Last Week's Show

US VOTERS TO POLITICIANS: STAY AWAY FROM MID

According to a nationwide poll of likely voters commissioned by the National Association of Home Builders, the vast majority of American voters say they value home ownership and oppose any steps by the government to make it more difficult to own a home. These results certainly provide a few words of caution for politicians who want to win votes.

The main messages to politicians from surveyed homeowners and would be homeowners? Do more to help home owners and those who want to be homeowners, and leave the mortgage interest deduction alone.

FORECLOSURE RATES PLUMMET

The rate of foreclosures fell steeply in 2011 according to RealtyTrac as reported by CNN money. Foreclosure filings posted a 33 percent drop in 2011, falling to their lowest levels since 2007.

So does that mean the worst is over for the housing market? Well, we may have a bit further to go. RealtyTrac CEO Brandon Moore says that while he expects more foreclosures in 2012, he also expects them to stay well below the 2010 peak thanks to refinancing programs, such as the government’s Home Affordable Modification Program, which are helping more borrowers lower their payments and avoid foreclosure.

FOREIGN INVESTORS FLOCK TO US REALS ESTATE AS SAFE HAVEN

Foreign investors are finding plenty of real estate deals in the U.S. and more international investors are flocking to key states to buy their piece of the American Dream, according to a recent study by Credit Sesame, which used National Association of REALTORS® data for its findings.

But what’s the big draw for foreign investors? Susan Wachter, professor of real estate and finance at the University of Pennsylvania told MSNBC.com that in this period of tremendous financial uncertainly globally, real estate here in the U.S. is a safe haven.

For those of you wondering, the top destinations of foreign investors for U.S. real estate purchases are Florida, California and Texas.

GRADUAL RECOVERY MODE

RIS Media is reporting that according to a recent survey of 1000 real estate agents, we can expect the housing market to be in gradual recovery mode through 2012.

More than 60 percent of agents surveyed said that they think 2012 will be a good to very good year.

Agents appear to be most confident about recovery in the South, however the Northeast may face tougher challenges.

But regardless of region, the agents surveyed reported more delays in closings with more than half saying that they had closings that were significantly delayed in 2011, mostly due to bank procedures, financing, or appraisals.

FANNIE OFFERS MORTGAGE FORBEARANCE TO JOBLESS

Fannie Mae says that starting March 1st, it will be providing more mortgage aid to the unemployed and possibly extending the forbearance period to up to a year to those who qualify.

According to Housingwire, Fannie Mae will require mortgage servicers to extend the forbearance relief to qualified unemployed borrowers for six months without any approval needed from Fannie Mae.

Fannie’s announcement follows on the heels of Freddie Mac’s earlier announcement about similar changes to its mortgage relief program for the unemployed.

SINGLE FAMILY CONSTRUCTION STARTS

Although 2011 was among the slowest years ever for single-family construction starts, a recent report in Investors Business Daily say builders across the country are preparing to start work on new developments.

Meritage Homes CEO Steve Hilton expects a pick-up this year and for starts to reach eight hundred thousand to one million during the next few years.

Meanwhile, Toll Bros. is setting its sights on Dallas, Houston, and the Washington, D.C., to Boston corridor, hoping to capitalize on pent-up demand as consumer confidence rises. Other builders ramping up production include Lennar, focusing on the Pacific Northwest; and Pulte Group, which plans projects in northern Virginia, Texas, and the Carolinas.

HOMEOWNER ADVOCATES RAISE THEIR VOICES IN S.C.

Home builders and homeownership advocates filled the Statehouse lawn in South Carolina recently to make their point to state and national leaders that the housing sector of the state is hurting.

GOP Presidential hopeful Newt Gingrich was on hand, talking about the importance of home ownership.

The event also highlighted the latest poll by the National Association of Homebuilders which indicates that home ownership is still a priority for Americans.

HUD SAYS HOME AFFORDABILITY HIGHEST SINCE 1971

According to the U.S. Department of Housing and Urban Development, home affordability is at levels not seen since 1971, due to record low mortgage rates and affordable home prices.

This record affordability is putting home ownership within reach of more and more Americans, housing predictor reports, and that home owners are bringing in nearly double the median income they need to cover the cost of an average home.

We could be in for a great 2012 as home sales have been increasing, according to recent reports by the NATIONAL ASSOCIATION OF REALTORS®, the National Association of Home Builders, as well as the Obama administration’s December Housing Scorecard.

OVERPRICED INSURANCE POLICIES

The New York State’s Department of Financial Services is investigating several big banks to determine if they illegally steered distressed home owners toward overpriced insurance policies, The New York Times reports.

The agency has found cases where large banks have steered distressed home owners into insurance policies up to 10 times as costly as the home owners’ original plans.

The agency is also investigating whether the banks showed conflicts of interest in offering customers home insurance policies that may have been affiliated with the banks rather than shopping for the best rate in the open market.

JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are among the major banks named in the investigation.

MORTGAGE SCAMMERS

During the past few years, scammers have been trying more and more to target delinquent borrowers, hoping to take advantage of their desire to keep their homes in an unfortunate situation.

Sheri Stuart, education manager at Springboard Nonprofit Consumer Counseling, says she often runs into people at courses offered by her organization who have been taken for a ride. Recently she gave REALTOR® magazine some tips on how to recognize a scam artist.

If they ask for money up front, if they present suspicious credentials, if they make promises and if they cold call you out of the blue, they might be a scammer.

If you’re concerned, you can always go to loanscamalert.org for more information and report scams.

So what’s behind the improvement? Lawrence Yun, Chief Economist for the NATIONAL ASSOCIATION OF REALTORS®, says that the trinity of job growth, record-low interest rates, and bargain prices are fueling consumer confidence. Mr. Yun believes that the trends we are seeing are typically indicative of a market in recovery.

NAR President Moe Veissi informs us that even more buyers are expected to benefit from the advantageous market conditions in 2012. Mr. Veissi also noted that the resurgence of home buying brings strong benefits to the overall economy as home purchases also stimulate the purchase of a many related goods and services.

One indicator of an obstacle to the housing recovery is the report by Freddie Mac that last month the average annual commitment rate for a 30 year fixed conventional mortgage nationally fell to a new record low of 3.96 percent, representing a 16 percent drop from December of 2010. These drops in commitments are occurring despite the fact that interest rates announced Thursday by Freddie Mac for a 30 year fixed mortgage rate hit a new all-time record low of 3.88percent, marking the seventh consecutive week below 4 percent.

Despite the increase in a lack of commitments from lenders, we’ve now got enough evidence accumulating over the past few months that we can say we’re definitely moving in the right direction as far as sales are concerned. One other indicator is that total housing inventory at the end of December fell more than 9 percent, continuing a trend where available homes for sale are moving towards a point of price stabilization.

Another measure of that tightening inventory is that there was only a little more than a SIX months’ supply of homes on the market in December, a healthy sign for sellers who, consequently, have less competition to deal with.

Finally, wrapping up a good report with a very quick look at regional figures, existing home sales rose more than 10 percent in the Northeast in December; more than 8 percent in the Midwest, almost 3 percent in the South, and over two and one half percent in the West.

The good news about the end of 2011 is a great omen of what could be a robust year for the housing market in 2012. We are certainly off to a great start. Naturally we’ll have all the data to keep you informed here on Real Estate Today.

And that’s important even if the neighbor is your best friend, and says, ‘hey, I don’t care…put that shed anywhere you like.’ Because if he ever sells – the next owner might just say – ‘take it down’.

There have been many cases of home owners who have had to remove sheds, tear down fences, garages, or even dig up pools because it was later discovered the items weren’t really in their yard. Even a few inches off may mean you’re over the line, which in legal terms is called ‘an encroachment ‘ and you may be forced to tear it out, relocate, and…pay every dime yourself.

Lenders and title insurers usually require you to get your property surveyed before purchasing a home. After all, lenders want to know what they’re lending money on, and title insurance companies want to know what they’re insuring.

Also, boundaries are important so you know what you’re responsible for maintaining –are those trees on your property, are they city-owned, or do they belong to your neighbor? If a tree falls down, who’s responsible for the costly removal? That’s important stuff, you need to know. And it all starts with the survey.

So how do you go about knowing where that property line really is?

Certainly, you can request a copy of your home’s land survey from your city’s clerk office or dig out that old plat of your home. These documents can be very detailed and sometimes complicated to understand. Plats reveal the shape and dimensions of your property and often times they’ll reveal where surveying pins originally may have been placed in the ground as boundary markers.

But over the years, those boundary markers can be hard to find, and things can change over time, renovations happen, easements are added. A past survey may only protect the previous owner of the property. Having a new survey done will protect you. Your new survey will reveal any encroachments that may have occurred, both by your neighbors AND by you…and allow you to plan accordingly — and legally — whenever you want to add something to your yard.

So hiring a professional surveyor to take a more formal account of your property is often viewed as the best, most accurate option. They will use precise measuring tools, mapping systems, and they’ll consult any old surveys completed on the property to assess your boundaries.

You can easily find a private land surveyor by checking your local phone book or doing an Internet search for property surveyors in your area. Property surveys need to be done by a surveyor who is licensed in the state where your home is located.

There are two main types of residential property surveys:

There’s something known as a “house location survey” — this is a very basic type of survey and typically is the least expensive option. It will reveal the location of the home and other large structures on the property. Many home buyers get this type of survey when they go to close on the sale of a home.

For a more detailed survey, you’ll want something called a boundary survey, also called a “cadastral [kuh-das-truh l] land survey.” These are the most common ones used in establishing boundaries, particularly to protect you against any disputes later on. This will include precise measuring and marking of your property, so there’s no question where your property ends and begins.

Property surveyors often will also show you easements on your land, such as power poles, drainage ditches, and utility boxes. Easements are important to note because it’s the area of land that you own but that other parties–like utility companies or the city — can have limited rights to use for a specific reason. Your city may have laws in place to prevent you from putting a structure, such as a pool or deck, within a certain distance of an easement, so they are important to note.

Surveys can be costly, anywhere from $300 to $1500, or more. Prices vary and often are determined by the size of your land, among other factors.

It may seem like a lot of trouble to go about getting a property surveyed, but as you can see, it’s a lot more important then you may ever realized. Having your property boundaries marked accurately can be important in knowing your precise acreage when calculating property taxes and your land’s value. And having a professional survey conducted of your property can be a safeguard to avoid trouble later on.

But most of all, it’s peace of mind. As you enjoy your piece of the American Dream, whether it’s the size of a postage stamp, or an entire zip code – it’s good to know it’s yours. Every square inch of it.

Of all the borrowers who defaulted on their mortgages in 2010, strategic defaults were estimated to account for 30 percent of them, an alarmingly high number–which continues to grow.

Trouble is, many people who walk away think – it’s all done. Finished. And that once they leave the old place, they can just get a new one, and enjoy a fresh start.

But unfortunately, many of them are learning it’s not that easy. And they’re shocked to learn they could go to court, or be sued, or face the biggest IRS tax bill of their lives!

So let’s try to separate the myths of strategic default – from the reality.

OK. Myth Number One: I can walk away from my old house, and just buy a new one.

Well, a strategic default is considered a foreclosure, which could make your credit score plunge hundreds of points. In fact, a foreclosure may take you seven years, maybe even more, to repair your credit score. And while it’s at an all-time low, it’ll be incredibly difficult to qualify for new credit, like with credit cards or a car loan. Even your auto insurance premiums can go up after a foreclosure–the fallout can be widespread. You also may find it difficult to even rent a home…since if you walked out on your mortgage, a landlord may think twice about renting a property to you.

As for getting another mortgage one day, you’re going to have a long time to wait. Fannie Mae has a policy that requires strategic defaulters to wait seven years before getting a new Fannie Mae-backed mortgage–which covers many mortgages out there. Freddie Mac–the other mortgage giant–says it won’t loan to strategic defaulters for five years.

Myth Number Two: if you walk away, the bank will take the hit – not you.

Well, that’s partly true. The bank WILL take the hit. But in many states, the bank will then come after you to get their money back. And I mean they’ll sue you in court.

In some states, lenders can come after borrowers who skip out on their mortgage and pursue them in court for the amount they owe. This is known as a deficiency judgment. Lenders can bring a legal case against you, possibly making you forfeit your future wages and empty out your bank account in order to pay the debt you owe.
It doesn’t happen in all states – but it might happen – in yours. Also, even the states that don’t allow deficiency judgments usually DO allow them for second mortgages, or home equity lines of credit. Plenty of people who walked away are shocked – when they get sued. Because again, they thought it would never happen.

Myth Number Three: The IRS won’t be a problem, and they won’t tax you on the default.

The reality is? Sometimes true – sometimes not. The IRS has specific rules for when they forgive a default, and when they don’t. In some very, very narrow cases, if your house was $100,000 underwater and you walked away – you might not have to pay taxes on that money. But – in many cases you do. For instance, if it was for a home equity loan and you spent the money on a couple of cars? The IRS might declare the hundred thousand to be taxable income, and you might have to pay federal income taxes on it. So you can see, it’s not always as easy, as just walking away.

Myth Number Four: Everybody’s doing it. So, why not me?

Well, let’s ask a question. Do you like your neighbors? Because the average foreclosure can decrease nearby property values up to SEVENTEEN-THOUSAND DOLLARS, according to a recent report from the Government Accountability Office. Those who walk away from their obligations not only hurt themselves, but also the neighbors left behind. So perhaps the better question is not, ‘do you like your neighbors,’ but rather…’will they still like YOU?’

So there you have it. Four myths about strategic default, and why it might not be as simple, as it sounds.

But here’s something that is not a myth: help is out there. Yep. For home owners struggling to make their mortgage payments, there are several places to turn for help–and every one of them is better than walking away.

First, talk to your lender. They may be able to do a loan modification to help decrease your monthly mortgage payments. Or in cases where there’s just no other way, a short sale or a deed-in-lieu of foreclosure — that’s when you hand your property over to the bank for resale — can be a better option. A lender would much rather work with you than have you walk away.

Also, if you’re unemployed, mortgage giants Fannie Mae and Freddie Mac recently announced an extension to an aid program for the unemployed. You may be eligible to get your mortgage payments suspended or greatly reduced for up to a year. It used to be six months.

And that’s not all. There are government programs, like the Home Affordable Modification Program. And there’s been recent changes to the Home Affordable Refinance Program, known as HARP, which are helping more home owners refinance their mortgages at today’s lower mortgage rates, without all the hassles of those big refinance fees. Mortgage rates have dropped considerably from just a few years ago, and you may be able to shave $200 off of your monthly payments by just refinancing.

We know it’s a brutal economy. And we know that for many American home owners, it’s extremely hard – just to hold on.

But here at Real Estate Today, we believe your home – your piece of the American Dream, is worth fighting for.

And whatever decisions you make, we want to help you make them with solid information, up-to-date strategies and all the facts you need.

And we want to make sure you never base one of the biggest decisions of your entire life – on a bunch of myths.

After all, if the information we provide can help even one home owner keep their house – even one – then 2012 will truly be the best year ever, for all of us here at Real Estate Today.