Help for Underwater Homeowners

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

Despite the recent bout of good news that's spreading through some real estate markets in the U.S., the word "underwater" is still part of the vocabulary in many others. In fact, the problem is still so widespread that Freddie Mac, the U.S.-supported mortgage company, this week announced it will drop a fee associated with refinancing deeply underwater mortgage loans.

The fee drop signals that the government and its mortgage giants Freddie Mac and Fannie Mae are determined to make the Home Affordable Refinance Program (HARP for short) work. Freddie Mac said it will eliminate a fee of 0.5 percentage point, known as a "cash adjustor," on home loans that are refinanced under HARP and have balances greater than 125% of the property's current market value.

The move aims to help underwater homeowners refinance their mortgages, thus enabling them to stay in their homes (as opposed to foreclosing or walking away). Freddie Mac officials said that they hope the drop of the fee will encourage more homeowners to take advantage of HARP.

There were 11.1 million homes with negative equity at the end of the fourth quarter 2011, according to a report from CoreLogic. The number of homes with negative equity (or that were "underwater") was up from 10.7 million the previous quarter, showing that the problem had not stopped growing at last tally.

Many underwater homeowners do wish to stay in their homes. Refinancing and taking advantage of HARP can help. But some good old motivational math can also help tremendously with moral, which is why I thought these calculators developed by HSH are interesting and potentially helpful:

KnowEquityWhen is a calculator that aims to help underwater homeowners answer the question, when will I be above water again?

KnowEquityHow is a calculator that aims to help underwater homeowners what it will take to reach equity within a specified time frame.

Both calculators are helpful if you are trying to set a goal to stay in your home. Knowing what you need to do to get there is a powerful motivator.

Unfortunately, when looking at the numbers, underwater mortgages will not be disappearing anytime soon. While some markets are seeing values increase, it's just not enough to offset the lost equity that spans 11.1 million home loans. So seeing a bit of positive news in the form of help and motivation on this front is worth flagging.

4 Signs It's Time to Buy a Home Now

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

If ever there was a fantastic time to buy a home, it's right now. Never mind the fact that I head a leading real estate brokerage company. Let the statistics show you why now is your best bet to get into the housing market:

1. Home values are recovering U.S. home values rose 0.5% from February to March, the largest monthly increase since May 2006, before values at the national level peaked, according to a recent report from Zillow this month. In addition, the company said in its home value forecast that it expects 19 of the 30 markets it covers will reach a bottom in values this year. Phoenix and Miami-Ft. Lauderdale are expected to see significant home value increases.

2. Interest rates are still extraordinarily low The cost of borrowing is still extremely attractive for buyers who qualify and are ready for the financial responsibility of a home mortgage. Saying mortgage rates have hit a new "record low" has become a bit of a broken record. At an average 4.04% in the latest Mortgage Bankers Association survey, rates on the standard 30-year fixed-rate mortgage are almost too good to be true. While there's no sign from the Federal Reserve that rates will increase significantly anytime soon, it's definitely a great condition for buyers right now.

3. Multiple offers are back
Demand for housing is starting to outweigh supply in some markets across the country. We covered the return of bidding wars this spring in markets like Silicon Valley, Miami, Seattle and Washington, D.C. Even despite the presence of "war" like situations, multiple offers are once again a fact of life in markets with strong economies and job prospects.

4. Rents are rising with no end in sight The median U.S. rent was $721 per month in the first quarter, up 5.6% from the same period a year earlier, according to the Commerce Department. Altogether, rental income has increased 12% in the year ended in March. In addition to rising rent, the supply of units is the tightest in more than 10 years, with 8.8% of units vacant in the first quarter. This at a time when the demand for rental units is at the highest in 15 years. This means more buyers likely will continue to jump from that tight market into owning while the numbers make sense.


As you can see, the buyer market is about to get more crowded than it's been the last few years. These are each solid market forces that could push more and more buyers off the fence, creating more transactions and helping to lift home values this year and next. If you think you want to buy – or know buyers who are testing the waters – now is your chance to take advantage of prime home-buying conditions. 

Open House Extravaganza Week-End

Lots of opportunities to see homes that you could own this week-end. We're going to be at 1201 Lerma Lane, Gilroy. Stop by and see the house - it's spacious and has a lot of potential. We'd love to see you.

It’s safe to sell your home again

While analysts debate when the housing market will hit bottom, for a surprising number of cities the turnaround has already begun.  In December, prices rose in 109 of the 384 metro areas tracked by data firm CoreLogic. 

Making sense of the story

• There are certain signs to help determine if a particular neighborhood is on the verge of a rebound.  For instance is local employment on the upswing?  That’s a critical factor for a region to get itself on the path to recovery.  Improving jobs picture has led to shrinking housing stock across the country, as investors and bargain hunters have started buying up foreclosures that have been preventing a recovery.
• For years, buyers were scared of overpaying for a home, but less so now.  Many buyers have grown accustomed to thinking they’ll score deals, so they tend to act slowly, and typically start bidding around 10 percent to 15 percent below list price.  However, a growing number of buyers are beginning to realize that if they wait too long in this market, they may miss out.
• Sellers can hold firm on price if they’re patient.  The days of having to deal with low-ball offers are coming to an end.  The higher the price, the more patient the seller must be.  Cheaper homes are affordable to more buyers and appealing to investors, so recoveries usually start there. 
• Sellers should keep in mind that while they don’t have to placate low-ball offers anymore, they also can’t shoot for the moon either.  Working with a REALTOR® and setting a realistic price from the get-go is key.
• Sellers should know what they’re competing against.  Homeowners should let their home’s value dictate the price.  While this may seem self-evident, some owners may have lost sight of it during the bust.  On the one hand, some sellers clung to the false hope of a return to boom prices, so they set prices unrealistically high.  Others may have gone too far the other way, and set their price too low.
• It’s also important that sellers understand they’re no longer competing with gutted foreclosures.  Buyers are tired of looking at worn-down, neglected, distressed properties and often don’t have much extra money to do a lot of fixing up.  REALTORS® often report their clients are willing to pay a little more for a home that’s ready to move into.

Read the full story

Tips for a Smooth and Stress Free Home Purchase Closing

By: G. M. Filisko
for HouseLogic

We always go over all of these items, and so much more, with our Buyers. And usually we do it more than once! Nevertheless, it's good to be reminded of all of these things.

1. Take old utilities and services out of your name: Avoid a dispute with the buyers after closing over things like fees for the cable service you forgot to discontinue. Contact every utility and service provider to end or transfer service to your new address as of the closing date. If you’re on an automatic-fill schedule for heating oil or propane, don’t pay for a pre-closing refill that provides free fuel for the new owner. Contact your insurer to terminate coverage on your old home, get coverage on your new home, and ask whether you’re entitled to a refund of prepaid premium.
2. Spread the word on your change of address: Provide the post office with your forwarding address two to four weeks before the closing. Also notify credit card companies, publication subscription departments, friends and family, and your financial institutions of your new address.
3. Manage the movers: Scrutinize your moving company’s estimate. If you’re making a long-distance move, which is often billed according to weight, note the weight of your property and watch so the movers don’t use excessive padding to boost the weight. Also check with your homeowners insurer about coverage for your move. Usually movers cover only what they pack.
4. Do the settlement math: Title company employees are only human, so they can make mistakes. The day before your closing, check the math on your HUD-1 Settlement Statement.
5. Review charges on your settlement statement: Are all mortgages being paid off, and are the payoff amounts correct? If your real estate agent promised you extras—such as a discounted commission or a home warranty policy—make sure that’s included. Also check whether your real estate agent or title company added fees that weren’t disclosed earlier. If any party suggests leaving items off the settlement statement, consult a lawyer about whether that might expose you to legal risk.
6. Search for missing credits: Be sure the settlement company properly credited you for prepaid expenses, such as property taxes and homeowners association fees, if applicable. If you’ve prepaid taxes for the year, you’re entitled to a credit for the time you no longer own the home. Have you been credited for heating oil or propane left in the tank?
7. Don’t leave money in escrow: End your home sale closing with nothing unresolved. Make sure the title company releases money already held in escrow for you, and avoid leaving sales proceeds in a new escrow to be dickered over later.

G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Happy Earth Day 2012

First gain for Calif. prices in 16 months

Here's the Leading News item: 

The median price for an existing, single-family home in California rose 1.6 percent in March compared with the year before, marking the first year-over-year increase in 16 months, the CALIFORNIA ASSOCIATION OF REALTORS® reported Monday.

Making sense of the story

• The statewide median price of an existing, single-family detached home jumped 9.2 percent to $291,080 in March from February’s $266,660 median price and was up 1.6 percent from a revised $286,550 recorded in March 2011.  The month-to-month increase was the largest since March 2004.
• Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 505,360 units in March, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide.  Sales in March were down 4.5 percent month-over-month and 2.3 percent year-to-year.
• The statewide sales figure represents what would be the total number of homes sold during 2012 if sales maintained the March pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.
• “Housing inventory remains extremely tight throughout the state and at levels severely under normal market conditions,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “In areas, such as Los Angeles and Riverside counties, where the Federal Housing Finance Agency (FHFA) wants to implement the REO bulk sale pilot program, inventory is running at levels well below the long-run average.  These low inventory levels demonstrate that the pilot program is not necessary in California.”
• The pilot program calls for the sale of more than 600 Fannie Mae-owned foreclosed homes in Los Angeles and Riverside counties to institutional investors.

Here's the whole story...

Mitt Romney Eyes Mortgage-Interest Deduction

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.
Throughout the economic downturn and recovery, we've seen the topic of the mortgage-interest deduction come up time and again. It's fitting that Republican presidential candidate Mitt Romney would bring it up this week as millions of Americans are frantically filing income taxes to avoid being late.

In a speech on Sunday, Romney said he's considering eliminating the mortgage-interest deduction for second homes for high-income individuals. This often comes up with politicians and congressional groups as a viable option for creating more revenue for the federal government.

Let's first look at the number of homes and owners this might affect. The National Association of Realtors estimates that second homes – including vacation and investment properties – accounted for 38% of home sales in 2011. The group said that about half a million vacation homes and 1.2 million investment properties were sold last year, continuing a trend in which these homes have accounted for the largest chunk of sales since 2005.

Generally speaking, eliminating or making changes to the mortgage-interest deduction is not going to have a great impact on the housing market. While the government may reap some rewards in the form of more cash made via taxation, most homeowners and first-time buyers still see the deduction as an important perk or benefit of owning a home. Messing with this deduction now at a time when the recovery is still quite fragile and slow would be a bad idea.

Eliminating or scaling back the mortgage-interest deduction would hit states in which vacation homes are most popular harder than others. Florida, Maine, Michigan and Colorado could see fewer sales as a result.

Moreover, more buyers have been jumping in the market and buying investment properties in recent years. Sales of investment properties spiked 64% last year. These are properties that otherwise may not have been purchased, which makes a pretty big case for keeping all incentives in place for investors to continue buying, and therefore aiding the housing recovery along.

While some say that the mortgage-interest deduction isn't as big a deal for second home buyers because of the emotional nature of those purchases, I'm leery of mucking up a homeownership perk that's long been held as a great benefit to owning a home. If incentives like this are working to keep investors hungry for real estate – and that hunger in turn is helping the market as a whole – then let's back off and find another way to fix our fiscal mess.

Myths about HUD-approved counseling busted

There are many myths associated with HUD-approved counselors.  Here are some common ones busted to give homeowners an idea of the benefits and limits of their services. This article was written by a Union-Tribune San Diego reporter Lily Leung so it has a San Diego slant. But the cases and examples are good all across the state. Pay attention and read on…