leaves you some room in case house prices drop further. You’ll also get better interest rate offers when you’ll still have 20 percent equity left in your home.

Now let’s map out the decision-making process for tapping equity safely:

Turn 1: Should you take a equity loan or equity line?

When borrowing against the equity on your home you can choose one of two types of loans. One is a equity loan, which is usually at a fixed rate for a fixed amount of money and time. When you pay off that loan the loan will be closed. The second option is an equity line of credit, which is usually at a variable rate. The advantage of an equity line is that once you have it in place you can pay it off and then tap it again through the term of the loan, which is usually 15 years, but other terms may be available. Check with your bank about the specific terms of their equity line or loan programs.

So which type should you take? That depends upon your plan. Also consider which way you think interest rates will be moving. A fixed-rate equity loan may be your best choice if you know that you only want to use if for one specific purpose, pay it off and close the loan. With a fixed-rate you know the interest rate won’t change.

An equity line of credit might be best if you know you have a series of projects you want to do or more than one major purchase you want to make. Your plan is to pay each project or purchase off and then tap the equity. If that’s what you want to do than an equity line of credit may be your best bet, but do remember that the interest rate will be variable and could start to creep up when the Federal Reserve starts to raise interest rates again.

Turn 2: What interest rate should you expect?

Interest rates will vary based on your credit score. Those with the best credit scores of 740 or above can get the best rates that you’ll see quoted on the Internet. For example, currently you can get a $50,000 equity line for as low as 4.84 percent and a $75,000 equity loan for 8.25 percent.

But those favorable rates only go to people with the best scores. FICO has an excellent breakdown showing what you can expect to pay in interest based on your credit score. This will not necessarily be the final quote that you’ll get from your bank, but it gives you an idea of how much more you might have to pay if your credit score is below 740. For example, someone with a credit score of 700 to 719 would pay 0.8 percent more for an equity loan. You can check your credit score for free at CreditKarma.com.

The final interest rate you’re actually offered will depend on the lender. Shop around for rates based on your credit score. Some lenders may offer better rates than others.

Turn 3: Check out the fees

You may find a great interest rate, but if the upfront fees are high that could wipe out any savings from a slightly lower interest rate. Generally it’s best to look for the lowest fees. In fact, some banks are even offering to pay your appraisal costs and waive any application fees. Make sure there aren’t any hidden fees, such as a broker fee to be paid to a third party. Some fees you will likely have to pay include recording fees and an annual fee to use your credit line.

Turn 4: Understand the Tax Benefits

Some people say an equity line is the best way to go, even better than an auto loan or other type of loan, because you can write off the interest. If an auto loan is being offered at 0 percent and you get a good price on the car you want, why put your home at risk at all?

In order to write off the interest on an equity line, you must itemize deductions. If you’re not doing that now, the interest on your equity line likely will not be enough to make it worthwhile in the future. So if you’re choosing an equity line so you can write off the interest, be certain you’ll be able to do so. Also, you can only write off interest on up to $100,000, so if you’re taking an equity line of greater than that amount, the interest on the loan above $100,000 won’t be deductible.

Equity loans and lines of credit can be a good option for you, but use them wisely. Be sure you’ll be able to make the payments for the length of the loan. If you have any doubts about your income, don’t put your home at risk.

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/how-to-tap-home-equity-wisely-02/

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Filed under: Home Equity

WASHINGTON (MarketWatch) — Gary Kent has more foreclosed properties to sell than ever before during his 23 years in the real estate business. The San Diego-based realty agent currently represents about 100 homes for sale, 85 of which are foreclosures. A year ago, Kent represented about 20 homes for sale with only a couple of foreclosures among them. “I feel sorry for the people who lost their homes, but I’m probably

WASHINGTON (MarketWatch) — Gary Kent has more foreclosed properties to sell than ever before during his 23 years in the real estate business.

The San Diego-based realty agent currently represents about 100 homes for sale, 85 of which are foreclosures. A year ago, Kent represented about 20 homes for sale with only a couple of foreclosures among them.

“I feel sorry for the people who lost their homes, but I’m probably going to have to best year I’ve ever had,” Kent said.

While all those foreclosed homes mean opportunity for Kent, they spell trouble for homeowners in the neighborhoods in which they are located. In addition to the potential for dragging down the values of surrounding homes as lenders try to unload, vacant foreclosures also present an inviting target for vandals and squatters.

“When there are a lot of foreclosures in a neighborhood, that will put downward pressure on other homes. The banks will try to get foreclosures off their balance sheet as fast as they can, and they will be aggressive at pricing them,” said Celia Chen, director of housing economics at Moody’s Economy.com.

Even when priced below the competition, foreclosed homes can linger on the market. Kent thinks it could take up to four months to sell the foreclosed properties in his listing book, particularly those that appeal to “low-ballers” and “bottom-feeders” willing to wait in order to pressure lenders into taking just 50 cents to 75 cents on the dollar for the homes.

Although Moody’s Economy.com sees home prices overall declining through 2008 due to excessive inventory, individual owners can take steps to make their property more attractive, Chen said. She recommended home improvements such as fresh paint and landscaping to ward off the impacts of falling prices due to a great number of foreclosures in a neighborhood.

Keeping watch

For those homeowners fearing that the “low-ballers” and banks trying to unload foreclosed homes will sap the value of their own properties, Kent suggested that residents could band together to watch out for a property.

“They could try forming a little neighborhood watch where people watch over that house to make sure there’s no vandalism, no squatters trying to move in, and to keep people from stealing the fixtures of the home,” he said.

Banks will board up houses that are vandalized or that people break into, Kent said. Making sure that doesn’t happen can keep banks from dumping problem homes at fire-sale prices, he said.

Homeowners who have to sell in an area where foreclosures are numerous might want to follow the lead of home builders, which are throwing in extras in to attract buyers while keeping up the selling price.

“One thing that the builders do is to offer to put all kinds of things into the house at no extra charge, like granite countertops,” said David Seiders, chief economist for the National Association of Home Builders. “That gives the buyer more house for the money.”

Also, paying your buyer’s closing costs is an option that some home builders take, Seiders said. Those strategies “help hold the price up, but they do come out of the builder’s margins,” he said, as they would cut into home sellers profits.

More than two million households in the subprime market have already either lost their homes to foreclosure or hold subprime mortgages that are likely to fail in coming years, according to consumer groups.

According to a recent survey from Yahoo Real Estate and Harris Interactive, 22% of homeowners are at least somewhat concerned about the possibility of foreclosure due to their inability to meet monthly mortgage payments.

But even more Americans think there is opportunity in the situation: 37% of all U.S. adults would be at least somewhat interested in buying a house in foreclosure.

Don’t sell in a panic

It’s important to think of homeownership as a long-term investment, said David Berenbaum, executive vice president with the National Community Reinvestment Coalition. “People have been in an environment where they’re flipping homes. We need to look at homeownership as promoting intergenerational wealth.”

Berenbaum added that owners should remain calm rather than panicking and trying to sell now. Owners don’t actually lose money on a home until they sell at a discount to the purchase price, he pointed out.

“We will weather this storm,” he said. “At some point the housing market will come around. What we don’t want to see are homes that are empty, home that create a destabilizing environment.”

Markets at risk

Here is a list of the 10 metro area markets where mortgage delinquency rates have increased the most between the fourth quarter of 2005 and the first quarter of 2007, according to Equifax and Moody’s Economy.com.

* Modesto, Calif. — 3.9% rise

* Stockton, Calif. — 3% rise

* Merced, Calif. — 2.8%

* Port St. Lucie-Fort Pierce, Fla. — 2.7%

* Miami-Miami Beach-Kendall, Fla. Metropolitan Division — 2.5%

* Riverside-San Bernardino-Ontario, Calif. — 2.5%

* Vallejo-Fairfield, Calif. — 2.4%

* Las Vegas-Paradise, Nev. — 2.3%

* Atlantic City, N.J. — 2.2%

* Cape Coral-Fort Myers, Fla. — 2.2%

Ruth Mantell is a MarketWatch reporter based in Washington.

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Source: http://realestate.aol.com/blog/2008/01/28/protecting-your-homes-value-as-foreclosures-rise/

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Filed under: News, Advice, Buying, Economy, Financing, Renting, Selling

Is it possible that the housing crisis is really just a problem caused by our state of mind, not the state of the economy? Is the thing stopping people from buying houses nothing more than their perceptions? Apparently, to some extent, yes.

We are having what, if economists talked like this, could be described as an irrational fear of commitment.

The facts: The recession is considered over, the country’s gross domestic product is growing, unemployment is down and consumer spending is up. Yet, the housing market remains comatose. The only explanation is that we are either all still unemployed and not being counted or we’re scared out of our boots.

Want some more evidence that we’re just one giant anti-anxiety pill away from fixing what ails the housing market?

1. The number of applications for mortgages is down.

It’s becoming a broken record: Interest rates are at all-time lows yet nobody is applying for loans. Yes, lending standards are tighter now — tight enough to put the kibosh on almost 16 percent of all home deals that open escrow – but the bigger problem is that potential buyers are afraid to even try to get a loan. Loan applications for home purchases were down 10 percent in a week, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.

Buyers are just plain scared that banks won’t approve their loan. This is the grownup equivalent of hiding in the playground bushes during recess because you think the cool kids won’t pick you for their team.

2. People don’t believe the worst is over.

They are afraid that home prices might fall further. They are afraid that they could lose their jobs tomorrow. They are afraid of looking like a chump, buying when nobody else is buying.

Without question, the days of house-flipping are over. If you are buying, you are buying for the long haul. Remember this: Rents will most certainly go up — that’s why investors are buying properties like mad nowadays; but mortgages that are locked into the current record-low rates will not. If you are planning on staying put, doesn’t it make sense to buy?

As for losing your job tomorrow, ask yourself this: Really? Do you really think that’s likely? While new jobs aren’t being created with anything close to wanton abandon, neither are they being eliminated with the gusto of three years ago. Do you really want to put your life on hold while you wait to see if The Man sneezes in your direction?

Looking like a chump is a tough one. No one wants to be the last soldier killed before the war ends and no one wants to be a homebuyer who bought when prices were still falling. But that gets back to the long-term strategy. You aren’t buying for now, you are buying for the many years to come.

Fear can be paralyzing, but so can group-think. If you read how nobody is buying, you figure all those nobodies must know something. Yeah, they know how to be lemmings.

3. Consumer confidence has plunged, yet we are spending again — just not on houses.

A recent Nielsen poll found that nine of 10 Americans think the country is still in a recession. The memo went out a while ago that the recession officially ended in June of 2009. Pain and misery have clearly lingered and depressed consumers don’t spend money. But if we’re all so depressed, how do you explain why consumer spending rose in the third quarter by 2 percent. We’re even back to our old ways regarding charging and not saving: Consumer credit is back up to 2009 levels and our savings rate has dropped to 3.6 percent, the lowest level in four years. I see our old ways creeping back, don’t you?

We may not be happy, but we’re spending again. I have but one question: If you are willing to hit Macy’s with enthusiasm, why not the housing market?

%Gallery-139870% Also see: Survey: Most Boomers Would Cover Kids’ Down Payment Will FHA Be the Go-To Source for High-Cost Mortgages? When It Comes to Mortgages, Women Don’t Shop Enough

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Source: http://realestate.aol.com/blog/2011/11/30/viewpoint-is-housing-crisis-just-a-state-of-mind/

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Filed under: News, Advice, Home Improvement

Home improvement contractors play a key role in many home sales. Sellers may need to do some significant repairs to ready their home for market; buyers oftentimes want to customize or renovate their new purchase as soon as they close. Jorgen Wouters of our sister site, WalletPop, offers some valuable advice when hiring the contractor you plan to trust with your home improvement wishes and dreams.

As Spring finally approaches and homeowners around the nation begin to contemplate home improvement projects, the Better Business Bureau is warning consumers to choose contractors with care to avoid getting scammed. According to the BBB, the home improvement industry regularly ranks among the top five sources of complaints year after year. Construction and home improvement scams also placed third among the top 10 consumer complaints reported to the Illinois Consumer Protection Division in 2010. To avoid hiring a sub-standard contractor, the BBB advises consumers to be suspicious of handymen who show up at your door, advertise in local newspapers, or put fliers in your mailbox offering a variety of services at bargain-basement prices.

Read more at WalletPop.com.

Thinking about adding value with home improvements? Here are some AOL Real Estate guides to help you, whether you’re selling or staying.

• Home Improvements: Do It Yourself or Hire a Contractor?
• 10 Home Improvements That Pay You Back
• Home Renovation: Tips for Thrifty Upgrades

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Source: http://realestate.aol.com/blog/2011/03/07/home-improvement-finding-the-best-contractor/

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Filed under: News, Advice

Seventeen-year-old Scottsdale, Ariz., resident Caitlin “Caitie” Hemmerle is up to her eyeballs in debt, including owing $600,000 in mortgage loans and another $100,000 in car loans and credit cards.

How did this happen? Easy. Caitie is a victim of child identity theft, a practice that is growing for one simple reason: Nobody bothers to monitor their kids’ credit and ID.In Caitie’s case, the details of which can be seen in the “Today” show video below, investigators determined that her Social Security number was stolen when she was just 3 years old. The scammers went on a shopping spree undetected for years — a buying jag that included taking out at least three mortgages, refinancing twice, buying cars and opening at least 42 credit card or charge accounts in her name.

“Children’s Social Security numbers are uniquely valuable because they’re essentially a clean slate for an identity thief,” says Jamie May, chief investigator with AllClear ID, an identity protection company. “A thief can pair a child’s Social Security number with any name, date of birth or address and create a new identity.”

Caitie’s dad discovered the problem when he signed her up for a free child scan with AllClear ID. The results were startling. The family filed a police report, and AllClear worked to repair Caitie’s credit. All but one account has been removed from her record.

“The best advice to parents is to check for misuse of their child’s information early, before they run into problems like Caitlin’s,” May says.

UPDATE: Caitlin’s case is unusual inasmuch as it was a high dollar amount of debt charged in her name. More typically, the amount is around $50,000, said May. Caitlin’s stolen identity was not discovered for many years, allowing the debt to increase. AllClear found that her Social Security number had been used by eight different people.

The Scottsdale Police Department did not return AOL’s call for comment on this case. May said AllClear turned over its files to the police in August of 2010, more than a year ago.

The problem of stolen IDs is widespread, said May. She said that a complete ID can be bought from various websites for as little as $30.

Children’s information can be stolen from numerous sources. Attacks range from sophisticated cyber-hacks to simple theft of computers, school records, hospital records or other physical equipment containing large amounts of child data.

Visit msnbc.com for breaking news, world news, and news about the economy

And, as the “Today” video points out, when lenders check credit, they frequently don’t match up the Social Security number with the name of the applicant. UPDATE: May says there is no mechanism in place for lenders to do this. All a lender can determine is whether the Social Security number is a valid one.

Here are some things you can do to protect your child from the dangers of identity theft:

o. Monitor the mail. If pre-approved credit offers or other unsolicited financial offers start showing up, it’s an indication that your child has an open credit file.

o. Teach your children not share personal information online, including on social networking sites.

o. Never use your child’s name or Social Security number to open an account for yourself.

o. Check your child’s credit early. Complicated cases could take years to resolve and interfere with their ability to get college loans.

Also see: Child Identity Theft Takes Advantage of Unused Social Security Numbers Three Ways to Protect Your Child Against Identity Theft Child Identity Theft and Other Scams

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Finds homes for rent in your area.

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Source: http://realestate.aol.com/blog/2011/10/14/teenager-owes-600-000-in-mortgage-loans-after-id-theft/

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Filed under: News, Financing, Refinancing

Mortgage rates are at record lows and should stay that way as long as economic reports continue to be disappointing, according to Bankrate.com, which tracks mortgage rates weekly. However, if you’ve been thinking about refinancing, you should act quickly. If mortgage rates rebound, they could do so fast, according to Bankrate.com.

But don’t make mistakes in your rush to refinance. Here are five of the biggest ones, according to a survey of LendingTree network lenders. LendingTree is an online marketplace of mortgage lenders.1. Overestimating the value of the home. Despite the fact that home values continue to drop, homeowners still tend to over-value their home. As a result, they receive higher-than-expected loan offers. Use our tool to track home prices in your area so you’ll have a better idea how much your house is worth.

2. Hesitating to lock in low rates. Lenders are seeing borrowers waiting for rates to drop further, missing out on the opportunity to lock-in with the current low rates.

3. Focusing only on interest rates. Borrowers often forget to factor in lender fees, loan terms and lender reputations into their decision to refinance. Compare several offers and run all the numbers (including fees) using calculators at Mortgage Professor to see which offer is the best and to determine whether refinancing even makes sense for you.

4. Overlooking shorter-term loans. Remember, the 30-year mortgage isn’t your only option. A 20-year or 15-year mortgage can shorten the life of the loan and significantly reduce the amount of interest paid.

5. Not knowing what documents are required to refinance. If you haven’t taken out a mortgage or refinanced recently, you might not be aware that you need a lot more documentation these days to get a loan. Be ready to provide pay stubs from a recent month, two months of bank and other financial statements, two years of W-2s and, if you’re self-employed, two years of tax returns showing self-sustaining income.

More from Kiplinger: 10 Cities With the Lowest Cost of Living Should I Refinance? 10 Best Value Cities for 2011

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/2011/09/20/5-mistakes-to-avoid-when-refinancing/

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Filed under: Advice, Financing, Credit

By Ismat Sarah Mangla, Money Magazine

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

1. Put your credit on ice.

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

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

2. Ask for time.

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

3. Get at least six quotes.

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

4. Match the lock period to the loan.

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

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5. Opt for an ARM.

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

6. Talk to a broker.

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

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

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. See celebrity real estate.

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Source: http://realestate.aol.com/blog/2012/04/30/6-ways-to-get-a-great-mortgage-deal/

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Filed under: Home Equity

As a first time home buyer there is a lot of new concepts and terminology to get the hang of. The home buying game can be intimidating and you’ll need to seek guidance to learn the lingo. You’ve finally found the perfect home and are working out the finances with your real estate agent and mortgage broker. This step of the home buying process can be eye opening and a shock to the

As a first time home buyer there is a lot of new concepts and terminology to get the hang of. The home buying game can be intimidating and you’ll need to seek guidance to learn the lingo.

You’ve finally found the perfect home and are working out the finances with your real estate agent and mortgage broker. This step of the home buying process can be eye opening and a shock to the wallet in many ways. The costs of financing and closing on a home can be staggering and you may wonder what each of the elements are that are making your monthly payment rise each time you run the numbers.

Often as a first time homebuyer you don’t quite have the twenty percent down on your home that is the standard when you use all those handy online mortgage calculators to figure out your payment. When you have less than the twenty percent down on the cost of your home, you are forced by the bank or mortgage holder to take out PMI, or private mortgage insurance. This protects or insures the bank against the possibility of you defaulting on your loan. The additional monthly cost of the private mortgage insurance can be a substantial line item and add a significant amount of money to your monthly mortgage payment.

Only once you have paid your mortgage down to 78% of the value of the current loan, and are in good standing with the bank, may they drop your PMI. Often times you’ll find it won’t just be an automatic process by the bank. It’s something you’ll probably need to call up and ask for. There may also be a chance you can get your home appraised if home values rise significantly in your area to prove you have 20% equity, and you then have an argument to drop the PMI. You will have to pay for the audit though, and it may not be a quick and simple process working with the mortgage holder to drop the insurance.

Mortgage insurance can be a pain on the pocket book and may seem an unnecessary cost for the struggling first time homebuyer, however this may just be the necessary evil that allows you to get a large loan in the first place. So save, save save your money and get that twenty percent down from the get go or expect to have higher payments for the first couple of years of your new mortgage loan.

Learn more about Types of Mortgages.

See current Mortgage Rates.

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Source: http://realestate.aol.com/blog/2008/11/11/explaining-mortgage-insurance/

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Filed under: News, Advice, Buying, Financing, Foreclosures, How To, Investing, Renting, Selling

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

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

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

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

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

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

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

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

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

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

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

Also see: College Town Real Estate Investments Score High Marks Upside Down on Your First House? Just Buy a Second One! Viewpoint: Why No New Houses May Be a Good Thing

%Gallery-137999% More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Find rentals in your area.

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

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Filed under: News, Advice, Financing, Foreclosures, How To, Selling, Credit

Short sales, the hot potatoes of the real-estate market, are becoming easier to handle. Over the next three years, look for the number of short sales and mediations to grow, as the last reset of those toxic adjustable-rate mortgages comes due and major banks and their servicing divisions get more cooperative.

But throwing a line to upside-down homeowners isn’t happening out of the goodness of lenders’ hearts. They’ve just figured out that it’s a smarter way to do business.

Michelle D. Plevel, broker and short sales division consultant with Chase International, says that over the past three years, lenders have learned that letting homes go into foreclosure left them holding properties that continued to devalue, and in many cases degenerated physically when left unoccupied. Not to mention the public pressure against allowing foreclosed homes to blight neighborhoods and decrease property values. “Lenders have realized that a short sale is much better,” said Plevel.

The biggest obstacle is servicing time: How long it takes the lender to approve the short sale, especially if there’s more than one lender involved. That can scare off a potential buyer. (At a recent short sale symposium for real estate agents, Housing Pulse reported that it takes, on average, three potential buyers to make a short sale stick.) And since short sale properties are sold “as is,” there’s also some uncertainty about what you’re buying.

A Breeding Ground for Alligators?

Julie Escobar, a single mom of three teenage daughters, bid on a $149,000 Tampa, Fla., short sale last year so that she could take advantage of the tax credit offered to first-time home buyers. “The paperwork was a long process,” she said, “but for me, the scariest part was the condition of the house. What was I buying?”

Her biggest fear was what lurked in the “black swamp” in the yard — the in-ground pool. “It was pure sludge,” she recalled, perfect conditions for those Florida alligators. She’d heard that some sellers, angry about losing their homes, use the pool as a receptacle for everything, including car engines, washing machines and household trash.

Escobar closed escrow in 60 days, then assembled a band of teenagers to fish through the muck. Luckily, there were no reptiles. “Everything worked out,” Escobar said, “but I definitely felt that I took a risk.”

For sellers, the risk is not getting the debt relief they seek, ending up in foreclosure, and taking a big hit to their credit rating. Ayanna Dookie bought her home in Baltimore in 2007 for $182,000, getting a 10-year, fixed-rate, interest-only loan. When she decided to move to New York a few years later to pursue an entertainment career, “property values had dropped way below what I had paid for the house,” Dookie said. She ended up selling for $89,000 — less than half what she owed the bank.

The short sale dropped her credit rating from 725 to 697, but at 29, she’s not worried. “I have time to rebuild. This is the time to follow my dreams.”

Getting Short Sale Help

Short sale expert Plevel said that the No. 1 thing for sellers pursuing a short sale to do is find someone strategically trained in loss mitigation.

“John Q. Public can’t handle a short sale by themselves,” she said, “and many real estate agents lack the experience.”

Plevel counsels that sellers should ask potential listing agents how many loan modifications and defaults they’ve handled, and then check their references and ask those clients how the process went.

Rick Keefer of Pacific Union International in the San Francisco Bay Area, another short sale consultant who has closed about $7 million in short sales, suggests these additional tips:

1. Complete short-sale documentation prior to placing your property on the market. That way, an experienced agent/negotiator can identify any potential obstacles. For instance, a second lienholder may want a contribution to remove the lien or to completely extinguish the debt. Many transactions fail, Keefer said, because all the details don’t emerge until weeks or months into the deal.

2. Don’t list too low to start. Banks like to see some days on the market at a reasonable asking price. If you start out too low, the bank may reject your offer. List the property at a fair price, then adjust the price every few weeks until you get an offer.

3. Lenders don’t like to make concessions for repairs. Buyers should inspect the property and send the lender an as-is offer.

4. Take the long view. Make sure the buyer is committed and in the deal for the long haul. If a transaction fails, you have to start at square one and end up losing valuable time.

For more on short sales and related topics, see these AOL Real Estate guides:

• Short Sales: Tips for Home Buyers
• How to Sell Your Home in a Short Sale
• Video: “All About Short Sales.”

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Get property tax help from our experts.

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Source: http://realestate.aol.com/blog/2011/05/24/short-sales-nightmare-or-a-path-to-financial-solvency/

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Filed under: News, Home Improvement

Updated Jan. 7: Andre Hall came back from the holidays to continue repairing a 4-bedroom, 1-bath home he had acquired from a friend facing foreclosure in the West End area of Pittsburgh in November only to find that a city contractor had demolished the 1916-built house that had been vacant for five years.

“When I came back I saw a guy with a backhoe tearing the house down,” Hall told AOL Real Estate.

City records show Hall had six months from the November acquisition date to make repairs on the once-condemned Sheraden neighborhood home that had previously sustained water damage, reported the Pittsburgh Tribune-Review. #mini_module_blank { width: 269px; height:206px; border: none; float:left; margin:10px; font-size:12px;} #mini_module_blank img {border:none; width: 265px; height:131px; border: none; margin:0px; } #mini_module_blank .mini_main { margin: 0px; padding:0px; width:269px; height:206px; background: transparent url(http://www.aolcdn.com/travel/zing-background-no-photo)} #mini_module_blank .mini_item_header {padding:12px 0px; margin: 0px 20px; font-size:16px;} #mini_module_blank .mini_item {padding:8px 0px; margin: 0px 20px; border-bottom:1px dotted #CCCCCC;} #mini_module_blank a { color: #49A3CA; text-decoration:none; } #mini_module_blank a:hover { color: #F98419; text-decoration:underline;}

Hall, 40, who works in home repairs, said he was about three weeks away from being able to Find Local Homes for Sale Browse through photos of millions of home listings on AOL Real Estate See Homes for Sale Search Foreclosures for Sale

move into the 1,613-square-foot home that had an assessed value of $31,000. He planned to live there with his girlfriend, her three children, and his three daughters when they would come visit in the summers from Kansas City, Kan. The couple currently lives in a one-bedroom apartment.

“I wasn’t even able to do Christmas for my girls because everything I had I was putting into the house. This was my gift to them,” he said.

“My dream is done now,” he said. “Someone needs to man up and take responsibility for this.”

P.J. Deller Excavating & Hauling was hired to tear down the home immediately next door, and although it did so, it is accused of also demolishing Hall’s home.

“We have stopped any contracting from going to P.J. Deller until further notice,” a spokeswoman for Mayor Luke Ravenstahl told competing publication the Pittsburgh Post Gazette. “They will not be doing any demolition for the city until our Law Department has appraised the matter.”

The Bureau of Building Inspection wrote to and called Deller in early November, telling the firm that Hall’s home was no longer scheduled for demolition, according to John Jennings, acting chief of Pittsburgh’s Bureau of Building Inspection, who added that the city did not have record of Hall obtaining a building permit to do work on the house.

Still, that doesn’t change that Hall’s house, a pool table, furniture and even his tools inside are now gone. “One of the [demolition] workers even had my lumber in the back of his truck.”

Hall said the workers said they were also to tear down the house next door, but they had started on his first. They had not gotten to the other home by time Hall arrived. If only they had done the other one first.

Hall’s girlfriend, Shawna Jones, told AOL Real Estate that they have not heard from the city at all. “The city has not contacted us and the contractor is missing in action. No one has called us but the news media.”

Hall, who said he was still finalizing homeowner’s insurance for the home at the time of the demolition, said he has contacted a couple of attorneys, but all he wants is a house to live in. He went on a month-to-month lease ever since the previous owner of the home, Lorraine Nichols, began working with him to help him obtain the home. “Everytime I had a court date [about the foreclosure] Lorraine was with me. She gave me the home and didn’t want me to pay her anything. She just wanted me to take care of the $15,000 in back taxes that were owed.” He says there was no mortgage on the home and he would’ve owned it free and clear after the taxes were paid.

“I just need some help getting this resolved, that’s all. I just hope it don’t take three years because I was planning on being in there in three weeks.”

In April, a 69-year-old Denton, Texas woman was also the victim of a wrongful demolition after a crew wrongly tore down most of her house, instead of one across the street, reported the Denton Record-Chronicle.

Thinking about adding value with home improvements? Here are some AOL Real Estate guides to help you, whether you’re selling or staying.

• Home Improvements: Do It Yourself or Hire a Contractor?
• 10 Home Improvements That Pay You Back
• Home Renovation: Tips for Thrifty Upgrades

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Source: http://realestate.aol.com/blog/2011/01/06/home-demolished-by-accident/

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Filed under: News, Advice, Buying, Investing, Selling

Give it to central Indiana real estate agent Jeanne Clarkson for thinking outside the lockbox. The former eBay power seller has packaged three buildings and posted them to the popular online site where the public can buy just about everything — including, thanks to her, a bank building in the town of Anderson, Ind.

Clarkson (pictured) told AOL Real Estate that she’s sold $6 million in commercial real estate using eBay’s classifieds section, and is frankly a little surprised that other agents haven’t caught on to the idea. Right now, she’s got a package on the site priced at $4.5 million that includes a good portion of Anderson’s skyline: the First Merchants Bank building (pictured below), the Union Building (shown above) and a property at 11th and Jackson streets; she already sold the Union Building once using eBay. While there’s plenty of real estate being auctioned on eBay, her listings appear under eBay’s classifieds section.

Clarkson, who is the broker of Elan Real Estate Inc., told WRTV Indianapolis that it’s important to use technology in marketing real estate. She said she’s already heard from people around the world on this listing. Her client is a California investor.

And we suppose if eBay fails, she could always try Craigslist.

Also see: Realtors’ Latest Challenge: A Surge of Squatters Low Refi Rates Are Great, But Not for Everyone How to Buy Foreclosures VIDEO: All About Short Sales

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Find rentals in your area.

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Source: http://realestate.aol.com/blog/2011/09/06/agents-commercial-property-sale-on-ebay-includes-a-bank/

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Filed under: News, Advice, Foreclosures, Investing, Lifestyle

AOL Real Estate asked Utah-based real estate investors Doug Clark and Mike Bard, whose show “Flip Men” premieres this week on Spike TV, for tips on how to flip a foreclosed home. Here’s what they had to say to novice investors:

1. Pick a property that is well within your means.

Don’t allow yourself to get too overextended on the property. Way too often, we have seen people show up at a foreclosure auction and then after one bad deal, their own house is in foreclosure. Everything will take more time and money then you anticipate, so don’t bite off more then you can chew.

2. Prepare to break in.

Foreclosed homes don’t come with keys or contracts. It is up to you to find a way in. Our favorite methods are: Slip the lock with a credit card, lift a window, lift the garage, put your hand through a doggy door and unlock the door from within, climb on the roof and look for an open window.

Get creative and have fun with this step! If you want a set of keys to your new property you need to make your own or call a locksmith and pay $150 to get the job done. Make sure you research the local laws regarding abandoned property. You may have to store any items you find in the house for a period of time before they are yours. Former owners almost never come back for their items, so it’s not out of the question to find cash, furniture, collectibles, firearms and even vehicles.

3. Check everything.

Most foreclosures were abandoned. These homes have many issues, so check all the systems thoroughly. The last thing you want is to find out that the roof is bad or the furnace needs to be replaced the day before closing.

A great tip: Speak to the neighbors. You would not believe how much they know about the houses around them. Don’t avoid disclosing bad news with the house, because the people you sell to will notice everything. Budget for contingency items because they are always there, especially in foreclosures.

4. Tour other houses for sale.

Take an afternoon and tour two or three homes similar to the one you hope to flip. This is your direct competition, so view it that way. How is the curb appeal, paint colors, smell, clutter, layout, backyard, etc. This is especially important if you are new to the business and don’t have the same reference points that a professional flipper does.

5. Price aggressively.

It’s easy to overprice a listing, it’s difficult to under-price one. If you under-price the property, you will get a lot of attention and showings fast, and people will compete for the house. Set the price to move. If you are not getting showings and no one is calling to see the house, then it is priced too high. If you are getting a lot of attention and people are walking through but no offers are being made, then the price is right, but there is something wrong with the house. Call the agent for details and don’t be afraid to ask why the buyers are passing on your house.

Also see: Mansion or Meth House? Flip Men Want to Know Viewpoint: Feeling Guilty About Buying a Foreclosure? ‘Mortgage Prof’: 5 Reasons Banks Would Rather Foreclose Tempted to Invest in Real Estate? Read This First

%Gallery-131160% More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area.

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Source: http://realestate.aol.com/blog/2011/10/25/5-foreclosure-flip-tips-from-the-flip-men/

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Filed under: News, Economy, Foreclosures, Credit

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

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

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

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

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

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

Also see: Foreclosed Homeowner ‘Booby-Traps’ Home Realtors’ Latest Challenge: A Surge of Squatters Foreclosure Rescue Scammers Busier — and Trickier — Than Ever

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. See celebrity real estate.

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

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Filed under: News, Advice, Buying, Financing, Foreclosures, How To, Investing, Renting, Selling

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

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

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

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

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

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

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

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

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

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

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

Also see: College Town Real Estate Investments Score High Marks Upside Down on Your First House? Just Buy a Second One! Viewpoint: Why No New Houses May Be a Good Thing

%Gallery-137999% More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Find rentals in your area.

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

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Filed under: News, Advice

Seventeen-year-old Scottsdale, Ariz., resident Caitlin “Caitie” Hemmerle is up to her eyeballs in debt, including owing $600,000 in mortgage loans and another $100,000 in car loans and credit cards.

How did this happen? Easy. Caitie is a victim of child identity theft, a practice that is growing for one simple reason: Nobody bothers to monitor their kids’ credit and ID.In Caitie’s case, the details of which can be seen in the “Today” show video below, investigators determined that her Social Security number was stolen when she was just 3 years old. The scammers went on a shopping spree undetected for years — a buying jag that included taking out at least three mortgages, refinancing twice, buying cars and opening at least 42 credit card or charge accounts in her name.

“Children’s Social Security numbers are uniquely valuable because they’re essentially a clean slate for an identity thief,” says Jamie May, chief investigator with AllClear ID, an identity protection company. “A thief can pair a child’s Social Security number with any name, date of birth or address and create a new identity.”

Caitie’s dad discovered the problem when he signed her up for a free child scan with AllClear ID. The results were startling. The family filed a police report, and AllClear worked to repair Caitie’s credit. All but one account has been removed from her record.

“The best advice to parents is to check for misuse of their child’s information early, before they run into problems like Caitlin’s,” May says.

UPDATE: Caitlin’s case is unusual inasmuch as it was a high dollar amount of debt charged in her name. More typically, the amount is around $50,000, said May. Caitlin’s stolen identity was not discovered for many years, allowing the debt to increase. AllClear found that her Social Security number had been used by eight different people.

The Scottsdale Police Department did not return AOL’s call for comment on this case. May said AllClear turned over its files to the police in August of 2010, more than a year ago.

The problem of stolen IDs is widespread, said May. She said that a complete ID can be bought from various websites for as little as $30.

Children’s information can be stolen from numerous sources. Attacks range from sophisticated cyber-hacks to simple theft of computers, school records, hospital records or other physical equipment containing large amounts of child data.

Visit msnbc.com for breaking news, world news, and news about the economy

And, as the “Today” video points out, when lenders check credit, they frequently don’t match up the Social Security number with the name of the applicant. UPDATE: May says there is no mechanism in place for lenders to do this. All a lender can determine is whether the Social Security number is a valid one.

Here are some things you can do to protect your child from the dangers of identity theft:

o. Monitor the mail. If pre-approved credit offers or other unsolicited financial offers start showing up, it’s an indication that your child has an open credit file.

o. Teach your children not share personal information online, including on social networking sites.

o. Never use your child’s name or Social Security number to open an account for yourself.

o. Check your child’s credit early. Complicated cases could take years to resolve and interfere with their ability to get college loans.

Also see: Child Identity Theft Takes Advantage of Unused Social Security Numbers Three Ways to Protect Your Child Against Identity Theft Child Identity Theft and Other Scams

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Finds homes for rent in your area.

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Source: http://realestate.aol.com/blog/2011/10/14/teenager-owes-600-000-in-mortgage-loans-after-id-theft/

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Filed under: News, Home Improvement

Updated Jan. 7: Andre Hall came back from the holidays to continue repairing a 4-bedroom, 1-bath home he had acquired from a friend facing foreclosure in the West End area of Pittsburgh in November only to find that a city contractor had demolished the 1916-built house that had been vacant for five years.

“When I came back I saw a guy with a backhoe tearing the house down,” Hall told AOL Real Estate.

City records show Hall had six months from the November acquisition date to make repairs on the once-condemned Sheraden neighborhood home that had previously sustained water damage, reported the Pittsburgh Tribune-Review. #mini_module_blank { width: 269px; height:206px; border: none; float:left; margin:10px; font-size:12px;} #mini_module_blank img {border:none; width: 265px; height:131px; border: none; margin:0px; } #mini_module_blank .mini_main { margin: 0px; padding:0px; width:269px; height:206px; background: transparent url(http://www.aolcdn.com/travel/zing-background-no-photo)} #mini_module_blank .mini_item_header {padding:12px 0px; margin: 0px 20px; font-size:16px;} #mini_module_blank .mini_item {padding:8px 0px; margin: 0px 20px; border-bottom:1px dotted #CCCCCC;} #mini_module_blank a { color: #49A3CA; text-decoration:none; } #mini_module_blank a:hover { color: #F98419; text-decoration:underline;}

Hall, 40, who works in home repairs, said he was about three weeks away from being able to Find Local Homes for Sale Browse through photos of millions of home listings on AOL Real Estate See Homes for Sale Search Foreclosures for Sale

move into the 1,613-square-foot home that had an assessed value of $31,000. He planned to live there with his girlfriend, her three children, and his three daughters when they would come visit in the summers from Kansas City, Kan. The couple currently lives in a one-bedroom apartment.

“I wasn’t even able to do Christmas for my girls because everything I had I was putting into the house. This was my gift to them,” he said.

“My dream is done now,” he said. “Someone needs to man up and take responsibility for this.”

P.J. Deller Excavating & Hauling was hired to tear down the home immediately next door, and although it did so, it is accused of also demolishing Hall’s home.

“We have stopped any contracting from going to P.J. Deller until further notice,” a spokeswoman for Mayor Luke Ravenstahl told competing publication the Pittsburgh Post Gazette. “They will not be doing any demolition for the city until our Law Department has appraised the matter.”

The Bureau of Building Inspection wrote to and called Deller in early November, telling the firm that Hall’s home was no longer scheduled for demolition, according to John Jennings, acting chief of Pittsburgh’s Bureau of Building Inspection, who added that the city did not have record of Hall obtaining a building permit to do work on the house.

Still, that doesn’t change that Hall’s house, a pool table, furniture and even his tools inside are now gone. “One of the [demolition] workers even had my lumber in the back of his truck.”

Hall said the workers said they were also to tear down the house next door, but they had started on his first. They had not gotten to the other home by time Hall arrived. If only they had done the other one first.

Hall’s girlfriend, Shawna Jones, told AOL Real Estate that they have not heard from the city at all. “The city has not contacted us and the contractor is missing in action. No one has called us but the news media.”

Hall, who said he was still finalizing homeowner’s insurance for the home at the time of the demolition, said he has contacted a couple of attorneys, but all he wants is a house to live in. He went on a month-to-month lease ever since the previous owner of the home, Lorraine Nichols, began working with him to help him obtain the home. “Everytime I had a court date [about the foreclosure] Lorraine was with me. She gave me the home and didn’t want me to pay her anything. She just wanted me to take care of the $15,000 in back taxes that were owed.” He says there was no mortgage on the home and he would’ve owned it free and clear after the taxes were paid.

“I just need some help getting this resolved, that’s all. I just hope it don’t take three years because I was planning on being in there in three weeks.”

In April, a 69-year-old Denton, Texas woman was also the victim of a wrongful demolition after a crew wrongly tore down most of her house, instead of one across the street, reported the Denton Record-Chronicle.

Thinking about adding value with home improvements? Here are some AOL Real Estate guides to help you, whether you’re selling or staying.

• Home Improvements: Do It Yourself or Hire a Contractor?
• 10 Home Improvements That Pay You Back
• Home Renovation: Tips for Thrifty Upgrades

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Source: http://realestate.aol.com/blog/2011/01/06/home-demolished-by-accident/

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Foreign nationals wanting to buy property in the United States can do so.  Knowing which Visa to apply for (immigrant or non-immigrant) and deciding whether to invest as an individual or under an LLC or corporation are decisions that an attorney should advise you on.  The options for visas include:  Immigrant vs. Non-Immigrant Visas Business Visas L-1A: Intra-company Transferee Branch or [...]

Source: http://feedproxy.google.com/~r/MiamiRealEstateCafe/~3/bGzFZCb42yg/

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Filed under: News, Home Improvement

Curb appeal counts: If you’re looking to invest some money in your house, look no further than the front door. For the second year in a row, curb appeal projects remain at the top of the list of high-value home improvements, according to just-released data from Remodeling’s 2010-2011 Cost vs. Value Report.

In fact, an entry door upgrade is the curb appeal project that returns the most at resale — and the only one surveyed to recoup its entire cost, at 102 percent payback. Other big returners are a replacement garage door, an upgrade to fiber-cement siding and a wood deck addition. This year’s edition of the annual survey covers 35 exterior and interior improvements, with data on project costs and resale value nationally and by region. As you might expect, home improvement returns overall have taken a hit in recent years, with project costs escalating while home prices have stagnated. This year, for the first time since 2006, the cost of remodeling projects started to come down–but resale values declined even more precipitously.

To read the full survey, visit Cost vs. Value’s official site.

For help making smart home improvements, check out these AOL Real Estate guides:

Improvements That Get Your House Sold Top 10 Home Improvements That Pay You Back Home Improvements Sellers Should Avoid

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/2010/12/15/curb-appeal-is-still-king/

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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:

%Gallery-134664% 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

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. See celebrity real estate.

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Source: http://realestate.aol.com/blog/2011/11/01/1-million-parcel-of-land-can-be-yours-for-350/

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Filed under: News, Advice, Buying, Selling

Even in a good real estate market — which this is not — autumn is when buyers start to nod off before the deep sleep of winter. How does a seller combat the market doldrums this time of year?

Here are five tips for getting your house sold before real estate hibernation season sets in.

1. Determine if you really need to sell.

If you do, keep reading. If you don’t, consider taking your house off the market until the spring. Traditionally — and we admit there is nothing traditional about the current housing market — buyers lose interest in the fall. Kids are settled in school, the holidays are approaching, and buyers’ sense of urgency just evaporates.

In today’s market, it’s all that and more. As a seller, you are competing with foreclosures and short sales as well as standard sellers. Unless you really need to sell, consider delaying the listing of your house for a few months to avoid it sitting on the market and growing stale. If it makes you feel better, let a few agents know that you are still open to an offer and make it a pocket listing. #mini_module { width: 265px; height:220px; border: none; float:left; margin:10px; font-size:12px;} #mini_module img {border:none; width: 265px; height:131px; border: none; margin:0px; } #mini_module .mini_title { margin: 0px; padding:0px; width:265px; height:131px;} #mini_module .mini_main { margin: 0px; padding:0px; width:265px; height:85px; background: transparent url(http://www.aolcdn.com/travel/bg-short)} #mini_module .mini_item {padding:12px 0px; margin: 0px 20px; border-bottom:1px dotted #CCCCCC;} #mini_module a { color: #49A3CA; text-decoration:none; } #mini_module a:hover { color: #F98419; text-decoration:underline;}

2. Update your listing photos, especially if you live in a four-season climate.

It just won’t do to have photos of the trees in full bloom and the lawn nice and green when your house is in Minnesota and it’s January. Yes, you know your house has been on the market for six months, but why underscore that fact to prospective buyers with your photos?

By the way, don’t be afraid of winter photos. House exteriors can look pretty in the snow, but do try and shoot it while the snow is fresh. For the interior photos, light the fire in the fireplace and make sure every room conveys warmth.

If you are shooting the photos with a cell phone camera — and you shouldn’t be — make sure there is no date stamp.

It’s important to change out the photos every season. It’s easy enough to do and different photos “speak” to different buyers. Encourage your agent to update the remarks in the MLS listing as well. “Spend Christmas in front of this beautiful original stone fireplace” won’t fly in February.

3. Know your potential buyers and speak directly to them.

Long gone are the days when buyers would get into bidding wars over houses. But what’s not gone are the emotions that a home can evoke. It’s your job to identify what makes your house a home, and zone in on that emotion — and hire an agent smart enough to do the same. Before you list, ask prospective agents to describe the potential buyer of your house.

It’s important that you and your agent know whether you are marketing to a family, a young professional, someone who wants a sophisticated urban loft. Once that’s determined, think about where you find those people. What publications do they read, what websites do they visit? Where are they likely to look for the house of their dreams?

Los Angeles area agent Gary Harryman of Pritchett-Rapf once listed a pyramid-shaped house in the Santa Monica Mountains. He envisioned his buyer to be a creative type who would appreciate the one-of-a-kind structure that even had a perfectly placed sundial on the floor. He also figured, because of the remoteness of the house, that its buyer would likely be someone who worked from home. Instead of advertising in the traditional outlets, he took out ads in a magazine for astronomers and in The Hollywood Reporter and Variety. It sold.

For family homes, consider advertising in the local school bulletins or in the PTA newsletter. If your home is an equestrian property, try some of the horse publications — or ask some of the local riding stables to post a flyer on their bulletin board. Are you close to public transportation, near the university with a converted garage that students are eager to rent, on a street filled with stay-at-home moms and a playground at the corner? Your selling point may not be a spectacular view, but if you market directly to your audience you may not need one.

4. Make it easy to buy your house.

The biggest obstacle that buyers have today is getting a loan. If you are in a position to, consider offering owner financing. If not that, can you handle a lease-purchase option? Talk to not just a real estate agent, but also an accountant, and get creative. You might find that tax-wise, you are better off with something other than a sale involving a third-party lender.

How else can you help someone afford your home? Is there any room for rental income? Could your garage be converted into a rental unit? Is it set up for a work-from-home business?

Buyers today are shopping situations as much as they are houses. They want bargains and are more savvy than ever before about what homes are selling for. While those bargain-hunters may be drooling over foreclosures and short sales, the convenience and expediency of a standard sale has value.

5. Keep your house comfortable during showings.

In the winter, turn the heat on. In the spring, open the windows. In the summer, stage the patio furniture. And in autumn, rake the leaves, burn some spice candles and remember that the buyer pool has dwindled, so make each showing count.

Also see: Faked You Out! Prop Furniture Finds a Place on Home Stage 5 Staging Tricks for a Quick Sale Latest Open House Bait: Botox and Thai Massages

%Gallery-114122% More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Finds homes for rent in your area.

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Source: http://realestate.aol.com/blog/2011/10/13/5-ways-to-nab-autumn-buyers-before-they-hibernate/

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Filed under: News, Economy, Foreclosures, Home Equity, Selling

The news that 2011 may go down as the worst year in the past 50 for construction of new homes brought out many a weeping violin. Sorry, the strings on mine must have popped.

Yes, I understand that construction jobs — the ones that are created when builders build new homes — are a good thing for the economy. But the dark cloud of no new houses being built may have a silver lining: No new homes means less competition for existing homeowners trying to sell. #mini_module { width: 265px; height:220px; border: none; float:left; margin:10px; font-size:12px;} #mini_module img {border:none; width: 265px; height:131px; border: none; margin:0px; } #mini_module .mini_title { margin: 0px; padding:0px; width:265px; height:131px;} #mini_module .mini_main { margin: 0px; padding:0px; width:265px; height:85px; background: transparent url(http://www.aolcdn.com/travel/bg-short)} #mini_module .mini_item {padding:12px 0px; margin: 0px 20px; border-bottom:1px dotted #CCCCCC;} #mini_module a { color: #49A3CA; text-decoration:none; } #mini_module a:hover { color: #F98419; text-decoration:underline;}

Have we forgotten the economic rule of supply and demand? When the supply is smaller (no more new houses), the demand increases (for existing houses). When the demand increases — especially coupled with record-low interest loans — home values increase. Equity builds in existing homes, fewer people are upside down on their loans. People feel like they can spend again. Remember the old adage about land, how they aren’t making any more of it? Now apply it to houses.

Without the option of shiny new faucets and developers promising low-interest adjustable rate loans that got so many people in financial trouble in the first place, what exists of the homebuying public will be forced to focus its attention on the resale market. Surely with so many short sales and foreclosures out there — not to mention desperate sellers who just need to move — people can find something to their liking.

And stimulating sales of the comatose existing-home market also is a job stimulant, albeit different jobs. It creates work for home inspectors, termite-treaters, appraisers, real estate agents and others in the home transaction pipeline.

And what do new homeowners do if not immediately rush out to call contractors and remodelers? They visit Home Depot, shop for new couches and carpets, put in a swimming pool or refinish the kitchen cabinets. The first impulse of a new homeowner is to put their stamp on the house, making it theirs. Whether it’s as simple as slapping up a new color of paint or putting up a ceiling fan, they spend money on their new baby. And that stimulates the economy.

Don’t believe me? In 2009, new homeowners (those who have owned for two years or less) spent an average of $10,465 on home improvements, compared to $8,532 spent by those who have owned longer, says a Joint Center for Housing Studies report.

Inventory levels are flush in the resale market. Homes stay on the market for ages. Maybe the key to leaving the recession in our rear-view mirror has been in moving the excess housing market all along instead of worrying about how to create more of it.

Your thoughts, readers?

(The photo at top shows a housing development in Rio Vista, Calif., where work was halted in 2008.)

Also see: Viewpoint: What’s Behind Banks’ Big Foreclosure Push? Viewpoint: Hey Mr. President, How About Housing? Million-Dollar Foreclosures, Just Bring Your Checkbook

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Find rentals in your area.

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Source: http://realestate.aol.com/blog/2011/09/21/viewpoint-why-no-new-houses-may-be-a-good-thing/

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From October 2011 to March 2012, the average price per square foot in the 33156 zip code has risen. If you would like to sell your house, call the Restivo Team to get a FREE Home Valuation. Our noteworthy sales record shows that we can sell fast and for the right price!

Source: http://feedproxy.google.com/~r/MiamiRealEstateCafe/~3/ey55RXMBvJM/

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Filed under: News, Credit

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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Filed under: News, Financing, Foreclosures

WASHINGTON — The Obama administration is offering some relief to homeowners who have government-backed mortgages. Under a program President Barack Obama unveiled Tuesday, the government would cut the fees it charges to insure those borrowers.

The idea is that lower fees would persuade millions to refinance their loans while interest rates are near record lows. It’s the administration’s latest attempt to minimize the damage from the foreclosure crisis and help more people keep their homes.

Here’s a look at the program:

Q: What has the administration proposed?

A: Borrowers with mortgages insured by the Federal Housing Administration could refinance at half the current fee. A lower fee would follow years of rising mortgage insurance premiums. FHA is also reducing an up-front premium when it initiates a loan. The FHA charges the fees on top of standard interest rates because it backs riskier borrowers. #mini_module_blank { width: 269px; height:206px; border: none; float:left; margin:10px; font-size:12px;} #mini_module_blank img {border:none; width: 265px; height:131px; border: none; margin:0px; } #mini_module_blank .mini_main { margin: 0px; padding:0px; width:269px; height:206px; background: transparent url(http://www.aolcdn.com/travel/zing-background-no-photo)} #mini_module_blank .mini_item_header {padding:12px 0px; margin: 0px 20px; font-size:16px;} #mini_module_blank .mini_item {padding:8px 0px; margin: 0px 20px; border-bottom:1px dotted #CCCCCC;} #mini_module_blank a { color: #49A3CA; text-decoration:none; } #mini_module_blank a:hover { color: #F98419; text-decoration:underline;}

Q: Who’s eligible?

A: The administration estimates 2 million to 3 million homeowners. Most are first-time or low-income homebuyers. The FHA requires only a 3.5 percent down payment. And borrowers don’t have to prove that they’re employed. FHA borrowers can also refinance even if they’re “underwater,” or owe more on their mortgage than their home is worth.

Q: How much will those who get the reduced fees actually benefit?

A: The fee is now 1.15 percent of the mortgage balance each year. Those fees are unappealing to many borrowers who want to refinance. The plan would cut the fee to 0.55 percent. The current up-front premium would also be lowered, from 1 percent of the loan balance to .01 percent. As a result, a borrower who owed $175,000 on their mortgage could save about $1,750 in one-time fees and more than $1,000 per year in annual fees by refinancing. The borrower could save nearly $150 a month more if the interest rate declined from 5 percent to 4 percent.

Q: Can those who are eligible be excluded from other government housing programs?

A: Most of the other federal housing programs, including its signature refinancing and mortgage modification programs, target other types of homeowners. So there’s little overlap with the FHA’s refinancing plan. For example, the administration’s refinancing and mortgage modification programs are for homeowners whose mortgages are owned or backed by government-controlled Fannie Mae and Freddie Mac, not the FHA.

Q: Will it work?

A: Possibly, if the reduced fees are well-advertised and borrowers are confident of saving on their mortgage payments by refinancing. If homeowners are wary of paying even a small amount to refinance, the program could fail to reach millions who are eligible. Economists said the lower fees are a modest way to help the troubled housing market but won’t turn it around. “The only thing that will do that are low interest rates and job growth,” said Susan Wachter, a professor of real estate at the University of Pennsylvania’s Wharton School. Stan Humphries, chief economist at the real estate website Zillow.com, predicted that a separate plan to compensate military service members who were wrongfully foreclosed upon would be a big help to that group. It’s unclear how many military service members would benefit.

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: Barbara Corcoran on Refinancing Do’s and Don’ts Homeowners Association Forecloses on Vet for $340 Foreclosure Starts and Sales Spiked in January, Report Says

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Source: http://realestate.aol.com/blog/2012/03/07/how-obamas-fha-loan-plan-can-help-you-refinance/

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www.loanofficersforprofit.com Free video training, software, blog and newsletters close more loans now! Here go over marketing tips that i use to generate 7.1 million in commissions.

Source: http://fha-interest-rates.org/2012/05/14/loan-officer-free-video-mortgage-training-marketing-tips/

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Filed under: News, Foreclosures

By Bonnie Kavoussi

Fannie Mae, Freddie Mac, and other mortgage providers have a Christmas present for struggling homeowners: They won’t get thrown out of their houses homes during the holiday season.

Fannie Mae and Freddie Mac will not foreclose on any homeowners between December 19 and January 2, according to statements on their web sites. Private mortgage providers, such as JPMorgan Chase, Wells Fargo, and Bank of America, also said they plan to suspend their evictions during the holidays, according to CNNMoney.

“The holidays are meant for families to spend time together,” Terry Edwards, executive vice president at Fannie Mae, said in a statement.

That holiday spirit will only go so far. During the holidays, Fannie Mae and Freddie Mac acknowledged that they will continue the administrative and legal proceedings leading to foreclosure in their statements.

Read the full story at The Huffington Post.

%Gallery-139166% Also see: Should You List Your Home During the Holidays? 5 Ways to Nab Autumn Buyers Before They Hibernate Family Wrongly Booted From Home Returns To Wreckage

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find rentals in your area.

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Source: http://realestate.aol.com/blog/2011/12/02/fannie-and-freddie-freeze-foreclosures-for-the-holidays/

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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

%Gallery-135214% 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/2011/10/18/mortgage-prof-why-banks-foreclose-instead-of-settling-for-les/

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Filed under: News, Economy, Financing

NEW YORK — If the U.S. economy does not suffer more setbacks, the rate of mortgage holders behind on their payments should decline significantly by the end of next year, according to credit reporting agency TransUnion.

Mortgage delinquency rates — the ratio of borrowers 60 or more days behind on their payments — will likely tick up to about 6 percent through the first three months of 2012, TransUnion said in its annual delinquency forecast issued Wednesday.

But by the end of next year, it could drop to 5 percent, TransUnion said. That’s well off the peak of 6.89 percent seen in the fourth quarter of 2009.

Chicago-based TransUnion’s forecast takes into consideration several factors, including expectations that consumer confidence and the economy will improve next year.

Also, banks are expected to get a good portion of pending foreclosures off their books next year, said Charlie Wise, TransUnion director of research and consulting.

Slowed by Foreclosures

Banks are still working through a backlog of foreclosures created by issues including the robo-signing scandal, in which bank officials signed mortgage documents without verifying the information they contained. The issue surfaced last year in areas with large numbers of foreclosures, and banks had to backtrack and review foreclosures across the country to make sure their paperwork was in order.

That slowed down the process, Wise said, and left mortgages listed as delinquent for longer than they otherwise might have been, temporarily boosting delinquency rates.

Economic uncertainty has also contributed. In the third quarter of 2011, mortgage delinquencies saw their first uptick in six quarters, largely fueled by concerns over the economy as lawmakers were debating the U.S. debt ceiling and Europe’s debt crisis was unfolding.

Helping to cut the mortgage delinquency rate are a slowly improving job market and a stabilizing housing market.

While the drop will be significant, the rate will remain well above the pre-recession average of 1.5 to 2 percent.

“We have a long way to go to get back,” said Steven Chaouki, a TransUnion vice president.

The situation with credit cards is much stronger. Card delinquencies — payments late by 90 days or more — dropped to their lowest levels in 17 years during the spring, then saw a slight increase in the third quarter, but still remained near historic lows.

TransUnion expects further edging up in the current quarter and the first three months of 2012, but then late payments on bank-issued cards should fall again.

Credit Still Tight

One reason card delinquencies are expected to remain so low is that credit is much tighter than it was before the recession. TransUnion data showed that nearly a quarter million new card accounts were opened by people with less-than-stellar credit scores during the third quarter, which contributed to the slight increase in late payments during the summer months. But banks are mainly still going after consumers with top-tier credit histories.

“Lenders are willing to lend, but are still pursuing the best customers,” said Chaouki.

TransUnion predicts by the end of 2012, just 0.69 percent of cards will be considered delinquent, down from a predicted 0.74 percent in the current quarter. The rate has wobbled in the last few years, peaking at 1.36 percent in the fourth quarter of 2007, then dropping and bouncing back up to 1.32 percent in the first quarter of 2009.

The figures reflect a shift in which debt payments consumers consider most important, largely because home prices fell so far.

Chaouki said the conventional wisdom before the Great Recession was that homeowners would put their mortgages first because of concern about their reputation and the emotional attachment involved in owning a home. But what has become clear as housing prices have continued to fall, he said, is that bill payment is far more practical.

“People were protecting their home equity,” he said. Credit cards were relatively easy to come by in years past, he said, so when money got tight, it was an easy decision to default on cards and maintain house payments. Now it’s common to owe more on a mortgage than a house is actually worth, but credit cards are harder to get. So consumers are being practical and protecting what is more valuable to them.

He said he expects the equation will shift again if housing prices rebound and people go back to building home equity.

Copyright 2011 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

%Gallery-139870% See also: Detroit Mom Trades $96,000 House for Used Minivan Fannie and Freddie Freeze Foreclosures for the Holidays Viewpoint: Is the Housing Crisis Just a State of Mind?

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Finds homes for rent in your area.

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Source: http://realestate.aol.com/blog/2011/12/07/mortgage-delinquency-to-drop-sharply-in-2012-report-says/

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Filed under: News, Investing

As the Iowa Republican caucus hogs the media spotlight, a less reported but perhaps equally compelling story continues to unfold in the Hawkeye State.

While most of the country continues to struggle with the aftershocks of the housing meltdown, Iowa is riding the wave of a remarkable real estate boom. Republican primary candidates in Iowa needn’t fear broaching the subject of real estate as they might in other states: farmland prices in Iowa have skyrocketed more 30 percent in the last year alone, MSNBC reports.

The rapid climb in prices continues a trend that has emerged over the last few years in states across the grain belt. Prices of farmland in some parts of Iowa rose 23 percent last year, The New York Times has reported. The spike has been driven by a boom in crop prices. Buoyed by rising demand for ethanol, the price of corn, for example, has tripled in only half a decade, reports MSNBC.

Some land in Iowa recently sold for $20,000 an acre, setting a state record.

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Reminiscent of the real estate boom leading up to the 2007 meltdown, the rise in farmland prices has some experts cautioning that Iowa and its neighbors could be incubating the country’s next real estate bubble. The Times reports that the president of the Federal Reserve Bank of Kansas City, Thomas M. Hoenig, told the Senate Agriculture Committee in February that farmers could suffer from a drop in real estate prices if grain prices were to fall and interest rates tick up.

But the risk of implosion may not be as high as some fear, since many land buyers are paying hefty cash down payments for their purchases. MSNBC was told that buyers are often required by banks to pay for close to half of the land that they buy upfront. Strict lending standards like that stand in stark contrast to those that fed the subprime loan crisis.

For the moment, Iowa appears to be poised to enjoy the current rise in real estate prices.

Meanwhile, real estate markets for much of the rest of the country are still sputtering. The Standard & Poor’s/Case Shiller Index released last week reported that real estate prices dropped in 19 of 20 cities from September to October. And as of October, banks looked to be on track to repossess 800,000 homes by the end of 2011.

One recent report from the National Association of Realtors has offered a glimmer of hope on an otherwise bleak horizon, however. According to the report, pending home sales in November reached their highest level in a year and a half, possibly indicating the beginning of a market turnaround.

Also see: How Large We Live: Average Home Sizes Across the U.S. 2011 in Real Estate: The Top 11 News Stories

%Gallery-142373% More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. See celebrity real estate.

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Source: http://realestate.aol.com/blog/2012/01/03/iowa-real-estate-boom-defies-slump-felt-elsewhere/

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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?

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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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Filed under: News, Advice, How To, Credit

It’s a Catch-22 if ever there was one. The very process of shopping around for a low interest rate on a mortgage can adversely impact your credit score and cost you your eligibility for the cheaper loan you’re seeking.

Each time a lender does what is known as a “hard pull” on your credit report, their action actually shaves a few points off your score. A lower credit score means a higher mortgage rate. (You can check your own score 500 times a day and it won’t matter. A hard pull is when a third party checks your score with the intent of extending you credit.)

With lenders tightening the noose, credit scores have become a matter of great concern for home buyers struggling to qualify for loans. Getting a favorable loan rate can mean saving hundreds of thousands of dollars over the course of the loan, so the idea that just in the course of loan-shopping you are doing yourself financial damage is logic-defying. But it’s true.

The one break you can get is to do all your loan shopping within a two-week window. All checks done within this period will count as one — and drop your credit score by just two to five points. But step outside that window, and each hard pull of your credit will cost you two to five points. Shop among eight lenders and you could see your scores drop by 40 points — a drop that takes at least six months to recover from.

Tracy Becker, a national credit-score specialist located in New York’s Hudson Valley and founder of the 20-year-old North Shore Advisory, offers these tips:

1. Don’t open or close any credit accounts for three months prior to applying for a loan.

Yes, you read that right: Closing a credit account hurts just as much as opening a new one. Even the act of ending your car lease will cost you up to 60 points on your credit score.

Somewhere, some place, some analyst determined that one of the symptoms of a person about to go into default was that they began to close credit accounts. Well, duh. Isn’t that what you’re supposed to do when you find yourself overextended? Apparently the credit scorekeepers lump the financially solvent in with the defaulters’ profile. So if your car lease is about to expire, extend it for three months while you loan shop, says Becker. And don’t apply to increase your credit limits on any cards or take out any new ones.

2. Don’t apply for a loan until you have a signed contract to buy a house and then do an intense day of loan-shopping.

The idea is to have all your hard pulls done within the 14-day window. One obvious problem is that not all home deals come to fruition. Estimates are that about 35 percent of open escrows fall apart. That means that those 35 percent of buyers will likely be back out there looking for another home and another home loan. And when they find it, their earlier efforts could work against them. The one glimmer of reasonableness here is that if you return within 90 days to the initial lender you approached, they will consider the credit score they pulled on that first go-round.

Becker had a client about a year ago who wanted to refinance his Long Island home. Not knowing the rules, he shopped for a loan about 30 times over a five-month period. He also went shopping for a car loan, got a credit card limit increase and was looking for a student loan for his daughter. The result: His credit score dropped 40 points and he couldn’t get the mortgage loan he wanted, at a cost to him of an extra $600 a month.

Another of her clients had a credit score of 722 when he started looking to refinance his home. But he went out and bought a car, dropping his score by four points. Once under the credit threshold of 720, the refi application was denied. “Ultimately he paid down some balances and got back the extra points, but it was a lot of stress, a lot of paperwork and two-and-a-half months to get the loan he wanted,” says Becker.

3. Don’t let your balances exceed more than 10 percent of your available credit for at least three months, and pay your bills on time.

Getting a home loan these days is hard for everyone, and near impossible for those who have bad credit. Becker says to keep your balances below 10 percent of your available credit for at least three months prior to applying. That means if you have a credit card with a ceiling of $10,000, don’t let the balance exceed $1,000. And since the credit reporting bureaus don’t update their sites daily, you need to allow for a three-month delay.

FICO last month released information about how easily even a single unpaid bill can wreak havoc with your credit score. If you have a score of 780 and are 30 days late on your mortgage, your score will drop to 670 and it will take you three years to recover it. (Obviously, the F in FICO doesn’t stand for Forgiveness.)

Credit consultant and head of New Start Financial Corp. Wayne Sanford — a.k.a. “Wayne the Credit Guy” — says that credit scores are just part of the equation.

He recently worked with a Texas family trying to buy a $330,000 home in Plano. The couple was ready to put $150,000 on the purchase and had scores of 690 and 740 between them. Yet the loan was flagged because a well-known national furniture store had marked their account as having a “consumer dispute.” It was a computer error; the account had never been disputed and had in fact been paid in full on time and was closed. Nevertheless, it held up their loan and they almost lost their house deal.

Sanford advises running regular checks on your credit–which, by the way, won’t impact your scores.

For more on credit scores and related topics, see these AOL Real Estate guides:

• How to Keep Your Credit Score Stable
• Disputing Credit Report Errors
• How to Get a Home Loan With Bad Credit

More on AOL Real Estate: Find out how to calculate mortgage payments. Find homes for sale in your area. Find foreclosures in your area. Get property tax help from our experts.

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Source: http://realestate.aol.com/blog/2011/05/19/credit-score-catch-22-shopping-for-a-mortgage-can-raise-your-ra/

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