Bank of America is starting a program to offer homeowners who owe significantly more than their homes are worth the opportunity to have their loan balances reduced. The program, which starts in May, would potentially help about 45,000 homeowners nationwide. In launching the effort, Bank of America is jumping into the debate about how to address the millions of homeowners whose mortgages exceed the value of their homes and who have complicated industry and government efforts to prevent foreclosures. The Bank of America plan is limited in scope. Borrowers MUST have missed at least TWO mortgage payments and be severely underwater to qualify, owing 20 percent more than their homes are worth. It is also limited to borrowers with certain types of risky loans, including subprime mortgages or other loans with a two-year adjustable rate. Bank of America expects to forgive about $3 billion in principal on loans as part of the program. The effort expands a settlement agreement that th
e bank made with several state attorneys general in 2008 to modify thousands of mortgages and settles a Massachusetts investigation of lending practices by Countrywide Financial, which Bank of America acquired in 2008. So what happens now? Joe Sixpack, who up till now has managed to make all his payments in time, reads that he doesn’t qualify precisely BECAUSE he has made all his payments on time, and guess what he does? This is pure insanity.
Initial job claims down
The Labor Department said today that initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 442,000. report included annual revisions to the weekly unemployment claims seasonal factors going back to 2005. Using the old seasonal factors, claims would have dropped only to 453,000, a Labor Department official said. Analysts polled by Reuters had expected claims to slip to 450,000 from a previously reported 457,000 the prior week. The decline in initial claims last week pushed them into a range that analysts reckon signals labor market stability. The labor market has lagged the economy's recovery from its worst downturn since the 1930s, but payrolls are expected to grow this month as the government steps up hiring for the 2010 census. About 8.4 million jobs have been lost since December 2007, when the recession started. The number of people still receiving benefits after an initial week of aid fell 54,000 to 4.65 million in the week ended March 1
3, the lowest since December 2008, the Labor Department said. The so-called continuing claims data included the household survey week, from which the unemployment rate is derived.
Mortgage rates up
Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.99 percent for the week ended March 25, up from the previous week's 4.96 percent, according to a survey released by Freddie Mac the second-largest U.S. mortgage finance company. Mortgage rates are expected to rise when the Fed—the U.S. central bank—stops buying mortgage-related securities at the end of March. The rate for the latest week is also above the year-ago level of 4.85 percent and the record low of 4.71 percent in early December. Freddie Mac started the survey in 1971. "Mortgage rates inched up slightly this week as bond yields rose even further," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
Exit is dangerous
John Taylor, a Stanford University economist and author of a key central banking rule of thumb, will testify before the House Financial Services Committee that the Federal Reserve has not been clear enough about how it intends to unwind its unprecedented monetary easing campaign, and some of the tools it expects to use may not work. He says the Fed's unorthodox approach has not only threatened its independence but also made policy making more difficult. "By taking these extraordinary measures, the Fed has risked losing its independence over monetary policy," said Taylor, arguing that such steps veered too far into the arena of fiscal policy. "Unwinding them involves considerable risks," said Taylor, who was a Treasury official during the Bush administration, in prepared testimony made available on the House committee's website on Wednesday. Federal Reserve Chairman Ben Bernanke will be the first to testify before the committee, starting at 10 am ET. The Fed has taken pain
s to assure investors and the public that it can and will pull back on its zero percent interest rate policy when the times comes, probably through a mixture of draining credit from the banking system, raising the interest it pays on bank reserves, and selling some of its assets. But this approach has serious shortcomings, Martin Goodfriend, a professor of economics at Carnegie Mellon University, will testify.
Social Security underwater
Social Security will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office. Stephen C. Goss, chief actuary of the Social Security Administration, said that while the Congressional projection would probably be borne out, the change would have no effect on benefits in 2010 and retirees would keep receiving their checks as usual. The problem, he said, is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax. Analysts have long tried to predict the year when Social Security would pay out more than it took in because they view it as a tipping point — the first step of a long, slow march to insolvency, unless Congress strengthens the program’s finances. �€
œWhen the level of the trust fund gets to zero, you have to cut benefits,” Alan Greenspan, architect of the plan to rescue the Social Security program the last time it got into trouble, in the early 1980s, said yesterday.
Now on to our real estate investing educational section...
Online Real Estate Research
Whether you are interested in buying a short sale across town or across the nation, learning how to use online resources to perform basic research is simple and cost effective. Here are some of the most popular and easy to use sites that buyers and agents alike tend to use when evaluating potential properties.
1. Request a copy of the Homeowners Association guidelines (or condo). Not only will you find out important information about community restrictions, limitations and use patterns but many HOA packages include a welcome letter informing newcomers about utilities, cable, phone and other service providers as well as neighborhood clubs and events. Make a copy to present to potential buyers.
2. Obtain crime statistics. Without a doubt, one of the most important predictors of property value over the long term is the safety of the community. Contact the local police department to request an up-to-date report on types of crime (property crimes, violent crimes etc…) for the zip code in question. Follow up by performing a predator search courtesy of the free search tool at www.familywatchdog.com.
3. Contact the Chamber of Commerce to request a Calendar of Events and learn about local tourist attractions, restaurants, entertainment and other amenities.
4. Rate the schools or request a school report card by visiting www.greatschools.net. Homes in preferred school districts sell for an average of 10% more than comparable homes in less desirable districts!
5. Rate hospitals. Easy access to preferred hospitals also increases the desirability of homes by an average of five to ten percent compared to similar homes in other areas. Determine how good the hospitals are in your new area by visiting non-profit organizations like www.LeapFrog.org or www.HealthGrades.com.
6. Sign-Up for State and Local Website Information. It's important to keep up with local trends, events and other pertinent information. Most communities have online newspapers and city/county government websites tend to post everything from tax information to information about small business concerns. Learn about bank branches, major employers, recreation and parks plus much more by having it fed directly to your email or phone.
See you at the top!
Thursday, March 25, 2010
Monday, February 22, 2010
Foreclosure Defense Legal Strategies: How to Slow A Foreclosure
Home ownership lowest in a decade
According to US Census Bureau data, the homeownership rate dipped in Q409, bringing the rate of homeowners at its lowest point since the second quarter of the year 2000. The Q409 rate of 67.2% is down slightly from Q309’s rate of 67.6%, and is also down from Q408, when the homeownership rate was 67.5%. Seasonally adjusted, the Q409 rate was 67.3%, down from the seasonally adjusted rate of 67.4% in Q309 and 67.6% in Q408. The seasonally adjusted homeownership rate is also at its lowest level since Q200. Regionally, The biggest drop was in the South, where the rate declined to 69.1% from 69.7% in Q309 and 69.8% in Q408. The West declined to 62.3% from 62.7% in both Q309 and Q408. Homeownership in the Midwest decreased to 71.3% from 71.6% in Q309 and 71.4% in Q408. In the Northeast, homeownership declined to 63.9% from 64% in both Q309 and Q408.
Housing prices to drop 5% more?
In normal times, people won't pay much less to lease a house than to own it. After all, if you're paying rent instead of a mortgage and taxes, you still get to enjoy the same rec room, chef's kitchen, and casita for visiting grandparents. So the surest sign of a frenzy appears when owning becomes far more expensive than renting. That's precisely what happened during the last bubble. And the surest sign that prices have fully adjusted arrives when the ratio of what people pay in rent versus what owners spend on the same property returns to its historic average. "If you look at the trend in rents to see where housing prices are headed, you're looking at the right measure," says Yale economist Robert Shiller. In recent reports, Deutsche Bank (DB) demonstrates how steady or even falling rents have pulled down housing prices, to the point where in many markets it costs about the same amount to own as to lease. That's a golden mean that America hasn't seen in almost a decade. Th
e DB research also offers convincing evidence that the wrenching adjustment in housing prices is finished for much of the nation, with a bit more pain to come in selected areas.
On average, DB found that families across America were spending about 87% as much to rent as to own in 1999. Hence, they were traditionally willing to pay a premium as homeowners, though not a big one. But by mid-2006, with the craze in full swing, the figure fell below 60%. At that point, Americans were spending an incredible 66% more to own than to rent. It was far worse in the bubble markets: In Las Vegas, Phoenix and Miami, homeowners were paying twice as much as renters, and in San Francisco and Orange Country, owners' monthly payments were triple those of their neighbors with leases instead of mortgages from 1999 to 2007, apartment rents increased only 32%, but home prices jumped more than three times as fast, around 105%. DB reckoned that housing prices are more or less reasonable when the ratio returns to its 1999 level. Why 1999? Because the ratio was relatively stable throughout the 1990s, and it was the year the steep rise in prices began in earnest.. At the end
of the third quarter of 2009, the overall number stood at 83%, meaning renting was just a tad more attractive than owning. Given that analysis, it's likely that prices will fall another 5% or so nationwide. The drop could even be slightly greater. One reason: Rents, the force that govern housing prices, are still falling. In 2009, apartment rents dropped 2.3%, and the fall continues. And enormous adjustments are needed in still-exorbitant markets such as New York and Baltimore. Thankfully, the improving economy and decline in the rate of job losses means that rents should soon stabilize and could even start increasing by the end of 2010.
Let big banks fail
White House advisor Paul Volcker said yesterday that large financial institutions that engage in speculative activities for profit should be allowed to fail if they get in trouble. "If a big non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it -- not save it," Volcker said on CNN. "It's called euthanasia, not a rescue." As Congress debates financial reform in the wake of the worst financial crisis since the 1930s, Volcker has argued for fencing off investment firms primarily engaged in market speculation from commercial, deposit-taking banks. The former Federal Reserve Chairman, most famous for raising interest rates sharply in the early 1980s to quell double-digit inflation, said the central bank and other regulators were amiss in preventing the crisis. "I don't think there's any question the Federal Reserve and other regulators were not on top of t
he housing picture," Volcker said.
DSNews.com - Short sales in Las Vegas
Las Vegas has the highest foreclosure rate of any metro in the country, but lenders there have become more willing to accept short sales as an alternative to foreclosure. The Greater Las Vegas Association of Realtors (GLVAR) reports that 21.1 percent of all existing-home sales in the area last month were short sales. The association’s short sale figures represent a 2 percent increase from the previous month. Rick Shelton, GLVAR president, called the increase in short sales “one of the more promising trends” for the month, particularly because it was coupled with a decline in sales involving foreclosed homes. Shelton said bank-owned homes accounted for a decreasing percentage of all local home sales, dropping from 60.1 percent in December to 57.4 percent of all sales in January.
Overall, GLVAR’s local housing statistics showed that 2010 started looking very much like the end of 2009, with local home prices staying about the same and home sales increasing from the previous year. During January, GLVAR reported the median price of single-family homes sold in Southern Nevada was $134,925, down 0.8 percent from $136,000 in December. The median price for condos and townhomes increased 5.7 percent, from $65,300 in December to $69,000 in January. According to the GLVAR, the total number of local homes, condominiums, and townhomes sold in January was 3,266, down from 4,196 total sales in December 2009, but up from 2,664 in January 2009. Shelton said this decline in total sales from December to January was expected since it occurs nearly every year in Southern Nevada during these months. The percentage of local homes purchased with cash during January was 45.5 percent, up from 40.4 percent the previous month and the highest such percentage ever tracked by
GLVAR.
Consumer sentiment down
A Reuters/University of Michigan Surveys of Consumers said its preliminary index of consumer sentiment for February was 73.7, down from 74.4 in late January but up from 56.3 a year ago. The reading fell short of analysts' median expectation of a reading of 75.0, according to a recent Reuters poll. The survey's gauge of current economic conditions was 84.1 in early February, the highest since March 2008. It was up from 81.1 in late January and above the 81.4 predicted by analysts polled by Reuters. But the survey's barometer of consumer expectations dipped to 66.9, down from 70.1 in late January and short of the 70.9 forecast by analysts. "Few consumers anticipated any significant declines in the jobless rate any time soon, and the majority expected recurrent economic weaknesses over the next several years," Richard Curtin, director of the surveys, said in a statement. "The cumulative financial strain during the past few years, coupled with the fact that the majority stil
l expect no gains in their incomes, work hours or home values in the year ahead, has meant that consumers have remained extremely cautious spenders," Curtin said. The index of consumers' 12-month economic outlook fell to 79 from 84 in late January. The survey's 1-year inflation expectation index eased to 2.7 in early February from 2.8 in late January. The five-to-10-year inflation measure eased to 2.8 from 2.9 late last month.
WSJ - US Debt to keep growing no matter what
The crushing weight of US debt threatens to overwhelm everything the federal government does, even in the short-term, best-case financial scenario -- a full recovery and a return to pre-recession employment levels. The government already has made so many promises to so many expanding "mandatory" programs. Just keeping these commitments, without major changes in taxing and spending, will lead to deficits that cannot be sustained. Take Social Security, Medicare and other benefits. Add in interest payments on a national debt that now exceeds $12.3 trillion. It all will gobble up 80 percent of all federal revenues by 2020, government economists project.
The US debt crisis also raises the question of how long the world's leading power can remain its largest borrower. Moody's Investors Service recently warned that Washington's credit rating could be in jeopardy if the nation's finances didn't improve. Proposed belt-tightening steps by President Barack Obama, including a freeze on some nondefense, nonentitlement spending, would make only a small dent in the mountain of debt. The budget he submitted to Congress this month proposes record spending of $3.8 trillion for 2011. Taxes in next year's budget will support only $2.5 trillion of that spending, leaving $1.3 trillion to be borrowed. The president's budget doesn't take into account future liabilities from the growth of entitlement benefits and is based on projected economic growth that depends on a solid recovery. It assumes Congress will pass all of Obama's initiatives, including spending cuts and tax increases previously rejected by Congress.
According to US Census Bureau data, the homeownership rate dipped in Q409, bringing the rate of homeowners at its lowest point since the second quarter of the year 2000. The Q409 rate of 67.2% is down slightly from Q309’s rate of 67.6%, and is also down from Q408, when the homeownership rate was 67.5%. Seasonally adjusted, the Q409 rate was 67.3%, down from the seasonally adjusted rate of 67.4% in Q309 and 67.6% in Q408. The seasonally adjusted homeownership rate is also at its lowest level since Q200. Regionally, The biggest drop was in the South, where the rate declined to 69.1% from 69.7% in Q309 and 69.8% in Q408. The West declined to 62.3% from 62.7% in both Q309 and Q408. Homeownership in the Midwest decreased to 71.3% from 71.6% in Q309 and 71.4% in Q408. In the Northeast, homeownership declined to 63.9% from 64% in both Q309 and Q408.
Housing prices to drop 5% more?
In normal times, people won't pay much less to lease a house than to own it. After all, if you're paying rent instead of a mortgage and taxes, you still get to enjoy the same rec room, chef's kitchen, and casita for visiting grandparents. So the surest sign of a frenzy appears when owning becomes far more expensive than renting. That's precisely what happened during the last bubble. And the surest sign that prices have fully adjusted arrives when the ratio of what people pay in rent versus what owners spend on the same property returns to its historic average. "If you look at the trend in rents to see where housing prices are headed, you're looking at the right measure," says Yale economist Robert Shiller. In recent reports, Deutsche Bank (DB) demonstrates how steady or even falling rents have pulled down housing prices, to the point where in many markets it costs about the same amount to own as to lease. That's a golden mean that America hasn't seen in almost a decade. Th
e DB research also offers convincing evidence that the wrenching adjustment in housing prices is finished for much of the nation, with a bit more pain to come in selected areas.
On average, DB found that families across America were spending about 87% as much to rent as to own in 1999. Hence, they were traditionally willing to pay a premium as homeowners, though not a big one. But by mid-2006, with the craze in full swing, the figure fell below 60%. At that point, Americans were spending an incredible 66% more to own than to rent. It was far worse in the bubble markets: In Las Vegas, Phoenix and Miami, homeowners were paying twice as much as renters, and in San Francisco and Orange Country, owners' monthly payments were triple those of their neighbors with leases instead of mortgages from 1999 to 2007, apartment rents increased only 32%, but home prices jumped more than three times as fast, around 105%. DB reckoned that housing prices are more or less reasonable when the ratio returns to its 1999 level. Why 1999? Because the ratio was relatively stable throughout the 1990s, and it was the year the steep rise in prices began in earnest.. At the end
of the third quarter of 2009, the overall number stood at 83%, meaning renting was just a tad more attractive than owning. Given that analysis, it's likely that prices will fall another 5% or so nationwide. The drop could even be slightly greater. One reason: Rents, the force that govern housing prices, are still falling. In 2009, apartment rents dropped 2.3%, and the fall continues. And enormous adjustments are needed in still-exorbitant markets such as New York and Baltimore. Thankfully, the improving economy and decline in the rate of job losses means that rents should soon stabilize and could even start increasing by the end of 2010.
Let big banks fail
White House advisor Paul Volcker said yesterday that large financial institutions that engage in speculative activities for profit should be allowed to fail if they get in trouble. "If a big non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it -- not save it," Volcker said on CNN. "It's called euthanasia, not a rescue." As Congress debates financial reform in the wake of the worst financial crisis since the 1930s, Volcker has argued for fencing off investment firms primarily engaged in market speculation from commercial, deposit-taking banks. The former Federal Reserve Chairman, most famous for raising interest rates sharply in the early 1980s to quell double-digit inflation, said the central bank and other regulators were amiss in preventing the crisis. "I don't think there's any question the Federal Reserve and other regulators were not on top of t
he housing picture," Volcker said.
DSNews.com - Short sales in Las Vegas
Las Vegas has the highest foreclosure rate of any metro in the country, but lenders there have become more willing to accept short sales as an alternative to foreclosure. The Greater Las Vegas Association of Realtors (GLVAR) reports that 21.1 percent of all existing-home sales in the area last month were short sales. The association’s short sale figures represent a 2 percent increase from the previous month. Rick Shelton, GLVAR president, called the increase in short sales “one of the more promising trends” for the month, particularly because it was coupled with a decline in sales involving foreclosed homes. Shelton said bank-owned homes accounted for a decreasing percentage of all local home sales, dropping from 60.1 percent in December to 57.4 percent of all sales in January.
Overall, GLVAR’s local housing statistics showed that 2010 started looking very much like the end of 2009, with local home prices staying about the same and home sales increasing from the previous year. During January, GLVAR reported the median price of single-family homes sold in Southern Nevada was $134,925, down 0.8 percent from $136,000 in December. The median price for condos and townhomes increased 5.7 percent, from $65,300 in December to $69,000 in January. According to the GLVAR, the total number of local homes, condominiums, and townhomes sold in January was 3,266, down from 4,196 total sales in December 2009, but up from 2,664 in January 2009. Shelton said this decline in total sales from December to January was expected since it occurs nearly every year in Southern Nevada during these months. The percentage of local homes purchased with cash during January was 45.5 percent, up from 40.4 percent the previous month and the highest such percentage ever tracked by
GLVAR.
Consumer sentiment down
A Reuters/University of Michigan Surveys of Consumers said its preliminary index of consumer sentiment for February was 73.7, down from 74.4 in late January but up from 56.3 a year ago. The reading fell short of analysts' median expectation of a reading of 75.0, according to a recent Reuters poll. The survey's gauge of current economic conditions was 84.1 in early February, the highest since March 2008. It was up from 81.1 in late January and above the 81.4 predicted by analysts polled by Reuters. But the survey's barometer of consumer expectations dipped to 66.9, down from 70.1 in late January and short of the 70.9 forecast by analysts. "Few consumers anticipated any significant declines in the jobless rate any time soon, and the majority expected recurrent economic weaknesses over the next several years," Richard Curtin, director of the surveys, said in a statement. "The cumulative financial strain during the past few years, coupled with the fact that the majority stil
l expect no gains in their incomes, work hours or home values in the year ahead, has meant that consumers have remained extremely cautious spenders," Curtin said. The index of consumers' 12-month economic outlook fell to 79 from 84 in late January. The survey's 1-year inflation expectation index eased to 2.7 in early February from 2.8 in late January. The five-to-10-year inflation measure eased to 2.8 from 2.9 late last month.
WSJ - US Debt to keep growing no matter what
The crushing weight of US debt threatens to overwhelm everything the federal government does, even in the short-term, best-case financial scenario -- a full recovery and a return to pre-recession employment levels. The government already has made so many promises to so many expanding "mandatory" programs. Just keeping these commitments, without major changes in taxing and spending, will lead to deficits that cannot be sustained. Take Social Security, Medicare and other benefits. Add in interest payments on a national debt that now exceeds $12.3 trillion. It all will gobble up 80 percent of all federal revenues by 2020, government economists project.
The US debt crisis also raises the question of how long the world's leading power can remain its largest borrower. Moody's Investors Service recently warned that Washington's credit rating could be in jeopardy if the nation's finances didn't improve. Proposed belt-tightening steps by President Barack Obama, including a freeze on some nondefense, nonentitlement spending, would make only a small dent in the mountain of debt. The budget he submitted to Congress this month proposes record spending of $3.8 trillion for 2011. Taxes in next year's budget will support only $2.5 trillion of that spending, leaving $1.3 trillion to be borrowed. The president's budget doesn't take into account future liabilities from the growth of entitlement benefits and is based on projected economic growth that depends on a solid recovery. It assumes Congress will pass all of Obama's initiatives, including spending cuts and tax increases previously rejected by Congress.
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