San Diego Short Sale and Foreclosed Homes

 
 
A new analysis by the Center for Neighborhood Technology (CNT) shows that only two in five American communities—or 39%—are affordable for typical households when their transportation costs are considered along with housing costs.

The Housing + Transportation (H+T) Affordability Index examines 337 metro areas across the country—encompassing 161,000 neighborhoods and 80% of the U.S. population—and provides the only comprehensive snapshot of neighborhood affordability by accounting for combined housing and transportation costs associated with a community. The H+T Index and its accompanying report, Penny Wise, Pound Fuelish, illustrate the direct link between household transportation costs and the location and design of neighborhoods and transit options.

Under the traditional definition of housing affordability (30% or less of household income spent on housing), seven out of ten U.S. communities are considered “affordable” to the typical household. But in almost all metro regions of the country, when the definition of affordability includes both housing and transportation costs—at 45% of income—the number of communities affordable to households earning the area median income decreases significantly. Nationally, the number of affordable communities declines to 39%, resulting in a net loss of 48,000 neighborhoods with combined housing and transportation costs that stress the average family’s budget.

“Across the nation, families are dealing with the economic crisis and looking at their bottom lines to determine how they can save money and plan for the future,” said Congressman Earl Blumenauer (D-OR). “The H+T Index provides valuable information about the two biggest household expenses, housing and transportation. This index will help policymakers level the playing field to improve location efficiency, and it will help lenders educate consumers about the trade-offs and costs associated with their housing choices.”

For most families, transportation is the second largest household expense. The new analysis shows that for many families in “drive ‘til you qualify” zones, savings realized from lower cost housing are eliminated by unexpectedly high transportation costs. Yet it is difficult for consumers and policymakers to estimate the full costs of a location, including the cost of both housing and of transportation. This lack of information can lead families to unknowingly make housing decisions that cause them to live beyond their means as gas prices rise and commutes grow longer. A community’s average transportation costs can range from 12% of household income in efficient neighborhoods with walkable streets, access to transit, and a wide variety of stores and services to 32% in locations where driving long distances is the only way to reach essential services.

“The Rockefeller Foundation is proud to have funded the H+T Index as part of our initiative to promote equitable and sustainable transportation,” said Nick Turner, Managing Director at The Rockefeller Foundation. “This unique tool will give consumers the opportunity to make more informed decisions about where they can afford to live, and help provide policy makers with data to develop new policies and targeted investments that can reduce transportation costs. Transportation costs are often the second highest expense for working Americans–and the Rockefeller Foundation’s initiative is committed to helping Americans re-think our transportation future as a critical way to expand economic opportunity.”

The failure to provide Americans with affordable transportation and compact neighborhoods that support pedestrians and cyclists as well as drivers, increases the financial pressure on families, resulting in unstable household budgets, lack of savings, and even foreclosure, and places communities across the country, particularly those with inadequate transportation options, at greater risk.

“In recent years we have seen foreclosures increasing faster in outer suburbs than in central cities. When gas prices peaked in 2008, families in many regions saw their transportation costs soar by $3,000 per year or more. When communities have few transportation options and require driving long distances for basic necessities, already stressed household budgets are very vulnerable to spikes in gas prices and rising transportation costs,” said Scott Bernstein, president and founder of CNT. “The H+T Index gives a reliable estimate of each neighborhood’s average household transportation costs, a strong move toward a ‘no surprises, no sticker shock’ home buying or renting experience.”

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RISMEDIA, March 30, 2010—I finally broke down and got my first smart phone with a touch screen, the Blackberry Storm 2. Wow, from the original Maxwell Smart’s shoe phone to this.

If I understand this correctly, I believe that with this device I can now script, shoot, edit and distribute a full length feature movie without ever leaving the patio of the Yellow Deli.

Which hadn’t ever occurred to me as something I might want to do, but then I didn’t know that you could. As a matter of fact, I went into this kicking and screaming. Once I adapt to a new cell phone, I don’t want to switch and have to relearn how to make a call. But, what the heck, the thing is free.

Now those of you who have already worn out a couple of sets of thumbs are surely going to ask, “Where has he been?” But, this is truly amazing, and the carrier gave it to me.

It’s got GPS so I can call in an airstrike on my exact coordinates. Which begs the question, does someone want to know where I am? And, could they know from this device what I’m saying, emailing, watching and listening to? You have to admit that it does have a sort of Orwellian aspect to it.

A video camera? My first video camera weighed ten pounds. But, before I digress too far, I didn’t set out to write about the features of smart phones, as much as the possibilities to use these tools to put our country back on the right track. We now have the ability to shine heat and light on some dark places. But, how will we use this remarkable ability?

Is it power to the people or a pacifier? Hey, it works for the kids; just plop them in front of a screen and it doesn’t even have to be entertaining.

Is this a tool of change or another time-burning distraction?

I bring this up because I am suddenly aware of the gap between what we could be doing with what we have available to us and what we actually do, which is not much.

Little by little, the “time-saving convenience” has whittled away our prosperity until these stark truths are impossible to ignore:

–We cannot feed our children, “Almost one in four children in our country lives on the brink of hunger,” said David Beckmann, the President of Bread of the World.

–We cannot protect our children from predators because our governments have been forced to slash budgets.

–We are laying off teachers assuring that the next generation will not receive the quality of education they will need to compete in the emerging economy.

–We are saddling several future generations with a huge debt that will limit their options even further. The young men and women of our military are coming home to a 21% unemployment rate for returning service people.

–Everyday, more and more homeowners are being illegally evicted from their homes without right or even cause. And, they don’t even know what happened to them. What ever your passion or talent, it has a place in the American Foreclosure Resistance Movement. This is affecting children, women, the elderly, minorities, pets and all of the services that our community relies on to be a safe and livable community.

–Slow emergency response times are becoming common place. Pot holes the sizes of Hippopotami are left to widen and deepen. Parks are closing.

We can do better than this. The American Foreclosure Resistance Movement (AFRM) is a step beyond tea and coffee parties to a more focused effort to return the wealth and power to the middle class. We cannot wait to change politicians; we need to act now.

The objectives are two fold: to assist those resisting foreclosure, and to organize a movement to demand that Congress act to stop all foreclosures until the Financial Crisis Inquiry Commission finishes its work and issues its report.

Even people who, a year ago, were rabid about dead-beat borrowers are beginning to see that this is way bigger than that. That this will touch them on many levels and that this is the only real solution. Just stop the foreclosures until we sort out a few things.

I believe what we are going to find is that the financial intermediaries have attained all of their wealth through a massive fraud upon everyone. Your loan obligation was satisfied long ago and you don’t owe that money to anyone. It starts with sophisticated predatory lending, phony ratings, and illegal foreclosures, and ends with massive income tax fraud.

And, as long as foreclosures continue, there can be no meaningful recovery on the jobs front.

The law is on our side, but it isn’t being fairly administered. The role of the AFRM is to become a clearing house for information that will prevent illegal foreclosures and provide those already illegally foreclosed with support they need to obtain significant damages.

People from all over the country send me their scenarios, and last week I came across the most egregious example yet of banksters stealing homes. It proves that in a non-judicial foreclosure state such as California, anyone can manufacture documentation and steal someone’s home without them ever missing a payment.

The homeowner documented everything in a 14-page chronology, and contacted every government agency in her 28 month battle to overcome a totally false assertion that she had not paid her property taxes. She paid them and has the receipt. The servicer never provided any evidence that they paid anything. But, that gave them the excuse, without the homeowner’s approval, to establish an impound account to collect additional monthly funds ostensibly to pay property taxes.

Attempts to resolve the matter were continually frustrated by conflicting instructions, lost paper work, missing employees, and mysterious disconnections after critical questions.

Wouldn’t you just know it, even after there was never enough money in the impound account so the homeowner was defaulted and eventually the servicer seized the home.

Along the way, they hired loan modification experts and lawyers who simply didn’t know what to do.

Mortgage servicing fraud is so easy in California because California is a non-judicial state. This foreclosure went right on even though the servicer said it was still attempting to resolve the discrepancy. They received no notice of the sale. This is a crime, and it’s going on in every state. I believe judges look the other way and rubber stamp obviously phony documents.

That is why we need the AFRM.

Our leaders’ answers are to look the other way and respond by giving pretender lenders a ton of money. The numbers boggle the mind, but it really doesn’t matter; it’s the general idea that seems to lack any common sense. But, what have they really done to keep people in their homes? Nothing!

But, I don’t really blame them; we knew who they were when we voted for them. We let them divide us into to camps with bogus ideology while they do nothing but line their pockets and enrich their friends. Don’t get me wrong, there are three people who give me some hope, but they are mostly branded kooks.

Alan Grayson, Marcie Kaptur and Ron Paul, among others want to audit the Fed, and we should support that transparency and let all of congress know that we want that bill to pass. Go here to sign the petition, http://www.auditthefed.com/

But, that isn’t going to help the 13 million people who will lose their homes because not enough of us are standing up for each other. Government is organized and deceitful; we are disorganized, apathetic and “disinformed.”

However, we’ve got social networks, the Internet, and access to heaps of information. I think we take this web of connectivity and really do something with it. I know that no one cares about my cat video, but spreading the truth about what really was done to the economy and how we can turn this around is interesting.

Because the law is on our side, we can win. But, we have to fight back. First, in the courts to stop foreclosures until all predatory lending claims can be heard.

If you have a problem or you want to help out, you are welcome. It’s all about spreading the word. If you can help out with a website, we now have a domain name, but we need to get it unparked. Right now it is showing a lot of services that I haven’t evaluated or recommended.

Send information. If someone in your community has something to share, let’s get it out there.

Finally, I want to point out that those who are foreclosed on receive a 1098 that, in other years, would have been taxable as income to the borrower. It reflects the so-called loss that the banks are claiming on the loan. Now, considering that the financial intermediary didn’t loan any money, set the sale price at auction, received TARP funds, and cashed in credit default swaps, isn’t there a strong likelihood of income tax fraud on top of everything else.

If anybody over at the IRS is reading this, I have a question. When a pretender lender issues a 1098 for a loss on a residential mortgage that they do not and have never owned, and they received credit default swaps and tarp funds covering or exceeding that amount, why isn’t that income tax fraud? If I buy a credit default swap saying I won’t hear a peep back from the IRS for at least two weeks, are my winnings taxable?

George W. Mantor is known as “The Real Estate Professor” for his consumer education efforts including a long-running radio program, monthly workshop series, public appearances, and frequent articles.

During a career dating back to 1978, he has amassed experience in new home and resale residential real estate, resort marketing and commercial and investment property.

Prior to starting his own real estate and mortgage brokerage in 1992, he had been Director of Training and Customer Service for Great Western Real Estate. In addition, he has served on virtually every real estate committee, including a term as a Director of the California Association of REALTORS.

George is a nationally respected authority on all areas of real estate and is frequently quoted in a wide range of publications. He is an oft invited guest of Fox Business Network and for many years, he was the host of “Keepin’ It Real…Real talk about the real thing, real estate” on KCEO radio.

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RISMEDIA, March 30, 2010—Home sales decreased 11.7% in February 2010 in California compared with the same period a year ago, while the median price of an existing home rose 14.1%, the California Association of Realtors® (C.A.R.) recently reported.

“The federal tax credit for home buyers, low mortgage rates, and affordability at record levels have contributed to an unprecedented opportunity for many first-timers in the market for a home of their own,” said C.A.R. President Steve Goddard. “Although sales have declined from the unusually strong levels we experienced a year ago, they’ve remained above the 500,000 unit threshold for 18 consecutive months, while home prices continue to firm in the regions of the state most attractive to buyers taking advantage of today’s favorable market conditions.”

Closed escrow sales of existing, single-family detached homes in California totaled 528,930 in February at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local Realtor associations statewide. Statewide home resale activity decreased 11.7% from the revised 598,770 sales pace recorded in February 2009. Sales in February 2010 decreased 2.2% compared with the previous month.

The statewide sales figure represents what the total number of homes sold during 2010 would be if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. The median price of an existing, single-family detached home in California during February 2010 was $279,840, a 14.1% increase from the revised $245,230 median for February 2009, C.A.R. reported. The February 2010 median price decreased 2.4% compared with January’s $286,600 median price.

“Sales of distressed properties to investors and first-time buyers continued to drive the market in February, although at a lesser rate than a year ago,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Supply continues to lag demand at the more affordable end of the market, with a 3.9 month supply of homes for sale priced below $300,000, compared with the long-run average of more than seven months. This contrasts sharply with the nearly 15-month supply of homes for sale priced at $1 million or more at the upper end of the market.”

Highlights of C.A.R.’s resale housing figures for February 2010:

-C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in February 2010 was 6.3 months, compared with 7.1 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

-Thirty-year fixed-mortgage interest rates averaged 4.99% during February 2010, compared with 5.13% in February 2009, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.23% in February 2010, compared with 4.87% in February 2009.

-The median number of days it took to sell a single-family home was 41.2 days in February 2010, compared with 51.4 days (revised) for the same period a year ago.

-Statewide, the 10 cities with the highest median home prices in California during February 2010 were: Newport Beach, $1,000,000; Santa Monica, $781,250; Danville, $755,000; Santa Barbara, $725,000; San Clemente, $685,000; Pleasanton, $650,000; Mountain View, $637,500; San Francisco, $637,441; Redondo Beach, $615,000; and Sunnyvale, $609,500.

-Statewide, the cities with the greatest median home price increases in February 2010 compared with the same period a year ago were: Banning, 44.4%; Richmond, 38.9%; La Habra, 35.9%; Rancho Mirage, 33%; Vista, 29.3%; National City, 29%; Oakland, 29%; El Cajon, 28.1%; San Pablo, 26.3%; Fremont, 26%; and Pittsburg, 25.8%.

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RISMEDIA, March 29, 2010—(MCT)—The Obama administration took a series of steps recently to fortify its $75 billion effort to modify mortgages and plans to unveil more changes—including a push to reduce principals on difficult loans—to help struggling homeowners and cut down on foreclosures.

In announcing the renewed effort, the administration acknowledged that the year-old program known as Home Affordable Modification Program (HAMP) hasn’t done enough. By the end of December, 2009, it had permanently lowered monthly payments for only about 170,000 borrowers out of the expected 3 million to 4 million it was aimed at covering through 2012.

Even so, the program and separate efforts by banks and other lenders to rework overdue loans have pushed the rate of new foreclosures down 15.4% in the final three months last year, according to a recently released federal report. But the report also sounded alarms about a potential looming tide of foreclosures. The number of borrowers who were 90 days or more past due on their mortgage payments, a key measure of future defaults, swelled 20.4% in the last quarter over the previous quarter.

Worse, the modifications, while delaying the foreclosure process, did not appear to be a long-term solution: About 52% of those with modified loans defaulted again after nine months, said the report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision, which cover about two-thirds of the outstanding home loans.

The time bomb of delinquencies and repeat defaults has focused more attention on the administration’s Home Affordable Mortgage Program, which President Barack Obama launched with great fanfare more than a year ago.

At a House hearing, frustrated Democrats and Republicans labeled the program a bust so far, echoing a stinging report this week by a government watchdog. “This program is a failure and a waste of taxpayer dollars,” said Rep. Patrick McHenry, R-N.C.

Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform committee, warned the Obama administration it needed to act quickly to fix the program. “I really do believe we can do a whole lot better than what we’re doing to keep people in their homes,” he said.

Assistant Treasury Secretary Herbert M. Allison admitted that modifying mortgages has been more difficult than administration officials had anticipated.

“Certainly we’ve seen a lot of frustration with this program since its inception,” he told lawmakers. “We did not fully envision the challenges we would encounter.”

Among the changes to take effect June 1, 2010 is a prohibition on mortgage servicers from starting or continuing foreclosure proceedings on a borrower who enters the Home Affordable Modification Program.

Companies servicing mortgages also must screen every borrower who has missed two or more payments to determine whether the borrower is eligible for the program. If so, the servicer “must pro-actively solicit those borrowers” to participate. Those companies also are required to make quicker decisions about eligibility and to process documents quickly.

In addition, Allison said, the administration was preparing to move forward with an initiative to modify second mortgages after four of the largest mortgage servicers—Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co.—agreed to participate.

That initiative would be part of a greater administration push to have lenders reduce the amount of principal owed on delinquent loans, an action analysts said is a key to limiting foreclosures.

Administration officials will announce greater incentives for servicers to write down mortgage principal as well as to allow jobless homeowners in the program to skip three months of payments, according to an industry executive who requested anonymity because the changes had not been made public.

“Principal reduction is probably the last remaining significant vital step that needs to be taken in loan modifications in order to make those modifications stick,” said Stuart A. Gabriel, director of the Ziman Center for Real Estate at University of California-Los Angeles.

Many analysts believe the problem of negative equity—about a quarter of U.S. homeowners with mortgages owe more than their homes are worth—will make it difficult for modifications to succeed, since even a slight economic setback could cause those borrowers to abandon their loans and homes.

First American CoreLogic, a Santa Ana, Calif., real estate research firm, estimated that the typical homeowner who is under water won’t see home value rise above the loan amount at least until late 2015.

In some extremely depressed markets, such as Las Vegas, Detroit and parts of Florida, it might take until 2020 or later for those borrowers to regain any ownership stake in their homes, the research firm said.

Trying to address that issue, Bank of America said that it would offer to reduce $3 billion in principal over a five-year period for certain borrowers with adjustable-rate mortgages from Countrywide Financial Corp., the former No. 1 mortgage lender that Bank of America acquired in 2008. The bank said it hoped its effort would serve as a model for other mortgage servicing companies.

Such efforts may be too little, too late, according to analysts at the financial research firm Institutional Risk Analytics in Torrance, Calif., who said the latest refinements of the government’s anti-foreclosure efforts show little prospect of success.

“This is a ‘kick the can down the road’ action at best,” said Institutional Risk Chief Executive Dennis Santiago. “It defines a series of procedural hoops that need to be jumped prior to allowing foreclosure to complete. Yes, it will keep people in their homes longer. However, there remain no provisions for relief of the debt.”

The Home Affordable Mortgage Program, which was launched last spring, got off to a slow start. By the end of February, just 168,708 mortgages had been permanently modified. Allison said more than 1-million three-month trial modifications have been started, but conversion to permanently reduced payments has been difficult amid complaints from homeowners about delays, lost paperwork and bureaucratic runarounds by lenders who process the modifications.

(c) 2010, Los Angeles Times.

Distributed by McClatchy-Tribune Information Services.

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As the April 15 deadline to file 2009 federal tax returns approaches, the National Association of Home Builders (NAHB) is providing answers to some of the questions home buyers are most frequently asking about the home buyer tax credit.

“NAHB’s website that provides information about the home buyer tax credit, www.FederalHousingTaxCredit.com, has received more than 8 million visits,” said NAHB Chairman Bob Jones, a builder and developer in Bloomfield Hills, Mich. “We are doing everything we can to make sure home buyers are informed about this outstanding opportunity to benefit from buying a home before it expires April 30.”

Some of the more commonly-asked questions, and the answers, include:

1. How does a home buyer claim the tax credit?

The credit is claimed when the home buyer files or amends their federal income taxes. For qualifying homes purchased in 2009 or 2010, the taxpayer must complete IRS Form 5405 and attach a copy of the settlement statement. In most cases, the settlement statement is a properly executed Form HUD-1.

In circumstances where a HUD-1 is not provided, such as purchasing a mobile home or a newly constructed home, the IRS will accept an executed retail sales contract (mobile homes) or a copy of the certificate of occupancy (new homes).

2. Does the home buyer have to sell their current home in order to qualify for the $6,500 repeat home buyer tax credit?

A home buyer does not need to sell their current home in order to be eligible for the repeat buyer credit. They can continue to own both homes, and rent or use their former home for something else, as long as it no longer serves as their principal residence. The taxpayer is required to use the new home as their principal residence, and live in it for at least 36 months, or they will have to repay the credit.

3. Do married couples both have to meet the eligibility requirements in order to claim the credit, even if they file taxes separately?

Both spouses must fully meet all the eligibility requirements for either the $8,000 first-time home buyer tax credit or the $6,500 repeat buyer tax credit, regardless of if they file joint or separate tax returns. However, if an unmarried couple purchases a home and only one person qualifies, the eligible person may claim the full credit.

4. Do all home purchases need to be completed by April 30, 2010, in order to be eligible for the credit?

There are two exceptions to the April 30 deadline. If the buyer enters into a binding contract by the deadline, they have until June 30, 2010, to complete the purchase. The deadline has been extended a year, to April 30, 2011, for members of the uniformed services, Foreign Service or employees of the intelligence community who have been on qualified extended duty outside the United States for at least 90 days between January 1, 2009, and April 30, 2010.

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RISMEDIA, March 27, 2010— Agents report that the home buyer tax credit currently can deliver meaningful savings, but only for those who, at a minimum, have a binding contract to purchase a home in place on April 30, 2010. With that deadline bearing down, potential buyers who want to capture the tax credit had better get serious about home shopping.

“It is certainly possible to find a great home and get it under contract in a month or less, but doing it requires intense focus on the part of both the buyer and the buyer’s real estate agent,” said Jim Merrion, regional director of the real estate network.

Two versions of the tax credit are still being offered: a maximum credit of $8,000 for first-time buyers (and those who last owned a home 3 or more years ago), as well as a $6,500 credit for current homeowners. Either way, the credit applies only to the purchase of a new principal residence costing $800,000 or less, and there are income restrictions and other limitations, including a requirement to close the sale before July 1.

How can buyers eager to capture the tax credit streamline their home shopping?
Here are some suggestions:
1. Get to Know Your Market: Buyers can do that using Internet sites that permit you to see the homes currently on the market, and by finding a good real estate agent who is ready to expedite the shopping process. “A capable agent can guide buyers through the home search process and save them a lot of time,” contends Debbie Laskowski of Chicago. “New listings can be emailed to buyers as they are posted, and buyers should stay on top of the market on a daily basis, seeing what properties are coming onto the market and which ones have sold.”

2. Line Up Your Financing: Talk to a reputable lender right away and go through the pre-approval process. That will tell buyers quickly how much they can borrow. At today’s extremely low interest rates, that amount may be more than many buyers imagined. But either way, the process will help buyers determine how much they are willing and able to spend on the home.

3. Start Narrowing Your Search: With a large inventory of homes to choose from in the current market, buyers won’t have time to look at everything in their price range. By establishing specific criteria of the home they want, buyers can screen out homes that won’t fit their needs. “If you can give your real estate agent answers to two questions: Where do you want to live, and how much can you invest, you should be well on your way to a successful home search,” said Merl Carberry of Arlington Heights, Ill.

“When it comes to geography, buyers should factor in their daily commute. Few of us want to be more than 45 minutes from work. If buyers need access to public transit, then that also shapes their choice, and if they have children, schools are going to be a factor. Ideally, you can narrow you search to one or two communities rather quickly.”

4.Separate Needs from Wants: Buyers can look at fewer homes if they can tell their agent what features the home they buy must have and what features would be nice but aren’t required. “When it comes to must haves, start with the basics,” recommends Dan Bundy of Grayslake, Ill. “How many bedrooms are needed? Is a separate home office essential or just desirable? Do you require a basement? Will a two-car garage be sufficient, or do you need something larger? And don’t forget to consider the type of home. Are you interested only in a traditional two-story single-family detached dwelling, or would a ranch plan work just as well? And what about a townhouse?”

5. Consider Condition: In today’s market, many of the best values are foreclosed homes that aren’t in perfect condition. Buyers should decide up front if they are willing to tackle a home that needs work, and if so, how much.

“Buyers often have a hard time articulating what they will accept when it comes to condition,” explained Jim Hannigan of Western Springs, Ill. “That’s why it is important for a buyer to get out and walk through some properties with their agent as soon as possible. Buyers’ reactions give an agent the clearest picture of their priorities.”

6. Keep Things in Perspective: As nice as it may be to get the tax credit, don’t let the desire to do so completely control your home search. “Some buyers are quick decision makers, and others aren’t,” noted Debbie Laskowski. “If you like to mull over important decisions, take the time you need. The tax credit is a great incentive, but an $8,000 credit equals just 2.5% of the price of a $320,000 home. Buying the wrong home can end up costing you a lot more.”

7. Leave Time to Handle Standard Contingencies: The typical purchase contract may have several contingency clauses, for such things as a home inspection, attorney’s approval, obtaining financing and even the sale of the buyer’s current residence. Fortunately, standard contingencies in a contract won’t prevent it from qualifying for the tax credit.

However, “the more contingencies you have in a contract, the greater the risk that it won’t close”. For example, if an issue arises in the home inspection, and it can’t be resolved, the buyer may want to find another house, but doing that after April 30 will mean losing the tax credit. Allowing time to work through the contingencies before the deadline reduces that risk.

8. Be Careful of Short Sales: If the home you want to buy is offered as a short sale, qualifying for the tax credit may become more difficult. “Short sales require that purchase offers be approved by both the seller and the sellers’ lender, and lenders often are slow about responding,” said Merl Carberry. “Waiting for lender approval could leave you without a binding contract on April 30.”
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RISMEDIA, March 23, 2010—(MCT)—With home prices expected to keep falling in many parts of the country, experts said finding a fix for the underwater crisis will be difficult. Banks can’t afford to bail out homeowners without another bailout from the government. Even if federal help comes—either for the homeowner directly or for banks—taxpayers ultimately will be on the hook for the debt. Do nothing, and homeowners and communities continue to suffer.

One economist said it all boils down to one thing: sharing the pain. “At the end of the day, someone has to pay for this problem—either the lender, the homeowner or the public pays,” said Mark Zandi, chief economist for Moody’s Economy.com. “It is really about divvying up the cost, and that is very difficult politically to do.”

The Obama administration said last month it would allocate $1.5 billion to five states to create programs that target unemployed homeowners struggling to avoid foreclosure, as well as people underwater on their mortgages. The programs would also focus on helping people with second mortgages modify their loans.

Here’s a look at some other options and what experts say about them:

Principal reductions
One way to solve the negative equity problem is to simply get rid of it. That would require banks to modify loans—and write down the principal owed to reflect a home’s value on the current market. Proponents of this solution argue that it is more costly to continue the cycle of foreclosures. But lenders would face large losses if they wrote down large portions of their loans.

Zandi said some lenders are doing this when it makes sense. Under the Obama administration home loan modification program, lenders can write down or defer principal if the borrower’s debt-to-income ratio is greater than 31%. Principal write-downs typically are being done when the homeowner wants to stay in the house and the lender doesn’t think it can sell the house to recoup what is owed.

He also predicts lenders will engage in more short sales, where they write down the difference between what is owed on the mortgage and what a buyer is willing to pay, to avoid costly foreclosures.

Julia Gordon, senior policy counsel for the nonprofit Center for Responsible Lending, agrees that principal reduction is one of the better ways to start healing the housing market.

But it gets complicated when there are second mortgages or lines of credit, common when economic pressures left little equity in some people’s homes. She said there is often a conflict of interest when the mortgage, or first lien, is held by one lender and the second is held by a different one. Lenders often don’t want to approve reducing principal on the first lien unless the second lien holder also takes a hit. “If the second liens disappear, that would clear servicers to do more principal reductions,” she said.

Rick Sharga, senior vice president of RealtyTrac Inc., an Irvine, Calif.-based foreclosure website, said he doubts that banks will write down principal in large numbers. “Many are in a capital position where they can’t afford to do that,” Sharga said. “The glimmer of hope is we figure 2010 will be the peak of foreclosure activity.”

RealtyTrac expects 3.5 million properties nationally to receive a foreclosure filing this year, up from 2.8 million last year.

Stabilize home prices
Gail Madziar, spokeswoman for the Michigan Bankers Association, said some banks are even leasing homes they foreclosed on back to the original owners to help stabilize home prices and neighborhoods.

Another way to stabilize prices is to control the release of distressed inventory onto the market. Banks have been doing this in recent months to slow the erosion of home prices and minimize the losses they record on their books.

Help for unemployed workers
The Mortgage Bankers Association announced recently that it was considering a program to help qualified borrowers who have lost their jobs so they can stay in their homes while they seek new employment.

The forbearance program would have loan servicers reducing the borrower’s mortgage payment for up to nine months. The payment would be reduced to an affordable level based on household income.

John Courson, president and CEO of the association, said that the average U.S. worker is unemployed for up to seven months and that is a long time for a homeowner to stay current on the mortgage with such a large drop in income.

“Further, borrowers with such a precipitous drop in income can’t qualify for most loan modification programs, so we are looking for ways to allow those borrowers to keep their homes while they look for another job,” he said.

The association has asked the government to add this tool to the Home Affordable Modification Program to help the swelling ranks of unemployed people.

Gordon of the Center for Responsible Lending said another solution might be to provide a low-cost loan fund like one in Pennsylvania that unemployed homeowners can tap into to pay their mortgages. The Homeowners’ Emergency Mortgage Assistance Program was created in 1983 to prevent homelessness in Pennsylvania by offering loans of up to $60,000 for 24 months. In times of high unemployment, the loans extend to three years.

Freeze foreclosures
Michigan state Sen. Hansen Clarke, a Democrat who sponsored 90-day foreclosure moratorium legislation that took effect last July, said he thinks judges should be given the power to temporarily suspend foreclosures for up to two years. “Look at all the people who have had to walk away from their houses. I get so angry when I see these neighborhoods, because action could have been taken,” Clarke said.

Gordon said a temporary suspension could be helpful if servicers use that time to evaluate the homeowner for a loan modification. Now, the foreclosure process and evaluation process generally are happening at the same time, sending mixed messages to homeowners.

Tim Ross, president of Royal Oak, Mich.-based Ross Mortgage, said that more mortgage loan servicers are eager to keep people in their homes these days and that could go a long way to solving the negative equity problem.

On top of that, new household formation, which occurs when young adults leave home to set up their own places or when people get married or divorced, continues to create demand for new homes. And with new home building at a standstill, demand driven from household formation should absorb what’s in the market, he said.

“Despite the fact that we have outmigration, there are fundamentals in place that will ultimately rescue us,” Ross said.

(c) 2010, Detroit Free Press.

Distributed by McClatchy-Tribune Information Services.

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RISMEDIA, March 23, 2010—(MCT)—Facing criticism over the slow progress of its foreclosure-prevention efforts, the Obama administration has struck deals with two giant banks that would extend mortgage relief to homeowners with second mortgages.

Wells Fargo & Co. has agreed to modify home-equity loans in cases where borrowers have already qualified for relief under the U.S. Treasury’s mortgage-modification program. Wells Fargo joined Charlotte, N.C.-based Bank of America, which made a similar announcement in January. Together, the two banks account for 25% of the second-mortgage market in the United States, according to the U.S. Treasury.

Consumer advocates say a key weakness with the government’s $50 billion foreclosure-prevention program is that mortgage modifications leave second loans unchanged. Borrowers qualifying for lower mortgage payments risk default because of large payments on a home equity loan. Some homeowners owe more on a second mortgage than the first.

The U.S. Treasury, recognizing the second-mortgage problem, last summer began urging large banks to modify those loans, too. “Our goal is to provide another benefit to customers who may be in distress,” said Kevin Moss, the executive vice president in charge of Wells Fargo’s home equity group, which has a $124 billion home equity portfolio with 2.3 million customers. “The housing market is showing some positive signs of stabilizing in some markets, but there are still too many foreclosures, and too many people who are still struggling out there.”

The move by two giant banks may compel other lenders to follow suit, said Celia Chen, a housing economist at Moody’s Economy.com. Even so, she said, the modification program will do little to reduce foreclosures this year and may simply postpone them. In February 2010, about 308,000 Americans lost their homes through foreclosures, up 6% from a year earlier, according to RealtyTrac.

The Obama administration is under pressure to improve its Home Affordable Modification Program, or HAMP, which aims to slow the surge in foreclosures. The goal of the program is to lower the payment on a first mortgage to about 31% of a borrower’s gross income.

Borrowers have complained of disappearing paperwork and slow service by the banks, which have the final say over loan changes. So far, 168,708 mortgages have been permanently modified with lower payments or longer payoff periods, according to a recent Treasury Department report. That’s just a small fraction of the 3.4 million people who qualify for the program.

Extending relief to second mortgages improves the odds that borrowers will avoid default, say consumer groups. “This is a step in the right direction,” said Tara Twomey, an attorney with the National Consumer Law Center, a nonprofit advocacy group that has tracked the federal government’s mortgage-modification efforts. “It’s a recognition that people with second mortgages are struggling, too, and that ignoring seconds was problematic.”

(c) 2010, Star Tribune (Minneapolis)

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RISMEDIA, March 20, 2010—(MCT)—The Obama administration recently reported that its mortgage modification program continued to make progress, with the number of homeowners receiving permanently reduced monthly payments in February 2010 increased by 45% to 168,708.

An additional 91,483 three-month trial modifications have been approved by the companies servicing the mortgages and were awaiting acceptance by the borrowers, the Treasury Department reported. While the numbers continue a steady increase in recent months, only about 15% of homeowners who have started trial modifications have had them made permanent.

The $75 billion Home Affordable Modification Program was launched last year to ease the foreclosure crisis by providing cash incentives to mortgage companies to lower payments for homeowners who were 60 days or more behind on their loans. The goal is to modify 3-4 million mortgages through 2012.

The program began slowly, particularly in converting temporary modifications into permanently lowered payments. In December, Obama administration officials began aggressively pushing banks and other mortgage servicers to make more of the modifications permanent. At the end of November, there were just 31,424 permanent modifications.

But as the number of permanent modifications has increased, the pace of new trial modifications under the program has slowed, according to the report. There were 835,194 active trial modifications in February, compared with 830,438 in January. The median payment for permanent modification is 36% lower than before the modification, with a savings of more than $500 each month, the Treasury Department said.

The Los Angeles-Orange County area had 5.9% of all the program’s trial and permanent modifications, second only to the New York City area’s 6.1%.

(c) 2010, Los Angeles Times.

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RISMEDIA, March 19, 2010—(MCT)—Want to sell your home? Get out the bucket, mop and Mr. Clean. The key to making a positive first impression is simple, said Sandra Rinomato, host of HGTV’s popular “Property Virgins” show.

“Get it clean, clean, clean,” said Rinomato. “If your house isn’t clean, it instantly sends up negative thoughts that the home is not well maintained. If your house is spotless, you’re ahead of the game,” she said.

But don’t stop there, advised Rinomato. To increase your chances of making a sale, “stage” the house to make it as attractive as possible. Until recently, “Staging meant pulling out all the stops—setting the dining table with your best china and crystal, arranging flowers, lighting candles,” she said. “Now we take the minimalist approach. Basically, you want to strip the house to its bare essentials, depersonalize it so potential buyers can superimpose themselves and their lifestyle on the house.”

Rinomato offered the following tips for staging a home:

1. Visit model homes and examine shelter magazines for inexpensive decorating ideas. Always keep in mind you are not decorating for yourself but for the general public.

2. Start with the outside. Give the house a fresh coat of paint, add shiny hardware to the front door and plant a few flowers to send a subliminal message the house is loved and well cared for.

3. Declutter every room to make it look larger. Get rid of family pictures, trophies and knickknacks. Closets and drawers should be no more than 30% full.

4. Invest in eco-friendly but bright lights. Open the drapes or remove them completely. “Light, bright rooms give the impression this is a happy place—and everyone wants to move into a happy place,” said Rinomato.

5. Feature only a few pieces of furniture with mainstream appeal. Pull pieces away from walls to make rooms look bigger.

6. Make sure a room’s primary use is obvious. A bedroom should look like a bedroom, not an office, hobby center or gym.

7. Bedrooms and kitchens are difficult to stage because they are in daily use, but make the effort. Clear everything off the counters and nightstands, roll up the rugs and hide the laundry hamper. Buff the cabinets with car wax and clean under the sinks. Invest in pristine white bed linens and towels.

8. Minimize the “pet effect.” Remove food bowls and litter boxes to the utility room. Deodorize thoroughly.

9. Organize the utility room and garage. Hang up the bicycles, roll up the hose. Renting a storage locker is worth the cost if it helps you sell faster and for a higher price.

10. Once your house is staged, invite your friends or Realtor over and walk them through to get an objective opinion.

(c) 2010, The Orlando Sentinel (Fla.).

Distributed by McClatchy-Tribune Information Services.

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