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The Day the US Economy Nearly Died

2009-02-15T00:01:00.001-06:00

In the following video US Representative Paul Kanjorski describes what happened to the US banking system on what was either Thursday, September 11 or 18, 2008. Although he is a bit vague about the date, Kanjorski describes how the US banking system was nearly destroyed that day and how the US economy would have collapsed subsequent to that.

Paul Kanjorski has been a Pennsylvania representative in the US House of Representatives since 1985, is the Chair on the House’s Capital Markets Subcommittee and is the second ranking Democrat on the House Financial Services Committee. (1,2)

The Financial Services Committee oversees the entire financial services industry, which includes the securities, insurance, banking, and housing industries. The Committee also oversees the Federal Reserve, the United States Department of the Treasury, the U.S. Securities and Exchange Commission, and other financial services regulators. (3)

Consequently Representative Kanjorski should know what he is talking about when he speaks of the US banking industry.

The video was originally placed on YouTube in a longer version, (4) but it has been shortened for inclusion here.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Free Mortgage Rate Float Down

Bibliography
1. Paul Kanjorski’s web site: http://kanjorski.house.gov/
2. Wikipedia re Paul Kanjorski: http://en.wikipedia.org/wiki/Paul_Kanjorski
3. Wikipedia re: Financial Services Committee. http://en.wikipedia.org/wiki/United_States_House_Committee_on_Financial_Services
4. Youtube http://www.youtube.com/watch?v=pD8viQ_DhS4

How to Solve the Housing Crisis? - Video

2008-12-22T18:37:00.008-06:00

Gary Shilling, economist and president of A. Gary Shilling and Co., shown here in a video that is hosted by Yahoo Finance, is explaining a method he thinks will solve the housing crisis. Mr. Shilling believes that opening the gates to a flood of immigrants will bring in people who can afford to buy up the current supply of homes that are for sale. What do you think?

My main question is where are all of these immigrants going to find jobs? Now that the economy is in such tough shape, I doubt that these jobs that Mr. Shilling claims are available in the tech industry are really still waiting to be filled.

Also, what would that many new tech workers do to the job prospects of the tech industry? If you glut the tech market with highly skilled workers, the salary level of those jobs would fall dramatically. You may end up creating more foreclosures if tech salaries suddenly drop precipitously.

What if far too many of these immigrants decide to rent a home instead of buy? There is no guarantee that these immigrants will buy a home, especially if they are only on H1-B visas, which means they are temporary workers.

If many of these new immigrants are from Asia, that could produce another problem because any Realtor will tell you that Asian immigrants prefer to buy new homes rather than used ones. What is to prevent these immigrants from building a new home rather than buying a home that is already built and for sale?

That could help the builders but would do nothing to soak up all of those homes out there that are still for sale.

Mr. Shilling's idea could be creating even greater problems in the economy than the ones that already exist. But, at least Mr. Shilling is thinking,

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Use Your 401(k) as Your Down Payment

Housing Bill 2008 Style

2008-09-30T13:03:00.002-05:00

The federal government passed an extensive and comprehensive housing bill that takes effect on October 1st. Among the provisions are new mortgage limits for high cost parts of the US, a slightly altered down payment formula for Federal Housing Administration (FHA) loans, and a $7,500 tax credit for first time home buyers. It is called a tax credit, but it is actually an interest free loan that must be repaid over a 15 year period, which is still a pretty good deal.

CNN has prepared an extensive video report, so take a look to learn more about the provisions:

Reverse Mortgage Basics - Video
Technology Forging New Trends in Real Estate - Video

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Free Mortgage Rate Float Down

Reverse Mortgage Basics

2008-08-04T18:28:00.005-05:00

Reverse mortgages are getting more and more popular with retired people and with those folks who are near retirement age. With a reverse mortgage, you tap the equity in your home to use for anything you want--home improvements, helping out the kids or your grandkids, buying a boat, that European vacation--anything.

The remarkable part about a reverse mortgage is you don't have to make any monthly mortgage payments. That is what makes a reverse mortgage so affordable.

Watch the video to learn more:

For more information on reverse mortgages, contact Bob Roscoe at Mortgage Marketing Associates, at NameThatValue.com or email Bob at Mortgage.BobR [at] gmail.com.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
NameThatValue.com

Ben Bernanke's Conundrum

2008-07-31T16:56:00.014-05:00

When Federal Reserve Chairman Ben Bernanke testified before Congress in July he spoke about the risks the US economy faces from two dangers: 1) a continued weakness in the economy and 2) increasing inflation. The conundrum Bernanke faces is this: if he employs the Fed's usual weapon against spiraling prices by increasing interest rates, that would contribute toward weakening an already faltering economy even further. But if he attempts to stimulate the weak economy by lowering interest rates, that will serve to stimulate an already uncomfortable level of inflation.

Because of the Fed's catch-22 situation, economic experts predict that the Federal Reserve will neither lower nor raise interest rates when it meets on August 5, 2008. Some of those experts are also saying that if Bernanke and crew leave interest rates unchanged on Tuesday, they are as much as admitting that the Fed is powerless to fight inflation or aide the weakening economy.

Rich Yamarone, who is the director of economic research at Argus Research, said "I think the Fed is not really part of the equation any more because of the corner they've painted themselves into."

That is some pretty strong language from Yamarone because it implies that the Fed is responsible for the nation’s current economic situation, when, in reality, a whole host of entities are to blame.

The Federal Reserve has cut the key federal funds rate seven times between September, 2007, and April, 2008, in an attempt to prevent the Nation’s economy from weakening any further. The Mortgage Mess, the housing slowdown, and the Credit Crisis that are affecting not only Wall Street, but also every mom and pop up and down Main Street, are still able to erode consumer confidence a great deal further.

But the Fed left rates alone at its meeting in June, and the federal funds rate currently sits at 2%, while the prime rate rests 300 basis points higher at 5%.

Yamarone said that the Fed’s primary concern should be inflation, implying that he would favor an increase in interest rates. His feeling is that inflation is one of the greatest threats to economic growth. If oil, food and other commodities continue soaring, that must affect future growth.

However, David Wyss, the chief economist at Standard & Poor's, believes that our current economic weakness, not inflation, should be the Federal Reserve’s first priority.

"Public enemy no. 1 is still a recession," said Wyss.

It's unimaginable for the Fed to raise interest rates in the near future. After all, the upheaval in the financial markets appears far from over and that was strongly felt to be a major contributing factor that influenced the Fed to initiate its rate cutting spree that began last September. David Wyss remarked that he believes the Fed will refrain from raising rates until next spring at the earliest.

Wyss also believes that the Fed will not cut rates again any time soon either. Wyss said that "at least a couple of months of really disastrous jobs numbers" would need to be reported before the Federal Reserve would consider cutting rates again.

If all of that is true, any change in interest rates, either up or down, will now come from market pressures, not from the Federal Reserve.

Quotes by market professionals come from CNNMoney.com

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Do You Qualify for Government Mortgage Giveaway?

Technology Forging New Trends in Real Estate - Video

2008-05-08T19:03:00.005-05:00

Some of the experts are saying that the changes brought by technology are heralding some new trends in the real estate and mortgage industry.

One trend boosted by Money Magazine is that you will be able to sell your home yourself much more easily because of the ability to place your home's listing on numerous websites that tout for sale by owner (FSBO) properties. Money claims that you will be able to avoid paying a listing real estate commission this way, paying only the selling agent's fee.

That may work for a handful of home sellers who already know the ropes of selling their home. But for the majority of home sellers, a qualified listing agent is a necessity, not a luxury--especially in a slow or declining market.

Despite the often touted perception that the job is easy, the work that a listing agent must do to sell a home is remarkably extensive. The number of real estate agents that fail as Realtors is far greater than the number that thrive, and that is because it is a very competitive and challenging field.

Money's idea that the number of mortgage brokers will shrink is also incorrect, because the job is much more labor intensive than it was just one year ago.

Underwriters are requiring far greater documentation than they used to. The idea that a home buyer could do it himself online is overrated. Some will be able to do so, but the vast majority will still need a loan officer to get it done right.

The paper work required on a mortgage is immense. The idea that most folks will be able to do it themselves is naive.

Think Property Taxes are High Now? Just Wait!

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
401k for Down Payment

Interview with Billionaire Investor George Soros

2008-04-09T08:49:00.008-05:00

George Soros is the billionaire chairman of Soros Fund Management. He has also recently written a book entitled “The New Paradigm for Financial Markets.”

Here he is interviewed by Eric Schurenberg, the managing editor of Money magazine.

Mr. Soros is an influential figure in the financial community. In the interview he shares his insights into the current financial crisis and lends his opinion about the course Ben Bernanke, Chairman of the Federal Reserve Board, has charted for the US economy.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Free Mortgage Rate Floatdown

Do You Qualify for Government Mortgage Giveaway?

2007-12-20T11:06:00.000-06:00

Are you one of the millions of homeowners who is waiting and hoping that the federal government will freeze the rate on your subprime mortgage? Be sure you’re not holding your breath, because taking advantage of this government program will not be easy. Just calculating whether you qualify for the program will take some time and effort.

To update the uninformed, the White House rolled out a voluntary plan on December 6th that subprime lenders will be using to determine who may get the interest rate on their subprime mortgages frozen for the next five years.

The purpose of the plan is to prevent massive foreclosures on mortgages that are held by homeowners who have a less than stellar credit history. Most subprime mortgages are adjustable rate loans and most also will adjust within the next two years.

If you are unable to afford the new monthly payments once your rate adjusts, this program may work for you. May is the key word. Remember that this is a government program, so expect considerable red tape just to determine if you qualify.

Test number one is your FICO, or credit, score now and when you signed on the dotted line to get your mortgage. If your FICO score was over 660 when you applied for your loan, you can kiss this government giveaway goodbye because your credit is too good.

If your score was under 660 when you took out your loan, the next determinant is what is your score now? If it has not increased more than 10%, you are still okay. But if your score is up over 10%, sayonara sailor.

For example, suppose your FICO score was 650 when you took out your mortgage. That is less than the maximum, 660, allowed, so you pass the first part of the test. Now suppose it is 700 currently, which is an increase of 7.69%. You still fall within the guidelines because you did not raise your score by more than 10%.

But, suppose it increased to 716, which is a raise of 10.15%. That would normally disqualify you unless you did something to lower your score, like skipping a payment on a credit card. Something like that would probably reduce your score back within the desired range.

Now for test number 2. You need to be current on your mortgage payments, which means, for the sake of this program, you are not more than 30 days behind on your mortgage now and have not been more than 60 days behind during the previous year.

Test number 3: Your equity in your home cannot exceed 3%. That means that the amount that you owe on your home and the home’s value must be pretty close to equal. If your home is valued at $300,000 and your mortgage balance is $250,000, you are disqualified because the ratio of your mortgage to the value of your home is about 83%, which is too low. That ratio, which is called your Loan-to-Value (LTV), must be no lower than 97%.

The final two tests are much simpler. Number 4: You must occupy the home as your principal residence. If it is an investment property or a vacation home, then you are disqualified.

Test number 5: Your monthly payment must be increasing by more than 10%.

If you pass the test, congratulations. You are eligible for the program, but if you flunk the test, do not give up. Contact your lender to see if something else can be worked out because it doesn’t cost anything to ask.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage News

Think Property Taxes Are High Now? Just Wait…

2007-12-02T20:22:00.000-06:00

If you think your property taxes are high now, just wait, because “you ain’t seen nuttin’ yet.”

That is what some city and county assessors have been thinking lately, although you won’t find many who are willing to say it loud enough to be quoted.

Your local assessor did not have to raise property taxes during the recent real estate boom because the spiraling home values did it for him. A $50,000 or $100,000 average increase in property values translated into a similar increase in property taxes too. Your local county or municipality had more than enough cash coming in, thank you.

But now that property values in many locales are heading south, some homeowners are contesting the value that the assessor has placed on their homes. And it is not just a few homeowners filing to contest their valuation. They are filing in droves, by the tens of thousands per county.

It makes perfect sense. As property values decline, so should assessor valuations. If the assessor does not re-assess your home, you might consider drawing his attention to the lower valuation of your home in order to obtain a tax reduction.

But the cost of services that the county provides to you is not decreasing. Those costs continue to rise along with the price of other goods and services. Plus, since fewer homes are being sold, the counties are realizing far less income from transfer fees and deed and mortgage registration taxes. In many cases it is millions of dollars less.

If your local government does not cut its services, it will be forced to raise the tax rate to pay for those services that it provides, which means that your annual property taxes increase right along with the tax rate.

In areas like Cleveland, where foreclosures are spreading as quickly as a winter cold, a lot of those boarded up homes are being bulldozed. Such demolition results in further erosion of the tax base because a vacant lot produces far less tax revenue than an occupied home.

If the city’s foreclosure rate is harsh enough, lenders with foreclosures in the most severely blighted neighborhoods will give up trying to sell them and begin walking away from them instead. As you can probably guess, an abandoned home produces no revenue for city coffers.

County assessors nationwide are bracing themselves for an expected glut of abandoned properties to head their way.

Those abandoned homes require city services to mow lawns, cut weeds, and board up windows. It all costs money, and somebody has to pay for it. The county won’t be reimbursed for those funds until that boarded up shell sells to someone willing to rehab it.

And that may take years in the most blighted neighborhoods. All of that culminates in higher taxes for the remaining homeowners who have not lost or abandoned their homes.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Real Estate News

Schwarzenegger Brokers Foreclosure Rescue Program

2007-11-25T18:30:00.001-06:00

MSNBC is reporting that California Governor Arnold Schwarzenegger is leading action on mortgage foreclosure reform well ahead of lawmakers on Capitol Hill.

Schwarzenegger brokered a deal to slow the rate of home loan defaults in California initiated by the credit crisis in the subprime mortgage market.

Schwarzenegger's deal with four of California’s largest mortgage lenders, Countrywide Financial, GMAC, Litton and HomeEq, is "jaw-dropping in its ambition and implications," according to Matt Fellowes, a fellow with the Brookings Institution.

Under the plan, the four lenders will extend for a "sustainable" period the low teaser rates on adjustable subprime loans to homeowners who are at risk of foreclosure.

Assuming that “sustainable” means a few years, that would address a major headache and reason for some foreclosures, the huge number of adjustable rate mortgages (ARMs) taken out at low introductory rates and which are due to adjust to higher rates in coming years.

ARMs make up about 30 per cent of all US home loans and are the standard loan in the subprime market. More than $350 billion in ARMs will reset to higher rates in the next 1 ½ years.

Falling house values are leaving some borrowers with negative equity and no chance of refinancing. These homeowners then face a double whammy when their mortgage rate resets making their home unaffordable in some circumstances.

This could also slow consumer spending, affecting the US and world economies.

Attempts to avert such a scenario by encouraging mortgage lenders and servicers to renegotiate home loans have not gone as well as expected.

Although lenders generally agree that in many cases everyone is better off if a loan is restructured rather than foreclosed, they have so far resisted efforts to standardize delinquent mortgage work-outs based on criteria such as loan type and status of the borrower.

Many lenders feel standardized solutions will benefit borrowers who can afford to make higher payments, and want to proceed instead on a case-by-case basis.

Federal officials are seeking further information on the California deal and would not comment whether potential exists to extend this solution on a state-by-state or national level.

However, there is interest in the approach. "It has the potential to save tens of thousands of Californians their homes and perhaps hundreds of thousands of homes across the country by proving . . . that the public and private sectors can collectively work together," the Brookings Institution’s Fellowes said.

Michael Krimminger, special adviser for policy with the Federal Deposit Insurance Corporation, which guarantees deposits held by banks, said the plan might be a catalyst for other states to adopt similar measures.

"The influence that the governor of California can bring to bear means there will be a big push for this (nationwide),” he said.

Yet California has not promised either financial or legislative incentives to the lenders, according to a Schwarzenegger spokesperson.

"If only one of these companies was modifying its loans . . . they would lose out to the competition and (home) prices would keep falling. It would be a double whammy," she said.

However, with four mortgage lenders representing 25 per cent of subprime mortgages signing up to the plan, the risk to the lenders has been diminished.

The lenders will only offer the agreement to homeowners who are current in their mortgage payments. Plus homeowners will also need to prove they cannot afford a rate increase.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Delinquencies Fact and Fiction

Get Rich Quick Foreclosure Scams

2007-10-16T20:47:00.000-05:00

Don't believe everything you read in the newspapers. The scam artists are everywhere offering to make you rich--for a fee.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
More Foreclosure Scams
Foreclosure Buying Homework

Mortgage Refinancing Tips Video

2007-09-16T18:43:00.000-05:00

If you are thinking of refinancing your mortgage, you may want to consider these tips from Andrea Coombes of CBS Marketwatch.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Rate Floatdown

Navigating New Mortgage Maze

2007-08-16T18:33:00.000-05:00

Erica Sandberg of the Consumer Credit Counseling Service in San Francisco provides some tips about what to do if your current mortgage is resetting, if you are refinancing or simply trying to get a loan.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Rate Floatdown

Government Can't Protect You from Trigger Lists

2007-03-27T01:45:00.000-05:00

If you apply for a mortgage and get a barrage of irritating and confusing phone calls from competing mortgage companies before noon the next day, where can you turn to for help? The government? Not according to the Federal Trade Commission (FTC).

The FTC recently issued a long-awaited answer to that very question, and the FTC’s response is attracting considerable criticism. The FTC, which has regulatory oversight over consumer credit, states that it lacks the legal authority to police unsolicited "trigger-list" phone calls to consumers who have applied for home loans within the preceding 24 hours.

The trigger-list sales pitches to mortgage applicants issue has heated up in recent months as new mortgage volume sank nationwide in the softening housing market. Since fewer people are buying homes or refinancing, some mortgage companies have begun investing heavily in “leads,” or contact information for consumers who are in the market for mortgages.

Trigger leads often provide the loan officer with much more information than phone numbers. The mortgage company can customize the leads order to include credit scores of a specific category, loan balances, credit card debts, estimated home values and other similar data. When they call to pitch you, they often know more about your finances than you do.

Marketing companies sell these lists to lenders at hefty prices on the Internet. The lists are based on consumer information sold by the three major credit bureaus -- Equifax, Experian and TransUnion -- after a mortgage loan officer orders your credit report.

Suppose that you apply for a new loan with a mortgage broker or banker. The loan officer orders a report on your credit information on file with the three bureaus. That inquiry, in turn, goes into databases at the credit bureaus. The inquiry alerts the credit bureaus that you are interested in getting a mortgage, and they know that other competing mortgage companies may be willing to pay hundreds, even thousands, of dollars a month in some cases for that information.

Consumer advocates argue that such trigger lists may lead to bait-and-switch schemes, in which lenders try to use deceptively low interest rates to lure unsuspecting customers who have just applied to other mortgage companies and may have received higher interest rate quotes. Once a customer switches loan applications, the trigger-list marketing lender either can't or won’t deliver the promised low rate, and borrowers are stuck with either higher cost loans or no loans at all. The scheme is classic bait and switch.

Harry H. Dinham, president of the National Association of Mortgage Brokers, charges that mass distribution of loan applicants' financial information may open the door to identity theft, with your supposedly private data floating around the Internet. What is protecting the theft of your data residing on a print out at some telemarketing company?

"This is a big, gaping hole in the system, and we'd like to see it shut," Dinham said.

Dinham also argued that trigger-list marketers' loan offers often do not meet the Fair Credit Reporting Act's criteria for "pre-screened" firm offers because the marketers sometimes lack the necessary information to extend mortgages, such as appraisal and documentation of income and assets. Nor do the lead generators who sell the trigger lists meet the law's strict standards for receiving access to consumers' personal information.

To constitute "firm offers of credit," Dinham said, "mortgage offers need to be in writing, so that the consumer can review it, and understand whether there are problems."

Rebecca E. Kuehn, the FTC's assistant director for privacy and identity protection, said the fair credit law, which permits firm offers of credit using such prescreened lists, does not specifically prohibit telemarketing offers. Nor does it require lenders to know every detail of a consumer's credit situation to make a firm offer. It does permit some "post-screening" such as verification of income and assets or other similar verifications.

Kuehn said that even though the FTC lacks statutory authority to ban such pre-screened mortgage offers, it does have enforcement authority against bait-and-switch scams and misuse of information regarding consumers' credit. Consumers who experience such problems connected with trigger-list marketing can file complaints with the FTC on-line at http://www.ftc.gov.

Better yet, you, the consumer, can eliminate prescreened credit solicitations for mortgages or credit cards by opting out. That theoretically prohibits the credit bureaus from selling your personal information to lenders for marketing campaigns, although the bureaus sometimes require you to “opt out” as often as every six months.

You can opt out by calling 888-567-8688 or visiting http://www.optoutprescreen.com or . The FTC says that your request should be processed within five days, although it may take up to 60 days for all prescreened offers end.

Mortgage applicants can also block trigger-list telemarketing pitches by signing up for the National Do Not Call Registry at http://www.donotcall.gov or by calling 888-382-1222. However, some telemarketers are actually calling potential borrowers at their workplace rather than their home to get around the Do Not Call Registry rules.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
How to Improve your credit score

Lawmakers Seek to Halt Mortgages to Some Immigrants

2007-02-24T19:28:00.000-06:00

WASHINGTON - New legislation on Capitol Hill seeks to curb an increasingly popular mortgage concept: providing home loans to applicants using their Individual Taxpayer Identification Number (ITIN), in lieu of a Social Security number.

ITINs are issued by the Internal Revenue Service to assist immigrant workers who do not qualify for a Social Security number -- but do have taxable income -- to report their income and pay federal taxes.

Dozens of banks around the country have begun offering home mortgages to undocumented immigrants using ITINs, but their programs generally have been low-key and small in volume. Bank of America stirred controversy earlier this month when it announced a pilot program in Los Angeles to provide credit cards to resident alien customers who lack Social Security numbers but have ITINs.

Some critics charged that the bank was seeking to profit by helping illegal immigrants. Bank of America said its program is legal, and may be rolled out nationwide if the pilot is successful.

Now a bill has been introduced in Congress that would prohibit financial institutions from providing home mortgages to anyone who lacks a Social Security number. The bill (H.R. 480), introduced by Rep. John Doolittle, R-Granite Bay, would amend the Truth in Lending Act to make ITIN mortgage lending illegal.

Doolittle's office released a statement which said in part: "The government should not be in the business of creating incentives to encourage illegal behavior. Nor should companies be permitted to reward those individuals in clear violation of our laws.''

Proponents of ITIN-based lending to home buyers say Doolittle has it all wrong. Tim Sandos, president and chief executive of the National Association of Hispanic Real Estate Professionals, said Doolittle's bill would be "extremely disruptive,'' and affect far more people than the illegal immigrants the measure purports to target.

Sandos estimates there are as many as 7 million to 8 million resident aliens in the United States who do not have Social Security cards, but are in some phase of the immigration process leading to citizenship. That process can take years -- often more than eight years -- and ``meanwhile, these individuals are working here, earning incomes, paying taxes, contributing to the economy.''

They "are not illegal,'' said Sandos, "they are undocumented. The government knows exactly who they are and where they are.'' Doolittle's bill, he added, "is the equivalent of trying to drive a tack with a sledgehammer.'' Sandos' group, which is composed of Latino and non-Latino representatives of banks, real estate firms, developers, home builders and real estate service providers, conducted a study which concluded that if mortgage companies made greater use of ITINs to extend home loans to qualified buyers, $44 billion in new mortgages -- primarily to first-time buyers -- could be originated.

Geoffrey F. Cooper, director of emerging markets for MGIC Investment, a major private mortgage insurance firm, said lenders in roughly 40 states already are making mortgages to customers using ITINs. MGIC's role is to provide insurance against losses to lenders in the event borrowers default or go to foreclosure.

Cooper said his company's program was initiated at the request of community banks and other local lending institutions that found many of their customers who lacked Social Security numbers -- but had ITINs for tax purposes -- earned solid incomes, had stable employment histories and excellent payment histories on debt obligations.

Under MGIC's program, underwriting standards are strict, with mandatory documentation of income, assets, residency and other criteria -- stricter standards, in fact, than many lenders impose on applicants who have Social Security cards.

Home buyers with ITIN mortgages "perform like 'A' credit borrowers,'' said Cooper, and they qualify for MGIC's favorable "A-premium'' insurance rates because they are so dependable.

Janis Bowdler, senior housing policy analyst for the National Council of La Raza, a Hispanic advocacy group, said the home buyers who use ITIN mortgages should be seen simply as "hardworking, taxpaying families who want to participate in the American dream,'' even if they do not yet have Social Security numbers because of their immigration status.

Sandos noted that making Social Security numbers mandatory to obtain a mortgage also could affect the ability of Asian, European, South American and other foreign investors who simply want to buy a house or condominium in the United States for periodic visits, but not full-time residency. That, in turn, could prompt foreign governments to impose restrictions on the ability of U.S. citizens to buy real estate abroad.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Rate History

Lenders Offering Subprime Loans in Trouble

2007-01-31T18:31:00.000-06:00

Is a blowout taking shape in the impaired-credit mortgage market? Could lax underwriting standards during the housing boom years -- no verification of applicants' incomes or assets, low or no down payments, and big mortgages to people already saddled with heavy consumer debt -- finally be coming home to roost?

The omens are unmistakable:

Delinquencies in the $1.3 trillion impaired-credit mortgage market hit 12.6 percent in the latest quarter, up from 11.7 percent. Delinquencies exceeded 13 percent among borrowers with subprime adjustable-rate loans.

Some of the companies that make or invest in subprime mortgages are themselves facing financial distress, and some have shut their doors or filed for bankruptcy protection. HSBC Holdings, Europe's largest bank and a major subprime lender in this country, shocked Wall Street recently by announcing that home-loan delinquencies have gotten so bad that it has set aside $10.6 billion to cover potential losses.

New Century Financial, a California-based subprime lender, saw its stock plunge 36 percent on Feb. 8 when it announced that "buybacks" of delinquent loans have been more numerous, and more costly, than anticipated. Subprime lenders are required by Wall Street bond investors to repurchase loans that go into serious default early in their terms, suggesting poor underwriting, bad appraisals or other issues.

Ownit Mortgage Solutions, another high-profile California subprime mortgage lender, abruptly went out of business when buyback demands reached a reported $100 million. Ownit's chief executive, William D. Dallas, acknowledged problems in underwriting but also blamed bond investors' voracious demands for high-yielding no-income-verification loans.

Dozens of smaller subprime originators have ceased operations or are scaling back new lending. One of the mortgage industry's top executives, Angelo Mozilo, chief executive of Countrywide Financial, was quoted as saying: "There's probably 40 or 50 [subprime loan originators] a day throughout the country going down in one form or another. And I expect that to continue throughout the year."

What's going on here? At a recent Senate hearing, a leading consumer-protection advocate, Martin Eakes, chief executive of the Center for Responsible Lending, called the subprime market "a quiet but devastating disaster."

The "ultimate effects are very much like Hurricane Katrina," he said, but "the difference is that this disaster . . . is occurring every single day across the country, house by house and neighborhood by neighborhood."

Eakes's organization published a study last month that estimated that 2.2 million overextended subprime mortgage borrowers will lose their homes to foreclosure -- a projection hotly disputed by the mortgage industry. Eakes told the Senate Banking, Housing and Urban Affairs Committee that subprime lenders have "virtually guaranteed" high levels of delinquency and foreclosures by offering borrowers excessively risky loans with teaser rates and low payments for the initial two or three years that later explode into sharply higher payments.

Lenders also have allowed unqualified borrowers to merely "state" -- not verify or document -- their incomes, putting large numbers of them into loans they should never have been granted, Eakes said. He quoted industry research that found that 90 percent of stated-income mortgage applicants "had inflated incomes compared to IRS documents" and that 60 percent of them exaggerated their incomes by 50 percent or more.

Representatives of the lending industry challenged Eakes's analysis of rising subprime defaults and told the Senate committee that the real reasons for homeowner defaults are unanticipated economic difficulties such as job loss, income curtailment, illness, high consumer debt loads and marital problems.

Douglas G. Duncan, chief economist of the Mortgage Bankers Association, challenged the idea that "delinquencies are at crisis levels" or that unusually high numbers of borrowers, subprime or otherwise, are losing their houses to foreclosure. In mid-2002, for instance, subprime delinquencies exceeded 14 percent, then fell to just above 10 percent in 2004 and 2005, and have risen since then, Duncan said.

Whichever perspective you prefer, Eakes's or Duncan's, this much you can be certain about:

With major players such as HSBC and New Century taking financial hits, the entire subprime industry is likely to tighten underwriting standards and throttle back on the highest-risk loans. Home buyers with marginal or poor credit are likely to be quoted even higher rates and fees than they would otherwise. Look for big cutbacks on the availability of no-documentation loans for subprime applicants.

Congress, with a new Democratic majority in charge, is certain to push for tougher standards on loans that combine multiple layers of risk -- low down payments, limited documentation and the potential for hefty payment increases.

Consumer lawsuits against lenders with high early default rates on high-cost subprime mortgages are almost guaranteed. Likely allegations: Loan originators steered borrowers into inappropriate loans, didn't explain how they worked and walked away with fat fees in the process.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Free Mortgage Rate Floatdown

Alternative Credit Reporting Boon for Immigrants

2006-12-31T15:29:00.000-06:00

Picture this: You have lived in this country for 15 years, earned a decent wage, raised a family, and always paid your rent, utilities, cell phone charges and other bills on time, month after month. But you made little or no use of the conventional banking and credit systems -- avoiding bank loans, credit cards and debt in general.

Now you go to apply for a mortgage to buy your first home and get smacked with this sobering news: Sorry, but there is not enough information in your national credit bureau files to score your credit. We either will charge you an interest rate well above prevailing rates -- 9 percent or 10 percent in a 6 1/2 percent market -- or simply reject you altogether.

That is precisely what many Latino families now face, according to a new survey. The 14,000-member National Association of Hispanic Real Estate Professionals -- Latino and non-Latino real estate agents, builders, mortgage bankers and lenders, lawyers and credit counselors -- polled 500 of its members and found:

Nearly one-third said their clients end up paying subprime rates on mortgages because their limited credit histories make them appear high-risk when lenders use traditional FICO credit scores, the dominant credit evaluation method in the highly automated mortgage underwriting process.

Nearly 80 percent said that for every Latino household they help to homeownership, they turn away two prospects solely because they can't pass muster under traditional score-based computer underwriting programs.

The chairwoman of the Hispanic realty association, Frances Martinez Myers, estimates that if mortgage lenders used alternative credit-scoring models that factored in rent, utilities and other types of payments that are not reported to the national credit bureaus, an additional $200 billion in new home loans could be extended to Latino buyers.

Felix DeHerrera, incoming chairman of the association, said that under current underwriting approaches, Latinos often get "penalized for being debt-averse, rather than being rewarded for their consistency in meeting financial commitments, even if it is in cash."

But the credit-scoring inadequacy problem extends far beyond Latinos. Fair Isaac Corp., developer of the FICO score, estimates that as many as 50 million Americans -- of all ethnic backgrounds, ages and incomes -- are unscoreable or difficult to score because they have minimal information on file at the three national bureaus.

In effect, the credit deck is stacked against them. They often pay higher fees and interest rates than they deserve. But there is good news for many of these consumers: Growing numbers of lenders and mortgage brokers understand the "thin file" issue and have begun offering at least one of several alternatives to traditional credit scores.

At the annual convention of the National Association of Hispanic Real Estate Professionals earlier this month, a new guide was released listing hundreds of brokers and lenders around the country who use the Anthem system of nontraditional credit reports and scores as supplements to FICO.

Anthem, developed by First American CredCo, the credit data subsidiary of Santa Ana, Calif.-based First American Corp., evaluates whatever information on an applicant may exist in the files of the national bureaus -- Equifax, Experian and TransUnion. Then it mixes in information collected by CredCo from other sources. These include regular child-care payments; telephone, electricity and other utilities payments; current and past rent payments, plus personal credit data from businesses that do not report to the bureaus -- small local retailers that extend credit, payday lenders, rent-to-own companies and the like.

This produces an alternative credit file that can then be scored. First American CredCo says its scores accurately predict borrowers' risk of future default. Better yet, alternative scoring allows lenders to cut mortgage rates, down payments and fees for people with solid -- albeit nontraditional -- credit backgrounds.

The goal, according to Mark F. Catone, CredCo's senior vice president for product and market development, is to help "deserving families to secure prime-grade mortgage loans," even though they score poorly using traditional FICOs.

The Anthem system is just one of several alternatives that are now available to help "thin file" applicants. Fair Isaac itself offers an alternative-data counterpart to its traditional FICO score known as the Expansion score.

Another company is functioning as a national repository for nontraditional credit data. Annapolis-based Pay Rent, Build Credit Inc. specializes in helping consumers build their own alternative credit databases by supplying verifiable rent, utilities and other periodic payment information directly to the firm.

Bottom line here: Just because there's not a lot on file about you in the big three credit bureaus no longer means that you can't obtain a home mortgage on favorable terms. You just need to ask about -- or demand -- scoring alternatives from lenders that give you a fairer shot.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
What is a Credit Score?

Real Estate Con Artists' Giant Scam

2006-11-30T23:16:00.000-06:00

It seemed like an answer to a prayer for people facing hard times.

The sales pitch sounded too good to be true, and it was.

One of the largest mortgage frauds in living memory began with a small-town lay minister and her daughter, a hairdresser. They gathered friends, neighbors and clients, and pitched a get-rich-quick scheme tinted with religion and targeted specifically at African-Americans.

"'This is what the white man has done to get ahead their whole life.' …. That was their exact words," said Barry Moore, a resident of Virginia who found himself the unwitting owner of two houses in Indiana.

Federal authorities are still investigating, but it appears the fraud ensnared more than 100 people, as many as 400 properties and as much as $80 million.

"Fannie Mae … believed it was the mother of all mortgage fraud," said Robin Pickett, an Indiana real estate agent working with the fraud's victims.

Mortgage fraud has become an "epidemic," according to an FBI report issued last year. According to the report, the value of total fraud ballooned from about $400 million in 2004 to more than $1 billion in 2005 — and is on pace this year to go even higher.

Outline of a Fraud

Beulah Penn was a lay minister in Martinsville, Va. Her daughter, Sharon, worked in a beauty salon in the town, which had lost thousands of factory jobs in recent years. Bealuh's son, Robert Penn, was a successful property speculator who lived — literally — on Easy Street, in Indianapolis. One evening in 2005, Beulah Penn and her daughter gathered friends and neighbors, and Robert Penn came into town for a dinner that Moore said felt "like a festive celebration."

According to investors, the Penns offered the opportunity to join what they called a "real estate investment group" as a blessing from God. They emphasized that no individual would bear responsibility. Instead, each would have a stake in a portfolio of properties that one of Robert Penn's companies companies. When the properties were eventually sold, the profit would be returned to the members. And according to the group, all that Robert Penn asked for was their Social Security numbers so that he could verify their credit ratings.

Many of the investors were reluctant to join, and did so only after months of persistent urging. Once they had been persuaded, the next stage required signing some documents. And on this point, Beulah and Sharon Penn always seemed to be in a hurry, investors said.

"You get over there and you get to signing, everything was highlighted, where you need to initial it, initial here, sign here, initial here, sign here, date here, put yesterday's date on here or what not," Moore recalled. "Literally standing over me, flipping the pages for me."

The investors expected the next they would hear of their investment would be a check in the mail. It wasn't until months later that they realized they had been swindled, they said.

Kelvin Thompson went to his credit union for a small loan, "a little extra money for the holidays," he said, and was surprised to find that five Indiana properties were registered in his name. He owed nearly $1 million on the mortgages.

The victims of the alleged fraud found their credit ratings, in some cases nearly perfect before they signed those documents, ruined. Small or simple transactions had suddenly become arduous.

Unexpected Support

Robin and Tony Pickett, real estate agents in Indianapolis, discovered a large number of big mortgages registered in the names of people living outside Indiana. They became suspicious.

"Once we saw the values that they had been sold for we immediately thought there was something a little strange about this," Tony Pickett said. "So the next day I went over to the properties and did an assessment myself. And what we found was most of them were abandoned. Most of them were in total disrepair."

Robert Penn had secured appraisals of the properties, which the Picketts said were as much as four times their value. One of the five properties in Thompson's name was worth only $29,000, but the mortgage issued was for $139,000.

According to the Pickets, Robert Penn pocketed huge sums of money by purchasing dilapidated homes at market value, while arranging mortgages of far greater value in the names of his investors. The difference between the two became his profit.

In June, New York-based Countrywide Home Loans Inc., the nation's largest home lender, filed a lawsuit in Indiana's Marion Superior Court, charging Robert Penn with masterminding the fraud.

When Beulah Penn was deposed by another lender involved in the case earlier this week, she decided to invoke her right to silence, even refusing to answer when asked if Robert Penn was her son.

"Nightline" has learned that federal investigators are now interviewing members of other investment groups started by Robert Penn in Michigan and Indiana. Sharon Penn has closed her hair salon.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
How Credit Repair Crooks Can Scam You

Improved IRS Technology Makes Mortgage Fraud Easier to Detect

2006-10-31T23:06:00.000-06:00

Starting Monday, it's going to get much riskier to fib about your income when you apply for a home mortgage. That's because the Internal Revenue Service is overhauling a key income verification tool used by lenders -- making it faster and easier to pull up electronically the confidential income tax information of borrowers.

"It could be huge" in spotting fraud upfront, before it's too late, said Mike Summers, vice president of Veri-tax.com, a Tustin, Calif.-based firm that services 3,000-plus large and small mortgage lenders nationwide. Fraud in mortgage applications is now a multibillion-dollar-a-year problem, according to the FBI, and falsified income tax filings are an important contributing factor.

Some popular mortgage products open the door to bogus claims about income. Many lenders in recent years have offered "stated income" and other limited-documentation mortgages aimed especially at self-employed applicants. Dubbed "liar loans" by industry critics, stated-income mortgage programs allow applicants to bypass standard underwriting requirements for W-2s or copies of personal and corporate income tax records.

Instead, applicants simply assure the loan officer or broker that, yes indeed, we earn enough to qualify for the mortgage, and the transaction proceeds to closing. Often lenders will ask borrowers to fill out an IRS Form 4506-T along with their other mortgage documents.

That form authorizes the lender or the investor providing the money for the mortgage to obtain transcripts from the IRS summarizing income and tax data for as many as four years. The form must be signed by the borrower and can be used only during the 60-day period following the date of signing.

Until now, the process of faxing in 4506-T requests to the IRS and obtaining transcripts has been paper-driven and non-electronic. That has made income verifications slow and difficult to fit into lenders' highly automated loan-underwriting systems. Most lenders have used 4506-T forms as a way to perform quality-control checks on pools of closed mortgages.

But now, with the IRS promising to provide electronic transcript tax data within one to two business days in an electronic format, more lenders are likely to run income checks before closing -- even on loans to applicants who are not self-employed or using stated-income programs.

"This is going to be light years ahead of where the IRS was before," when the income-verification process was in the horse-and-buggy era, Summers said. "We are really excited" at the prospect of lenders making more extensive use of IRS double-checks before closings.

The only downside from a lending industry perspective: Rather than providing transcripts at no cost as in the past, the IRS now plans to charge a flat $4.50 for each tax year covered in a 4506-T request. Typically lenders want to see two years of returns, so the IRS policy change means costs will jump by $9 per loan application. Though lenders will be able to deal directly online with the IRS, most are expected to continue working through third-party vendors such as Veri-tax, who can handle large volumes of requests per month, but at a higher cost.

What does the IRS move to electronic tax verifications mean for mortgage applicants? For one thing, they will probably be asked to fill out Form 4506-Ts earlier and more frequently. Borrowers who are playing games with stated incomes or falsified 1040 tax returns are more likely to be spotted before closing and could be subject to prosecution.

Wider uses of 4506-Ts could also increase the potential for lender or broker abuse of the system. For example, some large wholesale lenders have required borrowers to sign the forms, but not date them or indicate the tax years to be checked. That allows secondary market investors -- the firms that ultimately own and fund the mortgage -- to access the data on up to four years of filings long after the 60-day limit prescribed by the IRS.

At worst, improperly executed Form 4506-Ts give unknown and unseen individuals the potential to obtain your most confidential income and tax information, then sell it, distribute it or post it on the Internet. With income checks likely to be faster and more frequent in the new electronic format, it will be more important than ever for home mortgage applicants to follow the IRS instructions on Form 4506 to a "T."

That means never signing the form without dating it and specifying the tax years you're authorizing to be checked. Even if the loan officer insists that it's the mortgage company's standard procedure -- or worse, a precondition for obtaining the loan itself -- never sign an incomplete 4506-T.

In the right hands, federal income verifications are a great way to fight fraud. In the wrong hands, it's an open invitation to identity theft, or worse.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Rate History

Slow Real Estate Market Hinders Valuations

2006-09-30T22:55:00.000-05:00

In cooling real estate markets, it's one of the hottest questions: How do you value a specific piece of property when local home sales are down 20 percent to 40 percent from last year, inventories of unsold homes have ballooned by 200 percent or more, and all the trend lines are pointing negative?

It can be tough. Traditionally, real estate appraisers focused heavily on sales of similar properties -- "comparables" that sold in recent months -- to make their valuations. But that doesn't work well in markets that had been superheated -- prices rising at 1 percent to 2 percent a month -- but are now stalled out or falling.

It also doesn't work well in markets where recent closed sales prices often were inflated by incentives provided by sellers to buyers -- contributions to closing costs, for example, "buydowns" of mortgage interest rates and other sweeteners not always on the public record.

"It's getting pretty dicey out there," said John D. Bredemeyer, a residential appraiser and spokesman for the Chicago-based Appraisal Institute, the largest professional group for the industry.

"Just looking at historical data can be perilous. You've got to open up the window and see what's really happening now. You've got to answer the question: 'Where are we in this cycle?' And you've got to factor that into your valuation."

Some mortgage lenders and relocation companies now expect appraisers to examine a wide range of data they never emphasized during the boom years. Gary Crabtree, owner of Affiliated Appraisers, based in Bakersfield, Calif., said that besides the traditional "recent comps," he now factors in at least eight other types of data in determining the value of a house:

· Pending sales under contract.

· Listing prices of houses in the area.

· Market supply and demand.

· Length of time unsold on the market for current listings.

· Price reductions or increases on current listings.

· Notices of defaults and notices of trustee's sales.

· Known concessions provided to buyers to facilitate sales.

· Personal interviews with real estate agents on what they're experiencing with sellers and buyers.

Even some of these factors can be tricky. For example, Crabtree said, some agents increasingly are playing what he calls "the re-list game." Because multiple listing system data reveals how long each property has been on the market, agents with unsold houses now sometimes cancel the listing -- take the property off the market for a short period of time -- and then list it again with a different price and MLS code.

"Now the house no longer looks like it's been sitting dead in the water for months on end," Crabtree said. "It looks like a new listing," and it's reported in that misleading way in the data that appraisers use to gauge the overall market.

Crabtree said one house he tracked was first listed in October at $299,900. It sat unsold for 122 days. Then the listing agent pulled it out of the system briefly and brought it back as a new listing, but this time at $269,000. When it didn't sell in 30 days, the agent again yanked the listing and reported it as a new one with an asking price of $259,000.

The house is now on the market for $229,000, "but it's still not selling."

Crabtree also is constantly on the prowl for concessions that may have puffed up the price of houses he's using as one of the six to nine comparables for an appraisal.

"There's just a tremendous number of them out there right now" -- some of them under the table and tough to detect -- "but they've got to come off the valuation."

In other words, if the recorded contract price on a pending or recently closed sale is $395,000, but the seller is kicking in $25,000 in concessions, the value of the property for comparable purposes is $370,000.

Another emerging challenge for appraisers in cooling markets: Some relocation companies and lenders are asking for not only current market values but also forecasts of where the property value will be in the coming 60 to 120 days.

Crabtree does that by feeding all the data at his disposal into a computer spreadsheet program to produce a linear regression "scatter pattern" chart showing the most probable valuations during the months ahead.

Lately, Crabtree's scattershot trend lines have been pointing down. But like most experienced appraisers, he knows that real estate moves in cycles. Booms typically have been followed by corrections, but not busts.

The unanswered questions: Where exactly are we in the correction phase? And when do prices stabilize and move up again?

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
What's the Value of Your Home?

Bubble Sitting Pros and Cons

2006-08-31T21:33:00.000-05:00

Convinced home prices will fall? So are a lot of other Americans.

Some - known as bubble sitters - are acting on their conviction. They're
cashing out by selling their homes and renting, figuring they'll return
to the market after prices have fallen.

Bubble sitters also include those people who have never owned a home
and are waiting to take the plunge, along with folks who are relocating
and holding on to their cash until the market in their new hometown
softens.

Many experts have labeled the majority of U.S. housing
markets either overvalued or severely overvalued, but is it wise to
count on prices falling?

Roulette or sound reasoning?

Bubble sitting has contributed to softening in housing markets, especially in
new homes. Builders have reported slowing sales and they're offering
numerous incentives, rebates and discounts in order to move inventory.
Just this week, builder Toll Brothers announced they expected sales to
decline substantially for the year.

"With many potential buyers on the sidelines right now, we believe there is growing pent-up demand that will come into the market once buyer sentiment improves," said CEO
Robert Toll.

He does not, however, think bubble sitting works. "It's very hard to pick a bottom," he said.

Bubble sitters might argue, though, that it has worked for new home buyers this year. They are, after all, receiving discounts and incentives that were nearly non-existent last year.

Dean Baker, an economist and co-director of the Center for Economic and Policy Research, is a bubble sitter himself, having sold his home a couple of years ago. "It is a very bad time to buy. Prices are heading down," he said.

Baker also predicts that the markets that have run up the most will suffer the worst turndowns. He compares it to the tech bubble when Nasdaq stocks rang up the biggest gains before the pop
and fell the farthest from their highs after it.

Even though he did it himself, Baker says most people should not sell in anticipation of getting back into the market at a lower price.

"I don't think people want to speculate on their homes," he says. "But if they're selling for another reason - if they're downsizing, for example, because their children have moved out - they should cash out and rent for a while."

A colleague is a perfect example of someone who Baker thinks could take advantage of plunging home prices.

The colleague is moving from one New Jersey suburb to another with a more respected school system. He's selling and renting. That way, he hopes, he can wait out the bubble and scoop up a property from a motivated seller at a big discount next year.

"He's playing a bit of roulette," says Jim Gillespie, CEO of Coldwell Banker, who doesn't think even that scenario justifies bubble sitting. "Look at the history of prices in this country. [Postwar prices] have never gone down."

While that may be true on a national level, it's also true that home prices in individual markets have fallen during periods after 1945.

"My advice is don't do it," Gillespie said. "If the Feds stop raising rates, mortgage rates will start to go down and prices will recover."

Factors to consider before making a move

But Bernice Ross, CEO of realestatecoach.com, says that there's a lot of downward pressure on home prices. Foreclosures and delinquencies have risen and, in many of the hottest markets, interest-only mortgages will be adjusting upwards, making it difficult for some owners to keep up with monthly payments.

That will open up buying opportunities, but also will draw more professional investors into the mix. These, she says, are "not emotional buyers. They're crunching numbers, looking for cash flow."

If professionals enter a market, they could help support prices, making them less attractive for bubble sitters, not to mention that the entry of professionally investors will indicate that the market has fallen as far as it is likely to go.

John Bredemeyer, speaking for the Appraisal Institute, an association of professional real estate appraisers, says anyone considering bubble sitting should take three basic factors into account:

Where the market is heading: Says Bredemeyer. "You need to know what your market is doing. (This is where a professional appraiser comes in.)"

It matters little if California crashes when you're buying in Iowa. Local economic conditions such as factory closings and population changes, count as much as or more than national trends.

What your reason is for buying: Bredemeyer says cashing out and buying later is usually not a good idea - the costs of selling and repurchasing is going to kill you, even if prices do fall.

But, says Bredemeyer, "If you feel you're sophisticated enough to time the market, go ahead, but go in with your eyes open."

For those who are just entering the home market, it can make sense to rent for a year, according to Bredemeyer. "If you don't know the area, you can learn more about it and find out where you really want to live." Falling prices make the advantages of that strategy even more compelling.

"But if you already own a house you like and there's no other reason for moving, stay put," he says.

What your time horizon is: The value of bubble sitting also depends on how long you intend to live in a house. If you're planning to be there for five years or more, it make sense to buy as soon as possible. Time smoothes out any price bumps - over long periods prices nearly always go up - and the tax advantages may help make it cheaper to buy than rent.

It's a different story for the short term. Then, all those buying and selling expenses means that even in flat markets, you could be underwater if you sell out after two or three years.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Is the Real Estate Bubble Real?

Technorati Tags: Real estate bubble

50-year Mortgage Hits Market

2006-08-21T18:14:00.000-05:00

As home prices and interest rates keep rising, lenders have figured out a way to keep the dream alive for millions of people who want to own their own home. It's called the 50-year mortgage.

According to a report in USA Today, a handful of small lenders have begun offering 50-year adjustable-rate loans to buyers who need to keep payments low in the current economic environment.

Most banks already offer 40-year mortgages, which account for about 5 percent of all home loans, the report said.

"One of the biggest things in California is the high costs of homes. With rates going up, there's demand from customers (for) longer loans," Alex Diaz Jr., with Statewide Bancorp in Rancho Cucamonga, Calif., was quoted in the report as saying.

Statewide, which introduced its 50-year loan in March, has already received about 220 applications, Diaz said, according to the report.

The 50-year mortgage also signals that the cooling real estate market is heating up competition among lenders, the newspaper said.

"Mortgage lenders are getting craftier to get the attention of consumers," Anthony Hsieh, CEO of LendingTree, told the newspaper.

But he added that consumers first need to understand the product.

Two issues to keep in mind: A borrower with the 50-year mortgage builds equity very slowly. And because rates on the loans are adjustable, a borrower's monthly payments could rise, the report said.

Mortgage experts caution that the 50-year mortgage is best-suited for those who plan to stay in their home for about five years, while the loan's interest rate remains fixed, the report said.

"If you're going to be there for more than five years, you're gambling," Marc Savitt of the consumer protection committee for the National Association of Mortgage Brokers told the newspaper. "You don't know what interest rates are going to be. I wouldn't do it."

The report of the new 50-year loan comes as the signs mount that the nation's real estate market is cooling.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Fixed Rate Mortgage or ARM - Which is better?

Home Buyers Scarce in Florida Market

2006-08-10T17:18:00.000-05:00

House hunters in Florida, where some of the hottest markets have been found in recent years, have taken a vacation from buying.

June sales volume was down nearly 30 percent statewide - 18,089 homes were sold in the month, according to figures released this week by the Florida Association of Realtors. Condo sales volume fared even worse, down 35 percent to 5,421.

Nationwide, the National Association of Realtors reported Tuesday, sales volume dropped 8.2 percent.

Prices in Florida have flattened as well. Year-over-year prices rose just 3 percent last month, to a median of $257,800. That was after years of consistent annual gains in the double digits - home prices have nearly doubled during the past five years.

Condo prices actually fell in June, to $212,500 from $215,700.

Some of Florida's erstwhile hottest markets experienced steep sales volume declines.

Naples, where the median single family house sells for $451,500, had a 48 percent drop in unit sales. Prices were down 8 percent.

The Sarasota metro area had a 40 percent fall in sales volume and a 3 percent drop in prices. West Palm Beach-Boca Raton sales volume dropped 39 percent, and prices were flat.

Major condo markets hit hard with sales volume declines included Tampa, down 47 percent, and Miami and Fort Lauderdale, both down 31 percent. Some smaller markets really took it on the chin - Punta Gorda logged just three condo sales, a 97 percent drop.

With mortgage rates for a 30-year fixed at about 6.8 percent, according to Freddie Mac, the monthly costs of buying a home have increased significantly in the past year. Rates were at about 5.58 percent last year. On a $200,000 30-year mortgage, that's a difference of about $158 a month.

Property insurance costs in Florida also skyrocketed on the heels of the disastrous hurricane season in 2005. Nearly 98 percent of Florida's population lives in coastal areas, according to the U.S. Census Bureau, and insurance rates have risen to reflect their vulnerability to storm damage.

And soaring energy costs have made it much more expensive to air-condition that home and to operate a car, leaving fewer dollars to pay for real estate.

The shift to a buyer's market in Florida reflects a national trend, and it's one that many experts indicate could last for a few years.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Housing Value Information

Ah! The Repair Challenged Homeowner

2006-08-05T19:26:00.000-05:00

The staff at his neighborhood hardware store can spot John Carter from a distance.

He's the slightly befuddled guy who often comes in declaring, "I have no idea what I'm doing. Can you at least get me through tonight?"

The 26-year-old Chicagoan, who's been slowly rehabbing the condo he bought last year, is part of a generation of young homeowners who admit they often have no clue how to handle home projects.

For them, shop class was optional. It also was more common for their parents to hire contractors, leaving fewer opportunities for them to learn basic repair skills.

With low interest rates allowing more young adults to buy property in recent years, many inexperienced homeowners are desperate for advice when the furnace goes out, the roof leaks or when a home project that seemed like a no-brainer goes terribly wrong.

"They know they've got to buy real estate; they know it's a good investment. But that doesn't help you when you swing a hammer and hit a pipe in the wall," says Lou Manfredini, a Chicago hardware store owner who gives do-it-yourself advice on local radio and nationally online and on TV. "Unfortunately, homes don't come with an instruction manual."

Contractors say it's not unusual for them to get frantic calls from young do-it-yourselfers who get in over their heads.

Sometimes, the mistakes are silly.

Michel Hanet, who owns a door replacement business called IDRC in Scottsdale, Ariz., has arrived at homes to find doors hung upside down. He's also discovered more than one sliding pocket door that won't open because someone nailed a picture on the wall and into the door.

"The younger generation are more likely the ones that are getting into trouble," Hanet says. "The baby boomers have the money to do it, so they just call and say 'I don't like my doors; just come and replace them.'"

Kirsten Pellicer, the 30-year-old vice president of Ace hardware stores in Longmont and Boulder, Colo., sees many young customers looking to tackle projects on their own, often to save money.

"We rarely get requests for 'Do you know a good handyman?' from the younger set," she says.

For Carter, the young Chicagoan, it's all about being brave enough to try — and sometimes fail.

With the help of a buddy who has rehabbing experience, he's put in hardwood floors, knocked out a wall and completely remodeled his condo kitchen.

In the process, he's also managed to nearly flood the kitchen after forgetting to completely seal off a refrigerator water line; had a sliding closet door he was installing shatter a light bulb over his head and crash on top of him; and been fined by his condo association for a couple of other mishaps.

"The one thing about home remodeling is that it is intimidating. But in the end, you find it's definitely worthwhile," says Carter, whose day job is at a large accounting firm where he secures computerized financial data. "You just have to accept that you're going to screw up."

Dave Payne, a 26-year-old condo owner in suburban Atlanta, knows what he means. Payne made the mistake of trying to spackle over wallpaper in his condo bathroom, leaving uneven chunks where the wallpaper pulled away from the wall.

"There were just times when I wanted to pull my hair out and hire someone when I looked at my ruined walls," he says. But after hours of "spackling, sanding, spackling again, sanding again, then priming," he's hoping no one will notice.

Increasingly, hardware professionals and others are addressing the need for know-how.

Some community colleges and stores such as Lowe's and Home Depot offer classes in projects from changing a faucet to tiling and putting in a dimmer switch. "It gives them some exposure, so if they want to do it on their own, they have a starting point," says Peter Marx, a remodeling contractor who teaches home repair at North Seattle Community College.

Others find help online, including at the Ace site, where Manfredini — the Chicago hardware store owner — answers questions.

Home-centered television networks, including HGTV, are also in vogue. HGTV executives say shows such as "Design on a Dime" and "What's Your Sign? Design" — a show that builds on the unlikely combination of astrology and home decorating — have helped boost its recent ratings among young adults.

While 27-year-old Amy Choate occasionally goes online or watches TV shows to get home-improvement ideas, more often she uses a resource closer to home: her mom. Among other things, mom showed her how to fix wall cracks in her Chicago condo.

But Choate has no intention of tackling an upcoming kitchen rehab. She'll leave that to a professional.

"I'd probably do it wrong," she says, "and end up paying twice as much."

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
How to Buy a Foreclosed Home

World's Most Expensive Homes

2006-07-27T16:09:00.000-05:00

In Hong Kong, they gaze over the glittering city from the heights of the Peak. In Africa, they harbor elephants and lions. In Australia, they lie on the beach, of course.

The most expensive homes in the world may not seem to have much in common besides price—and even those vary greatly, from $100 million-plus palaces in England and the United States to grand houses priced under $10 million in South Africa.

But they do share common locations, in ghettos of wealth such as the Hamptons, the Côte d'Azur and Australia's Gold Coast, or business centers like New York and London. And the most luxurious residences in the most desirable locations share a shifting international pool of buyers, people who cross countries and oceans to get the homes they want.

According to the 2006 International Residential Review published by international real estate firm Knight Frank, the world's prime residential markets saw strong growth in 2005, and second-home buying was a major factor. The company predicts that this year, buyers from growing economies will increasingly look abroad for real estate.

"We saw it about five years ago begin with Russian buyers. The really seriously wealthy buyers came into London and increased prices at the high end," says Liam Bailey, head of residential research for Knight Frank.

"We expect to see the same process coming from China, Brazil, etc., as a new class of wealthy is created," he says. "America dominates in terms of number of millionaires, but you look at the potential of growth from places like India and China, it's absolutely vast."

Prices in the high-end segment of Hong Kong's market have doubled from 2003 to 2005, and there has been an increase in wealthy Chinese buyers from other parts of Asia, Knight Frank says. Strong economic growth in Dubai has increased the interest in buying foreign real estate, especially in London.

"There is lots of money going around the world these days," says Steve Laposa, director of the global real estate research group at PricewaterhouseCoopers.

Increased transparency has made international real estate purchases less risky, he says. The internationalization of real estate services—agencies such as Knight Frank and RE/MAX work around the globe—has made more information available.

And buyers with means are seeing that their real estate investments are in many cases performing better than their bond or equity investments. "These investors are seeing that, you know what, residential has had great returns as far as increase in capital values," he says. "They say, I'll invest in Hawaii, invest in Macau, etc."

For our second annual look at the most expensive homes in the world, we compiled lists of the 10 most expensive properties currently on the market on each of six continents. We scoured international real estate listings and spoke to top brokers around the world, restricting our list to homes and apartments, not including apartment buildings or plots of land, no matter how large or desirable. We allowed for some properties with a commercial aspect, such as ranches or vineyards, if they had prominent residences as well.

Uncovering absolutely every top-priced home around the world is impossible. Some secretive owners will allow their homes to be shopped around only to preselected potential buyers. Others do not reveal asking prices. We include properties only if we are able to verify from the owner or broker that the property is currently up for sale, and that the price is correct.

Last year, we found only one property priced at $100 million or more. This year, that has grown to four—small numbers, but powerful when you're talking about such sums.

"What we noticed in the last two years is that the most rapidly appreciating property prices are at the top end of the market," Knight Frank's Bailey says. A main reason is simple supply and demand, he says. A wealthy buyer of a house in London wants to be in an area like Mayfair or Kensington, already mature neighborhoods.

"The number of properties doesn't grow, but demand can double or treble over a couple of years," he says. "These are discretionary purchases; these aren't necessary. If they want it, they will pay what it takes to get it."

The home once again at the top of our list is Updown Court, a spanking-new palace in England. The residence has what one might call strong curb appeal, with 103 rooms, five swimming pools and a heated marble driveway. What it doesn't have is an owner in residence, as it was built on speculation in the hopes that a very wealthy, probably foreign, buyer will covet it.

The same goes in Palm Beach, where Donald Trump has put a massive oceanfront mansion on the market. It's gorgeous and grand, with marble floors and a conservatory that overlooks the ocean. But it lacks chandeliers and other details, because nobody has lived there since Trump bought it two years ago and began refurbishing it for the potential new owner.

As impressive as these homes are, just as rarified are the neighbors. That holds true whether you are in England (the queen of England's home, Windsor Castle, is near Updown Court) or in a seemingly far-flung place like Marrakech, Morocco. A romantic Art Deco tower nestled in the middle of a lush, private oasis is on the market for $10 million, tying for fourth place on our Africa list. Buy it and you can borrow sugar from the Hermès family or renowned and reclusive designer Yves Saint Laurent.

New properties are constantly popping up around the world--two impressive newcomers are in Istanbul, one for $100 million. But you will also see the same ones on our list year after year. Despite the expansion of Forbes' billionaires list (we found 793 this year, compared with 140 two decades ago), the number of people in the world who have the means to purchase a $100 million spread is quite small.

And the subset of those who want a particular property with, say, views of the Bosphorus rather than the Atlantic Ocean, or done in the sleekest of contemporary styles rather than with gold leafing on the living room moldings, is even smaller. But fortunate, nonetheless.

Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Buy the most expensive house in the neighborhood?

Real Estate, Mortgage Write-offs Favor High Price Locales

2006-07-15T16:49:00.000-05:00

Federal tax benefits for homeownership are among the heftiest and most popular of any in the Internal Revenue Code: An estimated $81 billion for mortgage interest write-offs, $15 billion for local real estate taxes and $24 billion for capital gains exclusions this year alone, according to the congressional Joint Committee on Taxation.

But who really gets those tax-code goodies? Who gets to write off the most? New research offers insights into where the billions of dollars in annual mortgage interest and real estate tax deductions flow, state by state, congressional district by congressional district. The research was conducted by the National Association of Home Builders, using the latest Internal Revenue Service data available, from 2003.

Among the findings:

Homeowners in a single congressional district in California -- the 14th in Silicon Valley -- took more in mortgage interest write-offs than all the residents of six states combined. Homeowners in that district claimed $3.2 billion in mortgage interest deductions during the year covered by the study, compared with $2.9 billion by all the residents of Vermont, Wyoming, West Virginia, Alabama and North and South Dakota. The average deduction in the 14th District was $35,000, compared with an average of $9,500 for homeowners nationwide. (The 14th District is represented by Democrat Anna G. Eshoo.)

Residents of a single congressional district on Long Island wrote off more in real estate property tax deductions than all the homeowners from six states and the District of Columbia combined. Owners in New York's 3rd District took $1.25 billion in deductions -- more than the $1.2 billion total claimed during the same period in Hawaii, Wyoming, Arkansas, Delaware, the District and North and South Dakota. (The 3rd District is represented by Republican Peter T. King.)

The average New Jersey homeowner claimed $6,005 in real estate tax write-offs -- more than five times the average deduction by residents of Hawaii ($1,126). New Yorkers claimed an average $5,181 in property tax deductions, followed by the residents of New Hampshire ($4,830), Illinois ($4,129) and Vermont ($3,845).

The average California homeowner wrote off $14,217 in mortgage interest deductions, while the average homeowner in Oklahoma wrote off $5,710. D.C. homeowners took an average $11,759 in mortgage interest deductions, while the average homeowner in North Carolina took $$8,545.

The study totaled the deductions for mortgage interest and local real estate taxes for all 435 congressional districts. A key purpose was to show congressional representatives how economically significant current homeowner-related tax write-offs are to those they represent. Though there are no legislative threats to the mortgage interest and real estate benefits in Congress, their size and uneven distribution geographically make them perennially tempting targets for budget balancers.

The mortgage interest write-off -- available on qualifying primary home loan balances up to $1 million and $100,000 in home equity debt -- is expected to cost the Treasury close to $100 billion a year by 2009, according to joint tax committee estimates. If the deductions were capped at a mortgage limit considerably below today's $1.1 million -- say at $300,000 or $400,000 -- the federal deficit could be reduced by tens of billions of dollars every year, proponents say.

A lower cap would also lessen the current system's huge disparities between the tax benefits received by residents of states with high housing costs and big mortgages -- primarily on the West and East coasts -- and the benefits received by residents of lower-cost jurisdictions in the Midwest, the South and Mountain states.

Defenders of the current system -- the National Association of Home Builders, the study sponsor, is among the most outspoken -- argue that the disproportionate write-offs are attributable to the starkly different realities confronting homeowners from state to state. For example, New Jersey and New York residents get to deduct more for local property taxes because they pay much higher taxes than people who live elsewhere. Their state governments rely heavily on real estate tax revenue to run schools and other government services.

California homeowners write off far more for mortgage interest because they pay a lot more for their houses and have the biggest mortgages, on average, in the country.

It's only fair, say defenders of the current system: The tax write-offs are proportional to the underlying expenses borne by homeowners. Equally important, homeowners across the country -- whether in high-price or low-price markets -- consider mortgage and real estate deductions as key factors in their household finances.

Bottom line on real estate write-offs: If you're not taking big ones, that's probably because you're not being eaten alive by huge mortgage bills and heavy property taxes.

Things could be worse.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Foreclosures: Fact and Fiction

Credit Bureaus Sued for False Credit Scores

2006-07-02T10:06:00.000-05:00

In a case with potentially far-reaching significance for mortgage applicants nationwide, a South Carolina consumer has filed class-action lawsuits against the three national credit bureaus, charging that they allow a practice that lowers the credit scores of millions of people.

Depressed scores raise the interest rates and fees that mortgage lenders offer. Sometimes the higher rates lead to monthly payments that are hundreds of dollars higher than they otherwise would be.

The three lawsuits charge that, under the federal Fair Credit Reporting Act, the national bureaus -- Equifax, Experian and TransUnion -- are required to follow "reasonable procedures to assume maximum possible accuracy of information in consumer [credit] reports."

Nonetheless, said William A. Harris Sr. in his complaints, each of the bureaus allows credit card giant Capital One to withhold the credit limits on its customers' card accounts -- knowing full well that such omissions frequently lower consumer credit score calculations.

Though not the only company that refuses to report credit limits, Capital One Financial is the biggest and best known. According to Barron's, the weekly investment publication, Capital One is the fourth-largest issuer of Visa and MasterCards in the United States and has 49 million customers. Capital One did not respond to a request for comment on the Harris suits, but in the past has confirmed that it withholds its customers' credit limits from the bureaus as a corporate policy.

Credit industry experts say lenders withhold limits as a way to discourage raids on their customer lists by competitors. Cardholders with lower apparent scores may be less desirable to other creditors sifting through national bureau data in search of prospects.

The suits, filed in U.S. District Court in Greenville, S.C., shed fresh light on a behind-the-scenes practice that may be more common than many consumers know. When Federal Reserve Board researchers examined 310,000 individual credit files two years ago, they found that fully 46 percent of consumers were missing at least one credit limit.

Consumers who are new to the credit marketplace or have relatively few cards or other credit accounts typically are hurt the most. That's because the most widely used credit scoring system in the mortgage field -- Fair Isaac Corp.'s FICO score -- gives heavy weight to a consumer's "utilization" of his available credit. The higher the use of credit relative to the limit, the lower the score.

To illustrate, say you have a credit card with a $5,000 limit. The highest monthly balance you have ever had on the card was $2,500 -- a moderate 50 percent utilization ratio. If your card company withholds reporting your limit, however, the scoring software may substitute your highest balance in place of your actual limit to compute your ratio.

Say your most recent balance on the card was $2,000. That appears to be a very high usage of credit when your substitute limit is just $2,500, not the actual $5,000. Now you appear to have a utilization ratio of 80 percent and your credit score could be depressed significantly -- 20 to 50 points or more -- according to Terry Clemans, executive director of the National Credit Reporting Association.

A 50-point decrease could mean a 1 percentage point difference in your mortgage rate quote, according to Fair Isaac's MyFico.com Web site. On a $216,000 fixed-rate, 30-year mortgage last week, an applicant with a 660 FICO would typically be quoted 7.07 percent, or $1,447 a month in principal and interest. An applicant with a 610 FICO would be quoted 8.05 percent, with a payment of $1,592, or $145 more.

In his lawsuits, Harris charges that Capital One's "standard policy of not reporting has a substantial adverse impact on consumers. It makes it appear that many, if not most, Capital One credit card customers have used up more of their available credit than is actually the case, thereby lowering their credit scores."

Because Equifax, Experian and TransUnion know the potentially negative effects whenever a creditor withholds credit limits, the bureaus "have systematically violated the [law] by failing" to require Capital One to report all card holders' limits.

Capital One is not named as a defendant in the suits. Under the prevailing, voluntary credit system in this country, no federal law requires it, or any other lender, to report any client's data to any bureau. However, federal law does require the credit bureaus to strive to be accurate, and Harris's suits argue that Equifax, Experian and TransUnion are not in compliance.

Asked for comment, a spokesman for Experian said the company had not yet seen the complaint, but that "in any event, we do not comment on ongoing litigation." Equifax and TransUnion did not respond to requests for comment.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Rate History

Seven Remodeling Don'ts

2006-06-15T18:07:00.000-05:00

The in-ground swimming pool is a huge asset to the social lives of Greg Gabbard's college-aged children -- it's so popular with them and their friends, their father wants to charge admission.

To Gabbard, however, the pool is one of the biggest home-investment mistakes he has ever made. It's expensive to run the filter and cleaning usually falls on his shoulders. Even worse, it may be working against him in efforts to sell the house.

"Assuming I can sell this place, I will never have another pool," the 43-year-old said.

Gabbard is convinced that the pool -- along with the high-maintenance cedar siding on the house's exterior -- is the reason his four-bedroom home in rural North Carolina didn't sell during a five-month stint on the market last summer. Nearby Charlotte enjoyed a healthy real estate market during the time, while Gabbard got a dozen lookers and no takers.

His assumption is probably correct, said Holly Slaughter, brand manager and consumer experience expert for RealEstate.com, a Web site that provides information to home buyers and sellers. A pool often is a deterrent for buyers, especially in areas where there are a number of community swimming holes, she said.

People often don't want the hassle or the energy bill that comes along with the feature. Moreover, most lenders don't include pools in their mortgage appraisals so the investment doesn't get much bang for its buck.

Homeowners can find plenty of information on which improvements will help boost the value of their houses. But significantly less attention is paid to what to avoid when remodeling your home, Slaughter said.

"Knowing the positive as well as the negative will make you a more educated home seller and will give you an advantage and a leg up over other home sellers in your neighborhood," she said.

Consider the following seven deadly home-improvement sins before committing to projects that may work against you to lessen your resale value.

1. Overexpanding

Keeping up with the Joneses is fine, but don't keep outdoing the homes on the block with a procession of additions -- unless you plan on staying put for a long while. A home that becomes conspicuously larger -- and more expensive -- than those around it risks becoming difficult to sell, Slaughter said.

Also keep in mind that additions tend not to return their entire investment, according to Tom Stevens, president of the National Association of Realtors. The 2005 "Cost vs. Value Report" by the association and Remodeling magazine found that homeowners were able to recoup 83% of the cost of a family-room addition and 82% of the cost of a midrange master suite addition. An upscale master suite addition paid off even less: On average, it recouped 80% of its cost at resale.

2. Making your home into something it's not

Don't change the general architecture or style of the home, and make sure that renovations match. For example, a modern steel door doesn't belong on a ranch house built in the 1970s, Slaughter said.

Changes that are obviously inconsistent with the style of the home limit the number of people who will be interested in buying it, said Michael Nagel, vice chairman of the National Association of Home Builders' Remodelors Council. This is especially true for structures such as the Frank Lloyd Wright house he's working on; it's relevant to a somewhat lesser degree for a typical tract home.

3. Changing a room's functionality

Completely altering the purpose of a room is risky. So keep kitchens as kitchens and bathrooms as bathrooms -- they were built that way for a reason.

"We all expect basic functionality," Slaughter said. "If you start changing the basic items that you expect out of your home, you're really customizing it for yourself. It's not appealing to a wide amount of the masses."

Even with the rising number of people who work at home, building up an office also can be a negative, Stevens said. The National Association of Realtors/Remodeling magazine study found that installing a computer workstation, office storage and commercial carpeting -- as well as rewiring the room for computer and fax use -- only produced an average 73% return on investment.

4. Doing it yourself -- when you shouldn't

Be extremely confident you're capable of taking on a project before attempting to do it yourself.

"I wouldn't try and fix my own car, why would someone want to fix their own house?" Nagel said. He frequently sees sloppy tile jobs, for instance, completed by amateurs who should have contracted an expert instead.

If you opt to hire a professional, get referrals from friends or family members before going to the classified section of the newspaper, Stevens said.

The National Association of Home Builders' Web site advises checking professional candidates with local or state offices of consumer protection and the local Better Business Bureau. Ask if the contractor has received complaints and verify the company has appropriate licenses and registrations.

5. Under budgeting

Don't underestimate how much projects will cost. Homeowners routinely make that mistake and end up 20% to 30% off in their budgets, Slaughter said.

"People not only under budget from a monetary point, but they also under budget time," she said. A prospective buyer walking through a home isn't going to see the glass half full when a project is only half complete.

Be conservative when budgeting, Nagel said. Expenses usually are added to jobs and rarely subtracted.

6. Making unnecessary renovations

When remodeling for resale, don't waste time with renovations that won't pay off. If you must have a pool, it helps to install a new patio, porch and alternative entry way, Slaughter said, but you still may have to lower your expectations on who will be interested in buying.

Proceed first with projects that are going to have the highest rate of return, experts advise.

In the last four annual editions, the National Association of Realtors/Remodeling magazine study has identified four projects that show the greatest return at resale: improvements to siding, windows, kitchens and bathrooms.

In the 2005 study, a midrange bathroom renovation paid off with an average 102% return on investment and an upscale bathroom renovation recouped 93% of its cost. A midrange kitchen renovation recouped 91% of its cost on average, and an upscale kitchen recouped 85%. A minor kitchen remodeling job returned 99% of its cost.

7. Neglecting regular maintenance

Don't forget proper maintenance and annual upkeep -- those may be the most important improvements of all. Make sure the home is painted as needed, clean the gutters to protect from water damage to the exterior, trim shrubs and check for termites. Keep track of annual checkups and use that as a selling point, Slaughter said.

"The little bit of money people spend to do annual maintenance saves them a lot of money in the end," Stevens said.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

Bank Demands 94-year-old Widow Sell Home

2006-05-22T00:04:00.000-05:00

The following article is by Kenneth Harney and was run in the Washington Post.

If you want to understand just how toxic a home mortgage can get, consider this real-life, ongoing saga:

Katherine Stephens is a 94-year-old widow, now living in a nursing home in southern New Jersey. According to her nephew, William Finch, she has $38 in her bank account. Monthly Social Security checks pay only a small portion of her nursing home bills.

In 1988, Stephens and her husband, Harold, signed up for what they thought was a great concept for seniors: A "reverse mortgage'' that would pay them $312 a month virtually in perpetuity -- until they died or moved out of their house in Brigantine, N.J., near Atlantic City. At the time, Katherine was 76 and Harold was 78. Harold later died, leaving Katherine alone in the house. The $312 checks came in like clockwork every month, until early this year when she moved to the nursing home.

The interest rate on the Stephenses' mortgage wasn't cheap -- 11 1/2 percent. When all the fees associated with the loan were rolled into the financing charges, the annual percentage rate (APR) came to 13.43 percent. But those costs were hardly the worst features of their reverse mortgage. Buried away in the block print was something called "additional interest.''

The "additional interest'' provision gave the lender the right to 100 percent of all gains in the market value of the property from the date of settlement to the date of final payoff. At the time of the loan settlement in 1988, the appraised value of the Stephenses' house was $83,500, according to the mortgage documents. Two recent appraisals put its current market value at roughly $500,000.

From 1988 through January of this year, Katherine Stephens received a total of $67,586.01 in monthly payments -- first from the original reverse mortgage lender, the now-defunct American Homestead Mortgage Corp., and later from Wilmington Savings Fund Society (WSFS), a Delaware bank that purchased American Homestead's portfolio of reverse mortgages in 1994.

WSFS, a $2.2 billion federally regulated bank, now is demanding that Katherine Stephens pay it:

• the $67,586.01 advanced in monthly payouts, plus

• $158,218.19 in compounded interest at the 11 1/2 percent rate, plus

• the 100 percent of house appreciation since 1988 it is entitled to as "additional interest'' under the loan contract.

All this comes to $416,500, but the contract puts a "cap'' on total potential payouts to the lender at 100 percent of the current appraised value of the house, i.e. $500,000, less selling expenses. Without the cap, she could have owed WSFS more than $642,000.

Bottom line: WSFS wants nearly half a million dollars in compensation for total loan advances of $67,586.01, dribbled out at $312 a month over 18 years.

WSFS is adamant that it receive full payment despite the fact that the debtor is a frail, virtually penniless 94-year-old widow who simply wants to use some of her appreciation proceeds to pay her $4,000-per-month nursing home bills.

"I think it is absolutely disgusting,'' said nephew Finch, who is 70 and lives in Clermont, Fla. "They (the Stephenses) signed something they didn't really understand. Now the bank wants everything she's got.''

Finch, who has power-of-attorney for his aunt, said all discussions with WSFS "went nowhere. They took a totally hardball approach.'' After I contacted WSFS and asked for an explanation, company representative Joan H. Sullivan said in an e-mail reply that the bank's reverse mortgage loans comply "fully with federal and state laws, and WSFS understands that at the time of these early reverse mortgage originations -- approximately 15 to 20 years ago -- all of the terms and conditions of those loans were fully disclosed to borrowers.''

Absent "special circumstances,'' wrote Sullivan, WSFS has always "sought to collect all amounts due to the lender under the contractual terms of the loan, which we believe the lender (is) entitled to given the benefits provided and the risks assumed.''

Benefits provided? You mean the $67,500 in advances vs. the $500,000 now demanded? Risks assumed? How big were they with $67,500 in advances on a $83,500 house that soared to $500,000 in market value?

Finch has now listed the house for sale. At the moment, virtually all of the proceeds appear to be headed to the coffers of a $2.2 billion bank.

The reverse mortgage industry no longer makes equity-grab loans. Major institutions such as Fannie Mae no longer collect interests based on appreciation sharing on reverse mortgages, even when loan contract language entitles them to do so.

But that's of no consolation to Katherine Stephens, is it?

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota

Mortgage Mistakes

What Type of Amenities Do the Rich Want in a Home?

2006-04-28T09:32:00.000-05:00

The very wealthy want pretty much what everyone else wants in a home – just more of it.

That's according to a study released recently by the Harrison Group in conjunction with Worth magazine. The study surveyed members of 500 households with net investable assets of at least $5 million -- the median was $28 million, the top half percentile or so of the population.

The survey found that wealthy Americans usually pay cash for their house, typically a seven-figure, stand-alone on a good-sized lot in an upscale suburb. The homes tend to be oversized, according to Jim Taylor, who led the survey team, and one of the reasons is that their owners want spots in them for every need.

That means separate media and game rooms, quarters for family members no longer inhabiting the house full-time and guest rooms for more casual visitors.

With most of their purchases, newly monied Americans at first tend to be conservative spenders. Home buying is an exception to this pattern. "In the early stages of wealth, up to 10 years after individuals became very rich, they display a bit of reluctance to spend money," says Taylor. "It's a lot easier rationalizing spending a lot for a house."

And they continue to pour money into their houses after purchase, between $100,000 to $250,000 in taxes, upgrades and maintenance every year. Upgrades account for about $50,000 of that total with kitchen renovations the most popular remodeling job, followed by baths and landscaping.

In addition, they are looking toward the future and they don't want to spend their last months or years in an institution. "The home amenity of the future figures to be a home-suite medical care facility," says Taylor, "where aging moguls can be nursed in the comfort of their home."

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

When You Have to Sell in Order to Buy

2006-04-17T08:45:00.000-05:00

It's the height of the spring home-buying season and many of the shoppers are families looking to upgrade to bigger or better homes. These house hunters have a different set of issues to confront than first-time buyers.

The biggest one: They can't afford to buy the new one before they sell the old, and timing is tricky.

If they sell the old house before they buy...

Most buyers can't afford to own two properties at once.

But if they sell first, they face the prospect of having to move before they have taken possession of the new place.

In hot markets many buyers prefer to make certain the old home is sold before they commit to the new one. The reasoning is that once they absolutely have to find a place, they'll shop very hard.

"Many of my clients get their house under contract first and then rush to buy a new home," says John Mudd, an agent with Exit Realty Suncoast in the dynamic Tampa, Florida market. "It takes less time to find a new home than to sell the old one," he says.

If they buy the new house before they sell the old one...

Even scarier, perhaps, is that they could end up carrying the costs of owning both homes for a while.

Austin Schuster, founder of NYC Living Realty in the equally hot New York area, says, "It can get tricky when a buyer tries to buy a new home without having a contract on the old one."

"Under those circumstances," he says, "buyers have to be extra cautious in pricing the old home; they have to sell it as quickly as possible. They can't overprice it. They should get at least some offers within 30 days. If they don't, they have to be willing to look at the price point again."

In other words, they may have to be prepared to take less for the house to get a deal done.

There are a couple of ways to deal with the juggling act

Contigency sales: Many buyers attempt arrangements with sellers to make the new purchase contingent on the sale of the old one. If the buyers can't sell their home within a period of time, the purchase is cancelled.

Sellers don't like these such arrangements, of course, and are more likely to accept them in slowing markets than hot ones.

But no matter what, asking to buy on a contingency hands the seller a bargaining chip. That can translate into paying more for the property.

Bridge loans: It seems that no matter how you go about it, buying one home when you're selling another will cost you money. Either there'll be pressure to accept a lower bid for your old property or you'll be scrambling to find a new one and wind up spending more than you want. What you need is to be able to do is find the best buy on a new home while your old one fetches the highest price the market will bear.

For that, you may need time.

Enter the bridge loan, also known as a swing loan, which can give buyers the time they need to make the best financial decisions.

A bridge loan is just what the name implies; it's a loan that spans the gap between the time you buy a new home and you sell the old one.

Bridge loans come in two flavors. The first kind gives you the money to pay off an existing mortgage and to pay down on the new house. You make no payments on the bridge loan, just on the new home. When you sell the old home, you pay off the bridge loan, including interest.

In the second kind, you keep your first mortgage and borrow against the equity in the first home to make a down payment on the second. Let's say your old home is worth $220,000, the new one costs $300,000, and you owe $100,000 on your existing mortgage. That means you have equity of $120,000. You're putting 20 percent down on the new home, which is $60,000.

You can use the bridge loan to pay at least part of the down payment.

In both cases, you're paying interest on two mortgages, but one is deferred until you sell.

Consumers may be under the impression that high fees can make bridge loans costly. But George Hanzimanolis, founder of Bankers First Mortgage Inc. and a vice president of the National Association of Mortgage Brokers, says that's not so. According to him, the interest rates on bridge loans are the same as on regular mortgages, and fees, such as for recording mortgages, should only add a few hundred dollars to the transaction expenses.

"Bridge loan costs are reasonable," he says. "Because banks feel secure; the loan is cross-collateralized by the two properties, so it shouldn't cost any more. And they come from the same lender as the regular mortgage."

"A bridge loan can pay off because borrowers are not forced to sell their homes short, at lower prices," says Hanzimanolis. "They can wait for a better offer."

In an up market, that may add thousands of dollars to the selling price, offsetting the added mortgage interest and fees.

"It can be a very good benefit," says Hanzimanolis.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates Blog

Fixed Rate Mortgage or ARM? Which is Better?

2006-04-06T03:39:00.000-05:00

The fixed rate mortgage offers the certainty of a constant monthly payment, but an adjustable may seduce you with its lower payment. Security or affordability? Which do you choose? Just what is a home buyer to do?

Which loan you eventually choose may depend more upon your personality than a careful analysis of each loan’s advantages and disadvantages. People who generally seek security in other areas of their lives, such as occupations and relationships, will often opt for the security of a fixed rate mortgage. Those who are more adventurous will sometimes respond to the lure of an adjustable.

The attractions of a fixed rate mortgage are a principal and interest payment and an interest rate that remain the same for the entire length of the loan. That stable predictability is what entices so many people to choose it, and its safety and reliability will afford the homeowner peace of mind. You get your fixed rate mortgage and you forget about it. What could be easier?

An adjustable rate mortgage or ARM, on the other hand, is generally the opposite. An ARM usually has an interest rate and a monthly payment that are fixed only for a specific period of time, after which both rate and payment will adjust periodically.

The ARM's initial low rate and monthly payment are its appeal, and it can offer that because its rate is based on the short term bond market while a fixed rate mortgage is pegged to long term bonds. The short term bond market generally features lower rates than the long term market. If you believe that interest rates will decrease by the time your mortgage rate begins adjusting, then the lure of an even lower rate and payment down the road may tempt you even further.

The foreboding most people have with the ARM involves its uncertainty. An element of fear is introduced because your rate and payment might increase once the rate starts to adjust. If interest rates in the bond market are higher once adjustment does begin, then your rate and payment will increase. None of us wants payments higher than they need to be, but some of us shrink from the risk more than others do.

But much of that risk aversion is needless hand wringing. Here’s why.

By deciding which ARM you prefer, you are also choosing the initial time period you want the rate and monthly payment to remain fixed. ARMs generally offer the following initial fixed time periods: one month, three months, six months, one year, two years, three years, five years, seven years and ten years. The shortest time periods will offer the lowest initial rates. A one month ARM may provide for a rate and payment guarantee of just one month before adjustment begins. A one year ARM is fixed for one year and then the adjustments start. A three year ARM is fixed for three years, and so on.

By picking a time period that best fits you and your situation in life, you can take advantage of the lower rate and monthly payment that an ARM provides at a substantially diminished risk. If you are a first time home buyer, for example, then a three year ARM might make the most sense because first time home buyers often stay in their home for only three or four years. Why get a 30 year mortgage if you won’t be in the home that long?

If you are middle age and your children are at the point in life where they go off to college or trade school, statistics suggest that they will soon move out and you will become an empty nester. Empty nesters frequently downsize to a smaller home once their kids depart, which means a different home and yet another mortgage.

The point is that our lives change frequently and predictably. We get married, have babies, relocate, get divorced, remarry, get sick, grow old, retire and die. All of these chapters in our lives will often occur in a span of only 30 to 40 years. When these joyous and not so joyous events arise, sometimes without warning, our housing and mortgage needs will oftentimes shift just as suddenly. Yet most homeowners rarely take such life events into account when choosing their mortgage.

The average mortgage lasts only about five years, sometimes because a major life event sprouts up inducing the homeowner either to move or refinance. Other times economic change will cause mortgage rates to drop, which, in turn, may influence people to enact changes themselves. They either refinance or perhaps decide that it’s an affordable time to invest in other housing. Despite all of this, people predictably embrace the 30 year fixed rate mortgage rather than an ARM because of the warm and fuzzy sense of safety that a fixed exudes.

The choice is yours to make. An informed decision will include considering all of the alternatives with the knowledge that your personality traits may be influencing your decision making process. While statistical analysis will often favor choosing the ARM, there is nothing wrong with selecting a fixed rate loan.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Tips

Fed Won't Protect Home Values

2006-03-21T23:16:00.000-06:00

The Federal Reserve has no intention of preserving all of the recent gains in home price values, said Federal Reserve board governor Donald Kohn on Thursday.

"If real estate prices begin to erode, homeowners should not expect to see all the gains of recent years preserved by monetary policy actions,' Kohn said in a speech prepared for delivery to a European Central Bank forum in Frankfurt, Germany.

In his remarks, Kohn attacked the popular 'Greenspan put' theory that Fed policy would always protect investors from sharp asset market drops while doing nothing to restrain these markets when prices rise.

"This argument strikes me as a misreading of history," Kohn said. "Conventional policy as practiced by the Federal Reserve has not insulated investors from downside risk."

"Whatever might have once been thought about the existence of a 'Greenspan put,' stock market, investors could not have endured the experience of the last five years in the United States and concluded that they were hedged on the downside by asymmetric monetary policy," he said.

"The same consideration apply to homeowners: All else being equal, interest rates are higher now than they would be were real estate valuations less lofty; and if real estate prices begin to erode. Homeowners should not expect to see all the gains of recent years preserved by monetary policy actions," Kohn said.

But Kohn said he doubted that central banks should "lean against the wind" of an incipient stock market bubble by adopting a somewhat tighter policy stance than otherwise would be the case.

He said there were three tough conditions that would have to be met before the costs of the extra tightening would be worthwhile.

First, the central bank would have to be able to identify the bubble in a timely faction. Secondly, there would have to be a fairly high chance that the tighter policy would check the speculative activity and finally, the expected improvement in the economy would have to be sizable.

"For my part, I am dubious that any central banker knows enough about the economy to overcome these hurdles," Kohn said.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Real Estate Corner

How Big is Your Home Equity Position?

2006-03-12T08:47:00.000-06:00

Billowing appreciation rates have been the hot news in real estate for much of the past three years. But now, with many of the most effervescent local markets calming, the focus is turning to something much more fundamental: homeowners' equity stakes.

How big is your home-equity cushion? How much more is your home worth compared with the debt you've loaded onto it -- primarily your first and second mortgages and credit lines? Do you have a 20 percent equity stake? Less than 10 percent?

The popular image is that America's homeowners are turning into debt junkies, hocking their houses to the hilt and banking on double-digit appreciation rates to bail them out. But a new analysis of home equity holdings nationwide suggests that the reality is much more nuanced. On the one hand, it is true that a surprisingly large percentage of recent home buyers have minimal, even negative, equity levels. On the other hand, most homeowners have substantial net equity holdings -- $11 trillion, almost double what they had just five years ago.

The study tapped into proprietary mortgage and real estate valuation databases maintained by subsidiaries of Santa Ana, Calif.,-based First American Corp., a title insurance, credit and settlement services company. Christopher L. Cagan, director of research and analytics for First American Real Estate Solutions, was the primary investigator. The data included appraisal or valuation information on 26 million homes in 36 states and the District of Columbia as of September, and data on nearly 20 million active mortgages originated in 2004 and 2005.

Some of the findings appear to support the stretched-to-the-limit, debt-binging picture critics paint of today's homeowners and borrowers. Among 2004-05 borrowers:

· Nearly 1 in 10 was in a zero or negative equity position. Five percent were in negative territory by more than 10 percent; that is, their combined mortgage debts exceeded their home values by more than 10 percent.

· Nearly 30 percent had equity cushions of less than 20 percent. Forty-four percent had less than a 30 percent cushion.

· State-by-state net equity holdings were sobering in some cases. More than 28 percent of Colorado buyers or refinancers had less than 5 percent equity in their properties. Nearly 24 percent of Ohio owners were in the same situation, as were 13 percent in the District and around 11 percent in California and Florida.

Equity levels are important measures of household financial health and a key component of net worth. Low equity makes owners more vulnerable to economic shocks and rising interest rates. If these owners had to sell in a pinch, they could find themselves walking away with little or nothing at the end of the transaction. If property values declined even modestly, large numbers of recent buyers with minimal equity stakes could slip to the negative side.

But overall, the state of the nation's home equity holdings is hardly so dire. The First American study cites Federal Reserve research findings that contrary to some critics' assumptions, most U.S. homeowners have plenty of equity -- 57 percent stakes on average. Five years earlier, the figure was almost the same, 58 percent.

Not surprisingly, households' equity positions vary by the age of their mortgages. Eight in 10 people who took out their mortgages in 1985 have equity stakes of 75 percent to 80 percent, because of price inflation and paying down principal. Sixty-five percent of borrowers whose loans date to 1990 have 50 percent to 55 percent equity positions. Roughly half of 2001 buyers and refinancers have equity stakes growh of 25 to 30 percent.

In contrast, the most recent borrowers tend to be thin on equity because of high housing prices, low down payments, "piggyback" second loan programs, plus widespread use of interest-only and "payment option" plans that cut monthly payments significantly but may add to principal debt. Nearly 30 percent of 2005's borrowers have zero to negative 5 percent equity positions. Some -- but not large numbers -- of those low-equity homeowners who face hefty payment "resets" on interest-only and negative-amortization loans in the coming two to three years will end up in hot water, Cagan said.

But most will not. And need not. The upshot: If you've got a low-equity mortgage that's heading for a reset, plan ahead now. Make sure you have a financial action strategy to handle what's coming. Why risk the equity you already have, plus the equity you're almost certain to accumulate in the future?

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Live Journal Blog

Bankers & Realtors Fighting it Out

2006-02-21T07:02:00.000-06:00

In 1999, big U.S. banks won a victory with the passage of the Gramm-Leach-Bliley Act, which allowed them to offer investments, insurance and other products and services for the first time. Seven years later, banks have their sights set on offering one more service: real estate brokerage.

But, in an escalating fight, real-estate brokers are pushing back against banks and urging regulators to throw out a proposed rule that would let banks compete for buying and selling properties.

Real-estate brokers are increasingly edgy about what they perceive as banks' growing powers. And the banks' push to offer brokerage services comes at a prickly time for the realty industry. Online and discount brokers are giving traditional, full-service agents a run for their role as middle-men between property buyers and sellers.

Banks argue that existing law supports their entry into the real estate brokerage and property businesses -- which could represent new and potentially lucrative areas to compete in. Trade groups like the Financial Services Roundtable, which represents banks, say solidifying legal authority for brokerage rights is a legislative priority for 2006.

Banks claim that consumers will enjoy better convenience and lower prices if they're allowed to use banks as real-estate brokers. Real-estate brokers say they welcome competition in the brokerage business but argue banks' federal backing gives them an unfair advantage. They also claim consumers won't save any money using a bank as a broker.

But as the feud continues, some analysts say it could only be a matter of time before banks get into the brokerage business. "Over time, brokerage is going to be in trouble" from the challenge by banks, says Peter Wallison, who studies financial issues at the American Enterprise Institute (AEI).

Slippery slope?

Real-estate brokers have been on the defensive against banks since 2001, when the Treasury and Federal Reserve published a proposal -- still unapproved -- giving banks the green light to operate as brokers.

But now, real-estate agents say, three recent actions by the Comptroller of the Currency have allowed banks to move a step closer to participating in the brokerage business.

Traditionally, laws have barred banks from owning or developing commercial real-estate projects unless the buildings are mostly occupied by their employees. It's part of a longstanding separation between banking and some forms of commerce.

But in December 2005, the comptroller reportedly approved Bank of America's plans to build and own a Ritz Carlton hotel in Charlotte, N.C., where the bank is headquartered. (The comptroller, the arm of the Treasury Department that regulates national banks, doesn't name banks in its decisions.) The bank says its clients and visitors will account for half of the annual hotel occupancy.

That same month, the regulator gave PNC Financial Services Group an OK to build and own a $170 million mixed-use building near its Pittsburgh headquarters. PNC employees are expected to only make up 22% of the new office and hotel space.

Finally, the National Association of Realtors is protesting the approval of Union Bank of California's 70% equity investment in a wind energy project.

Though the approvals aren't directly tied to the brokerage business, Realtors suggest the decisions set up a slippery slope toward breaking down barriers between banking and commerce.

"The new rulings represent [the comptroller's] continued efforts to dramatically expand the real estate powers of national banks," National Association of Realtors President Thomas Stevens wrote to Treasury Secretary John Snow on Feb. 7. Treasury should ask the comptroller's office to revisit the rulings, Stevens wrote.

Realtors aren't as concerned about banks' development projects as they are about the brokerage issue. But in a letter to Comptroller of the Currency John Dugan, Stevens said boosting banks' investment powers would increase their risk exposure in the commercial real-estate market and could ultimately undermine the U.S. banking system.

In separate letters to Stevens and Senate Banking Committee Chairman Richard Shelby, R-Ala., the comptroller's office said its approvals were consistent with existing law and that the regulator allowed only limited development projects. Moreover, argued comptroller attorney Julie Williams, the approvals "have absolutely nothing to do with real estate brokerage."

Banks believe the Gramm-Leach-Bliley Act allows them to enter the real-estate brokerage industry. Based on that law, the Treasury and Federal Reserve published a proposal in 2001 giving banks the green light to operate as brokers. But, as yet, Congress hasn't OK'd the proposal.

Banking advocates say consumers will win if national banks are permitted to act as brokers. "We believe consumers benefit from more competition in this area," said Floyd Stoner, congressional relations director for the American Bankers Association. "It is intuitive that more competition brings more choice and lower prices," says Steve Bartlett, president of the Financial Services Roundtable, which represents banks like Bank of America, Fifth Third Bancorp and BB&T Corp.

Irving Daniels, vice president of banking and financial services for the roundtable, says the trade group will spend the spring and summer congressional appropriations season urging "everybody who will listen" in Congress to allow banks to offer brokerage services.

Analysts like Wallison believe banks will eventually be able to persuade Congress that real estate is a financial service. But he acknowledges banks have an uphill fight. "The Realtors are very powerful in Congress," he said. "More powerful than the banks are."

Where bankers see more competition -- and more business for themselves -- Realtors cry foul. They argue the law permits banks to engage in financial activities -- and that real estate isn't one of them. Gramm-Leach-Bliley addressed insurance and securities, says NAR spokesman Steve Cook. "It did not address real estate."

Ongoing fight

The brokerage issue isn't the only threat Realtors see to their business. NAR is also fighting Wal-Mart's application to get a loan-company charter, protesting the move in a Feb. 1 letter to Federal Reserve Chairman Ben Bernanke. "When commercial firms are allowed to engage in banking, the bank functions under an inherent and irreconcilable conflict of interest," Stevens wrote to Bernanke.

Realtors argue that a giant retailer operating a bank would be another example of mixing banking and commerce -- just like a bank operating property brokerage services. Wal-Mart's application has also met resistance from the banking industry and some members of Congress.

Meanwhile, the fight over brokerage rights is expected to drag on. Realtors are seeking a meeting with Treasury Secretary Snow, but nothing's been scheduled yet, according to a Treasury spokeswoman. But it's questionable whether Snow could change the comptroller's decisions: the office is under Treasury but is independent.

"These wheels grind very slowly," said Peter Wallison, the American Enterprise Institute analyst.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

Confessions of an Economic Hit Man

Five Things to Know if You Need a Loan

2006-02-04T01:14:00.000-06:00

If you're looking for a loan, it's a very scary time. Interest rates are on the rise and with them, mortgage delinquencies are increasing.

Here are 5 tips you need to know if you're out shopping for a loan.

1. Don't believe everything you hear

Banks have been bending over backwards to offer mortgages to consumers with low introductory rates, teaser rates and all kinds of mortgage products from jumbo loans to hybrid adjustable rate mortgages.

But these products are not always a good thing.

One class action lawsuit filed in Milwaukee on behalf of homeowners says they were misled by lenders. They believed they were locking in a mortgage rate of 1.95 percent for five years. Instead the lock only lasted for 30 days. They face a rate ceiling of 13 percent.

The lesson here is that, if the terms of the deal seem too good to be true, it probably is.

2. Know what it all means

As you know, your credit report basically determines how loan-worthy you are, and the report is based on your credit history. That includes how many credit cards you have, how well you make you payments, your debt load, your available credit and whether other lenders have inquired into your report.

Your credit score is based on your credit report. So, of course, the higher the score, the better your credit rating is. And the better your credit rating, the more favorable loan rates you'll get.

So if you're looking to buy a car or take out a mortgage, you'll probably get a better interest rate if you have credit is above 620. Most credit scores range from 300-850.

3. Trouble Shoot

One out of four credit reports had errors serious enough to deny the consumer credit, according to a study by the US Public Interest Research Group. That's why it's so important monitor your credit report.

Yet only 10 percent of Americans check their reports annually, says Steve Rhode of Myvesta.org.

Go to www.annualcreditreport.com or call or call 1-877-322-8228 to get more information on your report. This way you'll be able to identify mistakes or missing information plus you'll be able to catch any fraudulent activity. But you'll have to pay more to get your actual score.

To get an estimate of your score for free, check out bankrate.com's Web site under calculators.

4. Fix your score

If you have discovered an error in your report contact your credit bureau. Get more details about your rights from the FTC at www.ftc.gov/os/statutes/fcrajump.htm.

When you receive your report, you should by law also receive a fact sheet detailing all your rights. Generally, negative information more than seven years old cannot be reported

But if that debt is indeed yours, paying your bills on time is one of the most important steps you can take in cleaning up your credit, says Greg McBride of Bankrate.com. That alone counts for 35 percent of your score.

Make sure your debt load is not more than 50 percent of your available credit. Allen Fishbein of the Consumer Federation of America says that often people close down their credit cards to decrease the amount of credit they have. But this lowers your credit limit making your debt to credit limit ratio increase.

And do not transfer your debt onto that 0 percent introductory interest rate credit card. "That is a marketing tool," says Rhode, "Not a personal finance tool." If you don't pay off your balance within the introductory period, your interest rate could zoom into the double digits.

5. Your lender doesn't have your back

Two years ago congress passed a law that said lenders must notify consumers when their credit scores have negative information that triggers a less favorable rate quote. Guess what? Affected consumers still haven't gotten their letters.

The FTC has not even issued the date for when this policy will go into affect. The point is that you should be vigilant against negative marks on your credit report.

For More...
Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Credit Score Info

Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan

Reverse Mortgages - Funding Retirement

2006-01-25T17:55:00.000-06:00

Article by Guest Author Dan Lewis

Great Western Mortgage

With people living longer and longer, funding retirement can become a stressful situation. Reverse mortgages can help home owners avoid worries about cash flow.

Reverse Mortgages

Reverse mortgages are essentially a method for turning the equity in your home into cash. Although there are various options, a typical reverse mortgage will provide you with a lump sum, monthly payments or a credit line based on the equity in your home. The mortgage will have a term of a certain number of years. Instead of making payments on the loan, the bank will become the owner of the percentage of your equity applied for the loan at the end of the term.

Reverse mortgages are only available to older applicants. Every person listed on the deed of the home must be 62 years of age or older. You must also use the home as your primary residence.

The decision to pursue a reverse mortgage can be a tricky one. The biggest issue is an emotional one. We are all mentally trained to buy a home and try to build equity over the years. With a reverse mortgage, we are making the mental leap to actually reduce the equity in our homes. While this may sound like a sensible method for using the nest egg equity, it makes you, me and everyone very nervous.

For some seniors, the reverse mortgage decision makes sense while it doesn’t for others. To limit the potential for problems and scams, banks are required to have senior applicants meet with unbiased third parties to determine the benefits and downside of using reverse mortgages.

If you or your parents have reached retirement age and are facing cash flow problems, you need to become flexible in dealing with finances. Reverse mortgages may be one flexible option that makes sense for your particular situation. After all, you can’t take the equity in a home with you.

Dan Lewis is with http://www.gwhomeloans.com - a San Diego mortgage brokers providing San Diego home loans. Visit http://www.gwhomeloans.com/services.html to learn more about options on San Diego mortgages from a San Diego mortgage broker company.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Reverse Mortgages for Dummies

Real Estate: Buy, Sell or Hold?

2006-01-19T18:05:00.000-06:00

Signs are a-popping that the era of explosive home-price gains is kaput for at least the next few years. Every homeowner must adjust to the new realities in real estate.

In the past four months, the median asking price has fallen 5 percent or more in Boston, Cleveland, Los Angeles, Miami, Phoenix and Washington, D.C., reports blogger Ben Engebreth's Housing Tracker Web site, which compiles weekly data on 49 cities.

Across the United States, the number of existing homes sold fell 1.7 percent in November, while the supply of homes continued to tick higher.

Real estate agents in formerly redhot markets like San Diego and Boston say that open houses are getting little traffic.

"At the height of the frenzy, properties sold after one to three days on the market, with multiple offers," says ReMax realtor Mary Kaljian, whose Los Banos office is 75 miles southeast of San Jose. "Now we are looking at six to eight weeks -- or longer. It's becoming a buyer's market."

The good news is, there aren't a lot of sound reasons to think real estate is ready to bust. Home prices are what economists call "sticky" -- unlike stocks, homes can't be unloaded with the click of a mouse. And huge demographic forces continue to favor real estate: Baby boomers and first-generation Americans are still buying, and demand exceeds supply in many places.

In addition, local job markets remain healthy in most major metro areas, notes David Seiders, chief economist with the National Association of Home Builders.

Here's one big fear: If enough of the many homeowners with adjustible-rate mortgages are forced to sell quickly when faced with interest-rate adjustments that raise their monthly mortgage payments, the rush to sell could intensify any bust in their local market.

In addition, condo-crazed towns like Phoenix and Fort Lauderdale -- where more than 15 percent of recently purchased homes are owned by investors -- could be more vulnerable to steep declines than areas heavy with owner-occupied homes, since investors may be more likely to sell at the first whiff of trouble.

Faced with these realities, what should you do? Here's how to think through your three options.

Thinking of selling?

Go ahead, sell. If you want to move on in the next year or two, consider selling sooner rather than later. Obviously, don't cut and run in a panic.

But if you're fairly sure you won't want to be in the home -- you're on the cusp of retiring, say, or the kids are leaving the nest --it can't hurt to pocket your gains. "Prices aren't likely to go up from here," says Wellesley College economist Karl Case.

Same goes for investment property you don't think you can afford to hold on to during a sustained period of slow to no growth.

Price it right. Just because the neighbor sold his house for $450,000 six months ago doesn't mean yours can fetch $500,000 today. "In a seller's market, you can push the envelope on pricing," says agent Robert Byrne of Needham, Mass. "But if there's a lot of competition, you need to look like a good value."

Crowd psychology can be crucial, so consider pricing a notch under what comparable homes in your area have sold for lately. "Properties that are undervalued get pushed up to value or above because there will be more than one person interested," Byrne says. "Once buyers get drawn into a negotiation, they get focused on winning the house and often lose track of the price they pay."

Thinking of buying?

Go ahead, buy. Whether the housing market is up, down or sideways shouldn't be the deciding factor for purchasing. "Think of a home as another consumer durable, like a refrigerator," suggests Case. "When you need to buy a new fridge, you think about the service it'll give you, not whether the price is going to go up or down while you own it."

If something in your life is pushing you to buy now -- baby on the way, job transfer -- do so with peace of mind. In a flat market, you're still getting value out of your home simply by living there. Even if prices plummet, all's well as long as you can keep making your mortgage in tough times. "The people who get hurt in a falling market are the ones who need to sell as it's falling," says ReMax chairman Dave Liniger.

Again: Price it right. You no longer need assume a seller's asking price is the final price. But don't expect a slew of fire-sale bargains right away. As long as the local economy is in good shape, sellers are typically in no hurry and can hold on for months before dropping their prices.

"Unless you know from recent comparable sales in the area that something is really mispriced, offering 20 percent less than asking will often just tick off the seller," says New York City real estate consultant Kathy Braddock.

Adds Roy Grimm, a Sedona, Ariz. broker who only represents buyers: "If something is priced well, I'm delighted to settle at 3 percent to 4 percent off the asking price."

Thinking of staying put?

Cash out with caution. When interest rates were low and home prices soaring, you could cash out a big chunk of equity and get much of it back (on paper, at least) within a few months. Kiss that good-bye. If you're going to borrow against the value of your home in the near future, make sure it's for things that create long-term value, like a child's education, not a TV.

Don't bet your retirement on the ranch. Pouring your savings into real estate instead of stocks may have seemed smart when home prices were soaring in the double digits. But historically, real estate has appreciated at a lower rate than stocks -- 5 percent to 6 percent a year, only a percentage point or two above the rate of inflation.

All the equity you've accrued over the past few years won't suddenly disappear, but you should temper your expectations for how much more you'll see in the future.

Don't over-renovate. In a soft market, a top-shelf renovation isn't going to pay for itself. There's nothing wrong with buying a high-tech European dishwasher if you like and can afford it, but do so for yourself, not because you think it'll add $5,000 to the value of your home.

Make sensible improvements to your home -- and then sit back and relax. "Enjoying your house and community," says Gabriel of USC, "is the most important, legitimate reason to be a homeowner."

For More...
Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
MMA Update

Home investors, flippers may fade away

2006-01-16T23:13:00.000-06:00

The decade's fiery demand for homes as investments may soon be doused, dragging down inflated house prices and choking consumer spending, housing analysts and industry executives say.

Torrid demand to buy investment properties helped fuel the past five years of record home sales and propped the economy.

An unusual spike in short-term interest rates to match long-term rates will thwart many second home buyers who tended to use low adjustable-rate mortgages for savings or affordability. Whether for vacation, retirement, rental cash flow or the quick flip as home prices surged, the incentive to invest in homes is shriveling, experts say.

"The stats that we've all seen show anywhere from 15 to 25 percent of all home purchases right now are from investors and second homeowners," said Robert Foregger, chief strategy officer at EverBank in Stowe, Vermont.

"If you revert to the mean, you could have somewhere between maybe 10 and 20 percent of the market that could really just dry up," he said. "If it does, it has the potential to put more downward pressure on prices."

This decade's record sales pace and price appreciation are seen as unsustainable. Housing economists look for slowing this year, but still robust levels historically. An investor pullout is considered a major risk.

Nearly one-third of new home loans last year were adjustable-rate mortgages, or ARMs, which carry a low initial rate that later gets reset.

These loans, and more exotic and riskier mortgages, made investment home buying appealing just as home prices soared and the stock market seemed less of a sure bet.

But an inflation-fighting campaign by the Federal Reserve sent short-term rates up sharply in the past year and a half.

Fed officials have cited worry about aggressive lending and risky loans to squeeze people into houses they might not otherwise afford, putting a shaky floor under the sector when interest rates and thus loan payments rise.

Last week, for the first time in five years, two-year Treasury yields surpassed the yield on 10-year notes. The rate advantage of ARMS disappeared. Homeowners started the rush to refinance and lock in low rates with fixed-rate loans.

The pain will be felt by the new home shopper, home buyers already facing affordability problems and the home investor.

"In terms of the behavior of the new shopper, the ARM product was sort of the magic elixir for the consumer," said Foregger. It made housing affordable to people who were buying more house than their personal income would otherwise allow.

The share of ARMs used this year and last reached the highest levels since U.S. home funding company Freddie Mac began tracking it 10 years ago. It was about triple the lowest share of 11 percent, reached in 1998.

One of the most popular products is a 5/1 hybrid ARM that has a fixed rate for five years and then resets annually.

Freddie Mac said the rate could spurt by as much as five percentage points on the fifth anniversary. With short-term rates jumping, these loans make sense for homeowners who sell by then, but could otherwise be painful.

If the yield curve inverts more deeply and home price gains slow or reverse, ripple effects could be more severe.

"I think people who were trying to get into investment properties and trying to flip them won't see those financial advantages with the short-term rates being higher than the long-term rates," said Bob Moulton, president of Americana Mortgage Group in Manhasset, New York.

Home sales in recent months are already less steamy than in the five years that drove home prices up 53 percent nationwide, according to government data.

Some of the hottest markets had even larger gains, such as California, where home prices soared nearly 110 percent this decade. Sky-high prices in the most costly areas encouraged demand for ARMs and more exotic loans with lower initial rates.

"Buyers to be concerned about are those who couldn't afford a fixed-rate mortgage when rates were below 6 percent and opted for an interest-only or other adjustable-rate mortgage as a way to keep payments low," said Greg McBride, senior financial analyst at Bankrate Inc. in North Palm Beach, Florida. Many borrowers "won't be able to get the deal done like they could when short-term adjustable rates were much lower."

Business volume will slide but home prices are still more apt to fall regionally than nationally, he said.

An outlying concern is if "you start to get a lot of these markets like California and the Northeast all experiencing the same symptoms at the same time. That's a very bad sign for consumer spending and the broader economy," said McBride.

For More...
Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates Blog

Home Sales Fall, Inventories Rise

2005-12-29T09:51:00.000-06:00

Sales of existing homes fell 1.7 percent in November to a 6.97 million unit rate as inventories hit their highest point in more than 19 years, the National Association of Realtors reported, demonstrating that there is a slowdown in housing.

November's sales rate compared with an unrevised 7.09 million annual rate in October and marked the first time the pace of sales has dipped below 7 million units since March.

The existing homes figure includes both single-family homes and condominiums.

Analysts had expected overall sales to decline to a 7 million unit pace in November.

Inventories rose 1.2 percent to 2.903 million existing homes available for sale in November -- the biggest since April 1986, when inventories hit 3.04 million units, the group said.

November's inventory level equates to 5.0 months' supply at the current sales pace.

For More...
Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Real Estate Industry Awash in Agents

2005-12-18T11:03:00.000-06:00

Jamie Finch said goodbye to a high-pressure job in New York and "more money than I ever thought I'd make" to return to Washington 20 months ago and try his hand as a real estate agent.

He jumped into a field that seemed to be on fire at the time. Houses were selling in a day, with bidding wars epidemic. Potential buyers were camping out overnight at new-home projects.

Finch may have anticipated making money when he came back home, but he may not have known he'd be working just as hard -- the pace in the Washington real estate biz has proved to be pretty exhausting. And extremely competitive.

And maybe, with the market slowing, not the best job to be fantasizing about now.

Seduced by the housing boom and its promise of ever-higher prices with ever-bigger sales commissions for agents, the number of licensees in Maryland, Virginia and the District has just about doubled in the past six years, according to local licensing agencies, with the Northern Virginia real estate association adding about 300 new agents a month. Nationally, the number of licensees was at a record high of more than 2.5 million at the end of 2004.

There are so many real estate agents locally, said Susann H. Haskins, president of the Realtors' association that covers Montgomery County and the District and a broker for Long & Foster, that "the joke these days is that when the police ask for your license, they're not going to ask for your driver's license, but your real estate license."

The 143,000 agents in the area certainly didn't have to be dragged into the field as home prices skyrocketed. On a $600,000 sale, the traditional 5.5 or 6 percent commission -- which the selling broker and agent usually split with the buyer's team -- would be about $36,000. Even discount brokers who charge sellers between 1 and 2 percent for putting houses into the local multiple-listing system would be looking at a $6,000 to $12,000 slice of that particular action.

Not bad when buyers were begging for houses.

But even though movies such as "American Beauty" may make real estate seem glamorous and filled with Jaguars, it's basically a sales job -- and not one for the weak of heart or pocketbook, say the pros. It's a business built on marketing and long referral lists. And as the market seems to be cooling, experts say, the half-hearted and unprepared may soon be heading for the exits.

"In January, when [association] dues are due, we will see a lot of dropouts," predicted Haskins of the Greater Capital Area Association of Realtors.

Not bad when buyers were begging for houses.

"In January, when [association] dues are due, we will see a lot of dropouts," predicted Haskins of the Greater Capital Area Association of Realtors.

"What you're seeing now are a lot of people coming into the business thinking they can make a lot of money quickly and easily. But they often have no idea of the hours that you have to put in, or the commitment. And they will not last very long," said Haskins. Stokes, who has been an agent for a year, operates in her own Northwest Washington neighborhood of Glover Park, which is well covered by established real estate agents. But she doesn't think "any agent has a total lock on a neighborhood" and that creativity can sometimes trump budgetary strength.

Stokes got her name out in front of the public by putting together a tour of renovated properties in the neighborhood and charging $10 a ticket to benefit the local school's PTA. "It was certainly a way for me to meet potential sellers and potential buyers," but it also was a way to contribute to Stoddert Elementary School, she said. The tour sold 250 tickets for a $2,500 donation.

If Stokes, 26, seems way ahead of the game, it may be because she is the daughter of a real estate broker and a high-end custom builder in South Florida. A 2001 graduate of George Washington University, she knew one important thing about her neighborhood: "So many of my clients buy with an eye to renovation."

Stokes has closed 13 deals worth about $5.4 million and expects to close the 14th next week. But she has not captured any of her own listings -- listings are when a seller signs a contract with you to sell your house, and they are hard to get without a large referral base. Nonetheless, Stokes says, "some are in the works."

At $5.4 million, Stokes is doing much better than the average agent, not just the average rookie. According to the National Association of Realtors, the typical sales member in 2004 was involved in 12 transaction sides on behalf of the buyer or seller. The median sales or leasing volume was $2.2 million in 2004, up from $1.8 million in 2002. Upon his return to Washington, Finch teamed immediately with three-year veteran Long & Foster agent Frank Griffin and set up offices not only in the Northwest Washington neighborhood of Friendship Heights but also in Fells Point, a hot Baltimore area. He also created a development company with another partner, specializing in renovating Baltimore properties.

Finch focuses on first-time buyers, a natural fit since they haven't already forged a relationship with an agent. Finch and Griffin have had about 50 closings in the Washington area, including 40 this year worth a total of more than $11 million. But they've each had only about four listings this year.

Focusing on first-timers may be a natural, but it was no fun when the market was hot. Although listing agents will capture part of the sales commission no matter who buys the house, the reality for many agents working with potential buyers was that they spent a lot of unpaid time schlepping unsuccessful bidders from property to property.

While hot and cold markets are equally challenging for a rookie, as the inventory of houses has climbed in the past few months, selling agents have become more challenged. They've had to go back to holding open houses on weekends and strategizing with clients about why properties aren't selling and how best to advertise.

GCAAR's Haskins said new agents must understand that business costs stay the same no matter the market. "It costs about $1,000 to get started, for fees and dues and that kind of thing," she said. "And you should expect to spend about 10 to 20 percent of your income on marketing. Of course, in the beginning you don't have any income. So you should make sure you have about six to nine months of money to live off of."

And a slowing of the market could have big consequences. When the housing market slumped the last time, about 20,000 salespeople and brokers in Maryland jumped ship from 1990 to 2000, regulators said.

Craig Cheatham, chief executive of the Association of Real Estate License Law Officials, said, "I think by now that, with the number of people who are out there in real estate, there are a lot of people who are not making money."

But the NAR says its surveys show that real estate never has been "something you get rich quick in," said spokesman Walter Molony. In its latest survey, in August, those in the business for two years or less earned only $12,850. However, for those with more experience, the past two years were very good. Those with six to 10 years' experience earned a median $58,700, up 18.6 percent from 2002. Those who had at least 26 years earned $92,600, up 37.2 percent.

Laura Culbreth, who got her District license in January, said she has found the local market to be "definitely tough."

Culbreth, 29, who moved to Washington from San Francisco in December, said she decided to try real estate after working with developers in California and because a Washington friend, a mortgage broker, had told her the market was "really hot" here.

She started early this year with a discount brokerage but last month joined the Tom Murphy Long & Foster team in Foggy Bottom. Being part of a team can mean a lot to a newcomer: Manning the telephones on an office rotation, taking calls from strangers looking for a real estate agent, a rookie has a chance to grab a listing or at least a willing buyer.

At the discount brokerage, Culbreth had six listings and seven sales, all in the District, worth more than $5 million; since starting with Murphy, she has snagged one listing, for a building lot on W Street NW, with no sales so far.

Nonetheless, she said, "Now that the market has changed and properties are sitting longer, full service is really the way to go."

Coattails are key for new agents, say those who have seen real estate cycles come and go. "It's very tough to be a new agent in this environment," said Murphy. "Two-thirds of the business is people coming back to you, and a new agent doesn't have that."

Some beginners have already bailed, said Murphy, "and there will be a lot more because it's going to be tougher and tougher. . . . The ones who are surviving are the ones who are associated with a team, or with senior agents, where they have this flowback and they can't handle it all."

If a hot market was tough on newcomers, a possible cooling-off period promises to be just as unwelcoming.

New agents aren't used to sellers being angry because their houses don't sell, even if the reason is that they've priced the property too high, said Tracy Pless, chairman of the Northern Virginia Association of Realtors. "They've never gone through a market like that."

And rookie agent Finch warns those just starting out to be prepared: "It's not going to be a walk in the park. . . . Those days are gone."

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

Mortgage Rates Dip Again

2005-12-06T08:35:00.000-06:00

Rates on 30-year mortgages fell for a second consecutive week, but analysts still believe the future direction will be up as the Federal Reserve keeps tightening credit to keep inflation under control.

Mortgage giant Freddie Mac reported in its weekly survey Thursday that rates on 30-year, fixed-rate mortgages averaged 6.26 percent this week, down from 6.28 percent last week.

Rates for 30-year mortgages had hit 6.37 percent three weeks ago, the highest level in more than two years.

Analysts attributed the two weeks of declines to market uncertainty over the economy.

“Mortgage rates are in a holding pattern at the moment as financial markets try to discern where inflation and growth in the economy are headed,” said Frank Nothaft, Freddie Mac’s chief economist.

“Until the market decides these issues, mortgage rates should stay within a relatively narrow band,” he said.

Most analysts believe that the fall in rates will be only temporary as the Fed keeps pushing short-term rates higher to slow the economy enough so that a surge in energy prices this year does not spill over into more widespread inflation problems.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.81 percent this week, unchanged from last week.

One-year adjustable rate mortgages edged up slightly to 5.16 percent after having fallen to 5.14 percent last week.

Rates on five-year hybrid adjustable rate mortgages averaged 5.76 percent this week, up slightly from 5.75 percent last week.

The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a nationwide average fee of 0.5 point; one-year ARMs had a 0.8 point fee and five-year hybrid ARMs carried a fee of 0.6 point.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

ARM Mortgages Beginning to Come Due

2005-11-23T12:26:00.000-06:00

Many adjustable rate mortgages are now coming due, and higher interest rates could add hundreds to monthly mortgage bills, unless homeowners take action.

In the past few years, nearly a third of all mortgage loans have been in the form of adjustable rate mortgages (ARMs). Now, it's time to pay the piper if the homeowner does nothing.

There are several types of ARMs but most share one feature: After an initial period of fixed payments with low rates, the loans adjust -- usually to the prevailing yield of one-year Treasury bills or a similar index plus a margin of one to seven or more percentage points.

For example, a borrower with a 3/1 ARM pays at the initial interest rate for three years and the loan adjusts once a year after that. A one-year ARM, which has a lower initial rate, adjusts after one year and a 5/1 adjusts after five. There are also 7/1 and 10/1 ARMs.

People who took out a 3/1 ARM in late 2002 or early 2003 will soon get socked with big increases in their monthly mortgage payments.

The Mortgage Bankers Association estimates that some $330 billion worth of ARMs will adjust in 2006 and $1 trillion worth will reset by the end of 2007.

Since the average ARM loan is about $300,000, according to Freddie Mac, a trillion dollars probably represents more than 3 million homeowners who will face bigger bills in the next two years.

If you took out an 3/1 ARM for $300,000 back in late 2002, your initial interest rate was probably around 5 percent and your monthly payment has been about $1,610.

Keith Gumbinger, vice president at HSH Associates, a publisher of consumer loan information, says 3/1 ARM coming due today would readjust to a rate of 7.1 percent, a jump of more than 2 percentage points. (Most 3/1 ARMs, however, have 2 percentage point caps; they can't be raised more than that until they readjust after another year).

Your new payment: $1,995 a month -- a difference of $385, or more than $4,600 a year.

Holders of 5/1 ARMs coming due later in 2006 and in early 2007, should not have to undergo increases as big. Their rates were higher to begin with, about 6.6 percent in early 2002; going to 7.1 percent would only add about $100 to their monthly payments.

Gumbinger says, "Most borrowers have some financial cushion so the impact won't be immediate; spending an extra $380 is manageable at first. But it's safe to say there are some who will find themselves in budgetary difficulties a year or two down the road."

The simple solution is to refinance to a fixed rate mortgage or another long term ARM, and many homeowners are doing just that. But, homeowners who are asleep at the switch could find themselves making higher payments that they didn't plan on.

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates Blog

Mortgage Rates Jump Up Again

2005-11-03T13:31:00.000-06:00

The average rate for a 30-year mortgage has risen for an eighth straight week to its highest level since June 2004, and adjustable-rate mortgages are at their highest levels in more than three years, Freddie Mac reported Thursday.

Freddie Mac reported that the average 30-year rate rose to 6.31% from 6.15% last week, while 15-year mortgage rates also experienced a sharp increase, rising to 5.85% in the week ending Nov. 3, compared to 5.69% a week ago.

The 5-year ARM, commonly known as a "5/1" ARM, which is set at a fixed rate for five years, then adjusts each year thereafter, averaged 5.76%, up from 5.63% a week ago, Freddie Mac said.

One-year ARMs averaged 5.31%, up from 4.91% a week ago.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Bob Roscoe's Blog

New Home Sales Rise Slightly

2005-10-28T06:50:00.000-05:00

Sales of new U.S. homes rose more slowly than expected in September, while the number of new houses on the market hit a record and median prices fell, according to a government report Thursday that might signal a cooling in the housing boom.

The Commerce Department said new single-family home sales rose 2.1 percent last month to a seasonally adjusted annual rate of 1.222 million units from 1.197 million unit pace in August — a downward revision by Commerce. New home sales were also revised lower for June and July. The September sales pace was 0.1 percent slower than a year ago.

Economists had expected new home sales to rise to a 1.250 million unit pace from August’s originally reported 1.237 million unit pace.

The Commerce Department said Hurricane Katrina had a minimal impact on new residential sales for September.

While sales rose, the supply of homes available for sale increased to a record 493,000 at the end of September, surpassing August’s high of 478,000. At September’s sales pace, that represented a 4.9 months’ supply.

Meanwhile, the median home sales price fell 5.7 percent to $215,700. While unit sales still rose, an increase in new home supply and a drop in median sales price has foretold of a new-home sales cooling off period in years past.

Low mortgage rates have sustained a years-long rally in the U.S. housing sector, but recent data have begun to suggest some cooling in the market. Earlier this week, the National Association of Realtors said existing home re-sales came in flat in September but would have been lower if not for aggressive buying around hurricane-impacted areas.

On Wednesday, the Mortgage Bankers Association said mortgage applications fell last week to a six-month low.

Interest rates, too, have begun to climb after previously ignoring rising short-term borrowing costs. The rate on the 30-year mortgage loan, considered the industry benchmark, averaged 6.06 percent last week, up from a 2005 low of 5.47 percent in June, according to the Mortgage Bankers Association. A year ago, the 30-year mortgage averaged 5.54 percent. Freddie Mac reported an average 30-year rate of 6.15% last week.

Regionally, new home sales in September jumped 24.9 percent in the Midwest and 5.6 percent in the South. But sales tumbled 20 percent in the Northeast and 11.8 percent in the West - the regions that have posted the double-digit home price appreciation that many economists think is unsustainable.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Name That Value Xanga Blog

Latest Mortgage Rates Up Again

2005-10-20T14:52:00.000-05:00

30-year mortgage rates rose this week to the highest level in 15 months while one-year adjustable rate mortgages climbed to the highest level in 4½ years. Freddie Mac reported Thursday that the nationwide average for 30-year, fixed-rate mortgages rose this week to 6.10 percent, the highest level since 30-year mortgages were at 6.21 percent in late July 2004.

Rates on 15-year, fixed-rate mortgages averaged 5.65 percent this week, up from 5.62 percent last week, while rates on five-year adjustable rate mortgages averaged 5.59 percent this week, up from 5.57 percent.

One-year adjustable rate mortgages rose to 4.89 percent, which was up from 4.85 percent last week, and pushed the one-year ARM to its highest level since it was at 4.91 percent the week ending April 26, 2002.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Name That Value Main Blog

Kenneth Harney gets it wrong!

2005-10-12T18:14:00.000-05:00

Kenneth Harney, a highly respected columnist for the Washington Post, expressed surprise in his column recently because home buyers in high-cost parts of the country like California, Hawaii, Boston and Washington, D.C. are not leading the nation in mortgage delinquencies.

Mr. Harney stated (in near amazement) that the opposite is actually true--that home owners in the high-cost areas of the nation have the lowest mortgage delinquency rate. The Mortgage Bankers Association of America, which recently released its latest survey on delinquency rates, states that Hawaii has the lowest mortgage delinquency rate in the nation at only 0.89%, followed by California at 1.02% and Virgina at 1.32%.

These numbers are contrasted by the states with the highest delinquency rate: Mississippi at 8.5%, Louisiana - 6.7% (pre-hurrucane Katrina numbers), Indiana - 6.66%, Tennessee - 6.32%, Texas - 6.31% and Ohio - 6.13%. Notice that most of the high delinquency rates occur in states with a lower than average per capita income.

You could read more about the numbers in his column at the Washington Post, but that newspaper makes you sign in and become a member to read their articles. An easier way is to go to The Wichita Eagle (as in Wichita, Kansas) where Harney's column is reprinted without the signing-in hassle.

While Harney doesn't actually state that he expected the high cost areas to lead the country in mortgage delinquencies, the tone of his column highly suggests that. Harney's recent columns have made no secret of his belief that home owners in the U.S. are overextending themselves because they are taking out more interest-only mortgages and other non-traditional type of mortgages to finance their home purchases and refinances. His implied expectation is that folks with these type of loans will be the new wave of foreclosures to hit the nation.

Anybody with any long term experience in the mortgage or real estate industries will be able to tell you that high cost does not equal more frequent mortgage delinquencies. Both mortgage delinquencies and foreclosures are most often the result of loss of income. Alcoholism and drug and gambling addiction certainly are factors, but the number one reason people cannot pay their bills is because they are earning less money than they used to.

Every economic downturn produces a new wave of foreclosures, and the next downturn should be no different. This next time around, however, the pundits that predicted the crash of the so-called "real estate bubble" will be telling anyone who will listen that they told us so. They will equate the uptick in foreclosures with the popping of the "real estate bubble."

They will be wrong.

Foreclosures and mortgage delinquencies follow the economic cycle as sure as sunset follows sunrise. Folks who are laid off their job or are the victims of downsizing are usually the ones who experience difficulty paying the mortgage. I have helped many clients avoid foreclosure, and the constant recurring theme I see with the vast majority of those people is loss of income.

It's really time that the media stopped trying to create the news rather than simply to report it. All of the media hype about an impending bursting of a "real estate bubble" is mere conjecture. Most of those who believe that the bubble will burst believe it because the media has harped on it so much. If you hear almost anything long enough and often enough, you begin to believe it. It's the underlying principle of today's advertising. For most of the U.S., the "real estate bubble" will not burst.

It will merely hiss a bit

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Live Journal Blog

Mortgage Rates Up Again

2005-10-07T09:37:00.000-05:00

Rates on 30-year mortgages rose for a fourth consecutive week, climbing to the highest level since late March, as financial markets continued to worry about inflation.

Freddie Mac reported Thursday that the nationwide average for 30-year, fixed-rate mortgages rose this week to 5.98 percent, up from 5.91 percent last week. It was the highest level since rates rose the week of March 31 to 6.04 percent, which so far has been the highest nationwide average for the 30-year mortgage so far this year.

“Mortgage rates have been rising for the last four weeks on inflation jitters caused in part by extended higher energy prices,” said Frank Nothaft, chief economist for Freddie Mac.

Energy prices have been pushed upward by Hurricanes Katrina and Rita, which shut down oil platforms and refineries along the Gulf Coast.

The Federal Reserve last month decided to raise a key short-term interest rate it controls for an 11th time with Fed officials saying they are more worried about the inflation threat from surging energy prices than they are concerned that the hurricanes will have a lasting impact on economic growth.

Nothaft said he believed mortgage rates would continue to rise in coming months as the economy keeps growing but at “perhaps a slightly slower pace than in the recent past.”

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.54 percent this week, up from 5.48 percent last week.

One-year adjustable rate mortgages rose to 4.77 percent, the highest level in more than three years, and up from 4.68 percent last week.

Rates on five-year hybrid adjustable rate mortgages averaged 5.48 percent this week, up from 5.31 percent last week.

A year ago, 30-year mortgages averaged 5.82 percent, 15-year mortgages were at 5.24 percent and one-year ARMs averaged 4.08 percent.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

Manhattan Luxury Home Prices Decline

2005-10-04T06:41:00.000-05:00

Although luxury Homes in Gotham got a little more affordable in the third quarter...or rather, prices dropped, they still remained in nosebleed territory for most people.

In its third-quarter Manhattan Market Overview report released Tuesday, Prudential Douglas Elliman attributed the price declines to a number of factors, including a modest uptick in mortgage rates, concern over the economic impact of Hurricanes Katrina and Rita, and a spike in gas prices.

The price declines followed two consecutive record quarters in which real-estate prices saw gains of at least 10 percent.

Luxury-home prices (condos and co-ops combined) were hit hardest, according to the report. The average sales price of a luxury home sank 26 percent, to $3.8 million, from $5.2 million in the second quarter. It also was 7 percent below the average price of $4.1 million from a year earlier.

There were, however, price increases for smaller apartments. The average price for studios rose nearly 13 percent, to $428,831, while the average price for one-bedrooms rose nearly 10 percent to $687,744.

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Want to be a Landlord? Better read this

2005-09-27T08:39:00.000-05:00

There's more to owning property than collecting rents. Here's some of the downside. Real-estate investing is big business...and getting bigger. Second-home purchases, mostly for investment purposes, last year accounted for more than a third of all single-family home sales in the United States, according to the National Association of Realtors.

Throw in sales of duplexes, apartment houses, and condos for investment purposes and you get some idea how many people want to play landlord. And why not? Not only do you rake in rent money every month, you can also reap profits from soaring housing prices.

As any landlord will tell you, however, it's not as easy as it looks.

Erwin Jackson, who owns about 300 units in the Florida panhandle, has done well swooping in and buying from disillusioned landlords. "The best deals I ever got were from new landlords who six months in realized," 'This is a lot more work than I thought.'"

Ken McElroy, a founder of MC Companies in Scottsdale, Arizona and author of a bestseller, "The ABCs of Real Estate Investing," said too many buyers of rental properties look at is as an investment, not as a business. "But it's both -- the business part takes much more time than they imagined."
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates Blog

30-year rates up slightly

2005-09-23T09:24:00.000-05:00

U.S. 30-year mortgage rates averaged 5.80 percent this week, a level reached in the Aug. 18 week, Freddie Mac said in its weekly survey. Fifteen-year mortgages averaged 5.37 percent, inching up from 5.32 percent last week.

One-year adjustable rate mortgages (ARMs) averaged 4.48 percent in the week compared with 4.46 percent last week.

“Mortgage rates look like they are back on track where the Fed wants them, which is gradually rising,” Frank Nothaft, vice president and chief economist at Freddie Mac, said in a statement.

On Tuesday, the Federal Open Market Committee voted for the 11th straight time to raise the federal funds rate, this time to 3.75 percent.

The hybrid “5/1” ARM, set at a fixed rate for five years, then adjustable each year following, averaged 5.31 percent, up from 5.26 percent a week ago, Freddie Mac said.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Bob Roscoe's Blog

Katrina to boost home demand, prices

2005-09-19T08:50:00.000-05:00

Hurricane will have long-term consequences on industry, Realtors say

Hurricane Katrina will have long-term consequences for the housing market and economy, boosting both home prices and construction costs as rebuilding gets underway, the National Association of Realtors said in its monthly economic forecast.

Rebuilding will put pressure on the already short-supply of building materials, sending construction costs higher.

As building activity is focused on the hurricane affected areas, housing inventory will remain tight nationwide, meaning demand will continue to outstrip supply in most areas, the group’s chief economist, David Lereah, said.

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Name That Value Xanga Blog

30-year rates rise for first time in five weeks

2005-09-15T14:51:00.000-05:00

Rates on 30-year mortgages rose for the first time in five weeks as investors awaited word from next week’s meeting of the Federal Reserve on the future direction of mortgage rates.

Freddie Mac reported Thursday that the nationwide average for rates on 30-year, fixed-rate mortgages rose slightly this week to 5.74 percent, up from 5.71 percent last week.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.32 percent this week, up from 5.30 percent last week.

One-year adjustable rate mortgages rose slightly to 4.46 percent from 4.45 percent last week. In mid August, one-year ARMs hit their highest level in more than three years at 4.58 percent.

Rates on five-year hybrid adjustable rate mortgages averaged 5.26 percent this week, up from 5.24 percent last week.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Name That Value Main Blog

Baton Rouge's real estate boom

2005-09-12T00:30:00.000-05:00

New Orleans families uprooted by Hurricane Katrina have triggered a rush on real estate in nearby Baton Rouge, causing a sudden surge in home prices as people realize they will not be quickly returning home, according to an informal sampling of real estate experts and the city's mayor.

"This caught us all by surprise," said Judy Burkett, president of the Greater Baton Rouge Association of Realtors.

Baton Rouge Mayor Kip Holden told CNN that he has been "hearing stories of people bringing cash in and saying 'I don't care what it cost, let me have the house.'"

"Buyers started the bidding war," Burkett said, with prices rising between 20 and 30 percent in one week.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

30-year rates unchanged, 15-year rates down

2005-09-09T01:19:00.000-05:00

Rates on 30-year mortgages, after declining for three weeks, were unchanged this week while other types of mortgages dipped lower. Freddie Mac reported Thursday that the nationwide average for rates on 30-year, fixed-rate mortgages remained at 5.71 percent this week, the same as last week. The 30-year rate had fallen for three weeks, pushing it down to the lowest point since mid-July.

Rates on 15-year, fixed-rate mortgages averaged 5.30 percent this week, down from 5.32 percent last week. One-year adjustable rate mortgages edged down slightly to 4.45 percent from 4.48 percent last week. In mid August, one-year ARMs hit their highest level in more than three years at 4.58 percent.

Rates on five-year hybrid adjustable rate mortgages averaged 5.24 percent this week, unchanged from last week. A year ago, 30-year mortgages averaged 5.83 percent, 15-year mortgages were at 5.22 percent and one-year ARMs averaged 4.00 percent. Long term rates are are down slightly overall from one year ago, while the short-term ARMs are up significantly. This is an unusual narrowing of the yield curve which has some economists slightly worried about the economic consequences.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

Louisiana Real Estate Market transformed overnight

2005-09-08T09:31:00.000-05:00

In Baton Rouge before Hurricane Katrina hit the Gulf coast, "a fast sale here was a home that sold in a week in a hot neighborhood," says Judy Burkett, owner of Judy Burkett Realtors in Baton Rouge. "Today, homes last for minutes. You put them into the Multiple Listing Service, and they're gone almost immediately."

Because phone networks haven't been completely repaired, buyers and agents are frustrated because by the time they ring through to a seller, an available house has already been sold. On average-priced homes in the $140,000 range, buyers are bidding as much as $10,000 above the asking price, sight unseen, and hoping to get a contract signed before a competing bid arrives. In one instance Ms. Burkett knows about a seller who accepted an offer on a house but hadn't yet signed the paperwork when another buyer knocked on his door and offered $30,000 more.

Homes that have been on the market for a year in some cases "are now receiving multiple offers at the listing price or above," says Betty W. Jackson, a CJ Brown agent who has sold off all of her inventory of homes.

Other communities are being similarly affected. Amy Jones, a spokeswoman for U.S. Rep. Charles Boustany, said real-estate agents had reported to the Louisiana congressman's office that 250 homes were sold in one day in Lafayette, about 60 miles west of Baton Rouge. "Just about every available property here has been sold," she said.
For More...
Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Mortgage Rates Down Slightly

2005-09-02T08:52:00.000-05:00

Rates on 30-year mortgages declined for a third consecutive week as bond investors worried that Hurricane Katrina and soaring energy prices will slow the economy.

Mortgage syndicator Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages fell to a nationwide average of 5.71 percent this week, down from last week’s 5.77 percent.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.32 percent this week, down from 5.35 percent last week.

One-year adjustable rate mortgages edged down slightly to 4.48 percent from 4.56 percent. Two weeks ago, one-year ARMs had hit the highest level in more than three years at 4.58 percent.

Rates on five-year hybrid adjustable rate mortgages averaged 5.30 percent this week, unchanged from last week.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
The Review

Free credit reports for all

2005-08-31T17:09:00.000-05:00

Beginning Sept. 1, all U.S. adults will be able to request one free copy of their credit report from each of the nation's three credit bureaus. Consumers were granted the free reports as part of the Fair and Accurate Transaction Act, passed by Congress in December 2003.

The site consumers visit to obtain their free report, AnnualCreditReport.com, went live back on Dec. 1, but the credit bureaus engaged in a rolling release of the reports from West to East -- the Northeast region was the last in line. So on Thursday, New Yorkers, Washingtonians, Bostonians, and others in the Northeast get their first crack at the Web site.

Consumers can also call a toll-free number, 1-877-322-8228, to get their report, or they can send for it via U.S. mail.

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Bob Roscoe's Blog

Credit

2005-08-26T09:57:00.000-05:00

The following article is about your credit and how it can help you or hurt you when buying a home.

Credit Score Myths

Knowing more about your credit rating could help you get that mortgage loan and even save you money.

To most Americans, your credit rating may seem like a string of numbers that hinges on your ability to pay your bills on time.

But it's also a crucial tool for saving money -- something most people don't know, according to a recent survey.

According to a recent survey conducted by GMAC Mortgage, 62 percent of consumers do not realize that a score of 620 or better means you can become eligible for getting the best possible mortgage rate.

"It really shows how little the consumer understands about what goes into a credit score and how it affects their home financing," said Paul Fein, the senior vice president and southeast divisional manager for GMAC Mortgage.

The survey, which polled 1,000 households during the month of May, also showed that many misconceptions about credit ratings persist among consumers. More than 50 percent of consumers answered that a rise in income means a better credit score when in fact credit scores do not take into account your income -- just your ability to pay.

Your credit rating, which can range from the worst possible score of a 300 to a perfect 850, is determined by a number of factors.

While the timeliness of your payments counts, the number of credit lines you might have and the length an account has been open all have a hand in determining that three-digit number.

The two factors that have the biggest impact on your score, said Fein, is the consistency and amount allocated towards paying off your debts over time and the amount of credit outstanding relative to total available credit.

Having a low score could cost you money when it comes to figuring out your mortgage payments.

Let's assume you have two identical home mortgage applicants -- one with a score of 640 and the other with a credit rating right at the magic number of 620.

According to MyFico.com, a credit information company, that 20 point difference turned into a little over half of a percentage point on the mortgage rate. The better credit risk could have gotten a $150,000 30-year fixed rate mortgage for 6.38 percent. The other guy would have to pay 6.92 percent, or $54 more per month and $648 more per year.

And that disparity can only increase as your credit score worsens or improves.

So what if you are below that 620 mark?

The first thing to do, said Fein, is to reevaluate your notion of how to improve credit.

That means trying to reduce the amount of total debt you might be carrying from credit cards to car loans.

Bumping up that credit rating, he said, also means limiting the number of inquiries into your credit history, which might involve not applying for that new credit card for a while.

While lenders will consider your income and how much you have invested for down payment when approving your mortgage, your credit score will be scrutinized.

And probably the best way potential home owners can improve that rating, said Fein, is to plan ahead.

That means getting a sense of what your credit rating is far enough in advance before diving into the housing market.

He recommends checking out your credit history at least a year in advance even if you are thinking about buying a home so you have time to correct any misunderstandings, show you can make payments and trim your debt.

In the meantime,it may be worthwhile to speak with a lender or a credit counselor about your credit score and figure out a strategy to secure that home.

"If you're a consumer, you need to get with someone who works with it everyday," he said.

While consumers may be more knowledgeable about their credit rating than in years past, Fein warns that the results of the survey indicate more consumers need to be better informed.

"A large of group of people pride themselves on being more informed than a generation before and I think it leaves the door open to a lot of misinformation."

To get your free credit report, go to AnnualCreditReport.com.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Live Journal Blog

Mortgage rates slip for second straight week

2005-08-25T14:56:00.000-05:00

Average U.S. interest rates on 30- and 15-year mortgages fell for the second straight week, but mortgage finance company Freddie Mac Thursday said it expects rates to increase.

U.S. 30-year mortgage rates averaged 5.77 percent this week, down from 5.80 percent last week. Fifteen-year mortgage rates averaged 5.35 percent compared with 5.40 percent last week, Freddie Mac said. One-year adjustable rate mortgages also fell to an average of 4.56 percent from 4.58 percent.

“Although mortgage rates slipped a little again this week, I do see rates trending upward over the year,” Frank Nothaft, vice president and chief economist at Freddie Mac, said in a statement.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

Second home sales are booming

2005-08-22T13:55:00.000-05:00

Americans are falling in love again, with leisure properties.

America's steamy love affair with real estate is hot as ever. Nationwide, home prices jumped 13.6 percent in the 12 months ended June 30.

Increasingly, though, homeowners are guilty of straying from their primary relationships. They still love their homes but that doesn't prevent them from engaging in weekend trysts.

Americans purchased 1.02 million vacation homes in 2004, many of them within easy drives of their hometowns. That represented a 20 percent jump from the 850,000 bought in 2003. The total has more than doubled in the last four years.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

Rent the condo or sell for the profit?

2005-08-21T11:46:00.000-05:00

My husband and I are live in a condo in Southern California, but we're now buying a townhouse because our family needs more space. Question is, what should we do with the condo? My husband wants to sell it and use the gain to invest in stocks. He expects the real estate market to cool. I want to hold on to the condo and rent it out, even if the rent doesn't cover our mortgage payment initially. Which do you think is the better way to go?

I'm reluctant to get myself into the middle of these husband-wife disputes about finances (or anything else, for that matter). But I've got to say I side with your hubby on this one.

Let me explain.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates Blog

Mortgage rates dip after six straight increases

2005-08-19T02:16:00.000-05:00

Rates on 30-year mortgages declined this week after posting increases for six consecutive weeks.

In its weekly survey, mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages fell to 5.80 percent, down from last week’s 5.89 percent, which had been the highest level in four months.

Analysts said the small decline reflected an assessment in financial markets that such factors as surging energy prices might dampen economic growth a bit going forward.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.40 percent this week, down from 5.47 percent last week.

However, rates on one-year adjustable rate mortgages edged up to 4.58 percent from 4.57 percent last week. Both levels were the highest for one-year ARMS in more than three years, since they averaged 4.66 percent in mid-July 2002.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates Blog

Ten inexpensive things to do to increase the value of your home

2005-08-18T01:48:00.000-05:00

Want to get top dollar for your home when you sell? With some U.S. real estate markets showing signs of fatigue, there are things you can do to increase your home's value — or just make it more salable — without spending a bundle.

But before making any decisions as to what improvements need to be made, it is important to use your common sense first, advises Pamela J. O'Connor, president and chief executive of RELO/Leading Real Estate Companies of the World, the largest network of independent real estate firms in the U.S., with 4,700 offices and 120,000 associates. "Think like a buyer who is looking at your house," she says. "Think in terms of relativity to the competition in your neighborhood, because it is so dependent on what you are up against. If you live in an expensive area, or an area with a lot of new construction, and you have an outdated kitchen, you may need to improve it."

Be careful not to over-improve your house, O'Connor adds. "You should think what you are up against in terms of what you want to spend. People shouldn't spend a lot of money to remodel a kitchen in a neighborhood where it simply doesn't command it. Maybe all you need to do is replace a ceiling fan, paint the cabinets and replace door pulls."

Newly remodeled kitchens and bathrooms can make a home more marketable. "But rarely do you get a 100 percent return on any kind of remodeling job you might do," says O'Connor. Indeed, a remodeled bathroom typically returns 90 percent of your investment, while a major remodeling job on a kitchen will return, on average, only 75 percent of the investment. It is better to remodel a kitchen in neutral tones so it appeals to a broader range of people, says O'Connor, adding to "do it a year or two before you sell the house, so you can enjoy it."

Many improvements that will provide the best returns are ones that you can do yourself, says O'Connor. Many of the supplies you might need for a minor renovation can be found at such home improvement stores as Home Depot, Lowe's or even at your local Wal-Mart Stores or Sears Holdings stores.

Since everybody's taste is different, however, it may not be wise to spend too much money to change things, because it may not be what the buyer wants. "Keep improvements on par with other homes it will be competing with, and try to appeal to the broadest group of buyers as possible," says O'Connor. "Most importantly, be objective. Sometimes, you may need a real estate agent, decorator or even a friend, to give you that consumer perspective."

If you don't do minor repairs or renovations, you may take a hit. O'Connor recalls a home in Dallas that was on the market for several million dollars. "The problem was the home's décor was very outdated," says O'Connor. "It had last been decorated in the 1970s. It had flower prints everywhere and shag carpets in greens and oranges. Potential buyers thought it would cost $300,000 or more to fix up. But if the owners had spent $100,000 in renovations, they would have gotten it back plus much more."

On the other hand, expensive additions to a property may not increase its value at all. A home owner in an expensive Atlanta neighborhood transformed his large backyard into a soccer field. The owner didn't recoup the investment he made when he sold the house, because the new owners didn't care for his choice of landscaping.

An experienced real estate agent who knows the market where you live can help you make key decisions about what improvements your home may need. Good agents will be able to tell you what you will and won't have to do. O'Connor advises, "If an improvement will really make the difference, you may have to bite the bullet and do it."

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

The risks of interest-only mortgages

2005-08-17T06:35:00.000-05:00

I'm getting ready to buy my first home and I'm thinking about getting an interest-only mortgage to make it more affordable. What do you think of these types of mortgages?

Interest-only mortgages are booming in popularity for one good reason: They lower your initial monthly payments. Not only does this save you some money in the first years of the mortgage, it can enable you to get a larger mortgage (and more expensive house) than you'd otherwise qualify for.

For example, a traditional 30-year, fixed rate mortgage for $300,000 with a 5.875 percent interest rate would mean a monthly payment of $1,774 per month. On the other hand, an interest-only, adjustable-rate mortgage at 5.5 percent would mean a monthly payment of just $1,375.

But despite these kinds of savings, interest-only mortgages are not the right solution for everyone.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Home buyers pay less down, increase risk

2005-08-16T13:18:00.000-05:00

Home buyers are using lower down payments and more borrowing pay for their houses.

New home purchasers own a lot less of their homes than ever before, according to a study released Tuesday by SMR Research, which studies market trends in the mortgage industry.

In the first six months of 2005, 38.1 percent of home buyers who financed their homes did so with a down payment of five percent or less of the purchase price, up from 30.6 percent in 2000.

And the percentage of buyers paying the traditional 20-percent downpayment fell to 33.7 percent of borrowers, down from 39.1 percent in 2000.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates Blog

Most overpriced home markets

2005-08-16T09:22:00.000-05:00

Even as real estate as a whole stays strong, some once red-hot markets have cooled. Which is next?

Several once high-flying housing markets in the United States have come down to earth recently. Could yours be next?

The Denver metro area went from consistent double-digit house price gains from 1998 to 2001 to little movement since. In the second quarter, single-family home prices in Denver rose just 2.7 percent from a year earlier, according to the National Association of Realtors.

San Diego has slowed from 29.8 percent in 2004 to just 8.2 percent in the second quarter. Las Vegas from 48.7 percent growth to 11.2 percent.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Bob Roscoe's Blog

Home prices post record gains

2005-08-15T10:19:00.000-05:00

Single-home price growth over the 12 months ending June 30 was the strongest in history, according to the National Association of Realtors.

In its quarterly survey, NAR found that U.S. home prices rose at an annual rate of 13.6 percent, to a median price of $208,300.

Of the 149 metro areas surveyed, 67 showed gains of more than 10 percent.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

Fed's rate hikes hurt equity lines' appeal

2005-08-14T10:20:00.000-05:00

Could the mismatch between short-term and long-term interest rates change the way millions of Americans tap their home equity for remodelings, college tuitions, autos and other big-ticket expenditures?

Market forces certainly are pushing consumers in that direction, and there is evidence the shift is already under way. You can refinance into a conforming 30-year fixed-rate mortgage and take substantial additional cash out for 5.75 percent with little or no closing costs. But a new home equity credit line -- pegged at prime plus 1 percent -- would run you 7.5 percent to start. Worse yet, it is highly likely to get more expensive in the coming months under Federal Reserve Board monetary policies. Even equity lines at prime plus zero don't cut the mustard.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Option ARMs: A Cautionary Tale

2005-08-13T15:11:00.000-05:00

Question: I would like your opinion on option adjustable-rate mortgages in regards to refinancing and utilizing some of the equity to invest.

Answer: If Britney and Kevin, Jessica and Nick or any other rich couple wants to refinance and put their money into hedge funds or some other profitable venture, an option adjustable-rate mortgage (ARM) might make sense. Option ARMs allow several different payment choices, such as making the standard principal-and-interest payment or paying less, including paying as little as 1% interest. These mortgages were originally designed for wealthy folks with a lot of disposable income. With money managers on tap to make sure that their wealth multiplies safely, the rich can absorb the risks of borrowing money cheaply against their many assets and investing it elsewhere, where it can earn higher returns.

That's not necessarily the case for the rest of us, who live in Tracturbia and get our financial advice from TV talking heads. For most of us, an option ARM is a very risky temptation, unless you have a big cushion of cash in the bank to cover future spikes in interest rates. (Most of us don't -- according to the U.S. Commerce Department, the national personal savings rate dropped to zero in June, down from 10.8% in 1984.)
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates Blog

Does Moving to a Bigger home make financial sense?

2005-08-13T11:44:00.000-05:00

My husband and I are trying to decide whether to stay in our current home or move to a bigger one. I think we could make do with our present house (although things are getting a bit crowded with three kids).

But we also think that by moving to progressively bigger and better homes and selling along the way we could pile up some nice profits for retirement. In fact, a real estate agent told me that moving from home to home over the years was the best financial move he ever made. What do you think we should do?
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

30-year rate jumps for sixth straight week

2005-08-12T08:41:00.000-05:00

Mortgage rates rose again this week with 30-year mortgages hitting their highest level in four months and one-year adjustable rate mortgages rising to the highest level in more than three years.

In its weekly survey, Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages rose to a national average of 5.89 percent, up from 5.82 percent last week.

It marked the sixth week in a row that rates on 30-year mortgages have risen, pushing them to the highest level since they averaged 5.91 percent for the week ending April 14.

For one-year adjustable rate mortgages, rates rose to 4.57 percent, up from 4.47 percent last week. That was the highest level for one-year ARMS in more than three years, since they averaged 4.66 percent in mid-July 2002.

Rates on 15-year, fixed-rate mortgages averaged 5.47 percent this week, compared with 5.38 percent last week. This week’s rate was the highest since the first week in April.

Rates on five-year adjustable rate mortgages averaged 5.40 percent this week, up from 5.30 percent last week.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

Regulators putting their foot down on ARMs

2005-08-07T08:53:00.000-05:00

You've seen the home loan pitches -- possibly ad nauseam: ``Refinance now!! 1 percent mortgages!! Save thousands of $$$$$ per year with our 1 percent option ARM!!''

Given the seductions of 1 percent money, you might not be surprised to learn that this form of financing has quintupled its national market share in the past 12 months. But two developments -- one that took effect Monday, another due this fall -- could reduce the number of promotions you see for cut-rate option ARMs.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Should we paydown our mortgage?

2005-08-05T10:13:00.000-05:00

My wife and I are both 28 and contribute enough to our 401(k)s to get the full company match. We are putting most of our extra money towards paying down our mortgage. Is that a good use of our money or should we be investing more for retirement?
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Mortgage rates continue upward climb

2005-08-05T07:58:00.000-05:00

30-year benchmark rises to 5.82 percent, Freddie Mac reports

Mortgage rates continued their upward climb this week, with rates on 30-year mortgages rising to their highest point since the middle of April. In its weekly survey, mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages rose to a nationwide average of 5.82 percent, up from 5.77 percent last week.

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

America's riskiest real estate & some not so risky

2005-08-04T09:51:00.000-05:00

Some of the nation's frothiest housing markets are at growing risk of price declines, according to the most recent survey from PMI Mortgage Insurance Corporation, while other areas appear quite safe from a bubble bursting. How is your area ranked?

The PMI Risk Index is based on economic activity and other conditions that PMI thinks are predictive of home-price declines over the next two years.

Factors used to derive the index include home prices, employment conditions and the affordability of homes.

At a 55.3 percent chance, the index singles out Boston as the area most at risk for a decline. That's up from 53.4 percent three months earlier.

The Nassau and Suffolk County area, in suburban New York, is right on Boston's heels. The probability of a decline, according to PMI, is 54 percent, up from 51.1 percent.

The metro area that had the biggest increase in risk is Riverside-San Bernadino, east of Los Angeles, which rose 8.3 points to 42.2 percent.

Some areas got a little safer during the quarter. Among them, Detroit had the biggest drop from 37.9 percent to 29.5 percent while New York's risk score fell from 33.1 percent to 32.6 percent.

So where are homeowners all but guaranteed to not go through a bubble burst?

They can breathe easiest, according to the PMI listing, in Pittsburgh (5.6 percent), Memphis (5.8 percent), and Indianapolis (5.9 percent). Among western cities, Seattle scored the safest, at 6.4 percent.

Here are other cities tracked by PMI, with their probability of a decline during the next two years.

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Mortgage rates continue steady increase

2005-07-28T13:30:00.000-05:00

30-year benchmark jumps again, hits highest level since May

Average U.S. interest rates on 30- and 15-year mortgages inched upward for a fourth straight week, rising to their highest level since May, mortgage finance company Freddie Mac said on Thursday.

Fifteen-year mortgages averaged 5.34 percent compared with 5.32 percent last week. One-year adjustable rate mortgages (ARMs) rose in the week to an average of 4.46 percent from 4.42 percent.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Housing Bubble depends on where you live

2005-07-28T09:11:00.000-05:00

With real estate, it all boils down to location, location, location. In some cities, $235,000 seems like an exorbitant amount to pay for a home. In others, first-time buyers cannot even dream of homes under $350,000. Here are some of the letters from readers on "America's Housing Craze."

When I moved from the Midwest to California five years ago, I was in sticker shock. Having a real estate background helped me only to understand that the market was supercharged. My fiance and I looked at one development after another -- beautiful homes that became a blur after awhile. When we became interested, they weren't even putting people on waiting lists for the new releases. We were told "come back" or "call us" to see if the new releases were available. We finally settled on a development. That was two years ago. The property has almost doubled in appreciation. It was struggle to make the down payment, but we knew that if we didn't jump on the train, it would be gone before we knew it.

Seralynn
Rocklin, Calif.

Buying a home is not even a option. My wife and I have two children and make a decent living. We have been saving for a few years. I am not willing to sacrifice on some unstable ARM or interest-only loan. All my years of education and research show what a risk people are taking to buy a piece of the American craze, or should I say dream. I am not even close to saving enough money to purchase a home. If I am not even close, that shows me that people have stopped saving for their retirements and have put all of their fate in the housing market. Have they not taught us not to put all your money in one place? Diversify? I'll take my chances and try in a few years. The media has done a good job in advertising that we are out of space. Last time we checked no one has received a 20 percent raise in a while.

Anonymous

Anaheim Hill, Calif.

After living in two places that were clearly beyond our means for purchasing a house (San Diego and Washington, D.C.), my wife and I moved to the Columbus, Ga., area. In less than three days we found a nice single-story three-bedroom house, in a nice neighborhood, less than 30 minutes from my work, on nearly an acre of land. The cost? It ended up at $137,600, low enough that my wife will not have to work and I won't need a second job just to make the house payment. All that while holding a government job that pays less than $55,000 per year. The solution to the insane housing prices is to discover another world, one .. with the small-town charm of having a house that is more than an arm’s distance from your neighbors window and you actually know their names.

Wayne

Phenix City, Ala.

The only "housing bubbles" that exist are primarily in California, the East Coast, and a handful of huge cities. I'm shopping for my first home here in Dallas, and I'm overwhelmed by affordable choices. I almost bought my dream house last year until the inspector helped me realize that it had hidden damage. I've had to work with a different (read: reputable) real estate agent this time, and I'm overwhelmed by what's available in my price range of $100,000 to $125,000. I'm almost always the only bidder. We always offer below the asking price. Similarly, my parents just bought a phenomenal home in a VERY nice area of Houston for less than $200,000! Houston is the fourth-largest city in the country, and there are TONS of affordable, immaculately clean homes on the market for qualified buyers. Please report on cities other than L.A. when yelling about the housing bubble. It may cause places with normal or flat housing markets to jump just because of the hype. There is just no crazy housing market in the Midwest, South, or Southwest that any of us have heard about, and we are the ones actually buying houses!

Heather

Dallas

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Homeowners Dive into Pool Houses

2005-07-27T05:40:00.000-05:00

Veronica Cervera-Goiseke's latest home-building project has been complicated. Just getting a permit took seven months. She had to specify where every bush was going, what colors she planned to paint the exterior and how the style would flow with the rest of the neighborhood. A new dream home? Actually, a new pool house.

With homeowners already transforming backyards across the country into "outside rooms," now many are focusing on that empty spot across the lawn, and adding pool houses. "It started with a grill and a barbecue," says New Canaan, Conn., architect Louise Brooks, who is currently working on three pool houses -- compared with three in the past eight years. "Now it's become a whole entertaining area."

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
www.namethatvalue.com

Eminent domain backlash akin to 'Boston Tea Party'

2005-07-24T08:50:00.000-05:00

Since the Supreme Court sanctioned the seizure of private homes by municipal governments for private ''economic development,'' a firestorm of reaction has broken out.

To call it a backlash would hardly do it justice. Calling it an unprecedented uprising to nullify a decision of the highest court of the land would be more accurate.

In the four weeks since the Supreme Court sanctioned the seizure of private homes by municipal governments for private ''economic development,'' a firestorm of reaction has broken out in dozens of state legislatures and in Congress.

At the federal level, the House adopted by a 365-33 vote a highly unusual resolution deploring the court's ruling. The House also voted 231-189 for a bill that would prohibit expenditure of any federal housing, transportation or treasury funds ''to enforce the judgment of the Supreme Court in the case of Kelo v. City of New London.'' The court ruled that municipalities have the right to determine what constitutes a ''public purpose'' for eminent domain seizure purposes -- even if that means taking privately owned real estate away from one set of citizens and handing it over to private developers who promise to increase the local tax revenue base or increase employment.

In effect, the House told the court: You may have narrowly approved the Connecticut city's eminent domain seizures of homes for a privately developed and owned urban renewal project, but we have a weapon in this fight, too. If the appropriations amendment passes the Senate, the city of New London will not be able to use key federal funds in any way, directly or indirectly, to move that project forward. No transportation money, no housing subsidies, no assistance from the U.S. Treasury.

Meanwhile, bipartisan support is building in the Senate for the broader-sweeping ''Protection of Homes, Small Businesses and Private Property Act of 2005,'' authored by Sen. John Cornyn, R-Texas. That bill declares that it is Congress' view that 'the power of eminent domain should be exercised only for 'public use' as guaranteed by the Fifth Amendment, and that this power to seize homes, small businesses and other private property should be reserved only for true public purposes.''

Under no circumstances, according to Cornyn, should local eminent domain powers ''be used simply to further private economic development.'' If passed and signed into law, the bill would prohibit all uses of federal funds in connection with any eminent domain seizures for economic development purposes.

At the state level, legislative moves are under way in more than two dozen states to rein in -- or at least clarify -- the powers of municipalities to condemn and seize homes. Eight states -- Arkansas, Florida, Illinois, Kentucky, Massachusetts, Montana, South Carolina and Washington -- already impose restrictions in some form.

In Connecticut, Gov. Jodi Rell has endorsed a moratorium on seizures, and called the issue ''the 21st century equivalent of the Boston Tea Party: the government taking away the rights and liberties of property owners without giving them a voice. But this time it is not a monarch wearing robes in England we are fighting -- it is five robed justices at the Supreme Court in Washington.''

The outraged reaction to the Kelo decision has erupted across the entire political and ideological spectrum, creating momentary bedfellows out of legislators who rarely agree on anything. Name another issue where House Majority Leader Tom DeLay, R-Texas, Rep. Maxine Waters, D-Calif., Senate Majority Leader Bill Frist, R-Tenn., Rep. Bernie Sanders, I-Vt. (the House's lone self-described socialist), evangelical Christian groups, Rush Limbaugh and Ralph Nader all are on the same side.

Waters denounced the decision -- which she said would weigh most heavily upon minority and poor neighborhoods -- as ''the most un-American thing that can be done.'' DeLay called the ruling ''a travesty.''

A few of the opponents of the Kelo decision are looking to mount direct action -- sometimes tongue-in-cheek. A California-based group called Freestar Media LLC is organizing an effort to convince the town council of Weare, N.H., where Supreme Court Justice David H. Souter owns property, to condemn the land in order to give it to developers who promise to construct a hotel on the site, substantially raising town revenues and employment in the process.

Souter voted with the majority in the case. The name of the proposed project: The Lost Liberty Hotel, which will also feature a restaurant called the Just Desserts Cafe.

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates

Mortgage rates up for 3rd straight week

2005-07-22T08:23:00.000-05:00

Average U.S. interest rates on 30- and 15-year mortgages inched upward for a third straight week but remained at affordable levels to keep housing activity bustling, mortgage finance company Freddie Mac said on Thursday.

U.S. 30-year mortgage rates averaged 5.73 percent in the week ended July 21, up from 5.66 percent a week earlier. It was the highest level for 30-year mortgages since they averaged 5.77 percent in the May 12 week.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

Two months in house-hunting hell

2005-07-15T09:33:00.000-05:00

How one L.A. couple survived a tight market, head-spinning bidding wars.

When my husband and I finally decided to buy a home in the Los Angeles area after renting in various cities for so many years, we were genuinely excited. More closet space! No more white walls! A backyard for the baby! But we were not at all prepared for the two months of drudgery, desperation and downright insanity that came next.

We knew we would not get much for our money in L.A.’s super-hot housing market. Still, we were surprised at just how little we would get. Tiny run-down homes — more like glorified boxes — were going for considerably more than half a million dollars. But sticker shock was only the beginning of our house-hunting hell.

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

Debunking credit-score myths

2005-07-14T13:10:00.000-05:00

Knowing more about your credit rating could help you get that mortgage loan and even save you money.

To most Americans, your credit rating may seem like a string of numbers that hinges on your ability to pay your bills on time.

But it's also a crucial tool for saving money -- something most people don't know, according to a recent survey.

According to a recent survey conducted by GMAC Mortgage, 62 percent of consumers do not realize that a score of 620 or better means you can become eligible for getting the best possible mortgage rate.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

Mortgage rates rise for second straight week

2005-07-14T12:58:00.000-05:00

Analysts continue to forecast that rates will rise at a gradual pace.

Mortgage rates around the country rose for a second straight week but still remain below rates seen a year ago.

In its weekly survey, mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages increased to 5.66 percent, up from last week’s 5.62 percent. The increases were coming after rates had dipped to 5.53 percent in the last week of June, the lowest point for 30-year mortgages in 14 months.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

By some measures, houses are still cheap

2005-07-14T12:41:00.000-05:00

Boomers demand bigger homes, more amenities — and builders deliver.

With the cost of a new house seeming to defy gravity, many would-be home buyers suffering from sticker shock are baffled by the relentless run-up in prices. The explanation may, however, be simple — houses have gotten bigger.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

College Grads face rent or buy decisions

2005-07-13T17:24:00.000-05:00

Do young people have a chance in hot real estate markets? Even though the purchase of a home may not be in the immediate future, financial experts say it's never too early to educate oneself about mortgage options. Gwen Thomas of the Bank of America says given the number of loan options and the savings that buying a home requires, "it's worth the time to sit down with someone to go over where you are real estate-wise and where you want to be in five or 10 years."
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

Bush adviser: Housing-bubble fears overblown

2005-07-13T09:50:00.000-05:00

The Bush administration is closely watching the housing boom, though so far the surge appears to be driven mostly by basic market forces and not speculation that could lead to instability, Ben Bernanke, the president's top economist, said Tuesday.

"While speculative behavior appears to be surfacing in some local markets, strong economic fundamentals are contributing importantly to the housing boom," said Bernanke in his first speech as the new chairman of the White House's Council of Economic Advisers.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

The Ten best places to live

2005-07-11T08:56:00.000-05:00

MONEY magazine and CNN/Money spent months looking for Great American Towns -- where you would want to raise your children and celebrate life's milestones. Starting with more than 1,300 cities, they settled on 10 winners.

While Minnesota didn't didn't have any towns in the top ten, Chanhassen, MN, made it to number 16. Minnesota did have one distinction that no other state can match: All of the top ten coldest cities were in Minnesota.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

Luxury Homes getting even posher

2005-07-11T08:09:00.000-05:00

Owners keep spending even after buying luxury homes.

Owners of luxury homes are pouring cash into their properties, according to a report by Coldwell Banker. The company released its Luxury Index today, which revealed that many luxury homeowners are using income, money from tax returns, and home equity loans to pay for improvements to already expensive houses.

According to the report, these home improvements contribute even more fuel to the already blazing real estate market by fostering an upward spiral of high prices, followed by upgrades, followed by even higher values, that shows little sign of abating.

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

Some "pre-approvals" considered worthless

2005-07-10T08:43:00.000-05:00

If your loan officer only runs a credit check and subsequently tells you you're "pre-approved" for a mortgage, you are probably being taken for a ride.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

Mortgage rates edge up over past week

2005-07-07T13:37:00.000-05:00

Housing ‘likely headed for another record-breaking year’

Mortgage rates around the country rose this week but remain at a level that should continue to support the buoyant housing market.

In its weekly survey, mortgage giant Freddie Mac reported Thursday that for the week ending July 7, rates on 30-year, fixed-rate mortgages increased to 5.62 percent, up from last week’s 5.53 percent, which had marked the lowest rate since early April 2004.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

Branching out in a hot housing market

2005-07-05T16:39:00.000-05:00

Investors look to neighborhoods once considered a waste of time.

As home prices in hot markets across the nation continue to grow, it’s getting harder and harder to find affordable opportunities. As a result, home buyers are looking in areas they wouldn’t have even considered five years ago. And even in such neighborhoods, cheap isn’t really all that cheap.

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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

The nuts and bolts of home improvement

2005-07-05T16:34:00.000-05:00

I'm contemplating a major home remodel, but I'm worried about everything that could go wrong and end up costing me money. How should I protect myself?
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

Court Ruling puts poor & Middle class homeowners most at risk

2005-07-03T10:29:00.000-05:00

Is your home more vulnerable to eminent domain seizure by your local government in the wake of the Supreme Court's 5-4 decision allowing seisures of private homes for the use of private development?

The ruling upheld that Connecticut city's right to seize 15 properties from private owners, and to transfer the real estate to private developers for future hotel, office and conference center projects. None of the owners wanted to sell at any price. None of the houses was considered to be blighted or in bad repair. None of the real estate will be used or owned by the city itself.

Yet those homeowners are now forced by the government to give up their homes.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com

10 Steps to get your ideal home

2005-07-01T17:00:00.000-05:00

Ten practical steps to take to smooth the transition from one home to another. This article tells you things you should and should not do.
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Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Mortgage Marketing Associates
www.namethatvalue.com