'Realistic' approach is needed in weak market
by Ellen James Martin-Universal Press Syndicate
Those who sell real estate recall those heady days just a few years ago, when competition over the best homes on the market - known as "showcase properties" - was robust. Multiple bids were common, and eager buyers submitted contract offers stripped of all conditions, such as the right to a home inspection.
Indeed, some buyers were so anxious to beat rival bidders in the race to own an attractive home that they would snap it up without even visiting first, recalls Tom Early, a real-estate broker and former president of the National Association of Exclusive Buyer Agents (www.naeba.org).
Nowadays, the tables are turned. In many neighborhoods, buyers have lots of leverage, and motivated sellers, including the corporate owners of homes taken back through foreclosure, are compelled to bargain with prospects. The sellers of showcase homes, known as "cream puffs," are no exception. "At a time when buyers are incredibly demanding, you must be absolutely realistic about the market," Early says.
Here are pointers for the sellers of homes with exceptional allure:
• Select a listing agent with a good eye.
"If your house is spectacular, you want visuals to show just how good it looks," says Dorcas Helfant, a former president of the National Association of Realtors (www.realtor.org).
Visuals include photos for print advertising and video for online listings, including the "virtual tours" that have become a popular home-marketing tool in cyberspace.
As Helfant notes, more agents are taking classes in digital photography, and more are producing the sort of professional-quality visuals that home sellers need to compete, especially in neighborhoods with many homes for sale.
• Don't expect too much of a pricing premium.
Is the property you're selling decked out with several features that excite buyer interest, such as fine wood cabinets, granite countertops, floor-to-ceiling windows and a fireplace in the master suite? Does it also have 10-foot ceilings throughout? If so, you may be tempted to ask a lot more than your neighbors are asking for similar-size properties that lack such fancy features.
But Helfant cautions against attaching too high a premium when pricing your showcase home, no matter how fancy or well-kept it is.
"Given today's competitive markets, where available properties abound, I wouldn't go more than 3 to 5 percent over other like homes in your community, even the ones that don't show nearly as well," she says.
• Consider a neighborhood open house for the public.
Real-estate experts often downplay the value of public open houses as a means of attracting the interest of serious purchasers. They say most open-house visitors are curious neighbors or "wishful buyers" who lack the means to go through with a purchase. On the other hand, well-qualified buyers are typically guided through homes by their agents.
But Helfant says there's a way to increase the impact of the public open house conducted for your showcase property: Encourage other sellers in the neighborhood to hold open houses on the same day, thereby increasing your potential draw.
"Ask your listing agent to contact the agents representing all the other sellers. The more the merrier when it comes to open houses. With more homes open, the greater the chance that serious prospects will come by, with or without their agents," Helfant says.
A neighborhood open house can be especially beneficial for the sellers of showcase homes because buyers can quickly compare all the places they see.
• Don't second-guess yourself on your plans to sell.
Many owners of showcase homes are ambivalent about letting go of their properties in a market where bargain shoppers have so much clout. Even after they've put their place up for sale, they wonder if they should pull the place off the market until they can get a better price.
Before retreating, Early urges you to take into account the personal and financial implications of postponing your sale.
"Maybe your neighborhood market could stage a huge rebound within one to two years. But you should also consider all the ways you might lose out by waiting," Early says.
"Postponing your hopes and dreams for a better housing situation means you could be missing that once-in-a-lifetime chance to buy your fantasy property at a major discount," he says.
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Wednesday, November 19, 2008
'Realistic' approach is needed in Real Estate weak market
Fannie Mae and Freddie Mac will have lower limits on the size of loans they can buy.
Fannie Mae and Freddie Mac will have lower limits on the size of loans they can buy.
WASHINGTON - People looking to buy more expensive homes next year will have fewer options to find financing because Fannie Mae and Freddie Mac will have lower limits on the size of loans they can buy.
The changes, effective Jan. 1, will lower the limit in high-priced real estate markets to $625,500 down from $729,950. Consumers who need to take out home loans above that amount typically pay higher interest rates, and that can price some would-be buyers out of the market.
The Federal Housing Finance Agency, which regulates Fannie and Freddie, kept the limit for lower-cost metro areas at $417,000. Some counties, including parts of Virginia, Utah and Maryland, have limits that range between $625,000 and $417,000.
Lawmakers temporarily raised the loan limits for Fannie and Freddie in a housing bill passed over the summer.
There are fears, however, that the reduced limits will hurt the housing market next year. Fannie and Freddie have become the dominant source of mortgage funding since last year's collapse of the subprime lending market.
The National Association of Realtors is pressing lawmakers to keep the limit at $729,950 to help the U.S. housing market recover from its worst slump in decades.
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Thursday, October 30, 2008
That's Not My Monkey! Real Estate Humor
That's Not My Monkey! Real Estate Humor
Phoenix AZ new homes, bank owned, foreclosures, short sales, REO's oh-my! Let's face it, real estate is stressful for everyone... buyers, sellers, and real estate pros. Sometimes you have to just let it all go and look at the humorous side of real estate...then find a FUN, Professional Realtor to help you through it all!
Homeowners Avoid Foreclosure with Loan Modification Plan
Homeowners Avoid Foreclosure with Loan Modification Plan
WASHINGTON - The government is preparing to unveil a plan that would help around 3 million homeowners avoid foreclosure, sources briefed on the matter said.
A final deal had not been reached as of Wednesday afternoon and negotiations could still fall apart, but government agencies were contemplating using around $50 billion from the recently passed bailout of the financial industry to guarantee about $500 billion in mortgages.
The plan could include loan modifications that would lower interest rates for a five-year period, according to two people briefed on the plan, who asked not to be identified because details were still being worked out and the plan was not yet public.
The plan would be the most aggressive effort yet to limit damages from the U.S. housing recession, which has shaken global credit markets.
More than 4 million American homeowners with a mortgage were at least one payment behind on their loans at the end of June, and 500,000 had started the foreclosure process, according to the most recent data from the Mortgage Bankers Association.
The government's program would be run by the Federal Deposit Insurance Corp. The agency's chairman, Sheila Bair, said last week she was working "closely and creatively" with the Treasury Department on such a plan, but revealed few details.
The plan had been scheduled to be announced Wednesday but was pushed back because the details were still being finalized.
Andrew Gray, an FDIC spokesman, said it would be "premature to speculate about any final framework or parameters of a potential program."
Treasury Department spokeswoman Jennifer Zuccarelli called details of the loan modification plan "simply inaccurate." She said the Bush administration "is looking at ways to reduce foreclosures, and that process is ongoing," but has not decided on a final approach.
Borrower frustration is growing over the government's slow and limited assistance programs.
On Wednesday, about 100 demonstrators marched in front of the headquarters of Fannie Mae, and forced a mid-afternoon meeting with the company's chief executive, Herbert Allison.
Some held signs that read "Restructure our loans now," "Fannie Mae destroys lives" and "Foreclose on Fannie Mae."
Bruce Marks, chief executive of the Boston-based Neighborhood Assistance Corp. of America, said the Fannie Mae should adopt a program similar to the one the FDIC put in place at failed IndyMac Bank of Pasadena, Calif. Borrowers there are getting interest rates of about 3 percent for five years.
Fannie Mae, as the largest buyer and guarantor of mortgages "sets the standard" for the industry, said Marks. "They talk and they talk and they never do."
After the meeting, which included Allison and other top managers, company spokeswoman Amy Bonitatibus said "we agreed to continue to meet with them and work together on foreclosure prevention."
Over the past 10 weeks, Fannie Mae says it has received more than 40,000 defaulting loans and stopped 80 percent of them from going into foreclosure.
Last month, the government seized control Fannie Mae and Freddie Mac, the two biggest U.S. mortgage finance companies, with a rescue plan that could require the Treasury Department to inject as much as $100 billion into each to keep them afloat.
It was unclear Wednesday what role Fannie and Freddie would play in the government's sweeping plan to help millions of American homeowners. But lawmakers on Capitol Hill want the companies to take a more aggressive approach.
Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee said in a statement Wednesday that "federal agencies and financial institutions must do more to modify the mortgages they hold in order to stop foreclosures and help families keep their homes."
By guaranteeing millions of mortgages, the government could help restore confidence in the market for securities backed by mortgage loans. That was where the global credit crisis started.
As a surprising number of homeowners began defaulting on their loans, investors could no longer put a value on the securities which were backed by pools of mortgages. So trading of these securities froze, sending shock waves through the financial industry.
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Feds Slash Interest Rates.
Feds Slash Interest Rates.
Ratcheting its key rate from the current 1 percent all the way down to zero can't be ruled out. But there are risks in taking such an unprecedented step: namely, that it wouldn't work in turning around the economy and breaking through a stubborn credit clog.
Eventually, a zero percent rate - virtually "free" money - could trigger a speculative investment frenzy that could feed a bubble that pops, wreaking havoc on the economy. And that, in turn, could lead to the very kind of financial crisis now afflicting the global economy. Former Fed Chairman Alan Greenspan - now partly blamed for the current problems - has called today's crisis a "once-in-a-century credit tsunami."
Emphatic as it was, the bold rate reduction the Fed ordered Wednesday and the possibility of even lower rates ahead are no panacea. Even lower rates won't necessarily entice skittish Americans to spend and squeezed banks to lend more freely - forces at the heart of the economic woes.
With any luck, though, the Fed's action will cushion the blow to the country, which is on the brink of - or already in - its first recession since 2001.
The Fed slashed its key rate by half a percentage point to 1 percent, a rate not seen since 2003 and part of 2004. The rate hasn't been lower since 1958.
In a gloomier assessment of the economy, Fed policymakers said "the pace of economic activity appears to have slowed markedly" as consumers and businesses cut back on spending, and economic slowdowns in other countries sap demand for U.S. exports, which have helped keep the economy afloat.
Moreover, the "intensification of financial market turmoil" is likely to weigh on consumers and businesses, further reducing their ability to borrow money, the Fed said.
Many economists predict Fed policymakers will drop the rate again to half a percentage point, which would mark an all-time low, on or before Dec. 16, its last scheduled meeting of the year. The Fed left the door wide open to more rate cuts, pledging to "act as needed" to revive the economy.
Yet even if the Fed were to lower its key rate to zero, that might not reverse the bunker mentality of consumers and lead them to ramp up spending.
More than in recent recessions, consumers have retrenched as vanishing jobs, shrinking paychecks and nest eggs, and sinking home values have made them feel less wealthy and less inclined to spend.
Consumer spending - the single biggest chunk of overall economic activity - probably fell in the July-to-September quarter. That would mark the first quarterly drop since late 1991, when the country was emerging from a recession.
And just because borrowing costs are cheaper doesn't mean banks will feel more inclined to beef up lending to people and businesses.
"The problem is not the interest rate," said Sean Snaith, an economics professor at the University of Central Florida. "It is that no one is willing to loan, regardless of what the rate is. Lower rates will not make the problem go away. The credit crunch will take time to resolve."
The Fed's move Wednesday meant the prime lending rate for home equity loans, certain credit cards and other consumer loans dropped to 4 percent. Even if the Fed were to cut its main rate to zero, the prime rate would fall to 3 percent but no lower.
The Fed probably would want to stop short of zero, so it saves precious ammunition - meaning additional rate cuts - should the economy take a turn for the worse later on, some economists said.
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Tuesday, September 30, 2008
Stock Market Financial Crisis Wrapup - Commentary
Stock Market Financial Crisis Wrapup - Commentary
At the risk of offering too many communications, I want to keep you informed during these very turbulent weeks. Last Thursday night, Washington Mutual failed. Despite this being, by far, the largest U.S. bank failure, JPMorgan Chase took over their operations, assets and deposits immediately and with surprising smoothness. Depositors and customers should be fine. However, Washington Mutual equity holders were wiped out, and debt holders will likely get little return of their investment. Today, the FDIC announced that Citigroup was immediately taking over the commercial and investment banking operations of Wachovia in a complex transaction. The FDIC, our federal bank deposit insurer, did not lose money in the Washington Mutual transaction, and may not lose money in the Wachovia transaction. I think the FDIC has been doing a great job of handling these momentous events smoothly. Those little placards on bank counters really do have a great federal agency behind them!
On Sunday, Congressional leaders announced that they had finally reached agreement on a rescue package for the financial firms experiencing difficulty. While many details of what is now called the “Emergency Economic Stabilization Act” (EESA) remain to be resolved, this 109 page agreement likely means that a gradual return to normal functioning of credit markets is possible. While the $700 billion sum that would be authorized is substantial, it is important to note that this is not an expenditure. The EESA funds will be used to purchase or insure sub prime mortgage debt and other low quality debt that, along with high leverage, has led to the failures and shotgun mergers we have seen to date. We taxpayers may or may not lose money with this program. The outcome will depend on the price we pay up front, the future course of the economy and home prices, and many other factors. This government program in combination with other actions already taken is intended to allow these troubled financial institutions to delever their balance sheets without the serious threat of bankruptcy over their heads.
The first vote on this Act in the House today failed, but House leadership on both sides have said that the Act will be “reconsidered” on Wednesday or Thursday. Between now and then, I expect that there will be some modifications to the bill and some arm twisting and that the Act will then be passed by the House. The Senate vote is scheduled to follow. With only one third of Senators up for election this year and noses easier to count, I think the Senate will vote in the affirmative, and so I expect passage of this Act.
It is safe to say that the market was very disappointed in the House vote, with the Dow, for example, falling about 578 points after the failed vote, adding to the 200 point loss earlier in the day. If there is no additional negative news tomorrow or Wednesday, the markets may remain at about these levels and allow Congress some breathing room to debate, amend and approve this legislation. Possible negative news to send the markets down further may come from Europe and the UK, or from indications that the EESA legislation will not be passed this week. There is some positive news; the Fed has announced it will pump in an additional $630 billion into the global financial system.
Now I certainly understand the concern and anger many of you have expressed over this program. If the Treasury pays too much for the assets it buys, the effort would become a Wall Street bailout and leave taxpayers stuck with the bill. However, I do see a bipartisan consensus that such a misuse of the funds is not going to be tolerated. On the other hand, the prices paid must be high enough to reduce failure risk by strengthening the current weak link in our system, high enough to rescue the institutions in crisis.
Are these further actions necessary? I can argue both sides. On the “yes” side, I would say that while these deeply troubled financial institutions are few, they provide a huge amount of lending, securities issuance, trading, clearing, custody, and other functions. They are analogous to the oil for your car’s engine – not a big part, but absolutely essential for the engine’s operation. This analogy is why folks keep talking about credit markets “seizing up”. We are running our economic engine while it is low on oil. Now we could just park the car, let these Wall Street firms succeed or fail on their own and then build new firms to provide the oil. But that course is risky and we are not sure what would happen. I doubt that it would lead to the Great Depression II, but it might turn what looks to be a developing modest recession into a bigger one. So to prevent a deeper recession, the rescue is probably a good idea.
On the “no” side, I would say that we may be able to whistle past the graveyard and avoid serious consequences. Maybe the many other good banks will continue to pick up the slack on lending and acquire the needed pieces of failed banks, as JPMorgan has done, and we can all move on. And the program does have problems of its own. The rescue could turn into a bailout, costing us taxpayers money and rewarding bad behavior and bad decision making at a few large financial institutions. It could turn into a “let’s bail out everybody” program, rewarding folks for their bad decisions on home purchases and all sorts of other people—spec. homebuilders, home “flipping” speculators and the like at the expense of the vast majority of homeowners who pay their mortgages on time. In my experience, real estate bailouts are always unavoidably inequitable and ugly. And the rescue could expand to other lenders and borrowers; lobbyists are swarming Washington.
Weighing both sides, I have to say that while my heart says no but my head says yes to the Emergency Economic Stabilization Act. I am glad there has been a vigorous debate over the program and that the legislation now incorporates a number of important safeguards. They will likely be needed as this program unfolds over the weeks and months ahead. We are not out of the woods. Other banks could fail, but let me hasten to add that I think the vast majority of banks are sound, with solid balance sheets and good business models and prospects.
These truly are troubled times. Absolutely stunning mistakes and very bad business and investment decisions have been made by some Wall Street firms. The damage has been large. I am not happy, and I am sure that you are not happy to now be a part of this rescue package. Nevertheless, I do take comfort from the fact that, while some financial firms have levered up on very risky investments, most non-financial companies have not. Non-financial U.S. corporations have, in aggregate, de-levered enormously over the last 12 years, stripping $2 trillion of net liabilities off their balance sheets. U.S. non-financial corporations are now, for the first time in history, net lenders, not borrowers. And, unlike financial corporations, non-financial corporations have also reduced their net equity—by about $2 trillion dollars over the last four years. The combination represents, in my opinion, a huge deleveraging that surpasses the direction Wall Street took. So, while we deal with this problem of overly levered, bad investments at a few, but important Wall Street firms, we need to maintain a sense of proportion. The vast majority of American workers and companies have, in my opinion, conducted themselves well. And I believe that these companies and their stock and bond prices are, generally speaking, fairly or under valued. I do think that the rescue program will work to quell this financial market crisis and we can return over time to evaluating the substantial fundamental economic value in the market. In the midst of this financial crisis I think it is important to maintain perspective. Panicky moves away from well balanced investment portfolios at times like this most often in my experience lead to locking in losses and missing the ensuing recovery.
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Wednesday, September 24, 2008
Google G1 Android Phone Review
Google Android Phone's Big Premiere
In the most anticipated mobile-phone launch since the release of Apple's iPhone, the T-Mobile G1 was unveiled Sept. 23.
Like the iPhone, unveiled in June 2007, the G1 is the brainchild of one of tech's most innovative companies; it's the first phone boasting the Android software created by a Google (GOOG)-led consortium. Like Apple's music-playing handset, the G1 features a full Web browser and connects to the Internet with Wi-Fi technology. G1 similarly boasts a large touchscreen and lets users download games and tools from an online bazaar akin to the Apple App Store.
That's about where the similarities end. The G1 is to follow a different path from the Apple (AAPL) iPhone in some crucial ways, notably volume growth. G1 is expected to do well, though it may not replicate the iPhone's early successes.
Fewer T-Mobile Subscribers
Analysts predict that manufacturer HTC will sell 200,000 to 400,000 units this year, once the device becomes available on Oct. 22 in select markets. The device will sell for $179 with a two-year contract. At the high end of that estimate, the first Android device would gain almost 4% of the U.S. smartphone market in the fourth quarter, expected by wireless researcher Strategy Analytics to total 10.5 million. Tina Teng, an analyst at research firm iSuppli, believes Android-based devices will sell 2 million to 3 million units globally in 2009.
Still, the original iPhone sold 1 million units in its first 1½ months on the market—and that was during what is usually a slow sales season, compared with end-of-year holidays. Apple expects to sell 10 million units of the next-generation device, the iPhone 3G, this year.
Sales expectations are lower for Android partly because G1 will be carried by T-Mobile USA, which has 30 million subscribers, compared with Apple's iPhone partner, AT&T (T), which has more than 70 million.
Another strike against Android is that T-Mobile's high-speed wireless network isn't as extensive as AT&T's. "Consumers still choose the carrier first," says Ross Rubin, an analyst at consumer electronics research firm NPD Group. "For early adopters, they'd need to contend with T-Mobile's embryonic 3G network for at least a few months," Rubin says. What's more, G1 buyers will likely have to buy an additional calling plan to use G1's built-in Wi-Fi more extensively; iPhone users can freely use their device's Wi-Fi capability. T-Mobile will offer a limited data plan for $25 a month and unlimited Web access and messaging for $35 a month.
Some analysts who have seen versions of G1 also say it's not quite as stylish as the comparable Apple device. "It does not feel as luxurious as the iPhone," says Moe Tanabian, senior principal at IBB Consulting who has seen a late prototype of the device. The device is a cross between the iPhone and a Sidekick, an earlier T-Mobile phone that also boasts Web access and was a favorite of hip cell-phone users. Andy Rubin, who heads Google's Android effort, helped develop the Sidekick.
Wide-Open App Marketplace
Google and other Android supporters surely will try to prove the pessimists wrong. Google, for one, is expected to launch an extensive marketing campaign for the device. "Google is the defining Web 2.0 company for online search," Ambrosio says. T-Mobile is also throwing its marketing muscle behind the G1—though its budget is typically nowhere near as big as that of larger rivals. "It will be the biggest marketing campaign we ever launched for a mobile device," Cole Brodman, T-Mobile's chief information and innovation officer, said at the unveiling, attended by Google founders Sergey Brin and Larry Page.
G1 sales will also benefit from the flexibility of the Android Marketplace online app store. Unlike Apple's iTunes App Store (BusinessWeek.com, 9/5/08), Google's marketplace won't vet developers. Google will let anyone post applications to its store, where features will be rated in a YouTube-like manner. The openness of the Android software also can make it easier for developers to create associated tools more quickly.
The Android-based handset also boasts a slide-out full Qwerty keyboard, which the iPhone lacks. The device, which will feature a capable music player, that allows for easy music downloads from Amazon (AMZN), is also expected to come in three colors: black, white, and brown. And as expected it offers plenty of tight integration with a wide range of Google services, including search, mapping, and address book tools. "If T-Mobile launches a bugs-free, easy-to-use phone, then its brand equity will increase," says Tanabian, who has consulted for T-Mobile.
The Android Army Is Coming
Apple's iPhone isn't expected to be the main competitor for G1. The Android-based phone may erode sales of the Sidekick, phones that run Microsoft's (MSFT) Windows Mobile software, and smartphones made by Motorola (MOT) and Research In Motion (RIMM), maker of the BlackBerry. RIM "might lose some share by virtue of being the market leader" in the U.S., Rubin says. T-Mobile's parent, Deutsche Telekom (DT), will introduce the phone in the U.K. on Oct. 22 and elsewhere in Europe in the first quarter of 2009.
G1 stands to become a more formidable competitor as it's picked up by other manufacturers as well. Motorola, LG and Samsung are expected to launch Android models worldwide in 2009. And their Android-based phones may look vastly different from each other and the G1. Europeans may get a slider with a 12-key keyboard that they favor. Japan may get a phone with built-in mobile TV. There could be special phones for doctors or for lawyers.
Big cell-phone carriers also will help determine the success of coming Android phones. "Android has the potential to be much bigger than Apple because they can have many more manufacturers making its products," says Chris Ambrosio, an analyst with consultancy Strategy Analytics.
Kharif is a senior writer for BusinessWeek.com in Portland, Ore.
Monday, September 15, 2008
Your Internet Access Is Going To Get Suspended - Not True
Your internet access is going to get suspended - SPAM
Sophos has been intercepting many spam emails containing a malicious attachment overnight.
The emails all claim that “your internet access is going to get suspended”, as the receipient has committed “illegal activities” such as pirating software, movies or music.
This is the email:
Your internet access is going to get suspended
The Internet Service Provider Consorcium was made to protect the rights of software authors, artists.
We conduct regular wiretapping on our networks, to monitor criminal acts.
We are aware of your illegal activities on the internet wich were originating from
You can check the report of your activities in the past 6 month that we have attached. We strongly advise you to stop your activities regarding the illegal downloading of copyrighted material of your internet access will be suspended.
Sincerely
ICS Monitoring Team
The emails, which say they come from the “ICS Monitoring Team”, claim that a report of the user’s activities in the past six months is attached in a file called user-EA49943X-activities.zip.
However, if you open the contents of the user-EA49943X-activities.zip file you risk being infected by a malicious Trojan horse designed to communicate with remote hackers. Criminals can then break into your computer and use it for their own money-making purposes.
Sophos is identifying the malicious files seen being used in the campaign so far as Troj/Meredrop-A and Troj/Agent-HQK. Users of other anti-virus products would be wise to check their vendor to see if an update is available.
With so many people suffering from internet addiction (also known as ‘discomgoogolation’), it’s not hard to imagine how many people would react to receiving an email like this.
Not only would many people be prone to clicking before thinking at the accusation that they have been engaged in illegal activities, but also a disturbing proportion would be alarmed about the prospect of not being able to surf the internet.
Remember, THIS IS SPAM. Never open an attachment unless you know the sender
Friday, July 18, 2008
The Ever-Changing Mortgage Loan Requirements
The Ever-Changing Mortgage Loan Requirements
In a brutal real estate market where all the players want to hedge against the tremendous risks, down payment requirements and up-front fees have soared, shutting many potential home buyers out of the market.
"I have as many people calling me for financing as ever," said George Hanzimanolis, a Pennsylvania mortgage broker, "but I'm putting less than half of them into loans."
That's happening all over the country, and may slow the housing market's recovery. Indeed, in a Realtor.com survey released today, potential home buyers said high down payments were the second biggest obstacle, after high home prices, to buying a home.
These days, home buyers almost always have to make a substantial down payment, at least 5%, according to Rich Wordman, president of the Florida Association of Mortgage Brokers. The days of no-down loans are over.
In deeply declining markets, lenders are reluctant to issue loans unless borrowers put at least 10% down, he said.
JP Morgan Chase (JPM, Fortune 500), for instance, now asks for a minimum of 10% down in most markets, according to a spokesman, and for 20% in hard-hit areas. In Reno, Nevada, which has been devastated by the housing crisis, the bank requires 25%.
Even bigger jumbos
For expensive homes, the down payments are disproportionately more. Lenders issuing jumbo loans, which are too pricey to be sold to Fannie Mae (FNM, Fortune 500) or Freddie Mac (FRE, Fortune 500) in the secondary market, are asking for at least 20% down, according to Ed Craine, a San Francisco mortgage broker. In the most expensive markets, where jumbo loans are over $729,000, that means a minimum down payment of $148,500.
Higher interest rates on jumbo loans are also making them more expensive than they normally would be - with interest rates a full point to a point and a half higher than non-jumbo loans, said Mike Tacconi, a mortgage advisor with lender CMG Mortgage Services based in San Ramone, Calif.
And buyers purchasing homes for investment purposes are getting clobbered. Lenders are telling them to come up with at least 25% of the purchase price, according to Tacconi - and sometimes as much as 35%, depending on the kind of loan.
"Rents are high where I am," said Pennsylvania mortgage broker Hanzimanolis, "so people are having trouble saving enough for down payments."
Those high down payments are are being driven in part by the privatemortgage insurance companies, according to Jay Brinkman, chief economist for the Mortgage Bankers Association, which have themselves hiked their down payment requirements. These firms insure loans when borrowers put less than 20% down, making lenders whole when homeowners default.
In the past, these companies, such as MGIC Investment Corp (MTG). and PMI Group (PMI), often guaranteed mortgages when borrowers put no money down. Today they require 5%, 10% in steeply declining markets, according to Jeff Lubar, spokesman for the trade association Mortgage Insurance Companies of America.
In addition, private mortgage insurers are also charging higher insurance rates. Historically, PMI cost about 0.5% of a home's purchase price. Now, a borrower putting 5% down can pay about 0.75% for the first year.
Higher rates
And although interest rates are relatively low, industry experts say that they're higher than they should be, thanks to concerns about the solvency of Freddie and Fannie, which buy about half of all outstanding mortgages in the U.S.
The average 30-year, fixed-rate loan carried a 6.37% interest rate last week, according to Freddie Mac, up nearly a point from the year's low of 5.48% set last January and up from under 6% in late May. At the same time, yields on 10-year treasuries, which mortgage rates usually track, have trended down.
From June 12 to July 10, 10-year treasurys fell from 4.20% to 3.81%, while mortgage rates actually increased, inching up from 6.32% to 6.37%. Borrowers are probably paying at least a half point more than they ordinarily would, according to Keith Gumbinger of HSH Associates, a publisher of loan information.
That's because the questions surrounding the future of Fannie and Freddie have made the investors who buy their loans - hedge funds, pension funds, and banks - wary. They're demanding higher interest rates to take on the added risk they perceive.
Freddie and Fannie have also imposing higher up-front fees for riskier borrowers, based on credit scores.
As of June 1, buyers with scores of less than 620 with less than a 30% downpayment must pay a fee of 2.75% of mortgage principal, up from 2%. Between a 620 and 640 credit score, borrowers pay 2.5% (up from 1.75%); 640 to 660, 1.75% (1.25%); 660 to 680, 1.25% (0.75%); and 680 to 720, 0.5% (0).
"The fees are costing consumers a considerable amount of money," said Mark Savitt, a mortgage broker there and current president of the National Association of Mortgage Brokers.
All these added expenses are slowing an already moribund real estate market. That means it's going to take even longer to get rid of the tremendous inventory of unsold homes, according to the MBA's Brinkman, especially in areas that were overbuilt during the boom.
Cities hard hit by the housing bust, like North Las Vegas, Stockton, Calif. and Tucson, Ariz, may have to suffer through many more months of stagnant prices and increased foreclosures before they return to better times.
And these higher costs are going to stick around long after housing recovers, according to Brinkman. From now on, they'll just be the price of doing business.
Monday, July 14, 2008
Senate Passes Foreclosure Rescue
Senate Passes Foreclosure Rescue
The 63-5 vote reflected a keen interest by Democrats and Republicans to send election-year help to distressed homeowners with economic issues topping voters' concerns.
The plan lets homeowners buckling under mortgage payments they can't afford keep their homes and get more affordable mortgages backed by the Federal Housing Administration. Banks that agreed to take substantial losses on those distressed loans could avoid costly foreclosures and be assured of recovering at least some money.
The new program would let the FHA insure as much as $300 billion in new mortgages, helping an estimated 400,000 homeowners.
It still faces challenges, however, with the House planning to rewrite key details and the White House threatening a veto without major changes.
"It's not the final stop, but it is a major stop in getting this bill done," said Sen. Christopher Dodd, D-Conn., chairman of the Banking Committee. "For those who said this Congress cannot come together in a bipartisan fashion to do something responsible about housing, this bill does that."
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman and an architect of the bill, says the few but significant revisions House leaders are seeking could be made in as little as one week.
Dodd said he was expecting minor "tweaks" that could be dealt with quickly.
But key players are bracing for intense negotiations to resolve the differences. They hope to smooth over disputes with the White House at the same time, with an eye toward producing a bill President Bush could sign later this month.
The White House Friday renewed its warning that Bush would veto the Senate-passed bill without revisions, citing $3.9 billion in the measure for buying and rehabilitating foreclosed properties it said would help lenders, not homeowners.
The measure includes a long-sought modernization of the FHA and would create a new regulator and tighter controls on Fannie Mae and Freddie Mac, the government-sponsored mortgage giants. It also would provide $14.5 billion in housing tax breaks, including a credit of up to $8,000 for first-time home buyers.
Democrats are divided over important elements of the plan, including limits on loans the FHA may insure and Fannie Mae and Freddie Mac may buy. The Senate measure sets them at $625,000, while House leaders - including Speaker Nancy Pelosi, D-Calif. - want the cap as high as $730,000.
House leaders also oppose the immediate effective date of the Senate plan, preferring to phase in the new regulations for Fannie Mae and Freddie Mac over six months.
"We'd have a hard time agreeing to that," Dodd told reporters Friday. He called a Capitol Hill news conference to dispel fears about the financial health of Fannie Mae and Freddie Mac as their stocks plummeted on reports that the government was considering taking over one or both of them.
Another key point of dispute is the funding in the Senate measure for buying and fixing foreclosed properties. The House's band of conservative "Blue Dog" Democrats oppose the money, arguing that it would swell the deficit unless paired with cuts or tax increases to cover the cost.
But many Democrats, particularly members of the Congressional Black Caucus, are fighting to keep the funding, which they say will help prevent the communities hardest hit by the housing crisis from sliding into blight.
"There are people who tell me to ignore" that threat, Frank said in a statement Friday. "But there is too much that is important in this bill, and it has already been too long delayed by procedural problems in the Senate, for us to risk the further delay involved in a veto."
He said he was working to find a way to shift the funds to a must-pass spending bill that would be approved before lawmakers scatter for the year in September.
Dana Perino, Bush's spokeswoman, said the money should be stripped out of the measure "so that they can get a housing bill to the president that he could sign right away."
Sen. Barack Obama, D-Ill., the presumptive presidential nominee, said Bush should drop his opposition to the housing plan and other Democratic efforts to ease economic pain.
"I call on the administration to support this bill along with a second emergency stimulus package to jumpstart the economy and build on this important start to advance more rigorous measures to protect homeowners from foreclosure," he said. Obama was on the campaign trail Friday and did not vote on the measure, which had been expected to pass by a wide margin. He was one of 32 senators not voting.
With the administration scrambling to tamp down on investor fears about Fannie Mae and Freddie Mac, Perino called the new regulations in the measure for the two mortgage giants its "most important feature."
Lawmakers and the Bush administration agree on the central concept behind the housing package: allowing the government to backstop new mortgages for struggling homeowners.
To make it more palatable to Republicans, the Senate measure would take responsibility for any losses away from taxpayers and instead cover them by diverting a newly created affordable housing fund drawn from Fannie Mae and Freddie Mac profits.
Thursday, July 10, 2008
Celebrity Foreclosures Show Extent of Housing Woes
Celebrity foreclosures show extent of housing woes
LOS ANGELES - Tabloid magazines like to reassure us that celebrities are just like us - they go grocery shopping, take their dogs for a stroll around the neighborhood, even pump their own gas.
These days, that can also hold true when it comes to the plummeting real estate market. Several celebrities have dealt with foreclosure issues on their luxurious estates and many more have had to drop their asking prices, putting some high-profile faces on a growing problem: the real-estate meltdown is now hitting every socio-economic class.
The case of Ed McMahon has shown that you can make millions over a lengthy show business career and still find yourself in foreclosure. Johnny Carson's former "Tonight Show" sidekick owes more than $644,000 in mortgage payments on his Mediterranean estate in Beverly Hills, a house he and his wife have been trying to sell for the past two years. The six-bedroom, five-bathroom home - in the same exclusive, gated community where Britney Spears lives - is now on the market for $6.5 million, down from an original price of $7.6 million.
The 85-year-old television personality, who has been unable to work since breaking his neck in a fall 18 months ago, described his economic problems as "a perfect storm."
"If you spend more money than you make, you know what happens. And it can happen. You know, a couple of divorces thrown in, a few things like that. And, you know, things happen," McMahon said on "Larry King Live" recently. "You want everything to be perfect, but that combination of the economy, I have a little injury, I have a situation. And it all came together."
McMahon certainly is not the only celebrity to find himself in such financial trouble. Former NBA player Vin Baker saw his home in Durham, Conn., go up for auction last weekend. The seven-bed, six-and-a-half-bath mansion, on about 11 acres with a basketball court and a bowling alley, had been on the market for $2,950,000. Earlier this year, former baseball star and "Juiced" author Jose Canseco stopped making payments on his $2.5 million home in the upscale Encino section of LA's San Fernando Valley.
Rick Sharga, vice president of marketing for RealtyTrac, which monitors foreclosures, says that people of any income level can get in trouble by buying overvalued homes at the peak of the market that they ultimately can't afford.
"Ed McMahon's a sympathetic character in this scenario in that he got into a house that possibly he could have afforded if he had been able to keep working, then he had an injury that upset his financial apple cart pretty badly," Sharga said. "What you don't know is, in a normal real estate market, if the same lender would have taken a look at an 82-year-old man at the tail end of his career and written him a $4.6 million mortgage he had to keeping working to be able to afford."
It's not all doom and gloom, of course. Avril Lavigne listed her nearly 6,900-square-foot Mulholland Estates mansion for $5.8 million and, after just 36 days on the market, recently accepted a cash offer of $5.2 million.
But as celebrity real estate columns like "Hot Property" in the Los Angeles Times and "Gimme Shelter" in the New York Post show, other stars can't command the same prices for their homes that they might have been able to a few years ago.
The price of Angela Bassett and Courtney B. Vance's house has dropped more than $2 million in the past year. The French Colonial in a gated section of Los Angeles' old-money Hancock Park neighborhood has five bedrooms, seven and a half bathrooms, a gym, a hair salon and a two-story guest house. An agent listed it last year for $5,999,000, then a month later took it off the market for seven months. Then June Ahn of Coldwell Banker got the house and listed it for $4,999,000; she reduced it soon afterward to $4.6 million, and now has reduced it again to $3.9 million.
"It was overpriced," Ahn said. "The price difference from $5,999,000 to $3.9 (million), obviously we'll have a bigger number of buyers that can afford to get into it and even take a look at it."
It helps that the husband and wife, who bought the house 17 years ago for about $1.8 million, own it outright. "They're very flexible, they just go with the flow of the market," Ahn said. "Unfortunately, this happens. Last year was better than this year. Now they realize they didn't reduce in time. They were hoping to get the best (price) last year but it didn't happen so they learned the lesson."
Then again, property values can be a matter of perspective, says Ed Kaminsky, a Manhattan Beach, Calif.-based real estate agent who helps professional athletes relocate.
"You've got the new guys with the big contracts that are excited about the $8 million check they just got and they want to spend some, and I'd say rightfully so. Sometimes it's not a smart investment and sometimes it is," he said. "But if you make $8 million a year and you blow $5 million on a house and you sell it for $3 million a few years later, is it really wrong?
"What I try to do is identify what is it that they want, and let them know that it is possible that they could buy a home for a lot of money and sell it for less than they paid for it, and are you OK with it?" he added. "If I handed you $25 million right now, would you think differently about the $2 million house that's down the street? You may not really care that it's 50 grand overpriced cause you like the swing set in the backyard for your kids."
The primary element driving where a celebrity chooses to live is privacy, said Jordan Cohen of Re/Max, who has represented more than 50 stars and athletes in real estate transactions, including Shaquille O'Neal and Marilyn Manson. He's now selling actress Joely Fisher's house - a four-bed, seven-bath, mid-century craftsman at the end of a secluded drive with a pool and a screening room - for $3,295,000, about $1 million less than the asking price when another agent first listed it last summer.
He believes a star's property can bring in more money than a regular house.
"I know it adds value," said Cohen, sitting on a limestone countertop in the kitchen of the suburban Encino home. "A good analogy would be, shoe companies pay athletes millions of dollars to wear a specific shoe so you'll have young America buy that shoe because a celebrity endorses it. It's the same thing with a house."
"Why does anyone read Hot Tracks in People magazine or any other publication?" he continued. "I've never understood that, because they're just, like, people - just like you and me. From the celebrities I've gotten to know, they're just normal people. . .. I don't know why America is fascinated by that, but they are."
But Mark David, who follows celebrity real estate on his cheeky blog "The Real Estalker," doesn't think prospective buyers are willing to pay top dollar for houses simply because someone famous has lived in them.
"It's not common. Property values are property values," said David, a 38-year-old graphic designer who writes under the pseudonym "Your Mama." "You've really got to be somebody for it to add cachet. Maybe if it's a major A-list celebrity who's going to go down in Hollywood history, like Jack Nicholson. But does anybody really care about most of these people's houses? Would you pay more for Danny Bonaduce's house? And I'm not trying to bag on him. I can't imagine that people would do it - then again, there's a lid for every pot."
Bonaduce's house, by the way, is still on the market. It was listed last July for $4.5 million - now it's down only slightly to $4.2 million. The ornate Spanish-style mansion, with four bedrooms, five and a half bathrooms and a theater on just over 7,000 square feet, sits in the hills of LA's Los Feliz section.
So why not drop the price further and finally sell the property?
"He can afford to wait it out for 20 years," said Alfonso Milanese of Show4you Realty, who co-listed the home with another agent when Bonaduce and his wife, Gretchen, filed for divorce. "It's such a minuscule mortgage on there. He's one of the few the people who are not in dire straits in selling their house."
As for McMahon's home, "we've actually gotten a bunch of offers," his real estate agent, Alex Davis of Hilton & Hyland, said recently. "I think we're going to sell it very soon and that it's going to be onward and upward for the McMahons."
Celebrity Foreclosures Show Extent of Housing Woes
Celebrity foreclosures show extent of housing woes
LOS ANGELES - Tabloid magazines like to reassure us that celebrities are just like us - they go grocery shopping, take their dogs for a stroll around the neighborhood, even pump their own gas.
These days, that can also hold true when it comes to the plummeting real estate market. Several celebrities have dealt with foreclosure issues on their luxurious estates and many more have had to drop their asking prices, putting some high-profile faces on a growing problem: the real-estate meltdown is now hitting every socio-economic class.
The case of Ed McMahon has shown that you can make millions over a lengthy show business career and still find yourself in foreclosure. Johnny Carson's former "Tonight Show" sidekick owes more than $644,000 in mortgage payments on his Mediterranean estate in Beverly Hills, a house he and his wife have been trying to sell for the past two years. The six-bedroom, five-bathroom home - in the same exclusive, gated community where Britney Spears lives - is now on the market for $6.5 million, down from an original price of $7.6 million.
The 85-year-old television personality, who has been unable to work since breaking his neck in a fall 18 months ago, described his economic problems as "a perfect storm."
"If you spend more money than you make, you know what happens. And it can happen. You know, a couple of divorces thrown in, a few things like that. And, you know, things happen," McMahon said on "Larry King Live" recently. "You want everything to be perfect, but that combination of the economy, I have a little injury, I have a situation. And it all came together."
McMahon certainly is not the only celebrity to find himself in such financial trouble. Former NBA player Vin Baker saw his home in Durham, Conn., go up for auction last weekend. The seven-bed, six-and-a-half-bath mansion, on about 11 acres with a basketball court and a bowling alley, had been on the market for $2,950,000. Earlier this year, former baseball star and "Juiced" author Jose Canseco stopped making payments on his $2.5 million home in the upscale Encino section of LA's San Fernando Valley.
Rick Sharga, vice president of marketing for RealtyTrac, which monitors foreclosures, says that people of any income level can get in trouble by buying overvalued homes at the peak of the market that they ultimately can't afford.
"Ed McMahon's a sympathetic character in this scenario in that he got into a house that possibly he could have afforded if he had been able to keep working, then he had an injury that upset his financial apple cart pretty badly," Sharga said. "What you don't know is, in a normal real estate market, if the same lender would have taken a look at an 82-year-old man at the tail end of his career and written him a $4.6 million mortgage he had to keeping working to be able to afford."
It's not all doom and gloom, of course. Avril Lavigne listed her nearly 6,900-square-foot Mulholland Estates mansion for $5.8 million and, after just 36 days on the market, recently accepted a cash offer of $5.2 million.
But as celebrity real estate columns like "Hot Property" in the Los Angeles Times and "Gimme Shelter" in the New York Post show, other stars can't command the same prices for their homes that they might have been able to a few years ago.
The price of Angela Bassett and Courtney B. Vance's house has dropped more than $2 million in the past year. The French Colonial in a gated section of Los Angeles' old-money Hancock Park neighborhood has five bedrooms, seven and a half bathrooms, a gym, a hair salon and a two-story guest house. An agent listed it last year for $5,999,000, then a month later took it off the market for seven months. Then June Ahn of Coldwell Banker got the house and listed it for $4,999,000; she reduced it soon afterward to $4.6 million, and now has reduced it again to $3.9 million.
"It was overpriced," Ahn said. "The price difference from $5,999,000 to $3.9 (million), obviously we'll have a bigger number of buyers that can afford to get into it and even take a look at it."
It helps that the husband and wife, who bought the house 17 years ago for about $1.8 million, own it outright. "They're very flexible, they just go with the flow of the market," Ahn said. "Unfortunately, this happens. Last year was better than this year. Now they realize they didn't reduce in time. They were hoping to get the best (price) last year but it didn't happen so they learned the lesson."
Then again, property values can be a matter of perspective, says Ed Kaminsky, a Manhattan Beach, Calif.-based real estate agent who helps professional athletes relocate.
"You've got the new guys with the big contracts that are excited about the $8 million check they just got and they want to spend some, and I'd say rightfully so. Sometimes it's not a smart investment and sometimes it is," he said. "But if you make $8 million a year and you blow $5 million on a house and you sell it for $3 million a few years later, is it really wrong?
"What I try to do is identify what is it that they want, and let them know that it is possible that they could buy a home for a lot of money and sell it for less than they paid for it, and are you OK with it?" he added. "If I handed you $25 million right now, would you think differently about the $2 million house that's down the street? You may not really care that it's 50 grand overpriced cause you like the swing set in the backyard for your kids."
The primary element driving where a celebrity chooses to live is privacy, said Jordan Cohen of Re/Max, who has represented more than 50 stars and athletes in real estate transactions, including Shaquille O'Neal and Marilyn Manson. He's now selling actress Joely Fisher's house - a four-bed, seven-bath, mid-century craftsman at the end of a secluded drive with a pool and a screening room - for $3,295,000, about $1 million less than the asking price when another agent first listed it last summer.
He believes a star's property can bring in more money than a regular house.
"I know it adds value," said Cohen, sitting on a limestone countertop in the kitchen of the suburban Encino home. "A good analogy would be, shoe companies pay athletes millions of dollars to wear a specific shoe so you'll have young America buy that shoe because a celebrity endorses it. It's the same thing with a house."
"Why does anyone read Hot Tracks in People magazine or any other publication?" he continued. "I've never understood that, because they're just, like, people - just like you and me. From the celebrities I've gotten to know, they're just normal people. . .. I don't know why America is fascinated by that, but they are."
But Mark David, who follows celebrity real estate on his cheeky blog "The Real Estalker," doesn't think prospective buyers are willing to pay top dollar for houses simply because someone famous has lived in them.
"It's not common. Property values are property values," said David, a 38-year-old graphic designer who writes under the pseudonym "Your Mama." "You've really got to be somebody for it to add cachet. Maybe if it's a major A-list celebrity who's going to go down in Hollywood history, like Jack Nicholson. But does anybody really care about most of these people's houses? Would you pay more for Danny Bonaduce's house? And I'm not trying to bag on him. I can't imagine that people would do it - then again, there's a lid for every pot."
Bonaduce's house, by the way, is still on the market. It was listed last July for $4.5 million - now it's down only slightly to $4.2 million. The ornate Spanish-style mansion, with four bedrooms, five and a half bathrooms and a theater on just over 7,000 square feet, sits in the hills of LA's Los Feliz section.
So why not drop the price further and finally sell the property?
"He can afford to wait it out for 20 years," said Alfonso Milanese of Show4you Realty, who co-listed the home with another agent when Bonaduce and his wife, Gretchen, filed for divorce. "It's such a minuscule mortgage on there. He's one of the few the people who are not in dire straits in selling their house."
As for McMahon's home, "we've actually gotten a bunch of offers," his real estate agent, Alex Davis of Hilton & Hyland, said recently. "I think we're going to sell it very soon and that it's going to be onward and upward for the McMahons."
AZ Home Buyers Getting Down Payment From Non-Profits
Down-payment aid debated
Home buyers turning to non-profits for cash
Arizonans treading in the housing market's choppy waters have found an unusual lifeline - a group of non-profit organizations that siphon down payments from home sellers to buyers.
Use of the decade-old practice known as down-payment assistance has dramatically increased since the demise of subprime lending because it offers another opportunity for buyers without substantial savings to obtain mortgage loans.
Advocates of down-payment assistance contend it has kept Arizona's failing real-estate market on life support by opening doors for responsible borrowers who simply lack the cash for a down payment.
Critics of the practice say it allows home sellers to kick back a percentage of bank-loaned money to buyers, which would be illegal if not done through a non-profit intermediary.
Housing statistics also indicate that charity-assisted loans default at higher rates compared with loans where the down payment comes from the buyer.
The Federal Housing Administration, which insures all loans involving down-payment assistance, has argued that such loans carry a higher default rate and could ultimately bankrupt the FHA.
A housing-reform bill up for vote in the U.S. Senate this week calls for eliminating the practice, while a competing resolution in the House would allow it to continue with some restrictions.
Phoenix loan originator Dean Wegner said nearly half of the home loans being issued involve seller contributions to special non-profit organizations that gift the money - usually 3 to 6 percent of the home's sale price - to buyers after charging a transaction fee of $400 to $600. Unlike other charitable contributions, the seller's donations are not tax-deductible.
"It's a loophole in the FHA guidelines that says the down payment can come from a 501(c)(3) charity," Wegner said.
Now that subprime loans and their creative financing schemes are gone from the market, lenders have returned in droves to FHA loans and the primary reason is down-payment assistance, he said.
"This is what everyone is talking about now," Wegner said, adding that sellers are generally willing to put up the money because it greatly increases their chances of finding a buyer.
The two leading providers of down-payment assistance are AmeriDream, based in Gaithersburg, Md., and Sacramento-based Nehemiah Corp.
Nehemiah was involved in 676 Arizona home-sales transactions in 2007 and is on pace to quintuple that amount this year, passing down payments from buyer to seller on 1,692 sales as of early July.
AmeriDream President Ann Ashburn said the two non-profits provide a vital service to low-income, minority and first-time home buyers while giving the economy a needed boost.
Ashburn opposes eliminating down-payment assistance programs that benefit "good, qualified people."
"The real tragedy will be that 100,000 to 200,000 home buyers annually will be locked out of homeownership," she said.
AmeriDream data indicates that roughly a million U.S. residents have used down-payment assistance in the past 10 years, including nearly 43,000 Arizonans.
Nationwide, $130 billion in loans have been generated by the practice, the non-profit says, with about $5.5 billion in Arizona.
Since its advent, down-payment assistance has faced several attempts by the federal government to ban its practice, but so far the courts have protected it.
In recent months, FHA Commissioner Brian Montgomery has launched a full-scale verbal attack on down-payment assistance, calling it a "shell game" that threatens to bankrupt his administration.
"We had to book an additional $4.6 billion in unanticipated long-term losses, mostly due to the increased number of certain types of seller-funded loans in the FHA portfolio," Montgomery said in June.
"Unless we take action to mitigate these losses, FHA will soon either have to shut down or rely on appropriations to operate."
Montgomery also said the federally insured value of those loans is often inflated, because many sellers simply tack on the amount of their charitable contribution to the home's sale price.
About 30 percent of all FHA loans now involve down-payment assistance, according to the U.S. Department of Housing and Urban Development, FHA's parent agency.
HUD data indicates that charity-assisted loans were more than twice as likely to go into default or foreclosure in recent years than loans with the down payment coming from buyers' pockets.
However, Wegner said all FHA loans have credit-score and income requirements, which make them far less risky than subprime loans.
"These people are still getting scrutinized heavily," he said.
One such buyer is Lawrence Smith, who recently purchased a vacant Phoenix home from an out-of-state investor. Although he had never heard of down-payment assistance, his real-estate agent recommended he look into it.
"I had gone through a divorce, so most of my assets were gone," Smith said.
He got an FHA loan with down-payment assistance through AmeriDream. Smith said the entire process was transparent and spared him the six to 12 months it would have taken to save up a down payment.
"I think if you have people that have decent credit and decent incomes, but for whatever reason can't come up with the down payment, it makes a difference," he said.
Source:AZ Republic. J. Craig Anderson - Arizona Republic
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Phoenix AZ Area Million Dollar Home Sales
Phoenix AZ Area Million Dollar Home Sales
A Scottsdale land developer, a founder and CEO of an information technology group and two local Realtors, are among the buyers and sellers in this week's done deals.
$5,791,500.
Richard and Kimberly Cabral bought a new 10,645 square-foot home with five bedrooms, seven bathrooms plus two powder rooms, bonus room, kids retreat, game room, library with fireplace, office theatre, gourmet kitchen with two islands, six-car garage, plus detached casita has two bedrooms and living room with fireplace. This Calvis Wyant luxury home on four and a half acres is northeast of the Pinnacle Peak Country Club in Scottsdale.
$4,995,000.
Stuart and Mary Rhea purchased a new 8,400 square-foot home with six bedrooms and seven bathrooms. The master suite has an exercise room with bar and two flat screens. There is a library and office with fireplace and private patios; formal living room, dining room with wine room and butlers pantry; huge gourmet kitchen opening to oversized family room, three en-suite bedrooms, media room, game room; and a separate guest house out by a party gazebo and diving pool, A/C garages and Crestron Smart house. This luxury home at Mummy Mountain is on the southwest side of the Camelback Golf Club in Paradise Valley. Stuart Rhea is the founder and CEO of Tolt Service Group, a nationwide provider of outsourced technology field services. He has spent over 30 years in the information technology field.
$3,170,000.
Kent Bowerbank and Leslie Bowerbank, as Trustees of the Bowerbank Trust, paid cash for a 6,991 square-foot home with 650 square-foot pool originally built in 1999. Kent Bowerbank is a Realtor with Embassy Properties in Phoenix.
$3,125,000.
Michael L. White, as Trustee of the Statice Revocable Trust, purchased new home west of the Camelback Golf Club in the Morton Mesa Subdivision of Paradise Valley.
$3,100,000.
Robert D. MacMillan and Mary Hazel MacMillan, as Trustees of the Robert D. MacMillan Family Trust, paid cash for a 4,565 square-foot home with 704 square-foot pool originally built in 1977 on over two acres on the west side of the Camelback Golf Club in Paradise Valley.
Source: AZ Republic
Wednesday, July 9, 2008
Ritz-Carlton remains committed to Paradise Valley
Ritz-Carlton remains committed to PV
PARADISE VALLEY - The proposed Ritz-Carlton, Paradise Valley Resort will not go to another community.
The project planned northwest of Lincoln Drive and Scottsdale Road received a setback last week when a Maricopa County Superior Court judge ruled that a referendum challenging the project could be placed on the Nov. 4 ballot.
But Jerry Ayoub, president and chief executive officer of Scottsdale-based Five Star Development, this week sought to clarify a statement released by the company after the ruling about what might happen next.
"Other communities have solicited us to move the project; that is a fact. However, we have worked for three years to establish trust with Paradise Valley officials and residents," Ayoub said in a prepared statement.
"Collectively, we have created a project that we can all be proud of for decades to come. Our commitment to the community has not wavered and we believe that the Ritz-Carlton is a perfect fit for Paradise Valley," Ayoub added.
The Paradise Valley Town Council unanimously approved the project on April 10. But a citizens group called Preserve Our Paradise, which opposes the density of some of the project's homes, collected enough petition signatures to force a referendum.
Five Starr challenged the referendum in court, but was turned down by Judge Peter Swann. Five Starr has not decided whether to appeal.
Tonight, the Town Council will consider setting a Nov. 4 election date for the referendum. The meeting begins at 7 p.m. at Paradise Valley Town Hall, 6401 E. Lincoln Drive.
The project calls for a 225-room resort hotel and 161 residences ranging from 1-acre home sites to patio homes on 105 acres.
Ayoub said the project's team maintains that the overwhelming majority of Paradise Valley residents are behind the project. He said Five Star has, and will continue, to have immense support from town residents and officials.
"It's unfortunate that such a small group of people can cause this significant of a delay after we've worked tirelessly with neighbors and officials to get this project right and get it unanimously approved. However, we are confident in Paradise Valley's acceptance of the Ritz-Carlton," Ayoub said.
The council also will vote to give the Scottsdale Convention and Visitors Bureau an additional $25,000 in annual funding. That would bring the total to $625,000 to promote the town's resorts and $75,000 in special funding to support the Fiesta Bowl.
At its 4 p.m. work-study session, the council will discuss the mayoral selection process. In Paradise Valley, the council elects the mayor, not voters. Vernon Parker, who was chosen mayor June 12, would support voters doing so. He requested the council discussion.
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Fed Curb Shady Home-lending Practices
Fed Curb Shady Home-lending Practices
WASHINGTON - The Federal Reserve will issue new rules next week aimed at protecting future homebuyers from dubious lending practices, its most sweeping response to a housing crisis that has propelled foreclosures to record highs.
Fed Chairman Ben Bernanke spoke of the much-awaited rules in a broader speech Tuesday about the challenges confronting policymakers in trying to stabilize a shaky U.S. financial system. To that end, Bernanke said the Fed may give squeezed Wall Street firms more time to tap the central bank's emergency loan program.
To prevent a repeat of the current mortgage mess, Bernanke said the Fed will adopt rules cracking down on a range of shady lending practices that has burned many of the nation's riskiest "subprime" borrowers - those with spotty credit or low incomes - who were hardest hit by the housing and credit debacles.
The plan, which will be voted on at a Fed board meeting on Monday, would apply to new loans made by thousands of lenders of all types, including banks and brokers.
Under the proposal unveiled last December, the rules would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower's income. It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower's ability to repay a home loan from sources other than the home's value.
"These new rules ... will address some of the problems that have surfaced in recent years in mortgage lending, especially high-cost mortgage lending," Bernanke said.
Consumer groups have complained that the proposed rules aren't strong enough, while mortgage lenders worry that they are too tough and could crimp customers' choices.
In an extraordinary action aimed at averting a financial catastrophe, the Fed in March agreed to let investment houses go to the Fed - on a temporary basis - for a quick, overnight source of cash. Those loan privileges, which are supposed to last through mid-September, are similar to those permanently afforded to commercial banks for years.
"We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end should the current unusual and exigent circumstances continue to prevail in dealer funding markets," Bernanke said in prepared remarks to a mortgage-lending forum in Arlington, Va.
The Fed's decision to act - temporarily at least - as a lender of last resort for Wall Street firms was made after a run on Bear Stearns pushed the investment bank to the brink of bankruptcy and raised fears that others might be in jeopardy. It was the broadest use of the Fed's lending powers since the 1930s.
Bear Stearns was eventually taken over by JPMorgan Chase & Co., with the Fed providing $28.82 billion in financial backing.
Those controversial decisions have drawn criticism from Democrats in Congress and elsewhere that the Fed is bailing out Wall Street and putting billions of taxpayer dollars at risk.
Bernanke, in appearances on Capitol Hill has said he doesn't believe taxpayers will suffer any losses.
In his speech Tuesday, the Fed chief defended those actions anew. If the Fed didn't intervene, he said, problems in financial markets would have snowballed, imperiling the country.
"Allowing Bear Stearns to fail so abruptly at a time when the financial markets were already under considerable stress would likely have had extremely adverse implications for the financial system and for the broader economy," Bernanke said to the mortgage forum, organized by the Federal Deposit Insurance Corp.
The Fed's consideration of giving Wall Street firms more time to tap the Fed's emergency loan program is part of an ongoing effort by the central bank to bring back stability to fragile financial markets and help to bolster shaky confidence on the part of investors.
Policymakers - in the White House, in Congress and other federal agencies - will need to work together to come up with ways to make the U.S. financial system more resilient and stable and to prevent a repeat of the types of problems that brought about the end of Bear Stearns, an 85-year-old institution, Bernanke said.
Although those efforts are already under way and will be the focus of a House Financial Services Committee hearing Thursday, it will fall to the next president and next Congress to settle them. Both Bernanke and Treasury Secretary Henry Paulson are scheduled to testify at Thursday's hearing.
The Bush administration has proposed revamping the nation's financial regulatory structure. That plan would make the Fed an ubercop in charge of financial market stability. But the Fed would lose daily supervision of big banks. Bernanke said the Fed must maintain this power if it is to be an effective overseer of financial stability.
The Fed, which regulates banks, and the Securities and Exchange Commission, which oversees investment firms, announced an information-sharing agreement on Monday aimed at better detecting potential risks to the financial system.
Over the longer term, though, Congress may need to adopt legislation to bolster supervision of investment banks and other large securities dealers, Bernanke said.
Bernanke recommended that Congress give a regulator the authority to set standards for capital, liquidity holdings and risk management practices for the holding companies of the major investment banks. Currently, the SEC's oversight of these holding companies is based on a voluntary agreement between the SEC and those firms.
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New Sotelo Condos Tempe AZ
Sotelo Condos Tempe AZ.
Sotelo was designed by Todd & Associates, a Phoenix-based architecture firm with a history of designing award-winning residential projects throughout the Southwest. The project will feature 170 urban flats designed in seven different floor plans.
The flats range from 794 to 1,953 square feet, with 134 two-bedroom units and 36 one-bedroom units. The building will be designed with a modern architectural aesthetic that emphasizes the connection to the outdoors, open and flexible living spaces, access to natural light, and community gathering spaces. The building design gives many units a direct view of Papago Park.
Amenities
Sotelo features a detached, state-of-the-art clubhouse geared for large gatherings, celebrations and parties. Designed by Inter Plan Design Group, a Scottsdale-based interior design firm, the clubhouse is equipped with a flat-screen television wall, full kitchen, outdoor fireplace, and WiFi access. Residents will have access to a resort-inspired pool and spa and a fitness center.
Features
Individual units will have modern kitchens with granite countertops and wood cabinetry. Other features include nine-foot ceiling heights, walk-in closets in master bedrooms, gas fireplaces, balconies or patios, and underground parking with elevator access. Residents will have accessto a resort-inspired pool and spa and a fitness center.
Your beautiful backyard, also known as Papago Park, has over 1,200 acres of pristine desert-scape to explore. With baseball and softball fields, the Desert Botanical Garden, world-class golf, and the fabulous Phoenix Zoo, you'd never know there was a thriving downtown district just a few minutes away.
Satisfy the urbanite inside:
Your playground for dining, nightlife, arts and entertainment is just over a mile away. Downtown Tempe offers the lively Mill Avenue District with an eclectic assortment of bars, live music, theater, galleries and more, plus ASU athletic events are just a jump shot away for Sun Devil fans.
Bordering the expansive desert landscape and clear blue sky, Sotelo's urban-inspired architecture creates bold, clean lines that draw the eye. Inside, modern living spaces offer functional open floor plans bathed in the desert's natural light.
9" Ceiling, gas fireplace, and private patio or balcony
Ceramic tile entry, kitchen, and bath
Upgraded Carpeting in living, dining and bedrooms
Granite kitchen countertops
Full appliance package including full size washer and dryer
Wood cabinets in the kitchen and baths
Bathroom feature granite countertops and tub/shower surrounds
Spacious walk in closets in master bedrooms
Pre-wired for optional security system
Reserved underground parking with elevator access
While you're taking a rest from communing with nature, Sotelo invites you to commune with your friends and neighbors. Enjoy a refreshing dip in the beautifully landscaped pool, gather around the communal fire pit under a canopy of desert stars, or entertain guests at Sotelo's gorgeous Clubhouse, complete with full kitchen, and flat-screen TV wall.
Heated pool with spa and ramada
State-of-the-art fitness center
Wi-Fi access throughout Clubhouse
Gated community with limited access
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Monday, July 7, 2008
Forex Profit Accelerator Free from Bill Poulos
Forex Profit Accelerator from Bill Poulos. Brand New Free Forex 4-Pack' Just Released
You're About To Learn How Select Groups Of Traders Discovered Forex FREEDOM With The 'Underground' Techniques Revealed In My FREE 'Forex 4-Pack'...
HINT: They spend 20 minutes a night, and they're NOT day trading...
The bar for Forex training is about to be raised again...
...because one of the top Forex mentors has just released his BRAND NEW multimedia training "kit" that challenges 90% of what most Forex traders hold to be true.
It might "ruffle your feathers", but if you have ANY interest in discovering how select groups of traders have been quietly riding the coat tails of the big banks to maximize their "pip potential" in the Forex markets...
-I think you're in for a big SURPRISE.
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YOUR FREE 'FOREX 4-PACK'
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If a 30+ year seasoned trader grilled you on your top Forex challenges and then delivered a custom-made, step-by-step, multimedia "blueprint" that addressed each and every one...
-do you think you'd be interested?
Well, that's pretty much what you're about to get your hands on.
Over the past year, thousands of Forex traders were invited to take part in a landmark survey about their top challenges trading the Forex markets.
And the result?
* A four-part multimedia POWERHOUSE that ignores what's popular, and instead tells you the TRUTH about what's working NOW in the Forex markets...
It's called the 'Forex 4-Pack', and honestly, you shouldn't even consider placing another trade until you see what it reveals...
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20 MINUTES A DAY?
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Find out how the author spends just 20 minutes a day with TOTAL confidence in the Forex markets, identifying more pip potential in that time than most traders dare to dream about...
You'll also learn:
** How to "shake out" the good Forex brokers from the unscrupulous ones. Many brokers won't be prepared when you ask them these 5 questions (part 1, page 16, & part 4).
** The "core essentials" of Forex trading that will let you "leapfrog" over other traders, giving you a "fast track" that would otherwise take months, or years to achieve (part 2).
** The 4 "golden rules" your Forex trading method MUST follow if you want to have an edge over all other traders (part 1, page 58).
** The "insiders formula" on how to determine the best mix of technical indicators to use when trading Forex pairs (part 1, page 27).
** Step-by-step tactics for applying the "Optimal Profit Exit Strategy". This is a deadly accurate way of enjoying profit-taking as quickly as possible (part 1, page 37).
** The 4 market conditions that you should avoid at all costs and that practically eradicate risk (part 3).
** How to drastically reduce your "time in the trenches" trading Forex by spending only 20 minutes a day. These 2 discoveries make it all possible (part 1, page 70).
** ...plus, there's a TON more you'll get to sink your teeth into when you get the '4-Pack'...
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SORRY, IT'S NOT FOR SALE
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When I snuck a look at the 'Forex 4-Pack', I was certain I'd be asked to cough up 150 bucks or more for it. After all, it's not one of those flimsy 10-page "ebooks" many so-called "gurus" try to pass of as "value" these days...
-Instead, it's a collection of lengthy reports, "screen capture" video tutorials, and more... there's even a "Broker Scorecard" that your broker might have a hard time with. Bottom line - it's all designed to PROTECT YOU and to HELP YOU FIND MORE PIPS, with more FREQUENCY.
That's why I was surprised to find out that...
-it's not for sale (at least not right now).
You see, the author released an early version of just one of the pieces to this '4 Pack' last year and he was overwhelmed by the response he received from the trading community.
So that's why he decided to give it away. In his own words, "I want to de-mystify the Forex markets once and for all. So I sat down to produce this material as if I was under oath, being grilled by an attorney. That's how direct and forthcoming it is."
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HOW TO GET YOUR FREE FOREX 4 PACK COPY
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To get your free forex profit 4 pack copy, just click here right now
I hope you enjoy it as much as I have.
Good Trading,
Bonnie Burns
P.S. This is a TON of material. Take your time and read it all, but hurry and download it. Why? Because it's so large, it could be taken offline at any moment if the author's web server "bandwidth" gets eaten up with all the requests for the '4-Pack'. You can get it here
