Everyone assumes bankruptcy automatically means you bid farewell to credit and that’s not necessarily true; you can get approved for a mortgage after going through a bankruptcy but there will be conditions you need to meet.
First of all, anyone that files for bankruptcy needs to have a plan to restore their credit. This is a tool for you to restart your financial future yet many people let this opportunity slip away.
Yes, bankruptcy is damaging to your credit however, lenders look at this as a clean slate and you are really in a better position than most individuals because you can build up a new reputation. Keep in mind, there are many reasons people file for bankruptcy and creditors take this into consideration.
Bankruptcy often reduces credit scores by 100 to 150 points and if you have filed a Chapter 7, it will normally takes2 or 3 years to attain scores required to qualify for a new mortgage.
If you have filed a Chapter 13, you will not qualify for a mortgage until you fulfill all your scheduled payments; the newest bankruptcy laws prohibit debtors from obtaining credit during the payment phase, unless you can get court approval.
Individuals who file mortgage bankruptcy to stop foreclosure and later lose their property might not qualify for another home loan for at least 5 years. Foreclosed homeowners should consider investigating alternative finance options such as if a seller will carry or lease purchase option agreements.
There are government lending programs such as FHA that have more lenient credit guidelines to help you qualify for a mortgage, even with a prior bankruptcy. If you have a steady job with solid income and have been working to pay off debts lenders will definitely look at the “new you” as a reliable potential homeowner.
You can also use your current home, as well as other assets to use as equity to convince a lender that you should qualify; and always remember, the less money you want to borrow, the less risk you are to a lender so choose a moderately priced home to start with.
The real lesson here is that bankruptcy should not be taken lightly; you must be absolutely sure that it is the best option for you because your credit will take a few dings and you will have to work to show that you are once again credit worthy.
Thursday, April 28, 2011
Wednesday, April 27, 2011
Scrutinize The Neighborhood Before You Buy
It used to be a heck of a lot easier to tell a good neighborhood from a bad one. All you had to do was drive through the neighborhood, perform a quick check on nearby schools, do a crime check and keep an eye out for abandoned properties. If the schools were good and the homes well-kept, the neighborhood was a keeper.
But today, determining whether a neighborhood is good and will hold its value isn't so easy. The suburbs were once the Mecca of homebuyers with kids the white fence and a dog yet now the burbs outrank urban city centers in terms of poverty.
So how can you tell if you're buying into a neighborhood likely to hold its value until you're ready to sell? There are a few ways to properly scrutinize a neighborhood before you buy.
1.Most people have a clear idea of their dream home but they give little thought to the neighborhood. Start by defining what your dream neighborhood is like. Is it walkable? Can you walk to the downtown area? Do you want to live in a historic neighborhood? Do you want to be in an exciting college town or in a more sedate, family-oriented environment?
2.With property taxes being lowered many towns and cities have to cut back on the public services they offer. Parks, libraries and town police often get the ax first. Drive through a potential neighborhood, and then through the town, and look carefully for clues that the city is having financial trouble. Are the streets clean? Are the parks in good condition? Is the grass cut? Check the library as well. Have they had to cut their hours?
3.If you have kids, then the quality of local schools is a huge issue. Even if you don't have children local schools still matter simply because when it comes time to sell, your buyers may have kids. Research the local schools and think about attending a PTA meeting to talk with parents. You can get an ear full of the neighborhood pro’s and con’s from local parents.
4.Examine the clues right under your nose; do you see a barrage of For Sale signs? Are the surrounding businesses shutting down? These are signs that things might be on the decline.
5.How are the neighbors keeping up their homes? Take a stroll through the neighborhood; look at all the details like sidewalks, grass and trees. How’s the upkeep? Are decks being maintained; what about window coverings? All of these signs tell the story of the neighborhood and how people feel about where they live.
Small details are a reflection of the people living in our communities. When you’re about to invest in one of the most important purchases in your lifetime, you should scrutinize where you will be happy; why wait until after you move in to notice all the things you don’t like about the neighborhood?
But today, determining whether a neighborhood is good and will hold its value isn't so easy. The suburbs were once the Mecca of homebuyers with kids the white fence and a dog yet now the burbs outrank urban city centers in terms of poverty.
So how can you tell if you're buying into a neighborhood likely to hold its value until you're ready to sell? There are a few ways to properly scrutinize a neighborhood before you buy.
1.Most people have a clear idea of their dream home but they give little thought to the neighborhood. Start by defining what your dream neighborhood is like. Is it walkable? Can you walk to the downtown area? Do you want to live in a historic neighborhood? Do you want to be in an exciting college town or in a more sedate, family-oriented environment?
2.With property taxes being lowered many towns and cities have to cut back on the public services they offer. Parks, libraries and town police often get the ax first. Drive through a potential neighborhood, and then through the town, and look carefully for clues that the city is having financial trouble. Are the streets clean? Are the parks in good condition? Is the grass cut? Check the library as well. Have they had to cut their hours?
3.If you have kids, then the quality of local schools is a huge issue. Even if you don't have children local schools still matter simply because when it comes time to sell, your buyers may have kids. Research the local schools and think about attending a PTA meeting to talk with parents. You can get an ear full of the neighborhood pro’s and con’s from local parents.
4.Examine the clues right under your nose; do you see a barrage of For Sale signs? Are the surrounding businesses shutting down? These are signs that things might be on the decline.
5.How are the neighbors keeping up their homes? Take a stroll through the neighborhood; look at all the details like sidewalks, grass and trees. How’s the upkeep? Are decks being maintained; what about window coverings? All of these signs tell the story of the neighborhood and how people feel about where they live.
Small details are a reflection of the people living in our communities. When you’re about to invest in one of the most important purchases in your lifetime, you should scrutinize where you will be happy; why wait until after you move in to notice all the things you don’t like about the neighborhood?
Tuesday, April 26, 2011
HAMP Application Rejections Become More Transparent
The success rates for the HAMP modifications have been extremely low and the program was best labeled a failure. While there are a few reasons for this disappointment Many servicers have improperly denied homeowners HAMP eligible loan modifications due to improper evaluation procedures, poorly trained employees or due to faulty data; but homeowners who’ve been rejected will now be able to question the validity of these denials.
A new HAMP appeals process will help borrowers understand why they were rejected for the program. This new test falls under the Dodd Frank Wall Street Reform and Consumer Protection Act. Here are some highlights to this new process;
• The HAMP appeals process gives you an opportunity to see what information was used to determine that you were ineligible for the HAMP program.
• Servicers must reveal up to 33 test factors on some mortgages.
• Borrowers have 30 days to dispute the accuracy of the disclosed data
As of Feb 1st, if you are not approved for a trial HAMP modification plan or a permanent HAMP loan modification, your servicer (this does not include Freddie Mac or Fannie Mae backed mortgages) is required to send you a Non-Approval Notice which explains the reason you were not approved and provide you with an opportunity to submit evidence that the information used in the evaluation was inaccurate.
These notices are required to disclose up to 33 key data factors as to why a homeowner has been rejected for the HAMP program. And once the appeal process has been started, the lender is required to provide reasons and justifications within very specific time frames.
Under the Dodd Frank Wall Street Reform and Consumer Protection Act, servicers are also required to supply guidance to you such as how to communicate with the servicer if you wish to dispute the reasons for the non-approval determination and where you can send your evidence.
But is the transparency just more hype because it looks more like a blessing in disguise. Won’t this add a heavy load to servicers who are already under water with mounds of paperwork? Borrowers cannot test the HAMP model's accuracy, and they will never be able to test their servicers' assumptions. Although borrowers now have an appeals process, the last word still lies with the servicer; there is no third party to settle any dispute.
Soon homeowners’ will be able to evaluate whether their situation might pass the HAMP test; the US Treasury is setting up a website for consumers to run their own practice HAMP tests.
This should give you a better outlook as to where you stand and how the servicer might view your paperwork.
A new HAMP appeals process will help borrowers understand why they were rejected for the program. This new test falls under the Dodd Frank Wall Street Reform and Consumer Protection Act. Here are some highlights to this new process;
• The HAMP appeals process gives you an opportunity to see what information was used to determine that you were ineligible for the HAMP program.
• Servicers must reveal up to 33 test factors on some mortgages.
• Borrowers have 30 days to dispute the accuracy of the disclosed data
As of Feb 1st, if you are not approved for a trial HAMP modification plan or a permanent HAMP loan modification, your servicer (this does not include Freddie Mac or Fannie Mae backed mortgages) is required to send you a Non-Approval Notice which explains the reason you were not approved and provide you with an opportunity to submit evidence that the information used in the evaluation was inaccurate.
These notices are required to disclose up to 33 key data factors as to why a homeowner has been rejected for the HAMP program. And once the appeal process has been started, the lender is required to provide reasons and justifications within very specific time frames.
Under the Dodd Frank Wall Street Reform and Consumer Protection Act, servicers are also required to supply guidance to you such as how to communicate with the servicer if you wish to dispute the reasons for the non-approval determination and where you can send your evidence.
But is the transparency just more hype because it looks more like a blessing in disguise. Won’t this add a heavy load to servicers who are already under water with mounds of paperwork? Borrowers cannot test the HAMP model's accuracy, and they will never be able to test their servicers' assumptions. Although borrowers now have an appeals process, the last word still lies with the servicer; there is no third party to settle any dispute.
Soon homeowners’ will be able to evaluate whether their situation might pass the HAMP test; the US Treasury is setting up a website for consumers to run their own practice HAMP tests.
This should give you a better outlook as to where you stand and how the servicer might view your paperwork.
Monday, April 25, 2011
Focus On The Listing Price
When it comes to buying a home, most potential buyers will use the listing price when determining which homes to look at. Even though the price may be too high and most buyers probably won’t give it a second thought, keep in mind, there are always negotiations. No price is set in stone so if you find your dream home you should certainly try to bargain for a better price.
Sellers
If you set the correct price, you’ll notice a much faster sale. Many homeowners will argue this point with their realtor; you placed so much time and effort in your home and you have a set number in mind. However, setting the right listing price will attract more potential buyers to your property and you’ll also notice an increase in response from realtors, and receive more calls from prospects. The listing price is very important - and it can ultimately determine whether or not you sell your property or it remains on the market.
When you put your home up for sale, most activity will happen within the first few weeks. If you price your home right, you’ll notice immediate interest. There are always buyers looking for homes in a specific price range and waiting for new homes to be listed or homes to be reduced in price. Potential buyers could miss seeing your home completely if the price is too high.
Buyers
The list price greatly determines the search criteria for finding your home. Anticipating that many homes in today's market are overpriced with respect to their Fair Market Value, some real estate agents may extend the upper limit of the search by $10,000 or so to provide a better selection of homes for the buyer.
To determine the listing price of your home, you may consider having it appraised before you put it on the market. This way, you’ll know the full value of your home. You can sell it for market value or go a little under, although you should never attempt to go way over the value. In doing so, you’ll miss out on a lot of potential buyers.
The home market is very competitive these days, which is why you want your home to draw as much interest as possible. Keep in mind that realtors really have no control at all over the real estate market, only the plan behind marketing.
Realtors don’t determine the asking price - the market does.
If you follow your realtors’ advice you’ll set the listing price in the right area and have no problems selling your property.
Sellers
If you set the correct price, you’ll notice a much faster sale. Many homeowners will argue this point with their realtor; you placed so much time and effort in your home and you have a set number in mind. However, setting the right listing price will attract more potential buyers to your property and you’ll also notice an increase in response from realtors, and receive more calls from prospects. The listing price is very important - and it can ultimately determine whether or not you sell your property or it remains on the market.
When you put your home up for sale, most activity will happen within the first few weeks. If you price your home right, you’ll notice immediate interest. There are always buyers looking for homes in a specific price range and waiting for new homes to be listed or homes to be reduced in price. Potential buyers could miss seeing your home completely if the price is too high.
Buyers
The list price greatly determines the search criteria for finding your home. Anticipating that many homes in today's market are overpriced with respect to their Fair Market Value, some real estate agents may extend the upper limit of the search by $10,000 or so to provide a better selection of homes for the buyer.
To determine the listing price of your home, you may consider having it appraised before you put it on the market. This way, you’ll know the full value of your home. You can sell it for market value or go a little under, although you should never attempt to go way over the value. In doing so, you’ll miss out on a lot of potential buyers.
The home market is very competitive these days, which is why you want your home to draw as much interest as possible. Keep in mind that realtors really have no control at all over the real estate market, only the plan behind marketing.
Realtors don’t determine the asking price - the market does.
If you follow your realtors’ advice you’ll set the listing price in the right area and have no problems selling your property.
Wednesday, April 20, 2011
Find The Note
Roughly one of every three mortgages has been found to have a considerable legal discrepancy and this is most notably because a substantial amount of loans are bought, sold and assigned to a third-party.
Most homeowners look to the lender as the owner of the mortgage loan – Wrong!
Individual mortgages are often bundled into pools of similar mortgages and sold on the market as a mortgage backed security (MBS) or investment. After your mortgage loan closes and paperwork processed, your lender probably outsourced the job of managing your loan to another third party company called a SERVICER.
The nation’s four largest banks – JP Morgan Chase, Wells Fargo, Bank of America, and Citibank – are the largest mortgage servicers.
Mortgage servicers have a long list of administrative responsibilities, from collecting monthly payments, maintaining detailed accounting records, paying taxes and insurance premiums, and distributing payments to the investors. For this work, they receive a servicing fee.
The problem with many servicers is that they often fail to maintain proper records. And the fouled-up paperwork and other lack of legal compliance have resulted in a much higher rate of negotiated mortgage modifications.
Each time millions of mortgages are sold the paperwork should exchange hands to the new investors and new servicers; yet this rarely happens. This makes it all the more difficult to decipher the true holder of the mortgage.
So what does this mean for the Homeowner?
When lenders wish to foreclose on a homeowner, the law typically requires them to produce original, signed documents including the mortgage and loan note. While the mortgage documentation is on file at the local courthouse, the note is often lost or misplaced, particularly if the mortgage has been sold. The “missing note” has become a tool for those homeowners who face foreclosure.
Keep in mind, there are varying state laws so while a few states require foreclosure proceedings to go through a judge, there are states that leave it up to the homeowner to file motions to fight on their own. You must be knowledgeable in what to do, what to ask for and what to argue or you can count on running up legal bills for an attorney’s help. And if you’re losing your home, you should get the help of an attorney.
Chances are the lender or servicer cannot put their hands on that original note and any legal proceedings will have to be delayed until they do.
Be proactive; learn everything there is to know about where your money is going and whom are the responsible parties when it comes to your home. Never wait until the last minute to learn how to protect your home and your interests.
Most homeowners look to the lender as the owner of the mortgage loan – Wrong!
Individual mortgages are often bundled into pools of similar mortgages and sold on the market as a mortgage backed security (MBS) or investment. After your mortgage loan closes and paperwork processed, your lender probably outsourced the job of managing your loan to another third party company called a SERVICER.
The nation’s four largest banks – JP Morgan Chase, Wells Fargo, Bank of America, and Citibank – are the largest mortgage servicers.
Mortgage servicers have a long list of administrative responsibilities, from collecting monthly payments, maintaining detailed accounting records, paying taxes and insurance premiums, and distributing payments to the investors. For this work, they receive a servicing fee.
The problem with many servicers is that they often fail to maintain proper records. And the fouled-up paperwork and other lack of legal compliance have resulted in a much higher rate of negotiated mortgage modifications.
Each time millions of mortgages are sold the paperwork should exchange hands to the new investors and new servicers; yet this rarely happens. This makes it all the more difficult to decipher the true holder of the mortgage.
So what does this mean for the Homeowner?
When lenders wish to foreclose on a homeowner, the law typically requires them to produce original, signed documents including the mortgage and loan note. While the mortgage documentation is on file at the local courthouse, the note is often lost or misplaced, particularly if the mortgage has been sold. The “missing note” has become a tool for those homeowners who face foreclosure.
Keep in mind, there are varying state laws so while a few states require foreclosure proceedings to go through a judge, there are states that leave it up to the homeowner to file motions to fight on their own. You must be knowledgeable in what to do, what to ask for and what to argue or you can count on running up legal bills for an attorney’s help. And if you’re losing your home, you should get the help of an attorney.
Chances are the lender or servicer cannot put their hands on that original note and any legal proceedings will have to be delayed until they do.
Be proactive; learn everything there is to know about where your money is going and whom are the responsible parties when it comes to your home. Never wait until the last minute to learn how to protect your home and your interests.
Tuesday, April 19, 2011
Factors To Help Sell Your Home Quicker
The ideal home means different things to different people; but the most appealing home always will possess a clear and clean sense of style. Yet many of us allow our personal style to get in the way and that can interfere with selling your home. A few fixes can help you sell your home quicker.
Clutter Control:
Every room of the house should be organized so that potential buyers can easily walk through. It can be a headache and an extra burden but think about placing items in storage, especially out-of-season items.
Take a walk around your kitchen and ask yourself, what do you really need? Start by storing bulky appliances that you rarely use. They quickly take up lots of counter space that you want to render useful to buyers.
The bedroom should reveal an oasis however it often becomes a repository for heaps of clothing and portable tech gadgets. Everything has a place so if it doesn’t fit or it’s in the wrong room, move it or lose it.
What’s in a Room:
Did you know the number two reason people select a particular house is because of kitchen space? Eight out of ten home buyers who walk through a house remember what the kitchen looks like and what its benefits verses faults were. This leads to the question -- what is the most significant part of the kitchen? Choices include floors, appliances, lighting, but the part that stands out the most are the kitchen cabinets. It is the most dominant aspect of the kitchen, and the easiest way to create a "wow" factor. Everyone remembers the kitchen cabinets; it could be because of the color or stain, the design of the cabinet, or mostly because of the clean feel that a new kitchen cabinet provides.
Does Your Front Door say “Welcome”:
And finally, Curb Appeal really sells the house. Exterior features for new or existing homes will make your house say "welcome" when you return after work or when guests come to call.
Think of your home’s facade, lighting, landscaping, and exterior elevation to name a few; these items can easily customize a home when everyone else on the block seems a bit standard.
Give your home a different feel and stand out from the crowd.
Clutter Control:
Every room of the house should be organized so that potential buyers can easily walk through. It can be a headache and an extra burden but think about placing items in storage, especially out-of-season items.
Take a walk around your kitchen and ask yourself, what do you really need? Start by storing bulky appliances that you rarely use. They quickly take up lots of counter space that you want to render useful to buyers.
The bedroom should reveal an oasis however it often becomes a repository for heaps of clothing and portable tech gadgets. Everything has a place so if it doesn’t fit or it’s in the wrong room, move it or lose it.
What’s in a Room:
Did you know the number two reason people select a particular house is because of kitchen space? Eight out of ten home buyers who walk through a house remember what the kitchen looks like and what its benefits verses faults were. This leads to the question -- what is the most significant part of the kitchen? Choices include floors, appliances, lighting, but the part that stands out the most are the kitchen cabinets. It is the most dominant aspect of the kitchen, and the easiest way to create a "wow" factor. Everyone remembers the kitchen cabinets; it could be because of the color or stain, the design of the cabinet, or mostly because of the clean feel that a new kitchen cabinet provides.
Does Your Front Door say “Welcome”:
And finally, Curb Appeal really sells the house. Exterior features for new or existing homes will make your house say "welcome" when you return after work or when guests come to call.
Think of your home’s facade, lighting, landscaping, and exterior elevation to name a few; these items can easily customize a home when everyone else on the block seems a bit standard.
Give your home a different feel and stand out from the crowd.
Friday, April 15, 2011
Lenders' Two-Track Forclosure Process Under Fire
Mortgage lenders call it "dual tracking," but for homeowners struggling to avoid foreclosure, it might go by another name: the double-cross.
Dual tracking refers to a common bank tactic. When a borrower in default seeks a loan modification, the institution often continues to pursue foreclosure at the same time.
Lenders contend that dual tracking simply protects their investment if the homeowner is unable to qualify for new loan terms. Mortgage servicers can lose money if they don't foreclose in a timely manner, and repossessions often are complicated and lengthy.
Regulators and consumer advocates say the practice lulls some homeowners into thinking they are no longer at risk of having their homes taken away. (VERY, VERY TRUE!!!)
Federal banking regulators issued settlements with major banks and home-loan servicers that would, among the many provisions, stop foreclosure once a homeowner is approved for a temporary mortgage modification. In ordering the changes, the regulators said they found "critical weaknesses" in the way the lenders handled foreclosures.
Some still feel the regulators didn't go far enough especially in regards to the subject of "dual tracking". A separate coalition of state attorneys general and federal agencies including the departments of Justice, Treasury and Housing and the Federal Trade Commission is still negotiating details of a foreclosure-system overhaul that could include a near-ban of the practice.
The demands by the attorneys general would prohibit lenders from starting the foreclosure process on a home if a borrower has submitted an application for a loan modification. The terms require that mortgage servicers provide homeowners a written list of any missing documentation from their modification package within 10 days of submission. Mortgage servicers would also be required to immediately notify a homeowner in writing of any new sale date if the foreclosure clock already begun when a borrower reaches out for a modification. If the loan modification is denied, then a mortgage servicer would be required to submit an affidavit in court summarizing all of the efforts to work with a borrower and the basis for denying a modification. In states such as California, where a court order isn't required to foreclose on a property, the mortgage servicer would be required to send that sworn statement directly to the borrower.
The Obama administration in effect banned dual tracking in most cases last summer under its signature foreclosure relief initiative program.
Most major banks service loans for investors who have set up specific rules governing how and when they must proceed with a foreclosure. If a bank doesn't follow those guidelines, if can lose money.
Furthermore, depending on the jurisdiction, certain states can set up strict timelines for when certain steps in a foreclosure must be taken. If those deadlines aren't met, duplicate costs can result.
Quick Recap:
What: Dual tracking is a common practice in which a lender continues to pursue foreclosure even though the homeowner is applying for a mortgage modification.
Why: Lenders say the practice protects their investment if a homeowner doesn't qualify for new loan terms. Consumer advocates say it discourages homeowners and leads to unintended foreclosures.
Limits: A coalition of federal regulators has ordered major banks and mortgage servicers to halt foreclosure when homeowners qualify for loan modifications.
Ban: A coalition led by state attorneys general has proposed prohibiting lenders from starting the foreclosure process if a borrower has applied for a loan modification.
Note: The full article written by Alejandro Lazo of the LA Times
Dual tracking refers to a common bank tactic. When a borrower in default seeks a loan modification, the institution often continues to pursue foreclosure at the same time.
Lenders contend that dual tracking simply protects their investment if the homeowner is unable to qualify for new loan terms. Mortgage servicers can lose money if they don't foreclose in a timely manner, and repossessions often are complicated and lengthy.
Regulators and consumer advocates say the practice lulls some homeowners into thinking they are no longer at risk of having their homes taken away. (VERY, VERY TRUE!!!)
Federal banking regulators issued settlements with major banks and home-loan servicers that would, among the many provisions, stop foreclosure once a homeowner is approved for a temporary mortgage modification. In ordering the changes, the regulators said they found "critical weaknesses" in the way the lenders handled foreclosures.
Some still feel the regulators didn't go far enough especially in regards to the subject of "dual tracking". A separate coalition of state attorneys general and federal agencies including the departments of Justice, Treasury and Housing and the Federal Trade Commission is still negotiating details of a foreclosure-system overhaul that could include a near-ban of the practice.
The demands by the attorneys general would prohibit lenders from starting the foreclosure process on a home if a borrower has submitted an application for a loan modification. The terms require that mortgage servicers provide homeowners a written list of any missing documentation from their modification package within 10 days of submission. Mortgage servicers would also be required to immediately notify a homeowner in writing of any new sale date if the foreclosure clock already begun when a borrower reaches out for a modification. If the loan modification is denied, then a mortgage servicer would be required to submit an affidavit in court summarizing all of the efforts to work with a borrower and the basis for denying a modification. In states such as California, where a court order isn't required to foreclose on a property, the mortgage servicer would be required to send that sworn statement directly to the borrower.
The Obama administration in effect banned dual tracking in most cases last summer under its signature foreclosure relief initiative program.
Most major banks service loans for investors who have set up specific rules governing how and when they must proceed with a foreclosure. If a bank doesn't follow those guidelines, if can lose money.
Furthermore, depending on the jurisdiction, certain states can set up strict timelines for when certain steps in a foreclosure must be taken. If those deadlines aren't met, duplicate costs can result.
Quick Recap:
What: Dual tracking is a common practice in which a lender continues to pursue foreclosure even though the homeowner is applying for a mortgage modification.
Why: Lenders say the practice protects their investment if a homeowner doesn't qualify for new loan terms. Consumer advocates say it discourages homeowners and leads to unintended foreclosures.
Limits: A coalition of federal regulators has ordered major banks and mortgage servicers to halt foreclosure when homeowners qualify for loan modifications.
Ban: A coalition led by state attorneys general has proposed prohibiting lenders from starting the foreclosure process if a borrower has applied for a loan modification.
Note: The full article written by Alejandro Lazo of the LA Times
Thursday, April 14, 2011
Home Prices Plummett in South Bay
Local home prices fell in January as inventories rose, a sign that the housing market is still struggling to pull out of it's funk. The median price of a local SFR fell 25.4 % to $462,500 last month compared with a year earlier, according to the South Bay Association of Realtors. The report does not include the Palos Verdes Peninsula and Inglewood. The median price is the middle figure where half of homes sold for more and half for less. In a promising sign, sales rose 32.33% to 176 year over year. However, units for sale rose 10.4% to 1,168, possibly indicating that demand is not keeping up with supply. For condominiums and townhomes, the median price fell 10.04 % to $425,000. Sales fell 10.47% to 77, while inventory rose 13.27% to 734. "Given the higher number of sold single-family homes combined with decreased prices, more buyers may be responding to the current market in the S0uth Bay," Caren Greenwood, president of the local Realtors group, said in a statement. "The increased sales volume did not carry over to condominiums and townhomes last month" The South Bay has been up and down in the past few months, but there has been no major "change or shift that I have seen," said John Parsons, of Horrell Realtors in Redondo Beach. "In the broadest terms, it seems to me that prices are holding,"said Parsons, former Redondo Beach City Council member who sits on Planning Commission. Parsons said he didn't expect any major changes in the local housing market as conditions appear "pretty steady." Statewide, home sales rose for the third straight month in January as prices fell, according to a seperate report from the California Association of Realtors. California sales of existing single-family homes rose 2.5% compared with a year earlier. That was the first year-over-year sales increase since May 2010. The statewide median price was $278,900, down 2% from a year earlier.
Tuesday, April 12, 2011
Mortgage Rule Change Might Rule Out Buyers
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's deeply sobering news for large numbers of prospective first-time and moderate-income buyers. But some of the other requirements that federal agencies and the Obama administration are proposing in the same plan could prove just as troublesome:
- Strict mandatory debt-to-income limits. Under the proposal, to get the best mortgage rages, 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, unlike in today's marketplace, in which Fannie Mae and Freddie Mac consider debt-to-income ratios along with other factors.
- 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 you 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 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 changes in decades for the housing and mortgage markets. The "qualified residential mortgage" proposals were released in march by banking, securities and housing regulators and the Dept of Housing and Urban Development. The agencies were required by the 2010 financial reform law to come up with new standards for low-risk conventional mortgages.
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 to cover possible losses from defaults. This 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! Can't fit into the tight confines of the debt-to-income ratio rule?Payup!
The proposals are out for public comment through June 10 and probably won't be put into effect until mid-2012. The agencies' proposal exempts mortgages sold to Fannie and Freddie from the rule as long as both remain under federal conservatorship. FHA and VA mortgages would not be subject to QRM either.
Builders, consumer groups, banks and others are readying campaigns to persuade the regulators and Obama administration to back off some provisions. Michael Calhoun, president of the Center for Responsible Lending, says 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 proposals have strayed far beyond Congress' intent, and they threaten to wreck any recovery in housing and force millions of Americans to rent rather than to own.
Note: This article originally published by Kenneth R Harney in the LA Times
Monday, April 11, 2011
Credit Scores Plunge In Short Sale
Do I need to stop making payments for my bank to consider a short sale?
Lenders have different policies on short sales, which is when they agree to let a borrower sell a home for less than what is owed on the mortgage. But expect your credit scores to take a major hit, no matter whether you stop payments first.
A short sale typically will have the same effect on your credit scores a s foreclosure, according to Fair Isaac Corp., the company that created the leading credit score blows, from a missed mortgage payment to a foreclosure or a short sale with a deficiency balance (the difference between the home sale proceed and what you owe). some with FICO scores in the 780 range would lose 90 to 110 points with single skipped payment. A short sale or foreclosure would trim 140 to 160 points from that 780 score. (You can see the charts at Fair Isaac's Banking Analytics Blog: http://bankinganalyticsblog.fico.com/2011/03/research-looks-at-how-mortgage-delinquencies-affect-scores.html ). Your score will plummet that far whether or not you stop making payments.
You might be able to reduce the damage from a short sale if you can persuade the lender to report the deficiency balance to the credit bureaus. Short sales without a reported deficiency balance would trim 105 to 125 points from a 780 score, according to Fair Isaac. But lenders that have been cajoled into a short sale often aren't in the mood to grant you additional favors.
There are some advantages to a short sale over a foreclosure. One is that you can start the long road to credit recovery sooner because foreclosures usually take much longer than short sales. Then other good news: You can qualify for another mortgage faster. Lender typically will consider you for a home loan 2 years after a short sale, versus a wait of up to 7 years if you let the lender foreclose.
Lenders have different policies on short sales, which is when they agree to let a borrower sell a home for less than what is owed on the mortgage. But expect your credit scores to take a major hit, no matter whether you stop payments first.
A short sale typically will have the same effect on your credit scores a s foreclosure, according to Fair Isaac Corp., the company that created the leading credit score blows, from a missed mortgage payment to a foreclosure or a short sale with a deficiency balance (the difference between the home sale proceed and what you owe). some with FICO scores in the 780 range would lose 90 to 110 points with single skipped payment. A short sale or foreclosure would trim 140 to 160 points from that 780 score. (You can see the charts at Fair Isaac's Banking Analytics Blog: http://bankinganalyticsblog.fico.com/2011/03/research-looks-at-how-mortgage-delinquencies-affect-scores.html ). Your score will plummet that far whether or not you stop making payments.
You might be able to reduce the damage from a short sale if you can persuade the lender to report the deficiency balance to the credit bureaus. Short sales without a reported deficiency balance would trim 105 to 125 points from a 780 score, according to Fair Isaac. But lenders that have been cajoled into a short sale often aren't in the mood to grant you additional favors.
There are some advantages to a short sale over a foreclosure. One is that you can start the long road to credit recovery sooner because foreclosures usually take much longer than short sales. Then other good news: You can qualify for another mortgage faster. Lender typically will consider you for a home loan 2 years after a short sale, versus a wait of up to 7 years if you let the lender foreclose.
New Law To Require Home Carbon Monoxide Detectors
California homeowners will be required to install carbon monoxide detectors starting in July 2011 under a bill signed Friday by Gov. Arnold Schwarzenegger that is aimed at preventing deaths and injuries caused by poisoning from the odorless, colorless gas.
Up to 40 California residents die each year from carbon monoxide poisoning, according to state Sen. Alan Lowenthal (D-Long Beach), whose legislation was signed by the govenor.
"SB 183 will help put an end to the senseless deaths and injuries Californians suffer due to accidental carbon monoxide poisoning every year," said Kevin Nida, president of the California State Firefighters' Assn.
The California Air Resources Board says an average of 30 to 40 "avoidable deaths" occur in California each year because of unintentional carbon monoxide poisoning. Lowenthal said there also are hundreds of "avoidable" emergency room visits and hospitalizations in the state each year.
The bill requires that alarm devices, which can cost less the $30, to be installed in existing single-family homes that have a fossil-fuel burning appliance, fireplace or attached garage, starting in mid-2011. All other residential units will have to have the detectors in place by Jan. 1, 2013.
In addition to the firefighters association, the legislation also was supported by the California Alarm Assn and Home Depot.
Up to 40 California residents die each year from carbon monoxide poisoning, according to state Sen. Alan Lowenthal (D-Long Beach), whose legislation was signed by the govenor.
"SB 183 will help put an end to the senseless deaths and injuries Californians suffer due to accidental carbon monoxide poisoning every year," said Kevin Nida, president of the California State Firefighters' Assn.
The California Air Resources Board says an average of 30 to 40 "avoidable deaths" occur in California each year because of unintentional carbon monoxide poisoning. Lowenthal said there also are hundreds of "avoidable" emergency room visits and hospitalizations in the state each year.
The bill requires that alarm devices, which can cost less the $30, to be installed in existing single-family homes that have a fossil-fuel burning appliance, fireplace or attached garage, starting in mid-2011. All other residential units will have to have the detectors in place by Jan. 1, 2013.
In addition to the firefighters association, the legislation also was supported by the California Alarm Assn and Home Depot.
Friday, April 8, 2011
Choosing the Casual Mr. Fix-it over the Expert
1 in 6 homeowners will hire an unlicensed contractor, with two-thirds believing it will save them money. Believe me, a penny saved is not always a penny earned.
The tragedy of hiring a casual laborer is that it can cost homeowners hundreds of times the money they saved, and worse, it can jeopardize their safety and nullify a warranty.
Many of these workers might not have current knowledge of building codes and many times the unlicensed contractor has not updated his or her education to know the latest requirements for your particular needs.
Handymen are hired to do odd jobs around the house that homeowners don't have the patience, skills or time to do. From fixing a leaky faucet to hanging an office shelf, handymen provide an affordable alternative for homeowners who don't want to hire an expensive specialized tradesmen or contractor to do the work.
Handymen are also commonly called in to tackle do-it-yourself projects, like assembling furniture or switching out light fixtures that seem too overwhelming for the homeowner to do.
By outsourcing small home improvement projects you can save a significant amount of time and energy however using a handyman that is not licensed or insured can put you at risk. If an uninsured handyman were to get hurt on your property while working, you or your homeowner’s insurance policy would be responsible for damages. And using an unlicensed handyman can makes things challenging to get fixed if something goes wrong. Unlike a licensed company you would be able to file a claim with their insurance company or through your state.
When homeowners look to save a buck, they often don't realize the project they thought was easy requires expertise; we’ve all heard the horrific stories for example a homeowner who attempted to do his own wiring rather than hire a licensed electrician.
• The homeowner made a series of mistakes, including connecting aluminum and copper wires of different gauges directly together without using a junction box. The wiring overheated and sparked a fire, and a state inspector ordered that the entire house be rewired. It cost nearly $20,000 to correct.
• A homeowner hired a handyman to build a carport onto his house. The handyman used materials that were too heavy and attached the carport only to the home's siding, not into the studs. The carport collapsed and crushed the homeowner's expensive car.
Your home is your castle! Homeowners should always hire a licensed and bonded contractor whenever the work involves a permit, codes, or has other community regulatory restrictions.
And you can always contact your state’s labor department to check on a contractor’s license and surety bond information.
The tragedy of hiring a casual laborer is that it can cost homeowners hundreds of times the money they saved, and worse, it can jeopardize their safety and nullify a warranty.
Many of these workers might not have current knowledge of building codes and many times the unlicensed contractor has not updated his or her education to know the latest requirements for your particular needs.
Handymen are hired to do odd jobs around the house that homeowners don't have the patience, skills or time to do. From fixing a leaky faucet to hanging an office shelf, handymen provide an affordable alternative for homeowners who don't want to hire an expensive specialized tradesmen or contractor to do the work.
Handymen are also commonly called in to tackle do-it-yourself projects, like assembling furniture or switching out light fixtures that seem too overwhelming for the homeowner to do.
By outsourcing small home improvement projects you can save a significant amount of time and energy however using a handyman that is not licensed or insured can put you at risk. If an uninsured handyman were to get hurt on your property while working, you or your homeowner’s insurance policy would be responsible for damages. And using an unlicensed handyman can makes things challenging to get fixed if something goes wrong. Unlike a licensed company you would be able to file a claim with their insurance company or through your state.
When homeowners look to save a buck, they often don't realize the project they thought was easy requires expertise; we’ve all heard the horrific stories for example a homeowner who attempted to do his own wiring rather than hire a licensed electrician.
• The homeowner made a series of mistakes, including connecting aluminum and copper wires of different gauges directly together without using a junction box. The wiring overheated and sparked a fire, and a state inspector ordered that the entire house be rewired. It cost nearly $20,000 to correct.
• A homeowner hired a handyman to build a carport onto his house. The handyman used materials that were too heavy and attached the carport only to the home's siding, not into the studs. The carport collapsed and crushed the homeowner's expensive car.
Your home is your castle! Homeowners should always hire a licensed and bonded contractor whenever the work involves a permit, codes, or has other community regulatory restrictions.
And you can always contact your state’s labor department to check on a contractor’s license and surety bond information.
Wednesday, April 6, 2011
California Foreclosure Relief Opened To More Homeowners
California homeowners who refinanced their properties for cash or took out home equity lines of credit will now be allowed to participate in parts of the state's $2 billion foreclosure relief initiative. Many peopole tapped their rising equity during the boom years, using their homes as ATM's to fuel spending. The California Housing Finance Agency had initially excluded people who used their home equity in such a manner from participating in its "Keep Your Home" initiative, which launched this year with federal funds reserved for the 2008 rescue of the financial system. But California's high unemployment rate caused the agency to reconsider its policy, agency Executive Director Steven Spears said in a statement. "In the two short months since the launch of these programs, we have collected information that has helped us identify areas of improvement to make the programs more effective, particularly given the continued high level of unemployment in California," he said. The California Housing Finance Agency will now allow people who refinanced or took out home equity lines of credit to participate in three of its four Keep Your Home programs. This includes the agency's biggest inititative, which allocates $875 million as temporary financial help to people who have seen their paychecks cut or have lost their jobs, providing as much as $3,000 a month for six months to cover home payments and associated costs. It also includes a plan that would give homeowners as much as $15,000 to help them get current on their mortgages. The third program provides moving assistance for people wh0 can't afford to remain in their homes. These same programs also are being expanded to include mortgages that were originated after Jan. 1, 2009, the agency said. Homeowners who previously applied to the program and were disqualified for that reason can reapply. Those who refinanced or took out a home equity loan will not be allowed to participate in the initiative's principal-reduction effort, its second-biggest and most controversial program. About $790 million is slated for that program, which would write down the value of an estimated 25,135 "underwater" mortgages, those in which the amount owed is more than what the property would bring in a sale.
Tuesday, April 5, 2011
How Eco-Fabulous Can Be Eco-Nomical
Becoming eco friendly is the newest favorite pastime but while everyone has their own reasons for “going green” the underlying theme is green could be your wallet’s ally.
Everything from conserving water and energy to other essential environmentally conscious choices can put more money back in your pocket and homebuyers are considering these options when purchasing a home.
How much money could you be saving?
• Alternative powered homes like solar, wind or geo-thermal are easier to locate and much more affordable today. The initial costs of these systems can be high but when seeking a new home to buy consider streamlining your choices to include homes with alternative generated energy. A top energy saving item is the Owl Energy Monitor; this device shows you how much energy you use in your home and how much its costing you. Take for instance the solar energy systems. Many are portable systems that are utilized in high traffic areas of the home such as the family room. You could cut your energy usage in that room up to 40%. There are many other items that are surprisingly simple to install and again while the initial costs are quite high, looking for a home that is already comprised of these items can save you a bundle. Less money towards the utilities and more disposable income for you wallet.
• Indoor air quality can make a big impact on your medical expenses. Studies show that asthmatics and allergy sufferers have fewer to no breathing problems when using eco friendly materials like green flooring and low VOC paint materials. You can rid your home of most dust mites, allergens and sometimes mold just by disposing of the carpet and installing hard wood flooring. While searching for your new home you can look for greener components that will cost you less for maintenance and help keep your family healthy. A healthier home life means less money spent on medicines, doctor visits and absences from work.
• Traditional appliances have been outsourced with newer energy efficient models. Water heaters can account for 15% of your water bill and if more than 10 years old it will only work at 50% of its capacity. Toilets and shower heads, faucets and other energy efficient appliances that conserve water can be advantageous to a new home owner. While utility bills continue to increase everyone should look for ways to safeguard their money.
New home buyers can realize the positive effects of buying green with a little pre-planning. Looking for ways to save money before selecting your new home is a valid safeguard for future expenses. By seeking out those homes that already have green components installed, you’ll save a tremendous amount of time and money for years to come. And while many people believe going green is just too expensive and time-intensive the way to get around those concerns are by starting out small. Look for those items that will make the deal and save you lots of money in the long run.
Everything from conserving water and energy to other essential environmentally conscious choices can put more money back in your pocket and homebuyers are considering these options when purchasing a home.
How much money could you be saving?
• Alternative powered homes like solar, wind or geo-thermal are easier to locate and much more affordable today. The initial costs of these systems can be high but when seeking a new home to buy consider streamlining your choices to include homes with alternative generated energy. A top energy saving item is the Owl Energy Monitor; this device shows you how much energy you use in your home and how much its costing you. Take for instance the solar energy systems. Many are portable systems that are utilized in high traffic areas of the home such as the family room. You could cut your energy usage in that room up to 40%. There are many other items that are surprisingly simple to install and again while the initial costs are quite high, looking for a home that is already comprised of these items can save you a bundle. Less money towards the utilities and more disposable income for you wallet.
• Indoor air quality can make a big impact on your medical expenses. Studies show that asthmatics and allergy sufferers have fewer to no breathing problems when using eco friendly materials like green flooring and low VOC paint materials. You can rid your home of most dust mites, allergens and sometimes mold just by disposing of the carpet and installing hard wood flooring. While searching for your new home you can look for greener components that will cost you less for maintenance and help keep your family healthy. A healthier home life means less money spent on medicines, doctor visits and absences from work.
• Traditional appliances have been outsourced with newer energy efficient models. Water heaters can account for 15% of your water bill and if more than 10 years old it will only work at 50% of its capacity. Toilets and shower heads, faucets and other energy efficient appliances that conserve water can be advantageous to a new home owner. While utility bills continue to increase everyone should look for ways to safeguard their money.
New home buyers can realize the positive effects of buying green with a little pre-planning. Looking for ways to save money before selecting your new home is a valid safeguard for future expenses. By seeking out those homes that already have green components installed, you’ll save a tremendous amount of time and money for years to come. And while many people believe going green is just too expensive and time-intensive the way to get around those concerns are by starting out small. Look for those items that will make the deal and save you lots of money in the long run.
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