Bush outlines plans to help homeowners

Proposals aimed at helping those with risky mortgages keep their homes

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White House housing help Aug. 31: President Bush outlines his plan to help subprime mortgage borrowers. MSNBC

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Updated: 7 minutes ago

WASHINGTON - Offering federal aid for strapped mortgage holders, the White House outlined proposals Friday to help borrowers hard hit by credit problems and the housing slump.

The initiatives unveiled by President Bush were intended to help homeowners with risky mortgages keep their homes. Bush also was to discuss efforts to prevent these kinds of problems from arising in the future.

It was the administration’s first efforts to deal with an expected wave of mortgage defaults fueled by the subprime-mortgage crisis.

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White House press secretary Tony Snow said he could not provide an estimate of how much the proposals would cost taxpayers or what affect they would have on the housing market. He bristled at questions about why the measures had not been taken sooner. “I’m sure we’ll have plenty of time for backseat driving,” Snow said.

The White House said the plan was not a bailout for lenders or speculators.

One of the key elements of Bush’s plan would allow homeowners with a good credit history, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.

Earlier this month, Bush predicted that the ongoing decline in the housing market wouldn’t become precipitous, but would result in a “soft landing.”

He rejected any direct government aid to homeowners losing their houses to foreclosures, saying he only supported federal government help that would encourage refinancing and educate prospective home buyers about risky mortgage terms

“Anybody who loses their home is somebody with whom we must show enormous empathy,” the president said at an Aug. 9 news conference. “The word ‘bailout,’ I’m not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no, I don’t support that.”

On Friday, Bush said he planned to:

• Urge Congress to pass legislation that would give the Federal Housing Administration more flexibility in assisting mortgage holders with subprime mortgages.
• Pledge to work with Congress to reform the tax code to help troubled borrowers rework their loans.
• Call for rigorously enforcing predatory lending laws and strengthening lending practices.

Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can’t afford to refinance or even sell their homes.

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Discuss: Should U.S. bail out subprime borrowers? Bernanke says Fed ready to bolster economy

Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners’ headaches.

The economy enjoyed a strong revival in the spring although growing troubles in housing and credit markets have darkened prospects considerably since then. The Commerce Department reported Thursday that the gross domestic product grew at an annual rate of 4 percent in the second quarter — the strongest showing in more than a year.

But that growth could be the best showing for some time as the economy continues to be battered by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller-coaster ride in recent weeks.

4 ways to fight for your home

If you're feeling pinched by an adjustable-rate mortgage or a falling salary, take action before the situation gets worse.

Kiplinger.com

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Even if you're a fiscally conservative homeowner, you may be feeling the pressure of high housing costs, particularly if you have a mortgage with a rate that's headed up or if your income has taken a hit. Here’s what to do if your home is on the line.

Spot trouble early. Assess where you stand, especially if your house payments are rising. For advice on cutting back your spending or increasing your income, consult a fee-only financial planner or a nonprofit credit counselor, such as one certified by the U.S. Department of Housing and Urban Development. Credit-counseling services should be free or low-cost -- say, less than $50 for a session.

Try a refi. Rates on 30-year, fixed-rate mortgages are still attractive and are generally lower than fully indexed rates on adjustable-rate loans. If you can't refinance because your financial prospects are poor, you have no equity in the home or you're looking at a large prepayment penalty, you may want to try selling your home. If you can't afford a full-service agent, try one who offers a limited package of services for a flat fee. See "3 ways to pay lower real estate commissions."

Doing it yourself is no easy task -- you have to price the property aggressively, make yourself and your home available for showings, and close the deal.

Take advantage of mortgage relief, if it's available. In Massachusetts, for example, the governor mandated that homeowners in financial trouble be allowed to request extra time to avoid foreclosure. Their cases will be considered individually. In California, legislators have proposed creating a mortgage pool to assist first-time homeowners in trouble. Fannie Mae and Freddie Mac soon will introduce their HomeStay program, which is designed for borrowers with adjustable-rate mortgages who are at risk for payment shock.

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Head off foreclosure. As soon as you think you will miss a mortgage payment, call your lender to discuss your options. Besides refinancing, these may include a forbearance (you temporarily pay nothing or only a minimum amount, making up the payments either over time or at the end of the loan) or a loan modification (the lender temporarily adjusts the interest rate). The better your credit score and employment history, the more receptive the lender will be. But note that some lenders may not be able to change the terms of your loan until you're at least 30 days delinquent, and sometimes as many as 120 days past due.

If all else fails, you could try to negotiate a short sale. In that case, the lender agrees to cancel your debt in exchange for the proceeds from the sale of your home. As long as you're an owner-occupant, not an unhappy investor, lenders are likely to be receptive. Plus, they want to avoid the hassle and expense of foreclosure.

A real-estate agent can help you negotiate the deal. (Call local agencies and ask for an agent with experience or training in short sales.) You have a limited window of opportunity: Most lenders allow only three months' delinquency before they issue a formal notice of foreclosure, and state law mandates how quickly the process moves after that.

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How to sell in a homebuyer's market

A real estate marketing pro shares her tips for selling in tougher conditions.

Thanks to www.realestate.msn.com for this article.

By Marilyn Lewis

• Back to: The best time to buy a home
• Should you hold an open house?
• 5 tips for a better open house

Has it been a while since you sold a house? Things have changed in the last six months.

Angela Stamoulos, an education manager for Coldwell Banker Residential Brokerage in Massachusetts and Rhode Island, trains agents to educate sellers about the changed market.

The trick these days, she says, is to distinguish your property from the large number of similar homes in the same price bracket. "These wallflowers are the big problem right now, from the point of view of sellers and real estate agents," she says.

Stamoulos' tips:

1. Don't let your property languish while new, competitive inventory is building up. Price it right initially to give buyers a sense they are getting a value for their money and to avoid numerous, incremental price reductions that reek of desperation.

2. If you get a lot of activity -- visits and second showings -- don't respond instantly to an offer. Tell buyers you'll allow a couple of days to give adequate time for multiple house hunters to view your home. Even in this difficult market, Stamoulos says, well-priced properties are bid up over the asking price.

3. Educate yourself about your local market. Ask agents for these statistics, including comparisons from last year:

• Inventory. The number of homes currently on the market.

• Days on the market. The length of time properties are staying on the market.

• Average sale price. This is helpful information, but it can be skewed by, for example, numerous high-end properties sold. The average price in your market may still be $350,000, just as it was last year, but today $350,000 may buy a lot more house.

• Median price. This is the price at which half of the homes sold for more and half sold for less.

• List-to-sell ratios. This ratio, expressing the list price of homes over the selling price, will reveal drops in prices. Ratios are given for periods of time -- say, a month or a quarter -- showing the effect of price reductions on time on the market.

4. Find the agent who can expose your property to the most buyers:

• Ask whether the company is part of a larger company or network. How many agents does the company employ to promote your property to buyers? The more the better.

• Use Alexa Internet to compare agencies' Web-site traffic. Be sure to compare local -- not national -- Web sites when checking local offices of national companies.

• Learn about the agency's overall marketing strategy. Do they use newspaper ads? E-mail? Their Web site? What's their marketing plan for your property?

• To screen agents, interview several, asking each for their market data and their interpretation of local trends.

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MOVING....

6 tips for making a smooth move

Shipping all of your belongings to a new home isn't cheap, but you can save thousands of dollars by doing some work yourself, including packing and unpacking. If you want professional help, your first move should be to find an honest and qualified company.

By Kiplinger's

• On Kiplinger's: Top 10 smart places to live
• On Kiplinger's: Smart cities for all stages in life
• On Kiplinger's: Protect your house this winter

The keys to a successful move:

1. Don't throw darts at the Yellow Pages. There are better ways to find a reputable mover. Start by visiting the Web site of the American Moving and Storage Association and click on "Why You Should Use a Certified Mover." Next, vet several outfits that serve your area by looking up their complaint records at the Better Business Bureau's Web site. Get bids from at least three companies.

2. Full-service will cost you full freight. Although hiring a professional interstate mover is still the easiest way to transport your family belongings, it is also usually the costliest. A typical household move over a distance of, say, 1,200 miles -- including the cost of loading, unloading and hauling goods that weigh about 8,000 pounds -- will run you $3,000 or more. The good news? You may save money by moving between October and May, because rates drop by about 10% during the offseason.

3. Movers may tip the scales in their favor. When you hire a full-service van line, insist on going with the driver to a weigh station twice: once to see the van's weight when it's empty and a second time to see its weight after it's been loaded. Otherwise, the company may fudge the weight measurements and charge you more than your fair share.

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4. Pack Mom's china yourself. And while you're at it, pack all your own boxes if you can. Interstate movers charge an additional $900, on average, to pack and unpack your belongings for you. One caveat: Prices for packing tape have tripled and prices for cardboard boxes have risen about 20% in the past two years. You can save on packing supplies by buying from OnlineMovingBoxes.com or BoxesDelivered.com, whose prices are usually 10% to 20% below what moving companies and office-supply stores charge.

5. Save money and leave the driving to them. You can save as much as 50% on an interstate move by renting from the do-it-yourselfers (U-Haul, Ryder and Penske, among others). But who really wants to drive a 15-year-old rental truck? Now there's another option: Household-freight companies such as ABF U-Pack Moving, Broadway Express and Door to Door will do the driving for you. The company leaves a crate or trailer outside your house; you pack the boxes and load them into the crate, and you unload them after the move. Moving the contents of a three-bedroom home the 1,900 miles between Columbus, Ohio, and Scottsdale, Ariz., would cost an estimated $2,984, including gas, if you rented a U-Haul truck. A comparable move would cost $3,057 with ABF U-Pack -- only about $75 more. By comparison, having Allied Van Lines do the driving for you, without its optional packing service, would run at least $6,090.

6. Unload some of the cost on the Internal Revenue Service. You may be eligible for an income-tax break for moving expenses when you take a new job, if your new workplace is at least 50 miles farther from your old home than your old workplace was. You may take the deduction even if you do not itemize.

-- By Sean O'Neill, Kiplinger's

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5 tips for a better open house

If you're committed to holding an open house, here's how to do it right.

By Melinda Fulmer

• Back to: Is an open house a waste of time?
• Should you hold an open house? 5 questions
• What to do if your home isn't selling

1. Clean and repair your home. It should go without saying, but clean your house as if you were going to eat off the floors. Also, consider making minor cosmetic repairs and upgrades such as touching up paint and planting fresh flowers.

2. De-clutter. Put away the ceramics collection, toys and things lining the bathroom and kitchen counters. A crowded house makes it look smaller and makes it harder for buyers to imagine it as their own, says Gail Mayhugh, a professional home stager and owner of GMJ Interiors in Las Vegas.

3. De-personalize. Take down family photos, trophies and other personal touches, even that book on your nightstand. Buyers need to imagine the house as a blank slate, ready to be occupied and personalized by them, Mayhugh says.

4. Consider holding an early viewing just for the locals. For instance, if you are having an open house from 1 p.m. to 4 p.m., invite your neighbors from noon to 1 p.m. It will make them feel good and allow the agent to focus on the most interested parties when the real open house starts.

5. Promote heavily. Make sure your open house is listed on the MLS and on other Internet sites such as Realtor.com, Expo or Craigslist.com. Post lots of pictures, send out fliers, put up lots of signs and advertise in your local paper.

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Reinventing the family room

(Thanks to http://realesate.msn.com for this article)

The hottest new thing in homes is a computer room with stations for parents and children. It's not without problems -- would you believe noisy kids and snooping parents? -- but it has increased family time.

By Kate Goodloe, The Wall Street Journal

The Lucido family used to spend a lot of weekday time apart -- kids in the toy room, mom Kelli working upstairs. So when they moved to a new house in Oakville, Mo., in December, Lucido says she came up with a fix: a whole-family home office, with mom-and-me desks and a new laptop for her 7-year-old. It's the "heart of the house," she says.

In an effort to eke out more quality time, some families are designing group home offices in which parents and kids can work together. Some are renovating existing rooms, installing desks and adding laptop ports for every member of the family, while others are ordering them as custom-built options in new homes. In its new Menifee, Calif., development, Capital Pacific Homes has a model outfitted with an "education space"; the bright-yellow room can fit up to eight stools and has desks that adjust to adult and kid heights.

Results are mixed. Some families say the shared workspaces help facilitate intergenerational bonding, with parents learning about YouTube and kids getting their first taste of Excel spreadsheets. But others say the new spaces are counterproductive -- after all, it isn't easy talking to clients when your kids are doing vocabulary drills in the background. And kids say it's hard to concentrate with parents interrupting their Web searches to give them unsolicited grammar lessons.

For Shannon and Fred Converse of Norwalk, Conn., a shared office has meant more time with their 13-year-old twins -- and more noise when they're trying to work. Since they converted their formal dining room into a space for everyone to work in together, the Converses say they've gotten to know each other a lot better. But when the parents, who own a tutoring business, are on the phone with clients, Eli and Jacob often erupt into cheers over computer-game victories, creating a "kind of hairy" situation, Shannon Converse says.

Eli says his parents can be a distraction, too: He recently wrote out a homework assignment, only to discover he had inadvertently copied down a transcript of his father's phone conversation instead of the schoolwork. Now, he tries to do at least some of his homework in his bedroom. "It's a lot quieter there," he says.

Interior designers say the family home office is in part a backlash against the McMansion-fueled sprawl in recent years that ceded separate bathrooms, libraries and entire wings of the house to children -- essentially cutting them off from the rest of the family. In a September survey by the American Institute of Architects, the shared office was named the most popular "special-function room," with home theaters second.

But in a BlackBerry world, it's also a way for parents who take their work home with them to not lose touch with -- or sight of -- their kids. About 20 million people did some work from home in 2004, with about half simply taking work home from the office, according to the U.S. Bureau of Labor Statistics.

Nancy Stack says she and her two teenage daughters spend hours some evenings in their family's Corona del Mar, Calif., home office, with three computers, two printers, custom workstations for the girls and a mahogany desk for Nancy Stack.

Nancy Stack uses the room to make conference calls to doctors and researchers for the nonprofit foundation she runs; 10th-grade Natalie is studying European history and 17-year-old Alex is researching saints for a religion course.

While she says the arrangement has "brought us closer together," she says it has also led to some tensions. When her older daughter started updating a MySpace page in the office, Nancy Stack objected to language and pictures other users posted on the networking site -- and banned her kids from using it. Without the room, Nancy Stack says, she "wouldn't have known about it."

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5 steps to a profitable home purchase

Inman News

5 steps to a profitable home purchase
Jun 15, 2007, 5:00 am PDT

Editor's note: Robert Bruss is temporarily away. The following column from Bruss' "Best of" collection first appeared Sunday, July 16, 2006.

"I can't believe the mortgage company approved me to buy a condo in such bad shape." That's what I overheard a young lady tell her breakfast date at the coffee shop I like to visit on Saturday mornings. The place is always very busy. The tables are close together so it's hard not to overhear conversations at the adjoining tables.

Burying my head in the newspaper, I then heard her say, "But my dad remodels kitchens so I know he will make it a beauty." I wanted to tell the guy, "Marry her, she's on her way to a real estate fortune!" But I kept quiet and looked away.

Purchase Bob Bruss reports online.

Then she went through a list of condo fix-up work she plans to make, such as fresh paint, new carpets and several decorating ideas. At that point, the guy changed the topic. If they marry, she will obviously be the real estate tycooness in that family.

HOW TO FIND A PROFITABLE HOUSE OR CONDO. If you are a typical house or condo buyer, you probably want to purchase a new or resale residence in near-perfect, "model home," move-in condition. That's fine.

But expect to pay full retail market value. That is not the way to make a profitable home purchase.

If you want to profit from your home purchase, as that young lady will, buy a house or condo needing profitable improvements. Extreme cases are called "fixer-uppers."

To be polite, some listing agents call them "tired homes." Having bought and sold many profitable residences over 40-plus years of investing, here are my top five criteria for buying a profitable house or condo:

1. ASK HOW MUCH THE SELLER PAID. The longer I'm involved with real estate investing, the more important I think this key question is. I wish I started asking it many years ago when purchasing investment properties.

Even if you find a house or condo in excellent condition, before making a purchase offer, ask your buyer's agent, "How much did the seller pay for this home?"

Most buyers don't ask this vital question. Your buyer's agent might be shocked. Just explain the reason you need to know is to discover how much negotiation room the seller has so you can buy the property. Your agent will be thrilled to learn you plan to make a purchase offer.

For example, if you learn the seller paid $100,000 for the property many years ago, and the comparable home sales prices in the vicinity indicate it is worth $300,000 today, that seller has lots of negotiation room. However, if your buyer's agent checks the public records and discovers the seller paid $250,000 for that house last year, the seller doesn't have much negotiation room for you to buy a profitable house at a below-market purchase price.

2. ASK WHY THE SELLER IS SELLING. This is a controversial question for a home buyer to ask. Only the smartest buyers dare ask it. Knowing the seller's true motivation for selling is critical if you are to buy a profitable house or condo.

Often the listing agent doesn't know the answer. Be sure to communicate to your buyer's agent, who will then tell the listing agent, "I need to know so my buyer can make a purchase offer that meets the seller's needs."

Sometimes, you won't be told the truth. For example, if the reason for the home sale is a divorce, the listing agent might be reluctant to reveal that fact. However, I've found that to be important information so I can make a purchase offer providing cash to satisfy both sellers.

Or, if you learn the home is in foreclosure and the lender has scheduled a foreclosure sale in three weeks, you better be prepared to purchase fast before the seller loses the house.

I recall one situation several years ago where I asked the nasty listing agent why the sellers were selling a home I really wanted to buy for my personal residence. He arrogantly replied, "It's none of your business. Just bring a cash offer."

Not wanting to do business with him, I never made a purchase offer on that house. Later, I learned the sellers were very wealthy and were retiring to Palm Springs. I could have made a low-down-payment offer and they probably would have carried back a mortgage on very attractive terms.

3. LOOK FOR "THE RIGHT THINGS WRONG." This used to be my primary criteria for buying a house or condo at a bargain below-market purchase price. Although this reason is still ultra-important, it is no longer as important as the first two criteria.

That condo buyer who sat at the table next to mine a few weeks ago, understood this rule even if she didn't have it on her profitability list. By purchasing a condo needing a kitchen renovation, she was acquiring an almost instant profit opportunity, especially since her father is in the kitchen remodeling business.

"The right things wrong" mean profit opportunities. Often, all that is needed are a coat of paint and new wall-to-wall carpets. Additional profitable examples include new light fixtures, new appliances, fresh landscaping, and bathroom updating.

Examples of the "wrong things wrong" or unprofitable improvements include a new roof, foundation repairs, new plumbing or wiring, and new windows. The reason these obviously necessary updates are unprofitable is they add less market value to the home than they cost.

4. DEDUCT FROM MARKET VALUE FOR THE COST OF REPAIRS. Most sellers of houses and condos are well aware if their home needs repairs or updating to current market value standards. There are two ways for buyers to handle this.

One is to offer a low purchase price to compensate for the obviously necessary repairs. However, such an approach often upsets the seller who doesn't realize how much it will cost to bring their home up to neighborhood standards.

A better approach is to offer close to current market value, based on recent sales prices of nearby comparable houses or condos, but then list and ask for credits for necessary repairs, such as a new roof, foundation repairs, landscaping, and new plumbing or wiring. This method is often more effective because the seller then realizes all the work their "fixer-upper" needs.

5. ASK THE SELLER FOR AFFORDABLE FINANCING. Although home mortgage financing is easily available today, you might be able to do better in the right circumstances by asking the seller to carry back a mortgage for you. This can be especially valuable if the seller owns the home free and clear with no mortgage, you plan to immediately renovate the house to increase its market value, and you expect to refinance or sell the home after the improvements are completed.

To illustrate, if you offer a retiree seller a 5.5 percent interest rate on a carryback mortgage, that's better for you than is easily available at the local bank. However, be sure there is no prepayment penalty so you can refinance when you complete renovations to increase the home's market value.

As the old saying goes, "It doesn't hurt to ask." There is no easier mortgage lender than the home seller. My experience is retirees are especially anxious to finance home sales because they usually can't obtain such a high yield with the safety of a mortgage on their former residence if you fail to make the payments and they have to foreclose. By obtaining easy seller financing, you just increased your purchase profit even more.

SUMMARY: If you ask the right questions, your house or condo purchase can become a profitable investment. Whether you plan to keep your home purchase a short time or for many years, look for the "right things wrong" and the extra bonus profit opportunities, such as seller carryback mortgage financing.

(For more information on Bob Bruss publications, visit his
Real Estate Center).

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