Reverse Mortgages: A source of cash and Some New Opportunities

This week the housing slump continues with the western states of California, Arizona and Nevada taking the lead in foreclosures. It seems pretty clear that the slump will continue, now that mortgage rates are rising. The cost of money, in the form of higher interest rates, always makes home prices even more out of reach for many people. Consider that the variable mortgages that have been taken out in the last few years are re-setting and that the higher monthly payments will put more supply on the market. The only conclusion is that the markets will continue to slump until this surplus inventory is absorbed and that is now expected to take until 2008.

New foreclosures Rose to a Record level

New foreclosures rose to a record level in the first quarter, with 0.58% of all mortgages entering the foreclosure process, the Mortgage Bankers Association reported this week.
Much of the blame for the increase came from the jump in foreclosure starts in California, Florida, Nevada and Arizona, where speculators likely walked away from homes, the MBA said. Other states keeping the foreclosure inventory rate elevated were Ohio, Michigan and Indiana, where local economies were hurt by job losses.
And, as the Stanford Washington Research Group, part of financial services firm Stanford Group Co., told investors following the report, these states represent about one-third of seats in the U.S. House of Representatives -- helping to keep the issue of mortgage reform legislation on Congress' to-do list this year.
Further, the firm doesn't believe delinquency and foreclosure data will improve before the enactment of reform legislation, including the revamping of the FHA mortgage program and the imposition of restrictions on mortgage underwriting.

MarketWatch

Mortgage Rates Spike as Treasury Yields Rise

Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.74 percent with an average 0.4 point for the week ending June 14, 2007, up from last week when it averaged 6.53 percent. Last year at this time, the 30-year FRM averaged 6.63 percent. The 30-year FRM has not been higher since the week ending July 20, 2006, when it averaged 6.80 percent.

The 15-year FRM this week averaged 6.43 percent with an average 0.4 point, up from last week when it averaged 6.22 percent. A year ago, the 15-year FRM averaged 6.25 percent. The 15-year FRM has not been higher since the week ending July 6, 2006, when it averaged 6.44 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.37 percent this week, with an average 0.5 point, up from last week when it averaged 6.24 percent. A year ago, the 5-year ARM averaged 6.23 percent. The 5-year ARM has not been higher since the week ending July 6, 2006, when it averaged 6.39 percent.

One-year Treasury-indexed ARMs averaged 5.75 percent this week with an average 0.7 point, up from last week when it averaged 5.65 percent. At this time last year, the 1-year ARM averaged 5.66 percent. The 1-year ARM has not been higher since the week ending July 27, 2006, when it averaged 5.78 percent.

Freddie Mac

An Extra Cash Lift Reverse Mortgages Expand to Second Homes
By Tom Kelly

Reverse mortgages for second homes, until now available through a handful of small regional banks, will soon be offered by at least two national lenders.

Bank of America, which recently announced an agreement to acquire the reverse-mortgage business of Seattle Mortgage, is expected to roll out the second-home wrinkle as soon as the purchase is completed this summer. BNY Mortgage, which recently introduced the first jumbo fixed-rate reverse mortgage, also will allow reverse mortgages on second homes under certain guidelines.

"The demographics of our seniors and the upcoming boomer group indicate there are multiple tentacles of financial planning tools that could be used in the long run," said John Nixon, executive vice president and chief operating officer of Reverse Mortgage of America, a division of Seattle Mortgage. "One of those tools would be helping people with significant equity in the second home to help tap that equity to make their lives more comfortable."

Washington Post

Reverse Mortgages

Many older Americans are seeking money to finance a home improvement, pay off a current mortgage, supplement their retirement income, or pay for healthcare expenses.They allow older homeowners to convert part of the equity in their homes into cash without having to sell their homes or take on additional monthly bills.

In a conventional mortgage, you make monthly payments to the lender. But in a “reverse” mortgage, you receive money from the lender and generally don’t have to pay it back for as long as you live in your home. Instead, the loan must be repaid when you die, sell your home, or no longer live there as your principal residence. Reverse mortgages can help homeowners who are house-rich but cash-poor stay in their homes and still meet their financial obligations. NOTE: Reverse mortgages are loans against your house and you do not have to have any income to qualify. You must be at least 62, living in your home as your principal residence and have equity in the home.

To qualify for most reverse mortgages, you must be at least 62 and live in your home. The proceeds of a reverse mortgage (without other features, like an annuity) are generally tax-free, and many reverse mortgages have no income restrictions.

As you consider a reverse mortgage, be aware that:

• Lenders generally charge origination fees and other closing costs for a reverse mortgage. Lenders also may charge servicing fees during the term of the mortgage. The lender generally sets these fees and costs.

• The amount you owe on a reverse mortgage generally grows over time. Interest is charged on the outstanding balance and added to the amount you owe each month. That means your total debt increases over time as loan funds are advanced to you and interest accrues on the loan.

• Reverse mortgages may have fixed or variable rates. Most have variable rates that are tied to a financial index and will likely change according to market conditions.

• Reverse mortgages can use up all or some of the equity in your home, leaving fewer assets for you and your heirs. A “nonrecourse” clause, found in most reverse mortgages, prevents either you or your estate from owing more than the value of your home when the loan is repaid.

• Because you retain title to your home, you remain responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. So, for example, if you don’t pay property taxes or maintain homeowner’s insurance, you risk the loan becoming due and payable.

• Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.

Getting a Good Deal

If you are considering a reverse mortgage, shop around to compare your options and the offered terms. Learn as much as you can about reverse mortgages before you talk to a counselor or lender. It will help you ask more informed questions, which could lead to a better deal.

If you want to make a home repair or improvement or need help paying your property taxes, you may want to find out if you qualify for any low-cost single-purpose loans that may be available in your area. Area Agencies on Aging (AAAs) generally know about these programs. To find the nearest agency, visit www.eldercare.gov Ask the AAA for information about available “loan programs for home repairs or improvements,” or “property tax deferral” or “property tax postponement” programs.

If you are interested in a federally-insured HECM, know that all HECM lenders must follow HUD rules, and that many of the loan costs including the interest rate will be the same no matter which lender you select. Still, some costs including the origination fee, other closing costs, and servicing fees may vary among lenders.

If you live in a higher-valued home, you may be able to borrow more from a proprietary reverse mortgage. But it generally will cost more. The best way to see key differences between a HECM and a proprietary loan is with a detailed side-by-side comparison of future costs and benefits. Many HECM counselors and lenders can provide you with this important information.

No matter which type of reverse mortgage you are considering, be certain you understand all the conditions that could make the loan due and payable. Ask a counselor or lender to explain the Total Annual Loan Cost (TALC) rates, which show the projected annual average cost of a reverse mortgage, including all itemized costs.

Its Your Property

Tenant Screening Mortgages & Insurance Services

Apartment Rentals: Multi Housing Sector is Alive and Well

Where housing will bounce back and when

When it comes to real estate, the questions on everyone's lips are: How low is low, and when's the perfect time to buy back in? hat moment has passed in Seattle and Charlotte — both metros hit bottom in the first quarter of 2006 and have since posted price gains of 12.3 percent and 6.3 percent, respectively, according to National Association of Realtors (NAR) data.

Ripe for investment? Philadelphia and New Orleans. Based on housing inventory and local economic conditions, both should hit price troughs by year's end and bounce back with moderate gains around 4 percent in 2008.

MSNBC

Long and Short-Term Mortgage Rates Reach 10 Month Highs

McLean, VA Freddie Mac today released the results of its Primary Mortgage Market Survey® in which the 30-year fixed-rate mortgage averaged 6.53 percent with an average 0.4 point for the week ending June 7, 2007, up from last week when it averaged 6.42 percent. Last year at this time, the 30-year FRM averaged 6.62 percent. The 30-year FRM has not been higher since the week ending August 10, 2006, when it averaged 6.55 percent.
The 15-year FRM this week averaged 6.22 percent with an average 0.4 point, up from last week when it averaged 6.12 percent. A year ago, the 15-year FRM averaged 6.23 percent. The 15-year FRM has not been higher since the week ending August 3, 2006, when it averaged 6.27 percent.

Freddie Mac

Full Commissions Make a Comeback

The tough market for home sales may be spurring a surprise side effect on real estate commissions: For the first time in years, the average commission rate on closed sales nationwide rose slightly last year.

According to a review of revenue and cost data from hundreds of brokerages by the industry publication Real Trends, the average commission rose by nearly one-fifth of a percentage point last year, to just under 5.2 percent. That turnaround came despite the growing number of real estate firms that offer discounted standard commissions or limited-service options in which consumers pay lower fees but perform some of the tasks traditionally handled by full-service real estate agents.

Washington Post

Rental Properties Can Be a Good Investment

If you own to rent it can be very helpful to understand why renters move and what amenities they choose in their new digs. If we can isolate the major needs of tenants we can begin ot offer those amenities ourselves and we can certainly punch up our new listings advertising by highlighting those amenities for ourselves.

HUD produces a study every two years or so and polls tenants that have moved. Paying attention to our tenants is the best way to create strong interest in our available rentals and to assure good tenant rentention. Keeping good tenants assures a stable cash flow. This allows us to plan with some assurance new business activities and helps us stay on a stable maintenance program.

Why do renters move

According to the US census Bureau about 1 in 3 move every year. With home sales slowing we see rentals gaining strength and in my market, San Francisco, we see apartment sales which are based on cash flow and are bought for investment reasons not emotional reasons (as family homes are often bought).

The first reason given in the HUD study was to begin a family. This means to us that if your tenant has notified you with a thirty notice to terminate and you have a larger unit coming up, you should consider an offer to move them to the larger unit rather than letting them go.

Target Market: new families. If you have a large unit vacancy then you might consider new families as a target market. Please be careful of Federal fair housing laws, you cant discriminate for or against children. Post flyers in laundromats, near family clinics, family birthing classes.

The second reason given for a move was job location.

Target Market: We think it would be good for an owner to be aware of transportation, location to highways and emphasize being close to any large companies or industrial parks in your area. The target market should certainly include employees in these locations and your listings should mention ease of travel or even travel time to large employees. Place flyers near work places with good access to your area, local community papers, internal company newspaper

Another big reason when choosing units is price.
The take away: Know you market. Price you unit or home according to the area and your amenities. If you price too low you may wait years to get to market value for that unit, especially if its rent controlled. If you price too high, you may wait months for a rental causing a loss in the unit.

Action Plan
1. Search craigs list for units in your area with the same size and amenities. We like to use craigs list as a MLS for rentals. Its been very effective for establishing a ball park number.
2. Drive your neighborhood and notice for rent signs. Call them and get a sense of your local market before you price your home or unit.
3. Notice the curb appeal of units in your area.There are many cosmetic upgrades that are inexpensive yet create interest.
a. Try some flowers or landscaping to make the front more attractive at little cost to you
b. Try offering some high tech amenities such as DSL or wireless in the building
c. Offer storage if you have under utilized space such as a basement area
d. Consider installing a revenue sharing plan for either storage units or laundry room. There are companies that will provide the equipment on shared revenue basis.

Fair Housing

Be sure you are aware of fair housing laws as they relate to what and how you can describe a property or you can face a discrimination law suit.

Fair housing laws prohibit making, printing or publishing a notice, statement, or advertisement that indicates any preference, limitation, or discrimination based on a protected class. Advertising must show that all people and classes are being equally considered. Fair housing laws address all types of statements newspaper, radio, magazines, and television. All of the above including vacancy signs are advertising and must not prohibit making any statement indicating a preference or put limits on housing. There are some exemptions but it is advisable to be sure that you are among those exceptions before you advertise

Images in Advertising: If you customarily use advertising with photographs or drawings of people, try to use men, women, children, people with disabilities, and people of all races, nationalities and ages in a way that reflects the population as a whole. A key is to be sure to use images that are representative of society in general.

Language: Avoid using words or phrases that show a preference or discourage anyone because of his or her protected class. If you describe the property itself and not the targeted audience, you are safer under fair housing laws. Make no assumptions about the needs or desire of a protected class that may seem to categorize them.

Marketing to a protected class: Be careful with your language. 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, but it can be mentioned that your unit has access for the disabled or that you are near schools and playgrounds and that families are welcome. There are other exceptions. It is advisable to always be careful and consult with your attorney or apartment association.

Tenant Screening Mortgage & Insurance Services

Its Your Property

Short Sales An Answer For Tough times

Many areas of the country are seeing an alarming increase in foreclosures. There are quite a few options that can minimize the damage done by such a loss. The short sale is one, but beware it is not for everyone.

Home prices: More pain to come: The outlook for home prices this year - already expected to post the first drop on record - got worse Wednesday as an industry group cut its forecasts for sales and prices for 2007.

The National Association of Realtors said it now sees the median price of existing homes sold falling 1.3 percent this year. That's almost twice the 0.7 percent drop forecast just two months ago, and is worse than the 1.0 percent drop in prices it estimated in May. As recently as March, the group was forecasting a 1.2 percent rise in the median existing home price for this year.

Mortgage Rates Rise Again on Growth In Durable Goods Orders: The 30-year fixed-rate mortgage (FRM) averaged 6.42 percent with an average 0.4 point for the week ending May 31, 2007, up from last week when it averaged 6.37 percent. Last year at this time, the 30-year FRM averaged 6.67 percent.

The 15-year FRM this week averaged 6.12 percent with an average 0.4 point, up from last week when it averaged 6.06 percent. A year ago, the 15-year FRM averaged 6.26 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.19 percent this week, with an average 0.5 point, up from last week when it averaged 6.02 percent. A year ago, the 5-year ARM averaged 6.26 percent.
One-year Treasury-indexed ARMs averaged 5.57 percent this week with an average 0.6 point, down from last week when it averaged 5.64 percent. At this time last year, the 1-year ARM averaged 5.68 percent.

SF Chronicle: Usually, when something sounds too good to be true -- it is. But as more people are facing the possibility of foreclosure -- losing both their house and their credit in a process fraught with humiliation -- a little-known transaction known as a "short sale" may seem like a dream come true. Short sales occur when a lender allows a homeowner in default to sell a house for less than the total value of the loan. In most cases, the lender then forgives the remaining portion of the debt.

Short Sales An Answer For Tough times

Well you bought your home during good times and now times have changed. Your property rentals are down or you’ve lost your job and cant carry the mortgage. Worse than that, the markets have changed and you cannot sell for what you’ve paid. Still you have no choice but to sell or foreclose. There is one possibility besides foreclosure and that’s a short sale.

What is a Short Sale?

Its not a Get Out of Jail Free Card

A short sale in the mortgage world amounts to a lender agreeing to accept a pay off less than the original mortgage. For example, if your mortgage was $200,000 and all your property would bring in todays market was $160,000, a lender may agree to accept the lesser amount to clear the debt. That amounts to a forgiveness of $40,000.

Why Would a Bank Say Yes?

It’s a resignation on the part of the lender that this is the best it will get. Banks do not want to foreclose and they do not want to take the property (known as a deed in lieu of foreclosure). They are not in the property management business and foreclosure look bad on the books. It may even affect their ability to borrow if the lenders have too many foreclosures on the books, its not a stretch to wonder whether they have been prudent lenders. There are down sides to this procedure and it may not be the best alternative for you. 1. If their is a second mortgage on the property, its not likely the second lender will agree. 2. The IRS will consider the $ 40,000 of mortgage debt forgiven by the bank as gross income and the tax bite may be prohibitive. You would need to talk to your adviser (just when you can afford it right?) to confirm that the tax implications of a short sale make sense for your situation. 3. You cant fake this, you must truly be destitute. The seller will need to be in default. That is to have stopped making mortgage payments. 4. You must clearly have no equity left in the property for the lender to agree to accept less than the full debt owed. 5. It will be reported to the credit reporting depositories and it will remain on your credit report for 7-10 years. It’s a derogatory

What the Buyer Needs to Know

1.You must have a firm offer before you ask the lender to approve the sale. 2.You do not have a deal until the lender approves your deal. The agreement with the seller is not the final agreement. The lender must agree to the purchase. It can be wise to create a contingency here requiring the lenders to respond within a specific time frame. This will give you a reason to back out if its dragging on. 3.The deal can be held up because lenders often will want to re-negotiate the commission structure, even though you have signed a listing agreement with your agent. 4.You can expect be offered the property “as is”. This can be ver
y a costly so we think you should have the property inspected by a building inspector, home inspection and a termite report. If you cannot negotiate the “as is” component of the sale, cover yourself by knowing what you are buying. Make the deal contingent on your approval of the properties condition.

5. Even if a bank approves a short sale in principal, they make not accept any of the offers or they may simply bury the offer and never respond.

Why Do Banks Do It

1.Banks do not want property they want cash flow.

2.It may cheaper and less time consuming for the bank than a foreclosure process

Why Do Owners Do It

Although its reported to the credit agencies as a derogatory, its less severe than a foreclosure or bankruptcy and may be a bit kinder on your FICO score. If you are looking for a short sale deal you might start with the lenders “Lis Pendens” list. This is where lenders start the foreclosure process.

Tenant Screening Insurance and Mortgage Services

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