Rescue Offers: Helpful Plans or Foreclosure Scams?

Homeowners in need should call lender or non-profit counselor

By Marcie Geffner, Cyberhomes Contributor

Homeowners who are facing foreclosure tend to be stressed out, short of cash and anxious about their future. Unfortunately, those characteristics can make them attractive targets for financial predators. That’s why these homeowners must be especially alert to avoid foreclosure scams and rely only on reputable organizations to help them.

One common foreclosure rescue scam is “phantom help,” in which a “rescuer” charges the homeowner outrageous fees to make telephone calls and complete paperwork the homeowner could have completed himself or promises “more robust representation that never materializes,” according to “Dreams Foreclosed: The Rampant Theft of Americans homes Through Equity-Stripping Foreclosure Rescue Scams,” a report by the National Consumer Law Center in Boston.

This type of scam “gives homeowners a false sense of hope, delays them from seeking qualified help and exposes their personal financial information to a fraudster,” according to the Federal Deposit Insurance Corporation, the agency that insures bank deposits.

While not all foreclosure rescue services are scams, many of these outfits are less competent and clearly more costly than legitimate nonprofit counseling agencies, explains Bruce Hahn, president of the American Homeowners Foundation, a consumer education organization in Arlington, Va.

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6 Ways To Cut Your Housing Costs

By Marcie Geffner -

Housing costs make up a large chunk of most people's household budget. That's one reason why housing costs can be a prime target if you're looking for some good ways to save money this year.

Here are six ways you can cut the amount of money you spend each month on your home:

1. Refinance. A new mortgage at a lower interest rate may be the best way to save the most money on your housing costs. And that may be true even if you have to spend some money upfront to lock in a lower interest rate. Refinancing can pay off month after month, and the longer you continue to own your home, the more you'll save.

2. Downsize. If your home is too large for your current needs, now may be a good time to consider moving to a less costly residence to save money on your monthly housing costs. Now that home prices and mortgage interest rates have declined, you may be able to find a home that suits your needs at an affordable price. A smaller home also could mean big savings on utilities, maintenance and repairs.

3. Relocate. If you live in an area that has relatively high housing costs, you might be able to save a bundle by moving to an area where housing is more affordable. This option may make the most sense for retirees or those with flexible jobs. The differences can be dramatic, and you may be able to save hundreds or thousands of dollars each month without skimping on the size or comfort of your home.

4. Reassess. If your home has declined in value since your last property tax assessment, you may be able to save on your taxes by challenging the assessor's latest valuation of your property. Many communities have a formal process that allows homeowners to present information they believe will demonstrate a lower value of their home for property tax purposes. The tax savings can be a substantial cut to your housing costs for minimal effort.

5. Research. How much you pay for homeowner's insurance can vary widely among insurers. Do some research, shop around and compare rates, and you might find that you can save a lot of money and still get the same amount of coverage. Ask for a multiple-policy discount if you insure your home and car with the same company.

6. Reduce. Utilities are another good way to save money on your housing costs. Weatherproof your home to reduce small air leaks. Plant shady trees to keep your home cooler in the summertime. Install water conservation devices. Turn down the setting on your hot water heater. Turn off lights, computers, television sets and other electronic devices when they're not in use. Consider energy-efficient appliances that can pay for themselves in just a few years.

© 2009 LendingTree, LLC. This story, "6 Ways To Cut Your Housing Costs" is reprinted by the author with written permission of LendingTree, LLC.

What Interest Rate Will You Pay on Your Loan?

Marcie Geffner -

If you've decided to buy a home or refinance your mortgage, you may be puzzled by the different interest rates you've seen advertised for home loans. You're not alone: Many home buyers and homeowners are confused when they discover they don’t qualify for these rock-bottom interest rates.

The reality is that the interest rate you’ll pay on a loan is determined largely by your own personal situation. Even if you don’t meet the requirements for the best-of-the-best rates that you've seen advertised, that doesn't mean you won't be able to qualify for a loan or won't be offered an attractive interest rate that you'll be able to afford.

The interest rate you'll be offered will depend on:

● Credit score. Your credit history and credit score will have the greatest effect on the interest rate you'll be offered. The higher your score, the lower your interest rate likely will be. A credit score is a numerical representation of how well you've handled other loans and credit cards in the past.

● Type of property. The interest rate you'll be offered also depends on the type of property you want to purchase. You'll generally pay a higher interest rate to buy a second home or a property you want to rent out to tenants than you will to buy a home you intend to occupy yourself.

● Loan term. Interest rates tend to be higher on 15-year loans than they are on 30-year loans. That means you'll likely be offered a higher rate if you choose the shorter term.

● Loan amount. If you want to borrow more than $417,000, your mortgage may be considered a non-conventional or even "jumbo" loan, in which case, you'll pay a higher interest rate due to the larger loan amount.

● Loan-to-value (LTV) ratio. Your loan-to-value ratio is the total amount of your mortgage divided by the appraised value of your home or the home you want to buy. If you have only a small downpayment, or not much equity, you'll likely pay a higher interest rate. Taking out cash can raise your interest rate as well.

● Location. Interest rates vary from lender to lender and state to state. Some states simply have lower borrowing costs on average.

When you compare the interest rates you’re offered with advertised interest rates, keep in mind that some advertised rates require payment of discount points, which makes those rates appear to be cheaper than they actually are. A point is an upfront fee that's equal to 1 percent of the loan amount. Points don't directly influence the interest rate you'll be offered, but you can pay points to reduce the interest rate on your loan.

© 2009 LendingTree, LLC. This story, "What Interest Rate Will You Pay on Your Loan?" is reprinted by the author with written permission of LendingTree, LLC.

What to know before you refinance

By Marcie Geffner •

The most fundamental consideration in whether a homeowner should refinance an existing mortgage is the break-even point that represents how soon the cost of the refinance will be recaptured through lower monthly payments. But while the break-even point is easy enough to calculate, other factors may also influence your decision and, if it's a go, the type of loan you'll select.

While there is no rule of thumb for the maximum payback period, or break-even point, that makes sense for most borrowers, three years or fewer typically is considered reasonable if you intend to keep your mortgage at least that long.

To calculate a break-even point, divide the anticipated total cost of your refinance by the monthly savings on your loan payment. The result is the number of months that would be required to recoup the cost.

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Lenders face flood of loan applications

Homeowners who want to refinance should be prepared to be persistent.

By Marcie Geffner - January 16, 2009

If you've decided to refinance your mortgage to take advantage of today's low interest rates, be prepared to be patient and persistent. Many lenders have received a flood of new loan applications due to the lowest interest rates on record. And as a result, most lenders now face enormous backlogs of refinance requests that need to be processed.

A survey conducted every week by the Mortgage Bankers Association (MBA) shows just how swamped lenders really are. For the week that ended Jan. 9, 2009, the volume of loan applications nearly doubled compared with the previous week. Volume was up more than 50 percent compared with the same week a year earlier as well, according to the MBA's survey. (These figures are on a non-seasonally adjusted basis.) Applications to refinance hit their highest volume since June 2003, the last time there was a boom in refinancing.

Moreover, many lenders now employ fewer people, which means there are fewer hands and eyes on deck to process all of the loan applications lenders have received. And since lenders have tightened their standards and reinstated documentation requirements, each application now takes longer to process. This combination of fewer people and a heightened level of scrutiny has added to the delays.

The flood of loan applications was set in motion Dec. 16, 2008, when the Federal Reserve cut a key bank interest rate to near zero. While the Fed doesn't set rates that homeowners pay on their mortgages, the government agency's decisions do impact the general level and direction of consumer interest rates. After the Fed's action, interest rates on 30-year fixed-rate mortgages dropped below 5 percent, a remarkably low level. Given rates this low, the flood of loan applications isn't expected to ease up any time soon.

Homeowners who want to refinance are well-advised to be patient and persistent. Shop around for a lender who can meet your needs. Ask questions about the lender's ability to close your new loan in a timely fashion. Stay in touch with your loan officer and be prepared to pick up the telephone periodically if you haven't received an update on the progress of your loan application.

© 2009 LendingTree, LLC. This story, "Lenders face flood of loan applications," is reprinted by the author with written permission of LendingTree, LLC.

Feds to retry former Homestore CEO

Feb. 12 hearing scheduled to set new trial date


Inman News

LOS ANGELES -- Stuart Wolff isn't yet out of the woods. U.S. prosecutors intend to retry Wolff, the former Homestore CEO whose conviction and 15-year prison sentence related to an accounting scandal was tossed out last year by a three-judge panel.

"There will be a new trial. Where we are is essentially as if the original trial had never happened," Assistant U.S. Attorney Michael R. Wilner told Inman News.

Wolff has been newly accused of conspiracy, filing false statements with the Securities and Exchange Commission, lying to accountants, fraudulent insider trading, and falsification of corporate books and records in connection with an alleged accounting scandal nine years ago at the online property listings company now known as Move Inc.

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Return on Investors

Who’s buying foreclosures and how to attract their business

By Marcie Geffner - California Real Estate

Real estate investment is back in style. And that means REALTORS® need look no further for new business than these profit-minded buyers, who’ve returned in droves to some of California’s weakest housing markets.

“Investors are coming back into the market, and they are changing the dynamics of the market,” says Lori Mode, a REALTOR® with Keller Williams Realty in Elk Grove, south of Sacramento.

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Cash crunch? 6 ways to get liquid

By Marcie Geffner •

If your budget is like that of so many other households, it may seem like you never have quite enough cash on hand to pay all your bills at the end of every month and still set aside a few extra bucks for a rainy day. And these days, your cash crunch may be worse than ever if your expenses are rising, your income is falling and your credit limits are being shredded.

Though there aren't really any new ideas in cash management, financial planners suggest six tried-and-true techniques that can help you improve your liquidity and boost your cash flow without resorting to such drastic measures as selling your home, bailing out of your long-term investments or even raiding your jewelry box.

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Solving refinance challenges

By Marcie Geffner •

Homeowners who have financial problems and want to refinance their mortgage may be pleased to know there are some strategies that can help them overcome such challenges as inadequate income, excessive debt, negative equity or poor credit.

The challenges aren't imaginary. Lenders have indeed tightened their standards, and there are few good solutions to common problems, according to Robert Satrick, president of Prime Financial Services in Van Nuys, Calif., and chairman of the California Mortgage Bankers Association in Sacramento.

"That sounds harsh. I know that," he says. "But that's the reality of the way it is."

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