home equity line of credit

November housing markets sluggish

2008-12-16T19:04:00.001-08:00

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GREENSBORO – November abstracts appearance added bad account for the apartment and architecture industries.

Business was apathetic in home sales and home construction, something not altogether abrupt to absolute acreage brokers like Kevin Green.

“With the aggregate of a presidential election, the affliction bread-and-butter times we've apparent in this country in a decade and again the anniversary division advancing in, it absolutely was a absolute storm for crumbling numbers," Green, with Yost & Little Realty Inc., said.

In Greensboro, 303 homes were sold last month, compared to 476 in October. Brokers don't expect December to be much better, but they say they do see a light at the end of the tunnel.

“I do believe that we'll see some improvement as we go into the first quarter and the second quarter of 2009," Green said.

Construction of new homes also plummeted in November by the largest amount in a quarter-century.

Numbers released by the U.S. Department of Commerce show nationwide, new home starts fell by 18.9 percent.

And even though people aren't buying or building, they're not remodeling either, according to Marc Cockerham, with Bella Construction in Greensboro.

Cockerham said in October of last year, his company was working about 14 jobs. This October, it had four.

“I know that the credit crisis affected us. I know that I personally talked with folks who before could get plenty of lending through a home equity line and now things have gotten so tight that they can't tap into that," said Cockerham.

Industry insiders tell him the future isn't looking so bright either.

“I'm hearing 18 months and I'm hearing 6 months, so we're planning on 2009 being a wash,” he said.

Online Lending Portals: The New Sophisticated Way in Lending

2008-12-16T19:00:00.000-08:00

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Remember the canicule afore the cool grocery abundance became mainstream? You had to go to one abundance for your fruits and vegetables, a boner for meat, a bakery for aliment and so on. Not absolutely the account of convenience. Now, with an airport-terminal sized abundance on every corner, one-stop arcade has become the barometer for the accouterment of our circadian lives.

In today's chaotic world, everyone seems to be looking for ways to streamline. From the minutiae of everyday life to the grand scheme of things, we are all looking for ways to find order among the chaos. And this is perhaps especially true when it comes to organizing our finances. Who wants to have to deal with one company for a business loan, another for a mortgage, a third for a personal loan and yet another for a commercial loan? It can seem impossible to keep all of one's financial balls in the air when we are being pulled in so many different directions. But there is a better way to do business.

For an efficient way to manage your finances, go online and check out an online lending portal. These sites are the equivalent of the Super-Mart for all of your borrowing needs, one-stop shopping for lenders and borrowers alike.

But wait: That's not to say that an online lending portal is impersonal. On the contrary, they are designed to help meet the individual needs of their members while at the same time helping to simplify the process for both borrowers and lenders.

Unlike traditional lending arrangements, wherein the borrower may be contacted by a different representative from a different company for each type of loan they hold, in this new kind of arrangement only one financial institution will contact the client about all of his loans. Borrowers can contact their lenders more easily too, since all of their loans will be handled centrally. Clients receive one-on-one attention designed to meet their specific needs.

When you're talking money, easy access to information is key, whether you are looking for a residential loan, commercial loan, mortgage, home equity line or credit or if you are looking to refinance. If you can't get through to the person who understands your unique situation, your needs may or may not be met as effectively as they could be. The pull of a one-stop loan portal is that your specific needs are matched to a lender that can best meet them. And when you deal with the same lender for all of your needs, there is greater possibility of fostering a relationship with that person. That can be important in getting what you need and what you want.

Loan portal sites make the relationship between you and your lenders much less intimidating. You won't find yourself bombarded by phone calls and emails from a host of different lenders. When you are on the receiving end of a flurry of phone calls from different lenders, it's easy to get confused. But with centralized lending, the process is made much easier to understand and therefore easier to navigate.
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Bad Credit Loans and What You Should Know About Them

2008-12-16T18:55:00.000-08:00

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Are you anyone who is adversity from poor acclaim history? If yes, is there a way for you to recover? The actuality is, no amount how poor your acclaim history has become, you can still yield absolute accomplish to clean it. For instance, if you’re in charge of banking help, a bad acclaim accommodation may just be what you need.

Applying for a this type of loan will give you the chance to rebuild your credit standing. How? Find a poor credit loan lender that will report your payments to the major credit bureaus. As long as you submit your monthly loan payments on time, you can begin to improve your history one step at a time.

Do bad credit loans always come with high rates and expensive fees? True, these loans may cost more than loans that require good or excellent credit. However, this doesn’t mean you should settle for lenders that ask for too much. Even if you have a poor history, you still deserve to be treated fairly and with dignity.

How can you avoid dealing with unfair lenders? The only way to avoid predatory lenders is to do research and comparison. You can find hundreds of lending companies over the internet offering bad credit loans but only a few of them can be considered “legitimate” or “trust-worthy”. Thus, it is up to you to find the right lending company to deal with.

Improve Your Bad Credit History with a Bad Credit Personal Loan

How can this loan help in rebuilding your credit history? The important thing to remember is to be consistent with your payments. There is no room for delays or late payments. You must prove to your lending company and to the credit bureaus that you can keep up with your obligations.

Of course, completely rebuilding a damaged credit history isn’t achieved overnight. You may need to wait at least 6 months to a year or two before you can recover from a poor credit history. However, you can raise your credit score slowly but surely if you stay prompt with your payments.

Aside from applying for this type of loan, you should also take a look at your lifestyle and spending. Is there a need for change in your style, particularly when it comes to managing personal finances? Remember, getting approved for this loan is also the first step towards credit improvement. Your success will still depend on how well you handle your responsibilities as a borrower.

Small Business Loan - construction Credit Score in 2 Steps

2008-12-16T18:49:00.000-08:00

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Are you aggravating to get a business accommodation but you do not accept acclaim history to appearance up to a bank? It is difficult to get a business accommodation with no acclaim history at all, this because banks act, and consistently do, with anticipation on investment advised top risk. However, there are still some things you can do to alpha architecture your hopefully acknowledged acclaim history;

There are two recommended means in adjustment to body acclaim history, and those are distinctively advised for baby business owners, it is absolutely that action (small business owner) that get you admission to some able accoutrement that get your acclaim account bigger in a beneath amount of time, admitting the actuality that acceptable baby business loans are difficult to get for the newbie entrepreneur.

Lines of credit for small business owners

There are special lines of credit for small business owners, those are specially designed and have lower interest rates, your local bank is the perfect place to start researching about loans for small business. Moreover, by paying on time you are building a first hand credit history with a local institution, meaning it should be easy to get a larger loan after your line of credit is paid off.

Credit cards for small business owners

Another effective way to build credit history is through business credit cards, similar to lines of credit these ones have lower interest rates as well, and you build credit history in no time, plus you have immediate access to purchases your business could be needing. Once again, by paying on time you get good credit score and this helps with future larger application loans.

Finally yet importantly, as you can see, small business owners have access to cash, at the beginning a small amount of credit, but sooner or later, if you pay on time you will get access to larger business loans because of a good credit score, the due date then, become an important piece of your financial planning.

Summing up, by improving your credit score you get just benefits, while this can be done by yourself properly, just make sure you have the right guide helping you in the process. However, seasoned advise from a financial counselor is recommendable on every situation, if you decide going with a company, make yourself sure you are dealing with a trusted and reputable score fixing company.

Hector Milla runs the Improve Your Credit Score website, where you can see his “Improve Your Credit Score Up To 700 in 60 Days” Guide Recommendation, and the Best Credit Repair Companies resources center.

Find how to improve your credit score advice and credit report repair tips respectively, visit for further information.

Loan variation FACTS

2008-12-16T18:40:00.000-08:00

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Folks with acceptable acclaim are award it harder to get a appropriate Home Equity Line or refinance these days. The accepted bazaar is actual arduous for abounding who had ahead relied on their absolute acreage investments for assets or cannot advertise in this market. Below are some options:

Explore Loan Workout: If you have an Adjustable Rate Mortgage that is adjusting, have missed mortgage payments, or may simply be financially stressed by a change of circumstances, you may negotiate new new terms with your current mortgage holder. Your lender may offer several options including but not limited to: reinstatement, forbearance or a new repayment plan to suit your situation. When you call your lender directly ask for a supervisor for best result! As a consumer, you have every right to negotiate with your lender for better terms. Making your case to lower your rate or extend your loan requires a very solid plan and documents to back up your ability to meet your proposed new terms.

FHA Rescue and Secure Plans FHA: Officially, these plans were rolled out to offer help for people needing to get out of ARM loans or who may be in arrears. Not all lenders offer these plans. FHA manages the higher risk of default with pricing hits (translated: higher interest rates) to encourage lenders to fund these loans. Certainly you should speak with an FHA licensed broker or bank about whether you will qualify. Officially FHA has advised they prefer a minimum FICO score of 500. However, the banks who fund FHA loans have very strict loan limits (by city/county) and very few will fund under 580 FICO. Unfortunately, with guidelines tightening on all fronts, alternative credit reports are no longer acceptable in this market.

Mortgage Modification For longer term issues impacting your ability to afford your current mortgage, you are advised to pursue mortgage modification with your current lender. Mortgage modification may help by adding missed payments to your current loan balance while adjusting the adjustable rate to a fixed rate. This may be accomplished by extending the number of years on your loan, thereby lowering the payment within your means.Mortgage Insurance Loan: If your mortgage is insured (via Mortgage Insurance) you may qualify for a one-time interest-free loan from your MI guarantor to bring your account current and pay it back within a certain time frame. Your lender handles this process since they are essentially the insured party.

Modification Resources: There are some specialist companies and attorneys who will help you work with your lender to modify your loan for a fee. These firms usually charge a flat fee from $1000 to $4,000 or more. Your success depends on your circumstances and you ability to build your case with your lender. Modifiers are professionals who have the inside story with lenders and are skilled negotiatiors.

In Washington State, our Dept of Financial Institutions has proposed a (pending) rule that only Licensed Loan Officers and Brokers or Attorneys can offer this service to protect consumers. You should not have to pay more than $1000 up front. If they don't get an acceptable result, you should get your money back less an application fee of around $300. MPlease undstand that in this market, lenders are very motivated to keeping people in homes. They do NOT want your house back. Saying that, banks are less likely to help you out if they think a minimal effort will keep your business.

Private Options: Several private lenders offer refinance terms. Generally, they are very strict on minimum 580 to 600 FICO Scores in this market. Most private lenders want hefty fees up front and interest rates starting at 10-12% for higher risk loans. Since some ARM loans are already adjusting higher than that, a private lender could be a very decent option if you are in too deep to have your loan modified.

Non Profit Counseling Hotline: For borrowers in arrears or nearing a rate reset they know they cannot afford, call Hope Alliance's hotline. Hope Alliance is a non profit HUD sponsored counseling organization who will help you determine the parameters of your situation. After which , they will petition your existing lender on your behalf. The lender will then respond directly to you, after which you are on your own to negotiate.

Call: Hope Alliance 800 449 9392 www.995hope.org The Hope Alliance fee is paid by the lender if successful, so there is absolutely no cost to you.BUT FIRST If you are not sure how to proceed, the first step is to ask your lender directly about potentially working out a solution.

Fed Cuts Rates: Here's What's Next

2008-12-16T18:30:00.000-08:00

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Will 10 after amount cuts be enough? The Federal Reserve is absolutely acquisitive so now that it’s absitively to cut the federal funds amount down to a ambit of 0% to 0.25% -- abrogation little to no allowance for ante to be bargain further.

Since it started acid ante in September 2007, the Fed has been acquisitive to reignite the abridgement by dispatch added consumers to absorb and lenders to lend. However, the moves accept had little all-embracing appulse on customer lending ante and -- even worse -- they've aching ante on commonly safe-haven investments like money-market funds and CDs.

Considering that the lowest level the federal funds rate can go is 0%, this latest move appears to be a last-ditch effort by the Fed to make this rate-cutting policy work. The rate range, as opposed to a target number, may seem odd, but it was quite common in the 1970s and '80s, says David Wyss, chief economist at Standard & Poor’s. Basically, when the federal funds rate hits such low levels it becomes hard to control.

Odds are slim, however, that the latest rate cut can offset the overwhelming force of the credit crunch and slumping housing market, says Ron Shevlin, senior analyst with Aite Group, a Boston-based financial services research and advisory firm. Here's what consumers can expect.

Fixed-Rate Mortgages

Rates on fixed-rate mortgages are at their lowest levels in years, but it has little to do with the Fed's rate cuts, says Keith Gumbinger, a vice president at HSH Associates, a mortgage-information firm.

Rates on fixed mortgages have fallen from roughly 6.5% to about 5.5% in the past three weeks as a result of the Fed's announcement that it would spend $600 billion to buy mortgage-related debt held by Fannie Mae (FNM: 0.73, +0.01, +1.38%) and Freddie Mac (FRE: 0.73, +0.01, +1.38%), Ginnie Mae and the Federal Home Loan Banks. The news sparked a flurry of refinancing and new home mortgage applications, says Gumbinger.

As of Monday, new fixed-rate mortgages carry an average interest rate of 5.28%, down from 6.2% a year ago, according to HSH Associates.

Adjustable-Rate Mortgages

Homeowners who have adjustable-rate mortgages, or ARMs, are now seeing their interest rates decrease and may see an additional small drop in the wake of the Fed rate cuts.

Most ARM rates move in tandem with either the Treasury or the London Interbank Offered Rate (LIBOR), which is the rate financial institutions use when lending to one another. Currently, a one-year Treasury-based ARM has an interest rate ranging from mid- to upper-3%. Typically, a rate cut would help lower rates on these mortgages even further, but since rates are already so low, it's doubtful that will happen this time, says Gumbinger. Since the LIBOR is only slightly influenced by the federal funds rate, homeowners with ARMs that are pegged to the LIBOR may see their rates drop slightly.

Currently a 5/1 conforming ARM (a mortgage that holds a set interest rate for the first five years and adjusts annually thereafter), carries an interest rate of 5.92%.

Home Equity Loans

Unfortunately, homeowners with home equity loans, or HELs, which carry a fixed rate, won't see a change in their payments as a result of the Fed's cut. In fact, as the credit crunch continues and the housing meltdown worsens, interest rates on new HELs may continue to rise, says Gumbinger.

Lenders currently consider HELs to be risky. Should a homeowner foreclose on their home, the mortgage lender gets paid first, while second lien holders must wait in line (and often don't see any money). The average fixed rate on a HEL is currently 8.3%, down from 8.16% a year ago but up from 7.61% in March.

Home Equity Lines of Credit

Typically when rates are cut, rates one home equity lines of credit, or HELOCs, fall too. However, this time, the impact on HELOC rates will be much more limited.

Most HELOCs have floors, meaning the rates can go only so low, says Gumbinger. And many borrowers are already close to hitting that floor -- if they haven’t already.

Also, some new HELOCs are also carrying higher rates than the ones issued just a couple of months ago when the Fed last cut rates. Some lenders are now adjusting their policies -- and hiking up rates -- to make better returns on their money, says Gumbinger.

Currently, the average overall interest rate on HELOCs is 5.22%.

Credit Cards

Previously, a Fed rate cut would spur credit-card issuers to think about being a little more generous to cardholders by lowering rates. But don't even dream of that happening now, says Shevlin.

As a growing number of cardholder defaults continue to weigh on card issuers' balance sheets, they're doing everything they can to make money -- from keeping interest rates high to charging exorbitant fees.

CDs & Money-Market Accounts

Typically when the Fed cuts rates, the yields on certificate of deposits, or CDs, and money-market accounts, fall too. And over the course of the last year and change, they've certainly taken a hit. But right now many banks can't afford to lower rates on these safe-haven investments any further. They need to offer attractive rates and other incentives in order to remain competitive. "Right now, deposits are the battleground," says Shevlin.

Rates on six-month and one-year CDs currently average 1.93% and 2.30%, respectively, according to Bankrate.com. Meanwhile, rates on money-market accounts average 0.69%.

Family Getting environment Home In Time For Christmas

2008-12-16T18:22:00.000-08:00

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Before volunteering for Habitat for Humanity, Margo Ballew said she knew actual little about construction.

"Before volunteering, I was consistently my husband's accommodating and able assistant. I could maybe acrylic something," she said.
But two years ago, all of that changed.

"I went to a Habitat luncheon," she said, recalling her first glimpse of the organization. "There were two women speaking. I was so impressed and so touched with their stories. I was definitely interested."
Ms. Ballew wasted little time after that first encounter.
"The next build was the Women Build and I went on the site to check it out. As soon as the walls went up I was hooked. This was for me," she said.

A DRAMATIC IMPACT
Ms. Ballew describes Habitat's Women Build program as "including women, not excluding men. It is giving women an opportunity to do something they had never been able to do."
Habitat's women-oriented projects in East Texas are sponsored by the Junior League of Tyler. But, it is a part of Habitat for Humanity International's Women Build program, which is nationally sponsored by Lowe's.
Across the country, more than 160 homes were built by 32,000 women volunteers in 2006 and by the end of 2008, Habitat officials are hoping that number doubles.
Ms. Ballew, who is now a volunteer construction supervisor with the Smith County chapter, believes these builds dramatically change lives.
She said she has been deeply affected by being involved in two Women Build projects.
"It really has changed my perspective on life," she said. "It has raised my self-confidence. I see that I accomplished that, and I bet I can accomplish more."
The Lindsey Wall family - which includes a single mother and her three children - is currently the subject of the 2008 Women Build.
Ms. Wall has been renting space in her parents' home and wants to create a less crowded and more stable environment for her children.
After purchasing the home, Ms. Wall hopes to return to college and earn her degree.
The build began on Oct. 4 and was completed on Saturday.
Ms. Wall is scheduled to close on the house Thursday.
Ms. Ballew, who is also on the family selections committee for Habitat, said the Walls were chosen because Lindsey had the most "sweat-equity hours."
"The more sweat-equity hours you have, the quicker in line you are to owning your own home," Ms. Ballew said. "(Lindsey) had a lot of hours, so she was chosen to be a recipient of the Women Build. When she was chosen, she had 97 sweat-equity hours. You have to be involved in working on your own home and other people's homes before you can start building your own house. Sweat-equity hours are the down payment on their home."
She said recipients must have between 350 and 500 hours after the build before they are able to close on their home.

'A WIN-WIN SITUATION'
Ms. Ballew has been working with Ms. Wall through the course of the build and seems to be even more confident now with Habitat's family choice.
"(Lindsey) is so excited. I was out there on a recent Saturday with her and she was, of course, out there, and she is planning the rooms. And her youngest son knows which room will be his. And they are just so excited to have their first Christmas in their own house," she said.
Ms. Ballew said Ms. Wall has almost become a different person since she was chosen by the committee earlier this year.
"Lindsey was a quiet, frightened woman when we first selected her. When we first told her she was a recipient, she cried. Everybody cries," she said. "Now she is confident, well spoken, she's funny. She will get in front of groups and address them. She has so much self-confidence now. It has really changed her. And that is what Habitat does for every family they help and for the people who are involved ... like me."
Ms. Ballew said she would encourage any woman who is thinking about getting involved to "go for it."
"Get out there and try it. I wouldn't be out there if it wasn't fun and if the homeowners weren't out there working with me. I can guarantee that anyone who goes out there will have a good time and really feel like they have changed lives," she said. "Habitat is a win-win situation for everybody - a win for the community, for the people and for the volunteers."

By LAUREN KEATON

Debt diet requires diligence

2008-12-13T21:17:00.000-08:00

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How to trim animal acclaim agenda bills

It’s time to go on a debt diet.

Carrying about a few thousand dollars in credit-card balances may accept seemed altogether adequate a few months ago. But in this banking crisis, it can be absolute alarming to your banking health.

Credit-card companies are jacking up rates and fees, making it easier to fall deeper in the hole. And during a recession, when the possibility of layoffs looms larger and most of us feel increasingly vulnerable, debt becomes even more pernicious.

Unfortunately, even if you are determined to be more disciplined, paying off your debt can be just as slow and frustrating as trying to work off those irritating love handles. Just as we have to keep eating when we’re dieting, we still may have to use our credit cards for travel and other needs.

That means we must be extra diligent about what we charge — and be wary of the “lose debt quick” solutions that often uncannily resemble weight-loss schemes. Here are a few pros and cons of each:

THE BALANCE-TRANSFER METHOD

Just as some diets — think Jenny Craig — begin with prepared meals to give your eating habits a fresh start, transferring your accumulated credit-card debt to a new card with a 0 percent or very low interest rate can give you a clean slate.

You’ll need a good or better credit score to qualify for the limited offers now available, and like the Jenny Craig program, there are costs and rules: Transferring your balance typically includes a 3 percent fee, or $300 added to a $10,000 debt. In addition, the 0 percent rates usually last just six to 12 months, meaning you could be paying stiff interest again fairly soon. Be sure to read the terms carefully to avoid getting burned; making a late payment, for instance, may mean an immediate end to the 0 percent rate.

This diet may offer good savings from your current interest rate — which may range as high as 32 percent — assuming you don’t make any new charges and can pay off all or a substantial amount of your debt before the 0 percent rate expires. If you do need to make new charges, you should do it on a separate card that you pay in full every month so that you don’t add to your debt burden.

THE HOME-EQUITY LINE OF CREDIT PLAN

It’s like the Atkins high-protein diet: You can pay off your debt more quickly with a much lower interest rate by using a home-equity line of credit — and get a tax deduction in the process. But cheating by using the credit line to borrow more will ruin your hard work. And you have to have the right stuff for it, including adequate equity in your home and a good credit record, to qualify for the current rate, about 5 percent, according to Bankrate.com.

Joe Ridout, a spokesman for Consumer Action, a consumer-education and advocacy group in San Francisco, warns that such a move is risky because you’re replacing unsecured debt with debt secured by your home.

As with the Atkins diet, you need a lot of discipline as well. Some banks’ minimum line of credit is $25,000, more than you likely need. And most banks will ask for just a small payment each month, so the interest charges will accumulate. You’ll have to figure out a payment that eliminates your debt as quickly as possible; if you take your time, you could easily end up paying off your credit-card balance for years.

RAIDING YOUR RETIREMENT

The classic grapefruit diet calls for you to eat grapefruit or drink grapefruit juice at each meal, which, along with cutting calories, supposedly boosts your weight loss. In fact, the method is a mirage — just another low-calorie diet, and a really unpleasant one at that.

Using your 401(k) to reduce your debt is just as distasteful. True, you can borrow against your savings and pay yourself back. But today, you’d be cashing out beaten-down investments, and those funds could miss the market’s eventual upturn. Worse, if you lose your job, you’d have to repay the loan right away, or pay income taxes and a 10 percent penalty on any amount you borrowed.

A less-invasive option is to reduce your 401(k) contribution and use the extra funds to repay your debt. You should keep contributing at least enough to receive the company match. Even so, you’ll be hurting yourself down the road.

THE SUPPORT-GROUP STRATEGY

The tried-and-true Weight Watchers plan combines a balanced diet with peer-group support. You might achieve something similar by asking a parent, sibling or other family member to make you a loan at a rate higher than they can get from current savings accounts, like 4 percent to 5 percent, says Roy Williams, the founder of Prestige Wealth Management Group in Pennington, N.J.

Another possibility is to call your credit-card company and ask it to reduce your interest rate. Many banks will accommodate you, especially if you always pay your bill in time. You might try calling a couple of times over several months to see if you can get your rate down in steps toward the single digits.

MAKING DO WITH LESS

Painstakingly counting calories, though boring and tedious, does work for dieters, just as systematically trimming expenses and increasing your payments will help you get rid of debt. Lower energy prices could help right now if you take your savings from what you would have had to spend on gasoline and heating oil and put it toward your credit card.

Gail Cunningham of the National Foundation for Credit Counseling, a not-for-profit credit-counseling network in Silver Spring, Md., suggests trying to cut $10 or $15 a month from each of several budget categories so that you can still have a taste of pizza and dessert. “Cutting back is much more effective than cutting out,” she says.

Many financial planners will tell you to pay off the highest-interest-rate debt first. But Joe Clark of Financial Enhancement Group in Anderson, Ind., says you may want to pay off some smaller debt first so that you can see some progress. You should also try to reduce the debt on a card that is maxed out, since your credit score is determined in part by what percentage of your individual and total credit lines you are using.

Whatever method you choose, you have to keep up with the payments and change your charging habits. As with a diet, you may end up worse off if you run up the debt again after paying it off.

Constructing a table for survival

2008-12-13T20:48:00.000-08:00

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Developers attempt through acerb economy
One Colorado Springs developer bankrupt his appointment four months ago, hasn't been able to borrow money and expects to lose all his backdrop to foreclosure.

Another owes added than $10 actor to contractors and subcontractors who haven't been paid for plan they've done on the developer's behemothic residential, bartering and ball project.

A third developer scrambles to pay his bills and jettisoned nearly all of his employees because there was little work for them.
Colorado Springs' development community is reeling, thanks to a combination of factors: a credit crisis has made it tough to borrow money, the region's housing market is at its worst in two decades, and retailers are skittish to open new stores.
Some developers acknowledge they're fighting to survive, and industry experts predict all of them won't make it. Some developers who capitalized on the area's last real estate downturn in the late 1980s - scooping up land at discounted prices - are in danger of going under this time around.
"I think there will be both survivors and casualties from this recession," said veteran developer Steve Schuck, who lost almost everything 20 years ago and who says his company has taken a cautious approach on deals to make sure it survives.
"This (downturn) will separate the men from the boys," Schuck added. "I believe there is going to be a massive realignment in the local development industry."
Developers help shape, for better or worse, what a city looks like. While growth critics howl that developers are responsible for unsightly sprawl, developers say they respond to demand by providing places for area residents to live, work and shop and for employers to do business.
But a slumping economy means fewer jobs for home builders, construction workers, land planners and traffic engineers, among others. Construction of shopping centers, subdivisions and office complexes generates millions in sales and property tax revenue; when development slows, local governments have less money to pay for public safety, roads and other basic services. A development slowdown can mean half-finished buildings, rising numbers of commercial foreclosures and empty shopping centers and offices.
"It's definitely, by far and away, the most significant slowdown since the late ‘80s," said Scott Smith, chief operating officer of La Plata Investments, developer of Briargate on the Springs' north side.
Today's credit crunch means banks won't lend money or are requiring developers to first put more of their own money into their projects. Meanwhile, a recession has created a disastrous ripple effect for developers, said Les Gruen, who owns the Urban Strategies consulting firm in Colorado Springs. Home builders don't need new lots because fewer people are buying houses; retailers are waiting for home building to rebound before constructing stores; and industrial users aren't clamoring for warehouse space because there's reduced demand for their building-related materials.
Developer Ray O'Sullivan already has felt the effects. He closed his Realty Development Services in August and let go his staff of 16. Since then, O'Sullivan said, he's unsuccessfully sought financing to jump-start residential and commercial projects.
O'Sullivan said he's tried selling his properties, including the 6,420-acre Santa Fe Springs residential and commercial project east of the Springs in unincorporated El Paso County. But he hasn't found any takers and expects to lose everything to foreclosure.
When he came to town from California in 1990, opportunities were plentiful, O'Sullivan said. Now, "the properties I have...I cannot finance them, I cannot ‘equitize' them, I can't develop them, I can't build them. I'm going to basically lose all 20-some projects that I have," he said.
Springs developer Jannie Richardson insists she has no intention of losing her 153-acre Colorado Crossing project on the north side, which will include a 14-screen Cinemark movie theater complex, residences, stores, restaurants and offices, among other uses.
But Richardson hasn't paid more than $10 million to contractors and subcontractors who have worked on the project, according to legal actions, known as mechanic's liens, those companies have filed against her. Richardson said she's cash poor at the moment and hasn't been able to line up financing.
A trio of general contractors has walked away from Richardson's project over the past several weeks; she says she now has licensed general contractors on her staff who oversee the project. By March 1, Richardson says she'll complete the theater, a parking garage and retail space for three restaurants and a coffee shop.
At that point, she said she's confident she'll obtain a construction loan and pay her bills.
"I feel very confident I'm going to make it because I don't owe any debt on anybody (for the land)," Richardson said. "I realize I owe the liens, but I assure you I will pay them."
Developer Jim Morley also owes contractors and subcontractors on a couple of projects, but said there are good reasons he hasn't paid his bills.
For example, in 2006, Morley bought the Appletree Golf Course in Fountain, where he plans to develop higher-end homes as part of a revamped golf course project. But Columbian Bank and Trust Co., a Topeka, Kan., lender that financed the Appletree project, failed in August and was taken over by the Federal Deposit Insurance Corp.
A $1.6 million account he was drawing on to pay his golf course contractor and subcontractors was frozen by the FDIC, Morley said. As a result, he has unpaid bills totaling about $522,000, of which $380,000 are liens for golf course work, he said.
The liens remain unpaid while he sorts out his financing with the FDIC, he said.
Morley develops residential and commercial projects, but it's the housing side where he's been clobbered. His development company sold about 900 home sites to home builders in both 2005 and 2006. Last year, that number plunged to 384 lots. Through the middle of last week , Morley said, he's sold 59 lots for all of 2008 - none since early August.
His company continues to sell commercial sites to retailers, restaurants and hotels, Morley said. Each of his 17 projects is independent of the other, Morley said. That's one of the keys to survival; don't let one bad project drag down the others, he said.
He's laid off all his staff and is down to three people, which includes himself, his wife, Robin, and chief operating officer Jim Hamel. He's sharing a receptionist with two other tenants in his downtown Colorado Springs building.
When he pays bills, Morley said, he negotiates with vendors to pay part now and the rest later. He's also sold several "toys," as he calls them - an interest in a plane, a boat, a couple of cars - and put an Arizona home on the market.
"It's all about cash flow," Morley said. "You sell whatever you can and get what you can and move as much stuff. We're in the same survival mode. We will survive."
Other Springs developers say they're doing fine.
Kevin Kratt, who's building the University Village Colorado retail center that's part of a North Nevada Avenue urban renewal project, said anchor Costco Wholesale Club is scheduled to open in August, while Lowe's Home Improvement Warehouse and a Kohl's department store will open in early fall.
Ray Marshall made a splash this year when his LandCo Equity Partners joined the city and other partners to offer a $53 million incentives package to keep the headquarters of the U.S. Olympic Committee in Colorado Springs.
LandCo has launched the remodeling and expansion of a downtown building at 27 S. Tejon St., which will be transformed into a new USOC headquarters and open in July. A $167,336 lien filed against the project stems from a dispute with a suburban Denver company hired to remove asbestos from the building, Marshall said. The company wasn't paid because it made errors and another firm had to be hired, Marshall said.
LandCo is staying conservative, too. For example, the company plans to develop a 400,000-square-foot shopping center northwest of Powers Boulevard and North Carefree Circle. A couple of years ago, LandCo would have started construction when it had tenants to fill 50 percent to 60 percent of the space, Marshall said. Today, construction won't start until the center is 90 percent to 100 percent pre-leased.
Classic Cos., which started in the early 1990s as a home builder and expanded into one of the area's largest residential and commercial developers, has cut about 40 percent of its 240 employees over the last two years - "painful" steps taken by a company that also has eliminated an annual employee trip to Mexico and a Broadmoor hotel Christmas party, said Chief Executive Officer Doug Stimple.
Classic has a longtime loan agreement with a syndicate of banks headed by Texas-based Guaranty Bank.. While the loan agreement has been renewed annually, the latest renewal was for six months, with another six-month option, said Stimple and Classic Chairman Jeff Smith.
That change reflects the slowness in home-building and development, not a lack of confidence in Classic, Stimple and Smith said. In fact, Classic remains in the top 20 percent of Guaranty's customer list, unlike the other 80 percent who are in so-called "work out" situations trying to resolve problems with their loans, they said.
The company expects to continue to grab 11 percent to 12 percent of the new home market in coming years, Stimple said.
"We're here, we haven't pulled our headquarters out of here like a lot of companies have," said Stimple, referring to several national builders that have closed offices in the Springs. "This is our home. This is the only place where we build."
Chris Jenkins, a vice president of Nor'wood Development Group, which, along with Classic, is one of the city's two biggest developers, said his company recognized the housing slowdown two years ago and is prepared for the market downturn.
"Nor'wood's been in business for 30 years, and we're a conservative company and we will come out of this just fine," Jenkins said.
As should Colorado Springs, said Gruen, the development consultant.
The Springs' assets - including a desirable quality of life and an educated workforce - remain strengths for the future, especially when compared with other cities, Gruen said. But when it comes to developers, he said companies that have borrowed heavily will be the ones hurt the most.
"Those that are perhaps better funded or have been better able to prepare for what's ahead ... are going to be more likely to weather the storm," he said. "Those developers that were exceptionally highly leveraged ... are going to face challenging times."

RICH LADEN and WAYNE HEILMAN

Market's Moving On Up

2008-12-08T19:00:00.000-08:00

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Last week's stock rally on horrible employment news could be a good signal that we've found a bottom.

December definitely started off on the wrong foot, but stocks bounced back from the worst of their losses amid grim economic reports that had the potential to send the market down to new lows.

Job cuts plagued the Street last Thursday, as AT&T (nyse: T - news - people )DuPont (nyse: DD - news - people ), State Street (nyse: STT - news - people ), Credit Suisse (nyse: CS - news - people ) and Viacom (nyse: VIA - news - people ) all announced plans to trim their respective workforces. Friday revealed additional evidence that the job market is worsening, as non-farm payrolls suffered their sharpest monthly decline in 34 years.

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The Dow closed the week with a loss of 2.2%. The S&P 500 Index (SPX) finished the week with a 2.3% loss, and the Nasdaq Composite (COMP) shed 1.7% for the week.

The 850 area on the SPX has established itself as an important region of support following the break below the critical 160-month moving average in the first week of October. Why are we viewing 850 as significant?

First, this area marked the lower rail of the index's trading range during the final three weeks of October. Moreover, despite considerable movement around the 850 level since Oct. 10 (the date this support was first tested), the SPX has logged only six closes below this level during this time frame.

Friday, Oct. 10, was also the day that the CBOE Market Volatility Index (VIX) traded at its greatest premium to the SPX's 20-day historical volatility, since the break of the latter's 160-month trend line. It remains to be seen whether this premium is significant enough to mark a fear-based bottom.

So why is the market finding support amid dismal economic reports that could have been a catalyst to send the broad market plunging through these important areas? First, the action in the home building and financial sectors has been impressive after the government's announced $200-billion Term Asset-backed Securities Loan Facility and the $600 billion Government-Sponsored Entities Purchase Program. There were additional reports last week of plans to push mortgage rates down to 4.5%, which could help spur housing activity.

Small business must ‘do more with less’

2008-12-08T08:12:00.000-08:00

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NORTH BAY – Small businesses all over are disturbing with clamminess during this recession and are accepting to about-face aback to added acceptable agency of blockage in the black.

“The inability of the small business owner to tap their home equity line — or the unwillingness for the time being if they still have the ability to borrow — certainly has and will continue to have an impact on small business financing,” said Richard Grant, senior vice president of First Community Bank. “Historically as borrowers have sought small-business financing for business acquisition purposes or real estate purposes, they have been able to use this equity line of credit as a source of their equity contribution.”

Most financial advisers would agree that changes, such as creating capital and not working completely off of loans, is the best way to go.

But it also has a great deal to do with timing, said Bob Bernard, certified public account and partner at Brush Bernard Mitchell CPA in Healdsburg.

“In 1998 if I took out a bunch of loans and aggressively built my business and was able over time to pay it down, I was smart. But if I did the same thing in 2007, exactly the same thing, does that make me dumb?”

Without a doubt, people need to get more creative in their solutions, said Russ Colombo, president and chief executive officer of Bank of Marin.

“It is going to force them to look at business opportunities differently. You can’t finance everything on borrowing.”

Being diligent about collecting receivables and raising money from partners, friends and family will play a role in which businesses stay open and which businesses do not, said Mr. Colombo.

”Businesses have to watch inventory,” he added, “and find ways to do more with less.”

He said an employee is really 1.4 times the cost of their salary when the benefits package is added in.

Eric Aanes, president of Titus Wealth Management in Larkspur, said cross training employees to do different tasks, automating programs and database management are all ways businesses can use technology to stay afloat.

He said people are not growing their businesses, and the consumer is ultra tight with their dollars.

“I don’t know any business in any industry that isn’t down 20 percent. The majority of them are down 15 to 25 percent,” he said.

“My personal view is that we are addicted to consumption. We will do it at all costs. We are addicted to buying things, but we should still see growth.”

Mr. Bernard agrees. “While businesses may be down 10 or 20 percent,” he said, “it has been up 50 percent over the last five years. I have a lot of clients who are doing well. Not everything is all doom and gloom.”

And at Charter Oak Bank in Napa, collaboration is the key, according to President and CEO Brian Kelly.

“It is not the end of the world,” Mr. Kelly said. “Banks are lowering interest rates, which is keeping people in a cash-flow position. I have yet to hear of a local business going out of business.”

Mr. Kelly adopted a Skip-Your-Payment program for the month of December.

“This payment-deferral offer will help alleviate financial stress that may be affecting some customers as a result of the current economic state of the country.”

According to Mr. Kelly, the purpose of this offer is to help customers with near-term cash flow during the holidays.

“We recognize that this is a difficult time for many people, and we want to be supportive of our customer’s needs by offering this program.”

“Ultimately, the businesses that are going to survive are the ones that are not as leveraged,” said Mr. Colombo. “You have to look at all scenarios. It is not ‘What if you lost X percent’ anymore. It is ‘What if you lost X-times-two percent.’ Hope for the best, prepare for the worst and make sure the worst you are preparing for is bad enough.”

turn around mortgages getting more popular in tough economy

2008-12-08T08:09:00.000-08:00

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Reverse mortgages acquiesce homeowners 62 or earlier to borrow up to $417,000 of their home's disinterestedness to use any way they wish. They don't accept to accord it as continued as they break in the home.
Like abounding retirees, Marlene Laffoon, 73, watches in agitation as both her home's amount and her investments accelerate southward. And yet accustomed costs for this above bookkeeper and Snohomish County citizen aren't falling correspondingly.

So Laffoon's spirits rose last month on an unexpected windfall of good news: Loan amounts on reverse mortgages have been increased, and the fees decreased.

A reverse mortgage allows homeowners 62 or older to borrow up to $417,000 of their home's equity to use any way they wish; the old limit was $352,790. They don't have to repay it as long as they stay in the home.

Laffoon promptly asked her reverse-mortgage officer, Frontier Bank's Jerry Dawson, how much cash she could get if she took out a new reverse mortgage to replace the one she got several years ago.

"I really don't want to touch anything in my investments now, and yet I can't wait 10 years to have something to draw on," says Laffoon, who used funds from her original reverse mortgage to remodel the bathrooms and re-roof her home of 43 years.

As the economy unwinds, Dawson says he's increasingly been hearing from older homeowners who are anxious about their finances and looking for cash.

"I've taken five applications in the last two weeks for that very reason," says Dawson. "A lot of people rely on liquidating their portfolios over their lifetime to supplement their income. Now they're asking if there's a way to use the equity in their home instead of selling their portfolio in a bad time."

In Mountlake Terrace, Golf Savings Bank reverse-mortgage officer Chris Anderson also is seeing increased interest. Some is coming from older workers.

"They're concerned their job will be gone, and their chances of finding a new job over age 62 aren't good," says Anderson. "They want to be able to put a reverse mortgage in motion. It does take away the anxiety knowing there's an option, whether you need to take it or not."

Reverse mortgages have been growing in popularity for some years now, with more than 100,000 homeowners nationally taking them out so far this year. They've been offered by private lenders, by quasi-governmental mortgage backer Fannie Mae and by the Federal Housing Administration (FHA).

Following the turmoil in the mortgage industry, both private-lender and Fannie Mae reverse mortgages have either ceased or cut back substantially, says Darryl Hicks, associate director of the National Reverse Mortgage Lenders Association in Washington, D.C.

That leaves the FHA as the biggest player on the block. It announced the new across-the-board national $417,000 limit for its reverse, called Home Equity Conversion Mortgage, or HECM for short.

"It's going to allow those people who own higher-priced homes to access a lot more of the equity of their homes for whatever need they may have," notes Hicks.

A borrower's age and home equity determine the amount of money available to them. There are no income or credit score requirements, and a homeowner who's already had a reverse mortgage can get another.

The older the borrower, and the more equity they have, the more money they can pocket. They can take it in monthly payments, in a lump sum or as a line of credit to be drawn on as needed. The amount of a reverse mortgage has to be paid back once the homeowners move out of the house — even if the house isn't sold.

Anderson ran hypothetical numbers for an owner whose home, worth $400,000, is paid off. At age 62, $228,581 would be available. By age 80, the amount would climb to $290,186. The money is tax-free.

The typical borrower is in his or her 70s. Getting a reverse doesn't affect the borrower's ability to get Social Security or Medicare.

A home needn't be paid off for its owner to get a HECM reverse. However the owner must pay off the outstanding mortgage balance as part of the process.

So for example if the same owner of that hypothetical $400,000 house owed $100,000, at age 62 that owner would still qualify for $228,581, but would have to spend $100,000 of it to retire the outstanding mortgage. So they'd walk away with $128,581.

The FHA requires counseling for those considering a reverse so they clearly understand the pros and cons.

The Urban League of Metropolitan Seattle is one of the approved counseling agencies. A. Linda Taylor, its housing director, says there are a lot of misconceptions about reverse mortgages, which counseling clears up.

A common fallacy: Homeowners who get a reverse are signing their house over to the government or a loan company. That's incorrect; they still own it.

Another one: Owners will have monthly mortgage payments. That's not true, nor can the seller (or the seller's estate) ever owe more than the total loan amount (including interest, which can be either variable or fixed).

However, Taylor suggests that homeowners and their families consider the reverse issue carefully because getting one isn't always the best answer.

The loan, which requires all the normal closing costs plus mortgage insurance, can be expensive relative to the amount borrowers get, particularly if they're near the 62 age limit or they have little equity in their home.

And finally, a reverse may not be the best solution for a cash-strapped homeowner.

Taylor recalls an elderly man who came with his large family for counseling.

"He was worried to death" about his finances, she said, but also concerned that getting a reverse would use up home equity he'd hoped to leave to his children.

A frank family conversation revealed the man was struggling to secretly pay a family member's bills. When they others learned of this, they prevailed upon that family member to stop relying on the elderly man for support.

They also did the repairs the man's home needed, repairs that would have consumed his reverse mortgage money.

So in the end, he found he didn't need a reverse mortgage at all.

As for Marlene Laffoon, she doesn't have a pressing need for cash right now, so she's taking a line of credit.

"There's always the old washer and dryer," she said. "You don't know when they'll go."

Getting a reverse mortgage "was a win-win as far as I was concerned."

Elizabeth Rhodes: erhodes@seattletimes.com

WHAT IS THE disparity BETWEEN A HOME EQUITY LOAN AND A EQUITY LINE OF CREDIT??

2008-12-08T08:07:00.000-08:00

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Your Equity Options
Home equity line of credit or a home equity loan: Which is right for you?

If you are a homeowner, you can borrow adjoin the amount of your abode through either a home disinterestedness band of acclaim (often alleged a HELOC or a line) or a home disinterestedness accommodation (often alleged a HEL or loan). Both are about a additional mortgage.

What's the difference?

A HELOC is a form of revolving credit similar to a credit card. It allows you to draw funds, up to a predetermined limit, whenever you need money. There is generally a minimum payment due each month, with the option to pay off as much of the line as you want. With a HEL, you receive a lump sum of money and have a fixed monthly payment that you pay off over a predetermined time period. In each case, the amount you can borrow is based on factors such as your income, debts, the value of your home, how much you still owe on your mortgage and your credit history.

Benefits

The appeal of both of these types of loans is their interest rates, which are almost always lower than those of credit cards or conventional bank loans because they are secured against your home. In addition, the interest you pay on a home equity line or loan is often tax deductible (consult a tax advisor about your particular situation).

Which is best for you?

Generally, a HELOC is a good choice to meet ongoing cash needs, such as college tuition payments or medical bills. A HEL is more suitable when you need money for a specific, one-time purpose, such as buying a car or a major renovation.

Comparing the costs

Both HELOCs and HELs usually carry a higher interest rate than that of a first mortgage. With a HEL, you may choose either an adjustable rate that fluctuates according to variations in the prime rate, or you may opt for a fixed rate. A fixed rate enables you to budget a set payment monthly without worrying about increasing costs should interest rates rise. With a HEL, there are also closing costs that you should consider.

A HELOC usually carries a lower initial interest rate than a HEL, but its rate fluctuates according to the prime rate, so there is more interest rate risk. Unlike a HEL, where your monthly payments are a set amount, a HELOC enables you to borrow funds as needed and repay as little as interest only each month. In addition, there are generally no closing costs when you open a HELOC.

Keep in mind, your home is the collateral for both a HELOC and a HEL. If a HELOC's easy access to cash tempts you to run up more debt than you can repay, or if you fail to make your payments, you risk losing your house.

Costs and fees How you receive the money Interest rate Tax status

to 20-year period when you can draw on the line (up to the credit limit), after which you have a fixed period to pay off the outstanding balance plus interest.	The term of the mortgage can be as short as a year or as long as 30 years.
Usually no closing costs, but may have an annual fee.	Closing costs that are lower than for a first mortgage.
You draw funds as needed, using special checks or a credit card.	You receive one up-front lump sum.
The prime interest rate plus a margin (which can vary from one institution to another).	A fixed or adjustable interest rate.
Interest may be tax-deductible (consult a tax advisor).	Interest may be tax-deductible (consult a tax advisor).

How to Get the Lowest Rate house Equity Line of Credit

2008-12-08T08:05:00.000-08:00

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Homeowners can account abundantly from accepting a home disinterestedness band of credit, or HELOC. Basically, home disinterestedness curve of acclaim are a agency through which homeowners can use their home equity. As a blazon of home disinterestedness accommodation that is lent through a band of credit, homeowners can yield advantage of the money any time they charge it. As such, home disinterestedness curve of acclaim accommodate a adjustable band-aid for assorted expenses, such as charge and medical bills. Those who accede accepting a HELOC should plan their decisions able-bodied to abstain any pitfalls that may aftereffect in abortion to pay HELOC bills, which may advance to foreclosure. Here are some tips on how to acquisition the everyman amount accessible on home disinterestedness curve of credit:

Why get the lowest rate HELOC

The biggest risk of getting a home equity line of credit is the interest rate that comes along with the loan. Interest rates on HELOCs are usually variable, as opposed to fixed rates. Variable interest rates means that the interest rate charged today may differ the next day, depending on the amount of the loan and the repayment for the said loan. The fact that HELOCs are usually based on variable interest rates also means that they are susceptible to daily fluctuations in the real estate market. Finding the lowest rates or the lowest on HELOCs is the best way to counteract the downside of HELOC interest rates.

How to find the lowest rate HELOC

Finding the lowest rate HELOC will depend largely on the persistence of the borrower. It can take time to analyze and compare the rates that mortgage lenders and other finance companies charge. Lenders often have different methods for computing their costs and rates. When calculating rates, it would be a good idea to calculate the final costs, including the interest rates and principal payment fees for the entire HELOC term. Whether or not the homeowner is well-versed with HELOCs , it is advisable to get expert advices from financial advisors or mortgage brokers who can help in planning out the HELOC terms and agreements.

Where to search for the lowest rate HELOC

One of the best places to find the lowest rate HELOCs is the Internet. When looking for lenders through the Internet, it is best to deal only with credible lenders who have built a good reputation for their services and prices.

What did Home Equity Loans have to do with the Credit emergency?

2008-12-08T08:00:00.000-08:00

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As the acclaim agenda debt was disallowed on tax allotment the charge for acclaim that was beneath big-ticket arose. Presto. You could borrow adjoin your home disinterestedness and use the tax answer for your anew begin credit. So abounding homeowners angry to their disinterestedness as a antecedent of acclaim and never dreamed the disinterestedness could compress as home ethics dropped. This was instigated by the government who saw a antecedent of tax acquirement by eliminating acclaim agenda absorption deductions. Again we see how the government in its never catastrophe seek for taxes to pay for its arrears spending convolutes the bazaar by banishment taxpayers to seek apartment from their acquisitive gouging.

The politicians have a silly notion that if they can keep the market going by way of credit expansion there will always be sources of revenues that they can tap for political pandering. What they fail to understand ( or evade) is that the credit market has some inalterable rules that override their manipulations. These rules are really quite simple and easy to understand not like the volumes of regulations that require interpretations and consultants to make a best guess.

One basic rule for the credit market is there has to be a surplus from which to borrow. All lenders must keep a reserve that allows them to meet cash obligations if withdrawals or debts start to mount. Congress has no reserves yet spends as if it did. Printing paper money is not a reserve but a sure method of fueling inflation and eventually making the paper money worthless. This has been proven countless times yet Congress thinks it can defy reality and nothing will happen this time. In their naive foolishness they think the spending that got us into debt will somehow get us out of debt. They believe they can kick start the economy by an infusion of cash and credit and the resulting revenues and profits will be tapped to continue their reckless spending for political pandering.

Since not everyone had a house with equity to tap into the politicians thought if they could get more home ownership through such mechanisms as the Community Resources Act the expansion of the use of home equity would fuel more spending and a greater source of revenue to tap into for the government. The thing they didn´t consider was their ignorance of how credit works. Bringing in under qualified home buyers only led to bad loans and foreclosures, a glut of houses on the market, falling prices and lenders with nothing for reserves. All of this was the result of the government trying to manipulate the housing and credit markets.

Of course the credit market distortion brought out the inefficient producers such as the big three auto manufacturers who had given into union demands for wages and benefits that could not be sustained and were not competitive. Now the government, without any sense of business understanding, thinks it must do something to turn the economy around and that something is to bailout by way of a loan these labor bloated companies. This will not make the companies more efficient or profitable. It will only delay their demise.

The other problem the government has created is ( like the sorcerer´s apprentice) a flood of requests from all the industries that are unprofitable, inefficient and must live on borrowed money and time. Congress and the President and the President Elect are punch drunk on solutions that start with stimulus packages and more deficit spending. This is the opposite of what should be done to get America on the right track to fiscal soundness. The cure will be painful but sure. The pragmatic spending panacea will be much worse. The emerging inflation from pouring paper dollars into the market will make the market more unstable than ever. We saw a prelude of this during the Carter years. That was tame compared to what we are facing now.

The cure is to immediately stop rewarding the inefficient and forget that notion that a company is too big to fail. Many steel companies failed in the past and the economy recovered. Many retail giants failed and the economy recovered. The bigger a company is the more companies are required to make up the shortfall if they run at a loss and require government tax revenues to bail them out. This puts a burden on the marginal producers and they too fall back on a need for a government bailout. This is easily seen and understood and denied and evaded by the majority of politicians. They are blindly reverting to their fundamental interest of election and the short term consequences that deficit spending appears to generate. Like a shopaholic they spend with abandon saying they must "act´ to save the economy. It won´t be done by government spending or loans or fiat money poured into the market.

It is not an issue of Congress having the will but a lack of economic knowledge partly because of an unwillingness to consider the nature and role of a proper government. If you simply look at the way private business operates and the principles it uses you know government does not and cannot operate that way. The government has no bottom line to guide its revenues and costs. It is totally nonprofit which means it spends what it allocates and continually asks for more. It cooks the books and distorts reporting to meet political objectives such as creating a Boskin Commission to misreport the actual rate of inflation to avoid the high cost of living increases to Social Security.

The current crisis should give pause to the intellectuals that teach in the universities and pontificate in the New York Times to consider how what they have proposed and are teaching correlates with what is happening in the real world. The Keynesian mantra just doesn´t fit. The government cannot control the economy and never will. It will invariably distort the market and create the very results it deems undesirable. Just as the various religions preach peace and end up with war, so too the governments that talk about controlling a stable economy end up in chaos. The method not based in reason and relying on faith to succeed only generates a false hope, a failed experiment and misery. It is time for the government to bail out of the business world before they destroy any remnants of the American dream. Theirs was only a small part in a grand play that they were not cast to star in. It is time for a final bow to a very poor performance by a group of clowns that had no business trying to steal the show. The reviews are in and the verdict must be "thumbs down.

Banks Are finishing in on HELOCs

2008-12-08T07:57:00.000-08:00

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Even if you feel defended that you will not lose your home to foreclosure, you may acquisition yourself afflicted by the excess of bankrupt homes on the market. Those of you who accept a home disinterestedness band of acclaim (HELOC) accept acumen to be anxious because the all-embracing acclaim crisis can affect your loan.

A HELOC is a loan that is available on a continual basis, so people who took out these kinds of loans were counting on being able to access that money when they felt it was necessary. Losing that pool of money put a serious crimp in plans, since people often use HELOCs to start a business or cover ongoing medical expenses. But what happens if that expected resource in not available?

Unlike foreclosure, these loans have not gone into default and may be paid up, but even homeowners with good credit are finding that the banks are tightening the purse strings on HELOCs—either lowering limits or suspending these lines of credit altogether.

What is a homeowner to do? Some people have applied for additional lines of credit. Others, who have already trimmed their budgets are just accepting that they will not have as much credit as they thought and making necessary adjustments.

Has your HELOC been altered due to factors beyond your control? If not, what would you do if this were to happen?

Labels: home equity, real estate market

Feds nab more members of supposed identity theft ring

2008-12-08T00:31:00.000-08:00

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December 8, 2008 (Computerworld) Federal authorities say they accept taken addition footfall against busting a bunch identity-theft ring that allegedly acclimated baseborn claimed abstracts to abjure millions of dollars from home disinterestedness line-of-credit accounts at U.S. banks.

Four U.S. association were arrested in backward November in affiliation with the scheme, which netted added than $2.5 million, according to the U.S. attorney's appointment in New Jersey. Four added men had been arrested amid August and October.

Accounts were compromised at Citibank, JPMorgan Chase, Bank of America and "dozens" of other banks and credit unions, court documents said. The filings noted that the perpetrators appear to have harvested much of the personal data from publicly available databases and public records posted on government Web sites. They then allegedly transferred funds out of home equity accounts via phone, fax and online transactions.

The activities described in the court documents highlight the increasing sophistication of cybercriminals. Indeed, in a report released last month, Symantec Corp. described in detail a "self-sustaining" underground marketplace populated by online thieves.

Dean Turner, director of Symantec's global intelligence network, said the value of all the compromised bank accounts found by the company during the 12-month period starting in July 2007 was at least $1.7 billion.

Bad Reasons to get Out Home Equity Loans

2008-12-08T00:29:00.000-08:00

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Tax Deductions
Tax deductibility of Home Equity Loans ain't a acceptable acumen to lose money :-) For every dollar in your loan, you get aback about 30 cents. Not a acceptable deal! Tax deductions should be a accessory or tertiary benefit. Get some reliable admonition from a trusted tax able afore demography on a accommodation for tax answer reasons.

Investment Funding
Stock market investing is high risk. If your home is your nest egg, it's not wise to risk your family's nest and put your eggs into the stock market basket!

Deferring Debt
Using home equity to consolidate debt without making adjustments in lifestyle could create long term financial disaster or slide into further debt. If you consolidate credit card loans into a home equity loan, your house is on the line.

Wish Lists and Wishful Thinking
People who have lot of money typically haven't used much debt. They don't buy discretionary items like boats, wardrobes and trips with debt...especially their core housing!

... On The Other Hand
Home equity loans are good for home improvements that improve the value of the property, reduce operational costs...or cope with disasters such as floods or health problems.

Is overturn mortgage right for you?

2008-12-08T00:26:00.000-08:00

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Many of my chief clients, who anticipation they were financially defended to adore retirement, are getting affected to bare another sources of funds.

One of the more accepted accoutrement getting acclimated today by seniors who own their primary residences is the about-face mortgage.

The reverse mortgage is a special type of home loan that lets homeowners convert a portion of their equity into cash. The size of a reverse mortgage is determined by a borrower’s age, the interest rate, and home’s value. A borrower can take the proceeds from the loan in a lump sum, on a monthly basis, or as a home equity line of credit. The borrower retains title to the property, and homeowners are still responsible for taxes, insurance, and upkeep.

Unlike a traditional home equity loan or second mortgage, no repayment is required until all borrowers cease to use the home as a principal residence.

After the home is sold and the loan is paid off, any remaining equity in the home belongs to the borrowers or their heirs. Reverse mortgages can protect against depreciation, and borrowers will continue to receive payments even if they owe more than the value of the house with no additional liability.

How can you decide if a reverse mortgage is right for you? Ask yourself the following questions:

n Are you a homeowner 62 or older who lives in a primary residence and has equity built up?

n Are you planning on staying in your home for the foreseeable future, at least five years?

n Do you find yourself short of funds each month?

n Are you having difficulty finding other sources of funds because of credit or limited income?

If you answered yes to any of these questions, then it may be time to seriously consider a reverse mortgage.

Because individual circumstances differ, it is always wise to consult a qualified financial adviser and involve family members before making a decision.

There are situations when a reverse mortgage would not be a wise choice. Because of the higher up-front costs and compounding interest associated with these loans, it usually does not make sense for borrowers who intend to move soon. Also, if the borrowers’ health is declining and there is a good chance they may have to move into a nursing home, the reverse mortgage would not be a good choice. Once all borrowers are out of the home for a period of 12 months, which includes stays in nursing homes, the mortgage becomes due and payable. The interest accrued is still tax deductible at termination.

Do your research before making a decision, and talk with your advisers and family. Reverse mortgages are not for everyone, but they have helped many seniors with necessary expenses and added to the quality of life.

Brian McMahon, a licensed mortgage broker with more than 14 years of experience, can be reached at (941) 720-2573.

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Pay downstairs the credit card, then the home equity loan

2008-12-07T01:35:00.000-08:00

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Credit agenda absorption ante are usually abundant college than those answerable on home disinterestedness curve of credit, and bringing down a agenda antithesis can advice your acclaim array more.

Dear Liz: We have credit card debt and a home equity line of credit. Which should we pay down when we get extra money? The credit card total is $15,000 and the home equity line balance is $44,000.

Answer: Typically, you'll want to pay credit card debt first.

Credit card interest rates are usually much higher than those charged on home equity lines of credit. Current average rates for credit cards exceed 11%, whereas the average rate on a HELOC is around 5%. Also, the interest on a HELOC may be tax-deductible, but the interest on a personal credit card isn't.

Furthermore, your issuer can change your credit card rate on a whim, and lately many have. Some card customers have seen their rates double or even triple, not because they were late or otherwise violated their account agreements but simply because the issuers needed to boost revenue.

Rates on home equity lines of credit can also change. But they're usually tied to a benchmark rate such as the prime rate, which moves up or down in relatively small increments. HELOC rates are typically capped at 18%, whereas credit card rates can exceed 30%.

Finally, balances on the typical credit card hurt your credit score far more than balances carried on most home equity lines of credit. Credit scoring formulas are more sensitive to big balances on cards, so paying those down can significantly improve your scores -- at a time when credit scores are more important than ever before. For more, read on.

High scores still give you clout

Dear Liz: You recently wrote that people with high credit scores still have access to cheap credit, even as credit card issuers are raising interest rates and tightening lending standards for everyone else.

You are doing a disservice by telling people this. There are numerous articles about banks raising interest rates even on their best customers. I have 29 years with my credit union and near-perfect credit, and they raised my line of credit from 14.5% to 17.5%, just because they could. Things have changed, and you need to reflect that in your responses.

Answer: The lending environment has changed radically in recent months. The subprime market, which once catered to people with bad credit, has all but disappeared, and lenders indeed are raising rates on broad swaths of their customers, even those who pay on time.

But that doesn't alter the fact that people with the highest credit scores can still get cheap credit.

If you have FICO scores of 760 or above, your projected default rate is very low and lenders typically will compete for your business. Even 720 or above will get you good rates. Check out credit card offers at CreditCards.com, Bankrate .com or CardRatings.com and you'll find many low-rate and 0% balance transfer options for people with good credit.

Meanwhile, the average rate on a personal line of credit is less than 13%. If your credit is good, you should be able to get that rate or less if you check around at other banks and credit unions.

People who know they have good scores may be able to talk a bank into rescinding a rate increase by threatening to take their business elsewhere. If that fails, they can always follow through on their threat, because they have plenty of low-rate options.

It's possible, of course, that your "near-perfect" credit isn't quite as good as you think. It may be worth buying at least one of your FICO scores at www.myfico.com (the cost is about $16) to see if you're as desirable a credit risk as you think you are. If you've been carrying big balances on that line of credit, you may not be.

Tracking down safe-deposit box

Dear Liz: My nephew, who is executor of his deceased uncle's estate, found a safe deposit box key while cleaning out the uncle's home. The problem is, he cannot identify or find the bank it belongs to. Is there any way to connect a key to the right bank and box?

Answer: Your nephew should first check through the uncle's papers to locate any bank statements. Safe deposit boxes typically require an annual fee, so spotting the charge could lead him to the right bank.

If that doesn't work, your nephew should contact the escheat office in the state or states where the uncle lived. Unclaimed property is typically turned over to this office after a few years.

He can find the appropriate links at MissingMoney.com.

Freelance writer Liz Pulliam Weston is the author of the book "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life." Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd., No. 238, Studio City, CA 91604, or via the "Contact Liz" form at www.asklizweston. Distributed by No More Red Inc.

What Is A HELOC Loan?

2008-12-02T18:52:00.000-08:00

HELOC is an abridgement for home disinterestedness band of credit, or aswell alleged “home disinterestedness line.” The bureaucracy is agnate to a accommodation but by agency of application a band of acclaim to defended adjoin your absolute home or mortgage. The aberration amid a HELOC and a accustomed accommodation is that with a home disinterestedness band you can beforehand the lenders money upfront and use it for whatever you please. A accustomed mortgage is paid aback over time and has to be paid off in abounding if the mortgage arrangement ceases. Home owners who admiration “what is a HELOC” acquisition this generally ambagious to activate with but afterwards some time they anon get the adhere of it.

Once you lender has accustomed your HELOC accommodation you can draw on it by cashing in, by analysis or with a appropriate acclaim card. Most HELOCs are in actuality additional mortgages. If you attending carefully enough, you can see that disinterestedness stands for your net worth. So already you accrue account with your aboriginal mortgage, you body equity.

In recent years new home owners have started to use HELOCs as first mortgages. Doing this carries considerable risks which are outlined below.
HELOC risk 1: Draw Period

Because a home equity line of credit loan has a draw period, which can negatively affect your financial situation. If you are forced to pay back the entire balance of your HELOC at the end of the draw period you might be forced to refinance.
HELOC risk 2: APR

A HELOC APR stands for the interest rate of the loan. Contrary to standard loans interest rates, an APR or equity line rates differ and can cause massive fluctuations in your daily interest levels. On a 6 percent HELOC, interest for a day would be calculated with .06 divided by 365 or .000164, which is multiplied by the average daily balance during the month. If your balance is $200,000, the daily interest would amount to a total of $32.88.

Over a 30-day period (monthly), interest alone would amount to $986.30. As you can see, this are potential traps many are now aware of when they first ask “what is a HELOC”.

Normal mortgages amount to a lot less when we look at interest alone and can therefore be the better choice for consumers. Usually home owners choose a HELOC when they need additional funding, such as renovations, college tuition, vacations, paying off a credit card (as interest levels are higher still), or other.

The convenience of drawing and paying interest on monies needed only draws many to a HELOC loan. Depending on a lender, some of these loans can also be converted into a fixed rate loan upon drawing it. So you shouldn’t really ask what is a HELOC but more so, is a HELOC right for me?

Source : http://firstequityinc.com/

Home Equity Fraud

2008-12-02T00:33:00.000-08:00

This Sunday’s Arizona Republic best up Brian Krebs’ commodity in the Washington Post about thieves borer into home disinterestedness curve of credit. This is actual interesting- not just because it agency there are humans out there who in fact still accept home equity, but that aswell because it is a actual simple con with potentially adverse effects. Note that there was no abstracts annexation here- rather the advice was mined legally. Second is that if the coffer avalanche for the con, back they accept it was the borrower who fabricated the withdrawal, the borrower has to ascertain the artifice and accommodate some anatomy of affirmation that it was not they who fabricated the withdrawal.

After I read this story, I went out to see what data was available to see if this was possible. Despite a wife who uses this information on a daily basis to perform her job, I was still surprised. The amount and quality of information that is held in public databases, readily accessible to anyone who cares to view it, is pretty amazing. If you are not aware of it, when you buy a home, pretty much every piece of information regarding that transaction is logged by the county recorder and placed in the public domain. If you are a homeowner, go out to your county recorder’s web site and search for the data; your name, address, signature, lender, the amount, possibly the interest rate, and a lot of other information as well. Seriously, take a minute and check it out; I think you will be startled as to what you find. Stars, celebrities, politicians, along with everyone else.

In this particular case there was no data theft component- rather it was simple and legal data mining for ID theft. They probably were able to cross-reference those people who looked like they might have assets with a credit score, and voila, instant target list.

A lot of people have had their HELOC, or Home Equity Line of Credit, yanked by their banks recently, some in the middle of remodeling projects. Part of the issue is the banks trying to reduce their exposure on people who are living off their credit lines, but another is this type of fraud. Banks and financial institutions have long had the problem of ‘How do I know it’s really you?’, and thieves often know in advance what the banks ask for in the way of authentication. Of course, this makes it easier to either have that information, or a suitable excuse, prepared. Had the group in this specific case not been so greedy and tried to move such a large sum of money, I am not sure they would have been caught. And since the perpetrator is able to mask their identity and location, it’s up to the bank’s representative to have enough savvy to not fall for the con. And even if detected, it’s trouble for both the lender and the borrower, so check your statements as this could happen to pretty much anyone.

Written by alane

Cyber Monday 2008: Paying the mortgage and holiday expenditure

2008-12-02T00:24:00.000-08:00

With the anniversary arcade division able-bodied beneath way in America, with the alpha today of the huge Cyber Monday Sales, and endure week’s Black Friday blame off the arcade frenzy, you are still brash to watch your dollars, with the United States on the border of recession and added countries about the apple amidst an bread-and-butter downturn, abstain blame yourself added into debt by purchasing appurtenances that you do not need.

You should check the Cyber Monday Sales on-line and just buy what you feel is a necessity purchase even if it does have a huge saving. Also if you are paying for your goods on a credit card make sure you are aware of interest rate your credit card will be charging you, it may mean that your discount is eaten up with your credit card charges.

Remember that equity in your home is reducing during this housing slump, to re-finance and pay for your holiday spending using your home equity may not be a great move right now, if the house prices continue to fall you could find yourself in negative equity.

Article Source : http://www.100mortgages.org

The 3rd Tax benefit To Buying A House - Tax Free Borrowing

2008-12-01T19:07:00.000-08:00

The added you go in life, the added you're starting to feel like affairs a abode absolutely provides austere tax apartment advantages.

Rare cerebration humans like you already apperceive that the adeptness to borrow by demography advantage of the disinterestedness in your home is an important one. If you reside in the United States, affairs a abode should be a antecedence of your claimed banking plan because of the befalling to apartment assets from taxes.

Tip amount one already discussed how costs accompanying to home affairs can be tax deductible. Two ample deductions of owning a home are the mortgage absorption answer and the acreage tax deduction. It is simple to attending at these deductions as the government allowance to pay for the amount of attributable or affairs a house.

Remember the second tax benefit of owning a home is the tax-free sale. Individuals may be able to exclude up to $250,000 from tax liability due to the sale of a house or up to $500,000 if a married couple. By meeting the ownership test and the use test, it is possible to enjoy such an incredible benefit. The second benefit alone is a significant reason a financial plan should include buying a house.

This third tip is amazing. The next benefit you can enjoy from buying a house is the ability to borrow tax-free against home equity without having to sell your house.

Accordingly, when your house appreciates in value you create equity in your home over and above the original loan amount for the mortgage. Over the years you also pay down the mortgage, freeing up more equity. You are then free to borrow against that equity.

Here is an example. Suppose you bought your home for $200,000 using a mortgage of $160,000. Since you purchased, the house has appreciated to $350,000 while you have paid down the balance to $150,000. Potentially you have equity of $200,000 that you may borrow against.

Also notice there are several ways to do this that you should discuss with your financial advisers and mortgage lender. You may choose to refinance the entire amount of the mortgage balance plus cash out, taking advantage of any additional equity you want to borrow against. When interest rates are low, your refinanced mortgage payment may even be less than what you originally borrowed.

Along these same lines there is another method to access your equity yet not have to take it in one lump sum. You can request a line of credit from your bank. The equity from your home becomes the collateral for your loan.

Without a doubt a line of credit loan has several advantages. You have the money available when you need it but don't have pay interest on it if you don't use it. Any costs to establish a line of credit are usually small versus refinancing which usually includes origination fees and closing costs.

Finally, a line of credit, sometimes called an LOC, can be repaid easily but you still have the option of accessing the LOC again without a new application being formally submitted. The costs are also significantly lower versus a personal loan or credit card.

Other methods include applying for a 2nd mortgage sometimes referred to as an equity loan or home improvement loan. These loans mostly have specific terms for the amount of time to pay back the loan and generally have a fixed interest rate. So be sure you understand how soon the 2nd mortgage is to be repaid, the amount of monthly payments, if there is a balloon payment at the end of the term, and whether the interest rate is fixed or adjustable.

This advice applies to any mortgage whether it for buying a house, refinancing, or obtaining a line of credit, or equity 2nd.

Although you can borrow against your home tax free that doesn't mean it is cost free. Banks are in the business of making money as are all mortgage lenders. Whether you decide to refinance your 1st mortgage entirely, apply for a line of credit, or acquire a 2nd mortgage, you must be sure you understand completely what closing costs will be incurred, what is the period for the loan to be repaid, and what interest rate you will receive. In addition you must know if the interest rate and payment can adjust and if so, how much and how often.

Before ending this article, focus on one other additional factor. When getting any type of mortgage for buying a house or refinancing, you must inquire if the home loan is going to have a pre-payment penalty.

A pre-payment penalty is a stipulation by the lender that does not allow you to repay the mortgage prior to a certain date without penalty. It usually lasts from one to three years. Whether or not you accept a pre-payment penalty as part of the terms of your mortgage may or may not be important to you. However it is important that you are aware of it especially if you have plans to pay the loan off early.

Regarding tax implications, it is always recommended that you consult a qualified financial adviser.

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Kate Ford, your mortgage insider at Get Your Best Mortgage Rate has been sharing with home buyers how to translate the secret language of mortgage lending for more than 20 years. Would you like to learn the two most important steps you must take before shopping for a house? Visit Buying A House and discover the magic today.