Why Rates Are Low Again

Mortgage rates are declining towards their all tine lows. This chart helps explain why.

FHA Mortgages Are Increasingly Popular For Buyers

Nearly 1 in 5 home buyers use FHA financing, though, and there are good reasons why. The FHA has been helping U.S. home buyers since 1934 and, with its myriad of loan programs, there's an FHA loan program for just about anyone.

The Mortgage Report's FHA FAQ will help you understand the in-and-outs of how the FHA mortgage program works.

Perfect Timing for a Realtor's Open(casket) House

Welcome to the highest priced residence in Belleville, NJ. The historic converted 18th century mansion had been on the market for over six months at $1,650,000 with no takers. So it was time, last week, for the listing agent to pull out all the stops with a catered open house to alert local brokers to news of a huge price drop to $999,000. The chief selling point was the owner's amazingly luxurious residence on the two upper floors of the historic mansion that had been converted to "mixed use" on the ground floor.

"9000 square ft mixed use building with additional 2 story structure (10 car garage) and parking in rear. Ground floor appropriate for commercial use. 2nd floor is a residential renaissance masterpiece with work by Italian and French master craftsmen. Also includes Freight elevator, finished basement."

Until we arrived at the downtown Belleville address, most the invited brokers had no idea what the current commercial use was.  At the time I opened their creaky front door, all 3 sales persons were occupied on the upper floors, leaving me several creepy minutes to wander undisturbed through the ground floor establishment accompanied only by the funereal piped in mood music. In my mind, I channelled The Adams Family theme.

Flow Chart of The Morgtage Process

Despite the hurdles that many buyers face in getting a mortgage approved, today's home buyers have more mortgage financing options than at any time in the last 5 years. With so much choice and brand-new rules, it can be tough to know which loan is best. Thanks to Dan Green's Daily Mortgage Report:

Check local mortgage loan limits at The Mortgage Reports.

The Shutdown's After Effects on Housing Market

The government closure that finally ended late last week was beginning to put a noticeable  crimp in the recovering housing market.

Housing lenders rely on a variety of government data, such as verification of borrowers' income, which are unavailable with the partial closure of the Internal Revenue Service and other agencies. The mortgage industry has found creative ways to work around the shutdown. Banks are getting data from other sources. Sometimes they're simply taking the risk of making loans without some information.

Nevertheless, the shutdown is delaying loans around the country. And some experts warn that home lending could have been more severely disrupted if the political stalemate in Washington persisted much longer.

The chart below, showing rate projections for the 2014, was prepared just before the shutdown.

The Price of Waiting to Buy

The Government Shutdown and its Effect on Real Estate

Congress has failed to approve a Continuing Resolution (CR) providing funding for most government operations. Therefore, spending authority for most of the government expired at midnight on Sept. 30, 2013. Until legislation providing for funding is signed into law, many offices and programs of the federal government are now shut down.

This means many, but not all, government programs, including some that impact federal housing and mortgage programs, have been suspended or slowed due to the lapse in government funding. The Office of Management and Budget (OMB) requires each agency to have contingency plans in place. The information below is based on a National Association of Realtors" (NAR) staff review of agency contingency plans for the current shutdown and past experience with previous shutdowns and near-shutdowns.

Internal Revenue Service The IRS is closed and has suspended the processing of all forms, including tax return transcripts (Form 4506T). These transcripts are required for many kinds of loans, including FHA and VA, so delays can be expected if the shutdown is protracted.

Federal Housing Administration 
HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program, but it will not make new commitments in the Multi-family Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. Management & Marketing (M&M) Contractors managing the REO portfolio can continue to operate. You can expect some delays with FHA processing. inistration The Social Security Administration is closed and has suspended most customer service functions. According to the SSA Contingency Plan, verifying Social Security numbers through the Consent Based SSN Verification Service will also be suspended during the shutdown, a further complication for mortgage processing.

Renovation SOS

Licensed contractor John DeSilvia comes to the rescue of distraught homeowners who have seen their homes left in shambles by the contractor they hired to fix it. Bad plumbing, shoddy framing, being structurally unsound: These are the complaints that homeowners have after hiring a bad contractor. DeSilvia steps in to make everything right, but he only has a few days in which to do it. After John and his team finish their work, these homeowners won't recognize their place.

 "Rescue My Renovation" crews demolish, build, renovate and refurbish projects in Tri-State area homes. “If you have been a victim of a contractor who has done shoddy work on your home, they want to hear your story,” Firstbrook said. If you would like to be considered for the new series and are currently living in nightmarish conditions, email casting@boywonderproductions.net.

The Fate of Rates

Last week, Bernard Bernanke startled many by announcing that the Fed will not wind down their bond buying program right now. The program is part of an overall stimulus package geared at bringing back the national economy. The Fed’s purchase of these bonds over the last few years has driven mortgage rates to historic lows. The assumption that there would be a reduction in bond purchases has caused 30 year mortgage rates to spike upward over the last few months. Surprisingly, Bernanke revealed the Fed will continue bond purchasers at the current pace.

 What does it mean to mortgage interest rates? Some buyers are waiting to see if interest rates will come back down before making a decision about buying a home. Though no one can guarantee where rates will be in a few months, we don’t believe waiting is a good strategy.

Most experts believe rates may actually move higher. The Mortgage Bankers Association,Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will continue to climb.
With home prices increasing and interest rates projected to also increase, the cost of buying a house could quickly increase rather dramatically.

NJ Cash Buyers Grow to 45% of Housing Market

As interest rates climb steadily, the proportion of cash purchases that are taking place in New Jersey has made it one of the top 10 markets in the country for investors. In addition to rising interest rates, the reluctance of big banks to make mortgages easily available has also become a significant contributing factor, as well.  

Finally, given their propensity to pay for real estate purchases with cash, in whole, and up front, institutional investing has also been a huge contributing factor Cash sales: 45.0% Median list price: $279,900 institutional sales: 3.1%

Mining Ethics From the Wind

Ethical Electric is America's first supplier of exclusively 100% renewable energy. They characterize themselves as "the good guys" in the energy industry. Their goal is to power as many American homes and businesses as possible with 100% clean energy from renewable sources like wind and solar.

Ethical Electric intends to use their profits to fund causes that benefit our planet and "advance equality, peace, justice and opportunity." To spread the word, they're partnering with some of such prominent environmental organizations as the Sierra Club, the League of Conservation Voters and the Wilderness Society.

Switching is fast and easy - you'll still get the same bill, the same service, over the same wires. All that changes is that instead of powering your home with dirty energy, like oil, gas and nuclear, funding dirty politics, your electricity will be 100% from local, renewable sources and a share of your electric bill will help support their affiliated environmental causes.(click on photo to enlarge)

Bubbles of Fresh Expectations

Rebounding from 6 years of declining prices, this infographic includes the average projected growth in home values for the next 4 years.

Great Epectations

Real Estate analyst Steve Harney is reflecting on the latest Home Price Expectation Survey that came out a few weeks ago.  It’s a quarterly report done where they survey a nationwide panel of over 100 economists, real estate experts and investment and market strategists. They take over a hundred of the real gurus in our industry and they say, “Where do you think prices are going to be over the next five years?”
The survey takes both ends of the spectrum and everyone in between and they mesh all their answers together, and then they give you the average.  It surveys the experts, both bulls and bears, and says, “All right, what’s the average of their findings?”  They give us a little historical perspective on it. Here is the average annual appreciation on a yearly basis.

What these experts did is looked at it and said, all right, what’s the pre-bubble number? What happened during the bubble? And they redefined the bubble. That’s why that number sometimes vacillates a little bit.

 What happened during the bust? What’s happened so far from the bottom to where we are today? And what are the expectations on an annual basis going forward?

An inexpensive A/C Alternative for Your Whole House

Although they may be initially more expensive than single room a/c units whole house fans can save a lot on your electric bill and increase your green footprint.

Whenever the outside temperature drops below inside temps, open some screened windows and flip on the fan to pull cool, dry air through the house and exhaust hot air through your roof vents.

For a morning “pre-cool,” run your whole-house fan just before sunrise, then close the windows to seal in the cool air as the day warms up. In the evening when outside temps dip, turn on your fan to cool off the house, which takes about 20 minutes for a 2,500 sq. ft. house. In general, whole-house fans are more effective in multi-story homes than single-level.

Read more at houselogic.com

(You can find more house logic tips on the bottom right of this page)

hhttp://www.wholehousefan.com/where-wholehousefans-work/

Introducing My New Website

I've just published a brand new website that is designed to give potential home buyers and sellers more control in today's rapidly changing marketplace. It will be updated on a daily basis.

The live link can be found above as well next to my profile on this blog. Let me know if you have any suggestions for improving it's functionality.

Near Record Rise in Home Sales

Pending home sales rose in May to the highest level since late 2006, implying a possible spark as mortgage interest rates began to rise, according to the National Association of Realtors®.

 The Pending Home Sales Index,* a forward-looking indicator based on contract signings, increased 6.7 percent to 112.3 in May from a downwardly revised 105.2 in April, and is 12.1 percent above May 2012 when it was 100.2; the data reflect contracts but not closings.

Contract activity is at the strongest pace since December 2006 when it reached 112.8; pending sales have been above year-ago levels for the past 25 months.

New Record Set for Home Values

US home prices have taken a major leap in April, setting a new monthly record for gains. From March to April, home price gained 2.6% and 2.5% for the top ten and top 20 US markets respectively, according to the latest S&P/Case-Shiller Home Price Indices. Average prices rose 11.6% and 12.1% in April from a year ago.

Newest Data Suggests Buying Beats Renting

Harvard University’s Joint Center for Housing Studies released its annual State of the Nation’s Housing report for 2012. The report, which always does a good job laying out in plain language what’s happening with the market, points to the increasingly strong market fundamentals and says home sales really could see serious improvement this year.

The big beneficiary of the last several years has been the multifamily housing sector. It’s booming. As the report puts it, “the number of renters surged by 5.1 million in the 2000s, the largest decade-long increase in the postwar era.” More rental growth is expected. It’s in part because of this rental growth that home ownership is poised to improve.

The report includes an informative graph (see below) that shows how much more affordable mortgage payments have become relative to rental rates. At some point, renters are going to realize they’re losing money each month they continue to rent.

Newark's Water Wars

The Gateway Group of the Sierra Club is sponsoring "Newark's Water Wars", a free public forum, on Wednesday, June 12, from 7-9 pm, at St James Parish, 143 Madison St, Newark. All are welcome. Membership is not required. The panelists include Columbia Economics Professor Dan Flaherty, Dr Ana Baptista (Ironbound CC), Kim Gaddy (Newark Environmental Council Chair), Guy Sterling (retired Newark Star Ledger Reporter), and Lenny Thomas (Ironbound Super Group Chair). Dr Flaherty will be doing a Power Point presentation about the history of the Newark Watershed controversy. The part played by US Senate Candidate Mayor Cory Booker will be part of the discussion. The Panel intends to address other environmental challenges for Newark as well.

Mortgage Rates Approaching 4%

After bouncing along their all time lows for several month, residential mortgage rates seem to be on a steady upward climb.

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates climbing higher for the fifth consecutive week on concerns the Federal Reserve may slow its bond purchases amid a strengthening economy. This marks the first time the average 15-year fixed-rate mortgage has gone above 3 percent since the week of May 24th of last year.

It's
30-year fixed-rate mortgage (FRM) averaged 3.91 percent with an average 0.7 point for the week ending June 6, 2013, up from last week when it averaged 3.81 percent.
Last year at this time, the 30-year FRM averaged 3.67 percent.

15-year FRM this week averaged 3.03 percent with an average 0.7 point, up from last week when it averaged 2.98 percent. A year ago at this time, the 15-year FRM averaged 2.94 percent.

Essex Home Values Continue to Rise

Here's a map of Essex County home values lumped broadly by each town's Zip code.

Are You Making the Most Out of Your MID?

A home mortgage interest deduction allows taxpayers who own their homes to reduce their taxable income by the amount of interest paid on the loan which is secured by their principal residence.

As the national map indicates. New Jersey residents have been high among the one third of all taxpayers who take the largest deductions from the program. Further down, you can find a town by town breakdown within NJ showing which parts of the state benefit the most.

Foreclosures Decline Nationally But NJ Backlog Still 2nd Highest

According to Housing Wire, the nation’s supply of homes in some stage of foreclosure fell 23% in March, declining from 1.5 million housing units a year earlier to 1.1 million distressed properties, CoreLogic said in a new report Tuesday.

While foreclosure filings were dropping year-over-year, the number of completed foreclosure actions actually rose 6% from February to March. Still, the overall trend is for foreclosures to continue to decline. From the years 2000 through 2006, the nation averaged roughly 21,000 foreclosures per month. Since the onset of the crisis, CoreLogic estimates 4.2 million homes have been lost to foreclosure,

The states with the highest foreclosure inventory rate based on the percentage of all mortgaged homes includes Florida, which boasts a 9.7% foreclosure inventory rate. New Jersey comes in second with a 7.3% foreclosure inventory rate, while New York, Maine and Illinois maintain foreclosure inventory rates between 4.4% and 5%.

10 Ways to Have Earth Day Every Day

From the new Managing Editor of Treehugger.com:comes a reminder that you don't have to spend a lot of money to make a difference in transforming your environment:

Housing Recovery Now 56% Back to Normal

Trulia's latest gages of the housing market are all showing encouraging signs of a steady recovery. Averaging these three back-to-normal percentages together — construction starts, existing home sales and the delinquency-plus-foreclosure rate — the housing market is now 56% of the way back to normal, up from 54% in February and 43% six months ago in September, writes Trulia in a blog post.

One year ago, the market was only 33% back to normal – so the last year has been a significant recovery, says Jed Kolko, chief economist at Trulia.
 .

Home Prices Soar at 8.1% Annually Highest in 6 years.

January was the second consecutive month-over-month increase in house prices and the eighth consecutive year-over-year increase.
According to the most recent release by Standard and Poor’s Case-Shiller 20-City Composite House Price Index rose by 0.1% on a not seasonally adjusted monthly basis and the 10-City Index rose by 0.2% on a not seasonally adjusted monthly basis. In the 12 months ending in January 2013, house prices rose by 8.1% according to the 20-City Composite Index and 7.3% according to the 10-City Composite Index.

 Year-over-year house price growth has been generally widespread. House prices have risen on a not seasonally adjusted 12 month basis in each city tracked by the 20-City Composite Index

Pet Owners Fighting Housing Bans With "Nuclear Option"

Pet owners who move into apartments or condos have to deal with all kinds of restrictions. Many ban pets altogether or have weight limitations on dogs. Other large new projects allow pets when they first open, but clamp down later when homeowner associations takeover. When the original owners move, they may not even know that they can't transfer all their "grandfathered" rights to the new owner or renter.
Exceptions were often made for Service Dogs owned by the blind or severely handicapped.
Now, legal precedents have expanded the Service Dog rules to include the emotional support of  "Assistance Animals."  Faced with choosing between their dream home and their forever pet, dog owners are beginning to resort to a "Nuclear Option."
While it can't hurt to have a doctor's note prescribing the need for the animal, Americans With Disability(ADA) and Fair Housing regulations state that

When it is not obvious what service an animal provides, only limited inquiries are allowed. Staff may ask two questions: (1) is the dog a service animal required because of a disability, and (2) what work or task has the dog been trained to perform. Staff cannot ask about the person’s disability, require medical documentation, require a special identification card or training documentation for the dog, or ask that the dog demonstrate its ability to perform the work.

This option for Emotional Support Animals (ESA) could conceivably be applied to almost any animal.

The owner can be charged for actual damage done by the animal, but they may not require the applicant to pay a fee or a security deposit in order to keep the animal.

If this process becomes seriously abused by pet owners, we can expect pushback from the owners of multifamily homes and apartment complexes. Since Fair Housing regulations are federally mandated, appeals of the substantial fines may ultimately wind up in the Supreme Court.

Budgeting for Fossil Fuels

This is the top section of an informative new infographic illustrating the reality of the world's past, present, and future use of fossil fuels.

Sequester Eve, and All Thru the Housing Market....

(The original use of the word dates back to the 14th century and defines it better than the common "jury room" usage we use today. According to Meriam Webster: Origin of SEQUESTER Middle English sequestren, from Anglo-French sequestrer, from Latin sequestrare to hand over to a trustee, from sequester third party to whom disputed property is entrusted, agent, from secus beside, otherwise; akin to Latin sequi to follow.)

 The real estate market is seeing a noticeable turn-around in the past few months, but the impending sequestration could have a significant impact on jobs, incomes and ultimately the ability of potential homebuyers to close on a home.

(Collage courtesy Newseum) The Bloomberg Consumer Comfort Index rose to minus 32.8 in the week ended Feb. 24 as the share of Americans with a positive view of the world’s largest economy matched the highest since March 2008. In spite of this encouraging news, the housing market is once again at risk.

The Federal Housing Administration (FHA) reportedly guaranteed 23 percent of all mortgages last year, but because of sequestration they can expect job cuts and ultimately less processing of loans, refinances and properties in major distress--all of which need attention for a recovering housing market.

 Federal funding most at risk would be this year's Community Development Block Grants and HOME programs, which may be reduced by 10 to 25 percent. The HOME program helps develop low-income housing.

In the New Jersey area, families who were affected by Superstorm Sandy are bracing for deep cuts to their programs and aid, according to Shaun Donovan, secretary of the Department of Housing and Urban Development(HUD).

The Patch has just introduced an interactive chart showing the effect of the sequester on jobs in each county. Essex and Morris counties are predicted to take the hardest hit. Job losses created by the sequester would put a damper on th e housing market too. “Borrowers need to be employed to close on their home loan, Craig Strent, CEO of Maryland-based Apex Home Loans, tells Olick. “As a quality control measure, lenders call a day or two before closing to verify an individual is still employed. If a loan is denied during the process due to the borrower losing their job, they are likely to lose their loan lock as well,

Where Homes Can Be Bought for Less than $600/month

Taken together, lower home prices and cheap mortgage rates have made homebuying much more affordable than just a few years ago. And given that real-estate values in many traditional retirement spots — like Florida and Arizona — have fallen even harder than the national average, Americans who are ready to retire are in a particularly favorable position. To that end, U.S. News & World Report has compiled a list of 10 places where retirement homebuyers can purchase property for less than $600 a month. In putting together our list, we obtained median home-price data from the National Association of Realtors for 159 metropolitan statistical areas throughout the country. After subtracting a 20% down payment, we plugged the remaining figure into a mortgage calculator using a 4.24% rate on a 30-year fixed mortgage. We then looked for places that would make desirable retirement destinations and where monthly mortgage payments totaled less than $600.

Urban Homesteading in the 'Burbs

When you look at some of the issues that motivate homeowners to turn their front yards into gardens, it's surprising that more folks don't do it.

Some backyards are either paved or just too small and shady to support a garden. Some folks resist conforming to the dominant cookie cutter lawn culture and need to express their creativity.

In the southwest, a green lawn may get you a fine, but in most of the rest of the country it takes courage to plant anything more lush than an ivy patch.

Urban Homesteading has grown up from being part of the counterculture movement of the '70's to embrace many suburban lifestyles.

Now, some New Jersey towns like Bloomfield and Maplewood are looking to clarify fuzzy ordinances to specifically allow for expanded front yard gardens as well as backyard chicken coops to support the trend towards a more self-sufficient lifestyle. They may model their proposed ordinance after that of their upscale neighbor,  Montclair, which for years has had a number of productive chicken coops scattered around the town.  Where to draw the line? Rabbits, goats, and pigs all have their own fans. Even New York City in now taking steps to legalize porkers as pets.

Living Large by Thinking Small

Small is the new big when it comes to micro-living. If you think a tiny home would crimp your way of life, check these out via HouseLogic.com. Here are three homes with curb appeal that feel like much larger homes. The home pictured here is only 500sq. feet and has a garage.  In western Canada, they call them lane houses. The trick is that each place maximizes space to compliment the resident’s lifestyle.

NJ Dems Dump On New DEP Flood Maps

When Gov. Chris Christie signed emergency regulations adopting FEMA’s advisory base elevation maps as the rebuilding standard, a number of prominent Democratic state senators and local political leaders promptly questioned the move as a knee-jerk reaction to Hurricane Sandy that would be ultimately detrimental to shore residents hoping to rebuild.(Click on map to enlarge) Contractors that costs for an effective "house raising" for a smaller home would be in the 45k to 60k range. Because of federal reforms to the National Flood Insurance Program to move toward increased flood insurance rates that reflect actual risk, families who rebuild their properties in a manner that does not conform to base flood elevations will see significant premium increases.

FICO Credit Score SNAFU's

As many as 42 million consumers have errors on their credit reports, and around 20 million have significant mistakes, a Federal Trade Commission study of nearly 3,000 credit reports indicates in a report released today,

Not all of these errors will impact your ability to get credit, however. About 13% of study participants saw their FICO credit score change once a mistake on their credit report was fixed, and those changes were big enough to potentially result in better credit offers for 2.2% of participants. The Consumer Data Industry Association defended this 2.2% rate, saying in a statement that overall, the report "shows that 98% of credit reports are materially accurate."

But since the three biggest credit bureaus -- Experian, Equifax and TransUnion -- maintain credit reports for about 200 million consumers, the 2.2% error rate still means millions of Americans are being denied loans or given higher-priced credit due to errors on their reports, said John Ulzheimerpresident of consumer education at SmartCredit.com and a former manager at FICO.

Code Red for Nemo

As this weekend's megastorm approaches, it's a good time to register with Code Red. Just fill in the appropriate information to be notified by your local emergency response team in the event of emergency situations or critical community alerts. Examples include: evacuation notices, bio-terrorism alerts, boil water notices, and missing child reports.

The township pays for this service, and it is used only to distribute official emergency notifications

Algae Powered Apartments About to Open

The walls of the four-story, 15-unit residential BIQ building in Hamburg, Germany, have large glass panels with microalgae inside. The bacteria-sized plants are fed with water and sun until they can be harvested and sent as a thick pulp to a nearby plant that converts the biomass to biogas. The algae will insulate the cubic building and cast shade during the summer months, when the plants will grow fastest as a result of longer days and more sunshine.

The panels can also absorb the sun’s rays to provide hot water and heating to the building, even storing extra heat in the ground as geothermal energy. The building is scheduled to open this spring.
 More details from buzzhome.com....

Rates Continue Their Slow Rise

Mortgage rates today are still very low, but borrowers have a very short memory. They tend to forget that the rate on the 30-year fixed, which sits around 3.6% today, was a full percentage point higher a year ago, and above 5% in January of 2010. The purchasing power gained through today"s low rates have arguably helped fuel the recovery in home sales.

Low rates have also sparked a boom in mortgage refinancing, which in turn has put more spending money in consumers pockets. Still, the slightest move higher has dramatic effects. Witness the 10% drop in refinance applications from a week ago, on the Mortgage Bankers Association"s weekly report. The rate on the 30-year fixed moved from 3.62% to 3.67%.  But rates are now up .375%, and it may hold given MBS/Treasury market technicals and moderately improving economic fundamentals.

The complacency has a lot to do with rates having be en low enough to make no-cost refis easy. But when rates rise this much, the no-cost options go away and people tend to wake up.

When Squatters Don't Flee, Their Home Can Be Free

Andre Barbosa is expecting a casserole or a batch of cookies from his new neighbors, he's going to be waiting a long while. The 23-year-old Brazilian man has been squatting in a fab $2.5 million mansion in Boca Raton, Fla., since July.

Angry neighbors called the cops on Dec. 26, but police could do nothing. No one saw Barbosa break in, and he had paperwork claiming ownership under a quirky state law called "adverse possession," which allows a person to move into a home and claim the title if they stay there for seven years.

Bank of America says it's following the legal process regarding Barbosa, but one neighbor has already offered to buy the house to get rid of him. But the situation is driving his wealthy neighbors crazy. "This is a very upsetting thing," said next door neighbor Lyn Houston. "Last week, I went to the Bank of America and asked to see the person in charge of mortgages. I told them, 'I am prepared to buy this house.' They haven't even called me back."

Barbosa, according to records, is a Brazilian national who refers to himself as "Loki Boy," presumably after the Norse god of mischief. He did not return calls. Someone with his name has been boasting about his new home on Facebook, even calling it Templo de Kamisamar. Barbosa also posted a notice in the front window naming him as a "living beneficiary to the Divine Estate being superior of commerce and usury." S

Superior Ice Fest

This looks like a moonscape, but its origins are purely terrestrial. (click on photo to enlarge) It’s actually a shot from NASA’s Moderate Resolution Imaging Spectroradiometer, showing the frozen-solid region around Lake Superior and northern Lake Michigan.

Home Sales See Slight Slip But Prices Keep Rising

Existing-home sales eased in December but are well above a year ago, while limited inventory maintained the upward momentum in home prices, according to the National Association of Realtors®. Total sales in 2012 were the highest in five years, while the annual price rose the most since 2005. Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 1.0 percent to a seasonally adjusted annual rate of 4.94 million in December from a downwardly revised 4.99 million in November, but are 12.8 percent above the 4.38 million-unit level in December 2011. The preliminary annual total for existing-home sales in 2012 was 4.65 million, up 9.2 percent from 4.26 million in 2011. It was the highest volume since 2007 when it reached 5.03 million and the strongest increase since 2004.

Home Affordability Reaches New High in 2012

2012 is shaping up to be a record year for favorable housing conditions and a strong year for buyers, according to the National Associations of Realtors.

As of November, the Housing Affordability Index released by NAR stood at 198.2. This index takes into account the relationship between median home price, median family income and average mortgage interest rate.

A higher index indicates a stronger household purchasing power. When an index hits 100, it is at the point where a median-income family is making enough money to qualify to buy a median-priced single-family home, assuming 20% is put down and a quarter of gross income is devoted to mortgage principal and interest payments.

NAR predicts that once the December numbers are reported, 2012 will hit a record high 194 on the index, up from 186 in 2011, which was the previous record.

New Rules for New Mortgages Raise New Questions

Although not scheduled to take effect until next January, the new changes in lenders's mortgage regulations are likely to begin affecting the housing market much sooner.

Some consumer groups are complaining that they will provide cover for lenders to refuse more loan applications, http://money.cnn.com/2013/01/10/real_estate/mortgage-rules/ l

Most are seen as common sense ways to avoid a repeat of the Sub Prime Loan mess that triggered the housing crisis 7 years ago.

1. Lenders must consider now at least eight criteria in applications, including a borrower’s credit history, debt obligations, employment status, income and assets.

2. Lenders can no longer base borrowers’ repayment ability on teaser rates.

3. “Qualified mortgages,” offer lenders certain legal protections as long as they adhere to the criteria laid out by regulators.

 4.. Most qualified mortgages will have a 3 percent cap on the amount of fees and origination expenses that lenders can charge.

5. A borrower’s total debt burden can not exceed 43 percent of his or her income. Debt in this instance includes student loans, auto loans, revolving debt, alimony, child support and existing mortgages.


What's still needed is clarity on government incentives for homeownership, such as the mortgage interest deduction, zoning, and backing of mortgage underwriters Fannie Mae and Freddie Mac. These have the potential to renew the perception that prices will always trend upward, once again turning home buying into a speculative market.
 http://www.cnbc.com/id/100370451

http://www.washingtonpost.com/business/economy/new-mortgage-rules-a-checklist-for-consumers/2013/01/10/0a588942-5b47-11e2-beee-6e38f5215402_story.html

Big and Small Towns are Taking Control of Energy Resources

City of Ellensburg, Washington, is one of the few municipalities in the US that still owns all of its own utilities (water, gas, sewer, electricity). It's also no coincidence that it was also the first city to build a community/utility owned solar array in 2006, feeding the community grid. It began generating power in November of 2006, and has since produced more than 170,000 kilowatt-hours, averaging 58,000 kilowatt-hours, annually. They're constantly expanding the array, and as of this fall, started adding wind turbines.

The Department of Energy is also using the community's local power generation to measure the impact on a local grid of expanding renewable power integration. They're easily 5+ years ahead of any other municipality when it comes to locally produced renewable power.

Grist is reporting that Boulder, Colorado, is investigating the formation of its own,publicly owned municipal utility. They initiated the study with a climate action plan passed by the city in 2002, committing it to reducing its emissions in line with Kyoto targets.

In 2006, the city imposed a carbon tax and just last year extended the tax by five years. Nonetheless, the city is falling short of its targets, in large part because it gets its electricity from the big private utility Xcel, which gets 60 percent of its power from coal (as of 2011). The idea behind forming a municipal utility would be to buy more renewable energy and have more direct control over pricing, distribution, and demand-side programs.

Banks Pay Massive Fines to Government

In two of the biggest civil settlements since the financial crisis, the nation's biggest banks agreed Monday to cough up nearly $19 billion to resolve federal allegations of mortgage misdeeds.

Bankers saw the settlements as a major step in providing more certainty for their balance sheets and possibly foreshadowing an end to the era of billion-dollar mea culpas and open-ended regulatory probes. In one case, 10 banks settled with regulators for $8.5 billion. In the second, Bank of America Corp. agreed to pay almost $10.4 billion to Fannie Mae, the giant loan buyer that the U.S. seized and propped up with tens of billions of taxpayer dollars.

The deals come three years after prosecutors dropped criminal investigations against such subprime-mortgage kingpins as Countrywide Financial Corp.'s Angelo Mozilo in favor of pursuing civil fines.

Debt Relief Act Extended

The Mortgage Forgiveness Debt Relief Act was introduced in Congress on September 25, 2007, and became law on December 20, 2007. This act offers relief to homeowners who would formerly owe taxes on forgiven mortgage debt after facing foreclosure.

The act extends such relief for three years, applying to debts discharged in calendar year 2007 through 2009. (With the Emergency Economic Stabilization Act of 2008, this tax relief was extended another three years, covering debts discharged through calendar year 2012.) In the eyes of the Internal Revenue Service, housing debt that is forgiven or written off is the same as income.

If the law had expired last week, forgiven mortgage debt would be taxable. The same applies to foreclosures and to loan modifications in which principal is reduced. Once the lender writes off the debt, it will report the amount to the IRS. Homeowners should expect to receive Form 1099-C showing the canceled debt amount. Part of the new year's Fiscal Cliff deal extended the Mortgage Forgoveness Debt Relief Act.

How Small Cutbacks Can Make a Huge Savings in Your Annual Budget

Budgeting doesn't have to be hard.You don't even need to be tied down to the idea of "making a budget." Saving money can be as simple as making a few small changes at home. This infographic from Intuit shows you easy, convenient ways to save up to $8,800 a year, without ever feeling the pinch of a restrictive budget

Personal Finances from Quicken

2013 Predictions (1)

The Real Estate Market is expected to see a major upswing this year to a greater degree than it has in the last 6 to 8 years.  Leading the boom is the return of home price appreciation.

Most experts agree that home values hit bottom sometime in early 2012. Zillow Home Value Forecast shows that 67 of the 156 markets it covers will experience an increase in home values over the next 12 months. Nationally, Zillow forecasts home values will rise 1.1 percent.

Home price increases will exceed inflation in most housing markets for the first time in nearly 7 years. Investors, first time buyers and move up buyers will return to the housing market in earnest. In many markets demand will outstrip supply for homes in FHA price ranges.

2012 Highlights

These thumbnails suggest some of the factors that helped make this a turnaround year for Real Estate.

Independent Foreclosure Review Deadline is Monday

The program stems from orders issued by the Treasury to “14 large residential mortgage servicers and two third-party vendors,” according to a statement from the Treasury’s Office of the Comptroller of the Currency In April 2011, the government determined that 16 companies had used “unsafe and unsound practices related to residential mortgage servicing and foreclosure processing,” the statement said.

As a result of those determinations, the consent orders were issued. The orders require the servicers to pay for independent consultants to evaluate whether borrowers lost money because of the servicers’ bad behavior during foreclosure proceedings. If the independent reviewer finds errors in a particular case, the servicer is required to pay restitution to the harmed borrower or offer some other form of remediation — including the suspension or cancellation of a foreclosure.

But the opportunity for homeowners to apply for a no-cost review by a third-party consultant is coming to a close. Homeowners who “believe they suffered financial injury as a result of errors, misrepresentations, or other deficiencies in foreclosure proceedings related to their primary residence between January 1, 2009 and December 31, 2010” must submit a request for the review of their foreclosure proceedings by Dec. 31, the Comptroller of the Currency’s Office said.

Examples of injuries that homeowners may have suffered because of errors include, but are not limited to: a foreclosure sale that occurred while the homeowner was waiting for a decision on a mortgage modification, a balance at the time of foreclosure that was higher than what was actually owed and a foreclosure that went forward although the homeowner was following a loan modification plan.

At Home With the Hobbits

Probably the real reason Tolkien put the hobbits in earth sheltered houses is that he knew them from Ireland and Iceland, two countries where people did it because it was much warmer in the winter. It so happens that it is also much cooler in the summer. Treehugger.com has put together a grand tour of the latest in hobbit-friendly housing.
They point out that many of these home building techniques have been around for thousands of years.

Harp 2 is Humming Along.

The Home Affordable Refinance Program was launched in early-2009. It was meant to give homeowners whose homes had lost value access to the same low rates as everyone else. The recession had started, mortgage rates had been dropping, and the government wanted to use HARP as economic stimulus.

As homeowners refinanced in California, Arizona, Florida and Michigan, among other states, monthly mortgage payments were reduced, helping households to save or spend to meet other financial needs.

The original HARP program, however, failed to gain much traction because of loan-to-value (LTV) restrictions and far-reaching default liability which was placed on banks making HARP loans.

So, to help broaden HARP's base, the program was re-written and relaunched in October 2011. "HARP 2", as the program is commonly called, was meant to expand the reach of the Home Affordable Refinance Program and it has. Prior to HARP 2, the refinance program was reaching fewer than 30,000 households monthly, tallying fewer than one million closed loans through its first 30 months. Since March 2012, the Home Affordable Refinance Program has nearly tripled its volume, closing 87,000 loans per month, on average.

More than 1,000,000 HARP loans are expected for 2012. While HARP 2 is considered a success, the program likely to fall short of its original goal to help 7,000,000 U.S. households. This is just one reason why Congress has considered launching HARP 3. More details can be found in Dan Green's Mortgage Report.

Fully Insured? Allstate's Not Sure....

Just posted on Facebook by Tori Cardinale, a Staten Islander friend of a friend:

HI Everyone, This is my house. We walked in through a HOLE in the front to the entire first floor COMPLETELY gone. We are fully insured. Allstate had just quoted us on the amount we are receiving. $165.38. Notice the RED tag on the door (WE ARE NOT ALLOWED IN) This is not acceptable, and basically a slap in the face. Please re-post this, Share or Whatever everyone does to make this Viral. To make Allstate know what its like to be jerked around, we are hanging the Banner in hopes of some Media Attention. Everyone who was helping from the storm, Just repost this! Thanks!

Unemployment Falls Along with Mortgage Rates

 Sandy blew a hole in not in the nation’s labor market but economists’ crystal balls as the economy added 146,000 jobs and the unemployment rate fell to 7.7 percent, the lowest level since December.

Half-way Back to Normall -- Almost

Each month, Trulia’s Housing Barometer charts how quickly the housing market is moving back to “normal.” We summarize three key housing market indicators: construction starts (Census), existing-home sales (NAR), and the delinquency+ foreclosure rate (LPS First Look). For each indicator, we compare this month’s data to (1) how bad the numbers got at their worst and (2) their pre-bubble “normal” levels.

In October 2012, all three housing measures improved: construction starts increased again, existing-home sales rose, and the delinquency + foreclosure rate dropped considerably. Even though construction and sales declined month-over-month in the Northeast region, stronger activity in the rest of the country outweighed the impact of Hurricane Sandy.

"Modern Family" is Becoming New Model for Modern Families

The multi-Emmy award winning sitcom Modern Family may have seemed to some viewers to be atypical, but recent economic and cultural changes have made it a new reality for a growing number of extended families.

"We've seen a 25 percent increase in demand for multigenerational housing structures over the past two years and expect to see more,"
said Luis Tusino, CEO of the GBI-Avis building group, which specializes in building custom modular homes.

Sea Levels Rising 60% Faster Than Expected

Treehugger.com is reporting that new research from the Potsdam Institute for Climate Impact Research shows that global sea level rise is happening 60% faster than IPCC projections, even though temperatures are rising much as expected.

The new findings highlight that the IPCC is far from being alarmist, and in fact in some cases rather underestimates possible risks. So how fast are sea levels actually rising? This latest research, based on satellite data, shows that sea levels are rising on average 3.2mm each year—and not because of any temporary event like ice discharges from the ice sheets of Greenland or Antarctica, or because of internal variability in the climate system.

The Vanishing FSBO

During the last five years of the downturn in Real Estate, For Sale signs have been a familiar sight on most major streets. But one of the biggest casualties of the sluggish housing market has been the Realtors call these sellers "Fizzbo's" and have been increasingly successful in converting them to happy clients. In the past 20 years,the percentage of sellers who sell on their own has dropped from 19% to about 10%.

Most of those who choose to go it alone either have s background in Real Estate or know their buyers personally. Even then, buyers feel uncomfortable looking at a home with the seller looking over their shoulders. Even if the seller steps outside, the buyer is acutely aware that the seller is paying close attention to how long the buyer spends in the home. Buyers tend to leave much more quickly if the seller is nearby.

 One shift we’re seeing is that FSBOs are increasingly private transactions. In 2003, the first year NAR started looking at the question, a little more than a third of FSBOs, or 36 percent, knew who their buyers were upfront. By last year, that number had increased to 50 percent. That’s a 38 percent shift.

That suggests FSBOs are increasingly hesitant to go it alone unless they have their buyer lined up before they take the plunge

Mortgage Programs for 620 and Up FICOs

Our local go-to guy on mortgage approvals,  Ken Lombardi,  just posted this useful update on his FB page:

Today, stocks are up, so it looks like rates may edge up. After election thet dropped, but now it looks like we may retreat from the lows, so act fast. Dont forget November is when the bond market fiscal year ends, thats why rates rise in Nov. and Dec. They are taking huge profits they made this year!. Important, new data shows average person closing on a real estate transaction has a 760 credit score. The 620-660 market is not taking advantage of low rates and the best time in history ever to buy!!
They may think they cant get a loan, because banks want 700 or better in most cases. We have special programs for people down to 620 scores, lower for VA. Call me for details, Yes there are even no money down programs where closings costs are paid. Buying or refinancing.
We are a full service Mortgage Banker with our own funds, we can help!! 973-632-3487.
Get informed and know how to get prepared

As if to prove his prediction, Zillow 30 year rates, in column at right, have today just jumped from 3.2& to 3.27%.

Just tell him Geoff sent you!

2 - 4 Legged Food Drives for Sandy Victims

The Four Legged Food Drive aims to bring pet food to dogs cats who are victims of the home foreclosure crisis, through your donations. This year, Keller Wiliams Realty in Montclair is leading the drive to feed pets that have fallen victim to Hurricane Sandy. Most are in the devastated NJ Shore towns.

For the rest of our two legged folks in North Essex, we're assisting the Food Pantry of Montclair.  Right now, they're looking for donations of Thanksgiving related food. For their ongoing needs, check out their website.

The ABC's of 203k's

You don't have to be a victim of Sandy's wrath to get government help for home repairs and renovations. Whether you're a first time buyer looking for a great deal in a home that needs a little TLC, or you own a home that is overdue for an upgrade, a 203k loans may be the perfect solution. It's not a new program, having been around for over 30 years but, since it was streamlined in 1994, it is now far and away the fastest growing home repair loan program.

The Federal Housing Administration has specified that their 203k loans must be for improvements that cost at least $5,000, and work must be completed within 6 months. For small projects under $35,000 you may want to use a Streamlined 203k instead; the process is less cumbersome.

 If you underestimate costs, you cannot increase your loan amount so it's important to work with good contractors. Interest rates on FHA 203k loans are a little higher than other FHA loans (by about

1% or so), so you’ll pay more over the life of your loan.

Lenders have to do extra work to track your project and lock an interest rate for the longer application process. However, FHA 203k loans are guaranteed so lenders have less risk. Rates may still be lower than you can find without FHA backing.

http://www.rehab203kloan.com/

DEP Issues Water Conservation Advisory for NNJ

In the aftermath of Hurricane Sandy, DEP Commissioner Don Martin has issued the following advisory:

We are asking residents and businesses served by the PVSC to heed the Governor’s Executive Order for mandatory water use restrictions, and to be even more diligent in conserving water to help us reduce the flow of effluents into the harbor and limit environmental impacts until we get this plant fully operational.

Among the restrictions:

• All indoor water use, including showers, baths and domestic cleaning, must be conducted with minimum amounts of water.
• Non-essential indoor water use is prohibited.
• Watering of grass, lawns and landscapes is prohibited except for newly sodded or seeded areas done by professional. landscapers or immediately following a commercial application of fertilizer, pesticide or herbicides; minimum amount of water should be used during these applications.
• Use of water for washing paved surfaces, such as streets, sidewalks, driveways, garages, parking lots and patios is prohibited.
• Outdoor use of water for ornamental or aesthetic purposes, including fountains, artificial waterfalls, and reflecting pools is prohibited, except to preserve or support wildlife.
• Use of water for power washing of buildings is prohibited except for commercial enterprises engaged in power washing, and with minimum water use.
• Car and truck washing, except for emergency vehicles, is prohibited.

Still Recovering from Sandy? FEMA Can Help

More than 49,000 have registered with FEMA in NJ for disaster relief and more than $31M in assistance has already been approved. A major disaster declaration has been issued for 12 NJ Counties. The number of those assisted will continue to increase as residential power is restored and those affected are able to register for assistance with FEMA online, as well as through their 800#.

If you live in one of the counties affected by Hurricane Sandy, we encourage you to apply for assistance by calling 1-800-621-FEMA(3362) TTY 1-800-462-7585 or if you have access to the internet, applying online at www.disasterassistance.gov. You can download a FEMA smartphone app here.

The SBA, Small Business Administration, is making Economic Injury Disaster Loans available to small businesses and most private non-profit organizations in eligible Counties. Disaster loans up to $2 million to repair or replace disaster damaged or destroyed real estate, machinery and equipment, inventory, and other business assets are available at low interest rates.

 Apply at: https://disasterloan.sba.gov/ela/ Find the nearest FEMA Disaster Recovery Center by inputting an address at the following site: http://asd.fema.gov/inter/locator/home.htm

Power Failures From the Top Down

I don't usually agree with NY Post editorial views, but their cover story on Mayor Bloomberg's making Sunday's NY Marathon a priority over the region's current crisis with power outages and gas shortages reflects a good chunk of public opinion.

It reinforces today's comments by Steve Crooks, good friend who is always thinking out side the box. He just posted this observation on his Facebook wall:

I'm wondering, who remembers the oil embargo back in the '70s? The closed-up gas stations everywhere, the long lines? Remember 'odd and even days'? Why on Earth isn't some genius mandating something like that? Or some alphabetical system? At least you would KNOW when your turn was! Because these endless gas station lines are obscene, glutting up traffic and eating away at our police forces, just to keep the peace. Jesus, during World War II the federal government was rationing EVERYTHING, and the general public pitched in for the effort. Are our current officials so gun-shy that they are afraid, with an election coming on, to mandate ANYTHING, even if it were the smart thing to do? What say you? Because I really want to know...

Maybe our local governors could learn from the past and  get a bit more pro-active in dealing with this escalating crisis.