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Showing posts from 2008

More Perfect Unions

More Perfect Unions

Brokerage firms weigh the benefits of acquisitions and contractions

By Marcie Geffner

It’s no secret that a sharp decline in home sales has triggered a wave of consolidation that has swept through California’s real estate brokerage companies. With statewide sales at just 366,720 in April, there simply isn’t enough demand to keep nearly 175,000 REALTORS® busy.

The closure of realty companies and offices may sound like more bad news for an industry that’s already under siege, but consolidation isn’t all bad. Some practitioners have greeted an office closure as an incentive to reinvent their business.

Chuck Knapp, owner and general manager of Century 21 Desert Rock in Hesperia, is a case in point. The firm, which has 55 full-time agents, closed one of its three offices in February. The office was closed because the outlying locale hadn’t experienced the sales growth Knapp and his wife, broker/owner Hanna Knapp, had expected three years earlier.

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Borrowers look for mortgage modification

By Marcie Geffner •

Homeowners who can't afford their mortgage payments can get a better deal from their lender. But the process is complicated and potentially onerous, and concessions are offered only to borrowers who earn neither too much nor too little income to meet the lender's guidelines.

"If they can afford to pay, they should pay. If they can't afford to pay, we need to make sure they have a fighting chance to make the new payments and pay back the loan over the long term," says Thomas Kelly, a spokesman for J.P. Morgan Chase, which also owns the Washington Mutual, or WaMu, and EMC brands.

Payment must be affordable, but also pay off loan

An "affordable" payment typically is defined as a targeted percentage of the borrower's monthly gross income. Thirty-eight percent is common, though some lenders use a lower or higher figure, usually between 31 percent and 41 percent. The new payment must be sufficient to pay off the loan, sometime…

Death by a thousand price cuts

By Marcie Geffner •

It's the worst-case scenario for home sellers: To endure price cut after price cut until their houses become stigmatized and hungry buyers smell blood. But how can you avoid this unpleasant scenario in today's troubled housing markets? The answer, experts suggest, is to put your home on the market at the right price, and if it doesn't sell quickly, cut the price deep and fast, so you won't be caught in a downward spiral of price reductions.

Not surprisingly, few sellers want to hear that advice. They'd rather price their homes aggressively and then hope buyers will take the bait. But testing the market simply isn't a good strategy with home prices depressed, sales at a slower pace in many markets and buyers on the hunt for good deals, says Mark Reitman, Chicago sales manager for real estate brokerage Redfin in Schaumburg, Ill.

Buyers today are "looking at every aspect in so much more detail and trying to find out how they can …

Mortgage rates near record lows

Low mortgage rates entice home buyers and spur refinancing.

By Marcie Geffner -

It's true: Interest rates on home loans have fallen to new lows for this year. In fact, rates have declined so dramatically that many homeowners are taking advantage of the opportunity to lock in a low fixed rate on a new mortgage.

“Today’s rates are some of the best we’ve seen all year, so for those borrowers looking to purchase a home or refinance a mortgage, now is the time to take action,” says LendingTree Chief Economist Cameron Findlay.

Rates have dropped largely due to the federal government's latest billion-dollar initiatives to support small-business and consumer lending. The government's programs were intended to lower the cost and increase the availability of home mortgages. So far, they appeared to have worked brilliantly, at least as far as mortgage interest rates are concerned.

Treasury Secretary Henry Paulson, who announced the government's initiatives last week, s…

New program streamlines mortgage modifications

New mortgage modification program offers a faster, simpler way for homeowners to get more affordable mortgage payments.

By Marcie Geffner -

The federal government has introduced a new mortgage modification program to simplify and streamline the process of modifying some homeowners’ mortgages so they will be able to afford their monthly mortgage payments.

The new program is "a bold attempt to move quickly in defining a nationwide program that can quickly and easily reach many of these troubled borrowers, thereby stabilizing those families and the communities and neighborhoods in which they live," said James B. Lockhart, director of the Federal Housing Finance Agency (FHFA), a regulatory arm of the federal government, in Washington, D.C.

This new mortgage modification program might be a good fit for you if:

● your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac;

● you’ve missed at least three mortgage payments;

● your home is your primary residence;

● you …

Avoiding negative equity

By Marcie Geffner -

If you're thinking about buying a home, you may be concerned about the prospect of negative equity.

Also referred to as being "underwater" or "upside-down," negative equity occurs when you owe more on your mortgage than your home is worth. While this situation isn't desirable, there are strategies you can use to try to avoid it when you buy a home.

Technically, negative equity is when your loan balance is more than the current value of your home. For example, if you owed $130,000 on your mortgage, but your home was worth only $120,000, you would owe $10,000 more than your home's value. That $10,000 would be negative equity.

Negative equity isn't new. On the contrary, housing markets and home prices historically have been cyclical over long periods of time, and homeowners collectively have experienced negative equity throughout these cycles. When house prices rise, equity naturally expands; and when house prices fall, …

Housing hints for President-elect Obama

By Marcie Geffner, INMAN NEWS
Wednesday, November 12, 2008

Dear President-elect Obama,

Strong housing markets and financially stable homeowners are crucial to the well-being of the U.S. economy. With that in mind, I hope you'll support policies that will strengthen the nation's housing markets and polish off the tarnish that clings to homeownership today.

Here are nine suggestions:

1. Create jobs. There is a plain and direct connection between employment and healthy housing markets. People who feel secure about their financial situation can form new households, get married, have children, buy homes and rent apartments. People who are out of work lose their homes and are forced to bunk in with their families and friends. The creation of more good high-paying jobs is the best way to strength the housing markets and national economy.

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Government offers Hope for Homeowners

New loan program allows homeowners to refinance mortgages
By Marcie Geffner -
November 2, 2008

The federal government has introduced a new mortgage program for homeowners who are having difficulty making their mortgage payments. The program, called “Hope for Homeowners,” is another option for struggling homeowners who want to refinance their mortgage into a fixed-rate loan that they can afford.

The Hope for Homeowners program might be a good choice for you if:

● Your home is your primary and only residence.
● You don't own any other residential property.
● You obtained your mortgage on or before Jan. 1, 2008.
● You've made at least six payments on your mortgage.
● You're financially unable to make any future mortgage payments without help.
● As of March 2008, your monthly mortgage payment (including principal, interest, property taxes and homeowner's insurance) was more than 31 percent of your monthly income.

If you qualified for the Hope for Homeowners program, y…

Buyers rule autumn housing markets

By Marcie Geffner, Cyberhomes Contributor
November 04, 2008

No one likes to negotiate from a position of weakness. Yet that’s the challenge most home sellers faced in U.S. housing markets in September: More homes were for sale, prices were lower and homes remained on the market for months at a stretch before they were sold.

Yet just as one condo owner’s ceiling is another condo owner’s floor, those same market conditions added up to good news for home buyers. Competition, pricing pressure and delay worked in their favor.

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Unemployment could knock out housing

By Marcie Geffner, Tuesday, October 28, 2008

First, subprime mortgages exploded and home prices crashed. Then, the financial markets fell apart. Will unemployment be the proverbial next shoe to drop on the already weakened U.S. housing markets? If so, the implications for real estate will be profound indeed.

Historically, employment and home sales have been inextricably linked: People who had good jobs with steady paychecks bought homes while people whose income wasn't reliable weren't given home loans. Strong employment was a good indicator of future home sales while rising unemployment was an equally sure sign of fewer home sales on the horizon.

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States offer foreclosure rescue loans

By Marcie Geffner •

Homeowners who need to refinance a burdensome mortgage may be heartened to hear that more U.S. states may soon offer home loan refinancing programs similar to those already available from the federal government and at least nine states. The existing programs are limited in scope, but do give some homeowners another option to avoid foreclosure.

So far, Connecticut, Delaware, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio and Pennsylvania have set up refinancing programs, according to "Defaulting on the Dream: States Respond to America's Foreclosure Crisis," a study published by the Pew Center on the States, a research organization in Washington, D.C. Collectively, these states have committed at least $450 million to help homeowners refinance loans they couldn't afford or take out short-term emergency loans to tide themselves over during temporary financial difficulties.

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U.S. government may buy mortgages

Proposed bailout plan intended to protect economy.

By Marcie Geffner - September 24, 2008

Top officials in the federal government have been working on a new plan to strengthen the country's financial system.

The plan would allow the U.S. government to buy mortgage-backed securities and other assets from banks and financial institutions. The U.S. Treasury would then be able to sell those assets or keep them as investments. The goal of the bailout plan is to protect the nation's economy.

Treasury Secretary Henry M. Paulson, Federal Reserve Chairman Ben Bernanke and members of Congress have been working on the plan this week. The plan needs approval from Congress and the President's signature to go forward.

The plan would be cheaper than other alternatives and would "fundamentally and comprehensively" address the root causes of the stress in the financial system, Paulson explained in a statement.

“When the financial system works as it should, money and cap…

The state of foreclosure prevention

Inman News

Homeowners who can't afford their mortgage payments may not find much in the way of rescue or relief in the U.S. government's $700 billion bailout of the financial markets.

But while the feds have fearfully sat on their hands and watched a severe credit crunch turn into a major crisis, a number of states have introduced their own foreclosure prevention programs, as detailed in "Defaulting on the Dream: States Respond to America's Foreclosure Crisis," a report by the Washington, D.C.-based Pew Center on the States.

"The jury is still out about whether and to what extent (these approaches) will be effective. Still, several states among those hardest hit by foreclosures also have been among the most assertive in trying to address the problem," the Pew study stated.

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Better credit can save cash

Improving your credit - and paying your bills on time - can save you money.

By Marcie Geffner -

Want to save an easy $105 this year? If you’re an average consumer, that’s how much you could cut your annual finance charges if you improved your credit score by just 30 points, according to a new survey released by the Consumer Federation of America (CFA) and Washington Mutual Bank.

Boosting your credit score by a mere 30 out of several hundred points might be much easier than you’d think it would be. According to the survey, these five strategies may be among your easiest opportunities for improvement:

● Pay all of your bills on time and in full every month.

● Don’t max out, or get close to maxing out, the limits on your credit cards or revolving credit accounts.

● Pay off your debts, rather than transferring your balances from one account to another.

● Don’t open multiple new credit accounts all at one time or in rapid succession.

● Check your credit report annually and take act…

First-time home buyer tax credit not what it seems

By Marcie Geffner -

If you're planning to buy a home in the next 10 months, you may be eager to take advantage of the federal government's latest effort to jump-start the nation's moribund housing markets: A tax credit of up to $7,500 for certain home buyers.

The credit may appear to be an attractive opportunity, but you should be sure you read the fine print before you elect to claim it on your federal tax return.

"The big story is that it is not a credit. It is a loan, and you are going to have to pay it back, so you'd better make sure that you have the money," says John W. Roth, senior tax analyst at CCH Group, a Riverwoods, Ill.-based company that provides tax software, services and information.

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Same-sex couples denied property tax perks

By Marcie Geffner -

Most married couples take their special tax benefits as property owners for granted. But gay and lesbian couples who tie the knot in California or Massachusetts may not be able to take full advantage of certain property-related tax breaks because federal law doesn't recognize their marriages.

California and Massachusetts now consider so-called "same-sex" marriages to be equivalent to traditional, now so-called "opposite sex," marriages. However, federal agencies, such as the Internal Revenue Service, must take their cue from the 1996 Defense of Marriage Act, or DOMA, according to John W. Roth, a senior tax analyst with tax-software provider CHH Group. DOMA stipulates that only a marriage between a man and a woman is valid in the U.S.

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What appraisers really do

Home buyers, sellers may be surprised to find out the truth about the appraiser’s loyalty

By Marcie Geffner, Cyberhomes Contributor

An appraiser is one of the most important people in a home-buying transaction. Yet few home buyers or sellers understand the facts about who appraisers are or what they do.

The most common misperception is that the appraiser represents the home buyer. That mistaken idea is understandable since the buyer typically pays for the appraisal. But in fact, appraisers are hired by lenders, and appraisals typically are done not to make sure the buyer doesn’t overpay for the home, but to assure the lender that the home won’t be mortgaged for more than a certain percentage of its value.

“Home buyers generally are not my clientele, and that’s the case with most appraisers,” explains Sara Goodwin, a certified real estate appraiser with Ashcroft & Associates, an appraisal firm in Vancouver, Wash. “For the majority of appraisers, lenders are the clients.”

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McCain keeps hands off housing

Perspective: Candidate advocates market transparency, accountability
By Marcie Geffner, Inman News

Real estate professionals who turn to John McCain's Web site for information about his housing policy may be disappointed to discover there's not much there to examine. But the omission of specific plans and programs may be less of an oversight on the candidate's part and more of a statement in and of itself as to his views.

The presumptive Republican nominee in this year's presidential election has spoken out about the housing crisis and established parameters for the steps he believes the federal government should and shouldn't take in response. He's also announced one specific housing program that he'd try to enact if elected.

McCain addressed the "devastating impact" of the housing crisis on U.S. financial markets and household budgets in a March 27 statement that recapped a day-earlier speech on the crisis. The candidate acknowledged a responsibilit…

Obama's housing plan is long on rhetoric

Perspective: Candidate proposes $10 billion to aid foreclosure victims

By Marcie Geffner, Inman News

As Democratic delegates and power brokers prepare in Denver, Colo., for the political party's presidential convention that begins tonight, real estate and mortgage professionals and homeowners may be curious about likely nominee Barack Obama's housing proposals.

The candidate's three-page housing policy statement doesn't say how many houses Obama owns (one), but offers plenty of speculation about the causes of the housing crisis, tons of rhetoric about the value of home ownership and a broad overview of the programs he supports. The statement offers some general insights into Obama's perspective on housing, but includes hardly any meaningful details about how his plans would be implemented.

Dubbed "Protecting Homeownership and Cracking Down on Mortgage Fraud," the plan aims to "crack down on fraudulent brokers and lenders," "make sure home buyer…

Housing Bill To Aid Homeowners, Home Buyers

By Marcie Geffner -

The federal government is poised to enact a major housing bill that aims to assist first-time home buyers, homeowners who need to refinance their mortgage and an assortment of housing-related companies.

The House of Representatives has already passed the 694-page bill, which is now being heard in the Senate. President Bush has said he will sign the bill, which could be on his desk within a few days.

The details won't be official until the ink dries on the President's signature, but here's a summary of several key points:

FHA refinancing program
A new FHA loan program would be established to help struggling homeowners refinance their mortgage with a new 30-year, fixed-rate FHA loan.

To qualify, the homeowner must:

-- have an existing mortgage originated before Jan. 1, 2008,
-- be unable to afford the payments on that mortgage,
have a mortgage debt-to-income ratio of at least 31 percent (or potentially higher),
-- live in the home and
-- meet a nu…

Downpayment assistance bites the dust

By Marcie Geffner •

A countdown clock on a Web site operated by Nehemiah Corp. of America is ticking off the days, hours, minutes and seconds until a new government ban will terminate virtually all seller-funded down payment assistance programs in the United States. But the clock may be stopped, now that a bill has been introduced in Congress that would reverse the ban.

The clock will tick off its last second Oct. 1, the last day when homebuyers will be able to use seller-funded down payment assistance with any mortgage backed by the Federal Housing Administration, or FHA, a division of the U.S. Department of Housing and Urban Development, known as HUD.

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How To Deal with a Low-Ball Offer

Don’t get mad. Get smart. Negotiation and patience can turn that disappointing offer into a better deal.

By Marcie Geffner, Cyberhomes Contributor

Weak housing markets embolden bargain-minded homebuyers to offer much less than the seller’s asking price. While there is no agreed-upon definition of a lowball offer, any price that’s discounted enough to provoke the seller’s wrath may well qualify for that distinction.

Conventional wisdom says sellers shouldn’t bother to deliver a civil counteroffer to buyers who present a lowball offer because they may prove excessively demanding or miserably difficult to work with during the transaction.

But that approach might not be so wise if your home has been on the market for a while and hasn’t attracted other bidders.

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How To Sell a Vacant House

You’ve moved out, but can’t afford to rent a houseful of furniture: tips to better your odds of a quick sale

By Marcie Geffner, Cyberhomes Contributor

Houses may be vacant for any number of reasons: Some owners have moved to a new home that better suits their needs. Others have gotten married, gone through a divorce or relocated to take a new job. Sadly, some homes are vacant because the owner has died.

Regardless of the reason, a vacant house can be a real turnoff for buyers and, consequently, more difficult to sell than a house that’s occupied.

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Hiring a Home Stager

By Marcie Geffner

Every home, no matter how luxurious or well-kept it may be, can benefit from at least a few improvements before it's put on the market to be sold. Though not every home that needs to be staged also needs the services of a professional stager, a professional can help you de-clutter your home and highlight its best features in a way that will make the home more attractive and appealing to prospective buyers.

"Most people love their own home," says Dan Eason, president of Energized Seller, a Web site that helps home sellers improve their home's marketability. "Your home might look great to you and your friends. But selling your home isn't about you or what you like, it's about the home buyer and what that buyer wants. Buyers don't want clutter, disorganization, disrepair, wild colors or crowdedness. They want a home where they can easily imagine themselves living."

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The Pros and Cons of Price Cuts

By Marcie Geffner - Cyberhomes Contributor

Home sellers hate price cuts and with good reason: Every dollar that’s knocked off the sales price is a dollar less in the seller’s pocket when the sale closes. But sometimes, a price cut is the best option, as unpalatable as it may be.

There’s no absolute rule for timing a reduction in your asking price, but some experts suggest two to four weeks as a good guideline, depending on how fast comparable homes have sold in your market and how quickly you need to sell.

If your home has been on the market for a while without a decent offer, you’ll have to choose a tactic:
- reduce your asking price
- wait for more buyers
- make major improvements
- take your home off the market.

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Where's My Office?!

By Marcie Geffner - California Real Estate

Pam Spoo thought she’d seen everything in her 30-plus years in real estate. But even she was surprised and shocked when she learned that her brokerage company, Robert Weil Associates in Long Beach, was about to close its doors for good.

"In the first week of December, we got the news that the company was going to be closing," Spoo recalls. "We knew business was slow, but I did not understand what it costs to keep an office open."

Spoo’s experience is instructive for others who may face a similar situation. She and her business partner Mary Klingensmith acted quickly to make sure their own business would suffer as little disruption as possible. Within weeks, they’d landed at Coldwell Banker Coastal Alliance in Alamitos Heights.

Read the rest of this story:'smyoffice/

Housing bill no panacea

By Marcie Geffner - Inman News

The Housing and Economic Recovery Act of 2008, signed by President Bush July 30, contains a hodge-podge of new programs, protections and perks for homeowners, home buyers and housing-related companies. But considerable doubt remains as to whether the law will do much to change the current dynamics of the nation's housing markets, which are still mired in misfired mortgages and depressed home sales. The bill may turn out to be not so much too little, too late, but rather misdirected, riddled with loopholes and subject to unintended consequences.

Let's take some of the homeowner and home buyer items for a spin:

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Better Credit Can Save Cash

By Marcie Geffner -

Want to save an easy $105 this year? If you’re an average consumer, that’s how much you could cut your annual finance charges if you improved your credit score by just 30 points, according to a new survey released by the Consumer Federation of America (CFA) and Washington Mutual Bank.

Boosting your credit score by a mere 30 out of several hundred points might be much easier than you’d think it would be. According to the survey, these five strategies may be among your easiest opportunities for improvement:

● Pay all of your bills on time and in full every month.
● Don’t max out, or get close to maxing out, the limits on your credit cards or revolving credit accounts.
● Pay off your debts, rather than transferring your balances from one account to another.
● Don’t open multiple new credit accounts all at one time or in rapid succession.
● Check your credit report annually and take action to correct any mistakes that might have been made.

The survey als…

The Puzzle of Home Price Indexes

By Marcie Geffner - Bankrate

U.S. home prices declined 15.3 percent, 8 percent or 4.6 percent from April 2007 to April 2008, according to Standard & Poor's, the National Association of Realtors and the U.S. government, respectively.

If you're puzzled by that sentence, you're not alone. Home price measures have been front and center this year as home values have fallen across the country, but amid all the uproar, very little attention has been paid to the startling discrepancies among these three measurements of house prices or the implications of this conundrum for home buyers and sellers.

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Foreclosures hurt condo owners

By Marcie Geffner - Bankrate

When too many condominium owners lose their units to foreclosure, condo associations feel the financial pain. That's bad news for homeowners and real estate investors who depend on these associations to take care of building maintenance, property insurance, utilities, landscaping and other amenities that are shared in common.

While most owners pay their association dues as they are obligated to do, a rising number have fallen behind for various reasons. The problem isn't insignificant: Approximately 24 million housing units are governed by some 300,800 homeowner associations in the United States, according to the Community Associations Institute, or CAI, a nonprofit organization of homeowner association managers in Alexandria, Va.

"If you've been foreclosed on and you have a lien against your home or (if you're in financial trouble due to) general economic conditions and you aren't able to pay your assessments, that creates some major…

Breaks for big loans

By Marcie Geffner - Bankrate

Homeowners and homebuyers who live in expensive housing markets may be pleased to learn that the federal government recently increased the size of mortgages that Fannie Mae and Freddie Mac can purchase and the Federal Housing Administration (FHA) can insure. The higher loan limits are expected to help people in high-cost housing markets buy homes and refinance existing mortgages, though the extent of such aid won't be assured until the new programs are put into place.

The higher loan limits were part of the economic stimulus package that President Bush signed into law in February. At that time, the loan limit for Fannie Mae and Freddie Mac was $417,000 in high-cost markets, except for Alaska, Guam, Hawaii and the U.S. Virgin Islands, where the limit was $625,000. The new limits will be based on a percentage of the median home price in each county and could be as high as $729,750 in some areas.

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The bad business of 'Friends of Angelo'

By Marcie Geffner - Inman News

Quick quiz: Which mortgage company chieftain took home $140 million in compensation last year while the company he founded lost $704 million?

If you said Angelo R. Mozilo, CEO of Countrywide Financial Corp., take a bow. And add a couple of gold stars if you knew Mozilo's pay was comprised of more than $120 million from exercised stock options and more than $22 million in other compensation, according to a Reuters' report based on the mortgage company's year-end filing with the Securities and Exchange Commission.

Set aside the stock options, and the astonishing disconnect between Mozilo's star-quality compensation and the company's horrific performance could nonetheless suggest why Mozilo decided it was OK to arrange some special insider deals on home mortgages for an assortment of people dubbed "Friends of Angelo." Yet while this disconnect may serve as an ego-booster and explanation, it's by no means an acceptable excuse f…

Mortgage approval made easy

By Marcie Geffner •

Whether you're buying a home or refinancing an existing home loan, you'll soon find out that lenders today are a picky and demanding bunch when it comes to loan approvals. Even well-qualified borrowers are expected to jump through some pretty high hoops to qualify for financing.

But fear not: These tips and suggestions can help you make the best possible impression on the lender of your choice.

Just as job-hunters may wonder what top employers want to see on a resume, prospective borrowers may be curious about what lenders look for on a loan application.

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What to ask before you list your home

By Marcie Geffner - Cyberhomes Contributor

Real estate agents aren’t all alike. Here’s help to figure out which one you should hire.

Home sellers are understandably concerned about the asking price at which they’ll list their home for sale and the commission they’ll have to pay the real estate agent when the sale closes. But selecting an agent just because he or she promised you a high price or low commission may be “the single biggest mistake a seller makes,” warns Jean Bourne-Pirovic, an assistant manager at Long & Foster Real Estate in Silver Springs, Md.

With that in mind, here are some questions you should ask before you sign a listing agreement with a real estate agent:

Ask: What is your marketing plan for my home? Which websites will my home be displayed on? Which newspapers will my home be advertised in and how frequently? How many open houses will you hold for other brokers and the public? Will my house be included on your office tour of new listings? If I haven’t received a…

A dozen ways to get a down payment

By Marcie Geffner -

Not long ago, no-down payment loans were the height of fashion for homebuyers. But now that lenders have tightened their standards, borrowers once again are expected to "put some skin in the game," to use the industry's favorite catchphrase. That "skin" refers to the borrower's own cash, and it means down payments are definitely back in style.

The chief advantage of a down payment today is simply the ability to qualify for a loan, since only a handful of so-called "zero-down" loan programs still exist. Yet down payments have other benefits, too.

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Fed holds interest rates steady

By Marcie Geffner –

The Federal Reserve decided last week to keep its key interest rate unchanged at 2 percent. That’s good news for home buyers and homeowners who feared an increase in the benchmark federal-funds rate might trigger higher interest rates on home loans.

The Fed held steady because it is trying to balance the different pressures on the U.S. economy. On the one hand, the Fed suggested in its statement, the economy has been strong enough to continue growing and withstand the current risks. But on the other hand, the Fed statement noted, "the upside risks to inflation and inflation expectations have increased" and "uncertainty about the inflation outlook remains high." Inflation, which refers to higher prices, is one of the Fed’s chief concerns.

The Fed doesn’t directly set the interest rates that borrowers pay on home mortgages, auto loans or credit cards. But the Fed’s actions indirectly affect the rates that lenders charge on those loa…

FHASecure program expanded

By Marcie Geffner - Lending

The Federal Housing Administration (FHA) has announced an expansion of its FHASecure loan program, which is designed to help homeowners who can't afford the monthly payments on their existing subprime adjustable-rate mortgage (ARM).

The FHASecure program allows borrowers to use an FHA loan to refinance a subprime ARM if the original lender agrees to reduce the amount the homeowner owes as an alternative to foreclosure. The lender may require a separate loan for repayment of the "gap" between the amount owed and the reduced amount. Homeowners who have used the FHASecure program were able to cut their mortgage payments by $400 a month on average, according to the FHA.

The expanded program is scheduled to take effect in July 2008 and will be open to:

● Borrowers who were late on three monthly mortgage payments, either consecutively or three times in the previous 12 months. A loan-to-value (LTV) ratio of 90 percent is required. (The LTV ra…

Is your real estate blog a lawsuit magnet?

By Marcie Geffner - Inman News

Real estate blogging is long overdue for a few good lawsuits.

While free speech and fair use are legitimate and important legal concepts, what goes on in the blogosphere is all too often well beyond what's permissible. Bloggers may be guilty of libel, defamation, copyright infringement, invasion of privacy and a number of other crimes. Whether individual cases have merit is a matter for the courts to decide, but the risks of liability present a clear warning for real estate bloggers who operate in ignorance or disregard of the laws that govern free speech and fair use.

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Rediscovering the American Dream

By Marcie Geffner - Inman News

Home ownership has enjoyed a well-deserved reputation as a crucial component of the so-called "American Dream." But for many people, home ownership is now perceived more as a nightmare than an essential element of the (admittedly somewhat mythical) "good life" that could be attained in the United States. Whether that negative perception is based on valid fears or little more than irrational overreactions to today's market correction, it's nonetheless a paradigm shift that should be of concern to anyone whose livelihood depends on real estate.

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When will YOUR housing market recover?

By Marcie Geffner -

Pundits love to make predictions as to when home prices will stabilize in U.S. housing markets. But even well-respected forecasters and analysts may disagree, and even if a forecast proves true nationally, your local market may behave in a wildly different way. This disconnect between broad-stroke forecasts and small-scale local markets presents quite a puzzle for homebuyers and home sellers, who need to make major financial decisions on the basis of facts, not fiction.

Two examples nicely illustrate the divergent opinions of respected economists, some of whom suggest a housing rebound is just around the corner and others of whom say a recovery could take years just to get started.

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REALTOR® Rescue Squad

By Marcie Geffner - California Real Estate

REALTORS® who want to learn more about short sales might take a few tips from Doug Fowler, a manager at Coldwell Banker Brokers of the Valley in Napa.

A dozen sales agents in three of the firm’s four offices attended Fowler’s internal training sessions on short sales, and seven or eight of the participants later banded together in an informal group that aims to help homeowners explore alternatives to foreclosure.

“We trained pretty much everybody [in our offices],” Fowler recalls. “Some people yearned for more and wanted to have a support network and exchange of ideas, so that was the genesis of putting together what we called the ‘rescue squad.’”

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Is Your Business REO-Ready?

By Marcie Geffner - California Real Estate

While no one is happy to hear sad stories about homeowners who’ve lost their home in foreclosure, the hard truth is that foreclosures can be an excellent business for real estate salespeople who have the expertise, cash flow, and professional demeanor to sell bank-owned properties.

The incidence of foreclosure has soared so quickly that many lenders are overwhelmed by the number of “real estate-owned” or “REO” properties they have on their books, according to Vicki Carpenter, director of training at Coldwell Banker ABR in Menifee.

“Banks have a very high inventory” of REOs and “the floodgates have just started to open,” Carpenter says.

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Fence-sitters waiting for the bottom may miss it

By Marcie Geffner - California Real Estate

It’s a common condition in today’s housing markets: Buyers appear to be glued to the proverbial procrastinator’s fence and their hesitancy creates plenty of work, but generates no income for REALTORS®, month after commission-less month.

“What we are finding is fence-sitters,” says Pat “Ziggy” Zicarelli, owner of Style Realty in Tarzana. “Young people, single people, divorced people who need to buy properties are saying, ‘I like that property; however, I’ll wait until the prices come down more.’

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Survey finds tougher loan requirements

By Marcie Geffner -

It's no secret that banks have raised the bar for borrowers who want to get a new home loan. The fact is that today's requirements may be significantly more challenging, regardless of whether you want to buy a home, refinance your current mortgage or take out a home equity loan or line of credit.

Yet these tougher requirements definitely don't mean that you won't be able to get a loan. Plenty of borrowers have obtained new loans this year on good terms and often at historically low interest rates.

Banks tighten across the board Lenders use the phrase "tighter credit standards" to describe their own tougher requirements. And indeed, most banks have tightened their credit standards this year.

A recent Federal Reserve survey of senior loan officers found that 62 percent of the banks surveyed had tightened their standards for prime residential mortgages, and even higher percentages had tightened their standards for non-tradition…

Rates dip on big mortgages

By Marcie Geffner -

Interest rates on so-called "jumbo-conforming mortgages" have dipped significantly in recent weeks. The new lower rates should make these larger loans more affordable for people who live in high-cost housing markets and can meet the qualifications to get this type of loan.

Jumbo-conforming loans were created in February, when the federal government raised the loan limits on mortgages that can be purchased by Fannie Mae and Freddie Mac, two government-sponsored corporations that buy packages of securitized mortgages from lenders. The loan limit used to be $417,000 even in most of the nation’s high-cost housing markets, but was raised to as much as $729,750 in some counties. To find maximum loan limits in your county, you can download Fannie Mae’s Jumbo-Conforming Loan Limit Look-Up table.

Initially, interest rates on jumbo-conforming loans remained stubbornly higher than rates on smaller conforming loans. But the interest-rate gap has narrow…

After VOWs, what next?

Marcie Geffner - Inman News

The U.S. Justice Department and National Association of Realtors have at last settled their long-running dispute over the competitiveness of virtual office Web sites. The settlement is good news for real estate, but VOW innovations may yet play out in surprising ways that neither the DOJ or NAR could have anticipated, and the settlement itself still leaves plenty of intriguing questions to ponder.

In case anyone's still confused, a VOW is a Web site that functions like a "virtual" real estate brokerage office in the narrow sense that registered users can use the Web site to access just about the entire MLS database of for-sale homes. Only selected information that's protected for business or privacy reasons is excluded. These Web sites enjoyed some popularity as new innovations some years ago. But the extended controversy over their use and allegations of anti-competitive practices stalled the VOW revolution in its early days.

The settlement …

What To Know About FHA Loans

By Marcie Geffner -

It's a common misconception, but in fact, the FHA is not a lender. Nor does the FHA give people money to buy a home or set interest rates on home loans. Rather, the FHA, or Federal Housing Administration, is a federal government agency that offers mortgage insurance on loans originated by lenders that are approved by the agency. This insurance protects the lender in case the borrower defaults on the loan.

The FHA was set up in 1934 after the Great Depression and is a division of the U.S. Department of Housing and Urban Development, or HUD. FHA-insured loans enjoyed decades of popularity, but then fell out of favor during the recent housing boom in part because lenders began to offer subprime loans that had artificially low initial interest rates and monthly payments. These subprime loans have since proved disastrous. As a result, lenders have tightened their credit standards and borrowers have flocked to the comparative safety and familiarity of FHA-…

Improve your financial fitness

By Marcie Geffner -

Did you know financial fitness can save your life?

Well, maybe not literally. But being well informed about money can reduce stress and help you live a healthier and happier life. Here are three tips to get you started:

Did you know? The U.S. has one of the lowest personal savings rates among the world’s economically developed countries. In February 2008, people in the U.S. saved only 0.3 percent of their disposable income, on average, according to the U.S. Department of Economic Analysis.

Saving money is crucial to financial well-being. Savings can help you cope with a financial emergency, make a major purchase and even get ready for retirement.

Saving is easier if you start early and make a habit of it. One good practice is to sign up for an automatic savings plan that deducts money from your paycheck or checking account and sets it aside before you have a chance to spend it. Stash your savings in a savings account, certificate of deposit (CD), inv…

Real estate should rethink affordable housing

By Marcie Geffner - Inman News

There's no doubt that the current mortgage crisis has caused a lot of pain. Lenders and investors have lost their shirts. Realtors and mortgage brokers have lost their livelihoods. And home buyers, many of them first-timers or minorities, have lost their homes.

But will the lessons of toxic mortgages, blind-eyed regulators, irrational borrowers and inflated appraisals be learned this time? Or will the problems again repeat themselves and will the pain that so many have endured come again to naught?

One absolutely vital lesson that simply must be learned to turn this crisis into new opportunities is that the affordability of housing, whether it is owned or rented, should be a higher public policy priority than the rate of home ownership. That means affordable housing should be part of the solution to the current crisis.

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Property taxes trip up naive homebuyers

By Marcie Geffner -

Longtime homeowners may be willing to accept property taxes as an unavoidable fact of life, but homeownership newbies could be surprised or even shocked to discover just how costly these annual government assessments can be.

Homebuyers need to plan ahead for property taxes, which can easily amount to thousands of dollars each year. Yet it's not always easy to figure out how much to budget for this expense.

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Conforming-jumbo loans still playing hard to get

By Marcie Geffner and Holden Lewis -

Higher loan limits, set by the federal government as part of an economic stimulus package early this year, were supposed to make jumbo loans more affordable in expensive housing markets. Rates finally have come down on these so-called "jumbo conforming" mortgages, though these loans likely will remain hard to get for most borrowers.

Jumbo-conforming loans range in size from $417,000 to nearly $730,000 and are especially important in expensive housing markets. A small condominium or modest first home can cost upward of $500,000 in markets such as Los Angeles, San Francisco, Alexandria, Va., New York and other costly locales.

Depending on the buyer's credit score, the appraised value of the home and the condition of the real estate market in the area, there are three types of jumbo-conforming loans to consider.

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How To Buy Short-Sale Properties

By Marcie Geffner -

Weak housing markets create new golden opportunities for property investors. One classic opportunity is a "short sale," so-called because the owner has agreed to sell the property for less than he or she owes on the first and possibly second mortgages. The seller usually intends to leave the lender "short" on the sale, and that's why the lender's approval is required for such sales to close.

Here are some tips for investors who want to purchase short-sale properties:

Get to know the sellers. A successful short sale typically is predicated on the seller's financial hardship, which is the impetus for the lender's approval of the deal. Savvy buyers look for sellers who are behind on one or more of their mortgage payments and who aren't in a strong enough financial position to catch up the payments they've missed.

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Fed cuts key interest rate

By Marcie Geffner -

As expected, the Federal Reserve has trimmed a key bank interest rate by one-quarter of a percentage point from 2.25 percent to just 2 percent. The Fed has now lowered the federal funds rate 3 percentage points in the last seven months.

In its statement, the Fed noted that turmoil in the financial markets, tougher requirements for new loans and weak housing markets have put pressure on the U.S. economy.

"Tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters," the Fed said.

One of the Fed’s primary objectives is to protect the U.S. economy from inflation. That means the Fed has to find a balance between lower interest rates and higher prices. This week’s statement said the Fed would "continue to monitor inflation developments carefully."

The Fed doesn’t directly control interest rates on home loans, credit cards or other consumer debts. But this week’s rate cut c…

House Offers: How Low Can You Go?

By Marcie Geffner -

Homebuyers are looking for a steal; home sellers are looking for an out, and homebuilders and banks are selling homes at cut-rate prices. Combined, these conditions have triggered a wave of lowball offers to buy homes in distressed U.S. housing markets.

Conventional wisdom claims that lowball offers don't work. Homebuyers are warned not to "insult" sellers, who are counseled not to counter offers from "disrespectful" buyers. Real estate salespeople are stuck in middle, oftentimes unwilling to engage in prolonged negotiations that might not earn commissions.

But conventional wisdom doesn't always hold true. With a severe slowdown in sales, some experts now offer new advice.

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Judges should have say in mortgage modifications

By Marcie Geffner - Inman News

The Mortgage Bankers Association recently fought off federal legislation that would have allowed bankruptcy judges to modify residential mortgages. The MBA's victory was a huge success for lenders, but an unfortunate loss for homeowners who have declared bankruptcy.

Lenders had good reason to dislike the proposal, which would have shifted some of the power over mortgages from lenders' loss-mitigation departments to bankruptcy judges, who might have imposed modifications that the lenders wouldn't have liked.

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Why housing is cyclical

By Marcie Geffner -

It's no secret that the U.S. housing market is cyclical and in the midst of yet another painful correction. The causes and characteristics of these cycles vary, at least in some respects, but the implications for homebuyers, home sellers and homeowners remain remarkably reliable as the cycles roll by.

Housing cycles aren't all alike, yet over long periods of time a basic pattern can be discerned, says Mark Dotzour, chief economist of the Real Estate Center at Texas A&M University.

A cycle doesn't really have a start or a stop, but to pick a point at random, we might say that a housing cycle "starts" when economic activity heats up and interest rates rise. Higher interest rates make housing less affordable, so demand decreases and home prices fall.

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Making sense of house prices

By Marcie Geffner –

It’s no secret that home prices have declined in many U.S. towns and cities. Indeed, the downward trend has been the subject of numerous newspaper headlines, not to mention plenty of cocktail party small talk, water-cooler chitchat and neighborhood gossip.

Yet home prices aren’t just a subject of idle conversation. If you want to buy a home, prices determine which homes you can afford. Or if you already own a home, your home’s value affects whether you can refinance your mortgage, take out a home equity loan or line of credit, or stop paying for mortgage insurance.

Equity is king
Your home’s value is a component of your equity, which is the difference between the value and the amount you owe, often expressed as a percentage. For example, if you borrowed $270,000 to buy a $300,000 home, your equity at the time of purchase would be $30,000, or 10 percent. If the value of your home dropped, your equity would shrink as well. The more equity you have, the ea…

Foreclosure crisis hits rental housing

By Marcie Geffner -

It's no secret that the nation's subprime mortgage meltdown, spike in foreclosures and fall in home prices have affected legions of homebuyers, home sellers and homeowners. But what may be surprising is that the turmoil in today's U.S. housing markets has important implications for renters as well.

"There is some pickup in demand, but there is also a pickup in supply -- both new apartments that are being built and also units shifting from owner to renter," says Mark Obrinsky, chief economist of the National Multi Housing Council, or NMHC, an apartment industry trade group.

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Downpayment Assistance Should Be Ended, Not Mended

Marcie Geffner - Inman News

When all else fails, why not sue the federal government?

That's the card Nehemiah Corp. and AmeriDream have played, perhaps to defend their very existence as two of the largest downpayment assistance organizations in the United States. Yet while these organizations and their 180-plus brethren have helped many people buy a home, their business model has been suspect since the start and today's weakened housing markets would be better off without their inflationary intervention.

Downpayment assistance programs funnel "donations" from builders and home sellers to buyers, who use the "gifts" as all or part of their downpayment. The amount of money at stake isn't nominal: AmeriDream alone has given more than $726 million, in chunks of $3,600 on average, to more than 200,000 home buyers since 1999, according to the lawsuit.

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Documents are new reality for borrowers

By Marcie Geffner -

If you recently applied for a new home loan, you might be surprised at the large number of documents your lender will expect you to hand over before your loan is approved.

In 2005, 2006 and 2007, many mortgages required only limited documentation. But today, lenders have begun to reinstate traditional "full doc" requirements. The fact is that lenders have become pickier about who can qualify for a loan, and more documentation is part of that trend. Even if you submitted very few documents when you obtained your current mortgage, you’ll likely be asked for a stack of documents if you want to refinance now.

Documentation isn’t just paperwork. Lenders actually use your documents to verify the information on your loan application and make an assessment of your financial situation. Some of the documents you’ll be asked for include W-2 forms and paycheck stubs. These show that you earn enough income to make the payments on your new mortgage.

If you’…

Borrowers flock to FHA loans

By Marcie Geffner -

FHA loans, which are backed by the Federal Housing Administration (FHA), are enjoying a resurgence in today’s tighter lending climate.

FHA loans have been out of favor in recent years, but are especially popular today because they typically have easier qualification requirements than non-governmental loans and require only a small down payment or very little equity. An FHA loan also may have a lower interest rate than would be offered on a comparable loan that wasn’t backed by the U.S. government.

What is the FHA?
The FHA doesn’t actually make loans. Instead, this agency offers a guarantee that reimburses your lender if you don’t pay back your loan. You’ll have to pay small upfront and monthly fees for that protection, but a lower interest rate might offset the extra expense.

An FHA loan can be used to buy a home or refinance an existing mortgage. Traditionally, the agency has been seen as an alternative for lower-income borrowers or borrowers with shaky…

New mortgage form a grand idea

By Marcie Geffner - Inman News
It's easy to complain about government paperwork, but sometimes something as seemingly simple as a new form can be worth much more than the paper it's printed on. Such is the new standardized and borrower-friendly Good Faith Estimate that has been proposed by the U.S. Department of Housing and Urban Development.
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Can Fed rate cut benefit borrowers?

By Marcie Geffner -

The Federal Reserve made a substantial cut in a key interest rate Tuesday, March 18. The federal funds rate was lowered three-quarters of one percent, referred to as "75 basis points," from an already-low 3 percent to just 2.25 percent.

The rate cut may be good news for borrowers, even though the Fed’s decision doesn’t directly reduce interest rates on consumer or home loans. Instead, the rate cut can influence short-term interest rates on home equity lines of credit, adjustable-rate mortgages tied to the prime rate, car loans and credit cards. Longer-term loans like 30-year fixed-rate mortgages are less likely to benefit from the Fed’s rate cut.

The Fed decided to cut the interest rate due to slower growth in the economy and consumer spending, softer job markets and "considerable stress" in the financial markets.

The lower rate should "promote moderate growth over time" and "mitigate the risks to economic activity,&qu…

Overseas Buyers Stake Claim in California Real Estate

By Marcie Geffner - Los Angeles Times A new pond is emerging in which to fish for home buyers--overseas. As home sales have stalled and home prices have slumped in Southern California, realty agents have geared up to help sellers tap into an international market of property buyers. Some local agents have adapted their websites for foreign buyers by adding multiple language translation options. Others have joined professional organizations to give themselves an international reach. One local agent has even offered to reimburse buyer travel expenses should a sale close. Read the rest of this story:,0,5922805.story International real estate on the Internet:,0,4141772.story

Should bankruptcy courts modify mortgages?

By Marcie Geffner -
Federal bankruptcy courts currently offer only scant relief to homeowners who can't afford to pay their mortgages. That could change, if supporters of legislation that would allow bankruptcy judges to modify mortgages can muster enough votes in Congress to override a threatened presidential veto.
Giving bankruptcy courts the authority to modify home loans would be a palatable way to accommodate both borrowers and lenders, says Jack Williams, a bankruptcy professor at Georgia State University College of Law. Borrowers would "get to keep a major asset with significant upside potential" and avoid the emotional wound of losing their homes, while lenders would be placed in "a position based on the fair market value of the property," which would be better than a foreclosure, Williams says.
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