Lake Tahoe Summer Evenings

What do you have if you take one famous alpine lake, one legendary playwright and two months of balmy summer nights? The fabulous and enjoyable Lake Tahoe Shakespeare Festival! The 2009 season begins July 11th and runs through August 23rd. The Festival playbill typically includes two Shakespearean classics full of laughter, love, scheming scandal & dancing in the aisles! I’ve gotten many of my friends “hooked” on these performances because this is Shakespeare like you’ve NEVER seen Shakespeare done before! This season’s productions include Measure for Measure and Much Ado About Nothing. The Festival’s spectacular outdoor venue, a sand amphitheater located at Sand Harbor, uses Lake Tahoe as its stunning backdrop. Guests are welcome to pack their own picnic or dine on the variety of goodies offered at Shakespeare’s Kitchen. For more information and dates, please visit the website at http://www.laketahoeshakespeare.com/

If you enjoy beautiful music and exquisite scenery, you won’t want to miss the Lake Tahoe Music Festival’s amazing 27th season. The LTMF remains the largest summer cultural event benefiting our local communities and is a major attraction in the the West. This exciting concert series begins July 23rd and runs through August 8th. You can enjoy music of all genres including classical favorites, jazz, rock and Broadway while delighting in the surroundings of the Sierra Nevada and Lake Tahoe. Th e concerts take place at different venues including Homewood Mt. Resort, Tahoe Donner, Donner Lake and Old Greenwood in Truckee. Check out their website for dates and performances at http://www.tahoemusic.org/. Two favorties of mine this season will be Huey Lewis and the News on July 25th and Bozz Skaggs on August 1st!

This article appeared in the July/August issue of the Coldwell Banker E-Newsletter

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Mortgage Fraud Crackdown

Apparently, even in hard times, mortgage fraud remains an easy con.

The number of Suspicious Activity Reports (SARs) for mortgage fraud tracked by the Federal Bureau of Investigation could skyrocket by nearly 300 percent this year.

Compared to 2007, mortgage fraud SARs in 2008 had already increased by more than 36 percent to 63,000. But just two months into 2009, the FBI has already documented nearly 29,000 mortgage fraud SARs. At that rate, some 174,000 SARs,

• a 276 percent increase

• could be filed by the end of the year.

And that's only what the FBI can see.

"Many mortgage finance-related entities are either loosely or completely unregulated at the state or federal level," said FBI Director Robert Mueller in recent testimony before the U.S. Senate Appropriations panel.

The good news?

"The current financial crisis has produced an unexpected consequence. They have helped reveal numerous mortgage fraud schemes, Ponzi schemes, and investment frauds, such as the Bernard Madoff scam," Mueller testified.

But while the Feds are catching up with Wall Street crooks, struggling homeowners on Main Street remain common prey. Despite tougher lending standards putting the kibosh on some types of home loan scams, organized wise guys continue to traffic in mortgage fraud.

That's prompted the U.S. Department of the Treasury, the U.S. Department of Justice (DOJ), the Department of Housing and Urban Development (HUD), the Federal Trade Commission (FTC), and the Attorney General of Illinois to launch new initiatives to pump up fraud investigations and step up enforcement actions, especially to protect homeowners seeking relief from President Obama's Making Home Affordable initiative.

The effort particularly targets loan modification and mortgage fraud.

Mortgage fraud, a relatively new form of organized crime, first cashed in on the greed that came with the boom market, when some buyers would do anything to own a home • including lie on the application. Cons, often insiders, also falsified documents, inflated appraisals and used other underhanded techniques to get home loans approved and properties flipped for a hefty profit when appreciation was skyrocketing.

With the housing market bust, however, came stricter underwriting scrutiny which helped stem the tide of loans approved with fabricated information.

Now, mortgage fraud is taking advantage of vulnerable, gullible homeowners facing foreclosure. Like those who once fibbed to cash in on the booming market, many struggling homeowners are likewise willing to do anything to remain homeowners.

Mueller said today's host of sophisticated scams are associated with new loan modification services, foreclosure bailouts, equity grabs, bankruptcy, identity theft and property flipping, among others.

Bruce Hahn, president of the American Homeowners Foundation, a non-profit advocacy group in Washington, D.C. says it's tough to tell the good guys from the bad without a scorecard.

"Some loan modification services are competent, but some are incompetent and there is another group of people who post ads to help with mortgage problems, but are basically fraudsters and fronts," Hahn said.

The FTC recently surveyed online and print advertising for mortgage foreclosure rescue operations nationwide and identified approximately 71 distinct companies running suspicious ads.

It's clear homeowners, who want to avoid being taken by the new scammers must likewise become more sophisticated.

The experts advise:

• Don't be a rube. If it sounds too good to be true • it probably is. Debts, bad credit and other financial holes didn't appear over night. They won't magically disappear over night.

"A fair number of homeowners have actually paid someone money before they see us. They see us because they paid and the company didn't do anything for them," said Martin Eichner, director of housing counseling services for Project Sentinel in Northern California.

• Be wary of strangers and unsolicited contacts, as well as high-pressure sales techniques. Avoid spam come-ons and web-based advertisements promoting the elimination of mortgage loans for an up-front fee to prepare documents to satisfy the debt. Beware of offers to "save" you from defaulting on loan payments or from foreclosure.

"The most outrageous of these schemes are offers to take your mortgage payment and hold them for you in a trust account. That is a total rip off. Never give your mortgage payment to any third party," Eichner said.

• Attempts to cajole you into making false statements in the name of mortgage relief is a red flag. Likewise don't sign blank documents or those you don't understand.

• Seek out family, friends, co-workers and others you trust who recently successfully solved a mortgage problem. Ask them for referrals. That applies to loan modifications, work outs, restructuring and refinance efforts.

"I would say contact a U.S. Department of Housing and Urban Development, but you can't just say that. We can't help everybody who needs help (because of overwhelming demand). If you hire a for-profit service you should be paying money only if (and after) they are successful. If they are an attorney, contact the state bar. For mortgage brokers (and real estate agents) check with the California Department of Real Estate," Eichner added.

Hahn also says to contact city and county housing offices for assistance and referrals and the latest information on legal, government-sponsored assistance.

Get more help from the Making Home Affordable initiative.

This article appeared in Realty Times
Written by: Broderick Perkins, July 23, 2009

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No-Doc Loans Returning?

The undocumented income or no-doc loans got a bad reputation when the housing crisis occurred. Some borrowers who used the loans misstated and inflated their income, (some with the support from now out-of-business brokers). The loans thus became labeled, "liar loans". But experts say these types and other alternative loans may soon be making a comeback.

"There's little appetite for no-doc loans at this time," says Dustin Hobbs, spokesperson for the California Mortgage Bankers Association (CMBA). Hobbs spoke to me via telephone from the CMBA's 37th Annual Western Secondary Market Conference in San Francisco.

While Hobbs doesn't know exactly when these types of loans will return, he believes they will make a comeback. Some experts say they could return in six months. "There's definitely a segment of borrowers, that in some cases, this is the only product that will help them purchase a home. [The loans] will come back at some point; it's just a matter of how fast the economy turns around and how fast we get back to a period when lenders and investors are willing to take on some level of risk," says Hobbs.

The self-employed who are actually appropriately qualified are finding that getting a loan is a bit difficult. Hobbs says, "Don't give up hope." The no-doc loans "have been painted with a broad brush by the media and some political circles as being a nasty product but, as people who are self-employed know, it's the only product they can use to qualify," says Hobbs.

But some people can't wait for the no-doc loans. They need help now, Hobbs recommends this. "For folks unable to fully document their income and who are looking to purchase or re-finance soon, it's important that they go above and beyond to document and prove their credit-worthiness. They should provide contracts, bill payment history, and any tax information they have. The key is to be creative—be active in their attempt to convince their lender that they are a low-risk borrower, in spite of their inability to fully document their income." Some say the overcorrection to the lending industry has missed the real issue. According to Hobbs the elimination of a particular type of loan does not solve the problem. Various types of mortgages are needed to meet the needs of diverse borrowers. The real disaster occurred not because of one type of loan but instead because of a lack of accountability—the lender making the loan wasn't necessarily concerned if the loan defaulted because these risky mortgages were pushed off lenders' books and packaged up and sold to third parties.

President Obama's proposed plan to help overhaul the financial regulatory system would require lenders to retain a portion of the loans they originate. Hobbs says that those attending the conference know better days will come. "There is a lot more positive energy here than there probably will be at our commercial multi-family conference [coming up] in a few months. That sector is definitely hurting and probably will be for a few years," he says.

What's making the difference in the residential market? "The incentives for homebuyers has definitely helped and low rates have helped on the refinance side as well as some of the new programs that have been springing up at the national and state level," he says.

This article appeared in Realty Times
Written by: Phoebe Chongchua, July 17, 2009

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Your Lake Tahoe Retirement / Vacation Home: 10 Reasons To Buy NOW!!!

1. Market Statistics: Incline Village Since May, 2008 there have been between 600 and 700 properties available for sale including homes, townhomes, and condominiums. That is significantly more choices than in the 2000 to 2004 time frame. See the article in this newsletter labeled July 2009 Market Statistics for Incline Village for further information.

2. Bargains Bank Owned foreclosures, “short sales,” some very motivated sellers (over the decades this perfect storm of low interest rates, large supply of properties for sale, and bank foreclosures to drive down prices has never happened). Our past tendency was for a market driven by a limited supply of property for sale and an ever increasing demand from Californians seeking to escape California state income tax, either immediately or eventually in retirement.

3. Favorable interest rates to the qualified borrowers with provable income and good credit. Up to $417,000 conforming loans, generally available, attractive interest rates below 6%. Jumbo loans up to $2,000,000 are again available, but more expensive interest rates. Currently hovering 6.5% fixed rate.

4. Today’s buyers recognize that the prevailing consumer’s attitude is “wait and see”. This is the time for opportunistic buyers to take action. Ben Bernanke and President Obama and many others are saying, “There are green shoots (in the garden of recovery) appearing in the economy.” I heard of a 1031 exchanger buyer in the market. They are able to enter the market, because they can sell their current property. That is a sign of green shoots.

5. Local markets, Reno/Sparks as well as Incline Village and regional markets are reporting new open escrows are more numerous this May than May 2008. Individual prices are not rebounding, but total sales volumes are on the rise. That is typically the beginning of the turnaround.

6. It is always difficult to find a property that meets your needs and desires and your budget. If owning a vacation, retirement home, or leaving the city life for a mountain living experience is on your mind, now is when buyers are finding the best value/ cost equations in years.

7. Studies show that since the recession, people are getting back to values “calmer lifestyles,” “green, healthy living,” “activities with family and friends”. A Lake Tahoe get away matches the “values of the current generations” as well as the family traditions of so many families before them. The family that plays together stays together.

8. Because consumers are not spending, it is possible to get good contractors, painters, plumbers, electricians, etc. to provide repairs in a timely and cost effective basis. Now is the time to implement remodeling projects to older homes on great lots, in
terrific locations.


9. Quality of Life is amazing at Lake Tahoe. Now is the time to acquire that quality of life for yourself and your family. From the two private beaches, the $6,000,000 state of the art recreation center with Olympic size pool, two Robert Trent Jones designed 18 hole golf courses, tennis complex, hiking, skiing, bird watching, fantastic boating with a nice boat ramp, snowshoeing and cross country skiing. All topped with 24 hour life of the Hyatt Hotel providing restaurants, gaming, entertainment and banquet facilitates. Four season living in a small community setting.

10. Incline Village, and the state of Nevada, does not have state income tax, corporate income tax, lower property taxes, no estate taxes, no warehouse taxes, for those who can live here as their primary residence, a real tax haven from California, Arizona, and many western retirement states. For many tax wise retirees, Nevada is their accountant’s choice for primary residence.

This article appeared in the July/August issue of the Coldwell Banker E-Newsletter

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Boating In Lake Tahoe

Lake Tahoe is a Boater’s Paradise:

Without a doubt Lake Tahoe is one of the clearest, cleanest, deepest and most beautiful lakes in the United States. Did you know that Lake Tahoe is the highest and largest alpine lake in the U.S? Th e maximum depth of Lake Tahoe is 1,645 feet. Th ere are 71 miles of surrounding shoreline. Lake Tahoe is 22 miles long, 12 miles wide and has 39 trillion gallons of capacity. Most of my boating friends agree, boating on Lake Tahoe puts one in a peaceful serene environment, enhanced by the majestic mountains, no phones, no computers, and no stress.

If fun and excitement are on your agenda while visiting Lake Tahoe, there is a wonderful variety of marine activities from which to choose including driving your own personal watercraft to sailing, to kayaking, or jet skiing.

Incline Village Boat Launch is the only private boat launch on the North Side of the Lake. The IVGID pass that all home owners receive allows access to the several private beaches and the boat launch. You can rent a private boat from one of the many marina locations, or simply bring your own. We have many historic sites to visit by boat as well as many wonderful restaurants. It is great to take the boat over to the Hyatt for their Sunday brunch or mosey on over to Sunnyside for their great deep fried zucchini.

A beautiful trip to take is the Emerald bay cruise or the MS Dixie … They have many cruises departing throughout the day. The MS Dixie offers a great sunset dinner cruise with dancing. This is a wonderful way to relax and let someone else captain the boat. Tahoe offers many chartered excursions. We have sunset cruises, private cruises, historic Glenbrook breakfast cruises, or if you really want to pick up the pace, you can take a ride on the Tahoe Thunder.

Boating Safety:

There are many significant elements to think about when boating. BOATING IS SOMETHING TO TAKE VERY SERIOUSLY.

Wind:

Sudden, high gusty winds of sufficient intensity to capsize a small craft are not unusual in the basin. When the dark line appears down the lake, gusty winds are
moving in your direction. This can happen in a matter of minutes and is not something to take lightly.

Underwater Hazards:

The lake level is very low this year so you must be aware of underwater obstructions, such as rocks and old pilings which may be exposed or barely covered near shorelines.. Very hazardous areas of Lake Tahoe have been marked by the Coast Guard with red buoys.

Water Temperature:

The water temperature of the lake is very cold. Surface temperature is approximately 40 degrees during December through April. Summer temperatures may reach the upper 60’s near the shoreline. The boater must be prepared at all times for adverse wind conditions. The wearing of personal flotation devices by all passengers aboard and the use of wet suits for water skiing is highly recommended.

Warnings:

Please don’t overestimate your boating ability or underestimate the danger of some waterways. Before getting underway, be sure your craft is not overloaded and that you have a full tank of gas. Always make sure you have the drain plug in - wouldn’t want to sink the boat!

Water Quality:

No sewage or waste water can be discharged into the waters of Lake Tahoe. Gas tanks are not to be topped off. All boats are REQUIRED to place an oil absorbent sleeve in the boat’s bilge area. Boats should be washed only with biodegradable agents which contain no phosphates. All boaters must be aware of safe boating and environmental laws which govern the waters and realize the consequences associated with violations. It is always a great idea to take a class with the Coast Guard.

Inspections:

As of June 1st all boats will be inspected for invasive species. Before you launch your boat TRPA will be doing an inspection on your boat AT ALL BOAT RAMPS.

This article appeared in the July issue of the Coldwell Banker E-Newsletter

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NAR: Home Hunting without Fear

As any daredevil, extreme sports addict or adrenaline junkie knows, well-grounded preparation for the specific task at hand is what takes the fear out of trying.

The sometimes risky sport of home buying is no different.

Those who've suffered the agony of defeat in what's likely the most dangerous consumer game, learned the hard way that sheer fearlessness isn't enough to become and remain a homeowner -- through good times and bad.

With the rules of the housing game changed forever, preparing to just squeak by the home buying ordeal isn't enough to achieve a decisive and lasting victory.

The idea isn't just to buy a home. The goal is to keep your own roof over your head.

Preparation is key, according to the National Association of Realtors.

From NAR, here's how to get ready to be and remain a homeowner.

Create a wish list. Write down housing wants and needs. Include all the physical characteristics you want or need. Include style, size, layout and room configuration. Look at the number of bedrooms and bathrooms, and the basic amenities you must have. Include critical features such as location and services and a home's proximity to good schools or public transportation lines.

Browse for housing. Realtor.com and other Web sites offer home valuation features and neighborhood data on trends in local markets. Use features to determine how a listing compares with nearby, comparable properties in terms of value, actual sales prices, home features, neighborhood characteristics, and more.

Work with an expert. Finding a professional real estate agent who will represent your best interests can make the difference in location, negotiating the best offer, and closing the home of your dreams. Look for a full time real estate agent, who has uploaded telling photos and videos of their listings and look for agents with good Web sites to market your listing.

Get the complete picture before you visit. You can't know everything about a community from an online listing. Schools, crime, and proximity to shopping and work all impact property values. NAR says talk to a Realtor and go to Realtor.com to explore communities.

Make sure the property details are reliable. Buyers need know when a listing has experienced a price change. Look for Web sites like Realtor.com that updates listings frequently, including price changes. Fresh and reliable information is critical. Realtor.com time stamps listings to help buyers make better informed decisions. Get email alerts and stay on top of changes so you can be first to act.

Published in Realty Times
Written by Broderick Perkins
July 16, 2009

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Real Estate Outlook: Positive Signs Reported Again

With the stock market still jumpy and investors worried that the global recession may not be ending soon enough, it may seem a little surprising to see strong positive signs in the home real estate market.

But that's what's been happening.

Pending home sales rose sharply, by nearly 7 percent, in the latest month measured by the National Association of Realtors. Pending sales are those where the contracts are signed, but the deals haven't gone to settlement yet.

Pending sales were up in all four major regions of the country -- and that caught the attention of some key industry economists.

Orawin Velz, economic forecaster for the Mortgage Bankers Association, said in a commentary that "the steady improvements in pending home sales are encouraging," and confirm the view that existing home sales hit their cyclical bottom in January and are likely to continue to rise in the coming months.

Since the January low point, she noted, the Realtors' pending sale index is up by 13 percent.

Mortgage rates continue to be favorable, an average of 5.3 percent last week for 30 year fixed rate loans, 4. 8 percent for 15 year fixed, and those rates are pulling in growing numbers of home purchase loan applications.

According to the Mortgage Bankers Association's weekly survey, new applications to buy houses increased by nearly 7 percent in the week ending July 3rd.

Meanwhile a new survey by the California Association of Realtors found sales up in most parts of the state, especially in areas hard hit by price busts following the boom.

More than two out of three buyers polled by the group -- 68 percent -- said affordable prices are the key factor pulling them off the sidelines.

Now, of course, not everything is on the plus side in the real estate sector. Many of the houses being sold at near-giveaway prices are the byproducts of foreclosures and short sales, signs of continuing financial distress among many buyers who purchased at the height of the boom with low equity stakes.

Even the rental market is taking some economic hits in the face of rising home sales. Rental unit vacancies have just hit 7.5 percent nationwide; that's the highest they've been in 22 years, according to the New York research firm that compiles these statistics.

So on balance, real estate market conditions depend on where you're looking.

If it's home sales, the outlook is improving. On rentals, it looks like the turnaround will be a little further down the road.

This article was published in Realty Times
Written by: Kenneth R. Harney

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REALTY GURU DAN JACUZZI CONTINUES PROPERTIES SEARCH

Dan Jacuzzi isn’t done buying residential real estate brokerages in northern Nevada.

Jacuzzi, whose The Select Group rolled up 12 real estate offices in Reno and Tahoe late last year, then bought five at Lake Tahoe from Dickson Realty, continues to shop for more brokerages in the region, says one of his executives.

Before The Select Group is done, it likely will run residen­tial brokerages with about 300 agents in Reno and Sparks, says Fred McElroy, a managing broker for Coldwell Banker Select Real Estate in Reno.

McElroy says The Select Group has offers pending to acquire several Reno-area bro­kerages that he described as “strong players” with signifi­cant forces of sales agents.

Currently, the company has about 200 agents in its Reno offices and another 80 at Lake Tahoe. With 300 agents, Coldwell Banker Select Real Estate would be approaching the size of Dickson Realty, which recently reported 375 agents.

The Select Group also includes residential brokerages operating under the Century 21 and ERA flag in the Sacramento area as well as a commercial real estate opera­tion, a referral system, a mort­gage company and a real estate school. Jacuzzi is posi­tioning The Select Group to take advantage of a market rebound, McElroy says.

“There are people who are struggling to make ends meet, and he’s got a system that works,” he said.

That system includes innova­tive technology — an iPhone application that quickly delivers information about new listings, for instance — as well as struc­tured approaches that boost the closing rate on short-sale trans­actions to twice the national average.
Equally important, Jacuzzi has said, are the economies of scale that arise when overhead costs are spread across larger operations.

The Select Group arrived in the Reno-Sparks market last fall with the acquisition of 12 offices — Coldwell Banker Incline Village, Century 21 Tahoe Pines at Stateline, Century 21 Goldcrest Properties in Reno, Century 21 Mountain Properties in Reno and Incline Village, and Coldwell Banker Village Realty’s seven locations. It quickly consolidated those 12 offices into four.

When the company bought Lake Tahoe offices from Dickson, it consolidated five locations into three.

Ron Hoy, who previously owned Goldcrest Properties, is general manager of the Reno-Tahoe operations and a part­ner in The Select Group.

Along with McElroy, who serves as bro­ker and manager of the company’s Galena office, other managers include Mark Sykes, broker manager of its McCarran office; Ken Amundson, broker manager of its Sparks office; and Michael Specchio, broker manager of its Fernley office.

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The Loan Modification Debacle

In an article written by Ms. Podmolik that appeared in the Business section of the Chicago Tribune, I guarantee you the only real point in this story was missed by 98% of those who read it. In following the attempts of a couple individuals who have been trying in vain to have their loans modified, it's easy to see that banks are frustrating matters by their lack of motivation in pursuing a loan modification that would allow the borrowers to stay in their homes. Like all loan modification attempts, it seems like the banks just don't know how to get out of their own way as honest homeowners attempt to keep their homes.

The problem here is a simple one. First, banks are awash in procedural folly, a check and balance system that is way over cautious, and doomed to self regulate to a degree that they’ve begun to operate more like inefficient governmental agencies than private sector corporations. While I hate the way banks are doing business, I do not blame them for their lack of efficiency or motivation in dealing with loan modifications, because there's a very hard truth that most of us just don't understand... Your bank doesn't want to modify your loan.

Your bank is like your brother. You're 8 and he's 10. He calls you a name, so you punch him, your mom, always looking for reasons to blame you for the strife, tells you to apologize to your brother. You know it was his fault for starting the trouble, but you apologize, with an under the breath "sorry" while you storm into your room for an afternoon of playing with the 1986 style Transformers. You're the bank. The bank feels slighted in this process, but has been told by a tweed-jacket-with-leather-elblow-patches-wearing Obama that they should be granting these modifications, so the bank gives a have hearted attempt at the loan modification that it's being forced into by the socialist Federalies.

Whether or not your bank has a nice little section on their website regarding the "Hope for Homeowners Act", or some warm hearted story about how they're helping millions of homeowners avoid foreclosure and stay in their homes, be sure you know this. The bank doesn't want to modify your loan, not in the least bit.

Think about it from the bank's point of view. They agree to eat some past due payments, rework your loan to lower your rate, and then send you on your way. They spend real money doing this modification, both in legal fees and in lost time by their employees. Banks are over burdened, slow moving creatures that have a hard enough time just walking in a straight line, and now you want them to do a front flip and stick the landing?

The bank doesn't want to modify your loan because they know the odds are that it just isn't going to help, and for that claim, they have statistics on their side. According to a study by Barclay's, "current loans receiving rate modifications will experience a 62% redefault rate; while delinquent loans receiving rate modifications will experience an 83% redefault rate." If you're in trouble with your loan, the bank knows that if they don't modify your loan, you default. But they also know that if they do spend time and money modifying the loan, you'll also default. The result is the same to them, but one option requires more energy on their behalf and increased the amount of money they're going to lose off of the troubled homeowner.

You see now why the banks don't want to waste time and money modifying a loan that is statistically doomed even after the modification? In spite of these realities, Obama and friends continue to think this is the answer to our housing crisis. It's no wonder a bunch of academics from Harvard who boast a combined real estate resume roughly the size of the fingernail on my pinky can't figure out how to fix this mess.

The free market is moving towards a resolution, but every bit of Obama intervention, outside of the Mortgage Backed Securities purchases that are keeping mortgage rates artificially low, is only getting in the way of recovery. Let the banks ignore modification attempts, and although it's cruel, it will indeed speed up our housing recovery. Why Obama doesn't understand that is beyond me, and is further proof that the principles guiding this administration are feel good principles that prove an easy sell to a simple minded public, but have little statistical proof to back them up. I believe that's called hot air, but in this case, it's really, really expensive hot air.

Published in Realty Times
Written by David Curry
July 9, 2009

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Starts Are Up Again

The most bearish of Wall Street economic analysts have made the same point for the past 18 months. There's no recovery or rebound in the housing market, they said, until home builders start building again.

"Show us positive numbers on new home starts for a few months," they say, "and then we will we agree that the housing market has finally turned around."

Hey there bears, here are the numbers you asked for: The end of last month, the Commerce Department reported an unexpectedly large increase in new single family home starts during May - up by seven and a half percent.

That was the third consecutive monthly gain in single family starts. Total starts, including multifamily apartment starts and condos, were up by 17 and a half percent.

Not only were starts up a lot, but so were other key indicators of future home building activity: single family permits, which surged by about 8 percent. That was the second straight monthly gain in permits - and points to at least moderately higher starts in the coming six months to a year.

On top of the good news about new construction, which has clearly been the weakest segment of the housing market since 2007, we also got some other positive reports last week:

Consumer confidence, which is extremely important for home buying, was up again for the fourth consecutive month, according to the University of Michigan's consumer sentiment survey.


Even retail sales were up slightly -- and that's an important sign that people are slowly coming out of the shell they've been in since last Fall, and are now starting to spend money again.

The latest inflation readings -- both the Consumer Price Index and the Producer Price Index -- were down slightly in May. Despite rising gas price, a dollar bought a little more in goods and services last month than the month before. That's good.

The National Association of Home Builders now projects that the current recession will end in the second half of 2009, with a one point five percent growth rate in the overall economy between July and December.

Finally, mortgage rates took a slight dip after several weeks of increases. Fixed thirty year rates averaged about 5.5 percent last week, according to the Mortgage Bankers Association, after climbing to 5.6 percent the previous week.

Many lenders had actually been quoting much higher rates - all the way to 6 percent - because of inflation fears in the bond market.

We've definitely got to keep our eye on mortgage rates, but otherwise the rebound appears to be underway.

This article was published in Realty Times
Written by: Kenneth R. Harney

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June Round Up: Rates Mostly Flat

In Freddie Mac's results of its Primary Mortgage Market Survey® (PMMS), the 30-year fixed-rate mortgage (FRM) averaged 5.42 percent with an average 0.7 point for the week ending June 25, 2009, up from the previous week when it averaged 5.38 percent. Last year at this time, the 30-year FRM averaged 6.45 percent.

The 15-year FRM this week averaged 4.87 percent with an average 0.7 point, down from the previous week when it averaged 4.89 percent. A year ago at this time, the 15-year FRM averaged 6.04 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.99 percent this week, with an average 0.7 point, up from the previous week when it averaged 4.97 percent. A year ago, the 5-year ARM averaged 5.99 percent. One-year Treasury-indexed ARMs averaged 4.93 percent this week with an average 0.7 point, down from the previous week when it averaged 4.95 percent. At this time last year, the 1-year ARM averaged 5.27 percent.

"Mixed economic reports on the state of the housing market helped hold mortgage rates fairly flat," said Frank Nothaft, Freddie Mac vice president and chief economist. "Existing home sales rose for the second consecutive month in May by 2.4 percent, slightly less than the market consensus forecast; however the median sales price was 16.8 percent below that of the same time last year, according to the National Association of Realtors® (NAR). In contrast, new home sales fell 0.6 percent and the median sales price was only 3.4 percent lower than May 2008.

"On a more positive note, the inventory of unsold homes has lessened from a year ago, which may help cushion further house price declines. The number of existing homes for sale was 15.3 percent below that of May 2008, and new homes for sale fell by 35.9 percent. In addition, distressed properties accounted for only about one-third of existing home sales in May, down from over a half in March, according to the NAR."

Existing-Home Sales Continue to Rise

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66 million units in April. Sales remained 3.6 percent below the 4.95 million-unit pace in May 2008.

Lawrence Yun, NAR chief economist, expected an improvement in sales.

"Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates," Yun says. "First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory.

How to Respond to Appraisals That Miss the Mark

What can be done if a home appraisal comes in dramatically lower than the agreed-upon sale price?

Lenders will consider an appeal, but sellers must provide them with evidence.

Start by examining the appraisal carefully for errors. If the appraiser missed one of the bathrooms, miscalculated the square footage, or didn’t note the garage, the seller has grounds for an appeal.

Look at the comparables: Is the home used as a comparison in a different and more challenged school district? Is the comparable next door to something undesirable? If possible, pull some more realistic comps.

How to Find Cash in a Second Home

Second homes are a tougher sell during an economic slump when people are reluctant to buy first homes.

Owners who discover their vacation homes have become a financial burden can find ways to generate income from their properties, say real estate professionals with experience in making second homes pay off.

Here are some of their suggestions:

1. An owner can rent out a property for two weeks without paying taxes on the income. If there is an annual cultural activity, like a film festival, it can provide a good opportunity to make significant money.

2. Concentrate on renting properties profitably. An effective do-it-yourself Internet rental campaign can cost less than $500 and yield thousands in return. One option is to put an ad on VRBO.com which is the Web site for Vacation Rentals by Owner.

3. Donate a week or two stay at your vacation home to charity and then take a tax deduction for the gift. VacationHomesforCharity.com will help identify the right value.

4. Donate the whole property to charity. The owner can maintain a life estate which is the right to live in the house until death.

5. Appeal property taxes. Municipalities are recognizing that some assessments are out of whack and will adjust them.

This article was published in Realty Times
Written by: Realty Times Staff

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Reshaping Fannie and Freddie

Congress took its first step last month on a mission that could totally reshape the American mortgage market.

A House financial services subcommittee held the first hearing on what to do with Fannie Mae and Freddie Mac -- the failed, trillion-dollar mortgage giants that are now operating under direct federal control.

The ultimate answers are likely to determine the types of loans and interest rates that home buyers will have in the future. That's because Fannie and Freddie have dominated the real estate market for decades, writing the rulebook on everything from loan sizes, credit requirements, down payments and underwriting standards.

Among the idea floated at last week's Capitol Hill hearing were a "utility" concept, where Fannie and Freddie might be merged into a single, privately-owned, federally-regulated superstore for mortgage money.

The model would be along the lines of the water, power and sewage utilities we see all over the country, but there'd just be one mega-utility to fund mortgages. The utility concept was first proposed last year by former Treasury Secretary Hank Paulson. The Obama Administration has not spoken out publicly on it yet.

Another idea floated at the hearing was to broaden the mortgage menus of whatever agency or agencies replace Fannie and Freddie to include types of mortgages they currently can't touch -- especially jumbo home loans and commercial real estate mortgages.

Frances Martinez Myers, representing the National Association of Realtors, said jumbos and commercial real estate loans are suffering in the credit crunch and need more support.

Commercial and investment property owners in particular, said Myers, find themselves unable to refinance because there is neither a private nor public secondary market for their loans at the moment.

The Mortgage Bankers Association came to the hearing with a white paper listing various alternative futures for Fannie and Freddie, including turning them into a government-owned version of the FHA and Ginnie Mae, but targeted on conventional mortgages.

Without endorsing any particular alternative, the MBA also suggested consideration be given to a private "cooperative" model, in which banks and other mortgage industry players would pool their assets and provide secondary market services in addition to mortgage origination's.
Under this scenario, the federal government would provide back-up insurance against "catastrophic losses" that exceed the private cooperative's capital and pledged assets.

Where's the debate over Fannie and Freddie headed? Look for Congress to hold more exploratory hearings this year. Then, maybe as early as next year if the recession is over and the market is healthier , the Obama administration might begin drafting its preferred solution - which almost certainly will not involve total privatization.

This article was published in Realty Times
Written by Kenneth R. Harney

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The Contract Offer: What Price to Start With

When a decision is made to make an offer to purchase a home, be sure to go back and take a second look. It is so much easier changing your mind about a home before a contract offer is made than after a contract offer is accepted and signed by the seller. This second appointment would be a perfect time to bring along others who may have an impact on a buying decision, such as parents, friend, contractor, etc.

Go through the home a second time and look beyond the owner’s décor, whether it was the home just previewed, the first one seen earlier in the day or the one previewed last week. Why? There are many reasons, but most importantly is seeing if the second look creates the same good feeling as the first, and then taking a closer look to see if there are aspects of the home missed during the first preview which may alter the decision to submit a contract offer.

So what is the right price to start with?

That depends on a number of things, such as the risk of losing the home to another buyer, how close to market value the seller’s asking price is and what is the maximum price willing to be paid for the home.

Even though the current market is considered a buyer’s market, there are many properties on the market for sale where the listing price is at, or very near market value, and where price negotiation will not be as great as other properties on the market that are priced well above market value.

In fact, don’t be surprised to find that there are multiple offers being submitted and negotiated. This does occur, more often than most buyers imagine, and it happens when a seller prices their home to sell and sets a very attractive list price to attract buyers and sell fast.

When negotiating a real estate purchase offer, the seller wants to sell at the highest price and the buyer wants to buy at the lowest price! The reality is that a home will sell for what is worth, whether a seller is looking to get more or a buyer wants to pay less. Contract negotiation is all about getting agreement.

Often overlooked by home buyers at this point in the home buying process is the experience and value of your REALTOR® in the contract negotiating process. In preparing to make a contract offer, a buyer needs to obtain as much information as possible, and much of that information will be provided by their agent.

This is the point in time when buyers need to have trust in their REALTOR when asking for recommendations and guidance. The truth of the matter is that this is the point in time when the buyer must know and believe that their agent’s concerns are for them.

The buyer should obtain a sellers disclosure if one is available and obtain additional background information about the home, such as the sellers desired closing time frame, if any offers were previously submitted or if a contract offer is currently being negotiated. This is information buyers should have when preparing to make a contract offer. Information like this is invaluable when deciding what price to offer and how to negotiate when submitting a contract offer.

So how does a buyer start negotiating to purchase a home?

That depends on the home. There are homes on the market for sale that are simply over priced, some slightly over priced, and then there are those listings that are priced to sell. There are home sellers who are pricing their home at three year ago price levels and will sell only if they get their price, there are sellers who must sell within a certain time frame and there are sellers who just have to sell.

In contract negotiations, one size does not fit all.

While there are many homes on the market, only one buyer gets to own the home in contract negotiations. A home buyer needs to decide how much they want a specific home and at what price!

Written by David Fialk / Realty Times

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