When It Makes Sense to Keep an Underwater Home

By Tara-Nicholle Nelson

Inman News®

Editor's note: This is the first of a two-part series.


Q: At the top of the market, I owned three properties: my first home (in a marginal neighborhood, now about 100 percent upside down), my own residence (a big fixer in a great neighborhood), and a triplex I bought as an investment (an OK neighborhood, needed some work, fully rented, but now upside-down by about 30 percent).

When the market turned, I had a couple of bad tenants in my first home and the triplex that set me way back financially, and I was unable to borrow the money I needed to fix the house I lived in. I did a short sale on the fixer, got temporary loan mods on the other two, and moved back into my first home.

Problem is, they're both so upside-down and don't seem likely to come back up anything soon. I'm 45 years old and have a great job, but I don't like the neighborhood I live in now and I can barely ever save anything because these properties -- which I thought would help fund my retirement -- eat me alive.

Also, I just got word that my loan mod on the triplex is going to expire in January. Should I just sell everything and start over?

A: First, know this: You are not alone. More than 25 percent of home mortgages nationwide are upside-down.

While the majority of Americans have held onto homes with declining and stagnant values in the hopes that the market will recover to avoid locking in their losses, the data is clear on the fact that those who own homes worth less than they owe are the borrowers most likely to fold, short-selling, strategically defaulting or negotiating a "deed in lieu of foreclosure" with the bank.

I don't think data exists on this point, but I suspect these are the borrowers most prone to give up on the excruciating and prolonged path of home retention efforts the most easily. "Why throw good money, time, energy and emotions after bad?" they wonder.

A few years ago, I would probably have fallen into the cheerleader camp, exhorting "Hang on! Hang in there!" Now, though, going into the fifth or sixth year of this real estate recession, depending on whom you talk to, I'm more jaded and realistic.

As I see it, you have two different scenarios that make up your dilemma, and there are a couple of different ways to think about them. First, let's limit the scope of our conversation to the situation on the home you actually live in. Next week, we'll look at the broader constellation of issues you have, including both your residence and the investment property.

My advice to people in your situation is to always go through the preliminary step of getting clear on whether their personal residence still works for their lives as a personal residence.

If you own a home that works well for your life, is affordable and seems like it will continue to be a good fit for your life and your finances in the foreseeable future, I'm generally inclined to advise homeowners to avoid making market-based decisions about whether to continue to hold on to it, whether or not it happens to be upside down.

On the flip side, I've seen numerous situations in which families have expanded or shrunk or need to relocate, rendering the upside-down home a serious mismatch. In these cases, it makes sense to more seriously consider whether to divest.

I'd encourage you to ask yourself that question -- "Does this home 'fit'?" -- regarding your personal residence. You mention the neighborhood weighs against that finding of fit; you might also be thinking that the neighborhood could prolong the "value recovery" timeline.

Take a more holistic viewpoint and make a decision about whether the home overall still works for your life or not -- outside of the context of it being underwater. Whether it does or does not, this knowledge will get you started down the path of cultivating the clarity you'll need to put a full action plan and decision-making process in place. We'll discuss what the rest of that plan looks like next week.

THIS ARTICLE WAS ONE THAT I THOUGHT AFTER READING WAS WORTH SHARING GIVEN THE MARKET AND THE TOPIC.  STAY TUNED FOR THE FUTURE ARTICLE, PART TWO.

Sellers....To List or Not to List...The before or after the Holidays Question

Should I list my home or is it better to wait until after the Holidays? 

The big answer to the question that so many sellers ask themselves as Christmas, Hannakuh, and the New Year nears is not necessarily what you think.

Most real estate professionals always advise sellers to list their homes during the holiday season rather than waiting, citing more serious buyers and less competition among properties, according to a recent survey from Realtor.com.


The property search site's Holiday Home Selling Survey gathered responses from 429 real estate professionals surveyed online between Oct. 26, 2011, and Nov. 8, 2011. The "holiday season" was defined as Nov. 23, 2011, to Jan. 2, 2012.

Among respondents, 60 percent said they would always advise a seller to list a home during the holiday season and agreed that "it's a good time to sell," while 30 percent said they would sometimes advise it if the seller were motivated. Only 1 percent said they would never advise it because "selling during the holiday season is always a bad idea."

The vast majority of respondents, 79 percent, said more serious buyers were one of the biggest benefits of listing during the holidays, while 61 percent said less competition among homes was a plus. Only 17 percent said cold weather making homes look cozy was an advantage.

Indeed, 39 percent of respondents cited winter weather as one of the biggest challenges to putting a home on the market during the holidays. An equal share said buyer vacation and celebration schedules were problem.

But the biggest challenge, noted by 63 percent of respondents, was keeping a home "open house ready," meaning clean and staged, during this time of year.

Selling a home during the holidays requires employing different strategies from selling a home during other times of the year, according to the survey.

More than eight out of 10 respondents said online listing photos were particularly crucial for homes listed during the holiday season. The main reasons cited were that buyers attend fewer open houses because of busy schedules or winter weather, while sellers also host fewer open houses during this time.

The majority of respondents, 74 percent, said pricing a home to sell was even more important during the holiday season, and 40 percent said staging a home was more important at this time of year. Nearly a third said being flexible with contract terms such as move-in dates and when closing costs were paid was more essential during the holidays.

The way a home is staged during this time of year is also significant, according to the survey. Almost all respondents said they advised sellers to put up some seasonal decorations, though there were differing opinions on the types of decorations.

A 37 percent plurality said homeowners should put up some nonreligious holiday decorations to make a home feel inviting, while 28 percent said sellers should put up all of their holiday decorations, including religious ones, to make their home feel festive, the survey said.

A similar share, 27 percent, said sellers should put up seasonal decor that is not suggestive of specific holidays, while 8 percent of respondents advised sellers to stage their home without any decorations at all.

Eighty percent of respondents said they encourage sellers to light their fireplace when staging a home during the holiday season, while 62 percent said they suggested sellers update outdoor lighting because the buyer is more likely to see the home at night due to shorter days.

Other popular staging advice for sellers included using winter-scented home fragrances before an open house, making the home feel more cozy through reading nooks and blankets on couches and beds, setting the table to showcase holiday entertaining, and playing seasonal music that is not specific to a particular holiday, the survey said.

Hope this information you find useful and please feel free to share with others that may benefit from this advice.  I appreciate as always your time in reading my blog and I hope that you have a wonderful Holiday Season! Merry Christmas & Happy New Year :-)

Have you Winterized Your Home Yet? Cost Effective Tips

Its that time of year again, yes Winter is around the corner or some would say is already here!  Well be sure if you have not yet taken a few steps to best winterize your home you do so now.

There are two kinds of home winterizing tips. The first variety often involves spending a load of money to upgrade your energy efficiency. While definitely worthwhile and timely with many federal energy tax credits expiring this year, these fixes can still be very costly (think adding insulation, getting a new energy efficient furnace, energy efficient windows, etc.).

The other variety of home winterizing tips focus on the things that you can do on a weekend afternoon for very little money (or free) with a little bit of elbow grease. The cost savings of doing such work generally comes in the form of preventing costly fix-it repairs that come from neglect. Here are seven things that you should do around the house every year before the first sign of snow hits.

1. Clean Out Your Gutters

Gutters that are dammed up with leaves can result in ice dams, which can lead to all kinds of costly outdoor repairs — damaged shingles, roof leaks, broken gutters, etc. Additionally, if your gutters are clogged up, water could be falling right next to your foundation and leads to possible flooding in the basement.

Estimated Cost: Free, as you don't fall off the roof and end up with a medical bill.

2. Drain Your External Faucets

Water that is sitting in pipes that lead to outside faucets can freeze and burst, ultimately flooding your basement and leading to possible water damage and mold problems. Simply close off the interior faucet valves by turning them clockwise all the way to the right. Then go outside and make sure that every last drop has come out of the faucet.

Estimated Cost: Free

3. Caulk

Search for drafts around windows and doors on a cold windy day. Place a tissue paper over the suspected draft area. If the paper flutters, you've probably located the draft. For drafts under doors, you may have to buy a rubber draft stopper to place at the bottom of the door.

Estimated Cost: $3/tube (One tube should be more than enough)

4. Repair Your Shingles

If you have cracked, missing, or otherwise damaged shingles, have them replaced immediately so that you don't get roof leaks. Strong winds, falling tree limbs, and sun weathering can all lead to damaged shingles. You might as well check them out while you're up on your roof cleaning out your gutters.

Estimated Cost: $1/shingle

5. Flush Your Hot Water Heater

You can flush a hot water heater any time of year, but you might as well throw it in with the other maintenance work you'll be doing since you really only need to do it about once a year. If you don't, sediment can build up at the bottom of your water heater and cause it to lose efficiency or even leak.

Simply take one of your water hoses and fasten it to the water faucet at the bottom of your water heater. Turn off the water heater so that you don't get burned by hot water accidentally. Run the hose outdoors, preferably, but if you can't do that, then a laundry tub should be sufficient. Open the valve and let the water drain out completely, rinsing out the sediment with it.

Estimated Cost: $0.001 for the water

6. Replace Your Furnace Filter

Furnace filters, in a clean basement, can lead to a more efficient furnace when replaced about every six months. I usually replace mine when I first turn on the heat and then when I switch over to air conditioning in the summer.

Estimated Cost: $5-$15, depending on the furnace

7. Programmable Thermostat

Most programmable thermostats can be purchased for $30-$70. In a cold climate, you might be able to save that much in a month alone if you set one up to be cooler while you are out of the house and at night, and warmer when you are at home. And they are easier to install than you may think (half-hour job, max.).
Estimated Cost: $30-70

Hope you found this blog useful today as you prepare for the cold that is ahead of us!  Thanks for reading my blog and please feel free to share with any others that you know could benefit or would also enjoy being a follower!

Can't Refinance? Can't Get a Loan? Here's why 2 Million had the same problem in the past year...

Today is some useful information for those of you that are considering applying for a loan, have recently applied for a loan or would just like to know how the process works.

Half of refinance applications are abandoned or rejected, as are 30 percent of purchase mortgage applications, according to the Mortgage Bankers Association. All told, the Federal Financial Institutions Examination Council (FFIEC) says that well over 2 million mortgage applications were rejected last year.


Want to avoid falling into that number? It's tough -- especially in light of the fact that mortgage lenders have become increasingly restrictive in terms of their lending guidelines since the housing market crash.

Here, as a cautionary tale and primer on what to expect, are the top six reasons mortgage lenders reject applications.

1. Income issues. Most failed applications falling into this category have income too low for the mortgage amount they are seeking; often, a spouse's credit issues can create this problem, too, as the income the spouse plans to actually chip in toward the mortgage cannot be considered by a lender.

But increasingly, the recent vagaries of the job market are also causing this issue, as people who have changed their line of work or have changed from salaried employee to freelancer over the last couple of years can also have their home loan applications rejected based on income.

2. Muddled money matters. If the mortgage for which you're applying plus your monthly payments on credit card, car and student loan debts will comprise more than 45 percent of your total income, you could have problems qualifying for a home loan. You might also run into problems if you rely too heavily on bonuses, overtime, cash wages or rental income -- all of these can be difficult or impossible to get a mortgage bank to consider, and if they do, they might not take all of it into account.

3. Credit issues. Today, the mortgage-qualifying FICO score cutoff falls somewhere between 620 and 660, depending on which lender and which loan type you seek. More than one-third of Americans, by some numbers, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.

4. Property didn't appraise. Since the whole industry had its hand (among other things) smacked for allowing home values to skyrocket in a very short time, appraisal guidelines have tightened up -- some would say, even more than overall mortgage guidelines. So, it is increasingly common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller.

This is especially common in the refinance realm, as well over a quarter of U.S. homes are now upside-down, meaning the mortgage balance owed is greater than the value of the home. (If you're trying to refinance an upside-down mortgage, consider the FHA Short Refi program -- contact your lender or get referrals to any mortgage broker who makes FHA details to apply.)

5. Condition problems. With all the distressed properties on the market, and with most nondistressed sellers barely breaking even, more home-sale transactions than ever are falling apart due to condition problems with the property. Many lenders will not extend financing on homes where the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot.

And in the world of condos and other units that belong to a homeowners association, if more than 25 percent of units are rented (rather than owner-occupied) or more than 15 percent are delinquent on their HOA dues, new applications for refinance or purchase mortgages on units in the development are likely to be rejected.

6. Technical difficulties with application. The days when lenders just took your word for it are long, long gone. Applications with incomplete or unverifiable information are doomed.

If any of these mortgage loan application glitches arise in your homebuying or refinancing process, it's critical that you connect with your mortgage professional, be it your banker or mortgage broker, to determine what course of action to take.

In some cases, it might be as simple as buying a stove you find at Craigslist and installing it before escrow closes; but with income issues your mortgage pro will need to help you determine whether it makes sense to pay some bills down, get a co-signer, or even wait six months so your income documentation will qualify.

Foreclosure Activity falls to 42 Month Low in May!

Is the market finally on its way towards brighter days?  Can we really expect that with foreclosure numbers dwindling that our home inventory levels would finally subside and come down to normal levels within the next year? 

Anything is possible right? haha....Well I being the optimistic person that I am would love to see the foreclosure activity continue to fall, not just a month at a time but month after month.  This would then prove to me and to many others that we are in fact on our way to a recovery.  Yes, I said it....There is hope for a recovery folks but it starts with inventory levels as compared with the number of buyers and as long as we see the number of homes that hit the market decline from banks and short sales then we are on the right track. 

Foreclosure activity falls to 42-month low in May

Default notices drop to lowest monthly total since December 2006

By Inman News

Inman News™

Foreclosure-related filings on U.S. properties fell 33 percent year-over-year in May, hitting a 42-month low, according to a report from foreclosure data site RealtyTrac.

One in every 605 housing units, or 214,927 properties, received a foreclosure-related filing such as a default notice, scheduled auction, or bank repossession. That's a 2 percent drop from April and a 33 percent drop from a year ago.

"Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask," said James J. Saccacio, RealtyTrac's CEO, in a statement.

"First, activity spiked in May for various stages of the foreclosure process in some states, a pattern that has occurred in several states over the past few months. This pattern provides evidence that lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory.

"Second, while the inventory of properties in the foreclosure process has declined steadily over the past six months -- thanks in large part to 16 consecutive months of year-over-year declines in new default notices -- the inventory of unsold bank-owned REOs increased in April and May even as new REO activity slowed in both of those months. That points to continued weak demand from buyers, making it tough for lenders to unload their REO inventory. Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month."

Default notices declined to a 53-month low in May, falling to 58,797, the lowest monthly total since December 2006. Default notices fell 7 percent month-to-month and 39 percent year-over-year.

After eight straight months of decreases, the number of foreclosure auctions scheduled rose slightly, to 89,251, up 3 percent from April but down 33 percent from a year ago.

Bank repossessions fell 4 percent month-to-month and 29 percent year-over-year in May, with lenders taking 66,879 homes into their real-estate owned (REO) inventories.

"Since the so-called robo-signing controversy came to light in October 2010, REO activity has followed a roller coaster pattern, with five monthly decreases and three monthly increases," the report said.

States with a judicial foreclosure process saw activity decrease 45 percent year-over-year in May, while states with a nonjudicial foreclosure process saw activity fall 25 percent year-over-year. Scheduled auctions rose in both judicial and nonjudicial foreclosure states on a monthly basis, 6 percent and 2 percent, respectively. REO activity rose 1 percent month-to-month in judicial foreclosure states and fell 6 percent in nonjudicial foreclosure states.

Five states accounted for 51 percent of all foreclosure activity last month. California had the highest volume of properties receiving a filing (51,906), followed by Florida (19,192), Michigan (14,614), Arizona (13,122), and Nevada (11,039).

Nevada had the highest foreclosure rate among states for the 53rd straight month in May, with one in 103 housing units receiving a foreclosure-related filing that month. Overall foreclosure activity in the state fell 23.1 percent year-over-year, with bank repossessions falling 21 percent from an all-time monthly high in April. Default notices rose 8 percent and scheduled auctions fell 1 percent on a monthly basis.

For the sixth straight month, Arizona held the second-highest foreclosure rate in the nation with one in 210 housing units receiving a filing. Overall foreclosure activity in Arizona fell 18.5 percent year-over-year. Scheduled auctions rose 4 percent month-to-month and bank repossessions fell 8 percent month-to-month but were essentially flat year-over-year.

Scheduled auctions also rose month-to-month in California, 16 percent, though default notices fell 16 percent and REOs fell 25 percent. Though overall foreclosure activity fell 27.9 percent, the Golden State had the third-highest foreclosure rate in the nation, with one in 259 units receiving a foreclosure filing.

Spring Tips for a Healthy Lawn

Not really sure if it Spring is truly here as in the past week we actually had snow in various parts of the midwest but according to the calendar its Spring! That being said, I continue to get visits weekly now from many companies vying for my business to help make my average lawn beautiful.  I'm sure this happens by you as well and for those not willing to spend the big bucks for one of these companies then hopefully the following tips will be of help.

The best lawn care tip you can get is to start with a solid plan.

1. Do you need to plant grass? Do some research on the best seed for your area, where to buy it cheap, and when it"s available. Depending on where you live, you"ll plant either cool season or warm season grass.

Cool season grass, planted in northern areas, is usually best planted in early fall, but if you missed planting then, plant it in the spring when soil temperatures reach 50 F.

Warm season grass needs soil temps of 70F to thrive and is the choice for southern plantings. Don"t make the mistake of thinking you can plant warm season grass in the upper Midwest. Warm season grasses are bred to thrive in southern climates and are not winter hardy in the north.

2. Of course, you"ll keep new grass plantings moist, but once grass reaches a height of three inches, water it deeply once a week.

A healthy lawn needs about an inch of water a week. When watering, remember to consider recent rainfalls. Shallow watering techniques keep grass from sinking the deep roots that your lawn needs to compete with deep-rooted weeds.

3. Do you already have a lawn? Aerate it in the spring while it"s still moist and before the spring rains are done.

Aerating your lawn in the springtime gives microbes and other small life forms a breath of fresh air after winter. Aeration also makes new paths for drainage and keeps your lawn from becoming saturated.

4. A lot is written about lawn fertilizer and the big question is why? Grass is the most efficient user of nitrogen on earth!

Feed your soil with nutrient rich compost and let your lawn get its nutrients the natural way. The more chemicals you use, the more you disturb the natural biological processes that convert organic matter into nutrients and the microbes and other small organisms that take natural care of your lawn.

5. Mow your grass high. A 2 ½ to 3-inch high cut makes your lawn look fuller, feel softer, and helps keep it healthy. Taller grass shades pesky weed seeds and keeps them from getting established. In addition, a taller lawn is better able to absorb sunshine and better able to retain moisture, the two main contributors to a healthy lawn.

6. Enjoy your lawn. After all, isn"t that your main reason for having a yard?

HAPPY GOOD FRIDAY FOR THOSE THAT READ THIS TODAY!

Make a Home Investment in 2011

Location, location, location. In the latter half of 2011 that adage should come back into vogue. But first, more declines. C'mon, you're thinking, you've been hearing for months that prices have been more or less stable nationwide. True, but the still-soft job market, the foreclosure crisis, and the absence of incentives such as the homebuyers tax credit will push down the median home price another 5% or so next year, according to Moody's and Fiserv, before it stabilizes by late 2011 or early 2012.

Individual markets, though, will start diverging from the downtrend by summer. About one-quarter of the nation's 384 metro areas should see higher prices by year-end, and half will see drops of less than 3%.

Certainly, conditions will favor anyone in the market to buy a new home -- or homeowners looking to refinance. Today's record low mortgage rates, averaging 4.2% for a 30-year fixed term, are expected to remain low at least through the first half of the year.

Even if the economy picks up steam in the latter half of 2011, rates are unlikely to climb higher than 5%, says Amy Crews Cutts, deputy chief economist at Freddie Mac.

On top of that, assuming that banks can solve their issues with poorly documented foreclosures, home seizures will revert back to record highs, creating competition for sellers and keeping a lid on home values.

The combination of low prices, cheap mortgages, and a slowly improving job market should gradually entice buyers back to the market, setting the stage for prices to stabilize.

Demand, though, won't be strong enough for values to rise substantially, largely because the weak labor market is depressing new household formation as family and friends opt to live together, and recent graduates return to their childhood bedrooms, says Patrick Newport of IHS Global Insight.
Only about 350,000 households are forming a year, vs. 1.3 million typically. "All you hear about is foreclosures and the supply problem," says Michael Castleman Sr., CEO of housing research firm Metrostudy. "But the bigger problem is demand."

Wildcards: Foreclosures. If the investigations into robo-signed seizure documents and other issues turn up more problems for banks, foreclosures could be halted indefinitely. That would prop up prices in the short run but weigh them down over the long run.

Jobs. Housing demand could rise if the labor market picks up faster than expected. In that case, prices would firm up earlier in the year.

What to Watch: Signs of an improving market: three straight months of rising sales and a decreasing inventory of homes (a six-month supply is considered healthy; today it's 11 months). A local agent or realtor's association can supply you with that data.

Action Plan: Buyers. Don't try to time the market perfectly. Even if prices fall a bit more in your area, mortgage rates could rise later in the year, offsetting the drop. Initially bid about 10% below what comparable homes have sold for over the past three months; go even lower if the area is rife with foreclosures.

By contrast, if well-priced houses in your desired area are receiving multiple offers -- your agent will know -- bid close to list price. But don't engage in a bidding war, plenty more homes will be coming onto the market.

Until your house keys are in hand, don't change your financial profile don't buy a car, take a new job, or pay a loan late. Increasingly lenders are re-pulling credit reports and reconfirming jobs just before closing,

Action Plan: Sellers. Hang on a few more years until the market recovers. Can't hold off? Then try to unload fast.

Prices will be falling in most areas for the next several months and, depending on your location, the foreclosure slowdown in place may temporarily reduce your competition, advises Ellen Klein, a realtor in Rockaway, N.J.

Wherever you are, pricing your home right is key. Buyers typically put an upper limit on their search in increments of $25,000 or $50,000. If your house is priced at $365,000, shoppers who cut their search at $350,000 may never see your home.

Best idea: Slightly underprice your house. More often than not you'll attract numerous buyers who bid up the price, and you'll end up getting fair value in much less time.

Action Plan: Investors. Assuming foreclosures have slowed where you are, hold off until a few months after they ramp up again. Until then, inventory will be limited, and that will set a floor under prices. When you're ready to make your move, paying in cash will better the odds of a winning bid, says Foreman.

Action Plan: Owners. One word: refinance -- even if you just did it a few years ago, urges Keith Gumbinger of HSH.com, a mortgage information publisher.

If you can shave at least one point off your rate and plan to stay in your home for at least four years, a refi makes sense. On a two-year-old $300,000 loan at 6.5%, refinancing will save you $465 a month and $120,000 in interest.

Or go with a 15-year loan, which averages 3.7%. Your payment will jump $225, but you'll own your home 13 years earlier and save $253,000 in interest.

Underwater or have little equity? You may be able to refinance through a federal program known as HARP (for details go to makinghomeaffordable.gov). Have funds to spare? A cash-in refi, in which you put in enough to reach 10% or 20% equity, will let you nab those record low rates.

Get that Spring To Do List Ready!

Really, can it be that spring is almost here? Yes indeed, won't be long and the birds will be chirping, the Canadian geese will be making their way back and the trees and bushes will end their season of hibernation and begin to bud. I don't know about you but I am done with Winter bring on the warmer weather already !

Recently I spoke about what the spring market means to buyers and sellers but today I'm going to share tips on what to do with your home to prepare for Spring. These tips are just a handful of some popular to do's that I've compiled that are sure to help you start the season off right.

There are both indoor and outdoor checklists but we'll start with OUTDOOR:

• Take a walk around the home and look for any damage specifically to the roof. Are there any missing shingles or damage done from snow or ice that may have built up on the gutters?


• Clean the gutters from all debris


• Now is the perfect time to trim back trees or bushes as they are easiest to manage without leaves. Be sure to trim anything that is directly in contact with the home or roof to provide for a gap to protect your home and siding.


• Pressure wash your deck if you've got one. Once the weather improves you'll want to put a sealer on it to protect against water and sun damage.


• Wash Windows


• Caulk Windows and seal any areas that could use it


• Be sure to check your garden hoses for cracks and turn on the exterior water valves that you may have shut off prior to winter


• Clean the grill


• Rake the yard and clean up any leaves from the fall/winter season in the yard

That is a great start to your Spring Cleaning List! Once you've managed that part of the list, its time to focus on the INTERIOR:

• Wash interior windows in addition to the exterior


• Replace and check furnace filter


• Caulk the windows inside your home as well to repair any damage that may have been done by ice and snow during a brutal winter. This will help maintain your heat/cool of the home and also prevent mold or other damage


• Deep Clean the carpets


• Clean and store your humidifiers that you would have made use of for fall/winter


• Dust your home and be sure to pay special attention to the fans in your home. Clean them well so they are good to use once warmer weather arrives and you'll need the circulation they offer for the home.


• Test your A/C. When its 105 this summer and you turn it on for the 1st time, that is not the time to find out it needs service. However, it is best to wait until the temperature is 65 to do this.


• Test all your smoke and fire alarms in the house to ensure they are working


• Did you use the fireplace quite often this winter? Now may be a great time to get this cleaned

I hope the tips I've provided can start you off on the right path to great home maintenance for the year and a wonderful spring!

As always, if you know anyone that may benefit from my blog please forward my articles on to them and be sure to follow future blogs :-) Thank you, Ben.

Real Estate Sales Rise in 49 States in 4th Quarter 2010

Real estate sales rise in 49 states in Q4NAR: home prices roughly flat year-over-year in Q4

By Inman NewsInman News™
February 10, 2011

Sales of existing single-family homes and condominiums in the fourth quarter of 2010 rose from the third quarter in all but one state, though only one state saw an annual rise compared to fourth-quarter 2009, according to a National Association of REALTORS® report released today.
Existing-home sales in the U.S. rose 15.4 percent in the fourth quarter from the third quarter, to a seasonally adjusted annual rate of 4.8 million. That's a 19.5 percent drop from fourth-quarter 2009, when the rate was 5.97 million -- a homebuyer tax credit-fueled rate NAR called "unsustainable." In 2010 overall, sales fell 4.8 percent, to an estimated 4.91 million, from 5.16 million in 2009.

The national median existing single-family home price in the fourth quarter of 2010 was essentially flat compared to the fourth quarter of 2009: $170,600.

Median prices in the fourth quarter of 2010 rose in 78 of 152 metropolitan areas across the country compared to the fourth quarter of 2009.

10 metro areas to see highest quarter-over-quarter median price jumps:
Metropolitan Area Q4 2009 median price Q4 2010 median price % change
Elmira, N.Y. $86,800 $101,100 16.5%
Pittsfield, Mass. $173,100 $200,500 15.8%
Binghamton, N.Y. $117,900 $136,300 15.6%
Burlington-South Burlington, Vt. $236,600 $270,600 14.4%
Bloomington-Normal, Ill. $146,700 $167,700 14.3%
Buffalo-Niagara Falls, N.Y. $110,700 $126,500 14.3%
Erie, Pa. $97,700 $110,300 12.9%
Peoria, Ill. $111,900 $126,100 12.7%
Indianapolis, Ind. $111,500 $124,300 11.5%
Milwaukee-Waukesha-West Allis, Wis. $188,400 $210,100 11.5%
Source: NAR

Median price rose the most quarter-over-quarter in the Northeast, up 2.3 percent to $240,400. Prices in the Midwest and South remained essentially flat at $139,200 and $152,400, respectively. The West was the only region to see a median price drop, -2.9 percent to $214,400.

When comparing 2009's median price to 2010's median price, metro areas in California stand out for their rate of appreciation:
Metro Area 2009 median price 2010 median price % change
Akron, Ohio $93,200 $108,900 16.8%
Elmira, N.Y. $87,300 $101,000 15.7%
San Fran Nor. Cali $493,310 $567,900 15.1%
San Jose-Sunnyvale $530,000 $602,000 13.6%
Riverside-San Bernardino $169,680 $187,000 10.2%
Erie, Pa. $97,900 $107,700 10.0%
Burlington-Vt. $241,800 $261,200 8.0%
Bridgeport-Conn. $379,200 $408,600 7.8%
Boston-Cambridge-N.H. $332,600 $357,300 7.4%
San Diego-Carlsbad-Calif. $359,500 $385,700 7.3%
Source: NAR

Lawrence Yun, NAR's chief economist, said in a statement that he was encouraged by the quarterly rise in sales. "Home sales ... are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they've been selling well and housing supplies have trended down," Yun stated. "A recovery to normalcy requires steady trimming of the inventories."

Yun projected about 150,000 to 200,000 jobs will be added to the economy this year from an expected 300,000 additional home sales in 2011, the report said.
"An improving housing market and job growth will go hand in hand. The housing recovery will mean faster job growth," Yun added.

Virginia was the only state to see a quarterly drop in sales, down 5.4 percent, and sales in Washington, D.C., remained unchanged from the third quarter.

Compared to fourth-quarter 2009, however, only Idaho saw a yearly rise in sales: up 7.3 percent. Some foreclosure-ridden states -- Florida, Arizona, Nevada and California -- saw the smallest drops in sales during that time.

Distressed sales made up 34 percent of all sales in the fourth quarter, up only slightly from 32 percent in the fourth quarter of 2009.

10 states to see largest gains or smallest drops in sales from fourth quarter 2009 to fourth quarter 2010 (sales rates are seasonally adjusted, in thousands):
State Q4 2009 sales rate Q4 2010 sales rate % change
Idaho 49.2 52.8 7.3%
Florida 435.2 416.8 -4.2%
Arizona 158.4 150.4 -5.1%
Wyoming 9.6 8.8 -8.3%
Nevada 120 108 -10%
Mississippi 47.6 42.8 -10.1%
California 526.4 464.8 -11.7%
Hawaii 25.2 22 -12.7%
Colorado 108.4 90.8 -16.2%
Vermont 14.8 12.4 -16.2%
Source: NAR

Idaho also saw the biggest jump in sales from the third quarter of 2010 to the fourth quarter of 2010:
State Q3 2010 sales rate Q4 2010 sales rate % change
Idaho 26 52.8 103.1%
Vermont 8 12.4 55%
Minnesota 60.8 81.2 33.6%
Iowa 41.2 52.8 28.2%
North Dakota 9.2 11.6 26.1%
Oregon 44.4 56 26.1%
Utah 22 27.6 25.5%
Nevada 87.2 108 23.9%
Alaska 16.8 20.8 23.8%
Missouri 74.4 92 23.7%
Source: NAR

Idaho was at the top of a list of only seven states, and Washington, D.C., to see sales rise from 2009 to 2010:
State 2009 sales rate 2010 sales rate % change
Idaho 33.8 38.9 15.1%
Hawaii 18.4 21 14.1%
Florida 357.8 396.5 10.8%
Washington, D.C. 8.4 8.8 4.8%
Maryland 72.5 74.4 2.6%
Washington 82.3 83.7 1.7%
Mississippi 41.9 42.1 0.5%
Oregon 55 55.1 0.2%
Alaska 22.4 22.4 0%
Vermont 11.3 11.3 0%
Source: NAR

Several Midwestern states saw the biggest drops in sales from the fourth quarter of 2009 to the fourth quarter of 2010.

10 states to see biggest drops in quarter-over-quarter sales:
State Q4 2009 sales rate Q4 2010 sales rate % change
South Dakota 20.8 12.8 -38.5%
Minnesota 126 81.2 -35.6%
Pennsylvania 41 50.8 -33.4%
Kentucky 87.6 60 -31.5%
Nebraska 41.6 28.8 -30.8%
Indiana 124 88.4 -28.7%
Delaware 14 10 -28.6%
Oklahoma 89.66 4.4 -28.1%
North Dakota 16 11.6 -27.5%
Rhode Island 17.6 12.8 -27.3%
Source: NAR

The Midwest experienced the biggest estimated overall drop in sales in 2010 compared to 2009: 7.5 percent, to a rate of 1.08 million. The Northeast saw a drop of 4.8 percent, to 817,000. The West saw a decline of 4.7 percent, to 1.15 million. The South saw the smallest decrease, down 2.8 percent, to 1.86 million.

10 states to see biggest decreases in sales from 2009 to 2010:
State 2009 sales rate 2010 sales rate % change
South Dakota 17.4 14.2 -18.4%
Minnesota 107.4 89.7 -16.5%
Delaware 12.6 10.9 -13.5%
Oklahoma 83.5 72.3 -13.4%
Rhode Island 15.4 13.6 -11.7%
Missouri 105.9 94.6 -10.7%
Michigan 167.1 149.6 -10.5%
Pennsylvania 176.5 160.3 -9.2%
Utah 31.1 28.5 -8.4%
Kansas 56.5 51.8 -8.3%
Source: NAR

Springtime is Around the Corner....Buying? Selling?

Is it possible that after the worst snow storm in over a decade that we can really be talking or even thinking about Spring? Is is possible that in only a matter of a few short weeks that Mother Nature will shine down on us and bless us with warmer weather and melting snow?

I for one am ready for Spring and can only hope that we've seen our last of "major" snow falls for the year and I'm hopeful that warm weather and all the optimism of spring is around the corner. The realist in me however realizes that its very likely we may have a couple months before this happens.

So When is Spring?

We all have our own opinion on this but is it March, is is April or May? From a real estate broker's prospective the spring market is March. Its the month that we have glimpses of warm weather, then the next day may revert to cold and snow. The days lengthen however and there just seems to be a better all around mood amongst people as we are seeing that we are truly in the fourth quarter of a long winter.

What does this mean for Sellers?

Springtime historically is a time that many home sellers that are currently on the market may see a bump in activity and its a time when home sellers that had prepared over the winter time are set to put their home up for sale.

Putting a home up for sale in the dead of winter often has many obstacles to it compared with waiting until Spring.

1. Your competing with Holidays - Christmas, Thanksgiving, New Years....Buyers have too much on their plate to find time often to go home shopping.
   


2. Snow & Bath Weather - Lets face it, when its Minus 5 degrees there aren't many places most people would rather be when they aren't at work than wrapped up in a blanket at home.



3. Spring is Nearing - many buyers expect a larger number of homes to be available come spring so many decide to make plans for a more thorough and expansive home search once winter nears an end.

What Does Spring Mean for Buyers?

Spring is such a great time of year for so many reasons but for those looking to buy a home its now the time that you generally are seeing many options hit the market. Didn't find what you were looking for the previous few months? Now may be the time that the perfect home hits the market!

The downside for buyers if any with a spring market is that sellers do often have optimism at the highest and may put their home on the market a tad high. I've seen this more often than not but on the flip side, for those that may have missed the buyers they were hoping for during winter they may be getting more aggressive and will lower their prices as competition heats up.

No matter how you slice it, the upcoming Spring Season is always an exciting one for the Real Estate Market.

If your considering selling your home, now is the time to get it prepared. Meet with a professional realtor like myself and get advice on final "to do's" and set a goal for the completion of your projects.

If your hoping to buy a home, now is the time to meet with your banker or a mortgage broker. If you need someone, I have a few that I highly recommend that can be of assistance. Getting pre-approved to purchase a home is easy and painless. If your not quite ready to buy, it still may be a good idea to meet with a lender and discuss options and determine if your credit is where it needs to be in order to purchase a home in the future. If its not, they can often help advise you on what steps to take in order to clean up your credit.

I hope you found today's blog helpful! If you or anyone you know may benefit from my blog please feel free to forward this to them. Additionally, I'm available for any advice specific to your needs so please don't hesitate to contact me direct if you'd like.

Thanks for reading my blog and happy house-hunting/selling! Ben

Lots to Love about Investing in Storage Units

I've been a huge fan of and hopefully one day investor into storage facilities for many years now. I've always felt the allure of the business as one of the most recession proof and sounds investments that could be made.

Think about it....The population continues to increase, land does not, and people love to buy things! Many now more than ever are also down-sizing or may have lost their homes and are in need of storage space for their belongings. When the market is booming, the need is also very real as each city finds a storage facility a necessity for its growing population.

Maybe your a fan of the new hit series TV Show Storage Wars...http://www.aetv.com/storage-wars/. As the rave about storage units grows for the avid buyer of units that are repossessed or for the investor looking for a sound place to put their money, the business is hot.

Here are some big companies that have put their money in a big way into this business as of recent. Recent news reports show that a number of companies have been buying up self storage facilities as fast as they can. An Austin firm has pledged to spend close to a $150 million in the next year.

Another spent $53.9 million in the last quarter for a total of just under $90 million on the year. Another announced that it spent $126 million in self storage facility acquisitions for 2010. However, those numbers pale in comparison to what another company has recently announced they plan to do.

Axxcess Capital Ventures LLC and former Universal Self Storage Acquisitions president Troy Downing have teamed up with plans to spend $1 billion to acquire as many self storage units as they can in 2011. That’s right-- $1 billion.

“We believe this is an excellent time in the real estate cycle to acquire self-storage properties...a return to positive growth fueled by a slowly improving economy and Americans shifting to smaller, more affordable housing and needing more rentable storage space for their possessions...Entrepreneurs launching small businesses and online marketers needing to warehouse inventory are added demand factors,” Downey says.

I'm sold....I think that for years to come the rental price per square foot and combination of market trends and growth opportunities makes this one of the best investment opportunties there is.

Whats in Store for Former Real Estate Boom Towns

Study Predicts What's in Store for Former Real Estate Boom Towns

In former home-building hot spots, the housing bust has created a new kind of declining city, different from the nation’s traditional rusting centers of industry that could languish for years.

Although the causes of the decline in these metropolitan areas are distinct from the loss of employment from shrinking manufacturing and industry in some of the nation’s old industrial powerhouses, these areas could experience fates similar to places such as Cleveland and Detroit, with neighborhoods experiencing high rates of vacancies for a very long time, according to a recently released study.

“Some neighborhoods are going to suffer tremendously or are never going to come back or come back very, very slowly,” said James R. Follain, senior fellow at the Rockefeller Institute of Government and author of the study published by the Research Institute for Housing America, a division of the Mortgage Bankers Association.

Potential candidates for long-term decline named by the study are the areas hit hardest by the drop in home prices in recent years. They include Las Vegas, Miami and several inland California metropolitan areas that grew rapidly during the boom, such as Stockton and Modesto.

A traditional city in decline is one that has suffered a sustained population drop, leaving behind empty houses, apartment buildings, offices and storefronts. Cleveland and Detroit, for instance, suffered from the erosion of manufacturing and the loss of residents, who left in search of jobs.Instead of eroding a particular industry, however, the housing bust left a glut of homes because of overbuilding and the foreclosure crisis. Follain argues that the future of these cities is threatened in similar ways to that of Rust Belt cities.

“Long-vacant neighborhoods are going to develop, and we can imagine what can happen,” he said, including potentially higher crime and lower property taxes.In California, some coastal cities are already seeing a housing market recovery. But inland areas that were built on optimistic assumptions of continued population growth and ever-climbing home values are facing a much more difficult recovery.

Celia Chen, a housing economist with Moody’s Economy.com, predicts that a full recovery in parts of California, Nevada, Arizona and Florida won’t occur until 2030. “The housing boom elevated home prices in a number of areas far, far above what can be supported by the economic fundamentals, and so prices have fallen significantly, and they will remain below their previous peaks easily for a decade, or even two decades,” Chen said.Some experts contend that foreclosures, which have pierced neighborhoods of all income levels throughout the country, are quickly turning developments on the outskirts of metropolitan areas into the nation’s newest slums. Complicating any recovery for these beaten-down areas is the difficulty in predicting which neighborhoods will fare worst. That uncertainty could lead to increasing skepticism by buyers and lenders looking to make loans on homes in these areas.

“If you are looking at this from the perspective of a home buyer or a lender, it is one thing to say you are in a market where home prices may drop 10 percent or 20 percent,” said Michael Fratantoni, vice president of research and economics with the mortgage bankers group. “That is different from the idea that 80 percent to 90 percent of the value could evaporate. That changes the whole nature of the business.”

Still, the future of these regions remains a point of contention. Economist John Husing argues that the inland regions of California don’t have a long-term problem.“What has driven the Inland Empire economy is, for the last 30 years, simply the fact that the rest of Southern California is completely out of dirt,” Husing said. “Right now the price differential between coastal counties and inland counties is $100,000. People will ultimately respond to that.”The development of industrial facilities to handle cargo from Southern California’s ports will also continue inland because they require lots of space, said Husing, principal of Economics & Politics Inc. in Redlands. Such development, he said, will create jobs for workers who will need housing.

What Buyers can learn from the Stock Market

Real estate and stocks aren't often compared to one another unless your speaking of a REIT (real estate investment trust) or a stock in a company that focuses on real estate. Most of the time however they are mutually exclusive of one another.

While my career is in Real Estate I've dabbled in more than my share of stocks and share a passion for investing in companies and trends in the stock market. I've made far more mistakes trying to be the next Warren Buffet than I'd care to share however but have learned often more during these set-backs than I have during times when I've been right.

The one thing that I've learned that I can relate to the real estate market for today's buyers is that you shouldn't try to "TIME THE MARKET PERFECTLY".

Timing the market perfectly is a gamble that is never mastered. Even if prices fall a bit more in your area, mortgage interest may rise later in the year offsetting the drop. If your in the market for a new home, now is the time to get off the side-lines and make what could amount to be one of the better investments of your life. If your thinking about investing in real estate and want to purchase a rental property, also a great time to do so.

Of course when making a bid, have some research done to determine what comparable homes have been selling for over the past three to 6 months. Then make a bid 10% below that average number and in some cases more if the area is extremely distressed with foreclosures.

In contrast however, if your area has a home thats been listed at a very strong price and your comps suggest that it is, multiple offers are not uncommon even in this market. Your agent can contact the listing agent to find out about additional offers and if this is the predicament you are in, keep your offer as competitive as you feel you can. This however does not mean to let emotion get the best of you during a bidding war as many homes will be available if this bid doesn't work out for you.

If you are hoping to buy a home soon, another rule of thumb is to keep any and all other big ticket purchases on hold until you have successfully found and closed on a home. Do not purchase a new car, take a new job, or pay any loans late. This could all adversely affect your approval when it comes to the ability to get a loan.

Hope these suggestions and thoughts on the market are useful to you! As you take the next steps towards your new home be sure to find a full time realtor that knows the business, can be counted on to look out for your best interests, and is reliable.

Please forward this and any of my past blogs to anyone that you feel may find this useful information and thanks again for taking the time to read my blog! Ben

The Art of Shoveling Snow!

Who loves snow? Who loves shoveling it? Probably much fewer enjoy the shoveling aspect of the winter guest to our drive-ways and side-walks J Today I’m going to share some thoughts on an article that caught my attention to help save as many backs, and hard-aching bodies as possible, ready?

With the recent snowstorms that have—and still are—pummeling the U.S., many residents will be doing more snow shoveling than ever before. That news leaves some people thinking about all the pain that will come once they’re finally back indoors. However, shoveling snow can actually be good exercise if done safely and correctly.

"Shoveling snow for about fifteen minutes at a time counts as moderate physical activity, similar to a brisk walk," said Terry Carolan, PT, NCS, ATP, clinical manager at Kessler Institute for Rehabilitation. "Adults are generally advised to do about 20-30 minutes of moderate exercise at least three to four days a week and shoveling can help provide that—especially during the winter months when both outdoor temperatures and personal motivation tend to drop."

However, snow shoveling, like most types of exercise, does present some physical risks.Kessler, a leader in the field of physical medicine and rehabilitation, offers these guidelines:

• Drink plenty of water to avoid dehydration.

• Avoid caffeine or nicotine, as they can cause extra stress on the heart, especially among individuals with a history of or are at high risk for a heart attack.

• Dress in layers and be sure to wear a hat, gloves, and sturdy, non-skid footwear.

• Do some basic warm-up exercises before shoveling, such as walking for a few minutes or marching in place. Stretch the muscles in your arms and legs. Warm muscles will work more efficiently and are less likely to become injured.

• Try to shovel fresh snow rather than partially melted and packed snow and lift small amounts at a time using your legs, not your back. Scoop snow in a forward motion and step in the direction as you throw the snow and avoid twisting and tossing the snow over your shoulder or to the side. If possible, try pushing the snow forward rather than lifting.

• Make sure you have a good snow shovel. Many newer models offer ergonomic features to facilitate lifting and throwing.

• Pace yourself. Take frequent rest breaks and avoid over-exertion.

• Most importantly, if you experience any pain in the chest or arm, shortness of breath or profuse sweating, stop shoveling immediately and seek appropriate medical attention.

There you go folks, the shoveling snow how to guide to help you navigate through this sometimes brutal winter and make it out healthy and strong once Spring comes around!

If you feel anyone else you know may benefit from my blog, please forward this article or previous to those friends or family members. I usually stick to articles that are more closely related to my business of Real Estate but will at times throw an article appropriate for the times or season. Have a wonderful day and thanks for reading my blog!

P.S. - Don't forget, if you or anyone you know is in the market to buy or sell a home contact me today, you'll receive the best in service, dedication and my expertise to make it a success! Ben

Facing Foreclosure?....7 Options To Consider

Here is some information that many of you may find useful when trying to determine your options if you find yourself or a friend/family member facing the challenge of losing your home.

According to RealtyTrac.com, 1 out of 84 homeowners received at least 1 foreclosure filing during the first half of 2009, and for the 4th straight month, more than 300,000 foreclosure filings were reported nationwide.

The FDIC reports that the 2 most common reasons for foreclosures are job loss and health crisis. Despite the media seemingly blaming a subprime loan program that affected 3-5% of the population for our foreclosure woes, the reality is that the combination of job loss and dropping home values have created a perfect storm of financial disasters for many normal families. Now with a slower real estate market translating into falling home values, more homeowners who opted for adjustable rate mortgages are finding that their mortgage rate is rising as their home value is lowering. Therefore, unfortunately, the foreclosure crisis in America is likely to continue.

In years past, if you lost your job, couldn’t pay medical bills, or moved out of state, you had a decent chance of selling your home for a profit, or at least breaking even. Now, many people are tens of thousands of dollars upside down on their loan and are unable to downsize to a smaller dwelling without suffering a foreclosure.

According to homebuying.com, a foreclosure will damage a consumer’s credit score, lowering it on average 200-300 points and making it difficult to get another home for 5-7 years. Bad things happen to good people, and the purpose of this article is to provide people with options available to them during the foreclosure process:

• Option 1- Bring loan current. According to the FDIC, most homeowners in foreclosure have no savings and no available credit. And since the number one reason for foreclosure is due to job loss, there may be no way for the homeowner to catch up the loan. However, if you as a homeowner struggling with a foreclosure have the reasonable expectation of income coming in sometime in the near future, it may benefit you to talk to an extended family member or friend about a short term loan.

• Option 2- Loan modifications. According to a Freddie Mac / Roper Poll, most homeowners fail to contact their lender because they are embarrassed, don’t believe the lender can help, and/or believe it would cause them to lose their home more quickly. However, this option may be a viable. Loan modifications occur when the bank agrees to reduce principal, interest, and/or payments. Unless you have experience with the Loss Mitigation Dept. at banks, I would recommend working with a legitimate, experienced loan modification company who can prepare an effective argument for the banks because loan modifications do not have a high success rate. According to the Office of Comptroller Mortgage Metrics report of April 2009, “…In 2008, only 41.85 percent of all modifications reduced monthly principal and interest payments for homeowners. For delinquent borrowers - - a loan modification resulted in an INCREASED or EQUAL payment amount 58.15% of the time!!” As stated earlier, the number one reason for people going into foreclosure is due to job loss. If no income is coming in from a traditional job, then there is little chance that a mortgage company will reduce your loan principle, interest rates, or payment.

• Option 3 – Forbearance. Forbearances are when a mortgage company allows you to delay your payments or spread your missed payments over the next specified number of months until you are caught up. Again, if you have a reasonable expectation of revenue coming into your household within a certain number of months, then this may be a solution for you. However, keep in mind that until your past amounts are brought current, you will have a negative mark against your credit, even during months when you are paying more than your requirement! Also, some programs may allow the banks to immediately foreclose on you if you fall behind on payments again. Read the agreement you receive from the bank diligently and weigh the pros and cons carefully.

• Option 4- Deed in Lieu of Foreclosure. According to Nolo.com, “with a deed in lieu of foreclosure, you give your home to the lender (the “deed”) in exchange for the lender canceling the loan. The lender promises not to initiate foreclosure proceedings, and to terminate any existing foreclosure proceedings.” This option, if accepted by the bank, is a quick and easy way to walk away from the house, doesn’t require a sale, and may look better on a credit report than other options. Also, some banks may accept this option as it is less expensive than the foreclosure process. This process will not work if you have multiple liens on the house. Also, banks are in the business of collecting cash, not property. And the banks are holding onto more property than they would like so this options very seldom works. Plus, in many mortgage agreements, it is stated that if the buyer goes into default, the bank will only take the property back through foreclosure.

• Option 5 – Bankruptcy. This option is widely misunderstood and possibly the worst option for homeowners. Bankruptcy will only pause a foreclosure, not eliminate it. As stated earlier, most mortgage agreements state that if the property goes into default, the bank will take back the property through foreclosure. Then, you will have both a bankruptcy and foreclosure on your credit history for the next 10 years! Plus, you may still be required to work out a repayment plan for the house. Seek legal counseling prior to deciding on a bankruptcy.

• Option 6 – Foreclosure. Do nothing and let the bank take the house back. The foreclosure process will negatively impact your credit by dropping your score 200-300 points and preventing you from purchasing a house again for another 5-7 months. Plus, you may be sued for deficiencies by the bank for the difference between what the house sold for at auction and what you owed. Or you may receive a 1099 from the bank, stating that the difference is income and you can be taxed upon it.

• Option 7- Short Sale. A short sale occurs when a third party negotiates with the mortgage company to accept a discount on what is owned and release their interest in a property in exchange for a cash payment. The seller is not allowed to financially benefit from the transaction. For a short sale scenario, it is better to utilize the services of a Real Estate Investor rather than a Realtor. First, an investor has more experience with these types of creative transactions than a Realtor. Second, the investor will agree to purchase the house, providing the bank with a signed Purchase Agreement. This Purchase Agreement increases the likelihood of a bank accepting a discount. Most Realtors try to negotiate with the bank and then find a buyer after the negotiations. This strategy leads to a very low success rate. Some of the drawbacks of a short sale are similar to a foreclosure, as your credit score will be negatively impacted but you may be able to purchase a house again after 24 months.

Also, you may be sued and taxed as well, although if you have a knowledgeable investor working your short sale, he or she can negotiate with the bank a ‘satisfaction of the loan’ result, meaning that the accepted short sale would satisfy the loan and no remedies would be needed.

Doing nothing or declaring bankruptcy is probably your worst option. Homeowners facing foreclosure today are going through enough misery and stress and deserve options other than these.

Underwater Mortgages, New Options?

Below I wanted to share an article that I read today addressing the widespread foreclosures that have devastated this entire country. While everyone that reads this will have their own personal views on whether this administration has done a good job of managing this crisis, its important to understand your options for your family or others that you may know that may be facing this dilemna.



For many, the route of being under-water on a mortgage which is a simple way to say that you owe much more than the home is worth has been enough reason to walk away from their home. The path leads to foreclosure and a major hit to ones credit. The other answer for many has been to consider the path of a short sale by working with the bank on a reduced settlement in lieu of foreclosure through a home sale for a balance less than what the bank is owed. The problem again here lies in the fact that homeowners damage their credit by being forced into missing payments for no less than three months before you could even be considered for this.



The following could be a more pro-active solution for some, please read and share any thoughts and comments. As always, thanks for visiting my blog and please share with friends and family!



After months of criticism that it hasn't done enough to prevent foreclosures, the Obama administration is announcing a plan to reduce the amount some troubled borrowers owe on their home loans.

The effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default. That would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program. In addition, the homeowner's existing mortgage company will get incentives to lower the principal balances on underwater loans.

The plan, announced Friday, would also enable the borrowers' existing mortgage companies to receive incentives to lower their principal balances. To be eligible for the FHA refinancing program, borrowers who owe more than the value of their homes, known as being "under water," must not have fallen behind on their existing mortgage payments. Separately, the program also would reduce monthly payments for unemployed homeowners for up to six months.

The administration cautioned that the plan isn't intended to stop all foreclosures or assist all troubled homeowners. "There's no intention here of tackling what may be 10 to 12 million foreclosures over the course of the next three years," said Diana Farrell, a White House economic adviser. Instead, officials said, the goal is to make it more likely the administration will meet its original target, announced last year, of assisting 3 million to 4 million struggling homeowners.
That would be "enough to provide help to those for whom help is worthwhile ... and to provide some kind of stability in the market."

The plan won't assist investors and speculators or "Americans living in million dollar homes or defaulters on vacation homes," an administration fact sheet said. Some homeowners will not be able to afford to stay in their homes because they bought more than they could afford, officials said. To help borrowers who have been hurt by falling home prices, the government also will require mortgage servicers to consider cutting a loan's principal if it is up to 15% more than the home is worth, officials said. The principal would be reduced over three years as long as the borrower stays current on payments.

In addition, servicers will get more incentives — double the amount the government now pays to lenders — if they reduce the unpaid balance of second loans. The changes reflect a new attack by the Obama administration to address the foreclosure crisis, which at first was driven by subprime mortgages going delinquent, and now is being fueled by unemployment. The current program provides modified mortgages to homeowners who show proof of income.

"The cost is going to depend on the participation rate. In terms of the cost to taxpayers, the cost of not doing something is greater than doing something," says Scott Talbott, senior vice president for government affairs at the Financial Services Roundtable. "Up to now, there was no government program to help the unemployed, and that was the biggest problem."
The federal program, known as the Home Affordable Modification Program (HAMP), is aimed at helping up to 4 million Americans avoid foreclosure. So far, about 170,000 homeowners have been granted permanent modifications with lower monthly payments through the plan.
Also Thursday, the Treasury Department announced new measures that buy time for some borrowers to avoid losing their homes to foreclosure.

Lenders soon will be unable to start foreclosures unless they've determined borrowers aren't eligible for a modification. Other changes announced Thursday will provide other protections for troubled homeowners.

They include:
•Ensuring servicers intervene once two or more mortgage payments are missed and actively solicit borrowers for the federal program.
•Setting a 30-day deadline for lenders to decide applications for trial modifications.
•Requiring servicers to consider borrowers who file for bankruptcy-court protection for the HAMP program if the borrower, their lawyer or bankruptcy trustee make a request.
The four big holders of second mortgages —Citigroup, Bank of America, Wells Fargo and JPMorgan Chase — have now joined the government's program to modify second mortgages. That program was delayed for months but with Citi on board, the major players in the industry are now participating.

Critics have complained that the Obama administration has done little until now to encourage banks to cut borrowers' principal balances on their primary loans. Nearly one in every three homeowners with a mortgage are "under water" — they owe more than their property is worth — according to Moody's Economy.com.

Contributing: Stephanie Armour and David Jackson of USA TODAY; Associated Press