The Real Estate Wonk

Now playing on YouTube: loan-modification advice

2009-07-09T15:33:38Z

The variety on YouTube is pretty amazing, when you stop to think about it. Old music videos. Clips of random people making silly faces for your amusement. Whatever hot new visual meme is making the Internet rounds. And -- now up this week -- a Freddie Mac video for borrowers who are behind on their payments and want to request a loan modification.

Foreclosure prevention amid the pop culture.

Freddie Mac says in a press release that homeowners will have an easier time of it if they gather these documents before calling:

* Most recent monthly mortgage statement;

* Pay stubs or other documents showing their household's monthly pre-tax income;

* Most recent tax return;

* Second loan or home equity line of credit statements;

* Account balances and minimum monthly payments on credit cards, car loans, student loans or other debt;

* A short, concise description of the financial hardship that is causing – or leading to – a mortgage delinquency.

Fair warning: There's no guarantee it won't still be a difficult process.

And be wary of consultant-type firms promising to get you a loan modification if you'll pay an upfront fee. The New York Times notes in this story that you can end up closer to foreclosure and several thousand dollars poorer, even if you got a "money back" guarantee. The Federal Trade Commission is going after some companies for "marketing potentially deceptive relief programs," the newspaper reported.

For advice on avoiding foreclosure-prevention scams, check out the Maryland Department of Labor, Licensing and Regulation's foreclosure-help page.

Mortgage fraud in Maryland

2009-07-08T13:28:31Z

Sure, it wasn't hard to get a mortgage under false pretenses when the rules were so loose that anyone qualified. But shouldn't mortgage fraud be easing now that we're several years into a lending clamp-down?

Nope. Mortgage fraudsters will always find a way.

That's the lesson of the Federal Bureau of Investigation's newest Mortgage Fraud Report, which notes that the crime "continued to be an escalating problem in the United States during 2008." The FBI lists Maryland as one of the "top 10 mortgage fraud states" last year.

The problem ranges from people fudging numbers so they can buy a home -- the "crime? what crime?" folks -- to sophisticated thieves using faked documents to grab loan money and run.

The FBI warns that FHA loans, used to devastating effect in Baltimore flipping scams about 10 years ago, offer opportunities for today's crooks. And the housing slump is hardly a deterrent:

Multiple fraud schemes are being conducted by industry professionals who are in a position to exploit the current depressed housing market. Market conditions are also fueling the use of traditional and emerging schemes which have the potential to multiply across jurisdictions as foreclosures increase, the market contracts, access to credit diminishes, and more homeowners are unable to sell or refinance their homes. Properties affected by these schemes negatively impact neighborhoods; federally insured loan programs; the mortgage, banking, and securities industries; secondary market investors; tax payers; homeowners; and the overall US economy.

Local condo law blog launched

2009-07-08T12:49:46Z

Here's something to check out if you're a condo owner: Raymond D. Burke, a Baltimore attorney with law firm Ober Kaler, has started blogging about condo issues at Maryland Condo Law Blog. So far he's weighed in on mold, warranties and maintenance.

Burke specializes in construction defect cases.

Other condo-law attorneys see their field as a ripe one for blogging, too. There's a Northwest Condo & HOA Law Blog, for instance, and an Ontario Condo Law Blog.

Home maintenance

2009-07-07T12:55:00Z

One of the joys of being a homeowner is replacing appliances when they break. Thus I spent last night researching my buying options after coming home to discover that my dryer was -- technically speaking -- no longer a dryer but rather a sort of amusement-park ride for clothes. (In wet, out wet, despite great tumbling action in between.)

It seemed the right time to replace the washer as well -- both washer and dryer are 17 years old, so they're elderly as appliances go. Total bill: $931.

This got me musing about the difficulty deciding when to replace and/or upgrade things. Get a new carpet, for instance, and you might have to repeat the purchase when it's time to sell (can you tell I own cats?). But if you hold off getting new things with the idea that you'll do it when you're leaving, you'll never get to enjoy them. And if you wait until things break, well -- you could end up with a pile of wet laundry.

How have you homeowners out there dealt with this now vs. later dilemma? What sorts of things have you replaced and why?

And you buyers out there: What deferred maintenance issues really bug you in homes for sale?

More search options for home buyers

2009-07-06T13:19:31Z

You might use Google to search for a variety of things, but chances are you don't for real estate listings. Thing is, you can.

Search Engine Land, a search engine news site, notes today that Google Maps has expanded its real estate information. To take a look, throw in "Baltimore real estate" on the site, then click on the option to "Search for real estate listings near Baltimore, MD." (If you don't click that option, you'll see a map dotted with real estate companies and organizations.)

What you get isn't all you can find on the established real estate search engines. But you might find it useful:

On the map, each individual listing, whether a property for sale or rent, behaves like a business listing does in Google Maps’ business search. Users can click the red icon/dot for more information about the property; they can get directions, save the listing to My Maps, or send the listing to someone else via email, phone, car, or GPS.

I was interested to see how local listings (at least the ones Google could find) were spread out in nearly all the nooks and crannies of the area. You really can get a fuller perspective by seeing something mapped out.

I also tried searching for Baltimore real estate on Google Base. There, you can specify if you want to see properties for sale or for rent, or things that are being sublet, or even rooms for rent. Google Base tells you where it's pulling the information, so you can jump to those sites if you want to search them directly.

Thanks to the excellent Liz Kay for noticing the Search Engine Land article! Seen any other interesting housing-search options lately?

New poll: Weigh in on Q&As

2009-07-06T00:50:05Z

So: Q&As with housing experts -- with the Q's coming from you rather than me. You've already weighed in on the types of experts you're most interested in questioning (though feel free to keep suggesting professions or specific people in these comments). Now let me know how you'd like to do it. Live? Not?

The nice thing about a live chat is that it can turn into a conversation, with answers to questions begetting more questions. The downside: You'll miss it if the time doesn't work for you. (Worse, if no one shows up on the blog at the allotted time, the chat will become the proverbial tree falling in the woods.)

Take a moment to tell me whether you'd come to the blog for a live chat -- almost certainly over lunch hour -- or whether you'd prefer another option:

Poll results: The experts you'd like to question

2009-07-05T13:08:47Z

I'm thinking of lining up some expert-types willing to do live (or email) Q&As with you folks. When I mentioned that last week, I asked you to choose the sorts of experts you're most interested in questioning.

The results of the multiple-choice poll:

Housing-market forecaster got the most interest, with 19 votes. Not surprising, since the direction of prices and sales is always a hot topic among commenters here.

Close behind was appraiser -- also not surprising, what with recent debate about the effectiveness of the Home Valuation Code of Conduct.

After that, in order of popularity:

Mortgage originator

Credit-score expert

Real estate agent (a few of you offered specific suggestions -- thanks!)

And with one vote each: home stager, successful investor and flipper. (The last two were write-ins.)

Now, here's the thing: Housing forecasters -- good ones, at least -- have plenty of opportunities to appear in the national media. I don't want to convince one to free up a half-hour to an hour for a live chat and then have no one show up to ask questions. They'll never do it again -- ya follow?

So here's the deal: I'll look for a knowledgeable local appraiser willing to give this a go, and you be ready to pepper him or her with great questions. If that goes well, I don't see why we can't do this with a forecaster next, and then a mortgage originator and so on down the line.

Does that sound like a plan?

In secondary poll results, I asked you if you'd like to see fewer polls. (Yes, a poll about polls. Oh the irony.)

Almost half of you say you like the weekly polls and to keep doing them. Twenty-seven percent of you have no opinion one way or the other. Nineteen percent of you say less frequent polls would be preferable.

Of the remaining two voters, one of you opted for the choice to stop the polls altogether, and the other wrote in this suggestion: "how about doing some REAL reporting?" (Er -- you do realize you don't have to read this blog if it annoys you, right?)

I think Wonk reader MrRational's recommendation could make most folks happy: "Having polls is a great feature; but don't feel obliged to create one because of a schedule." So I'll still aim to do regular polls, but if nothing suggests itself in a particular week, I won't sweat it.

Tougher times for renters, landlords

2009-07-04T11:00:00Z

We all hear that layoffs and salary reductions are bad for homeowners and will probably keep foreclosure numbers from dropping anytime soon. But the cuts aren't good for renters, either. And what's not good for renters -- in this case -- is bad news for landlords.

Half of U.S. property managers are having more trouble filling their units with "qualified renters," according to a new TransUnion survey. Eight out of 10 say they're worried about how the rest of the year will go. (TransUnion, a credit-information company that sells renter-screening services, said it surveyed more than 870 property managers last month.)

But what about the people who got foreclosed on? Aren't they in need of a place to rent? As it happens, only half the surveyed property managers reported an increase over last year in applicants leaving foreclosed properties. TransUnion speculates that "many consumers coming from these circumstances are moving in with family members or friends to share expenses."

Local landlords, how are things going for you? (Come on, now. I know some of you are reading. Well -- maybe not on the Fourth of July, but I'll wait.)

Renters, have you needed to make a change -- moving to a cheaper apartment, bringing in a roommate, going back to live with parents -- to deal with tighter finances? (Or are things going so well that you're moving to a nicer place?)

Hey there, underwater borrowers: Want a refi?

2009-07-03T11:00:00Z

HUD announced this week that the Home Affordable Refinance Program will now accept borrowers who aren't behind on payments but are up to 125 percent underwater -- people who aren't going to find anyone else offering them a refi. Originally, program eligibility was limited to borrowers whose mortgages totaled no more than 105 percent of their home values.

You still need a loan that was bought or guaranteed by Fannie Mae or Freddie Mac. (Don't know if it was? Ask your lender. Or check here for Fannie and here for Freddie.)

Zillow, the real estate information site, estimated yesterday that 29 percent of Baltimore-area homeowners are prime candidates for the program because they owe between 80 percent and 125 percent of their homes' value on their conforming first mortgages. That's 151,000 homeowners. But Zillow can't say how many meet the Fannie/Freddie requirement. (That's not publicly available information, the company says.)

These figures are up from the 113,000 (or 22 percent) of metro-area homeowners with conforming mortgages who owe between 80 and 105 percent of their home values.

The number of potentially eligible folks is higher nationwide: 36 percent of conforming-loan borrowers now and 26 percent under the original rules, Zillow estimates.

But apparently-eligible and actually-eligible are very different things, as the original rules of the program prove. Bloomberg reports that Fannie and Freddie have refinanced 80,000 mortgages under those guidelines, a tiny fraction of the participation the feds hoped for. And 60,000 of those had loan-to-value ratios of 80 percent or less. Mortgage professionals say it's tough for borrowers to qualify.

Has anyone out there tried to refinance under the older rules? I'm curious to know how it went.

Instead of new homes, these folks got heartache

2009-07-02T12:49:18Z

If you put down a deposit on a new home, you expect to get a new home. But whenever you hand over a chunk of change for something in return down the road, there's always an opportunity for something to go horribly wrong.

Example one:

Two business-partner siblings who registered a homebuilding company with the state near the beginning of the housing boom pleaded guilty this week to misusing deposits from 22 couples and individuals. I reported the story for today's paper -- you can read more about it here, but here's a taste:

Walter Osborne Ely Jr. and Kimberly Zahrey started JAE Developers in 2002 and collected between $1,000 and $50,000 in upfront payments from prospective home buyers, according to Attorney General Douglas F. Gansler's statement of fact submitted to Baltimore County Circuit Court Judge Vicki Ballou-Watts. Instead of putting the money in escrow accounts as required, the two quickly spent it. Some of the money went to business expenses that had nothing to do with building the customers' homes, the state said. Some of it Ely and Zahrey spent on themselves, the state said.

Meanwhile -- example two -- the state attorney general announced Wednesday that a Garrett County homebuilder also failed to build homes for several customers or return their money.

This comes on the heels of Lorraine Mirabella's stories about Altieri Homes, which the state has charged with "failing to start or finish construction of at least 20 homes in Harford and Howard counties after taking deposits and payments." Owner Greig Altieri said in a story last month that the tough economy put him out of business.

This story makes me feel itchy

2009-07-01T14:17:05Z

The City Paper's Edward Ericson Jr. has a story that will send a chill down the backs of homeowners and renters alike: Bed bugs are an increasing problem in parts of Baltimore. (There's a map here showing the location of bed-bug-related 311 calls.)

He writes, "They are fiendishly hard to eradicate, tougher than roaches, silent as a draft."

Just the thought of them makes some of the people interviewed in his story start "involuntarily" scratching. Many of the readers probably have, too.

Real estate for the Facebook crowd

2009-07-01T13:05:11Z

Sawbuck.com has updated its real estate information site with a nod to social media, including a news feed of home listings that's a lot like the friend status updates on Facebook. Choose Baltimore as your city of search, and you'll see this compilation of new listings and price changes. (You can see sales and contracts, too, but only if you register.)

The Sawbuck site also offers its take on housing-market health, rating Baltimore a 58 -- "Not Healthy," though closer to "Barely Healthy" (60-69) than "Deteriorating" (40-49). The scale runs from 0 to 99.

Market activity varies from neighborhood to neighborhood, of course -- that's true nationwide. How would you rate the housing-market health in your neighborhood? (I realize this is tricky because "deteriorating" in a seller's mind might be "improving" from a buyer's perspective. Hmm: Maybe choose a number from 0 to 99 with 0 being a market where buyers can get homes for nothing and 99 where sellers can successfuly demand a buyer's first-born child in exchange for accepting their offer?)

Baltimore's new-construction tax credit

2009-06-30T17:13:26Z

The clock starts today on that second chance for people who qualified for Baltimore's new-construction tax credit but didn't apply in time (it's a short window after buying). Here are the details on the amnesty approved by the City Council:

If you went to settlement on a new home after Oct. 1, 2004, you can apply for the city’s new-construction tax credit through Aug. 28, when the amnesty period ends. Homeowners in properties that were substantially rehabbed after being vacant may also be eligible.

You can find more details from the city Department of Finance, including the application form, in this PDF document. (You can also read my original post on the topic here.)

Why should you care, you ask? Because the credit reduces a homeowner’s property tax bill by half and then phases in the full amount over a five-year period. Yeah. That's why.

The City Council also changed the process going forward so new-home buyers have two windows to apply: within 90 days of settling and within 90 days of getting the first tax assessment notice.

Deciding when to refinance

2009-06-30T12:39:05Z

Let's say for argument's sake that you know you could refinance if you want to (no sure thing for a lot of homeowners today) but you're not certain if you should.

Enter "A Financial Analysis of Consumer Mortgage Decisions," a new report by the Research Institute for Housing America and the Mortgage Bankers Association. It discusses various mortgage choices and when it makes sense to get what, including a refinancing.

The authors' advice: Don't just consider interest rates. Look sharp at the closing costs.

Play around with this "Optimum Mortgage Refinancing Calculator," noted in the report, and you'll see how cosing costs can make a difference.

Say you've got a 6 percent interest rate on a mortgage with a balance of $250,000. You're contemplating a refi into a loan that has a 5.5 percent interest rate and 1 discount point.

If your closing costs add up to $2,200 and you roll that into your new mortgage along with the point, you'll save $137 a month over your old loan.

But what if you have $5,000 in closing costs, at the higher end of what LendingTree says the range can be?

Then your monthly savings are $121. That's $192 less a year than the savings with the cheaper closing costs.

Ah, you say, but a savings is a savings. Who cares about the closing costs if you can roll them into the mortgage amount and still pay $121 less a month?

Because, the authors say, you want to think about the "opportunity cost" of refinancing now only to see rates fall further. If you refinance now, it might not be in your best interest to refinance later as well.

"If closing costs are significant, say 3 percent of the remaining principal, and you refinance every time there is a 50 basis point drop in rates, you may never fully recover the cumulative closing expense incurred," they write. (And meanwhile your principal keeps growing. That's why the "serial refinancing" encouraged by some -- ah -- "helpful" folks in the mortgage industry isn't a good idea for a typical borrower.)

The mortgage calculator I linked to above attempts to take all this into account and tell you whether -- given your potential interest rate and costs -- it's a great, OK or bad idea to refinance. Its opinion on the refi opportunity with $5,000 in closing costs: Pass. It dubs the one with $2,200 in closing costs "OK, But Not Optimal." (What would be optimal in this case? Closing costs under $1,250. Or $2,200 in closing costs with a 5.4 percent interest rate rather than 5.5 percent.)

The authors dub this "refinancing efficiency."

What do you think of this way of looking at refinancing options?

And something to consider in today's environment: Does it make sense to hold off refinancing on the chance that rates could go lower when the prevailing expectation is for increases?

Home appraisal "code of conduct" under fire

2009-06-29T10:55:00Z

Inflated home appraisals were one ingredient in the toxic stew that overflowed onto our economic stove, if you'll permit me a Dave Barry-like analogy. Enter the Home Valuation Code of Conduct, New York Attorney General Andrew M. Cuomo's plan to change the process using the heft of Fannie Mae and Freddie Mac.

The code, which went into effect last month, prohibits "lenders and third parties from influencing or attempting to influence the development, result, or review of an appraisal report," at least if they want to sell to mortgage giants Fannie and Freddie. The idea is that appraisals will more likely reflect true value if lenders, brokers, agents, etc., aren't suggesting to Joe Appraiser that $504,999 is an excellent number for anyone who intends to do any business with them again.

But many industry folks -- including appraisers -- aren't happy about the rules. As The Wall Street Journal reports:

The code bars loan officers, mortgage brokers or real-estate agents from any role in selecting appraisers. This has encouraged lenders to outsource the selection to appraisal-management companies, or AMCs, which take a sizable cut of the appraisal fee. As a result, appraisers are under pressure to "do it faster, do it cheaper," said Bill Garber, a spokesman for the Appraisal Institute, a trade group.

The National Association of Realtors' Lawrence Yun says "stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment." The National Association of Mortgage Brokers proclaims, "Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo’s rule." The appraisal management companies, critics say, don't seem to care if the appraisers they pick know anything about the neighborhoods in question.

News that U.S. Reps. Travis Childers (D-Miss.) and Gary Miller (R-Calif.) are co-sponsoring a bill to put the Home Valuation Code of Conduct on an 18-month moratorium was met with some loud cheers Friday. (You can follow some of the chatter here, at Mortgage News Daily.)

But though it doesn't think the code is "ideal," the Appraisal Institute is not amused by all the talk of faulty appraisals. It issued a press release after the NAR blamed appraisers for lower-than-expected May sales numbers:

Bill Garber, Appraisal Institute Director of Government and External Relations, said: "We take offense with the notion that the appraisal is only good if it happens to come in at the sales price. That mentality helped cause the mortgage meltdown to begin with. The fact that the appraisal does not match the sales price is not the fault of the appraisal but a fault of the market today.”

Have you had personal experience with the appraisal process since May 1 as a buyer, homeowner or industry pro? Let me know what you think of it, and of the bill to put the code on ice.