This makes me crazy. A homeowner is in trouble, yet wants to do the right thing and attempt a short sale rather than just walk away. So what does the IRS do? Possibly count the amount forgiven as income. Aaaaargh! If the homowner just lets the lender foreclose then the IRS isn't interested. What is wrong with this picture?
by Dave Cherry - Dec. 26, 2010 06:10 PM
Question: My daughter executed a "short sale" of her home in 2010. What are the tax ramifications?
- Barry Davis, Apache Junction
Answer: In a "short sale," the IRS would most likely consider the difference between what the house sold for and what she owed on it as income to her in 2010. This applies when the lender forgives the debt entirely and gives up any further rights to collect it. In this case, the lender would most likely send her a 1099-C showing the difference as income, and your daughter could owe tax on it. Your daughter should check IRS form #982 to see if she qualifies for one of the many exemptions available. If she does qualify, the difference may not be considered income. Conversely, in a foreclosure the difference is most often not considered income to the homeowner.Read more: http://www.azcentral.com/arizonarepublic/business/articles/2010/12/26/20101226tax-cherry1227.html#ixzz19KWc6Xxo
Monday, December 27, 2010
Friday, December 24, 2010
Christmas musings, Christmas
I sat down to write my usual “Christmas Cheer” Bits and Pieces. I quickly became suspicious that it was turning out to be a clone of my “Thanksgiving Blessings” piece last month.
I can’t do it. Let’s be honest – I’m not a big fan of Christmas. As a child growing up in an alcoholic/workaholic family, Christmas was always (at the very least) disappointing, and often it was just plain awful. One year I mounted a focused campaign for a bride doll. For some strange reason I wanted this doll that I had seen in the Sears catalog desperately. Yes, she showed up under the tree all right, with my sister’s name on her tag. Parents with too much to drink and a child asking for an anomaly of a gift led to a mistake. It has not been forgotten.
Then, on December 15th, when I was 19, a tragedy in my family happened. That event led directly to an even bigger tragedy on Christmas Eve. I’m not prepared to talk about the particulars, but there I was looking at the Christmas tree and listening to the Christmas Carols feeling my heart break and wishing that I could die, too.
Time marches on. I was a single Mom with 2 boys, frantically compensating for the fact that given a choice I would have just ignored the whole accursed thing. I would happily have gone to China or India, where I suspect they don’t sing many Christmas Carols. Since I couldn’t do that I went full-bore and rampant with the commercialism of Christmas. I spent way too much money on way too much stuff, pretending that I didn’t want to scream most of the time.
Fortunately I came out of the “Happy Holidays!” closet years ago and admitted to the world that I don’t like Christmas very much. I was amazed at how many like-minded people are out there. (I know a guy who became a Jehovah’s Witness solely to get away from Christmas.) Some people embraced me like a long-lost sister, while others look at me like I suddenly sprouted a leg out of the side of my head. “How can you hate Christmas? Why, there’s lights and Carols and poinsettias and gifts and unicorns and sparkleys and Santa Claus! Comfort and happy happy happy joy joy joy! What’s wrong with you, you horrible Grinchy Scrooge, you?”
That’s OK – as Popeye would say, I yam what I yam and I’m hard-wired to look at the weeks between Thanksgiving and New Year’s with narrowed eyes.
And now here we are, December 2010. I’ve gotten better – I don’t break out in hives anymore when I’m forced to be in the same place as a Christmas Carol. I don’t flinch (as much) when I suspect that I’m about to be inflicted with a Santa Claus.
I’ve found things about this season that I can get behind. I adore the concept of “Peace on Earth, Good Will Towards All” – that’s a good one. The lights are pretty. I’ve made peace with the tree. I like presents, and I give them because it’s fun to give and not because I have anything to prove. I like the feast and I love the family gathering. I like observing people that are actually enjoying this whole Yuletide thing, sort of the same way that I would watch an alien from another planet that I don’t really understand but find to be intriguing. I like to see that even the grouchiest among us try to be a little nicer, and I hope that this new attitude of theirs will last past December 25th. Hey, why stop now?
It occurs to me that I am not such an oddity in the global sense - most religions don’t much get into Jesus’ Birthday. So however you feel about the season and whatever your declared religion, find a place in your heart for some holiday spirit.
If you love the season, congratulations! I envy you. If you find it to be a chore, that’s OK. If you celebrate Hanukkah as opposed to Jesus’ Birthday, L’Chaim! If Kwanzaa is your thing, Umoha! If you celebrate the Hopi Soya Luna or the Winter Solstice, Cheers! The point is that whatever your personal reason for the season, remember the spirit of the season. Decide what matters most and keep it safely in the front of your mind.
I believe that the great leaders of all religions taught the same thing: Be nice. Be good. Do your best. Keep your priorities straight. Love another. Take care of the weak and feed the hungry. Do the right thing. We are all brothers and sisters, and what hurts one of us hurts all of us. Respect the Earth. At its best, Christmas embodies these concepts and gives us a season for embracing them.
Now, at THAT I can rejoice!
Happy Holidays!
I can’t do it. Let’s be honest – I’m not a big fan of Christmas. As a child growing up in an alcoholic/workaholic family, Christmas was always (at the very least) disappointing, and often it was just plain awful. One year I mounted a focused campaign for a bride doll. For some strange reason I wanted this doll that I had seen in the Sears catalog desperately. Yes, she showed up under the tree all right, with my sister’s name on her tag. Parents with too much to drink and a child asking for an anomaly of a gift led to a mistake. It has not been forgotten.
Then, on December 15th, when I was 19, a tragedy in my family happened. That event led directly to an even bigger tragedy on Christmas Eve. I’m not prepared to talk about the particulars, but there I was looking at the Christmas tree and listening to the Christmas Carols feeling my heart break and wishing that I could die, too.
Time marches on. I was a single Mom with 2 boys, frantically compensating for the fact that given a choice I would have just ignored the whole accursed thing. I would happily have gone to China or India, where I suspect they don’t sing many Christmas Carols. Since I couldn’t do that I went full-bore and rampant with the commercialism of Christmas. I spent way too much money on way too much stuff, pretending that I didn’t want to scream most of the time.
Fortunately I came out of the “Happy Holidays!” closet years ago and admitted to the world that I don’t like Christmas very much. I was amazed at how many like-minded people are out there. (I know a guy who became a Jehovah’s Witness solely to get away from Christmas.) Some people embraced me like a long-lost sister, while others look at me like I suddenly sprouted a leg out of the side of my head. “How can you hate Christmas? Why, there’s lights and Carols and poinsettias and gifts and unicorns and sparkleys and Santa Claus! Comfort and happy happy happy joy joy joy! What’s wrong with you, you horrible Grinchy Scrooge, you?”
That’s OK – as Popeye would say, I yam what I yam and I’m hard-wired to look at the weeks between Thanksgiving and New Year’s with narrowed eyes.
And now here we are, December 2010. I’ve gotten better – I don’t break out in hives anymore when I’m forced to be in the same place as a Christmas Carol. I don’t flinch (as much) when I suspect that I’m about to be inflicted with a Santa Claus.
I’ve found things about this season that I can get behind. I adore the concept of “Peace on Earth, Good Will Towards All” – that’s a good one. The lights are pretty. I’ve made peace with the tree. I like presents, and I give them because it’s fun to give and not because I have anything to prove. I like the feast and I love the family gathering. I like observing people that are actually enjoying this whole Yuletide thing, sort of the same way that I would watch an alien from another planet that I don’t really understand but find to be intriguing. I like to see that even the grouchiest among us try to be a little nicer, and I hope that this new attitude of theirs will last past December 25th. Hey, why stop now?
It occurs to me that I am not such an oddity in the global sense - most religions don’t much get into Jesus’ Birthday. So however you feel about the season and whatever your declared religion, find a place in your heart for some holiday spirit.
If you love the season, congratulations! I envy you. If you find it to be a chore, that’s OK. If you celebrate Hanukkah as opposed to Jesus’ Birthday, L’Chaim! If Kwanzaa is your thing, Umoha! If you celebrate the Hopi Soya Luna or the Winter Solstice, Cheers! The point is that whatever your personal reason for the season, remember the spirit of the season. Decide what matters most and keep it safely in the front of your mind.
I believe that the great leaders of all religions taught the same thing: Be nice. Be good. Do your best. Keep your priorities straight. Love another. Take care of the weak and feed the hungry. Do the right thing. We are all brothers and sisters, and what hurts one of us hurts all of us. Respect the Earth. At its best, Christmas embodies these concepts and gives us a season for embracing them.
Now, at THAT I can rejoice!
Happy Holidays!
Monday, December 20, 2010
total eclipse of the moon
If rain, clouds or fog don't obscure the midnight sky Monday night, a dramatic total eclipse of the moon will be well worth staying up late to watch - in the Bay Area and across the nation.
Lunar eclipses are by no means uncommon, but during this one the moon will be high in the sky, so it should be easily observable from everywhere, said Andrew Fraknoi, chairman of astronomy at Foothill College in Los Altos Hills.
"It's a really democratic event," he said, "because you don't need an expensive telescope or any other sophisticated equipment to enjoy the spectacle - just your eyes or, if you like, a pair of binoculars."
The moon is always full during an eclipse, and for astronomers, this one actually starts at 9:55 p.m. Monday, when the full moon enters the pale outer fringe of Earth's shadow, called the penumbra. The dimming, though, will be so faint it can't be observed by ordinary folk.
By 10:33 p.m., the moon's edge will move into the inner shadow of Earth, called the umbra, and during that time of partial eclipse, watchers will see Earth's shadow creeping slowly across the bright lunar surface. By looking closely, it's apparent that the edge of the shadow is actually curved, which to ancient Greek observers proved that Earth is indeed round.
At 11:41 p.m., the lunar eclipse will be total as the moon will have moved entirely inside the Earth's shadow. That sight can be spectacular: refraction of the sun's light by the Earth's atmosphere will color the moon's surface unpredictably, and during past eclipses it has appeared a deep bronze or blood red or even a dark yellow.
Totality ends at 12:53 a.m. Tuesday, and the last of the partial eclipse finishes at 2:01 a.m.
Two Bay Area institutions have announced public events for the eclipse.
The Chabot Space and Science Center in Oakland will be open from 9 p.m. to 2 a.m. for its Midnight Delight, rain or shine. If the sky is clear, visitors can watch the eclipse from the observatory's deck and through its major telescopes. A simulated eclipse will be shown in the Chabot planetarium, and astronomers will explain the event to visitors.
The Lawrence Hall of Science in Berkeley will be open from 8 p.m. to 2 a.m. and will also offer a planetarium show, telescope viewing and explanations by astronomers and veteran eclipse enthusiasts.
On the Internet
Helpful NASA video of the total lunar eclipse, along with animations and more information about the moon and the night sky, can be found at shadowandsubstance.com.
E-mail David Perlman at dperlman@sfchronicle.com. Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/18/BAJ31GSALU.DTL#ixzz18fT57LJH
Lunar eclipses are by no means uncommon, but during this one the moon will be high in the sky, so it should be easily observable from everywhere, said Andrew Fraknoi, chairman of astronomy at Foothill College in Los Altos Hills.
"It's a really democratic event," he said, "because you don't need an expensive telescope or any other sophisticated equipment to enjoy the spectacle - just your eyes or, if you like, a pair of binoculars."
The moon is always full during an eclipse, and for astronomers, this one actually starts at 9:55 p.m. Monday, when the full moon enters the pale outer fringe of Earth's shadow, called the penumbra. The dimming, though, will be so faint it can't be observed by ordinary folk.
By 10:33 p.m., the moon's edge will move into the inner shadow of Earth, called the umbra, and during that time of partial eclipse, watchers will see Earth's shadow creeping slowly across the bright lunar surface. By looking closely, it's apparent that the edge of the shadow is actually curved, which to ancient Greek observers proved that Earth is indeed round.
At 11:41 p.m., the lunar eclipse will be total as the moon will have moved entirely inside the Earth's shadow. That sight can be spectacular: refraction of the sun's light by the Earth's atmosphere will color the moon's surface unpredictably, and during past eclipses it has appeared a deep bronze or blood red or even a dark yellow.
Totality ends at 12:53 a.m. Tuesday, and the last of the partial eclipse finishes at 2:01 a.m.
Two Bay Area institutions have announced public events for the eclipse.
The Chabot Space and Science Center in Oakland will be open from 9 p.m. to 2 a.m. for its Midnight Delight, rain or shine. If the sky is clear, visitors can watch the eclipse from the observatory's deck and through its major telescopes. A simulated eclipse will be shown in the Chabot planetarium, and astronomers will explain the event to visitors.
The Lawrence Hall of Science in Berkeley will be open from 8 p.m. to 2 a.m. and will also offer a planetarium show, telescope viewing and explanations by astronomers and veteran eclipse enthusiasts.
On the Internet
Helpful NASA video of the total lunar eclipse, along with animations and more information about the moon and the night sky, can be found at shadowandsubstance.com.
E-mail David Perlman at dperlman@sfchronicle.com. Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/18/BAJ31GSALU.DTL#ixzz18fT57LJH
Saturday, December 18, 2010
AZ AG's Office sues B of A for loan fraud
Arizona sues BofA for alleged mortgage fraud
by Catherine Reagor - Dec. 17, 2010 11:37 PMThe Arizona Republic
Arizona's attorney general filed a lawsuit Friday against Bank of America, accusing the state's largest mortgage lender of deceiving borrowers who were trying to obtain loan modifications to keep their homes.
Bank of America violated the state's consumer-fraud laws by not responding to many homeowners' requests for help, rejecting loan-modification applications without supplying sufficient reason and beginning foreclosure proceedings on homeowners at the same time those borrowers were starting loan modifications, according to the lawsuit filed in Maricopa County Superior Court.
"BofA is abusing borrowers systematically," Arizona Attorney General Terry Goddard said. "It showed a blatant disregard for people's rights and practiced blatantly deceptive procedures."
Goddard's lawsuit follows a one-year investigation into the loan servicing and foreclosures practices of the Charlotte, N.C.-based lender, Arizona's largest mortgage holder and servicer. In 2010, nearly 500 consumers filed complaints against the bank with the state attorney general.
Goddard said in one case, attorney general investigators were able to prove the fax number BofA employees were giving customers to send in loan-modification requests and documents was a dead line.
Nevada's attorney general filed a similar lawsuit against the bank on Friday.
Goddard's lawsuit alleges the bank violated a previous consent judgment with the attorney general over mortgage-fraud allegations against Countrywide. BofA bought Countrywide in summer 2009. Later that year, the lender reached agreements with several state attorneys general to modify subprime loans made by Countrywide and to fund consumer-fraud-prevention efforts.
Goddard is calling for BofA to pay $25,000 for each violation of the consent judgment and $10,000 for each violation of the Arizona Consumer Fraud Act. Goddard said it's too early to place a price on the suit or any settlement. He said his office negotiated with Bank of America this week to try to reach a settlement before filing the suit.
Bank of America on Friday described the filing of the lawsuits as hasty.
"We are disappointed that the suits were filed at this time, however, because we and other major servicers are currently engaged in multistate discussions to address foreclosure-related issues more comprehensively," said Dan Frahm, a senior vice president for the bank, through an e-mail statement.
"Bank of America has been a cooperative partner with the attorneys general, has worked with state leaders to evolve programs and resources to broaden assistance to distressed customers," he said. "And we are already under way with further improvements to our processes and programs for Bank of America customers."
The Arizona attorney general's lawsuit describes the experience of more than a dozen Bank of America borrowers. One is Jeff Adams, who filed a complaint earlier this year with the Attorney General's Office over BofA's handling of his loan modification. He requested a modification on the mortgage for his Scottsdale home early last year. By October 2009, he said BofA had lost his paperwork four times, but his loan application was finally approved.
Early this year, Adams received a foreclosure notice despite making his payments on time. He called BofA and said he was told to keep making his payments and ignore the foreclosure notice. In July, someone from Fannie Mae knocked at his door and told him to move out because the mortgage company had foreclosed on it. Adams was able to fight and have the foreclosure canceled because no one had bought his home through the foreclosure auction.
"I felt like I was housejacked," he said. "I am making my payments but am still afraid that another foreclosure notice might come in the mail or at my door."
Goddard's lawsuit, if successful, won't provide compensation for Adams or other BofA loan holders who believe they have been wronged. Goddard said any damages paid by the lender would go toward the state's fund to fight consumer fraud. The lawsuit, though, could help pave the way for Arizona homeowners to file civil lawsuits against BofA, Goddard said. A successful settlement or lawsuit would establish bad practices by BofA.
Goddard said anyone in Arizona who feels he or she was treated unfairly by Bank of America through a loan modification or foreclosure proceeding should contact the Attorney General's Office at www.azag.gov. The lawsuits against Bank of America are the latest sign that homeowners and regulators are getting increasingly impatient with the banking industry.
Many metro Phoenix homeowners trying to avoid foreclosure through federally backed loan modifications are frustrated and angry with lenders over the problems with the process. Borrowers accuse several of the nation's biggest lenders of being unresponsive, requesting the same paperwork multiple times and making mistakes on paperwork and foreclosure actions.
The prosecutors want lenders to standardize their practices to reduce the chances of improper foreclosures and create a fund to help homeowners who have been foreclosed on illegally.Read more: http://www.azcentral.com/arizonarepublic/news/articles/2010/12/17/20101217bofa-suit-mortgage-fraud.html#ixzz18TUUuePB
by Catherine Reagor - Dec. 17, 2010 11:37 PMThe Arizona Republic
Arizona's attorney general filed a lawsuit Friday against Bank of America, accusing the state's largest mortgage lender of deceiving borrowers who were trying to obtain loan modifications to keep their homes.
Bank of America violated the state's consumer-fraud laws by not responding to many homeowners' requests for help, rejecting loan-modification applications without supplying sufficient reason and beginning foreclosure proceedings on homeowners at the same time those borrowers were starting loan modifications, according to the lawsuit filed in Maricopa County Superior Court.
"BofA is abusing borrowers systematically," Arizona Attorney General Terry Goddard said. "It showed a blatant disregard for people's rights and practiced blatantly deceptive procedures."
Goddard's lawsuit follows a one-year investigation into the loan servicing and foreclosures practices of the Charlotte, N.C.-based lender, Arizona's largest mortgage holder and servicer. In 2010, nearly 500 consumers filed complaints against the bank with the state attorney general.
Goddard said in one case, attorney general investigators were able to prove the fax number BofA employees were giving customers to send in loan-modification requests and documents was a dead line.
Nevada's attorney general filed a similar lawsuit against the bank on Friday.
Goddard's lawsuit alleges the bank violated a previous consent judgment with the attorney general over mortgage-fraud allegations against Countrywide. BofA bought Countrywide in summer 2009. Later that year, the lender reached agreements with several state attorneys general to modify subprime loans made by Countrywide and to fund consumer-fraud-prevention efforts.
Goddard is calling for BofA to pay $25,000 for each violation of the consent judgment and $10,000 for each violation of the Arizona Consumer Fraud Act. Goddard said it's too early to place a price on the suit or any settlement. He said his office negotiated with Bank of America this week to try to reach a settlement before filing the suit.
Bank of America on Friday described the filing of the lawsuits as hasty.
"We are disappointed that the suits were filed at this time, however, because we and other major servicers are currently engaged in multistate discussions to address foreclosure-related issues more comprehensively," said Dan Frahm, a senior vice president for the bank, through an e-mail statement.
"Bank of America has been a cooperative partner with the attorneys general, has worked with state leaders to evolve programs and resources to broaden assistance to distressed customers," he said. "And we are already under way with further improvements to our processes and programs for Bank of America customers."
The Arizona attorney general's lawsuit describes the experience of more than a dozen Bank of America borrowers. One is Jeff Adams, who filed a complaint earlier this year with the Attorney General's Office over BofA's handling of his loan modification. He requested a modification on the mortgage for his Scottsdale home early last year. By October 2009, he said BofA had lost his paperwork four times, but his loan application was finally approved.
Early this year, Adams received a foreclosure notice despite making his payments on time. He called BofA and said he was told to keep making his payments and ignore the foreclosure notice. In July, someone from Fannie Mae knocked at his door and told him to move out because the mortgage company had foreclosed on it. Adams was able to fight and have the foreclosure canceled because no one had bought his home through the foreclosure auction.
"I felt like I was housejacked," he said. "I am making my payments but am still afraid that another foreclosure notice might come in the mail or at my door."
Goddard's lawsuit, if successful, won't provide compensation for Adams or other BofA loan holders who believe they have been wronged. Goddard said any damages paid by the lender would go toward the state's fund to fight consumer fraud. The lawsuit, though, could help pave the way for Arizona homeowners to file civil lawsuits against BofA, Goddard said. A successful settlement or lawsuit would establish bad practices by BofA.
Goddard said anyone in Arizona who feels he or she was treated unfairly by Bank of America through a loan modification or foreclosure proceeding should contact the Attorney General's Office at www.azag.gov. The lawsuits against Bank of America are the latest sign that homeowners and regulators are getting increasingly impatient with the banking industry.
Many metro Phoenix homeowners trying to avoid foreclosure through federally backed loan modifications are frustrated and angry with lenders over the problems with the process. Borrowers accuse several of the nation's biggest lenders of being unresponsive, requesting the same paperwork multiple times and making mistakes on paperwork and foreclosure actions.
The prosecutors want lenders to standardize their practices to reduce the chances of improper foreclosures and create a fund to help homeowners who have been foreclosed on illegally.Read more: http://www.azcentral.com/arizonarepublic/news/articles/2010/12/17/20101217bofa-suit-mortgage-fraud.html#ixzz18TUUuePB
Thursday, December 16, 2010
5 tips before you list your house
It's resolution time, folks. Last week, we offered some immediate action items for those who want 2011 to be the year they become homeowners. By popular demand, this week it's sellers' turn! Whether you are simply trying to decide whether to sell your home next year, or it's been on the market before and you are trying to revamp your approach to get it sold next year, here are 5 things you can do during what's left of 2010 to position yourself for home selling success in 2011.
1. Reality check yourself . . . before you wreck yourself (and the sale of your home, that is). The age-old real estate advice to wanna-be sellers is to get real about pricing - and like my sweet Grandma's advice about always rinsing the cake batter out with cold water, never hot, the caution against overpricing is advice that will stand you in good stead. (And that cold water trick works, btw - rinsing with hot starts to cook the batter to the bowl! But I digress) Before you even get to pricing, though, first you should get real about what your goals really are. Why do you want or need to sell? And how badly - how important is it to you? What would it take to make selling make sense? If you even think you may want to sell your home next year, get clear on these items in your own head before you even talk to anyone outside of your household.
Your very next step is to look at your mortgage account statement online and find out what you owe, and find out what your payoff amount would be.
Get a reality-based idea of what your home is worth - by talking with several local real estate agents who have a strong, recent track record of succesfully selling homes in your area; these are the folks who'll have a strong idea of what recent sales are the most comparable to yours, and what a local buyer would agree to pay for your home, as well as what it might appraise at. If 3 agents give you one range, and one gives you a bizarrely higher number, be skeptical about the outlier; there are rare bad apples out there in the agent world who will tell you whatever it takes to get the listing. Get real and stay there - don't fall prey to the fallacy that your home is worth more than others, for no substantive reason beyond the fact that, well, it's yours.Then, move toward making a decision about whether selling actually makes sense for you. Whatever you do, don't let your mental GPS steer you anywhere near that fantasyland where all your plans for selling, moving, etc. rest on the hypothetical that you can get 25% more than your home's actual fair market value. That sort of magical thinking costs you and your agent the time, inconvenience and money it takes to try to conjure up a sale that just ain't gonna happen, and that doesn't even count the opportunity costs of other things you could be doing with those resources. If your home's current value is bizarrely less than you want or need to move on, consider a short sale and price it appropriately or consider staying put and sprucing up your home so it better suits your needs - but don't price it at your "wishful thinking" price and set yourself and your agent up for failure.
2. Figure out the lay of your local land. National blogs and media outlets offer all sorts of useful advice about whether, how and when to sell your home, but there's one thing that sort of advice cannot convey: what's going on in your local market. Ask questions and read blogs in your local market and start talking with the real estate brokers and agents from your area who are actively blogging, listing properties and answering questions. They can give you the hyperlocal essentials you need to knows. Sure, it's a buyer's market nationwide, on average. But if you live in Omaha, that may mean that homes sell at or near asking in 45 days or less; in Mesa, Arizona, your home could stay on the market 6 months and sell for 30% below asking. In my neck of the woods, it's not bizarre for homes to sell at 5 percent above asking, in two weeks - and that's still a buyer's market compared to the 20% above asking sales that were common in 2006. Every market is different, and you can neither know what to expect when you list your home for sale, nor implement smart strategies for getting your home sold without knowing what's going on in yours.
3. Tour nearby Open Houses. Your job, as the seller of your home, is to present a compelling package to buyers - compelling enough to make them sign away 30 years of their lives and the vast majority of their worldly possessions in exchange for your home (kinda ups the ante, doesn't it?). To do that, it helps to get inside the minds of your home's target buyers. And to do that, you need to think how they think and see what they see. Visiting the other homes your target buyers will also see online and/or in real life will give you a sense for how your home's price and condition will measure up to the competition. Go view other homes that are for sale in your area, making sure you see at least a few that fall into each of these categories: (a) properties in your neighborhood or similar neighborhoods, (b) homes in your home's general price range, all around town, and (c) homes that have similar numbers of bedrooms, bathrooms and square feet - no matter what the price. You'll likely end up seeing homes in a wide range when it comes to price and condition; know that your home, to sell, will need to beat these on one or both measures. Also, if you try to go to at least a few open houses, rather than just asking your agent to show them to you at your convenience, you'll also get a sense for what sort of buyer traffic you can expect from open houses, and you can even chat with those home's listing agents about local market dynamics and what factors they believe may help or hurt that particular listing.
4. Formulate a plan: in A-B-C order. Collaborate with your broker or agent to put an action plan in place. Make sure you address: list price, list date, showing arrangements and the property prep work (see #5, below) that your agent recommends you do prior to listing the place. To minimize the stress of a somewhat inevitably stressful experience (i.e., selling your home!), work with your agent on Plans B and C now, too! What is the average number of days a home stays on the market in your area before it sells (DOM)? (Hint: don't look at the ones that never sold, because you don't want to be part of that group!) Decide up front if your home sits on the market for X number of days with no offer, you'll lower the price to Y. Also cover alternative marketing plans/vehicles for your home, and even calendar when you might start to offer transactional incentives, like closing cost credits, interest rate buy-downs, throwing in personal property and even making reverse offers to buyers who have expressed an interest but can't seem to get off the fence. At some point along the timeline, include a pause where your agent can interview buyer's brokers who have shown your home to collect buyer feedback, so you can course correct your pricing, marketing or staging strategies accordingly.
5. Do your prep work - fix and pre-pack. If you are sure you're selling in 2011, and want to put your holiday vacay time to good use, make a list of all those little repairs you've been wanting to do forever, call up your neighborhood handyperson and get 'em done. Loose knobs and handles, double-hung windows that are painted shut, the frayed carpet on the steps, that broken bathroom tile - fixing those things can give your place just the patina and polish it'll take to compete with the ample, low-priced competition you'll have next year.It may be tough for non-distressed home sellers to compete with foreclosures and short sales on price. But one area where individual home sellers usually can best the competition is CONDITION! Your home can present to buyers in tip-top condition in a way that most foreclosures and short sales cannot. And this includes staging - most foreclosures will be shown vacant, and/or with the debris of the former owner's lives tragically littering the premises. Short sales are usually (but not always) a bit better, but are most often shown fully occupied, furnished and cluttered - just as the owners live in them, because of the distressed nature of the sale. As a non-distressed home's seller, it behooves you to ensure that your home's curb appeal is at it's best and that throughout the interior, the buyer is able to visualize the lovely life they can, scratch that, WILL live once they buy and move into your home. Depersonalizing and decluttering are essential to this staging effort; in fact, one wise Trulia Voices contributor tells her sellers to go ahead and start "pre-packing" - put most of the personal items that make your home yours in a box, like you're getting ready to move (which you are!) and leave your place in as close to model-home move-in condition as possible.
Carol Anne disagrees with this stance, saying that a "real" house sells better than a "model."
1. Reality check yourself . . . before you wreck yourself (and the sale of your home, that is). The age-old real estate advice to wanna-be sellers is to get real about pricing - and like my sweet Grandma's advice about always rinsing the cake batter out with cold water, never hot, the caution against overpricing is advice that will stand you in good stead. (And that cold water trick works, btw - rinsing with hot starts to cook the batter to the bowl! But I digress) Before you even get to pricing, though, first you should get real about what your goals really are. Why do you want or need to sell? And how badly - how important is it to you? What would it take to make selling make sense? If you even think you may want to sell your home next year, get clear on these items in your own head before you even talk to anyone outside of your household.
Your very next step is to look at your mortgage account statement online and find out what you owe, and find out what your payoff amount would be.
Get a reality-based idea of what your home is worth - by talking with several local real estate agents who have a strong, recent track record of succesfully selling homes in your area; these are the folks who'll have a strong idea of what recent sales are the most comparable to yours, and what a local buyer would agree to pay for your home, as well as what it might appraise at. If 3 agents give you one range, and one gives you a bizarrely higher number, be skeptical about the outlier; there are rare bad apples out there in the agent world who will tell you whatever it takes to get the listing. Get real and stay there - don't fall prey to the fallacy that your home is worth more than others, for no substantive reason beyond the fact that, well, it's yours.Then, move toward making a decision about whether selling actually makes sense for you. Whatever you do, don't let your mental GPS steer you anywhere near that fantasyland where all your plans for selling, moving, etc. rest on the hypothetical that you can get 25% more than your home's actual fair market value. That sort of magical thinking costs you and your agent the time, inconvenience and money it takes to try to conjure up a sale that just ain't gonna happen, and that doesn't even count the opportunity costs of other things you could be doing with those resources. If your home's current value is bizarrely less than you want or need to move on, consider a short sale and price it appropriately or consider staying put and sprucing up your home so it better suits your needs - but don't price it at your "wishful thinking" price and set yourself and your agent up for failure.
2. Figure out the lay of your local land. National blogs and media outlets offer all sorts of useful advice about whether, how and when to sell your home, but there's one thing that sort of advice cannot convey: what's going on in your local market. Ask questions and read blogs in your local market and start talking with the real estate brokers and agents from your area who are actively blogging, listing properties and answering questions. They can give you the hyperlocal essentials you need to knows. Sure, it's a buyer's market nationwide, on average. But if you live in Omaha, that may mean that homes sell at or near asking in 45 days or less; in Mesa, Arizona, your home could stay on the market 6 months and sell for 30% below asking. In my neck of the woods, it's not bizarre for homes to sell at 5 percent above asking, in two weeks - and that's still a buyer's market compared to the 20% above asking sales that were common in 2006. Every market is different, and you can neither know what to expect when you list your home for sale, nor implement smart strategies for getting your home sold without knowing what's going on in yours.
3. Tour nearby Open Houses. Your job, as the seller of your home, is to present a compelling package to buyers - compelling enough to make them sign away 30 years of their lives and the vast majority of their worldly possessions in exchange for your home (kinda ups the ante, doesn't it?). To do that, it helps to get inside the minds of your home's target buyers. And to do that, you need to think how they think and see what they see. Visiting the other homes your target buyers will also see online and/or in real life will give you a sense for how your home's price and condition will measure up to the competition. Go view other homes that are for sale in your area, making sure you see at least a few that fall into each of these categories: (a) properties in your neighborhood or similar neighborhoods, (b) homes in your home's general price range, all around town, and (c) homes that have similar numbers of bedrooms, bathrooms and square feet - no matter what the price. You'll likely end up seeing homes in a wide range when it comes to price and condition; know that your home, to sell, will need to beat these on one or both measures. Also, if you try to go to at least a few open houses, rather than just asking your agent to show them to you at your convenience, you'll also get a sense for what sort of buyer traffic you can expect from open houses, and you can even chat with those home's listing agents about local market dynamics and what factors they believe may help or hurt that particular listing.
4. Formulate a plan: in A-B-C order. Collaborate with your broker or agent to put an action plan in place. Make sure you address: list price, list date, showing arrangements and the property prep work (see #5, below) that your agent recommends you do prior to listing the place. To minimize the stress of a somewhat inevitably stressful experience (i.e., selling your home!), work with your agent on Plans B and C now, too! What is the average number of days a home stays on the market in your area before it sells (DOM)? (Hint: don't look at the ones that never sold, because you don't want to be part of that group!) Decide up front if your home sits on the market for X number of days with no offer, you'll lower the price to Y. Also cover alternative marketing plans/vehicles for your home, and even calendar when you might start to offer transactional incentives, like closing cost credits, interest rate buy-downs, throwing in personal property and even making reverse offers to buyers who have expressed an interest but can't seem to get off the fence. At some point along the timeline, include a pause where your agent can interview buyer's brokers who have shown your home to collect buyer feedback, so you can course correct your pricing, marketing or staging strategies accordingly.
5. Do your prep work - fix and pre-pack. If you are sure you're selling in 2011, and want to put your holiday vacay time to good use, make a list of all those little repairs you've been wanting to do forever, call up your neighborhood handyperson and get 'em done. Loose knobs and handles, double-hung windows that are painted shut, the frayed carpet on the steps, that broken bathroom tile - fixing those things can give your place just the patina and polish it'll take to compete with the ample, low-priced competition you'll have next year.It may be tough for non-distressed home sellers to compete with foreclosures and short sales on price. But one area where individual home sellers usually can best the competition is CONDITION! Your home can present to buyers in tip-top condition in a way that most foreclosures and short sales cannot. And this includes staging - most foreclosures will be shown vacant, and/or with the debris of the former owner's lives tragically littering the premises. Short sales are usually (but not always) a bit better, but are most often shown fully occupied, furnished and cluttered - just as the owners live in them, because of the distressed nature of the sale. As a non-distressed home's seller, it behooves you to ensure that your home's curb appeal is at it's best and that throughout the interior, the buyer is able to visualize the lovely life they can, scratch that, WILL live once they buy and move into your home. Depersonalizing and decluttering are essential to this staging effort; in fact, one wise Trulia Voices contributor tells her sellers to go ahead and start "pre-packing" - put most of the personal items that make your home yours in a box, like you're getting ready to move (which you are!) and leave your place in as close to model-home move-in condition as possible.
Carol Anne disagrees with this stance, saying that a "real" house sells better than a "model."
Monday, December 13, 2010
Funny. My last post was also from Freddie Mac, saying that interest rates are going up.
5 Predictions for 2011:
Freddie Mac analysts point to five features that they believe will likely characterize the 2011 housing and mortgage markets:
1. Low mortgage rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively low mortgage rates will be a feature of the 2011 mortgage market. Thirty-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates of 5/1 hybrid adjustable-rate mortgages will likely remain below 4 percent in 2011.
2. Prices have hit bottom. House prices are likely to begin a gradual, but sustained recovery in the second half of 2011.
3. Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market in the New Year, likely translating into more home sales in 2011 than in 2010.
4. Refinances will dwindle. Many eligible borrowers have already refinanced and the federal Making Home Affordable refinance program is expiring on June 30. While fixed-rate loans are likely to remain low, they will move up gradually, making it even less likely that refinances will be attractive to most home owners.
5. Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings — known as the "seriously delinquent rate" — generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.Source: Freddie Mac (12/09/2010)
5 Predictions for 2011:
Freddie Mac analysts point to five features that they believe will likely characterize the 2011 housing and mortgage markets:
1. Low mortgage rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively low mortgage rates will be a feature of the 2011 mortgage market. Thirty-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates of 5/1 hybrid adjustable-rate mortgages will likely remain below 4 percent in 2011.
2. Prices have hit bottom. House prices are likely to begin a gradual, but sustained recovery in the second half of 2011.
3. Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market in the New Year, likely translating into more home sales in 2011 than in 2010.
4. Refinances will dwindle. Many eligible borrowers have already refinanced and the federal Making Home Affordable refinance program is expiring on June 30. While fixed-rate loans are likely to remain low, they will move up gradually, making it even less likely that refinances will be attractive to most home owners.
5. Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings — known as the "seriously delinquent rate" — generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.Source: Freddie Mac (12/09/2010)
Saturday, December 11, 2010
Mortgage Rates Jump to 6-Month High
Mortgage rates rose for a fourth-straight week to reach a six-month high as yields on government bonds continue to rise.
The average interest on a 30-year fixed loan hit 4.61 percent, up from 4.46 percent a week ago, Freddie Mac reported.
Also, 15-year fixed loans averaged 3.96 percent, up from 3.81 percent last week; and rates for variable adjustable-rate mortgages floated higher as well.
Source: Los Angeles Times, E. Scott Reckard (12/10/10)
Mortgage rates rose for a fourth-straight week to reach a six-month high as yields on government bonds continue to rise.
The average interest on a 30-year fixed loan hit 4.61 percent, up from 4.46 percent a week ago, Freddie Mac reported.
Also, 15-year fixed loans averaged 3.96 percent, up from 3.81 percent last week; and rates for variable adjustable-rate mortgages floated higher as well.
Source: Los Angeles Times, E. Scott Reckard (12/10/10)
Thursday, December 9, 2010
Home Buying checklist
There are lots of purchases that are highly prone to impulse buying: shoes on sale, puppies at the pound, and carrot cupcakes with cream cheese buttercream frosting come instantly to mind. (But that's just me.)
But houses? Not so much. Savvy, regret-free homebuying can take weeks or months of financial and lifestyle research and planning. If you want 2011 to be the year you become a homeowner, here are 5 things you should be doing, as we speak.
1. Minimize your holiday spending and save your cash. Instead of using the holiday sales to acquire a new winter wardrobe of cashmere sweaters, hold the discretionary spending down so you can give yourself the gift of homeownership! If you are serious about buying a home next year, don't run up additional credit card debt on gifts this year. Instead, make homemade cards or write holiday letters this year for everyone except the kiddos. And even for the kids, consider scaling back on the stuff, spending more of your time with them than your money, and getting started now saving toward your home purchase. (I don't think too many folks would argue that a less materialistic holiday season would hurt anyone, at any age.) Kickstart your 2011 homebuying resolution by starting a "Home" savings account at an high-interest, online bank (the discipline-boosting goal is a bank that isn't super easy to transfer funds out of when you run low on cash), and set up an automatic deposit into it every payday. To get specific about your savings goal, if you're cash-flush, obviously a 20% down payment will get you top notch interest rates and provide you with the maximum ability to manage your monthly payments. If you're going to be more of a bootstrapping buyer, an FHA loan might be right up your alley - they offer a down payment of 3.5% of the purchase price. All buyers should plan to have at least 3 percent of the purchase price saved up for closing costs, even if you want the seller to chip in. The lower-priced the home you want to buy, the more percentage points you should be willing to chip in for closing costs. It's easy for closing costs on an $150,000 FHA loan to run as high as $4,000 or more, considering transfer taxes, inspections, appraisals and mortgage insurance fees. So, even the scrappiest buyer should have a savings target somewhere around 6.5% of their target home's price. To buy a $200,000 home, for example, that would mean a savings target of $13,000. Local real estate and mortgage pros can help you clarify realistic "cash to close" expectations and savings targets for your area.
2. Research financing, areas homes, prices, agents and online. Smart homebuying takes a lot of research and knowledge-gathering. Since most buyers find it much harder to qualify for a mortgage than it is to find a home you'd love to live in, start with studying up on home financing and what it will take for you to get a home loan (note: FHA loans are preferred by the average homebuyer on today's market who has less than a 10% down payment, so start your research there). If you're considering relocating next year, now's the time to start narrowing down states, cities and even neighborhoods that may or may not work for you. Take into account the job market, housing and other costs of living, and income and property tax rates, as well as the critical lifestyle inputs that vary from state-to-state, like weather and whether the place is a personality fit for you and the life you want to live, be it urban sophisticate or outdoors adventurer. Also, start to develop a feel for home prices in a what-you-get-for-your-money type way, and start narrowing down the home styles and even neighborhoods that might fit your aesthetic preferences and lifestyle. If you're one of those rare buyers-to-be who is not already obsessively house hunting, hop on Trulia and start regularly checking out homes and neighborhoods, making sure to take advantage of the neighborhood ratings and reviews feature, which empowers you to surface what other folks think and say about an area.
3. Rehab your credit, if you need to. Go to AnnualCreditReport.com and check out your credit reports - from all 3 bureaus - for free. (Note - these will not give you your credit score for free - that costs extra, but it will give you the actual detailed credit reports.) Audit them for errors and do the work of disputing inaccuracies to have them corrected. Pay particular attention to: accounts that are not yours/you never opened, derogatory information that should have "aged off" your report by now (i.e., 7 years for late payments, 10 for bankruptcies) and balances or credit limits that are inaccurate (i.e., your credit card balance is listed at $2500, but you actually only owe $250.) These are the errors most likely to foul up your financing, so follow the instructions each bureau provides to correct them, stat. While you're at it, don't close any accounts, even if you are able to pay some down or off - actually, check out these tips for getting the bank to give you the best possible home loan, without unintentionally making your score worse!
4. Run your numbers. In the past, some overextended homeowners complained that they felt pushed into a mortgage they couldn't afford. Pundits blamed that on the real estate and mortgage industry, but I have witnessed firsthand many a homebuyer push themselves or their spouses into buying too expensive of a home. Eliminate this issue entirely by doing this - run your own numbers, before you ever even talk to a salesperson or start looking at homes beyond your means. (I assure you, once you see the million dollar home you think you can afford, the $250,000 home you can actually afford will be underwhelming.) Get your monthly finances in order, and get a clear read on how much your monthly bills are - outside of housing. Decide how much you can afford to spend every month for housing, when you buy your home. Get clear on exactly how much cash you plan to have at hand to put into your transaction up front. When, in the next step, you begin working with a mortgage broker, you'll want to share these numbers with them, early on in your conversation, to empower them to tell you what home price you can afford - not based on their rubrics, but based on what you say you want to spend every month and what you want to put down.
5. Talk to a real estate and mortgage broker (1 of each). Call or email MIke or Carol Anne. We will give you timely, thorough responses to your questions, and communicate in a language you understand. Drop us an email, letting us know you'd like to work on putting an action plan together for buying a home next year, and would like to talk with us about what action steps need to go on the list. Ask us to brief you on the timeline of a transaction in your local market, and to point out for you things like when along the process you'll need to bring money in, when you'll need to miss work and come into their office or the closing office, whether we offer conveniences like digital document signing, and generally the local standard practices about which buyers you'll need to know.
Depending on your target home purchase timeline, we might even want you to take a spin and look at a few properties to reality-check your expectations or narrow down a broad wish list. In addition to chatting about timing your purchase vis-Ã -vis your other life events and plans for the year, make sure to ask for referrals to a local, trustworthy mortgage broker or two - preferably one that has worked with them and closed a number of transactions with our clients. (In fact, many busy real estate pros will want you to talk with their trusty mortgage partner before they get too involved in your planning process. You may think you only need a month to get ready to buy, but once the mortgage folks weigh in, it might turn out that you actually need a few.) When you do get in touch with the mortgage maven, if you're serious about buying, you will want them to actually pull your credit report, check the actual FICO scores that come up on their system and give you their professional recommendations for what final tweaks you can do to your debts to get your credit score where it needs to be.
But houses? Not so much. Savvy, regret-free homebuying can take weeks or months of financial and lifestyle research and planning. If you want 2011 to be the year you become a homeowner, here are 5 things you should be doing, as we speak.
1. Minimize your holiday spending and save your cash. Instead of using the holiday sales to acquire a new winter wardrobe of cashmere sweaters, hold the discretionary spending down so you can give yourself the gift of homeownership! If you are serious about buying a home next year, don't run up additional credit card debt on gifts this year. Instead, make homemade cards or write holiday letters this year for everyone except the kiddos. And even for the kids, consider scaling back on the stuff, spending more of your time with them than your money, and getting started now saving toward your home purchase. (I don't think too many folks would argue that a less materialistic holiday season would hurt anyone, at any age.) Kickstart your 2011 homebuying resolution by starting a "Home" savings account at an high-interest, online bank (the discipline-boosting goal is a bank that isn't super easy to transfer funds out of when you run low on cash), and set up an automatic deposit into it every payday. To get specific about your savings goal, if you're cash-flush, obviously a 20% down payment will get you top notch interest rates and provide you with the maximum ability to manage your monthly payments. If you're going to be more of a bootstrapping buyer, an FHA loan might be right up your alley - they offer a down payment of 3.5% of the purchase price. All buyers should plan to have at least 3 percent of the purchase price saved up for closing costs, even if you want the seller to chip in. The lower-priced the home you want to buy, the more percentage points you should be willing to chip in for closing costs. It's easy for closing costs on an $150,000 FHA loan to run as high as $4,000 or more, considering transfer taxes, inspections, appraisals and mortgage insurance fees. So, even the scrappiest buyer should have a savings target somewhere around 6.5% of their target home's price. To buy a $200,000 home, for example, that would mean a savings target of $13,000. Local real estate and mortgage pros can help you clarify realistic "cash to close" expectations and savings targets for your area.
2. Research financing, areas homes, prices, agents and online. Smart homebuying takes a lot of research and knowledge-gathering. Since most buyers find it much harder to qualify for a mortgage than it is to find a home you'd love to live in, start with studying up on home financing and what it will take for you to get a home loan (note: FHA loans are preferred by the average homebuyer on today's market who has less than a 10% down payment, so start your research there). If you're considering relocating next year, now's the time to start narrowing down states, cities and even neighborhoods that may or may not work for you. Take into account the job market, housing and other costs of living, and income and property tax rates, as well as the critical lifestyle inputs that vary from state-to-state, like weather and whether the place is a personality fit for you and the life you want to live, be it urban sophisticate or outdoors adventurer. Also, start to develop a feel for home prices in a what-you-get-for-your-money type way, and start narrowing down the home styles and even neighborhoods that might fit your aesthetic preferences and lifestyle. If you're one of those rare buyers-to-be who is not already obsessively house hunting, hop on Trulia and start regularly checking out homes and neighborhoods, making sure to take advantage of the neighborhood ratings and reviews feature, which empowers you to surface what other folks think and say about an area.
3. Rehab your credit, if you need to. Go to AnnualCreditReport.com and check out your credit reports - from all 3 bureaus - for free. (Note - these will not give you your credit score for free - that costs extra, but it will give you the actual detailed credit reports.) Audit them for errors and do the work of disputing inaccuracies to have them corrected. Pay particular attention to: accounts that are not yours/you never opened, derogatory information that should have "aged off" your report by now (i.e., 7 years for late payments, 10 for bankruptcies) and balances or credit limits that are inaccurate (i.e., your credit card balance is listed at $2500, but you actually only owe $250.) These are the errors most likely to foul up your financing, so follow the instructions each bureau provides to correct them, stat. While you're at it, don't close any accounts, even if you are able to pay some down or off - actually, check out these tips for getting the bank to give you the best possible home loan, without unintentionally making your score worse!
4. Run your numbers. In the past, some overextended homeowners complained that they felt pushed into a mortgage they couldn't afford. Pundits blamed that on the real estate and mortgage industry, but I have witnessed firsthand many a homebuyer push themselves or their spouses into buying too expensive of a home. Eliminate this issue entirely by doing this - run your own numbers, before you ever even talk to a salesperson or start looking at homes beyond your means. (I assure you, once you see the million dollar home you think you can afford, the $250,000 home you can actually afford will be underwhelming.) Get your monthly finances in order, and get a clear read on how much your monthly bills are - outside of housing. Decide how much you can afford to spend every month for housing, when you buy your home. Get clear on exactly how much cash you plan to have at hand to put into your transaction up front. When, in the next step, you begin working with a mortgage broker, you'll want to share these numbers with them, early on in your conversation, to empower them to tell you what home price you can afford - not based on their rubrics, but based on what you say you want to spend every month and what you want to put down.
5. Talk to a real estate and mortgage broker (1 of each). Call or email MIke or Carol Anne. We will give you timely, thorough responses to your questions, and communicate in a language you understand. Drop us an email, letting us know you'd like to work on putting an action plan together for buying a home next year, and would like to talk with us about what action steps need to go on the list. Ask us to brief you on the timeline of a transaction in your local market, and to point out for you things like when along the process you'll need to bring money in, when you'll need to miss work and come into their office or the closing office, whether we offer conveniences like digital document signing, and generally the local standard practices about which buyers you'll need to know.
Depending on your target home purchase timeline, we might even want you to take a spin and look at a few properties to reality-check your expectations or narrow down a broad wish list. In addition to chatting about timing your purchase vis-Ã -vis your other life events and plans for the year, make sure to ask for referrals to a local, trustworthy mortgage broker or two - preferably one that has worked with them and closed a number of transactions with our clients. (In fact, many busy real estate pros will want you to talk with their trusty mortgage partner before they get too involved in your planning process. You may think you only need a month to get ready to buy, but once the mortgage folks weigh in, it might turn out that you actually need a few.) When you do get in touch with the mortgage maven, if you're serious about buying, you will want them to actually pull your credit report, check the actual FICO scores that come up on their system and give you their professional recommendations for what final tweaks you can do to your debts to get your credit score where it needs to be.
Monday, December 6, 2010
Have you ever seen Australian Rules football? I don’t know why they include the word “Rules” in the name – as far as I can see there are no rules whatsoever. I love Australian Rules football. It’s a bunch of guys theoretically trying to get a football across the goal line, although usually they seem forget about the football entirely – they break often to have a fight. To my eyes, accustomed to civilized American football, it jut looks like one big brawl. There’s no padding, you don’t know who’s on which team, there’s lots of blood and cussing and sometimes they bite. It’s very different from what I’ve always been used to when it comes to football.
Representing a buyer on an REO or short sale reminds me a lot of Australian Rules football.
REOs, short sales, and auction properties comprise at least one quarter of the available residential properties on the market today. I was surprised at that number, 25%. I thought that it was higher – maybe 50 to 60%. I showed property the other day – out of the 7 properties, 2 of them were owned by “normal” people. The other 5 were foreclosures.
Knowing me as you do, you might be expecting a rant right about now. It’s not going to happen. I’m not going to rant, but I am going to ask us to adapt. If you or I (comfortable with how we’ve always done it here) decide to go to Australia and play football then we’d better learn how to play it in a different arena.
Like it or not, right or not, wrong or not, if we’re willingly going to The Land Of The Deal With The Bank then we’d better learn how their game works there. To come out of the first round of their game bitter and bloody and bitten, whining “They’re not playing fair!” is foolish, and is not representing our buyers. (Oh. “Bloody and bitten” comes from the bank’s asset managers, not our list agents.)
If we’re going to play on their field then we’re going to have to live with their rules or we don’t play. That’s how it is right now. Do I like it? It doesn’t matter. To spend our energy thrashing around instead of adapting to the new game and learning the new rules is a waste of time and is making neither progress nor money.
So what are the rules? That’s the problem. Each team (bank) makes their own rules. However, some trends seem to be in lockstep with all of the banks, so these I will take a stab at. I’m going to talk about REOs today. OMG! What the hell am I doing? I am going to get so nailed for this piece when all I’m trying to do is help. Oh, whatever. Nail away – I can take it.
Our time frames mean nothing to the bank. We can and should write “This offer must be responded to by Seller before next Tuesday the 7th at noon.” This way we have a valid offer with valid time frames. That’s all very nice, but the banks don’t care about our arbitrary time limits. (My favorite is when it takes the asset manager 3 weeks to respond and then demands a 7 day inspection period and a 10 day close. ~Snort.~) Warn your people that they shouldn’t expect a response quickly, and not to take it personally. The banks figure that when they finally respond to our offer we will either proceed (time for acceptance stipulations be damned) or we’ll go away. They don’t much care which one we do.
Now the back and forth of negotiating happens. Expect this negotiating to be verbals on the bank’s part. You will probably get emails or unsigned counter offers or phone calls from the list agent until you reach an agreement – then you’ll get the whole thing in writing in the form of the dreaded bank addendum.
Once you get the bank’s addendum, READ IT. Just as all REALTORS® are not the same, neither are all bank addendums. Some of them get grabby at the Buyer’s earnest money, some of them impose per diem penalties for delay in closing (no matter whose fault the delay is), some of them are just plain ludicrous. If we tell our Buyer to sign something without us thoroughly reading and understanding it first and then things get sticky over the language we’re going to look pretty stupid, and with good reason.
IMPORTANT THINGS TO UNDERSTAND ABOUT THE BANK’S PROCESS.
· The whole thing is totally unemotional on the bank and asset manager’s part. It’s business - pure dollars and cents. They can’t care that this was your childhood home, they can’t care that you love the house more than anything you’ve ever seen, they can’t care that this is your dream home. Show ‘em the money.
· The actual bank might never see your offer. The list agent uploads the pertinent info into the asset manager’s screen. The only thing that this asset manager sees is price, COE date, the amount of Seller concessions (Seller paid closing costs, Homeowner’s warranty, etc.) and the bottom line - what will the bank get when it’s all done? This asset manager can accept or kill a deal without ever consulting the bank. BTW – if the Buyer gets mad and calls the bank and says “Why didn’t you respond to my offer?” and the banker says “What offer?” it could mean that it was never presented, but it probably means that it died at the asset manager.
· Cash versus financing isn’t an issue.
· You will not get an asset manager or bank officer’s signature or a “REJECTED” or much of anything at all in response to your offer until and unless it is accepted. Acceptance is evidenced by the appearance of the Seller’s Addendum.
· If you end up in a competing offer situation and get a request for your Buyer’s “highest and best” it’s time to get serious. No more caginess, no more holding back. Get your Buyers to put on paper the highest price that they can stomach. The asset manager will choose which offer they want and either you win or you’re dead - Game Over.
· If your Buyers blew it at the highest and best stage they can still hang around as back-up. It’s the same story, though – you will not get a signature that puts you into iron-clad first back-up position. Hang and hope, that‘s what I say.
Title and escrow companies. Oh, what a bone of contention this is! Very simply, since the big banks are doing so many escrows they worked out a deal with their favorite title company for a volume discount. They used to like to insist that you use their title company or no deal. OK - cool, except that that’s a violation of RESPA and Fair Trade and Arizona State law. So now they say that they will pay the title company fees if you use their favorite. The Buyer is welcome to use any title company that they want, but in that case the Buyer will usually pay all title fees, both sides. Since Buyers think that all title companies are the same and they don’t want to pay all of the fees, we end up with a title and escrow in Far Away and a title officer that we don’t know, and who may or may not be competent.
You know what? Deal with it. Either your Buyer pays the fees (which they won’t want to do) or we work with the bank’s choice. Pick your battles – this is one that (in my opinion) is not worth the fight.
Once you get into escrow the battles that you and the list agent can (and have to) win will commence. The asset managers seem to all live together in a basement in New Jersey. They don’t understand easements or wells or septics or private roads and they don’t want to acknowledge our State mandated Affidavit of Disclosure. They also don’t want to understand that when they’ve accepted an offer that includes these items as a Seller’s expense they do have to deal with them. Instead, they want to throw up their hands and scream “As is! We won’t do it!” Or, “We don’t need any stinkin’ disclosure statements!”
The list agent goes head-to-head with them at this point and it’s usually fixed pretty quickly. If the list agent doesn’t win, tell them to tell the asset manager to consult with their legal department – that usually takes care of it. We might have to provide the statute for their legal department, since Arizona is so very different about a lot of these things.
Requirement for the Affidavit of Disclosure can be found at www.azleg.state.az.us/ars/33/00422.htm
Requirements for certification and transfer of septics (cost is negotiable in contract): www.azdeq.gov/environ/water/permits/download/septictank.pdf
Let’s talk about the agents who specialize in listing foreclosures. Most of them are doing their best to do a good job in a tough niche. REO list agents are bound by Article 1 of the Code just like everybody else – if the instruction from their client is lawful then they have to do what they’re told, so don’t shoot the messenger. That said, yes, I repeat, REO agents are just as bound by the Code of Ethics and Arizona law as anybody else. Just because the banks don’t want to follow the rules doesn’t mean that their agents are bullet-proof. Forgive them if they’re having an unmannerly moment – maybe you’re the 40th person to yell at them so far today and it’s only 10 AM. (No, it’s not ever OK, but if it’s just this once try to forget about it.)
I spent my Wednesday at another Association of REALTORS® sitting on a Professional Standards panel. The Respondent (the guy defending himself) is primarily an REO list agent. This whole process just bit him. The Complainant/Buyers did not believe that he had presented their offer on his listing, since there had never been much traditional-type response from the bank. We (the panel) knew that he had presented the offer because the bank issued a “highest and best.” The buyers dinked around and didn’t get the house and were mad. I wish that this list agent had kept all communication with the asset manager to email, and saved his “sent” emails. Even better, there is a little button at the top of my keyboard. It says “print screen.” I can’t get it to “print screen” (Maybe Mary knows how?) but if it does capture the image of what I’ve just done (like upload an offer) this will be an awesome CYA. If I was an REO agent I’d sure as heck learn how to make it work, I would email copies to everybody involved, and I would keep the “printed screen” in a file somewhere until the statute of limitations runs out.
Yes, List agents must disclose the existence of accepted offers by changing the status in MLS. When I call on an active listing and am told “We have an accepted offer, 2 back-ups, and 6 more in the wings but we’re leaving it active so that we can collect a few more,” I get mad.
List agents must also present all offers. Just because “it will confuse the bank and delay closing” is not an excuse to bag somebody’s offer. The only time that it’s permissible to sit on an offer is when you’ve got a letter from the Seller instructing you not to present anything after the property goes into escrow, and even then I’d let them know about it, anyway. (I am NOT talking about short sales. If during a short sale the Seller says “Don’t let the bank know about any other offers” that could be construed as mortgage fraud. I’m just saying.)
There you go. As a NON-REO agent, I did my best. You foreclosure list agents out there, thank you so much for consulting, and I look forward to your kind and constructive feed-back. If I got anything really wrong I will happily print a clarification next week, so let me know. It would be good if you start out with “thank you.”
Representing a buyer on an REO or short sale reminds me a lot of Australian Rules football.
REOs, short sales, and auction properties comprise at least one quarter of the available residential properties on the market today. I was surprised at that number, 25%. I thought that it was higher – maybe 50 to 60%. I showed property the other day – out of the 7 properties, 2 of them were owned by “normal” people. The other 5 were foreclosures.
Knowing me as you do, you might be expecting a rant right about now. It’s not going to happen. I’m not going to rant, but I am going to ask us to adapt. If you or I (comfortable with how we’ve always done it here) decide to go to Australia and play football then we’d better learn how to play it in a different arena.
Like it or not, right or not, wrong or not, if we’re willingly going to The Land Of The Deal With The Bank then we’d better learn how their game works there. To come out of the first round of their game bitter and bloody and bitten, whining “They’re not playing fair!” is foolish, and is not representing our buyers. (Oh. “Bloody and bitten” comes from the bank’s asset managers, not our list agents.)
If we’re going to play on their field then we’re going to have to live with their rules or we don’t play. That’s how it is right now. Do I like it? It doesn’t matter. To spend our energy thrashing around instead of adapting to the new game and learning the new rules is a waste of time and is making neither progress nor money.
So what are the rules? That’s the problem. Each team (bank) makes their own rules. However, some trends seem to be in lockstep with all of the banks, so these I will take a stab at. I’m going to talk about REOs today. OMG! What the hell am I doing? I am going to get so nailed for this piece when all I’m trying to do is help. Oh, whatever. Nail away – I can take it.
Our time frames mean nothing to the bank. We can and should write “This offer must be responded to by Seller before next Tuesday the 7th at noon.” This way we have a valid offer with valid time frames. That’s all very nice, but the banks don’t care about our arbitrary time limits. (My favorite is when it takes the asset manager 3 weeks to respond and then demands a 7 day inspection period and a 10 day close. ~Snort.~) Warn your people that they shouldn’t expect a response quickly, and not to take it personally. The banks figure that when they finally respond to our offer we will either proceed (time for acceptance stipulations be damned) or we’ll go away. They don’t much care which one we do.
Now the back and forth of negotiating happens. Expect this negotiating to be verbals on the bank’s part. You will probably get emails or unsigned counter offers or phone calls from the list agent until you reach an agreement – then you’ll get the whole thing in writing in the form of the dreaded bank addendum.
Once you get the bank’s addendum, READ IT. Just as all REALTORS® are not the same, neither are all bank addendums. Some of them get grabby at the Buyer’s earnest money, some of them impose per diem penalties for delay in closing (no matter whose fault the delay is), some of them are just plain ludicrous. If we tell our Buyer to sign something without us thoroughly reading and understanding it first and then things get sticky over the language we’re going to look pretty stupid, and with good reason.
IMPORTANT THINGS TO UNDERSTAND ABOUT THE BANK’S PROCESS.
· The whole thing is totally unemotional on the bank and asset manager’s part. It’s business - pure dollars and cents. They can’t care that this was your childhood home, they can’t care that you love the house more than anything you’ve ever seen, they can’t care that this is your dream home. Show ‘em the money.
· The actual bank might never see your offer. The list agent uploads the pertinent info into the asset manager’s screen. The only thing that this asset manager sees is price, COE date, the amount of Seller concessions (Seller paid closing costs, Homeowner’s warranty, etc.) and the bottom line - what will the bank get when it’s all done? This asset manager can accept or kill a deal without ever consulting the bank. BTW – if the Buyer gets mad and calls the bank and says “Why didn’t you respond to my offer?” and the banker says “What offer?” it could mean that it was never presented, but it probably means that it died at the asset manager.
· Cash versus financing isn’t an issue.
· You will not get an asset manager or bank officer’s signature or a “REJECTED” or much of anything at all in response to your offer until and unless it is accepted. Acceptance is evidenced by the appearance of the Seller’s Addendum.
· If you end up in a competing offer situation and get a request for your Buyer’s “highest and best” it’s time to get serious. No more caginess, no more holding back. Get your Buyers to put on paper the highest price that they can stomach. The asset manager will choose which offer they want and either you win or you’re dead - Game Over.
· If your Buyers blew it at the highest and best stage they can still hang around as back-up. It’s the same story, though – you will not get a signature that puts you into iron-clad first back-up position. Hang and hope, that‘s what I say.
Title and escrow companies. Oh, what a bone of contention this is! Very simply, since the big banks are doing so many escrows they worked out a deal with their favorite title company for a volume discount. They used to like to insist that you use their title company or no deal. OK - cool, except that that’s a violation of RESPA and Fair Trade and Arizona State law. So now they say that they will pay the title company fees if you use their favorite. The Buyer is welcome to use any title company that they want, but in that case the Buyer will usually pay all title fees, both sides. Since Buyers think that all title companies are the same and they don’t want to pay all of the fees, we end up with a title and escrow in Far Away and a title officer that we don’t know, and who may or may not be competent.
You know what? Deal with it. Either your Buyer pays the fees (which they won’t want to do) or we work with the bank’s choice. Pick your battles – this is one that (in my opinion) is not worth the fight.
Once you get into escrow the battles that you and the list agent can (and have to) win will commence. The asset managers seem to all live together in a basement in New Jersey. They don’t understand easements or wells or septics or private roads and they don’t want to acknowledge our State mandated Affidavit of Disclosure. They also don’t want to understand that when they’ve accepted an offer that includes these items as a Seller’s expense they do have to deal with them. Instead, they want to throw up their hands and scream “As is! We won’t do it!” Or, “We don’t need any stinkin’ disclosure statements!”
The list agent goes head-to-head with them at this point and it’s usually fixed pretty quickly. If the list agent doesn’t win, tell them to tell the asset manager to consult with their legal department – that usually takes care of it. We might have to provide the statute for their legal department, since Arizona is so very different about a lot of these things.
Requirement for the Affidavit of Disclosure can be found at www.azleg.state.az.us/ars/33/00422.htm
Requirements for certification and transfer of septics (cost is negotiable in contract): www.azdeq.gov/environ/water/permits/download/septictank.pdf
Let’s talk about the agents who specialize in listing foreclosures. Most of them are doing their best to do a good job in a tough niche. REO list agents are bound by Article 1 of the Code just like everybody else – if the instruction from their client is lawful then they have to do what they’re told, so don’t shoot the messenger. That said, yes, I repeat, REO agents are just as bound by the Code of Ethics and Arizona law as anybody else. Just because the banks don’t want to follow the rules doesn’t mean that their agents are bullet-proof. Forgive them if they’re having an unmannerly moment – maybe you’re the 40th person to yell at them so far today and it’s only 10 AM. (No, it’s not ever OK, but if it’s just this once try to forget about it.)
I spent my Wednesday at another Association of REALTORS® sitting on a Professional Standards panel. The Respondent (the guy defending himself) is primarily an REO list agent. This whole process just bit him. The Complainant/Buyers did not believe that he had presented their offer on his listing, since there had never been much traditional-type response from the bank. We (the panel) knew that he had presented the offer because the bank issued a “highest and best.” The buyers dinked around and didn’t get the house and were mad. I wish that this list agent had kept all communication with the asset manager to email, and saved his “sent” emails. Even better, there is a little button at the top of my keyboard. It says “print screen.” I can’t get it to “print screen” (Maybe Mary knows how?) but if it does capture the image of what I’ve just done (like upload an offer) this will be an awesome CYA. If I was an REO agent I’d sure as heck learn how to make it work, I would email copies to everybody involved, and I would keep the “printed screen” in a file somewhere until the statute of limitations runs out.
Yes, List agents must disclose the existence of accepted offers by changing the status in MLS. When I call on an active listing and am told “We have an accepted offer, 2 back-ups, and 6 more in the wings but we’re leaving it active so that we can collect a few more,” I get mad.
List agents must also present all offers. Just because “it will confuse the bank and delay closing” is not an excuse to bag somebody’s offer. The only time that it’s permissible to sit on an offer is when you’ve got a letter from the Seller instructing you not to present anything after the property goes into escrow, and even then I’d let them know about it, anyway. (I am NOT talking about short sales. If during a short sale the Seller says “Don’t let the bank know about any other offers” that could be construed as mortgage fraud. I’m just saying.)
There you go. As a NON-REO agent, I did my best. You foreclosure list agents out there, thank you so much for consulting, and I look forward to your kind and constructive feed-back. If I got anything really wrong I will happily print a clarification next week, so let me know. It would be good if you start out with “thank you.”
Saturday, December 4, 2010
Banks favor foreclosure
Banks favor foreclosing over altering home loans
by Laurie Roberts, columnist - Dec. 4, 2010 12:00 AMThe Arizona Republic
Hannah Swearengin and I are walking around her cozy north-central Phoenix home on Thursday, and she is describing what it feels like to live there these days.
"Terrible stress, just terrible stress," she says. "I have, like everybody else, worked hard all my life. I raised and educated four children, one with special needs. I've never asked anybody for anything. I never thought at this time in my life that I'd be in this position, ever."
Swearengin is in good company. Close to 200,000 Arizona families are believed to be behind on their mortgages. By month's end, more than 50,000 will have lost their houses this year, as banks foreclose and sell them for a song.
OAS_AD('ArticleFlex_1')
When that happens, the Swearengins of the world will be out and their neighbors will be left an empty eyesore, plus an average $22,000 hit to the value of their own homes, according to the Center for Responsible Lending. Meanwhile, the banks or whoever owns the loans will have bigger losses in many cases than if they had just worked with the struggling homeowner.
So what gives?
"I wish I knew," said Attorney General Terry Goddard, who is asking the Legislature to adopt a Borrower's Bill of Rights that would force banks to treat customers more fairly.
"They're hurting themselves. They're hurting their investors. They're hurting their credibility going forward, bottom line, by essentially trashing these assets. Every house that gets sold on the courthouse steps in this economy is a fraction of its value. All of us take a hit."
Swearengin, 68, has owned a home for most of her life and says she had never missed a payment until February. Her struggles began in late 2008 when she fractured her back and was unable to work, assuming she even could find work given that she's a Realtor in one of the nation's worst real-estate markets. For much of the past two years, she's lived on her savings, and the drain only increased in late 2009 when she was hospitalized with kidney failure.
By January, it became clear that she wouldn't be able to keep up with the $1,700 monthly payments on her $225,000 mortgage. So she called CitiMortgage, hoping to work something out, only to be told that she had to miss three payments before they could even talk about it.
She's now missed 11. She's faxed and re-faxed documentation of her situation. She calls every few days, never speaking to the same person twice. And still she waits to hear whether the bank will modify her mortgage. At one point, she says, the bank told her that it might be able to cut her payments in half by extending her loan to 40 years.
But since then, she's heard only silence, and her home is due to be auctioned off on Dec. 30.
CitiMortgage declined to discuss Swearengin's loan, citing privacy, but it offered a general comment. "The modification process involves submission of financial documentation, which must be updated and refreshed at certain points," wrote Mark Rodgers, CitiMortgage's director of public affairs. "If any required documentation is missing, the modification may not proceed. Variations in the borrower's financial circumstances, such as changes in income, also have a direct bearing on eligibility for permanent modifications. We are looking into this case and will work with the homeowner to explore potential solutions to avoid foreclosure."
This is, of course, what all the banks say, right up until the moment they foreclose and sell your place for a fraction of what it's worth.
In fact, the practice is so prevalent that this week, U.S. Acting Comptroller of the Currency John Walsh told the U.S. Senate Banking Committee that he's directing the big banks to suspend foreclosures for borrowers who are actively seeking loan modifications.
So who's responsible for putting people like Hannah Swearengin and Hazel Nitis - the cancer patient whom I wrote about earlier this week - out when it appears each could stay put if given a modification?
Banks blame the investors who own the loans.
But two of the biggest - Freddie Mac and Fannie Mae - pointed right back at the banks that service the loans, in testimony before Congress this week. "Servicers are required under our servicing contracts to help borrowers in trouble, not just collect payments," said Terence Edwards of Fannie Mae.
But a local real-estate attorney tells me that there's a financial incentive for the banks to foreclose rather than modify.
"At a foreclosure, they get all the fees, they get all the late charges. They get all their lost money off the top," said attorney Robert Nagle. "They don't want to reduce principal, because it's like your investment portfolio: They charge you 1 percent based on the amount they're managing. So if they start giving everyone reductions, their fees are going to be less because they're not managing as much."
Swearengin isn't even looking for a reduction of her principal, just an extension of her loan and perhaps a lower interest rate to bring her payments to a level she can afford.
The alternative is obvious. All you have to do is look at the foreclosed house next door. It's not hard to spot. It's the albatross at the end of the block, the weed-ridden mess surrounded by homes with neatly trimmed lawns ... for now.
Reach Roberts at laurie.roberts@arizonarepublic.com or 602-444-8635.Read more: http://www.azcentral.com/arizonarepublic/local/articles/2010/12/04/20101204bank-foreclosures-roberts.html#ixzz17AIR29bj
by Laurie Roberts, columnist - Dec. 4, 2010 12:00 AMThe Arizona Republic
Hannah Swearengin and I are walking around her cozy north-central Phoenix home on Thursday, and she is describing what it feels like to live there these days.
"Terrible stress, just terrible stress," she says. "I have, like everybody else, worked hard all my life. I raised and educated four children, one with special needs. I've never asked anybody for anything. I never thought at this time in my life that I'd be in this position, ever."
Swearengin is in good company. Close to 200,000 Arizona families are believed to be behind on their mortgages. By month's end, more than 50,000 will have lost their houses this year, as banks foreclose and sell them for a song.
OAS_AD('ArticleFlex_1')
When that happens, the Swearengins of the world will be out and their neighbors will be left an empty eyesore, plus an average $22,000 hit to the value of their own homes, according to the Center for Responsible Lending. Meanwhile, the banks or whoever owns the loans will have bigger losses in many cases than if they had just worked with the struggling homeowner.
So what gives?
"I wish I knew," said Attorney General Terry Goddard, who is asking the Legislature to adopt a Borrower's Bill of Rights that would force banks to treat customers more fairly.
"They're hurting themselves. They're hurting their investors. They're hurting their credibility going forward, bottom line, by essentially trashing these assets. Every house that gets sold on the courthouse steps in this economy is a fraction of its value. All of us take a hit."
Swearengin, 68, has owned a home for most of her life and says she had never missed a payment until February. Her struggles began in late 2008 when she fractured her back and was unable to work, assuming she even could find work given that she's a Realtor in one of the nation's worst real-estate markets. For much of the past two years, she's lived on her savings, and the drain only increased in late 2009 when she was hospitalized with kidney failure.
By January, it became clear that she wouldn't be able to keep up with the $1,700 monthly payments on her $225,000 mortgage. So she called CitiMortgage, hoping to work something out, only to be told that she had to miss three payments before they could even talk about it.
She's now missed 11. She's faxed and re-faxed documentation of her situation. She calls every few days, never speaking to the same person twice. And still she waits to hear whether the bank will modify her mortgage. At one point, she says, the bank told her that it might be able to cut her payments in half by extending her loan to 40 years.
But since then, she's heard only silence, and her home is due to be auctioned off on Dec. 30.
CitiMortgage declined to discuss Swearengin's loan, citing privacy, but it offered a general comment. "The modification process involves submission of financial documentation, which must be updated and refreshed at certain points," wrote Mark Rodgers, CitiMortgage's director of public affairs. "If any required documentation is missing, the modification may not proceed. Variations in the borrower's financial circumstances, such as changes in income, also have a direct bearing on eligibility for permanent modifications. We are looking into this case and will work with the homeowner to explore potential solutions to avoid foreclosure."
This is, of course, what all the banks say, right up until the moment they foreclose and sell your place for a fraction of what it's worth.
In fact, the practice is so prevalent that this week, U.S. Acting Comptroller of the Currency John Walsh told the U.S. Senate Banking Committee that he's directing the big banks to suspend foreclosures for borrowers who are actively seeking loan modifications.
So who's responsible for putting people like Hannah Swearengin and Hazel Nitis - the cancer patient whom I wrote about earlier this week - out when it appears each could stay put if given a modification?
Banks blame the investors who own the loans.
But two of the biggest - Freddie Mac and Fannie Mae - pointed right back at the banks that service the loans, in testimony before Congress this week. "Servicers are required under our servicing contracts to help borrowers in trouble, not just collect payments," said Terence Edwards of Fannie Mae.
But a local real-estate attorney tells me that there's a financial incentive for the banks to foreclose rather than modify.
"At a foreclosure, they get all the fees, they get all the late charges. They get all their lost money off the top," said attorney Robert Nagle. "They don't want to reduce principal, because it's like your investment portfolio: They charge you 1 percent based on the amount they're managing. So if they start giving everyone reductions, their fees are going to be less because they're not managing as much."
Swearengin isn't even looking for a reduction of her principal, just an extension of her loan and perhaps a lower interest rate to bring her payments to a level she can afford.
The alternative is obvious. All you have to do is look at the foreclosed house next door. It's not hard to spot. It's the albatross at the end of the block, the weed-ridden mess surrounded by homes with neatly trimmed lawns ... for now.
Reach Roberts at laurie.roberts@arizonarepublic.com or 602-444-8635.Read more: http://www.azcentral.com/arizonarepublic/local/articles/2010/12/04/20101204bank-foreclosures-roberts.html#ixzz17AIR29bj
Friday, November 26, 2010
At this very special time of the year
the most sacred time for our Ancestors
I send to each of you
my beloved family and friends
this Blessing
with words taken from ancient Celtic prayers.
During this time of turmoil in our world
I ask you to send with me
your thoughts and prayers for wisdom
peace
and sanity
to prevail
for all Nations
for all peoples
I am grateful to have each of you in my life
I send my love and prayers to you
at this time of Thanksgiving and Harvest Blessings
May your life be enriched, as you have enriched mine.
~Anacoana~
the most sacred time for our Ancestors
I send to each of you
my beloved family and friends
this Blessing
with words taken from ancient Celtic prayers.
During this time of turmoil in our world
I ask you to send with me
your thoughts and prayers for wisdom
peace
and sanity
to prevail
for all Nations
for all peoples
I am grateful to have each of you in my life
I send my love and prayers to you
at this time of Thanksgiving and Harvest Blessings
May your life be enriched, as you have enriched mine.
~Anacoana~
Wednesday, November 24, 2010
I want to share my Thanksgiving email to the Sedona Verde Valley Association of REALTORS®. (Why should they get all of the fun?) While it's directed at real estate agents, anybody can enjoy it, so please do.
********************************************
Thanksgiving, yay! I love the idea of Thanksgiving. A day specially set aside to gather up our family and friends and loved ones and give thanks for our blessings and on top of that, eat a feast. How simple and elegant is that? My youngest son long ago designated Thanksgiving as his favorite holiday of the year. He says that it’s the purest of all days – no stress, no obligations, just the pure enjoyment of your loved ones, your blessings, and the feast.
I said this to a guy the other day. His response was along the lines of “Bah! What do I have to be thankful for? I’ve lost my investment properties, I filed bankruptcy this year, I had to accept a horrible loan mod on my house, I have 63 dollars in the bank and the bills are piling up, and if this next escrow doesn’t close I’m in big trouble! Thanksgiving, my…..derriere!”
Wow.
We all have stress. We’re all living in and trying to deal with this wretched economy. We all wish that the money situation throughout the whole world was better. However, I venture to guess that my son will pull out of his financial problems sooner than REALTOR® Scrooge because my son is focusing on his blessings, his “haves,” as opposed to his “don’t haves” and “used to haves.”
I learned a long time ago that when we notice a good thing it gets bigger. The problem is that when we obsess about a scary thing, it gets bigger, too. I’m not saying “Put on the rose colored glasses and be irresponsible - ignore the distress in our lives. Just pretend that it isn’t happening!” I am saying that the thing that we feed grows. The thing that gets our attention is the thing that thrives.
Can I give you an example? Let’s say that I have floor duty. Listen to this talk that I give myself while I’m drinking my coffee: “Oh, Boy. I am so freakin’ broke. I’m in deep doo-doo for sure! If things don’t turn around today I might as well just go put my head in the oven. I need a good escrow right now! Today! Yes! I will make somebody buy something! I will!” Or, let’s pretend that instead I think, “Wow. Great coffee! Look at that sunrise. Hi, bird! I am so lucky to live in a place that I can see this. I’m lucky to have eyes to see it with. Hey! Good job, God! You know, I hope that I can help somebody today. Those money problems? Whatever. I have faith that if I do the right thing it’ll all work out OK.” So when those buyers walk in, which attitude are they going to want to hang around and do business with? Who are they going to trust to take care of their best interests?
Is it really that simple? Yes, I think that it is. I do believe that good energy begets more good energy. I also believe that negativity attracts more negativity, and then we get even more negative and there you go – there’s a head in the oven.
Believe that happy thoughts bring happy things. What have we got to lose? Call me a crackpot and a Pollyanna if you will – I’m used to it. Whatever you choose to believe is up to you.
BUT…………let me give you another example of thoughts becoming reality. I have a shirt. I love this shirt – it fits perfectly, I adore the color, and whenever I wear it I feel good and get lots of compliments. You know what I’m talking about – we all have one of those shirts. Since I’m so attached to this shirt I take good care of it. If it falls off of the hanger it doesn’t lie crumpled up on the closet floor – it gets picked up and lovingly hung back where it belongs. This favorite shirt of mine has lasted for years, and it will still be around when I’m 60. I have another shirt that I don’t like one bit. It’s scratchy, it rubs the back of my neck, when I wear it makes my skin look green and it adds an easy 10 pounds. This one I let the children wear for dress-up and cooking and Easter-egg painting. When they’re done it gets tossed into the wash with the Levi’s, on hot. THIS shirt is obviously of shoddy workmanship and it has always been a waste of time and money because look – it’s stained and falling apart.
The thing is that these 2 shirts were almost identical. They’re the same brand and the same material - different colors and a little different pattern. I bought them on the same day. But since I value one and resent the other, my actions have made them into entirely different animals.
So what if the same principal is true of real estate or the people that we meet, or our careers, or buyers, or our listings? Take the paragraph about the shirts and substitute the idea of a spouse or a friend or a house or a client. The concept is the same, and so is the result. Negative thoughts and feelings can turn a simple thing into a pain in the neck that we’re glad to see go into the rag bag or the expired file. An attitude is all that it took to nurture one and ruin the other.
Some of you know that I volunteer for Trauma Intervention Programs. Not to add a downer, but I want to make an observation. I was at a home the other day to be with a woman whose husband had just committed suicide. The economy had gotten them. He left her a note that said that he had lost everything and so he was checking out. I hugged his wife who was inconsolable and crying her eyes out. I thought to myself that his priorities were skewed – he certainly had not lost everything. He just perceived that he had, and he forgot who and what are really important. He didn’t count his blessings.
I’ll start. My blessings are:
My family. I have a husband that is a saint, 2 wonderful sons, 4 amusing and adorable grandchildren, 2 daughters-in-law that complement the family beautifully, and in-laws that have accepted and welcomed me. I am blessed.
My health. Sure, it’s not perfect. Without medication my cholesterol goes astonishingly high. I need to go back on my diet and get back to the exercising. My eyes went south when I turned 40, and the readers are getting thicker and my arms seem to be getting shorter. My hair seems to have forgotten that it belongs on my head instead of moving to new and unfamiliar places. Gravity sucks, and that’s all OK. These are the worst of my complaints, and for that I am blessed.
My mind. As strange as my brain can be, I like it. It’s not schizophrenic or damaged (at least I don’t think that it is) and it usually operates pretty well. I am blessed with a working brain.
You guys. These past few years have been incredible. I am honored to have been part of your leadership team. I am amazed at the caliber of the people that I’ve gotten to work with – this includes staff, and the leadership ahead of me and those that are coming up, and you. I’ve learned, I’ve made friends, I’ve curled my lip a time or two. I grew mentally and emotionally. I’ve learned what I am capable of and I’ve learned restraint. I went to places that I would not have chosen for myself and absolutely loved. I have been blessed by you, my cohorts in SVVAR. Thank you.
My home, my neighborhood, my city, my community, my county, my state, my country. I love where I live. Even if we think that our elected politicians are idiots, we got to elect them and we get to say what we think about them. We are blessed.
Now - your turn. What are your blessings? I would love to hear about them.
Have a blessed Thanksgiving!
********************************************
Thanksgiving, yay! I love the idea of Thanksgiving. A day specially set aside to gather up our family and friends and loved ones and give thanks for our blessings and on top of that, eat a feast. How simple and elegant is that? My youngest son long ago designated Thanksgiving as his favorite holiday of the year. He says that it’s the purest of all days – no stress, no obligations, just the pure enjoyment of your loved ones, your blessings, and the feast.
I said this to a guy the other day. His response was along the lines of “Bah! What do I have to be thankful for? I’ve lost my investment properties, I filed bankruptcy this year, I had to accept a horrible loan mod on my house, I have 63 dollars in the bank and the bills are piling up, and if this next escrow doesn’t close I’m in big trouble! Thanksgiving, my…..derriere!”
Wow.
We all have stress. We’re all living in and trying to deal with this wretched economy. We all wish that the money situation throughout the whole world was better. However, I venture to guess that my son will pull out of his financial problems sooner than REALTOR® Scrooge because my son is focusing on his blessings, his “haves,” as opposed to his “don’t haves” and “used to haves.”
I learned a long time ago that when we notice a good thing it gets bigger. The problem is that when we obsess about a scary thing, it gets bigger, too. I’m not saying “Put on the rose colored glasses and be irresponsible - ignore the distress in our lives. Just pretend that it isn’t happening!” I am saying that the thing that we feed grows. The thing that gets our attention is the thing that thrives.
Can I give you an example? Let’s say that I have floor duty. Listen to this talk that I give myself while I’m drinking my coffee: “Oh, Boy. I am so freakin’ broke. I’m in deep doo-doo for sure! If things don’t turn around today I might as well just go put my head in the oven. I need a good escrow right now! Today! Yes! I will make somebody buy something! I will!” Or, let’s pretend that instead I think, “Wow. Great coffee! Look at that sunrise. Hi, bird! I am so lucky to live in a place that I can see this. I’m lucky to have eyes to see it with. Hey! Good job, God! You know, I hope that I can help somebody today. Those money problems? Whatever. I have faith that if I do the right thing it’ll all work out OK.” So when those buyers walk in, which attitude are they going to want to hang around and do business with? Who are they going to trust to take care of their best interests?
Is it really that simple? Yes, I think that it is. I do believe that good energy begets more good energy. I also believe that negativity attracts more negativity, and then we get even more negative and there you go – there’s a head in the oven.
Believe that happy thoughts bring happy things. What have we got to lose? Call me a crackpot and a Pollyanna if you will – I’m used to it. Whatever you choose to believe is up to you.
BUT…………let me give you another example of thoughts becoming reality. I have a shirt. I love this shirt – it fits perfectly, I adore the color, and whenever I wear it I feel good and get lots of compliments. You know what I’m talking about – we all have one of those shirts. Since I’m so attached to this shirt I take good care of it. If it falls off of the hanger it doesn’t lie crumpled up on the closet floor – it gets picked up and lovingly hung back where it belongs. This favorite shirt of mine has lasted for years, and it will still be around when I’m 60. I have another shirt that I don’t like one bit. It’s scratchy, it rubs the back of my neck, when I wear it makes my skin look green and it adds an easy 10 pounds. This one I let the children wear for dress-up and cooking and Easter-egg painting. When they’re done it gets tossed into the wash with the Levi’s, on hot. THIS shirt is obviously of shoddy workmanship and it has always been a waste of time and money because look – it’s stained and falling apart.
The thing is that these 2 shirts were almost identical. They’re the same brand and the same material - different colors and a little different pattern. I bought them on the same day. But since I value one and resent the other, my actions have made them into entirely different animals.
So what if the same principal is true of real estate or the people that we meet, or our careers, or buyers, or our listings? Take the paragraph about the shirts and substitute the idea of a spouse or a friend or a house or a client. The concept is the same, and so is the result. Negative thoughts and feelings can turn a simple thing into a pain in the neck that we’re glad to see go into the rag bag or the expired file. An attitude is all that it took to nurture one and ruin the other.
Some of you know that I volunteer for Trauma Intervention Programs. Not to add a downer, but I want to make an observation. I was at a home the other day to be with a woman whose husband had just committed suicide. The economy had gotten them. He left her a note that said that he had lost everything and so he was checking out. I hugged his wife who was inconsolable and crying her eyes out. I thought to myself that his priorities were skewed – he certainly had not lost everything. He just perceived that he had, and he forgot who and what are really important. He didn’t count his blessings.
I’ll start. My blessings are:
My family. I have a husband that is a saint, 2 wonderful sons, 4 amusing and adorable grandchildren, 2 daughters-in-law that complement the family beautifully, and in-laws that have accepted and welcomed me. I am blessed.
My health. Sure, it’s not perfect. Without medication my cholesterol goes astonishingly high. I need to go back on my diet and get back to the exercising. My eyes went south when I turned 40, and the readers are getting thicker and my arms seem to be getting shorter. My hair seems to have forgotten that it belongs on my head instead of moving to new and unfamiliar places. Gravity sucks, and that’s all OK. These are the worst of my complaints, and for that I am blessed.
My mind. As strange as my brain can be, I like it. It’s not schizophrenic or damaged (at least I don’t think that it is) and it usually operates pretty well. I am blessed with a working brain.
You guys. These past few years have been incredible. I am honored to have been part of your leadership team. I am amazed at the caliber of the people that I’ve gotten to work with – this includes staff, and the leadership ahead of me and those that are coming up, and you. I’ve learned, I’ve made friends, I’ve curled my lip a time or two. I grew mentally and emotionally. I’ve learned what I am capable of and I’ve learned restraint. I went to places that I would not have chosen for myself and absolutely loved. I have been blessed by you, my cohorts in SVVAR. Thank you.
My home, my neighborhood, my city, my community, my county, my state, my country. I love where I live. Even if we think that our elected politicians are idiots, we got to elect them and we get to say what we think about them. We are blessed.
Now - your turn. What are your blessings? I would love to hear about them.
Have a blessed Thanksgiving!
Tuesday, November 23, 2010
Totally plagiarized from Mark Miskiel.
Hey all,
If you have a transaction in the queue or a potential transaction that is ready to come together, you may wish to mention this to your clients to PROTECT YOUR TRANSACTION.
As black Friday approaches and the Christmas shopping season starts, caution your clients to resist the store promotions where you open a new credit account and get a big discount at the register for doing so.
While it may be tempting to take advantage of the in store promotion, opening that account could potentially harm their credit score enough to preventing closing their mortgage loan or making their pre-qualification null and void.
Opening “New Credit” accounts can impact a borrower’s credit score up to 85 points because the credit bureaus take the following into the consideration.
Number of recently opened accounts
Proportion of newly opened accounts to all open accounts
Number of recent credit inquiries
Amount of time since the recent inquiries
It’s no news that mortgage lenders have been increasing the minimum credit score to obtain a mortgage. Also, there is a new requirement for the lenders to pull a “soft” credit inquiry right up to the point of funding the loan to ensure the borrowers credit profile has not changed. While the in store promotions may look great, the borrowers may want to carefully consider if accepting such a promotion is worth the risk of no longer qualifying for a mortgage.
I am here to help if you have questions about this or other lending topics.
Happy Holidays!
Mark A. Miskiel - Residential Lending Specialist
The Lending Company – Verde Valley
Office: (928) 634-7987 (rings to cell when out of office)
e-Fax: (480)-371-1150
www.Lender4you.com
NMLS # 198563
Not all loan officers are required to be licensed.
I am proud to be a licensed loan officer!
Hey all,
If you have a transaction in the queue or a potential transaction that is ready to come together, you may wish to mention this to your clients to PROTECT YOUR TRANSACTION.
As black Friday approaches and the Christmas shopping season starts, caution your clients to resist the store promotions where you open a new credit account and get a big discount at the register for doing so.
While it may be tempting to take advantage of the in store promotion, opening that account could potentially harm their credit score enough to preventing closing their mortgage loan or making their pre-qualification null and void.
Opening “New Credit” accounts can impact a borrower’s credit score up to 85 points because the credit bureaus take the following into the consideration.
Number of recently opened accounts
Proportion of newly opened accounts to all open accounts
Number of recent credit inquiries
Amount of time since the recent inquiries
It’s no news that mortgage lenders have been increasing the minimum credit score to obtain a mortgage. Also, there is a new requirement for the lenders to pull a “soft” credit inquiry right up to the point of funding the loan to ensure the borrowers credit profile has not changed. While the in store promotions may look great, the borrowers may want to carefully consider if accepting such a promotion is worth the risk of no longer qualifying for a mortgage.
I am here to help if you have questions about this or other lending topics.
Happy Holidays!
Mark A. Miskiel - Residential Lending Specialist
The Lending Company – Verde Valley
Office: (928) 634-7987 (rings to cell when out of office)
e-Fax: (480)-371-1150
www.Lender4you.com
NMLS # 198563
Not all loan officers are required to be licensed.
I am proud to be a licensed loan officer!
Saturday, November 20, 2010
An email from a good lender.
Hey all,
Mortgage rates have reached a 3 month peak. If you have fence sitters, it may be prudent to let them know what is going on as they should seriously consider purchasing that home they were thinking of.
According to Bankrate.com, the benchmark 30-year fixed rate mortgage averaged 4.62 percent. This is despite the government purchasing of Treasury Notes that was supposed to keep the rates low.
For the complete article, the link is below. You may need to copy and past the link into your browsers window to make it work.
http://www.bankrate.com/finance/mortgages/mortgage-rates-leap-to-3-month-peak.aspx
Have an outstanding weekend!
Mark A. Miskiel - Residential Lending Specialist
The Lending Company – Verde Valley
Office: (928) 634-7987 (rings to cell when out of office)
e-Fax: (480)-371-1150
www.Lender4you.com
NMLS # 198563
Not all loan officers are required to be licensed.
I am proud to be a licensed loan officer!
Hey all,
Mortgage rates have reached a 3 month peak. If you have fence sitters, it may be prudent to let them know what is going on as they should seriously consider purchasing that home they were thinking of.
According to Bankrate.com, the benchmark 30-year fixed rate mortgage averaged 4.62 percent. This is despite the government purchasing of Treasury Notes that was supposed to keep the rates low.
For the complete article, the link is below. You may need to copy and past the link into your browsers window to make it work.
http://www.bankrate.com/finance/mortgages/mortgage-rates-leap-to-3-month-peak.aspx
Have an outstanding weekend!
Mark A. Miskiel - Residential Lending Specialist
The Lending Company – Verde Valley
Office: (928) 634-7987 (rings to cell when out of office)
e-Fax: (480)-371-1150
www.Lender4you.com
NMLS # 198563
Not all loan officers are required to be licensed.
I am proud to be a licensed loan officer!
Friday, November 19, 2010
Tuesday, November 16, 2010
Understand which mortgage loan is best for you so your budget is not stretched too thin.
By: G. M. Filisko
The basics of mortgage financing:
The most important features of your mortgage loan are its term and interest rate. Mortgages typically come in 15-, 20-, 30- or 40-year lengths. The longer the term, the lower your monthly payment. However, the tradeoff for a lower payment is that the longer the life of your loan, the more interest you’ll pay.
Mortgage interest rates generally come in two flavors: fixed and adjustable. A fixed rate allows you to lock in your interest rate for the entire mortgage term. That’s attractive if you’re risk-averse, on a fixed income, or when interest rates are low.
The risks and rewards of ARMs:
An adjustable-rate mortgage does just what its name implies: Its interest rate adjusts at a future date listed in the loan documents. It moves up and down according to a particular financial market index, such as Treasury bills. A 3/1 ARM will have the same interest rate for three years and then adjust every year after that; likewise a 5/1 ARM remains unchanged until the five-year mark. Typically, ARMs include a cap on how much the interest rate can increase, such as 3% at each adjustment, or 5% over the life of the loan.
Why agree to such uncertainty? ARMs can be a good choice if you expect your income to grow significantly in the coming years. The interest rate on some—but not all—ARMs can even drop if the benchmark to which they’re tied also dips. ARMs also often offer a lower interest rate than fixed-rate mortgages during the first few years of the mortgage, which means big savings for you—even if there’s only a half-point difference.
But if rates go up, your ARM payment will jump dramatically, so before you choose an ARM, answer these questions:
How much can my monthly payments increase at each adjustment?
How soon and how often can increases occur?
Can I afford the maximum increase permitted?
Do I expect my income to increase or decrease?
Am I paying down my loan balance each month, or is it staying the same or even increasing?
Do I plan to own the home for longer than the initial low-interest-rate period, or do I plan to sell before the rate adjusts?
Will I have to pay a penalty if I refinance into a lower-rate mortgage or sell my house?
What’s my goal in buying this property? Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford?
Consider a government-backed mortgage loan
If you’ve saved less than the ideal downpayment of 20%, or your credit score isn’t high enough for you to qualify for a fixed-rate or ARM with a conventional lender, consider a government-backed loan from the Federal Housing Administration or Department of Veterans Affairs.
FHA offers adjustable and fixed-rate loans at reduced interest rates and with as little as 3.5% down and VA offers no-money-down loans. FHA and VA also let you use cash gifts from family members.
Before you decide on any mortgage, remember that slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment. To determine how much your monthly payment will be with various terms and loan amounts, try REALTOR.com’s online mortgage calculators.
The basics of mortgage financing:
The most important features of your mortgage loan are its term and interest rate. Mortgages typically come in 15-, 20-, 30- or 40-year lengths. The longer the term, the lower your monthly payment. However, the tradeoff for a lower payment is that the longer the life of your loan, the more interest you’ll pay.
Mortgage interest rates generally come in two flavors: fixed and adjustable. A fixed rate allows you to lock in your interest rate for the entire mortgage term. That’s attractive if you’re risk-averse, on a fixed income, or when interest rates are low.
The risks and rewards of ARMs:
An adjustable-rate mortgage does just what its name implies: Its interest rate adjusts at a future date listed in the loan documents. It moves up and down according to a particular financial market index, such as Treasury bills. A 3/1 ARM will have the same interest rate for three years and then adjust every year after that; likewise a 5/1 ARM remains unchanged until the five-year mark. Typically, ARMs include a cap on how much the interest rate can increase, such as 3% at each adjustment, or 5% over the life of the loan.
Why agree to such uncertainty? ARMs can be a good choice if you expect your income to grow significantly in the coming years. The interest rate on some—but not all—ARMs can even drop if the benchmark to which they’re tied also dips. ARMs also often offer a lower interest rate than fixed-rate mortgages during the first few years of the mortgage, which means big savings for you—even if there’s only a half-point difference.
But if rates go up, your ARM payment will jump dramatically, so before you choose an ARM, answer these questions:
How much can my monthly payments increase at each adjustment?
How soon and how often can increases occur?
Can I afford the maximum increase permitted?
Do I expect my income to increase or decrease?
Am I paying down my loan balance each month, or is it staying the same or even increasing?
Do I plan to own the home for longer than the initial low-interest-rate period, or do I plan to sell before the rate adjusts?
Will I have to pay a penalty if I refinance into a lower-rate mortgage or sell my house?
What’s my goal in buying this property? Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford?
Consider a government-backed mortgage loan
If you’ve saved less than the ideal downpayment of 20%, or your credit score isn’t high enough for you to qualify for a fixed-rate or ARM with a conventional lender, consider a government-backed loan from the Federal Housing Administration or Department of Veterans Affairs.
FHA offers adjustable and fixed-rate loans at reduced interest rates and with as little as 3.5% down and VA offers no-money-down loans. FHA and VA also let you use cash gifts from family members.
Before you decide on any mortgage, remember that slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment. To determine how much your monthly payment will be with various terms and loan amounts, try REALTOR.com’s online mortgage calculators.
Monday, November 15, 2010
It’s All About Perception. By Dan Polimino.
I speak with a lot of real estate agents on a daily basis and they all seem to be talking about how many deals are falling apart over inspection items.
If you are not familiar with what I am talking about, it is when a buyer puts a home under contract and then terminates the contract after the home inspection. The question is, why is this a growing trend now?
To answer that question, let’s take a look at two different time periods.
It’s 2005 and it’s a hot real estate market. Bill Smith has a home for sale and Tom Jones puts it under contract. Jones has an inspection done, items come up on the inspection, some minor and some more serious in nature. Jones doesn’t object to the inspection items, he doesn’t even bat an eyelash and moves on with the purchase of the home asking for nothing to be fixed.
Fast forward to 2010 and Bill Smith is selling his home, Tom Jones put it under contract and orders his inspection. Items come up on the inspection, some minor and some more serious in nature. Buyer and seller argue, haggle, and fight over who is going to fix what and how much. Jones is not happy and terminates the contract shortly thereafter.
What’s the difference between these two scenarios? What happened between 2005 and 2010? Did all of the homes in America all of a sudden fall into serious disrepair? I think not! The answer is, “It’s all about perception.” In 2005, buyers looked the other way on inspection items or thought “No problem, I’ll fix them myself.”
Buyers did not want anything to get in the way of them getting the home they wanted, not even inspection items. Today the buyer perception is, “I have the seller’s over a barrel, I am going get what I want, when I want it, and if I don’t win, I’ll take my money and go home or elsewhere.”
In most cases, deals should not be falling apart over inspection items. This can and should be a give-and-take compromise with both parties winning. I understand what the market is right now and buyers have an advantage, but I think that we can make even more progress in the recovery of the real estate market if we can get to a more equitable “perception.”
Dan Polimino is a Realtor with Fuller Sotheby’s International Realty.
I speak with a lot of real estate agents on a daily basis and they all seem to be talking about how many deals are falling apart over inspection items.
If you are not familiar with what I am talking about, it is when a buyer puts a home under contract and then terminates the contract after the home inspection. The question is, why is this a growing trend now?
To answer that question, let’s take a look at two different time periods.
It’s 2005 and it’s a hot real estate market. Bill Smith has a home for sale and Tom Jones puts it under contract. Jones has an inspection done, items come up on the inspection, some minor and some more serious in nature. Jones doesn’t object to the inspection items, he doesn’t even bat an eyelash and moves on with the purchase of the home asking for nothing to be fixed.
Fast forward to 2010 and Bill Smith is selling his home, Tom Jones put it under contract and orders his inspection. Items come up on the inspection, some minor and some more serious in nature. Buyer and seller argue, haggle, and fight over who is going to fix what and how much. Jones is not happy and terminates the contract shortly thereafter.
What’s the difference between these two scenarios? What happened between 2005 and 2010? Did all of the homes in America all of a sudden fall into serious disrepair? I think not! The answer is, “It’s all about perception.” In 2005, buyers looked the other way on inspection items or thought “No problem, I’ll fix them myself.”
Buyers did not want anything to get in the way of them getting the home they wanted, not even inspection items. Today the buyer perception is, “I have the seller’s over a barrel, I am going get what I want, when I want it, and if I don’t win, I’ll take my money and go home or elsewhere.”
In most cases, deals should not be falling apart over inspection items. This can and should be a give-and-take compromise with both parties winning. I understand what the market is right now and buyers have an advantage, but I think that we can make even more progress in the recovery of the real estate market if we can get to a more equitable “perception.”
Dan Polimino is a Realtor with Fuller Sotheby’s International Realty.
Friday, November 12, 2010
NAR prohibits sexual orientation discrimination!
NAR Bars Sexual Orientation Discrimination!
The change to Article 10 of the REALTORS® Code of Ethics passed in a roll-call vote by a greater than 9-to-1 margin.
It had been previously approved by the Professional Standards Committee and the Board of Directors at the 2010 Midyear Meetings in Washington D.C.
Here is the amended language of Article 10:
REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, or national origin, or sexual orientation.
REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, or national origin, or sexual orientation.
REALTORS®, in their real estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, handicap, familial status, or national origin, or sexual orientation.
A related recommendation amending Standard of Practice 10-3 was approved as well:
REALTORS® shall not print, display or circulate any statement or advertisement with respect to selling or renting of a property that indicates any preference, limitations or discrimination based on race, color, religion, sex, handicap, familial status, or national origin, or sexual orientation.The amendment was discussed prior to the vote.
A few of the questions raised were:
1. Is "sexual orientation," without qualifiers or any further explanation, the right phrasing?
2. Is NAR denying private property rights (ostensibly, the right of property owners to refuse to do business with people of a certain sexual orientation due to their moral beliefs)?
3. Should NAR precede the federal government in adding sexual orientation as a protected class?
In response to the third question, a delegate from Minneapolis pointed out that the purpose of the Code of Ethics was to hold REALTORS® to a higher standard. Another delegate who approved of the amendment said the Code of Ethics was a living document. Delegates approved the Code change by voice vote, but one delegate called for a vote by ballot. In ballot voting weighted by size of local association, the amendment passed by more than 93 percent.
- Brian Summerfield, REALTOR® Magazine
Mold Remediation: What to Expect When You Hire An Expert
By: Karin Beuerlein
Published: October 13, 2010
Mold remediation can be a pricey venture. Here’s what to look for and expect when you call in the professionals.
Who you gonna call?
Mold remediation is the Wild West of home improvement. The field largely is unregulated, and anybody can call himself an expert and call just about anything mold. There’s no required separation between who diagnoses the problem and who fixes it. And home inspectors, who evaluate your home’s major systems, don’t necessarily know much about mold remediation.When you need professional mold remediation, look for an independent consultant with credentials in mold remediation and investigation. Such professionals should:
Demonstrate completion of industry-approved coursework in mold investigation given by the American Board of Industrial Hygiene or the American Council for Accredited Certification (formerly the American Indoor Air Quality Council).
Provide a written report that includes lab results of air and surface samples.
Work independently from a mold remediation outfit.
Refrain from selling you products.
Investigate the mold
Mold remediation begins with an eyeball investigation that takes anywhere from 20 minutes to 2 hours, depending on where the problem is hiding--in plain sight or behind walls.Next, the consultant may suggest taking air and surface samples, necessary only to identify your particular mold for health or legal reasons. Always ask the mold remediation consultant why he wants to take samples: He should be able to articulate whatever hypothesis he is trying to confirm.
Make a mold removal plan
If cleanup is a simple DIY project, the consultant will advise you about procedures, protective equipment, and tools. He should also tell you where/what moisture problem gave birth to the spores. If cleanup is beyond amateur status, the consultant should draw up a mold remediation and removal plan that a professional mold remediation company or trusted demolition and building contractor will follow. Make sure the professionals you hire have a long track record, provide references, and are bonded and insured.Cleanup can be as simple as spraying and disinfecting drywall, or as complex as:
HVAC disinfection
Drywall, stud, and insulation removal
Cleaning personal belongings
HEPA (high-efficiency particulate air) filtration
How much it costs
Mold consultant: $250-$500 (which might include air and surface samples: always ask).
Air samples: $18-$225 apiece, depending on the laboratory.
Simple mold removal: $500 for surface mold removal.
Extensive mold remediation: $6,000-plus for severe infections that require extensive demolition, disinfection, and restoration.
Check your insurance
Homeowners insurance typically covers mold remediation and removal only if the problem results from a sudden emergency already covered under your policy, such as a burst pipe. Insurance usually doesn’t pay if the mold resulted from chronic moisture, deferred maintenance, or floodwaters (unless you carry flood insurance).As always, consult your insurance agent before contracting for work.Karin Beuerlein has covered home improvement and green living topics for HGTV.com, FineLiving.com, Better Homes & Gardens and the Chicago Tribune.
By: Karin Beuerlein
Published: October 13, 2010
Mold remediation can be a pricey venture. Here’s what to look for and expect when you call in the professionals.
Who you gonna call?
Mold remediation is the Wild West of home improvement. The field largely is unregulated, and anybody can call himself an expert and call just about anything mold. There’s no required separation between who diagnoses the problem and who fixes it. And home inspectors, who evaluate your home’s major systems, don’t necessarily know much about mold remediation.When you need professional mold remediation, look for an independent consultant with credentials in mold remediation and investigation. Such professionals should:
Demonstrate completion of industry-approved coursework in mold investigation given by the American Board of Industrial Hygiene or the American Council for Accredited Certification (formerly the American Indoor Air Quality Council).
Provide a written report that includes lab results of air and surface samples.
Work independently from a mold remediation outfit.
Refrain from selling you products.
Investigate the mold
Mold remediation begins with an eyeball investigation that takes anywhere from 20 minutes to 2 hours, depending on where the problem is hiding--in plain sight or behind walls.Next, the consultant may suggest taking air and surface samples, necessary only to identify your particular mold for health or legal reasons. Always ask the mold remediation consultant why he wants to take samples: He should be able to articulate whatever hypothesis he is trying to confirm.
Make a mold removal plan
If cleanup is a simple DIY project, the consultant will advise you about procedures, protective equipment, and tools. He should also tell you where/what moisture problem gave birth to the spores. If cleanup is beyond amateur status, the consultant should draw up a mold remediation and removal plan that a professional mold remediation company or trusted demolition and building contractor will follow. Make sure the professionals you hire have a long track record, provide references, and are bonded and insured.Cleanup can be as simple as spraying and disinfecting drywall, or as complex as:
HVAC disinfection
Drywall, stud, and insulation removal
Cleaning personal belongings
HEPA (high-efficiency particulate air) filtration
How much it costs
Mold consultant: $250-$500 (which might include air and surface samples: always ask).
Air samples: $18-$225 apiece, depending on the laboratory.
Simple mold removal: $500 for surface mold removal.
Extensive mold remediation: $6,000-plus for severe infections that require extensive demolition, disinfection, and restoration.
Check your insurance
Homeowners insurance typically covers mold remediation and removal only if the problem results from a sudden emergency already covered under your policy, such as a burst pipe. Insurance usually doesn’t pay if the mold resulted from chronic moisture, deferred maintenance, or floodwaters (unless you carry flood insurance).As always, consult your insurance agent before contracting for work.Karin Beuerlein has covered home improvement and green living topics for HGTV.com, FineLiving.com, Better Homes & Gardens and the Chicago Tribune.
Thursday, November 11, 2010
Four years into the housing crisis, myths about foreclosure still litter the minds of even the smartest of real estate consumers. When it comes to matters as high stakes as your home, confusion can cost you thousands - or even your home. Whether you’re a buyer looking at foreclosures, a homeowner struggling to keep your home or a seller concerned making sure your home can compete with the foreclosed homes on your block, these foreclosure myths are prime for the busting, with no further ado.
Myth #1: Foreclosure happens fast. With unemployment and underemployment still affecting nearly 1 in every 4 Americans, no one is immune from fears that a pink slip might quickly turn into a foreclosure notice. According to NeighborWorks America, nearly 60 percent of families seeking foreclosure counseling cited a lost job or cut wages as the reason they were facing foreclosure. While the Obama Administration's Home Affordable Programs haven't been nearly as effective as predicted in actually preventing foreclosures, they have had the effect of extending the foreclosure process for many families. Even though the legal process of foreclosure can happen in as few as 6 months in most states, it is currently taking much longer for the average foreclosure to get to completion. Recently, JP Morgan Chase revealed that their average borrower who loses a home to foreclosure has not made any payments in 14 months nationwide; 22 months in FLorida and 26 months in New York.To be sure, some see this as a good, others view it as unnecessarily dragging out the overall market's recovery. Many insiders will point out that these delays in foreclosure may be calculated to save the banks the costs of owning and maintaining foreclosed homes, not to help homeowners. In any event, the fact that foreclosure does not happen nearly as fast, in many cases, as expected does give families who are temporarily down on their luck some extra time to try to get back on their feet and save their homes.
Myth #2: Buyers can’t get clear title or title insurance on foreclosed homes. When the foreclosure robo-signing scandal first hit, there was widespread concern that buyers would not be able to get clear title on foreclosed homes, because the former foreclosed owners might be able to come get their homes back when the improprieties in the bank's foreclosure documentation processes came fully to light. At the same time, several of the country's largest title insurance companies publicly balked at issuing policies on bank-owned homes until the issue was resolved. At this point, the banks claim they have revamped their processes, and all banks have stated that they have found not a single borrower whose home was repossessed without them having missed the requisite number of mortgage payments. Nevertheless, a number of governmental investigations are still in progress.The fact is, buyers of bank-owned properties in nearly every jurisdiction are protected from later title attacks by foreclosed homeowners by the bona fide purchaser rule, under which courts would prefer to simply award cash damages to be paid by the culpable bank to a wrongfully foreclosed-on homeowner, rather than reversing the sale or ownership to the new, innocent buyer. Additionally, the title insurers have now changed their tune and restarted issuing insurance policies on bank-owned homes which protect buyers' interests, after working with the banks for them to take responsibility in the event a former homeowner prevails in a wrongful foreclosure suit. While there are still many intricacies of title to be resolved for foreclosure buyers who purchase homes at trustee sales and auctions, or for cash buyers who often went without title insurance in the past, on the average, Trulia-listed, bank-owned property purchased with an average mortgage and title insurance, the chances a buyer's title will later be successfully challenged by the foreclosed homeowner on the basis of robo-signing? Exceedingly slim.
Myth #3: Buyers should wait for the shadow inventory to be released. Many a buyer, discouraged with the homes they see on the the form in their price range, has decided to sit still and wait for the banks to release for sale what is called their "shadow inventory" - rumored to be anywhere from 4 to nearly 6 million homes that have already been foreclosed, but not listed for sale, or will be foreclosed in the near future. The fact is, to the extent that the banks have acknowledged the existence of a pool of homes they own but are not selling, they have expressed that their reasoning for holding the homes off the market is to avoid flooding the market and driving home values down any further. For that reason, buyers should not expect to see a massive influx of these shadow homes onto the market anytime soon - if ever. The banks' current modus operandi is that as they sell a home, the replace it with another home in that market - if they sell 50 homes in a town that month, they'll put another 50 on the next. So, don't hold your breath waiting for a fabulous new flood of homes. Instead, set up a Trulia alert to notify you when homes that fit your search criteria come on the market, and be ready to call your agent and go visit any and every one that looks like it might be a good fit.
Myth #4: If you’re looking for a deal, you’re looking for a foreclosure. Despite what they may say, no buyer’s heart's fondest desire is to buy a foreclosure. But almost every buyer dreams of buying a great home - and getting a great deal on it. Many people think that to get a great value on their home on today's market, it means they must buy a foreclosure. As a result, the value and other advantages of buying an individually-owned home on today's market are frequently overlooked. Individual sellers with homes on the market right now are generally quite motivated, and understand that their homes are competing with discounted short sales and foreclosed homes. Many of these sellers are slashing prices in an effort to get them sold - the most recent Trulia Price Reduction Report revealed that 27 percent of homes on the market across the country have had at least one price reduction. Now that's what I call a sale!Further, individual owners are often much more negotiable on a wide range of contract terms than a bank which owns a foreclosed home. You can work with non-bank owners on things like repairs, closing dates, choice of escrow provider, closing costs and even included personal property much more flexibly than you can when the bank is on the other side of the bargaining table. On top of that, many individually-owned homes are in pristine, move-in condition; that is much rarer with foreclosures. So, don't underestimate the value of the deal you might be able to get on a non-foreclosed home. Just get clear on what you can afford and look at all the homes that are available in that price range, without discriminating against non-foreclosures.
Myth #5: Having a foreclosure on your credit history means it'll take years and years before you can buy again. One of the most Frequently Asked Questions in the Trulia Voices Community by homeowners who are facing or have just lost a home through foreclosure is how long it will take before they'll be able to buy again. Until recently, the standard wisdom was that 5 years, minimum, would have to have elapsed between the foreclosure and the new home purchase. Now, though, borrowers can obtain an FHA loan with the low, 3.5 minimum down payment requirement as soon as 3 years following a foreclosure. To do so, though, all your other ducks must be in a row. Post-foreclosure buyers need a credit score of 620-640 to qualify for an FHA loan; higher for a non-FHA loan - given that the foreclosure itself usually dings anywhere from 100-150 points off the credit score (not necessarily counting a full year or more of pre-foreclosure missed payments), former homeowners who want to buy again need to ensure they have no other late payments or credit dings after they lose thier home. You must have clean credit with no derogatory marks like late credit card payments following the foreclosure, and you may also be required to document 12 to 24 months straight of on-time rent payments after the foreclosure. Further, the bank may impose a lower debt-to-income ratio on post-foreclosure borrowers than on borrowers who have not had a foreclosure, in an effort to keep your mortgage payments low, keep you from overextending yourself and boost the chances you'll be a successful homeowner over the long-term this time around. The bank will also need to see 2 years of continuous employment history in the same field, and documentation that you meet other loan qualification requirements.
Thanks to Tara-Nicholle Nelson
Myth #1: Foreclosure happens fast. With unemployment and underemployment still affecting nearly 1 in every 4 Americans, no one is immune from fears that a pink slip might quickly turn into a foreclosure notice. According to NeighborWorks America, nearly 60 percent of families seeking foreclosure counseling cited a lost job or cut wages as the reason they were facing foreclosure. While the Obama Administration's Home Affordable Programs haven't been nearly as effective as predicted in actually preventing foreclosures, they have had the effect of extending the foreclosure process for many families. Even though the legal process of foreclosure can happen in as few as 6 months in most states, it is currently taking much longer for the average foreclosure to get to completion. Recently, JP Morgan Chase revealed that their average borrower who loses a home to foreclosure has not made any payments in 14 months nationwide; 22 months in FLorida and 26 months in New York.To be sure, some see this as a good, others view it as unnecessarily dragging out the overall market's recovery. Many insiders will point out that these delays in foreclosure may be calculated to save the banks the costs of owning and maintaining foreclosed homes, not to help homeowners. In any event, the fact that foreclosure does not happen nearly as fast, in many cases, as expected does give families who are temporarily down on their luck some extra time to try to get back on their feet and save their homes.
Myth #2: Buyers can’t get clear title or title insurance on foreclosed homes. When the foreclosure robo-signing scandal first hit, there was widespread concern that buyers would not be able to get clear title on foreclosed homes, because the former foreclosed owners might be able to come get their homes back when the improprieties in the bank's foreclosure documentation processes came fully to light. At the same time, several of the country's largest title insurance companies publicly balked at issuing policies on bank-owned homes until the issue was resolved. At this point, the banks claim they have revamped their processes, and all banks have stated that they have found not a single borrower whose home was repossessed without them having missed the requisite number of mortgage payments. Nevertheless, a number of governmental investigations are still in progress.The fact is, buyers of bank-owned properties in nearly every jurisdiction are protected from later title attacks by foreclosed homeowners by the bona fide purchaser rule, under which courts would prefer to simply award cash damages to be paid by the culpable bank to a wrongfully foreclosed-on homeowner, rather than reversing the sale or ownership to the new, innocent buyer. Additionally, the title insurers have now changed their tune and restarted issuing insurance policies on bank-owned homes which protect buyers' interests, after working with the banks for them to take responsibility in the event a former homeowner prevails in a wrongful foreclosure suit. While there are still many intricacies of title to be resolved for foreclosure buyers who purchase homes at trustee sales and auctions, or for cash buyers who often went without title insurance in the past, on the average, Trulia-listed, bank-owned property purchased with an average mortgage and title insurance, the chances a buyer's title will later be successfully challenged by the foreclosed homeowner on the basis of robo-signing? Exceedingly slim.
Myth #3: Buyers should wait for the shadow inventory to be released. Many a buyer, discouraged with the homes they see on the the form in their price range, has decided to sit still and wait for the banks to release for sale what is called their "shadow inventory" - rumored to be anywhere from 4 to nearly 6 million homes that have already been foreclosed, but not listed for sale, or will be foreclosed in the near future. The fact is, to the extent that the banks have acknowledged the existence of a pool of homes they own but are not selling, they have expressed that their reasoning for holding the homes off the market is to avoid flooding the market and driving home values down any further. For that reason, buyers should not expect to see a massive influx of these shadow homes onto the market anytime soon - if ever. The banks' current modus operandi is that as they sell a home, the replace it with another home in that market - if they sell 50 homes in a town that month, they'll put another 50 on the next. So, don't hold your breath waiting for a fabulous new flood of homes. Instead, set up a Trulia alert to notify you when homes that fit your search criteria come on the market, and be ready to call your agent and go visit any and every one that looks like it might be a good fit.
Myth #4: If you’re looking for a deal, you’re looking for a foreclosure. Despite what they may say, no buyer’s heart's fondest desire is to buy a foreclosure. But almost every buyer dreams of buying a great home - and getting a great deal on it. Many people think that to get a great value on their home on today's market, it means they must buy a foreclosure. As a result, the value and other advantages of buying an individually-owned home on today's market are frequently overlooked. Individual sellers with homes on the market right now are generally quite motivated, and understand that their homes are competing with discounted short sales and foreclosed homes. Many of these sellers are slashing prices in an effort to get them sold - the most recent Trulia Price Reduction Report revealed that 27 percent of homes on the market across the country have had at least one price reduction. Now that's what I call a sale!Further, individual owners are often much more negotiable on a wide range of contract terms than a bank which owns a foreclosed home. You can work with non-bank owners on things like repairs, closing dates, choice of escrow provider, closing costs and even included personal property much more flexibly than you can when the bank is on the other side of the bargaining table. On top of that, many individually-owned homes are in pristine, move-in condition; that is much rarer with foreclosures. So, don't underestimate the value of the deal you might be able to get on a non-foreclosed home. Just get clear on what you can afford and look at all the homes that are available in that price range, without discriminating against non-foreclosures.
Myth #5: Having a foreclosure on your credit history means it'll take years and years before you can buy again. One of the most Frequently Asked Questions in the Trulia Voices Community by homeowners who are facing or have just lost a home through foreclosure is how long it will take before they'll be able to buy again. Until recently, the standard wisdom was that 5 years, minimum, would have to have elapsed between the foreclosure and the new home purchase. Now, though, borrowers can obtain an FHA loan with the low, 3.5 minimum down payment requirement as soon as 3 years following a foreclosure. To do so, though, all your other ducks must be in a row. Post-foreclosure buyers need a credit score of 620-640 to qualify for an FHA loan; higher for a non-FHA loan - given that the foreclosure itself usually dings anywhere from 100-150 points off the credit score (not necessarily counting a full year or more of pre-foreclosure missed payments), former homeowners who want to buy again need to ensure they have no other late payments or credit dings after they lose thier home. You must have clean credit with no derogatory marks like late credit card payments following the foreclosure, and you may also be required to document 12 to 24 months straight of on-time rent payments after the foreclosure. Further, the bank may impose a lower debt-to-income ratio on post-foreclosure borrowers than on borrowers who have not had a foreclosure, in an effort to keep your mortgage payments low, keep you from overextending yourself and boost the chances you'll be a successful homeowner over the long-term this time around. The bank will also need to see 2 years of continuous employment history in the same field, and documentation that you meet other loan qualification requirements.
Thanks to Tara-Nicholle Nelson
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