HouseBlogUSA.com

2011-02-26T22:01:00.002-05:00

High-End Real Estate Provides Unique Value

RISMedia

2011-02-26T21:59:00.002-05:00

Low Costs and Spring Fever Expected to Spur Home Buyers

RISMedia

2010-11-08T15:27:00.000-05:00

Press Release

Weichert Raises Funds for Susan G. Komen For the Cure

11/4/2010

Printable Version

MORRIS PLAINS, N.J. – Employees at the Weichert corporate headquarters in Morris Plains recently completed their annual fundraiser to raise money for the Susan G. Komen Passionately Pink for the Cure™ event. All together, the Weichert Family of Companies employees raised nearly $6,000 in October to support the North Jersey affiliate of Susan G. Komen for the Cure.

“We’d like to thank our employees for their generosity and commitment to Passionately Pink for the Cure™,” said Denise Smith, senior vice president for Weichert. “We are committed to helping make a difference and assist in finding a cure for a disease that impacts the lives of many.”

Up to 75 percent of the net income from each Komen domestic affiliate is dedicated to fighting breast cancer in that affiliate's community. Every year, Komen affiliates award grants to local hospitals and community organizations that provide breast health education and breast cancer screening and treatment programs for medically underserved women. Remaining net income, minimum of 25 percent, supports the Komen Research Grant Program, which funds groundbreaking breast cancer research and scientific programs around the world.

Passionately Pink for the Cure, a year-round fundraising and education program, encourages companies, schools and organizations to share in the promise of finding a cure by supporting breast cancer research, education, screening and treatment. Since 1982, Susan G. Komen for the Cure has been a global leader in the fight against breast cancer through its support of innovative research and community-based outreach programs.

For more information about Passionately Pink for the Cure or to make a donation to Susan G. Komen for the Cure, please visit www.komen.org.

Weichert has nearly 18,000 sales associates in approximately 500 company-owned and franchised sales offices in key markets throughout the U.S. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. For more information, call Weichert's customer service center at 1-800-USA-SOLD or visit Weichert's Web site, www.weichert.com. Each Weichert franchised office is independently owned and operated.

2010-11-08T15:25:00.000-05:00

Leading French Real Estate Network Visits Weichert

MORRIS PLAINS, N.J. – Weichert, Realtors recently hosted ORPI, the largest real estate network in France, for a business exploration and idea-sharing event. The meeting, which took place at Weichert’s corporate headquarters in Morris Plains, was attended by ORPI executives and board members as well as senior personnel from Weichert, Realtors, Weichert Financial Services and Weichert Relocation Resources, Inc.

“We are honored that ORPI asked to meet with us to learn from our approach to real estate and explore ways we can work together,” said Jim Weichert, president and founder of Weichert, Realtors. “Having the chance to discuss real estate and gain perspective from professionals who sell homes not only in a different market but a different country was greatly beneficial to both organizations.”

During the meeting, the two groups explored ways they can share international leads among the organizations. The attendees also discussed the impact that the recent economic downturn had on their respective markets, exchanged thoughts on the role of the internet within the real estate process and shared best business practices.

Founded in 1965, ORPI is the oldest and largest real estate network in France. The network includes more than 1,200 brokerage offices and some 6,000 professionals who provide real estate services under the OPRI brand name. More information about ORPI can be found on their English language Web site, www.orpirealestate.com.

Weichert has nearly 18,000 sales associates in approximately 500 company-owned and franchised sales offices in key markets throughout the U.S. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. For more information, Weichert's customer service center can be reached at 1-800-USA-SOLD or at Weichert's Web site, www.weichert.com. Each Weichert franchised office is independently owned and operated.

2010-11-08T15:22:00.001-05:00

MORRIS PLAINS, N.J. – Employees at the Weichert corporate headquarters in Morris Plains recently completed their annual fundraiser to raise money for the Susan G. Komen Passionately Pink for the Cure™ event. All together, the Weichert Family of Companies employees raised nearly $6,000 in October to support the North Jersey affiliate of Susan G. Komen for the Cure.

“We’d like to thank our employees for their generosity and commitment to Passionately Pink for the Cure™,” said Denise Smith, senior vice president for Weichert. “We are committed to helping make a difference and assist in finding a cure for a disease that impacts the lives of many.”

Up to 75 percent of the net income from each Komen domestic affiliate is dedicated to fighting breast cancer in that affiliate's community. Every year, Komen affiliates award grants to local hospitals and community organizations that provide breast health education and breast cancer screening and treatment programs for medically underserved women. Remaining net income, minimum of 25 percent, supports the Komen Research Grant Program, which funds groundbreaking breast cancer research and scientific programs around the world.

Passionately Pink for the Cure, a year-round fundraising and education program, encourages companies, schools and organizations to share in the promise of finding a cure by supporting breast cancer research, education, screening and treatment. Since 1982, Susan G. Komen for the Cure has been a global leader in the fight against breast cancer through its support of innovative research and community-based outreach programs.

For more information about Passionately Pink for the Cure or to make a donation to Susan G. Komen for the Cure, please visit www.komen.org.

Weichert has nearly 18,000 sales associates in approximately 500 company-owned and franchised sales offices in key markets throughout the U.S. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. For more information, call Weichert's customer service center at 1-800-USA-SOLD or visit Weichert's Web site, www.weichert.com. Each Weichert franchised office is independently owned and operated.

2010-06-11T14:06:00.003-04:00

Weichert.com offers a fresh take on search process

Clifton Journal

MORRIS PLAINS – Weichert.com, the highly-trafficked website for Weichert, Realtors, has made several enhancements to provide a simpler, more personalized experience for consumers searching for a home online. The Web site, now also make it possible for visitors to share listings and other information on Facebook, Twitter and a host of other social media, networking and bookmarking sites.

"Consumers today have shown an increased desire to turn the time they spend online into an experience they can share with family and friends," said Mike Montsko, president of Weichert Lead Network, the Internet marketing arm for Weichert, Realtors. "Our latest release of Weichert.com not only enhances the home search for visitors, it makes it easy for them to share it directly through social media and social networking sites."

The redesigned home page sets the tone for a more personalized experience for Weichert.com visitors from the onset. The site employs technology that will remember returning user's most recent home search and displays just listed, just reduced and open house listings that fit their criteria of interest.

For even greater customization, Weichert.com added a number of new features to myWeichert, a program which allows homebuyers to save property searches, sign up for various e-mail alerts, and rank and save specific listings with personalized notes. The latest version now offers a RSS Feed to notify individuals of new listings, price reductions and open houses. A new mileage calculation tool helps visitors determine the potential distance, as well as driving directions, from work or another location to a specific listing.

In addition to creating a more personalized experience, the latest version of Weichert.com combines a simpler navigation and streamlined layout with a fresh, attractive design and more listing information to make it easier and quicker to find homes that meet your needs.

Adding to a wide range of existing options, the site now allows users to search by days on market, square footage, lot size, year built and fees, such as those from a homeowners' association. In the map search view, visitors can now also see points of interest within the map such as schools, banks, restaurants and shopping centers.

Once they reach the detail page for a specific listing, Weichert.com visitors will find it easier to navigate for the information they need. A new photo control simplifies the viewing of property images. With a simple click of an icon, users can quickly share a listing through Twitter, Facebook, Digg or other social media sites.

A top 30 real estate website, weichert.com had over 30 million visitors in 2009. Indicative of its value to consumers, weichert.com consistently ranks as a top site among all real estate companies for the length of time that visitors spend at the site, according to HitwiseÒ, which monitors the activity of major websites.

Weichert has nearly 18,000 sales associates in approximately 500 company-owned and franchised sales offices in key markets throughout the U.S. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. For more information, Weichert's customer service center can be reached at 800-USA-SOLD or at Weichert's website, www.weichert.com. Each Weichert franchised office is independently owned and operated.

2010-06-11T09:38:00.003-04:00

Weichert Realtors Franzese Group:
New York City Real Estate is Unique

By Weichert Realtors The Franzese Group

Weichert Realtors Franzese Group. Wednesday, June 9, 2010. New York City Real Estate is Unique · Living in New York City can be drastically different from other areas in the US. Prices of NYC real estate can differ quite a bit from ...

Weichert Realtors Franzese Group - http://weichertfranzese.blogspot.com/

2010-06-02T12:42:00.000-04:00

Exposure for Weichert Listings
on FrontDoor.com

One of the keys to selling a home quickly is to get as many people as possible to see the listing. Because of this, Weichert has arrangements with many companies and media outlets to have your listings also appear on their websites.

HGTV's FrontDoor.com is one of the websites that sy ndicates Weichert listings. As the real estate information site for HGTV, a leading online content provider in the Home & Garden category, FrontDoor.com promotes your property to even more interested homebuyers through the site's unique, extended network. This provides even greater exposure for Weichert listings and increases lead generation for Weichert Sales Associates.

2010-06-02T12:37:00.000-04:00

WEICHERT LEADLINK
The Weichert, Realtors franchise network also recently launched a direct-mail platform. Weichert LeadLink automatically creates a "Just Listed" card for each new listing from data entered in a multiple listing service. The listing agent can preview the postcard before placing an order, and the cards are then mailed to 50 addresses around the listed home.

The postcards help "sales associates increase marketing recognition in the neighborhood," the company said.

Each card includes a Web address and a unique code to a customized Web page.

"The system then provides real-time leads to sales associates via e-mail, including a notification for every person who visits the website and another for those who fill out the (contact) form," the company said.

Weichert developed LeadLink in conjunction with digital marketing company Quantum Digital. Weichert has about 500 sales offices, both company-owned and independently franchised, and about 18,000 sales associates.

2010-05-20T14:31:00.000-04:00

An up-to-the-minute communication for the Weichert sales team

Contrary to reports and newspaper articles circulating widely on the Internet, there is not a 4 percent sales tax or transfer tax on the sale of a home included in the recently signed health care reform bill.

This myth has been invalidated by the National Association of Realtors (NAR) and other experts who are knowledgeable about what is included in the heath care reform bill.

NAR is working to spread the word that there is no truth to this rumor. http://www.realtor.org/fedistrk.nsf/pages/wk04262010?OpenDocument#report_1_04_26_2010

2010-05-19T12:25:00.001-04:00

Press Release

Current Market Affords Great Opportunity for Buyers

5/18/2010

MORRIS PLAINS, N.J.– Much attention was paid to the now expired tax credit and the unique opportunity it presented for homebuyers, and rightfully so. However, those who didn’t have a chance to capitalize on this financial incentive from the government but plan to buy a home in the near future shouldn’t dwell on it for too long. If they do, they might miss out on an even more important factor that is currently benefiting homebuyers – affordability.

“When it comes to determining housing affordability, no two factors play a bigger role than home prices and interest rates,” said James M. Weichert, president and founder of Weichert, Realtors. “Those who buy today are able to get more home for their buck thanks to a great combination of low interest rates and attractive home prices.”

In fact, according to Freddie Mac, the national average of interest rates for a 30-year fixed convention mortgage was 5.00% last week, less than a tenth of a percent from the all-time record low. That means today’s buyers are able to borrow money on more affordable terms than virtually any other time in the past.

Current home prices are also contributing favorably for buyers. As a result of the market correction that took place the past few years, home prices have receded to their lowest level in years. This is good news for those looking to buy now at an affordable price.

Just as encouraging for those thinking about purchasing a home in the near future is the fact the home prices appear to be stabilizing or even rising. A recent survey from the National Association of Realtors shows that for the first quarter of the year, 91 of 152 metropolitan areas experienced home price gains from the same period in 2009. In the Northeast, home prices were up nine percent from last year.

While home price stabilization is good news for potential buyers in terms of the likely return on their investment, it should also signal some sense of urgency. The same can be said for today’s historically-low interest rates. The reality is rates are much more likely to begin creeping up throughout the year than they are to drop any further.

“Those who didn’t purchase a home before they tax credit missed out on a chance to claim up to $8,000. However, those who don’t capitalize on the affordability being offered by today’s market could easily be leaving five to 10 times that amount on the table over the course of a 30 year loan,” added Weichert.

Weichert has nearly 18,000 sales associates in approximately 500 company-owned and franchised sales offices in key markets throughout the U.S. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. For more information, Weichert's customer service center can be reached at 1-800-USA-SOLD or at Weichert's Web site, www.weichert.com. Each Weichert franchised office is independently owned and operated.

2010-05-17T11:59:00.002-04:00

Looking for a property in Fairfield County, CONNECTICUT?????
The market has stabilized and there are some phenomenal opportunities. Just listed 2Family at $414,000 in Greenwich. There are three offers including two cash offers. Don't miss another opportunity Email or Text me to be put on the CT Deals to Buy list.
or email me at drew@drewpeterson.net

2009-10-23T21:49:00.002-04:00

Agents & Agencies
Greenwich Time 10/22/09

Drew Peterson in the Greenwich office of Weichert Realtors was recognized as one of the top 12 associates in the Connecticut and Westchester County region for the first half of 2009. A member of the company's Sales, Marketed and Multi-Million Dollar clubs, by May of this year, he was ranked No. 11 of all 18,500 Weichert agents.
Judith Nathan-Levine, a neighborhood specialist in Weichert Realtors' Greenwich office, was also among the top 12 agents in the region for the first six months of '09.

2009-10-15T09:43:00.001-04:00

2009-10-15T09:28:00.002-04:00

WEICHERT ADDS ZIP-FORM

FRASER, Mich., Oct. 15, 2009 (GLOBE NEWSWIRE) -- zipLogix, the creator of the real estate industry's leading contract software, zipForm(R), today announced anew alliance that will provide sales associates, managers and processingmanagers at Weichert, Realtors(R) the unprecedented efficiencies of electronicforms through the newly enhanced zipForm(R) 6 Professional (online version)software. With this agreement, Weichert is joining the growing list of topbrokerages across the nation that has chosen to provide zipForm to their salesassociates.During 2009, zipLogix has been rolling out their enhanced zipForm(R) 6Professional (online version) and zipForm(R) 6 Standard (desktop version)software to their large, well established user-base. zipForm 6 Professionalgives today's savvy real estate professionals the flexibility to securely accessreal estate forms and edit transactions from multiple locations. By using thisupgraded electronic forms solution, Weichert sales associates, managers andprocessing managers are discovering faster, more accurate transactions andsignificant time and cost savings from a streamlined workflow.Weichert, Realtors, one of the nation's largest independent real estatecompanies, is providing 2,200 associates in 40 offices located in Maryland,Washington DC and Virginia with the ability to complete transactions anytime,any place by simply connecting to the Internet. By accessing zipForm 6Professional, all brokerage locations stay on the same page and receiveconsistent and immediate access to the most updated information."Through this new agreement with zipLogix, we are able to provide our sales teamwith an Internet-based solution that is more comprehensive and user-friendlythan our previous online forms program," said Lisa Pomerantz, director ofleadership development and compliance for Weichert, Realtors. "We have beenparticularly pleased with zipLogix's commitment to educate and train our salesassociates and managers on the many benefits of the program."zipLogix is proud to have their real estate software selected by prestigiousbrokerages across the nation. Today's real estate offices are looking for waysto set themselves apart from their competition by providing best-in-classcustomer service all while showing they care about the environment.Incorporating zipLogix's paperless solutions such as zipForm(R)6 Professionaland relay(R) transaction management sends clients the message that your businessis using the most advanced technologies to assist in your "go green"initiatives. Also by going green, your brokerage is saving "green" by cuttingcosts, reducing overhead, getting rid of paper clutter and emptying filecabinets.For more information on "green" products and services for your brokerageprovided by zipLogix, call 866-627-4729 866-627-4729 and speak to one of our brokerspecialists.About Weichert, RealtorsWeichert has nearly 18,000 sales associates in approximately 500 company-ownedand franchised sales offices in key markets throughout the U.S. A family offull-service real estate and financial services companies, Weichert helpscustomers buy and sell both residential and commercial real estate, andstreamlines the delivery of mortgages and home and title insurance. For moreinformation, Weichert's customer service center can be reached at 1-800-USA-SOLD 1-800-USA-SOLDor at Weichert's Web site, www.weichert.com. Each Weichert franchised office independently owned and operated.

2009-10-15T09:25:00.000-04:00

Give and Take Negotiation
by Drew Peterson

Headlines bleed:“Housing Market in Shambles”, “Mortgages Defaulted”, “Steal A Short Sale Today!” Since the onslaught of the national media, there are many Buyers who have successfully negotiated the “bargain of the year.” Other Buyers are pondering the press and the internet to search house sales data waiting for the signal to purchase.

However, Buyers who wait are realizing they may have missed the wave as short sales and bargain properties are swept away at the closing table. Many Sellers grasp the realization that the real estate market did not shift from Boom to Bust. Rather, the market has shifted from Boom to REALITY. And, based on seller’s motivation, house inventory has been moving since now sellers are treating every offer as if it were the only one the Seller will receive – its all about the give and take between buyer and Seller.

With the media blood bath, buyers who do decide to dive in, pounce on a list price with a vengeance. Many home sellers refer to these buyers as oceanic “bottom feeders” where the attempt is to negotiate tooth and nail to strip the home seller of every penny and ounce of pride. Of course, until title is passed, it is still the Sellers’ property.
Buyers should not be over confident when it comes to negotiating. If a house is priced right from the get-go, there may be multiple bids where Sellers propose highest and best terms and price to buyer contenders. Every property for sale is not a short sale or fire sale opportunity. So, what makes a good negotiation for a Buyer and Seller?

Buyers should submit a pre-approval or commitment letter from a mortgage representative. The letter should be specific to the offering price and loan terms. If a cash offer, provide a verification of funds.
Your real estate agent can provide and review comparables of houses that have SOLD. In many markets, bank appraisers are using only recent sales. Active list prices are not factual and are not used by a bank appraiser.
Know what the list to sales ratio has been over the past six months in your local market. Is the offer in range of the ratio?
Review the Multiple Listing Data Sheet. Understand what is included, appliances, sprinkler system, lighting fixtures, etc…Even window treatments and fireplace tools are not considered fixtures. Rather, anything not bolted attached is referred to as personal property is known as chattel. Please do not forfeit a sale with the loss of a over a washer or dryer combination either.
All offers should be in writing to be taken seriously and to validate open questions.
Include a specific time frame for inspections and contract signing. Can inspections be completed in 5, 7, 10 business days?
Buyers and Seller should provide the name of a real estate attorney with the offer.
Determine what the Seller paid for the property, current mortgage, commission fees and estimated closing costs to determine potential net to Seller.
Sign all property disclosures and submit with offer
The Seller has three options, accept, reject or counter offer.
A counteroffer automatically nulls the initial offer and Buyers now have the decision to accept, reject or counter offer once again.
Be very clear on what may be termed an “AS IS” listing. Most foreclosures and short sales are “AS IS” I have witnessed many personal effects including dishes in the dishwasher, televisions sets and plain rubbish left for the new homeowner to contend with on closing day.
Connecticut is not a survey state where a survey is required from the Seller. Therefore, when not available, it is the Buyer’s responsibility to research data showing lot dimensions, wetlands, easements, setbacks, well, septic, locations. Does the property share any contiguous lot lines for undeveloped parcels? Is there a shared driveway? Neighborhood Association? Annual Fees? A real estate attorney can advise in these areas and a visit to the local town hall will provide most of the information.

Realize that negotiations are a business transaction, market conditions vary by locality, and location, location, Motivation will be key component to establishing a meeting of the minds between a Buyer and Seller.

2009-08-26T11:24:00.000-04:00

New U.S. home sales surged 9.6 percent in July,
Rising for the fourth straight month and beating expectations as the housing market marches steadily back from its historic downturn.
The Commerce Department said Wednesday that sales rose to a seasonally adjusted annual rate of 433,000 from an upwardly revised June rate of 395,000.
It was the strongest sales pace since September and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 390,000 units. The last time sales rose so dramatically was in February 2005.
The median sales price of $210,100, however, was still down 11.5 percent from $237,300 a year earlier.
There were 271,000 new homes for sale at the end of July, down more than 3 percent from May. At the current sales pace, that represents 7.5 months of supply — the lowest since April 2007. The decline means builders have scaled back construction to the point where supply and demand are coming into balance.
Buyers, meanwhile, are rushing to take advantage of a federal tax credit that covers 10 percent of the home price, or up to $8,000 for first-time owners. Home sales must be completed by the end of November for buyers to qualify.
Builders and real estate agents are pressing Congress for that credit to be extended. If it isn't, sales could reverse their upward trend.

2009-08-24T13:16:00.000-04:00

REAL ESTATE UPTREND
The real estate uptrend continues as the National Association of Realtors (NAR) announced today that existing-home sales rose 7.2 percent in July. This marks the first time in five years that existing-home sales have increased for four months in a row and is the largest monthly sales gain on record.
In addition to the month-over-month increase, existing-home sales were 5 percent higher than in July 2008. The last time sales were higher than a year earlier was November 2005.
NAR Chief Economist Lawrence Yun is encouraged by the recent statistics. "The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales," he said.

2009-07-08T10:45:00.002-04:00

Weichert.com Mobile Site Brings

Home Search to the Next Level

Looking for houses? Now you can use your mobile devices such as BlackBerries and iPhones. There's no doubt that "smart phones" are moving from a purely business-related tool to a must-have accessory, and Weichert is poised to help you capture more business via its mobile site that provides homebuyers with access to more than 2 million listings from their phones.
The mobile-compatible version of Weichert.com gives homebuyers the ability to search properties for sale from any cell phone or other portable device with a data plan. The light and streamlined site design ensures a fast load time so on-the-go homebuyers can get the information they want quickly and conveniently.
There is also a "click to call" feature to offer further convenience for buyers conducting their home search from a mobile device. If, at any time while looking at listings, the site visitor wishes to receive more information or set up an appointment to see a property, they can be put in touch with a Weichert sales professional with one simple click.

2009-06-24T11:47:00.001-04:00

NEW MORTGAGE GUIDELINES
RENTING OUT & BUYING ANOTHER
I am getting more and more applicants who want to purchase another home while already owning a home through FHA or CHFA. They can only rent out the house and utilize the rental income If they relocate to another place due to employment and have 25% equity in their present home. Otherwise, they will have to qualify with the 2 mortgages. I have attached the Feds explanation for this new regulation. Any questions, please give me a call.
Have a great day,

Iliad M. Estrada
Iliad M. Estrada
Mortgage Specialist
Gold Service Manager
203-661-5400
203-661-6703 (Fax)
203-570-7869 (Cell)
iestrada@weichertfinancial.com

2009-06-24T10:19:00.001-04:00

Existing-Home Sales Rise Again
Sales of exiting homes showed another gain in May, according to the National Association of Realtors (NAR). May's increase of 2.4 percent represents the first back-to-back monthly gain since September 2005.
Spread the good news!

2009-06-24T10:16:00.001-04:00

Weichert.com Survey
Supports Idea of Expanded Tax Credit

Despite affordable home prices and low interest rates, the majority of Americans considering a home purchase still need a little extra incentive. According to a recent survey of more than 500 visitors to Weichert.com, increasing the current first-time buyer tax credit to $15,000 and/or extending it to all buyers would offer the motivation needed to turn more onlookers into buyers.
To read the Weichert press release detailing the survey, click here.

2009-06-16T16:30:00.001-04:00

Sales Tip: Earning the title of “Trusted Advisor”
QUALIFYING FOR A LOAN IN TODAY’S MARKET
DOESN’T HAVE TO BE A MYSTERY

-- Weichert Financial Services provides insight to help consumers understand that mortgage money is still available for qualified borrowers --

MORRIS PLAINS, N.J., – June 14, 2009 – The cautionary adage “too good to be true” often comes to mind when we first learn of a great financial opportunity. Understandably then some prospective homebuyers might be looking for “the catch” when they hear about the historically low-interest rates currently available to borrowers.

Given the current economic challenges banks and financial institutions are facing, many consumers believe “the catch” is that while it is extremely affordable to borrow money it is also virtually impossible to qualify for a loan. However, the reality is many secure, safe and reliable lenders are ready, willing and able to provide mortgages to qualified buyers.

“Given the tremendous opportunity offered by today’s market, I think it would be shortsighted for anyone interested in buying a home to just assume they will not qualify for a loan,” said Stephen Adamo, president of Weichert Financial Services. “The reality is there are plenty of companies still lending money. In fact, we are qualifying approximately nine out of every 10 people who come to us applying for a mortgage.”

To help hopeful homebuyers better understand what lenders consider when deciding whether or not to grant a loan, Weichert Financial Services offers the following insights:

Ability to Repay
One of the first things a lender will look at is the borrower’s ability to repay the loan. To determine this they will consider several questions: Is the applicant currently employed? Are they in a steady line of work? Have they earned a similar income in the past?

Typically, a borrower will be asked to provide documentation of their income. Lenders want to see stability both in terms of the position the borrower has held and their earning potential. A prospective homebuyer who has worked for the same employer and earned an income within the same range as their current salary for several years stands a great chance of being approved for a loan.

Track Record
Granting someone a loan ultimately is based on risk taking. A lender will be far more likely to grant a loan to a low-risk borrower - that is someone with a proven history of paying off debt in a timely fashion - than someone with a poor track record. A person’s credit score, or FICO score, is the most commonly used method to evaluate their bill-paying history and debt profile. Credit scores range between 300 and 850. The higher the score the better the chance to qualify for a loan, and at a more attractive interest rate.

Typically, someone with a score of 660 or better is considered to have good credit and is an excellent candidate for a loan. However, interested buyers with a credit score below 660 may often still qualify for a loan or will be able in a short amount of time by taking a few simple steps to quickly improve their overall credit rating.

Stake in the Game
Another factor a lender will take in to consideration is how much money a borrower puts down toward the purchase of a home. The common perception is that someone can’t even think about getting a loan today without 20 percent down. This is simply not the case.

Lenders take into account the size of the down payment in relation to the many other factors they consider. If for example, a person has an excellent credit score and tremendous ability to pay back the money, a lender may grant the borrower a loan even with less than the traditional 20 percent down payment.

“Perhaps the biggest myth today regarding mortgages is that you must have 20 percent down. We regularly see people get mortgages with less money down. Recently, we gave a loan to a person who only put 3.5 percent down because he had a great credit rating and a steady, reliable source of income,” added Adamo.

Finally, one important factor for borrowers to consider when selecting a lender is the stability of the company loaning them the money. Today’s economy has created a more unstable marketplace with stricter regulations and more complex processes. Unfortunately, many borrowers get qualified for financing only to discover that the lender is unable to provide the funding needed for a timely closing.

Homebuyers want to select a secure, reliable lender with a reputation for getting their clients to closing. Weichert Financial Services, for example, offers a performance guaranteed to meet a borrower’s closing date, backed by a $5,000 credit, for customers who obtain the “core services” of mortgage financing, homeowners’ insurance and title insurance from the company.

Weichert Financial Services is one of the "Top 30" lenders in the U.S., according to the industry newsletter "Inside Mortgage Finance," based upon sales to Fannie Mae and Freddie Mac nationally in 2008.

The company also ranked in the top five percent in product offerings, according to Radian, a leading mortgage insurance lender. Currently, Weichert Financial Services offers more than 300 mortgage and financial products to meet the unique needs of all of its borrowers.

Iliad M. Estrada
Iliad M. Estrada
Mortgage Specialist
Gold Service Manager
203-661-5400

2009-06-10T16:35:00.002-04:00

Weichert Well Represented on Forbes' List of
"Best Places to Grow Old"
A growing number of retirees are foregoing the typical warm-weather retirement spots like Florida and Arizona in favor of college and commuter towns, as well as places they have spent time in the past. In light of this trend, Forbes magazine used data from the U.S. Census Bureau to identify the best counties for people 65 and older to live.
The magazine examined housing costs, employment opportunities, the availability of hospitals and eldercare facilities, and more, to develop its list of "Best Places to Grow Old." The findings show that Weichert, Realtors does business in some of the best locations for retirees.
Four markets in the Weichert, Realtors company-owned footprint are represented in the magazine's Top 10 list:
Montgomery County, Pa.
Nassau County, N.Y.
Pima County, Ariz.
Palm Beach County, Fla.
Honolulu County, Hawaii
Brevard County, Fla.
Montgomery County, Md.
Ocean County, N.J.
Westchester County, N.Y.
Lancaster County, Pa.
Click here to read more about the Forbes list and to see how you might be able to incorporate these rankings in your marketing material or when assisting buyers

2009-06-09T08:52:00.003-04:00

Greenwich CT - Drew Peterson, Broker Sales Associate with Weichert Capital Properties in Greenwich CT has listed a new construction grand manse to be built on Milbank Avenue across from the Bowman Observatory rotary. Contractor Developer John Harris has teamed with Architect Alex Esposito to showcase one of downtown Greenwich's premier new addresses and single family opportunites rarely offered. The Federal style residence includes grand public rooms, 5BRS, 5.5 Baths including in-law/caretakers suite. The ecliptical dining room and grand staircase will be featured architectural focal points. Ideally located close to shops, restaurants, parks, and the Julian Curtis Elementary School. Specs are available for preview by contacting Drew Peterson (203) 253-7653 or email drew@drewpeterson.net

2009-06-09T08:50:00.001-04:00

Valuable information to share with buyers and sellers.
Homeownership has many advantages, including tax benefits and the ability to build equity. And now, current market conditions make purchasing a home an even more attractive option than ever before.
In fact, a report earlier this week showed that the National Association of Realtors' Housing Affordability Index rose in April to the second highest monthly reading on record. That means homes are more affordable now than at almost any other time. What's more, the limited-time $8,000 first-time buyer tax credit makes purchasing a home an even better deal.
Those considering a move from renter to homeowner should keep these factors in mind:
Length of ownership: How long do you plan to own your new home? Because of the costs associated with a home purchase, buying now could be a great choice if you plan to own the home for at least five years.
Cost: How much should you spend? Contact a mortgage professional to find out your price range, and then crunch the numbers so you don't buy a home that is more than you can afford.
Quality of life: In addition to greater median wealth compared to renters with comparable incomes, research shows that homeowners have better physical and psychological health, as well as higher life satisfaction and self esteem.

2009-06-02T08:52:00.000-04:00

WEICHERT, REALTORS® GREENWICH OFFICE
HONORS TOP ASSOCIATES
GREENWICH, CONN. (Grassroots Newswire) May 29, 2009 – Peggy Doepper, regional vice-president of Weichert, Realtors®, announced that Drew Peterson and the Greenwich Office individually, were recognized for achievements in April.
Neighborhood specialist Peterson led the sales associates in the Weichert region for resales, resale revenue units, and resale dollar volume. Additionally, the entire Greenwich sales team, under the leadership of branch manager Elsie Pecorin, led the offices in the region for resale dollar volume. The region consists of offices throughout Connecticut and Westchester County, New York.
Invite these experienced real estate professional in to learn about the real estate services that Weichert, Realtors has to offer. They can be reached at Weichert’s Greenwich Office (203) 661-5400, located at 25 Field Point Road.
Weichert has nearly 18,000 sales associates in approximately 500 company-owned and franchised sales offices in key markets throughout the U.S. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. For more information, Weichert's customer service center can be reached at 1-800-USA-SOLD or at Weichert's Web site, www.weichert.com. Each Weichert franchised office is independently owned and operated.

2009-05-30T10:31:00.000-04:00

EMERGING SIGNS RECESSION IS ENDING

Once again, additional signs have emerged that point to an end to the economic recession. The newest "green shoots" include rising demand for big-ticket items such as appliances, fewer people applying for unemployment benefits and positive sales data in the housing market.
The latest statistics and other positive news over the past several months have had an impact on the outlook of both consumers and economists. In fact, the Conference Board's Consumer Confidence Index soared in May to the highest level since September 2008. Additionally, more than 90 percent of the economists surveyed by the National Association for Business Economics predict the recession will end this year.
The positive news specific to real estate shows that homes are selling:
The National Association of Realtors reported on Wednesday that existing-home sales increased 2.9 percent nationally in April, beating economists' forecasts. In the Northeast, existing-home sales jumped 11.6 percent.
Sales of new homes also rose in April. According to IHS Global Insight economist Patrick Newport, the new home sales numbers seem to confirm that the market for new single-family homes is flattening and

2009-05-18T12:11:00.002-04:00

POSITIVE SIGNS ABOUT REAL ESTATE
... AT LAST!
As positive signs about the real estate industry and the economy continue to emerge, I am more confident than ever that the key to recovery lies with the first-time buyer. According to the National Association of Realtors, first-time buyers now account for more than half of all transactions.
Our greatest opportunity lies with these buyers, and our best tool for getting them off the fence is the $8,000 tax credit. Yet, time is running short. The credit only applies to home purchases that are closed before Dec. 1, 2009. That leaves us only a few short months to get our clients under contract to close before the deadline.
There are many tools available to help you attract first-time buyers, including a tax credit flyer, and the NAR tax credit fact sheet and Frequently Asked Questions.

2009-05-09T07:58:00.001-04:00

Valuable information to share with buyers and sellers.
This week brought many signs that the economy and the real estate market may be recovering from recession. Positive trends were reported in real estate, retail and consumer confidence.
In addition, a report on Friday showed that the pace of job losses slowed in April, as employers shed fewer jobs than in previous months. This is notable since employment tends to be one of the last areas where improvement is seen before an economic recovery takes place.
The positive news specific to real estate points to increased demand for home purchases, and included:
The National Association of Realtors' index of pending sales rose 3.2 percent in March. The index was 1.1 percent above last year's levels and has risen for two straight months. Pending home sales typically turn into closed transactions.
According to a Federal Reserve survey of loan officers, demand for prime mortgages was up substantially in the first quarter of this year, for the first time since early 2007.
While it is still early, these "green shoots" are encouraging signs of a brighter future to come.

2009-04-22T16:36:00.001-04:00

Fannie Mae names insider Michael Williams as CEO

NEW YORK (Reuters) — Fannie Mae (FNM), the largest provider of U.S. residential mortgage funding, Monday named Michael Williams, an 18-year veteran of the government-controlled company, as president and chief executive officer. Williams, most recently the company's chief operating officer and previously with KPMG Peat Marwick and DuPont Company, succeeds Herbert Allison. Allison has been nominated as assistant secretary for financial stability and counselor to the secretary at the Treasury Department. Appointing an insider chief executive may be a move to enhance perceptions of stability at the company, whose importance to the U.S. housing market has grown as the credit crunch has lingered, analysts said. The abrupt exit of David Moffett from rival Freddie Mac in March after just six months on the job put a spotlight on the uncertain futures of the companies and increased concern about a drain of talent.
Fannie Mae and Freddie Mac have also been hit by a steady exit of other executives since September, when concerns of capital shortfalls led the government to seize the companies and place them in conservatorships. "Internally, the team at Fannie Mae would view it as very positive that someone from their shop was viewed with enough confidence to run the company," S.A. Ibrahim, chief executive officer of mortgage insurer Radian Group, told Reuters at the meeting of the Mortgage Bankers Association in Chicago.

2009-04-22T16:32:00.000-04:00

Average 30-year mortgage rate below 5% for fifth straight week

WASHINGTON — Rates on 30-year mortgages dipped this week after rising a week earlier and remain just above record lows. Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages fell to 4.82% this week, from an average of 4.87% last week. Rates have been below 5% for five consecutive weeks. The all-time low of 4.78% was recorded on the week of April 2. Freddie Mac's survey dates back to 1971. Low rates have sparked a surge in refinancing activity, with nearly 80% of new home loan applications coming from borrowers seeking to refinance. Freddie Mac's sibling company, Fannie Mae, refinanced $77 billion in loans last month, nearly double February's level and the best month for such activity since 2003, when the housing market was still surging. Mortgage rates fell dramatically over the winter. They fell further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
"The housing industry is starting to exhibit some positive signs," Frank Nothaft, Freddie Mac's chief economist, said in a statement but noted they were "scarce and too early to tell how permanent." Homebuilders are feeling a lot more optimistic that the worst housing downturn in decades may be finally starting to turn around. An index of builders' confidence released Wednesday posted its biggest one-month jump in five years in April as many homebuyers seized on lower prices and incentives, and took advantage of lower interest rates and tax credits.
Qualifying for a loan, however, is still tough. Lenders have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year fixed-rate mortgage fell to 4.48% from 4.54%, according to Freddie Mac. Rates on five-year, adjustable-rate mortgages fell to 4.88% from 4.93%. Rates on one-year, adjustable-rate mortgages rose to 4.91% from 4.83%. The rates do not include add-on fees known as points. The nationwide fee averaged 0.6 point last week for all mortgages in Freddie Mac's survey except for one-year adjustable mortgages, which had an average fee of 0.7 point.

2009-03-25T15:52:00.002-04:00

WASHINGTON (CNN) -- President Obama headed to Capitol Hill on Wednesday to lobby lawmakers on his $3.6 trillion budget proposal, ahead of votes in the House and Senate this week. President Obama is looking to sell his budget proposals to congressional Democrats on Wednesday. Democratic Sen. Kent Conrad, who leads the Senate Budget Committee, has already taken a paring knife to the proposal, and the Senate is expected to vote on his version Wednesday. "We've made hundreds of billions of dollars of changes to make this work to get down to the deficit goal and at the same time maintain the president's priorities -- education and energy and health care," Conrad said as he left a closed meeting in the Capitol, where he briefed Senate Democratic colleagues on his plan Tuesday. Conrad and other centrist Democratic senators, whose support is crucial to passing the legislation, have raised concerns about the long-term impact of the president's spending plan on the deficit. Publicly, the administration has tried to minimize any differences between Obama's budget proposal and changes sought by congressional Democrats. The "House and Senate budget committees are taking up resolutions that are fully in line with the president's key priorities for the budget," White House Office of Management and Budget Director Peter Orszag said in a conference call Wednesday morning.
"There have been some changes made ... but they are 98 percent the same as the budget the president sent up in February." A top administration official, speaking not for attribution, said the White House might go along with Conrad's proposal because it maintains the key elements of Obama's plan. The Congressional Budget Office last week estimated Obama's plan would cost more than $9 trillion over the next 10 years. In Tuesday's news conference, Obama defended his budget, which has come under criticism for its hefty price, saying the plan he proposed is "inseparable" from the overall strategy for economic recovery. "We've got to make some tough budgetary choices," the president said in his second prime-time news conference. "What we can't do, though, is sacrifice long-term growth, investments that are critical to the future. And that's why my budget focuses on health care, energy, education -- the kinds of things that can build a foundation for long-term economic growth, as opposed to the fleeting prosperity that we've seen over the last several years." Former GOP presidential candidate Fred Thompson told CNN's John Roberts on Wednesday that he wants Obama's policies that "I believe take us in the wrong direction to fail." "If he takes us down the road of tripling our national debt in 10 years and making us vulnerable to higher interest rates and higher inflation, and things of that nature, I want all those policies not to succeed," he said. Thompson criticized Obama's ambitious health care agenda, saying the president's plans would cost the government more than they would save.
House Minority Leader John Boehner also blasted Obama's budgetary plan.
"It's very hard to work within this framework, given the level of spending that he is proposing and given the level of new taxes he's proposing, and the new debts that he's proposing," he said Tuesday. "So it's very difficult to deal with the aircraft carrier that he's proposing, when we're suggesting a destroyer would probably do the job."
Obama brushed off skeptics of the scope of his investments, saying, "We haven't seen an alternative budget out of them." He also reiterated his pledge to cut the deficit in half over the next five years. Republicans who blasted the budget proposal for spending, taxing and borrowing too much also criticized Conrad's proposal because some of the items Conrad stripped from the spending blueprint might have to be funded anyway.
For example, Conrad's budget strikes Obama's proposal to set aside $250 billion in case more money is needed for the financial sector rescue, an aide said.
Conrad's budget also curtails Obama's fix of the costly alternative minimum tax and doesn't account for increased payments for doctors who care for Medicare recipients, said Sen. Judd Gregg of New Hampshire, the top Republican on the Budget Committee.
"You can get these presidential numbers down by using a lot of gimmicks that the president didn't use. That would be a mistake. Let's be honest with the Americans," Gregg said Tuesday.
"It's certainly not a gimmick," Conrad responded. "We faced up to changes."
Republicans were also critical of Conrad's plan to calculate the budget deficit over five years instead of 10, meaning a common measure of government spending, the 10-year cost, wouldn't officially be part of the price. Gregg accused Conrad of trying to hide the true cost of the plan.
One hot-button item that will not be part of the Senate proposal is a controversial procedure called "budget reconciliation," Conrad said. Through reconciliation, Democrats would be able to pass major overhauls of health care, global warming and other key policies without the threat of a Republican-led filibuster. While several Republicans said they were pleased Democrats would not use reconciliation, they remained skeptical, because the White House and House Democrats have expressed interest in using the procedure.

2009-03-12T17:14:00.002-04:00

Obama says long-term investments cannot wait

WASHINGTON, Thu Mar 12, 04:09 PM

Facing misgivings within his own party, President Barack Obama mounted a stout defense of the administration's economic blueprint Thursday, arguing that delay on health care, energy and education would make "recovery more fragile and our future less secure."
The president's far-reaching plans faced skepticism from both Democrats and Republicans, as senators questioned his long-term budget outlook and the deficits it envisions in the middle of the next decade. Sen. Kent Conrad, the chairman of the Budget Committee called the track of future deficits "unsustainable" and singled out Obama's proposal for spending $634 billion on health care over the next 10 years. "Some of us have a real pause about the notion of putting substantially more money into the health care system when we've already got a bloated system," said Conrad, D-N.D. Treasury Secretary Timothy Geithner, testifying before Conrad's committee, also encountered blunt questions about the administration's plans for shoring up the nation's banks. He reiterated the administration's goal to lay out a private-public partnership fund designed to make up to $1 trillion in financing available to help banks clear their books of toxic, mortgage-related assets that have led to a national credit freeze.
Geithner hinted more money might be required beyond the existing $700 billion financial rescue fund. "We certainly can start with the resources we have," he said.
Meanwhile, House Speaker Nancy Pelosi, D-Calif., played down talk that Democrats would consider a second economic stimulus bill. "I know that people have made suggestions that we should be ready to do something, but I really would like to see this stimulus package play out," Pelosi said. "It's just not something that, right now, is in the cards," she added later.
The flurry of comments illustrated the complicated moving parts confronting Washington as the economy continues to decline, credit remains clogged and a new president advances broad and expensive initiatives. The money set aside to address those needs so far has been staggering — $787 billion for an economic stimulus designed to save and create jobs, $700 billion approved by Congress for the financial rescue package and hundreds of billions more through programs from the Federal Reserve Bank.
On top of that, Obama wants to overhaul health care, reduce greenhouse-gas pollution and undertake major changes in energy policy. He's projecting a federal deficit of $1.75 trillion this year, by far the largest in history, but says he can get it down to $533 billion by 2013.
"I am not choosing to address these additional challenges just because I feel like it, or because I'm a glutton for punishment," Obama said in prepared remarks to the Business Roundtable. "I am doing so because they are fundamental to our economic growth, and to ensuring that we don't have more crises like this in the future."
Obama said his health and energy changes would build a foundation for a lasting economic recovery, arguing that the current economic crisis was precipitated by an "illusion of prosperity."
Critics of Obama's budget, such as Sen. Judd Gregg, R-N.H., complained that the spending blueprint does not tackle the rising costs of Social Security and Medicare. Geithner said the administration intends to confront higher health care costs with broad changes that will lower Medicare spending.
Geithner is at the center of Obama's economic policy, advocating for its budget proposals and tax policies, as well as the rescue program for the financial sector. He faced questions on all those fronts before heading to London for talks Friday and Saturday with finance officials from the Group of 20 nations.
Obama's budget would raise taxes, starting in 2011, on individuals earning more than $200,000 and on households earning more than $250,000. Geithner said the increases would kick in after the economy was expected to be in recovery. But he sidestepped a question by Sen. Mike Crapo, R-Idaho, about whether the administration would let the increases take effect if the economy had not recovered in two years. "We have to watch how the economy evolves," Geithner said.
At the White House, the administration conferred with state officials about how the $787 billion in stimulus money will go out. Vice President Joe Biden opened the meeting by warning state officials that if they misuse money from the stimulus package, they should not expect more help from the federal government for a long time. "If we don't get this right, folks, this is the end of the ability to convince Congress that anything should go to the states," Biden said.
Added Obama: "If we see money being misspent, we're going to put a stop to it

2009-03-04T20:35:00.002-05:00

Here is a recent response from
CT 4th District Congressman Jim Himes

March 4, 2009

Dear Mr. Peterson,

Thank you for contacting me about housing provisions in the American Recovery and Reinvestment Act. I appreciate your comments and am grateful that you took the time to contact me.

Our economy is in crisis. Every day, tens of thousands of Americans lose their jobs. Since the recession began, our nation has lost 3.6 million jobs. Behind each and every one of these job losses is a family struggling to put food on the table, anxious about its healthcare, or less likely to send a child to college. In the face of these challenges, doing nothing is not an option. We need bold, rapid action to reverse this slide.

The American Recovery and Reinvestment Act is a big step in the right direction. This legislation invests in roads, bridges and mass transit; provides 95% of American workers with an immediate tax cut; and, and will help make our country more globally competitive and energy independent.

I am sensitive to your priorities as a realtor. As you may know, the American Recovery and Reinvestment Act includes a number of initiatives to stimulate our nation's housing markets, including funding for a Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed and vacant properties. The bill also provides first-time homebuyers with an $8,000 tax credit and eliminates a requirement in current law that this credit be repaid over time.

In addition to the resources provided in the American Recovery and Reinvestment Act, as a member of the House Financial Services Committee, I have supported a number of initiatives to address the nation's housing crisis, including efforts to direct TARP funds toward foreclosure mitigation and a number of important rules changes to the HOPE for Homeowners' program that will help keep individuals in their homes and get our economy moving again.

If you have any additional questions regarding this or other issues, please do not hesitate to contact my office. You can sign up for my newsletter and find more information on my views and what I am working on in Congress by visiting my official website at www.house.gov/himes. Sincerely,Jim HimesMember of Congress

2009-03-04T10:04:00.002-05:00

Marketwatch
Low Mortgage Rates Will Cost You

By AMY HOAK
Mortgage rates are low, but getting a home loan is going to cost you.
New rules by Freddie Mac and Fannie Mae are upping the fees for borrowers with less than perfect credit, those in the mortgage industry say. Other increased costs reflect the uncertainty in the mortgage market as lenders try to reduce their risk and anticipate rates.
"It's an interesting time, in that mortgage rates are historically low," says Amy Bohutinsky, vice president of communications for Zillow.com, a real-estate Web site. "But at the same time, while rates are low, lending standards are still really tight. What that means is that people who qualify for these really good rates … fall under a strict set of guidelines."
Even borrowers with decent credit aren't immune to higher fees and mortgage costs. In general, to get the low rates that make the headlines, borrowers also are often paying more points, or prepaid interest, that bring the mortgage rate down.
Pricing Changes
If you look at where mortgage pricing was a year and a half ago, and where it is now, "there have been a slew of changes, mostly negative from a borrower's perspective," says Rick Allen, vice president of MortgageMarvel.com, a mortgage Web site.
The most recent changes started to show up in lenders' rate sheets this year. New risk-based pricing from Freddie Mac and Fannie Mae adds fees to mortgages based on a borrower's credit score. In order to avoid the extra fees, borrowers need to have a FICO score of 740 or higher, says Dan Green, loan officer with Mobium Mortgage in Cincinnati and author of TheMortgageReports.com.
The new rules take effect in April at Fannie and Freddie, but many lenders have already incorporated them.
The new fees, called loan-level price adjustments, have been an unwelcome surprise for some homeowners interested in taking advantage of low rates. "It has created a different pricing scenario from one consumer to the next," Mr. Allen says. "What you see in the Sunday paper could be perfectly close for one borrower. The guy next door could be 1% higher."
Charges have also gone up for those who extract equity from their home through a cash-out refinance. Condo financing could also cost more.
According to Freddie Mac's weekly rate survey, the average rate on a 30-year fixed-rate conforming mortgage was 5.15% in January, and a payment of an average 0.7 point was required to obtain the rate. A year ago, the average rate was 5.76%, but it took just 0.4 point to get it.
There's an inverse relationship between points and rates; the more points you pay, the lower the rate becomes. A point is 1% of the mortgage amount, charged as prepaid interest.
In general, government intervention in the mortgage market is making rates unpredictable, causing lenders to price more conservatively, says Julian Hebron, vice president and mortgage consultant at RPM Mortgage in San Francisco.
Weighing Options
Before paying points, consumers need to decide whether the move makes sense for them, or if they'd be better off obtaining a mortgage with a higher rate while paying zero points.
The decision hinges on how long the borrower plans on staying in the home, and how long it will take to pay off the points, explains Ethan Ewing, president of Bills.com. The more time a homeowner plans on staying in the home, the more paying points makes sense.
Mr. Hebron says that paying points gets borrowers a bigger discount these days. "Historically, one point in fees gets a borrower a rate that's about 0.25% to 0.375% lower. Now, one point gets the rate about 0.625% lower," he has noted in an analysis.
Recently, Mr. Hebron could get a $417,000, 30-year fixed-rate mortgage at a rate of 5.625%, paying zero points. By paying one point (or $4,170) on the same loan, the rate went down to 5.000%, saving the borrower $261 a month in interest.
"At this monthly savings rate, it takes 16 months to pay back the $4,170 and everything from that point forward is benefit," he says. "Traditional breakeven periods are double this."
Additional Fees
Other fee increases for borrowers today include those on underwriting and processing, which range from $300 to $400 on average. It takes more work and expertise to process a fully documented file than the no-document loans that were popular a couple of years back, and that is reflected in the higher charges, according to Mr. Hebron.
Those attempting a refinance also can expect to pay an appraisal fee -- maybe $300 or so -- up front, Mr. Hebron says. Mortgage rate-lock fees are also becoming more common, though it's not impossible to find a firm that will not charge for that service, he adds.
"For title and settlement fees, the fees that we are seeing the largest increases in are the real-estate transfer taxes charged by cities and counties," Mr. Ewing says. One tip for borrowers who are refinancing: Using the same title-insurance firm from your last mortgage will likely save money.
In total, mortgage fees could cost you 3% or so of the loan amount, according to HSH Associates, a mortgage-information publisher.

2009-02-11T10:59:00.005-05:00

COST VS. VALUE REPORT - IMPROVEMENTS WORTH DOING.

According to Remodeling magazine's 2008-2009 "Cost vs. Value Report," even despite the challenging economy, investing in your home still pays off at resale. Based on interviews with real estate professionals throughout the country, the Remodeling report found that homeowners could expect to recoup an average of 67.3 percent of their investment in 30 different home improvement projects.
Exterior projects that boost curb appeal and kitchen remodels generally get the biggest bang for the homeowner's buck. The right remodeling project, when done well, also has the potential to make for a quicker sale and reduce negotiations with buyers over perceived shortcomings.
Some of the projects that are paying off the most nationally this year at resale include the following. The number in parentheses represents the percentage of the project's cost that is recovered.
Upscale fiber cement siding (86.7 percent)
Midrange wood deck (81.8 percent)
Midrange vinyl siding (80.7 percent)
Midrange minor kitchen remodel (79.5 percent)
Upscale vinyl window replacement (79.2 percent)
Midrange major kitchen remodel (76 percent)
Click here to access the "Cost vs. Value" Web site, where you can download data for 80 cities.

2009-02-11T10:29:00.001-05:00

Top 20 Most Popular Real Estate Related Websites
categories: Buyer's Resources, Real Estate News
Hitwise.com, a hugely reputable company that monitors traffic on the web for each website out there just came out with their list of the most visited real estate related websites. The Hitwise rankings system is based on the market share of visits to real estate related websites among the company’s own personal sample of 10 million U.S. Internet users.
Realtor.com has remained at the top spot with roughly a 6.7% share of the market, although Realtor.com itself is not widely know outside of the US market. Yahoo Real Estate remained in second place with roughly a 3.3% market share which is down from its position of about 4.2% of market share. Zillow is now third with just under 3% of market share.
All of these sites are useful and have their own allure for each individual. If you are a buyer for example, I think some of the portal sites such as Yahoo Real Estate, Zillow.com and Trulia.com are great places to start to get an overview of the market and the areas you are interested in. To get precise information on a city, schools and its neighborhoods, local perspectives and true values of individual homes, the next move is to still then contact a local Realtor that is ethical and on top of the market. Hopefully someone with an updated website or blog that is constantly providing new and useful perspective, tools and information to consumers.
Further Reading: Santa Barbara Real Estate News, Santa Barbara Market Statistics, Tips for Canadians Looking to Buy Real Estate in California, Santa Barbara Luxury Real Estate, Santa Barbara Oceanfront Areas,
For information on Santa Barbara Real Estate, Montecito Real Estate and/or our surrounding areas, as well as any other aspects of life in our area, please don’t hesitate to contact Kevin Schmidtchen at Sotheby’s Int’l Realty.
Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.
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2009-02-11T09:44:00.003-05:00

Connecticut Politicians Push for Buyer Incentives.
Both Senator Dodd and Senator Lieberman of Connecticut have proposed many incentives to motivate the economy. The $15000 tax credit is one that has many of my buyers very excited!
Here is my recent correspondence from Senator Lieberman

February 10, 2009

Dear Mr. Peterson:

Thank you for contacting me to express your thoughts regarding federal efforts to stimulate the housing market and prevent foreclosures. I am happy to respond.
The rapid decline of the housing market lies at the heart of the economic crisis. Real economic growth will not resume again until housing values stabilize and American families once again have faith and confidence that the most valuable asset they own - their home - is safe and secure. Only then will many working Americans increase spending, which will increase market liquidity and prompt banks to resume lending to businesses and consumers. As foreclosures in Connecticut and across the United States continue to occur at a rate unforeseen in the past 25 years, I believe it is imperative that Congress act to help families stay in their homes. In addition to devastating those who lose their homes, foreclosures also harm neighboring homeowners by lowering property values. In fact, the crisis will cost homeowners not facing foreclosure an estimated $265 billion in household wealth.

Consequently, during Senate consideration of the economic recovery package (the American Recovery and Reinvestment Act; H.R. 1), I strongly supported the inclusion of several provisions designed to jump-start the housing market. I was proud to introduce an amendment with Senator Johnny Isakson (R-GA), which the Senate passed unanimously, that substantially increases and enhances the homebuyer tax credit the Senate enacted last July. The credit, as currently constituted, provides homebuyers with a tax credit for ten percent of the purchase price of a principal residence. My amendment increases the maximum size of the homebuyer credit from $7,500 to $15,000 and also eliminates restrictions that limit the credit to first-time homebuyers and requirements that the credit be repaid to the government over 15 years. This extended credit will be available for one year after the bill becomes law. The credit will provide an incentive for more Americans to purchase a home, which will reduce the glut of available homes on the market today, drive up housing values and inject much-needed liquidity into the financial markets.

In addition, I also supported an amendment, introduced by Senator Chris Dodd (D-CT), designed to improve federal efforts to mitigate home foreclosures. This amendment, which also passed the Senate unanimously, makes several adjustments to the Hope for Homeowners (H4H) program, a voluntary program in which the Federal Housing Administration (FHA) works with borrowers and lenders to insure distressed loans for principal residences that have been renegotiated at a significant discount to the borrower. When H4H officially launched on October 1, 2008, the Congressional Budget Office (CBO) estimated that it could help up to 400,000 homeowners avoid foreclosure. However, the qualifying standards that loans must meet to be eligible for H4H have proved to be too costly for both borrowers and servicers. As of January 2009, the program had received just over 400 requests for assistance, and had yet to insure a single modified loan. The Dodd amendment loosens the program's restrictions so as to increase participation. Also, FHA would be authorized to provide lenders and other mortgage servicers with $1,000 for every mortgage they agree to refinance under the program to compensate them for their time.

The Dodd amendment also requires the U.S. Department of the Treasury to spend no less than $50 billion of the $700 billion authorized for the Troubled Assets Relief Program (TARP) for a foreclosure prevention and loan modification program. TARP was authorized last year to purchase up to $700 billion of troubled assets from banks as a means of restoring liquidity to financial markets. Originally, when Congress passed legislation to establish TARP, it directed the Treasury Department to try and modify all of the troubled mortgages it acquired to help these borrowers stay in their homes. Unfortunately, after this legislation passed, then Treasury Secretary Henry Paulson announced that Treasury would be using most of the funds authorized under the law to recapitalize the financial sector by purchasing nonvoting preferred stock in banks and thrifts. Because Treasury has not been purchasing troubled mortgages directly, as was the original intent of TARP, the program has made no progress in helping Americans avoid foreclosure. This amendment will guarantee that the massive commitment of taxpayer money made under TARP will go to help homeowners on Main Street. It is believed that this amendment could help up to two million Americans stay in their homes.

Other housing provisions in H.R. 1 include $2.25 billion for states and local governments to provide gap financing to affordable housing projects in need of funding due to the collapse of the Low-Income Housing Tax Credit (LIHTC) market; $5 billion to assist local public housing agencies in addressing a serious backlog in capital needs; $2.1 billion in full-year payments to owners receiving payments from Section 8 project-based rental assistance; and an additional $3 billion over two years for the New Markets Tax Credit (NMTC), which spurs private investment in low-income communities.

On February 10, the Senate, with my support, passed H.R. 1 by a vote of 61-37. On January 28, the U.S. House of Representatives passed a slightly different economic recovery package by a vote of 244-188. The Senate must now work with the House of Representatives to develop a compromise agreement. Please be assured that I will encourage leaders of both chambers to work out their respective differences so that we can quickly advance this critical legislation to stimulate the housing market and lay the groundwork for long-term economic growth. To keep track of further developments on this legislation, you can go to the "Bill Tracking" service at http://lieberman.senate.gov/issues/resources.

Beyond the recovery package, several additional proposals have been advanced to provide assistance to struggling homeowners. One such plan is to repeal an outdated provision of the bankruptcy code that expressly prevents bankruptcy judges from modifying the terms of primary residence mortgages during court proceedings -- even though the court can modify the mortgage terms on family farms, vacation homes, and investment properties. Repealing this provision would allow bankruptcy judges to put borrowers on a payment plan to repay a portion of their debts. The Center for Responsible Lending estimates that this could help up to 800,000 homeowners avoid foreclosure on their homes. Recently, congressional leaders have indicated that they will seek to include legislation enacting such a change into a consolidated appropriations package that will provide funding for the federal government for the second half of fiscal year (FY) 2009 I support this proposal because I believe that those Americans who are doing the right thing by facing up to their obligations and working out a plan to repay their debt should have the opportunity to keep their homes.

For those homeowners who are in danger of foreclosure, I have added a Mortgage Assistance Tip Sheet to my official Senate website. This site provides a list of several federal, state, and nonprofit resources to help homeowners refinance their loans. You can access the tip sheet at http://lieberman.senate.gov/documents/mortgagetipsheet.pdf. If you or someone you know is at risk of default or foreclosure, I encourage you to reach out for assistance as soon as possible.

As Congress looks forward, it will be necessary to ensure that we are doing all that we can to spark the housing market and rebuild our economy. This will require Senators of all political stripes to work together in the spirit of compromise. The American people expect and deserve no less.

Thank you again for sharing your views and concerns with me. I hope you will continue to visit my website at http://lieberman.senate.gov/ for updated news about my work on behalf of Connecticut and the nation. Please contact me if you have any additional questions or comments about our work in Congress.

Sincerely,

Joseph I. Lieberman
UNITED STATES SENATOR

2009-02-10T09:29:00.002-05:00

Whaddya Mean There Are Other Offers? I Thought This Was A Buyers' Market!
Elizabeth Bolton - Cambridge MA Real Estate Agent (617)844-2713 contributed from ACTIVERAIN.COM
Given the unrelenting doom and gloom in the media, it's no wonder you feel like you've got the upper hand when you're looking for a new home. Visions of lowball offers, grateful sellers, and bargain basement prices dance in your head.
But real estate is local and even today you may find yourself in a competive market where houses sell quickly and still get multiple offers.
There have been a number of multiple offers in my market recently and it can take newcomers by surprise. Some houses, clearly well priced, get half a dozen or more offers the first weekend on the market. So here's a game plan to take you through the crazy, stress-producing process of buying a home when you've got competition.
What's a savvy buyer to do when there are multiple offers?
For starters, don't be discouraged and don't be afraid. It is possible to "win" and get the house of your dreams and it doesn't necessarily mean you have to break the bank to do so. I've bought three of the four properties I've owned in multiple bid situations - including my first house. And I've been happy with every house - no regrets!
Get A Buyers' Agent
You need to be working with a buyer's agent who will represent your interests in the transaction. Sometimes buyers think that going directly to the seller's agent will give them a leg up. But the seller's agent's responsibility is to the seller, not to you as a buyer. And it's quite likely that the seller will still owe the same commission to the listing office even though only one agent is involved in the transaction. And most important - in a multiple bid situation the listing agent's responsibility is to get the best offer for the seller - regardless of whether you've submitted an offer directly to him or her. The sellers' goal is to get more money in their pockets - not the agent's.
You need somebody on your side. A buyers' agent will be able to:
Pull comparable sales info to enable you to decide on a reasonable but competitive offer price
Advise you about real estate activity in the neighborhood for similar houses
Strategize about how to put together a compelling offer that has a strong chance of prevailing in a bidding war
How Does the Seller Decide Which Offer To Accept?
When the seller looks at several offers there are only so many points to compare. You want to shine on all points:
Price - Go over the comparable sales information with your agent. Don't get stuck on the asking price - the house may be purposely priced low to generate excitement - and that strategy worked! Carefully go over the stats and decide on a price that makes sense and seems competitive. Your agent will have experience in the market and be able to offer advice but ultimately you're deciding on an offer price that is comfortable for you and reflects just how much you want the house.
Don't assume that multiple bids means the offers will go sky high - sometimes all the offers can be under the asking price. Other times it does seem the sky is the limit - we've had at least two houses in Cambridge sell for $1,000,000 over the asking price. The comparable sales info and the amount of activity for the listing should give you some sense of how the offers might go.
Dates - Your agent will find out what dates work best for the seller - do your best to meet them. Maybe you'll have to move in with your parents for a few weeks or move more quickly than you had hoped but remember - you'll be moving into the house you love. The temporary inconvenience will be quickly forgotten.
Contingencies - The typical offer contingencies are financing, inspection, and in the case of condominiums, satisfactory review of the condominium documents. You should have a letter of preapproval from your lender at the ready. Be aware that some buyers may very well drop any and all of their contingencies. You have to decide if you are comfortable eliminating any contingencies. Perhaps you have cash on hand from a previous sale or your parents will back you up and you're open to the idea of dropping a financing contingency. Or you had the chance to go through the property with an inspector prior to submitting your offer.
Everyone's situation will be different and everyone's risk tolerance varies as well. Decide what if any contingencies you're comfortable eliminating. And if you are including contingencies discuss with your agent how to minimize the impact - by tightening dates, increasing the dollar value of repairs you're willing to take on, etc.
Deposits - Expectations for deposit amounts vary in different states and regions. Talk to your agent about the norms in your area and consider increasing the deposit. Thist doesn't cost you anything since the deposit will go towards your down payment. From the sellers' perspective, however, it shows evidence of the seriousness of your offer.
Respect The Emotions Involved In Selling A Home
Don't forget that selling a home is often an emotional transaction. Honor that. The sellers want to feel good about passing on their home to its new caretakers.
Now is not the time for pointed questions or asking for repairs - though that time may come if you've allowed for an inspection. Remember - you're being compared with other buyers. Don't stand out as a pain in the neck - it's not to your advantage if you want the house.
Keep extraneous issues out of the offer. You're buying a house - not the furniture. Focus on the goal and talk about extras later.
And one no-cost but often very effective tool is a letter to the sellers. Write about who you are, why you love the house, and how you'll take good care of it. Mention any special things that stood out to you. If you can tell the sellers took good care of the house say so. If you like their decorating mention that. Sellers will often remember and remark about the letter weeks after receiving it.
Ultimately the seller wants the best price and the fewest hassles. And if they can feel good about the new caretakers of their family home all the better.
What Happens Next?
There aren't any rules for how the seller chooses an offer. You may get an opportunity to better your offer and resubmit at an agreed upon time. Or the seller may choose one of the offers on the spot. It's typically to your advantage to submit as strong an offer as possible in the first round. But it also might not a bad idea to have a small buffer so that you can increase your offer by a few thousand if given the chance. But remember - you might not get that chance. Plan accordingly and put your best foot forward.
Go For It!
Some buyers are tempted to walk away from a multiple offer situation without even making a bid. But if you've found the house you really want - give it your best shot. A multiple bid situation is not insurmountable. And you can't assume that you'll have to write a sky high offer to get your offer accepted. When I sold my first house, purchased in a bidding war during a down market, one of the first people at the open house was one of the other bidders from five years before. I never regretted buying that house and for him it was the one that got away. So - work with your agent, craft your bid, and know that you've done your best. And maybe, just maybe - you'll be the happy new owners. Good luck!

2009-02-05T09:49:00.000-05:00

Have We All Lost The Ability to Think For Ourselves?
Published on Friday, January 23, 2009, 9:06 AM Last Update: 15 hour(s) ago by Randy Eagar
Tags: economy housing foreclosure unemployment government
Every time I read the paper or listen to the news, I get mad. Really mad. In the last 30 days, the New York Times published the following headlines: “Plunging Housing Markets . . . Down Again”“Home Prices Suffer Record Monthly Drop”“Bank Closures at All Time High in 2008”
“Credit Crisis Waves Roll On”“Growing Market in Foreclosures”“Foreclosure Rates Show No Sign of Slowing”“States Unemployment Funds Run Low”And the bad news goes on and on, causing panic and fear until we become our own worst self-fulfilling prophecy. Here’s my beef. It's media hype. No it's worse than media hype. It's a vast media distortion, used to sensationalize and sell the news. It's not the first time the media has done this, but now it has hit close to home. Close to your home, close to your client's home and your livelihood. The result is that the American homebuyer is naively buying the lie and hesitating to buy that home they need. Another beef I have is that perhaps even a few of you Realtors reading this artilce have been sitting in your own family rooms reading and watching those headlines, and you've believed the hype yourselves. Why? Because, like me and everyone else who reads the papers, watches it on the TV and hears it on the radio, we think that just because the mainstream media says it, then, by golly, it's gotta be true. Pundits know that if they repeat anything long enough, people believe it. Well I’ve got a few surprising facts here that were shared in a speech given by my good friend Utah Lieutenant Governor Gary Herbert. He and I worked together years ago to establish the Utah Chapter of the Council of Residential Specialists. OK, here's what he shared with us:“Bank Closures at an All Time High in 2008”. Hogwash!
In 1989 there were 1,004 bank closures.
In 2008 there were 30 bank closures
On average there are 94 bank closures per year
“Foreclosure Rates Show No Sign of Slowing”. Baloney!
During the Great Depression Foreclosure Rates were 50%
Nationally today our Foreclosure Rates are 3% (1.4% in Utah)
“States Unemployment Funds Run Low”. Ridiculous!
During the Great Depression Unemployment ran at 25%
Nationally today our Unemployment is 7.2%
As Realtors, I challenge you to join me in confronting the main stream media in your own locations. Spread this information on your blogs, and in all your social networking. It's the real truth. It's not hype. I say let’s fight back and take back the one industry that is at the heart of the American Dream -- the Real Estate Industry -- and bring this whole mess, this nation and the world back from chaos. The one best weapon that you have at your disposal is the truth! Are times right now bad? Yes. Do we have a shaky market? Yes. But FDR's famous statement applies: "The only thing we need to fear is fear itself." It's time to start looking at our glass as 93% full rather than 7% empty. We need to look at putting 15-20% down payment and say what’s wrong with that? That's been a standard in real estate for years - a safe standard. We need to look at qualifying procedures and make sure that we are selling homes to people who can afford them. We are the grass roots of the economy, and we can make a difference. We can take it back. All we need to do is to tell our buyers and sellers the truth about what is going on and stop the panic. If there is insanity going on it is in the pundits that look for all the bad news to make sensationalism sell their message.Our message should be: "America is good. America is strong. America is proud!"

2009-01-19T11:55:00.015-05:00

FOR THE BARGAIN HUNTERS...EVERYONE WANTS A STEAL!
ASK YOURSELF, AM I LOOKING FOR A BARGAIN OR DO I WANT TO BUY A HOUSE?
by Drew Peterson, Greenwich real estate agent Weichert Realtors

I couldn't resist writing this blog entry. In fact, inspired by a recent comment from one of my wonderful buyer prospects. Having selected an online listing in Westport, CT listed at $1,499,000, the buyer commented, "Loved the house, but, by next year (2010) the house should be listed under 1 million."
The buyer prospect may desire to wait, but I am sure the Westport property Sellers are not testing the market now....Especially if the bank is chasing them or if bills are tight. Banks are crushing the price of houses validating the most recent sale to the last short-sale or foreclosure in the neighborhood. Who would ever imagine that quaint Darien, CT would be down 76% from sales 2008 compared to 2009?

But, despite all, I still need to eat and sell houses, so of course, I perservere like the postal worker showing houses...In fact, this weekend with snow and ice on neighborhood streets, I ventured to a Greenwich "fire sale" An unheard of listing where the average list price is $2.5 million. Here was a DEAL!

Bank-owned, the modest house 3BR, 2 BA single family house in the Glenville School District purchased in the golden years of 2005 for $625,000 was listed in 2009 at $389,900 by an out of area broker. I mass mailed to everyone that this price had not been seen in Greenwich for this single family area since 1999. Wow,what a suprise, the house had not been ravaged by angry foreclosed owners. The stainless steel appliances in a granite counter kitchen were practically new. There was even a newer hottub ready to jump into after the winter season closing. The listing had considerable updates, and was broom-swept clean. Yet I was in shock, after several showings to prospects, conveying the "deal of a century" stats, most people were still willing to consider offers below the drastically reduced bank price.

My research revealed that the outstanding mortgage was close to $330,000 and with legal fees and marketing, brokerage commissions, this was indeed a find. The listing broker informed me there were offers on the table as well.

Buyers would ask sincerely, "What do you think the bank will take?" My response was clear. I know they would consider strongly an offer at list price or over and depending on terms. Of course, I was required to submit any offer they desired. I did submit an offer, the buyer has a credit score of 816 (Close to Heaven) and can close in less than 30 days, it is not at list price and with offers brewing on the table, is there hope? I guess everyone is brainwashed by the SALES MERCHANDISE mentality. I pray this offer is accepted and we get to closing. But,
I still do not understand, the reaction to potential buyers who want to discount a discount and yet loose an exceptional and unique buying opportunity in Greenwich, CT. Stay posted to find out what the property sales for later this year.

Now, getting back to the Westport listing at $1,499,000,
Here was my response to the email:Most houses are NOT marked up as department store pricing for drastic reductions. The housing market is not representative as the collection of "fuscia turtlenecks" reduced by 80% off retail.

-There are fire sales, in over saturated markets where overbuilding and speculation took place, ie: Nevada, Florida, California.
-You must look at the LOCAL market where you are buying.
-Review the actual List to Sales price ratio. (The property's list price compared to the actual sales price.)
-Don't be suprised that in the majority of local sales, the ratio is quite close.(Even since November 2008 to present)
-There is never a property priced too low--Market demand will adjust pricing up if too low.
-Remember how a real estate brokerage is paid. Real estate agents work on commission. Agents are paid when a property sells .Real Estate Firms have huge marketing advertising costs each week.
-No respectable brokerage is going to take a property without a market evaluation to induce a sale for the best price in the best timing for the Seller.
-There will always be non-motivated Sellers who desire to test the market, but, this is very rare in 2009.
--Most retail department stores have sales when no customer traffic is roaming the asiles and when inventory is in surplus. Because real estate is unique, earch parcel and house is different, there are no across the board cuts.
-UNLESS, of course, there are highly motivated Sellers, banks foreclosures, and short sales. These are usually noted in remarks with most agent's MLS comments to encourage offers.
I am finding that there are many Buyers all looking for bargains. The truth is that the good bargains always end up with multiple bidders as is a case this weekend with the offer I wrote. If you love the house, the location, and the price. Buy the property now while interest rates are low!
My conclusion: If you fall in love with a house, make an offer! If you want to buy a "deal", realize that the purchase may be wonderful to brag about for a while, but in this market and area, there will be work to be done, grime to wipe, and having seen many of the "so called bargains", the property will not be the house of your dreams...BUT IT WILL BE A BARGAIN!

2009-01-16T12:25:00.002-05:00

Real Estate New Listing Watch the video of a New Listing in Norwalk CT listed for $655,000

2009-01-12T09:26:00.001-05:00

January 11, 2009
Mortgages
Will Loan Limits Rise?
The following was featured in the New York Times
By BOB TEDESCHI
IF you’re in the market for a new home, especially in an area where housing prices are typically high, it might make sense to wait a few weeks. Doing so could mean a significant reduction in your monthly mortgage bill — that is, if the lending industry and Congressional leaders have their way.
Both groups have been lobbying President-elect Barack Obama to include in an economic stimulus package a provision that would again raise the limits on “conforming loans,” which are mortgages eligible to be purchased by Fannie Mae and Freddie Mac, two government-sponsored agencies that resell packages of loans to investors.
Last year, the conforming loan limit was temporarily increased from $417,000 to $729,750 in the New York City area, and to $708,750 in Fairfield County, Conn. (Loan limits are based on median home prices; in areas with lower home prices, it was $625,500.) The limit was raised to help to bolster demand for higher-priced houses in a slumping real estate market.
The government made a similar attempt to spur sales in late 2007, when it decided to keep the conforming loan limit at $417,000, reversing a longstanding practice of moving the limit in accordance with the housing market. (Because the average home price fell in 2007, the limit should have been reduced.)
On Jan. 1, the conforming loan limit was set at $625,500 in all regions, disadvantaging borrowers in areas of higher-cost housing like New York City.
Interest rates on nonconforming, or jumbo, mortgages are typically higher than rates on conforming loans because they are considered riskier without a guarantee that Fannie Mae and Freddie Mac will buy them. The agencies are required by law to buy only conforming loans.
Looking to improve real estate sales in higher-cost areas, the provision sought by Congressional leaders would put the conforming loan limit at $729,750.
Borrowers with 30-year fixed-rate loans of $417,000 to $625,000 — categorized as agency “jumbo loans” — pay about three-quarters of a percentage point less than those with the conventional jumbo mortgages (though they pay about a quarter of a percentage point more than those with mortgages below $417,000).
By changing the “jumbo conforming” terms to include a hypothetical $700,000 mortgage, a borrower with good credit would qualify for a 5.25 percent interest rate on a 30-year fixed-rate mortgage, based on current rates, rather than the average 6 percent rate for jumbo mortgages, according to Oded Ben-Ami, a senior loan officer with the Sterling National Mortgage Company in Great Neck, N.Y.
Monthly payments on that $700,000 mortgage (excluding property taxes and insurance) would drop to $3,865 from $4,197, Mr. Ben-Ami said. The borrower would also save on fees — to get the jumbo mortgage, he or she would have had to pay a “point,” or an additional $7,000 upfront fee.
While borrowers who choose to wait for the government to change the conforming loan limit could derive significant savings, Mr. Ben-Ami says they are also “taking a gamble.”
Interest rates could increase, he said, and banks could place restrictions on loan amounts or further tighten their lending criteria. (Some in recent months have required borrowers to prove that they have liquid assets equaling 25 percent of the loan amount.)
Another element of risk, Mr. Ben-Ami said, is the borrower’s own financial situation.
“If you can qualify now while you still have a job,” he said, “should you make your move now?”
Other mortgage specialists urged borrowers not to wait.
Stephen Habetz, the chief executive of Threshold Mortgage in Westport, Conn., said, “Homeowners with large loans who are waiting on the sidelines may well find long delays and not the large drop in rates they are anticipating.”
At the start of January, Mr. Habetz noted, there was already a backlog of mortgage applications ready to be processed.

2009-01-05T12:22:00.002-05:00

Optimism for 2009!
Jim Weichert is CEO of Weichert Realtors, the nation's largest privately owned real estate firm with 18000 sales associates.

The new year is upon us; a time for setting goals and expectations for the months ahead. While 2008 was a year of unprecendented change and uncertainty, I am optimistic that 2009 will be a better year for us all.
In the past several weeks, I have read encouraging news reports that we may be closer to the end of the recession than to the beginning. Some forecasters are even predicting that the worst will be behind us soon, with slow but steady growth in the near future.
What is also clear is that the real estate business has the full support of the government. Our country's leaders realize that to fix the economy, they must fix real estate. That every time a home is sold or remodeled, it creates jobs and stimulates the economy. I find this encouraging and hope you do, too.

2009-01-05T09:27:00.003-05:00

This is a good article from the New York Times which I think sums up the attitude of our market overall. What will happen after the election, I am optimistic. The question is what is the catalyst for moving buyers to take action and more importantly having sellers realize the real market value of their ome is the best offer they have at them moment!
I have been telling homesellers that every offer should be treated as if it were the only one the seller will receive.
January 2, 2009
Catskill Home Prices: How Low Will They Go?
By FRED A. BERNSTEIN
RANDY FLORKE, a real estate broker who specializes in weekend houses in the Catskills, ought to be distraught.
Some sellers have had to reduce prices by a third or more. (His own house in Livingston Manor, which he had hoped to sell last year for $299,000, is now listed at $199,000.) And still, he said, buyers are scarce.
But during a drive last week past some of the houses he would like to sell, as sunlight reflected off the perfectly white snowbanks, the situation seemed far from bleak. Mr. Florke said that, if anything, “part of me is thrilled about this market.”
When he started selling weekend houses in 1996, he said, prices in Sullivan County (the heart of what has traditionally been called the Catskills) were so low, he was able to help Manhattanites of modest means buy second homes.
“It was an exciting time,” he said, recalling days when young couples, with only $100,000 to spend, could find a farmhouse fixer-upper. “And I feel like we’re recapturing that moment,” he said. He recently listed a house for $85,000, a price, he said, he hasn’t seen in years.
Mr. Florke, who has several other businesses, can afford to be sanguine. But for many in the Catskills, this is a tough winter.
“Buyers think everything should be a fire sale,” said David Knudsen, a broker at the Catskills Buyer Agency in Liberty, who said the average sale prices declined more than 15 percent from November 2007 to November 2008. At the same time, by all accounts, the number of closings has declined substantially.
The tightened credit market is part of the problem. But even those buyers who can get financing are playing wait-and-see. “They don’t have one iota of motivation to do anything,” Mr. Knudsen said, because they think both prices and interest rates are going lower.
At the same time, Mr. Knudsen said, “many sellers are in la-la land,” unwilling to recognize how low buyers expect prices to go.
And that — the expectations gap — means houses aren’t selling.
In early October, in his Catskills real estate blog, blog.catskill4sale.com, he called the situation an “economic Armageddon.”
A few weeks later, Sullivan County’s largest brokerage, Yeager Realty, with 40 agents in Liberty, Bethel and Rock Hill, shuttered its offices, after a 24-year run. (The company’s owner, Paula Yeager, said she would continue to work from home.) .
Indeed, with so many fewer serious buyers, Mr. Knudsen said, he thought the best advice to some sellers was to close up their houses for the winter, rather than keep them open for the occasional — very occasional — showing.
“If they want to come up for a weekend, they can stay in a motel,” he said. It’s cheaper, he said, than heating the house all winter.
True, Ronny Murphy, a broker at Coldwell Banker Currier Lazier, in Rock Hill, said she has sold a few places recently — one, in Fremont, was reduced to $205,000 from $300,000 — and that she had a “quite a few” people looking in December. Some of them figure “real estate is a better place to put their money than the stock market,” she said.
At the same time, Ms. Murphy said, a number of sellers have taken their houses off the market, because the Multiple Listing Service reports how long they’ve been for sale, and they don’t want the listings to say “one year.” They’ll put them back on the market, as fresh listings, in the spring, she said.
Mr. Florke said that he had an offer on his own house, but the buyer needed financing, which required an appraisal. And the appraiser said he couldn’t come up with comparables, because there hadn’t been any sales nearby in several months.
Homeowners who haven’t been able to sell include Mark and Lisa Hellman, who own a large farmhouse on a spectacular site in Youngsville. After buying the place for $275,000 in 2004, they put $500,000 more into a gut renovation. “I got my dream kitchen,” said Ms. Hellman, surveying her six-burner Viking range and Sub-Zero refrigerator, amid a sea of tasteful cabinetry. The entire house is ready for the cover of a magazine, thanks to the decorating efforts of Ms. Hellman (who is an executive of the fashion house Versace).
But the Hellmans — who have two small children and are considering exchanging their city and country homes for a single suburban residence — put the house on the market in mid-2007. At the time, they were asking $1.2 million. Soon they had an offer for $1 million, which they rejected as too low.
Now their asking price is $985,000, and still no one has looked in months, said Mr. Hellman, an executive of his family’s building maintenance company, Temco Service Industries. That may reflect a particular softness at the high end of the market, Mr. Knudsen and other brokers said.
But the Hellmans have something in common with many people offering houses in the Catskills: they don’t need to sell.
“You don’t see a lot of distressed sellers up here,” said Dorothy McArdle, the owner of Apple Tree Realty, in Andes (a small town in Delaware County). People who bought second homes in the Catskills, she said, have tended to buy places they could afford, and to make large down payments. “You don’t see the high loan-to-value ratio” that is causing problems in other areas, she said.
The owner of a house on a pond in Andes recently lowered the price to $299,000 from $329,000, said Ms. McArdle, who is listing it. She said she had seen “some reductions more drastic than that, but in those cases the original asking prices were inflated to begin with.”
Having sold real estate in Andes for 30 years, Ms. McArdle said she remained “optimistic about the market.
“Right now, people are scared. We need to get through the inauguration, through the winter. At the end of March, the beginning of April, we’ll see an increase in activity.”
But at what prices? Mr. Knudsen said the Catskills were seeing “a move to moderation.” He said that in 2007 “the sweet spot in the second-home market” — where a mid-range New York City buyer would be looking — was around $325,000. “That would have bought a chalet-style house,” he said, “with wood floors, cathedral ceiling, three bedrooms, two bathrooms — a really nice getaway.”
A year later, he said, buyers expect to pay about $100,000 less. “The buyer that I’m seeing in what I call the mid-range — employed, not wealthy, the middle-class urban buyer, looking for a getaway — is looking in the mid-200s. But I don’t know that their expectations have necessarily shrunk as fast as their budgets.”
Some of the biggest bargains may be not in homes, but in homesites. In mid-2007, Redstone Properties, a national developer of subdivisions, began marketing lots in Bethel, in Sullivan County. The lots were priced at $149,900 and up. Some of those same lots, which range from 4 to 10 acres, are now available for as little as $69,900, according to Toby Potterton, the sales manager for the development, the Highlands at Bethel. He said that the company was actually bullish, and that it wanted to sell the land so it could use the money for larger projects.
Undeveloped land isn’t the only real estate available for under $100,000. When a neighbor asked Mr. Florke to list his house — a cute cabin with an unfinished interior — Mr. Florke decided to price it at $85,000, making it his least expensive listing in years. (In 2007, he would have asked almost twice as much, he said.)
“Everyone asks, ‘Are we at the bottom?’ ” Mr. Florke said. His answer: “I don’t know, but there are some great deals out there.”
Indeed, he said, “this may become one of those periods that people look back on with nostalgia, talking about the bargains they were able to pick up.”

2008-11-26T12:30:00.000-05:00

New Fed Efforts to Jump Start Lending
On Tuesday, the Federal Reserve and Treasury Department committed up to $800 billion to unfreeze credit for homebuyers, consumers and small businesses. The newest programs are designed to jump start lending by the nation's banks and put money in the hands of consumers. Immediate results were seen, as rates on 30-year mortgages dropped a record 1-1/8 percentage points on Tuesday.
As part of the plan, the Federal Reserve will purchase up to $500 billion of mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae, as well as up to $100 billion in direct debt issued by the three government-sponsored mortgage finance firms. This action is being taken "to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets," according to a Federal Reserve statement.
Additionally, the Federal Reserve Bank of New York will loan $200 billion to holders of securities backed by consumer debt, such as credit card debt. This should make consumer credit more affordable and allow consumers to spend more freely, thus strenghtening the overall economy.
These new initiatives will improve the real estate market and overall economy, and freeing up more mortgage money for home purchases.

2008-11-19T21:21:00.003-05:00

Glitzy Greenwich feels hedge fund pain
© Thomson Reuters 2008 All rights reserved

GREENWICH, Connecticut (Reuters) - As many hedge funds suffer big losses and anxious investors yank out their money, the town synonymous with the riches of their recent glory is now hurting.
In Greenwich, Connecticut, the luxury car dealers are quiet, the prices of mansions are declining and the retailers who have made a good living serving its wealthy residents are complaining about a sudden drop in business.
"Everything is down. We started to see it in the summer, but October is when the bottom caved in," said James McArdle, whose family has run McArdle's Florist and Garden Center in Greenwich for 98 years. "Housing sales are down and so that always cuts into our market. Fewer buyers, fewer makeovers."
For as long as there's been a Wall Street, titans of finance and industry have built their palaces in this shoreline town 30 miles from New York. Later it became home to hedge funds -- lightly regulated investment pools that made rich clients richer and turned their managers into billionaires.
According to Hedge Fund Intelligence, this town of 62,000 was until recently home to 35 firms that together managed more than $200 billion of assets, greater than the annual GDP of nations such as Chile or Malaysia.
Now, two months after the bankruptcy of Lehman Brothers and the near collapse of American International Group, financial markets are still reeling and government bailouts of banks and other financial companies continue at a breathtaking pace.
After the worst back-to-back months in a decade, some expect one third of hedge funds will be forced to shut down and others will become much smaller than they were. Billionaire investor George Soros, one of the world's first hedge fund managers and among the most famous, has predicted the industry would shrink by as much as two-thirds.
Visit this town and it soon becomes clear that things aren't quite what they used to be. One recent weekday morning, the only creature strolling the showroom floor of Carriage House Motor Cars was a tiny mouse.
Richard Koppelman, owner of rival luxury dealership Miller Motorcars, did not want to discuss his sales. "We're in a cyclical business. It's obviously down right now. We'll hopefully see things get better soon," he said.
For now, there are fewer people able to splurge on cars like the 2009 Bentley Continental GTC, which Miller's website lists at more then $212,000 or a "base" 2008 Ferrari 612 Scaglietti coupe for just $263,500 and change.
The town itself is bracing for a slowdown in taxes and fees generated by property sales and new home permits. It froze hiring to hold headcount down.
"I think everybody is cautious. There's a high level of uncertainty," said Peter Tesei, the town's first selectman, an elected post akin to mayor.
For years, Greenwich benefited from hosting these funds, he said, but now these benefactors have less to spend. One tree service firm suffered a 30 percent decline, Tesei said, while local charities and cultural centers expect donations to fall.
The town's top notch Bruce Museum, which is operated by a private nonprofit organization, recently postponed a $16 million expansion in light of the market downturn, Tesei said.
Worries about the future have chilled the heady world of Greenwich real estate, where the average transaction price is $2.5 million and prices exceeding $20 million are not uncommon. Since markets were upended, real estate agents say houses are staying on the market longer and prices were down.
"There are fewer people buying $10 million, $20 million homes. We're seeing an adjustment, a correction taking place," said Roxana Bowgen, an estate agent at Engel & Volker, an international broker of high-end properties. "These things have to happen. After a while, things need to be cleaned up."
Bowgen, a former commodities trader at Phibro, stressed that houses are still being sold, but the pace has slowed. Banks demand two appraisals rather than the one or even none asked for in the past, she said. Mortgages are harder to get.
"People are in a wait-and-see mode. Buyers are not ready to jump in without asking a lot of questions. They're taking their time -- there's a lot more inventory," Bowgen said.
Realtor David Ogilvy of Ogilvy & Associates noted many managers he knows have weathered the financial storm, some by holding big piles of cash or correctly betting markets would fall, but they are being discreet about buying big homes.
Still, "We're definitely slower than we were," Ogilvy said. "Some people who have taken it on the chin, they were heavily leveraged. We don't know who they are yet."
For now, the proud citizens of Greenwich remain upbeat. The heart of the town is Greenwich Avenue, a mile-long stretch of high end shops that rivals the offerings of Beverly Hills. Besides some home grown luxe merchants and restaurants, there are elite national brands such as Coach, Saks and Tiffany's.
Even the police provide personal service. In lieu of traffic lights, officers stand watch over several intersections to usher shoppers across the street and scold jaywalkers.
Terry Bettridge, whose family has run Bettridge Jewelers on the Avenue since the 1940s, said the fall of Lehman has hurt a business where customers spend $10,000 to $50,000 at a time.
"Business was phenomenal in the first quarter. When Bear Stearns fell apart, things began to get a little wonky but were still up. But when Lehman went under, there was a precipitous fall in business," Bettridge said.
Another sign of the times is that a third of Greenwich High School's 2,700 students -- most raised in affluence -- are seeking jobs through a school-sponsored placement service and the number of new students registering for the service jumped to 230 in September from 170 last year.
In general, people are starting to keep a tighter hold on the purse strings.
"My clients are being a little more cautious. They're not doing everything at once. They're being more thoughtful," said Cindy Rinfret, who owns an interior design and decoration business that carries her name. "Before, it was 'How quickly can you get it done?'"
Rinfret, who wrote a book on style featuring Greenwich's colonial, Tudor and English country style houses, said her business has held up well. Some clients who cannot sell their house are spending to improve their surroundings, she said.
Residents have not stopped spending completely, but they're being a little more thrifty, she said. A friend planning a party for 150 people invited 20 close friends instead after a big drop in financial markets.
Luxury merchants are adapting to the environment, too, reaching out to customers.
"Given everything going on, things are good. But I wont lie to you: are we feeling it? Of course," said Scott Mitchell, a co-owner of Mitchell's. The family-owned department store sells high-end jewelry and clothing from brands such as Brunello Cucinelli and Hermes, and even Ralph Lauren sweaters costing $1,000.
Business has remained strong, though the store is adapting to the environment, he said.
"We are keeping our inventory in balance. That's our biggest expense. We're cutting expenses that don't touch the customer. We are trying to reach out to our customers, one-on-one, and thank them for their business," Mitchell said.
Greenwich merchants observed that the town was affluent long before the hedge fund boom and has weathered downturns before. Its proximity to New York City and top-notch facilities, they said, will always make it a destination for wealthy families.
"You're talking about a town that historically has housed some of the greatest wealth in the world," said Ron Cavalier, who sells artwork at Cavalier Galleries. "My guess is that, of all the towns, Greenwich is going to be affected the least."
(Reporting by Joseph A. Giannone; Editing by Eddie Evans)

2008-11-17T09:28:00.003-05:00

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2008-11-05T14:19:00.003-05:00

How to de-'80s Your House

Source: http://www.househuntnews.com/
The 1980s may be making a comeback in apparel, but forget about it ever coming back for your house. Find out what you should nix in favor of these great replacement ideas. From MSN.com
Ditch the Nagel prints, unplug the neon lights and repaint those teal and salmon-colored walls — it's time to bring your house out of the 1980s.
The '80s comprised a design era best forgotten, with too many flouncy touches, country kitchens and splashy "modern" looks ripped right out of a nightclub. This dated décor can cost you when you put your house up for sale, says Gail Mayhugh, a Las Vegas interior designer and home stager.
"If a prospective buyer views a property as a fixer-upper they're going to make a much lower counteroffer," Mayhugh says. "Or even worse, (they'll) just go down the block to one that has been updated and make them the offer instead."
A few simple updates can help move the focus onto the house's possibilities and away from what needs to be fixed, designers say. Here are some of the biggest red flags and what you can do to bring your home into this decade.
Color me datedOne of the easiest updates, designers say, is to remove the 1980s color palette from the walls of your house. The big paint color offenders from this era are:
- Hunter green- Teal- Peach or salmon (particularly if you live on the East Coast); and- That mix of dusty blues, grays and mauves.
"It's a big fat time stamp on your house," says designer Joseph Sacco of JS Interiors Group in Chicago. (See some of his design work in the photos below.)
And, it's distracting to buyers. If they're flashing back to “Miami Vice” and Members Only jackets, they can't really focus on the space itself, experts say.
Likewise, popcorn ceilings, bad sponge painting and paint-splash wallpaper are red flags that need to be dealt with immediately. And those ubiquitous wallpaper borders? Gag me with a spoon. Their time has come, too, designers say.
Bad mood lighting Dated lighting is another big tip-off that you haven't paid much attention to your house in the past 20-odd years, designers say. Luckily, it's a relatively inexpensive thing to fix.
- Take out old brass and etched glass chandeliers from entryways and dining rooms and replace them with simple brushed-nickel fixtures or pendant lighting.
- Remove that track lighting with the big "eyeball" bulbs nested inside large cans. Replace it with half-dollar sized recessed lighting in several points around each room. In the dining room, you can place these lights slightly to the front of each chair at your dining table. It's a cleaner look than a heavy fixture and it puts the light where you really need it, says Tucson interior designer Diana Lynne Patterson.
- In the bathroom, experts say, rip out those rows of Hollywood dressing-room-type lights that ring the mirror. Replace with recessed lighting, a simple fixture or some sconces.
- And please, remove that neon. While it seemed cool and high-tech in the 1980s, it's better left on pool-hall beer signs now.
Mirror, mirrorThe bathroom atrocities from the 1980s don't end at bad lighting. Vinyl flooring in tiny floral or marble prints might have been sophisticated then, but now it's just tacky, experts say.
- Replace those dated floors with large ceramic tiles or laminate flooring that's easier on the eyes.
- Rip out the old wallpaper and put in new paint or natural fiber wall covering such as bamboo or sea grass, Sacco says.
- Update your medicine cabinet, replacing damaged or dated units with something simple and sleek. Or hang a simple framed mirror and put in a separate cabinet or shelf with space for cosmetics and toiletries, Patterson advises.
- If your countertop tile is in bad shape, Sacco suggests having it reglazed for a fraction of the cost of replacing it.
- Brass or Lucite faucets with the "H" and the "C" for hot and cold should also go, Mayhugh says. "It's amazing what a new faucet will do," she adds. And it's a cheap fix, too. A simple faucet can be found at Lowe's or Home Depot for less than $40. A new soap dish and other bathroom accessories will help to complete the makeover, Patterson says.
The '80s eyesore that will cost a little more to fix is the wall-to-wall mirror in many older bathrooms. This job requires breaking the mirror, fixing the drywall and repainting. But eliminating this holdover from the disco era is a nice way to update a bathroom, Patterson says.
Getting rid of glass-block walls is high on some designers' wish lists, too. But some people, including Patterson still work with them.
Kitchen nightmaresThe kitchen is the most important room to update, say designers and remodelers. There were far fewer materials to choose from 20 to 25 years ago. So, if you haven't remodeled your kitchen in that span, you're probably looking at laminate countertops, or on the higher end, small ceramic tiles with a distinct grout line.
- Replace laminate countertops with more polished granite or Silestone quartz or even easy-care Corian, designers say. Or, for a fraction of the cost you can use larger 12-inch ceramic tiles with a minuscule grout line, Patterson says.
- Glass block may be passé in some people's books, but glass tile on backsplashes and countertops is hot.
- Older solid-wood cabinets and drawers can be refaced with more modern raised panel surfaces at half the cost of replacing them. If forking over that kind of money still isn't a possibility, merely replacing dated-looking knobs with some simple brushed-nickel pulls is a nice touch.
- Beige or black cook tops and stoves that were popular in the 1980s have given way to stainless appliances. It's a nice change, if you have the money.
What lies beneathOne of the best ways to update your kitchen is to get rid of ugly vinyl flooring and small hard-to-clean ceramic tiles. If you don't like the idea of wood or slate-look laminate floors, consider 12-by-12 ceramic tiles. "I think the last time I put down linoleum was as a vapor barrier. That was the closest I had come to it in 20 years," says Sacramento remodeling contractor William Carter.
In the rest of the house, kiss that wall-to-wall carpet goodbye. The plush Saxony carpet considered so posh in the '80s is a turnoff now. Buyers these days are often concerned about what all of those old carpets are housing, including allergens such as mold and dust mites. Carpet isn't taboo. A lot of people like it for bedrooms and hallways. But it should definitely be in the minority in your house. Sleek floors and area rugs are more timeless and practical.
Isn't that special?The last thing to consider inside your house is furniture and finishing touches. While classic wood furniture will look good in any decade, there are some signs of the times that need to be banished forever.
- If you have upholstered chairs and couches in a dated, splashy print you might consider recovering them in something a little less distracting such as stain-resistant microfiber, Patterson says. Some bold patterns are making a comeback, however. So thumb through current magazines and catalogs to help you decide whether you're truly passé or incredibly ahead of the design curve.
- Glass coffee tables with a very ornate iron base can be updated with a simple wood or stone pedestal.
Art is subjective, but here are some things to think about:
- Is it time to ditch the statue with the dancing figures?
- Do you really need that statue of fertility deity Kokopelli from your Southwest period?
- When was the last time you saw a Nagel-type print outside of a hair or nail salon?
Also, consider the scale of your accessories on fireplace mantels and shelves, Patterson says. Candles and vases sold at home stores today are wider and taller and look better in groupings rather than alone, Patterson says.
And a word about windows: In the 1980s, window treatments were full of flowers and frills, and drapes sported ornate valances. "We are moving away from all those ruffles," Mayhugh says.
Ditch any vertical blinds you have because they look cheap and invariably become mangled and dirty. Replace them with plantation-style shutters, flat-paneled drapes or curtains with a subtle inverted pleat.
LandscapingBad design isn't limited to the inside of the house. Experts say it also pays to review your landscaping.
- That classic 1980s kidney-shaped island of mulched flowers and a tree in the middle of your front lawn is no longer en vogue, says Cynthia Bee, owner of Utah-based Solscapes Landscape Design.
- Also out is yard art and knickknacks, including gnomes, deer, painted-wood Americana and gazing balls.
- Precast round steppingstones and sheared-off hedges also no longer make the grade."The more you depart from what looks natural, the more dated it gets," says Bee.
Ultimately, that holds true for the whole house, experts say. There was a lot of design in the 1980s that was more about making a statement than practicality. A lot of interiors were overdone, formulaic and, in some cases, too theatrical, Sacco says. And there weren't the quality options for decorating that there are today.
"I realize the '80s has come back in fashion for clothes," Sacco says. "But it will never be back (in style) for your house."

2008-11-04T08:55:00.002-05:00

Richard Robbins, CEO of RICHARD ROBBINS, INTl. A peak performance training motivator inspired me with these words this morning that arrived by email.

He primariliy does sales training and I thought this was inspirational as it is ELECTION DAY and new optimism abounds...Be sure exercise your right to VOTE!

Step Up...not Back!

We are presently living in turbulent times. As of late, we have witnessed record same day gains and drops in the stock market. We have seen savings and retirement funds shrinking, real estate sales declining and century old banks disappearing or merging.The media has bombarded us with all of the negative happenings in our world and the economy instilling uncertainty and fear in all of our lives. Can you guess which emotion uncertainty breeds?.. FEAR Fear can be a paralyzing emotion. Sometimes referred to as the "mental monster," fear can suck the life out of us. It is an emotion that often causes us to STOP so we can wait to see what's going to happen next. Fear can cause destructive inaction rather than constructive action which in turn causes us to step back instead of step up!In times of uncertainty:
Many people will start playing "not to lose" instead of playing to win.
Many will look at the obstacles instead of the opportunities.
Many will look at potential loss instead of potential growth.
Many will start to work from a position of scarcity rather than a position of abundance.
Many will focus on the risks rather than the rewards and play defense instead of offence. There is no question that these are times of unprecedented changes, however this is not the time to sit back and go on the defensive. Now is time to differentiate our self from our peers and step up to the challenge. It's time for a contrarian approach and for us to do the "opposite" of what "many" are doing. Lance Armstrong, winner of a record 7 Tour de France titles, didn't make up time against his competitors going downhill, he made up time going uphill when other riders were struggling just to maintain.

There is no question that we need to face reality as it is not as we wish it were, and we need to accept "what is" without resistance. However as business owners, we need to focus on the opportunities rather than the challenges and play to win rather than not play at all. Remember, you don't drown falling in the water you drown staying there. Step up to the challenge and make this year count www.richardrobbins.com

2008-11-03T15:39:00.000-05:00

Main Street Westport
In a Wealthy Town, ‘It’s Not Like It Was’
By MARGARET FARLEY STEELE
WESTPORT
FOR a while this wealthy town on the Long Island Sound seemed insulated from the nation’s economic woes, but all that changed six weeks ago with the bankruptcy filing of Lehman Brothers and the subsequent tsunami on Wall Street. Merchants in this posh community 47 miles from Midtown Manhattan are feeling the low rumblings of an economy that is readjusting to the events of the last few weeks.
Sarah Kaplan received at least 10 bad checks from customers at Dovecote, her home furnishings and jewelry business, in the month after the Lehman shakeup. She doesn’t recall any other bounced checks in the six years she has had her store here.
Ms. Kaplan, whose interior design fees sometimes reach $500,000, has also had clients suspend their makeovers midstream. “Everybody is afraid,” she said from her showroom on the same block as Tiffany & Company, aglitter with crystal chandeliers, but quiet now. “They want to wait till things settle down.”
With a median family income of $152,894 — well above the state median of $65,521, according to the 2000 United States Census — Westport exemplifies the good life, one that has been largely financed by profits on Wall Street. Nearly 20 percent of the city’s work force is in the sector of finance, insurance and real estate, according to the census.
Sixty-minute express trains to New York, renowned schools and an active arts community draw well-to-do, educated families to the community of 26,200.
But a pall — however slight so far — is beginning to settle over the town’s business district. Along the brick sidewalks of Main Street, for example, where upscale retailers like Brooks Brothers and Williams-Sonoma vie for investment dollars, pedestrian traffic is lighter and parking spaces easier to come by.
Some retailers find their business shifting subtly, as people who once had few spending limits are now thinking carefully about each item they purchase. “People are going either really high end or low end,” said Lisa Savone, owner of Lucy’s, a women’s clothing store. “They’re going for the gusto or something really safe.” At the safe end, buyers want versatility, say a sweater coat, rather than both a sweater and a coat. As a result, she has changed her inventory, bringing in fewer glitzy pieces.
At the Liquor Locker, wine sales still account for 99 percent of sales, but customers have stopped buying $70 and $80 bottles of California cabernet and Bordeaux, said John Steinberger, an employee. Wines in the $12 to $17 range are the current best sellers. “It’s not like it was,” he said.
But not everyone agrees that Westport will suffer real hardship. Nearby Stamford’s relative strength will ease the pain in Fairfield County, economists believe. Royal Bank of Scotland intends to move to Stamford next year, bringing 1,850 employees to its new building there.
“Where the pain lands is hard to predict,” said Fred V. Carstensen, director of the Connecticut Center for Economic Analysis at the University of Connecticut in Storrs. “If a lot of residents worked at Lehman Brothers, then it could be painful. If they work at Goldman Sachs, then maybe not.”
In September, Westport’s unemployment was at 4.4 percent, up from an average of 3 percent in 2007 but below the state average of 5.9 percent. The people of Westport have a skills set that will be in demand in fields besides finance, said Jack Condlin, president of the Stamford Chamber of Commerce.
Unemployment statistics may not tell the whole picture in Westport, Mr. Condlin said. “The big guns aren’t necessarily going to file for unemployment,” he said.
The effects of hard times in places like Westport will trickle down to nearby areas. Reduced income and spending in Westport could mean less income for Bridgeport, for example, which sends baby sitters, house cleaners, painters and day laborers to the rich towns to its west. In September, Bridgeport’s unemployment rate was 9 percent, more than twice that of Westport.
Home builders and the retailers of luxury goods will feel the effects of the economic downturn the most, said Walter Dolde, an associate finance professor at the at the University of Connecticut’s Stamford campus. For auto mechanics and other service providers, the bust will be a boom, he said.
FOR now, individuals in every occupation have their eyes on the Dow. “The market’s up 400 points!” exclaimed Nick Aquilino, business manager at New Country Lexus, which is eerily quiet. Sales were way off the last two months: 48 instead of the usual 65 by Oct. 17, even though Mr. Aquilino said credit was available for qualified buyers.
The median home price is $1.21 million, down from $1.3 million a year ago. “Real estate is dead now,” said Mark Basile, a real estate sales agent at Country Living Associates. Priced right, a house will sell, he said, but possibly at a loss.
At Westport Wash & Wax, the owner, Craig Tiefenthaler, hopes his detailing business will pull him through the slump. “Retailers all over Fairfield County are laying employees off,” he said. “I haven’t had to do that,” although his workers may get fewer hours.
In a town where image matters, the women of Westport are known for their smart appearance. But more are shopping at the local Goodwill, said Angelique Shutt, whose family owns Fred and Dolly’s Cleaning Station. “Then they complain, ‘It’s costing more to clean it than I paid for it,’ ” Ms. Shutt said. Customers still bring in their shirts for laundering, but fewer articles for dry cleaning, she said. Some are upset because “their husbands have made them fire the nanny or housekeeper,” she said.
Next door, at the Azena Nail Spa, where a manicure and pedicure combo costs $25, customers who came twice a month now come every two months, said Tina Chen, an employee. “It’s scary,” she said, scanning the nearly empty salon.
Residents are using the Westport Public Library more. “The library card is the new credit card,” said Maxine Bleiweis, director, noting membership increased 8 percent in September. “People have told me, ‘I can’t continue with my book group unless I borrow the books from the library.’ ” Cable TV series on DVD have gained popularity too as viewers cut back their paid cable programming, she said.
The library’s job search seminars, usually attended by 7 to 10 people a session, now attract 30 or more, she said.
Some businesses are more recession-proof than others. The week that the Dow fell below 9,000 for the first time in five years was one of the year’s best for Tony Anastasio, a fence maker who works mostly in Westport, Fairfield and Weston. While there are fewer “spec” houses to fence, “people are still putting in pools,” said Mr. Anastasio, whose jobs average $8,000 to $9,000.
Marilynn Lipton, owner of Soleil Toile, a lingerie store, said, “We still have our customers, but maybe they’re buying one or two things instead of three or four.” Fortunately, she said, “everybody needs a bra.”
Families are having conversations about whether to forgo or scale back the expensive ski trips, birthday parties, landscaping and more. Teenagers can no longer assume they can snap up cashmere sweaters at J. Crew or Juicy Couture sweats at Wish List, a local boutique, anytime they want. Sharon Kaplove, a certified financial planner at Ameriprise Financial with clients throughout Fairfield, said wise parents see this as a teaching moment. “It’s a great time to say to your children: ‘We had wanted to buy a new couch, but we’d rather have the money in the bank right now. We need to be more careful of our spending.’ ”
Some retailers are rethinking their business models. “It’s easy to expand and get caught up when business is great,” Ms. Kaplan said. She is making fewer buying trips overseas, stocking up on lower-priced goods, and vowing to “run my business as though there’s a recession all the time.”

2008-10-23T17:13:00.002-04:00

New foreclosure plan on tap
FDIC chief Sheila Bair says government is working on ways to use authority under bailout law to prevent foreclosures

The federal government, which has been criticized for not doing enough for Main Street while coming to the immediate aid of banks, is working on a new plan to help troubled homeowners.
The plan was discussed Thursday at a Senate Banking Committee hearing that probed the federal response to the credit crisis. Lawmakers repeatedly urged Treasury to act with dispatch and draw up clear guidelines to ensure that banks that receive taxpayer funding begin lending again and do all they can to prevent foreclosures. Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., told the Senate Banking Committee that her agency and the Treasury Department are working closely to find ways to prevent avoidable foreclosures. The plan would use the Treasury Secretary's new authority under the Emergency Economic Stabilization Act to provide guarantees to lenders and companies that service mortgages. "Loan guarantees could be used as an incentive for servicers to modify loans," Bair said. "Specifically the government could establish standards for loan modifications and provide guarantees for loans meeting those standards." That way, she said, "unaffordable loans could be converted into loans that are sustainable over the long term." Bair said one way loan guarantees can be used to prod loan servicers to modify more mortgages is for Uncle Sam to guarantee that the government would compensate servicers for losses in cases of re-default - that is, when a borrower receives a modified loan but then ends up becoming delinquent on the new mortgage. Re-defaults have been a concern for loan servicers, who must make the case to investors that a modification is a better deal for them than a foreclosure. The risk of re-default "is one area where greater certainty could be provided," Bair said, noting that it could make the option of modifying a loan "irresistible" to a servicer. Bair is taking the lead in shaping the government's next step on preventing foreclosures, but the Treasury is charged with creating such a program. Bair said Treasury is doing its due diligence and "is moving in a timely way." Neel Kashkari, the Treasury's interim assistant secretary for financial stability, told lawmakers Thursday that "we are looking at [the loan guarantee idea] very closely. It's something we're seriously considering."
Americans have made it clear they are not happy that the $700 billion financial rescue package is focused so heavily on financial institutions and less so on helping homeownwers directly.
"Now that the administration has taken strong measures to stabilize financial institutions, it is imperative that we apply the same sharp and urgent focus to help the individual homeowners whose plight is at the root cause of this crisis," said Senate Banking Committee Chairman Christopher Dodd, D-Conn. Bair, who worked with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke in crafting the financial rescue law, has been a longtime advocate of streamlining the modification process for homeowners who realistically have a chance of affording their mortgages once modified. After the FDIC became conservator of mortgage lender IndyMac this summer, Bair instituted a loan modification process for loans that were 60 days or more past due and which IndyMac either owned directly or serviced. About two-thirds of the 60,000 loans under IndyMac's umbrella are considered potentially eligible for the new program, she said. "Through this week, IndyMac Federal has mailed more than 15,000 modification proposals to borrowers and has called many thousands more in continuing efforts to help avoid unnecessary foreclosures," Bair said. So far, more than 3,500 have accepted the offers and others are being "processed." The modifications on average have cut borrowers' monthly payments by more than $380, Bair said. Not all foreclosures are preventable since some homeowners still won't be able to afford their homes, even under modified loan terms. Bair said the loans being modified at IndyMac must provide "improved value" for the bank or for the investors who own the loans. She added that she hoped the IndyMac modification program will serve as a "catalyst" for more loan modifications around the country. Other witnesses at Thursday's hearing included Brian Montgomery, the assistant secretary for housing at the Department of Housing and Urban Development; James Lockhart, director of the Federal Housing Finance Agency; and Elizabeth Duke, a member of the Federal Reserve Board of Governors. Kashkari is leading the Treasury's efforts under the $700 billion bailout to buy mortgage-backed securities and invest in banks. He said Thursday that Treasury "will look for every opportunity possible to help homeowners" as it carries out the plan. Members of the banking committee repeatedly urged the Treasury move swiftly. "Your actions and decisions are critically important to inspiring taxpayer confidence," said Sen. Bob Casey, D-Pa., noting that jobless rates are rising - which increases foreclosure risks. Dodd, meanwhile, said thousands of families are entering into the foreclosure process every day. Depending on the state, the foreclosure process can take several months to complete and not everyone who enters it loses their home. For his part, L ockhart said that mortgage finance companies Freddie Mac and Fannie Mae - which own or back trillions of dollars in home loans - are pushing hard to help homeowners. "We have already been working with Fannie Mae and Freddie Mac to find new ways to prevent foreclosures," Lockhart said. For example, he said the companies have boosted resources and staff aiming at assisting companies that service loans. Frustration with voluntary efforts Banking committee members expressed frustration on behalf of their constituents that the financial institutions receiving capital injections from public coffers may be getting too much latitude in deciding how they use the money. The intent of offering taxpayer funds is to spur banks to lend more and do more to keep troubled borrowers in their homes. Kashkari said the Treasury is pushing on financial institutions to do that but "we are afraid of discouraging healthy institutions from participating ... because they're in the best position to lend." He noted that restrictions on the use of that capital pertaining to the issuance of dividends and share repurchases provide "strong incentive to put that capital to good use." Recognizing that a legally binding, one-size-fits-all approach may not be possible given the broad range of institutions that might participate, lawmakers nevertheless told Kashkari they would like Treasury to consider issuing guidelines that state very strongly how the banks are expected to use the money.
Some banking committee members also expressed frustration with relying on the voluntary participation of lenders under a loan guarantee program. Sen. Robert Menendez, D-N.J., noted that the foreclosure-prevention programs already in place rely on lenders' good graces and have failed to adequately address the problem. Bair said the government and lenders are far behind where they should be in terms of preventing avoidable foreclosures. And that while voluntary programs have been helpful, going forward "there needs to be a package of carrot-and-stick incentives."

2008-10-16T16:44:00.002-04:00

Pending home sales jump 7.4 percent
Jump may be brief because of global financial meltdown

WASHINGTON - Pending sales of existing U.S. homes unexpectedly jumped in August to the highest in over a year, data from a real estate trade group showed on Wednesday.
The National Association of Realtors Pending Home Sales Index, based on signed contracts, rose 7.4 percent in August to 93.4 from an upwardly revised 87.0 in July on pent-up demand as affordability improved. The jump may be fleeting, however, as global financial markets chaos has since escalated, some analysts said.

August’s reading was 8.8 percent higher than a year earlier and was the highest since 101.4 in June 2007. Economists polled by Reuters had expected sales to drop by 1.8 percent.
“What we’re seeing is the momentum of people taking advantage of low home prices,” the association’s senior economist Lawrence Yun said in a statement. “Home buyers in July were hampered by overly stringent lending criteria in the months before the government takeover of Fannie and Freddie,” in early September, he said. “August shows some unleashing of pent-up demand before the credit crisis accelerated in September.” Home funding giants Fannie Mae and Freddie Mac, the largest buyers of U.S. mortgage bonds, were taken under government control on September 7. Yun said it is unclear how contract activity will be disrupted by the crisis on Wall St, “but we’re hopeful most of the increase will translate into closed existing-home sales.”

Pending home sales gained across all regions in August: up 18.4 percent in the West, 8.4 percent in the Northeast, 3.6 percent in the Midwest and 2.3 percent in the South. “The pending home sales data is not a signal of where we are going. Foreclosed homes at bargain prices have probably been supporting it,” said Nigel Gault, chief U.S. economist at Global Insight in Lexington, Massachusetts. “We shall see if these sales close and if those people will go through the transaction because people’s finances have worsened since that time,” he added. “Housing at first impacted the economy and the economy is now impacting housing in a vicious cycle.”
The 30-year fixed mortgage rate will average 6.1 percent in the fourth quarter, rising to 6.6 percent by the end of next year, the NAR predicts. The trade group forecasts U.S. existing home sales at 5.04 million this year, rising to 5.41 million in 2009, and new home sales of 503,000, falling to 471,000 next year. Housing starts, including multifamily units, should drop 28.2 percent to 973,000 units this year, and fall further to 843,000 in 2009 as builders clear inventory, it added.

2008-10-16T16:38:00.001-04:00

Survey Finds Expansion of Housing in the U.S.

The number of houses, apartments and mobile homes in the nation rose by almost four million from 2005 to 2007, to 128.2 million, according to a survey the Census Bureau released on Monday. Nearly 3 percent of housing units were occupied by three generations of the same family, the survey found, and 27 percent by people living alone. Renters occupied 32 percent and owners 68 percent. Of the total number of housing units, 6.3 million were manufactured or mobile homes and 6.4 percent were co-ops. The vast majority, 80 million, were detached single-family homes. The data, included in the 2007 American Housing Survey, does not account for the full impact of plummeting prices since the subprime and credit crises struck.
But the survey suggests one possible cause for the difficulty in meeting monthly housing costs: Among owners who reported making a down payment on the homes they occupied, about a third put down only 6 percent or less of the purchase price. Among black homeowners, about half made down payments of less than 6 percent. Housing costs consumed 24 percent of income over all. Those costs were 13 percent for owners without a mortgage, 28 percent for co-op residents with a mortgage and 33 percent for renters. Among the more than 75 million homes occupied by their owners, one in three had no mortgage. Median home value over all rose about 16 percent to $191,471, from $165,344 in 2005, a slightly smaller percentage gain than the two-year increase from $140,201 after 2003. The number of houses and apartments valued at over $300,000 soared more than 20 percent since 2005. The 2007 survey found more than four million occupied homes valued at $750,000 and up and another 92,000 for sale at those prices.
Median monthly housing costs in 2007 were $927 for owners and $755 for renters.

The American Housing Survey, conducted by the Census Bureau for the Department of Housing and Urban Development, also found more homes in communities that are gated or have rules against younger residents, compared with 2005. More homes had a usable fireplace than a working carbon monoxide detector, and more had a garage than a dishwasher. About 86 percent were air-conditioned. The median size of all single, detached and manufactured or mobile homes rose slightly since 2005, to 1,769 square feet (and to 2,304 for homes built in the previous four years). The median amount of space per person also increased, to 769 square feet.
The survey’s 600-pages of tables detail wide disparities based on race, ethnicity, income and location in the rates of home ownership, physical condition of dwellings, satisfaction with neighborhoods and dozens of other variables. Residents of about 15 percent of homes and apartments said a serious crime had occurred in their neighborhood in the preceding year, although 90 percent said they were satisfied with police protection. Compared with 2005, fewer windows were protected by bars, but more were boarded up or broken, another possible consequence of foreclosure and abandonment. Among households with small children, more than 60 percent said the children attended a satisfactory public elementary school. Occupants of about one in four housing units gave their neighborhood the top rating. About 23 percent had complaints of annoying street noise or heavy traffic. People living in 18 million homes said their neighbors were noisy, but 72 percent described the noise as not bothersome.

2008-10-07T17:42:00.002-04:00

Home sales, prices plunge in August
'Home prices likely to decline ... in the quarters ahead,' economist warns

A record decline in U.S. home prices in August attracted more buyers in some areas and led to a sizable decline in the number of unsold homes on the market, the National Association of Realtors said Wednesday.
The median sales price fell 9.5 percent to $203,100, the largest price decline on records dating to 1999. As prices fall, buyers are taking advantage of steep discounts, especially in hard-hit markets like California, Nevada and Florida.
“Time and price are the real cures for the housing market slump,” said Mike Larson, an analyst at Weiss Research.
The inventory of unsold homes fell 7 percent to 4.3 million, down from the all-time record of 4.6 million in July. That’s a 10.4-month supply at the current sales pace.
The decline, however, merits only “a small round of applause” because around five months of inventory is a more typical level, wrote Global Insight economist Patrick Newport. Also, many homeowners who don’t have to sell are likely keeping their properties off the market. At the same time, thousands of foreclosed properties are tied up in court and are not for sale yet.
Lawrence Yun, the trade group’s chief economist, said he hopes the downward trend in inventories continues because, “home prices will not stabilize as long as inventories remain high.”
Inventories have been driven higher by a massive wave of mortgage foreclosures, especially on risky loans.
Reckless lending standards during the real estate boom coupled with the current decline in home prices are the driving forces behind record mortgage defaults. They have spurred a credit crisis that has shaken Wall Street to its core and caused the Bush administration to propose a $700 billion financial industry bailout.
The Realtors hope the government’s takeover of mortgage finance companies Fannie Mae and Freddie Mac, combined with a massive purchase of distressed mortgage securities on Wall Street will ultimately make it easier for homebuyers to get a mortgage.
But with credit remaining tight and foreclosures still surging, “home prices are likely to decline considerably further in the quarters ahead,” wrote Joshua Shapiro, chief U.S. economist at MFR Inc., in a research note.
Making matters worse for buyers, mortgage rates, which fell after the takeover of Fannie Mae and Freddie Mac, have been creeping back up amid uncertainty over how the government’s intervention in financial markets would play out. New applications for home loans fell 10.6 percent last week, the Mortgage Bankers Association said Wednesday.
Existing home sales fell in August to a seasonally adjusted rate of 4.91 million units, down 2.2 percent from an upwardly revised pace of 5.02 million in July. Sales were down almost 11 percent from August last year. Without adjusting for seasonal factors, sales were down 15 percent from year-ago levels.
While buyers are pouncing on lower prices — especially in places like California, Florida and Nevada — sales are sluggish in formerly stable markets like the Pacific Northwest and Charlotte, N.C., Yun said.
Dave Lenderking, 67, saw his house in Holly Springs, N.C., sit on the market for four months before taking an offer $50,000 lower than his original listing price of $565,000.
“It was the only offer I had,” said Lenderking, who is in the process of moving to retirement community in Virginia. “Mentally I was just ready to move on.”
The rate of home sales fell from July to August in the Northeast and West, which posted 6.6 percent and 5.3 percent sales declines, respectively. Sales rose by less than 1 percent from July to August in both the Midwest and South.
Meanwhile, the Bush administration sought Wednesday to overcome obstacles to its plan to rescue financial firms and restore confidence in the credit markets. Real estate industry groups lined up behind the administration’s plan.
“The flow of credit has been severely curtailed for housing and other sectors of the economy,” Sandy Dunn, president of the National Association of Homebuilders said in a statement. “There’s no time to waste.”
The Mortgage Bankers Association wants to kill an effort by Democrats to allow bankruptcy judges to rewrite mortgages to ease the burden on borrowers facing foreclosure. John Courson, the group’s chief operating officer, wrote in a letter to lawmakers that the change “will inevitably raise the cost of credit.”

2008-10-07T17:34:00.004-04:00

A Loan Fit for the Countryside

AS the subprime mortgage crisis has left thousands of people in the New York City area jobless and struggling to make housing payments, the United States government is encouraging a move to the country — way out in the country.

The Department of Agriculture’s Rural Development Agency, which was established to help to raise the economic standing of those living in outlying communities, is making mortgages at a pace unseen in recent years.

For borrowers, a big attraction is that they can qualify even if they have no down payment.
There’s a catch, though. Actually two of them. First, borrowers must have a household income that does not exceed 115 percent of the area’s median. In the New York City area, that means a total income of no more than $82,000 for a two-person household and $102,500 for a family of four.
Second, the borrower must buy in a designated rural area. In the New York City region, that limits the choice of homes on Long Island to the far east end, beyond the town of Southampton or on the North Fork, and in Westchester County to northeastern communities like Pound Ridge and North Salem. All of Putnam County also qualifies.
In New Jersey, you have to get out to towns like Newfoundland and Kinnelon, in Passaic and Morris Counties, some 30 or 40 miles from Midtown, before you qualify. In Fairfield County, Conn., homes in Weston and Redding can qualify, as well as some farther northeast.
If you’re lucky enough to find a home you can afford on a moderate income in those areas, the loans offer a rare benefit, said Joaquin Tremols, the director of single-family loan programs at the Rural Development Agency. “It’s the only no-down-payment program left in America for nonveterans,” he said.
In general, lenders have steadily increased their down payment requirements as the mortgage industry has struggled — a logical response, given that borrowers may be more inclined to walk away from loans when they have little at stake. Now, many borrowers cannot qualify for a loan unless they can put down 20 percent of a property’s value.
Mr. Tremols said demand for the rural loans had jumped sharply in the past fiscal year, doubling to more than $6 billion in mortgages. That pattern, he said, has held true in the greater New York area, but the absolute numbers are relatively modest.
In the first 11 months of this fiscal year, which ends on Sept. 30, New Yorkers took out almost 700 Agriculture Department mortgages for roughly $65 million, while in New Jersey borrowers took out about 200 loans for $37.5 million. In Connecticut, 128 of the loans were distributed, for a total of $24 million.
By comparison, Michigan topped the list, with nearly 4,000 loans, worth around $388 million.
Although one need not have a down payment or a huge salary to qualify, prospective borrowers must have a fairly clean financial picture. Mr. Tremols said a borrower must be able to document his or her income, and the monthly mortgage expense cannot exceed 29 percent of the income.
When the mortgage is combined with car payments, credit cards and other debts, the borrower’s monthly payments cannot exceed 41 percent of his or her income. (This is the so-called combined debt-to-income ratio.)
Interest rates for Agriculture Department loans are in line with prevailing market rates, although the program’s borrowers incur a one-time fee of 2 percent.
For those considering a second home in the country, there is bad news: the loans are available only to those who use the home as their primary residences

2008-06-12T08:09:00.001-04:00

Will Machines Replace Real Estate Agents?
A New World
Some websites promote their equivalence to or superiority over the flesh and blood real estate agent. While mathematical computations can be completed much faster by microchips and microprocessors, they lack the same thing Dorothy's beloved Scarecrow lacked: a brain.
Today's Lenn Harley post on Zillow caused me to consider: Just what is it that makes a real, live, on-site agent better than the Zillow machine?

What's Wrong with a Machine Estimating Value?
Probably the largest fault to be found with Zillow's calculations is that they are entirely mechanical. Data In - Data Out.
And what is wrong with evaluating data? Absolutely nothing, so long as the unquantifiable facts are considered as well.

Consider the Following
Suppose 3 really run down homes sell recently in an otherwise upscale neighborhood... wouldn't Zillow guestimate that all the other homes in the neighborhood are worth significantly less than they really are? While this may be good if the Seller is willing to give his home away, it doesn't help anybody who wants to buy or sell a home in the real world.
Suppose those same 3 homes are subsequently renovated... all values in the neighborhood should rise, right? Yet the formula within Zillow can't see past the raw data, which remains unchanged.

Hallelujah!
At one point Zillow had my property valued at 1.3 million. I was ready to call them up and sell it to them for 1/2 it's value!
Often, Sellers who have such good fortune will leave a copy of Zillow's justification for their ridiculous asking price on the kitchen counter. Buyers who are off their guard might even be influenced by such an unbiased, third party's "appraisal" of the homes value. Unrepresented Buyers might go into the transaction feeling confident that they are getting a good deal, all the while significantly overpaying for the home.
Has the day arrived that I can send over a LOW Zillow Estimate as justification for a Buyer's ridiculously low offer and not be laughed at and called unprofessional by other agents? It has not.

Unquantified Factors
With time, Zillow might be able to give a rough estimate of value for a neighborhood, but a Zillow estimate should not be considered an accurate representation of actual market value.
Does a "zestimate" even take into account lot size?
Mitigating factors? (Power lines, busy street, view, etc...)
Does it consider the finish level of the home or take into account whether or not there were any concessions on the comparable sales?
Does it take into account that a home might have major structural problems?
What about whether or not the home has been stripped of appliances and fixtures (or maybe even copper wiring)?
Likewise, just because a few people relocate to the same area and overpay for their homes within a short period of time doesn't mean that the actual worth of surrounding homes has risen. It just means a few people recently overpaid.
If 2 or 3 people overpay within a limited geographic area, can Zillow comprehend this? Or will it add value to the surrounding homes as if their value actually did rise?

The Bottom Line
Data needs to be interpreted by a professional who can reasonably discern whether or not certain issues were taken into account when determining the sales price of a comparable property.
Buyers should seek out such an agent who will represent their interest only in the real estate transaction.

2008-05-07T12:52:00.000-04:00

Best real estate Web sites
Sixteen addresses that can save you time and money.

By Carolyn Bigda and Janet Paskin, MONEY Magazine reporters
May 17, 2006: 4:30 PM EDT
NEW YORK (MONEY Magazine) - Unless you've bought, sold or refinanced recently, you may not realize how much the Internet has changed the game in real estate. It wasn't all that long ago that you had to actually phone banks to get mortgage quotes or had to physically show up at an open house to get a look inside it.
Now, information that once was closely held by high-commissioned professionals is just a mouse click away.
Want to access the multiple-listing service without seeing an agent? Check.
Plan a dream home without hiring an architect? Check.
Find out the value of every home in your neighborhood (or any other)? Yep, you can do that online too.
But that's not all. Read on for a download of our favorite "home" pages.
Best site to find out if you can afford a house
Mortgage-calc.com
There's no shortage of mortgage calculators out there, but this one ranks high for efficiency. No ads, no pop-ups, nothing but straight number crunching. Here you'll find the standard offerings: What will your mortgage payment be? When will you pay it off? But the site also features more advanced arithmetic:With "prepay vs. invest," for example, you plug in the amount of a recent windfall to determine whether it's better used on your mortgage or on stocks.
Best site to satisfy your inner Bob Vila
DoItYourself.com
You could pay someone else to install a door, rip up your carpet or clean your gutters. Or, with coaching from DoItYourself.com, you can roll up your sleeves and, well, do it yourself. Founded by the son of a hardware salesman, the site provides step-by-step instructions for almost every home project - from removing adhesive (warm vinegar) to building an addition. Should you realize, mid-job, that you're not so handy after all, you can find support in the site's moderated forums.
Best moving calculator
moving.move.com/move/tools/movingcalc.asp
About 40 million Americans move annually, according to the Census Bureau. Next time you're breaking out the packing peanuts, ballpark your budget with the moving calculator at Move.com. Estimates are based on how far you're going and how many furnished rooms you have. If you're taking the contents of a two-bedroom house from Seattle to Sioux Falls, S.D., expect to pay between $4,200 and $5,100.
Best insta-estimate of your home's value
Zillow.com
At any given moment, you can look up the value of your stocks. But what about your biggest asset, your home? Launched earlier this year, Zillow.com delivers a free instant estimate, based on public records. Type in your address, and the site returns a value quicker than you can say "town assessor's office."
It's no substitute for a professional appraisal, as the records used can be outdated; and for now the site can give estimates on only 47.4 million homes, so it's hardly comprehensive. "But we're a starting point," says chief financial officer Spencer Rascoff - not to mention a great resource for nosy neighbors. Who've you "zillowed" lately?
Best site for seeing how far your equity will go
hpci.coldwellbanker.com
Now that you've zillowed your house, maybe you're considering cashing out and moving on. Here's a nifty tool that shows what you can get where: The Home Price Comparison Index spits out the equivalent value (circa 2005) for houses in more than 300 cities. A $400,000 property in Basking Ridge, N.J. would go for about $304,000 in Boca Raton, Fla., leaving you a little extra for sunscreen.
Best way to save money building a dream home
Homeplans.com
You have the perfect Dutch Colonial in mind. But how do you turn your mental image into a four-walled reality? You could hire an architect to design something - and pay, at minimum, 2% of construction costs. Or you can go to Homeplans.com, which sells thousands of readymade blueprints, each $1,000 or less. Search by style, square footage or number of rooms. You can even customize a plan using the in-house design team; it'll cost extra but may still save you in the long run.
Best listing site for sellers flying solo
ForSaleByOwner.com
Agent, schmagent. If you want to go it alone and deal exclusively with buyers doing the same, this is the place to do so. This site is the most heavily trafficked in the world of FSBO; in fact, the average listing sells in just over two months, according to chief operating officer Colby Sambrotto. For about $200, you can add your home to the site's listings. Or pay a higher fee (up to $900) to have it put on the multiple-listing service. If an agent approaches you with a buyer, you'll have to pay his commission (between 2% and 3%), but that's half the cost of working with a full-service brokerage.
Best site to jump-start your renovation
LetsRenovate.com
Bigger bathrooms and custom kitchens are the stuff of homeowners' dreams. Actually remodeling, on the other hand, can be a nightmare. Not to worry. LetsRenovate.com guides you from the first decision - renovate or move? - to the final inspection. The site aggregates function (check reviews of ovens), fashion (see how others painted their bedrooms) and finance (learn how to do the whole thing under budget).
Best way to steel yourself for a remodel
HouseBlogs.net
If you love watching Extreme Home Makeover but aren't sure you'd like to live it, get inspired at HouseBlogs.net. Run by a Chicago couple who are recording their bungalow's overhaul on houseinprogress.net, this site brings together a bunch of remodelers-cum-bloggers, all of whom chronicle the triumphs and tragedies of their undertakings online, complete with pictures. Once you're emotionally ready to begin your own renovation, consider joining the fray. Says founder Jeanne Olson: "This community can keep you motivated long after your offline friends think you've gone completely nuts."
Best site for real estate window shopping
Realtor.com
So you're not in the market for a home. Well, that's no reason not to look. For shameless real estate voyeurism, there's no better site than Realtor.com. Just plug in the zip code and let the ogling begin. The biggest online listing service, this site has more than 2.5 million homes for sale or rent across the country. So whether you're imagining a waterfront condo in Hilton Head, N.C., or a five-bedroom in the Chicago suburbs, you'll find something to covet.
Best hourly rate for an attorney
Real-estate-law.freeadvice.com
With entries on easements, mortgages and more, the real estate law section of FreeAdvice.com covers common issues that buyers, sellers and owners face: Should I sign a letter of intent? What kind of taxes am I subject to on my home? Should I put my kids on the deed? Lawyers write the entries and, as is legally prudent, they steer clear of specifics that vary from state to state. "If you're involved in a dispute, you need an attorney," acknowledges founder Gerry Goldsholle. "But we can give you the basics."
Best bird's-eye view of a neighborhood
HomePages.com
Looking at homes online, you can't tell where the nearest Target is or which way to go to get to the highway. HomePages.com can give you an eye in the sky. Enter an address, and the site loads aerial maps with retailers, restaurants, schools and other landmarks plotted. One caveat:Maps are typically more than a year old, so you might miss a Starbucks or three.
Best way to prepare yourself for the worst
iii.org/individuals/homei
Two-thirds of homeowners don't have the insurance coverage they need. Don't be one of them. Log on to the Insurance Information Institute's website, which explains different policies and helps you figure out which are right for you. Use the free home inventory software to assess the value of your belongings - and to create a record in case you ever need to file a claim. You can't get a quote here, but you can find an agent. And thanks to the glossary, you might even understand what the heck she's saying.
Best first stop for mortgage shoppers
Bankrate.com
It always pays to shop around for a loan, but especially now that rates are on the rise. No single site returns every option, but Bankrate.com gives more than most. Enter your location and the terms you want, and the site returns randomly sorted listings, both paid (updated daily) and unpaid (updated less often). Be sure to hit local banks in person to see if they can match the lowest rates you found online.
Best site to see which schools make the grade
SchoolMatters.com
When shopping for a new house, most families also find themselves shopping for a school district. Study up at SchoolMatters.com, published by Standard & Poor's. On it you'll find all the relevant numbers - size, test scores, teacher/student ratio, and so on - by district and school. The site also compares community income, education levels and median home values with state averages. Now if only it told you which teachers to request.
Best site to find a renter for your beach house
CyberRentals.com
At $158 a year, this site isn't the cheapest way to find paying guests. But its easy interface for renters makes it a good investment for vacationhome landlords. Listings, organized by region, feature descriptions and photos. And unlike on other sites, renters can search by availability, which gives them - and you - a better chance of finding a match. In fact, now that you're expecting a little extra income, you might just find yourself planning a vacation of your own on here. Nantucket is awfully nice this time of year....
Find mortgage rates in your area

2008-04-23T13:14:00.001-04:00

Our Towns
Hints of Fear in the Land of Mansions
By PETER APPLEBOME
GREENWICH, Conn.
You could have a pretty good time checking out the merchandise if you’re looking for a place to hang your hat in Greenwich: Mel Gibson’s manse on 75 acres with the walk-in fireplace and the two-handed Scottish claymore sword hanging above the mantel (asking price $39 million); Leona Helmsley’s 40 acres, which just went on the market for $125 million; the stunning 10-acre property overlooking Long Island Sound being sold, most likely, as a $34 million teardown.
But this might not be the first place you would come to take the temperature of the real estate market, Greenwich being the typical housing market much the way Maria Sharapova is the typical eHarmony.com Internet date.
On the other hand, who knows? The rich may be different, but judging from the chatter of real estate agents touring open houses on Tuesday, maybe not all that different as the house-selling season staggers off to an uncertain start.
When the subprime bubble became a problem for the housing market, people here yawned. Who in Greenwich has a subprime loan? If they’re yawning now, though, it’s only because they’re sitting around bored as megahomes sit on the market like beached yachts.
All of which is another reminder of just how far the contagion has spread. And it is serious grist for Chris Fountain, who fills one of those niches that would have to be invented if it didn’t exist: real estate blogger of Greenwich.
There’s always real estate to talk about in Greenwich — witness a report in The Greenwich Time this week that neighbors are upset about a proposed 30,000-square-foot house (Turkish bath, Finnish bath, gym, theater, wine cellar, etc.; not everyone is hurting) deemed too big even for Greenwich.
“Real estate is to Greenwich what wheat is to Kansas,” said Mr. Fountain, a recovering lawyer and sometime author who has been selling real estate since 2002 and writing about it since 2003 (he has a column in The Greenwich Post, a local weekly, along with the blog, greenwichrealestate.blogspot.com ). “It’s a blood sport in Greenwich. When I get stopped in the supermarket, you never know if people want to say hello or punch you in the nose.”
As he said on his blog the other day, real-estate brokers do not like it when their peers pass on any bad news, but, “Our selling clients certainly can figure out what’s going on, because their houses aren’t selling, so who are we supposed to be keeping in the dark?” He cited figures showing that as of the end of February, the number of sales in Greenwich was down 39 percent compared with last year.
The Greenwich market probably peaked in the fourth quarter of 2005 and has been slowing since, but this is the first time there’s a whiff of panic in the air.
After sampling the quiche and crudités at the lunch buffet in the empty kitchen of one of the new houses in the Golden Triangle area of Greenwich’s mid-country, the brokers wandered around with the air of picky estate appraisers.
Yes, it had the basics: 6 bedrooms, 7 ½ baths (it is practically illegal in Greenwich to build houses in which the future investment bankers of America don’t have their own bathrooms), master suite in the master wing, pool, spa. But at north of $10 million, in this market, well, maybe the closets were a tad small, the fixtures kind of ordinary, the mix-and-match exterior of stone and clapboard generic enough to be best described as neo-neo.
Mr. Fountain figured it would eventually sell for $7 million. Someone else said $7.5. The high estimate was $8, but she was talked down to $7.5 as well.
“It’s going to be an interesting market,” said one.
“It is an interesting market,” said a second.
“It’s going to be a challenging market,” said a third, and the escalation stopped there.
At the very top, the market seems to be holding up, because those buyers (unless they happened to work for Bear Stearns) tend to have enough stock to make anything work. It’s more the meat-and-potatoes houses in the $2 million to $4 million level that have really been hit, as lenders demand 30 percent or more as a down payment instead of the 20 percent in days gone by.
(And, truth to tell, even in Greenwich there is public housing, modest cottages that now cost six figures, and plenty of ordinary people living in houses they could never afford to buy.)
Of course, there are already winners. Mr. Fountain cited a deal in which he represented the buyer. The house was listed for $11.5 million, fell to $8.5 and finally sold for $6.9 million. (Hint: If you’re shopping, don’t offer $125 million for the Helmsley place).
Mr. Fountain lives in a house his grandmother bought for $17,000 in 1957 that is now a $2 million or $2.5 million teardown. “Right in the dumpster,” he said.
He figures everyone got spoiled, in Greenwich like nowhere else, but people have to realize that for now, at least, the music has stopped. He figures there’s a bottom somewhere, but it’s not necessarily around the corner, and, in Greenwich, at least, that’s not necessarily the end of the world.
“I once worked on the defense of a young man wrongfully convicted of rape and sentenced to 18 years in prison,” he said. “That’s something to lose sleep over, for years. Someone doesn’t buy a house? Hey, there are plenty more out there.”

2008-03-19T11:14:00.000-04:00

In the Region Westchester
Virtues of the Short Sale
By ELSA BRENNER
IS it possible for a homeowner who owes $725,000 on a mortgage to sell a house for only $560,000 and still walk away happy, or at least relieved? The answer is yes, if the transaction is a short sale — defined as selling for less than the mortgage owed, in a deal with the lender to forgive the rest of the debt and head off a foreclosure.
A last-ditch option for a homeowner in default, the short sale is increasingly being seen a valuable tool by sellers, buyers, real estate agents and lenders. But it does come with this caveat from real estate agents and lawyers: it is an intricate transaction, often taking many months to complete.
Describing the process as “the lesser of two evils,” Mark Boyland, the president of the Westchester-Putnam Multiple Listing Service and an associate broker at Keller Williams NY Realty, nevertheless emphasized its value as “a way to help out both the homeowner and the bank, and make a bad situation better.”
The case above, involving a four-bedroom ranch in southern Westchester, is typical. The sale price did not cover the entire mortgage but was still high enough for the lender to forgive the remaining balance, said Patti Cunningham, the owner of Cunningham Realty in Hawthorne, who brokered the deal.
The owner had been grappling with the costs of college tuition and a parent’s medical bills, and had refinanced the mortgage loan six times in five years to meet the growing expenses, Ms. Cunningham said.
The owner decided to sell the house, bought in 1999 for $310,000. But the $700,000 that a 46-year-old ranch in good condition might have fetched in a more robust market was not realistic. The house languished, and when bids did come in, they were far below the asking price. Several months later, the seller, who had fallen behind on mortgage payments, was notified that foreclosure proceedings had begun.
Finally, with an offer of $560,000, Phyllis Knight Marcus, a real estate lawyer in Hawthorne, contacted the lender, who eventually agreed to the deal.
“In the end, the seller got out from under,” the lawyer said. “The buyer was happy because he got a bargain, and the bank was pleased to have the situation solved.”
Ms. Marcus is working on five short-sale cases in Westchester County; last year she had none. Mr. Boyland at Keller Williams is similarly negotiating five short sales, versus none a year ago.
“It’s a trend that began last year in response to a troubled market,” he said, “and more and more people finding themselves in an upside-down situation.”
Nationally, defaults on home mortgages reached an all-time high at the end of 2007 as foreclosures surged on adjustable-rate mortgages, the Mortgage Bankers Association, an industry group, reported on March 6.
In Westchester, foreclosure numbers are also on the upswing, said Geoffrey Anderson, the executive director of Westchester Residential Opportunities, a nonprofit housing group in White Plains. In the first nine weeks of the year, there were 515 foreclosure filings in Westchester, Mr. Anderson said, adding, “That’s up significantly from what it was last year, and we’re expecting many more in the coming months” as many more adjustable-rate mortgages reset this spring and summer.
The bulk of the foreclosures are occurring in places like Yonkers, Mount Vernon, New Rochelle and Greenburgh, which have the highest concentrations of low-income residents, Mr. Anderson said. But more affluent communities are far from immune. For example, Mr. Boyland’s short-sale cases are in Pound Ridge, Katonah, Bedford and North Salem.
Still, when compared with foreclosures in other New York area suburbs, Westchester’s are relatively low. For instance, according to ForeclosureDeals.com, a listing service, Westchester has 91 homes in foreclosure, while Nassau County has 186.
As an indicator of how complicated such cases can be, and of how many more are expected, Mr. Boyland is one of a number of professionals taking courses in short sales. He has also hired a specialist as a consultant. “The banks change their guidelines every week,” he said, “so you have to stay on top of things.”
The laws governing such sales are also in flux. For example, a federal law passed late last year exempts sellers from having to pay income tax on the amount forgiven, but only if the house in question is the owner’s primary residence. In previous years, the forgiven debt was considered income, even though the seller received no money.
PropertyShark.com, a real estate data provider, is one of several businesses offering courses. “It’s very important for investors and brokers to understand the distressed-property industry,” said Bill Staniford, the company’s chief executive, “because it looks like we might be dealing with this for years down the road.”
But even though short sales are on the increase, Ms. Cunningham of Cunningham Realty cautioned that sellers should not expect to use them as “a quick way to get out of a bad deal.”
Before a bank agrees to one, she said, the lender first needs to ascertain that “a seller is really at the end of the rope financially, and has tried to utilize his or her own resources first.” A seller seeking a short sale must submit a hardship document outlining what led to the default in payments, along with a detailed lists of expected fees, expenses and commissions, in addition to principal and interest.
But even then, after a price has been determined and the paperwork submitted, many months often go by before a decision is reached by the lender, which retains the right to turn the deal down.
Housing advocates and mortgage counselors caution that a short sale is only one option; some nonprofit groups are helping borrowers work out alternative arrangements with their mortgage holders.
“The short sale is not the only way to go,” said Mr. Anderson at Westchester Residential Opportunities. “We’re not involved in any yet, but as we see that a short sale could benefit a homeowner, we would advocate for that.”

2008-03-17T15:11:00.001-04:00

At Auction, UFO Home Didn't Take Off

The sale price for a Chattanooga, Tenn., house shaped like a flying saucer is nothing to phone home about.
The Space House sold at auction Saturday for a down-to-earth bid of $135,000. Auctioneer Terry Posey says he's surprised bidding didn't go higher. The sale of the 38-year-old, three-bedroom structure perched on six "landing gear" legs attracted worldwide attention.
Posey says Pearl Johnson of Cincinnati bought the mountainside house but didn't want to discuss the transaction.
The house has a retractable staircase that lowers to the ground. A neighbor says that feature came in handy for one former owner who was having an argument with her husband. She pulled up the stairway, drove her husband's truck underneath it so he couldn't get the stairs down and left him stuck inside.

2008-03-17T13:51:00.000-04:00

Lowball Offers on the Rise
By LISA PREVOST
WHAT image does the term “lowballer” conjure up for you? A smirking bottom feeder in a bad suit? A fast-talking investor working the phone?
How about a couple of young newlyweds who have saved their wedding cash to put toward their first home?
James and Valentina Sbarra fit the last description, and they are relieved to be able to call themselves successful lowballers. Any nervousness they felt in making a stingy offer — lowballing is typically defined as offering less than 90 percent of a house’s asking price — fell away the minute they struck a deal on their two-bedroom raised ranch in Pawling, N.Y., in Dutchess County.
“We kind of took a gamble,” said Mr. Sbarra, a bank manager in Mount Kisco, N.Y. “But it worked out for us.”
Throughout the region, buyers of all stripes are feeling similarly empowered to bid low and keep their hopes high. The practice still fails more often than not, in that buyers are unlikely to get themselves a steal. But many sellers are swallowing hard and negotiating, because lowballing has become so common that, for better or worse, it’s part of the new norm in buying or selling a house.
The Sbarras gambled by offering $287,000 for their house, which was listed at a reasonable $329,000. In doing so, they risked angering the owner and ruining their prospects for negotiation.
“I think it’s worth $320, $325, and I gave them my opinion,” said Peter Bell, an owner of Balch Buyer’s Realty in Mamaroneck, N.Y., an agency that represents only buyers. “But they said, ‘We don’t want to go too high.’ So I said, ‘O.K., let me make the offer as strong as I can, and we’ll hope for the best.’ ”
Much to Mr. Bell’s delight, the owner responded with a counteroffer of $315,000, and the parties went back and forth until settling on a price of $300,000, the amount the Sbarras had set as their cutoff. The couple moved in last month.
“We would have been disappointed if it hadn’t worked out,” Mr. Sbarra said. “But it was a situation where we felt buyers had the upper hand.”
Many buyers are willing to go a lot further than the Sbarras did, apparently without concern about rankling owners.
“It’s like the Wild West out there right now,” said Terry Sciubba, the owner and broker at the Sherlock Homes Realty Corporation in Glen Cove, N.Y., on Long Island. “I do have customers where if a house is listed at $600,000, they’ll put in an offer for $350,000. That really, really happens.”
In Westchester, that mind-set plays out right through the home inspection process, which has become “a weapon for the buyers to further negotiate the contract,” said Keith E. Schutzman, a real estate lawyer in Scarsdale, N.Y. “A $500 repair item is now a $5,000 repair item” when it comes to asking the seller to lower the price.
Tami Rapaport, a sales associate in the Tenafly, N.J., office of Coldwell Banker Residential, finds the same thing happening in Bergen County. “People are coming in with offers even 20 percent under,” she said. “People have no shame.”
To be sure, there is an aspect of lowballing that seeks to take advantage of other people’s desperation or misfortune. Some lowball bids are plain outlandish, never mind insulting.
Yet in a difficult real estate market like this one, advocates of the lowball approach say that, practiced respectfully and within the bounds of reason, it can also serve as a necessary reality check on overpriced properties. If some agents are reluctant to push stubborn sellers to lower their prices out of fear of losing the listing, a few disappointingly low offers will communicate the market’s message in the bluntest terms.
James Bednar has been tracking New Jersey lowballers on his blog, New Jersey Real Estate Report (available at njrereport.com) since mid-2006. Inspired by his own frustrations as a buyer, Mr. Bednar said he wanted to test the conventional wisdom that lowballing “was a waste of time — that it was futile to even attempt it.”
So, after obtaining a real estate license, which gives him access to multiple listing service data, he began periodically posting lists of sales with gaps of 10 percent or more between the original list price and the selling price.
At first, the conventional wisdom held up — only a tiny percentage of sales reflected accepted lowball offers. But as the market began to slide, the discounts deepened. His last “Lowball!” report, in January, used a 25 percent discount as the starting point, and he still turned up 55 sales in the previous month.
A real estate agent now himself, Mr. Bednar sees no shame in making a low offer on a property clearly priced well above the market. While even 5 percent below the asking price might be considered an unfair lowball on a reasonably priced home, on a property priced “horribly high,” he said, “20 percent might be just scratching the surface.”
Sellers aren’t typically so logical in their assessment of an unexpectedly low offer, of course. Those who perceive a lowball as a slap in the face tend to treat the offending buyers — and sometimes their agents — accordingly.
“I have one seller who doesn’t want to talk to me because I brought him an offer $200,000 below the asking price” of $1.4 million, said Attilio Adamo, the owner and broker at Prudential Adamo Realty, in Ridgefield, N.J. “Some sellers get insulted and hold a grudge."
Their ire is understandable, said Lois A. Vitt, a financial sociologist and the director of the Institute for Socio-Financial Studies in Middleburg, Va. “Some sellers personify their home, believing the value is all about them, not just about the sticks and bricks,” she said. “They might have lived and loved the home, and a lowball offer can be seen as a very personal insult.”

That is particularly true in high-powered, high-value communities like Scarsdale and Greenwich, Conn., where location and status help prop up prices. Buyers making lowball offers in Greenwich are not getting what they want because sellers refuse to take such offers seriously, said Max Wiesen, a sales associate with Coldwell Banker.
Clients of his recently made a cash offer of $4.6 million for a property listed in the mid-$5-million range. Although it was low, the offer was reasonable, Mr. Wiesen said, given that the house had some issues and no other house on the street had sold at the price these sellers were after. The owners’ response was a counteroffer barely distinguishable from their asking price.
“These people in Greenwich are not in the position other people in America are in,” Mr. Wiesen said. “These are wealthy people who can sit on their houses, and they do.”
But elsewhere, many agents are counseling sellers to consider a lowball offer as a starting point. The gamble for sellers who stall a lowballer in hopes of a higher offer is that, with buyers so cautious and credit so tight, the next offer could be a long time in coming.
Owners who really want or need to sell are accepting lowball offers. Sarah Keenan, a sales associate at Nicholas Fingelly Real Estate in Southport, Conn., recently sold a four-bedroom Cape Cod there for almost 17 percent less than the original list price of $695,000. The house had been on the market since September. “The people that are really motivated to sell are taking it,” Ms. Keenan said.
This is not to say that every lowball offer is worthy of acknowledgment. Low bidders have a better chance of making headway if the house they are after has been languishing on the market or needs a lot of updating, agents say. Even then, the low offer is better off accompanied by a logical explanation, possibly with documentation.
John Herman, president of Buyer’s Representative in Greenwich, a buyers’ agency serving Connecticut, likes to write a letter explaining the thinking behind an offer and presenting some comparable sales prices. “The listing agent often can’t be that direct with their client,” he said. “We can be more direct and still be polite.”
Mr. Bell, the Mamaroneck broker, takes a similar approach with lenders when he attempts to negotiate on foreclosed properties. He was recently awaiting word from a bank about approval of his $143,000 offer on an unfinished lakeside house in Patterson, N.Y., with at least $200,000 in mortgage debt. Mr. Bell hopes to fix up the house for his daughter. If the deal goes through, he said, “I have three or four of her girlfriends waiting for the same thing.”
Though deals can be found if a buyer has enough nerve and stamina to put up with repeated refusals, agents advise that lowballing is a bad idea when the buyer really, really wants the house. “You take your chances when you do it,” said Frank Ledermann, an associate broker in the Scarsdale office of Houlihan Lawrence. “It’s America — you can bid whatever you want. But you may not get what you want.”
You certainly won’t get Carleen Lekelly’s house in Basking Ridge, N.J. Since Ms. Lekelly put the four-bedroom colonial on the market for $885,000 last November, she has received a couple of offers in the low $800,000 range.
Her response has been matter-of-fact: with new bathrooms and granite in the kitchen, her house doesn’t deserve discounting, and more important, she isn’t under any pressure to move. Ms. Lekelly politely suggests that lowballers look elsewhere.
“I truly believe there are certain towns that are going to keep their values,” she said. “There are people that think they can go in anywhere and just lowball — I think it’s kind of silly.”

2008-02-11T10:56:00.000-05:00

The 10 lies desperate home sellers tell
Read these tips from Barbara Corcoran before you sign on the dotted line
By Barbara Corcoran
TODAYShow.com contributor
updated 12:27 p.m. ET, Thurs., Feb. 7, 2008
Sellers can be ... let’s say, “flexible,” with the truth. A creative omission here, a slight exaggeration there, and before they know it, they’ve told more porkers than Pinocchio. The more desperate they are to sell, the more likely they are to gloss over the cracks.
Even more problematic than the seller, though, is the buyer! Once a buyer falls in love with a property, they actively collude in the whole fairy-tale process, swallowing whatever the seller says without thinking to question it.
“Subway trains don’t pass underneath?” asks the buyer, as the veritable earthquake passing below them jiggles them all around.
“Oh, no,” says the seller. “That’s just something I ate.”
“Phew, I was worried for a moment there.”
Here is a list of common untruths you should look out for:
“My neighbors are wonderful!” Really? Why not check it out for yourself? Knock on the wonderful neighbor’s door. Tell them you are thinking of buying the house next door and ask them what they think of the neighborhood. If you get the door slammed in your face, you can assume by “wonderful” the seller meant, “It will be wonderful to get away from those creeps.”
You could also check out RottenNeighbor.com. If you find them on there, you know you’re heading for trouble.
“The roof leaked once, but we fixed it.” You “fixed” it, eh? What exactly does that mean? Did you have the roof replaced? Patch the leaky area? Or did you just stick a bucket under it? The seller may not even think they are lying here, but if the repairs have been done in some half-baked way, you need to know. Get a professional home inspection.
“I’ve only seen one termite on the deck.” Termites, bats, rats and carpenter ants are not conducive to a happy home. And they’re not included in a typical home inspection. If there's any hint that there might be problems with pests, you should get an insect inspection. These creatures are not wandering hobos dropping in on a house for a look around then moving on their merry way. They come in groups.
“There’s no radon — ever.” Nearly one out of every 15 homes in the U.S. is estimated to have elevated radon levels. Bearing this in mind, it is sensible to request a radon test whatever the seller tells you. If you know the area is subject to radon gas, you should definitely do it. To find out about radon gas levels in your area, contact your local Environmental Protection Agency office.
“I didn’t know I should have told you about the foreclosure.”Get title insurance. Judgments, tax and mechanical liens are covered by title insurance.
“The planes from the airport don’t fly over this house.”You can find this out for sure by contacting the FAA. Alternatively, you can stick around for a while. If one flies over, watch as the seller’s face turns beet red.
“Of course we had a permit to build the new addition.” One-family house owners can do all the work themselves, even the plumbing and electrical wiring. But 90 percent of homeowners don’t bother to get the needed permits. If you are worried that something might be amiss, check with the building department.
“There’s never been any flooding.”Most older homes do have some flooding in the basement when there is excessive rain, so it is quite possible a seller could lie to you about this. One thing you can do to find out if the area is susceptible to flooding is to check the water tables at the town hall.
“Our schools are great!”“Greatness” is in the eye of the beholder. (Or something like that.) For an objective view, get a free school report from HomeFair.com or GreatSchools.net.
“They can’t build on that lot across the street.” Why can’t they? If the lot is too small, they might get a variance. Talk to the planning board to find out. My mother bought a house in Florida and now all of a sudden someone’s building high school across the street!
Here’s a concise list of important things you should do:
Get a professional home inspection.Qualified home inspectors routinely uncover problems with houses that you can’t see. The most common problems involve plumbing, cooling and heating systems, leaky roofs, kitchen appliances and cracked foundations.
Spring for extra inspections.These include insects, radon, leaky underground tanks and bad well-water.
Get title insurance. If you’re financing, you can’t close without it. It protects you from forgery, fraud, encumbrances, judgments and permit violations. You pay for insurance once only when you buy and the policy is good forever.
Visit the property during rush hour and on Friday or Saturday night. It’s the only way to see what the next-door kids are like, how traffic is on the weekends, and how noisy it really gets around the neighbor’s pool.Get a signed disclosure form from the seller or the broker representing the seller. If they don’t disclose the defect, they’re subject to suit.Do a final walk-through inspection. Revisiting the property before closing ensures that it’s in the condition you required in your offer and that any stipulated repairs have been completed. Make the final walk-through no sooner than five days before you intend to close, and make sure the right to do so is included in your offer to purchase.
I know this all sounds very tedious and not at all what you want to spend your time doing, but these few simple steps can save you countless hours of misery down the road. Picture yourself 10 years from now, lying on a damp bed with termites dancing a jig on your chest. The skyscraper across the street casts a dark shadow over your room, so dark you can see yourself glowing green from all the radon gas you’ve inhaled. Your nasty neighbor sits grinning at the foot of your bed, peppering you with pellets from his BB gun.
Heh! It could happen.
© 2007 MSNBC Interactive
© 2008 MSNBC.com

2008-02-05T22:56:00.001-05:00

Real Estate FeatureMost Expensive Homes In The U.S.
Matt Woolsey, 10.15.07, 6:00 AM ET
Call it quaint, but there was a time when a $75 million house made news. In 2005, that's what happened when the Three Ponds Estate in Bridgehampton N.Y., landed at the top of our list of most expensive homes in the U.S.
No more. That number is practically pocket change compared with what the market currently bears.
This year, the country's priciest properties include William Randolph Hearst's $165 million Beverly Hills, Calif., mansion; a $135 million Aspen, Colo., ranch; and a $125 million Versailles-inspired estate in Beverly Hills, Calif.
In Pictures: Most Expensive Homes In The U.S.
Why such price acceleration in the top-flight market? The simple answer: a good mega-mansion is hard to find.
"Try to find eight or 10 acres in the middle of the Hollywood Hills," says Mauricio Umansky, a broker at Hilton & Hyland. "God's not making any more land. [Trophy properties] are a true microeconomy with much less supply than demand."
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In addition, the financial muscle of flush buyers allows for quite a bit of upward price flexibility. Twenty percent of a household's wealth consists of home equity, according to the National Association of Realtors. Following that logic, steel magnate Lakshmi Mittal--worth $32 billion--could easily afford $6.4 billion in housing.
"The net worth of the buyers and the sellers is such that they can do whatever they want," says Joshua Saslove of Joshua & Co., an Aspen-based affiliate of Christie's Great Estates. "The rules of the regular real estate market don't apply."
Sellers who find themselves able to piece together huge pieces of land in desirable locations can expect large listings.
Gigantic Gems The latest addition to the $100 million-plus club is a Beverly Hills estate once owned by newspaper mogul William Randolph Hearst. Built in the 1920s, and featured in the film The Godfather, the 29-bedroom mansion has three swimming pools and a movie theater.
Right behind the Hearst mansion, listed in April, is Suzanne Saperstein's Los Angeles jewel aptly named the Fleur de Lys. Listed at $125 million and built in the style of Louis XIV's palace at Versailles, the 45,000-square-foot home took five years to construct following the accumulation of five acres in Beverly Hills during the 1990s by Saperstein and her now ex-husband, billionaire David Saperstein.
In Florida, beachfront land drives the highest-end market.
"There's nothing under $20 million that has 120 feet of ocean frontage in Palm Beach," says Cristina Condon at Sotheby's International Realty. "[Trump's house] has 475 feet on the ocean."
Is your city in one of America's overpriced real estate markets? Click here to find out.
While it's not news that private jets and telecommunications make the world smaller, an increasing number of buyers for trophy properties are international. This, says Peter Kozel, executive managing director of Newmark Knight Frank, an international real estate appraisal firm, "is easy to understand in light of the cheap dollar."
Hot Holdings What better place to develop a foothold in the U.S. than in the most desirable neighborhoods of Malibu, Aspen, Palm Beach or the Hamptons?
"Trophy properties can serve as a branding for big, new money," says Dolly Lenz, a broker at Prudential Douglas Elliman. "For a Russian oligarch, a trophy home in New York or Palm Beach is a way to brand themselves in the U.S."
As a result, brokerage houses are ratcheting up their efforts to reach out to potential buyers all around the world.
"International marketing has been very good for our [Florida] properties," says Condon. "We advertise in Russia, Asia and the Middle East."
But problems can arise when it comes to verifying those international buyers. In order to schedule a showing of a $65 million or $125 million home, brokers need to know you can afford to buy the house beforehand. If you don't appear on the Forbes billionaires list, a simple note from a Swiss banker will do.
Coming next month: Regional rankings of the country's most expensive homes.
"The hardest thing for me is to differentiate the people who contact me, to find out if they're real," says Lenz. "They can get very annoyed, but I need to know they can write the check."
Ah, the check. Sometimes there is no need. After all, when an international jet-setter pays $100 million for a third or fourth home, why take out a mortgage?
Many top-tier transactions are "done in cash," says Condon.
Real Estate Rat Race As for which mega-mansion will sell first, it's anyone's guess. The decision to purchase a home of such caliber comes down, more than anything, to personal preference.
"Think of it this way," says Umansky. "I could put three mega-yachts in a line-- one contemporary, one traditional and one Mediterranean. I don't know which one is going to sell because I don't know which one Larry Ellison or Bill Gates is going to pick."

2008-02-01T21:48:00.000-05:00

Jumbo mortgage changes are coming
E. Scott Reckard and Peter Y. Hong, Los Angeles Times
Sunday, January 27, 2008

The economic stimulus plan worked out Thursday in Washington would provide nearly a year of cheaper loans for Californians buying or refinancing higher-cost homes, and the news elicited jubilation in the housing and mortgage industries.

Leaders of the House of Representatives and the White House agreed that the size of loans that can be purchased by government-sponsored mortgage buyers Fannie Mae and Freddie Mac should be increased sharply for a year from the current cutoff of $417,000.

The plan also would nearly double the size of loans insurable by the Federal Housing Administration, from $367,000 to $729,750. The FHA was set up to provide mortgages to first-time buyers, including many with less-than-perfect credit, and insures loans to borrowers with down payments or home equity of as little as 3 percent.

Currently, any loans above $417,000 are considered "jumbo" mortgages. In recent months, they have become harder to obtain because skittish private investors have become reluctant to buy them.

Interest rates on jumbo loans were running about 6.5 percent this week - 1 percentage point higher than rates on the so-called "conforming" loans that Fannie and Freddie could buy. Someone who wanted to borrow $500,000 would save about $330 per month, or $3,960 a year, if such a loan were considered conforming and thus had a lower rate.

"It's the single most effective step they could take to stabilize the housing and mortgage market," said Rick Simon, a spokesman for Calabasas-based Countrywide Financial Corp., the nation's largest home lender, which had led the lobbying to raise the loan limits.

The precise increase on the "conforming" ceiling was being debated late Thursday. House Republicans said they had agreed to raise loan limits for Fannie Mae and Freddie Mac temporarily to $625,500, while Democrats said the deal would boost limits to $729,750.

Either way, the increased limit on loans eligible to be bought by Fannie Mae and Freddie Mac would be temporary, expiring Dec. 31. It was not clear if the higher FHA limit would be temporary or permanent.

Lobbying for an increase, the National Association of Realtors had estimated that increasing the conforming loan limit to $625,000 would strengthen current home prices by 2 percent to 3 percent and generate $42 billion in increased economic activity.

Higher loan limits would be especially significant in California, housing and lending industry officials said. Among other things, it would make it easier for battered lenders like Countrywide, which lost $1.2 billion in the third quarter, to sell new fixed-rate loans to borrowers at risk of defaulting when their adjustable-rate mortgages reset to higher payments.

The California Association of Mortgage Brokers said the plan would "increase much-needed liquidity in today's struggling housing market, giving homeowners and homebuyers access to safe, sustainable loans."

Not all observers were so optimistic.

Among those sounding skeptical notes was Edward E. Leamer, an economist at UCLA who said higher loan limits "are not going to matter much now" because the housing markets are still destabilized by bubble-era home prices that must continue to fall.

The proposed new conforming loan limit is far beyond the reach of most people, Leamer said. "Most Americans can't afford a $700,000 house. They don't have the down payment; they don't have the income."

Mortgages that size seem realistic only because "in the good old days, a year or two ago, you didn't have to have the down payment or income" to get such a loan, he said.

A bill wasn't expected to be signed for six weeks. Banking consultant Bert Ely of Arlington, Va., a frequent critic of Fannie Mae and Freddie Mac, said the final version could be restricted by region or available only to borrowers with significant equity.

Ely said opposition remains strong from critics who believe the plan shifts too much risk from the private housing markets to the government, because the FHA insurance is a federal program and investors regard Fannie and Freddie as having the implicit backing of the federal government.

Such observations weren't enough to put a damper on mortgage brokers, such as Jeff Lazerson of Laguna Niguel, who said the prospect of higher loan limits is "just fantastic."

Lazerson said he had dropped out of the FHA loan program two years ago because home prices had risen so high and his customers with marginal credit found it easy to get subprime loans or "alt-A" mortgages from private lenders that didn't require proof of income.

© 2008 Record Searchlight

2008-01-24T12:48:00.000-05:00

Mortgage rates lowest since summer of 2005
Freddie Mac reports 30-year, fixed-rate mortgages averaged 5.69 percent
The Associated Press
updated 3:27 p.m. ET, Thurs., Jan. 17, 2008

WASHINGTON - Rates on 30-year mortgages dropped for a third straight week to the lowest level since the summer of 2005 as worries intensified about the current economic slowdown.
Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 5.69 percent this week.
It marked the second week that 30-year mortgages have been below 6 percent and the third straight weekly decline since rates closed out 2007 at 6.17 percent. This week’s average was the lowest since 30-year mortgages were at 5.66 percent the week of July 14, 2005.
Analysts attributed this week’s decline to continued weak economic statistics which have increased worries that the country could be in danger of tipping into a recession.
The government reported that retail sales fell by 0.4 percent in December, giving retailers their worst Christmas season in five years, while construction of new homes dropped again in December, closing out a year when housing construction plunged by 24.8 percent, the worst showing in 27 years.
Consumer spending is being closely watched at present because it accounts for two-thirds of economic activity. The worry is that consumers battered by the housing slump, falling stock prices and a widening credit crunch may stop spending.
Frank Nothaft, chief economist at Freddie Mac, noted that the declines in retail sales were widespread and had “aggravated concerns about the well being of the economy and exerted downward pressure on mortgage rates.”
Many economists don’t believe mortgage rates will decline much more, however, even with a pledge last week by Federal Reserve Chairman Ben Bernanke that the central bank will cut interest rates further if needed to keep the country out of a recession.
Analysts said Bernanke’s comments did not greatly alter the expectations of bond investors who have already built further rate declines into the prices they are willing to pay for Treasury’s 10-year bond, a key benchmark for long-term interest rates. Many said they believe the 30-year mortgage will move in a narrow range around 6 percent for the rest of this year unless the economy does go into a full-blown recession. If that occurs, they said rates will fall further.
Other types of mortgages also showed declines this week.
Rates on 15-year mortgages, a popular choice for refinancing, dropped to 5.21 percent this week, down from 5.43 percent last week.
Rates on five-year adjustable-rate mortgages declined to 5.40 percent, compared to 5.63 percent last week while rates on one-year ARMs fell to 5.26 percent, down from 5.37 percent last week.
It marked the first time that the 15-year rate has fallen below one-year adjustable-rate mortgages in seven years.
The mortgage rates do not include add-on fees known as points. Thirty-year mortgages carried a nationwide average fee of 0.5 point while 15-year mortgages had a fee of 0.4 point. The five-year and one-year ARMS both had fees of 0.6 point.
A year ago, 30-year mortgages stood at 6.23 percent while rates on 15-year mortgages were at 5.98 percent. Five-year adjustable-rate mortgages averaged 6.04 percent and one-year ARMs were at 5.51 percent this time a year ago.
© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

2008-01-24T12:46:00.000-05:00

Real estate search heats up again
Roost takes cost-per-click approach to broker Web site trafficThursday, January 24, 2008By Jessica Swesey Inman News
A new real estate search site rivaling the likes of Realtor.com, Trulia and Zillow has pounced on the scene. Roost.com launched its public beta site Wednesday.
The San Francisco-based company bills itself as a vertical search engine for property listings in the 14 market areas it currently covers. The idea is that consumers go to Roost to search for listings in those markets, see property basics in search results, and then click over to brokers' IDX (Internet data exchange) sites for the full details on homes.
Though the space for online real estate search sites is already crowded, the slow real estate market has many brokers looking for more ways to market listings online, measure those efforts and cut costs where the return on investment isn't matching expectations.
While Roost's search platform resembles many of its predecessors', the venture-backed company's business model differs. Rather than sell banner advertising or featured listings spots to brokers, the company charges brokers for Internet traffic it pushes to their IDX sites on a cost-per-click basis, much like Google charges for its AdWords program.
"From a Realtor perspective, Roost is essentially a targeted search-engine marketing vehicle," Roost CEO Alex Chang said.
Listings indexed at Roost come from partnerships the company has with local multiple listing services, according to Chang. Brokers who want to receive traffic can then create an account with Roost and set up their pay-per-click campaign budgets. The revenue generated for Roost is based directly on the amount of traffic sent to a broker's Web site.
Asked how many listings Roost has indexed, Chang estimated 800,000 to 1 million, but he cautioned that was just a guess.
"We don't see ourselves as a destination," said Chang. "Roost is really a platform play," that consists of two pieces, he said. One piece is the network of broker IDX-compliant sites and the other is the search engine.
Chang said Roost doesn't consider itself a media company and won't be focusing on building content. The company is focused on providing search results and connecting consumers with the information they're seeking via the IDX listings sites.
Agents will also be able to partner with Roost, Chang said, though that service hasn't launched yet. Plans for agent services include the ability to set up individual agent IDX sites that reside within Roost just like the broker sites. Like the broker model, agents would also set up pay-per-click campaigns for targeted traffic.
MLS regulations in some markets do not allow agents to set up their own IDX Web sites and Chang said Roost won't be able to offer this service in those markets.
The Roost platform currently covers Atlanta; Baltimore; Boise, Idaho; Boston; Chicago; Dallas; Houston; Minneapolis, Minn.; Orange County, Calif.; Philadelphia; Portland, Ore.; Sacramento/Modesto, Calif.; San Diego; and Washington, D.C. The company plans to double the number of markets it covers by the end of the year.
Roost so far has launched only in markets where it has local broker partners and relationships with the MLS, Chang said. "The MLS has to be OK with what we're doing," he said, and all brokers must be members of the local MLS in order to participate at Roost.
"The MLS is really the definitive hub … (its) core mission is the integrity of the data," he said, which is why Roost decided to operate via these relationships in each market rather than rely on brokers to send listings feeds to the site.
Launching in a soft real estate market in a space that already has a handful of similar Web sites seems like a roll of the dice. But Chang said the expected shift in real estate advertising dollars to performance-based online marketing is significant.
"We're all looking for ways to provide innovative marketing channels," he said. "The assumption is that Realtors need to focus on this in a softer market … we're all trying to vie to get them more cost effective marketing."
To join a discussion about the launch of Roost, visit the Inman News blog.

2008-01-20T08:50:00.000-05:00

Excerpt from: Eastern CT Real Estate

Connecticut Foreclosures and Sainthood
10 1/2 Tips for buying a Connecticut Bank Foreclosure

I am not a foreclosure expert but having listed a number of foreclosures over the years, I know a few things about them. Some of the things I know, I learned the hard way. Anticipating a flood of CT foreclosures on the market in 2008, I thought I'd share a few tips for agents and buyers to make dealing with the bank foreclosure process a little easier. And while it might sound like I'm being a wise ass, I'm really trying to help you get a good deal. (See #3)

1. Complete all the bank requirements before submitting an offer. If the bank requires you to sign and initial 41 pages of documents, don't debate the subject unless you really don't want to buy the house. That is why they are called requirements.

2. Your attorney will hate the required bank addendum and try to change it. (See #1)

3. Don't assume a bank foreclosure is a great deal. In my experience, great deals are hard to find and most foreclosures are listed at fair market value. If you are willing to do repairs, you may find a good (maybe even great) deal on a house that needs work.

4. Although the price on a bank foreclosure may drop eventually, banks usually don't accept a "low ball" offer. In some cases there is even a secret formula of how much lower than the list price an asset manager can accept. Once the price is dropped, the formula is reapplied.

5. Closing dates can't be mushy. Time is of the Essence. Bank sellers expect you to close on or before the closing date of the contract. They don't accept excuses and will often charge a per diem if you are not ready when they are.

6. Keep your offer clean. Banks won't accept a contract littered with contingencies. AND if you have a house to sell, don't bother making an offer until your house is sold.

7. Close quickly. I swear asset managers have little contests for most closings in a month. They always want to close THIS MONTH.

8. Asset managers are dealing with hundreds of properties. Don't expect an answer from the bank within 24 hours even if your offer requires that.

9. Don't get mad at the listing agent if you don't get a response quickly. (See #8) You WILL need the patience of a Saint but it really isn't the listing agents fault. Calling her 5 times a day to ask, "Have you heard anything yet?", won't get you an answer any faster.

10. While your offer is being considered, other offers may come in. This will make you really mad. (See #9)

10 1/2. Agents who list bank foreclosures are automatically eligible for Sainthood. OK, I just threw that one in for other agents but bank foreclosures are a lot of work. There is tons of paperwork and reporting. Good systems will make the job easier. Unless you are working with banks who have their own list of contractors, be prepared with a list of good, reliable vendors you can count on. And expect to be yelled at a lot. (See #9 and #10)

2008-01-18T10:49:00.000-05:00

How Foreclosures Will Change The Presidential Election
Peter G. Miller
“The thinking it took to get us into this mess is not the same thinking that is going to get us out of it.” Albert Einstein
We have red states, we have blue states and increasingly we have purple states, beat-up states with substantial and growing numbers of foreclosures, states that may well decide the next presidential election.
The foreclosure issue is being politicized because it's too big to ignore and too many people are being impacted. Foreclosures are an emerging issue because they lead to reduced local home values and home values are one of the key measures of personal success. Foreclosures are front-page news, they're affecting financial markets worldwide and for the first time in decades the lending system, foreclosure practices and bankruptcy rules may all be changed.
"The growing political importance of the foreclosure issue cannot be ignored," says James J. Saccacio, chairman and chief executive officer of RealtyTrac, the leading online marketplace for foreclosure properties. "Conservative or liberal, democrat or republican, falling real estate prices caused by soaring foreclosure levels are an issue everyone can understand. If it's true that all politics are local, nothing is more local than the home where you live."
There's a growing consensus in Washington that "something must be done" and a recognition that the present system is inadequate. With a need to capture the moderate middle to win the next election, politicians are now in a contest to see who can do more about the expanding foreclosure meltdown.
The Purple States: Foreclosed America The political system is set up to assure that both large and small states are well-represented in Washington. Every state has two senators as well as a congressional delegation related to population size. By themselves, the top ten foreclosure states represent 20 of the 100 senate seats as well as 183 of the 435 members of the House of Representatives (42 percent).
The foreclosure states will play a pivotal role in the upcoming presidential election. In the U.S. we do not elect presidents by direct popular vote, instead we have an "electoral college" which consists one elector for each house and senate seat plus three for the District of Columbia, a total of 538.
To control the U.S. government you need 51 senators, 218 house members and 270 electoral votes. The number of house, senate and electoral seats represented by the 10 top foreclosure states are not enough, by themselves, to gain control of the government. But any candidate or party that wins the purple states will also win the next presidential election. Here's why:
The Purple States Coalition In terms of the presidency, the purple states represent 203 of the 270 electoral votes needed for victory. Seen the other way, of the 335 electoral votes outside the purple zone a candidate would need to capture just 67 votes to win the presidency — one-fifth of all other electoral votes. This could be done with victories in few as 13 states, the 10 purple jurisdictions plus New York (31 electoral votes), Illinois (21) and Pennsylvania (also 21).
A winning presidential campaign does not guarantee a house or senate majority but it surely helps those affiliated with a winning national ticket. The Founders shrewdly engineered a system where the states needed to win the presidency and the house are insufficient by themselves to control the senate. It's entirely possible for one party to win the presidency and lose one or both houses of congress.
What's important about a purple-based campaign is that a candidate with limited funds or a minority of national support could concentrate on the ten largest foreclosure states and still mount a competitive — and winning — presidential effort.
Possible Planks There's no single purple-states approach that guarantees a presidential victory, but according to the Mortgage Bankers Association we know there are some 50 million loans outstanding and that 35 percent of all residences are owned mortgage-free. The key issue that unites both those who are indebted and those without mortgages is the desire to maintain property values — something not possible with large numbers of foreclosures.
How could a candidate package a model foreclosure platform?
It's fairly clear, as Mr. Einstein explained, that more of the same won't work. As to what might work, candidates can pick and choose from a wide variety of possible planks and actions. Here are some of the choices that are readily available:
Being the candidate who will "protect our property."
Creating localized "photo ops" by visiting homes being foreclosed as cameras roll.
Advocating a six-month foreclosure moratorium — think of the banking holiday under Franklin Roosevelt. (Earlier this year, in fact, major civil rights groups argued for just such a moratorium.)
Advocating periodic and lifetime interest rate caps for all adjustable-rate mortgages equal to 1 percent per year and no more than 5 percent over the life of the loan.
Requiring loan officers to be licensed and to have a fiduciary obligation to get the best rates and terms for individual borrowers.
Banning negative amortization in all residential loans.
Banning all prepayment penalties except to the extent that a lender pays cash at closing to reduce settlement costs.
Requiring loan documents to include the name and license number of the loan officer who sold the loan and the underwriter who approved the documentation.
Amending bankruptcy laws to provide greater equality between borrowers and debtors, specifically rejecting current rules which prevent a modification of residential mortgage debt.
Creating federal laws against predatory lending. Right now there are no federal laws which prevent lenders from selling subprime loans to borrowers with better credit or otherwise overcharging.
Allowing closing agents to offer rebates on title insurance. Title insurance commissions often equal more than 70 percent of premium costs, but laws in most jurisdictions prohibit rebates and the result is virtually no price competition.
Permitting lenders to bundle and sell closing services. This would reduce settlement expenses because lenders are always in the market for closing services and have leverage in the marketplace; that is, they could get a better deal than individual borrowers. Bundle prices would have to be disclosed in truth-in-lending statements.
Are these "radical" platform choices? To many lenders, absolutely. But the majority of people with a vote are not lenders. _____________________

Peter G. Miller is the author of The Common-Sense Mortgage and is syndicated in more than 100 newspapers.

2008-01-17T09:15:00.000-05:00

What’s Next for New York City Real Estate?

By CHRISTINE HAUGHNEY
Published: January 13, 2008
LOOKING back, 2007 was supposed to be the year that the Manhattan residential real estate market slowed down and began to look a bit more like the slumping national market.

But that didn’t happen. While there were periods when condominiums and co-ops sat unsold because buyers and sellers couldn’t agree on prices, the year ended with the average price of a Manhattan apartment rising to a record $1.4 million, though the number ballooned in part because so many wealthy buyers purchased extraordinarily expensive condos.
No one is predicting that 2008 will be a repeat of 2007. The sprawling pieds-à-terre may still sell for millions at the Plaza and 15 Central Park West, but in general, economists are predicting that prices will drop in some segments of the market and in some neighborhoods around the city.
“New York has had a very good run, and there are still a lot of people sitting around with cash,” said Christopher Mayer, the Paul Milstein professor of real estate at Columbia Business School. “But that doesn’t last forever.”
There are already signs of a more sober market ahead: Wall Street workers may face leaner bonuses this year and in years to come, borrowers may have a harder time getting mortgages and foreign buyers may reconsider the potential returns of investing in New York.
Mr. Mayer said that a national recession could weaken Manhattan prices even further because fewer workers could afford to buy in the borough.
Diane M. Ramirez, president of Halstead Property, is less concerned about a recession because the inventory of property on the market is currently low. She said that in the recession of the late ’80s, Manhattan dropped sharply because the city had an oversupply of apartments. “We had a deeper, longer recession than most cities,” she said. “We lost 20 to 50 percent value.”
When trying to gauge the real estate market — or, for that matter, the city’s economic outlook — the first stop is always Wall Street.
Wall Street jobs make up 5 percent of the total jobs in New York City but 23 percent of the city’s total wages, according to data tracked by the New York State DepartmenticesLabor. Annual bonuses are also tracked by real estate brokers with a fanatical devotion.
History shows that a great deal of the bonus money is used to buy real estate. Financial workers are typically the first buyers to show up with the cash in the spring buying market, and this helps shape demand for apartments.
“That energy of the bonus money really does get the spring market percolating,” Ms. Ramirez said. “The bonus tends to be the starting gate for them.”
While it may seem counterintuitive, considering how much havoc the subprime crisis has brought to the financial industry, one analyst is predicting that 2007 bonuses, which workers will receive over the next couple of months, will be about the same as last year’s record bonus year for some bankers.
These workers are compensated based on their performance for the whole year, and most banks did well leading up to the credit crisis last summer. So, while workers may not earn more than they did in 2006, they could still have plenty of money to put toward real estate.
Alan Johnson, the managing director of Johnson Associates, a firm that tracks compensation data, said that over all, bonuses should remain flat for a broad spectrum of the financial industry. “This year was a pretty good year for bonuses, roughly on par with 2006, some of them less, some of them more,” he said.
But, he said, that won’t necessarily be true a year from now, and this knowledge could keep traders and investment bankers from splurging on real estate this year as they have in past years.
“Everybody sees the storm clouds on the horizon,” because Wall Street firms have already had write-downs of more than $100 billion from their mortgage-backed securities businesses, Mr. Johnson said. “If you’re going to commit to some big purchase, it makes you pause. Your pay may go down.”
He predicts that by the end of 2008 employees at the top will be hurt the most: those whose total compensation of salaries and bonuses is more than $1 million could see cuts by 40 to 50 percent; those in the $500,000 to $1 million range could see cuts of about 20 percent; and those with pay of less than $500,000 could see 10 percent cuts.
Shai Shustik, the president of the brokerage firm Manhattan Residential Inc., which has many clients who work on Wall Street, says they are proceeding with more caution. “I don’t think people are as gung-ho and anxious to get out there and spend everything they made, like they did in 2007,” he said. “People aren’t going to stretch as much.” In the past, “the guys who tell you they’re spending $2 million spend $2.4 million or $2.6 million,” he said. “Now, they want to stick to $2 million.”
Many of these Wall Street employees might also find that their bonuses are being paid less in cash and more in stock.
Melissa Cohn, the president of the Manhattan Mortgage Company, said that one banker who had negotiated the contract on a $9 million town house had to pull out of the deal because he found out he would receive only $750,000 in cash from his total bonus. The remainder would take other forms, like stock, meaning that he would have less to spend in the near term on real estate. “He’s gone from the $9 million to $10 million range to the $5 million to $6 million range,” she said. “Everyone in general is being more conservative.”
Moving beyond bonuses, the fallout from the mortgage crisis is likely to touch a broad swath of the real estate market. Qualifying for mortgages, for instance, may be more problematic this year for buyers in all price ranges. The mortgage crisis, which was set off by defaulting subprime loans last summer, has forced lenders to tighten their standards across the board in both Manhattan and the boroughs.
Richard Barenblatt, a mortgage broker with the Apple Mortgage Corporation, advises his clients to prepare themselves for far stricter mortgage requirements than they would have faced six months ago.
For starters, lenders expect borrowers to make higher down payments for co-ops and condos. He said that before the broad defaults on subprime mortgages forced banks this past summer to tighten standards, buyers with good credit applying for full-income verification loans could qualify for mortgages worth 95 percent of the purchase price up to $1 million. Now these same buyers qualify for mortgages valued at only 90 percent of the price up to $1 million.
Some lenders are also requiring borrowers to have more money in reserve; for example, borrowers applying for jumbo mortgages — those surpassing $417,000 — may need to show that they have the equivalent of up to 12 months of mortgage payments in cash after closing.
Mr. Barenblatt encourages buyers to pay down credit card balances below 40 percent of their total combined credit card limits; for buyers with debt levels above that, he said, banks are less likely to approve mortgages.
He also thinks buyers should talk to their lawyers about getting mortgage and appraisal contingencies written into their contracts. A contingency is a clause that allows a buyer to back out of a deal if he or she can’t find a mortgage, if the lender changes the terms of the mortgage before closing or if an appraisal comes in unexpectedly low. In the past, sellers in Manhattan have often balked at contingencies, because there was usually another buyer waiting in the wings willing to buy without one. Mr. Barenblatt also encourages buyers to try to get preapproved for mortgages.
Condo buyers might find extra scrutiny when visiting the mortgage broker because lenders have seen too many cities around the country where new condos are sitting vacant or unfinished.
Some major lenders in New York have stopped giving mortgages at condo projects where the developer has not sold 90 percent of the units. These banks are imposing even stricter standards than those Fannie Mae and Freddie Mac are putting into effect on March 1 for mortgages below $417,000, according to Brad German, a spokesman for Freddie Mac. The threshold for the two government lenders: 51 percent of units must be sold.
“We changed our guidelines in response to shifts in the real estate market, including oversupplies in Florida, Las Vegas, Arizona and other condo markets outside of New York City,” he wrote in an e-mail message. “Our mortgage purchase guidelines are national in scope.”
These national guidelines are making it more difficult for condo buyers in Manhattan. Foreign buyers and financial industry employees have paid top dollar for these new apartments in the last year precisely because they required less money down and had more flexible requirements than co-ops.
Ms. Cohn of Manhattan Mortgage tells of clients who have had mortgage applications rejected by some banks because the building where they wanted to buy was not 90 percent sold out. “There has been an apocalyptic change in the lending market,” she said. “Banks that were market leaders have eliminated numbers of programs and products and have made sweeping changes.”
Foreign buyers, who have made about a third of the condo purchases in the last 18 months, have done so because they see it as a wise investment considering the weakness of the dollar, said Mr. Mayer of Columbia Business School. But, he added, even foreign buyers will walk away from deals if they don’t think Manhattan prices will remain strong or if they cannot expect high returns on their investments.
“They don’t need to buy real estate to make a bet on the dollar,” he said.
All of these situations could create a window of opportunity for buyers. In fact, certain market segments have already started to show signs of slowing.
Sofia Kim, who is the head of research for StreetEasy.com, said that out of the 24,000 apartments listed by the site at some point in 2007, about 20 percent, or 4,800, had cut prices, by an average of 8 percent.
Most sellers who cut their prices were offering one- and two-bedroom co-ops, Ms. Kim said. These price cuts were concentrated on the Upper East Side and in Chelsea, Greenwich Village and Midtown. In the coming year, she expects that sellers may continue to cut their prices if sales are slow.
Prices in Inwood and Hudson Heights, in the northern reaches of Manhattan, had dropped about 5 percent by the end of last year, according to fourth-quarter data released by Halstead Property.
Data from the Corcoran Group, tracking sales in Brooklyn in the fourth quarter of 2007, show that prices on certain types of apartments in coveted neighborhoods like Park Slope and Fort Greene had dropped slightly.
Some neighborhoods like Williamsburg and Greenpoint have had 15 percent price drops from their peak in the summer of 2005, and sellers are negotiating deals, said David Maundrell, the president of Aptsandlofts.com, a Williamsburg brokerage.
Brooklyn buyers, he said, have been especially fortunate in negotiating deals on new condos. Developers of new condos with fewer than 10 units have agreed to pay closing costs for buyers, while developers of larger projects have been willing to negotiate on price. “Most of my guys in the larger buildings will consider any offer,” Mr. Maundrell said.
Prices in New York City are not expected to be significantly affected by foreclosures this year, as the number of foreclosures in the city’s outlying neighborhoods is rising, but still low. Fourth-quarter data tracked by PropertyShark.com show that there were 605 foreclosures throughout New York City in the fourth quarter of 2007, a 71 percent increase over the 354 foreclosures in the same period in 2006.
But that is in a city of three million households and represents only 0.02 percent of New York City inventory. That’s far less than in Miami, which has a 0.25 percent foreclosure rate, and Los Angeles, which has a 0.21 percent foreclosure rate.
Ryan Slack, the chief executive of PropertyShark, said that the New York numbers may rise steadily through 2008, but they will still represent only a tiny share of the overall market. “They’re not that high a percentage of the inventory,” he said. “If you’re selling into the market, you’re going to be more affected by the dynamics of buyers and sellers than foreclosures.”
The rental market, which has been exceptionally tight for the last few years, is also showing some signs of loosening up. Marc Lewis, the chief operating officer of rentals and investment sales at Century 21 Fine Homes and Estates, says that the rental market slowed in the middle of September and has not picked up since.
The December survey of 10,000 apartments tracked by the Real Estate Group New York shows that the rental market fell from the previous month, especially on the Upper West and East Sides, and in Midtown East, Gramercy Park and SoHo. Some declines were striking; rent in studios in doorman buildings in the financial district, for example, dropped by $503, to $2,559 a month.
Mr. Lewis said there were fewer new hires relocating to Manhattan for jobs and paying high rents. He said that landlords were much more willing to pay commissions, offer a free month’s rent or both. And, he said, they’re much more willing to negotiate on apartments that rent for more than $2,000.
“If they have an apartment that’s empty for a week or two or a month, they’ll entertain an offer,” Mr. Lewis said. “It’s definitely going to continue for the next three, four or five months.”
In the end, economists and real estate brokers say they don’t expect Manhattan to suffer as severe a housing slump as the rest of the nation because there hasn’t been as much overbuilding.
That’s because banks stopped lending to developers to build more condos and developers turned nearly a third of the sites into other uses like hotels, offices and rental buildings, said Robert Knakal, the chairman of the commercial real estate brokerage Massey Knakal Realty Services Inc., based on what he saw from the projects that his company had marketed.
In addition, more of the condos that were built were snapped up by more Wall Street bankers and foreign buyers than some real estate industry experts had originally expected.
“What this means for the consumer is that there will be product available for them to look at, but not a significant oversupply,” Mr. Knakal wrote in an e-mail message. He added, “Buyers who are on the sidelines waiting for prices to drop significantly before buying may be there for a long time.”

2008-01-17T09:05:00.000-05:00

Chase, Wells Fargo say they can weather subprime storm
Standard & Poor's warns of bigger losses on 2006 loans
Wednesday, January 16, 2008Inman News
Investors showed renewed confidence that financial markets will weather the subprime mortgage crisis after JPMorgan Chase & Co. and Wells Fargo & Co. reported write-downs on mortgage-related investments dented fourth-quarter profits but that the firms remain adequately capitalized.
Standard & Poor's Ratings Service, however, said home-price declines and losses on subprime loans made in 2006 will be greater than expected, raising the specter of further tightening of credit to prospective home buyers.
Shares of JP Morgan Chase and Wells Fargo both got a boost Wednesday after the companies disclosed that write-downs on mortgage-related investments were smaller than at some rival firms, and that both companies posted record revenue for the year.
Although JP Morgan Chase wrote down $1.3 billion in bad mortgage-related investments during the fourth quarter, it managed to turn a $3 billion profit and boost credit reserves to $10 billion. Fourth-quarter mortgage loan originations were $40 billion, up 2 percent from the previous quarter and 34 percent from a year ago, the company said.
For the year, JP Morgan Chase had record profits of $15.4 billion on revenue of $71.4 billion, growing its payroll by 6,307 positions, to 180,667.
At Wells Fargo, charge-offs on bad loans hit $1.2 billion, up from $726 million a year ago, and the bank boosted loan loss provisions by $1.4 billion. Fourth-quarter mortgage originations declined 20 percent from a year ago to $56 billion, largely because Wells Fargo has cut back or stopped making nonprime, nonconforming and home equity loans through third-party channels, the bank said.
Nevertheless, Wells Fargo posted a $1.36 billion profit for the quarter, and $8.06 billion in net income for the year. All told, Wells Fargo originated $272 billion in mortgages in 2007, down 7 percent from the year before, and grew its servicing portfolio by 12 percent, to $1.53 trillion.
Moody's Investors Service said today Wells Fargo can keep its "A" financial strength rating and "Aaa" rating on deposits, as the bank's diverse business model will help it endure greater-than-expected losses in its home-equity portfolio.
Stocks also got a boost today from a Labor Department report showing the Consumer Price Index rose by just 0.3 percent in December, raising expectations that the Federal Reserve will make a dramatic, 50-basis-point reduction in its target for the federal funds overnight rate when it meets at the end of the month.
The Dow Jones Industrial Average plunged 277 points Tuesday after Citigroup Inc. reported a $9.83 billion fourth-quarter loss driven by $18.1 billion in write-downs on investments tied to subprime mortgages. Investors were also alarmed by a Commerce Department report that showed retail sales fell 0.4 percent in December, a sign that the economy may be headed into a recession (see Inman News story).
Although stock market investors are rooting for short-term interest-rate cuts to stimulate economic growth, a dramatic move by the Fed could also send long-term interest rates up -- including those on 30-year fixed-rate mortgages -- if bond investors become concerned about inflation.
Falling home prices and rising delinquencies and defaults could also put upward pressure on mortgage rates, if investors who fund home loans demand higher returns for risk.
Analysts at Standard & Poor's Ratings Services said this week they now expect losses on subprime loans bundled up as collateral for investments in 2006 to reach 19 percent, up from a previous estimate of 14 percent.
The revisions were based on "growing economic consensus that U.S. home-price declines will be larger than previously forecasted and that the slump in the U.S. housing market is expected to last far longer than previously anticipated," Standard & Poor's analysts said.
Home prices have declined about 6 percent nationwide since the beginning of 2006, and Standard & Poor's Chief Economist David Wyss now estimates that before bottoming out in the middle of the year, home prices will have come down 8 percent to 11 percent from their peaks.
The rating agency said it has also changed other assumptions it uses to evaluate investments backed by mortgage loans, which could lead it to downgrade its ratings on those investments. Downgrades would force banks and bond insurers to undertake another round of write-downs, and further restrict mortgage lending.
Alt-A lender IndyMac Bancorp Inc. said Tuesday it was laying off 2,403 workers because the secondary market for loans it makes remains frozen, and it expects 2008 loan volume will dwindle to less than half of that seen two years ago (see Inman News story).
Today, bond insurer Ambac Financial Group Inc. said it is attempting to raise $1 billion in capital in order to keep its AAA ratings from Standard & Poor's and Moody's.
Ambac announced fourth-quarter write-downs of $5.4 billion on its credit derivative portfolio, and a $143 million loss provision related to securities backed by home-equity lines of credit and second loans.
With Ambac facing a fourth-quarter loss of up to $32.83 per share, Chief Executive Officer Robert J. Genader had been replaced by Michael A. Callen. The company promised further details when it reports fourth-quarter results on Jan. 22, a week earlier than planned.
While the news was not as grim at JP Morgan Chase and Wells Fargo, both companies did see increasing delinquencies and defaults on consumer loans, including auto loans and credit cards.
At Wells Fargo, the charge-off rate on credit-card debt rose grew from 4.3 percent to 5.01 percent, which the bank said was in line with industry standards. Credit-card losses for the quarter totaled $223 million, while losses on other revolving credit and installment loans, including auto loans, totaled $421 million.
The $1.2 billion in fourth-quarter charge-offs also included $277 million in bad second mortgages, up from $153 million in the third quarter, and $34 million in first mortgages, double the $16 million seen in the third quarter. The charge off rate on second mortgages rose to 1.46 percent, compared with 0.83 percent in the previous quarter.
Total nonperforming assets grew to $3.87 billion, up from $3.18 billion, including $649 million of foreclosed real estate and repossessed vehicles.
The bank said growth in nonperforming assets was due to a national increase in foreclosure rates. Due to "illiquid market conditions," Wells Fargo has decided to hold more foreclosed properties than it has historically.

2008-01-16T20:45:00.001-05:00

Americans Pay for Housing Boom's Excess
By MADLEN READ and JOE BEL BRUNO,
AP
Posted: 2008-01-16 16:41:14
NEW YORK (AP) - The bill for America's excessive borrowing during the housing boom has arrived, and more people are having trouble paying it. JPMorgan Chase & Co. and Wells Fargo & Co., two of the nation's biggest banks, on Wednesday joined a growing chorus warning that the subprime mortgage mess is just the start of a sweeping lending crisis. And some fear that consumers falling behind on all kinds of loan payments could tip the economy's scale toward recession. Strapped consumers are having a tough time making payments on credit cards, home-equity loans, and even for their cars. This has caused three of the top five U.S. commercial banks that have already reported damaging fourth-quarter results to set aside some $12.5 billion to cover future loan losses - and that number will likely grow as the year wears on. Problems in the subprime mortgage t in 17 years. There was no sign of a turnaround in the last few months of the year. The Federal Reserve reported that the economy grew at a slower pace in late November and December as credit problems intensified and consumers tightened their spending. To some, it appears that the Fed came to its rate-cutting decision in August a bit too late. Others point to the falling dollar and surging oil prices, factors that usually prevent the central bank from easing its monetary policy. While debate persists about the Fed's timing and the extent of the slowdown, bank executives - who have scrambled to prepare for another tumble in home prices and higher unemployment in 2008, feel academic definitions are beside the point. "We're not predicting a recession - it's not our job - but we're prepared," JPMorgan Chase CEO Jamie Dimon told analysts after the nation's third-largest bank wrote down $1.3 billion and said profit dropped 34 percent. His financial institution didn't do all that bad. Rival Citigroup Inc. fared the worst during the fourth quarter, losing $9.83 billion after writing down the value of its portfolio of mortgage and mortgage-backed products by $18.1 billion. Wells Fargo, a more traditional bank that avoided last year's trading woes, saw its profit fall 38 percent due to troubles with home equity loan and mortgage defaults. JPMorgan is girding for home prices to decline further in 2008 by 5 percent to 10 percent; Citigroup's estimate of 7 percent falls within that range, too. "The banks are the infrastructure for everything, the heartbeat of the market," said Chris Johnson, president of Johnson Research Group. "They need to be fixed before the market, and economy, can move forward with confidence. They need to get all their dirty laundry out there." Banks and card companies like American Express Co. - which warned last week that it would add $440 million to loan loss provisions - said in the regions where home prices are declining, card default rates are rising faster. The same goes for auto loans, subprime mortgages and home equity loans in these areas, which include Florida, Michigan and California. A big reason for the rise in credit card default rates is that they are returning to more usual levels following a change in bankruptcy law that sent rates lower for a time. But the fact that more losses are being seen in the weaker parts of the country shows the increase is economically driven as well. Analysts believe this means one thing: Consumers will be the ones paying for years of lax lending standards by U.S. financial institutions. Many will become more restrictive about who gets credit in a bid to stem future losses - and that could curb consumer spending, which accounts for more than two-thirds of the economy. "We've pushed the envelope," Johnson said. "Along with the joy of a market that goes as high as ours is the agony of when it starts to correct itself."
Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.
01/16/08 16:38 EST

2008-01-16T09:46:00.001-05:00

PMI: Odds favor price declines in 13 top markets
Risks greatest in California, Florida
Tuesday, January 15, 2008Inman News
The chance that home prices will fall during the next two years increased in 39 of the 50 largest U.S. markets during the third quarter, according to the latest quarterly risk index from PMI Mortgage Insurance Co.
PMI's Winter 2008 U.S. Market Risk Index showed a greater than 50 percent chance of price declines in 13 of the nation's 50 largest housing markets, up from 10 in the previous quarter.
PMI said some of the increase in house-price risk was due to changes to its model, which now includes data on foreclosure rates provided by the Mortgage Bankers Association. But in many cases, higher risk scores reflected "a significant deterioration of the housing market in the third quarter."
There is a "high likelihood that home prices will be lower in many of these MSAs two years from now," the report said. Although the number of MSAs with relatively low home-price risk continues to outnumber those with relatively high risk, that could change if the economy and financial markets worsen further, PMI warned.
All but two of the 13 highest-risk markets were in California and Florida. In California, the report noted, markets in the Central Valley and Southern California are weaker than those in the Northern California MSAs, where employment continues to be strong.
The metropolitan statistical areas (MSAs) with the highest risk scores were Riverside, Calif., where PMI forecasts a 94 percent chance of a two-year price decline; Las Vegas (89 percent); and Phoenix (83 percent).
Markets that saw significant price increases from 2002 to 2005 are "at much higher risk of price declines" than those where prices appreciated more modestly, said David Berson, chief economist for PMI's parent company, The PMI Group Inc., in a statement.
Although housing affordability improved in 161 of 381 MSAs studied, it declined in the remaining 220 markets. Nationwide, the affordability index was 95.53, compared with 95.96 in the second quarter of 2007.
The number of MSAs experiencing year-over-year price declines during third quarter -- 89 -- was also up from 67 in the previous quarter, the report said, citing numbers from the Office of Federal Housing Enterprise Oversight (OFHEO).
Among the top 50 MSAs, the 13 judged by PMI to be facing a greater than 50 percent chance of price declines in the next two years were:
Riverside-San Bernardino-Ontario, Calif. (94 percent)
Las Vegas-Paradise, Nev. (83 percent)
Phoenix-Mesa-Scottsdale, Ariz. (83 percent)
Santa Ana-Anaheim-Irvine, Calif. (81 percent)
Los Angeles-Long Beach-Glendale, Calif. (79 percent)
Ft. Lauderdale-Pompano Beach-Deerfield Beach, Fla. (78 percent)
Orlando-Kissimmee, Fla. (74 percent)
Sacramento-Arden-Arcade-Roseville, Calif. (73 percent)
Tampa-St. Petersburg-Clearwater, Fla. (72 percent)
West Palm Beach-Boca Raton-Boynton Beach, Fla. (71 percent)
San Diego-Carlsbad-San Marcos, Calif. (69 percent)
Oakland-Fremont-Hayward, Calif. (65 percent)
Miami-Miami Beach-Kendall, Fla. (58 percent)
The markets identified by PMI as the least risky, with a less than 1 percent chance of price decline during the next two years, were Charlotte-Gastonia-Concord, N.C.-S.C.; Kansas City, Mo.-Kan.; Austin-Round Rock, Texas; Columbus, Ohio; Cincinnati-Middletown, Ohio, Ky., Ind.; Indianapolis-Carmel, Ind.; San Antonio, Texas; Houston-Sugar Land-Baytown, Texas; Pittsburgh, Pa.; Dallas-Plano-Irving, Texas; and Fort Worth-Arlington, Texas.
***
Send tips or a Letter to the Editor to matt@inman.com, or call (510) 658-9252, ext. 150.
Copyright 2008 Inman News

2008-01-16T09:33:00.000-05:00

CONSIDERING A MOVE TO NEW MEXICO?
Last year, I had the opportunity to travel West for the first time! Lisa Davis, Taos realtor, provided an overview of the marketplace plus one of my friends was househunting.
If you are ever in the area, don't hesitate to say hi to Lisa or send her referrals! She'll do a great job. PS Let her know I sent you and you may have the opportunity to explore the ultimate green house..."the Earth Ship"

Here's Lisa's January newsletter regarding stats..

We have had such great snow this year, the Taos Ski Valley is hoppin'. The ski valley has announced some plans for refurbishing the village area which will enhance the appeal of the Taos Ski Valley, but the BIG news out of the Ski Valley is that starting in March, they are allowing snowboarding. This has been a hot topic for years and now, it's happening.

The attached newsletter offers a snap shot of the basic sales stats for 2007, as you will see, volume is down from 2006. This is no different from what is happening across the country. The volume and prices have reverted to a more normal market. I am curious to see what 2008 will bring, I have heard that the Fed's are expected to lower interest rates again this month.

As we all know, the media tends to sensationalize things and I think it's important to keep the following in perspective:
1. Real Estate is a long term investment. The boom created a misconception that real estate is a high yield, short term investment.
2. There is no such thing as a bad market. No matter where we are in a cycle there are still sellers and buyers...with low interest rates, it's still a good time to buy. NAR reports that 2007 existing home sales surpassed those of 2002, then a record breaking year!
3. Foreclosure perspective: Foreclosure is always bad news, the recent foreclosures that we are hearing about is predominately with sub-prime loans which are held by less than 10% of homeowners and most will not go into foreclosure. The foreclosure rate on prime loans is only 0.6 percent.

I wish you all a wonderful 2008...come on out to Taos and hit the slopes...or, don your snow shoes and take a walk through the woods...it's magical!

Sincerely,Lisa Davis, CRS, GRIAssociate BrokerResort and Recreation SpecialistFine Homes SpecialistPrudential Taos Real Estatehttp://www.enchantedtaos.com/lisa@enchantedtaos.comTel: 800-530-8899 ext 220Fax: 575-758-4833

STATS

2007 Total Units Sold (all types, entire MLS): 508 (compared to 752 in 2006.)
Dollar volume: 2007 $157,732,861 (compared to $197,553,722 in 2006.)
To break it down by category (not all categories shown):
2007 Single Family Residential total units sold: 214 (compared to 283 in 2006.)
Average sales price: $403,929. (compared to $359,873 in 2006.)
(2007 Median sales price $337,313) Average days on the market: 307
2007 Condo total units sold: 100 (compared to 144 in 2006.)
Average sales price: $279,226. (compared to $261,734 in 2006.)
2007 Land less than 5 acres units sold: 91 (compared to 144 in 2006.)
Average sales price: $123,832 (compared to $112,044 in 2006.)
2007 Land more than 5 acres and less that 10 units sold: 23 (compared to 46 in 2006.)
Average sales price: $127,741 (compared to $178,864 in 2006.)
2007 Land more than 10 acres units sold: 21 (compared to 52 in 2006.)
Average sales price: $193,733 (compared to $352,717 in 2006.
(Note: Available land is further away from Taos which is being reflected in the price)
What does all of this mean? Well it means that it’s a great time to buy in Taos! Some prices are
coming down along with interest rates! Opportunity is knocking!!!!
To put it in perspective, 2006 was a banner year on all accounts and the softening
of our market in 2007 is really more of a “normalizing”.

2008-01-14T10:40:00.000-05:00

Dramatic Fed cut would hike mortgage rates
Commentary: Bernanke must make choice as political pressure intensifies
By Lou Barnes Inman News
Long-term rates are unchanged this week, about the only things in finance that are. The 10-year T-note is still in the 3.80s, mortgages 6 percent, 5.875 percent, 6 percent. …
Two big speeches (Treasury Secretary Paulson and Fed Chairman Bernanke) and the demise of Countrywide overshadowed news of a steadily weakening economy and credit trouble spreading outward from mortgages.
The newest consumer data arrived in December retail results, uniformly lousy, and AT&T described a pullback in consumer spending on the most basic services. American Express -- good, tough, old outfit -- is the newest to announce rising defaults.
Countrywide: Its borrowers in process and sellers and Realtors nearby all should feel relieved. Fundings are now secure.
However, BofA's acquisition has all the fingerprints of a liquidation, one in the interests of banking regulators to avoid the collateral scramble and fire sale inevitable upon the instant of bankruptcy. The idiot stock market soared on the acquisition news on Thursday, and reality dawned today: BofA's stock is down, its credit-risk premium up, and Moody's is considering a downgrade.
So, what's the benefit of this deal to BofA, good money after the bonehead $2 billion infusion into Countrywide last September? First, good will and blessings from the whole regulatory apparatus. No other institution had the strength left to absorb the Countrywide wreck, and good deeds beget future favors. BofA's September infusion may have bought it control, but system conditions have since deteriorated so badly that it need not have paid a dime -- regulators would have come to call, hats in hands.
Deconstruct the deal: The prize inside Countrywide is its loan servicing portfolio; right now a migraine, but $1.4 trillion in mortgage customers is a huge base of clients who instantly become BofA pigeons. Loan servicing has a common market value in excess of 1.5 percent; even if this pool is discounted for bulk and trouble to 1 percent, that's $14 billion in value.
BofA is paying $4 billion for the overall wreck, meaning Countrywide -- minus its servicing portfolio -- has a negative value of at least minus $10 billion. Its dinky "bank" (really an S&L, easier regulation) is leveraged to the eyeballs and probably has a net-loss portfolio; and the insurance and securities and other tacked-on businesses have value only if originations run hot (not).
The massive origination arm has negative value also. Absent the fee-rich subprime and option-ARM game, Countrywide is a low-margin, commodity Fannie-Freddie shop just like the rest of us. BofA needs another brand name like a moose needs a hat rack, and assumes future losses from litigation, portfolio and downsizing. A lot of branch landlords are going to have some re-leasing to do.
Thus an industry re-sizes capacity from all-time-fantasy down to actual demand. Expect Washington Mutual to follow the merge-out parade.
The speeches: Treasury Secretary Paulson offered nothing, and the no-show hurt the markets. His gratuitous advice that firms re-capitalize ignored their grave difficulty in doing so.
Bernanke looked haggard. He has studied class-A financial crises his whole life, but leading the Western banking system out of one is a different matter. The speech is an excellent read. He is under no illusions: "... The financial system remains fragile" [!!]. Long sentence, third paragraph from the end, after many promises to intervene to save the economy: [compressed] "However ... unmoored inflation or eroded Fed credibility could reduce the Fed's ability to counter shortfalls in economic growth."
He is stuck: slash rates and take the inflation risk? Or fight inflation and let the economy fend for itself -- and become the most hated man in America?
If he cuts dramatically to save the economy, look for mortgage rates to rise. That's the largest probability, now, as political pressure on him is too strong to withstand.
Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

2008-01-14T10:37:00.001-05:00

Real estate rates dip overnight
30-year fixed rate at 5.52%; 10-year Treasury yield at 3.79%Monday, January 14, 2008Inman News
Long-term mortgage interest rates headed lower Friday, and the benchmark 10-year Treasury bond yield dropped to 3.79 percent.
The 30-year fixed-rate average sank to 5.52 percent, and the 15-year fixed rate slipped to 5.03 percent. The 1-year adjustable rate was down at 5.34 percent.
The 30-year Treasury bond yield fell to 4.38 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
In other economic news, the Dow Jones Industrial Average tumbled 246.79 points, or 1.92 percent, finishing at 12,606.3. The Nasdaq lost 48.58 points, or 1.95 percent, closing at 2,439.94.
Stock figures are current as of 7:30 p.m. Eastern Standard Time

2008-01-12T08:51:00.000-05:00

I thought this would be optimistic for our wallets...of course any savings will go directly to fuel our houses and keep our lights on in 2008...But, think green both in prosperity and ecological conservation...change your light bulbs...now, what company is that? That's a best stock!
Drew

Best Stocks for 2008: Housing woes take a toll on Toll Brothers (TOL)
Posted Dec 20th 2007 10:30AM by Steven HalpernFiled under: Newsletters, Toll Brothers (TOL), Stocks to Buy, Housing, Best Stocks for 2008
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"Homebuilders have been in a slump, to say the least," says Jim Farrish, editor of Sector Exchange.
"The technical charts on homebuilders look very similar to those of technology stocks during their rise from 1998-2000. In fact, the index has declined more than 70% peak to trough. Looking toward 2008 and the housing market, we could start to see a turnaround.
"The start is likely to be government aided, which is why we like this as an aggressive play, as the Federal government will put more money into fixing something than corporate America. Current proposals will not come close to fixing it, but will at least put a band aid on the situation and allow the healing process to begin.
"Our vote to benefit here would be Toll Brothers (NYSE: TOL). The company has one of the better-looking balance sheets in the industry and management has done a fairly good job of dealing with this downside market."Its weekly chart shows a decline from a high of $55 to a current price of $22. Their stock has found support near the $19.50 mark and has developed a trading range since July with the top at $23.50. With the stock currently near the high end of the trading range, we would look for a breakout as a buy point.
"If sales increase throughout 2008, we would look for the stock to rise near the $34 mark. There are a lot of things that need to come together for this play to achieve its goal, but then that is what makes it an aggressive opportunity.
"Thus, our entry point would be a break above $23.50 or accumulate shares on a pullback near the bottom of the trading range. Our stop would be $18 and the target $34."
Tags: best stocks 2008, BestStocks2008, contarian stocks, homebuilders, homebuilding stocks, housing stocks, jim farrish, money strategies, out of favor stocks, real estate stocks, sector exchange, sector investing, steven halpern, thestockadvisors.com, tol, toll brothers, TollBrothers, top stocks 2008, TopStocks2008

2008-01-09T14:01:00.000-05:00

The GOOD, THE BAD, The Ugly

Notice the two postings regarding COUNTRYWIDE today?
One Good, One BAD, the overall UGLY for the REAL ESTATE MARKET and THE PUBLIC PERCEPTION of Economic Woe

2008-01-09T14:00:00.001-05:00

Countrywide Home Loan Delinquencies Rise
Countrywide Financial Corp.'s shares tumbled for the second day Wednesday after the nation's largest mortgage lender said the delinquency and foreclosure rate of home loans in its portfolio surged in December.
The news drove Countrywide shares down almost 10 percent in midday trading. Shares slipped 54 cents to $4.93.
The drop followed a loss of $2.17, or 28.4 percent, on Tuesday.
The company said some 6.96 percent of the loans in its servicing portfolio were delinquent last month, up from 5.02 percent in December 2006.
About 1.04 percent of the mortgage loans were pending foreclosure, up from 0.65 percent.
Countrywide's loan fundings during the month rose 1 percent from the previous month, ahead of internal forecasts, the company said.
Calabasas, Calif.-based Countrywide said it funded $24 billion in loans in December, giving it a total of $69 billion for the fourth quarter.
Average daily mortgage applications in the month slipped from November, but Countrywide attributed that to a typical seasonal decline.
The company's banking operations had assets of $113 billion at the end of December, up from $83 billion at the end of November.

2008-01-09T09:34:00.000-05:00

Countrywide sees business stabilizing
Mortgage lender closed more loans in November, but foreclosures also rise
Reuters
updated 8:24 a.m. ET, Wed., Jan. 9, 2008
NEW YORK - Countrywide Financial Corp., whose shares have tumbled amid worries about the largest U.S. mortgage lender's survival prospects, on Wednesday said it made more loans than it expected in the fourth quarter, though homeowner foreclosures and delinquencies rose.
In its monthly operating report, Countrywide said it funded $23.4 billion of mortgage loans in December, up 1 percent from the prior month, though down 44 percent from $41.7 billion a year earlier. Average daily mortgage loan applications fell 16.9 percent from November to $1.54 billion.
For the quarter, Countrywide said it funded $68.5 billion of mortgage loans, and $69.2 billion of total loans.
"Management is pleased with the progress we have made in positioning the company to navigate the current challenging environment," Chief Operating Officer David Sambol said in a statement.
Countrywide shares rose 47 cents, or 8.5 percent, to $6.02 in pre-market trading.
The shares had fallen 27.4 percent on Tuesday. Some of the decline came even after the Calabasas, California-based company rejected market rumors that it was considering filing for bankruptcy protection.
In its monthly report, Countrywide also said foreclosures and delinquencies among mortgage loans it services, or for which it collects payments, rose in December to the highest level since 2002, the earliest period for which figures are available.
It said the pending foreclosure rate rose to 1.44 percent from 1.28 percent in November and 0.70 percent a year earlier, while the delinquency rate rose to 7.20 percent from 6.52 percent in November, and 4.60 percent in December 2006.
Countrywide's mortgage loan servicing portfolio rose to $1.48 trillion at year end, as homeowners prepaid fewer loans.
(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

2008-01-08T09:19:00.001-05:00

No easy answer to housing crisis, Paulson says
Administration looking at options as wave of mortgages to reset rates
The Associated Press
updated 3:53 p.m. ET, Mon., Jan. 7, 2008

WASHINGTON - The Bush administration is working to combat the country’s severe housing crisis but there is no simple solution, Treasury Secretary Henry Paulson said Monday, adding that a correction in the housing market is “inevitable and necessary.”
Paulson said the country was facing an unprecedented wave of 1.8 million subprime mortgages that are scheduled to reset to sharply higher rates over the next two years. He said this raised the threat of a market failure and was the reason the administration brokered a deal with the mortgage industry to freeze certain subprime mortgage rates for five years to allow the housing market to recover.
“By preventing avoidable foreclosures, we will safeguard neighborhoods and communities and fulfill our responsibility of protecting the broader U.S. economy,” Paulson said in a speech in New York. “However, let me be clear: there is no single or simple solution that will undo the excesses of the last few years.”
Paulson said that the deal the administration brokered with the industry to freeze certain subprime mortgage rates for five years did not involve the use of any taxpayer money. Conservative critics have complained that the administration’s plan represented government intrusion in the operation of markets that would end up rewarding some people who had taken out risky mortgages.
In his speech, Paulson raised the possibility that some sort of “systematic approach” may need to be developed to help homeowners with other types of adjustable-rate mortgages that are resetting to higher rates. The current plan only involves subprime mortgages, loans offered to borrowers with weak credit histories.
The steep slump in housing has been a serious drag on the overall economy. There are rising fears that the country could topple into a recession. Those worries were heightened after a report Friday showing that the unemployment rate jumped to a two-year high of 5 percent in December with job growth slowing to a crawl.
Paulson called the current housing correction inevitable after what occurred during the five-year boom in which sales and prices climbed to record levels.
“After years of unsustainable price appreciation and lax lending practices, a housing correction is inevitable and necessary,” Paulson said.
He said that the correction was taking a toll on the economy that would continue for a period of months.
“It will take additional time for markets to regain confidence,” Paulson said. “The overhang of unsold homes will contribute to a prolonged adjustment and poses by far the biggest downside risk.”
Paulson and President Bush both delivered speeches Monday declaring the economy is fundamentally sound. Bush received an update Friday from Paulson, Federal Reserve Chairman Ben Bernanke and other market regulators about how markets have been performing following a severe credit squeeze that began in August that roiled financial markets around the world.
The administration is considering an economic stimulus package that might include tax cuts to ward off a recession. Bush is expected to unveil the package, if he decides to go ahead with it, around the time of the Jan. 28 State of the Union address.
Asked about a stimulus package, Paulson said Monday that Bush has not made any decisions yet but that the administration was very much focused on the issue.
“This is a decision the president still has to make. When he makes it, we will report to all of you,” Paulson said during a question-and-answer session after his speech.
The credit crisis was sparked by raising defaults on subprime mortgages. Those defaults have already resulted in multibillion-dollar losses at many financial institutions who bought securities backed by the subprime mortgages that have gone bad.
Paulson said that those large write-downs showed the system was working.
“As markets reassess, we should not be surprised or disappointed to see financial institutions writing down assets and strengthening balance sheets,” he said.
Paulson said the administration is continuing to work with the mortgage industry to ensure the quick implementation of the agreement to freeze subprime mortgages that are due to reset if the homeowner is living in the house, is current with payments before they reset but cannot make the higher payments.
He said that last Friday more than 20 mortgage institutions that are part of the HOPE NOW alliance met to work through outstanding issues involved in the mortgage plan. “We expect most servicers to begin fast-tracking borrowers in the next few weeks,” he said.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

2008-01-07T09:28:00.000-05:00

Dirty deeds: Cities fight banks over vacant homes
As housing crisis deepens, cities fight lenders over abandoned homes
By Michael Orey
Business Week
updated 9:21 a.m. ET, Mon., Jan. 7, 2008

On Dec. 17 in a windowless Buffalo courtroom, Cindy T. Cooper, a prosecutor for the city, buzzes among a dozen men in suits, cutting deals. "You've got to unboard [the house], go in, and clean it out," she tells one. "If all the repairs are done quickly, I wouldn't ask for any fines." To another, she says, "the gutters weren't done right," and asks to see receipts for the work. It's "Bank Day" in Judge Henry J. Nowak's housing courtroom, more typically a venue where landlords and tenants duke it out over evictions and back rent. Instead, Cooper is asking lawyers for CitiFinancial, JPMorgan Chase, and Countrywide Financial to fix problems like peeling paint, broken masonry, and overgrown or trash-filled yards at houses the city says the banks are responsible for maintaining. It may be surprising to find these financial-services giants hauled before this obscure local tribunal.
In fact, Cooper and Nowak are at the forefront of a pioneering effort to deal with a vexing problem: The surging number of vacant and abandoned homes resulting from the mortgage market meltdown. The vacancies occur when lenders bring foreclosure suits against delinquent borrowers. Mere notice that such an action might be filed often sends residents packing. In Buffalo and other Rust Belt cities, the problem has been particularly acute, because in many cases banks are abandoning the houses, too, after determining that their value is so low that it's not worth laying claim to them. When city officials try to hold someone responsible for dilapidated properties, they often find the homeowner and bank pointing fingers at each other. Indeed, the houses fall into a kind of legal limbo that Cleveland housing attorney Kermit J. Lind calls "toxic title". While formal ownership remains with a borrower who has fled, the bank retains its lien on the property. That opens up a dispute over who is responsible for taxes and maintenance. Even when lenders do complete the foreclosure, they may walk away from the property, leaving it to be taken by a city for unpaid taxes, a process that can take years. Orphaned properties quickly fall into disrepair, the deterioration sometimes hastened by vandals who trash the interiors, lighting fires and ripping out wiring and pipes to sell for scrap. Squatters or drug dealers may move in.
The impact goes far beyond the defaulting homeowner, as neighbors and entire communities confront a spreading blight. Vacant residences deprive cities of tax revenue and can cost them thousands to maintain. A 2001 Temple University study in Philadelphia found that simply being within 150 feet of an abandoned property knocked $7,600 off a home's value.
In Buffalo, prosecutor Cooper is bringing lenders before Judge Nowak to hold them accountable. Wielding the threat of liens, which can hold up the lenders' other real estate transactions, she aims to make banks keep foreclosed homes in good condition until a buyer can be found. As an alternative, Cooper or Nowak may try to get lenders to donate properties to community groups or to pay for demolition when houses are beyond repair. "At least in Buffalo," says Cooper, "the days are gone when you can do a foreclosure and walk away without taking care of the property."
Those charged with violations by Cooper include participants all along the complex mortgage-industry food chain, from loan originators to servicers to the Wall Street trusts that buy up the vast majority of home loans and then securitize them. A similar initiative is under way in Cleveland, where Judge Raymond L. Pianka puts lenders on trial in absentia when they fail to respond to charges.
Even places with high property values, like Chula Vista, Calif., a San Diego suburb, are taking steps to avoid the neglect that can occur during lengthy foreclosures. "It seems like a number of the lenders aren't even doing things that are in their own best interest to preserve the asset," says Pianka — a problem he attributes to the fragmented nature of the business. "It's not an address. It's not a property. It's just a loan number," he says. "So they'll push a button in San Francisco, and it will set things in motion to do things with [a] property that don't even make sense."
The proceedings in Pianka's and Nowak's courtrooms offer a sobering reminder that underlying the attenuated ownership and esoteric products spun out of mortgages are actual buildings, some with leaky roofs or broken porch railings. The industry denies responsibility for properties to which it has not taken title. "The notion that a mortgage company has an obligation to make repairs on a property that it doesn't even own is very hard to comprehend," says Marco Cercone, a Buffalo attorney who represents a range of lenders before Nowak in the courtroom. Cooper says that banks and other financial firms once extolled houses as the best possible collateral for a loan. Now they're stuck with that collateral, and they don't like it.
If there ever is a national response to the messy legacy left by foreclosures, it might include something like the Buffalo system, which seeks to take action before the presence of abandoned houses hurts entire neighborhoods and which spreads the pain among many players. "We're kind of a crystal ball into what might happen" elsewhere, Cooper says.
Lenders may rue the day the State University of New York at Buffalo admitted Cooper to pursue a PhD in sociology and a law degree. The subject of her doctoral thesis, submitted in December, 2006: the role of banks in residential abandonment and why they should be accountable for property-code violations. The fourth-generation Californian says she quickly became attached to Buffalo for its history and architecture. Now 33, Cooper and her husband are rehabilitating a house that she bought after getting an IRS tax lien removed from the property. "My passion for this work is because I love this town," she says.
While researching her thesis, Cooper interned for Judge Nowak. Tall, soft-spoken, and unfailingly courteous, the judge, 39, began holding Bank Day earlier this year and schedules it once a month. The civility of the proceedings and the large number of bank lawyers in attendance belie a noteworthy fact: They are there under coercion. A few years ago, Nowak says, "the city became increasingly frustrated with the banks' role" in contributing to Buffalo's abandoned-property problem. (Estimates put the number of abandoned homes in the city at between 5,000 and 10,000.) In 2004, New York State amended the definition of "owner" in its property maintenance code to include not just titleholders but others who had "control" over a premises.
While the statute makes no reference to lenders, Nowak contends that the letters banks send to defaulting homeowners threatening to boot them from their houses show that they have begun to "assert some measure of control." On this premise, Nowak says, Buffalo began contacting banks "en masse" about foreclosed properties, but "a lot of times we'd just be rebuffed and ignored."
Cooper, as an intern, suggested a tactic that the judge adopted. When banks ignored summonses for code violations, Nowak began entering default judgments against them and imposing the maximum fine, which can reach $10,000 to $15,000. For a big bank, that's not much. The real pain comes because the fines give the city a lien that impedes the banks' ability to buy or sell other properties in the area. In addition, when lenders come to his court to get residents evicted from a particular property, Nowak refuses to grant the request until the bank addresses violations outstanding on other properties. Judge Pianka employs similar tactics in Cleveland. On Dec. 10, for example, he assessed a $50,000 fine against an absentee defendant, Mortgage Lenders Network USA, for 21 code violations at a home.
Even far from the Rust Belt, in places where empty houses retain significant value, the lending industry seems to have trouble preserving its collateral when homes are abandoned during foreclosure. In Chula Vista, a number of houses have been trashed by college students who have held parties in the vacant properties. In other cases, pillagers pull up in rental trucks to cart away cabinets, wood flooring, and fixtures stripped from the homes. But in October, an ordinance went into effect requiring lenders to register and maintain houses that have been abandoned during foreclosure.
Compliance, says Chula Vista code enforcement manager Doug Leeper, has been spotty. "What I need them to do is keep the water on and keep the lawn green," he says, noting that the first sign of abandonment is often a yard that has turned brown and a pool that has gone murky green.
That slide into decrepitude is exactly what Cooper is trying to head off in Buffalo. In February, she joined the city's law department, where one of her duties is prosecuting banks. She and Nowak each say their main objective is not collecting fines but bringing banks to the table to try to find constructive solutions for dealing with abandoned property. That doesn't mean borrowers are off the hook. Cooper typically charges both borrowers and lenders, and Nowak may fine homeowners or sentence them to community service. "Can both be responsible?" asks Cooper. "Absolutely."
The approach in Buffalo is paying dividends. In a case on Dec. 17, attorney Cercone addressed the status of a house that had gone into foreclosure in 2006. Cercone was representing JPMorgan Chase and Ocwen Loan Servicing (which in turn were representatives of a securitized trust that had purchased the mortgage). Cercone submitted an affidavit showing that Ocwen, which had been cited for violations in December, 2006, had spent $30,000 to repair the property, including scraping lead paint from the entire house. In September, the affidavit notes, JP Morgan Chase sold the property at a loss of $19,500, not including the cost of repairs. "The bank in this case dealt with the property as well as could be done under the circumstances," Nowak said from the bench, and he agreed not to impose any fines.
Still, even with novel and aggressive tactics, the path to resolution for many properties in Buffalo can be tortuous and protracted. A house at 1941 Niagara St. — one of dozens of properties that Cooper examined as a graduate studenthas yet to see its final chapter, though it may be close.
In 1998, Elizabeth M. Manuel obtained a $34,500 mortgage on the property from IMC Mortgage (since acquired by Citibank). By 2002, the loan had been sold into a securitization trust administered by Chase Manhattan (now JPMorgan Chase) as trustee. It also went into default, and Chase began foreclosure proceedings. In a court filing, Manuel (who could not be located for comment) said she left the home while the foreclosure action was pending. More than five years later, though, the title remains in her name. The house, although still standing, has become a fire-gutted wreck.
In May 2007, Nowak issued a default judgment against Chase for $9,000. But these cases can be notoriously difficult to untangle. Thomas A. Kelly, a spokesman for the bank, notes that Chase sold its trustee business to the Bank of New York Mellon in October, 2006, and couldn't locate anyone at Chase able to comment. But he reiterates the industry view that Chase can't be held responsible for maintaining a property it never owned. He acknowledges that if a home didn't seem worth taking as collateral, the bank may have made a decision to "just walk away."
The value of 1941 Niagara, estimate city assessors, is $4,500, of which $4,300 represents the value of the land. The home, Cooper says, is slated for "imminent" demolition.
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2008-01-06T20:03:00.000-05:00

Wall Street Eyes Housing, 4Q Earns Data
The start of 2008 has brought a harsh reality to Wall Street: The U.S. may indeed be headed toward recession.
So, after suffering punishing losses the first three trading days of the year, the stock market will be seizing on any data or forecast in the coming weeks that can help investors determine if their worst fears are coming to pass. And earnings are now part of the equation, with results from Alcoa Inc., the first of the 30 Dow Jones industrials to report fourth-quarter results, opening earnings season on Tuesday.
Analysts polled by Thomson Financial, on average, expect the aluminum producer to post a drop in per-share profit, but the company's outlook is likely to have a bigger impact on Wall Street.
Last week's readings showed that the economy continues to slump amid the ongoing mortgage and credit crisis, and that energy costs could have further to climb. Over the course of the week, oil prices hit the psychologically important $100-a-barrel mark, investors found out that manufacturing unexpectedly contracted in December, and — perhaps most devastatingly — payrolls grew less than anticipated last month, while unemployment hit a two-year high of 5 percent. When people start losing their jobs, they pare back spending and find it harder to pay their bills, a trend that would aggravate already deteriorated lending conditions.
The news pounded stocks. In just the first three trading days of 2008, the Dow Jones industrial average lost 3.50 percent, the Standard & Poor's 500 index fell 3.86 percent, and the Nasdaq composite index dropped 5.57 percent.
Economists and market analysts are still split on whether this year will bring recession, but virtually no one is completely discounting the possibility.
Keefe, Bruyette & Woods banking analysts are factoring into their forecasts a mild U.S. recession in 2008, and they predict the nation's unemployment will reach 6 percent by the end of the year.
There's hope, though: Fed rate cuts, companies continuing to find ways to make money, and ongoing growth overseas could save the U.S. economy from recession and stocks from a bear market, according to Michael Sheldon of Spencer Clarke LLC.
This week, as it has been for months now, Wall Street will be eyeing housing data — though bad news rarely comes as a surprise now to investors who have already sold off stocks related to homebuilding or mortgage lending. On Tuesday, the National Association of Realtors releases its forward-looking index of U.S. home sales for November. Economists surveyed by Thomson Financial predict the index will slip after gaining for two straight months, despite the association's forecast last month that sales and prices will start rising modestly next year.
KB Home's quarterly earnings report Tuesday could offer further insight into whether the housing market is near its bottom or has much further to fall. The homebuilder is expected to post a loss.
With the job market and energy sector in focus, the Energy Department's weekly report Wednesday on crude oil, gasoline and heating oil inventories and the Labor Department's weekly reading Thursday on jobless claims will be closely monitored.
Comments from several Fed officials could also give investors a clearer view of where the economy is headed, and if inflation is a growing concern to the central bank, which meets Jan. 29-30 to decide whether to lower interest rates again for the fourth time in a row.
On Tuesday, Philadelphia Fed President Charles Plosser will speak in Gladwyne, Pa., on the economy, and Boston Fed President Eric Rosengren will speak in Hartford, Conn., on the economy as well. On Wednesday, St. Louis Fed President William Poole will speak in St. Louis on economic and financial literacy, and Thursday, Kansas City Fed President Thomas Hoenig speaks on the economy in Kansas City, Mo.
Lastly, on Friday, the Commerce Department reports on November's international trade and December import prices. These two pieces of data that could indicate how the weakening dollar is helping or hurting the United States' position in global commerce.
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2008-01-04T16:51:00.000-05:00

Federal Reserve to loan banks $60 billion
Stepped-up lending intended to address credit crunch
Friday, January 04, 2008Inman News
With a surge in unemployment and rising oil prices as a backdrop, the Federal Reserve announced today it will make $60 billion in short-term loans available to banks this month -- half again as much as offered in December -- as the credit crunch shows few signs of easing.
To address fears about deteriorating credit markets, last month the Federal Reserve and four other central banks said they would inject more than $90 billion in liquidity into financial markets. The Fed made $40 billion in loans available to commercial banks in auctions held Dec. 17 and Dec. 20.
The auctions -- in which the funds available for 28-day loans go to the banks willing to pay the highest interest rates -- made it possible for banks to borrow at an average interest rate of 4.65 percent in December.
That's slightly less than the 4.75 percent rate the Fed charges for short-term loans at the "discount window," which some banks are reluctant to use because it's viewed as a last resort. The Fed has cut its target for the federal funds rate -- the amount banks charge each other for overnight loans -- three times since September, bringing it down from 5.25 percent to 4.25 percent.
Today, with oil prices flirting with $100 a barrel and a new report from the Department of Labor showing unemployment rose to 5 percent in December, the Fed said it would make a total of $60 billion in loans available to banks in auctions to be held Jan. 14 and Jan. 28.
In a statement, the Fed said it plans to continue conducting the twice-a-month auctions "for as long as necessary to address elevated pressures in short-term funding markets." The amount of auctions to take place next month will be announced by Feb. 1.
The latest numbers from the Department of Labor show the number of unemployed workers rose by 474,000 in December, to 7.7 million. Job growth in service industries, including professional and technical services, health care and food services, was offset by job losses in construction and manufacturing, the Labor Department said, bringing the unemployment rate to 5 percent -- the highest since November 2005.
Investors were gloomy about the jobs report, sending the Dow Jones Industrial Average down nearly 200 points in afternoon trading. Stocks in the index have lost about 5 percent of their value since Dec. 24.

2008-01-03T18:29:00.000-05:00

Mortgage rates down on economic worries
Manufacturing, home sales, loan apps high on radar
Thursday, January 03, 2008Inman News
Long-term mortgage rates this week dropped to their lowest levels in four weeks on news of a sharp slowdown in manufacturing and new-home sales, Freddie Mac reported today.
According to Freddie Mac, the average 30-year fixed-rate mortgage fell this week to 6.07 percent from 6.17 percent a week earlier, and the average 15-year fixed was down to 5.68 percent from 5.79 percent. Points, or fees lenders charge for loan processing expressed as a percent of the loan, averaged 0.5 and 0.6, respectively, on the 30- and 15-year loans.
Freddie Mac reported that average rates on adjustable-rate mortgages (ARMs) also declined, with the five-year Treasury-indexed hybrid ARM falling from 5.9 percent to 5.78 percent and the one-year ARM dropping from 5.53 percent to 5.47 percent. Points on these loans averaged 0.5.
"The new year has begun with mixed signals on the direction of the economy and mortgage market," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. "On the downside, the Institute for Supply Management's index of manufacturing activity showed significant contraction in this sector, perhaps a harbinger of a more substantial economic slowdown to begin this year. On the upside, the Conference Board reported that consumer confidence rose in December for the first time in five months, with more positive expectations for the next six months. Furthermore, interest rates have moved lower with average 30-year fixed-rate mortgage rates down about a tenth of a percentage point, the lowest in four weeks."
On home sales, Nothaft said the latest data sent "mixed messages on the direction of housing activity towards the end of 2007," and that the "latest forecast has total home sales continuing to decline in the first quarter of (2008) before starting a slow recovery."
Further weakening was seen in applications for home loans, as the Mortgage Bankers Association reported mortgage application volume declined 11.6 percent last week on a seasonally adjusted basis from the previous week, with the index tracking refinancings down 15.4 percent and the index tracking purchase loans down 8.5 percent.
According to Bankrate.com's mortgage-rate survey this week, "Declining new-home sales and weaker economic indicators gave investors new reasons to worry about the economy. Such worries typically prompt investors to park money in safe havens such as Treasury securities … With four weeks and an entire cycle of economic data before the next scheduled meeting of the Federal Open Market Committee, sentiment about the direction of interest rates and the economy may swing back and forth as worries alternate between economic growth and the outlook for inflation."

2008-01-02T09:23:00.000-05:00

Real Estate Professionals --Meeting the Needs of Home Sellers
by Dr. Paul C. Bishop, Harika “Anna” Barlett and Jessica Lautz, NAR Survey Research

Selling a home is a major decision for most households. Whether that decision is driven by the desire for a larger (or just different) home, a relocation due to a job change or personal situation, or plans to retire in a different community, selling one’s home can be a major challenge.Fortunately, sellers can choose from many options when looking to successfully complete a home sale. Sellers can work with a real estate agent who will manage the entire transaction, or they can take on the entire selling and marketing responsibility themselves, without the assistance of an agent.In fact, most home sellers do work with a real estate professional. Results from the recently released 2007 NAR Profile of Home Buyers and Sellers indicate that among recent home sellers, 85 percent were assisted by a real estate agent. How those home sellers select their real estate agent, what they expect their agent to do for them in the home sales transaction, and whether or not they would use that agent again are just a few of the questions that the report answers. Highlights from The Profileare presented below.Home selling experienceSome home sellers have considerable experience in the buying and selling of homes. The typical home seller has owned three homes; about one third have owned two homes. Not surprisingly, older sellers typically have owned more homes than younger ones; 43 percent of sellers 45 to 64 years old, have owned at least four homes, while more than a third of sellers who are 65 or older have owned at least five homes. Despite their previous experience of home buying and selling, the majority of these sellers still rely on the expertise and knowledge of real estate professionals to help them in selling a home.Finding a real estate professionalMost home sellers rely on referrals from a friend or family member or on their own experience with a particular agent when they look for a real estate professional to assist in their home sale. Among recent sellers, 41 percent reported that they found the agent they used in their home sale as a result of a referral, while 23 percent used the agent in a previous home sale or purchase transaction. Although there are a number of other ways that sellers can find an agent, they are far less common.The most important factor when choosing a real estate professional, cited by 38 percent of recent sellers, is the reputation of the agent. For an additional 20 percent of sellers, the agent’s honesty and trustworthiness was the most important consideration. Both of these qualities are closely tied to the manner in which most sellers find an agent – through referrals or as a result of their own experience with a particular agent, both of which can serve to validate reputation and trustworthiness.“Please Help Me”Sellers can choose the level of service they would like their real estate agent to provide. Some sellers want their agent to perform many tasks and manage the process from start to finish; others choose to perform some tasks themselves. In most cases, real estate agents assisted recent home sellers with many tasks. Seventy-four percent of sellers worked with their agents to determine the asking price, while 81 percent reported that their agent entered their property in the Multiple Listing Service.Most sellers continue to favor full-service brokerage, where real estate agents provide a range of services that generally entail managing the entire process of selling a home. Limited services, which may include discount brokerage, and minimal services also are important business models for sellers who want to take an active role in the process such as holding open houses, contacting potential buyers, negotiating terms or preparing the contract. Comparable to findings in the previous year’s profile, the 2007 report found 81 percent of sellers use full-service brokerage, 9 percent choose limited services and 9 percent use minimal service, such as simply listing a property on a multiple listing service.Expectations and performanceSellers have several expectations of their real estate agent depending on the particular circumstances of each sales transaction. These expectations vary among sellers in part because some sellers are willing to take on more of the tasks associated with selling a home, while other sellers want an agent to closely manage the entire process.Most sellers expect an agent to market the home, with 90 percent of sellers reporting their home was placed on a MLS and 88 percent saying their home was listed on the Internet; eight in 10 had yard signs. For one-quarter of sellers, the most important expectation is that the real estate agent will help sell the home within a specific timeframe. Nearly an equal percentage expects their agent to help find a buyer for their home.Eight in 10 sellers, using all kinds of brokerage services, said their agent reviewed sales contracts and purchase offers, managed paperwork and contracts, negotiated with buyers and scheduled showings. Three-quarters worked with their agent in determining the asking price, and said their agents coordinated home inspections and appraisals.FSBOs and commissionsWhile the majority of home sellers use a real estate agent to sell their home, some take on the tasks associated with completing a sale themselves. Many of these “for sale by owner” (FSBO) sales are between a seller and buyer who knew each other prior to the sale, which in most cases would not require the assistance of a real estate professional. The percentage of sellers who sell their home themselves has changed little in recent years. The level of for-sale-by-owner transactions remains at a record-low market share of 12 percent, the same as in 2006. The level of FSBOs has declined since reaching a cyclical peak of 18 percent in 1997.Why do people try to sell a home themselves? One in five FSBO sellers sold their home to a friend or relative. But the chief reason that sellers choose to sell their home without the assistance of a real estate agent, cited by 56 percent, is that they do not want to pay a fee or commission. Seventy percent of open-market FSBO sellers – that is, FSBO sellers who sold their home to a buyer whom they did not know – cited the fee or commission as the main reason.But it is important to note that often a real estate agent’s commission is one of several points of negotiation when sellers choose an agent. In fact, sometimes the real estate agent herself initiates the discussion of the commission or fee for selling the home; other times the seller raises the topic. Among recent sellers, 39 percent reported that the real estate agent raised the topic of compensation, while an additional 31 percent of sellers reported that they initiated the negotiation over the fee or commission.“Repeat” businessReal estate brokerage is a “people” business, and consumers’ satisfaction with their real estate professional is essential for generating repeat or referral business with the same or new clients.Whether or not sellers would recommend the agent who assisted in their sale is a critical measure of the sellers’ satisfaction. Moreover, the important role of referrals and word-of-mouth in the process of selecting an agent suggests that potential home sellers value the experience of others when choosingan agent.Among recent sellers, 62 percent reported that they would definitely use the same agent again or recommend that agent to others. An additional 19 percent would probably use the agent again.CompetitionReal estate is a very competitive industry. There are well over a million REALTORS® serving property buyers and sellers. What is particularly unique to these professionals is that they share vital information with their competitors. The industry is also very entrepreneurial. Real estate professionals constantly experiment with business models and cater to a wide array of consumer interests and preferences. NAR embraces this competition, and to succeed in this marketplace, REALTORS® must place a high priority on client satisfaction. The 2007 NAR Profile of Home Buyers and Sellersreveals that REALTORS® and other real estate professionals are effectively answering the needs of home sellers.In August 2007, NAR mailed an eight-page questionnaire to 150,000 consumers who purchased a home between July 2006 and June 2007. The survey yielded 9,966 usable responses with a response rate, after adjusting for undeliverable addresses, of 6.9 percent. Consumer names and addresses were obtained from Experian, a firm that maintains an extensive database of recent home buyers derived from county records. information about sellers comes from those buyers who also sold a home. All information in The Profile is characteristic of the 12-month period ending June 2007, with the exception of income data, which was reported for 2006. In some sections comparisons are also given for results obtained in previous surveys. Not all results are directly comparable due to changes in questionnaire design and sample size. The median is the primary statistical measure used throughout the report. Due to rounding and omissions for space, percentage distributions may not add to 100.

2008-01-02T09:16:00.000-05:00

This Slowdown We Can Handle
by Lawrence Yun, NAR Chief Economist

The economy is slowing. In the fourth quarter, GDP growth will have shrunk for the first time since the 2001 recession. The projected decline is only 0.4 percent, but it is nonetheless a decline. Because of the lag time in data collection, economic shrinkage will be reported in late January. At that point there will be shouts of RECESSION, RECESSION, and RECESSION. Beware of DoomsdayersNo worries though. Technically an economic recession comprises two consecutive quarters of contraction. (It is measured that way because only a sustained economic contraction leads to sustained net job cuts.) The projected fourth quarter decline is due to cutbacks in residential construction activity and from a statistical “quirk” in business inventory investment. The business inventory components generally regain quickly. The inventory-to-sales ratio is touching record lows (i.e., companies are operating with thin inventory) and some build-up in business inventory is inevitable going into 2008. The cutbacks in residential construction are continuing but most of the major declines have already occurred. Subsequent construction declines in 2008 will have less of an impact. Housing starts have fallen from their 1.5 million unit pace in the early part of 2007 to 1.2 million in the latter part of 2007. For 2008, housing starts are projected to be 1.15 million units – weak activity but still a rather mild decline from the final quarter of 2007.The other components of GDP will hold on. Consumer spending will continue to expand, albeit at a slower pace. It is difficult to foresee a consumer spending contraction given the fundamental improvement in household balance sheets. Compared to two years ago, salary payments to workers have increased by $700 billion, four million additional net new jobs have been added, and household net worth has risen by $8 trillion – principally from a rising stock market. Wealth in homes has declined by $200 billion in the past year due to the lower home prices (on average). On a net average though, if you add up the above figures, households are in better financial condition. Consumer spending will not contract.Business profit appears to have topped out in the past two quarters. However, business spending will advance at a respectable pace because aggregate corporate profits are considerably higher now compared to just two years ago. Government spending nearly always rises. Net exports also look favorable given the weakness in the U.S. dollar. Foreign purchases of U.S. products will remain strong because U.S. products are competitively priced.Eye on the FedAll in all, we will easily escape recession – despite the anticipated screaming headlines of impending doom. The GDP reading for each of the successive quarters in 2008 will be positive: 2.2 percent in the first quarter, 2.6 percent in the second quarter, 3.0 percent in the third quarter, and 3.1 percent in the fourth. Job gains also will continue into 2008.But even a temporary contraction in GDP has some benefits. Despite a relatively high inflation reading in November (0.8%), weaker GDP growth will hold back inflationary pressure in 2008. It is likely we’ll see another rate cut by the Federal Reserve. The Fed Funds rate will fall by another quarter point to 4.0 percent in January. Mortgage rates will hover near 6 percent – nearly comparable to the 45-year low rates we encountered in 2004 and 2005 during the housing boom years. Note, however, that is forconforming mortgages and not jumbo rates. But once the economy gathers momentum, mortgage rates will tick modestly higher.Foreclosures and FraudUnfortunately, foreclosure rates will continue to rise in 2008. That is a given due to the weak underwriting standards of past loan originations. Subprime mortgage loss write-downs will also continue. (Write-downs are based on assumed anticipated losses and not actual losses.) Because of inactive trading of subprime debts, the market value of these “toxic” loans is unknowable. It is possible that the actual losses – after tallying the figures for the next several years – could be measurably lower. In my view, a considerable share of the recent spikes in default rates is due to investors walking away from their loan obligations. Fraud is also a factor. However, homeowners will fight hard to keep their homes, so the assumed rise in default rates based on a simple extrapolation of recent figures may not be accurate. Investors/speculators and fraudulent loans will have defaulted quickly, thereby leaving fewer in the potential default pool at a later stage.Recent mortgage originations are much less problematic. We are back to the basics of sound underwriting. Nonetheless, past weak lending standards will mean higher foreclosures well into 2008. Therefore, it is critical for homebuilders to sharply cut back production so as to not add to the already high inventory. As always, we go back to our mantra: All real estate is local. There are wide variations with no one neighborhood trend looking like another. Some areas will see housing activity and prices moving up and some moving down. Local real estate professionals are critical in properly ascertaining local market conditions. In the aggregate, the national home sales and home prices will be very similar in 2008 as in 2007.

2008-01-02T09:10:00.000-05:00

Where are mortgage rates headed?
Commentary: Jobs report to shed light on economy, inflation

Monday, December 31, 2007By Lou Barnes Inman News
An inflation-inspired popup in rates is reversing on news of a weakening economy. Mortgages are still above 6 percent (they touched 6.25 percent at Christmas Eve worst), and markets will now hold until the release of all-powerful payroll numbers on Friday, Jan. 4.
The inflation news before Christmas was disturbing: The indicator was a technical one ("core personal consumption expenditure deflator"), but a Fed favorite jumping the 2 percent top-of-target range. Not by much, 2.2 percent year-over-year, but 2.9 percent in the last three quarters. "Headline" overall CPI is north of 4 percent, felt by everyone.
New claims for unemployment insurance are in an unmistakable uptrend, at 350,000 weekly within 20,000 of the level at onset of the last two recessions.
November data is old, but indicative: Orders for durable goods crept to a 0.1 percent gain versus 2.2 percent forecast, and personal spending soared by 1.1 percent, personal savings going negative by 0.5 percent -- hardly a sustainable party. Markets reacted to Friday's report of a 9 percent collapse in new-home sales as bad news; it is not -- we need these "incentive" discounters to take a couple of years off.
New Year predictions? Don't be silly. Not for 2008.
Instead, herewith a "bracketing" forecast, the probability borders of happy and poor outcomes set by today's mid-range optimists and pessimists. Outliers -- the wacky fringe -- need not apply (which excludes at least half of the commentariat).
First, on recessions in general: They are rare. Since the worst in modern times, the double-bottom '79-'82 affair, we've had only two, both short and shallow affairs, 1991 and 2001.
If you watch nothing else, watch the job market. Sensible optimists call for job "stability," meaning marginal gains and a gradually rising unemployment rate, the consumer staying in the game. Heard everywhere: "Historically, it's a bad idea to bet against the consumer." Reluctant pessimists counter that the job market is a lagging component of the economy, breaking after the start of recession.
Inflation. So long as oil, commodity and food prices behave as they have, it will be hard to find an optimist. In this case, bracketing goes to the world economy, and is three-sided. Economic optimists, many believing that a go-go world has "de-coupled" from the United States, are the inflation worrywarts; the slowdowners think that inflation is another lagging component and will fall back. The third bracket, pushing in from the cutesy sideline, says "stagflation." (I'll be judgmental, here: Stagflation was coined in the '70s during very high inflation and unemployment, both insignificant today by comparison. The stagflationists just can't make up their minds.)
Credit crunch. The hopeful see markets digesting trillions in bad assets "in a couple of quarters" -- Goldman Sachs. The non-apocalyptic skeptics see an impaired system short of credit suppressing growth for years -- Goldman Sachs (different guy).
Housing. Given an absence of optimists, I'll speak for the missing: Foreclosures will rise until 2011, but damage to the overall economy from housing alone (as opposed to the wreck in the financial system) will be less than forecast, as will be credit losses. Prices will stabilize in most Bubble Zones in 2008. Pick your own pessimist.
The Fed. Bernanke's solution to failure as a communicator is to stop trying. Hence, all is guesswork. Truly expert monetary mechanics are in a fierce argument, unable to tell if the Fed is fire-hosing cash to float the economy (and failing), or syringing just enough into banks to keep them alive. The range of serious opinion includes: Bernanke is a courageous, modern-day Volcker who will let the economy slide as far as he can to squelch inflation; or, now at the limit of the Fed's traditional power, is a passive Chairman. Quite incredible that we cannot tell which.
The World. Biggest forecast gap of all. Globalists expect strength to pull all through the credit wreck; old-timers look for Europe then Asia to follow the U.S. into the tank, then the U.S. to pull everybody out in 2009. I have increasing fondness for old guys.
Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

2007-12-30T09:08:00.000-05:00

Sales of New Homes Worse Than Expected
WASHINGTON, Sat Dec 29, 07:28 PM

The housing market plunged deeper into despair last month, with sales of new homes plummeting to their lowest level in more than 12 years.
The slump worsened even more than most analysts expected, heightening fears that the country might be thrust into a recession.
New-home sales tumbled 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000, the Commerce Department reported Friday. That was the worst sales pace since April 1995.
"It was ugly," declared Richard Yamarone, economist at Argus Research. "It is the one sector of the economy that doesn't show any signs of life. It doesn't look like there is any resuscitation in store for housing over the next year," he said.
The housing picture turned out to be more grim than most anticipated. Many economists were predicting sales to decline by 1.8 percent to a pace of 715,000.
By region, sales fell in all parts of the country, except for the West.
In the Midwest, new-home sales plunged 27.6 percent in November from October. Sales dropped 19.3 percent in the Northeast and fell 6.4 percent in the South. In the West, however, sales rose 4 percent.
Over the last 12 months, new-home sales nationwide have tumbled by 34.4 percent, the biggest annual slide since early 1991, and stark evidence of the painful collapse in the once high-flying housing market.
think you can classify what we are seeing in the housing market as a crash," said Mark Zandi, chief economist at Moody's Economy.com. "Sales and home prices are in a free fall. The downturn is intensifying."
The median sales price of a new home dipped to $239,100 in November. That is 0.4 percent lower than a year ago. The median price is where half sell for more and half for less.
On Wall Street, the Dow Jones industrials, after an erratic session, managed to squeeze out a small gain even as the grim home sales report added to some investors' angst. The Dow closed up 6.26 points at 13,365.87.
Would-be home buyers have found it more difficult to secure financing, especially for "jumbo" mortgages — those exceeding $417,000. The tighter credit situation is deepening the housing slump. Unsold homes have piled up, which will force builders to cut back even more on construction and look for ways to sweeten the pot to lure prospective buyers.
"A lot of borrowers are being disqualified for loans. If you can't qualify for a mortgage the game is over. For those who do qualify, it takes longer to get loans," said Brian Bethune, economist at Global Insight.
The housing market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. Sales turned weak as did home prices. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.
Foreclosures have soared to record highs and probably will keep rising. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates, which they couldn't afford.
Problems in housing are expected to persist well into 2008 — a major election year.
The housing and mortgage meltdowns have raised the odds that the country will fall into a recession. And, the situation has given Democrat and Republican politicians— including those who want to be the next president — plenty of opportunities to spread blame around.
The economy's growth is expected to have slowed sharply to a pace of just 1.5 percent or less in the final three months of this year. Former Federal Reserve Chairman Alan Greenspan recently warned that the economy is "getting close to stall speed." The big worry is that the housing and credit troubles will force individuals to cut back on spending and businesses to cut back on hiring and capital investment, throwing the economy into a tailspin.
To help bolster the economy, the Federal Reserve has sliced a key interest rate three times this year. Its latest rate cut, on Dec. 11, dropped the Fed's key rate to 4.25 percent, a two-year low. Many economists are predicting the Fed will lower rates again when they meet in late January.
"The risks are as high as they've ever been during this expansion that started in late 2001 that the economy will fall into a recession," said Bethune. "The odds are now nudging up close to the 50 percent mark."