The Obama administration brought about the loan modification program in order to help sinking homeowners. It’s designed to help homeowners come back to the normal repayment schedule with a limited period of help. This was an attempt to stop foreclosures and short sales for most part.

The program involves modifying the terms of the payment of the mortgage in such a way that it becomes more affordable. These programs act by extending the term of the loan, by reducing the rate of interest charged, changes in the type of loan and reduction in the outstanding balance. The period of help will end on January 31st 2012.

Individuals who wish to refinance, and are not being offered any new option by the banks, should definitely look at the loan modification program. Most of the time, banks or lenders aren’t keen on refinancing a delinquent or defaulting account. There are simple means by which you can prove your eligibility for this program and these criteria include:

·    Documented evidence of hardship or change in financial situation,
·    Delinquency for more than 90 days,
·    The premise should be the primary residence of the applicant,
·    Shouldn’t have purposely defaulted to get into the loan modification program

Some of the loan modification programs available are:
·    White House – Treasury Loan Modification program
·    IndyMac Federal Bank Loan Modification Program
·    Federal Housing Finance Agency Loan Modification Program
·    Other private programs are from
o    Citigroup
o    J P Morgan Chase
o    Bank of America

The advantages of this program are profound:
·    It avoids foreclosure and short sale
·    Reduces the interest rates therefore the monthly commitment reduces
·    It is a private arrangement between the lender and borrower
·    Lower impact on the credit score than foreclosure of the borrower
·    Borrower is able to stay in the house while availing the program

The disadvantages include:
·    Getting the proof of difficult financials may be quite heady
·    Only those with a mortgage amounting to 105 percent or less of home value would get the assistance.
·    Hits the credit score or FICO score of the individual
·    Some might deliberately miss payments
·    Worthy borrowers are not getting the assistance

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As every investor knows, the closing costs can impact the project. When you apply for the mortgage, the lender is obligated to provide a good faith estimate of the closing costs within three days after accepting the application. However, these are only estimates and often the lender will raise fess at the last minute. Like every other aspect of the purchase process, some closing costs are negotiable and there are steps the buyer can take to control those fees.

Remember that there are certain expenses not listed on the good faith estimate. Those expenses include the state mortgage tax, homeowners insurance and the property taxes which may be required to be held in escrow at the closing. Buyers should inquire about these rates and the lender’s policy regarding these expenses.

Closing cost irregularities do occur. The U.S. Department of Housing and Urban Development has acknowledged this and is working on a plan to limit the buyer’s exposure. Still in the formulative stages, the plan would save consumers as much as $1000 in closing costs.

Typically, the closing costs include out-of-pocket expenses like credit report fees, appraisal fees, document preparation fees, title fees, recording fees and underwriting fees. The good faith estimate may not be exact figures but at least it provides a breakdown of the closing costs.

To stabilize the closing costs and to help negotiate better fees there are four recommended practices.

· If you have credit relationship with a lender, talk to that lender. If your credit history with that lender is strong, you may qualify for reduced rates. Additionally, the relationship may pave the way to a streamlines process that is bound to save you money.

· Title insurance rates are not set by the lender. But, the lender can help. Don’t be afraid to ask for their help in reducing this expense. You may save as much as 50%.

· Before going to an outside lender, talk to your existing lender first. If they are happy with your business, they may give you the best terms.

· Negotiate, negotiate. There is plenty of money on the table. Don’t be afraid to negotiate with the lender.

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There is a lot to like about Tampa, Florida. It is not just the weather and the spectacular views or even Derek Jeter’s exciting new 33,000 square foot house. Tampa has cultural centers, a university atmosphere, a terrific hospital, great college and professional sports and panoramic big water vistas. It just plain feels healthy.

Tampa is also a city caught up in the Florida real estate crisis. Tampa has a few features that make it appealing for investors. The city has an unusually strong rental market. In November, 4500 rental units, including houses, condos and apartments came on the market. And, they are renting, not for as much as two years ago, but at acceptable rates considering purchase prices and today’s interest rates. Additionally, Tampa has a very favorable tax base.

In fact, rents, like property values are at the lowest levels in three years. So many investors purchased during the boom that the recession has encouraged many to simply walk away from the receding values attached to their homes. In November, 4200 homeowners were sued for foreclosure by lenders.

For many of these owners, foreclosure is a choice. They can afford to stay but are unwilling to continue pouring money into investments that have lost 30 – 40 % of the original purchase price. Many of these owners do not even attempt to capitalize on government-backed modification plans.

Local investors and northern neighbors are moving onto the scene. Recognizing the relative strength of the rental market and the bargain basement purchasing opportunities, blocks of homes are moving at pretty amazing prices.

The experienced investors are connecting with agents who understand the REO and foreclosure marketplace. The have their paperwork ready, their tentative financing in place and are approaching lenders with strong purchase offers.

This scenario is typical of what is happening throughout Florida, Nevada and Arizona. Investors, who are patient, understand the foreclosure and REO marketplace and those investors who have presentations ready to go, can buy low, rent and sell higher as the market recovers.

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The story gaining attention is that the foreclosure rates have dipped nationally by 3 percent in the month of October. However, the current rate of foreclosure is almost 20 percent more than what existed in the last year around the same time. During the month of October, there were as many as 332,292 notices of foreclosure, with banks taking over the ownership and defaults.

Now, for the third consecutive month, the foreclosure rates have been declining. This is a welcome signal for the real estate market and should boost the sentiments of the buyer.

The drop in foreclosure rates may also be due to the banks holding back foreclosure proceedings on properties. This is largely because of the rising default levels, increases in loan modification programs and sudden increases in foreclosure numbers leading to overwhelmed operations. California, Florida, Illinois and Michigan made up 52 percent of the total national number of notices for foreclosure.

In addition, to the foreclosure news, October saw first time homebuyers pushing the home sales numbers by contributing 45 percent of all sales made. This was also the result of the tax credit offer expiry on November, which is now pushed back to the June 2010.

The October month also saw home trends go upwards. Buying trends solidified in November with the interest rates going down further to 4.91 percent this Thursday, for the 30-year fixed term loan. A survey reveals that borrowers with credit who can make a down payment of 20 percent could pick up a debt amount not exceeding $417,000. Any value higher than this would be categorized as jumbo loan and the rates will increase.

A look at the applications for mortgage also shows that the numbers were up by 3.2 percent from the first week of November. However, on finer inspection it is disclosed that the refinancing made up 71.5 percent of the loans applied for this week. Overall, the refinance loan application rose by 11.3 percent while the loan for purchase actually went down by 11.7 percent.

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Americans have learned a lot about the real estate business and about the mortgage industry in this recession. In some cases, it is more than they care to know. Now, some homeowners know their loans were the result of predatory lending practices that have nearly destroyed our financial institutions.

Post recession credit markets, real estate markets and mortgage practices have changed. The American homeowner proceeds with caution and for the first time in a very long time, Americans are beginning to save money.

Before the ship is righted, there will be more suffering. But when the Oracle of Omaha, Warren Buffett, speaks, people listen. Buffett believes there are too many homes on the market. Supply outweighs the demand. This drives prices down and sends a buy signal to able investors.

The two factors driving this market are the first time homebuyers who are anxious to beat the November 30^th cutoff date and the expanding floor of distressed properties. These two components are driving the market.

The 2009 first time homebuyer tax credit has created more than 1 million transactions. Despite this activity, 35 percent of existing home sales are distressed, either foreclosed or short sales.

There is no disputing the difficulty of the current market. Basically homeowners and lenders are trying to work through a treacherous predicament that is wrought with disappointment and disillusionment. One symptom that has become increasingly evident is that more distressed sales will continue to occur. Between July and September 2009, more than 1 million homes were engaged in the foreclosure process. This trend will continue through 2010 and into 2011.

In areas like Nevada, once a booming real estate industry, one of every 23 households was in foreclosure. Real estate price have plunged 50-60% below market highs. Investors who can afford to buy low and hold are well positioned to capitalize.

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The mortgage industry has undergone regulatory reform. The recession took a heavy toll on the creative lending practices. Subprime lending and exotic subprime mortgage products are a thing of the past. Here are some of the reforms that have been implemented by the Mortgage Reform Act of 2009 and subsequent legislation.

· More documentation – The low documentation loans and no documentation loans that characterized the subprime lending practices are no longer permissible. Today’s mortgage applications require more paperwork than ever before. Lenders must substantiate and verify all income and debt. Borrowers should expect to provide lenders with pay stubs, bank statements, retirement account information, income tax returns and brokerage accounts and debt statements.

· Refinancing delays – The banking industry, like many recession industries, has undergone massive layoffs. Requests for refinancing can now take up to 60 days to process.

· New appraisal practices – The new Home Valuation Code of Conduct has overhauled the appraisal profession. The new code discourages contact between real estate sales people and appraisers. Only lenders can work directly with appraisers and even that practice is diminishing. Most appraisers are retained through the use of an independent third party. These changes have led to some confusion but Realtors have asked Congress to suspend the new rules.

· Credit evaluation – In the past a Fair Isaac Company (FICO) score of 740 would entitle the borrower to lower interest rates. The new favored credit standard is 760. If your credit score is 760, you may want to consider refinancing.

· More Truth in Lending – As of July 2009, lenders must disclose earlier in the application process how much a loan will actually cost. The purpose of this early disclosure is to allow the prospective borrower more time to consider the mortgage offer. After the borrower receives the new disclosure, the borrower has even days to confirm the selection.

· Longer Closing Dates – It now takes more time to close mortgages. Part of delay is caused by the extended decision time and part of the delay is caused by the simple fact that foreclosure departments are busier than lending departments.

The most aggressive mortgage lender is now the FHA. More than 60% of mortgages issued by the FHA in 2009 have been issued to first time homebuyers. The Federal Housing Administration has lowered their down payment requirement to 3.5% and has increased the acceptable debt to income ratios.

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When investing in a down real estate market, the investor must understand the local real estate market and what is happening with the local economy. Like any market, real estate values and opportunities are the direct byproduct of supply and demand.

Information about local economic supply and demand can come from several sources. Real estate agencies are usually willing to provide abundant information about pricing trends, available listings, sales and foreclosure activity and interest rates and various local lending products.

The challenge for the investor is to absorb these facts while configuring the impact of local economic trends like employment, projected economic development initiatives and the availability of real estate investment tax credits. In today’s real estate market, investors cannot expect the quick turnover. Today’s investors buy and hold.

In the buy and hold strategy, local economic projects and predictions are the name of the game. Communities that have business recruiting programs and tax benefits to attract new businesses can yield big long-term returns for housing markets.

Investors will also benefit from familiarity with local transportation initiatives. With many stimulus infrastructure funds assigned to community projects, the composition of communities can change rapidly and along with those changes, property values can change also.

Investors can attend planning board meetings, attend town meetings and meet with local officials to determine the direction communities are headed. Many times the key to the success of the investment can receive a boost from local economic development projects that may increase housing demand.

With today’s 24 hour news and many of the financial networks focusing on the real estate market, knowing the national statistics and sales trends are helpful. However, the government is desperately attempting to help clear the shadow inventory. Investors should always be aware of administration initiatives and new loan programs. Market conditions are likely to continue in transition until the end of 2010.

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In early 2009, the Appraisal Industry and Profession underwent a strong attack. The result was passage of the Home Valuation Code of Conduct (HVCC). The New York State Attorney General’s office participated in formulating the new appraisal standards in efforts to resolve discrepancies with Fannie Mae and Freddie Mac. The objective of the new appraisal guidelines was to put an end to the “old boy network” that the Attorney General’s office felt had contributed to the housing collapse.

If there was ever a question that highlighted the fact that politics and business do not mix, HVCC provides ample evidence. One of the stipulations of this new code called for the selection of an appraiser by an independent third party. The idea is that the appraisal must be an arms length transaction.

The problem with this selection mechanism is that appraisers who are unfamiliar with certain areas were requested to furnish appraisals. As real estate investors and agents know, location can greatly influence the value of a home. Very often the selected appraiser did not reside in the area where the appraisal was to be performed. Hence, there was great confusion. The net result was that thousands of transactions failed to close.

To complicate the process further, real estate appraisers were hesitant to approach local real estate agents for comparable analysis reports. The appraisers were intimidated by language relative to the arms length component of the HVCC.

In reality, the HVCC does not prohibit the real estate agent and the appraiser from discussing the subject property and the local market. Agents should be prepared to offer comparables to appraisers. Agents should have this analysis ready prior to the appraisal.

The primary complaint with the HVCC is that too often the selected appraiser was not local and had no knowledge of the local market and tendencies in that market. Real estate is, after all, about local values. At first the marketplace was in chaos. As local real estate agents presented their cases to HVCC, some modifications were made and local appraisers are used more regularly. However, agents should protect their clients and furnish appraisers with as much comparable data as possible.

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A series of factors are contributing to the recent upswing in national real estate sales and rising prices. The National Association of Realtors released the association’s monthly pending sales report stating that for the sixth consecutive month pending home sales have increased. This is the first time such a trend has emerged since the pending home sales index was initiated in 2001.

July pending sales rose 3.2% over pending sales recorded in June. Year-over-year comparisons show a 12.0% increase in July 2009. The current pending home sales reading is 94.6 as compared to the highest rating ever recorded of 100.7 in June 2007. Much of the credit for the recent upsurge is accredited to first homebuyers who are rushing to capitalize on the 2009 first time homebuyers tax credit.

However, as Lawrence Yun, NAR chief economist, reports; “Other buyers are taking advantage of low home values before prices turn higher. Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as homebuyers stay within their budget, mortgage payments will be very manageable.”

Yun refers to the fact that home values have decreased and interest rates remain very favorable for purchasers. With an abundance of distressed housing and foreclosed properties on the market, conditions for investors have never been better. Values are low but are beginning to show signs of recovery. It is an excellent time to buy low and sell high.

If Congress follows the NAR’s recommendations and passes the 2010 tax bill suggested by the association, all homebuyers will be eligible for a $15,000 tax credit, a percentage of which can be used toward the down payment. If this bill passes, investors can expect a flurry of buying activity and increasing property values.

With favorable purchasing terms and the prospect for rising demand and values, the time is right for real estate investing. Contact an experienced real estate agent and capitalize on the market trends.

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In today’s real estate market, houses are selling.  It takes some marketing and an understanding of market conditions but it also takes some good old-fashioned ingenuity.  Today’s successful real estate sellers know their market, know their market is on the Internet and deliver an exciting photo shoot to that market.

Sellers today acknowledge the importance of the Internet and embrace the venue as a great way to familiarize buyers with the property before an actual showing.  Buyers who have screened the house have found something they like and have opted to physically inspect the property.  That can only be interpreted as good news.

To maximize your online photography or virtual tour takes a bit of planning.  The process begins by establishing the sale of the property as the family’s common goal.  Every family member must do his or her part.

Prior to listing the home, remove all clutter.  Clean and re-organize closets, basements, garages and attics.  The only items that remain must be absolutely necessary or positively impact the photo-ability of the property.

Never underestimate the importance of the entryways and exits when it comes to real estate.  If you need to dress up the walkway, put fresh plantings in place or repair the doorbell, do not hesitate.  Go for it.  In fact, make sure every light switch, doorknob, faucet and toilet are working well.  Buyers will test everything, including your patience, but that is their job.  Yours is to make it easy for them

Once the house is free of clutter, organized and running efficiently, come up with a lighting plan.  Make sure all family members are familiar with the plan and can activate it for showings.

Before actual videoing or photo shooting the property, do a walk through and try to see what the camera will see.  For most buyers, this photo-op will be their first look at your property.  Give them something to think about.

When the photo shoot is complete, review the results.  If you are not satisfied, re-do the shoot.  It really is that important.  One picture says a thousand words.  Make sure they are the right words and you will be on your way.

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