House Refinance Center Blog

Freddie Mac Winter Promo Pays Bonuses To Real Estate Agents

2011-11-17T16:45:00.000-08:00

In an effort to sell more properties, Freddie Mac will be paying extra money to seller agents. This program is for the Winter season and will end on March 15, 2012.

Seller agents will receive $1,000 for each transaction they close in specific locations. HomeSteps, the sales arm of Freddie Mac, will pay the bonus to agents. Initial offers must be received between November 15, 2011 and January 31, 2012.

Freddie Mac is also giving additional incentives to owner occupants. Freddie Mac will help with the closing costs up to 3% of the final sales price.

In addition, some HomeSteps homes can qualify for a two-year Home Protect home warranty plan. The plan covers electrical, plumbing, air conditioning, heating, appliances and other major systems. Owner occupants are also eligible for a discount of 30 percent on the purchase of appliances.

Currently, Freddie Mac is selling more homes than it is taking in. For the third quarter this year it sold 25,387 houses. The number of homes Freddie acquired through foreclosure during the same time was 24,385.

Freddie Mac continues to get top dollar for its properties. The average price is 94% of the market price. Let's hope that this trend continues and that Freddie does not ask for a bailout.

For more news on mortgages, Freddie Mac and refinancing please visit:

House Refinance Center

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Condos Not Selling Fast Enough: Blame FHA

2011-11-16T18:26:00.000-08:00

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It is becoming harder to buy a condo. Part of the problem is the new changes to the Federal Housing Administration (FHA) insurance. These changes require a condo project to pass re-certification every two years. Even condo projects with healthy financials will find this process challenging.

Imagine the homebuyer has to qualify for a mortgage plus the condo building has to pass the FHA insurance test. This is too much to stress to place on a buyer considering our economic conditions.

One of the main requirements is owner occupancy. At least 50% of the units must be owner occupied. This rule keeps out real estate speculators. But it also saddles the existing owners with rising condo fees. Condo associations do not want to levy special assessment to raise more funds. The other alternative is to raise fees.

In addition to the owner-occupancy policy, the new rule also says that one investor can not own more that 10% of the unit in a condo complex. So investors are blocked from buying additional units in a building that they know very well. Consider a 500 unit building where the average condo fee is $300 a month. If 200 units sit vacant the condo association is losing about $720,000 a year in fees. This short fall could be crucial in the event that there is an emergency. The funding would have to come from the current condo owners, and this might force more owners to walk away from their homes and end up in foreclosure.

Allowing investors to buy more units is a solution. Prices will not fall as sharply and condo associations will be able to work within their budgets.

Additional articles on mortgages, banks and refinance, please visit:

House Refinance Center

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HARP Being Modified: Is It Too Late?

2011-10-26T12:19:00.000-07:00

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The Federal Housing Finance Agency (FHFA) announced that major changes will be coming to the Home Affordable Refinance Program (HARP). The highlighted change is the removal of the loan to value limit. The current loan-to-value (LTV) is 125%.

One of the objectives of HARP was to help the millions of homeowners who were underwater with their mortgages. In some housing markets the outstanding mortgage balance is about half the market value of the house. For example, a homeowner owes $500,000 on his mortgage but the house is valued at $250,000. In this example the LTV is 200%.

The revamped program, entitled HARP Phase 2, means that those homeowners who are underwater the most and are desperately in need of help, will finally get some relief. They will be able to refinance at the current low rates. The FHFA expects that the modified HARP will help about 1,8 million homeowners. If this target is reached it would be a great improvement from the 900,000 borrowers the program currently helps.

This might seem like a slam dunk case. But qualifying for the financing might be an issue for many borrowers.
>>> The mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac.
>>> The mortgage must have been sold to Freddie Mac or Fannie Mae on or before May 31, 2009.
>>> The loan to value must be greater than 80%.
>>> The homeowner must be current on the mortgage at the time of refinancing, with no late payments in the last 6 months or only 1 late payment in the last 12 months.

Here are the big issues.
1. If your mortgage is not owned or guaranteed by Freddie Mac or Fannie you have no chance of a refinance under the program. There are millions of private mortgages that are underwater.

2. If you are going to refinance from a fixed rate mortgage to an adjustable rate mortgage the maximum loan to value is 105%. This is not a good time to go from fixed to adjustable, but there are some borrowers that would like this option.

Let's hope that the majority of lenders get behind the program and help the millions of borrowers that are underwater.

For more articles on the housing market and mortgages please visit:

House Refinance Center

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Thousands Of Seniors Losing Homes In Foreclosure Crisis

2011-10-14T19:57:00.000-07:00

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It's difficult to think of your grandparents losing their homes in foreclosure. In many instances the homes were paid off years ago. The current economic crisis has led homeowners to dip into their assets including the equity in their homes.

There are three areas that trap senior homeowners into foreclosure. Remember, these are Americans on fixed incomes. According to AARP about 600,000 seniors are delinquent on their mortgages.

Health problems.

Paying for prescription medicine, and emergency health problems are an issue. Even with insurance plans, seniors have to pay some out-of-pocket costs. These medical expenses are not limited to the care of the seniors alone but they are also for family members. The McDavids of Raliegh, N.C. spent $70,000 on their son's medical care until he finally passed away.

Day to day living expenses.

The cost of living keeps rising. Gasoline and heating oil prices are up. And because of the drought this year in states like Texas, Arkansas and Oklahoma, food prices are rising. According to Dr.Amy K. Glassmeir, who created the Living Wage Calculator, for a family of two to live in Texas it takes $24,800 in after taxes dollars. In Illinois the amount is $25,371 and in Alabama it is $24,742

Help to family members.

Many seniors are helping their children and other family members pay their mortgages or pay the rent. To obtain the funds seniors had to refinance and take on new mortgages on houses that were paid off or had substantial equity in them.

With the economy in the shape it is in today, chances of recovering these loans are very slim. The extra monthly mortgage payment is taking a toll on seniors' budgets. In some cases medication is eliminated or the dosage is reduced because the seniors simply do not have the money. So now we have health problems that can and will worsen.

We have to find ways of protecting our seniors. If it means declining them for a mortgage, well, so be it.

For more information on foreclosures and mortgages, please visit:
House Refinance Center

Additional mortgage news and advice:

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Lowest Mortgage rate is not always the best rate

Home Sales Climbs 7.7% In August

2011-09-24T17:25:00.000-07:00

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August was a good month for sales of previously owned homes. Housing sales increased 7.7%. This translated to a seasonally adjusted annually rate of 5.03 million housing units.

Economists are still not excited with these sales numbers. They expect sales to be around 6 million units in order to provide some momentum to a stagnant housing market.

An increase in foreclosure activity was behind the rise in sales for August. This is an indication that home prices still have a long way to fall.

First time homebuyers have not participated in this buying frenzy. Our first time homebuyers represented 32% of sales in August. This was the same percentage in July. The percentage is normally 40%. For the most part, they have remained renters. There are a couple reasons for their action.

Number one, they are waiting for house prices to fall further. Buyers do not want to pay $200,000 for a house today which they can purchase a year later for $150,000. It makes perfect sense to rent the house and wait.

Number two, they can not get acceptable financing. Mortgage rates are at record lows today. The 30 year fixed rate mortgage is around 4.0%. Many lenders are heavily promoting the 4.0%, but this rate is seldom given to borrowers. There is always an issue with the credit score. It's never high enough.

Real estate investors are fueling the increase in house sales. Investors accounted for 22% of sales in August and 18% in July. The boom in previously owned homes come at the expense of new construction. New construction is 30% more expensive.

For more articles on mortgage, loans, foreclosures and banks, please visit:

HOUSE REFINANCE CENTER

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Are You Still Having Problems Getting A Loan Modification?

2011-09-12T14:37:00.000-07:00

Image by Getty Images via @daylife

The economy is still in the dirt, and hard working Americans are seeing the American Dream slip through their fingers. If you are one of the millions of homeowners trying to hold on to their houses, and get a loan modification, do not give up. Keep fighting! There are a few steps you should take.

Keep making those mortgage payments.

Many people believe that they have to be behind 4 or 5 months before the lender would consider modifying their loans. Some even think that the further behind they get the better their chances of getting the deal done. They are all wrong. Never give the lender the opportunity to foreclose on you. If you stop paying, they have every right to foreclose. Talk to your lender and complete the paperwork for the loan modification. Meanwhile, pay what you can. If your mortgage payment is $800 a month, and you have $500, pay the $500 and attach a note. Explain that you know that you are $300 short but that you are doing your best. Make copies of every note you send the lender.

HAMP is not your only option.

Our Federal Government sponsors HAMP. This should be your first shot at a loan modification. The rules are stringent, but the rates are good. If you fail to qualify for a loan through HAMP, ask your lender to give you a loan modification directly. The inhouse deals are quicker to close but you will pay a premium in the interest rate.

You don't have to pay a fee for a loan modification.

Beware of scam artists. Desperate homeowners sometimes will try anything to save their homes. The crooks know this and prey on vulnerable borrowers. The promise results. They brag about their contacts at the banks. Nothing is further from the truth. No one can guarantee that your loan modification will be approved. And certainly no one can tell you in advance what the interest rate will be or what the new monthly mortgage payment will be. The scam artists will try and get some money upfront. After you pay, you will never hear from them again. Your calls will not be returned. In many cases, the crooks have left town and will surface in a different city.

If you need help with a loan modification call a HUD approved housing counselors. They will work for you and the service is free.

For more articles on mortgages, tips, news and advice please visit:

HOUSE REFINANCE CENTER

Related article and mortgage stories.

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What is foreclosure?

New York Attorney General Eric Schneiderman: A Man With Principles

2011-08-29T11:05:00.000-07:00

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Mr. Schneiderrman must feel like an outsider. And this left me wondering, what has he done that is so wrong? There are 49 Attorneys General that are pressuring him to sign a deal that he obviously thinks is wrong. The Obama Administration wants him to tow the line. The big banks want him on their sides.

Now this tells you that something stinks when the Federal Reserve, the banks and 49 attorneys general are on one side of the fence, and one single attorney general is on the other side. Since when were the banks so generous and fair? The attorneys general are asking for $20 billion. This is a drop in the bucket.

On the surface this seems like a simple case. The banks were caught with their hands in the cookie jar. They were involved in shady foreclosures on millions of Americans. Furthermore, they sold questionable mortgage backed securities to investors. Let us not forget that some of these investors were American pension funds. This is money that hard working Americans were counting on to see them through their golden years. The state pension fund of Florida lost $62 billion. So the $20 billion that is on the table is not even in the ballpark.

As a settlement the banks want to write a check. That's it. No further litigations. No guilty plea. No apologies. Everyone seems to think that this is a fabulous deal. Everyone but Eric Schneiderman. He smells a rat, and rightfully refused to sign.

Mr. Schneiderman wants to look beyond the robo-signing. He wants to investigate consumer and investor claims, and matters about securitization. His opponents want a broad immunity deal that would stop future lawsuits.

Now he is being accused of not playing ball. In retaliation he was kicked off the executive committee of the 50 attorneys general that was negotiating the settlement with the banks.

We hope that he doesn't cave in to the pressure.

For more articles on mortgages, including tips, news and advice, please visit:

HOUSE REFINANCE CENTER

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Cook County Has $16 Million In Unclaimed Foreclosure Money

2011-08-28T22:15:00.000-07:00

Image by Getty Images via @daylife

Cook County has $16 million sitting in a mortgage foreclosure surplus fund and since 2009 the rightful owners of the money have not come forward. Dorothy Brown, the County Clerk, has been working to spread the word that money is waiting to be claimed. Information is on the County's website. Just type in your name and see if you have money owed to you.

The housing crisis and the foreclosure mess has demoralized countless Americans. They fell behind with their mortgages. They couldn't get the lender to work out a loan modification. So they just walked away. Many have moved out of state. They wanted to get as far away as possible. They thinking was, "let the bank deal with the problem. Let them sell the house".

In thousands of cases the banks did just that. They sold the houses at foreclosure auctions, or at bank owned real estate sales. In the majority of cases there is a shortfall. In other words the house is sold for less than what is owed on the mortgage. The $16 million represents a different scenario.

If the house is sold for more than what is owed the homeowner is given the surplus. The bank doesn't get to keep the surplus money. The bank has to notify the circuit court, file the required documents and give a check to the court. The court will contact the homeowners and give them the surplus.

In Cook County there are over 1,900 homeowners and business that have a check waiting for them The amount ranges from thirteen cents to $460,000.

For more articles on mortgages, including news, tips and advice, please visit:

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Banks Closing More Short Sales And In Less Time

2011-08-28T18:16:00.000-07:00

Image by Getty Images via @daylife

Short sales closing are finally increasing. Banks have been a bit stubborn over the last 3 years. Potential homebuyers had to wait months before they got an answer. Many homebuyers became so frustrated that they simply walked away from the deal and vowed never to deal with that particular bank again.

It is taking less time to close a transaction and the banks are willing to accept a price much lower than what is owed on the house. This is good news and it fosters hope for the housing recovery.

In the second quarter houses nearing foreclosure accounted for 12 % of total home sales, according to RealtyTrac. This number is up from 10% from the same period last year. Short sales were closed quicker as well. On average it took 245 days to close the transaction. This is still not an acceptable time. But it is a step in the right direction.

Some of the states that suffered the most during the housing crisis fared even better. California saw an increase in short sales to 25%, and Colorado saw 17%.

This good news mean that homeowners will avoid the high costs of going through foreclosure. In addition, they will be able to get a new mortgage in a shorter period of time than if they went the foreclosure route. Considering the overall housing market the discount was reasonable at 21% off the market price. If the homebuyer waited to buy a bank owned property then the discount could have been as much as 40%.

So what took the banks so long to realize that half a pie is better than no pie? Simple greed.

For more articles on mortgages, including tips, news and advice, please visit:

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Foreclosures Will Damage Our Children Forever

2011-08-21T13:30:00.000-07:00

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We seldom hear of the effect that foreclosure has on our children. Sure, it's hard on the parents. But the children suffer in silence.

The biggest problem for children in a foreclosure is moving. This involves changing schools. Lifelong friendships are broken, and familiar and loving teachers are gone.

A new school although it might be welcoming and warm, it doesn't have the feel of their old school. At the old school the students knew the way around the cafeteria. They knew which crowds to sit with, and which to avoid. For an athelete, the gym was home territory.

Grades decline when students change schools because of a foreclosure. Children blame themselves for the foreclosures and other financial shortcomings of their parents. Many will compensate by working part time. Some might even drop out of school and work full time.

Nevada has suffered a lot in recent years. It leads the nation with the highest unemployment rate, as well as the highest foreclosure rate. It is no doubt that we will have a generation of children in Nevada that will be damaged economically and academically.

The Kids Count survey found that 11% of teens in Nevada were not in school and had not graduated from high school in 2009. The survey also discovered that Nevada had 34% of children living in a family where both parents were not working in 2009.

The highlights of the survey says that children from low-income families will be raised in an unstable environment. It further stated that these children will not be gainfully employed.

Although this scenario might not be describing your child, you have to be aware of the larger picture. This picture includes higher health costs, higher law enforcement costs and higher welfare costs. This means higher taxes.

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Dangers Of letting The Buyer Assume Your Mortgage

2011-08-17T08:25:00.000-07:00

Image by Rev Dan Catt via Flickr

Desperate times call for desperate measures. Many Americans are facing financial problems and foreclosure. In the current housing market, prices are falling and there is an over supply of house. One way to get out of the mess is to sell the house. But it isn't easy.

Some houses are on the market for seven months or longer. Open houses aren't working. Dropping the price isn't bringing qualified buyers to the table.

One seller was so desperate that she allowed the buyer to assume her mortgage. I advised against doing this. It is too risky. I wouldn't do it for my mother.

Fortunately, the bank approved the buyer and the payments were on time for 4 years and then the house was sold. Happy ending!

But what if? If the buyer stopped making the payments. What if my friend wanted to buy another house. What if the property taxes were not paid. What if a contractor did some work, wasn't paid, and put a lien against the house.

If the buyer stopped making payments the lender would pursue the seller, my friend, for the payments. This could turn ugly and end up being a foreclosure.

If the seller wanted to buy another house there would be this unresolved liability hanging around. Chances are she would have been declined for another mortgage.

If the property taxes were not paid the city has a right to put a lien against the house. If the tax bill remains unpaid, the house could be sold on the court steps at auction.

Regarding the contractor, the lien would remain until he is paid. When the house is eventually sold he would be on record and would get his money plus court costs plus interest.

If you do decide to let a buyer assume your mortgage, be sure to get a Release of Liability for your lender. It is basically a document saying that you are free and clear and is not responsible for the mortgage. This information will also be reported to the various credit bureaus.

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Unemployment Among Post 9/11 Veterans 12.4%...Why?

2011-08-11T21:39:00.000-07:00

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Returning home is a shock for many veterans. Many have fought in Iraq and Afghanistan and return to America, only to be told "sorry, we don't have a job for you". According to The Bureau of Labor Statistics the national unemployment rate is 9.1%. But for post 9/11veterans it is 12.4%. And it is expected to get worse. There will be 10,000 veterans returning from Afghanistan and another 46,000 from Iraq. How will these men and women support their families and pay a mortgage?

Many veterans were promised that the skills and experience they receive in the Armed Forces will be transferable to civilian life. This has not been the case most of the time. Veterans have to be educated and they have to be trained.

The issue of unemployment focuses around the age group of 18 to 24 years old. In 2010 this age group of veterans had an unemployment rate of 20.6% while non-veterans in this same age group, it was 17.3%. We have to look behind and around the numbers and try to understand why the numbers are skewed. From reading the papers and listening to TV one would get the impression that corporate America is not hiring veterans. This is not the case.

The first reason for the skewed numbers is that many of these young people were deployed three or four times. The second reason, is that some haven't decided what to do, and they would like to spend a couple months just relaxing. And the third reason is that many of the veterans in the 18 to 24 years age group, went back to school. Over 440,000 veterans used the new GI Bill since it was enacted in 2009.

Overall, if we look at employment numbers for all veterans the numbers are good. For 2009 the unemployment for all veterans was 8.1% compared to 9.3% for non-veterans. In 2010 unemployment among all veterans came in at a respectable 8.7% while it was 9.4% for the general population.

What these numbers tell us is that a veteran simply wants an opportunity. And when the chance comes the veteran will keep working.

There are several organizations that are available to help the veteran. A few are listed below.

The Department of Veterans Affairs has launched a website connecting employers with veterans.
Hiring Our Heroes: organized by the Chamber of Commerce
Transition Assistance Program: sponsored by the Federal Government
Warriors to work program.
Tip of the Arrow Foundation.
Wounded Warrior Program.
Military to Medicine.
President Obama has challenged the private sector to create 100,000 jobs for veterans by the end of 2013.

Corporate America has invested heavily in recruiting veterans. These corporations realized that the leadership, teamwork and getting the job done while under pressure, are qualities that every veteran brings to the table.

For more articles on mortgage news, tips and advice, please visit:

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US Credit Rating Downgrade: What It means To The Average Joe

2011-08-08T08:15:00.000-07:00

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The S&P downgraded the US credit rating from AAA to AA+. This was expected. And then the stock market was down 10% last week. So what does all this mean to the average guy?

1. Profits disappear.
When the stock market goes down companies lose equity. As the companies lose equity they try to compensate by implementing cost cutting measures. Any expansion plans are put on hold.

2. Unemployment.
Unemployment is still high at 9.1%. This represents about 14 million Americans out of work.

3. Consumer confidence.
Consumer confidence is low. No jobs. House prices falling. Tight credit. This is not the time to go out and shop. Consumers are focusing on paying down their debt and saving a bit for a rainy day.

4. Housing.
The inventory of foreclosure homes is about 2 million units. It would take over 103 months to clear this inventory. As a result of the large inventories, house values are dropping as much as 10% each year. The question now is "how long would it take for me to be underwater?".

5. Europe.
America needs market to sell goods and services. The US market is just not big enough. Europe has always been a good choice. But recent events in Greece and Spain have dampened the enthusiasm of US exporters. Unemployment in Greece is 15% and in Spain it is 20%.

What should the average Joe do?

1. Do not take on any more debt. A new car is exciting, but wait.

2. Hold on to your job, and do not expect to get a raise.

3. Learn to do repairs around the house yourself. Forget about paying a contractor.

4. If you have teenagers, let them get a job. Flipping burgers never killed anyone. This saves you money for all the extra activities they like.

More articles on mortgage news, tips, rates and advice, please visit:

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Fannie Mae Wants The American Taxpayers To Hand Over Another $5 billion

2011-08-07T12:21:00.000-07:00

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Fannie Mae reported a second quarter loss of $2.9 billion in 2011. The first quarter loss was a huge $6.5 billion. The second quarter loss for 2010 was ONLY $1.2 billion. So it seems that the situation is getting worse when it should be better.

Fannie explained the losses this way. "The housing market is still weak". "Unemployment is high. The national average is 9.1%". "House values continue to fall". If Fannie were an employee at any company in America she would be fired. This $5 billion would bring the total given to Fannie Mae to $104.8 billion.

This is a lot of money to be wasted. You could take 2 million families in the United States and give each family $50,000.

On the bright side in the second quarter Fannie Mae did about 80,000 loan workouts. She also closed 59,000 permanent loan modifications and over 21,000 short sales. So there were over 100,000 houses that escaped foreclosure.

But what about the REO portfolio of Fannie Mae? This portfolio of houses is valued at over $12.5 billion. The houses are marketed and sold through HomePath. These are assets that are not generating adequate income and have become a drain on the cashflow of Fannie Mae.

Maybe it is time for a yard sale. Let's get some cash for these houses. Fifty cents on the dollar is better than throwing another $5 billion at Fannie Mae.

For more articles on mortgage news, tips, rates, and foreclosures please visit:

House Refinance Center

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Bank of America Wants to Settle ... Really?

2011-08-04T12:48:00.000-07:00

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Bank of America wants to reach a settlement with the Government in order to prevent further claims and lawsuits regarding improper foreclosures and evictions. So, which side is holding the best hand?

We believe that the Government has an excellent hand and should not rush into a deal with Bank of America. The Government has millions of Americans on its side. American that were fraudulently deprived of their homes. In addition, there are hundreds of courts across the nation that are dismissing foreclosure cases in favor of homeowners. This is a lot of ammunition.

The bank is offering to reduce the principal on many mortgages that need a loan modification. This is a sensible business practice that many lenders should all be doing in the first place. This is nothing new to the table.The bank has already posted a second quarter loss of $14.5 billion due largely to mortgage related claims. Back in June this year, the bank paid a settlement of $8.5 billion to a group of investors who suffered significant losses in mortgage backed securities. The winning companies include BlackRock Inc and MetLife. At this point Bank of America is trying to stop the bleeding.

Other recent claims paid by Bank of America were $1.3 billion to Freddie Mac and $1.5 billion to Fannie Mae. Many analysts considered this payout a very attractive deal for the bank.

It should be noted that Freddie Mac and Fannie Mae are not part of the present negotiations. Fannie Mae still owns about $397 billion in mortgages from Bank of America.

Lets hope the Government doesn't drop the ball on this transaction by trying too hard to reach a settlement.

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Garbage, Crime and Rats Plague Abandoned Boarded Up Foreclosure Homes

2011-08-03T22:11:00.000-07:00

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Sometimes we forget how quickly a neighborhood can deteriorate when there are foreclosed properties on every block. We can easily quote the economic fallout from distressed homes that were sitting empty for a year or more. For example, the house values in some areas have dropped 50% since 2006. What is difficult to comprehend is the garbage piling up, the stench, especially in the hot summer months, and hundreds of rats.

The garbage issue should never happen. But one or two people throw a bag with a couple empty bottle of cans, and then there are others. Some residents see it as an opportunity to add to the pile. This reminds me of when you exit an express highway and stop at the first set of lights. Garbage is piled up.

The smell of rotting food can be unbearable. This brings us to the problem of rats. These rodents will not just remain at the foreclosed house. They will spread to other houses in the neighborhood. In addition to being a bit creepy, rats can be a health problem to your family and to your pets. Rats carry rabies and they can bite and kill your pets.

Baltimore has a serious rat problem in foreclosed houses. The Patterson Park area is taking a direct hit. Rat incidents were 49 per 1,000 residents in 2006. This number surged to 183 in 2008, and it was slightly under 400 in 2009.

In Maricopa County officials are encouraging residents to pick the citrus fruit from their trees before the rats get to them. Apparently, rats like citrus. The fruit doesn't go to waste, as it is given to the inmates at the local jail.

To get rid of the rats, you have to first get rid of the debris and the bushes that have overgrown. Many cities do not have the budget to hire more code enforcement officers. So the owners of the foreclosed house, usually the lenders, get a free pass.

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Homeownership Rate Drops To A 13 Year Low: Why Try To Hold On To A House

2011-08-02T00:01:00.000-07:00

Image by Getty Images via @daylife

So homeownership has dropped to a 13 year low. This was reported by the Census Board. There is no surprise here. Many homeowners who were trying to get their loans modified have finally given up. And first time buyers do not want to take on the risk with the uncertainty of the job market.

The gains that were made during the housing boom, have all been wiped out. We are back at square one, and we have not even scratched the surface yet. There are about 2 million foreclosure homes waiting to sail down the pipeline.

The flip side of this coin is that there will be more renters which will drive rents upwards. The rental vacancy rate has fallen to 9.7% from a peak of 11.1% in 2009.

This is not as bad a situation as one would think. We have millions of houses sitting empty and we have rents going up. Why not put some renters in these vacant houses? We could give them short term leases such as 6 months. After 6 months we can go month to month. If we get half of what the market rent should be for the house, it's still a win. The neighborhood has less houses that were becoming eyesores. The drug dealers and other criminals have less houses to take over and run their activities from. And the local economy gets a shot in the arm.

If we really want to be aggressive, we could put low income families in the houses and use the "vouchers" to pay the landlord.

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Cheap Houses $50,000 Or Less: Why No Buyers?

2011-07-30T17:01:00.000-07:00

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With the housing market still tanking there are thousand of good deals if you are buying. You have to do your research and keep looking. No one will hand you a deal on a silver platter.

If you are in Colorado Springs, Colorado you can get a condo for $50,000. With 5% down you are borrowing $47,500. The rate would be about 4.375% and points 0.375%. You end up paying $263 a month. Condo fees might run about $100 so you are paying out $363 a month. Can you rent for less than this? Where? Colorado Springs is a decent size town. It's no hole-in-the-wall. The population is around 350,000. And there is an airport about 40 miles away.

Even if you bought at $60,000 with 5% down this is still cheap. Your monthly mortgage payment would be $316. Add in the condo fees of $100 and you are paying only $416.

Qualifying for a mortgage should be easy. You need a job making about $9.25 an hour or more.

Some people are offended by cheap. They want the house with 4 bedroom, 5 bathroom, a 2 car garage, a white picket fence and well manicured lawns. Well in case you haven't noticed the economy sucks. Some professionals with 3 or 4 degrees are being laid off. And some are having trouble finding work. Sometimes it takes them over a year.

So lets say you hate Colorado Springs. There are deals in Aberdeen, Washington, Ridgecrest, California, Youngstown, Ohio and Hickory, NC.

The American dream might have to be put on hold until you can make the big bucks.

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Tata Group Announces The $720 House

2011-07-29T13:10:00.000-07:00

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Tata Group, the company in India that brought us the cheapest car, is now building the cheapest house. Could this be the answer to the housing crisis in America? I know, most of you are thinking "no way, it won't work in America".

But have an open mind. Let's examine the house. The house is prefab. It takes one week to put together. (it has taken me 2 weeks to paint a bedroom and living room). The square footage is 215. It has one bedroom, a living room, a kitchen, a bathroom and a closet. Not much by North America standards.

But what if we modify the plans. We got five of them and join them together. Now we have a 1,075 square foot house, with five bedroom at a cost of $3,600. We won't need five kitchens so we could use some American creativity, make a big kitchen, and maybe three large bedrooms and two bathrooms. Now the plan is taking shape.

Let's be honest, these houses are not for the big city. We would have to put them in some rural areas and we would have to install some insulation. We won't want people freezing to death in the winter, or boiling in the summer. In we spend another $1,000 in upgrades we will still come in under $5,000. What a deal!

The point of all this is that we will not need a mortgage. Imagine have a house fully paid for. The American dream.

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Bank of America Demolishes Abandoned Houses

2011-07-29T11:30:00.000-07:00

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What to do with abandoned and foreclosed houses that you can't sell? Well, you bring in a bulldozer and you demolish them. That's what the Bank of America is planning to do. This is another way of tackling the foreclosure problem.

Residents of neighborhoods where there are hundreds of empty and abandoned houses can see the logic here. The houses are beyond an eyesore. They are a breeding ground for crime. They pose a fire hazard. They bring down the property values of other houses in the area.

There will be 100 houses in Cleveland that will be leveled. Detroit and Chicago will follow, and then other cities as the need arises. There will be a total of nine cities by the end of 2011.

Under this plan lenders will have to pay up to $7,500 to have a house demolished. Where the Neighborhood Stabilization Program is in place, this amount could drop to $3,500.

Future uses to the "new vacant" lots would be community gardens, small parks and development. Most of the houses are worth less than $12,000 and they are too far gone to salvage.

This is by no means a charitable act on the part of Bank of America. The gets a write off. So what took the bank so long to address this problem? Maybe, the bank heard news about some cities starting to charge lender for upkeep and maintenance. Chicago recently implemented a plan, and Los Angeles is still discussing something similar.

A year or two ago these houses could have been donated to a neighborhood non-profit or a church.

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Chicago Will Make Lenders Maintain Vacant Houses

2011-07-28T20:20:00.000-07:00

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Chicago passed a city ordinance that will make lenders pay for the upkeep and maintenance of properties they do not own. The City's position is that the lenders have an "interest" in the property and that is enough. Lenders are sure to fight this new law.

This change means that the mortgagees will have to cut the grass, shovel the snow, trim hedges and remove the garbage and the occasional graffiti. They will also be responsible for handling any complaints and disputes from the public. Mayor Emanuel applauded the city's decision.

Vacant and empty house produce extra costs to cities across America. Chicago spent about $15 million last year on empty buildings.

Los Angeles is suing Deutsche Bank for millions of dollars claiming that the bank failed to maintain foreclosed properties.

The California General Assembly is considering a bill that will fine lenders $20,000 for each foreclosure that is in violation.

We can expect more cities to try and collect from lenders. Lenders still have a vested interest in the properties and should definitely pay to have the house maintained.

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New Home Builder Offers Houses For $1 Down Payment

2011-05-07T19:54:00.000-07:00

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It seems that many Americans, including some home builders haven't learned from mistakes of the past. The housing crisis was caused, in part, by zero down payments and low down payments. If you have "no skin in the game" there is a high probability that you will default on your mortgage.

A program, nicknamed "A-dollar-and-a-dream" is the creation of Adams Homes, a large developer. The company is offering a brand new $150,000 house for a down payment of only $1.

The company has nothing to lose, it gets full price for the house. The home owner has an investment of $1 in the deal. If there is a financial hardship there is no incentive to tough it out and try to keep the house.
So stands to lose in this type of program? The taxpayers.

The deal provides two different mortgages with the blessings of the Federal Government. The first comes courtesy of the Federal Housing Authority (FHA) which services a mortgage of 96.5% of the purchase price. The second is a smaller mortgage federally insured that covers some or all the closing costs and the down payment.

This is not the time to be squandering money. Budgets are tight and stretched to the limit. This program will lead to another wave of defaults and foreclosures. With such an attractive offer Adams Home will not have trouble finding buyers. However this program encourages irresponsible borrowing and will do more harm than good.

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Idaho Sate Law Puts Pressure On Lenders To Reduce Foreclosures

2011-04-23T21:48:00.000-07:00

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Under a new Idaho state law lenders must respond to a homeowners's request for a loan modification within 45 days. Furthermore, during this time period the lender can not proceed with foreclosure activity and the lender must meet with the borrower in person or over the phone. This is a step in the right direction. Why aren't all the other states doing the same?

Bill 331 goes into effect September 1, 2011 and it stipulates that a company or person can not charge or collect a fee for a loan modification. The issue has long been a sour point for homeowners. Many of them paid thousands of dollars, usually upfront, and then received nothing in return.

With reference to foreclosure sales, the trustee must give written notice when a sale is postponed and has to be rescheduled. Under the existing law the trustee does not have to give written notice.

This new law should give Idaho homeowners facing foreclosure a voice. No longer will lenders be able to take advantage of struggling homeowners.

I believe that other states will wait to see how the Idaho state Bill 331 affects foreclosures. Perhaps 45 days is not enough time. This could be changed to 90 days. Then the fines and punishment to lenders that break the law has to be settled. If there is a fine, does the homeowner get some of the money from the state?

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If you have the money would you pay off your mortgage in full?

2011-04-05T20:03:00.000-07:00

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I always dream of paying off my mortgage. In other words telling my bank "you are fired". However, some financial experts are saying that this is not a good idea. They claim that there are better ways to spend or invest $400,000.

I might be missing something because there are no good investments worthy of my hard earned money. The stock market, the bond market, even gold, all carry high risks. I prefer to play it safe.

Benefits of paying off mortgage.

With your house paid off, you can sleep and rest easily. There is less stress in your life. You can't put a price on the happiness and financial security of your family. So there is an emotional benefit when your house is paid for in full.

A mortgage of $400,000 at 5% interest gives you monthly mortgage payments of $2,147.29. No mortgage, and you have this money to spend on other things. If you put this money in a bank account each month, in 10 years you would have accumulated about $300,000 allowing for a small bit of interest on the account. My advice would be to put this money into a workplace retirement plan such as a 401K. Some companies will match your contribution up to 6% of your annual income.

Now that you have that extra $2,147.29 every month, you should upgrade your life and disability insurance policies.

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Buying a foreclosure home at auction: Be very careful!

2011-03-20T20:31:00.000-07:00

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We keep hearing about all the great deals in foreclosure. Buying a house at auction seems to be gaining popularity. However you could end up with a money pit and lose a lot of money.

Where does the auctioneer get the houses to sell you?

The homeowner is unable to make the mortgage payments. A loan modification can not be worked out, so the lender forecloses. There is the judicial foreclosure where the property is auctioned off at the courthouse. Then there is the non-judicial foreclosure where the auction is done by a trustee instead of a judge. If you are looking to buy the process is the same. The auction system is mostly houses from the trustee. The trustee will wait until there is a sizable inventory of houses. The details of the auction will be advertised nationally and the actual auction will be held at a hotel, a convention center or some other locations that are appropriate for large crowds.

What traps should you look for?

>>Condition of the house.

The house could be crap. If you had an angry homeowner the appliances could be missing. There could be damage to the windows, doors and the roof.

>>Financing.

In order to bid on a house you need to put down a deposit. If you are successful with your bid you have to pay cash for the house.

>>Legal issues.

If the homeowner files bankruptcy the day of the auction, the lender will withdraw the house from the auction. If there are liens on the house, you have to pay off the liens in order to get clear title. These liens are generally child and spousal support, IRS taxes or county property taxes.

There are still good opportunities to make some decent profits at real estate auctions. But you must do your homework and be prepared to set a limit for your bidding and stick to it.

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