Roughly 78 million equity-rich baby boomers are heading towards their retirement years, and a new breed of flexible reverse mortgages is expected to provide important financial tools for them. Reverse mortgages, which currently are restricted to seniors 62 years and older, permit homeowners to convert their inert equity into cash for the balance of their lifetimes as long as they reside in the house. The money, plus interest, need not be repaid to the lender until the borrower sells the property, dies or moves out. Whereas FHA’s HECM plan limits total payouts to strict statutory maximums, private plans such as Seattle Financial’s allow loan amounts into the millions. The top players in the fields currently are Well Fargo and Indymac Bank Corp’s Financial Freedom. With its acquisition of Seattle Financial, Bank of America would take over the number three ranking, but officials make no secret of their long-term objective of becoming the biggest reverse mortgage source in the U.S.

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During this peak home sales season, when thousands of houses and condominiums will be sold, buyers and sellers need to be aware of what is legally included and excluded from their sale. Most experienced real estate agents have horror stories about “fixtures,” which the seller removed but the buyer thought were included in the sale. To illustrate, my mother was a mild-mannered woman. Only once did I ever hear her raise her voice. I was helping mom and dad move into their condominium. As I walked down the hallway to the condo carrying some boxes, I heard her scream as she entered the condo, “Where is the chandelier?” The seller had removed the dining room chandelier. Even my dad was surprised. Fortunately, a phone call to the real estate agent resolved the problem, the seller sheepishly restored the chandelier, and everyone lived happily ever after.

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Usually, when borrowers want to restructure their mortgages – go from a fixed-rate to a variable rate, for example – they have to refinance, an onerous, expensive process. There are new closing costs, legal fees and title search and insurance fees that could add thousands of dollars to the mortgage principals. But the new product from Washington Mutual (Charts, Fortune 500) (WaMu), called Mortgage Plus, gives customers the ability to switch the type of loan they have without going through a refinance. Say that originally, a family is planning to spend only a few years in their new house – they may choose a low, variable rate loan. They plan to sell the home and move before rate resets to higher one.

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search for : closing costs, Washington Mutual, variable rate loan

Mortgage fraud can take countless forms, says Ann Fulmer, an attorney, mortgage fraud investigator and founder of the Georgia Real Estate Fraud Prevention and Awareness Coalition. Homebuyers can run afoul of the law under a broad category called “fraud to qualify” or “fraud for house.” In these cases, the borrower typically provides false information, such as income, source of down payment, employment or intent to occupy the property.

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search for : Mortgage fraud, Homebuyers

Bond investors who financed the U.S. housing boom are starting to pay the price for slumping home values and record delinquencies in subprime loans. They will lose as much as $75 billion on securities made up of millions of mortgages to people with poor credit, says Pacific Investment Management Co., manager of the world’s biggest bond fund. Some of the $450 billion in subprime mortgage-backed debt sold last year has lost 37 percent, according to Merrill Lynch & Co.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aq3flDbwBCbk&refer=home

Q Washington: A friend and I are thinking of starting our own real estate investing/development firm. What are the basic things we need to do to get started? Do you know of any good sources of information that could help us? A Jim Abdo, chief executive of Abdo Development: Start small. The biggest mistake most people make when they want to enter real estate development is trying to take on too much, too fast. Know that you are going to make mistakes. It is better to deal with mistakes on a smaller project than on a larger one. As your confidence and knowledge grow, so can the size of your projects.

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Many programs to help those facing foreclosure are being launched, with the aim of moving borrowers out of high-interest, variable-rate loans and into lower-rate, fixed ones.Maryland launched one of the first such plans, called Lifeline, a year ago. Say you’re a homeowner with a 2/28 hybrid ARM due to reset next month from the initial two-year 5.25 percent “teaser rate” to 8.25 percent. It will reset again every six months up to as much as 12 percent. The difference in monthly payments between the initial rate on your $200,000 mortgage and the first reset is nearly $400 ($1,502 versus $1,104). That’s bad enough but after another year or two, your mortgage payment could come to $2,057. You can’t afford it.

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The conventional wisdom about mortgage-lending disclosures is that the government should formulate and enforce disclosure rules because that ensures uniformity of disclosures across the market. I shared that belief for a long time. But if the government-required disclosures are useless or worse, which is the case, uniformity does not help borrowers. Indeed, poor disclosures can be worse than no disclosures because they lull borrowers into a false sense of security.

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search for : mortgage-lending disclosures, disclosure rules

Freddie Mac and Fannie Mae said they expect to buy tens of billions of dollars of newly created subprime mortgage loans over the next few years to help prop up the roughly $1.3 trillion subprime market as lenders tighten their credit standards or flee altogether. The move shows how the two government-sponsored companies are redeeming themselves on Capitol Hill by depicting themselves as part of the solution to surging defaults on subprime mortgages, those for borrowers with weak credit records or high debt in relation to income.

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search for : Freddie Mac, Fannie Mae, subprime market

With all this recent talk about loan hybrids it’s no wonder refinance applications are up. People are seriously thinking about getting out of them and into fixed rate mortgages. Even though their adjustment period won’t take place for another couple of years. What gives? I have two good Realtor clients who have me on short leash that if the 30 year fixed conforming rate gets to 5.50 percent then they want me to refinance them out of their hybrid mortgage and into a fixed. Interestingly enough, they both have the same hybrid, a 5/1 conforming ARM at 5.50 percent.

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search for : loan hybrids, refinance, hybrid mortgage

As thousands of baby boomers decide to retire every day, many suddenly realize they don’t have enough income to provide for a comfortable lifestyle. Meager Social Security income certainly isn’t the answer. But there is an easy solution. It’s a reverse mortgage, which can provide lump sums of cash for any purpose (such as a new roof, new car, trip around the world, bill payoffs, or something frivolous), a credit line for emergencies or investments (except in Texas), or lifetime monthly income even if you live to 110. Or, you can select any combination of the above. The best part is tax-free reverse-mortgage money never needs to be paid back as long as you live in your principal residence. Also, there is no personal liability.

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search for : Social Security, reverse mortgage

If you’re looking for a refinance, whether it’s because your current mortgage will soon adjust to a higher interest rate or because you’d like to borrow extra cash against your built-up equity, you can expect lenders to be more demanding about your credit, your ability to document your income and the appraised value of your home. They are less likely to OK new mortgages if the monthly payments consume more than 28 percent of the borrower’s monthly gross income, or if, combined with payments on other loans, debt repayment consumes 36 percent or more of income.

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search for : refinance, mortgage, interest rate, appraised value of your home

The stricter lending standards are the fallout from the subprime mortgage market meltdown. About 15 percent of mortgage borrowers are in the subprime category. Those are the least creditworthy people, with credit scores less than 620 (on a scale of 300 to 850). About 85 percent of mortgage borrowers have credit scores of 620 or higher. So far — knock on wood — most of these prime customers needn’t worry about being turned down for home loans on the basis of their riskiness as borrowers, so long as they’re willing to let the lender verify their incomes and assets.

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Make sure your policy covers the cost of rebuilding — and don’t confuse the real estate value of your house with what it would cost to rebuild in case of damage. And remember, most standard policies, which usually cover disasters such as fire or hurricanes, do not include flood coverage. Consider buying coverage from the National Flood Insurance Program ( www.floodsmart.gov), or buy additional coverage from your current carrier.

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search for : real estate value, flood coverage, National Flood Insurance Program

Can you put a stop to those postal mailed mortgage offers that begin arriving soon after you apply for a mortgage? Or is it easier to simply let them keep coming until you find a better deal? Much to the chagrin of some consumer advocates, when you apply for a mortgage and the lender pulls your credit report, your file lights up like a runway for other companies with money to lend. It’s not that the original lender is selling information about your every move, creditors are taking advantage of federal law that allows credit bureaus to identify you and other mortgage applicants to companies that want to pitch their product to you often in the form of “prescreened” or “preapproved” credit.

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Loan modification represents just one approach that mortgage servicers can use to stem the tide of foreclosures. Other techniques include: Repayment plans that reduce unpaid balances over time through small, regular add-ons to borrowers’ monthly payments. Forbearance agreements whereby principal and interest payments are reduced or even suspended for a period of time, enabling the borrowers to get their finances under control. Then the regular payments resume, along with gradual reimbursements of balances in arrears.

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search for : Loan modification, mortgage servicer, tide of foreclosures, monthly payments, Forbearance agreement

Credit unions which are run as nonprofit cooperatives, typically do not have enough money to market their mortgage offerings, and their mortgages are not offered through outside brokers. So consumers often overlook some highly useful alternatives that credit unions offer. About 200 credit unions affiliated with the Credit Union National Association have offered a low-interest Home Loan Payment Relief mortgage since late 2005. The program is limited, with some exceptions, to borrowers with household incomes at or below their area’s median income.

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Because there are more houses and condos listed for sale in most communities than there are qualified buyers, that is known as a “buyer’s market.” The buyer is king. Unfortunately, many buyers (especially first-timers) are not aware of the best ways to buy a home to get the best price and terms. The place where more than 70 percent of today’s home buyers start their search is on the Internet, usually at www.Realtor.com and other large Web sites showing most local listings available. After searching local residence listings available and perhaps visiting a few open houses, the next step for savvy home buyers is to get preapproved in writing by a mortgage lender. The reason for this key step is to avoid disappointment later if you discover you have credit issues or can’t afford to buy the home you want.

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search for : buyer’s market, home buyers, www.Realtor.com

According to a recent study, the number of borrowers who are actually able to bring current their mortgage payments through bankruptcy is declining, and more filers are ultimately turning their homes over to the lenders. The finding means investors in high-yielding mortgage-backed securities should expect higher losses on the underlying collateral. At least part of the blame, says the report, lies with the bankruptcy law passed in October 2005. The law raised the bar for people to qualify for Chapter 7 “fresh start” bankruptcy proceedings. Chapter 7 can enable individual filers to wipe away debts such as credit-card and medical bills so they can continue to make their mortgage payments. With access limited, more subprime borrowers are forced into Chapter 13, where some can’t maintain their payment schedules for more than a couple of months.

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search for : mortgage payments, mortgage-backed securities, bankruptcy, Chapter 7

Britain’s wealthy are looking to the U.S. for real estate opportunities. Luxury homes values in London’s most expensive neighborhoods rose 24% last year and have already risen 27% this first quarter over last year’s first quarter. The price surge is expected to continue, driven by foreign real estate investors, record-breaking bonuses paid to London bankers, and a housing shortage. According to a recent Bloomberg article, homes valued at over $10 million have increased in value by an average of 50 % over last year.

British homeowners are faced with new tax laws that have doubled property taxes for some homeowners while absolving foreign investors from having to pay British taxes. Faced with exorbitant home values and stiff tax penalties, many British home buyers are taking advantage of the pound’s strength, which has been worth almost twice as much as the U.S. dollar in recent months. Add to this mix the security concerns and language barriers many are finding in other countries, and American properties quickly become an affordable and exciting option. For the savvy luxury home agent, this provides a clear opportunity to target a potentially fruitful demographic of international buyers. (more…)

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As hundreds of billions of dollars worth of these loans “reset” to higher monthly payments, many so-called subprime borrowers — historically those with shaky credit histories — are sitting on financial time bombs. They’re finding out the hard way that the paperwork they signed may have buried them under a crushing debt load they can’t sustain. For some, the lesson learned is: “buyer beware.” But a series of interviews with subprime borrowers, mortgage lenders, appraisers, current and former regulators, and the inspector general of the Department of Housing and Urban Development paints a different picture — of a widespread pattern of questionable lending practices and outright fraud that has already sparked a wave of criminal and civil actions against various players in the $10 trillion market for residential mortgages.

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search for : subprime borrower, residential mortgage

If you’ve made the decision to buy or sell a luxury home then it’s time to select the real estate professional who can best assist you. Not all good agents operate effectively in the upper-tier market. It is a market segment that requires special competencies.

1. Look for market knowledge and real estate skills. Not only should your agent know the city or area you are interested in, he or she should be knowledgeable about the price range you’ve targeted…

2. Notice special luxury affiliations and designations and ask what they mean. To zero in on professionals who specialize in the fine homes and estates market, look at an agent’s memberships and designations…

3. If you are selling, ask that the listing presentation include a specific marketing plan for your property. Don’t assume that the best marketing plan is always the most expensive. Listen to why the agent has included each element of the plan…

4. If you are selling, don’t let an agent “buy” your business. Choosing an agent based on the highest suggested list price is counterproductive if the house is overpriced…

5. Rapport and clear communication are important. Buying and selling can be stressful. Choosing an agent with whom you communicate clearly will help simplify the process…

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Learn enough to pursue your own tax strategies and direct your accountant, writes Sandy Botkin in “Real Estate Tax Secrets of the Rich.” , otherwise you can lose thousands in deductions and write-offs. “A solid knowledge of real estate taxation can increase most people’s rate of return on their homes and investment property by 10 percent to 20 percent per year.” There are few subjects less exciting than taxes, even if a financial bonus is the potential payoff. Luckily, Botkin, a former Internal Revenue Service attorney, seems to understand that. This primer on maximizing real estate tax savings is broken into bite-size chunks and livened up with whimsical illustrations and boldface headings.

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search for : Real Estate Tax Secrets of the Rich, Internal Revenue Service attorney

Members of The Institute for Luxury Home Marketing are knowledgeable professionals who have undergone extensive training in analyzing the luxury home market, providing quality service, and achieving effective results in the high-end residential market. Choose a member of The Institute as your real estate professional and you know you are getting someone who actively seeks out the latest training in marketing strategies, stays on top of the changing market conditions, and knows how to handle the special needs of elite clientele.

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A “spec home” still under construction in Big Sky, Montana tops the list of the 1000 most expensive homes currently on the market in the U.S., according to the just-released Unique Homes magazine’s special issue, Ultimate Homes, 2007. Built by Yellowstone Club developer Tim Blixseth, the “Pinnacle” home sits on 160 acres and comes with four 4,000-square-foot guest houses, security and staff quarters, a retractable helipad (with helicopter and pilot lounge), and an underground garage stocked with a fleet of Suburbans.

By comparison, the most expensive home currently listed in the Wilkesboro NC MLS is a $ 1,090,000 residence. For $155 million, one could buy 154 of the most expensive homes locally.

“The home prices on this year’s Ultimate Homes list reinforce the fact that the national market in luxury properties has generally remained healthy above the $5 million level,” said Laurie Moore-Moore, Founder and CEO of The Institute for Luxury Home Marketing, a Dallas-based organization whose members have hundreds of millions of dollars worth of the top properties on the list.

“There is currently only one property in the Wilkes County MLS system priced at a million dollars or more”, but the trend in Wilkes is definitely upward according to Elizabeth A. Carter a member of The Institute for Luxury Home Marketing and the owner of EA Carter Real Estate. The Ginn Company is developing Laurelmor Resorts in the western part of the county offering lots in the $500,000 range. In other parts of the county, mountain and lake lots are selling for $250,000 and up.

“The number of million-dollar-home sales isn’t available yet for 2006,” added Moore-Moore. “However, the number of million dollar homes sold in the country jumped from 10,000 in 1999 to over 109,000 in 2005, a reflection of the growth in the number of wealthy households. Although many marketplaces are seeing slowing appreciation, higher inventories and longer sales time, the top of the luxury market is outperforming the market in general.”

New York leads the Ultimate Homes list with the most properties — 240. Florida follows closely with a total of 234 properties, up from 183 last year, and California drops from second to third place with 205 properties on the list. Overall, thirty four states have properties that made the list. North Carolina is represented with 1 home. North Carolina is expected to be moving up the list in the very near future.

About The Institute for Luxury Home Marketing

The Institute for Luxury Home Marketing is an international organization which offers training to real estate professionals who work in the luxury residential market and awards the Certified Luxury Home Marketing Specialist designation to those who meet strict performance standards. The Institute has thousands of members on four continents. www.CLHMS.com

To find the perfect home, Wilkes County NC realtor Elizabeth A. Carter is available to help you be an informed home buyer or home seller in today’s changing Wilkes NC real estate market.

search for : Ultimate Homes, 2007, Wilkesboro NC MLS, The Institute for Luxury Home Marketing, Wilkes County MLS, Elizabeth A. Carter, EA Carter Real Estate, Ginn Company, Laurelmor Resorts, Certified Luxury Home Marketing Specialist

The controversy over yield-spread premium, or YSP, abuse has generated much more heat than light. Yield-spread premium abuse is associated in most people’s minds with mortgage brokers, but the fact is it’s not limited to just them. The potential for the same or a very similar abuse exists in connection with all types of mortgage loan providers. Mortgage brokers typically perform all loan origination functions except underwriting and funding. Some brokers underwrite and some fund with money provided at the closing table by the wholesale lender (table funding), but such exceptions don’t matter. What matters is that all brokers deliver loans at prices set by the wholesale lenders with which the brokers deal. Borrowers pay the wholesale price plus the broker’s markup. The yield-spread premium arises in this process.

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A home equity loan is a second mortgage that locks in the amount borrowed, the interest rate and the term, much like a conventional, conforming first mortgage, but at a greater cost. Bankrate said the rate for a $50,000 home equity loan for someone with a 700 to 719 credit score, averaged 7.36 percent nationwide on April 2. The average for first mortgages was more than a full percentage point less. A HELOC is also a second mortgage, but it works more like a credit card. Home owners get a revolving line of credit with a credit limit for a given time period. During the term, home owners can withdraw money as needed, or not. They can also pay down or pay off the balance and continue to use the credit during the term, like a credit card. The average rate for the same $50,000 loan averaged 7.25 percent on April 2, according to Bankrate.

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search for : home equity loan, second mortgage

Charges of blame were flying today for the meltdown of the high-risk mortgage market as pressure mounted for Congress to do something about rising foreclosures among homeowners unable to meet high payments. Under fire from lawmakers, federal regulators said they lacked full authority to prevent the crisis spawned during the soaring housing boom of 2003-2005. Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, laid out what he called a “chronology of regulatory neglect” as banks and other lenders loosened their standards for making riskier mortgage loans during the boom. “Our nation’s financial regulators were supposed to be the cops on the beat, protecting hardworking Americans from unscrupulous financial actors,” Dodd said. “Yet they were spectators for far too long.”

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The growing number of homeowners who are falling behind on their mortgage payments could spell opportunity for real estate investors. Most of the problems are among homeowners with “subprime” mortgages — loans extended to borrowers with poor credit, low incomes or both — and particularly among subprime borrowers with adjustable-rate loans, which total roughly 7% of the $10 trillion mortgage market. They are being pummeled by spikes in their mortgage interest rates as the low introductory rates expire.

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search for : payments, subprime, subprime borrowers

Real estate has its market cycles like any type of investment, and lately it’s been getting bad press. Investors may have second thoughts about putting money in this asset class right now, what with all the talk about a bursting housing bubble, the glut of unsold condominiums and homes, declining property values and the growing number of foreclosures. But the depressing news may mean that this is an opportune time to get into real estate. “Owning some paid-for, income-producing real estate, in addition to having a solid portfolio of other investments, can be a very good thing,” says radio talk-show host Dave Ramsey, best-selling author of “The Total Money Makeover.”

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search for : unsold condominiums, foreclosures