Fannie & Freddie Refi's

Calculated Risk: WSJ: Details on New FHFA Refinance Program, No LTV Limit, Eliminate appraisals

Home prices drop?

10/10/2011A Fannie Mae survey shows that respondents now expect home prices to decline 1.1 percent over the next year, a steeper drop than the 0.5% decrease predicted in the August survey and the biggest decline expected to date.

Profile of Repeat Buyers

June 1, 2011 by Sophia Stuart, Marketing Associate · Leave a Comment
Filed under: Home Buyers 

• The median age of repeat home buyers was 49. The median household income was $87,000.
• Seventy-nine percent of repeat buyers buyers purchased a single-family home with a median home size of 2,000 square feet.
• There are several reasons why repeat buyers purchased a home.  Fifteen percent desired a larger home, 12% had to move for a job relocation, and 10% of repeat buyers wanted to move closer to family & friends.
• Learn about the various demographics of home buyers with our 12 page Profile of Home Buyers Booklet. It contains information on first-time home buyers, repeat buyers, single females, and married couples among many others. Download it here: http://www.realtor.org/prodser.nsf/products/186-45-202?OpenDocument

What's a Rookie Agent to do?

What's a Rookie agent to do?!

If you're a Rookie agent (or even new to an area) you're probably feeling a bit overwhelmed.  They didn't tell you in real estate school it was going to be this hard to find a buyer or seller! You thought you'd be able to send out a letter to all your friends and family, sit phone duty, or even magically be handed hot leads from your broker/manager and BANG, you'd be rollin'!
That's not what happened is it?  You mailed out to your sphere of influence.  Your cousin decided to buy directly from the new home sales associate anyway.  You sat phone duty and besides answering 15 times that, "No, that property isn't for lease," you didn't get squat except a little better at Angry Birds.  Your broker hasn't given you a lead.  In fact, they're asking YOU what YOU'RE doing to get leads!
How can you possibly compete with these agents?  These agents are making fat bankroll.  They've been here forever and all they have to do is wake up in the morning and they're getting mad referrals from every person in their path. You hear the lead agent in your office in the bathroom stall next to you talking on his bluetooth.  He just landed another million dollar listing.  You think "Ahhhh sh%$!" You don't know anyone, you can barely log into a website, much less understand how to update the template website the company gave you.  Between your board association fees, that little black supra key that costs a fortune (but looks like a bad 1980's Knight Rider pager), the fees you paid to join your office and what you spent buying supplies and electronics to get started, you're tapped out.  You can't buy an eraser for your mechanical pencil, much less pay to have leads supplied to you!
It's tough, isn't it? 
So, here's my secret to how the Rookie agent can compete with the seasoned veteran agent who knows a third of the town:  GET IN FRONT OF THE CUSTOMER.  GET FACE TIME AND PHONE TIME.
How do you do it?  Here's a few ideas:
1. Start farming an area. Leave business cards on doors with a personal, handwritten message on the back. Start a newsletter or quarterly market report.  Better yet, walk the neighborhood on a regular basis and pass out viable information.
2. Send out expired listing letters on a daily basis.  Or, call them. There's also nothing wrong with showing up at their door with an informational package.  If you feel there's too much competition, go back a few months in the MLS and contact the past expired listings.
3. Go talk to an unrepresented seller. Here's a post that gives advice on how to get your foot in the door with FSBOs.
4. Talk to builder representatives and ask if you can market one of their homes or help hold open some of the homes. Follow up, offer to help, bring them lunch, ask for their referral if a buyer is desiring representation, ask for the opportunity to list one of their properties. Ask, Ask, Ask!
5. Ask an agent if you can advertise one of their listings or hold an open house.  This gives you an excuse to invite neighbors by going door to door. You can also call owners who live in the same neighborhood as that listing to tell them all about that listing and ask if they are thinking of selling in the next 3 months. (Follow Do Not Call procedures.)
6. Preview properties.  Preview listed properties, builder properties.  Get out there and learn the area.  You never know who you'll bump into that might want your help.
7. Blog, set up a Facebook business page, get a Twitter account and be consistent with updating these things.  I'm kinda preaching to the choir here.  I should be more consistent!  These things are free (well, not ActiveRain, but many other blogging platforms are).
8. Get involved in your community, volunteer, talk to your neighbors.  I'm not saying you should stick a business card in their face every time you see them, but reminding someone you work in real estate is ok.  for example, 'Gotta run, I'm previewing properties...have a property tour...have a real estate meeting...taking a continuing education course...got a closing..."
9. Take a successful agent to lunch.  Here's something you might have figured out by now: they probably like to talk about themselves.  Ask them to tell you what they wish they would've known when they started.  Ask them to tell you the top 3 activities you should do.  Get inspiration and hear their stories of how they started.  The good thing about this is they'll start getting all nostalgic and remember when they were poor and BOOM...your lunch is paid for!
10. Follow up often and immediately start a database.  It doesn't matter if it's on note cards, as long as you're contacting your database on a regular basis. You have got to constantly be on the front of that potential clients mind when they go to buy, sell or refer.
If you will commit to doing these activities, consistently, you will see success.  Once you start having closings you can start investing more money into marketing that leverages your time. But, for right now, you may have to pound the pavement a little bit and ACTIVELY pursue that client.  Pretty soon you'll be just like the bluetooth guy in the next bathroom stall.

Thanks to Laurie Jarrett!!!

Will I Still Owe the Bank Money If I Do A Short Sale?

Will I Still Owe the Bank Money If I Do A Short Sale?

If you have one mortgage loan on your California home the answer is no.  Senate Bill 931 allows that after January 1, 2011, if a lender on a first mortgage accepts a short sale, they are agreeing to waive the deficiency amount.  So, if they approve the short sale and it closes, you will not owe your lender any additional money, even though you have not paid back the entire loan balance.  In fact, in my opinion, that is the entire goal of a short sale.  You definitely should discuss the impact of Senate Bill 931 with your attorney when considering a short sale.

If you have two mortgage loans, the issue of whether you will continue to owe the second mortgage lender money is negotiable.  The goal of the short sale negotiation is to obtain a full release of the second lender’s right to pursue a deficiency after the short sale.  Accordingly, short sale sellers should review any and all short sale approval letters with their attorney to insure that the deficiency release language is sufficient to protect them.  Also, it is not unusual to receive two demands from a second mortgage holder.  The lower demand will often be what they will require to participate in the short sale -- a simple “lien release”  -- the second higher demand will often be what they will require for a full release of their right to pursue a deficiency.  

A short sale with two mortgage lenders may present itself like the following:  Lien release demand amount $3000, and deficiency release demand amount $5000.  Typically, the first mortgage holder will allow some amount of the short sale proceeds to the second mortgage holder.  So, let’s say the the first mortgage holder will allow $4000 to go to the second lender, but no more.  It would take an additional $1000 seller contribution to insure that the seller would not be pursued by the second lender after the short sale.  The first lender would have to approve that additional payment and it would have to be reflected on the closing documents.  In this example, after the $5000 deficiency release amount is met, the short sale seller would not owe any additional money after the short sale.  

If you are considering a short sale of your Orcutt, Vandenberg Village, Nipomo, or Arroyo Grande home, you should seek out an experienced short sale agent to guide you through this process.  If you would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.

Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

*Nothing in this article is intended to solicit listings currently under contract with another broker.  This article offers no legal or tax advice.  Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.  Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

Copyright© 2011 Tni LeBlanc *Will I Still Owe the Bank Money If I Do A Short Sale?*

A Simple Explanation Of The Federal Reserve Statement (April 27, 2011 Edition)

Earlier today, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.
The vote was 10-0 — the third straight meeting after which the FOMC vote was unanimous.
In its press release, the FOMC noted that since its March 2011 meeting, the economic recovery is proceeding “at a moderate pace” and that labor markets conditions are “improving gradually”. Household spending and business investment “continue[s] to expand” but the housing sector remains “depressed”.
Furthermore, the FOMC’s statement discussed the Federal Reserve’s dual mandate of (1) Managing inflation levels, and (2) Fostering maximum employment. The statement acknowledged recent inflation pressures on the economy, but it expects those pressures — because they’re related to oil and food prices — to be “transitory”. Unemployment remains “elevated”.
The FOMC statement also re-affirms the group’s plan to keep the Fed Funds Rate near zero percent “for an extended period” of time, and to keep its $600 billion bond market support package — more commonly called “QE2″ — intact.
The statement’s verbiage suggests that a third support package may be created after QE2 ends in June 2011, depending on the needs of the economy.
Mortgage market reaction to the FOMC statement has been positive thus far. Mortgage rates in Newport Beach are unchanged, but leaning lower. And, as always, market sentiment could shift quickly. If you like today’s mortgage rates, consider locking in.
The FOMC’s next scheduled meeting is a 2-day event, June 20-21 2011.

Possible Very Strict New Guidelines

Reporting from Washington—

You may have seen reports that the federal government is proposing new mortgage finance rules under which only home purchasers who can afford a minimum 20% down payment on a conventional loan would get a shot at the best interest rates and terms.

That is correct, and it's deeply sobering news for large numbers of first-time and moderate-income buyers who can't come up with that much cash or afford to pay higher rates.

But some of the other requirements that federal agencies and the Obama administration are proposing in the same plan have gotten much less attention yet could prove just as troublesome for consumers:

•Strict mandatory debt-to-income limits. Under the proposal, to get the best mortgage rates, you would need to spend no more than 28% of your gross monthly income on housing-related expenses, and you couldn't have total monthly household debt that exceeds 36% of your income.

There would be no flexibility to go beyond these ceilings, unlike in today's marketplace, in which Fannie Mae and Freddie Mac consider debt-to-income ratios along with other factors through their electronic underwriting systems. Freddie Mac, for example, has an overall debt-ratio limit of 45% of an applicant's stable monthly income.

•To refinance your existing mortgage and replace it with one carrying the best interest rate, you'd need no less than a 25% equity stake in your house to qualify. If you sought to take any additional cash out through a refi, you would need 30% equity. Today's typical requirements for a conventional refi are nowhere near as strict.

•Pristine credit standards. For example, if you were 60 days late on any credit account during the previous 24 months, you would be ineligible for a mortgage at the best terms.

These are all core features of what may be the most sweeping and controversial set of changes in decades for the housing and mortgage markets. The so-called "qualified residential mortgage," or QRM, proposals were released at the end of March by banking, securities and housing regulators, along with the Department of Housing and Urban Development. The agencies were required by the 2010 financial reform legislation to come up with new standards for low-risk conventional mortgages.

Congress did not specify what a "safe" mortgage should look like but directed the agencies to consider such factors as full documentation of borrower income and assets plus avoidance of toxic features such as negative amortization and balloon payments. Congress was silent on the subject of minimum down payments.

Under the law, loans that do not meet the strict QRM tests will be pushed into a less-favored, higher-cost category: Banks and Wall Street securitizers would need to set aside 5% of loan balances in reserves to cover possible losses from defaults. This extra capital cost inevitably would be passed on to consumers.

Mortgage industry estimates of the interest rate differential between ultra-safe, QRM-qualifying loans and all others range from three-quarters of a percentage point to 3 percentage points. In today's market, this would mean that mortgages that meet the federal agencies' stringent new standards might go for 5%. But all others — the vast majority of today's conventional loans — could cost from just under 6% to 7% and higher.

You can muster only a 10% down payment? Tough. You can't quite fit into the tight confines of the QRM's debt-to-income ratio rule? Pay up.

Where and when will this all start hitting the marketplace? The proposals are out for public comment through June 10 and probably won't be put into effect until mid-2012. The agencies' proposal, though not the legislation, exempts mortgages sold to Fannie Mae and Freddie Mac from the rule as long as both remain under federal conservatorship — a date uncertain. FHA and VA mortgages would not be subject to QRM either.

Meanwhile, builders, consumer groups, banks, real estate agents and others are readying campaigns to persuade the regulators and the Obama administration to back off some of the provisions. Michael Calhoun, president of the Center for Responsible Lending, argues that if adopted in its current form, the proposal would make it much tougher for modest-income and minority consumers to afford a first home.

Jerry Howard, chief executive of the National Assn. of Home Builders, says the agencies and the administration have strayed far beyond Congress' intent, and their proposals threaten to wreck any recovery in housing and force millions of Americans to rent rather than to own.

"I think we're in for a hell of a fight," he says.

More Borrowers Underwater: Why We Should Care

Falling home prices at the turn of the year pushed more borrowers into a negative equity position, meaning they owe more on their mortgages than their homes are worth.
In Q4, 23 percent of borrowers nationwide, or 11.1 million, were holding "underwater" mortgages; that's a collective $750 billion of negative equity, according to the latest survey from CoreLogic (NYSE: clgx). That's up from 22.5 percent, or 10.8 million, in Q3, again, thanks to falling home prices. To make matters worse, 2.4 million borrowers have less than 5 percent equity in their homes, deemed as "near-negative" equity.
Of course negative equity is concentrated in the hardest hit states: Nevada (65 percent), Arizona (51 percent), Florida (47 percent), Michigan (36 percent) and California (32 percent). This as the consensus among housing watchers is that home prices will fall another 5 to 10 percent this year before slowly climbing back. That means negative equity will climb another ten percentage points.
So why should we care if the bulk of these underwater borrowers can still make their monthly mortgage payments? "Negative equity holds millions of borrowers captive in their homes, unable to move or sell their properties," notes CoreLogic's chief economist Mark Fleming. "Until the high level of negative equity begins to recede, the housing and mortgage finance markets will remain very sluggish."
Negative equity will slow the pace of home sales, no question, but it will also provide more problems for policymakers and state and federal regulators. Right now the mortgage market is at the mercy of a huge potential settlement with the state attorneys general and a whole bunch of feds, part of which will be a push for principal write down on troubled loans. With negative equity continuing to rise, the principal write down argument gains strength. I spoke with Missouri state AG Chris Koster yesterday at a conference in DC:
"I think principal write-down is the right way to go. Twenty to 25 billion dollars is a significant amount of money. The big question is are we talking about five banks, 15 banks who chip in on that fund? We don't know the answer to that until we get through these negotiations, but we're at the beginning of something serious that could be successful."
But the head of the new Consumer Financial Protection Bureau, Elizabeth Warren, told a Reuters summit last week, with regards to punishing the banks with a monetary fund or fine, "I don't think this is about a pound of flesh. I think that's the wrong way to think about it." She seems more interested in repairing the market than giving borrowers back equity, the loss of which may or may not have been their own doing.
My concern is that the more borrowers in a negative equity position, the more may intentionally default on their loans in order to try for principal write down. Yes, it's the moral hazard, slippery slope argument, which I know appears to be losing some steam in Washington at least.
The negative equity issue also comes into play as regulators decide on risk retention rules and what exactly will qualify as a "Qualified Residential Mortgage." QRM's will be exempt from risk retention, so banks will not have to hold on to 5 percent of the risk on those loans before securitizing them. Rising negative equity bolsters the case for higher down payments for QRMs, especially as home prices continue to slide.
So yes, it's just another new number of how a lot of borrowers look on paper. It doesn't mean every underwater borrower will go delinquent on his or her mortgage. But it does add to risk, which this housing market does not like one bit.

Serious delinquency rate drops annually for first time since 2007

Monday, November 29th, 2010, 10:09 am

The serious delinquency rate on single-family mortgages held by Fannie Mae was 4.56% in September, a 16 basis point drop from September 2009 and the first yearly decline since April 2007.
In April 2007, the serious delinquency rate was at 0.62%, down 2 bps from April 2006.
The September 2010 rate, the latest available from Fannie Mae, also marked the seventh-straight monthly decline. It was down 14 bps from August.
The last time the delinquency rate increased from the previous month was in February, when it climbed 7 bps to 5.59%. It has averaged a roughly 14 bps drop every month since to what is now its lowest point since August 2009.
Fannie Mae mortgage-backed securities issuance held flat in October at $69.6 billion, roughly the same as the previous month but up roughly 71% from a year ago. So far in 2010, Fannie Mae has issued $472.6 billion in MBS. In 2009, Fannie issued $807.8 billion.
The Fannie Mae gross mortgage portfolio declined in October to $798.2 billion, down 0.5% from the previous month but up 3.5% from a year ago.

Your Mortgage Minute for the week of November 22, 2010

Mortgage markets worsened last week as the U.S. dollar gave up ground in currency markets, and inflation concerns mounted. In response to the events, conforming mortgage rates in California rose for the third straight week. Mortgage rates have now climbed by as much as half-percent since the start of the month, and Freddie Mac reports average loan fees to be higher, too. The 7-month rally in rates may be nearing its end. The 30-year fixed rate mortgage is at a 4-month high after reaching an all-time low just 3 weeks ago.
The abrupt change in rates makes for an interesting study in expectations, and how they can influence a market. Remember, inflation is bad for mortgage rates. Inflation devalues the dollar which, as a consequence, devalues repayments made to mortgage bond holders. As a result, when inflation is present, mortgage bonds tend to sell-off which causes mortgage rates to rise.
This is what’s been happening these past 3 weeks. However, we’re not in an inflationary environment. To the contrary:

1.     The Federal Reserve has said inflation is too low to be economically healthy

2.     Last week, the Cost of Living posted its lowest year-over-year gain in history

But mortgage rates are rising anyway. This is because global investors believe the Fed’s most recent market intervention — a $600 billion bond purchase program — will later lead to inflation. Just on the expectation, markets are behaving like inflation is already here.
This week is holiday-shortened, and rates should remain volatile. There’s a bevy of data including the Existing and New Home Sales reports, consumer confidence data, and the FOMC Minutes from the November 3 meeting. If you haven’t locked a mortgage rate, consider locking one today. Rates have farther to climb than the fall

California was 2nd Best Among Nationwide Real Estate Sales (OC Register)

How bad of a summer was it for real estate nationwide? Well, you know it wasn’t pretty in California!

Best states	Sales Q3	Qtr. Chg.	Year chg.
Nevada	87,200	-6.4%	-17.4%
California	439,600	-7.3%	-13.0%
Virginia	103,200	-12.8%	-17.0%
Florida	350,000	-13.9%	-1.0%
Georgia	148,800	-13.9%	-15.8%
Worst states	Sales Q3	Qtr. Chg.	Year chg.
Alaska	16,800	-38.2%	-26.3%
Nebraska	24,400	-39.0%	-33.0%
Iowa	41,200	-41.8%	-29.5%
North Dakota	9,200	-43.9%	-34.3%
Minnesota	60,800	-45.7%	-37.4%
Nationwide	Sales Q3	Qtr. Chg.	Year chg.
Total	4,163,000	-25.3%	-21.2%

New Realtor data shows that California single-family home re-sales fell 7.3% from the second quarter to the third quarter as a federal tax break for buyers expired. That left California home-buying’s pace 13% below a year ago.

However, that 7.3% quarter-to-quarter decline in California was the second best performance — yes, B-E-S-T — among the states.

Only Nevada — down 6.4% — fared any better. Hardest hit state was Minnesota, off 46% in those three months alone! Nationwide, it was a 25% tumble.

Perhaps California’s advantage — if we can call this a plus — was the tax break (worth up to $8,000) was likely not a major deal to our house shoppers. So any springtime home surge created by shoppers’ desires to qualify for the tax break — as we heard of elsewhere — was not a major factor. Still, considering all the real estate angst around this region, you can see why people are REALLY worried about housing elsewhere!

Curiously, here’s another snapshot of how things have changed: Our state’s recent relative recent “strength” makes California 11% of the U.S housing market, by single-family homes resold — largest share of any state. That’s up from 6% near the market’s peak in 2007.

Your Mortgage Minute Update for the Week of November 15, 2010

In a holiday-shortened trading week, mortgage markets tanked last week, casting doubt on whether the bond market’s 7-month bull run will continue. Fears of inflation caused conforming mortgage rates to rise in California. Last week marked the first sizable mortgage rate increase over the course of 7 days since April. The biggest reason why rates rose last week was because of concerns that the Federal Reserve’s latest round of stimulus will devalue the U.S. dollar. The Fed pledged an additional $600 billion to the bond markets two weeks ago and, to meet this obligation, the group will have to, quite literally, print new money.
It’s Supply and Demand. With more dollars in circulation, every existing dollar is worth less. It’s also inflationary. As the Fed’s pledge ties back to mortgage rates, remember that mortgage bondholders are paid in U.S. dollars. So, if those dollars are expected to be worth less in the future, we would expect mortgage bond demand to fall. And that’s exactly what happened last week — investors rarely clamor for assets whose value drops over time. The falling demand dropped down prices, and pushed up yields. Mortgage rates spiked.
This week, the trend could continue. There’s a lot of inflation-signaling data on tap:

• Monday : Retail Sales
• Tuesday : Producer Price Index; Consumer Confidence; Housing Market Index
• Wednesday : Consumer Price Index; Housing Starts
• Thursday : Initial and Continuing Jobless Claims

Analysts are calling for lukewarm data this week; none of the releases is expected to show strong growth. If the analysts are wrong, look for rates to rise again. Momentum is moving away from rate shoppers. If you’ve yet to lock in a rate, consider doing it now.

The Eleven Reasons People Can't Sell Their Homes

The environment for home sales becomes more difficult with each passing month. Some estimates put 11 million mortgages, about 20% of the U.S. total, underwater, meaning that homeowners owe their banks more than the underlying properties are worth. Home repossessions reached more than 100,000 for the first time in September. Rising foreclosure rates continue to further depress housing prices.
The federal government let its tax benefit for homeowners expire in April and has not renewed it since them. The program did boost sales earlier this year. Shoppers must now face a market without the credit in which many home prices continue to fall.

More from 24/7 Wall St.: • The Best and Worst Run States in America • More Evidence Apple Will Eventually Rule the PC World • Many Doomed Americans Aren't Saving for Retirement

The clamor over flawed foreclosure paperwork and robo-signers could further chill the housing market. People who might buy have bought a home in foreclosure will now worry about obtaining proper documentation and effective transfer of title.
24/7 Wall St. spoke with experts at real estate research firms Zillow.com and RealtyTrac to find the best way to sell a home. We also interviewed management from the National Association of Realtors, a number of real estate brokers, bank managers and elected officials in affluent communities. What emerged from these conversations and our research is the following: successful home sellers often do the same small number of things correctly. Often, these tactics are the difference between finding a buyer and not.
1. Pick the Best Broker
Many people who decide to sell contact a real estate brokerage with a sterling reputation or go to one that has the largest number of listings. Frequently, when potential sellers call these firms, they are turned over to the first available broker in the office. That person is often not the best representative. As a matter of fact, what is a successful broker doing in the office anyway? There are a small number of brokers in most markets who have a better track record than their peers. Most of them have been brokers for a long time and did not lose their jobs when the housing bubble collapsed.
2. Get an Appraisal
Sellers should obtain an appraisal for their home before they put it on the market. One of the major reasons house sales fall apart is that the bank assesses the home for less than the buyer has agreed to pay. For example, a buyer and seller agree on a price of say $250,000. Then the buyer goes to his bank to get a mortgage. But, the bank appraises the house for $200,000. Now, the buyer has to put up more money. Sellers who get their own appraisals get a realistic idea of what price a bank would value a house at before they enter into a sale. Most appraisers already do some work for banks. An appraisal often tells a seller what a "safe" price is. And an appraisal's average cost is only about $200.
3. Get the Right "Comp"
Sellers must make sure that foreclosures in their area are included in the "comps" the Realtor gives them. Traditionally, a broker will give a seller a list of similar properties in the market and that information is part of what is used to set a price. What brokers do not always do is put the price of any foreclosed properties that are comparable into the calculation. A typical foreclosed home sells for 25% to 30% less than similar inventory in the same area. If sellers don't take that into consideration, their home will not be priced competitively and they put themselves at a disadvantage. Sellers wind up slashing prices after their overvalued properties are on the market for several months without success.
4. Tax Assessment
Low property taxes are critical to finding buyers. Property taxes in most cities, towns and counties have gone up for years as home values appreciated. This revenue is used to run schools and other local services. However, now home values have dropped sharply, and the appraisals by local authorities on which taxes are based are too high. Many cities have a process for homeowners to request lower appraisals, and as a consequence obtain a reduced property tax. Some states even have a board of appeals for homeowners who do not think they were treated fairly. One way for people to get local authorities to cut the tax assessment of their home is to put it on the market at below the appraised price. If the home does not sell for several months, they can present empirical evidence of the lower value. A home assessed for $300,000 that goes on the market for $275,000, but does not sell for a year, is probably not worth $300,000.
5. Conserve Utilities
Turn the lights off! Most buyers ask for utility bills. "Energy wasters" who sell a home will rue the times they forgot to turn off lights, turn down the air conditioner or left the TV on all day. It would be ill-advised to fake the amount of energy being used by simply living in the dark and cutting utility costs to nearly zero. However, careful and prudent use of energy can cut bills by enough so that a buyer does not have sticker shock about what it costs to maintain electricity, gas or oil to run a house.
6. Sell "Green"
Not very many homes are actually built with environmentally friendly material or heated by solar panels or wind. But those that are have a special appeal to the crowd that buys green cars such as the Prius. A seller may have one of only a few "green" homes in their town or city. That may make it highly desirable to many shoppers.
7. Curb Appeal
This item appears on most lists, and many sellers don't bother to take the advice to prune the hedges or clean the gutters. But it is even more complex than that. Walk to the road on which your home is located. Now walk toward the house. What does a buyer see for the first time? Most sellers never bother to look at their homes through a buyer's eyes. Do the shingles need a paint job? Are the shutters looking shoddy? "Love at first sight" is no less rare with homes than with people.
8. Everything Is Negotiable
Negotiate the fee with the broker. The fee paid to a Realtor for selling a home is traditionally 6%. Sellers often believe that they can get that down to 5% or even 4%. But, in a market where brokers are desperate for business, pressing for 3% or even 2% may work. Whatever the savings are, they can materially affect how much a seller can drop the price of his home and still walk away with a profit.
9. Get an Inspection
Sellers should do some of the inspection work and testing before their home goes on the market. Inspectors for buyers are often aggressive when they report what is "wrong" with a home to their clients. For as little as $250, an inspector will go through your house and tell you what the inspector is likely to flag such as a roof leak or old, energy-wasting windows. That gives the seller a chance to fix the problem for less than the buyer may want to lower the price by, or at least know the items that a buyer will use to negotiate down the price.
10. Hire a "Stager"
For as little at $200, you can hire someone who can make your home look better by moving pictures, furniture, lights and addressing problems that may make the home show poorly. These people are cousins to the men and women who "fix" expensive homes before magazines come in to photograph them for stories. "Stagers" have lists of tricks that few Realtors and almost no homeowners know. The "better" your home looks, the more appealing it will be to potential buyers.
11. Fix It First
Sell a house that does not need any work. In a market in which people count every penny and worry about job security, fewer buyers want homes that are "fixer uppers" that require work that could cost thousands or even tens of thousands of dollars to address. These days, a buyer choosing between two homes will most likely take the one that needs the least work. It may cost some money to get your home to the point where a buyer can walk in and do almost no work. However, it may be the difference between selling a home and having it languish on the market.

Lenders prefer foreclosures, not short sales

While the recent halt in foreclosures gave defaulting homeowners some breathing room and a glimmer of hope their lender might consider a modification or short sale, lenders are still reluctant to concede a short sale in favor of foreclosure.
Historically, lenders have never preferred short sales for fear homeowners will take advantage of them to cut their losses. A recent report found that 2% of annual short sales involve fraud, costing banks around $300 million.
A 2009 change in accounting policy by the Financial Accounting Standards Board (FASB) allows lenders to delay recording losses on foreclosures until the home is sold, while losses from a short sale must be marked immediately.
Bank of America (BofA) has only processed 61,000 short sales nationwide in 2010, compared to the millions of homes in foreclosure it services.
first tuesday take: Instead of the “cat and mouse” game for short sales or foreclosures, banks need to focus on cramdowns if Californians are to remain homeowners as desired by agents, builders and the government. Reducing principal to keep homeowners in their homes is a far better solution than initiating the on-again, off-again short sale, or adding another foreclosure or real estate owned (REO) property to the massive pile of destroyed homeownerships. [For more information regarding short sales, see the August 2010 first tuesday article, Short sales could be shorter.]
Blinded by total fear of declaring losses, lenders are stuffing more skeletons in their already bursting closets of rising delinquencies (through 2013), shadow inventory (recorded notices of default (NODs)) and delayed reporting of their insolvency. Instead of focusing on clearing out their patently unmanageable profusion of foreclosures, banks are adding to it. They are unwilling to take a direct and immediate principal reduction hit for the benefit of consumers, the nation’s housing policy and the greater real estate market — all of which are partially to blame.
Foreclosures are necessary for fast, quick recovery — they are a fitting solution for a default if they are actually completed, lest we wish to go the way of Japan in this financial crisis. Until the government forces them to write down their loan portfolios to current market value and reduce mortgage principal for underwater homeowners, prepare for your short sale requests to be absolutely denied on arrival. It keeps lenders solvent; on paper, with paper. [For more information regarding proposed changes to foreclosure, see the October 2010 first tuesday article, The foreclosure process needs to change, not halt.]
Re: “Short sales resisted as foreclosures are revived” from the New York Times

Your Mortgage Minute update for the week of November 8, 2010

Mortgage markets took a roller coaster ride last week, powered by the dual-force of the Federal Open Market Committee, and the government’s monthly Non-Farm Payrolls report. As standalone events, both releases would have ranked among the top market movers of the year anyway, but throw in the rest of the week’s data –including the release of key inflation figures and the midterm elections — and it’s no wonder the bond markets were so bumpy.
Huge gains and losses characterized day-to-day trading last week. Overall, however, conforming mortgage rates in California improved; fixed-rate mortgage rates fell slightly less than adjustable-rate ones. Recapping last week’s economic news:

• Core PCE, the Fed’s preferred inflation gauge, posted a lower-than-expected 1.2% annual growth
• The Federal Reserve announced a $600 billion package to support the economy; more than most estimates.
• According to the government, 151,000 new jobs were created last month. Economists expected 61,000.

Additionally, the Institute for Supply Management’s Manufacturing Index showed strong sector growth. With each new surprise, Wall Street’s expectations adjusted for the future and, therefore, mortgage rates changed. 
This week, the direction that rates take is anyone’s guess. First, there’s no substantive economic data due for release and, second, markets are closed Thursday for Veteran’s Day. The absence of data coupled with lower volume expected overall may mean that market momentum rules the week. In other words, if mortgage markets open the week better, they may close the week better, too. Conversely, if rates start rising, they could rise by a lot.

6 Simple Steps To $1 Million

Let's face it; we all don't make millions of dollars a year, and the odds are that most of us won't receive a large windfall inheritance either. However, that doesn't mean that we can't build sizeable wealth - it'll just take some time. If you're young, time is on your side and retiring a millionaire is achievable. Read on for some tips on how to increase your savings and work toward this goal.

Stop Senseless Spending Unfortunately, people have a habit of spending their hard-earned cash on goods and services that they don't need. Even relatively small expenses, such as indulging in a gourmet coffee from a premium coffee shop every morning, can really add up - and decrease the amount of money you can save. Larger expenses on luxury items also prevent many people from putting money into savings each month. (For related reading, see Squeeze A Greenback Out Of Your Latte.)

That said, it's important to realize that it's usually not just one item or one habit that must be cut out in order to accumulate sizable wealth (although it may be). Usually, in order to become wealthy one must adopt a disciplined lifestyle and budget. This means that people who are looking to build their nest eggs need to make sacrifices somewhere - this may mean eating out less frequently, using public transportation to get to work and/or cutting back on extra, unnecessary expenses. (To learn more, read The Disposable Society: An Expensive Place To Live.)

This doesn't mean that you shouldn't go out and have fun, but you should try to do things in moderation - and set a budget if you hope to save money. Fortunately, particularly if you start saving young, saving up a sizeable nest egg only requires a few minor (and relatively painless) adjustments to your spending habits. (For more insight, read Under 30 And Financially Secure In 10 Steps.)

Fund Retirement Plans ASAP
When individuals earn money, their first responsibility is to pay current expenses such as the rent or mortgage expenses, food and other necessities. Once these expenses have been covered, the next step should be to fund a retirement plan or some other tax-advantaged vehicle.

Unfortunately, retirement planning is an afterthought for many young people. Here's why it shouldn't be: funding a 401(k) and/or a IRA early on in life means you can contribute less money overall and actually end up with significantly more in the end than someone who put in much more money but started later. (To see how this works, check out Why is retirement easier to afford if you start early?)

How much difference will funding a vehicle such as a Roth IRA early on in life make?

If you're 23 years old and deposit $3,000 per year (that's only $250 each month!) in a Roth IRA earning and 8% average annual return, you will have saved $985,749 by the time you are 65 years old due to the power of compounding. If you make a few extra contributions, it's clear that a $1 million goal is well within reach. Also keep in mind that this is mostly interest - your $3,000 contributions only add up to $126,000.

Now, suppose that you wait an additional 10 years to start contributing. You have a better job and you know you've lost some time, so you contribute $5,000 per year. You get the same 8% return and you aim to retire at 65. When you reach age 65, you will have saved $724,753. That's still a sizeable fund, but you had to contribute $160,000 just to get there - and it's no where near the $985,749 you could've had for paying much less.

Improve Tax AwarenessSometimes, individuals think that doing their own taxes will save them money. In some cases, they might be right. However, in other cases it may actually end up costing them money because they fail to take advantage of the many deductions available to them.

Try to become more educated as far as what types of items are deductible. You should also understand when it makes sense to move away from the standard deduction and start itemizing your return. (To learn everything you need to know about filing your tax return, check out our Income Tax Guide.)

However, if you're not willing or able to become very well educated filing your own income tax, it may actually pay to hire some help, particularly if you are self employed, own a business or have other circumstances that complicate your tax return. (For more on this, see Crunch Numbers To Find The Ideal Accountant.)

Own Your HomeAt some point in our lives, many of us rent a home or an apartment because we cannot afford to purchase a home, or because we aren't sure where we want to live for the longer term. And that's fine. However, renting is often not a good long-term investment because buying a home is a good way to build equity.

Unless you intend to move in a short period of time, it generally makes sense to consider putting a down payment on a home. (At least you would likely build up some equity over time and the foundation for a nest egg.) (For more insight on weighing this decision, read To Rent Or Buy? The Financial Issues.)

Avoid Luxury WheelsThere's nothing wrong with purchasing a luxury vehicle. However, individuals who spend an inordinate amount of their incomes on a vehicle are doing themselves a disservice - especially since this asset depreciates in value so rapidly.

How rapidly does a car depreciate?

Obviously, this depends on the make, model, year and demand for the vehicle, but a general rule is that a new car loses 15-20% of its value per year. So, a two-year old car will be worth 80-85% of its purchase price; a three-year old car will be worth 80-85% of its two-year-old value.

In short, especially when you are young, consider buying something practical and dependable that has low monthly payments - or that you can pay for in cash. In the long run, this will mean you'll have more money to put toward your savings - an asset that will appreciate, rather than depreciate like your car.

Don't Sell Yourself Short
Some individuals are extremely loyal to their employers and will stay with them for years without seeing their incomes take a jump. This can be a mistake, as increasing your income is an excellent way to boost your rate of saving.

Always keep your eye out for other opportunities and try not to sell yourself short. Work hard and find an employer who will compensate you for your work ethic, skills and experience.

Bottom LineYou don't have to win the lottery to see seven figures in your bank account. For most people, the only way to achieve this is to save it. You don't have to live like a pauper to build an adequate nest egg and retire comfortably. If you start early, spend wisely and save diligently, your million-dollar dreams are well within reach.

by Glenn Curtis (Contact Author | Biography)

Glenn Curtis started his career as an equity analyst at Cantone Research, a New Jersey-based regional brokerage firm. He has since worked as an equity analyst and a financial writer at a number of print/web publications and brokerage firms including Registered Representative Magazine, Advanced Trading Magazine, Worldlyinvestor.com, RealMoney.com, TheStreet.com and Prudential Securities. Curtis has also held Series 6,7,24 and 63 securities licenses.

Lender Rebates may be a thing of the past!

The Dodd-Frank Wall Street Finance Bill was signed into law by Obama last month. I've spent three weeks speaking with attorneys who have picked it apart. It's a disaster!! Our government walked into our Mortgage China Shop like a drunken bull on steroids. FACT: All loans have been CLEAN within the past 18 months. When was the last time you saw a subprime loan? How about an ALT-A or No-doc? The mortgage industry needed an antibiotic, the government prescribed a lobotomy. They produced a remedy without performing a diagnosis. Having the government monitor the lending industry is as brilliant as having Rosie O'Donnell guard a dessert tray.

The bill contains over 2,319 pages of pure junk. One of the originators, Chris Dodd made the same comment about this bill as Nancy Pelosi made about the healthcare bill: '"Let's pass it and figure it out later." In a nutshell; it closes one agency and establishes 22 others. It will be the largest government agency ever created. The largest expansion of government in our history!

Friends, this bill is so toxic to mortgage financing I don't know where to begin!

* If you are a Realtor specializing in home sales under $100,000, it might be time to find new employment. This bill caps financing costs. No wholesale originator will touch a loan under $100,000. I'll explain- There is a 3% cap on closing costs. Underwriting, processing, appraisal, survey, attorney, recording, mortgage policy, tax service, flood certs, credit report, etc…no room for an origination fee. That would be fine, however the bill removes lender rebates. And forget about writing a contract where the buyer pays the owners title policy!!

* Removal of lender rebates (yield spread). No longer will "no point" loans walk the earth. This will wipe out 50% of those purchasing FHA loans. The cost of refinancining a home will double. Our economy and the consumer are the biggest losers.

* Not wanting to leave any progressive stone unturned, Dodd-Frank had the audacity to sneak a "diversity" clause into the bill. The Equal Rights Act is not enough. If HUD audits my office and discovers that all of my employees look like me, I could be heavily fined or have my banker license revoked. My hiring practice has to be based on color, nothing else!!

* The bill calls for the removal of short-term ARMS. Consumers aren't intelligent enough to make short-term financing decisions so the government will make it for you.

* Want HVCC to go away? Your wish came true! Yes, HVCC is gone. Unfortunately, the process just became more complicated. A few months ago I sent an email saying, "the devil you know is better than the devil you don't know." The government controlling appraisal management companies is the devil we don't know. Expect hell!

Want a good laugh? As I stated, this bill consists of 2,319 pages. There is not one mention of Fannie & Freddy in the entire bill. The two entities responsible for 95% of the foreclosures in this country! Not one word!! (Hence, the word "sh*t" to describe this bill!)

Chris Dodd, a personal friend of Country Wide and Barney Frank, a personal friend of Fannie Mae wrote this bill. That is akin to Charles Manson writing children's books. Or, Paris Hilton teaching our daughters about abstinence. Or, economists saying our recession is over.

Unfortunately (or I should say understandably) NAR wants nothing to do with fighting this bill. NAR is running scared. Congress is looking into capping and taxing Realtor commissions. Now is not the time to take a high profile on anything it Washington. The inmates are running the asylum.

THE GOOD NEWS...

Ironically, the bill contains many RESPA violations. Lawyers are working behind the scenes on behalf of the National Association of Mortgage Brokers and Bankers. I'll keep you posted as things develop.

Fannie, Freddie Take Loan Files From Florida Law Firm

Fannie Mae and Freddie Mac have terminated their relationships with a top Florida foreclosure law firm and began taking possession of loan files on Monday afternoon from the firm, which processes evictions on behalf of the mortgage-finance giants.
Fannie and Freddie had previously suspended all foreclosures that had been referred to the law offices of David J. Stern in Plantation, Fla., a suburb of Fort Lauderdale.

More

• Fannie Mae Halts Firm's Foreclosure Work 10/26/10
• Complete Coverage: The Foreclosure Crisis

Freddie Mac took the rare step of removing loan files after an internal review raised "concerns about some of the practices at the Stern firm," a Freddie spokeswoman said.
"We have begun taking possessions of all files on Freddie Mac mortgages simply to protect our interest in those loans as well as those of the borrowers," the Freddie spokeswoman said. A Fannie spokeswoman declined to elaborate.
Fannie and Freddie said they will move those files to other law firms in the state but that they hadn't yet identified where they would be redistributed. The firms said they had notified Florida's attorney general about the decision to remove the files and that the Stern firm had cooperated with the action.
A lawyer for Mr. Stern didn't immediately respond to inquiries.
The Stern law firm has been at the center of allegations by the Florida Attorney General's Office of improper foreclosure practices. The office has released depositions of former law-firm employees who have alleged that the firm forged notarized documents and that employees signed files without reviewing them in an effort to speed through foreclosure filings.
Fannie and Freddie both provide lists of approved law firms to mortgage servicers that handle defaulted loans on behalf of the companies. Fannie said last week it was in the process of adding as many nine law firms to its legal network in Florida, doubling the current number of approved firms.
Freddie has as many as 10,000 foreclosures being handled by the Stern firm, according to people familiar with the matter.

Millions of homeowners keep paying on underwater mortgages

Reporting from Washington —

For almost two years, home foreclosures have swept the nation, spreading misery among once-buoyant families, spattering lenders with red ink and undermining efforts to restart the economy.

But a bigger problem may turn out to be the millions of Americans who are still faithfully paying their mortgages, but on houses worth far less than before the bubble burst. It's not that these homeowners will stop making their payments. It's just the opposite — that they will keep doing it.

How could that be a source of future trouble? Because, with home prices stagnant in much of the country, payments on mortgages that are underwater could absorb billions of dollars that might be used for other forms of consumer spending — a drag on family finances, the housing market and the overall economy.

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And the drag could persist for years.

Of the estimated 15 million homeowners underwater, about 7.8 million owed at least 25% more than their properties were worth in the first quarter of this year, according to Moody's Analytics' calculations of Equifax credit records and government data.

More than 4 million borrowers, including 672,000 in California, 424,000 in Florida and 121,000 in Illinois — three of the biggest real estate markets — were underwater more than 50%. Their average negative equity: a whopping $107,000.

Many of these homeowners are paying much higher interest rates than the latest national average of 4.25%. They still have jobs and can afford to make the payments.

But they can't refinance because they owe too much. That home equity line of credit isn't going to happen. Even ordinary loans may be impossible to get. And selling the home at a huge loss is out of the question.

Nor can most underwater borrowers take advantage of the Treasury Department's loan-modification program, which generally requires a job loss or another kind of hardship.

In other words, they're stuck.

Heather Hines and her husband reflect this new reality. They owe $415,000 on a Santa Rosa, Calif., town house they bought in 2004 for $430,000. When the county appraised the three-bedroom home a few weeks ago, it was worth $246,000 — even less than a year earlier.

The couple had planned to move to a larger home after their two grade-school children became teenagers, but now that looks impossible. Their house needs a new roof, but they've put off replacing it for more than a year.

"It's hard to think of making that investment when you're hundreds of thousands underwater," said Hines, 37, a city planner who like her husband is employed and has an advanced university degree. "It just feels hopeless. What are we supposed to do? It feels like we're never going to see any equity in our home."

Theoretically, the Hineses could walk away — stop making the mortgage payments that consume a big part of their income. But defaulting would ruin their credit and have other negative consequences. So, she said, they'll keep paying and hoping for the best.

Unhappily for the rest of the country, that's not the end of the problem: The Hineses' financial bind will ripple throughout their community and the larger economy.

The real estate market depends on such homeowners being able to sell and move up; without them the trade-up market can't grow.

Meantime, the Hineses will keep delaying that new roof, depriving a local roofer of business. They're unlikely to redecorate or upgrade the kitchen either, as millions of families were doing before the recession — more potential losses for local businesses, not to mention the car dealers, clothing and consumer electronics stores and manufacturers of the products that the Hineses won't buy.

Weighed down by the huge debt on their house, they also will be a lot more cautious about how they use credit cards. Big family getaways in the summer? Forget it, Hines said.

Multiply such sentiments by millions across the country and that translates into lackluster private spending, which accounts for 70% of the American economy.