Additional Topics

Summary of Housing and Economic Recovery Act of 2008

This Bill may help those after 10-1-08 that “may” get behind in their mortgage payments, but it will depend on a lenders’ decision to write of the portion of loan that FHA doesn’t pay. Right now, it means 10% of what the house is worth (whatever that means – appraisal, market value, etc). So if the lender doesn’t want to write this off before they get paid for 90% of the home’s value, nobody gets help. Plus, it raises to 3.5% from 3.0% required down payment for FHA loans. It also eliminates down-payment assistance mortgages (they are twice as likely to default), but will exclude more Buyers from the market. Also, it provides a tax credit (money back – non interest repayable loan from Uncle Sam) of 10% of property purchase price up to $7,500 that must be paid back within 15 years (i.e., 15 year advance/loan) – or at point of sale of property before that. So with all lending standards getting tighter, interest rates rising, 100% loans disappearing, falling property values in some areas, increased FHA loan down-payment requirements, more foreclosures on the market, repayable tax credit (loan), and other negative issues – is it any wonder why first time homebuyers are confused and nervous? If I were a first time homebuyer, I look at the possibility of buying a home this year that falls in price next year and if I had to sell the home in next 3 years, I may have to pay money to move. Not the most desirable position is it?Various news articles/information and observations

GOVERNMENT FIX TO SUBPRIME MESS

Government proposals to help about 600,000 homeowners who originated Adjustable Rate Mortgages (ARMs) between 1/1/205 and 7/31/2007 include either:

• Freeze the current interest rates of mortgage for five (5) years, or
  
• Credit counselor will help borrower refinance
  

NOTE 1: This applies if borrower has FICO score below 660; still current on mortgage payments; and when rate resets, borrower can’t afford new monthly payments.

NOTE 2: This proposal won’t help those borrowers:

• Currently in foreclosure;
  
• Delinquent on monthly payments for > 60 days;
  
• Already refinanced mortgage;
  
• Able to afford the higher monthly payment; or
  
• FICO Credit Scores above 660
  

Some WSJ and other articles

MORTGAGE CRISIS SUMMARY

Nationwide home prices are falling (up to 10% drop nationwide, but rising in Metro Atlanta). Interest rate on ½ of 1.2 million Adjustable Rate Mortgages (ARMs) are about to jump (adding several hundred dollars per month), and all this could result in $500 billion of foreclosures in 2008. I have seen the real possibility of 600,000 "additional" foreclosures from these ARMs in 2008. That would mean more inventory/more choices and more downward pressure on home prices. This is better for buyers, worse for sellers who need to sell their homes. Why this situation exists? Investors bought loans (investment pools) that were rated good and they thought they didn’t have too much risk. But the bond rating companies and many lenders knew better but still sold them anyway to make money. Lots of homebuyers jumped at the affordability of low interest rates and many lied or planned that rates would rise before they unloaded their homes and then home prices fell. These homeowners couldn’t flip or refinance their loan before the ARM interest rates jumped. Once the rates wet up (ergo – monthly mortgage payments rose), lots of people stopped paying their mortgages.

Investment Pool - There are over 11,000 mortgage related investment pools with 100’s up to 1,000’s of investors looking for rate of return. Many of these pools are repackaging into Collateralized Debt Obligations (CDOs) or Structured Investment Vehicles (SIVs).

About 55% of all subprime mortgages in 2005 (61% in 2006) were from people with good credit. Many borrowers were betting on refinancing their homes in 2 years before rate edged up. But the sudden decline in prices curtailed refinances. Almost 80% of subprime mortgage homebuyers are current (which means 20%, or 1.2 million homeowners are delinquent). Many of the subprime loans were made without income verification/documentation and were investors, speculators, and first-time homeowners planning to turn properties in a short period of time.

Various news articles/information and observations



ATTENTION - FOR THOSE HOMEOWNERS THINKING FORECLOSURE IS THE ONLY OPTION - CONSIDER THESE OPTIONS!

Housing & Urban Development (HUD)Department of the U.S. Government has instituted a new program to help those with good credit history who have adjustable rate loans resetting in the near future. FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.

Neighborhood Assistance Corporation of America (NACA). NACA has established the Home Save Program to provide hope and assistance for homeowners with unaffordable loans who are at risk of losing their homes (is not available to investors or people not occupying their home).

If you are behind on your mortgage, an ACORN Housing counselor may help you stay there and make your loan current. Our HELP program has established relationships with lenders to better serve their clients in getting their loans out of foreclosure. They helped out with repayment plans, forbearance plans, loan modifications, refinances and partial claims. Some owners kept equity that they built in their homes!!!
ACORN Housing's mortgage delinquency counselors are ready to review your situation to find out if you would be suitable for a resolution. Contact their toll free HELP line today at 888-409-3557 or download their intake form and fax it to 312-235-4995.

HUD's FHA Secure plan for Homeowners in trouble

HOMEOWNERS IN TROUBLE OF LOSING THEIR HOME- CLICK HERE FOR NACA

HOMEOWNERS IN TROUBLE OF LOSING THEIR HOME- CLICK HERE FOR ACORN

ATTENTION - AFFORDABLE HOUSING FOR FIRST TIME HOMEBUYERS - FOR THOSE HOMEOWNERS THINKING OF MOVING INTO CERTAIN CITIES OF THE METRO AREA- PAY ATTENTION TO THESE OPTIONS!
There are several programs for low income, first time homebuyers in the Atlanta area. Here are but a few that I know about:

Cobb Housing, Inc. - Covers Cobb and Cherokee counties.

Atlanta Development Authority - Covers Atlanta City limits - If you are planning to live in certain areas of the Atlanta Metropolis, you may be eligible for 20% down payment assistance in the form of a forgivable loan, or receive other down payment assistance if you qualify.

Dekalb County - Covers Dekalb County areas - If you are planning to live in certain areas of Dekalb County, contact the Dekalb County Community Development Department.

State of Georgia has a program called the Georgia Dream Homeownership Program for people with limited incomes - This has coverage for counties in Georgia outside Atlanta Metro Area.

CLICK HERE FOR COBB COUNTY HOMES AND PROGAMS

CLICK HERE FOR CITY OF ATLANTA PROGRAMS

CLICK HERE FOR DEKALB COUNTY PROGRAMS

CLICK HERE FO Georgia Dream Program for the State of Georgia






ATTENTION INVESTORS - Go to my Investor Corner

Investors are certainly licking their chops over the potential billions of dollars of real estate about to foreclose due to the eminent wave of foreclosures of Sub Prime Loans...stay tuned for more information.

INVESTORS - CLICK HERE TO VISIT THE INVESTORS CORNER



WHAT's HAPPENING NOW
My take from articles: "Long term outlook is ok, short term prices are down which makes it a good time to purchase between now and the end of 2008." Articles reflected that there are about 15% more homes on the market now as there were last year at this time...average price change is up 1.2%...continued pressures on home prices through 2008..lenders are getting stricter on loan guidelines.WJS Articles - 10-25-07, Pages D3 & D3


Foreclosures; Short-sales; and REO's in Georgia

Foreclosures: When the homeowner misses a mortgage payment, the lender may immediately file for foreclosure or may wait another payment to start the foreclosure process. In Georgia, the lender files a Notice of Default that begins the foreclosure process. After 4 weeks of notice of foreclosure in the newspaper of record for the appropriate county, the property is then placed for sale on the appropriate county's courthouse steps on the first Tuesday in the month following the fourth week. This may mean the property has at least three months of unpaid mortgage payments that need to be covered by purchase.---Pros: Foreclosure wipes out secondary loans and may be a good deal---Cons: May not be a good deal because mortgage, back mortgage payments an property taxes, and lender legal and associated costs must be paid.

Short sales: If the foreclosure process is started, but the property hasn't been sold at auction on the county's courthouse steps, lenders can take less than what is owed and their costs just to get rid of the real property.---Pros: Maybe even a better deal than at the courthouse steps---Cons: Still obligated to pay off all mortgages including secondary mortgages.

Roe’s: If the property isn't sold at the foreclosure auction on the courthouse steps, the primary lender retains ownership of the property and will then seek the help of a realtor to assist the marketing of the property.---Pros: All secondary mortgages are wiped out---Cons: House may be repaired and may be marketed at a higher asking price.

===>other former general discussions and experience



SAVE WATER - AVOID WASTING WATER
We all use water that goes down the drain and may take weeks to be treated and flow back through our pipes. Here are ways you can reduce the water you use and still live a comfortable lifestyle.
HERE ARE WAYS YOU CAN REDUCE WASTING WATER



Reverse Mortgages
Basically, people who own their homes and are over 62 may borrow against their equity in a lump sum, periodic withdrawals, or lines of credit and don't have to pay it back until the person dies. Two concerns: (1) Index used will determine interest rate and (2) Upfront fees may amount to 2-7% of the borrowed amount.
Pick any newspaper



SUBPRIME & ALT-A LOANS
Subprime loans to very risky borrowers---Alt-A loans are normally large loans that have a slight issue with one factor away from Prime borrowers....Get ready for the new buzzword in real estate instead of location-location-location=======>foreclosures!----foreclosures!----foreclosures!.
Pick any newspaper



Condo sales ahead of last year - fewer single family homes sold
The Atlanta metro area condominium sales in 2006 as of end of November is approximately 4,961 units which are more than 2005 entire year's sale of condos.
FMLS database



Mortgage Forgiveness Debt Relief Act 2007
Before this law, if a lender forgives a portion of the mortgage in lieu of a foreclosure (or foreclosure or short sale) proceeding, the amount forgiven was taxed...Wow, what a slap. Now, this amount forgiven, will not be taxed.
Realtor.org - 12-21-07



JANUARY 2008 – Atlanta Housing Price Direction
There was an increase of 13% in total housing inventory from a year ago; 11 month supply of homes exists (# of months supply of existing homes would last at 2007 sales rate); and prices on average fell 0.7% (based on Oct 2006 to Oct 2007 sales prices).
Wall Street Journal - Page D4 - 1-24-08


DECEMBER 2007 – NEW FICO 08 CREDIT SCORE
Fair Isaac (maker of the FICO score) plans to release a new calculated FICO score for everyone with credit history to more accurately predict borrower default on all types of loans. Sores are still to range from 300-850. Consumers with low risk now will score better under this new FICO score. Those who are high risk will be even riskier. FICO 08 plans to award relatively higher scores to those with different types of loans (cars, homes, or credit cards).
Wall Street Journal - Page D1 - 12-19-07



NOVEMBER 2007 – Tenants Pay as Landlords Default
Many people who are renting are being evicted due to house/condo/apartment owners missing mortgage payments and once properties are foreclosed, the lease is void. There are thousands of people in the U.S. who have been evicted because the rental property loan has been foreclosed.
Wall Street Journal - Page A2 - 11-23-07



NOVEMBER 2007 – Mortgage Giant Fuels Worries with Steep Loss
Freddie Mac (FHLMC) and Fannie Mae (FNMA) are U.S. Government sponsored companies, who get fees for guaranteeing mortgages (and reimburse losses of holders of their securities upon loan default - i.e., foreclosure), and are designed to purchase mortgages in what is called the "secondary market" and guarantee mortgages. They currently hold or guarantee about $5 TRILLION in home loans (about 50% of total U.S. home loans). The issues here are (1) Freddie Mac is running a $2.0+ BILLION loss. (2) OFTHEO has imposed a capital "surcharge" of 30% above minimum required capital requirements due to financial reporting delays (3) There have been reports of historical poor management and restatement of financial earnings.
Wall Street Journal - Page A1 - 11-21-07



NOVEMBER 2007 – U.S. House Passes Bill Curbing Mortgage Brokers
The House passed a bill that would tighten regulations over mortgage brokers and bank loan officers including preventing them from "steering" borrowers into higher cost loans they might be unable to repay. However, the Senate Banking Committee approved a bill to increase the maximum loan amount to $417,000 and lower the down payment to 1.5% of loan amount from the traditional 3% (which I think is a mistake as well).
Wall Street Journal - Page A2 - 11-16-07



NOVEMBER 2007 – Some Mortgage Bailouts Make Sense
Article mentioned a prospective "tidal wave of foreclosures" coming soon unless something significant happens. Lenders and investors renegotiating mortgages may work better than foreclosure since it may cost lenders 40-50% of loan defaulted and a home's value may drop by as much as 20% in six months.
Wall Street Journal - Page A2 - 11-15-07



NOVEMBER 2007 – Lenders Tighten Lending Standards
In the prime mortgage (i.e., good credit) and jumbo mortgage loan (i.e., currently over $417,000) markets, lenders are seeing reduced secondary market liquidity and lower risk acceptance and are looking more closely and documenting more specifics on loans.
Wall Street Journal - Page A2 - 11-6-07



NOVEMBER 2007 – Mortgage Insurers' Pain
In the sub-prime and prime mortgage default environment of today, those companies who insure mortgage loan loses are experiencing a large number of claims that are at time reaching 35% of the loan amount. Also, James Brender, a Standard & Poors director, estimates the housing downturn to end around the 3Q08 timeframe.
Wall Street Journal - Page B8 - 10-23-07



OCTOBER 2007 – U.S. House Approves Tax Relief for Homeowners
Normally, if you and a mortgage lender agree to restructure your home loan and it involves forgiveness of some portion of mortgage debt, then that portion is considered taxable income...(My opinion..another reason to implement the Fair Tax-National Retail Sales Tax)...The U.S. House has passed a bill (The U.S. Senate hasn't passed similar legislation yet)...that would allow the forgiven debt to be excluded from taxable income.
Wall Street Journal - Page A8 - 10-5-07



OCTOBER 2007 – Democrats Propose Mortgage Aid
Barney Frank proposes Fannie Mae & Freddie Mac (both under scrutiny for financial problems) should be permitted to raise their caps on loan amounts they can purchase (MISTAKE!). About $600 BILLION in adjustable rate subprime loans are fixin' to reset in 2008.(WOW!) The White House/Administration is looking for the private mortgage industry to help fix the problem they created.(AMEN!)
Wall Street Journal - Page A5 - 10-4-07



OCTOBER 2007 – Lenders May require higher credit scores
Basically, 35% of your credit score is from your payment history; 30% based on balances owed; 15% from length of credit history; 10% on type of credit; and 10% on credit inquiries and recent accounts. Missing payments can mean a "big" difference in scores...You may raise your credit score through certain behavior.
Wall Street Journal - 9-23-07 - Page D3



SEPTEMBER 2007 – Want to know what areas ASHI home inspections inspect?
The ASHI Virtual Home Inspection Tour is available at this link - Take a look at a professional home inspection summary and what systems/areas of the home are inspected and identification of common problems discovered during the home inspection.
CLICK HERE FOR VIRTUAL TOUR OF AN ASHI HOME INSPECTION


SEPTEMBER 2007 – Bush wants to expand mortgage disclosures
HUD thinks the closing process is confusing to people and plans to simplify things and change the standard format of the Good Faith Estimate requiring more detail of mortgage fees and compensation and loan terms.
Wall Street Journal - 9-20-07 - Page D3



AUGUST 2007 – Do Not Panic or believe there will be a great depression
Foreclosures will increase, builders going under, continued pressure downward on home prices overall, company closings & job losses in the mortgage industry, and sudden evaporation of Wall Street investors of Subprime and ALT-A loan paper, but remember - the free market system has a self-adjustment mechanism and we do not need the U.S. Government involved. Let's allow the free market system work this out. The people who acquired loans at extremely low rates shouldn’t have believed they were getting a better deal than anyone else. Interest rates as low as 1.5% were teasers and not intended to be 30 year fixed rates. Yes, unscrupulous mortgage lenders existed and will continue to exist but there is still the decision by someone to be responsible. The remaining lenders will acquire outstanding loans and excess employees, builders will find different financing or get bought out by builders with deeper pockets, and with more stable loans, more Wall Street investors will return to purchase loan paper, etc. I think the U.S. Government saw this coming and wanted to wait until the problem happened in order to reinforce their position as being "saviors" and "the ultimate solution" to bail out these poor decision making by Buyers and unscrupulous behavior by mortgage lenders. More regulation of disclosures, yes....bailout of poor decisions, no---- It's the old stoplight theory of Government at work here. A dangerous intersection goes unchanged until a fatal accident occurs, then suddenly a stoplight gets installed. The stoplight in this case is regulation that stops the flow of business, not a Speed Limit sign and enforcement visibility!
Various written articles, television programs, internet blogs & my opinions



JULY 2007 – Various articles on housing in Wall Street Journal
Washington Mutual is dropping two types of loans (per WSJ-7-19-07 - C3) - The 2/28 and 3/27 loans are going away---plus they will no longer make "stated income" loans to subprime borrowers....WSJ-7-19-07-C5---Subprime mortgages (real estate loans to individuals with questionable chances of repaying) delinquencies are rising and issuance of new subprime mortgages are falling - driving investors into 10 year treasury notes...making note rates fall and hence...maybe real estate interest rates?
Even AAA rated collateralized loans are being hit by scrutiny.

Wall Street Journal - Section C - Money & Investment

Various real estate topics

These topics are covered on my website: www.abuyeragent.com

THIS MONTH'S WORD TO THE HOMEBUYER

Here are some additional topics to discuss on this Broker's Blog

TOPIC & MONTH
SUMMARY
SOURCE and/or
CONTACT #s


ATTENTION - MY INVESTORS - Go to my Investor Corner

Investors are certainly licking their chops over the potential billions of dollars of real estate about to foreclose due to the eminent wave of foreclosures of Sub Prime Loans...stay tuned for more information.

INVESTORS - CLICK HERE TO VISIT THE INVESTORS CORNER

SUBPRIME LOANS
Get ready for the new buzzword in real estate instead of location-location-location=======>foreclosures!----foreclosures!----foreclosures!.
Pick any newspaper


Condo sales ahead of last year - fewer single family homes sold
The Atlanta metro area condominium sales in 2006 as of end of November is approximately 4,961 units which are more than 2005 entire year's sale of condos.
FMLS database


MAY 2007 – Several topics

Bank of America is offering a (No Fee Mortgage PLUS) no-closing cost loan

Jordan Goodman talked about loans that automatially lowered rate (arc loans)

Fair Issac - who provides the FICO sores to rate your ability to get a good interest rate on a home mortgage is revising their credit scoring criteria

Clark Howard radio show for FICO and Bank of America info Bank of America Loan here and For automatic reduction rate loans. and Modify my mortgage option here



APRIL 2007 – Real Estate Market in 2007 - Slow and steady, but some dips...
The builder in Atlanta with the most market share has about 3 percent(the top 10 Atlanta builders account for less than 20% of the housing product on the market)...there are about 2,000 builders in the Metro Atlanta area...demand is falling behind supply to about an 8 month supply of homes...increased foreclosures are throwing houses back on the market applying more pressure on prices and sellers...and the impending the
tightening of lending standards for the mortgage industry via U.S. Congressional action will probably shrink the pool of buyers

Online Atlanta Journal Constitution 4-1-2007



JANUARY 2007 – Mortgage Insurance on 2007 Loans and beyond are tax deductible
The U.S. President signed into law a bill making mortgage insurance premiums tax-deductible.

• Mortgage insurance premiums will be 100% deductible for households whose adjusted gross income is $100,000 or less.
  
• The law is effective for the 2007 tax year on purchase and refinance loans closed on or after January 1, 2007.
  

http://www.mgic.com/education/mioptions_tax.html


JANUARY 2007 – Mortgage Applications Up as Home Buyers See a Break in Rates
Mortgage applications, while they are some distance from their peak during the housing boom a year ago, surged 30 percent in early December from their summer lows as buyers took advantage of falling prices and low rates to buy homes before the holidays..The national average for a 30-year fixed-rate mortgage is now 6.04 percent....
New York Times - Timesdaily.com - 1-9-07



DECEMBER 2006 – End of Housing Slump Seems to be Drawing Nigh
Recent increases in mortgage applications give hope that the housing slump may recede soon.
Wall Street Journal, 12-28-06, Page A3


NOVEMBER 2006 – Lenders Get and Offer Help to Prevent Foreclosure
Foreclosing on a home loan costs lenders a lot more money than you would think. They would prefer to negotiate a payment plan with you, but most people never return lender phone calls about delinquent loans. Community Groups and Lenders themselves sometimes cooperate to prevent foreclosures. Community Groups are forming to prevent foreclosures through financial help. Lenders offer alternative payment plans. Most people are avoiding foreclosure by either (a) negotiating a payment plan or selling their home prior to foreclosure.
Wall Street Journal, 11-1-2006, Page B3B


NOVEMBER 2006 - Banks are aggressive on marketing Mortgage Loans
Bank of America is offering $250 toward closing cost if you chose another lender but requires you to be a current customer and other documentation. Lending Tree offers $500 price guarantee under certain circumstances; Charles Scwabb plans to give discounts on rates under certain conditions; R-Trade offers $500 off mortgage closing costs under certain circumstances; and others may have deals. Ask your lender for details of any incentives they offer.
Wall Street Journal, 11-1-2006, Page D3


OCTOBER 2006 - Builders Will Require Licensing in 2008
Builder licensing is here! Beginning January 1, 2008, all persons involved in construction affecting structures will need a license to pull a permit in the state of Georgia. “Grandfathering” or examination exemption applications are available now and must be submitted by January 1, 2007. After January 1, 2007, the Secretary of State will begin taking applications from all others wishing to become licensed. Before attending, please be sure to review the license applications at www.sos.state.ga.us/plb/contractors and be prepared to ask questions. For questions call Builder Licensing Hotline at (678) 755-1498 or call NARI Atlanta Headquarters at (404) 766-7179.

Georgia Law - Secretary of State's website.

OCTOBER 2006 - Builders Continue to Weather Storm
Some major homebuilder corporations like D.R. Horton; KB Homes; Beazer Homes and others have seen a 25-50% drop in new home orders and sales in 2006. However, depending on the forecaster, all isn't gloom and doom. In some markets existing home inventories are declining and other markets supply of homes coming onto the market isn't increasing as quickly.

Wall Street Journal - Personal Journal - October 11, 2006 - Page B9>

OCTOBER 2006 - ARMs Control for Borrowers
Long term interest rates are down now and it's a good time to get out of them. Alot of people into their 3rd or 4th year of an ARM are bailing into 30 year loans..some have 10 year interest-only and then balance paid in years remaining. (Caution: Watch any balloon payments.)

Wall Street Journal - Personal Journal - October 7-8, 2006 - Page B4.

SEPTEMBER 2006 - Copper and Robbers: Homeowner's Latest Worry
Copper pipes, air compressors, and other aluminum and steel items are being stolen from homes and businesses that are vacant and occupied...take precautions to prevent theft.

Wall Street Journal - Personal Journal - September 6, 2006 - Page D1.

AUGUST 2006 - Homeowners Start to Feel the Pain of Rising Rates

1. Option ARMs - Low rate, more choices but loan balance increases
2. Interest Only Mortgages - You pay principal, but no interest - interest accumulates.
3. Piggyback Loans - Home equity line of credit with mortgage without Private Mortgage Insurance.

Wall Street Journal - Personal Journal - August 10, 2006 - Page D1.

JULY 2006 - Scrutiny of Down Payment Gifts Threatens Charitable Movement

Although there is no doubt home ownership increased with these gift programs and default rates are higher, the main reason this gift program status is under scrutiny is the incredible profit that the founder, former pastor Don Harris, allegedly made while coordinating the program and his business relationship with Ron Melon who formed Invision Marketing to help market the gift (down payment) program. The IRS believes that profit driven sellers receive the benefits of sale of real estate and this practice may not really qualify as a charitable activity. In Ohio, some home buyers who accepted down payments from a charity are suing the home builder who provided the gifts - the gifts (e.g., down payments) were really added the down payment to the price.

Wall Street Journal - July 5, 2006 - Page A1.

JULY 2006 - Housing prices in Atlanta not inflated

California and Florida had 17/20 top overvalued markets...Median home price in Atlanta in 1Q06 was $175,800....national median home sales price is $223,000....National Association of Realtors estimates 5.3% average price appreciation for 2006.

Atlanta Journal Constitution - Homefinder Section - Page 6.

JUNE 2006 - New U.S. Home Sales Rose in May 2006

New home sales across the country rose 4.6% from April sales, but 5.9% lower than May 2005. Discounts and other incentives have been used to boost sales. Economists expect sales to weaken over the remainder of 2006. Median price of new home across the U.S. dropped to $235,000 in May from $245,900 in April 2006, but were 3% higher than a year earlier.

Wall Street Journal - June 27, 2006 - Page A2.

JUNE 2006 - Mortgage REITs Lose Curb Appeal

By 2005, the housing market slowed down and volume of new mortgages weakened....The Mortgage Banker's Association predicts that mortgage originations will drop 14% in 2006.

Wall Street Journal - June 7, 2006 - Page B7.

MAY 2006 - Late Payments on Mortgages Rise!

About 29% of mortgages taken out in 2005 either have no equity or owe more than their house is worth. One study reported that those who had ARM loans in 2005 are 3 times as likely to be delinquent after the first year.

Wall Street Journal - May 18, 2006 - Page D1.

MAY 2006 - Owner's Title Insurance!

Q: Why would owner's title insurance still be required if I only put down a small amount or nothing at all when buying a house?

A: The title insurance company may require you to pay the debt (loan) you agreed to pay.

Atlanta Journal Constitution - Homefinder Section - May 6, 2006 - Page 6.

MAY 2006 - Downpayment assistance programs are halted!

Other than "true" charities (e.g., churches), organizations like Nehemiah and AmeriDream no longer qualify for "tax exempt" status and can no longer offer down-payment assistance programs to homebuyers. In 2004, close 31% of the approximately 515,000 FHA single family mortgage loans were using some form of down-payment assistance.

Wall Street Journal - May 4, 2006 - Page A3.

MAY 2006 - Nationwide Housing Sales Slow Down

Nationwide - Pending sales of existing homes dropped 6% in March compared with March 2005 and home sales were up 14% but inventories were up 24%.

Wall Street Journal - May 3, 2006 - Page D3.

APRIL 2006 - Home Sellers Face Unexpected Tax Hit

After the $500,000/$250,000 gain exclusions on real estate are met, the extra is taxed at 15% capital gains and you may lose itemized deductions and other deductions and you may be subject to the Alternative Minimum Tax - Keep receipts of home improvements like adding bedroom/bathroom, updating new wiring or plumbing, etc,. - consult your CPA.

Wall Street Journal - April 2006 - Page D1.

APRIL 2006 - Good Samaratin Health Center of Cobb

On Roberta Drive off Austell near South Cobb Drive - Low income health, dental, and pharmacy assistance.

Marietta Daily Journal - April 18, 2006 - Page 6B.

FEBRUARY 2006 - Homebuyer's Check List Helps

Top 10 things a buyer should do before signing a real estate contract includes learning about the homebuying process, talk to several lenders to compare programs and services, see enough homes to get a comparison, and read & understand the real estate contract.

John Adams Newspaper - January or February 2006.

FEBRUARY 2006 - Share of People Owning Homes Is Leveling Off

Homeownership rate was 69% in 4th quarter in 2005; about half the metro area studied had double digit increases in median prices; over 15% of the metro areas studied show that the average citizen couldn't afford the home; and over 40% of first time homebuyers bought a home with NO MONEY DOWN.

Wall Street Journal - 2-16-2006 - Page D1.

FEBRUARY 2006 - Cobb Real Estate Trends.

Cobb residents are looking for charm in both the home's exterior and in the community. Seem like natural stone and cariage door exteriors are popular. Younger buyers like homes that require low maintenance and older buyers like privacy and space. Under $500,000 homes, people like to have swim/tennis communities and over $500,000, people tend to build their own activity areas. Interior features include non-neutral colors, more impressive molding, cherry or wood stain cabinets, granite countertops, energy efficient appliances and systems.

Marietta Daily Journal - 2-22-2006 - Page D1.

JANUARY 2006 - Real Estate Develops a Split Personality.

Mortgage rates rose steadily in 2005, the number of single family homes for sale rose about 5% in 2005, the NAR prdicts sales could fall about 4% in 2006, however, many financial institutions are willing to invest in large condominium projects.

Wall Street Journal, 1-3-2006 - Page R4.

SEPTEMBER 2005 - Does your Homeowner/Hazard Insurance Policy cover floods?

Standard homeowner's insurance doesn't cover flood damage. Homeowners may be left on their own to replace their home and belongings in the event of a flood. Federal Flood Insurance is available separately, but may be limited to $250,000 for residential reconstruction and $100,000 personal property coverage. Also, personal flood insurance policies may not cover improvements of a finished basement or loss of belongings in the basement. Excess flood insurance may be available in certain states.

Wall Street Journal - 9-01-05 - Page D1.

AUGUST 2005 - Builders are now focusing on aging Baby Boomer buyers.

U.S. Census figures indicate Georgians over 65 will grow from 847,000 to 1.9 million by 2030. Two 700+ homes for Hall & Cherokee Counties; 1300 home subdivision in Hall County; and a 3,400 home subdivision south of I-20.

Atlanta Journal-Constitution - 8-15-05 - Page E1.

JULY 2005 - New Private Christian School - Atlanta Classical Christian Academy.

The school will teach grades K-12 and is located off Spring Road near Cobb Parkway (Highway 41). The school will also teach home school individual classes like Latin and French.

Marietta Daily Journal - 7-1-05 - Page B1.

JULY 2005 - Median Prices of Homes.

The median price of a home in the Atlanta area is $165,000. The median price of a home in the top 183 metro areas is $225,000.

Atlanta Journal-Constitution, 8-10-05, Page C-5.

JULY 2005 - New U.S. Federal SEER ("Seasonal Energy Efficiency Ratio," or SEER rating) for new HVAC systems manufactured after 1-23-2006.

All central air conditioners manufactured in the United States after January 23, 2006 must meet the new federal minimum 13 SEER rating, a 30 percent increase from the current minimum standard. An air conditioner's SEER rating is determined by its total cooling output divided by its total energy consumption. More simply, SEER is akin to the miles-per-gallon rating for automobiles: the more efficient the air conditioning equipment, the higher the SEER rating and the less it costs to operate.

Click here for more details from the U.S. Department of Energy.


JUNE 2005 - New U.S. Federal HVAC Refrigerant Requirements - Starting in 2010 - You will have new air compressors for new or replacement HVAC systems.

January 1, 2010:
After 2010, chemical manufacturers may still produce R-22 to service existing equipment, but not for use in new equipment. As a result, heating, ventilation and air-conditioning (HVAC) system manufacturers will only be able to use pre-existing supplies of R-22 to produce new air conditioners and heat pumps. These existing supplies would include R-22 recovered from existing equipment and recycled.

January 1, 2020:
Use of existing refrigerant, including refrigerant that has been recovered and recycled, will be allowed beyond 2020 to service existing systems, but chemical manufacturers will no longer be able to produce R-22 to service existing air conditioners and heat pumps.

Click here Phaseout Schedule for HCFCs Including R-22 per EPA Website.


MARCH 2005 - Mortgage Application Volume Down 33% From Last Year
2005 Mortgage (i.e., home loans) were down from 2004. The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending March 11. The fewer loans given same number of lenders means more competition between lenders and some may drop out of business, others may offer incentives for better deals.
Originator Times, 3-17-05


MARCH 2005 - Cobb County is considering a Residential Senior Living (RSL) Ordinance
This ordinance will provide for developers and builders to construct independent residential units for seniors (55 and older).
Senior News, March 2005, Page 19


MARCH 2005 - Independent Websites for Home Service Contractor Ratings
"HomeReports.com" is an independent home contractor evaluation service and has no cost to view the contractors they have heard positive comments about. "AngiesList.com" is a subscription based service that has a more thorough database of contractors. Please use caution when selecting home service contractors to ask about their liability and workers compensation insurance, call their insurance agencies, and check the current status of the certificate of insurance with insurer and the issuing governing agency of business licensing, ask for 3-5 references, and ask your agent and around work or your home for suggestions.
Click here "HomeReports.com" and enter your zip code to get ratings on certain contractors

Click here for "AngiesList.com" and you can register for the service that rates many more home service contractors.

FEBRUARY 2005 - Atlanta Housing Market
Atlanta Fed Chairman Jack Guynn was quoted as saying "...our economy is positioned nicely to continue solid growth..."
Homefinder Section - John Adams column "Full Speed Ahead for Atlanta Housing", Page 6, 2-20-2005 and

Click here for Mr. Guynn's entire speech


FEBRUARY 2005 - Home price appreciation and number of new mortgages to decline in 2005 and 2006

• Given lower home sales, less new construction, fewer refinancing and slower house-price appreciation, overall mortgage
  originations are expected to decline by about 6 % to $2.6 trillion in 2005 and to $2.3 trillion in 2006. The refinance share of new mortgage
  applications should decline to 41% in 2005 and to 33% in 2006.


• Gradually rising mortgage rates should help slow home price appreciation from 10.5% in 2004 to around 7.8% in 2005 and to around 6.3% in 2006.
  
• ...forecasted housing starts are the same as last month’s projections. We show a 3% decline to about 1.90 million units in 2005 and
  then falling to around 1.80 million units in 2006. Similarly, total home sales are forecasted to fall by 3% to 7.66 million units in 2005 (marking
  their second best year) and then to around 7.27 million in 2006.

Per Freddie Mac via interpretations of Fed. Reserve Chairman Alan Greenspan comments

2-16-2005 Originator Times

FEBRUARY 2005 - Teaser Rates on Mortgages.

• Parker's Word of Caution: PLEASE BE CAREFUL TO READ & UNDERSTAND THE FINE PRINT! Adjustable rate mortgages as low as 1%. Risks are considerable but not well understood. For instance,
  low rates may last only a few months or adjust frequently. Even some defer interest for 6 months, but at an upfornt cost of $$$thousands.

2-16-2005 The Wall Street Journal Page D1,2


FEBRUARY 2005 - Median price of home in the U.S.

• New home sales, median price, $187,500 up 8.8% from 4th Quarter 2003.


• Las Vegas, San Bernadino, and West Palm Beach were the hot areas.

2-16-2005 The Wall Street Journal Page D3


JANUARY 2005 - Georgia Gas Marketers
Since the deregulation of the natural gas market in Georgia, we may select our own gas provider. However, who is the best choice? Well, that's up to the consumer to determine. Here are some sources the Georgia Public Servce Commission has provided to help you make a decision. Some general rules are: 60 days prior to expiration of contract, notice of expiration; 25 days prior to expiration, you gas marketer should send another notice; some gas marketers charge a cancellation penalty so check for it; sign-up with a marketer prior to the 20th of each month to be effective the 1st of next month or you will skip a month; check with others and the Public Service Commission Scorecard (see link in next box to right); and if you switch gas marketers more than twice each year, you may incur a $7.50 switching charge each time.
Georgia Public Service Commission website links are....
CLICK HERE FOR A LIST OF GAS MARKETERS

Georgia Public Service Commission scorecard of gas marketers is at....CLICK HERE FOR GEORGIA PSC MONTHLY SCORECARD OF NATURAL GAS PROVIDERS

Pest Control Company was sued for charging for reinspection/retreatment services, but the services were never provided
Be sure to verify the services that you are charged are really performed by your pest control company.
Atlanta Journal Constitution - December 23, 2004, Page B3


Need to find a nice home plan?
Check out the designs at HomePlanFinder.
Click here for New Home Floor Plans


Homesales in the 16 metro Atlanta area

• New home sales, median price, $175,700 up 3% from 2002 to 2003.


• Existing home sales, median price, $154,800 up 5% from 2002 to 2003.

Atlanta Journal Constitution, C1, 6-20-04.


Tankless Water Heaters - Continuous, Unlimited hot water
Costs for tank & installation ranges around $2,500. There are a few manufacturers (Rinai-Paloma-Takagi-etc). There may be some credits from the Gas Company to install one - check with Atlanta Gas Light or manufacturer rep in the area to see what credits exist.

Rinnai website

Atlanta Business Chronicle - May 28-June 3,2004 - Page 12C


First time Homebuyer class presented by builders
Academy of New Home Buyers
Greater Atlanta Home Builders at 770-938-9900


Need some inexpensive items for your home remodeling projects?
Check out the items at the Atlanta Habitat for Humanity "ReStore" Warehouse in Downtown Atlanta for some bargains. They are located at 519 Memorial Drive, Atlanta, GA 30312.
Click here for Habitat for Humanity ReStore Warehouse Information


JUNE 2004
Nationwide sales of existing homes dropped 5.2%. Seasonally adjusted volume of existing home sales was 6.02 million (down from December 2003's 6.37 million existing home sales).

Atlanta Journal Constitution, 2-26-04, Page F3

NO car, get a bigger loan?
Fannie Mae now offers the opportunity for a larger mortgage if you give up your car and live near mass transit and promise to use them. The loan allows only one car payment per household. As incentives, some homebuyers got 2 year bus passes free.

AJC, 1-26-04, Page E1.

FHA Considers "NO DOWNPAYMENT" Loans for first-time Homebuyers
As part of President Bush's ongoing effort to help American families achieve the dream of homeownership, Federal Housing Commissioner John C. Weicher today announced that HUD is proposing to offer a "zero down payment" mortgage, the most significant initiative by the Federal Housing Administration in over a decade. This action would help remove the greatest barrier facing first-time homebuyers - the lack of funds for a down payment on a mortgage.
Speaking at the National Association of Home Builders' annual convention, Commissioner Weicher indicated that the proposal, part of HUD's Fiscal Year 2005 budget request, would eliminate the statutory requirement of a minimum three percent down payment for FHA-insured single-family mortgages for first-time homebuyers.

Originator Times - Week of January 20, 2004.

General cost for Kitchen Counters
Granite=$50-200/sq.ft.; Limestone=$95-115/sq.ft; Marble=$50-160/sq.ft.; Corian=$40-100/sq.ft.; Concrete=$75-200/sq.ft; and Laminate=$10-20/sq.ft.

AJC Home & Garden Section, January 16, 2004, Page HG10.

Metro Atlanta Burning Ban - Check with your County Zoning Department for any changes.
Effetive May 1st to September 30th of the year, open shrub/bush/limb/leaf burning is prohibited. Fines may reach $1,000.00 per violation.

Cobb County Newspaper and Zoning Department.

DECEMBER 2003
Freddie Mac was fined $125 million for management misconduct and $5 billion understatement of earnings. Freddie Mac is Government backed, publicly held corporation that is part of what is considered the "secondary home loan market". In other words, you acquire a home loan through a lender and get chargeed fees, the lender then sells the loan to the secondary market (ie, Freddie Mac, Fannie Mae, etc) to get money back to relend. Click here to find out about Freddie Mac.

AJC, 12-11-03, Page E5.

Vehicle Insurance Card - No Longer Proof of Insurance
Effective February 1, 2003, your insurance card is no longer proof of insurance. It will be controlled by the VIN (Vehicle Identification Number). Make sure the VIN on your vehicle matches the VIN on your insurance card or policy and on your vehicle's registration tag receipt.

Cobb County Newspaper.

Homeowner's Insurance is going Up
Homeowner's (Hazard) Insurance is expected to rise 8% in 2004.

Recent Atlanta Journal-Constitution - September 2003.

Wood Infestation Reports(WIRs) (i.e., the well known "Termite Letters")

A Wood Infestation Report (WIR) is typically required in the state of Georgia to close a loan to purchase a home.

Several pest control companies are members of the Georgia Pest Control Association and hold themselves to organization standards.

These companies can issue these WIRs/letters and you can view the licensed pest control companies on the Georgia State Government website in the next box to the right.----->

Even though volumes are written on the subject in Georgia, I can sum it up in a nutshell. The report indicates if the property is "currently" or was "previously" infested with any of 5 different "wood destroying organisms" (including termites). Normally, lenders look for the WIR to be acquired within 30 days of closing (which identifies recent activity), but the WIR should be valid (ie, bonded to be free of these wood destroying creatures) for 90 days from the date of issuance of WIR. Be sure to read the back of letter to ensure coverage for 90 days.

Georgia also has established minimum standards by which pest control companies are to issue these WIRs. Discrepancies are notated on an EXCEPTION FORM II.

Georgia Licensed Pest Control Companies

Georgia Department of Agriculture
Structural Pest Control Section
19 M.L.K. Jr. Drive, Room 242
Atlanta, GA 30334
(404) 656-3641

Gain on Sale of Personal Residence
Current tax regulations may eventually change, but for now, you may exclude specific amounts on the gain on the sale of your personal residence. Under the rules in IRS Publication 523, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Exclusion of the gain on sale for Single people filing single returns is up to $250,000. Those who are married filing joint returns have up to a $500,000 gain on sale.

Click here for IRS Publication 523!

Recalls Notices of Consumer Products
Current and prospective homeowners should be aware of this website. Do you know if any products in your home including your auto and other products used outside the home are under any recall notices?

Click here for a summary of products under recall!

General Costs of Repairs
A prospective homebuyer should consider the costs of maintaining and repairing a home in addition to the monthly mortgage.

Click here for a summary of home repair costs

Cancellation of Private Mortgage Insurance
In short, under Federal Law, certain loans on or after July 29, 1999 will require Private Mortgage Insurance (PMI)until the loan balance reaches 78% of original loan amount. The applicable loans are conventional loans (i.e., NOT... FHA, VA, or Loans with Lender paid PMI). You may wish to review your prospective loan paperwork to understand if you can eliminate Private Mortgage Insurance(through an appraisal or a Real Estate Broker's CMA) before the loan balance reaches 78% of original loan amount.

Visit the FTC's website for more details

New Federal Law Regarding PMI!


Georgia Lottery Funding of HOPE - Pre-K Programs
Requirements: Children must be 4 or 5 on 9-1-02 to be eligible. You need official documentation like birth certificate, passport, medical documentation. Parents who want to enroll their chilren should call the local public or private schools.

Call 1-888-442-7735 or visit the Hope Pre-K website at....

Click here for listings by county or ZIP code

Buying Foreclosures in Georgia
I attended local foreclosure seminar and now I better understand pre, auction, and post foreclosures, ways to estimate offers and to consider rates of return. If you are an investor, call me and ask about my retainer program.

Jim Parker 770-971-5418

Buying a House on the Bubble
According to a recent Wall Street Journal article, you need be aware of factors that indicate market prices may be soaring or dropping fast such as:

Think twice about the "fancy" dream house..prices at the upper end tend fluctuate more than at lower end.

Be wary of cities that rely too much on one industry

Just because you buy in a good school district doesn't guarantee success

Buy a home you are comfortable living in for a while

Lower you risk by buying in a market that has a constant supply of homes

Be careful about condominiums and their price fluctuations

.

Wall Street Journal, Personal Journal Section, Tuesday June 4, 2002, Pages D1 and D2.

Improve Credit Before Getting a Mortgage
Fair, Issac and Company (FICO) is the predominant credit scoring agency. According to their website and others including Bankrate, you may improve your credit in several ways:

Pay all bills on time...don't be late if you can help it

Slowly close unused, zero balance credit lines, but not all at once

Don't transfer your balances from one credit card to another too often

Order your credit report and clear up any blemishes

You may shop for mortgages in a 14 day window without big hits on score
.

CLICK HERE FOR BANKRATE.COM WEBSITE

CLICK HERE FOR FICO.COM WEBSITE

Homeowner's (Hazard) Insurance
Several insurer's are cancelling insurance coverage or people who make more than one claim in 5-10 years. Some possible ways to reduce your premiums are to increase your deductible per claim, pay for most smaller claims, and make sure you shop around for and obtain coverage "before" you get cancelled or "non-renewed".
Wall Street Journal 5-14-02 - Personal Journal, Page D1.

People dropped or denied coverage have a right to get their claim history by calling 800-456-6004 - or - CLICK HERE FOR A COPY OF YOUR CLAIM HISTORY

Be sure to ask your agent for the "laundry list" of discounts like a monitored security system, in home sprinkler system, non-smoker over 50, etc,.

City of Canton in Georgia

- Impact Fees

City of Canton elected to have a Buyer pay $1,607.20 in addition to the home's price to cove a 2,800 square foot home and for commercial properties of same size an additional $604.80. Another note - Georgia law permits impact fees to cover the following costs: water treatment and supply; wastewater treatment; roads, streets, and bridges; storm water systems; parks, open space and recreation areas; public-safety facilities; and libraries. It is also noteworthy that even though all Georgia counties are permitted to charge an impact fee on new homeowners, only certain counties choose to charge one.
Atlanta Journal-Constitution, 4-24-02 - Page C5.

Sources are listed based on various newspapers, websites, and information by Broker and Broker is not responsible or liable for information or assistance.

Commune living for 65 years and older

Recently, I had discussions with some people in the mid 50’s about future living arrangements. A line of discussion came to the old commune format of living. As we discussed this idea further, we realized that if there were 3-5 people who lived together in one home, total household expenditures could be shared with each other. Even though we know that in a group, usually one or two people do the work of most of the others, this cooperative relationship is more affordable for those who have limited retirement incomes. A commune format of sharing expenses and responsibilities could help offset retirement expenses and provide a little dignity & responsibility for those over 65 years of age.

Thoughts on communes for 65 & older communities – designed more like a condominium form of ownership:

1. Person A buys a home for $200,000 – sells/leases to Age 55 or older in a trust/condo form of ownership.

2. Total occupants = 5 – each has an unfurnished 1 bedroom – 1 bathroom arrangement.

3. Optional finance plans for 1 bedroom and kitchen/yard privileges include:

(A) Charge flat $50,000 for life (20+ years), or

(B) $400/mo for life. (12x400=$4,800/year)

4. Nominal $50/month charge for

(A) maintenance to property includes painting, plumbing, electrical, roofing, HVAC & other repairs;

(B) household improvements landscaping;

(C ) replacement of appliances (dishwasher/stove/washer/dryer)

5. Eviction is possible if payments are not made.

6. Administrative household structure

(A) forecasts expenditures & outlines budgets

(B) evaluates contractors & administers budget

(C ) develops rules & privileges of residents (e.g., pets/housekeeping/yard/family room/kitchen, etc).

(D) ability to fine residents

7. Residents are still responsible for food, clothing, transportation, medical, etc.

8. Ability to sell or transfer ownership to another 65+ individual in need of a residence.

I would like to get your ideas on this and see more of this residential “commune” living arrangements addressed.

Business Owners & Homeowners Beware

According to the September 6, 2006 issue from the Wall Street Journal (see Copper and Robbers: Homeowner's Latest Worry) - Copper pipes, air compressors, and other aluminum and steel items are being stolen from homes and businesses that are vacant or occupied just for their scrap value which has repidly increased...take precautions to prevent theft. - Items from beer kegs to metal plates are being stolen. - I know I have seen cages over the A/C Compressors to homes and small businesses.


What are some of your ideas to protect your assets?