The Federal Reserve may have cut its key short-term interest rate to the lowest level on record, but that doesn't mean credit will be any easier to get.
The move to lower the fed funds target rate to a range between 0% and 0.25%marked the tenth time the Fed has cut rates in the past 15 months in an attempt to jumpstart the economy.
Generally, the Fed lowers rates when it is concerned about the economy slowing because consumers tend to spend more when the cost of borrowing is cheap. But economists say the problem for consumers and businesses right now is not the cost of borrowing, but the availability of credit.
"Consumers might see lower rates but it's still hard to get a loan "Banks are taking big hits, and they're still trying to preserve capital. So they'll only make loans if you're a good credit risk."
How it works
The federal funds rate is an overnight lending rate that is used as a benchmark to determine the price of a variety of loans, including credit cards, home equity loans, lines of credit and car loans.
Most types of consumer loans are pegged to the prime rate, which is directly influenced by the federal funds rate. Typically, the prime rate is 3 percentage points higher than the federal funds rate. It was 4% before Tuesday's rate cut; just after the decision, several banks announced they were lowering their prime rate to 3.25%.
In turn, all credit cards with variable interest rates will automatically reset to reflect the lower rate. That is good news for card holders, but expect issuers to counter it by setting rate floors in order to preserve their margins, as well as scaling back consumer credit lines and closing old accounts.
Banks are trying to mitigate losses, "New credit is going to be a problem, "If you have shaky credit you're going to be very challenged to find money...even people with good credit are going to find it's not as easy to get credit.
Those in the market for a new car will certainly find deals, but that's mostly thanks to slashed sticker prices, not lower interest rates. That's because auto loans are not overly rate sensitive. For example, despite the Fed rate cuts, the average five-year note for a new car loan is at 7.05%, down from 7.60% a year ago But remember the rates are based on your credit score and lenders like GMAC or Ford want to see scores over 800 to get there tier 1 financing.
Plus, even if borrowers can get financing, the difference of a percentage point doesn't seriously impact affordability. "Nobody is upgrading to a Hummer based on lower interest rates,".
For many mortgage holders, the cumulative Fed rate cuts will result in lower payments when their variable-rate loans reset in 2009. But there is also a diluted effect: While this is a good time to refinance your existing mortgage, those in the market for a new home will need excellent credit to get a low rate.
"To obtain today's low interest rates, you need to have a down payment - or equity position in your home in the case of a refi - of at least 10% and fully document your income and your assets," If you don't have good credit, you're going to have trouble getting financing. But as long as your loan is within FHA limits for your state and county you still can finance up to 97% of your loan. Just remember FHA loans are more expensive then your normally conventional loan and the PMI is more expensive as well.
Foreclosure Consumer Concerns for Older Americans
Steps That Advocates Can Take To Help Prevent Foreclosure
Foreclosure or the threat of foreclosure can be devastating for seniors. Older homeowners fall behind on their mortgages for many reasons: sudden decreases in income due to the loss of a spouse; poor financial management which contributes to nonpayment of utility bills, service shutoffs and liens against the property; failure to perform necessary repairs and maintenance which makes the property uninhabitable; second mortgage or scams which make impossible demands on the homeowner’s limited resources. All of these contributing factors can be addressed by skilled advocates--if homeowners turn to them in time. This issue of Consumer Concerns for Older Americans examines some of the measures that legal and non-legal advocates for the elderly can take to defend homeowners at risk of foreclosure.
How Foreclosures Work
Foreclosure procedures vary from state to state. The procedures are established by state statutes, by case law, and by local practice. In about half of the states, foreclosures are court proceedings. First the creditor files a suit in a court located near the property. Unless the homeowner files an answer successfully contesting the foreclosure, a judgment is entered for the creditor. The home is then sold under court supervision.
Other states have “non-judicial” foreclosures. Creditors foreclose by simply advertising the home for sale, using a legal notice in a newspaper. If homeowners want to contest this type of foreclosure, they must file a lawsuit and ask the court to stop the sale. Sometimes if the homeowner wants the court to stop the foreclosure, the homeowner must file a bond to protect the creditor. Unless the homeowner initiates a court proceeding, there is no judicial involvement in such a foreclosure.
Some states allow both types of foreclosure, judicial and non-judicial. Practicality and local custom usually dictate a creditor’s choice of one type over the other.
Consumer Strategies When Foreclosure Is Threatened
When a homeowner first becomes worried about meeting mortgage payments, advocates can recommend that a series of steps be taken to reduce the risk of foreclosure:
Get Legal Advice. Because foreclosure is a harsh legal process, homeowners threatened with foreclosure should immediately obtain legal help. Possible sources of legal help are the neighborhood legal services office, a bar association panel of pro bono attorneys, or a program providing legal assistance for the elderly. A competent attorney can determine whether there are legal defenses to a foreclosure.
Too often, homeowners either postpone consulting a lawyer until after the time to assert their legal rights has passed, or walk away from their homes in frustration, leaving themselves without any equity and vulnerable to deficiency claims. For each foreclosure situation, a counselor or lawyer must carefully evaluate the homeowners’ objectives and interests.
Homeowners should, however, avoid “quick fix” attorneys who may advertise or solicit through the mail from published foreclosure lists. Many times these practitioners will push the homeowner to file a bankruptcy prematurely. A bankruptcy may be necessary at some point. But, as with many things, proper timing may be critical.
Keep Current on Home Payments. The homeowner should not pay credit card debts, doctor bills or other low priority debts ahead of home mortgage payments. Skipping payments on low priority debts for several months may have few bad consequences. Skipping one or two home mortgage payments may subject the homeowner to loss of the home.
Apply for Income Maintenance, Tax Abatement and Public Assistance Programs. Benefits provided by government and non-profit agencies are a key source of assistance for individuals in financial distress. These resources can help older homeowners free their income for home payments. Benefit programs to apply for may include fuel assistance and weatherization assistance, food stamps and emergency home repair programs. Most municipalities also offer property tax abatements for reasons of age or hardship. For very low-income homeowners, particularly those who are recently widowed, advocates should also determine the homeowner’s eligibility for Supplemental Security Income.
The process of obtaining these benefits is often slow and difficult. When necessary, shepherd individuals through the bureaucratic maze, ensuring that application procedures are understood and that all documentation is properly assembled and delivered.
Negotiate with the Mortgage Company or Servicer. It may be useful to ask the mortgage company to agree to a temporary or permanent change in the mortgage terms, commonly called a “workout.” More and more creditors are realizing that foreclosure is a losing proposition for the lender, and that they are better off keeping the consumer in the home making whatever payments the household can afford. It is important to contact the lender early, as soon as the homeowner begins experiencing financial difficulties. Although consumers may attempt to arrange a workout on their own, it is best if they are assisted by an experienced attorney or mortgage counselor. If the loan is guaranteed by a federal or state funded agency, the lender may be required to provide certain assistance and options to the homeowner to try to avoid foreclosure.
Some workouts that lenders may accept include:
Payment arrangements including “forbearance,” “reinstatement,” or “deferral” agreements. These involve curing a default by making regular payments as they are due and making partial payments on the arrears.
Temporary interest rate reduction. Generally this will also require a reasonable plan to increase income to make future payments.
Recasting missed payments. This usually involves deferring the missed payments to the end of the loan.
Permanent interest rate reduction.
Extension of the loan period.
Reamortization/capitalization of arrears.
Reduction of the principal balance.
Refinance the Home Debt. If the homeowner has equity in the home, refinancing may allow the homeowner to avoid foreclosure. A refinance called a “reverse mortgage” may be especially useful for seniors. Such a reverse mortgage may reduce or eliminate the need for a senior to make a monthly mortgage payment. Advocates should keep in mind, however, that many refinancing schemes are frauds. Even legitimate refinancing options that look like an improvement on closer inspection are far more costly than the existing mortgage. The major disadvantages to refinancing residential debts are the increased finance charges that result from extending the repayment period, the possibility of having to pay points, the additional closing costs, and prepayment penalties on old mortgages. The feasibility of refinancing depends on whether the homeowner can obtain a loan at a reasonable rate, usually from a savings bank, a commercial bank, a credit union, or a legitimate mortgage company. Most finance companies and certain mortgage companies do not make residential loans at reasonable rates and terms.
Consider Selling the House Before Foreclosure. When foreclosure is threatened, a homeowner may wish to contact a local realtor to obtain an appraisal or a broker’s price opinion of the home’s value. Doing so provides the owner with information about the home’s marketability and its likely sale price, without necessarily obligating the owner to sell.
Most homeowners do not want to give up their homes, but sometimes no other solution exists. Selling the house may be painful, but it is always a better solution than letting a bank sell the house. If they find a buyer, homeowners may sell their home privately before a foreclosure sale takes place. If more is owed on the mortgage than the house can be sold for, it may be possible to get the mortgage company’s consent to sell the home at a price that is less than the amount owed.
Consider Filing Bankruptcy. Homeowners who are about to lose their homes should carefully consider filing a petition in bankruptcy. This can stop the foreclosure process and allow them time to regroup and try to work out a plan to keep the home. Bankruptcy may also help them cure past defaults and make future payments. However, the bankruptcy option is complicated and it is a good idea to seek professional assistance from an attorney specializing in bankruptcy. Bankruptcy law requires almost all debtors to receive budget and credit counseling within 180 days before the bankruptcy case is filed. Homeowners who are considering bankruptcy should obtain credit counseling from an approved agency well before they need to file the bankruptcy case.
Deed in Lieu of Foreclosure. Homeowners often will be tempted to turn over their deed to the creditor instead of fighting the foreclosure. This is generally a good idea only if the borrower will receive something from the creditor in return for saving it the trouble of foreclosing. Fore example, if the home’s value exceeds the amount of the indebtedness, the homeowner may want to ask the creditor to agree not to seek further collection remedies. Some lenders will even agree to pay a small amount of cash for a deed in lieu in order to help the homeowner move. However, by turning over the deed to the mortgage holder, the consumer may forfeit any right to equity in the home. Similarly, the consumer may have valid claims or defenses against the creditor that would be lost by turning over the deed. If the consumer does offer the creditor a deed in lieu of foreclosure, make sure that there is a written agreement giving them sufficient time to vacate the premises in order to find alternative housing and move in an orderly fashion.
Foreclosure or the threat of foreclosure can be devastating for seniors. Older homeowners fall behind on their mortgages for many reasons: sudden decreases in income due to the loss of a spouse; poor financial management which contributes to nonpayment of utility bills, service shutoffs and liens against the property; failure to perform necessary repairs and maintenance which makes the property uninhabitable; second mortgage or scams which make impossible demands on the homeowner’s limited resources. All of these contributing factors can be addressed by skilled advocates--if homeowners turn to them in time. This issue of Consumer Concerns for Older Americans examines some of the measures that legal and non-legal advocates for the elderly can take to defend homeowners at risk of foreclosure.
How Foreclosures Work
Foreclosure procedures vary from state to state. The procedures are established by state statutes, by case law, and by local practice. In about half of the states, foreclosures are court proceedings. First the creditor files a suit in a court located near the property. Unless the homeowner files an answer successfully contesting the foreclosure, a judgment is entered for the creditor. The home is then sold under court supervision.
Other states have “non-judicial” foreclosures. Creditors foreclose by simply advertising the home for sale, using a legal notice in a newspaper. If homeowners want to contest this type of foreclosure, they must file a lawsuit and ask the court to stop the sale. Sometimes if the homeowner wants the court to stop the foreclosure, the homeowner must file a bond to protect the creditor. Unless the homeowner initiates a court proceeding, there is no judicial involvement in such a foreclosure.
Some states allow both types of foreclosure, judicial and non-judicial. Practicality and local custom usually dictate a creditor’s choice of one type over the other.
Consumer Strategies When Foreclosure Is Threatened
When a homeowner first becomes worried about meeting mortgage payments, advocates can recommend that a series of steps be taken to reduce the risk of foreclosure:
Get Legal Advice. Because foreclosure is a harsh legal process, homeowners threatened with foreclosure should immediately obtain legal help. Possible sources of legal help are the neighborhood legal services office, a bar association panel of pro bono attorneys, or a program providing legal assistance for the elderly. A competent attorney can determine whether there are legal defenses to a foreclosure.
Too often, homeowners either postpone consulting a lawyer until after the time to assert their legal rights has passed, or walk away from their homes in frustration, leaving themselves without any equity and vulnerable to deficiency claims. For each foreclosure situation, a counselor or lawyer must carefully evaluate the homeowners’ objectives and interests.
Homeowners should, however, avoid “quick fix” attorneys who may advertise or solicit through the mail from published foreclosure lists. Many times these practitioners will push the homeowner to file a bankruptcy prematurely. A bankruptcy may be necessary at some point. But, as with many things, proper timing may be critical.
Keep Current on Home Payments. The homeowner should not pay credit card debts, doctor bills or other low priority debts ahead of home mortgage payments. Skipping payments on low priority debts for several months may have few bad consequences. Skipping one or two home mortgage payments may subject the homeowner to loss of the home.
Apply for Income Maintenance, Tax Abatement and Public Assistance Programs. Benefits provided by government and non-profit agencies are a key source of assistance for individuals in financial distress. These resources can help older homeowners free their income for home payments. Benefit programs to apply for may include fuel assistance and weatherization assistance, food stamps and emergency home repair programs. Most municipalities also offer property tax abatements for reasons of age or hardship. For very low-income homeowners, particularly those who are recently widowed, advocates should also determine the homeowner’s eligibility for Supplemental Security Income.
The process of obtaining these benefits is often slow and difficult. When necessary, shepherd individuals through the bureaucratic maze, ensuring that application procedures are understood and that all documentation is properly assembled and delivered.
Negotiate with the Mortgage Company or Servicer. It may be useful to ask the mortgage company to agree to a temporary or permanent change in the mortgage terms, commonly called a “workout.” More and more creditors are realizing that foreclosure is a losing proposition for the lender, and that they are better off keeping the consumer in the home making whatever payments the household can afford. It is important to contact the lender early, as soon as the homeowner begins experiencing financial difficulties. Although consumers may attempt to arrange a workout on their own, it is best if they are assisted by an experienced attorney or mortgage counselor. If the loan is guaranteed by a federal or state funded agency, the lender may be required to provide certain assistance and options to the homeowner to try to avoid foreclosure.
Some workouts that lenders may accept include:
Payment arrangements including “forbearance,” “reinstatement,” or “deferral” agreements. These involve curing a default by making regular payments as they are due and making partial payments on the arrears.
Temporary interest rate reduction. Generally this will also require a reasonable plan to increase income to make future payments.
Recasting missed payments. This usually involves deferring the missed payments to the end of the loan.
Permanent interest rate reduction.
Extension of the loan period.
Reamortization/capitalization of arrears.
Reduction of the principal balance.
Refinance the Home Debt. If the homeowner has equity in the home, refinancing may allow the homeowner to avoid foreclosure. A refinance called a “reverse mortgage” may be especially useful for seniors. Such a reverse mortgage may reduce or eliminate the need for a senior to make a monthly mortgage payment. Advocates should keep in mind, however, that many refinancing schemes are frauds. Even legitimate refinancing options that look like an improvement on closer inspection are far more costly than the existing mortgage. The major disadvantages to refinancing residential debts are the increased finance charges that result from extending the repayment period, the possibility of having to pay points, the additional closing costs, and prepayment penalties on old mortgages. The feasibility of refinancing depends on whether the homeowner can obtain a loan at a reasonable rate, usually from a savings bank, a commercial bank, a credit union, or a legitimate mortgage company. Most finance companies and certain mortgage companies do not make residential loans at reasonable rates and terms.
Consider Selling the House Before Foreclosure. When foreclosure is threatened, a homeowner may wish to contact a local realtor to obtain an appraisal or a broker’s price opinion of the home’s value. Doing so provides the owner with information about the home’s marketability and its likely sale price, without necessarily obligating the owner to sell.
Most homeowners do not want to give up their homes, but sometimes no other solution exists. Selling the house may be painful, but it is always a better solution than letting a bank sell the house. If they find a buyer, homeowners may sell their home privately before a foreclosure sale takes place. If more is owed on the mortgage than the house can be sold for, it may be possible to get the mortgage company’s consent to sell the home at a price that is less than the amount owed.
Consider Filing Bankruptcy. Homeowners who are about to lose their homes should carefully consider filing a petition in bankruptcy. This can stop the foreclosure process and allow them time to regroup and try to work out a plan to keep the home. Bankruptcy may also help them cure past defaults and make future payments. However, the bankruptcy option is complicated and it is a good idea to seek professional assistance from an attorney specializing in bankruptcy. Bankruptcy law requires almost all debtors to receive budget and credit counseling within 180 days before the bankruptcy case is filed. Homeowners who are considering bankruptcy should obtain credit counseling from an approved agency well before they need to file the bankruptcy case.
Deed in Lieu of Foreclosure. Homeowners often will be tempted to turn over their deed to the creditor instead of fighting the foreclosure. This is generally a good idea only if the borrower will receive something from the creditor in return for saving it the trouble of foreclosing. Fore example, if the home’s value exceeds the amount of the indebtedness, the homeowner may want to ask the creditor to agree not to seek further collection remedies. Some lenders will even agree to pay a small amount of cash for a deed in lieu in order to help the homeowner move. However, by turning over the deed to the mortgage holder, the consumer may forfeit any right to equity in the home. Similarly, the consumer may have valid claims or defenses against the creditor that would be lost by turning over the deed. If the consumer does offer the creditor a deed in lieu of foreclosure, make sure that there is a written agreement giving them sufficient time to vacate the premises in order to find alternative housing and move in an orderly fashion.
Beware of Foreclosure Rescue Scams
Foreclosure rescue scams are real. The people behind these scams prey on struggling homeowners who don't know where to turn for help. Scam artists often target defendants named in a foreclosure proceedings. Don't let them take advantage of you, your situation, your house, or your money.
The best way to avoid becoming a victim is to get informed and ask a lot of questions. If you receive an offer, information, or advice that sounds too good to be true, then it probably is. Here are some tips:
Know the person you do business with. The U.S. Department of Housing and Urban Development (HUD) sponsors many housing counseling agencies that can help you with questions relating to foreclosure and credit issues. Before responding to any person or organization offering to "save" you from foreclosure, check that the organization is HUD-approved at www.hud.gov/counseling.
Beware of anyone who says that you don't need a real estate professional or title company when selling your home. You should always have a real estate professional, attorney, or a title company to help you with any transaction involving your home and protect your interests.
Don't be pressured to sign papers immediately or to transfer the deed of your house. Do not sign over the deed to your property to any organization or individual if you are not working directly with your mortgage lender to forgive your debt.
Additionally, don't sign papers in exchange for a promise that someone else will pay off your mortgage. ALWAYS be sure to read and understand all paperwork before signing to ensure that you are not unknowingly giving someone else ownership of your home.
Beware of anyone who tells you that a buyer will purchase your home for the balance owed on your loan, plus an additional cash payment to you. Never make mortgage payments to anyone other than your lender, unless you have spoken personally to your lender about this. Scammers might ask you to make your payments to them; however, they pocket your payments instead of sending them to the lender.
Cantact me with any questions regarding your Mortgage Anthony Landaeta tlandaeta@aol.com
The best way to avoid becoming a victim is to get informed and ask a lot of questions. If you receive an offer, information, or advice that sounds too good to be true, then it probably is. Here are some tips:
Know the person you do business with. The U.S. Department of Housing and Urban Development (HUD) sponsors many housing counseling agencies that can help you with questions relating to foreclosure and credit issues. Before responding to any person or organization offering to "save" you from foreclosure, check that the organization is HUD-approved at www.hud.gov/counseling.
Beware of anyone who says that you don't need a real estate professional or title company when selling your home. You should always have a real estate professional, attorney, or a title company to help you with any transaction involving your home and protect your interests.
Don't be pressured to sign papers immediately or to transfer the deed of your house. Do not sign over the deed to your property to any organization or individual if you are not working directly with your mortgage lender to forgive your debt.
Additionally, don't sign papers in exchange for a promise that someone else will pay off your mortgage. ALWAYS be sure to read and understand all paperwork before signing to ensure that you are not unknowingly giving someone else ownership of your home.
Beware of anyone who tells you that a buyer will purchase your home for the balance owed on your loan, plus an additional cash payment to you. Never make mortgage payments to anyone other than your lender, unless you have spoken personally to your lender about this. Scammers might ask you to make your payments to them; however, they pocket your payments instead of sending them to the lender.
Cantact me with any questions regarding your Mortgage Anthony Landaeta tlandaeta@aol.com
Act Now to Avoid Foreclosure
If you have fallen behind on your mortgage payments, or if your loan has been referred to an attorney, you may still have time to save your home. You should act quickly to avoid losing your home. The most important step you can take is to get help early from your mortgage lender, servicer, or housing counselor.
If you delay and fall further behind in your payments, you are likely to have fewer options. Finding a solution that avoids foreclosure is better for you and better for your mortgage lender. Foreclosure damages your credit rating and your ability to borrow money or buy a home in the future.
It is important to be open and honest about your financial situation with your servicer or counselor. Here are important steps to take immediately:
Cantact me with any questions regarding your Mortgage Anthony Landaeta tlandaeta@aol.com
Call your lender or loan servicer to talk about your situation. You can find the contact information on your monthly mortgage statement or coupon book.
If you can't reach your lender or servicer or you do not receive help, contact the Homeownership Preservation Foundation at 1-888-995-HOPE. Experienced counselors can help you develop the best plan for your personal financial situation. This counseling is free.
Gather the information you will need. You will be asked to provide:
letters or communications from your lender,
foreclosure notices,
recent mortgage statements showing your loan number,
homeowner's insurance policy,
last two pay stubs and most recent tax return for all borrowers named on the mortgage,
proof of other income, such as child support, alimony, Social Security, or pension,
bank account statements, and
list of major monthly bills, including child care, utilities, credit cards, and cell phone.
Understand your options. Depending on your situation, you may have several options to discuss with your servicer or counselor. They could include:
Repayment Plan--You may be able to catch up on missed payments by creating a schedule for repaying the past-due amount.
Modification--In some cases, mortgage loan terms can be changed on a temporary or permanent basis to make the payment more affordable.
Your financial situation may have changed significantly since you qualified for your home due to unemployment, divorce, job change/relocation, or medical issues. You may want or need to sell your home as a result of this change. There are options for borrowers who are worried about possible foreclosure:
Pre-foreclosure or Short-Sale--Servicers work with borrowers to sell their home and use the proceeds to pay off the loan even if the proceeds are not enough to settle the entire balance.
Deed-in-lieu--Borrowers sign over title to the property to Fannie Mae without the expense of foreclosure.
You have more options if you act quickly. Now is the time to ask for help!
If you delay and fall further behind in your payments, you are likely to have fewer options. Finding a solution that avoids foreclosure is better for you and better for your mortgage lender. Foreclosure damages your credit rating and your ability to borrow money or buy a home in the future.
It is important to be open and honest about your financial situation with your servicer or counselor. Here are important steps to take immediately:
Cantact me with any questions regarding your Mortgage Anthony Landaeta tlandaeta@aol.com
Call your lender or loan servicer to talk about your situation. You can find the contact information on your monthly mortgage statement or coupon book.
If you can't reach your lender or servicer or you do not receive help, contact the Homeownership Preservation Foundation at 1-888-995-HOPE. Experienced counselors can help you develop the best plan for your personal financial situation. This counseling is free.
Gather the information you will need. You will be asked to provide:
letters or communications from your lender,
foreclosure notices,
recent mortgage statements showing your loan number,
homeowner's insurance policy,
last two pay stubs and most recent tax return for all borrowers named on the mortgage,
proof of other income, such as child support, alimony, Social Security, or pension,
bank account statements, and
list of major monthly bills, including child care, utilities, credit cards, and cell phone.
Understand your options. Depending on your situation, you may have several options to discuss with your servicer or counselor. They could include:
Repayment Plan--You may be able to catch up on missed payments by creating a schedule for repaying the past-due amount.
Modification--In some cases, mortgage loan terms can be changed on a temporary or permanent basis to make the payment more affordable.
Your financial situation may have changed significantly since you qualified for your home due to unemployment, divorce, job change/relocation, or medical issues. You may want or need to sell your home as a result of this change. There are options for borrowers who are worried about possible foreclosure:
Pre-foreclosure or Short-Sale--Servicers work with borrowers to sell their home and use the proceeds to pay off the loan even if the proceeds are not enough to settle the entire balance.
Deed-in-lieu--Borrowers sign over title to the property to Fannie Mae without the expense of foreclosure.
You have more options if you act quickly. Now is the time to ask for help!
J.P. Morgan Chase Unveils Mortgage Foreclosure Program
J. P. Morgan Chase & Company has announced that it will make its own contribution to stemming the tide of foreclosures sweeping the country by modifying around $70 billion of its owned mortgages that are in or nearing default.
The bank's efforts will focus on restructuring loans for borrowers who are at risk of foreclosure and it has placed a 90 day moratorium on all foreclosures in order to put guidelines for its program in place. The company will hire and train an estimate 300 additional loan counselors (it currently employs about 2,500) and open two dozen new regional counseling centers.
The company has targeted 400,000 families for the rescue program. This is in addition to what it claims are 250,000 families which have already been helped in the earlier restructure of some $40 billion in loans.
The bank is also a major servicer of loans owned by others. Its own mortgages account for only 20 percent of the total portfolio it controls. (The Wall Street Journal pegs the number at only 4.7 percent.) The restructuring program will not, at least at present, apply to those serviced mortgages however it hopes that eventually the initiative can be expanded to include some of the investor owned loans.
The Chase program joins one previously announced by the Federal Deposit Insurance Corporation (FDIC) for the assets it has taken from the failed IndyMac Bank which was a major player in the mortgage industry. Bank of American has also started a modification program as did Wachovia Bank shortly before it was taken over by Wells Fargo Bank.
The FDIC decided, after its experience in the banking and savings and loan crises of the late 1980's and early 1990's that there was a far greater recovery possible from working with borrowers to modify loans than in foreclosing on the underlying collateral. It has been trying to convey the wisdom of shoring up homeowners to the Federal Reserve and the Treasury Department which appeared to be focused on the recovery of financial institutions and the credit market. FDIC Chairman Sheila Bair has submitted a plan for White House consideration which would help three million homeowners facing mortgage defaults.
According to an article in The WSJ about the Chase program 7.3 million American homeowners are expected to default on their mortgages between 2008 and 2010 and approximately 4.3 million of them will actually lose their homes.
While Chase plans to work with holders of all types of mortgage loans, a particular emphasis of the new program will be on pay-option adjustable rate mortgages. These now widely discredited instruments allowed borrowers to make a monthly payment that might not even be sufficient to cover the mortgage interest, the balance of which was added to the principle in a variation on negative amortization loans. While the borrower could certainly make a payment that covered the interest or a regular interest and principal payment most opted for the lowest required amount. Chase inherited a large number of these pay-option loans when it acquired the failing Washington Mutual Bank and EMC.
According to CNNMoney.com, the bank will offer borrowers affordable 30-year fixed-rate loans or 10-year interest only loans where principal payments are deferred and may be forgiven over a period of years or until the house is sold.
One particularly unusual feature of the Chase plan is their intention to go to the borrower. Caseworkers will review the entire bank-owned portfolio to determine loans that can benefit from the program and will then contact the borrowers. Hopefully this will eliminate the frustration experienced by many troubled homeowners who have been unable to reach appropriate help or get any response to their requests for assistance.
According to CNN Charley Scharf, CEO of Retail Financial Services at Chase said of the program, "While Chase has helped many families already, we feel it is our responsibility to provide additional help to homeowners during these challenging times. We will work with families who want to save their homes but are struggling to make their payments."
The bank's efforts will focus on restructuring loans for borrowers who are at risk of foreclosure and it has placed a 90 day moratorium on all foreclosures in order to put guidelines for its program in place. The company will hire and train an estimate 300 additional loan counselors (it currently employs about 2,500) and open two dozen new regional counseling centers.
The company has targeted 400,000 families for the rescue program. This is in addition to what it claims are 250,000 families which have already been helped in the earlier restructure of some $40 billion in loans.
The bank is also a major servicer of loans owned by others. Its own mortgages account for only 20 percent of the total portfolio it controls. (The Wall Street Journal pegs the number at only 4.7 percent.) The restructuring program will not, at least at present, apply to those serviced mortgages however it hopes that eventually the initiative can be expanded to include some of the investor owned loans.
The Chase program joins one previously announced by the Federal Deposit Insurance Corporation (FDIC) for the assets it has taken from the failed IndyMac Bank which was a major player in the mortgage industry. Bank of American has also started a modification program as did Wachovia Bank shortly before it was taken over by Wells Fargo Bank.
The FDIC decided, after its experience in the banking and savings and loan crises of the late 1980's and early 1990's that there was a far greater recovery possible from working with borrowers to modify loans than in foreclosing on the underlying collateral. It has been trying to convey the wisdom of shoring up homeowners to the Federal Reserve and the Treasury Department which appeared to be focused on the recovery of financial institutions and the credit market. FDIC Chairman Sheila Bair has submitted a plan for White House consideration which would help three million homeowners facing mortgage defaults.
According to an article in The WSJ about the Chase program 7.3 million American homeowners are expected to default on their mortgages between 2008 and 2010 and approximately 4.3 million of them will actually lose their homes.
While Chase plans to work with holders of all types of mortgage loans, a particular emphasis of the new program will be on pay-option adjustable rate mortgages. These now widely discredited instruments allowed borrowers to make a monthly payment that might not even be sufficient to cover the mortgage interest, the balance of which was added to the principle in a variation on negative amortization loans. While the borrower could certainly make a payment that covered the interest or a regular interest and principal payment most opted for the lowest required amount. Chase inherited a large number of these pay-option loans when it acquired the failing Washington Mutual Bank and EMC.
According to CNNMoney.com, the bank will offer borrowers affordable 30-year fixed-rate loans or 10-year interest only loans where principal payments are deferred and may be forgiven over a period of years or until the house is sold.
One particularly unusual feature of the Chase plan is their intention to go to the borrower. Caseworkers will review the entire bank-owned portfolio to determine loans that can benefit from the program and will then contact the borrowers. Hopefully this will eliminate the frustration experienced by many troubled homeowners who have been unable to reach appropriate help or get any response to their requests for assistance.
According to CNN Charley Scharf, CEO of Retail Financial Services at Chase said of the program, "While Chase has helped many families already, we feel it is our responsibility to provide additional help to homeowners during these challenging times. We will work with families who want to save their homes but are struggling to make their payments."
Treasury, FDIC Said to Consider Guarantees to Stem Foreclosures
Oct. 30 (Bloomberg) -- The U.S. Treasury and the Federal Deposit Insurance Corp. are considering a program that may offer about $500 billion in guarantees for troubled mortgages to stem record foreclosures, people familiar with the matter said.
The plan, which might put as many as 3 million homeowners into affordable loans, would require lenders to restructure mortgages based on a borrower's ability to repay. Under one option, the industry would keep lower monthly payments for five years before raising interest rates, the people said.
FDIC Chairman Sheila Bair mentioned the program at an international deposit insurers conference in Arlington, Virginia, yesterday without offering details. ``A framework is needed to modify loans on a scale large enough to have a major impact,'' Bair said.
A program of guarantees backed by the $700 billion bank rescue would be the Bush administration's most aggressive step on behalf of homeowners since the subprime crisis began more than a year ago. The government until now has relied mainly on a voluntary, industry-led alliance to spur loan modifications and avert foreclosures.
``It will take a massive and quick infusion of funds for refinancings and other foreclosure prevention to turn the tide,'' said David Abromowitz, a senior fellow at the Center for American Progress, a Washington-based public policy research organization.
Multiple options to stem foreclosures are being considered by the agencies and a final decision on a ``particular approach'' hasn't been made, said Jennifer Zuccarelli, a Treasury spokeswoman. ``The administration is looking at ways to reduce foreclosures, and that process is ongoing.''
Rising Foreclosures
Bair, whose Washington-based agency insures deposits at U.S. banks, is pressing the mortgage industry to modify more loans to curb foreclosures, which rose to the highest on record in the third quarter led by California, Florida, Arizona, Ohio, Michigan and Nevada, according to California-based RealtyTrac.
``The FDIC has had better ideas about how to solve this mortgage crisis than anyone else in the Bush administration,'' said Senator Charles Schumer, a New York Democrat. ``We hope that the White House will listen very carefully to the FDIC's proposals.''
The FDIC and Treasury program would provide incentives to mortgage lenders and loan-servicing companies to change their loans, ``along with a framework for modifying them systematically into long-term and sustainable, affordable mortgages,'' Bair said.
Banks, Hedge Funds
The plan would apply to banks, savings and loans, hedge funds and other mortgage holders, the people said. While it would provide guarantees for about $500 billion in mortgages, it would cost about $50 billion that would be covered by the bailout package.
The government also is considering guaranteeing a second home loan, such as a home-equity line of credit, to assure mortgage holders they wouldn't lose money when they change loan terms, the people said. A guarantee in effect would put taxpayers on the hook for the loan if borrowers default.
Treasury's plan ``was very necessary legislation to keep the fundamental financial institutions and the financial markets from collapsing,'' Ara Hovnanian, chief executive officer of homebuilder Hovnanian Enterprises Inc., said last week. ``We think in isolation it will fail if it's not combined with something that stabilizes the housing market right now.''
The FDIC would manage the program, the people said, adding that details are still being worked out and might change.
`Productive Conversations'
While the FDIC has had ``productive conversations'' with Treasury on using loan guarantees, ``it would be premature to speculate about any final framework or parameters of a potential program,'' FDIC spokesman Andrew Gray said in an e-mailed statement.
Bair last week said the rescue plan lets the government set standards for mortgage modifications and offer loan guarantees for mortgages that meet the standards.
``Loan guarantees could be used as an incentive for servicers to modify loans,'' Bair said in her Oct. 23 testimony before the Senate Banking Committee. ``The FDIC is working closely and creatively with Treasury to realize the potential benefits of this authority.''
The plan, which might put as many as 3 million homeowners into affordable loans, would require lenders to restructure mortgages based on a borrower's ability to repay. Under one option, the industry would keep lower monthly payments for five years before raising interest rates, the people said.
FDIC Chairman Sheila Bair mentioned the program at an international deposit insurers conference in Arlington, Virginia, yesterday without offering details. ``A framework is needed to modify loans on a scale large enough to have a major impact,'' Bair said.
A program of guarantees backed by the $700 billion bank rescue would be the Bush administration's most aggressive step on behalf of homeowners since the subprime crisis began more than a year ago. The government until now has relied mainly on a voluntary, industry-led alliance to spur loan modifications and avert foreclosures.
``It will take a massive and quick infusion of funds for refinancings and other foreclosure prevention to turn the tide,'' said David Abromowitz, a senior fellow at the Center for American Progress, a Washington-based public policy research organization.
Multiple options to stem foreclosures are being considered by the agencies and a final decision on a ``particular approach'' hasn't been made, said Jennifer Zuccarelli, a Treasury spokeswoman. ``The administration is looking at ways to reduce foreclosures, and that process is ongoing.''
Rising Foreclosures
Bair, whose Washington-based agency insures deposits at U.S. banks, is pressing the mortgage industry to modify more loans to curb foreclosures, which rose to the highest on record in the third quarter led by California, Florida, Arizona, Ohio, Michigan and Nevada, according to California-based RealtyTrac.
``The FDIC has had better ideas about how to solve this mortgage crisis than anyone else in the Bush administration,'' said Senator Charles Schumer, a New York Democrat. ``We hope that the White House will listen very carefully to the FDIC's proposals.''
The FDIC and Treasury program would provide incentives to mortgage lenders and loan-servicing companies to change their loans, ``along with a framework for modifying them systematically into long-term and sustainable, affordable mortgages,'' Bair said.
Banks, Hedge Funds
The plan would apply to banks, savings and loans, hedge funds and other mortgage holders, the people said. While it would provide guarantees for about $500 billion in mortgages, it would cost about $50 billion that would be covered by the bailout package.
The government also is considering guaranteeing a second home loan, such as a home-equity line of credit, to assure mortgage holders they wouldn't lose money when they change loan terms, the people said. A guarantee in effect would put taxpayers on the hook for the loan if borrowers default.
Treasury's plan ``was very necessary legislation to keep the fundamental financial institutions and the financial markets from collapsing,'' Ara Hovnanian, chief executive officer of homebuilder Hovnanian Enterprises Inc., said last week. ``We think in isolation it will fail if it's not combined with something that stabilizes the housing market right now.''
The FDIC would manage the program, the people said, adding that details are still being worked out and might change.
`Productive Conversations'
While the FDIC has had ``productive conversations'' with Treasury on using loan guarantees, ``it would be premature to speculate about any final framework or parameters of a potential program,'' FDIC spokesman Andrew Gray said in an e-mailed statement.
Bair last week said the rescue plan lets the government set standards for mortgage modifications and offer loan guarantees for mortgages that meet the standards.
``Loan guarantees could be used as an incentive for servicers to modify loans,'' Bair said in her Oct. 23 testimony before the Senate Banking Committee. ``The FDIC is working closely and creatively with Treasury to realize the potential benefits of this authority.''
FDIC Chair Promotes Increased Incentives for Mortgage Modifications
While the media today focused mostly on the testimony of former Federal Reserve Chairman Alan Greenspan before the Senate Banking Committee, there was other news coming out of the hearing.
Federal Deposit Insurance Corporation Chairperson Sheila Bair told lawmakers about her plans to use methods pioneered by several existing programs to encourage mortgage servicers to increase the pace of loan modifications for homeowners facing foreclosure.
The proposed initiative in which the FDIC is working closely with the Department of the Treasury, will involve the government setting standards for loan modifications and then guaranteeing the resulting modified loans.
Ms. Barr said in her testimony that the bulk of the banking industry is healthy and well capitalized but there is a liquidity problem caused by uncertainty about the value of mortgage assets. This is making banks reluctant to lend to each other or lend to consumers and businesses.
She recounted recent actions by her agency to increase confidence in the banking system including increasing deposit insurance coverage and providing senior unsecured debt guarantees through the recently announced Temporary Liquidity Guarantee Program.
Ms. Bair said that since the program was unveiled at the beginning of last week, "we have seen steady progress in reducing risk premiums in money and credit markets. Yields on short-term Treasury instruments, which had approached zero in mid-September, have now risen back in line with longer-maturity instruments. Quotes for Libor, the London Interbank Offer Rate, also have declined in relation to Treasury yields - indicating a slow thaw in the interbank lending market. Interest rates on short-term commercial paper have fallen back to their lowest levels since mid-September, indicating that liquidity is also starting to return to that market.... We are making steady progress in returning money and credit markets to a more normal state."
She turned to the current unprecedented wave of foreclosures which she described as "often a very lengthy, costly and destructive process that puts downward pressure on the price of nearby homes. While some level of home price decline is necessary to restore U.S. housing markets to equilibrium, unnecessary foreclosures perpetuate the cycle of financial distress and risk aversion, thus raising the possibility that home prices could overcorrect on the downside.
"The continuing trend of unnecessary foreclosures imposes costs not only on borrowers and lenders, but also on entire communities. Foreclosures may result in vacant homes that may invite crime and create an appearance of market distress, diminishing the market value of other nearby properties. In addition, the direct costs of foreclosure include legal fees, brokers' fees, property management fees, and other holding costs that are avoided in workout scenarios. These costs can total between 20 and 40 percent of the market value of the property. The FDIC has strongly encouraged loan holders and servicers to adopt systematic approaches to loan modifications that result in affordable loans that are sustainable over the long term."
Specifically she suggested that loan guarantees could be used as an incentive for servicers to modify loans with the government establishing standards for loan modifications and providing guarantees for loans meeting those standards.
The Chairperson cited the steps taken by the FDIC following the failure of IndyMac Bancorp as an example of what the government can do to stem the foreclosure tide. She said that already more than 3,500 borrowers have agreed to loan modifications with the FDIC and these modifications have resulted in lowering monthly payments by over $350 on average.
"By achieving mortgage payments for borrowers that will be both affordable and sustainable, these distressed mortgages will be rehabilitated into performing loans and avoid unnecessary and costly foreclosures. We expect that by taking this approach, future defaults will be reduced, the value of the mortgages will improve, and servicing costs will be cut. The streamlined modification program will achieve the greatest recovery possible on loans in default or danger of default, in keeping with our statutory mandate to minimize impact on the insurance fund and improve the return to uninsured depositors and creditors of the failed institution. At the same time, we can help many troubled borrowers remain in their homes. Under the program, modifications are only being offered where doing so will result in an improved value for IndyMac Federal or for investors in securitized or whole loans, and where consistent with relevant servicing agreements.
She said she hoped that the program will be a catalyst for promoting more loan modifications for borrowers from other banks.
The FDIC has also been playing a role in the implementation of the HOPE for Homeowners Act Ms. Bair said. The FDIC has joined the Departments of Housing and Urban Development (HUD) and Treasury and the Federal Reserve in establishing requirements and standards for the Program outside those specified in the authorizing legislation, and prescribing necessary regulations and guidance to implement those requirements and standards.
"The HOPE Program incorporates many of the principles the FDIC considers necessary to be effective. It converts current problematic mortgages into loans that should be sustainable over the long-term and subsequently convertible into securities. It also requires that lenders and investors accept significant discounts and prevents borrowers from being unjustly enriched if home prices appreciate. "
She said that the Emergency Economic Stabilization Act (EESE - popularly known as "the bailout,) recently passed by Congress, includes a number of provisions to encourage loan modifications. In particular, EESA addresses the issue of foreclosure mitigation and provides authority that could hold significant promise for future loan modifications. Under EESE, the Secretary of the Treasury is empowered to use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.
Chairperson Bair said that "Applying workout procedures for troubled loans in a failed bank scenario is something the FDIC has been doing since the 1980s. Our experience has been that performing loans yield greater returns than non-performing loans. In recent years, we have seen troubled loan portfolios yield about 32 percent of book value compared to our sales of performing loans, which have yielded over 87 percent."
In conclusion Ms. Bair said, "In recent weeks, the FDIC has engaged in unprecedented actions to maintain confidence and stability in the banking system. Although some of these steps have been quite broad, we believe that they were necessary to avoid consequences that could have resulted in sustained and significant harm to the economy. The FDIC remains committed to achieving what has been our core mission for the past 75 years - protecting depositors and maintaining public confidence in the financial system."
Federal Deposit Insurance Corporation Chairperson Sheila Bair told lawmakers about her plans to use methods pioneered by several existing programs to encourage mortgage servicers to increase the pace of loan modifications for homeowners facing foreclosure.
The proposed initiative in which the FDIC is working closely with the Department of the Treasury, will involve the government setting standards for loan modifications and then guaranteeing the resulting modified loans.
Ms. Barr said in her testimony that the bulk of the banking industry is healthy and well capitalized but there is a liquidity problem caused by uncertainty about the value of mortgage assets. This is making banks reluctant to lend to each other or lend to consumers and businesses.
She recounted recent actions by her agency to increase confidence in the banking system including increasing deposit insurance coverage and providing senior unsecured debt guarantees through the recently announced Temporary Liquidity Guarantee Program.
Ms. Bair said that since the program was unveiled at the beginning of last week, "we have seen steady progress in reducing risk premiums in money and credit markets. Yields on short-term Treasury instruments, which had approached zero in mid-September, have now risen back in line with longer-maturity instruments. Quotes for Libor, the London Interbank Offer Rate, also have declined in relation to Treasury yields - indicating a slow thaw in the interbank lending market. Interest rates on short-term commercial paper have fallen back to their lowest levels since mid-September, indicating that liquidity is also starting to return to that market.... We are making steady progress in returning money and credit markets to a more normal state."
She turned to the current unprecedented wave of foreclosures which she described as "often a very lengthy, costly and destructive process that puts downward pressure on the price of nearby homes. While some level of home price decline is necessary to restore U.S. housing markets to equilibrium, unnecessary foreclosures perpetuate the cycle of financial distress and risk aversion, thus raising the possibility that home prices could overcorrect on the downside.
"The continuing trend of unnecessary foreclosures imposes costs not only on borrowers and lenders, but also on entire communities. Foreclosures may result in vacant homes that may invite crime and create an appearance of market distress, diminishing the market value of other nearby properties. In addition, the direct costs of foreclosure include legal fees, brokers' fees, property management fees, and other holding costs that are avoided in workout scenarios. These costs can total between 20 and 40 percent of the market value of the property. The FDIC has strongly encouraged loan holders and servicers to adopt systematic approaches to loan modifications that result in affordable loans that are sustainable over the long term."
Specifically she suggested that loan guarantees could be used as an incentive for servicers to modify loans with the government establishing standards for loan modifications and providing guarantees for loans meeting those standards.
The Chairperson cited the steps taken by the FDIC following the failure of IndyMac Bancorp as an example of what the government can do to stem the foreclosure tide. She said that already more than 3,500 borrowers have agreed to loan modifications with the FDIC and these modifications have resulted in lowering monthly payments by over $350 on average.
"By achieving mortgage payments for borrowers that will be both affordable and sustainable, these distressed mortgages will be rehabilitated into performing loans and avoid unnecessary and costly foreclosures. We expect that by taking this approach, future defaults will be reduced, the value of the mortgages will improve, and servicing costs will be cut. The streamlined modification program will achieve the greatest recovery possible on loans in default or danger of default, in keeping with our statutory mandate to minimize impact on the insurance fund and improve the return to uninsured depositors and creditors of the failed institution. At the same time, we can help many troubled borrowers remain in their homes. Under the program, modifications are only being offered where doing so will result in an improved value for IndyMac Federal or for investors in securitized or whole loans, and where consistent with relevant servicing agreements.
She said she hoped that the program will be a catalyst for promoting more loan modifications for borrowers from other banks.
The FDIC has also been playing a role in the implementation of the HOPE for Homeowners Act Ms. Bair said. The FDIC has joined the Departments of Housing and Urban Development (HUD) and Treasury and the Federal Reserve in establishing requirements and standards for the Program outside those specified in the authorizing legislation, and prescribing necessary regulations and guidance to implement those requirements and standards.
"The HOPE Program incorporates many of the principles the FDIC considers necessary to be effective. It converts current problematic mortgages into loans that should be sustainable over the long-term and subsequently convertible into securities. It also requires that lenders and investors accept significant discounts and prevents borrowers from being unjustly enriched if home prices appreciate. "
She said that the Emergency Economic Stabilization Act (EESE - popularly known as "the bailout,) recently passed by Congress, includes a number of provisions to encourage loan modifications. In particular, EESA addresses the issue of foreclosure mitigation and provides authority that could hold significant promise for future loan modifications. Under EESE, the Secretary of the Treasury is empowered to use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.
Chairperson Bair said that "Applying workout procedures for troubled loans in a failed bank scenario is something the FDIC has been doing since the 1980s. Our experience has been that performing loans yield greater returns than non-performing loans. In recent years, we have seen troubled loan portfolios yield about 32 percent of book value compared to our sales of performing loans, which have yielded over 87 percent."
In conclusion Ms. Bair said, "In recent weeks, the FDIC has engaged in unprecedented actions to maintain confidence and stability in the banking system. Although some of these steps have been quite broad, we believe that they were necessary to avoid consequences that could have resulted in sustained and significant harm to the economy. The FDIC remains committed to achieving what has been our core mission for the past 75 years - protecting depositors and maintaining public confidence in the financial system."
Foreclosure Filings Rose 71% in Third Quarter as Prices Fell
Oct. 23 -- U.S. foreclosure filings increased 71 percent in the third quarter from a year earlier to the highest on record as home prices fell and stricter mortgage standards made it harder for homeowners to sell or refinance, RealtyTrac said.
A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on in the quarter, the most since records began in January 2005, the Irvine, California-based seller of default data said in a statement today. Filings rose 3 percent from the second quarter and fell 12 percent in September from August as state laws created to keep people in homes slowed the pace of defaults.
``I wouldn't be surprised to see foreclosures increase as the economy slows down,'' Rick Sharga, executive vice president for marketing at RealtyTrac, said in an interview. ``The people living paycheck to paycheck are at risk if they lose their jobs. It will cause more people to lose their homes.''
The worst U.S. housing slump since the 1930s is being compounded by a recession that began in the third quarter and may last a year or more, according to Jay Brinkmann, chief economist for the Mortgage Bankers Association. Home prices in 20 U.S. metropolitan areas fell in July at the fastest pace on record, and sales of previously owned homes in August were 32 percent below the peak reached in September 2005.
Government Rescue
The government may buy home loans and related securities to help property owners struggling with monthly payments, even as ``people are walking away from their mortgages,'' Treasury Secretary Henry Paulson said in an interview with PBS television's Charlie Rose on Oct. 21. Congress passed a $700 billion financial-rescue fund that may be used to modify loans and inject capital to banks and unfreeze credit markets.
A new law in California, which accounted for 27 percent of the foreclosure filings in the third quarter, helped slow the process in September as notices of default dropped 51 percent compared with the previous month, RealtyTrac said. In North Carolina, default notices fell 66 percent last month after lawmakers required lenders to give homeowners an additional 45- day notice.
In Massachusetts, filings rose 465 percent in September from August after a law was passed requiring a 90-day notice before foreclosures could proceed, RealtyTrac said.
After a summer lull, defaults ``jumped back up close to the level we were seeing earlier in the year,'' James Saccacio, chief executive officer of RealtyTrac, said in the statement.
Spillover Effect
Homeowners may be buffeted by a deepening recession as consumer spending contracts and job losses mount, especially in states such as Michigan and Ohio where manufacturing has declined, said Brinkmann of the mortgage bankers group.
``The length of the recession will depend on how this bleeds over to employment,'' he said. The housing bust is the main reason more than 98,000 jobs in Florida and 77,700 in California were lost in the year through August, Brinkmann said.
Six states accounted for more than 60 percent of defaults in the third quarter, led by California with 210,845 foreclosure filings, more than double the amount from a year earlier, according to RealtyTrac. Florida more than doubled its total to 127,306 from the same period a year ago and Arizona almost tripled to 40,419. Ohio, Michigan and Nevada reported third- quarter filings of more than 30,000 each.
New York had 14,477 filings, up 19 percent from a year earlier, and New Jersey had 17,893 filings, up 95 percent.
California Leads
California had six of the 10 metropolitan areas with the highest foreclosure rates in the quarter, led by Stockton, where 3.69 of the housing units received a default filing in the quarter. Riverside-San Bernardino ranked third, Bakersfield was fourth, Sacramento was seventh and Fresno and Oakland ranked ninth and 10th, respectively, RealtyTrac said.
Las Vegas had the second-highest metro foreclosure rate with 3.48 of its housing units receiving a filing in the third quarter, more than double the amount from a year earlier. Fort Lauderdale and Orlando in Florida ranked fifth and eighth, respectively, said RealtyTrac, which has a database of more than 1.5 million properties.
Nationwide in September, one in every 475 U.S. housing units received a foreclosure filing.
The state of the U.S. economy is emerging as a key issue in the presidential race between Democrat Barack Obama of Illinois and Arizona Senator John McCain, a Republican.
Obama supports an economic stimulus plan to boost the economy, while McCain wants the government to purchase troubled mortgages.
By Dan Levy (Bloomberg)
A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on in the quarter, the most since records began in January 2005, the Irvine, California-based seller of default data said in a statement today. Filings rose 3 percent from the second quarter and fell 12 percent in September from August as state laws created to keep people in homes slowed the pace of defaults.
``I wouldn't be surprised to see foreclosures increase as the economy slows down,'' Rick Sharga, executive vice president for marketing at RealtyTrac, said in an interview. ``The people living paycheck to paycheck are at risk if they lose their jobs. It will cause more people to lose their homes.''
The worst U.S. housing slump since the 1930s is being compounded by a recession that began in the third quarter and may last a year or more, according to Jay Brinkmann, chief economist for the Mortgage Bankers Association. Home prices in 20 U.S. metropolitan areas fell in July at the fastest pace on record, and sales of previously owned homes in August were 32 percent below the peak reached in September 2005.
Government Rescue
The government may buy home loans and related securities to help property owners struggling with monthly payments, even as ``people are walking away from their mortgages,'' Treasury Secretary Henry Paulson said in an interview with PBS television's Charlie Rose on Oct. 21. Congress passed a $700 billion financial-rescue fund that may be used to modify loans and inject capital to banks and unfreeze credit markets.
A new law in California, which accounted for 27 percent of the foreclosure filings in the third quarter, helped slow the process in September as notices of default dropped 51 percent compared with the previous month, RealtyTrac said. In North Carolina, default notices fell 66 percent last month after lawmakers required lenders to give homeowners an additional 45- day notice.
In Massachusetts, filings rose 465 percent in September from August after a law was passed requiring a 90-day notice before foreclosures could proceed, RealtyTrac said.
After a summer lull, defaults ``jumped back up close to the level we were seeing earlier in the year,'' James Saccacio, chief executive officer of RealtyTrac, said in the statement.
Spillover Effect
Homeowners may be buffeted by a deepening recession as consumer spending contracts and job losses mount, especially in states such as Michigan and Ohio where manufacturing has declined, said Brinkmann of the mortgage bankers group.
``The length of the recession will depend on how this bleeds over to employment,'' he said. The housing bust is the main reason more than 98,000 jobs in Florida and 77,700 in California were lost in the year through August, Brinkmann said.
Six states accounted for more than 60 percent of defaults in the third quarter, led by California with 210,845 foreclosure filings, more than double the amount from a year earlier, according to RealtyTrac. Florida more than doubled its total to 127,306 from the same period a year ago and Arizona almost tripled to 40,419. Ohio, Michigan and Nevada reported third- quarter filings of more than 30,000 each.
New York had 14,477 filings, up 19 percent from a year earlier, and New Jersey had 17,893 filings, up 95 percent.
California Leads
California had six of the 10 metropolitan areas with the highest foreclosure rates in the quarter, led by Stockton, where 3.69 of the housing units received a default filing in the quarter. Riverside-San Bernardino ranked third, Bakersfield was fourth, Sacramento was seventh and Fresno and Oakland ranked ninth and 10th, respectively, RealtyTrac said.
Las Vegas had the second-highest metro foreclosure rate with 3.48 of its housing units receiving a filing in the third quarter, more than double the amount from a year earlier. Fort Lauderdale and Orlando in Florida ranked fifth and eighth, respectively, said RealtyTrac, which has a database of more than 1.5 million properties.
Nationwide in September, one in every 475 U.S. housing units received a foreclosure filing.
The state of the U.S. economy is emerging as a key issue in the presidential race between Democrat Barack Obama of Illinois and Arizona Senator John McCain, a Republican.
Obama supports an economic stimulus plan to boost the economy, while McCain wants the government to purchase troubled mortgages.
By Dan Levy (Bloomberg)
NAR Presents Four-Point Stimulus Proposal
The National Association of Realtors® (NAR) stayed right on message as it proposed a four-point plan for Congress to enact to resuscitate the housing market and including yet another plea to keep banks out of the real estate business.
The plan, revealed in a statement made late last week and in the NAR President's Podcast released on October 21, calls for a special "lame-duck" session of Congress and asks that it consider the following, what it calls "consumer-driven" provisions to boost the economy and soothe the nerves of jittery homebuyers.
1. Eliminate the provision contained in last summer's housing rescue bill that requires first-time homebuyers to repay the $7,500 tax credit they receive under the plan and expand that credit to apply to all buyers of a primary residence.
2. Urge the government to use a portion of the allotted $700 billion that was provided to purchase mortgage-backed securities from banks to provide price stabilization for housing. The Treasury department should be required to:
3. Extend credit down to Main Street, making credit more available to consumers and small businesses;
Extend credit down to Main Street, making credit more available to consumers and small businesses;
Expedite the process for short sales;
Expedite the resolution of banks' real estate owned (REOs) properties.
4. Make permanent the prohibition against banks entering real estate brokerage and management, further protecting consumers and the economy.
In the podcast NAR President Richard F. Gaylord called the proposal "a boldstep on the policy front," and urged NAR members to talk with members of Congress while they are home in their districts over the election hiatus about the proposal and how important its provisions are to consumers.
In the earlier statement Gaylor said, "Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible." It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans. We are asking Congress to act right away."
Gaylord said NAR, as the leading advocate for homeownership and private property rights, believes it is important for Congress to address the concerns and fears of America's families, much in the way it has addressed Wall Street turbulence. "Housing is and has always been a good, long-term investment and a family's primary step towards accumulating wealth."
Gaylord said that NAR will strongly pursue those proposals and is calling on Congress to return to enact housing stimulus legislation in a lame-duck session after the national elections in November.
The plan, revealed in a statement made late last week and in the NAR President's Podcast released on October 21, calls for a special "lame-duck" session of Congress and asks that it consider the following, what it calls "consumer-driven" provisions to boost the economy and soothe the nerves of jittery homebuyers.
1. Eliminate the provision contained in last summer's housing rescue bill that requires first-time homebuyers to repay the $7,500 tax credit they receive under the plan and expand that credit to apply to all buyers of a primary residence.
2. Urge the government to use a portion of the allotted $700 billion that was provided to purchase mortgage-backed securities from banks to provide price stabilization for housing. The Treasury department should be required to:
3. Extend credit down to Main Street, making credit more available to consumers and small businesses;
Extend credit down to Main Street, making credit more available to consumers and small businesses;
Expedite the process for short sales;
Expedite the resolution of banks' real estate owned (REOs) properties.
4. Make permanent the prohibition against banks entering real estate brokerage and management, further protecting consumers and the economy.
In the podcast NAR President Richard F. Gaylord called the proposal "a boldstep on the policy front," and urged NAR members to talk with members of Congress while they are home in their districts over the election hiatus about the proposal and how important its provisions are to consumers.
In the earlier statement Gaylor said, "Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible." It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans. We are asking Congress to act right away."
Gaylord said NAR, as the leading advocate for homeownership and private property rights, believes it is important for Congress to address the concerns and fears of America's families, much in the way it has addressed Wall Street turbulence. "Housing is and has always been a good, long-term investment and a family's primary step towards accumulating wealth."
Gaylord said that NAR will strongly pursue those proposals and is calling on Congress to return to enact housing stimulus legislation in a lame-duck session after the national elections in November.
MGIC Investment Corporation stop accepting new business
MGIC Investment Corporation, one of the nation's largest issuers of private mortgage insurance, announced on Friday that it plans to stop accepting new business under one type of contract that it now considers to present an unacceptable risk.
Starting the first of the year MGIC will no longer take new business from "captive insurance companies." These are entities that are established to finance risk. This is the latest of a series of actions the company has taken to protect itself in the midst of a meltdown that has seen its portfolio hit by mortgage foreclosures and a downgrade of its senior debt rating by Moody's from A2 to A1 in March of this year.
In a press release MGIC said that coverage for loans that have been reinsured through December 31 will be allowed to run out but that the company's quota-share reinsurance will be unaffected.
In an attempt to shore up its financial situation MGIC has in recent months raised $840 million through sale of its securities, changed its underwriting guidelines, raised insurance premiums, sold its stake in Sherman Financial and entered into a reinsurance agreement that covers business written by the company starting last April.
Private mortgage insurance is required by banks when they write a mortgage where the borrower makes less than a 20 percent down payment or has particularly questionable credit. The borrower pays the insurance premium but the insurance covers a portion of the bank's loss in the event the mortgage defaults. Obviously that section of the mortgage market requiring private mortgage insurance has been particularly hard-hit by foreclosures and short sales since those homeowners, by definition, had little or no equity in the home at origination and then watched their home's value erode from there.
MGIC has reported negative income in each of the last three quarters. In the second quarter of 2008 which ended on June 30, it reported net income of -$97,899,000.
MGIC stock was trading at $7.20 after Friday's announcement, down $0.75 from its close on Thursday. The stock has traded as high as $31.81 and as low as $3.51 in the last year.
Starting the first of the year MGIC will no longer take new business from "captive insurance companies." These are entities that are established to finance risk. This is the latest of a series of actions the company has taken to protect itself in the midst of a meltdown that has seen its portfolio hit by mortgage foreclosures and a downgrade of its senior debt rating by Moody's from A2 to A1 in March of this year.
In a press release MGIC said that coverage for loans that have been reinsured through December 31 will be allowed to run out but that the company's quota-share reinsurance will be unaffected.
In an attempt to shore up its financial situation MGIC has in recent months raised $840 million through sale of its securities, changed its underwriting guidelines, raised insurance premiums, sold its stake in Sherman Financial and entered into a reinsurance agreement that covers business written by the company starting last April.
Private mortgage insurance is required by banks when they write a mortgage where the borrower makes less than a 20 percent down payment or has particularly questionable credit. The borrower pays the insurance premium but the insurance covers a portion of the bank's loss in the event the mortgage defaults. Obviously that section of the mortgage market requiring private mortgage insurance has been particularly hard-hit by foreclosures and short sales since those homeowners, by definition, had little or no equity in the home at origination and then watched their home's value erode from there.
MGIC has reported negative income in each of the last three quarters. In the second quarter of 2008 which ended on June 30, it reported net income of -$97,899,000.
MGIC stock was trading at $7.20 after Friday's announcement, down $0.75 from its close on Thursday. The stock has traded as high as $31.81 and as low as $3.51 in the last year.
Mortgage interest rates remained flat during the week ended August 7 2008
Mortgage interest rates remained flat during the week ended August 7 according to the weekly Primary Mortgage Market Survey released by Freddie Mac.
The 30-year fixed-rate mortgage (FRM) averaged 6.5 percent with 0.7 point, unchanged from the previous week.
The 15-year FRM averaged 6.10 percent, up 3 basis points from one week earlier. Fees and point increased from 0.6 point to 0.7 point.
Short-term rates also remained relatively unchanged. The five-year Treasury-indexed hybrid adjustable rate mortgage moved from 6.05 percent from an average 6.07 percent. Fees and points were static at 0.6 point.
The one-year Treasury-indexed ARM averaged 5.22 percent compared to 5.27 percent a week earlier. Fees and points averaged 0.6 both weeks.
"The housing market is continuing to act as a drag on the economy," said Frank Nothaft, Freddie Mac vice president and chief economist. "Residential fixed investment subtracted 0.6 percentage points off second quarter growth in real GDP.
"More recently, mortgage applications for home purchases in the past few weeks fell to the slowest pace since the week ending February 21, 2003, according to the Mortgage Bankers Association. Finally, although showing some initial signs of improvement, the inventory of unsold homes remains at historically high levels."
The Mortgage Bankers Association (MBA) in results from its Weekly Mortgage Applications Survey reported substantially more movement in long term loans but the single ARM it tracks was virtually unchanged.
The average rate for 30-year FRMs increased to 6.57 percent from 6.41 percent with points, including the origination fee nudging up from 1.13 to 1.14.
The 15-year FRM rate increased to 6.17 percent from 6.02 percent while points increased to 1.06 from 1.02.
The average contract interest rate for one-year ARMs decreased to 7.15 percent from 7.17 percent, with points increasing to 0.38 from 0.36.
Mortgage applications were down 1.5 percent on a seasonally adjusted basis from the previous week and 2.2 percent unadjusted. The volume was down 36.9 percent from the same week in 2007.
Refinancing as a share of all applications decrease to 35.2 percent from 35.9 percent a week earlier and the market share of ARMs increased slightly to 7.3 percent from 6.9 percent the previous week.
The 30-year fixed-rate mortgage (FRM) averaged 6.5 percent with 0.7 point, unchanged from the previous week.
The 15-year FRM averaged 6.10 percent, up 3 basis points from one week earlier. Fees and point increased from 0.6 point to 0.7 point.
Short-term rates also remained relatively unchanged. The five-year Treasury-indexed hybrid adjustable rate mortgage moved from 6.05 percent from an average 6.07 percent. Fees and points were static at 0.6 point.
The one-year Treasury-indexed ARM averaged 5.22 percent compared to 5.27 percent a week earlier. Fees and points averaged 0.6 both weeks.
"The housing market is continuing to act as a drag on the economy," said Frank Nothaft, Freddie Mac vice president and chief economist. "Residential fixed investment subtracted 0.6 percentage points off second quarter growth in real GDP.
"More recently, mortgage applications for home purchases in the past few weeks fell to the slowest pace since the week ending February 21, 2003, according to the Mortgage Bankers Association. Finally, although showing some initial signs of improvement, the inventory of unsold homes remains at historically high levels."
The Mortgage Bankers Association (MBA) in results from its Weekly Mortgage Applications Survey reported substantially more movement in long term loans but the single ARM it tracks was virtually unchanged.
The average rate for 30-year FRMs increased to 6.57 percent from 6.41 percent with points, including the origination fee nudging up from 1.13 to 1.14.
The 15-year FRM rate increased to 6.17 percent from 6.02 percent while points increased to 1.06 from 1.02.
The average contract interest rate for one-year ARMs decreased to 7.15 percent from 7.17 percent, with points increasing to 0.38 from 0.36.
Mortgage applications were down 1.5 percent on a seasonally adjusted basis from the previous week and 2.2 percent unadjusted. The volume was down 36.9 percent from the same week in 2007.
Refinancing as a share of all applications decrease to 35.2 percent from 35.9 percent a week earlier and the market share of ARMs increased slightly to 7.3 percent from 6.9 percent the previous week.
Relief to thousands of borrowers whose option-adjustable-rate mortgage (ARM) loans are no longer optimal for their current situations
BankUnited Financial Corp., parent company of BankUnited FSB, has launched a comprehensive Mortgage Assistance Program (MAP) to provide relief to thousands of borrowers whose option-adjustable-rate mortgage (ARM) loans are no longer optimal for their current situations.
“This is one of the most sweeping, broad-based programs of its kind," says Ramiro Ortiz, BankUnited's president and chief operating officer. "This program will literally provide people with a map to find their way back into a more financially stable environment for their home mortgages."
BankUnited says it intends to refinance thousands of its option-ARM customers, with the largest percentage located in Florida, in the next six months.
Benefits to borrowers include waived pre-payment penalties, minimal modification fees and a variety of loan choices, including traditional mortgage products and government agency loans. Customers can refinance with other lenders and still take advantage of the prepayment waiver, the company adds.
Source: BankUnited Financial Corp.
“This is one of the most sweeping, broad-based programs of its kind," says Ramiro Ortiz, BankUnited's president and chief operating officer. "This program will literally provide people with a map to find their way back into a more financially stable environment for their home mortgages."
BankUnited says it intends to refinance thousands of its option-ARM customers, with the largest percentage located in Florida, in the next six months.
Benefits to borrowers include waived pre-payment penalties, minimal modification fees and a variety of loan choices, including traditional mortgage products and government agency loans. Customers can refinance with other lenders and still take advantage of the prepayment waiver, the company adds.
Source: BankUnited Financial Corp.
Tips For Selling Your Home:
The market has cooled, the tide has turned and it's now definitely a buyer's market versus a seller's. So what can homeowners do to help showcase their home and glean the attention of prospective buyers? These commonsense tips should help:
Tip #1: Curb appeal. You want to make sure your house is as appealing on the outside as it is on the inside. Keep your lawn trimmed, weed the garden beds, and add a splash of color from the wide assortment of annuals or perennials. And don't forget to sweep the walks and driveway regularly. And don't forget to rake leaves in the Fall and shovel in the Winter.
Tip #2: Paint by numbers. If your house is in need of painting, by all means invest those dollars. At the very least, a fresh coat of paint on the front door will say "welcome" to prospective buyers.
Tip #3: Declutter. You want potential buyers to see and feel space. Remove any unnecessary furniture, newspapers, books...you get the picture. Don't forget to streamline the kitchen, too. Remove any unused appliances on a daily basis like food processors and toasters and toaster ovens.
Tip #4: Thou shalt clean. Don't just surface clean, but tackle those rooms with gusto. Vacuum, wash the windows (inside and out), steam clean the carpets, and make those bathrooms sparkle. And don't forget the basement and attic (oh, so that's where you put all the items when you "decluttered!").
Tip #5: Get rid of odors (no this doesn't include Fido). You may have become accustom to the smells of your home, but for prospective buyers they can be a deal breaker. Make sure you remove pets' food bowls and litter boxes immediately after using. Open the windows for a few minutes before each showing. Relying on potpourri or sprays generally fools no one.
Tip #6: No dogs (or cats allowed). Prospective buyers may not share the same affinity towards your animals as you do. If possible, keep the pets outside or with neighbors during showings.
Tip #7: You too, get out. Let the real estate agent do his or her job. Whenever possible, make sure to leave the premises to allow for more impartial dialogue between the agent and the buyers without you in the shadows.
Tip #8: Lighten up. Nothing is more welcoming than lights which add color and warmth to any decor. Be sure to leave your lights on - inside and outside - when showing your home. And don't forget to open up the drapes and shades to let the sunlight in.
Tip #9: Use fresh flowers. Flowers are always nice to receive as well as to give. Give the gift of fresh flowers strategically placed throughout your home; and they just might help with any leftover odors that the open windows didn't eliminate.
Tip #10: Set the price carefully. Do your homework beforehand. Check out similar home prices in your neighborhood and on the internet. Listing your house at or just below competitive market pricing is usually recommended in this current economy. Talk to several realtors before locking in on one agent and agency.
Tip #1: Curb appeal. You want to make sure your house is as appealing on the outside as it is on the inside. Keep your lawn trimmed, weed the garden beds, and add a splash of color from the wide assortment of annuals or perennials. And don't forget to sweep the walks and driveway regularly. And don't forget to rake leaves in the Fall and shovel in the Winter.
Tip #2: Paint by numbers. If your house is in need of painting, by all means invest those dollars. At the very least, a fresh coat of paint on the front door will say "welcome" to prospective buyers.
Tip #3: Declutter. You want potential buyers to see and feel space. Remove any unnecessary furniture, newspapers, books...you get the picture. Don't forget to streamline the kitchen, too. Remove any unused appliances on a daily basis like food processors and toasters and toaster ovens.
Tip #4: Thou shalt clean. Don't just surface clean, but tackle those rooms with gusto. Vacuum, wash the windows (inside and out), steam clean the carpets, and make those bathrooms sparkle. And don't forget the basement and attic (oh, so that's where you put all the items when you "decluttered!").
Tip #5: Get rid of odors (no this doesn't include Fido). You may have become accustom to the smells of your home, but for prospective buyers they can be a deal breaker. Make sure you remove pets' food bowls and litter boxes immediately after using. Open the windows for a few minutes before each showing. Relying on potpourri or sprays generally fools no one.
Tip #6: No dogs (or cats allowed). Prospective buyers may not share the same affinity towards your animals as you do. If possible, keep the pets outside or with neighbors during showings.
Tip #7: You too, get out. Let the real estate agent do his or her job. Whenever possible, make sure to leave the premises to allow for more impartial dialogue between the agent and the buyers without you in the shadows.
Tip #8: Lighten up. Nothing is more welcoming than lights which add color and warmth to any decor. Be sure to leave your lights on - inside and outside - when showing your home. And don't forget to open up the drapes and shades to let the sunlight in.
Tip #9: Use fresh flowers. Flowers are always nice to receive as well as to give. Give the gift of fresh flowers strategically placed throughout your home; and they just might help with any leftover odors that the open windows didn't eliminate.
Tip #10: Set the price carefully. Do your homework beforehand. Check out similar home prices in your neighborhood and on the internet. Listing your house at or just below competitive market pricing is usually recommended in this current economy. Talk to several realtors before locking in on one agent and agency.
Tips For Selling Your Home:
The market has cooled, the tide has turned and it's now definitely a buyer's market versus a seller's. So what can homeowners do to help showcase their home and glean the attention of prospective buyers? These commonsense tips should help:
Tip #1: Curb appeal. You want to make sure your house is as appealing on the outside as it is on the inside. Keep your lawn trimmed, weed the garden beds, and add a splash of color from the wide assortment of annuals or perennials. And don't forget to sweep the walks and driveway regularly. And don't forget to rake leaves in the Fall and shovel in the Winter.
Tip #2: Paint by numbers. If your house is in need of painting, by all means invest those dollars. At the very least, a fresh coat of paint on the front door will say "welcome" to prospective buyers.
Tip #3: Declutter. You want potential buyers to see and feel space. Remove any unnecessary furniture, newspapers, books...you get the picture. Don't forget to streamline the kitchen, too. Remove any unused appliances on a daily basis like food processors and toasters and toaster ovens.
Tip #4: Thou shalt clean. Don't just surface clean, but tackle those rooms with gusto. Vacuum, wash the windows (inside and out), steam clean the carpets, and make those bathrooms sparkle. And don't forget the basement and attic (oh, so that's where you put all the items when you "decluttered!").
Tip #5: Get rid of odors (no this doesn't include Fido). You may have become accustom to the smells of your home, but for prospective buyers they can be a deal breaker. Make sure you remove pets' food bowls and litter boxes immediately after using. Open the windows for a few minutes before each showing. Relying on potpourri or sprays generally fools no one.
Tip #6: No dogs (or cats allowed). Prospective buyers may not share the same affinity towards your animals as you do. If possible, keep the pets outside or with neighbors during showings.
Tip #7: You too, get out. Let the real estate agent do his or her job. Whenever possible, make sure to leave the premises to allow for more impartial dialogue between the agent and the buyers without you in the shadows.
Tip #8: Lighten up. Nothing is more welcoming than lights which add color and warmth to any decor. Be sure to leave your lights on - inside and outside - when showing your home. And don't forget to open up the drapes and shades to let the sunlight in.
Tip #9: Use fresh flowers. Flowers are always nice to receive as well as to give. Give the gift of fresh flowers strategically placed throughout your home; and they just might help with any leftover odors that the open windows didn't eliminate.Tip #10: Set the price carefully. Do your homework beforehand. Check out similar home prices in your neighborhood and on the internet. Listing your house at or just below competitive market pricing is usually recommended in this current economy. Talk to several realtors before locking in on one agent and agency.
Tip #1: Curb appeal. You want to make sure your house is as appealing on the outside as it is on the inside. Keep your lawn trimmed, weed the garden beds, and add a splash of color from the wide assortment of annuals or perennials. And don't forget to sweep the walks and driveway regularly. And don't forget to rake leaves in the Fall and shovel in the Winter.
Tip #2: Paint by numbers. If your house is in need of painting, by all means invest those dollars. At the very least, a fresh coat of paint on the front door will say "welcome" to prospective buyers.
Tip #3: Declutter. You want potential buyers to see and feel space. Remove any unnecessary furniture, newspapers, books...you get the picture. Don't forget to streamline the kitchen, too. Remove any unused appliances on a daily basis like food processors and toasters and toaster ovens.
Tip #4: Thou shalt clean. Don't just surface clean, but tackle those rooms with gusto. Vacuum, wash the windows (inside and out), steam clean the carpets, and make those bathrooms sparkle. And don't forget the basement and attic (oh, so that's where you put all the items when you "decluttered!").
Tip #5: Get rid of odors (no this doesn't include Fido). You may have become accustom to the smells of your home, but for prospective buyers they can be a deal breaker. Make sure you remove pets' food bowls and litter boxes immediately after using. Open the windows for a few minutes before each showing. Relying on potpourri or sprays generally fools no one.
Tip #6: No dogs (or cats allowed). Prospective buyers may not share the same affinity towards your animals as you do. If possible, keep the pets outside or with neighbors during showings.
Tip #7: You too, get out. Let the real estate agent do his or her job. Whenever possible, make sure to leave the premises to allow for more impartial dialogue between the agent and the buyers without you in the shadows.
Tip #8: Lighten up. Nothing is more welcoming than lights which add color and warmth to any decor. Be sure to leave your lights on - inside and outside - when showing your home. And don't forget to open up the drapes and shades to let the sunlight in.
Tip #9: Use fresh flowers. Flowers are always nice to receive as well as to give. Give the gift of fresh flowers strategically placed throughout your home; and they just might help with any leftover odors that the open windows didn't eliminate.Tip #10: Set the price carefully. Do your homework beforehand. Check out similar home prices in your neighborhood and on the internet. Listing your house at or just below competitive market pricing is usually recommended in this current economy. Talk to several realtors before locking in on one agent and agency.
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