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Alexandra Zega

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RISMEDIA, May 1, 2008-The Bush Administration has put in place solutions to help American families stay in their homes and avoid foreclosure, U.S. Department of Housing and Urban Development Deputy Secretary Roy A. Bernardi said this week. Delivering the keynote address at the Federal Home Loan Banks Annual Directors Conference, Bernardi highlighted President Bush’s responsible plan to strengthen the economy and help homeowners by allowing HUD’s Federal Housing Administration (FHA) to be “a good safeguard against foreclosure.”

“This is the time for vision and prudence. We must give the American people real solutions to the housing crisis, not multiply problems. The Bush Administration favors responsible, specific efforts to save homeowners and allows FHA to be a central part of any lasting solutions,” Bernardi said.

In August 2007, FHA modified its refinancing program to help creditworthy homeowners who missed payments after their teaser rates reset. Since then, more than 170,000 families who are current and past due on their home loans have refinanced with FHASecure, FHA’s refinancing product. The number of single family mortgages endorsed by FHA has effectively doubled over the last year, Bernardi said. In the first quarter of 2008, FHA endorsements totaled more than 237,000, which is a 100% increase over the same period last year. Homeowners refinancing from the exotic subprime market to FHA are saving approximately $400 a month on their new mortgages.

Earlier this month, the Bush Administration announced additional administrative steps to extend FHA opportunities to troubled homeowners. Using its current regulatory authority, FHA will assist homeowners who are struggling with their current mortgage payments who have no other way to refinance their loans as their homes lose value. FHASecure will extend assistance to borrowers in subprime adjustable rate mortgages who were late on up to three consecutive monthly mortgage payments or at three different times over the previous twelve months. FHA will allow lenders to voluntary write-down outstanding principal mortgage balances and insure, which will provide an equity cushion and protect taxpayers against risk.

“Expanding FHASecurein this way is a good idea,” Bernardi said. “Borrowers will reduce their principal payments and keep their homes. Lenders will avoid taking a more significant loss at foreclosure. Neighbors will avoid vacant homes in their neighborhood, depressing their home values. And localities will keep a viable tax base to fund community health, schools, and other valuable services. The changes we have made with FHASecurewill help us reach about 500,000 homeowners in total by the end of this year.”

Bernardi also highlighted President Bush’s stimulus package, which will make a positive difference in the mortgage market by temporarily increasing FHA’s loan limits. For the rest of 2008, FHA is able to insure mortgages in higher-cost states and help homeowners hold on to their houses. The new loan limits were announced in March, and the affects of the program should be seen in the coming months.

“The reaction to the new, temporary loan limits should again explain the need for immediate passage of FHA Modernization, which we have urged for two years. Congress needs to make this important bill an immediate priority over other housing proposals that are under consideration. As a first order of business, a good FHA Modernization bill must be sent to the President,” Bernardi said.

The Bush Administration’s proposal to modernize FHA has bipartisan support. Introduced two years ago, this legislation would help hundreds of thousands of homeowners access safe, affordable FHA-backed mortgages by increasing FHA’s loan limits, making down payment requirements more flexible, and introducing fair pricing of insurance. The House and Senate have passed different versions of this legislation, but have not reconciled their differences and sent the President a final bill.

Bernardi also warned against proposals in Congress that “put us on a slippery slope, rapidly moving in the direction of a federalization of the mortgage industry.”

“Americans don’t want to pay for the risky financial behavior of others. And they don’t want to make the Federal government the lender of last resort, with the private sector dumping bad loans on FHA and the taxpayers themselves. We must not harm our economy through solutions that further erode the foundation of the nation’s housing market, hurt homeowners who are meeting their mortgage obligations, or prolong the correction,” Bernardi said.

Finally, Bernardi said the mortgage industry, in cooperation with the Bush Administration, has stepped forward and pro-actively implemented workouts to help homeowners avoid foreclosure, but there is still more work to do. With more subprime loan interest rate resets expected, Bernardi urged the industry to have “a strong and effective response that will quickly help to stabilize housing prices.” Yesterday, the HOPE NOW Alliance announced that mortgage servicers have provided nearly 1.4 million loan workouts since July 2007 for homeowners with prime and subprime mortgages. This includes 503,000 homeowners in the first quarter of 2008.

“I believe that Congress and the Administration can forge a strong working partnership on housing. There is some common ground which should be explored and extended. I will continue to try to convince our lawmakers that we need wisdom, not over-reaction. We must give the American people real solutions to the housing crisis, not multiply problems,” Bernardi concluded.

For more information, visit http://www.hud.gov.

RISMEDIA, April 30, 2008-The Federal Trade Commission testified before the U.S. Senate Committee on Commerce, Science, and Transportation’s Subcommittee on Interstate Commerce, Trade, and Tourism, about the Commission’s continuing efforts to protect subprime mortgage borrowers.

The testimony described the agency’s priorities, including deceptive mortgage advertising, deceptive or unfair servicing practices, discrimination in lending, and foreclosure rescue scams, and it emphasized the following points:

- The Commission has been at the forefront of the fight against deceptive subprime lending and servicing practices since 1998, when it filed its case against Capital City Mortgage. The case alleged that the defendant took advantage of African-American consumers in Washington, D.C.
- In the past decade, the FTC has brought 22 actions in the mortgage lending industry, with particular attention to entities in the subprime markets. Through these cases, many of which have challenged deceptive advertising and marketing practices, the FTC has returned more than $320 million to consumers.
- The Commission is investigating more than a dozen mortgage companies as part of a mortgage advertising law enforcement sweep. Last year, the agency sent more than 200 warning letters to mortgage brokers, mortgage lenders, and media outlets that carry their home mortgage advertisements. FTC staff recently reviewed the current advertising of those who received warning letters and will follow up with law enforcement where appropriate.
- With the recent rapid increase in mortgage delinquencies and foreclosures, the FTC has intensified its focus on protecting consumers from scams that promise to rescue them from mortgage foreclosure. The Commission has filed law enforcement actions against defendants allegedly engaged in mortgage foreclosure fraud, and has additional nonpublic matters under investigation.
- This month, FTC staff filed a public comment in response to the Federal Reserve Board’s proposed rules to restrict certain mortgage practices. The comment supports the Board’s goals of protecting consumers in the mortgage market from unfair, abusive, or deceptive lending and servicing practices. If the Board’s rules are finalized, the FTC will have the authority to enforce them against nonbank entities under its jurisdiction. The FTC’s enforcement efforts would be more effective if it could obtain civil penalties for violations of these rules.

To empower consumers to better protect themselves from potentially harmful conduct, the FTC’s extensive consumer education efforts include new educational materials, in English and Spanish, about deceptive mortgage advertisements, buying a home, mortgage foreclosure rescue scams, and steps borrowers can take to avoid foreclosure.

The Commission engages in research and policy development to better understand and protect consumers in the mortgage marketplace. Next month, FTC staff economists will host a conference to assess the role of consumer information in the current mortgage crisis, and to discuss strategies for ensuring that mortgage disclosures will be designed to provide the greatest benefit to consumers.

The Commission vote authorizing the presentation of the testimony and its inclusion in the formal record was 4-0.

In other FTC news, they have charged Foreclosure Solutions, LLC and Timothy A. Buckley with operating a nationwide mortgage foreclosure “rescue” scam that charged consumers as much as $1,200 to save their homes from foreclosure but failed to do so. The FTC seeks to bar them from further law violations and make them forfeit their ill-gotten gains.

According to the FTC’s complaint, the defendants market their services through direct mail to consumers named in court records of foreclosure actions and through Internet websites, including www.program10.com and www.foreclosuresolutionsusa.net. Through the direct mail solicitations, the defendants warn that consumers could lose their home within 10 days, and they promise that they can stop foreclosure proceedings. In one of their letters they claim a 93% success rate.

Consumers who call a toll-free number are told that the defendants will provide an attorney and a case manager to help them avoid foreclosure, the complaint alleges. The defendants allegedly state that they have helped thousands of others, and they promise to guarantee in writing that they will save each consumer’s home. In some instances, consumers are permitted to pay about half the fee up-front and the balance within 30 days for an extra $50.

The defendants allegedly send a representative to the consumer’s home to close the sale and collect the up-front fee. In the agreement they require consumers to sign, they attempt to disclaim their guarantee that they will save the consumers’ homes, stating that they will work faithfully but not guarantee the success of their efforts. The defendants also provide consumers with a money-back guarantee, promising a refund if the consumer follows their instructions to save money and avoid lender phone calls. They also require consumers to sign a power of attorney form, authorizing them to represent the consumer in the foreclosure action.

In addition, the complaint alleges that the defendants instruct consumers to open a savings account and to deposit, every month until further notice from the defendants, the consumer’s monthly mortgage payment plus an additional 25 to 35%. They claim that the extra payment will be used to negotiate with the lender to reinstate the loan. After consumers have paid for the services, the defendants often don’t answer or return their calls. In other instances, the defendants’ representatives allegedly tell consumers that they are working on a solution, that they need more information from the consumer, or that no solution can be found.

According to the complaint, the defendants hire attorneys to respond to the foreclosure complaints filed against consumers. In many instances, the attorneys file the same form response to every complaint, usually without investigating consumers’ individual circumstances that might identify defenses or counterclaims unique to particular consumers. In many instances, the defendants do not stop foreclosure or save consumers’ homes, and many consumers who have contracted for their services lose their homes to foreclosure. Consumers who stop foreclosure through their own efforts sometimes learn that their lenders offer the same settlement terms regardless of whether the consumers negotiate on their own or through the defendants. Others learn that their lenders will negotiate only with them and not with the defendants.

The Ohio-based defendants are charged with falsely representing that they will stop foreclosure in all or virtually all instances, in violation of the FTC Act.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Northern District of Ohio, Eastern Division.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

For more information, visit http://www.ftc.gov.

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Alexandra Zega (Lic. in MA and NH)

 

 

Dogs and Cats Get Sunburn, Too

by Alexandra Zega

A great reminder from Dr. Rainey - let's not forget our four-legged family members this summe

 jessie-sunbathing2.JPG

RISMEDIA, April 29, 2008-(MCT)-The approach of summer will bring constant reminders about the danger of overexposure to the sun and the need for sunscreen.

The dangers are real, and we should all take appropriate measures to prevent skin damage and skin cancer. But, did you know that the family pet is susceptible to many of the same diseases? Dogs, cats and even horses suffer from sunburn, solar dermatitis, and skin cancer.

The skin of a sunburned animal is red and painful, just as in people. Hair loss may also be evident. The most common sites for sunburn include the bridge of the nose, ear tips, skin around the lips, groin, abdomen and inner legs. Pets that have light-colored noses and skin, thin or missing hair, or have been shaved for surgery are at greater risk for solar induced skin diseases.

Sunburn can progress to solar dermatitis which is characterized by redness, hair loss, crusting and ulceration of the skin. With continued sun exposure skin cancer (such as squamous cell carcinoma) may occur.

The best way to prevent sunburn is to avoid the sun between 10 a.m. and 4 p.m. This can be done by keeping the animal inside or providing shaded areas in the yard. Horses can be protected in a barn. Using a black felt-tip marker or tattooing depigmented areas of the nose can help absorb some sunlight, but alone will not prevent sunburn.

Sunscreens may help prevent sunburn in our pets. They are not only a good idea, but are actually recommended by The American Animal Hospital Association in appropriate animals. The sunscreen should be fragrance free, non-staining, and contain UVA and UVB blockers. Because most human sunscreens can be toxic if ingested by a dog or a cat it is best to use a pet-specific product. Sunscreens should be applied liberally and reapplied every 4-6 hours during the brightest part of the day (10 a.m. to 4 p.m.).

Doggles, Nutri-vet, and Epi-Pet all produce pet specific sunscreens and can be found on-line. Be sure to inquire which product is right for your pet as some products should not be used on cats.

Ideally, it is better to prevent sunburn than to treat it. However, if sunburn does occur your veterinarian can provide you and your pet with treatment options.

Dr. Chris Rainey is a veterinarian at Northwood Hills Animal Hospital in Gulfport, Miss.

© 2008, The Sun Herald (Biloxi, Miss.).
Distributed by McClatchy-Tribune Information Services.

Act Now - What Agents, Buyers Need in Today’s Market

by Alexandra Zega

 

Here is an interesting article from a former Wshington Post journalist and editor, Eugene L. Meyer, as published by RISMEDIA on April 7, 2008:

Janice Petteway has a simple solution to the credibility gap that seems to plague the real estate industry as a result of public cynicism bred by media doom and gloom contrasted with smiley-face broker optimism.

“We just want one of the candidates to have a good affair and we’ll be really fine,” says the Orlando, Florida broker. Then, she says, the media would obsess over the scandal and publish fewer downbeat housing stories. Even without such a scandal, she adds, “The election has helped, because the media is on a different tangent.”

While that may not be entirely the case, many brokers believe that without what they consider media-fueled fear of the market, they are better able to give clients their best angst-free advice. For a lot of brokers, that translates into a recommendation to buy now. Or, as Barbara Reynolds, president and chief executive officer of Real Living Realty One of Cleveland, puts it: “If you’re in buyer’s market, you should buy.”

Keeping It Local

But what to tell clients in this complex marketplace, where perceptions are national but realities are local, may be one area where one size does not fit all. If consumer confidence is built on a foundation of straight talk, the rap can-and probably should-vary from region to region.

Wichita and Phoenix, for example, might as well be on different planets, their markets are so different. Wichita brokers’ biggest problem is not the local market-which is remarkably stable, with 4% appreciation forecast this year-but local perceptions based on negative national trend stories.

“Probably our biggest problem is simply overcoming the national press, because what they report has nothing to do with what’s going on here,” says Gary Walker, vice president and general manager of the residential division of J.P. Weigand & Sons Real Estate in Wichita. “If people are coming from one of the 27 states where values are depreciating, it’s a little hard to convince them that it’s not going on here. We haven’t been affected at all by the things that have been a downward force in other parts of the country.”

Consider what Phoenix-area agent Debora Nichols has to say. “In May 2005, we had somewhere around 7,000 to 8,000 homes on our market. Right now, we have over 56,000.” And, with a lot of adjustable-rate mortgages scheduled to reset in May, the expectation is for more foreclosures and further price reductions. “That tells me that the bottom of our market is nowhere near in sight.”

Nichols’ prescription might sound contrarian to some. “We’re all in it to make a living,” she says, “but I think taking care of your clients is more important. If they’re not going to benefit in the long-run or as far as we can see, then it’s not good to advise them to buy now.

A Relationship Based on Trust

“When you start to bond with somebody and build a relationship, I think they expect honesty. They expect you to be on their side. I hope that if I’m honest with them and they appreciate the straight talk that will come back to me in referrals. Or maybe when they are ready to buy, they’ll come back looking for me because I was honest with them.

“In the current climate, I try to put myself in the client’s shoes, because it’s really important for us to understand their longer goals.” If a buyer plans to stay put for five or six years, “it’s a good time to buy. Interest rates are good. There are a ton of opportunities. But if they don’t know what their future holds, then we tell them they’re better off to rent.”

Jennifer Melo, a working mother with three children whose mother-in-law recommended Nichols, appreciates her low-pressure style. “She’s not trying to sell me a house; she’s just waiting for me to pick one I like,” she says. “[Nichols] has the mindset of, ‘if it’s right, it will be.’ She’s very honest and just really open about how she feels. If we walk into house and it’s not meeting my qualifications, we’ll still look at it but she’ll tell me, ‘It doesn’t have the things you want.’ So I just don’t rush it. She keeps us updated on what the market doing.”

Says Keith Geissenberger, a Nichols associate: “My approach is honesty. I tell buyers the market is still dropping and has a very long way to go. My approach with sellers is simply to lay out the facts. I talk about just how bad the overall market is and show them the latest stats from the Arizona MLS. Most importantly, I tell them that no matter how much they love their house, they will only get what the market values it at.

“If all Realtors would just point out to their clients that the markets are efficient and no one is going to over pay just because they wish it, we would recover faster. Lenders know that. They’re not lending above appraised value. If you sell something that doesn’t appraise, what do you have? A lot of angry people.”

Lori Reynolds, moving from Arizona to Iowa, chose Geissenberger after the firm had sold her brother’s house. Working with him, she and her husband have dropped their asking price by about $50,000, from an initial $389,000. The house has been on the market 120 days.

“They’re pretty realistic and honest with you, as far as what to do to make it most presentable,” she says. “They don’t sugarcoat anything, as far as telling you to ‘sell it at this or that price.’ They continue to update you, looking at what you’re charging per square foot, compared to houses selling and listed.”

An Incentive for Buyers

The Florida market has also experienced rapid appreciation and is now trending downward. But Petteway says more buyers are looking now that prices are lower. “Our showings were up 200 percent in the last month,” she says. “Buyers are not sitting on the fence. They’re out there. Buyers are starting to see ‘Just Sold’ and ‘Sale Pending’ signs. They don’t want to miss it. I think the negativity has gone too long. The world has not fallen apart.

“People need homes,” she continues. “It’s a little bit different than consumer confidence in buying a vehicle. You can live with the car you have to get back and forth to work. But most people prefer to get their families settled. You can’t be settled in a rental, because you don’t know when it’s going to be pulled out from you. We’ve had people renting who don’t know if it’s in foreclosure, and they’re three days away from being homeless.

“We do what’s best for them. We want to make sure they’re 100 percent financially able. We don’t encourage them to buy over their means and grow into it. We encourage them to do 30-year fixed mortgages and buy into an area that’s right for their family. We make sure they have all the data they need. There are times we advise people to wait a year or two, typically not because of the market but because something is happening or not happening in own their own situation. If they are looking at being in area for only one or two years, it’s best to rent.”

But overall, she notes, “A lot of people seem to forget that when you’re buying real estate, you’re buying a huge asset with a very little bit of your own money. It’s one of the few things you can buy that is so leveraged, and you get to live in it.” Unless, of course, you’re an investor, as is Petteway, who is buying a rental property for $60,000 or $70,000 less than she would have paid at the height of the market. For her, she says, “it’s a smart time to buy.”

According to Rick Weidel, president of a large central New Jersey brokerage that bears his family name, “There is no time when you shouldn’t buy,” though, of course, buyers will be purchasing a home “relative to the market.” Even if a house doesn’t appreciate, however, he says, “it’s better than paying a landlord, and the odds of someone living in a house for only a year are very slim, next to zero in my market, unless there’s a financial hardship.”

Keeping It Real

The message for sellers unhappy over prices, Weidel says, is to look not at a home’s peak value but at the cost basis. “[Look at] what someone paid for the property,” he explains. “That’s what we try to get our associates to focus on; sellers then feel very realistic and pleased. I don’t know why the real estate industry is fixated on what a product sold for yesterday. “

To which Reynolds, the Cleveland CEO, adds: “Until last year, it was very much a seller’s market. From my vantage point, there is just a tremendous opportunity in the market today, particularly for first-time buyers. There are fewer buyers in the marketplace, and that puts the buyer in the driver’s seat.” Only if a client plans to move in two years, she “would tell them to save money, build up equity for where they are moving and, in the meantime, rent.”

Lynn Kosner, manager broker of Baird & Warner’s Highland Park, Illinois office, also urges house-hunting clients not to wait. “Real estate, whatever it’s doing at the current moment, will increase in value at the end of the day.” But she adds, “Unfortunately, so many properties are in distress and the process is so much more complicated. We’re all learning to deal with the correction. It’s a great time to take advantage of it. There is no bad time to buy.”

In Connecticut, brokers are also challenged in their client dealings by national headlines that don’t reflect local reality. “Lately, we’ve had to do a lot more educating because the media is broad-stroking,” says Candace Adams, president of Connecticut Prudential Realty. “We drive people to a quarterly market report on our website, so the public understands that our market is healthy.”

With interest rates still low and sellers willing to negotiate, Adams urged her own daughter to purchase a house less than a year ago. Buyers, she said, should “get a clear perspective on value and pay what it’s worth, understand the trend and offer 5% less if you think the property will be worth 5% less in a year.

“Our role,” she adds, “is to educate and support clients, sellers and buyers, through any time. Historically, housing remains a great investment.” Over the decades, there have been down times accompanied by “some awful headlines. People listened to them or they didn’t, and if they didn’t they’re millionaires or billionaires today.”

Eugene L. Meyer is a former Washington Post reporter and editor who freelances from Silver Spring, Maryland.

PLEASE FEEL FREE TO SEND ME YOUR THOUGHTS AND COMMENTS ON MY BLOGS. YOUR INPUT MEANS A LOT.

Thank you for your continued support. Alexandra Zega, Realtor, CBR - RE/MAX Country Crossroads in Rowley Massachusetts - 978 948 5333

Existing-Home Sales to Stabilize Before Upturn in Second Half of 2008

by Alexandra Zega

RISMEDIA, April 9, 2008-

Little change is expected in existing-home sales over the next few months, before improving notably during the second half of the year, according to the latest forecast by the National Association of Realtors®.

Lawrence Yun, NAR chief economist, said the market will come into clearer focus this summer. “Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure,” he said. “We’re looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, slipped 1.9% to 84.6 from an upwardly revised reading of 86.2 in January, and was 21.4% lower than the February 2007 index of 107.6. “The slip in pending home sales implies we’re not out of the woods yet, though an era of successive deep sales declines appears to be over,” Yun said.

The PHSI in the Northeast rose 3.2% in February to 71.8 but remains 25.4% below a year ago. In the Midwest, the index declined 3.7% to 82.7 and is 17.4% lower than February 2007. The index in the South fell 5.5% in February to 85.0 and is 30.3% below a year ago. In the West, the index dropped 9.8% in February to 84.6 and is 17.1% below February 2007.

Existing-home sales are likely to rise from an annual pace of 4.9 million in the first quarter to 5.9 million in the fourth quarter. With relatively weak activity in the first part of the year, existing-home sales for all of 2008 are forecast at 5.39 million, increasing 6.6% to 5.74 million in 2009.

“Exceptionally weak home sales related to jumbo loans problems will depress home prices in the first half of the year, but steady liquidity improvements in the conforming jumbo-loan market will help prices recover in the second half of the year,” Yun said. The aggregate existing-home price will probably ease by 1.4% to a median of $215,800 for all of 2008 before rising 3.7% to $223,800 next year.

Yun noted that there will continue to be wide variations in regional housing market conditions. “Some parts of the country that can expect improvement include the Northeastern region and the oil-patch states of Texas, Oklahoma, Louisiana and Arkansas,” he said. With lower interest rates and flat home prices in many areas, NAR’s housing affordability index is forecast to rise 14 percentage points to 127.0 in 2008.

New-home sales are projected to fall 25.7% to 576,000 in 2008 before rising 4.6% to 602,000 next year. Housing starts, including multifamily units, are estimated to drop 26.3% to 999,000 this year, and slip another 0.5% to 994,000 in 2009. The median new-home price will probably fall 3.6% to $238,400 in 2008, and then rise 4.0% next year to $247,800.

The 30-year fixed-rate mortgage, which has fluctuated recently, should average 5.8% in the second and third quarters, but trend up to an average of 6.3% in 2009.

“The economy will not grow in first half of the year,” Yun said. “However, the combination of recent fiscal stimulus enactment and the lagged impact of monetary policy will help jump start the economy in the second half.” Growth in the U.S. gross domestic product (GDP) is expected to be 1.4% in 2008 and 2.4% next year. The unemployment rate is forecast to average 5.4% this year and 5.6% in 2009.

Inflation, as measured by the Consumer Price Index, is projected at 3.4% in 2008 and 2.2% next year. Inflation-adjusted disposable personal income is likely to grow 1.2% this year and 3.0% in 2009.

For more information, visit www.Realtor.org.

This is the ‘Perfect Spring’ to Buy a Home!

by Alexandra Zega

April 4, 2008

For home buyers, this is the “perfect spring."

In fact, for the first time in 30 years, home buyers can take advantage of low mortgage rates, combined with a large selection homes that are realistically priced.

By acting now serious buyers can take advantage of "priced to sell" homes and low interest rates still available to buyers with good credit. Know your options and working with a Realtor you can trust  will make this home buying experience successful.

- Know what you can afford: talk with a mortgage lender you trust or ask your Realtor for someone they trust and work with to know your options. Low downpayments are still available but realize that the more you can put down the lower your monthly payment will be.

- Do your homework to determine your wants and needs. Pick a neighborhood that will suit your lifestyle and family. Be realistic , flexible and willing to compromise when it comes to finding that "dream" home. Ask questions and find your options. Short Sales and Bank Owned Properties are a good buy if you have an agent that knows their stuff and can explain the in and outs of those transactions.

-Retain a good real estate sale agent who knows the local housing market. The right agent can make all the difference when it comes to negotiating the deal and help you with the details of buying a home. The right Realtor will help you understand the process and guide you through the transaction in a easy and professional manner. Your real estate agent will help you find the right attorney, home inspector and other professionals needed to close the deal.

- Don't forget that there are closing costs. From Insurance to Radon testing to recording fees, there may be many costs that buyers and sellers are required to pay at closing. Talk to your real estate professional to get an estimate of what your costs may be so there are no surprises on closing day.

This is a great time to buy a home and done right this spring can be the perfect time for you to realize that dream of homeownership. Get the facts and get moving.

Limits lifted on US-backed mortgages

by Alexandra Zega

Here is some good news for a change as reported in today's Boston Globe.

Government raises maximum in Boston area to $523,750

Globe Staff / March 7, 2008

The federal government gave a boost to the local housing market yesterday, announcing it would let people borrow up to $523,750 at low interest rates to buy a home in the Boston area or to refinance an existing loan.

Mortgage companies will make the loans. The government will promise to pay if the borrower doesn't. The borrower pays a small insurance premium and gets an interest rate almost as low as the best-qualified borrowers.

The loans are not restricted to lower-income applicants. The 3 percent minimum down payment can be provided by the seller. Small credit problems? No problem. The government wants money to start flowing again. It hopes to help some people buy homes and to help others escape foreclosure by refinancing.

"This is the only positive thing that's happening right now," said Brian Koss, an executive at Mortgage Network in Danvers. "There are definitely people who are going to qualify for these programs who were shut out."

The move came on a day of otherwise bleak housing news. The Mortgage Bankers Association reported that 0.83 percent of outstanding loans entered foreclosure between October and December, the highest rate during any three-month period since the trade group started counting. The previous record was set between July and September.

The Federal Reserve reported that more than half of the total value of all American homes is now mortgaged, the first time that's happened since it started tracking home equity in 1945. That is a result of falling home values.

And the National Association of Realtors said pending home sales were at the second-lowest level since 2001.

Yesterday's action was not a direct response. It was approved by Congress as part of the economic stimulus package passed in January.

The government has guaranteed some mortgage loans since the Great Depression. But for the last few decades, the program focused on loans to low-income families. Before yesterday, the government would guarantee no more than $362,790 in the Boston area.

The guarantee program, known as the Federal Housing Administration, also was eclipsed by subprime lenders who let people borrow more money more easily - albeit at higher interest rates.

The share of mortgage loans guaranteed by the FHA nationwide fell from 19 percent in 1996 to 6 percent in 2005.

As of yesterday, lending limits were raised to 125 percent of an area's median price, up to a maximum of $729,750.

The maximums for loans on multifamily properties also were raised, at the behest of US Representative Michael Capuano. "This puts the FHA back in the business of making housing loans in our area," Capuano, who represents the Eighth District including Boston, Chelsea, Cambridge, and Somerville, said in a statement.

The new maximum single-family loan amount is $523,750 in Suffolk and four surrounding counties: Essex, Middlesex, Norfolk, and Plymouth. Lower limits apply in the rest of the state, save Nantucket and Dukes counties, where the maximum $729,750 now applies.

The new limits are higher than the median home price in all but a handful of Massachusetts cities and towns, primarily in Boston's western suburbs.

The new limits will allow more people to buy homes.

But they may not substantially increase the number of people who can refinance into FHA loans.

Research by the Federal Reserve Bank of Boston shows 90 percent of subprime loans already were small enough for the FHA to refinance. But only 16 percent met other requirements. The most common problem is that borrowers owe more than the value of their home.

Eric Rosengren, the president and chief executive of the Boston Fed, said yesterday that the FHA and mortgage companies could work together to help these "underwater" borrowers.

Rosengren sketched a model where lenders would forgive debt in excess of the home's value, and the FHA would then refinance the loan. If the home eventually sold at a price above the refinanced value, the mortgage company and the FHA would share in the proceeds. The idea is to encourage lenders to reduce debts by promising they can recoup some of their losses if home prices recover.

The government also plans to lower interest rates on many non-FHA loans by similarly increasing the size of loans that can be purchased by a pair of government-chartered corporations, Fannie Mae and Freddie Mac.

0212homespunweb.jpgRISMEDIA, Feb. 12, 2008-If you do not have a Valentine this year, don’t worry-just join the millions of other Americans who will be buying their own gifts on February 14. The flowers that are delivered to the front desk may not be from the significant other. A Bill Me Later/Ipsos Insight survey released today found that eight million Americans have sent themselves a gift such as flowers on Valentine’s Day.

The survey also found that there is a large discrepancy between the gifts that women would like to receive for Valentine’s Day and what men are purchasing. While 22% of men planning to give a Valentine’s Day gift will give lingerie to their significant other this Valentine’s Day, only two percent of women say they would like to receive lingerie as a gift. Gift giving men under the age of 35 are twice as likely to present this unwanted gift. In addition, the survey found that jewelry was the second most requested gift by women, but only the fifth gift overall in terms of what men plan to give.

Other survey results include:

The Valentine’s Day “No Gift Trap”-Men are also twice as likely as women to unwittingly fall into the “let’s not exchange gifts” agreement according to the survey. This occurs when you and your significant other agree to not exchange gifts, but then your sweetheart gets upset when they do not receive a present. One in five men fall victim to this trap, so it’s best to have a backup plan!

A Day for Lovers and Breakups-Unhappy with the gift from your Valentine? Too cheap to buy flowers for that special someone? Whatever the reason, Americans are also not afraid to call it quits, as six million people have broken up with someone on Valentine’s Day.

The survey, conducted by Ipsos Insight and Bill Me Later was a scientific, random sample telephone survey of 1,000 Americans ages 18 and older, and has a margin of error of +/- three percent.

HAVE A VERY HAPPY VALENTINE'S DAY!!!!

Why Bying Now Can Be a Smart Move

by Alexandra Zega

RISMEDIA, Dec. 17, 2007-Although much of the housing market is in a slump, this is still a good time for most to buy a home.

Even though many economists are predicting further drops in home values in most areas, today is still an excellent time for most of us to buy a home. The direction of area home values won’t make much difference to homeowners who will both buy and sell in the same area, and other important factors very much favor buying a home now.

Most move up buyers buy their next home in the same area. Whether overall home values in that area are going down, up, or holding their own, other homes in the area will be similarly impacted. Current local home values and any future changes in those home values, whether negative or positive, will therefore have the same effect on a home they might buy as they will have on their current home when they sell it. For that reason the direction of housing values in any given area is of small consequence relative to other factors for those homeowners, who should not let declining values get in the way of buying their next home.

If you are a prospective first time buyer in one of the few appreciating markets, buying sooner rather than later certainly makes sense. Similarly, if you live in an area where home values are falling and plan to relocate to another area where prices are rising, that is a good reason to buy and sell (or sell and buy) as soon as you can, before the gap widens further.

Holding off on a home purchase due to current market conditions may make sense in some cases only for a much smaller group - prospective first time buyers who live in an area where further home price declines are likely. The same is true for those living in the relatively few areas where homes are appreciating and who plan to relocate to other parts of the country where home prices are still falling. Unfortunately some homeowners now owe more money on their mortgage than their home is worth because of dropping home values. They may be unable to afford to sell at this time regardless of local market conditions unless they have sufficient savings to make up the difference.

There are several reasons that today is a particularly good time to buy a home for most of us. The selection is as great as it will ever be, mortgage rates are still relatively low by historical standards, and costs of any desired remodeling/upgrades are a lot less because of the downturn in new home construction and the resulting glut of building supplies.

With inventories of homes for sale at all time highs in many places, there’s a much greater chance that you’ll be able to find a home that’s ideally suited for your needs. That’s a very big plus because homeowners spend an average of nearly a decade in their home before they sell it. The shortage of inventory and high home prices that existed up until 2005 forced many buyers to make many compromises on home features at that time. No doubt many of them wish that some of the nicer homes for sale in their neighborhood today had been available at that time. Today’s home buyers will have to make far fewer, if any compromises, and many will be able to pay less for a home that’s much better suited to their needs.

If today’s home buyers decide to make some upgrades and improvements to their next home they can usually do it for substantially less than it would have cost several years ago. The rate of new home construction has dropped precipitously, and prices of many building materials have dropped substantially as a result. Prices for oriented strand board, which is used for exterior wall sheathing, roof sheathing and subfloors, is down 40% from late 2005, according to the National Association of Home Builders. Lumber used for framing floor and roof joints retreated 24%, in cost according to NAHB. Drywall prices are down 35% from late last year, according to United States Gypsum Company.

Construction labor costs are down as well, as many home builders have decided to become remodeling contractors until the market for new homes improves. The remodeling market has also slowed down somewhat. With many home builders recently reinventing themselves as remodeling contractors, price competition in that market is very intense today. Only a few years ago you were lucky if half the contractors returned your call, and a few actually showed up and subsequently gave you a proposal. That has changed dramatically.

“When we remodeled our kitchen and bathrooms several months ago every contractor we called showed up, and their bids were very competitive,” said American Homeowners Foundation President Bruce Hahn. “Many of them were ready to start immediately, and none of them balked when we told them we wanted them to sign a comprehensive contract specifying all of the details of the project,” he added. (Note: Judging from the continuing number of complaints regarding remodeling contractors, the competition has yet to drive incompetent and/or dishonest contractors out of the business.

Lastly, mortgage rates are still competitive by historical standards. Although lenders have become more particular about who they will lend to, and the gap between mortgage interest rates for those with excellent credit and those with marginal credit histories has widened, mortgages with 30 year fixed rates are still affordable for a majority of home buyers. If you are looking down the reset barrel of an adjustable rate mortgage on your current home, you will also be able to resolve that problem and avoid the higher mortgage reset interest rate with a fixed rate loan on your next home.

The bottom line: Trying to employ market timing in real estate entails many of the same risks as attempting market timing in the stock market, as many real estate flippers who flocked to the market in the middle of this decade learned the hard way. Despite all the current doom and gloom in the housing market, it’s still a great time for most of us to buy a home!

Courtesy of the American Homeowners Foundation and the American Homeowners Grassroots Alliance, www.AmericanHomeowners.org

Who's Ready to Buy? The Generational Housing Bubble and You

by Alexandra Zega

RISMEDIA, Jan. 22, 2008-The recent housing price bubble has caused concern, with the post-2000 increase in house prices keeping the younger generation out of the housing market, particularly in California and Hawaii, Nevada, Florida and the east coast states from Maryland north. Yet in context, these increases are merely one facet of a larger transition on the horizon.

What is the generational housing bubble?

The massive Baby Boomer population (78 million) is poised to enter elderly years after four decades of surging through the housing market. The elderly sell many more homes than they buy and in the next decade the relatively smaller younger generation may not absorb all the homes released by the Baby Boomers sell-off.

The younger generation is not only smaller but its purchasing power has been eroded by the rapid increase in house prices in the recent boom. This surplus of potential home sellers is expected to create a prolonged buyers’ market–a sharp reversal from recent decades-and will likely cause prices to soften and decline.

Newly estimated data reported in this article show that roughly 2% of people of all ages younger than 70 sell homes each year, but the selling rate climbs far higher after age 75 [1]. Meanwhile, the percent buying homes peaks at a much younger age, 30 to 34 (3.6%), before declining steadily into older ages.

After three decades of relative stability, the ratio of seniors to working age adults nationwide will increase by a total of 67% in the next two decades (2010 to 2030). After 2010 the leading edge of the 78m strong boomer population will pass age 65 and growth among the elderly population will substantially exceed that of younger adults, an unprecedented social and economic development that is expected to impact every state in the U.S.

How will it affect the states?

There are important differences between the states in the ages at which residents become net home sellers rather than buyers. The six earliest (where sellers dominate before age 60) are New York; Connecticut; New Jersey; Massachusetts; Illinois; Alaska. The latest (who sell on average after the age of 74) are Florida; Arizona; Nevada.

The study forecasts the time when the total number of annual sellers of all ages begins to outnumber the buyers, based on the growing number of seniors relative to younger adults, and applying typical per capita home buying rates at each age in each state.

States where sellers will dominate before 2015: New York; Connecticut; Massachusetts; Pennsylvania; West Virginia; North Dakota; Hawaii

States where sellers become surplus between 2016 - 2020: New Jersey; Rhode Island; Ohio; Iowa; Nebraska; Louisiana

A further 16 states, led by California and Illinois, develop a surplus of sellers in the 2020s .

Finally, another 21 states reach a position of surplus sellers after 2030 - including most of the Southern and Western states.

Consequences for the housing market

The market shift could begin as early as 2010, as the leading edge of the baby boom generation moves past the age of 65. As the number of sellers in the market begins to outnumber the buyers, it’s likely to lead to a drop in the housing market. It could mean:

- A collapse in home equity - for half the families in America, home equity amounts to more than half their net worth (this is especially important for the working class and most of the middle class)
- Young adults could get a bargain if they can wait long enough for prices to bottom out - but by waiting for the best price they could exacerbate the problem
- Many communities could acquire an excess of vacant and unsold properties, or they could be converted to rental units pending sale
- Property values will be assessed downward and this will diminish tax revenues available for municipal services

Planning for change

The coming generational transition in the housing market will upset the historic balance of buyers and sellers and demands action from state and local governments to reduce the impacts. They can:

- Monitor new construction and unsold inventory to prevent overbuilding
- Plan services and community designs to retain aging residents as long as possible, slowing their departure from the broader community
- Plan services to attract young households, such as better day care and schools, and more appealing amenities
- Attract new immigrants, who already account for 40% of US growth in homeownership this decade
- Invest in the economic capacity of youth, through higher education and job training - young adults with college degrees are more likely than those with high school degrees to become home owners, and they pay an average 64% higher price when better educated.

The impact of the aging boomer population will effect, not only housing prices, but transportation, land use and community development. It demands a response from urban planners and local officials that acknowledges the need to transform urban environments, and soon. Because this is a nationwide problem affecting a broad swath of the citizenry and with potential negative effects on the U.S. economy, the federal government should also assist in these solutions.

Aging and home ownership trends

A widely reported study by Mankiw and Weil (1989) predicted a 47% decline in house prices during the 1990s, based largely on their modeling of declining demand as baby boomers aged - an expectation that home investments would peak and decline after age 45. However, instead baby boomer demand for housing has grown into their 50s and house prices have doubled.

It has since proven that home ownership rates rise with age, and do not generally peak until after age 65. John Pitkin’s (1990) study of elderly homeownership was especially notable for showing how most variation in homeownership among older age cohorts over time is explained by demographic factors and inertia from prior decades, while current economic factors add small but significant effects at the margin.

Housing price changes and home ownership

In recent years, abnormally low mortgage rates have helped to inflate housing prices. This has encouraged even more home buying. In what might seem a paradox, when market fundamentals drive housing prices up, word of mouth and the fear that rising prices will make future purchases unaffordable amplify the trend. As a result, the number of buyers in the market increases to include both speculators and young adults accelerating their entry into homeownership.

This short-term housing bubble is now bursting in most of the U.S. Many analysts expect prices to decline through 2009 before beginning recovery. However, the eventual recovery in some states will be prevented by the downturn of the generational bubble that has been newly identified in this study.

Source: Journal of the American Planning Association (JAPA)

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