Despite the best intentions at assisting distressed homeowners, bad mortgage debt continues to rise with little hope of reigning it in.  The tough job market and high unemployment rates serve to add fuel to the economic firestorm.  After all, it’s difficult to pay the mortgage without any income.

The current shadow inventory estimate is about half of the entire market of homes for sale, according to Housing Watch.  Additionally, there are many other homeowners who have hesitated putting their home on the market due to market uncertainty.  In essence, this only clouds the housing market’s supply and demand picture.  Our local Fredericksburg, Virginia area isn’t any different than the rest of the nation.  We’ve got plenty of foreclosures on the market, and many others waiting for the market to turn.

Current estimates indicate that existing foreclosures , and the additional shadow inventory, will take nearly three years to sell at normal market absorption rates.  Can you imagine what will happen to home prices once the shadow inventory, and other would be sellers put their homes on the market?  Normally, I’m not an advocate of predicting the future.  But, in this case, with an overabundance of homes, and current economic conditions, something has to give.

When that time comes, do you think the sound we’ll hear is the shattering of the price floor for homes?  If so, let’s hope we’re not caught unawares.  We’ve certainly had plenty of warnings.

As part of the American Recovery and Reinvestment Act of 2009 (ARRA), the Department of Defense (DoD) expanded the Housing Assistance Program (HAP) to provide benefits to service members who are moving (in military jargon, PCSing – Permanent Change of Station), among others.

To be eligible for HAP, military members must have, 1) Purchased their home prior to 1 Jul, 2006, and 2) Have PCS orders dated 1 Feb 2006 thru 30 Sep 2012.

Have you heard of HAP?  Many service members have, but few homeowners understand just what it takes to sell their home using their Housing Assistance Program entitlement.  To educate service members, DoD and the Army Corps of Engineers have provided specific, informative guidance on their HAP website.

The website explains, among other things:

1.  Who Is Eligible

2.  How to Apply

3.  The Benefits HAP Provides

4.  Where HAP is Implemented

In addition, applicants are able to download the necessary application package  to be sent in for eligibility.  Their FAQ (Frequently Asked Questions) section, not only responds to the questions most of us have about applying and how the process works, but also provides updates on the Expanded program.

HAP is providing other ways for eligible members to get answers to their questions.  Coverage is handled by the three regional offices in Savannah, Fort Worth & Sacramento.  They do answer their phones and are ready to reply to questions about the program.  As well, representatives from the National Program Office will provide informational briefings if requested.

In the Fredericksburg and Stafford area, C21 AdVenture has been fortunate enough to host HAP’s Assistant Program Manager (PM), Mr. Donald Chapman, for an informational briefing last month for local Realtors.  While his presentation answered some of our HAP questions, the opportunity to ask questions was the perfect opportunity for him to dispel some of the misconceptions held about the program by those in attendance.   As a follow up, he’s returning in March to speak to a much larger audience of local military homeowners.

HAP leadership is pedaling as fast as they can in their attempt to inform military and civilian home owners who qualify, how to apply and participate in this timely offering.  To make this program work, all involved need to know what the requirements and expectations are.  Most endeavors take a little time to get off the ground, and this one is no exception.  They’ll certainly be bumps in the road for sellers and buyers who participate in this process.  Preparing yourself, by using the resources HAP is providing, may go a long way in making those bumps a bit more tolerable.

“The real risk to the banks and investors is that the people in those homes might just decide to walk away. And that’s what we must do. Doesn’t have to be everybody, of course; but anyone who finds themselves seriously underwater with no hope of ever recouping their investment….just walk away Renee. Morality has nothing to do with it. You are a cog in the wheel of a machine that is killing this country and if you remain a cog you enable it. Remove your cog and the machine will not keep running. Remove millions of cogs and the machine gets replaced.”

In other words, the Kos is advocating mortgage debt anarchy; a revolution of sorts.  It then cites Realtors from across the U.S. who seemingly justify the action.  Why?  In the words of one agent, since the economic and housing recovery is projected to take perhaps as long as a decade, “Isn’t it better to just cut the losses up front”? 

According to a recent report by First American CoreLogic, nearly one in four are underwater or upside down with their home mortgage.  In other words, they owe more for the property than it is worth.  According to the N.Y. Times, the housing collapse left 10.7 million families owing more than their homes are worth.  Is that a problem?  Of course it is.  Will walking away from a mortgage solve that problem?  Not hardly.  Have the Administration’s loan modification measures worked as fast or as well as hoped?  No, they haven’t.  Nonetheless, the programs were enacted for the affected homeowners to use.  I have yet to hear of a homeowner not being able to remain in their home as they attempt to modify their payments.

How about you?  If you know of a friend, relative, or client that has been forced out of their property despite the fact they’ve continued to make a payment, or partial payment, please let me know.

Is walking away from a mortgage debt justified?  While its track record isn’t perfect, the short sale is getting its act together.  Perhaps, for both the lender and the those upside down, it is a better alternative than burning the mortgage.

The change to appraisal periods involved decreasing the validity time for FHA appraisals from six to four months for both existing homes and those under construction.  Since the first of this calendar year, 2010, the new standard has been in effect.  Why does the change matter?

For those of us that have faced selling properties, only to encounter difficulties with the appraisal, this reduced turn around time, or reduction of validity time, couldn’t have come sooner.  Because, no matter the soundness of an agent’s estimation of a property’s value, it is the appraiser’s that matters most.

The home buying process is an exciting time, but one that may bring additional responsibilities into your life. Many homes may need renovations or inspections, especially in areas that are susceptible to natural disasters. Having the assistance of an experienced and honest real estate agent will make this process smooth and stress free.

Some older homes may still contain obsolete building materials. Citizens of this great state are striving to move to a green lifestyle, advocating environmentally sustainable methods to be used throughout the state. Building or remodeling your homes with eco-friendly materials can lower utility and water bills, higher real estate value, purer air quality, reduced waste sent to landfills and conservation of natural resources.

Asbestos + Healthy Tips

Asbestos is a fibrous mineral that was used in construction applications for the greater part of the 20^th century. Often appearing as insulation, piping, roofing and flooring, homes and buildings could still contain asbestos materials if they were built prior to 1980.

If you locate any suspected asbestos in the home, most experts suggest leaving it un-disturbed until a home inspector can examine your property, take evaluations and determine the safest course of action. Sometimes the best action is no action at all. Disturbing asbestos in good condition may cause its fibers to be released into the air. The removal of asbestos must be undertaken by a professional abatement contractor who is trained in handling dangerous materials.

Exposure to this material can lead to the development of mesothelioma, a lung ailment associated with asbestos exposure. Though a cure does not exist, mesothelioma treatment options such as radiation, chemotherapy and surgery may be available to patients to battle the disease. Mesothelioma compensation has become tough to predict for victims and their families because diagnosis can take 20-50 years. For this reason, many people refer to it as a silent killer.

Removal of asbestos in public facilities, workplaces and homes should be performed by licensed abatement contractors as long as the National Emissions Standards for Hazardous Air Pollutants (NESHAP) are not violated. They must wear protective equipment such as masks and gloves to avoid any exposure. The materials should be removed in as large pieces as possible and places in disposable bags.

Green Building Benefits

Each and every human being would like clean air to breathe and crisp water to drink. It takes a lot of effort and political advocacy to achieve this on a macro level. The implementation of eco-construction, green energy solutions will play an important role in the transformation to a healthier and sustainable world. Many locations throughout Alabama are swiftly changing their construction practices to suit the environment and the health of human beings.

There are many green, eco-friendly materials that replace the need for asbestos and can reduce energy costs annually. These include the use of cotton fiber, lcynene foam and cellulose. Cotton fiber is quickly becoming a favorite for home builders and renovators. Made from recycled batted material, it is also treated to be fireproof.  Research has demonstrated that the use of eco-friendly insulation alternatives can reduce annual energy costs by 25 percent.

Implementing green methods of building can have positive environmental, health and economic benefits. These include: Conservation of natural resources, enhancement of air quality, energy sustainability, increase property value, improve quality of life, improvement of pulmonary/cardiac health and reduction of waste.

So, what is your latest Christmas wish?  Somehow, I doubt that it’s A Christmas Story’s Red Ryder BB gun.  But, who doesn’t look forward to opening what’s under the tree?  For many, Christmas is a time of celebration and renewal.  Both, spiritual and personal.  A wonderful opportunity for family to get back in touch with one another.  For cards from distant friends.   And, for others, the focus of the holiday is on giving. 

What if we all were more like George Bailey?  You know, Jimmy Stewart’s role in the Christmas favorite, It’s a Wonderful Life.  The movie’s main character, whose dream was to travel the world, but never quite got there.  Instead, he was continually helping others less fortunate than he.  With money, and time, and his tireless efforts.  He certainly gave more than he got.  Wouldn’t you agree?  Of course, George Bailey was a movie character, not a “real” person.  But, if he was, who would he be?  Do you know someone who fits his description?  What about you? 

As this year draws to a close, I’m reminded during this Christmas season of giving, that whether fulfilling our duties as professionals, as Realtors, we have a responsibility to give more than we’ll get.   And while there are those transactions that make us all wonder why we ever chose this profession, looking back, it’s easy to realize the benefits clearly outweigh the challenges faced.  Let’s hope that the case for many of us. 

Merry Christmas!     

During the past year or so, I’ve had the opportunity to teach a reoccurring Real Estate Technology class.  The class briefly reviews the shift we’ve seen in the methods, tools and practices in our profession during the past few years, and examines how Realtors, by leveraging these recent tools, and social media platforms, can improve productivity and their business.  One point of emphasis we touch on during the class is the use of Real Estate blogs as a means of learning the business.  Blogs, and their collaborative structure, are a free classroom.  And an interactive one at that.  And there are loads of them.  Whether it’s foreclosures, luxury homes, mortgage issues, best ways to showcase a property, or just about any other subject related to the business of real estate, or homes, there’s a blog for it.  Best of all, as I say again and again during class, they are FREE.  Classes we used to pay for are now on the web, and at our fingertips, for FREE.  So, we really have no excuse for being uninformed, right?  But, having said that, what about the content?  How much substance is there in the information we’re taking in.  What credibility does the particular author, and real estate subject “expert” have?

When absorbing information, it’s a good idea to check your sources, don’t you think?  Have you ever wondered why the Federal Drug Administration (FDA) requires certain labels or notices on food and drug containers?  Do you think it’s important to know a drug is poisonous BEFORE you take it?  Have you ever looked on the label to see what’s in that jar of jelly you’re about to open?  Well, what about Real Estate information you’re consuming?  Is that article on Short Sales written by a practitioner who is a qualified expert in that transaction?  Does that individual teaching you Ethics actually have any background in the practice, or is their “expertise” a matter of having been convicted in court of lying or something worse?  Who knew? 

One the painful truths of growing up is that most of us have to learn from our own mistakes since we fail to learn from the mistakes of others.  Another is that, the older we get, the smarter our parents seem to be.  I don’t know about you, but my parents tugged on my ear a few times in my youth telling me not to believe everything I hear.  And, you know what, they were right.  With today’s abundance of online information, let’s try and be as discriminating with what we read, as well.

Today’s announcement that the Obama Administration plans on forcing mortgage companies to permanently reduce monthly payments for troubled homeowners was met by a mixed reaction.  While the action’s sponsor, the White House, said one thing, many others took a more realistic wait and see attitude. 

The Department of Housing and Urban Development’s (HUD) new initiative is part of the Administration’s efforts to provide relief for homeowners who are laboring to pay their mortgages, and is another piece of the effort to stabilize the housing market.  The initiative, according to HUD, wants to extend to those already receiving trial modifications to their home loan, a permanent modification to their mortgage.  In simple language, what does that mean?  A lower payment. 

While borrowers have understandably embraced the new program, mortgage lenders aren’t nearly as willing.  To ensure their participation, the Administration outlined steps to hold their feet to the fire.

Servicer Accountability

As part of the Administration’s ongoing efforts to hold servicers accountable for their commitment to the program and responsibility to borrowers, the following measures will be added:

• Top servicers will be required to submit a schedule demonstrating their plans to reach a decision on each loan for which they have documentation and to communicate either a modification agreement or denial letter to those borrowers. Treasury/Fannie Mae “account liaisons” are being assigned to these servicers and will follow up daily as necessary to monitor progress against the servicer’s plan. Daily progress will be aggregated by the end of each business day and reported to the Administration.
• Servicers failing to meet performance obligations under the Servicer Participation Agreement will be subject to consequences which could include monetary penalties and sanctions.
• The December MHA Servicer Performance Report will include the data on permanent modifications as well as the number of active trial period modifications that may convert by the end of the year if all borrower documents are successfully submitted, sorted by servicer and date.
• Servicers will be required to report to the Administration the status of each modification to provide additional transparency about situations where borrowers face obstacles to moving to the permanent phase.

While the new initiative is certainly welcome by homeowners whose mortgages have become a greater burden than they can bear, its viability is only as good as the rules it is guided by.  The process is riddled by paperwork, and paperwork and the U.S. government sometimes don’t mix too well.   Additionally, while the gov’t plans on using a carrot and stick approach when dealing with lenders, only time will tell how well their daily monitoring works in practice.  

Former Chief Credit Officer for Fannie Mae, Edward Pinto, calls the new initiative’s goals “a pipe dream”.  What do you think?  Is it simply eyewash?  Or, is the initiative good for homeowners and the economy?

Other than the dramatic shock to financial markets during the year following the height of the housing market and subsequent rapid fall in home prices, the sales market has been fairly predictable.  Once lenders got a grip on the deluge of foreclosures and short sales, and this glut of properties began to be adequately handled by them (O.K…so, they’ve still got problems with Short Sales, but they’re getting there), the housing market has been relatively stable.

Today’s latest news on the surge in home sales isn’t news to those of us in the business.  As one prospective home buyer in the latest USA Today article mentioned, the market is “insane….I’ve never seen a market like this before.” 

That, after having finally securing a home following unsuccessful offers on 20 Las Vegas homes.  And, while the rush to “get in” and take advantage before the First Time Home Buyers tax credit offer expired can partly be credited with the robust sales numbers, it doesn’t hurt that home prices, in many locations nationwide are 30-50% less than they were in 2005, or that interest rates are rock bottom.

Many believe that home prices have stabilized.  But, with more foreclosures and Short Sale properties landing on the market weekly, we may not have seen the bottom quite yet.  With extension of the tax credit, and mortgage rates in a low holding pattern, the surge in home sales numbers may, if we’re fortunate, become a trend instead.

It’s cool mornings and evenings, beautiful natural colors, and inkling of the coming holidays, seems to invigorate a sense of better things yet to come.  Around Stafford and Fredericksburg, for many, it’s jacket weather (for others, coats), and the stunning colors are second to none.

How about you, what is your favorite season?