Ron Alpert's Think and Grow Rich

After Christmas What is Your Next New Item to Attract Customers?

2010-12-14T12:04:00.001-08:00

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eMail Us	Tel: 760.230.5577	http://babyfun.us

This Product will make a HUGE Impact on your Holiday Bottom Line!

Happy Future 'Real Organic'™ Baby Bath Lotions

It our pleasure to learn about what you are doing with baby products in your area. We can support your customers with fine, real organic™ French baby bath products. This line will add an entirely new dimension to your current product marketing efforts, and will really appeal to your discriminating clients.

	HappyFuture

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You can read more about these fine products at our French website (English coming soon!).
Or request a brochure and samples.

Feel free to contact me at: phone 760.230.5577 or via email at:ron@babyfun.us

In the meantime, happy baby.

Be well and Happy Holidays!

Ron Alpert

BabyFun.us

European Organic Certification

Unlike US FDA approval, the EU certifies for purity. Absolute and without compromise. All Happy Future baby products carry this seal and you can be assured of 'real organic' purity.

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BabyFun.us

970 W. Valley Pkwy #199

Escondido, CA 92025

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Olive Oil and Lime Liniment/Lotion
Delicate Cleasing Bath and Shower Gel - moms' favorite!
Cleansing milk non-rinse
Cleansing lotion non-rinse
Moisturizing Cream face and Body - good for the entire family
Cleansing wipes 100% Biodegradable organic Cotton (Available in 1-2012)

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Posted via email from Ron Alpert's Preposterous

Make Your Customers Come Back for More - French Certified 'Organic' Baby Bath Products Available NOW

2010-11-21T20:45:00.001-08:00

Email not displaying correctly? View it in your browser.



eMail Us	Tel: 760.230.5577	http://babyfun.us

This Product will make a HUGE Impact on your Holiday Bottom Line!

Happy Future 'Real Organic'™ Baby Bath Lotions

	HappyFuture

More HappyFuture Product Info

We are BabyFun.us, and here to help you in any way to increase profits and provide affordable, real organic™ lotions and potions. Unlike all other brands on the market, this is uniquely EU Government Certified real organic and natural.

You can read more about these fine products at our French website (English coming soon!). Or request a brochure and samples.

Feel free to contact me at: phone 760.230.5577 or via email at:ron@babyfun.us

In the meantime, happy baby.

Be well!

Ron Alpert

BabyFun.us

European Organic Certification

Unlike US FDA approval, the EU certifies for purity. Absolute and without compromise. All Happy Future baby products carry this seal and you can be assured of 'real organic' purity.

View email in browser | Unsubscribe | Update your profile | Forward to a friend

ABC Show

BabyFun.us

970 W. Valley Pkwy #199

Escondido, CA 92025

Add us to your address book

Olive Oil and Lime Liniment/Lotion
Delicate Cleasing Bath and Shower Gel - moms' favorite!
Cleansing milk non-rinse
Cleansing lotion non-rinse
Moisturizing Cream face and Body - good for the entire family
Cleansing wipes 100% Biodegradable organic Cotton (Available in 1-2012)

Sent to ron@babyfun.us. Unsubscribe | Update Profile | Forward to a Friend

Posted via email from Ron Alpert's Preposterous

HELLO Be well! Ron

2010-10-12T09:16:00.001-07:00

Posted via SMS from Ron Alpert's Preposterous

The Future Growth of Major Societies around the World

2010-08-01T18:37:00.001-07:00

Here is a very interesting site revealing the grow over the next 40 years. Note that Italy is losing population all the way along.

http://www.ge.com/visualization/aging/

Posted via email from Ron Alpert's Preposterous

Great book about how women have reshaped today's business world - Take Note!

2010-07-31T10:54:00.001-07:00

Underhill ('What Women Want') reveals that five years ago, young women under the age of thirty over took men in earning power for the first time in history. Underhill writes, “In the United States, the chances of being twenty-five years old and gainfully employed are higher if you’re a female than a male. These odds go up even further if we don’t consider immigrant, African-American, and Latino populations. Economic hard times favor females, too. During the recent recession, 82 percent of job losses befell men, who tend to be disproportionately represented in industries like construction and manufacturing. Historically, women are apt to work in fields such as education and health care, which are more resistant to economic swings.”

Posted via email from Ron Alpert's Preposterous

Quote of the Day

2010-07-29T06:57:00.001-07:00

"The Almighty prefers YOUR deeds to your ancestors' virtues"

--- Midrash

Posted via email from Ron Alpert's Preposterous

Some Interesting Reading for This Week Ahead

2010-06-14T13:49:00.000-07:00

The week ahead looks to be nice with the weather turning warmer, the birds out doing birdie things and the bees have returned after the 'killer bee' scare of a few years back. I don't suppose we will see any oil globs on the Pacific Coast, at least not yet and hopefully never. However, as some interesting articles from the past few days point out, we simply cannot trust the oil companies (nor the government) in sane drilling efforts.

The links this week include:
Let's bet again on Vegas
Oil Companies Leave when Scrutiny Rears Its Head
Freedom to Choose
Who Blew The War on Drugs?
The Whale and the Pussy
Steve Jobs -Dyslexic and all that!
Salma Goes Bizarre!

Thoughts on Recent Readings

Las Vegas may be down, but not out. One of the most high visibility Let's bet again on Vegas investors (read: made megabucks betting against sub-prime mortgages) is putting lots of money in this city devastated by the real estate bubble collapse.

With all that we worry about in the Gulf, now it turns out that oil companies are pulling up stakes and 'leaving Dodge', and who will hold the bag do you think? If they stayed, perhaps they could pick up after the BP bankruptcy! (Ooops! Did I say that? Well, how else will British get out of this mess to err again?!)

John Stossel, longtime contrarian and pundit for Libertarian efforts, reviews a thought Milton Friedman said over thirty years ago regarding our miraculous prosperity. He said, "This miracle hasn't been achieved by government action — by someone sitting in one of those tall buildings and telling people what to do. It's been achieved by allowing the market to work."

I often wondered how the Japanese were able to get landlocked countries to vote in favor of continued whaling. If plundering the sea hasn't been enough, it seems the Japanese have been using bribery.

Here is some good stuff on Steve Jobs, the man who has defied Microsoft and now owns a company larger then he ever thought possible. Personal quirks revealed!

And finally, Salma Hayek is so scared of snakes she did a human pole dance!

2010-06-03T06:28:00.000-07:00

Lots of interesting and dismaying 'stuff' to comment upon this week. Of course, the Memorial Day long weekend took people away from the rift, and glad to know you are back!

Some updates:

Fox News' Fox & Friends had a couple of 'experts' on real estate addressing the current flood of 'strategic defaults', that is when a homeowner elects to not pay on their mortgage and instead use the funds to pay down consumer debt. Indeed, as any wizened credit counselor will tell you, keeping your consumer debt low and current has a huge positive impact on your FICO score. Enough, in fact, to offset much of the damage of a foreclosure or bankruptcy.

The FHA underwriting guidelines tell more of the truth, and as mentioned here on numerous occasions this past year or so, the credit scoring agencies are helping by skillfully altering the algorithms of their score generating software so that people with a bankruptcy can get a loan after two years, and with a foreclosure after just three.

And as for the oil gusher in the Gulf dragging down the economy further, many people want BP to pay through the nose for their failure and mismanagement. But, stop and think! Who is REALLY going to pay?

It will be (drum roll)us the American public that pays the price! And as so often is the case it we will pay more than once as we pay through the government's efforts, both present and future, as well to the oil companies for higher drilling costs, read this from oil industry news.

On a lighter note, having problems organizing all your many 'friends' in the Social Media sphere? Here is a good tip from Mashable.

It seems that the Internet, venerable culprit of society, is at it again. Here is a story relating the decline (or actually the increase) of first time driver age which is moving up from 16 to 18 or even 19.

Finally, today is my daughter's 14th birthday, so Happy Birthday, Sydney! Put the attitude aside and be nice to your brother, kind to your parents, and loving to your kitty cats! And why do you consider getting your license when you are 21!

Today's Blog

2010-05-26T14:31:00.000-07:00

I have been caught up with the idea of education lately, perhaps because my kids are headed into 7th and 9th grades and college is looming on the horizon. Combine that with quite a bit of reading on Social Media and Networking, I get that profound changes are necessary for tomorrow's children, but need today.

Here is a very good site for those interested in expanding their vision of Education, what it is and isn't today:

RSA

Some Musings on Economics, Social Media, and Creativity

2010-05-19T19:55:00.001-07:00

Mine eyes have been wondering far and wide over the past few days. I am amazed at the absolute flood of information that comes down the pipe every day...heck, every minute. In my own efforts of targeting specific interest groups, and being in many myself, I really 'get' the value of good writing and blogging as a filter to get to the type of information that interests me. As magazines and newspapers die, it will be important for all of us to learn how to tap into the flow of information in the pipe to learn what we must to survive.
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Doomsayers Beware, a Bright Future Beckons
As they specialized and exchanged, humans learned how to domesticate crops and animals and sell food to passing merchants. Traders congregated in the first cities and built ships that spread goods and ideas around the world.

The Phoenician merchants who sailed the Mediterranean were denounced by Hebrew prophets like Isaiah and Greek intellectuals like Homer. But trading networks enabled the ancient Greeks to develop their alphabet, mathematics and science, and later fostered innovation in the trading hubs of the Roman Empire, India, China, Arabia, Renaissance Italy and other European capitals.

Rulers like to take credit for the advances during their reigns, and scientists like to see their theories as the source of technological progress. But Dr. Ridley argues that they’ve both got it backward: traders’ wealth builds empires, and entrepreneurial tinkerers are more likely to inspire scientists than vice versa. From Stone Age seashells to the steam engine to the personal computer, innovation has mostly been a bottom-up process.
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I am a water drinker from way back having given up soda, faux beer various types of synthowater. Here is a list of the Ten Worst...no, Harmful drinks in America.
20. Worst Water
Snapple Agave Melon Antioxidant Water (1 bottle, 20 fl oz)

150 calories
0 g fat
33 g sugars

Sugar Equivalent: 2 Good Humor Chocolate Éclair Bars

While “Worst Water” may sound like an oxymoron, the devious minds in the bottled beverage industry have even found a way to besmirch the sterling reputation of the world’s most essential compound. Sure, you may get a few extra vitamins, but ultimately, you’re paying a premium price for gussied-up sugar water. Next time you buy a bottle of water, check the recipe: You want two parts hydrogen, one part oxygen, and very little else.
-----------------------------------

And if that isn't enough, check out this story on bottled water (don't get me started on this farce!) All of a sudden public water fountains have vanished and bottled water is everywhere: in every convenience store, beverage cooler, and vending machine. In student backpacks, airplane beverage carts, and all of my hotel rooms. At every conference and meeting I go to. On restaurant menus and school lunch counters. In early 2007, as I waited for a meeting in Silicon Valley, I watched a steady stream of young employees pass by on their way to or from buildings on the Google campus. Nearly all were carrying two items: a laptop and a throw-away plastic bottle of water. When I entered the lobby and checked in at reception, I was told to help myself to something to drink from an open cooler containing fruit juices and rows of commercial bottled water. As I walked to my meeting, I passed cases of bottled water being unloaded near the cafeteria.

Water fountains used to be everywhere, but they have slowly disappeared as public water is increasingly pushed out in favor of private control and profit.
-----------------------------------

Mortgages Going Bust Heck, who would of 'thunk' that?
Prime mortgages going bust at an alarming rate
WASHINGTON — Aftershocks from the nation's financial crisis continue rumbling through the housing sector as fixed-rate mortgages held by the safest borrowers accounted for nearly 37 percent of new foreclosures during the first three months of this year, the Mortgage Bankers Association reported Wednesday.

Additionally, more than one in 10 homeowners were behind on their mortgage payments in the first quarter — a record, the association said. That's up from 9.47 percent in the last three months of 2009

Read more: http://www.mcclatchydc.com/2010/05/19/94464/prime-mortgages-going-bust-at.html#ixzz0oTefPyN4
-----------------------------------

And finally, here is a wildly useless invention (but cool no doubt) from our friends at Honda, just another way to encourage obesity.

2010-05-15T06:59:00.000-07:00

Let's take a look at some indicators this week regarding money, Oil, and where to vacation with your teen. I suspect this upcoming week there will be more noise coming from the distressed property side of the economy, but Summer is almost here and kids will be out of school so we can look forward to those items.

Fannie and Freddie won't write down your mortgage... ...a growing number of loans backed by Fannie and Freddie are falling into default. Their delinquency rates are rising even faster than those of subprime mortgages as the weak economy takes its toll on more credit-worthy homeowners.

Oil to $100 I have been saying that the constant, unrelenting rise of gasoline prices with spikes, drops and rebounds to a higher level are all part of a sick 'Pavlovian' conditioning effort to increase oil company profits. The obscene amount of earning they report quarterly will continue. Now the refiners are pushing the prices out of the box!

May 14 (Bloomberg) -- Billionaire Mukesh Ambani, who runs the world’s largest refining complex, said the petroleum industry must be ready for oil prices to rebound to $100 a barrel or more on growing consumption in Asia.

Manage Your Time in Life like in Business...for many easier said then done!

Learn to live by the 80/20 rule. Generally speaking, only 20 percent of the things you spend your time doing produce 80 percent of the results you want to achieve. Yes, you read that correctly! To maximize your productivity, then, you need to identify the key 20 percent activities that are most effective and prioritize them.

To get started, take a look at how you currently use your time. What do you spend most of your day doing? How many things on your to-do list get checked off? Then, identify what you’d like for your 80 percent—your results—to look like. Once you know where you stand and where you’d like to go, reflow your priorities, and focus the first fruits of your time and energy on achieving them.

Aren't we all a-twitter these days about Twitter, Facebook and other social networking sites? For many, it is simply unclear about why they should become involved let alone engaged.
The differences between social media and social networking are just about as vast as night and day. There are some key differences and knowing what they are can help you gain a better understanding on how to leverage them for your brand and business.

And finally, if you are wondering the best place to vacation **with** a teen, check out these hot spots.

After '2012' is the World Coming to an End?

2010-05-02T07:55:00.001-07:00

Over the weekend, I watched the movie '2012' with the family. Hocky CGI and weak story that the kids loved, and which brings up the question, 'What the heck is going on in the world this week?'

Here are some stories from over the weekend, I will let you decide;

'Rewired' Generations Small But Savvy from NPR. What will become of the 'i' Generation when we're gone?

A generation used to last 25 years or so. It was defined by shared experiences, including wars, presidents, music, movies, or various inventions. Larry Rosen, a professor of psychology at California State University, says generations are now changing every few years as new technology creates substantially different experiences. Host Scott Simon speaks with Rosen about his new book, Rewired: Understanding the iGeneration and the Way They Learn http://su.pr/2WjEyz

I've been reading Michael Lewis' latest book The Big Short about the greed and avarice of Wall St. during the Housing Boom which it caused. With all of the Treasury money having been thrown at saving the bankrupt (both financially and morally) banks and trading houses that is now winding its way through the economy, here is a investment letter for the next Big Bubble or perhaps a way to avoid it.

The Roaring Teens?

"...After months of penny-pinching amid the recession, new figures — showing an improving job market, rising factory output and increased retail sales — suggest that consumers are no longer restricting their budgets to necessities like food and medicine. They are starting to buy clothes, jewelry and even cars again.

The mood has gone from panicked to cautious, and now, as Mark Zandi, chief economist for Moody’s Economy.com put it, some consumers are “almost a bit giddy.”
http://su.pr/25t3z5

Some people along the Gulf Coast might be thinking the 'end' is near what with the disasterous oil spill causing all sorts of havoc in the breeding waters of Louisiana. Will British Petroleum suffer the consequences? I see they are already blaming others, of course! In the end, it will be the American public that picks up the tab since BP doesn't have insurance, just massive profits, to cover the cost of clean up and rememdiation. Here are some photos
http://su.pr/83S4KB

Here is an update on the economic status of the American populace, where do you fit?
http://su.pr/20LNet

A friend of mine recently called to ask how he could save his home from going to sale on the courthouse steps. He had already gone through Chapter 7, that didn't resolve the issue and wondered if Chapter 13 might. Another friend was just hours away from being evicted from her house of ten years when she called. Both were able to forstall the actions they faced, for how long noboby knows. It isn't easy to negotiate, here are some helpful tips.

Top 5 Loan Modification Tips to Avoid Foreclosure

Avoiding foreclosure is a serious concern for millions of American homeowners. There is a lot of advice on methods to avoid losing your home when you are in financial difficulties. The Obama administration has an arsenal of loan modification programs, alternative foreclosure programs, forbearance periods for the unemployed programs and the list goes on and on. However, as it has been widely advertized, these programs have not obtained the results hoped. So what are the best options for a troubled borrower?

Finally, on the light side 'cause the world in my view won't end this week, here is a fun animation of Tom Lehrer's Periodic Table song.
http://su.pr/2tQmYs

Bullets from the Sky, Do You Really Trust BofA, others

2010-04-19T08:19:00.000-07:00

What a lovely weekend, no snow in SoCal! Although I heard there was some outside of Denver, which is to be expected. This week starts with some interesting real estate and lending news plus oddities and thoughts worth repeating.

And you thought it was safe, that BoA was going to help the underwater hapless. Oh, silly you!

Bank of America, the nation's largest mortgage lender, ramped up its foreclosure activity in March, sending hundreds of letters warning delinquent borrowers in the region that it could sell their homes at auction in as little as three weeks, according to North County Times analysis of data from ForeclosureRadar.
http://su.pr/2zTbzb

Of course, we still have the 'Shadow Inventory' question. Is it or isn't it? That is the question, and the banks want to create a 'soft landing'. Some financial institutions can stand higher write offs at this time and are more likely to foreclose and sell right now; others have weaker balance sheets and need to stretch out the write offs that come with the recognition of loss represented by foreclosures. http://su.pr/23li4p

Some good PowerPoint presentation ideas to which I add the following:
1. no more than 6 words per slide
2. add humor
3. no cheesy graphics
4. Keep It Simple, Stupid! (KISS)
and more... http://su.pr/227Ve5

I have been in New Orleans on Fat Tuesday and Mardi Gras when local authorities roll out stories of people dying. Bullets falling from the sky is a New Orleans expectation, but West Virginia? http://su.pr/2E23Lm

And, finally 'Killer Quakes on Rise With Cities on Fault Lines' (Bloomberg) -- Is the world falling apart? Surely it isn’t, though this year’s frequent earthquakes and the occasional volcano have left an exceptional path of ruin and misery, raising concerns that something very unusual is occurring. http://su.pr/22JbcZ

Please let me know if you have any thoughts, all are welcome!

Some Thoughts for April 13, 2010

2010-04-13T13:15:00.000-07:00

'So many things to write about, so little time.' Anon Blogger

Okay, so I quoted myself and we can now get past that! This week already quite a few things are rearing their heads (both ugly and cute) worth passing along.

First the Ugly - There is a notion in the Halls of Government, both State and Federal, that the way to solve what many now consider a falsehood, 'Global Warming' is to regulate, regulate, and regulate some more. One of the scariest of these upcoming possible regulatory invasions into our lives comes from Cap and Trade legislation.

A License Required for your House (http://su.pr/2WozLe)

Thinking about selling your house - A look at H.R. 2454 (Cap and trade bill) This is unbelievable!

Only the beginning from this administration! Home owners take note & tell your friends and relatives who are home owners!

Beginning 1 year after enactment of the Cap and Trade Act, you won't be able to sell your home unless you retrofit it to comply with the energy and water efficiency standards of this Act. H.R. 2454, the "Cap & Trade" bill passed by the House of Representatives, if also passed by the Senate, will be the largest tax increase any of us has ever experienced.

Second the Ugly - The economy and most specifically the Real Estate Sector has been buoyed by massive amounts of government intervention. In two weeks, a very popular but quite expensive support program to give tax credits to select home buyers will expire.

First time home buyer tax credit is gone, now what? (http://su.pr/2dhIyM)
Home buyer tax credit deadline approaches

There were loud calls from the real estate industry to extend the $8,000 first-time home buyer tax credit when the original Nov. 30 deadline neared. Now we're in shouting distance of the extended deadline -- April 30 to sign a contract -- and it's been pretty quiet. The National Association of Realtors, for instance, tells me it hasn't been lobbying for a re-extension.

But mortgage publisher HSH Associates notes that most of the people taking a poll on its blog "overwhelmingly support" more time. As of 10 p.m. Monday, 84 percent said they were "depending on" an extension.

HSH notes a quote from economist Robert Shiller (of Case-Shiller fame) in a New York Times story about the credit:

"You don't make drug addicts go cold turkey," Mr. Shiller said. "The credit interferes with the market in an arbitrary way, but ending it now would be psychologically powerful. People will be in a bad mood about buying a house." He advocates phasing it out gradually.

Third the Cute Password creation has always been a bugaboo for me and my clients. How do you remember them? Where do you safely store a reminder list? And on and on with worries about losing such important information. Now comes a brilliant solution.

Quick, easy and fun way to create fabulous passwords. (http://su.pr/2lnBbH)

Shift Your Fingers One Key to the Right for Easy-to-Remember but Awesome Passwords

You're constantly told how easy it would be to hack your weak passwords, but complicated passwords just aren't something our brains get excited about memorizing. Reader calculusrunner offers a brilliant tip that turns weak passwords into something much, much better.

His clever solution: Stick with your weak, dictionary password if you must; just move your fingers over a space on the keyboard.

That's it, onward through the week! Be well.

The short-sale wrinkle

2010-04-08T15:42:00.000-07:00

'And the people on the bus go up and down...' -Children's song

Are you wondering why it takes so long to get short sales approved? The real reasons may be very different from what you might believe. And what you believe is...well, beyond the pale of understanding!

In a recent article by Bernice Ross in Inman News, she lays out the logic path so many lenders in both first and second lien position are taking. That is, 'Nobody should get anything from a short sale but us!' So first lien holders have a cap on what second position interests may want, and so on down the line. The upshot of it all is that with nobody willing to play ball, the short sale process is inordinately long, cumbersome, painful and unnecessary.

As she states, 'One of the biggest issues in closing short sales is secondary financing. If the holder of the first mortgage is going to have to take a loss, it usually is reluctant to give any type of payoff to another lender who is in second position.

The holder (or holders) of the secondary financing can refuse to cooperate unless it receives part of the sale proceeds.

A common request that many secondary lenders seem to be making is for 10 percent of their loan amount. If the loan goes to the loss recovery department, the request can be $5,000 plus 10 percent of the loan balance.

What's messy here is that the holder of the first mortgage may have a cap on what it will allow to be paid to any secondary lien holders.'

You see there is no honor among thieves!

Now enters the PMI that has insured the individual liens. Ross continues, 'Complicating issues even further, many borrowers who placed less than 20 percent down on their property have private mortgage insurance (PMI).

Here's an example of PMI: Assume that a borrower is putting 10 percent down and obtaining a 90 percent loan. The lenders normally would require a 20 percent downpayment and would give an 80 percent new loan. PMI insures the 10 percent "difference" between the borrower's down payment and what would have been an 80 percent loan amount.

What seems to be a common source of frustration for both agents and consumers is that the PMI companies have joined the lender in asking homeowners to sign a promissory note for the shortfall amount.

PMI companies are insurance companies. Like other insurance companies, it's simply good business for PMI companies to limit their losses and payout. If the consumer will agree to the promissory note, then that reduces the PMI company's losses, which looks better on its balance sheet.

On the other hand, if the PMI company agrees to the short sale, it has to make an immediate payout on the lender's claim. By refusing to approve the short sale, the PMI company forces the lender to foreclose on the property.'

Knowing this information ahead of time is critical if you want to avoid wasting your time on a transaction that won't ever close if you are a real estate agent, seller or buyer.

This may explain why so many holders of secondary financing are unwilling to agree to a short sale and prefer a foreclosure instead.

Good luck!

They Say They are Helping Underwater Homeowners, are they really?

2010-04-07T09:30:00.000-07:00

Yesterday, while at my local WaMU cum Chase branch, I was kibbitzing with the manager and asked about the company's current efforts to aid underwater homeowners. She said she hadn't a clue. And when I asked about local or regional staff available to help these unfortunates, she said there was one person called a 'floater', who comes to the branch about once a week to help with new loan applications. OK, that is for new business origination only. (A quick side note: rumor on the street says the Chase is no longer originating loans)

Again I wondered about what the bank is doing with its huge portfolio of non-performing (eg. defaulted) real estate loans (see Recent Loan Defaults and newly redefaults? So, I went to the corporate website (JP Morgan Chase) and searched all of the terms I could think of relating to defaults to see what jobs were being posted. None! Zip! Nada! Nyet! How can that be?

The situation begs for lenders who are incentivized, and protected by Treasury against losses, to help get us out of this quagmire that some estimate to comprise more than 7.0 million homeowners in distress. And one of the largest holders of defaulted assets in the nation doesn't have a single job opening posted on its website.

Go figure!

Stop Blaming Until You Know!

2010-04-01T08:42:00.000-07:00

From a recent introffice memo:

When you do a conventional loan, odds are great that a review of the appraisal has to be done. More often than not, the value gets cut, due to that review.

Many question as to "why" this is, when you hear of the recovery of the housing market, or the "stability" of your particular geographic area. The short answer is held within "supply and demand" [equation]. There is a rather large supply that is not counted in the "official" inventories that are spewed forth by the media. That is why distressed sales are counted, and emphasized, as market sales. The distressed market inventory is huge, and the only reason that we are not currently watching a free fall in prices is due to the fact that this supply is being manipulated by the firms that hold them. (A recent Fox News report put that figure at 11 million 04/01/2010).

So, please stop blaming the underwriter, or the review appraiser. It is not their "fault". It is a fact of our lives in these times.

Read below:

Housing – ‘Shadow Inventory’ & Defaults Provide Endless Supply ‘Why do values keep falling when sales have picked up and there is less inventory?’ I get asked that question constantly. Part of the answer is ‘shadow inventory’, which real estate associations, banks and FDIC don’t count.

Shadow inventory is REO [Real Estate Owned by banks and lenders] on the shelves of banks and servicers not listed with a real estate broker. Because the ‘months supply’ figures are given out by the real estate associations based upon listed homes and most REO is not listed, the supply figures have been incorrect for over a year. To accurately estimate supply you must track the foreclosure market and add back in foreclosures as supply, listed or not.

The real estate associations do not do not add back REO inventory into the supply. As a matter of fact they take the present month sales, multiply by 12 then divide by the amount of known listed inventory. They then throw on some magic ‘seasonal adjustments’ to make everything ‘alright’. This leads to press releases like the CA Assoc of Realtors put out this week citing 545k annual home sales and 5.6 months supply in CA. This is as far from reality as any report I have ever seen on housing.

So, what is the answer? FHA and VA, as well as USDA (for those areas that are eligible). Those appraisals are NOT subject to outside review.

Daily Thought

2010-03-30T18:02:00.001-07:00

"Good fortune --- remember it's fickle; misfortune --- remember it'll pass." --Chovos HaLevavos

Posted via email from ronalpert's posterous

40 of the Most Useful Social Media and PR Blog Posts of Q1, 2010 (Jan - Mar)

2010-03-30T17:46:00.001-07:00

This year, I've been publishing 10 of the best posts from around the web each week as part of the '10 out of 10 in 2010' series.
Now that
the first quarter of the year has been completed, I thought it was worth bringing together 40 of my favorites from 2010 (so far)...and, here they are...

via socialmediatoday.com

Are you really aware of the top sites of Q1?

Posted via web from ronalpert's posterous

2010-03-29T14:36:00.000-07:00

Sometimes reinventing the wheel is an outlandish idea, take for example the current mortgage system. It works in other countries quite nicely and at a low cost. Do you think your Congressperson should know about this?

Reforming a broken mortgage system
By: George Soros March 25, 2010 04:29 PM EDT

Treasury Secretary Timothy Geithner testified Tuesday on a plan to reform Fannie Mae and Freddie Mac, the government-sponsored enterprises now in limbo. But we don’t have to wait years to reform the mortgage system; a better approach could be introduced right away.

The business model of Fannie Mae and Freddie Mac is fundamentally unsound. These public-private partnerships were supposed to serve the public interest and the interest of shareholders. But this was never properly defined and reconciled.

Management’s interests were more closely allied with those of shareholders. They had an incentive to lobby Congress — both to expand homeownership and to protect and use their government-sponsored duopoly status.

The GSEs extended their activities from insuring and securitizing mortgages to building highly leveraged portfolios of securities by taking advantage of their implicit government backstop. They profited from the growth without bearing the risk of collapse: Heads they win, tails you lose.

The GSEs already had a checkered history, riddled with accounting irregularities. Eventually, they blew up — at a huge loss to taxpayers that may exceed $400 billion.

Early in the century, private enterprise had started eating into the government-guaranteed mortgage market. Borrowers once served by the Federal Housing Administration turned to subprime and Alt-A mortgages.

These “non-agency” mortgage securities gained increasing market share. They were sliced and diced, repackaged into CDOs and CDOs squared. Geographic diversification was supposed to reduce risk. But the originate-to-distribute model of securitization actually increased risk by creating a severe agency problem: Agents were more concerned with earning fees than protecting the quality of the mortgages. The housing bubble ended with a crash — and the government was forced to take over GSEs.

With the private sector largely incapacitated, the GSEs and FHA became virtually the only source of mortgage financing. This is a paradoxical situation in which a fundamentally unsound business model holds a quasimonopolistic position. This cannot last.

What needs to be done is clear: The GSEs’ mortgage insurance function must be separated from mortgage financing.

The former, mortgage insurance, is the legitimate function of a government agency, especially when the private sector has collapsed. A mortgage insurance entity should be run as a government agency.

But mortgage financing should revert to the private sector. This would get rid of a business model that has failed.

There is a proven mortgage financing system already up and running. The Danish model has been in use, continuously, since the aftermath of the Great Fire of Copenhagen in 1795. It has not prevented housing bubbles, but it has never broken down. And it proved its worth again in 2008.

In the Danish system, homeowners do not borrow from either a mortgage originator or a GSE. They borrow from the bond market, through a mortgage credit intermediary. Every mortgage is balanced by an equivalent amount of an identical, and openly traded, bond. This is called the Principle of Balance.

In the United States, mortgage securities are separated at birth from the borrower. Thereafter, they lead separate lives. But in the POB system, the link is never broken.

Mortgage Credit Intermediaries operate the POB system. They help homeowners understand and navigate the process. Most important, MCIs bear the credit risk of the mortgages — they remain “on the hook” in the event of delinquency or default.

In Denmark, these mortgages are not insured by a government agency. This would have to be modified in America. Given the current demoralized state of the market, a government agency would have to guarantee mortgages, but the MCIs would be required to keep “skin in the game” with a stake of, say, the top 10 percent.

A key benefit of the POB system is that it offers performing homeowners the opportunity to buy back their loans when interest rates rise. If the price of the associated mortgage bond drops, the homeowner can buy the equivalent face value of bonds at a discount, to redeem the existing home loan.

The homeowner’s ability to lower his mortgage liability reduces the chance that he will be under water when home prices fall because of a rise in interest rates.

This helps forestall foreclosure crises. And it would have a countercyclical effect: Homeowners repurchasing mortgages help moderate upward pressure on interest rates. By contrast, the current system tends to exacerbate upward pressure by lengthening duration, a likely near-term prospect.

This system would have many other advantages over one that has collapsed.

It would eliminate the agency problem that was the primary cause of failure. It would separate the credit risk from the interest rate risk. It would be transparent. And it would be open: The duopolistic position of the GSEs would disappear.

What would remain is a government agency offering mortgage insurance to all qualified MCIs without competing with them.

How to get there from here? Do it in steps.

The first is to introduce mortgage securities based on the Principle of Balance. GSEs could, and should, do this, with the government regulator setting clear and conservative standards. No legislation is required.

The second step is to open the process so all qualified MCIs can issue POB bonds. To make this market work, this means new law requiring that MCIs maintain skin in the game for any federally guaranteed mortgage.

After that, the GSEs could be phased out from their role as MCIs, and the guarantee function hived off to a government agency. Eventually, the GSEs would be liquidated, as their portfolios run off.

Legislation would also be required to extend the POB system to areas that government insurance does not cover.

In fact, legislation authorizing “covered bonds” is making its way through Congress.

But it should better take into account the lessons of the last crisis — and begin the introduction of the Danish model. This should be part of the financial reform package.

We could start rebuilding a stronger mortgage finance system along these lines now.

George Soros, philanthropist and financier, pioneered the introduction of the Danish mortgage finance system in Mexico with the support of then-Treasury Secretary Paul O’Neill. He now participates in a joint venture with the Danish financial system that helps countries use this approach.

© 2010 Capitol News Company, LLC

Please forward this to your member of Congress, now.

2010-03-26T11:04:00.000-07:00

The other day I posted that BoA was about to get serious and help people underwater with their mortgages. Today we get a bit more insight into perhaps why this bank, probably the poorest performer of all banks in loan mods is becoming so 'aggressive'.

For many of you who've encounter the dreaded loan Servicer, here is a story to help you realize why so many pundits decry the government-backed 'road to ruin' as I like to call it. This road begins with the Servicer telling you the first thing you need to do is 'stop making your mortgage payments' so we take notice. Hrumph!

The truth about HAMP

Servicers share blame for some failed loan mods

By Steve Bergsman, Friday, March 26, 2010 Inman News

Over the course of President Barack Obama's first year in office, one of the priorities of his administration has been to stabilize the residential housing market. And there have been some signs of success, such as home prices finally touching bottom in a number of cities across the country.

Despite these salubrious data points, it's fairly obvious the residential sector remains troubled, as foreclosures and defaults continue to sweep across the nation. In short, more and more homeowners are still losing their homes.

The intransigence of the foreclosure and default problems has so far defied the best efforts of lenders to work their way out of the mess. All this becomes obvious when we look at recent statistics from the government's own Home Affordable Modification Program (HAMP).

As of January, more than 900,000 homeowners were in "temporary" trial loan modification plans, but mortgage servicers had managed to convert only about 63,000, or 7 percent, of the temporary modifications to permanent modifications, reported the Treasury Department.

(While mortgage servicers may or may not be the originator of your loan, they are the companies responsible for the ongoing management of your existing mortgage by collecting loan payments, crediting your account, handling escrow, etc. If you are behind on your mortgage, the firm you are dealing with is the servicer.)

With this in mind, the government took another shot at fixing the problems with HAMP, introducing at the end of January new guidelines aimed at streamlining requirements.

The guidelines now specify what documents borrowers must provide to loan servicers and that servicers must collect the documents before starting borrowers on three-month trial modifications.

"Not only do we have a multitude of individuals applying for loan modifications, but every lender seemed to have its own documentation standard and guidelines," observes Sylvia Alayon, vice president of operations for the Consumer Mortgage Audit Center in Fort Lauderdale, Fla. "What the government has done is wrapped some rules around documentation standards and added a timeline."

Will all this save HAMP?

The problem is not with HAMP, itself, says Alan White, industry-watcher and assistant professor at Valparaiso University School of Law in Valparaiso, Ind., it's that the servicers aren't doing a good job.

Given that the industry voluntarily modified to permanent status more than 100,000 mortgages per month just before HAMP was announced, these results are miserable, White emphasizes. "There are salvageable mortgages getting lost because the servicers can't seem to do the job right."

Strong words!

So, what seems to be the problem with the mortgage servicers, most of which are banks?

As White sees the situation, over the past two to three years a lot of mortgage servicing got consolidated into four big banks (BofA, Citicorp, JP Morgan Chase and Wells Fargo), all of which were not traditionally large subprime servicers.

The major banks are accustomed to dealing with a portfolio that might have a half-of-a-percent in default at any one time, which is usually handled by sending out bills and collecting payments. The banks are not accustomed to dealing with double-digit default rates and they just can't seem to get on the right track.

The servicers also may not have been able to get enough warm bodies into play fast enough. Once new staff is hired, it takes four to seven weeks for them to go through training. And let's face it, these newbies are certainly not going to be immediate experts.

To back up his contentious contention, White looked at the government statistics in regard to servicer conversions from trial mods to permanent mods, and the data show the major banks converting just a small percentage of their loans.

At the end of 2009, the best of the "Big Four" was Wells Fargo, which converted over a three-month period 11 percent, then in descending order came Citicorp with 4 percent, JP Morgan Chase at 1 percent, and BofA at less than 1 percent.

Over the same period of time, the troubled GMAC Mortgage managed to convert 41 percent of its loans, and smaller players like Residential Credit Solutions and Ocwen converted 88 percent and 77 percent, respectively.

The government was not without some blame on this. There were two ways to approach the loan modification situation through HAMP, and the government strongly promoted the least efficient methodology.

Homeowners could enter a trial modification with their mortgage servicer after a verbal interview. Supporting documents were submitted afterward. The more stringent approach was to allow a homeowner to enter a trial modification only after first supplying all the necessary documentation.

The first option -- putting homeowners in a trial modification after a verbal discussion -- resulted in a high percentage of "possibles" entering the program, but a low percentage of transfers to permanent modification. Going the other route meant a low percentage of possibles entered trial mods, but a high percentage of those in trial mods transferred to permanent status.

The problem with the first approach -- getting people quickly into trial mods after verbals -- was that it created a tremendous amount of extra work for the servicers, because they literally had to harass the homeowners to send along the necessary documentation and complete the process.

Indeed, this became a real sticking point. Mortgage servicers have been extremely frustrated by borrowers not completing the modification requirements.

So, why did the servicers opt for this approach?

The Treasury Department issued a monthly Servicer Performance Report that indicated how a servicer's performance under the HAMP program compared to others. One important statistic was the percentage of modifications, including trial mods, a servicer had established compared to that servicer's eligible group.

Establishing the trial mod based on verbals allowed it to be counted immediately in the servicer's performance, and therefore it looked good to the Treasury Department.

"The servicers would take this information verbally and there wasn't any verification," says Alayon. "You were placed in this trial period and what the lenders were saying was they weren't getting cooperation from the homeowners -- they weren't supplying the documentation."

The recent HAMP changes were meant to address this fundamental problem, among others.

"The changes are a step in the right direction," says Alayon. "Now it is going to require lenders to get the requirements up front instead of waiting at the end of the trial period to begin the process."

Quote of the Day

2010-03-25T09:29:00.001-07:00

"Playing not to lose' a winner does not make!" - Ron Alpert

Thanks and make it a great day!

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2010-03-24T13:27:00.001-07:00

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Load Mods - Facts and Fictions

2010-03-24T13:19:00.000-07:00

There is so much 'spin' about loan mods it makes one's head spin, literally. Today BoA announced it was going to reduce ('write down) principle balances for those 120% over market value. That is a start from one of the most recalcitrant lenders!

With just 7 days left until the Fed stops buying bonds in the market to support low interest rates, it is hard to guess just what will happen next. It'll be surprising, that's for sure.

Loan Modifications Update: The Spin and the Truth

Loan Modifications are going through an interesting stage. Enormous efforts are being made to save homes from foreclosure, and while some results seem to be made, millions are still heading straight to a foreclosure. The government has increased the pressure on loan servicers and lender, and relaxed the requirements for a HAMP modification. What have been the results? Is there any good news to share? This short article will look into the good news, and the bad, of loan modifications at the end of March 2010, and try and separate the spin (a.k.a propaganda) from the real news.

The Spin: There has been a 45% increase in the number of permanent loan modifications in February 2010, according to HAMP.

The Truth: The total number of permanent loan modifications is still only around 170,000 loan modifications.

The Spin: Homeowners that receive a loan modification will enjoy much lower mortgage payments because they are granted a fixed 2% interest rate for five years.

The Truth: This is true, payments can be lower for borrowers that receive a modification. Unfortunately there are still more than 830,000 homeowners that are awaiting a decision on their temporary loan modification, and are languishing in loan modification limbo.

The Spin: The figures look worse than they are because there are over 91,000 troubled borrowers that have been approved for a permanent modification, but has not signed the final paperwork yet.

The Truth: Granted, however there were also 90,000 trial loan mods cancelled.

The Spin: More than 1.35 million trial loan mods have been extended, which includes over a million HAMP modifications.

The Truth: The vast majority of these mods are trial loan modifications, and in any case, only represent a 35% of the troubled homeowners the Obama administration predicted the plan would help. It must also be noted that half a million of these troubled homeowners could easily lose their trial modifications. A even more worrying fact is that more than half a million of borrowers on a trial modification have already made the three monthly payments. Why? Apparently many will not receive the permanent modification because lenders have finally decided their income is too high, or too low, to justify a modification. The benchmark for qualifying, or not, is set in such a way that having just a few hundred dollars more or less in your banking account can make the difference between approval or denial.

This had created in many the feeling that trial loans are often just a way for banks to squeeze a few months mortgage payments out borrowers that either had no hope of qualifying or the bank feels they are hopeless cases that will most likely re-default whatever measures are taken.

In conclusion, and to be fair, there has been some progress in the last months. However, this is too little, too late for most homeowners. However, a new problem now arises. Now a new wave of unemployed troubled homeowners with prime mortgages is hitting the housing crisis shore. It is unclear what solution loan modifications can provide when the mortgage already has low interest rates and a long tenure.

2010-03-01T12:16:00.000-08:00

Rich Toscano is at it again on Voice of San Diego (www.voiceofsandiego.org) with his keen insight and sharp wit. This time he clearly states reality as 'it is' and not as many 'want it to be'!

The Nuclear Housing Bailout Option

A couple of interesting bailout-related items crossed my desk today. I have given up on trying to keep track of all the bailouts, but these both relate directly to our beloved topic of shadow inventory so I thought I'd note them.

First, the White House is trying to ban any foreclosure unless the loan in question has been screened for HAMP, the government's flavor-of-the-month home loan modification program. As I understand it, HAMP has been fairly useless, for reasons I will describe below. But no matter -- an extra mandatory step to screen every mortgage for eligibility will further delay the foreclosure process, perhaps resulting in even more delinquent mortgages remaining in pre-foreclosure limbo.

The reason that HAMP and the government's other varied foreclosure prevention schemes haven't made much of a splash is that they don't address the main cause of foreclosures: that many homeowners owe more than their homes are worth. (Though I suppose the term "homeowner" is a bit of a misnomer in these cases). If someone owes significantly more than a home is worth, regardless of how low you temporarily get their payments, they still just don't have much incentive to stay in the home and remain under the burden of that giant debt load. That is why the government's efforts to stop foreclosures have largely failed.

So I was very interested to read that the FDIC is going to use its failed banks as guinea pigs to, per the Washington Post, "test whether cutting the mortgage balances of distressed borrowers who owe significantly more than their homes are worth is an effective method for saving homeowners from foreclosure."

Do you really need to test that premise? Apparently so.

Widespread mortgage principal reductions for underwater owners are the nuclear option in the government's effort to bail out the housing market. That would be the one surefire way to take away underwater homeowners' incentives to walk.

Such an effort would in the majority of cases consist of reimbursing people for poor investment decisions just because the investment in question happens to be a politically favored one. But the government has already spent untold sums rewarding the horrific investment decisions of banks and their bondholders -- it shouldn't be too surprising that they would throw the same bone to bubble-era home buyers too.

I suspect that principal reductions are on the way. The FDIC's "test" certainly suggests as such. And this is why I think it's too early to tell whether shadow inventory or the vaunted "second wave" of foreclosures will ever actually amount to anything.

Loan Mods After 3 Years...and Counting!

2010-02-25T13:13:00.000-08:00

Another good piece from Blown Mortgage. Note how the Administration is offering certain states, including California, monies to help those underwater or suffering from the 'bubble' with their mortgages. Interestingly enough, although said sums might be designated for us there is nobody 'at home' to manage the distribution.

California (as with several other states) is in the throes of a budgetary disaster requiring that state workers be furlowed, retired or fired. And, just because there are Federal dollars to be disbursed doesn't mean these needed workers will be brought back online since the cost is to be borne by the state.

'Another fine mess you've gotten us into, Ollie!' as Laurel was fond of telling Hardy.

Loan Modifications, What Is The Situation 3 Years After The Housing Bubble Burst

It is hard to believe that three years have gone by since the housing market took a dive drowning with it millions of American homeowners. So what is the situation now? Have we hit rock bottom? Are the Administration’s measures starting to work?

Let us start with the good news. There are now over one million homeowners benefiting from temporary or final loan modifications. Admittedly, most of them are still in the trial period, but nevertheless, the Administration has made an effort to ‘encourage’ lenders and servicers to make an effort, sometimes by using a carrot and other times by brandishing a big stick. Another good newsbyte is that the rate of troubled homeowners, people behind on their payments, is dropping.

Also, new measures are being carried out as we speak. Just a few days ago Obama announced another program to avoid foreclosures. The program included offering $1.5 billion to housing agencies in California and four other states. These states have been especially hit by a fall in house prices making loan modifications harder to qualify for. This new program aims to provide these hard hit states with extra flexibility that will allow them to provide the help troubled homeowners need.

Unfortunately the good news is over. The bad news is that nearly 3 million homes are going through foreclosure and 4.5 million will do so this year according to conservative estimates. Another problem is that the figures we have may not even be telling the full story. Experts say that lenders have an estimate of 1.7 to 7 million homes in a shadow list of foreclosed home they are yet to put for sale. This fudges our foreclosure figures.

High foreclosure rates do not only affect the owners, it also lowers the price of homes in the neighborhood and cripples the economy as a whole. The question many are asking and we have discussed widely in this blog is how much should the government help. It is a fact that many borrowers overstretched their budgets to breaking point; these cannot and should not be bailed out. However, the fact remains that loan modification trial and completed number should be higher.

Another problem is the high re-default rates. These rates show some of the inadequacies of the current loan modification system. Studies show that re-defaulting rates are lower when the principal balance of the loan is trimmed or reduced. Unfortunately most loan modifications simply extend the term of the loan or reduce the interest rate.

What can the government do? Extra incentives for lenders and servicers might just make them weight for the next best deal, instead of focusing on providing fast loan modifications now. An idea that has been thrown around that seems promising is to give bankruptcy judges the power to write down mortgages like they can write down other kinds of debt. It is very likely that this would increase the interest rates of new loans to reflect the increased risk of loan balance reduction. However, it would provide a good incentive for lenders to negotiate reasonable loan modifications before a judge tells them to.

How to Deal with New Credit Card Law

2010-02-22T14:46:00.000-08:00

The newest changes to the law regarding credit card companies and how they are to deal with consumers is out. Supposedly, the changes in the law are meant to protect consumers, and if the past is any predictor of the future, but is probably just an illusion.

Holding Your Bank to New Credit Card Law

Today’s a big day for anyone with a credit card. A host of changes passed by Congress in the Credit Card Accountability Responsibility and Disclosure (CARD) Act in the wake of the financial meltdown go into effect today.

You’ve probably already heard quite a bit about the major changes, such as protections against unexpected rate hikes and the end of so-called double-cycle billing, which charges cardholders for interest based on the previous two billing cycles.

But what do you do if you think your bank isn’t living up to the new rules? In fact, when it comes to consumer recourse, credit card experts say that despite the new policies, consumers’ options remain little changed.

And of course, the moves by your bank that might upset you the most may not fall afoul of the CARD Act at all. As the new rules have cut off some old practices, banks have been trotting out new policies and fees that allow them to take additional money from consumers. And those consumers may not have any new legal avenues to pursue.

“Consumers are not the winners in this system very often,” says Linda Sherry, a spokeswoman for Consumer Action, a consumer-advocate organization. So we went to credit industry and consumer experts and asked them what are the key steps to take if they believe their banks aren’t living up to the new regulations.

Prepare for your conversation with the bank

When a credit-card issuer violates the new rules, consumers should first contact the company's customer service department. (That phone number is on the back of most credit cards or on the web site of the card issuer.) Just make sure you’re familiar with the provisions of the new law – and its many loopholes – and be ready to show proof that the lender has violated them.

“Consumers would have to be familiar with the law and they would have to have some sort of evidence of what had happened to them and clear understanding of what is legal,” says Sherry.
Assuming the law is on your side, the customer service department may undo the error while you’re on the phone – or there may be an ongoing back-and-forth. Conversely, the credit-card issuer could dismiss your complaint and say that it’s acting within its rights.

Complain to the bank’s regulator

The next line of defense for the consumer is the bank’s regulator. Nationally-chartered banks are regulated by the Office of the Comptroller of the Currency (OCC). Consumers can call this office at 800-613-6743 to speak with a customer service representative. Then, the OCC may reach out to the bank to investigate the complaint. The time it takes for complaints to be addressed varies. In 2009, the OCC received 70,000 complaints that involved investigations and each took 60 days to resolve on average, says Dean DeBuck, an OCC spokesman.

Consumers should be aware that the OCC has drawn some criticism as a regulator because it has a financial incentive to hold banks under their national charter. The OCC is candid about its relationship with banks but maintains its regulatory role isn’t compromised.

State-chartered banks are regulated by a state regulatory body. And American Express (AXP: 38.93, -0.13, -0.33%) is regulated by the Federal Deposit Insurance Corporation (FDIC).
Consumers who aren’t sure who regulates their bank can ask their bank’s customer service department or a local consumer advocate.

When a regulator finds a bank has violated a rule, it can assess penalties, including monetary payments or poor examination reviews that could result in a bank being shut down.

Call your state attorney general

A consumer should also complain to their state attorney general, especially if the bank is state-chartered. If the office receives multiple complaints, it could launch an investigation into the bank.

Even if the bank is nationally-chartered, having a complaint on file with the state attorney could still be helpful down the road, Chi Chi Wu, staff attorney at the National Consumer Law Center, says.

Go to court

If a consumer hasn’t gotten results by reaching out to the bank or its regulator, he can consider taking the bank to court.

Most consumer protection laws, including the CARD Act, have fee provisions mandating that if the consumer wins, the bank will have to pay their legal fees, and if the bank wins, they won’t have to pay either. The key is to find an attorney who will take the case on contingency (meaning that they only charge fees if they win) and who adhere to the consumer fee provisions in case of a loss. (To find such an attorney, contact the National Association of Consumer Advocates.)

Some attorneys will be on the lookout for similar consumer cases against particular banks, which can lead to a class action. If a consumer is successful in suing the bank, the consumer gets damages based on the amount he was overcharged, plus statutory damages.

Settle in arbitration

Many consumers may never get to court because they get stuck in arbitration, a third-party justice system that is contracted by the banks. In many cases, consumers who have credit cards are contractually bound to settle disputes in these forums, and the consumer must pay the costs, says Sherry. (Such a clause can be included in the agreement a consumer signs before he starts using a credit card.)

2010-02-19T14:12:00.000-08:00

Here's a quick note in passing about the present foreclosure rate in the country, note again that just because someone is underwater doesn't make them eligible for loan modification:

The Congressional Oversight Panel overseeing the $700 billion Troubled Asset Relief Program (TARP) issued a report in December concluding that the Obama administration's Home Affordable Modification Program (HAMP), which is funded largely by TARP, will prevent only a fraction of the projected 8 million to 13 million foreclosures anticipated in the next four or more years.

The report concluded that the HAMP program is not designed to address foreclosures caused by unemployment or to significantly reduce homeowners' negative equity, and that the Treasury Department expects 40 percent of borrowers who are offered permanent HAMP loan modifications to redefault over the next five years.

2010-02-17T15:03:00.001-08:00

The scare is in the Media at the moment. And, like many such moments there is a lack of perspective. Since there are two sides to each story, here is the other side of the 'looming flood of foreclosures' from Ric Edelmen:

Does Another Wave of Foreclosures Loom?

Not likely, but you won't hear that from the media

Just as the media hyped the real estate bubble, reporters and pundits are now riding an alarmist wave of foreclosure news. Case in point: A recent newspaper headline warned, “Another Wave of Foreclosures Looms — Ballooning Payments Put Mortgages at Risk, Posing New Setback to Market.”

The concern at the heart of the article: An estimated 70% of Option ARMs will reset by 2011. Option ARMs are adjustable-rate mortgages that give the borrower choices regarding how much to pay each month.

At first glance, that statistic sounds scary — it represents $189 billion worth of loans. But is it really all that bad? Let’s find out.

There are 75.6 million owner-occupied homes in the U.S., according to the Census Bureau. Of those homeowners, 61% have a mortgage.

The article states that Option ARMs make up 1.3% of all mortgages. In other words, we’re talking about a little more than 600,000 mortgages. If 70% of those loans reset, the figure is about 422,000 mortgages. And don’t assume that those homeowners are going to default merely because their loans reset. “Reset” means the interest rate will adjust to new rates — and rates are now lower than they were three years ago when these loans were obtained, not higher. That means many of these homeowners might enjoy lower payments, not higher ones. Say half of the resetting loans prove unaffordable. Even that doesn’t mean the homeowners will necessarily default. Many, after all, will be able to figure out a way to keep making their payments.

But suppose half of them actually do go into default. In that case, we’re talking about 211,000 loans defaulting — spread over the next two years. That’s about 100,000 loans defaulting next year — out of 75.6 million homeowners.

That’s 0.14% of all homes. And that is supposed to support a headline that reads, “Another Wave of Foreclosures Looms — Ballooning Payments Put Mortgages at Risk, Posing New Setback to Market.” Either the writer of that article is deliberately attempting to scare readers needlessly, or the writer fails to understand the true nature of the situation. Incompetent or irresponsible? Either way, you shouldn’t draw incorrect conclusions from this story — and stories like this one are all too common.

How to Start the Loan Mod Process

2010-02-08T13:55:00.000-08:00

Here is a pretty good article for anyone looking to negotiate a loan modification, it gives some good starting points and tips. It comes from AOL Real Estate:

If you're a homeowner on the brink of foreclosure, refinancing your loan at a lower interest rate could be your last chance to keep your home. But for millions of homeowners refinancing may seem impossible because they are "underwater' - the value of their home is now less than their mortgage.

Nearly one-in-four people with home loans have this problem, according to First American Core Logic. But the federal government's Home Affordable Program may be able to help.

Underwater but still employed
The Home Affordable Refinance Program (HARP) lets qualified borrowers refinance a first home mortgage even if the size of that mortgage is as much as 125 percent of a home's value.

The program aims "to provide access to low-cost refinancing for responsible homeowners suffering from falling home prices," according to President Barack Obama. It's designed to lower the interest rate and payments on your home loan. It could also help you replace an adjustable rate mortgage with a more stable fixed rate mortgage.

However, potential borrowers must show that they are employed and will be able to make their payments. There's no minimum credit score to participate though a low score could effect your interest rate. Applicants are immediately disqualified if they have been more than 30 days late on any home loan payments in the past 12 months.

The structure of the current loan also makes a big difference. For example, the loan has to be owned or guaranteed by Fannie Mae or Freddie Mac to benefit from this program. Don't panic - there's a good chance that your banker sold your loan to one of these two mortgage giants after they made the loan to you. Find out here for Fannie Mae or here for Freddie Mac.

Contact your lender or loan servicer to apply for the program - you should find the phone number on your monthly mortgage statement. You should have the numbers on your current income and expenses ready before you call. Here's a list of the documents you'll need.

You may also be able to work with a new mortgage company to refinance a Fannie Mae loan, provided the new lender is capable of making a Fannie Mae Desk Underwriter Refi Plus loan.

Difficulty making your payments
If your loan is bigger than the value of your house and you've already missed or made late payments on that mortgage, you may still qualify for the federal Home Affordable Modification Program (HAMP) available through mortgage lenders.

It's not a refinance program - instead the original mortgage is left in place while the terms of that loans are changed to lower the contract terms.

Once again, you will work with your mortgage company. Your monthly payments may be lowered to a rate you can now afford for as long as five years. Starting in year six, the interest rate on the loan, and the amount of your payments, may begin to increase by up to one percent until the rate reaches "the market rate at the time the modification agreement is prepared," according to the program Web site.

Your lender may also lower your payments by spreading them over a longer period, for example extending a 30-year loan term to 40 years. It could even forgive part of your debt.

Applicants will have to demonstrate financial hardship that puts your mortgage in imminent danger of default - your current monthly mortgage payment must be more than 31 percent of your current gross income and you must demonstrate that you are having difficulty making the payments. Also, you can't live in a mansion - the mortgage must be for an amount less than $729,750. Also, just like HARP, your loan must be owned by Fannie Mae or Freddie Mac.

Call your lender or loan servicer to find out of it is participating in the program - most are. You can find the number to call on your monthly mortgage statement.

Other options
If you don't qualify for either of the governments Home Affordable programs, you may still be able to negotiate a loan modification with your lender. Remember, if the lender seizes your house in a foreclosure, it is unlikely to be able to sell the house for the full value of the home mortgage in an auction.

Ask about the possibility of a short sale, in which you would sell your house at market value even though the price is likely to be less than the amount of the mortgage. In a short sale, the left over loan balance is forgiven. The mortgage company loses money on the deal, but usually not as much money as it would lose in a typical foreclosure and both you and the mortgage company are spared the expense and damage of the foreclosure process.

Someone to Talk You Though It
You probably still have questions, and it might help to talk to an expert. Here is a list of counselors who have been approved by the government who may by able to answer your questions for free.

Loan Mods Get Easier...Supposedly!

2010-02-04T08:22:00.000-08:00

With so much rancor around loan modifications, it appears the government is finally giving the 'push' so very much needed since day one of the program. Again, loan mods are not for everyone and the NPV factor still remains (see earlier post), but for many in our area a modification might prove worth the effort to apply.

Below is a snippet from Blown Mortgage you might find useful:

HAMP, the Government’s Loan Modification Program is changing their tune about the paperwork required to apply for a loan modification. Homeowners applying for a loan modification must now include their paperwork before even entering the trial stage.

Previously troubled homeowners could apply for a loan modification trial by simply providing proof of income over the phone. The problems arose when some troubled homeowners either took too long to send the paperwork or could not prove the claims they had made. The Treasury and many servicers claim that this is the cause that the conversion of trials to completed modifications has been so slow.

The Treasury’s response has been to simplify the paperwork required for HAMP conforming loan modifications and require that it is provided before a trial can start. The goal is to accelerate the process and help homeowners to start paying lower mortgage payments sooner.

What are the requirements?

Homeowners that want to apply for a HAMP mortgage modification must provide:

- Two pay stubs. If they have a job.

- A completed form that gives permission to the servicer to pull up a tax return.

- A modification request with a hardship letter included. Hardship letters are documents that explain why you need a modification for your mortgage. The hardship letter must explain what has changed in your circumstances so as to no longer afford your mortgage payments.

When will these changes occur?

The first of June is the official starting date but servicers are allowed to start sooner if they want to. If you are going to apply for a modification you will need the documentation detailed above.

The Benefits.

The plan is that these changes will increase the conversion rate of homeowners on trial modifications to those on completed modifications.

This has been a bone of contention between servicers and homeowners. Servicers complaining at how bad homeowners were at providing the required paperwork and homeowners claiming it was only an excuse.

It must be said that banks that required paperwork for the trial process to start, like GMAC, had much better trial to modification conversion rates. Herb Allison, assistant secretary at Treasury believes that these changes will help all servicers to speed up the whole process.

Let us hope these changes work because HAMP has a long way to go to fulfill its goal of helping 4 million homeowners with affordable mortgages by 2012. Up to date the program has more than 90,000 homeowners on trials and 66,000 homeowners have signed their mortgage modification papers with average savings of around $500 a month.

Although the simplified paperwork requirements will in all likelihood help speed up the process it does seem like speed is the least of HAMP’s troubles, helping the 3,800,000+ troubled homeowners that are neither on trials or have completed modifications does seem to be more of an issue.

Loan Mod - Is It Worth It?

2010-01-30T17:07:00.000-08:00

'Blown Mortgage' again has a good piece on what many people have experienced with the loan modification program, but more importantly how the banks are using it to further increase the indebtedness of the borrower.

If you'll recall, a few weeks ago I posted the financial calculations and reasoning behind a loan modification (January 5, 2010 - NPV). Borrowers must use similar calculations to their benefit in estimating the true cost and value of the modified loan agreement to which they are agreeing.

Loan Modifications Are They Worth It – An Overview In Simple English

by Andrew on January 28, 2010

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Loan Modifications do seem to have finally got moving. Trial loan modifications are heading towards their first million, there has been over a 100,000 completed loan modifications and even Bank of America, the sleeping giant of loan modifications has hit the 200,000 trial modifications line.

However, what is not clear is if loan modifications are actually a good thing for homeowners. Reports published in this website have shown that loan modifications may be pushing homeowners deeper underwater instead of lending them a helping hand, pun intended.

This is because many banks are simply cashing in the Government’s incentives while capitalizing the late payments and interest charges onto the loan modification without reducing interest rates or extending the loan term, reducing the principal balance of the loan is, of course, very rarely even mentioned.

So is it worth going for a loan modification? It depends on:

1) How good a deal you can get on your loan modification.

2) How underwater your home is and

3) How much you care about your home

Let’s analyze these three questions to see if loan modifications are worth it in your particular scenario.

1) You are getting a good deal on your loan modification if the lender reduces your interest rates and your monthly payments are significantly cheaper. Unfortunately, in the recent past banks have got away with providing loan modifications that simply put borrowers further into debt. However, Government guidelines effective from the 23^rd of November 2009 clearly state that loan modifications under the HAMP program, which provides incentives to lenders, must reduce the interest rate to the current market rate.

This is the pertinent paragraph in the Mortgagee letter 2009-35 from the Government to all approved mortgage providers:

The Mortgagee shall reduce the loan modification note rate to the current Market Rate. For purposes of this requirement, the Department shall consider Market Rate to be no more than 50 basis points greater than the most recent Freddie Mac Weekly Primary Mortgage Market Survey Rate for 30-year fixed-rate conforming mortgages (US average), rounded to the nearest one-eighth of one percent (0.125%), as of the date the Modification Agreement is executed.

What does this mean in practice?

The next paragraph in Mortgage letter 2009-35 gives the answer with an example (italics and underlining are ours):

The Mortgagee approves a Loan Modification that is executed by the borrower 35 days after the date of this Mortgagee Letter. The current note rate is 7 percent and the most recent Freddie Mac Weekly Primary Mortgage Market Survey Rate for 30-year fixed rate conforming mortgages (US average) as of the Modification date is 5.04 percent. To be eligible for payment of a mortgagee incentive and costs for a title search and/or recording fees on the Loan Modification, the fixed note rate on the modified loan may not exceed 5.50 percent (The Freddie Mac US average rate of 5.04 percent rounded to the nearest eight of a percent plus 50 basis points).

If your mortgage provider reduces your interest rate by nearly 1.5% you are likely and extends the mortgage for 30 years you are likely to see a very significant reduction in your monthly payments. However, don’t forget to check what the term extension will translate to in extra interest and make sure you can live with it.

2) If your mortgage is so underwater there are little chances it will ever be worth what you bought it for and you just started paying for it, you need to decide if it is even worth trying to save it. Walking away, taking the hit on your credit and starting fresh might be the best option for you.

3) Of course this depends how much you have emotionally invested in your home. If you can’t find another home in the area and you don’t want to change your children’s school, or you need to live near your parents the financial value of your home might only be one of the factors you have to consider.

Walk Away from the Underwater House

2010-01-28T14:11:00.000-08:00

We are fortunate in California that we live in a non-recourse state. Read below what this means to you.

Walking away isn't always the answer, there are many choices available. I prefer the ones that allow my clients to reposition their Balance Sheet and turn it into a 'positive' rather than 'negative' statement of net worth.

Banks Seek Payback from Walkaways

Increasingly aggressive mortgage lenders are seeking to collect deficiencies from former home owners who walked away from their properties or sold them in short sales.

Many states, including Florida, give mortgage holders as long as five years to seek a deficiency judgment. If granted, the bank gets up to 20 years to collect and the option to renew for another 20 years if the debt isn’t paid.

About one-third of U.S. states, including California and Arizona, prohibit collection efforts after foreclosure, but home owners usually waive that protection in a refinance.

Most states allow collection on unpaid home-equity loans.

Banks are most likely to try to collect from people who walk away from a property on which they are still making payments.

“The bank is going to pull your credit report, and if you’re current on your other bills they are going to come after you and potentially ruin you,” said Larry Tolchinsky, a Florida real estate attorney.

Source: Bloomberg,

2010-01-27T11:46:00.000-08:00

Probably the one most often heard statement since the collapse of the real estate market in 2006 I've heard has been, 'Let the banks write down those loan balances!' This notion is now taking hold, as the article below reflects.

Once you read it, you'll see that any other measely effort towards loan modification is senseless. This is something the banks, which are fully backed up by Treasury, should do quickly and without hesitation.

from Blown Mortgage...

Loan Modification consultants have being saying it for a long time; the best loan modifications are those that reduce the balance of the loan. This might seem obvious; of course borrowers are going to prefer loan modifications that reduce the amount they owe. What is not so obvious is that these types of loan modifications may be the best kind for lenders too.

Loan Modifications can use a variety of tools and measures to reduce the monthly payments of a mortgage. Reducing monthly payments is considered to be the main objective of a loan modification, as a way of giving troubled borrowers a break so they can continue to pay their mortgage. This can be done by:

1) Reducing the interest rate of the mortgage, either temporarily or permanently.
2) Extending the term of the loan, which means giving the borrower longer to pay the loan back.
3) Rolling interest payments to the end of the loan, this reduces monthly payments but creates a huge payment at the end of the loan.
4) Principal reductions of the loan balance. Here the bank or lender “forgives” or writes off a portion of the loan.

The Obama Administration does not control which measures lenders use on loan modifications and they certainly don’t require lenders to cut mortgage principals, what’s more, until recently principal reductions seemed unthinkable, a nice idea but not very practical. It must be said that forgiving debts is a nice thing for friends to do, but it doesn’t sound like a good way for lenders to do business.

However, recent reports are showing that principal reductions could be a key factor in creating cost efficient loan modifications for both lenders and borrowers. One of these reports was published by the Lender Processing Services June 2009 Mortgage Monitor and concluded that re-defaults on loan modifications with a principal reduction element fare much better than those based exclusively on interest rate reductions. The report states that “the success rate for loss mitigation-related loan modification hovers in the 30-40% range, with a higher success rate for loan modifications involving a reduction in unpaid balance.

The success rates of loan modifications with principal reductions is so much better than with other methods that lenders are beginning to listen to the data and increasing their principal reductions on mortgages of troubled borrowers.

You might still ask yourself why banks or lenders would be willing to cut unpaid loan balances instead of using other apparently cheaper measures. The key, we hinted at above, are foreclosures. Foreclosures are expensive for lenders, selling in a buyers’ market and the costs associated with selling a property are not cheap. Having said that any kind of loan modification carried out to avoid foreclosure is expensive for lenders whether they reduce interest rates, extend the term of the loan or reduce the principal balance, what makes it even worse is when borrowers re-default on their loans after the loan modification. Because foreclosure re-defaults are much lower on loan modifications with principal reductions, lenders are starting to think they might be cheaper in the long run, which is good news for the fortunate few that actually qualify for a loan modification.

The Secret is Out on Being Underwater with Your Loan

2010-01-24T11:54:00.000-08:00

A great article follows that challenges the wisdom being used to 'solve' the present real estate fiasco that continues into it's 4th year (2010). Ask yourself what your 'moral stance' is on defaulting on loans you've taken out, and please feel free to post it here.

Also, if you'd like a copy of the U of AZ research paper, let me know and I'll forward a copy. The times are interesting...and they are 'a-changing'!

January 24, 2010

Economic View

Underwater, but Will They Leave the Pool?

By RICHARD H. THALER

MUCH has been said about the high rate of home foreclosures, but the most interesting question may be this: Why is the mortgage default rate so low?

After all, millions of American homeowners are “underwater,” meaning that they owe more on their mortgages than their homes are worth. In Nevada, nearly two-thirds of homeowners are in this category. Yet most of them are dutifully continuing to pay their mortgages, despite substantial financial incentives for walking away from them.

A family that financed the entire purchase of a $600,000 home in 2006 could now find itself still owing most of that mortgage, even though the home is now worth only $300,000. The family could rent a similar home for much less than its monthly mortgage payment, saving thousands of dollars a year and hundreds of thousands over a decade.

Some homeowners may keep paying because they think it’s immoral to default. This view has been reinforced by government officials like former Treasury Secretary Henry M. Paulson Jr., who while in office said that anyone who walked away from a mortgage would be “simply a speculator — and one who is not honoring his obligation.” (The irony of a former investment banker denouncing speculation seems to have been lost on him.)

But does this really come down to a question of morality?

A provocative paper by Brent White, a law professor at the University of Arizona, makes the case that borrowers are actually suffering from a “norm asymmetry.” In other words, they think they are obligated to repay their loans even if it is not in their financial interest to do so, while their lenders are free to do whatever maximizes profits. It’s as if borrowers are playing in a poker game in which they are the only ones who think bluffing is unethical.

That norm might have been appropriate when the lender was the local banker. More commonly these days, however, the loan was initiated by an aggressive mortgage broker who maximized his fees at the expense of the borrower’s costs, while the debt was packaged and sold to investors who bought mortgage-backed securities in the hope of earning high returns, using models that predicted possible default rates.

The morality argument is especially weak in a state like California or Arizona, where mortgages are so-called nonrecourse loans. That means the mortgage is secured by the home itself; in a default, the lender has no claim on a borrower’s other possessions. Nonrecourse mortgages may be viewed as financial transactions in which the borrower has the explicit option of giving the lender the keys to the house and walking away. Under these circumstances, deciding whether to default might be no more controversial than deciding whether to claim insurance after your house burns down.

In fact, borrowers in nonrecourse states pay extra for the right to default without recourse. In a report prepared for the Department of Housing and Urban Development, Susan Woodward, an economist, estimated that home buyers in such states paid an extra $800 in closing costs for each $100,000 they borrowed. These fees are not made explicit to the borrower, but if they were, more people might be willing to default, figuring that they had paid for the right to do so.

Morality aside, there are other factors deterring “strategic defaults,” whether in recourse or nonrecourse states. These include the economic and emotional costs of giving up one’s home and moving, the perceived social stigma of defaulting, and a serious hit to a borrower’s credit rating. Still, if they added up these costs, many households might find them to be far less than the cost of paying off an underwater mortgage.

An important implication is that we could be facing another wave of foreclosures, spurred less by spells of unemployment and more by strategic thinking. Research shows that bankruptcies and foreclosures are “contagious.” People are less likely to think it’s immoral to walk away from their home if they know others who have done so. And if enough people do it, the stigma begins to erode.

A spurt of strategic defaults in a neighborhood might also reduce some other psychic costs. For example, defaulting is more attractive if I can rent a nearby house that is much like mine (whose owner has also defaulted) without taking my children away from their friends and their school.

So far, lenders have been reluctant to renegotiate mortgages, and government programs to stimulate renegotiation have not gained much traction.

Eric Posner, a law professor, and Luigi Zingales, an economist, both from the University of Chicago, have made an interesting suggestion: Any homeowner whose mortgage is underwater and who lives in a ZIP code where home prices have fallen at least 20 percent should be eligible for a loan modification. The bank would be required to reduce the mortgage by the average price reduction of homes in the neighborhood. In return, it would get 50 percent of the average gain in neighborhood prices — if there is one — when the house is eventually sold.

Because their homes would no longer be underwater, many people would no longer have a reason to default. And they would be motivated to maintain their homes because, if they later sold for more than the average price increase, they would keep all the extra profit.

Banks are unlikely to endorse this if they think people will keep paying off their mortgages. But if a new wave of foreclosures begins, the banks, too, would be better off under this plan. Rather than getting only the house’s foreclosure value, they would also get part of the eventual upside when the owner voluntarily sold the house.

This plan, which would require Congressional action, would not cost the government anything. It may not be perfect, but something like it may be necessary to head off a tsunami of strategic defaults.

Richard H. Thaler is a professor of economics and behavioral science at the Booth School of Business at the University of Chicago.

2010-01-12T19:58:00.000-08:00

This month the consumer is being rewarded with the results of many new rules and regulations. There are changes in how credit card companies bill you and charge interest, how banks can take your money for the smallest of services, and of course, we have many new rules for both real estate and lending.

OK, some of these are good, indeed. Others are but chimera. A good regulation deals with loan and real estate closing cost comparison, which will make us all better shoppers. Here is an enlightening article along those lines.

New RESPA Regulations Make It Easier to Shop for Closing Services

RISMEDIA, January 11, 2010—Consumers will no longer be left in the dark about the closing costs involved to complete the sale or purchase of a home- costs that account for an average of 5% of the purchase price.

Changes in the Real Estate Settlement Procedures Act (RESPA) that took effect on January 1, 2010 require lenders to fully disclose all closing costs including the costs of obtaining a loan and estimated costs for title insurance, settlement and other services within three days after a buyer applies for a mortgage.

Forms used in the closing process, including the Good Faith Estimate (GFE) and the HUD-1 Settlement Statement, have been overhauled to make it easier for consumers to understand estimated costs and compare them with final costs at closing. The new GFE encourages consumers to shop and compare fees from various lenders before choosing a mortgage. The new HUD-1 makes it easy to compare the GFE estimates with the final HUD-1 closing statement and flag discrepancies prior to closing.

However, estimates provided by the Good Faith Estimate are usually binding for only ten days, unless there are certain changed circumstances. Buyers have only a few weeks to complete required tasks like reviewing their title report and retaining settlement services before the closing. They may have to act quickly to meet deadlines in sales contracts.

“The message to buyers is don’t delay. Take control by working with your real estate agent to shop for and compare closing costs in your area. Compare the fees in your Good Faith Estimate with actual costs and the services provided by competing vendors,” said Tony Farwell, CEO of Closing.com, a website that provides a one-stop-shop for real estate closing and related services. The Department of Housing and Urban Development estimates that consumers will save an average of $668 on every loan as a result of the new regulations.

Farwell said that home buyers, working with their real estate professionals, should formulate a strategy to find the best vendors for their closing service needs in the short time available.

Here are some questions to cover with a real estate agent or broker:

1. Which closing services are required in your area and which are optional? Local laws and customs vary. Your agent may strongly recommend that you include optional services like a home inspection and home warranty.

2. On the Good Faith Estimate, did the lender use vendors who know your market well? It’s a good idea to shop for alternatives that might be less expensive or provide better service. Many vendors provide a higher, blended rate for lender’s to use in their GFEs that would be more costly than a quote for your transaction or property.

3. Upon reviewing your GFE, can you identify areas where you can save money without compromising quality? Smart buyers can save hundreds, even thousands by finding their own closing cost providers.

For more information, visit www.LiveLoveSanDiego.com

Loan Modifications - The Underlying Truth for January 2010

2010-01-05T18:46:00.000-08:00

Last month, last year, last decade I wrote about the actual financial mechanics involved in getting a loan modification...not on your part but on the behalf of the lender. In the end it is the lender that matters most, and if the numbers do not work out you won't get a workout on your loan (although you'll get quite a run around working arduously with the lender to no avail).

Here is a follow up post on NPV (Net Present Value) and what you should know about it. You'll see that the bottom line is that you have little say in the valuation process:

NPV Test, Your Personal Loan Modification Sword of Damocles

(from Blown Mortgage)

Understanding the factors that control the success or failure of your loan modification is vital if you want any chance of receiving a positive modification to your mortgage. Loan Modifications are not happening very fast and the modification rates for troubled homeowners are very low.

The reasons for this are many because loan modifications are complex and depend on a number of variables. Borrowers may fail to fill in paperwork, applications get lost in the process, banks and servicers drag their corporate feet and sometimes loan modifications are just bad business for lenders and must be dropped.

Determining if a loan modification makes financial sense to a lender is the purpose of the NPV (Net Present Value) test. It pays to understand how this test works because anybody that fails it has their loan modification automatically cancelled.

Why have an NPV test?

The purpose for the NPV test is to guarantee a loan modification is profitable in the long term for banks and servicers. The test is made up by an algorithm that takes into account various factors that will determine the behavior and attitude of the borrower, the price of the house and the ability of the borrower to pay the modified loan payments.

The exact form of the algorithm is kept secret to stop borrowers from trying to rig the test. The test measures the likelihood of a borrower from re-defaulting on their mortgage. This is determined by the income of the borrower and the reasons the borrower has to stay in the house. For example if a single borrower is stuck with an underwater house and has no ties with his current neighborhood he or she is going to get a much lower rating than a family with two children that moved to be closer to their aging parents.

An important part of the NPV test calculates the current value of the house. This takes into account the cost of foreclosure and the expenses related to selling the property. Once the “deducted” or real value of the house is determined it is compared with the return the bank would get from a modified loan. If the lender does not benefit from the loan modification it is automatically revoked.

How to help your chances to pass your mortgage´s NPV test?

The NPV test mainly deals with facts and figures that are hard to influence, unless you lie, but there is still much you can do to improve your chances of passing.

It is important to create a solid case that proves you are highly motivated to stay in your house. One of the biggest costs of loan modifications is that after all the work, time and money invested borrowers often re-default bringing on the borrower all the costs of foreclosure he was hoping to avoid with the foreclosure.

This can be done by giving good reasons why you will stay in your house whatever happens, even if it is underwater and does not seem like a great investment at the moment.

The valuation of your mortgage is a very important part of your NPV test. You cannot do much to control the valuation but federal valuation projections change every quarter so if you failed your NPV test one quarter it is worth doing it again the next if you still have time.

A final step you can take is to provide evidence of why you can´t afford the current mortgage payments. Loan modifications are expensive as they include reducing interest, often for the lifetime of the loan, so banks need to make sure they are not providing loan modifications to borrowers that could afford their current loan payments with a little bit of effort and good old fashioned frugality.

Loan Modifications - the Underlying Truth for December 2009

2009-12-30T07:55:00.000-08:00

I think everyone would like to know just 'how' to obtain a loan modification, whether they are underwater or not. For the majority of Americans, they don't qualify for many reasons including the fact that they reside in relatively stable areas and the real estate market is okay. For others who aren't so lucky and whom the government has extended relief through its proxies, the banks, there is a formula that was recently revealed.

Although this formula is nothing new and any B-school student understands it, for many it means the difference between a loan mod or foreclosure. Here is a recent post that gives a good overview:

Loan Modifications, NPV Test the Key to Loan Modification Success

What is a NPV test?

If you are trying to work your way through a loan modification you know what it is, if you are planning to get a loan modification you should find out soon.

NPV stands for Net Present Value. It is a financial concept that allows lenders to work out if it is profitable to make a certain financial choice. In the case we are currently considering banks and lenders use the NPV test to decide if it makes sound financial sense to approve a loan modification or not.

Passing the NPV test is paramount if you want to get a loan modification. Put simply if you fail this particular test there is no loan modification for you. The bank will simply foreclose your home and bite the bullet on any losses they have to deal with, you are not worth the risk of a loan modification.

Understanding how the NPV test works is therefore a priority for borrowers. The only problem is that many of the variables in the NPV formula are secret so that homeowners can’t rig the test. However there are some steps a homeowner can take to at least tip the scales in his favor.

The Net Present Value provides a way for lenders to quantify the current value of a property taking certain factors into account. These factors include the cost of foreclosing the property, the chances of the borrower defaulting in the future despite the loan modification, this is called the loan modification re-default rate, which unfortunately for borrowers is rather high.

What can you do to improve your chances of passing the NPV test?

As we mentioned above the exact formula and values of variables are secret to make it harder for delinquent borrowers to influence the test. The test calculates / guesses on various factors:

a) How many months you are likely to pay before re-defaulting.

b) What are the chances you can fix your own finances without the help of a loan modification.

c) The value of your home.

d) The estimated value of your home next year.

e) The cost of foreclosing your home.

f) What the house is likely to go for if it is foreclosed.

However there are three steps a borrower can make to improve his/her chances.

1) Make it clear that you really want to stay in your house. If you can prove that staying in your house is very important for you despite the financial investment you have vested in your home this will give added strength to your claim. You might want to stay in your home because you live near to your aging parents, or you don’t want to change your children’s school or it would be a huge embarrassment for you to go through a foreclosure. If you prove that you will do anything to avoid a foreclosure the lender might rate your risk of re-defaulting more positively.

2) The value of your home is critical for your NPV test. Banks expect homeowners that own underwater properties to default. After all why would someone keep paying for a house that is worth less than the mortgage? It is hard to influence the valuation of your home but the federal government’s home value projections change at the beginning of every quarter. Even if you were turned down one quarter there is a chance you could be accepted the next quarter.

3) Make a good case of your current inability to pay the mortgage but how you are very willing to pay if the monthly payments are reduced. Be prepared to back these claims with evidence. Prepare a budget and provide bills and other proof of your income and expenses.

Loan Modifications - Fact or Fiction

2009-12-22T16:28:00.001-08:00

Several articles out this week about just how poorly the entire process is being handled. If you didn't know that, I must apologize for this harsh announcement.

In several recent stories, the number of loans actually being permanently converted are ridiculously small at less than 4%. Large banks like BoA haven't been able to convert very few, 'To illustrate, Bank of America, one of the U.S leading banks has only completed 98 loan modifications from the160,000 that have applied. That success rate is so low you need four decimal points to even see it on a calculator.'

Yet, the masquerade continues. Here is an article with some valuable pointers if you are so inclined. Cut and paste into your browser, please.

http://www.marketwatch.com/story/lenders-a-failure-at-mortgage-modification-2009-12-18?siteid=nwhreal

2009-12-14T07:01:00.000-08:00

I must admit that even as a lender, I am woefully lost when it comes to loan mods, why? Truthfully, it seems to be a moving target that fluctuates with the daily political winds with no 'rhyme or reason' except expediency for politicians and bureaucrats. Also, I don't make any money doing them yet want people to know there is a possible solution for their problems. For the moment, here in two parts is the 'latest and greatest' guide to help you or someone you may know.

Loan Modifications Short Guide To Success Part 1 – The Problems

Obama’s loan modification program can be seen as a failure, if you focus on the millions upon millions that are benefiting, or as a modest success with over 650,000 borrowers on trials and 375,000 on the fast track to getting permanent modifications by January 2010.

As reported earlier the government is in the process of sending special task forces to win over, bully or cajole, depending on your point of view, the big lenders that decide how well the loan modification program goes.

The big question is why are loan modifications not working better with all the money, over $75 billion, being thrown at it. This article will look at some of the main problems that are creating the loan modification minefield borrowers are currently suffering.

Problem 1. Lack of information
Government firms like Freddie and Fannie are contracting the services of outside companies to go house to house providing accurate information on how to go about getting a loan modification.

This is a reply to lenders complaining that the main reason loan modifications are slow is that borrowers are really bad at filling in forms and providing the information required. Of course, the media is littered with counterexamples of model borrowers that provided all the information and battled with the conflicting instructions that lenders requested.

Problem 2. There is a lot of people that need Loan Modifications.
Around 7.5 million households in the U.S alone are delinquent on their mortgage payments. 25 percent of all borrowers are underwater in their mortgage, owning a home that is worth less than what the mortgage is worth.

Those figures are huge, to deal just with the paperwork, information and mechanics of dealing with so many people on a subject that so few of us understand is a big job that even if all the players wanted Loan Modifications to work it would be hard to do faster.

Problem 3. Banks are nearly as lost as the rest of us.
The simple truth is that even when lenders want to modify a loan it is not a smooth road because they are not used to dealing with this volume of modifications. Banks are already understaffed due to the recession and their mitigation departments are in no better shape. Add to this under-information about government programs, lost paperwork, changing fax and telephone numbers and you start to see why it is so difficult to process a loan modification.

Problem 4.The NPV test
The NPV test stands for Net present value. This test compares the money a loan is likely to generate if it is modified (and the borrower keeps the house and pays the mortgage at the modified rate) and what it is likely to generate if the modification is not carried out. The logic behind this test is not bad. Making loan modifications a profitable exercise for banks is good news, if you make it profitable your chances of making it happen grow exponentially.

However the actual formula to calculate the Net present value is according to many commentators unrealistic and allows lenders to shelve loans they should modify.

Problem 4. Banks often benefit from delinquency.
Banks often are not the actual lenders behind a loan but take on the job of loan servicers. Loan servicers collect payments and deal with borrowers but don’t own the mortgage. Loan servicers profit from delinquent borrowers and the late fees and higher interest rates they generate.

Many go as far as saying the loan modification trials are simply a trap loan servicers use to get three more monthly payments from borrowers that are beyond help and would not pay otherwise.

The problems that borrowers face when trying to work out their loan modification are pretty scary, our next post will deal on how we can face these problems and increase our chances of loan modification success.

Loan Modifications Short Guide To Success Part 2 – The Guide

Loan Modifications are not providing the help American homeowners need. Of the millions of troubled borrowers only a small percentage qualify for a loan modification trial and most of the lucky ones get stranded in the way.

Before we get into the practicalities of how to find your way through the maze of loan modifications it is worth spending a few words on the top reason why loan modifications are not working: They Don’t Address the Real Problem.

The real problem is unemployment and the Credit Crisis.

The fastest growing demographic for loan modification are prime mortgages. These are good mortgages, bought by borrowers with high credit scores that can’t pay their mortgage because of the increasing rate in unemployment. Unemployed borrowers struggle to get a loan modification because you can only qualify if you can prove you have nine months of unemployment benefits lined up. Most unemployed borrowers are unlikely to fulfill this requirement.

The other big reason loan modifications might not work for you is that your mortgage might be the least of your credit problems, you might be overstretched on your car loan, credit card loan, and other personal loans. Many commentators feel the government is trying to deal with a Mortgage Crisis when what they should be dealing with is the broader Credit Crisis.

First Step. Get the Information You Need.
Visit the government’s official website at www.makinghomeaffordable.gov . There you can find:
1) The current sponsored program the Government is touting.
2) Useful forms to help you compile the information you need to supply to lenders.
3) Find the closest government paid advisor that can provide you with personalized guidance.

Second Step. Decide what you can pay, and be realistic about it.
There is such a thing as a BAD LOAN MODIFICATION. After months of wasted time and resources some borrowers end up with a loan modification they still can’t pay.

You need to figure out what you can truly afford to pay on your mortgage every month. The government guideline is 31% of your monthly income but that might not work for you. Get some real figures together. How much do you spend on housing costs? What is your income, or average income if you’re self employed or work on commission. Put all this on paper, your lender will want a look at it.

Third Step. Tell the lender, giving you a loan modification is worth their effort.

Lenders are not charitable organizations. They lend for a profit not out of kindness. However if you can convince them that giving you a break is in their interest, that you are worth more as a borrower with a modified loan than as a foreclosure you are half way there. Explain the reason you are struggling to pay, illness, untimely death and losing your job are the reasons most likely to work.

Fourth Step. Put it in writing.

Send a written request for a loan modification. Make it short and to the point, one page should be enough, provide all the information you compiled in the earlier steps, why you need the loan modification, why it is a good investment for the bank, etc… Send all correspondence with your lender through certificate mail with return receipt requested, there are too many horror stories of lost forms.

Fifth Step. Call your lender.

Good idea to start with your loan servicer, the place you bought your mortgage from. Write down the name of everyone you talk to. Only talk to people who can help you and make decisions on your mortgage like officers in the mitigation department of your loan servicer. It is a good idea to send you letter with all your information to the person you have talked to over the phone.

Sixth Step. Be patient, follow up.

Unfortunately loan modifications can take as long as nine months (sometimes more) after you file in your application. So make a pain of yourself and follow up on the progress of your modification with calls, emails and faxes. Don’t underestimate the power of persistence, some officers might work faster just not to have to talk to you again on the phone.

Seventh Step. Get Help from the Professionals.

If you are not satisfied with how you are being treated contact the OCC. The OCC regulates all national banks. You can find a complaint form at www.occ.treas.gov/customer.htm

If you are having trouble working through any of the previous steps, like contacting your mitigation department, visit HOPENOW.org or call 888.995.HOPE and they will help you out.

You can also visit www.hug.gov for help in finding free certified housing counselors and www.loansafe.org for troubled borrower’s resources.

More on Credit...

2009-12-02T15:53:00.000-08:00

Yessiree! There's more than meets the eye when it comes to loan modifications. A recent article pulls back the curtain just a tad. Check it out. By the way, I'm working with homeowners who are underwater, current and want to do something positive for their balance statement...just ask me!

Loan Modifications and Mortgage Modifications Can They Affect Your Credit Score

Loan Modifications and Mortgage Modifications are being sold like they are going out of fashion and both the Government and private banks are reporting successes in the number of loan modifications and mortgage modifications processed.

If you are desperate to keep your home and you are finding it difficult to pay for your mortgage payments a loan modification might be the option for you. However there is a question you must ask yourself. Is a loan modification or mortgage modification worth my trouble? There are a number of negative consequences that are attached to mortgage modifications.

Among them is the risk of paying more that the mortgage is already costing you in deferred and balloon payments.

Another issue related to mortgage modifications is the possibility your credit score could be affected. It might surprise you but taking a government sponsored loan modification could lower your credit score. The reason for this is that some banks and loan providers report loan modifications as partial payment plans. These plans include programs that reduce the debt of borrowers that can’t afford to pay their loan. FICO, one of the organizations that prepare credit scores from the information financial institutions quantify partial payment plans negatively.

This could make it harder for borrowers that take on a loan modification to buy a home in the future. Of course if you are happy where you live and you just want to save your home this should not be a problem.

First-time Homebuyers Tax Credit

A completely different type of credit that people are concerned about is how the mortgage crisis will affect previous government sponsored first time homebuyers tax credit programs.

These tax credit provide a tax break, a percentage discount or sometimes a dollar to dollar deduction from tax of any mortgage related expenses.

The government is as interested in promoting home purchases as it is to stop foreclosures so these programs have been extended. However the recession is affecting the U.S budget so it is wise to get on the first time homebuyers tax credit bandwagon while there is a wagon to ride. The deadline for applying for a tax credit has been extended so that purchase agreements must be signed before May 1^st and closed by July 1^st.

For more information on this matter visit www.federalhousingtaxcredit.com

The same applies for other tax credit programs like the HOPE scholarship tax credit, a sister program to the HOPE loan modification program. This tax credit program provides dollar for dollar tax breaks on college tuition, fees and course materials. This program will end next year so it pays to apply early. For more information visit www.finaid.org.

Take Caution When Using Debit Cards for Holiday Purchases

2009-12-01T12:52:00.000-08:00

Tis' the Season of Joy and Wanton Spending! The following article has some pointers you may want to consider if you are also considering purchasing a house or refinancing an existing loan.

So "Ho...ho...ho! And enjoy it for the '...times, they are a-changin'!'

December 1, 2009—(MCT)—With the holiday shopping season in full swing, when consumers step up to the cash register to pay for their holiday purchases this year, a large percentage will pay with a debit card.

Debit cards have overtaken credit cards and other noncash methods as the payment of choice among consumers. Visa, the global payments technology company, said debit cards passed credit cards last December, representing a fundamental shift in consumer behavior. Gone are the days of cash and checks.

“In general, debit card use has been growing for many years, and we expect that trend to continue for the foreseeable future,” said Bob Whyte, head of consumer debit products, North America, at Visa. There are several reasons for the trend.

“There’s a perfect alignment of the product with the mood of the consumer today,” Whyte said. “There’s a recognition that debit cards provide a great sense of control,” he added. “There’s also a great appreciation for the safety of the product. It’s safer than carrying cash, which can be lost or stolen.”

Other reasons why debit cards have become increasingly popular include:
-Debt-laden consumers are trying to pay off their bills and don’t want to take on more debt. “A lot of consumers are using debit cards as a spending-control mechanism,” said Dennis Simmons, president and chief executive of SWACHA, the Dallas-based regional payments association whose members include financial institutions, businesses, government agencies and professionals. “Virtually all debit card transactions are deducted from someone’s checking account immediately.” In contrast, you typically have some time before you receive your credit card statement and the expenditure hits you in the face.

-Some consumers are using debit cards in a backlash against credit card companies, which have been raising annual percentage rates, slashing credit limits and instituting fees in response to new credit card regulations.

Card similaritiesOne of the main differences between debit and credit cards is that debit cards are linked directly to your bank account, while credit cards enable you to charge purchases against a preapproved credit limit.

But debit cards and credit cards are becoming more similar. Many financial institutions are starting to offer rewards on their debit cards, as they do with credit cards, Whyte said. Another similarity is cardholder liability. Federal regulations require financial institutions to cap your liability at $50 if you notify your financial institution within two business days from the moment you learn that your debit card has been lost or stolen. And many financial institutions have gone beyond federal regulations and adopted zero cardholder liability policies on unauthorized use of debit cards.

Take precautions- Despite the safeguards, debit card users should take certain precautions.-Protect your debit card as you would your credit card.-Pick a PIN or electronic password that can’t be guessed easily. Don’t use your birth date and personal names. Mix numbers and symbols in your PIN.-Memorize your PIN. Never write it on your card or store it with your card, and never let someone else enter your PIN for you.-Don’t disclose information about your card over the telephone.-Check your bank statements immediately to ensure that all payments are yours.-Periodically check your account balance and transactions, either online, by telephone, or by printing interim statements at the ATM.

Beware of overdrafts...a crucial concern for debit card holders is overdrawing their accounts. “Most overdrafts today are caused by debit cards,” said Carol Kaplan, spokeswoman for the American Bankers Association. Overdrafts have been a hot issue. The Federal Reserve recently imposed rules that will make it harder for banks to slap customers with overdraft fees, which one consumer group — the Center for Responsible Lending — said average $34 per transaction. The new rules will take effect July 1.

Consumer groups and lawmakers have chastised banks for using “courtesy overdrafts” to pay transactions even though customers don’t have the money in their accounts to cover them. The banks then charge account holders a high overdraft fee, consumer advocates say. Banks say they’re providing a service. The Fed’s new rules will prohibit banks from charging overdraft fees on automated teller machine and one-time debit card transactions unless the consumer opts in to the overdraft service for those types of transactions. “This new rule addresses the primary concerns that have been raised by consumers and policymakers and will help bring consistency and clarity to overdraft programs,” said Edward Yingling, president of the American Bankers Association.

Keep a cushionYou can avoid overdraft headaches with debit cards simply by keeping track of your transactions and recording them. Keep a cushion of money in your checking account and link your checking account to a savings account, so it covers you if you overdraw your account. If you use an overdraft line of credit, repay it as quickly as possible. Sign up for electronic alerts that automatically notify you when your checking account balance drops below a certain level.
Finally, know your limits. Many financial institutions limit daily withdrawals for your protection.

(c) 2009, The Dallas Morning News.

2009-11-23T08:20:00.000-08:00

OK, the holidays are upon us and the deals are ever more attractive. Gotta buy...buy...buy! Without you the economy would fall into the black abyss of...well, nobody knows what. So, if you still have those credit cards and haven't shifted to a cash-based personal economy here are some tips to remember.

Top Tips to Improve your Credit

1. Review your current credit report for accuracy. Everyone is entitled to one free credit report per year from each of the three credit bureaus—Experian, Equifax, and TransUnion. Get a copy of your credit report and look at it for accuracy. First, make sure that the information in your file is about you and only you, not someone who has a similar name or a similar Social Security number. It is very common for your credit reports to have mistakes or incorrect information. At a minimum, make sure that the information you are being evaluated on is current and correct.

2. Repair credit report mistakes. If you find something on your credit report that is incorrect or missing, you should dispute the mistake by contacting the credit bureaus directly. All credit bureaus have their dispute procedures on their website. They are also required by law to investigate any disputed items and these investigations will usually be done within 30 days of your request.

3. Pay your bills on time. Sounds like a no-brainer, right? Payment history accounts for roughly 35% of your credit score. Paying bills on time is the most important thing to do. If you’re struggling to catch up, contact your creditors to work out a payment schedule.

4. Increase the length of your credit history. This accounts for about 15% of your score. Don’t cancel your old card or get a lot of new ones in a short time span because this can hurt your score.

5. Keep credit card balances low. It’s a good idea to keep the balances below 25% of your available credit. Even if you pay off your credit cards every month, a high average balance will impact your score. This accounts for about 30% of your credit score.

6. Keep new credit requests to a minimum. This accounts for 10% of your score. Every time a lender runs your credit, an inquiry is recorded. If you are trying to get a loan, don’t apply for new credit cards first.

7. Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.

8. Pay off debt rather than moving it around. The most effective way to improve your credit score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.

9. Beware credit-repair scams. By all means, don’t pay someone to wipe away the negative items in your file. If they don’t follow through, the damaging items will reappear in two or three months.

2009-11-08T19:04:00.000-08:00

'There's a change in them thar hills...' or so the quote goes. Yes indeed! Congress is passing all sorts of new rescue programs. If you are wondering about HARP and HAMP (I think HEMP is due in short order), read the following:

Loan Modifications Back To Basics

Loan Modifications can seem complicated to many of us. Especially when we are dealing with the stress of losing our home and we are presented with a seemingly endless list of requirements and forms to cope with. It is easy when writing many articles on a specialized subject to assume that everyone knows what you are talking about, that everybody is familiar with what HAMP, TARP, a servicing company, short sales and foreclosures are.

If you are an expert in loan modifications what on earth are you doing reading an article titled Back To Basics, if not this article is for you. This article will explain the big picture loan modifications are currently set in and the basic terms you must be comfortable with.

Who is the owner of your mortgage? Knowing who owns your mortgage is vital. This is not as easy as it sounds. Often the bank or institution you bought your mortgage from is just a handler, a servicing company that sells mortgages and collects payments on behalf of an investor. We will not go into detail with how mortgages are bundled and sold but it is enough to say that it is probably more complicated than you expect so it pays to approach your lender or mortgage servicer with large amounts of patience and an open mind. It is also a good idea to become somewhat of an expert on the subject so you can at least ask the right questions and know when you are being taken for a ride.

The Programs.
Facing mixed feelings and responses from the public the American administration has started many programs and measures to modify loans and make them more affordable for troubled homeowners. There are two main programs, the HARP program (Home Affordable Refinance Program) and HAMP (Home Affordable Modification Program).

HARP is for homeowners that are current on their payments but have not been able to take advantage of the current lower interest rates because the value of their home has dropped and they are not able to refinance their mortgage. In order to qualify for HARP applicants must have mortgages owned or insured by Fannie Mae or Freddie Mac.

HAMP is by far the most widely used program. Any servicing company is eligible. The government provides incentives to investors and borrowers if a loan modification is successful. The purpose of HAMP is to bring mortgage payments down to 31% or less of a family’s monthly income. This program requires homeowners to have a job and be able to pay for a reasonable mortgage payment. The first step you must make with HAMP is to qualify for a three month trial loan modification. Once you have gone throught the three months without missing a payment you can qualify for a full loan modification.

HAMP reduces loan payments with three main methods: 1) Reducing interest, 2) Extending the mortgage term up to a maximum of 40 years and 3) Forbearance of principal and allowing for a ballon payment at the end of the mortgage.

Don’t pay for help, it is free!
It is importance not to fall for loan modification scammers no matter how much you hate paperwork. The best advice comes from the government and they have a vested interest in your success. You can call HUD for approved housing counseling at 239 434-2397 or visit www.hud.gov.

More Foreclosures on the Way - Take Advantage

2009-10-25T18:08:00.000-07:00

The other day I wrote that more properties were headed to market in the not too distant future. Well, the other day one of the trade rags wrote the following:

Treasury Says Millions More in Foreclosures are Coming; Are You Ready?

RISMEDIA, September 17, 2009—According to recent announcements by the U.S. Treasury Department, another wave of foreclosures is on the way in 2010. For over a year, now, we’ve been digesting foreclosures and distressed properties and it looks like we’ll all be doing it for another year or so. It’s too large a market segment to ignore: in some parts of the country, distressed properties account for about 65% of sales these days.

With more properties coming online, perhaps you should consider how to participate. Broken down to its simplest truth, the foreclosure craze breaks down to this -everyone wants a bargain, and it is a fact that a great many people who rise to the bait of foreclosure properties are simply looking for a bargain. Nothing drives investors like smelling bargains, and there are bargains aplenty in most markets these days.

Government financing continues to be attractive and prices remain low. Give me a call to discuss your ability to purchase a property.

Numbers, numbers everywhere but who to believe?

2009-10-17T12:57:00.000-07:00

Just the other day, I heard that wise souls at USD devined there to be almost 7 million houses in default across the country in what has recently be termed 'shadow inventory'. This includes short sales, short sales pending, foreclosures, pre-foreclosures, foreclosures and short sales under contract, and 30-60-90 late payers on loans in addition to whatever the banks have been holding back from the marketplace. That number is 5.5 million more than is being bantered about by banking authorities.

Why such a large discreptancy? That is a tough question and although I don't have the answer I know that as I look around different mediums the reportage of numbers is astonding. Just like the deficit and all of the money being thrown hither and yon, it all just seems to flow with no meter on the open tap. Of course, banks are more than reluctant (see article below) to share numbers or be proactive out of shear fear or greed.

So, you might think that this newly redefined 'shadow inventory' of 7 million is ripe for the picking, and that good deals are 'just around the corner'. Yet, if the recent past is any indicator of the future it is my opinion that the banks will continue to be stingy in settling short sales, providing meaninful loan modifications, and miserly in doling out foreclosed properties to the marketplace because they can!

The following article gives a glimpse into the reason they can...

Creative Ways a Loan Modification Lowers Your Monthly Payments

Creative is probably not the first word that comes to mind when you think about loan modifications. There doesn’t seem to be many new ideas in the loan modification department.
The Government is definitely doing its best to reach the borrowers that need the help, especially those that reach those that can pay affordable mortgage payments. This helps “guarantee” the government is not throwing away good money after bad with borrowers that overstretched themselves and cannot afford any reasonably monthly payment.

However all signs show that these programs are not being as successful as they hoped. But how do loan modifications lower, or attempt to lower your monthly payments. The first and main way is by lowering your interest rate. Actually one of the main purposes of loan modifications is to allow homeowners whose homes have dropped drastically in price to still take advantage of the lower interest rates now available. The problems come when low interest rates are not enough. The government is currently trying to drop interest rates to around 2%. However if this level of interest rate is still too high to make your monthly payments affordable there are still some options open to you. You servicer or lender can still extend your payment term.

This means you will extend the amount of time you take to pay your loan. This idea is pretty intuitive if you owe $1,000 and you have to pay it in 10 months you have to pay around $100 plus interest. If you can pay it in twice the time your payments should be half as much plus interest. Servicers can extend the loan to up to 40 years which can have a drastic effect on your loan payments even though it keeps you in debt well into your eighties.

What if all this is not enough? What if you still can’t afford your monthly payments? Your lender or service provider can actually defer a portion of the principal (original) amount you owe until the maturity of the loan. We call this a principal forbearance. This does not mean the debt or part of it is forgiven just deferred or set aside until you sell your home or the rest of your mortgage has been paid. This option can be very effective in lowering your monthly payment but will create a balloon payment on your mortgage. This means that your payments will be lower monthly but you will have to make a very large payment at the end of the mortgage. This can be beneficial if you are planning to sell your home and cut short your mortgage anyway or if you want a break in your monthly payments now and expect your income to increase in the future.

Another option, not very popular with service providers is to simply forgive the principal owed. This is a long shot to say the least but still worth a try. Service providers are not required to do this so don’t keep your hopes too high.

Loan Modification Primer

2009-10-01T17:34:00.000-07:00

Ok, I've refrained from saying much about the loan mod program mostly because so few loans are being recast as to make the topic 'rarified'. However, in the past week or so I've met people who have accomplished the task and apparantly done well by it. They certainly think so, and they are the clients. On one hand the debt reductions sound impressive while on the other one must look at the current market value to see if they've truly been repositioned and are no longer 'under water'. That being said, for those of you curious as to the steps and procedures, please read the following;

Loan Modifications Eligibility Criteria, The Rules Explained.

Providing loan modifications to those that need them and are eligible according to the current criteria is the goal of the cash happy loan modification aid program.

The goal is to keep out scammers and those who wish to take advantage of the system while not letting the “deserving” fall through the cracks. This is an ambitious goal. As we have discussed in previous blogs making good rules that keep out the cheats and welcomes the eligible is very hard.

Here is the current ten point criteria for loan modifications:
1.) Loans must be conforming conventional loans or conforming jumbo mortgage loans and they must have been contracted before January 1, 2008. What is a “conforming” loan is changing all the time.
2.) You must be three payments past due. This requirement was happily dropped. You don’t need to be behind in your payments although you must be able to prove you can’t pay your mortgage payments but could afford those of a modified loan.
3.) The loan is secured by a one-unit property and must be the borrower’s primary residence.
4.) The current mark to market LTV must be of 80 per cent or more.
5.) Property must not be abandoned, vacant, condemned or in serious disrepair as well as being the borrowers primary residence.
6.) The goal of the loan modification is to reduce monthly payments to 33% of the homeowners monthly income. In order for this to occur, servicers may:
7.) Capitalize accrued interest, escrow advances and costs as far as state law allows.
8.) Extend the term of the mortgage (tenure) by up to 480 months (40 years).
9.) Reduce the mortgage loan interest rate in increments of .125% to a fixed rate of no less than 3%. If this causes the rate to be below market rate it will step up in annual increments to a market rate after 5 years have passed.
10.) As a last resort eligible borrowers will be provided principal forbearance which will result in balloon payment. This means payments will be kept low while the big money is paid when the house is sold or the loan matures.

Some of the points of this criterion are under their third or even fourth revision so checking for accuracy is wise. The key criteria is to be able to afford the reduced monthly payments. If you can’t afford a reasonable loan modification there is little hope. This does not mean unemployed borrowers are automatically barred from loan modifications but they must provide some proof of income or prove they are likely to find employment soon.

The methods the government suggests to reduce monthly payments are rather bold which explains why many banks are doing their best to drag their feet as in many cases it actually costs them money to provide the loan modification.

$8000 Tax Credit is Worth Going For!!

2009-09-29T10:32:00.000-07:00

If you, or someone you know, is interested in buying a property as a 'first time homebuyer' - that is someone not owning property for the past 36 months- the following video is worth watching and passing along.

Now is definitely a very good time to buy because (1) interest rates are remarkably low (5% or less), (2) house prices are quite low, and (3) it's pretty easy to get qualified if you can put down at least 3.5%. Oh yes, and there is a tax credit of $8000 which is kinda like earning $40,000 and not paying taxes on it (for someone in the 20% tax bracket). Yes, it is pretty kewl!

The only drawback is that there isn't much time left, so call and let's get you or someone you know 'preapproved' for a loan to make the purchase. It really is THAT Easy!

When Banks Don't Play Fair

2009-09-21T07:13:00.000-07:00

For the next few posts, I'm going to offer you some insight into the shambles the Loan Modification program has become...or actually how it began and is now ever worsening. Don't get me wrong, of the +800,000 proposed modifications under the Administration's current plan, there will be about 45,000 (U-T 9-20-09) getting modified this next year, or about 5%. Ouch!

Here is a recent article that does a good job of exposing the lenders for what they are...sharks!

Loan Modifications: What to Do When Banks Don’t Play Fair
Posted: 19 Sep 2009 03:16 PM PDT

They say that crisis bring out who we really are. If that is so, things are not looking that hot in the financial sector. As the credit crisis deepens banks are acting more and more conservatively when it comes to loan modifications and mortgage refinancing.

Some would say that bailing out homeowners is wrong. We should all be responsible for our decisions and there is nothing wrong in renting. I would have to agree with this. My parents have worked all their life, still rent a humble apartment and are probably the happiest couple I know.Having said that if the government have decided to provide breaks for families that are struggling to pay their mortgages and are willing to pay mortgage providers for the privilege the least banks and servicers can do is take the cash and help out as much as they can, especially as they have been recently recipients of bailouts themselves.

Instead of showing empathy to the situation of desperate homeowners that are scared of losing their homes they are acting as what they are, profit based organizations. No surprises there, a capitalist economy is based on the assumption that companies are going to do what is best for them, not for the greater good. However that does not mean they should be allowed to break the rules and stall procedures for their own advantage.

Banks that don’t seem to understand the rules of the game.

What is especially scary is when banks don’t seem to understand the requirements for a government sponsored loan modifications. As an example, a recent story was published that involved Citimortgage loan. After an arduous procedure the homeowner in question was able to qualify for a loan modification and enter the 3 month trial. His mortgage was reduced to $1503 from $1727 a great difference for a family with three kids under the age of 5.Just before final approval was achieved Cit changed the monthly payment to $1817, a $90 increase to cover an increase in the insurance, even though they had not been approved for the loan modification. If they had have been approved for the loan modification there would have been no grounds for increasing the insurance as both the taxes and insurance are included in the reduction of monthly mortgage payments to 31% of the monthly income.

The homeowner then contacted the bank and was told that because he had recently filed bankruptcy he was no longer eligible for a loan modification. However there is not information in the loan modification literature provided by the government on bankruptcy disqualifying a homeowner that can afford the modified payments.

Contacting the government programs and asking for their help and assistance is probably the best way forward in these circumstances when banks are unwilling to budge.

Stalling to the eleventh hour.Another practice that seems to be popular with mortgage providers is to stall proceeding until the last minute. That was the case with a homeowner whose mortgage was owned by Wells Fargo. Paperwork was lost twice (which seems to be a common happening with loan modifications) and resubmitted by FedEx at the homeowner’s expense. Once the homeowner contacted Wells Fargo they were required to fax further information even though they had been assured that they had all they needed. It does seem disturbing that the homeowner was the one that had to contact the bank to find out they needed to send further information.

After stalling a reply for months and when the mortgage was close to foreclosing the homeowner was told they did not qualify for a loan modification but that they could offer a $11,000 loan. Why a homeowner that is struggling to make payments on his mortgage would want another loan on which to make monthly payments, I don’t know. This does seem to be a bad way to carry business, dangerous to the economy and homeowners.

The only way to fight these abuses or mistakes is to arm yourself with information. Contacting government organizations is the best step. Explain your circumstances and ask what your best options are. In this case free advice is the best money can buy because it is unbiased which is much more than can be said of most loan modification companies.

2009-09-20T13:58:00.000-07:00

Over the past year, there has a 'hue and cry' coming from many of the homeowners who are upside down and searching for some relief through a loan modification. It confounds the average person as to why banks are not more eager to help, and are now actually part of the problem instead of the solution.

The article below was recently posted and I'm passing it along so that you can get a sense of the idiocy and frustration that is coming out of the current misguided program. Until there is some accountability added into the system, and the various silos inside the banks are better educated and empowered, we will continue to see a mishmash of results with the public being frustrated.

Loan Modifications, Judges Frustrated by Banks Nonchalant Attitude Posted: 19 Sep 2009 03:13 PM PDT

Nationwide Judges are receiving complaints against banks and mortgage providers for dragging their feet and not providing the customer service that is to be reasonably expected. Especially since the government is paying for mortgage providers to deal with loan modifications as fast as possible.Unfortunately Banks and service providers are not carrying out loan modifications as fast as was expected by the government or hoped by homeowners. I find this hardly surprising.

If I had a business and was asked to spend money to reduce the monthly income I receive from a debtor I would make sure I was suitably compensated. The fact is that in some cases banks end up worse off when they modify a loan.What is not so easy to empathize with is when banks systematically stall procedures, lose paperwork and change their requirements systematically. This has been the story that has been told nationwide and some judges are starting to tire of it all.One case that has hit the news is that of Bobbi Giguere, initially published on the New York Times. Mrs Giguere submitted her paperwork three times to no avail.

Last Thursday an interesting turn of events occurred at Judge Randolph J. Haines courtroom. Judge Haines instructed Mrs Giguere to question a Wells Fargo high ranking executive on the bank’s lack of response towards her loan modification.Judge Haines explained the irregular procedure as a response to the growing concerns about Wells Fargo’s mortgage modifications practice.The problem is that this is not an isolated case. Consumers nationwide are complaining (that is certainly not new) about the difficulty of getting a response from their mortgage servicers. This is threatening the success of the Obama Administration’s loan modification plan.

While banks and mortgage servicers stall their response many homeowners foreclose on their mortgages and lose their homes which in many cases is good news, or the least of two evils for banks and loan providers.The questioning of Mr. Ohayon the Wells Fargo executive was carried dramatic enough to be part of any lawyer movie. Mr Ohayon initially stated that Mrs. Giguere had repeatedly failed to provide a financial worksheet, a critical document for the loan modification to be processed.Then came the fun part, what courtroom dramas are all about. Under cross examination Mrs. Giguere produced the letters Wells Fargo sent requesting the paperwork required for the loan modification. She asked Mr. Ohayon to read the letter and he was forced to concede that the letter did not ask for a financial worksheet.

This irregular procedure in which a Judge requires a large bank corporation like Wells Fargo to place an executive on the witness bench shows the federal frustration on the way loan modifications are being carried out throughout the United States.

How FHA is Helping Rehab Some Communities

2009-09-17T16:07:00.000-07:00

A lot of clients ask me about a program they've heard of for rehabilitating properties, of which there are two. One is a 'streamlined' version and allows for up to $35,000 in cosmetic improvements (but significantly less is actually available after closing the loan) and the more robust, 203(k) program.

If you are looking to buy a property that can use some modest and minor work, the streamlined loan will work just fine. For something more involved, you'll want to look into the other product. Here is an interesting article for your reading enjoyment:

FHA 203k Loans Today
Posted: 15 Sep 2009 08:09 AM PDT

Foreclosures have struck communities across the country in the wake of the subprime meltdown and ensuing housing slowdown.

While the FHA continues to garner headlines as an increasingly attractive lending option for prospective homebuyers, one of the agency’s lesser known programs may hold the key to helping to rebuild neighborhoods nationwide.

Government loans are headed for a record year in 2009. The FHA’s traditional home loan program has grabbed significant market share in the last fiscal year. But its unique program for purchasing and refurbishing rehab properties is gaining momentum.

The FHA 203(k) program provides qualified borrowers with fixed-rate and adjustable-rate mortgage options, which can be used for buildings anywhere from one- to four-family in size. Down payments, like the traditional FHA loan, are as low as 3.5 percent. Generally, the FHA will set the loan amount based on what the agency thinks the home will be worth upon completion of all rehab work – that includes the actual costs of repair.

Buyers can even use the 203(k) program on structures that were torn down, provided there’s some semblance of foundation at the site. A 203(k) loan can be used to cover rehabilitation costs such as room additions, painting, building decks, and a host of other alterations. Other acceptable refurbishing includes:
Roofs and gutters
HVAC systems
Plumbing and electrical
Flooring: carpet, tile, wood, etc.
New windows and doors
Weather stripping & insulation
Stabilizing or removing lead-based paint
Basement completion and waterproofing
Septic or well systems

Buyers can also take advantage of the FHA’s Energy Efficiency Mortgage program and finance into the mortgage the cost of significant efficiency improvements. There are specific values and dollar limits for the agency’s EEM program.

Underwriting standards can at times be stricter for 203(k) loans, although there are no income or credit score restrictions to qualify. In most cases, the rehab work must start within 30 days of closing, be complete within six months and be professional in nature.

The 203k program doesn’t cover things like luxury improvements, which homeowners have to pay for from their own pockets. To learn more about FHA 203k loans, visit the HUD website here.

As the Credit World Turns

2009-09-12T17:46:00.001-07:00

You may remember sometime back I predicted that the underlying algorithms for Fair Isaac's FICO would change to accommodate the millions of folks who have (or are) losing their homes as well as the many more millions (many of the same as above) who are in credit card default hell. In order to win the foreclosure battle the way the Government has chosen to fight it, there must be relief so that people can get back into a house.

I also predict that underwriting standards will be changing some time soon to allow people easier passage through the lending process. I'll keep you abreast of that as it happens. In the meantime, this article I read the other day clearly shows how and why new FICO modeling is needed:

Is the New Credit Score Model Helping Home Buyers?

Print Article

RISMEDIA, September 9, 2009—Credit Expert Eddie Johansson believes the improved FICO 08 credit scoring model will increase the credit scores of a significant segment of borrowers, but it’s not helping home buyers. According to Johansson, president of Credit Security Group, a leading nationwide credit analysis and rescoring firm, that’s because the largest sources of home financing, Fannie Mae and Freddie Mac, have not yet approved it.

“When Fannie and Freddie approve it, it has arrived- but not until then,” he said. Neither organization has provided its schedule or intentions for approving the FICO 08-based credit scores available from two major credit bureaus. Credit scores help lenders determine whether a mortgage loan is approved and the interest rate offered. In general, the higher the score, the easier it is to get a mortgage loan and the lower the interest rate.

Johansson said his analysis predicts the new model- if approved- will have the most impact on the current refinancing boom and mid-to-higher-end home sales. Speaking to 150 bank executives at the Independent Bankers Association of Texas Leadership Conference in San Antonio and to banking educators attending the Financial Literacy Summit at the Federal Reserve Bank of Dallas, Johansson said, “If it’s implemented as expected, it is a great opportunity to boost the housing market.” Johansson believes the new model will be a more accurate measure of credit risk. “It takes into account more of the borrower’s history and penalizes them less for a single unusual event,” he said. “It also has more score card levels, allowing finer adjustment of credit scores.” He said it will reduce the power of unscrupulous credit collectors too, since a single bad event- reported in error- will have less impact on scores.

FICO 08’s developer, Fair Isaac Corporation, predicts it will help lenders reduce default rates on consumer loans 5 to 15%.

Fannie Mae and Freddie Mac own or guarantee almost 31 million home loans worth about $5.4 trillion, which makes it all the more important that they approve the new score model.

For more information, visit www.creditsecuritygroup.com.

New Regulations, FICO Study Big News for Credit Card Holders

2009-09-03T14:39:00.000-07:00

To take some attention away from the housing debacle, here's an update on what has become know as the 'credit card debacle' where major companies like American Express, Visa and the like have taken a terrible bath both in lost revenues and defaults.

New Regulations, FICO Study Big News for Credit Card Holders By Pamela Yip

RISMEDIA, August 31, 2009-(MCT)-Last week brought significant news to credit card holders. First, the initial phase of a landmark bill overhauling credit card laws took effect, and a new study shed light on the growing practice of credit card issuers’ slashing consumers’ credit limits.
The most significant aspects of the new legislation don’t go into effect until February 2010 though. Those provisions include restrictions on interest rate increases and marketing credit cards to people under 21.

Meanwhile, the rules that just kicked in mean that:
-Card issuers must mail credit card bills at least 21 days before their due dates. That’s up from 14 days. “Don’t look at this as an extra week to wait and pay your bill,” said Bill Hardekopf, chief executive of LowCards.com and author of The Credit Card Guidebook. “Keep your regular payment schedule and be appreciative for the extra cushion to make sure your issuer receives it on time.”
-Card issuers must give you the option to avoid future interest rate increases and pay off any outstanding balance under your current rate. If you take this option, you won’t be able to make additional charges on that card, and you must pay off the balance within five years. “If you opt out, you must let the issuer know in a timely manner by mailing an opt-out letter to your issuer declining the rate increase,” Hardekopf said. Be aware that you may have to pay more each month to make that five-year payoff deadline. “The bank can cancel the card and make you pay it off under your old terms, but with a higher minimum payment,” according to Consumers Union. “Your new payment could be double your old minimum payment, or higher, if needed, to pay off the card in five years.”

-Card issuers must give you at least 45 days’ notice before making major changes in terms, such as changing your interest rate or the fees they charge. That’s up from 15 days. Other card changes that require at least 45 days’ notice include an increase in your minimum payment and switching your fixed rate to a variable rate.

The law doesn’t require advance notification if an issuer closes your account or cuts the credit limit on your card-as many readers report having happen to them. One reader had a $20,500 limit slashed to $5,100 – a 75% cut. Fortunately, she pays off her bill each month.

I have been intensely interested in how much credit scores would suffer from chopping the credit limit. The study released by FICO, the company that produces the most widely known credit score, shows the impact isn’t cut and dry.

Consumer who carry high balances and have their credit limits sliced too close to their balance could see their credit score suffer. For others, the impact may not be as acute as you’d think.
According to FICO’s study, card issuers sliced credit limits for an estimated 33 million U.S. card holders between October and April. An estimated 24 million consumers saw their credit limits reduced despite the absence of any new “risk triggers” during the study period. Those card holders generally had low balances, didn’t use up a lot of their available credit, had very few-if any-reports of missed payments, and had a long credit history. About one-third of the group, or 8.5 million, saw their credit scores drop after their limits were cut, typically less than 20 points, FICO said. The cuts had “negligible impact” on the scores of about 3.5 million people, and 12 million consumers saw score increases.

But the study also found that credit scores fare best when consumers keep credit card balances low. Credit counselors advise not using more than 30% of your available credit. “Consumers who use 70% or more of their available revolving credit were found to be 20 to 50 times more likely to become delinquent on a credit obligation within the next two years, compared to consumers who use less than 10% of their available credit,” FICO said.

The bottom line is, if you want a high credit score, pay your bills on time, keep your balance low and apply for credit only when you need it.

(c) 2009, The Dallas Morning News.Distributed by McClatchy-Tribune Information Services.

Stay tuned for more FICO changes...

New credit scoring model may boost some borrowers' scores

2009-08-28T17:33:00.000-07:00

I have said for some time now that credit scores will be adjusted to reflect the current hard times for so many people. Although the article below is addressing small items under $100, it is probably the first in a series of algorithm changes that will eventually downplay late mortgage payments and perhaps even foreclosures. The times they are a-changin'!
Making the grade

By Amy Hoak, MarketWatch

CHICAGO (MarketWatch) -- Even the most responsible borrowers slip up sometimes.

Maybe a utility bill went unpaid after you moved and the missed payment went into collections. Or, perhaps there are unpaid library fines or parking tickets in collections that are hanging onto your credit history and affecting your FICO credit score, which is widely used by lenders to evaluate your ability to repay a debt.

With the newest version of the FICO credit-scoring system, however, minor delinquencies are now overlooked in calculating creditworthiness.

Under the updated scoring model, called FICO 08, small, missed payments lingering in collections with original amounts of $100 or less will no longer do damage to your credit score.

Consumers also are less likely to be penalized for any single delinquency if it occurred two or more years ago -- and if their credit history is otherwise unblemished, says FICO , formerly Fair Isaac Corp., which developed the FICO scoring system.

"There's more flexibility with missing a payment," said Careen Foster, director of global scoring product management for FICO. "If you have a more habitual pattern of paying accounts late...you're more likely to get penalized for that."

If a consumer's credit usage is high, that will be more likely to hurt his or her score with FICO 08. But getting close to your credit-card limits -- even if you always pay on time -- is penalized in some way in every FICO score, not only the recent edition, Foster said.

The new system has been available at all three credit bureaus -- Experian, TransUnion and Equifax -- since last month.

The changes were made to provide lenders with a better risk assessment of borrowers, said John Ulzheimer, president of consumer education for Credit.com, a consumer education and advocacy site. FICO decided that one small library fine didn't really predict whether a consumer was likely to default, for example.

With the changes, individuals who pose a low credit risk will probably see their scores rise a bit, and those who are high risk could see their scores drop, he adds.

FICO 08 also addresses "piggybacking," a practice used by credit-repair companies to help people improve their scores, Ulzheimer said. In piggybacking, an individual pays to become an authorized user on a stranger's account. The account holder gets paid for allowing the person to be associated with the account, and the new authorized user is able to improve his or her credit score.

"It was a practice to...misrepresent what your credit looks like to your bank," Foster said.

FICO 08 aims to single out individuals who are named as authorized sources through deceptive means, Ulzheimer said. Those people won't see their credit scores rise as a result. But the scores of legitimate authorized users will be treated as they always have been.
Adoption Rate

Borrowers shouldn't expect their credit to be graded by this new scale on every loan they now apply for. Not all lenders have adopted the new model, though more than 400 lenders are using or testing FICO 08, the company said.

In a statement, Equifax said, "Currently, many lenders and businesses are validating the new score within their systems, and adoption will vary by financial institution based on business requirements and market need."

Many credit-card companies, auto lenders, regional banks and credit unions may have already adopted FICO 08, Ulzheimer said. But for mortgages, lenders doing traditional conforming loans backed by Freddie Mac and Fannie Mae likely haven't made the move yet, he said. That's because they're waiting for Freddie and Fannie to approve its use. Freddie Mac and Fannie Mae "are essentially the lender... they're the ones that set the underwriting criteria," he said.

Ulzheimer said he expects Freddie and Fannie to adopt FICO 08 by the end of the year. Fannie declined to comment on FICO 08; Freddie wasn't able to provide a comment prior to publication.
Improve Your Credit

While FICO 08 will help consumers' credit scores in some cases, people still should take steps to improve their credit. Granted, it's impossible for consumers to calculate their FICO scores themselves, said Rodney Anderson, of Rodney Anderson Lending Services in Plano, Texas.

"It's almost like the Coca-Cola formula. No one has access to the Coca-Cola formula, no one has access to the FICO formula," he said.

But by being proactive, you can start to work toward a higher score, something that will serve you well every time you apply for a loan.

Some suggestions:

*

Monitor your credit reports and correct errors. Look not only for negative events on your record, but also examine the credit limits to make sure they're accurate. If the credit limits appear lower on the report than they actually are, that has the potential to hurt your score, Anderson said.
*

Pay bills on time and keep card balances low. Your payment history, and the amount you owe on your accounts as a ratio of the amount of credit you have access to, are important components of your score, Foster said. FICO 08 is more sensitive to high credit usage, and consumers may see a lower score if their reported balance on one or more cards is near the account's limit.
*

Take on new credit only when you need it. Some credit cards come with great offers, including a percentage off your bill if you sign up for one at the cash register. If you accept, make sure you're getting a big enough benefit to make it worthwhile -- taking on additional credit could end up dinging your score, Foster said

Delay and Pray

2009-08-26T18:57:00.001-07:00

I'm back from burying Dad and helping Mom with her transition to a new reality. There is no way to delay the inevitable, and perhaps no way to prepare for it. Things kept rolling along in my absence with deals coming together and falling apart, all to the beat of giant juggernaut we call life.

Upon my return I spoke with Kelly, a longtime friend and client, about the current real estate market. When we began looking for a place for her to buy last April there were all of 67 properties along the 78 corridor. At the first of this week there were 57, most being short sales and in some state of negotiations presumably. In the end, nothing Kelly wants to buy.

So she asks me, 'What's going on? How long before the floodgates open?' A wonderful question, one that so many of us are pondering. My answer was along the lines of this great story from Marketplace radio on KPBS.org. Listen and learn:

http://marketplace.publicradio.org/display/web/2009/08/26/pm-banks-q/

My prediction is that as soon as the first time home buyer tax credit expires, there will be a flood of properties. The result of this I only dare to think.

Taxpayers Tax Breaks Do Have a Time Limit

2009-08-07T17:20:00.000-07:00

The Clock is Ticking - Taxpayers Need to Act Fast to Take Advantage of Temporary Tax Breaks

^[1]RISMEDIA, August 7, 2009-If the first half of 2009 is any indication, taxpayers have their work cut out trying to keep up with available tax breaks and potential tax pitfalls of 2009, according to CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services.

In February 2009, Congress passed the Economic Recovery and Reinvestment Act of 2009. The nearly $800 billion economic stimulus package offers significant tax incentives; however, many of the incentives, as well as other tax breaks, are temporary.

“It’s always confusing for taxpayers when rules change,” said CCH Principal Federal Tax Analyst Mark Luscombe. “But with so many people struggling economically, it’s well worth their effort to see where they may be able to save on taxes, even if it’s only temporary relief.”

According to CCH, among the important temporary tax changes affecting individual taxpayers and set to expire during 2009 are:

-First-time homebuyer credit. This credit reaches $8,000 for purchases between January 1 and November 30, 2009. Taxpayers must be qualified buyers and satisfy income requirements. Eligible taxpayers also can file an amended 2008 tax return to receive the credit sooner.

-Motor vehicle sales tax deduction. Taxpayers can take an extra standard deduction for state and local sales taxes paid on the purchase of a new vehicle and, in states without a sales tax, taxpayers can deduct other fees to take advantage of the temporary motor vehicle sales tax deduction enacted as part of the 2009 Recovery Act. The amount of the deduction is limited to the portion of the state sales or excise tax imposed on the first $49,500 of the purchase price of the vehicle and is effective for vehicles purchased between February 17 and December 31, 2009.

-COBRA premium assistance. Individuals laid off from their jobs between September 1, 2008 and December 31, 2009 meeting income limits may qualify for nine months of COBRA premium assistance under the 2009 Recovery Act. Individuals pay 35% of the COBRA premium and employers must treat that as full payment. Employers claim a credit for the other 65% of the premium on their payroll tax returns.

-Economic recovery payments. The 2009 Recovery Act authorized one-time payments of $250 to individuals receiving Social Security benefits, disabled veterans and others on fixed incomes. The Social Security Administration began sending the bulk one-time payments by mail and direct deposit in May 2009.

-Exclusion of unemployment benefits. Individuals receiving unemployment benefits in 2009 can exclude the first $2,400 from their income. The exclusion is only available for 2009.

-Tax evasion forgiveness. In an effort to shore up tax revenues, the IRS is encouraging taxpayers to disclose unreported foreign bank accounts and assets. In exchange for full disclosure and paying all back taxes plus interest and penalties, the IRS agrees not to criminally prosecute tax evaders and to waive the 75% fraud penalty. The settlement offer is only available up to September 23, 2009.

Additionally, Luscombe pointed out that while the Making Work Pay credit, another outcome of the 2009 Recovery Act, is in effect for both 2009 and 2010, taxpayers and pension recipients need to take a look at their withholdings now to make sure they don’t end up owing more than they expected in taxes. Specifically, Making Work Pay is a credit against a worker’s income tax equal to the lesser of 6.2% of their earned income or $400 ($800 for married couples filing jointly). This amount can be reduced by any economic recovery payment an individual received and phases out beginning at adjusted gross income of $75,000 for single filers and $150,000 for joint filers. Individuals with multiple jobs may need to adjust their withholdings if the credit results in too little income tax being withheld from their wages. In May, the IRS also issued a withholding option for pension plans to offset the credit which could result in some pension recipients underwithholding.

Looking Ahead at Tax Legislation
The rest of 2009 will likely bring additional tax law changes, although many will not take effect until 2010 or beyond. In May, President Barack Obama released details of his tax proposals which included extensive reform of the international tax rules, higher tax rates on upper income individuals, extended middle income tax breaks and deficit reduction. Individual tax cuts would total $736.5 billion over 10 years and business tax cuts would total $71 billion over 10 years. In addition, in late July, the administration outlined tax proposals to help pay for health care reform, including a surtax on families earning more than $1 million a year.

“Congress has already noted its opposition to some of the president’s proposals,” said Luscombe. “However, there are several more months remaining in the year, a growing deficit, an economy that is still trying to find traction and an urgency to reform health care. As a result, it’s a fluid time where policymakers can shift their priorities and make concessions in order to move forward the programs they think are important.”

New Credit Card Rules Spells Good News For Debt Relief

2009-08-01T13:32:00.000-07:00

One of the greatest culprits for serious debt problems are credit cards. Obviously it is our bad use or management of credit cards that causes the debt problems, you can’t blame a gun for what its owner does with it. Nevertheless some guns are more trigger sensitive than others, and it’s not the same to own an automatic machine gun than an air gun. It’s all about understanding the rules of the game and what the real cost of your credit is. The Obama administration have backed the implementation of new credit card rules that will help many of us to save money and stop paying so much of it to the banks in fees and penalties.

What are the new rules?

Raise interest rates on existing balance. This is a great victory for consumers. This is a little known tool banks had in their arsenal of money making methods. In fact most of us probably didn’t know the bank could increase the rate of interest on our credit card without asking. If you think of it that is pretty crazy because the interest rates on credit cards are already huge.

Payments will pay off your most expensive debts first. Borrowers using credit cards, especially when transferring balance from one card to another, can find themselves with different rates of interest for debts on the same card. Previously there was not guideline or rule on which part of the debt banks must use your monthly payments to cover. Obviously banks had an incentive to pay the cheaper interest rates first and leave the most expensive rates to last. With this new credit card rule that will not be a legal course of action for banks that must allow borrowers to pay off their most expensive credit card debt first.

Other cards can’t penalize you for missing a deadline on another cards. We all know that banks are a closed knit community. They might compete against each other but when they are dealing with borrowers data, credit record and payment history they are happy to share their knowledge. They can still share information on delinquent credit card payers but can’t hold it against them.

None of these measures will stop the banking industry from making more and more money on our misuse of credit cards but it has plugged some holes banks will no longer abuse.

(by Andrew on July 29, 2009)

In order to take advantage of current, low mortgage rates and home buying opportunities, let's discuss your current debt and how to make it work for you. Give me a call at 760.740.5111

Housing in a nutshell: Foreclosures up. Sales up. Prices down.

2009-07-23T09:59:00.001-07:00

Housing in a nutshell: Foreclosures up. Sales up. Prices down.

New research by Paola Sapienza of Northwestern University and Luigi Zingales from the University of Chicago, provide interesting insight into the foreclosure tsunami.

In the 1990-91 recession the study found that very few people who could afford their mortgage walked away from their homes. The magic number was 10. When equity declines exceeded 10% of the value of the home, owners started to waiver. A 10% loss and the default rate begins to rise. A 50% loss of home value and 17% of all owners preferred default to staying in the game.

The study concludes that in this cycle, a large segment of foreclosures were driven by a different metric. One in four recent mortgage defaults are strategic. Buyers of property make a business decision to walk away because they no longer like the deal. For 25% of all foreclosures, today, its not inability but unwillingness to make payments.

The study makes an interesting observation. The Obama administration is focused on cash flow to owners to keep them in their homes. This study points to a different reason for a large segment of foreclosures. Many people wont stay in their homes when the value of their mortgage exceeds the value of their home by 10% or more.

If the study is correct, then writing down the loan would significantly stem the tide. Since lenders are unlikely to do so, Im betting we will continue to see foreclosures for quite a while.

7 Options to Avoid Foreclosure

2009-07-13T08:47:00.000-07:00

Falling behind on your mortgage payments? Here are 7 options you need to know about to avoid foreclosure.

It is all too often these days that I am talking to people who are in a bind with their mortgage. They usually fall in to one of 3 groups:

* They have taken on too much mortgage debt with a large home or previous cash-out refinance
* They have fell on some hard times, either through a loss of a job, injury or loss of a spouse
* They have recently had their mortgage payment adjust and they can no longer afford the higher payment

The first option that they look for (and that we try to consider) is a refinance out of the existing mortgage and in to one that is more manageable in terms of the monthly payments needed to keep the debt in good standing. While this may not be the “best” option it is the one that people gravitate towards initially. Refinancing was easy over the last few years:

* Sky-rocketing property values ensured that consumers could count on home appreciation to help them pay off debt and pull cash out of their homes
* Interest rates continued to drop or remain low
* Credit guidelines became looser and made qualifying for loans easier than ever

However, today things are much different.

* Home prices are falling
* Interest rates are rising
* Equity is tapped out
* Credit guidelines are tougher

All of this means that refinancing is not always an option for homeowners who suddenly find themselves unable to handle their mortgage payments. If you are in a situation where you have missed-and are likely to miss future-mortgage payments, here are 7 options you need to know about and explore to avoid foreclosure and keep from losing your home.

1. Refinance - If you can. This may be the best chance you have to get a mortgage while rates are still reasonably low and programs are still available. If you are a subprime borrower in a short-term loan that is coming adjustable shortly you need to take advantage of this last window of opportunity. With Wall Street set to devalue billions of dollars in subprime loans you can bet that subprime lenders are going to become more strict in their guidelines and more expensive in terms of interest rate. Take advantage of the rates and programs today – they probably won’t be there tomorrow.

If you can’t refinance and are late on your mortgage here are 6 other options you have to help avoid foreclosure on your home.

2. Reinstatement – You may be able to have your loan reinstated by contacting the loan servicer and agreeing to repay the past due amount of mortgage payments plus any fees and penalties by a certain date. This will bring your loan current and stop the lender from initiating foreclosure proceedings. If you are having a hard time making your mortgage payment this option may be impossible for you; however if your inability to pay was based on a temporary situation or one-time expenses this may be viable.

3. Repayment plan – You may be able to stop foreclosure proceedings by establishing a repayment plan with your loan servicer which adds additional money to your currently monthly mortgage obligation to repay the amount of delinquent mortgage payments outstanding on your loan. Again, this will only work if you have a few mortgage payments delinquent as adding additional dollars to your monthly payment may make meeting these obligations impossible.

4. Forbearance - Forbearance is where your loan payments are either suspended temporarily or the amount of the monthly payment is drastically reduced for a short period of time. The length of time is negotiable between you and the loan servicer. The deferred portion of the payments can either be due upon completion of the forbearance period or they may be added to the outstanding balance of the loan. This depends on the loan servicer. Remember, the loan servicer is not going to agree to a forbearance agreement unless you can prove that the situation leading to your inability to pay is a temporary one that can be resolved shortly. If you can’t afford your home simply because the debt is too expensive there is little chance that the loan servicer will approve a forbearance request.

5. Loan Modification - A loan modification is a change to the terms of your loan to keep the loan affordable and to help you keep your payments current. A loan modification may reduce the long term interest rate, adjust the length of the fixed period of the loan, or adjust the loan balance to add missed payments on to the principal balance of the loan. Typical loan modifications include reducing the interest rate of loans that have recently adjusted out of their teaser rate period. This makes sense if you are able to remain current on your loan with slightly better terms than you are currently obligated to through the loan documents.

6. Selling Your Home – This may be the best option if none of the above solutions will work for you. While it may be painful to sell your home; it is far better than losing your home outright via a foreclosure sale. You may have to sell your home at a loss, called a “short sale,” in which your lender approves a sale amount that is less than the amount of your existing mortgage. If your lender approves a short sale you will be issued a 1099 for the difference between your mortgage amount and the sale amount. This amount is taxable as “debt relief” under existing laws. There is some pending legislation to change that tax that is working its way through Congress.

7. Bankruptcy – Bankruptcy is always a last resort; however, it may be the only thing that will let you keep your house out of foreclosure. If you are in foreclosure and the lender or servicer will not stop the proceedings for any of the above remedies consider filing bankruptcy. Once bankruptcy is filed foreclosure proceedings are halted immediately. While a bankruptcy will have a large negative impact on your credit for a long time to come, so will a foreclosure. But with a foreclosure you lose your house too. Talk to a bankruptcy attorney about specific pros and cons to filing bankruptcy if your lender or servicer will not consider any other options.

Remember, while your loan service collections department can be aggressive and downright unfriendly when trying to collect past-due mortgage debt their tune will change quickly if you inform them that you are unable to repay the debt. If you are late and need to consider one of the above options take the following steps immediately:

1. Talk to a trusted mortgage professional about refinancing options.
2. Talk to your loan servicer’s collections department and ask to be transferred to the “loss mitigation” department
3. Fully disclose to them your current situation and reasons for delinquency
4. Discuss your options to cure your debt and manage future mortgage payments
5. Become more informed about foreclosure prevention options
6. If you have a FHA or VA loan you may have other options – contact those entities directly (www.fha.gov)

For more information on staying out of foreclosure visit the Federal Trade Commission’s Facts for Consumers on the foreclosure process. Much of the information here is based off this valuable resource.

A few things not to do if you are facing foreclosure (we’ll cover these more in-depth in a future post):

1. Do not sign on with a foreclosure rescue firm
2. Do not add anyone to the title of your property who promises to bring you current or otherwise repay your loan
3. Do not agree to any impossible debt repayments such as borrowing $40,000 with a guarantee to repay $80,000 in 6 months.
4. Do not let anyone charge you an upfront fee for foreclosure advice and assistance (it’s illegal in California).

Feel free to email me if you have any questions or concerns about your existing mortgage. I am more than happy to help if I can. ronalpert@att.net

Reposted by Morgan on July 11, 2007

Some Good News about a Recent Post

2009-07-13T08:44:00.001-07:00

I have been notified by several Title and Escrow companies that the State of CA has backed off its ruling to prevent lenders and agents from searching the public files through their services for comparable sales. This is Huge and allows the business of lending and selling to continue in a more efficient manner.

Give a toast to Reason...it won this round!

Interesting Thoughts for July 7th

2009-07-07T10:57:00.000-07:00

There has been quite a bit of upset over the latest HUD and State of California rulings that are intended to place a barrier around appraisers from 'undue influences' by realtors and lenders. You've probably heard about this from friends and family who were unable to obtain financing because the property couldn't carry the value in today's marketplace, or may have experienced it yourself.

Realtors are particularly impacted, and as of July 1st lenders are also affected. The situation now is that in our efforts to know the market and what has sold, we have been denied access to the very information we use to compile CMA (Client Market Analysis) and provide BPO (Broker Price Opinion) which are the mainstay of property valuation to the market. The job of a realtor is to list a property 'at market value' and then conduct Marketing activities to get it sold. That has now been made ever more difficult...and that is undesirable for the consumer.

Below are two good articles you can link to that give some insight into the situation.

Letter to Change Current (New) Appraisal Act

How California is Screwing Up the Foreclosure Situation

Both of these actions by government and regulatory officials to 'protect' the public are a bit like closing the barn door after the horses got out. Perhaps it reflects more on their notion of CYA (you know...cover your arse) and placing themselves in the public's eye for future elections.

However, the practical applications are onerous at best, and at odds with the proclaimed intention of President Obama, FHA and HUD to clear up the foreclosure mess.

On a more positive note, interest rates have stayed level these past several days and it is a good time to refinance, or purchase a home. Take a look at the Ten Year Treasury's to get a sense of what the 30 yr. interest rate ebb-and-flow has been at www.bigcharts.com (Ten Year Treasury)

Mortgage Refis Extended

2009-07-01T16:20:00.000-07:00

Here is a new announcement that is important to you if you have been told you are upside down on your mortgage. Again, this is from my favorite local news source, Voice of San Diego:

For San Diego, one of the big sticking points on the federal homeowner-help refinancing program has been a restriction on how far underwater borrowers can be.

The plan announced in February was initially offered to homeowners whose mortgages were worth 105 percent of their homes' current value.

Now the option to refinance will be extended to homeowners who are even further underwater.

Today, HUD Secretary Shaun Donovan announced in Las Vegas that the plan will expand to include those 125 percent underwater on their mortgage but still current on their payments.

(More than 30 percent of all homeowners in San Diego County who have mortgages are underwater. Note: We're not talking about the loan modification, payment-reducing part of the federal Making Home Affordable program here, but the option to refinance the loans if you're underwater.)

There is a catch: The borrowers' loans must be owned or guaranteed by Fannie Mae and Freddie Mac. Both agencies have loan lookup programs (Fannie Mae and Freddie Mac) to determine whether you qualify. I'm checking to find out what other restrictions might apply to the refinancing program and I'll let you know what I hear.

I called a couple of people for their takes on the new restrictions.

"That's good, that'll help a lot of people in San Diego -- that makes a lot of sense," said Mark Goldman, a local mortgage broker and SDSU real estate professor. "If somebody is upside-down, and can't refinance, they're more likely to walk away from their house."

Gary Laturno, a local real estate attorney and recent host of our Savvy & Sage series, said he'd heard many criticisms that the 105 percent guideline didn't do enough. "This will certainly make a lot more refis possible," Laturno said.

Here's more on the plan, from the HUD press release:

Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. In just a few months, more than 200,000 borrowers have received offers for trial loan modifications, tens of thousands of refinances and trial modifications are under way, and informational mailings about the program have been sent to more than one million borrowers who may be eligible.

-- KELLY BENNETT

If you have any questions, or know someone who is looking to refinance or purchase a property, please let them know. My business comes from referrals and I have the best loan prices in town!

-- Ron

Back to Regular Shadow Inventory

2009-06-30T15:11:00.000-07:00

Here is a very good article from Voice of San Diego about what might actually be happening with the local real estate market:

Frequent readers know I've spilled a lot of virtual ink on the concept of "shadow inventory" -- the fairly vast category of homes that are in foreclosure but not for sale. This overhang of potential but not-yet-actual inventory contrasts with the very low levels of inventory currently for sale.

The title of this post refers to a recent entry describing how current inventory is even lower than it seems. That prior article contained a graph showing that the amount of current inventory is unusually low compared to the number of sales, even before taking account of the reverse-shadow inventory effect.

But while sales are numerous in comparison to available inventory, homes in foreclosure are quite numerous in comparison to sales. The following chart, which measures the number of single family home sales divided by the number of monthly default notices (the first official stage of foreclosure), makes this clear:

See the entire story with neat graphs at: http://www.voiceofsandiego.org/

Water Conservation Measures

2009-06-21T16:31:00.000-07:00

At a Boy Scout campout the other night, I was chatting with my friend Tom who is 'in the know' about what goes on in the County and most municipalities. He is always one to cut right to the quick and let me know what's happening in a way my friends and clients would appreciate. On this night, I asked what he thought the San Diego area would look like in five years of water rationing.

To the point, he said 'There'll be a lot less grass!" and we continued down that vein. It turns out, I discovered that the County has a very rigorous conservation program that includes heavy fines for violators and the use of wireless 'point to source' water meters that report the amount of water usage. If someone violates the watering restrictions, the water companies and districts can literally shut down the water.

This is reminiscent of growing up in Denver under water restrictions. Further, neighbors and visitors will be encouraged (does that mean 'bribed' with incentives?) to turn in law breakers. And, there will be water cops on patrol.

Water restrictions are a long time in coming to the area, and I believe these will serve us well if properly introduced and enforced. The local populace will come to have a better appreciation of our precarious position in a desert, and there will be plenty of water for us in the end. My purpose here is to let you know that messing with the 'Water Man' is no joke, live and act responsibly.

HOA Defaults Rising in California

2009-05-08T14:25:00.000-07:00

Here is something from my favorite local source of news:

HOA Defaults Rising in California

Defaults on homeowners association payments in California have risen sharply, according to this post The Wall Street Journal's real estate blog today.

Reporter Nick Timiraos saw the increase as a potential indicator that foreclosures in the state will increase, too:

The homeowner association delinquency rate can serve as a leading indicator of sorts because homeowners usually stop paying dues before they stop paying their mortgage. The 90-day delinquency rate on dues for the 260 homeowner associations in California managed by Merit Property Management jumped to 5.3% in March from 2.8% last June. Delinquencies first spiked to 2.6% in December 2007 from 0.8% in March 2007.

(Timiraos and many other bloggers and reporters have recently pointed out that foreclosures in the state are set to rise sharply, due to another indicator -- an increase in the number of notices of defaults that have been filed on homes that haven't yet been repossessed and resold as foreclosures. That indicator's known as "shadow inventory.")

More from the WSJ:

Rising delinquencies for homeowners associations, which function like municipalities, are forcing cutbacks on services like landscaping, security and community services. About 60 million Americans live in one of 300,000 community associations.

I wrote a story a few months ago about what happens to HOAs when they are burdened by short sales and foreclosures. Here's more from that story:

When banks foreclose on properties in default, they are required to pay back fees to the homeowners association. But a gap exists between when homeowners stop making payments and when the bank repossesses the house, enough time for several months' fees to be lost. ...

Real estate broker Joseph Galascione of ERA Metro Realty said he's steered clients away from certain buildings because of looming special assessments -- the onetime fees levied to make up for shortfalls -- or underfunded reserves.

"It's more common that we find HOAs that are OK -- most of the HOAs are financially stable," he said. "But there are enough out there that it warrants us spending more time researching the health of a building."

-- KELLY BENNETT

2009-04-25T16:31:00.000-07:00

A recent story for anyone keeping tabs on mortgage rates because of a need to refinance, or simple desire to buy property at a very good value, read the following: Rates to Remain Low

Are You Still Thinking About Buying Real Estate in San Diego?

2009-04-20T15:46:00.000-07:00

My favorite pundit from my favorite news source 'Voice of San Diego' has done some analysis on the housing market. Specifically about current and future foreclosure activity: Voice of SanDiego

When you're ready to do take advantage of the opportunities, please call and let's discuss the types of financing available to you now.

It is hard to believe we've gotten ourselves in such a mess. This not too recent skit from SNL pretty well defines who a banker really is!

2009-04-17T14:07:00.000-07:00

Bailout Explained as only Southpark Can Do!

2009-03-27T15:08:00.001-07:00

San Diego Housing in Now Affordable

2009-03-25T14:57:00.000-07:00

It's been many years since investors looked at our local housing market and viewed it as 'affordable'. (In this case, I'm referring to professional investors and not the lazy day, get rich quick who helped drive the market so high during the Bubble). Now, from my favorite local source of news Voice of San Diego comes this story:

San Diego Home Prices Reasonable At Last

Yes, you read that headline right. In aggregate, and based on their historical relationships with local rents and incomes, San Diego County home prices are reasonable. Not cheap, but reasonable. For the rest of the story, go here:

Voice of San Diego

There is another insight into the current market I find interesting, and it has to do with 'what' type of houses are selling and why. If you guessed foreclosed properties, you're correct. And as best stated the other day in a piece called Existing Home Sales: Turnover Rate:

The turnover rate during the housing bubble was boosted by:

Speculative buying by flippers.

Speculative buying by homeowners (using excessive leverage).

Move up buying, especially by Baby Boomers.

Although slowing, the turnover rate is still above the median for the last 40 years and substantially above previous troughs. Both types of speculative buying are over for now. And the Baby Boomers have probably bought move up homes, and the next major move for the Boomers will be downsizing in retirement (still a number of years away).

And finally - and probably a very important point - homeowners with negative equity, who manage to avoid foreclosure, will be stuck in their homes for years.

All of the above suggests the turnover rate - and existing home sales - will fall further, perhaps much further.

Read more at: Turnover

And finally, on the good news side (perhaps ironic):

Mountain House, Calif., in which more than 90 percent of owners owed more than their house was worth in 2008, is feeling less glum these days -- you can tell by the Little League participation, which has gone from 178 to 220 kids in a year.

More importantly, the bidding war has returned to the real estate scene, with one family jostling with 12 others for a $299,000 5-bedroom home. (They lost, and the house eventually went for 30 percent above asking.)

The exurb: It's not dead yet!

View post at Curbed.com. That's why I love San Diego with all of it's potential!

2009-03-23T09:00:00.001-07:00

It's a good, brisk morning and I'm ready to make this an awesome week of new business!

2009-03-22T16:57:00.001-07:00

Played bocce ball today with a Dane and 11 yr old, I won. Dang I'm good!

2009-03-21T10:57:00.001-07:00

Off to the San Diego Zoo to spend time with a friend not seen in several years.

2009-03-20T09:53:00.001-07:00

Happy Vernal Equinox!!

2009-03-19T13:35:00.001-07:00

Tired of the bad news and all of the 'woe is me', check out: http://ping.fm/9TLke

2009-03-18T10:50:00.001-07:00

You are not going to believe this. Save it...

Below is a link to a great piece of sound engineering. It is a composite audio/video of song whereby additional tracks were laid in by different singers and musicians from different places around the world. The finished product is tremendous!

The song itself is that classic standard "Stand By Me" originally released in 1955 by The Staple Singers and released again in 1961 by the Drifters.

This composite version is a real toe tapper, so turn up the speaker volume: http://ping.fm/8nynk

Enjoy!

2009-03-18T06:30:00.001-07:00

Back from the gym, sun coming up, time to roust kids and get the day movin'. It's gonna be a good one, I can feel the possibility.

2009-03-17T20:47:00.001-07:00

Holding a late evening coaching call with client in the Philippines, I love Skype!

2009-03-17T08:03:00.001-07:00

What a great morning, possibility is in the air...gotta go grab some!

2009-03-16T08:25:00.001-07:00

Great morning already, gonna be a wonderful week! Time to stay focused.

2009-03-15T19:31:00.001-07:00

Great day playing bocce ball and wondering if we'll ever get better...not that hard, really!

2009-03-15T10:08:00.001-07:00

Just planted a tree at Lake Dixon with the kids, we're building a forest for everyone.

2009-03-14T14:31:00.001-07:00

I just found a great site for California down payment assistance info, check it out at: http://ping.fm/mBlbY

2009-03-14T14:25:00.000-07:00

There is a lot being tossed around in the real estate industry about down payment assistance: "Is there some or isn't there?' is the question most often voiced. I just ran across a good site for every first time home buyer (remember this only means you haven't owned a home or been on title for 36 months): http://www.californiadownpaymentassistanceprograms.com/finding_down_payment_assistance_programs/

Please take a moment to check this out when you're ready to jump back into the market or to buy your first property. It'll be my pleasure to give you guidance and support in the process when you are ready.

2009-03-14T10:32:00.001-07:00

Is was wondering...

2009-03-13T19:17:00.001-07:00

Ready for dinner, Max made a big challah and little hot dog challahs...should be interesting.

2009-03-13T06:34:00.001-07:00

I'm up and at'um...time to get my fun monkeys out of bed and ready for school.

2009-03-12T20:34:00.001-07:00

Late night call with a client in the Phillipines where its daytime and 100% humidity...glad I'm here and not there.

2009-03-12T08:47:00.001-07:00

Back from a solid workout at the gym, ready to make things happen today!

2009-03-11T08:20:00.001-07:00

I'm gearing up for a really productive day with a cup or two of strong joe! How about you?

2009-03-10T20:18:00.001-07:00

Is winding down after a long day... plop!

2009-03-10T08:58:00.001-07:00

Cool and breezy morning, very nice! Off to buy a bocce ball set at Noon.

2009-03-09T08:12:00.001-07:00

Ready for a great day, great week and lots of excitement! How about you?

2009-03-08T19:35:00.001-07:00

It's been a long day with my 11 yr old son. Even without food he seems to have tons of energy to keep pushing me forward! Gotta love it.

2009-03-07T12:26:00.001-08:00

Off to an afternoon of watching kids and their sports. Can't wait for some great Mexican food tonight at Estrada's.

2009-03-06T13:53:00.001-08:00

Want to learn something and have a chuckle at the same time, check out my blog: http://ping.fm/mBlbY

It's time for some knowledge and amusement...

2009-03-06T11:54:00.000-08:00

I'm pretty frustrated with the politicians, fat cat bankers, greedy corporate honchos and media pundits during this time of economic bewilderment and fear, perhaps you are as well. It is fair to say the ship of Commerce is rudderless with an 'every man for himself' mentality...oh yeah, every woman, too! The government is in cahoots and everyone appears hell-bent on saving the dead and dying.

This week some interesting pieces were sent to me that gave me a chuckle, even a laugh, and I thought passing these along might brighten, enlighten or frighten you, your choice...

For a concise and very easy to understand explanation of what has happened and is happening, check out: http://crisisofcredit.com/

Once done with that, enjoy the top two commentators on the newspeople and media:

Colbert: http://paul.kedrosky.com/archives/2009/03/stephen_colbert.html (Doom Bunker)

Stuart: http://paul.kedrosky.com/archives/2009/03/a_few_minutes_w.html (Nocero and CNBC)

On a positive note, the stimulus efforts from 9-10 months ago are now beginning to filter down through the system and people are actually getting some relief. All of these 'relief packages' take time to infiltrate the economy, so it is almost time to start looking 24-36 months into the future to see what might befall us next!

Happy trails!

2009-03-05T16:43:00.001-08:00

Spring is here, flowers on the orange trees...just walked through the orchard.

2009-03-04T12:51:00.001-08:00

There's some good activity in real estate happening! San Diego is a good place to invest.

2009-03-02T15:08:00.001-08:00

Just finished a great social networking call with an expert, Brad Hanks, who really knows his stuff. See a recent article on him in RisMedia: http://ping.fm/eebI0