Successful Tenant Screening

Markets are on a roller coaster with some areas and asset types doing better than others. First, a notable comment by our Federal Reserve Board.

Bernanke: No upset from Mortgage Woes: Federal Reserve Chairman Ben Bernanke said Thursday that he did not believe the growing number of mortgage defaults would seriously harm the economy. “We believe the effect of the troubles in the sub prime sector on the broader housing market will be limited and we do not expect significant spillovers from the sub prime market to the rest of the economy or to the financial system,” Bernanke said. NOTE: The reason this is so noteworthy is that housing is such a major part of the economy, that if mortgages were to really get into trouble it threatens the banking system. Try getting a loan for anything if the banks pull back due to large quantities of debt. Good to hear that its not that bad. Of course, the truth is more likely, the trend has yet to play itself out, but we all hope its not too bad and we arnt forced into a recession.
To give you an idea of how hard it is to generalize heres two more:

New Home Sales Soared 16% As Prices Declined in April
By Jeff Bater
New-home sales soared in April, an unexpected surge marking the biggest climb in 14 years, according to a report that showed declining inventories and signaled hope for the long-suffering housing sector.Separately, demand for expensive goods rose mildly in April, according to a government report Thursday that also showed capital spending by businesses grew again.
Sales of single-family homes increased for the first time in four months, rising by 16% to a seasonally adjusted annual rate of 981,000, the Commerce Department said Thursday. March new-home sales decreased 1.4% to an annual rate to 844,000, a figure revised down from an earlier estimated 858,000. Sales fell 3.8% in February and 13% in January. Year-to-year, new-home sales were 11% lower than the level in April 2006. NOTE: Sellers Market?

Existing-Home Sales Fell in April As Sub prime Lending Drops Off
By Jeff Bater
Existing-home sales retreated in April, dropping to the lowest pace in nearly four years in another negative sign for the slumping housing sector.
Home resales fell to a 5.99 million annual rate, a 2.6% decrease from March's revised 6.15 million annual pace, the National Association of Realtors said Friday. March's rate was originally estimated at 6.12 million.
The median price for a home previously owned was $220,900 in April, down 0.8% from $222,600 in April 2006. The median price in March this year was $217,400.
NAR senior economist Lawrence Yun said he has anticipated slower demand because many subprime-loan products have dried up. NOTE: Buyers Market?

Many of us that have bought now realize we are landlords and many of us bought knowing we would be landlords. Its not so very bad to own and manage. But you must realize that the quality of our new career depends on who we have as tenants. One bad tenant can really ruin an experience. So, its most important to screen out the bad ones before you sign on for what could be a multi-year relationship.

Secrets to Successful Tenant Screening

One of the most important decisions you can make is who you allow into your life as a tenant. This can be a very long term relationship and in many parts of the country, frankly, the tenant has the upper hand.

We know of one tenant that has been in the samew unit for almost 25 years and has been to the local rent board dozens of times and small claims court almost as many times. He has made a business out of knowing the law and applying it successfully. The landlord is now so afraid of him that he complyies wilh almost all of his wishes. The file must weigh 10 pounds.

Do not rush into these decisions, it is much better to wait for the right person than to be pushed to a decision because you have to cover expenses until its rented.

Most of our decisions are based on how we feel. its very important to have a basic set of rules you always apply equally. This will keep you out of trouble.

Always check the application

1. Time/Date Stamp: It may be helpful to screen your applicants on a first-come, first-served basis, then when you reach qualified applicants who meet your screening criteria you may offer the unit to the first applicant that qualifies. It's a good idea to date and time stamp the applications; then you know the exact order in which you received them.
1. Attach all written commentary to the application.
2. Keep the commentary objective and rules based. Create your owdn scoring system or use the system provided by many professional credit reporting agencies.
3. Never write on the application itself. A Fair Housing law suit may look at notes or underlines and highlights as code that you use to somehow discriminate.
4. No personal commentary at all (keep that in your head).
5. Be sure to have a proper signiture on the application that allows you to llook into fcredit and call prior landlords. Never look into an applicants personals without a completed and signed application. You must have permission to screen.

Fair Housing

What is it?
Membership in one of seven protected classes: race, color, religion, sex, national origin, disability, and familial status are the protected classes that Fair Housing issues protect.

Federal law prohibits housing discrimination based on race, color, national origin, religion, sex, familial status and physical/mental disability.States have added a host of other law. Be syre to know the law in your area. There are professionals who study fair housing and state law and look to catch you in a mistake and sue. Its a living for some.

Some Basics:

1. Avoid using words or phrases that show a preference or discourage anyone because of his or her protected class.
2.Always describe the property itself and not the targeted audience
3. Be careful with your language.
4. Do not make assumptions about the need of a group of people. It is best to objectively describe the property and allow the prospective applicant to determine their needs
5. In a sentence its about differential treatment

Tenant Screening Mortgage and Insurance Services

Its Your Property

How to Use the Internet to Shop Your New Home

Before we offer some insights into the internet as a tool for search and shop a home, we cruised the internet and found some interesting news that may help in yoour consideration your next home.

Mortgage Rate Daily: Rates Remain Relatively Stable. Again Applications were down, decreasing 0.8 percent on a seasonally adjusted basis and 0.6 percent on an unadjusted basis from the previous week. The application volume was up 13.8 percent from the same week in 2006.

Refinancing as a share of all mortgage activity was up to 42.1 percent from 41.8 percent a week earlier while the share of ARMs fell yet again from 18 percent to 17.4 percent.

Associated Press: Wildfire Hotspots Spook Insurance Cos. Spooked by devastating wildfire seasons, the nation's top insurers are inspecting homes in high-risk areas throughout the West and threatening to cancel coverage if owners don't clear brush or take other precautions.

The inspections have angered homeowners and watchdog groups that accuse the companies of trying to cut risk at the expense of customers, even while industry profits soar.
The requirements can range from clearing brush to cutting down trees or even installing a fireproof roof.

Real Estate Journal: Product Taps Home Equity Without Taking Out Loan.
By James R. Hagerty
A small San Francisco investment company, backed by a subsidiary of insurer American International Group Inc., is rolling out a product that lets homeowners tap into their home equity without moving or taking out a loan.

The company, REX & Co., offers to pay homeowners cash now in exchange for a right to part of the proceeds when the home eventually is sold.
www.realestatejournal.com/buysell/mortgages/20070511-hagerty.html

The owner of a home valued at $750,000 might obtain $100,000 in cash by giving REX a 50% share of the change in the home's value. If the home sold for $850,000, REX would receive $150,000 -- the original $100,000 invested plus half of the increase in value. If the home sold for $650,000, REX's share would be $50,000, half of what it had invested

Washington Post: The services of a buyer's broker don't come free, even though buyers aren't asked to take pen to checkbook to pay for them. The good news is there are a growing number of local real estate agents offering to work with buyers for less in the form of rebates.
"Maybe the agent is new or inexperienced and needs the business," Odio-Páez says on his Web site. "Maybe the firm is virtual and can't open homes up for you, so you'll have to do it yourself. But when you focus on getting a rebate, you will always be giving something else up." He also warns: "Not negotiating the best deal could also cost you much more than you'll save by getting a rebate."

How to Use the Internet to Shop and Search Your New Home

According to NAR, which has a vested interest in following this new trend very carefully, 9 of 10 home buyers still use a real estate agent in the traditional way. However NAR, goes on to note that in 1995 only 2% of buyers used the net to search for a home but by 2005 that figure jumped to 77% and has most certainly increased since then. This is not necessarily bad news for the broker/agent. It actually provides a lot of information now including photos, maps demographics and all kinds of helpful information to a buyer.There is so much choice now for a new home buyer to search easily that it has been a boon to the industry as well as the consumer.

However, when the internet delivers information freely to the consumer, that was previously in the hands of the professional, the edge that the professional has is diminished and the commissions soon begin to drop. The 6% standard commission, we believe, is being challenged and that all buyers and sellers can now get a better deal. That commission has always been negotiable and the timing has never been better for the consumer to get a better deal.

For example discount realtor's such as Zip Realty will offer services for 4%. That is quite a savings and there are new business models challenging even the discount brokers. Redfin is an internet web site that is offering to rebate back to the buyer 2/3's of the commission. Normally, the 6% commission is split between the buyer and seller's agents. Redfin will keep just 1% of that commission for transacting the house and they will even find you a loan.

If the old adage holds true that you get what you pay for, are they really the good deal they appear to be? We don't think there is one answer for all people here, some people will be very happy with the service and others will not have a good experience. Either way, its clear that the internet is providing new choices for the consumer.

How to Shop Online

1. MLS. Its the old standard and trustworthy.
2. Trulia.com A new model for home buyers in search
3. realtors.com 4. freddie mac has a listing og homes for sale 5. forsalebyowner.com offers listing for sale without the use of a broker agent. This is a great way to save the commission, but please, only for the very knowledgeable.
6. HUD has a listing of HUD homes for sale
7. craigslist is a community bulletin board that lists homes for sale
8. All banks have a stable of foreclosed homes for sale, often a a great discount. Use a professional here, unless you understand the risks.
9. foreclosure.com is another site with foreclosed homes for sale
10. All the broker houses such as Caldwell Banker, Provident etc. all will provide good search tools to help you find your new home
11. Any individual agent associate web site will offer a listing of homes represented
12. housingmaps.com is another interesting new tool for home buyers and sellers

There is so much now on the internet, just sit back and take the tour.

Some Financing Resources

Veterans Administration home loan program,
Affordable housing at Freddie Mac,
Your Property Path
CICA programs for affordable housing, Housing Assistance Council

Tenant Screening Insurance & Mortgage Services

How to Hire an Insurance Agent, Find a Good Home Insurance Policy and Save Money

This week we wanted to explore some ideas on how owners and managers of property could keep fixed costs down, looking into operations is a good way to put more money back into your property. But first, lets look at some important developments this week.

Freddie Mac Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.15 percent with an average 0.5 point for the week ending May 10, 2007, down slightly from last week when it averaged 6.16 percent. Last year at this time, the 30-year FRM averaged 6.58 percent.

The 15-year FRM this week averaged 5.87 percent with an average 0.5 point, unchanged from last week when it averaged 5.87 percent. A year ago, the 15-year FRM averaged 6.17 percent.

MSNBC Gloomy outlook from top U.S. homebuilders. “Twenty months into this housing downturn, we continue to face difficult conditions in most of our markets,” Toll’s chief executive officer, Robert Toll, said in a statement."

Subprime mortgages had helped drive the housing market from 2005 through last year. As the housing market reached a crescendo, home loans became more accessible for people with poor credit.

As defaults rose, lenders started pulling back on the easy money. A survey of bank loan officers by the Federal Reserve showed that the net percentage of banks tightening standards for mortgage loans jumped to 16.4 percent in the firblog nest quarter from 1.9 percent at the end of 2006.
According to Celia Chen, director of housing economics at Moody’s Economy.com, the housing correction is expected to last until the end of 2008, with prices falling by 3.6 percent this year and 2.9 percent next year. The market peaked in mid-2005.

NPR New Census figures show that the percentage of vacant homes has risen to its highest level in four decades. Marketplace 's Steve Tripoli talks with Madeleine Brand about how this could affect housing prices. NOTE: It takes quite a while for a property to go from default to sale. Much of the oversupply that will enter the market is in front of us. The mitigating factor is that neither the banks want to handle property nor does the Fed want to create a housing crash. This would threaten the banking system, cause loan parameters to tighten and slow the economy. We have two blog articles on foreclosures and the help available, scroll down to get names and numbers of some of the programs available

Bloomberg TV The oversupply of vacant homes is beginning to affect the rental market. it rose to 61% and this is according to Real Estate companies. the increase is due to record amount of homeowners who can't sell condominiums and houses. nationwide, 2.8% for houses for sale were unoccupied. the highest since back in 1956.

Housing Tracker This is a blog that tracks Both home asking prices and inventory are tracked for about 55 city real estate markets. We note that of the 55 cities tracked inventory has increased in 35 cities. The highest inventory increase wer Atlant folloed by Cincinnati and then San Jose. Only Atlanta experienced a price drop. Keep in mind these are list prices, the sales priceis not reflected in these numbers. But clearly, it shows that markets are uneven and that there are uptrends within the major slowing or down trends. We think this is good news and points to the diversity of markets, always a good thing.

How to Hire an Home Insurance Agent, a Good Home Insurance Company and Save Money Too!

Home insurance is a fixed cost and better property looks to lower your bills. Here's how you can judge a good company and compare prices and find a good agent to represent you. All the while saving money! Your Property Path has done some research into how to choose a good insurance company and a good agent.

How to Find a Good Agent

Be sure you have choices There are two kinds of agents. A captive agent will only represent one company. All his solutions to your problem will be solved by recommendations from his company. Since No company has a product line that is the best in every area you use an agent or agency that can represent a variety of companies. You are likely to find better price and product with more choice

Your Property Path has developed a simple procedure that will help you find the best product mix at a good price.

Interview a few agents and ask some basic questions.

1. How long have you been in this business
2. Can you represent many companies
3. How do you get paid
4. Has your license ever been suspended

The Your Property Path Procedure

1. Insurance premiums can vary greatly. Use the Shop Rates quote button on www.yourpropertypath.com to get Insurance Agents to compete for your business. When agents compete for your business you win! Then follow this process to assure you are getting a good price with a strong home insurance company that you can trust.

2. Use the response list of insurance company's from your competitive quotes at to begin to find your best price and strongest company available.

3. Verify agent or Brokers license. The License Registry is an affiliate of the National Association of Insurance Commissioners (NAIC). All complaints, suspensions arbitrations and other issues are here. Be sure to get your agents Insurance license number, it is often on business cards or letterhead

a. National Insurance Producer Registry (NIPR)

b. National Association of Insurance Commissioners in Your State. Go to the state web map to find information about your agent.

4. Check for Consumer Complaints. Your Insurance Company is as good as its ability and its willingness to pay. Don't find out about how your Insurance Company does business after you need it to perform. Check for Insurance Company Complaints

a. National Association of Insurance Commissioners and research the number and type of consumer complaints outstanding against a company.

b. Check your local Better Business Bureau They have an area where you can check out an organization. Too many complaints and you should go elsewhere, even if you like the agent.

5. Check the Company's Financial Ratings. Your Insurance Companies ability to pay is everything. Shop wisely and you will be better protected if disaster strikes.

When you use the comparison shopping tool at www.yourpropertypath.com. You can get four to six competitive bids from agents working for different companies in a matter of minutes at no cost to you. Comparison shop the offers and let agents really compete for your business. Shop for good rates and strong financial s and then check the company's business practices.

How to Find a Good Insurance Company

The financial score. All insurance policy's are a promise to pay based on the assets of the insurance company. Thats why a good financial rating is so important.

AAA: This is the highest rating given and the company's ability to pay is very strong.
AA: Standard and Poors tells us the difference between AAA and AA is slight
A: The company is subject to economic swings, perhaps it carries high debt or has made some riskier insurance bets. The company ability to meet obligations is still strong
BBB: This rating is reserved for "adequate". The company is more likely to run into difficulty during hard times.

Its easy to see that the financial ratings of a companies ability to pay under some circumstances could translate into a longer time before you see a check or really narrow definitions applied to problems you have. Stay with the higher ratings.
Compare similar coverage using a AAA company (likely the most expensive) against AA and single A company.

Tenant Screening Insurance & Mortgage Services

Its Your Property

Foreclosure Fears……..Help is on the Way

Part Two

This week we wanted to take a closer look into the results of the sub prime collapse and how it will affect so many of us. We read that 2 million homes have now foreclosed and we wanted to offer some better understanding of foreclosure. We crawled the web to find some high quality credible stuff on the help now jelling over the pain of 2 million foreclosures and rising.
But first lets take a short look at he current markets

MarketWatch: Mortgage applications up as yields fall. The Mortgage Bankers Association (via MarketWatch) said that mortgage applications were up about 3% and almost 20% over last year, indicating healthy activity and helping balance the view that the sky is falling. Obviously a lot of folks still want real estate. It is interesting to note that at the same time yields fell making homes just a little easier to carry.

National Multi Housing Council: Investment Returns on Apartments. Demographic trends suggest that demand for apartment living should continue to moderately. In 1990 the value per square foot of a multi family property was $57.07 and by 2003 it had grown to $97.02. When home sales are flat to down rents tend to be strong and apartment units are priced as a multiple of rent rates or cash flow…..strong markets for apartments. There is an interesting article at yourpropertypath.com about the new amenities available and how an owner might increase rent rates and fill vacancies faster and present a modern face.

NAHB: New Home Sales Tick Up in March in Uncertain Climate. “The increase in home sales for March was quite disappointing, considering the weather-related weakness recorded earlier this year,” said David Seiders, chief economist for the National Association of Home Builders (NAHB).

The sudden tightening of mortgage conditions has had a profound impact on the housing market, and it is hard to know how far the credit pendulum will swing,” Seiders said. “NAHB’s forecast still shows improvements in home sales and housing production by the second half of this year, although these forecasts are subject to an unusually wide range of risk.”

"Since the housing boom went bust last year, sales and prices have gotten hammered by a glut of homes on the market. While home inventories shrank 1.6 percent last month from February and are now down about 3 percent from the record highs hit last July, they're still up 17 percent from a year ago."

Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property immovable property due to the owner's failure to comply with an agreement between the lender and borrower called a "mortgage or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property.

WikipediA

What is it: Basically, the owner cannot pay the bank or lender and a series of options come into play.

1. The lender can sell to another and avoid the foreclosure proceedings, since it can affect credit.

2. The owner can call one of the home counseling agencies and see what kind of deal can be made to keep the owner in the house and help buy time. (see Your Property Blog of April 21 2007)

3. The lender can buy back the property, often for the value of the mortgage and sell it in the open market

4. If a buyer does not step up and the lender does not want it then it goes to auction and is for sale to the public, generally at a discount.

Help is on the Way…

NACA: issues a press release indicating they will offer a billion dollars to rescue victims of predatory lending. There is more information on the NACA site that may be helpful

Fannie Mae: has produced a foreclosure workout guide they insist you should read before you do anything. NOTE: They can be reached by calling 916.408.0494 for immediate assistance.

The Your Property Path web site has a good deal of informative articles on mortgages and the April 21 blog that is part one of this series that may be helpful.

What if You Own Now…

The Real Estate weekly on the MarketWatch web site considers the impact of a foreclosed home in your neighborhood and what it does to the value surrounding homes. If you are in an area that is experiencing foreclosures near your property there are some steps you can take to protect your home values. It can be found located here

The Your Property April blog pointed some interesting articles for those owners who find themselves new landlords because they cant sell at their price. Consider renting and managing your property. Begin by talking to your local apartment association since the laws can be difficult. It may even make sense for you to consider hiring a property manager. We have a discussion on how to hire a property manager at yourpropertypath.com that will go a long way towards helping you figure out if that is the right thing for you. As always, good luck!

Its Your Property

Property Management and Keeping Costs Down

In keeping with last weeks blog on how to stay in your home we are going to take a quick view of the markets this week and then offer some articles on how to maximize your tax benefits and how to manage property if you now realize you want to rent rather than sell until the dust clears.

First a quick look at the markets this week:

MSNBC: Housing worst isn’t here yet. According to Richard Syron, chairman and CEO of Freddie Mac “The mortgages written in 2006 in the sub prime market are probably the most troublesome. They haven’t hit the reset point yet on interest rates.”
Syon went on to say "These steps are focused on helping individual people, and it will help the market. But once you get one of these market dynamics going, you don’t reverse them without it taking some time .... Theyve got to play themselves out.” NOTE: This is the best wisdom on changing markets yet! You can talk about it all day long....but trends play out according to changing circumstances and can be inconsistent.

International Herald Tribune: The S&P Housing index was released and it is an index based on twenty cities. The famed Robert Schiller is involved in crating this index and "He said the numbers indicate "a widespread downward trend" that started at the end of 2006 and has extended into the beginning of this year." How Steep a Downturn? The index looking at ten major metro cities notes a 1.5% decline in sales of single family homes. Seattle and Portland are the lucky ones with modest price increases.

Freddie Mac: Weak home sales are keeping a lid on mortgage rates. The 30-year fixed-rate mortgage (FRM) averaged 6.16 percent down slightly from last week. Last year at this time, the 30-year FRM averaged 6.58 percent. The fifteen year FRM this week was 5.87 and down slightly form the week before.

Now for the good news: Seattle, Portland and Dallas saw rising prices... There are always minor trends within a major trend...in other words its still a local market. Relief is on the way, to be sure it isnt enough to turn a trend but we hope to keep enough bad news out of the markets to keep this downturn moderate and cyclical. Here are some of the important institutions helping to keep people in their homes:
1. Washington Mutual Inc., one of the country’s largest financial institutions, said it will refinance up to $2 billion in sub prime mortgages to help borrowers avoid default and foreclosure.
2. Citigroup and Bank of America have pledged $1 billion of mortgage financing to help sub prime borrowers who are facing the loss of their homes
3. Freddie Mac will buy as much as $20 billion in fixed-rate and adjustable-rate mortgages to help borrowers with high-priced loans keep their homes. Hopes are this should be in place by mid summer.

What if You cant sell Now

If your home or condo has lost value an you are willing to wait the market out, then its a good time to rent. generally, when sales are down rentals are in more demand since people have to live somewheres. Strong rental markets are making rental property increasingly lucrative. Keep in mind that managing property is really work. You have to begin to see your home as a cash flow investment and rent wisely using good tenant screening policy.
Renting requires a working knowledge of your local rental markets and a good understanding of how to price your rental so that it rents quickly and at the right price. Too low and you will rent very quickly at at a loss....too high and it will sit on the market and you will lose months of valuable rental income.

Good Property Management Keeps Costs Down

Focus on fixed costs are where we think successful property management is made. Mortgages and Insurance are necessary but prices vary considerably. Always comparison shop these products and have agents bid against each other and keep more of your money. Yourpropertypath.com is a good place to get bids and have agents compete for your business

Taxes and tax credits are areas where savings can be had but you must know whats available. We found a few good articles that can serve as a tutorial. Please do take a look:

A Tax-Break Tutorial For New Homeowners: By Bill Bischoff. While the cost of renting is generally a nondeductible expense (except for when part of the home is used for business purposes), homeowners can claim an itemized deduction for interest on up to $1 million worth of mortgage debt used to acquire or improve their principal residence. Ditto for interest on up to $100,000 of home-equity debt secured by their principal residence. Real-estate property taxes can be claimed as an itemized deduction, too. You also can generally deduct any points you paid (or the seller paid on your behalf) to take out the mortgage"

A Primer on Homeowner Tax Breaks: Now for the tax-law catches your realtor probably never told you about. Don't worry: What's detailed below probably won't have you running back into the arms of your landlord. But it just might give you a more realistic expectation of how home ownership will affect your future tax bills.

Mortgage insurance Gaining Steam: "This time next year, some homeowners who pay mortgage insurance will have an extra deduction on their federal income tax returns."
"In recent years, many borrowers have opted to get around using the insurance by taking two loans: a primary mortgage as well as a second, "piggyback" loan in the form of a home equity loan or line of credit. The equity from the second loan fulfills the down payment of the first, and there are tax breaks on the interest of both loans.
But many piggyback mortgages have variable rates that fluctuate based on the prime rate, which has risen over the last year. The set rate for mortgage insurance has become attractive to homeowners aiming for predictable loan costs, Katkov said. There's also the lure of simplicity that the mortgage insurance offers, since borrowers only need to deal with one set of loan documents in that option, he added. "

Its your property

Forclosure Fears....Help is on the way

This week we wanted to offer information for those who are having trouble making the mortgage payments. The sub prime markets have collapsed with fifty lenders going belly up or closing shop in the year. Millions of homeowners will be affected and foreclosures are up substantially.

MarketWatch: Quotes an interview with Goldman Sachs which takes the observation “Median California home prices are still creeping up, and the state's strong employment trends should support the real estate market. But Goldman is worried that surging prices in the state in recent years weren't driven by traditional factors such as strong employment and income growth. Instead, the bank reckons an increase in ARM mortgages offered to borrowers who were already stretching to buy high-priced homes fueled the boom”.

In an effort to keep the lid on this the institutions are mobilizing and help is on the way.

Freddie Mac: Freddie Mac today announced that it will purchase $20 billion in fixed-rate and hybrid ARM products that will provide lenders with more choices to offer sub prime borrowers. The products, currently under development by the company and slated to be introduced by mid-summer, will limit payment shock by offering reduced adjustable rate margins; longer fixed-rate terms; and longer reset periods.

Federal Reserve Board: They issued a press release “reminding their institutions that existing regulatory guidance and accounting standards do not require immediate foreclosure on homes when borrowers fall behind on payments. In addition, under the Home ownership Counseling Act, institutions are required to inform delinquent borrowers about the availability of home ownership counseling.”

The Mortgage Bankers Association: They issued a statement “committed to keeping Americans in their homes and, to that end has partnered with NeighborWorks® America, a national nonprofit organization created and supported by Congress to provide financial support, technical assistance and training for community-based revitalization efforts…
“linking homeowners in danger of foreclosures to a free counseling hotline (888-995-HOPE) provided by the Home ownership Preservation Foundation,”

HUD: The Fed requires that the customer be told about the availability of home ownership counseling offered by the creditor and also advise the customer about home ownership counseling information available through HUD. The toll-free telephone number (1-800-569-4287) provides information about home ownership counseling. The HUD web site
also provides a list of counselors by state.

FORECLOSURE:

What is an ARM? Much of the sub prime market consists of ARM’s or adjustable rate mortgages. Lenders generally charge lower initial interest rates for ARM's than for fixed-rate mortgages, against these advantages, you have to weigh the risk that an increase in interest rates would lead to higher monthly payments in the future. Its a trade-off you get a lower rate with an ARM in exchange for assuming more risk.

Home owners may face when seeking help from the Government with their foreclosure problems, because each agency has its own rules for qualifying people. Among them are whether the borrower is employed, how much cash is on hand and more..

If this is all new to you then half the battle is getting the language. A glossary of foreclosure terms and a glossary of mortgage terms will help you get the process faster.

Its your property

A Look at the Housing Markets

Well...the jury is still out on what the sub prime mortgage melt down will do, but you know its serious when the IMF does a study.

Some observations:

IMF: Happily, they concluded that the sub prime problems were likely to be contained to that area. ""Major dislocation still appears to be a low-probability event," If it were to spread the fear is that banks would tighten credit even for their best customers. That would make it harder to borrow and that's a slowdown.
FRB: Fed Chairman Bernanke told congress that its likely that this can be contained. Now, this doesn't mean a crash or even a severe correction.
NOTE: At this point all we can conclude is that there is a slowdown in the real estate markets...that has already happened. Changing markets are always murky and it takes quite a while to actually figure out what is happening, predictions aside we usually get it after the fact.
NAR: They predicted this week that prices would drop by only 0.07 percent form 2006 levels and sales of existing homes will drop 2.2%....thats digestible.
NOTE: Of course, there is real pain out there. One of the major new home builders. DR Horton Inc reported a drop of 37% of new home orders in just the last quarter! Seems the new home sector is in much more dire straights.
Freddie Mac: Interestingly the 30 year mortgage was 6.49% last year and this week its 6.17%...Just as it should be. When markets slow money cost should drop eventually creating demand again.
SF Chronicle: Govt to the rescue! "The Federal Housing Administration could be revamped to refinance mortgages in danger of default, the JEC's report said, citing a proposal by a Harvard professor under which the housing agency could oversee a "rescue fund" that would restructure failed or failing mortgages. Aid could also be provided to community organizations or banks that work with borrowers to refinance loans."

Whats Ahead....

We think the markets have changed and the big question is how much. Markets such as Detroit or Richmond in California may be harder hit, since the sub prime mortgages help poorer people into homes to a greater extent. Although, much can be said for other over extended markets in high priced California. The same home builder DR Horton reported that the biggest decline in new hoe orders was 59% in California.
Be a cautious buyer. Don't overextend. Shop well and mind your fixed costs. Shop your insurances and mortgage rates. When shopping for the best mortgage, keep a close eye on extra costs such as points or fees.

• Ask each lender and broker for a list of its current mortgage interest rates and whether the rates being quoted are the lowest for that day or week.
• Ask about the loan's annual percentage rate (APR). The APR takes into account not only the interest rate but also points, broker fees, and certain other credit charges that you may be required to pay, expressed as a yearly rate.
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• Check your local newspaper for information about rates and points currently being offered.
• Ask for points to be quoted to you as a dollar amount rather than just as the number of points so that you will actually know how much you will have to pay.

Well What If You Now Own...

Management Tip: A good manager pays a lot of attention to the variables in ownership. Vacancy's are one of those areas that can be controlled to keep your unit full at a good rent rate. It begins with good tenant screening. Here are some tips:

• Have potential tenant complete and sign a standard rental application to provide personal and employment information and authorize the landlord to obtain a credit report and background checks. Obtain the applicant credit report through a Credit Reporting and Tenant Screening Agency
• Do call prior landlords. They are your best, most honest source for information regarding on your prospective tenant. Present landlords, wanting to get rid of bad tenants may not be most objective source for you.
• Set a minimum income requirement as a multiple of the rent. We are comfortable with 3X the gross income as a qualifyer.
  
• Credit Rating: Consider a minimum score, a minimum of late pays, income to rent ratios
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Its Your Property