Thursday, March 31, 2011

Heads up: Congress is debating a budget plan that would be devastating to Michigan.

Dear Lisa,
Heads up: Congress is debating a budget plan that would be devastating to Michigan. Will you pass this along?
Senators Debbie Stabenow and Carl Levin need to hear from all of us about it right now, before they cut a deal in the next few days.
Please spread the word about all of these proposed cuts to Michigan:
  • $76 million would be cut from federal funds for clean and safe water in Michigan.1
  • 6,100 Michigan children would be immediately cut from Head Start, which provides comprehensive early childhood development services for at-risk children ages zero to five.2
  • $202 million would be cut from Pell Grants, affecting all 337,000 higher education students with those grants in Michigan.3
  • Job training and employment services would be effectively eliminated for 8,800 dislocated workers, 139,000 low-income adults, and 19,000 youths age 14 to 21.4
  • $4.8 million would be cut from law enforcement assistance, taking cops off the beat.5
It's especially galling when the same budget protects tax breaks for corporations like GE and the very rich.
Just last night the news broke that Congress may be close to striking a deal on the budget. Now is the only time we can influence the outcome. 
Can you call Sens. Stabenow and Levin and ask them to oppose these cuts in the budget? You can pick one of the cuts in this list to highlight in your call.
Senator Debbie Stabenow
Phone: 202-224-4822

Senator Carl Levin
Phone: 202-224-6221
Click to report your call. Then pass this email along locally!
The cuts that the Republicans are proposing would disproportionately hit those who can least afford it in Michigan, and it's up to us to stop them.
Thanks for all you do.
-Daniel, Amy, Milan, Tate, and the rest of the team
1. "House Bill Means Fewer Children in Head Start, Less Help for Students to Attend College, Less Job Training, and Less Funding for Clean Water," Center on Budget and Policy Priorities, March, 1, 2010
2. "Projected Reduction in Children Served in Head Start Based on H.R. 1—Fiscal Year 2011 Continuing Resolution," Center for Law and Social Policy
3. "House Bill Means Fewer Children in Head Start, Less Help for Students to Attend College, Less Job Training, and Less Funding for Clean Water," Center on Budget and Policy Priorities, March, 1, 2010
4. Ibid
5. Ibid
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Lisa Ekanger Your Hometown Realtor!

Wednesday, March 30, 2011

Real estate: It's time to buy again

Real estate: It's time to buy again

Forget stocks. Don't bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.
A home under construction in Austin. The number of new homes in the pipeline nationwide is quite low.
From his wide-rimmed cowboy hat to his roper boots, Mike Castleman fits moviedom's image of the lanky Texas rancher. On a recent March evening, Castleman is feeding cattle biscuits to his two pet longhorn steers, Big Buddy and Little Buddy, on his 460-acre Bar Ten Creek Ranch in Dripping Springs, a hamlet outside Austin in the Texas Hill Country. The spread is a medley of meandering streams, craggy cliffs, and centuries-old oaks. But even in this pastoral setting, his mind keeps returning to a subject he knows as well as any expert around: the housing market. "I'm a dirt-road economist who sees what's happening on the ground, and in 35 years I've never seen a shortage of new construction like the one I'm seeing today," declares Castleman, 70, now offering a biscuit to his miniature donkey Thumper. "The talking heads who are down on real estate will hate to hear this, but America needs to build a lot more houses. And in most markets the price of new homes is fixin' to rise, not fall."
Castleman is in a unique position to know. As the founder and CEO of a company called Metrostudy, he's spent more than three decades tracking real-time data on the country's inventory of new homes. Each quarter he dispatches 500 inspectors to literally drive through 45,000 subdivisions from Baltimore to Sacramento. The inspectors examine 5 million finished lots, one at a time, and record whether they contain a house that's under construction, one that's finished and for sale, or a home that's sold. Metrostudy covers 19 states, or around 65% of the U.S. housing market, including all the ones hardest hit by the crash: Florida, California, Arizona, and Nevada. The company's client list includes virtually every major homebuilder and bank -- from Pulte (PHM) and KB Home (KBH) to Bank of America (BAC) and Wells Fargo (WFC).
The key figures that Metrostudy collects, and that those clients prize, are the number of homes that are vacant and for sale in each city, and the number of months it takes to sell all of them. Together those figures measure inventory -- the key metric in determining whether a market has a surplus or a shortage of new housing.

Today Castleman is witnessing an extraordinary reversal of the new-home glut that helped sink prices just a few years ago. In the 41 cities Metrostudy covers, a total of 78,000 houses are now either vacant and for sale, or under construction. That's less than one-fourth of the 343,000 units in those two categories at the peak of the frenzy in mid-2006, and well below the level of a decade ago. "If we had anything like normal levels of buying, those houses would sell in 2½ months," says Castleman. "We'd see an incredible shortage. And that's where we're heading."
If all the noise you're hearing about housing has you totally confused, join the crowd. One day you'll read that owning a home has never been more affordable. The next day you'll see news that housing starts have plunged to nearly their lowest level in half a century, as headlines announced in March. After four years of falling prices and surging foreclosures, it's hard to know what to think. Even Robert Shiller and Karl Case can't agree. The two economists, who together created the widely followed S&P/Case-Shiller Home Price indices, are right now offering sharply contrasting views of housing's future. Shiller recently warned that the chances were high for a further double-digit drop in U.S. home prices. But in an interview with Fortune, Case took a far brighter view: "The lack of new home building is a huge help that a lot of people are ignoring," says Case. "People think I'm crazy to be optimistic, but housing is looking like the little engine that could."
To see where real estate is truly headed, it's critical to keep your eye firmly on the fundamentals that, over time, always determine the course of prices and construction. During the last decade's historic run-up in prices, Fortune repeatedly warned that things were moving too fast. In a cover story titled "Is the Housing Boom Over?," this writer's analysis found that the basic forces that govern the market -- the cost of owning vs. renting and the level of new construction -- were in bubble territory. Eventually reality set in, and prices plummeted. Our current view focuses on those same fundamentals -- only now they're pointing in the opposite direction.
So let's state it simply and forcibly: Housing is back.
Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction that so amazes Castleman. The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.
Drumming up sales
Of course, home prices are low and home construction is weak for a reason: incredibly low demand. For our scenario to play out, America will need a decent economy, with job creation and consumer confidence continuing to claw their way back to normal.
One big fear is that today's tight credit standards will chill the market. But we're really returning to the standards that prevailed before the craze, and those requirements didn't stop prices and homebuilding from rising in a good economy. "The credit standards are now at about historical levels, excluding the bubble period," says Mark Zandi, chief economist for Moody's Analytics. "We saw prices rising with fundamentals in those periods, and it will happen again."
To see why, let's examine the remarkable shift in home affordability. A new study by Deutsche Bank measures affordability in two ways: first, the share of income Americans are paying to own a home. And second, the cost of owning vs. renting. On the first metric, the analysis finds that homeowners now pay just 9.8% of their income in after-tax mortgage, tax, and insurance payments. That's down from 17.2% at the bubble's peak in 2007, and by far the lowest number in the Deutsche Bank database, going back to 1999. The second measure, the cost of owning compared with renting, should also inspire potential buyers. In 28 out of 54 major markets, it's now cheaper to pay a mortgage and other major costs than to rent the same house. What's most compelling is that in all of the distressed markets, owning now wins by a wide margin -- a stunning reversal from four years ago. It now costs 34% less than renting in Atlanta. In Miami the average rent is now $1,031 a month, vs. the $856 it costs to carry a ranch house or stucco cottage as an owner. (For more, see The top 10 cities for home buyers)
Not all markets will bounce back equally, of course. Housing resembles the weather: The exact conditions are different in every city. But in general the big U.S. markets fall into two different climate zones right now. We'll call them the "nondistressed markets" and the "foreclosure markets." A more detailed look shows why the forecast for both is favorable.
Nondistressed markets: Ready for launch
No cities went untouched by the collapse in prices over the past few years. But markets such as Northern Virginia, Indianapolis, Minneapolis, San Diego, the San Francisco suburbs, and virtually all of Texas held up reasonably well. In those areas prices spiked far less than in bubble cities -- the foreclosure markets we'll get to shortly -- chiefly because they didn't get nearly as many speculators who thought they could flip the homes or rent them to snowbirds.
The nondistressed markets will be able to get prices rising and construction growing far faster than the harder-hit areas for a simple reason: Although some of these markets are still suffering from foreclosures, they don't need to work through the big overhang haunting a Las Vegas or a Phoenix. The number of new homes for sale or in the pipeline is extraordinarily low in nondistressed markets. San Diego is typical. It has just 921 freestanding homes for sale or under construction, compared with 4,425 in late 2005. The challenge for these cities is to generate enough demand to reduce inventories of existing, or resale, homes. In the entire country the resale supply stands at 3.5 million houses and condos. That's a fairly high number, since it would take more than eight months to sell those properties; seven months or below is the threshold for a strong market.
But in the nondistressed cities, the existing home inventory is lower, closer to seven months on average. So a modest increase in demand will translate into strong gains in both prices and new construction. That should happen quickly, because most of those markets -- including Silicon Valley, Northern Virginia, and Texas -- are now showing good job growth.
Zandi of Moody's Analytics expects that prices will rise three to four points faster than inflation for the next few years in virtually all of the nondistressed markets. His view is that prices will increase in line with rents, which are now growing briskly because apartments are in short supply. Those higher rents will encourage buyers to cross the street from an apartment to a home of their own.
In Northern Virginia, Chris Bratz, an engineer, and his wife, Amy DiElsi, a publicist, are planning to leave their rental apartment and become homeowners for the first time. The main reason? Buying has simply become a far better deal than renting. "The market got completely inflated, then it crashed, so prices are coming back to where they should be," says Chris. As the couple have watched prices fall, they have also watched the rent on their apartment spiral upward, reaching $2,700 a month. They calculate that they should be able to purchase a townhouse for between $400,000 and $500,000 and pay less per month for a mortgage.
The nondistressed markets will also lead the way in construction. Zandi predicts that for the nation as a whole, single-family housing "starts" -- measured when a builder pours a foundation for a new home -- will rise from 470,000 in 2010 to as much as 700,000 this year. A large portion of that activity will happen in nondistressed markets where a tightening supply of resale houses will start making new homes look like a good deal. "Our main competition is from resales," says Jeff Mezger, CEO of KB Home. "The prices of those homes have stayed so low, because of low demand, that it's hampered the ability of builders to sell new houses."
But many would-be buyers simply prefer a brand-new house. Eventually they'll move from renters to buyers, and the trend will accelerate now that prices are no longer dropping. In Minneapolis, Yuan Qu and her husband, Xiang Chen, a researcher at the University of Minnesota, just moved from a two-bedroom rental to a new light-blue four-bedroom ranch with a chocolate-colored roof on a spacious corner lot. They paid $400,000, a bargain price compared with a few years ago. The couple, both in their early thirties, moved to Minnesota from China six years ago. "We wanted to buy a house, and we've been waiting and waiting and waiting," says Qu. "The prices went down for so long, we finally thought they couldn't keep falling." For Qu the only choice was new construction. "We're not very handy people," she admits.
Foreclosure markets: The outlook is brightening
A home off the market in Mesa, Ariz.
The true disaster areas for housing since the bubble burst have been Sunbelt cities such as Las Vegas, Phoenix, and Miami -- places that boasted great job and population growth in the mid-2000s, only to suffer a housing crash that swamped them with empty homes and condos and crushed their economies. But people always want to live in those sunny locales, and their job markets are starting to recover, albeit slowly. In foreclosure markets the inventory problem is far greater because it includes not just traditional resale homes but millions of distressed properties. Fortunately those houses are now such a screaming deal that investors, including lots of mom-and-pop buyers, are purchasing them at a rapid pace. To be sure, some foreclosure markets won't rebound for years because they're both vastly overbuilt and far from big job centers; a prime example is California's Inland Empire, a real estate disaster zone 80 miles east of Los Angeles.
But the outlook is brightening for Phoenix, Las Vegas, Miami, and parts of Northern California. A big positive is the tiny supply of new homes entering the market. Phoenix, for example, has a total of just 8,100 new homes that are either for sale or under construction, down from 53,000 in mid-2006. The big test in these cities is absorbing the steady stream of distressed properties. The foreclosures put downward pressure on the market far out of proportion to their numbers because of markdown pricing. "We had levels of inventory even higher than this in 1990 and 1991," says MIT economist William Wheaton. "But they were traditional listings, not foreclosures, so they didn't create the big discounts you get with foreclosures."
Wheaton reckons that we'll see a flow of around 1 million foreclosures a year, at a fairly even pace, from now through 2013. That figure is frequently cited as evidence that the market is doomed for years in most foreclosure markets. Not so. The reason is that the vast bulk of those units, probably over 600,000, according to Gleb Nechayev, an economist with real estate firm CB Richard Ellis (CBG), are being converted to rentals either by investors or their current owners. Those properties are finding plenty of renters, since the rental market is still extremely strong across the country. Remember, the millions who lost their homes to foreclosure still need somewhere to live.
A typical investor is Alex Barbalat, a Russian immigrant who's purchased seven homes east of San Francisco in the towns of Bay Point, Antioch, and Pittsburg. His average purchase price is around $100,000 for homes that once sold for between $300,000 and $500,000. But he has no trouble finding renters, since his tenants can commute to jobs in San Francisco on the BART transit system. Barbalat is pocketing rental yields on the prices he paid of around 12%, and he's in no hurry to sell. "I'm holding them until prices drastically rise," he says.
Investment funds are also entering the game. Dotan Y. Melech looks for bargains in Las Vegas for UnitedAMS, a firm he co-founded that manages apartments and other real estate investments. The firm has raised more than $20 million from outside investors to purchase distressed properties. So far, Melech has bought around 300 houses and plans to purchase another 200 this year. He has no trouble renting the houses he buys, since, he estimates, occupancy rates in Las Vegas are touching 95%. The "cap rate," or return on investment after all expenses, is between 8% and 10% -- twice the rate on 10-year Treasuries. Melech rents to people who lost their homes but are reliable renters. "A lot of people can't be buyers because their credit got hurt," he says.
Even with investors jumping in, buying activity in foreclosure markets hasn't yet increased enough to bring inventories down. It will soon. Zandi thinks prices will fall a couple of percentage points lower in the distressed markets in the short run. "But that will be overshooting," he says. "It's like an elastic band. If prices do drop this year, they will need to bounce back because they'll be far too low compared with rents and replacement cost." Renters will come off the sidelines to purchase homes in the years ahead, precisely the opposite trend of the past few years.
Consider the example of Michael Dynda, a retired Air Force avionics technician who now works for a government contractor in Las Vegas. Dynda, 49, is a first-time buyer who put off purchasing for years, in part because prices were falling so rapidly in Las Vegas, with no bottom in sight. But last year the combination of bargain prices and low mortgage rates became too good to resist. He ended up purchasing a 2,300-square-foot stucco home for $240,000, or about half what it would have fetched in 2007. Dynda got a 4.38% home loan, and pays the same amount on his mortgage as on the rent on the house he left to become a homeowner. "The timing was about as good as it could get," says Dynda.
Mike Castleman's company tracks the inventory of new homes in 19 states across the country. He sees supply getting tight. "Home prices are fixin' to rise," he says.
Back on the ranch, Mike Castleman is lounging in his creek-front mansion, built from "a hundred tons of fine central Texas limestone." As he shows off his collection of custom-made guitars, including one crafted to resemble the skin of a rattlesnake, the homespun housing guru once again returns to his favorite topic.
Castleman claims that this recovery will look like all the others: It will bring a severe shortage of housing. He invokes the livestock business to explain. "It takes three years between the time a bull mates with a cow and when you get a calf ready for market," he says. "That's how it is in housing too. We'll get a big surge in demand and the drywall companies will take a long time to ramp up, and it will take years to get new lots approved. Buyers will show up looking for a house in a subdivision, and all the houses will be sold. The builders will tell them it will take six months to deliver a house." But those folks, says Castleman, will be set on buying a place. "And they'll want it so bad they'll bid the prices up!" In other words: Beat the crowd.
It's a Great Time to Buy a House
Mike Castleman, the Texan with the best realtime view of housing in the U.S., tells editor-atlarge Shawn Tully that the naysayers are about to get a big surprise: rising prices for new homes.

--Reporter associates: Anne VanderMey and Christopher Tkaczyk
More from Fortune:
Foreclosure vote could rock the banks
Homeownership should not be part of the American Dream
Obama has a mortgage plan (or three) worth reading
Lisa Ekanger Your Hometown Realtor!

Tuesday, March 29, 2011

Homeownership has been part of the American Dream for centuries...

Why Owning a Home Rocks

by Carla Hill - Tue, Mar 29, 2011
Provided byRealty Times
Homeownership has been part of the American Dream for centuries, and it's no wonder why. It rocks.
First, owning a home is an investment. No, it's not a sure-fire way to get rich-quick. It is a long-term investment. Over the course of many years, even through times of economic upheaval, you can build wealth over time.
An average appreciation rate during normal times is around 6.5 percent a year. That means if you buy a home for $100,000, in just ten years you will have a home that could feasibly sell for around $174,000.
During that time you build equity, as well. Equity is the value of your property minus what you owe. So even if you still owe $60,000 on your home after 10 years, you will now have $114,000 in equity. Many homeowners use this equity to take out loans to use for home improvement projects, such as adding on new additions.
Owning a home also comes with less tangible benefits. Studies have shown that it creates a sense of community, motivating community involvement. And family stability is manifested through higher graduation rates and lower crime rates.
When you own a home, you take control of the creation of your surroundings. You can paint, make updates, and style the home to your liking -- all things not possible with most rentals.
You have even further stability when you have a fixed-rate mortgage. A fixed-rate means your rate will never increase. This means you will know the cost of your mortgage for the life of the loan. There won't be any surprises, which is what caught many homeowners off guard during the sub-prime mess. And there aren't any worries about the cost of rent going up each year. You can budget for life!
Don't forget about those great tax breaks, such as deducting your mortgage interest, and tax credits, such as money back for making energy efficient upgrades!
And of course, just think of all the fun times you can have with your family and friends. Memories will be made that will last a lifetime! Today's Local Market Conditions Report

Friday, March 4, 2011

FHA concessions on seller concessions?

3 percent ceiling is likely 'off the table'
By Ken Harney
Inman News™
March 01, 2011
There's some good news brewing at the U.S. Housing and Urban Development Department that could save thousands of home sales in the months ahead. The final details aren't fully nailed down and a formal announcement is still more than a month away, but I can tell you about a broad outline taking shape that isn't likely to change.
It's all about seller concessions.
Last year the Federal Housing Administration announced that it intends to slash maximum seller contributions from 6 percent to 3 percent for purchasers using FHA-insured mortgages. Seller concessions or contributions are essential lubricants that make large numbers of FHA-financed home sales flow smoothly to closing. They make otherwise unaffordable deals doable.
Say you're negotiating on a house and the seller absolutely insists on getting a price of $150,000. Perhaps the buyer has struggled to come up with down-payment money and won't have the additional cash resources to pay for the settlement and loan origination expenses, which average about 4 to 5 percent in your area.
Under long-standing FHA rules, your seller is allowed to contribute money from the sale proceeds to help with your closing costs. A 6 percent contributions cap -- the current rule -- allows your seller to put as much as $9,000 into the pot, which would be more than enough to handle your closing costs and prepaids.
But a 3 percent ceiling -- the one HUD proposed last year -- would reduce that to $4,500, leaving you short and endangering the entire deal. A 3 percent cap would also make FHA's standard the same as what's typical in the conventional loan market, where both Fannie Mae and Freddie Mac permit nothing beyond that limit.
After hearing complaints from builders, REALTORS® and lenders, HUD is now planning to adopt a more nuanced approach. A formal notice is expected sometime in April, with the changes taking effect this summer.
The core of the policy revision: flexibility. Rather than an across-the-board 3 percent ceiling on all FHA mortgages, the new policy would permit higher seller contributions -- probably between 4 and 5 percent -- on smaller loan balances. Meanwhile, the 3 percent cap would be mandatory on all loan amounts above some yet-to-be-specified limit.
Alternatively, a dollar ceiling on all seller concessions might be available, such as a maximum of $6,000. On the smallest-balance mortgages, the dollar total permitted might even hit 6 percent. Loans on newly constructed houses, where abuses have been reported when builders use concessions to support artificially high sale prices, could have special restrictions.
Whatever the final version turns out to be, the net result should be much better for home sellers, buyers and real estate professionals than last year's threatened 3 percent cap for everybody. This would especially be the case in hundreds of local real estate markets where FHA is the main support for first-time and moderate-income home purchasers.
For example, in the seven Southeast states where Memphis-based Crye-Leike REALTORS® is a major player, FHA loans are used by 50 percent of all purchasers, according to Steve A. Brown, executive vice president. The key attractions, he said, are FHA's low down payments, relatively generous credit requirements and the 6 percent seller concessions limit.
"FHA is what's keeping us alive," Brown told me in an interview. "If they do a 3 percent across-the-board limit, that would knock out a lot of our sales. But if they go with some graduated deal tied into lower-priced homes, then we should be alright."
The average home price in the Memphis area is about $115,000; the average starter home is $85,000, according to Brown. He figures that a 4.5 percent cap on seller concessions would cover closing costs in most transactions, but a 3 percent limit would be a disaster.
"This economy is pretty darn fragile," he said. "People haven't had a raise in three years, prices keep going up on gas and food, plus you've got all those fixed fees" -- attorney costs, title insurance, loan origination and underwriting, among others -- "and none of them has gone down."
In the Minneapolis-St. Paul area, the situation is similar: FHA loans account for 35 percent to 45 percent of all transactions, according to John Anderson, broker at Twin Oaks Realty. The average home price is $163,000 -- somewhat lower for FHA transactions -- and settlement costs average about 4.5 percent.
"Ninety percent of our buyers are asking sellers to pay closing costs and prepaids," said Anderson. "This is a tight economy, and you can't turn to parents and grandparents any more for gift money because they're worried about their own" pension fund shortfalls and depleted savings accounts.
Many brokers agree with FHA that 6 percent contributions may be excessive in higher-end transactions; they top out above $43,000 in the most expensive housing markets. Brokers also concede that there have been abuses and games played in the past that have increased FHA's insurance fund losses.
An example: Say a prospective buyer wants a house that's listed for $100,000. The seller agrees to make a maximum $6,000 contribution to the closing costs but insists that the final selling price be adjusted up to $106,000.
But now the house has to appraise at $106,000, or FHA will be insuring a loan with an artificially inflated price with little or no borrower equity -- making it a prime candidate for future default and insurance claims. FHA says it holds appraisers and lenders responsible for sniffing out such frauds, but officials acknowledge they can't catch them all.
Will a tightened seller concessions policy put a better damper on such abuses? I have no doubt that a mandatory 3 percent cap for all higher-balance mortgages and loans on some new construction would limit the damage in dollar terms.
A graduated system for average-sized and low-balance loans might limit risks as well, while still allowing most home sales to get to closing. A set dollar limit for concessions -- say it's $6,000, hypothetically -- might also provide a flexible way to lower risk while still allowing the lowest-balance loans to enjoy seller contributions up to 6 percent.
In the meantime, the good news is that the widely feared, draconian 3 percent limit appears to be off the table. Something more flexible is coming that might just balance FHA's legitimate needs to safeguard its insurance fund while accommodating home sellers' and buyers' legitimate needs for affordable housing with agreeable financing terms.
Ken Harney writes an award-winning, nationally syndicated column, "The Nation's Housing," and is the author of two books on real estate and mortgage finance.

Tuesday, February 22, 2011

Even after foreclosure, debt collectors still pursue borrowers for repayment

Have you ever said to yourself, "I'm just going to walk away from this house and let the bank have it back." The truth is you certainly can walk away, but know that liabilities &  long term consequences will follow you.  Contact me for a better plan.

Brian J. O' Connor / Detroit News Finance Editor

A grim echo of the housing bust is building for Michigan homeowners who've lost their homes to foreclosure or sold them in short sales. Without even knowing it, they could end up owing tens of thousands of dollars in mounting debts under a previously unenforced provision of the state's foreclosure law.
Until a few years ago, when someone lost a home to foreclosure in Michigan, the owner walked away embarrassed and financially battered, but owing nothing more onthe property.

Now, because of dropping property values, mortgage lenders are engineering foreclosures so they can pursue a borrower for the unpaid balance of a home loan for years to come. With added fees and interest, this phantom debt — called a "mortgage deficiency" — could swell to become more than the homeowner paid for the property.

"It's a huge problem," said Julia Gordon, senior policy counsel at the Center for Responsible Lending in Washington. "This is the last thing anyone needs." There are no figures to show how many Michigan homeowners could be liable for deficiencies, but foreclosure rates suggest there will be plenty.

Since 2006, the number of foreclosures in Michigan has more than doubled to nearly 136,000 last year, and the state has recorded nearly 500,000 filings for homes in or near foreclosure. As a result, property values in southeast Michigan have plummeted. Home prices dropped 34 percent during the past decade and recently hit their lowest point since the summer of 1994. Before the real estate meltdown, few lenders ever pursued borrowers for mortgage deficiencies, said bankruptcy attorney Stuart Gold of Southfield. "We used to see it maybe once a year or very infrequently," Gold said. "In the last two years it's become more and more prevalent."
Values sink under water
Before the recession, foreclosed homes in most cases were worth enough that banks could recoup the amount they were owed plus legal costs, if not more. At the county sheriff's foreclosure auction, lenders would bid the amount they were owed on the mortgage, then sell the property, and banker and homeowner could move on.
But now that many homes in the region are worth far less than their mortgages, lenders aren't bidding what's owed. They enter bids for the current value of the home or, sometimes, even less. Under state law, the lenders can then pursue the homeowner for the shortfall between what was owed and what the lender got when the home was sold, plus legal fees and interest.

Lenders have up to six years to sue for the bad debt and, once they obtain a judgment, can pursue the borrower for 10 years. If they still haven't collected, they can renew the judgment for another decade, repeating the process indefinitely.

During that time, interest can build on the debt at the default rate stated in the original mortgage. That's usually four or five percentage points above the original mortgage rate, so a deficiency on even a low 6-percent loan would be charged 10 percent or 11 percent interest, doubling the cost of the debt in as little as six and a half years.

"The whole situation has gotten kind of crazy," said bankruptcy attorney Mike Greiner of Warren's Financial Law Group. "I have one or two clients a month who are being sued on the first mortgage, and it's usually a large number, $50,000, $60,000 or $70,000. It's quite a shock because the client's attitude is, 'I gave the house back to the bank.'"
Short sales not excluded
These unseen debts also are cropping up on short sales, where the bank approves the sale of a home for less than the amount owed.   But just because the bank OKs the sale and releases its lien on the property doesn't mean it can't sue for the balance, said Dan Lievois, a short-sale expert and chief executive of Devon Title Agency in Troy.

"There are a lot of folks walking around now who don't understand that in three or four years they're going to wake up and have letters coming in from debt collectors," Lievois said. "That's what's sad."
The only way out for the homeowner is to get a specific release on the amount owed, Lievois said. Often in short sales, the deficiency is negotiated down and paid off by having the seller take on a new unsecured loan for the amount owed.

"In instances where the consumer didn't get that waiver of the deficiency," he said, "they have to understand that the lender has the right to sell that debt or collect on it, and do whatever they want with that asset."
This, consumer experts say, is where the real trouble can start.

In the past two decades, a robust business has grown up around the buying and selling of old consumer debt, from years-old credit card balances to long-forgotten traffic tickets and library fines.
Collection agencies buy the debt for pennies on the dollar, then try to track down the debtor with threats of legal action and damage to credit scores. Often, the debt may not even be legally owed because it's beyond the statute of limitations, which is six years in Michigan.

Now, mortgage lenders can start selling their deficiencies to make up some of their loan losses, unleashing debt collectors who may wait years to file suit — well after foreclosed homeowners have rebuilt their financial lives and have assets that can be pursued for collection.
"There are certain lenders that know borrowers will become viable for collection down the road," Lievois said.

The best way for borrowers to avoid the problem is to get a release from the lender in a short sale or, in the case of a foreclosure, file for bankruptcy. If they file soon after a foreclosure, when they have few assets, they can wipe out the debt entirely in a Chapter 7 bankruptcy. But if they wait until a collector shows up years later, they might have to pay some of the debt under a Chapter 13 bankruptcy, or may not qualify for bankruptcy at all. "You can garnish their wages or you can seize property," said Greiner, the bankruptcy attorney. "You can go after people for their assets. "It's like a big iceberg out there. We haven't even seen the beginning of it yet."
If you're considering doing a short sale on your home, be sure you choose a real estate agent that is well aware of all the "down the road" implications to you and your family. 
I utilize the knowledge and negotiation power of a real estate attorney to ensure that this never happens to our clients. This service is provided free of charge to our clients also. Call me today, and I'll guide you through this process.

Increasing Seller's Property Value

Provided by

Understand first of all that there IS a difference between price and value. Price is the amount you are asking for the property. Value is buyer perceived, and this perception of value is influenced by many factors such as location, features, condition, comparison to other purchase option, etc. By attending to details that can have a positive impact on the value, sellers can significantly increase their chance of attracting qualified buyers willing to pay the asking price.
Some tips to achieve a positive impact on value are:

  • Perceived size impacts value, even more so than actual square footage. Open floor plans make a room feel bigger than larger spaces with smaller rooms. Showing property that is furniture free, or at reduced clutter, helps to make the space feel bigger.
  • Vacancy increases sale-ability. Property is easier to show and easier to sell, and quicker to take possession of when it is vacant at the time it is offered for sale. Evidence of problems to take possession of the property -- such as encroachments, or tenants who wont allow buyer tours -- negatively impact value. Vacancy also helps the buyer walk through the property imagining ownership. Sellers should remove personal trinkets and family pictures as well as being conveniently absent during a buyer tour.
  • Cosmetics are important.
    • Fresh paint will always add more value than it costs.
    • Clean or new carpet/flooring adds more value than it costs.
    • Landscaping adds more value than it costs. At the very minimum, make the entrance area neat.
    • If you can, add some colorful flowers and new sod.
  • Take care of the obvious! The spot on the ceiling from the roof leak takes thousands of dollars from the perceived value and the offer price.
  • Condition affects value. Do a seller's home inspection to identify and fix the problem BEFORE closing. No point holding up your check a few extra days; plus a failed buyer's inspection could cost you the sale. Buyers will often bargain down your asking price to accomodate for property condition and repairs.
  • If you can, remodel/update the kitchen and master bathroom. These two areas have a big impact on home buying decisions.
  • Strategic renovations impact value and your bottom line. Don't spend more money to renovate the place than you can recapture in value on the sales price.

Tuesday, February 15, 2011

How Much Can You Afford?

Start out with a budget so you can determine your price range

By LendingTree

If you're like many first-time homebuyers, chances are you've been spending your weekends driving around visiting open houses and new model homes. This is a great way to get a feel for what you want. The problem is that what you want isn't always what you should get.
Before you start touring homes for sale, it's important to start off with a budget so you know how much you can afford to spend. Knowing what mortgage payment you can handle will also help you narrow the field so you don't waste precious time touring homes that are out of your reach.
Where to begin
The key factor in figuring how much home you can afford is your debt-to-income ratio. This is the figure lenders use to determine how much mortgage debt you can handle, and thus the maximum loan amount you will be offered. The ratio is based on how much personal debt you are carrying in relation to how much you earn, and it's expressed as a percentage.
The ideal ratio
Mortgage lenders generally use a ratio of 36 percent as the guideline for how high your debt-to-income ratio should be. A ratio above 36 percent is seen as risky, and the lender will likely either deny the loan or charge a higher interest rate. Another good guideline is that no more than 28 percent of your gross monthly income goes to housing expenses.
Doing the math
First, figure out how much total debt you (and your spouse, if applicable) can carry with a 36 percent ratio. To do this, multiply your monthly gross income (your total income before taxes and other expenses such as health care) by .36. For example, if your gross income is $6,500:
doing-math1.jpg Next, add up all your family's fixed monthly debt expenses, such as car payments, your minimum credit card payments, student loans and any other regular debt payments. (Include monthly child support, but not bills such as groceries or utilities.)
doing-math2.jpg *Your minimum credit card payment is not your total balance every month. It is your required minimum payment -- usually between two and three percent of the outstanding balance.
To continue with the above example, let's assume your total monthly debt payments come to $750. You would then subtract $750 from your total allowable monthly debt payments to calculate your maximum monthly mortgage payment:
doing-math3.jpg In this example, the most you could afford for a home would be $1,590 per month. And keep in mind that this number includes private mortgage insurance, homeowner's insurance and property taxes. To determine the price of home you can afford based on this amount, use a home affordability calculator.
Exceptions to the 36 percent rule
In regions with higher home prices, it may be hard to stay within the 36 percent guideline. There are lenders that allow a debt-to-income ratio as high as 45 percent. In addition, some mortgage programs, such as Federal Housing Authority mortgages and Veterans Administration mortgages, allow a ratio higher than 36 percent. But keep in mind that a higher ratio may increase your interest rate, so you may be better off in the long run with a less expensive home. It's also important to try to pay down as much debt as possible before you begin looking for a mortgage, as that can help lower your debt-to-income ratio.
Lisa Ekanger Your Hometown Realtor!

Sunday, March 27, 2011

Make Your Home Smell Good!...❤¸.•*""*•.¸❤ ❤¸.•*""*•.¸❤¸.•*""*•.¸❤¸.•*""*

Make Your Home Smell Good

Mar. 25, 2011
Tagged with: home, house, scent, smell
What is the first thing that catches your attention when you go inside someone's home? Many times you feel its scent before you can look at the the decor. Actually, the smell of a house is more important than it seems. Make sure your place smells good. That will certainly help to make a good first impression.

When people come into your home, you want them to feel nice and comfy. Nobody will ever feel good in a badly smelling place. Of course, they probably woudn't tell you that they don't find your house the most amazing place to be, but chances are you wouldn't have many visitors, no matter how stylish or cool your home is. Briefly put, if you want your friends to like hanging out at your place, you definitely need to make it smell nice.

The smell of a place is one of the most important factors its possible buyers notice immediately. One of my clients refused to buy a really beautiful house just because the horrible smell of cigarettes was extremely overwhelming. No matter how great a house looks or how fabulous its price, it could be difficult to sell if its odour is unpleasant.

Here's a few ideas that might make your place nicely scented. Importantly, your windows should be open as much as possible. It's great to get some fresh air and even more so if the weather is good, you can see and feel flowers everywhere and the sun is shining.

You could also make use of what you may already have at home; try using cinnamon, orange peels or even pine cones for example. Scented candles help as well. When done with a bit of a creative attitude, they can both nicely decorate and freshen up your home.

Many times only one thing smells really bad . It's the carpet, very often. It's necessary to just throw it out, if it's very old. It may be best to simply replace wall-to-wall carpeting with wood or vinyl flooring and get a few small throw rugs for decoration.

Most problematic, in my opinion, is the smell of cigarettes. The easiest solution would be to smoke outside if you don't want to quit, although not everyone is willing to. I have heard a few helpful tips for alleviating cigarette odour from your house The most usual is to leave a bowl of vinegar in the affected room for some time and let it destroy the smell.

Do you know about anything else that could help? Inform me please if you have .We all ought to live in a house that smells good.
Lisa Ekanger Your Hometown Realtor!

Thursday, March 24, 2011

Community leaders got together last week for the second Downtown Summit

Downtown Summit spurs dialogue between St. Clair County communities

Community leaders got together last week for the second Downtown Summit at the Algonac High School conference room. More than 30 participants representing 10 cities and townships hugging the blue waterways of St. Clair County filed in for the second of three meetings.

The first summit last month, held in Marine City, was spent discussing ways each community is dealing with getting outside dollars into their town. Dialogue centered on drawing tourists and businesses into their town.

Randy Maiers of the Community Foundation of St. Clair County, St. Clair Chamber of Commerce Executive Director Jody Skonieczny and Blue Water Area Convention led the interactive session.

Maiers began the meeting by applauding Gov. Rick Snyder for approving the funding for the Pure Michigan campaign. He then shared some surprising statistics.

"The Discover the Blue part of the Pure Michigan campaign is the third most popular search in the state of Michigan," he said. "In the state of Michigan search, it is the top three in the whole country. So Discover the Blue is only behind Mackinac Island and Traverse City. We beat Frankenmuth, we beat Holland, Ann Arbor we beat every other area in the state of Michigan."

Dan Casey, newly-hired CEO of the Economic Development Alliance of St. Clair County, was in attendance. Case was not able to attend the first summit. When the discussion turned to facade and rental rehabilitation programs for traditional downtowns, Casey spoke about the "dark spaces" upstairs that could be turned into great living spaces. He offered services through the EDA that could help communities get a good start or continue to grow their programs.

"We would like to work with these communities to develop these programs," said Casey. "We have an established, model program that we'll tailor to your specific needs. We can also manage the program for you if that's what you need."

Maiers said the summit meetings were intended to work with the EDA Where Blue Meets Green campaign, which is more focused on economic issues in Port Huron.

"We decided to take a brand new track out of the plan and talk about the rest of the downtowns and develop a new game plan for going forward in 2011 for those downtowns," he said.

Maier contributed an idea that was explored for the rest of the meeting. Continued...
St. Clair County Commissioner Bill Gratopp shares his views during the second Downtown Summit in
"Traditionally, our downtowns have not yet realized what's good for Algonac is good for Marine City and what's good for Marine City is good for St. Clair," he said.

Skonieczny built on the idea after addressing some of the top voted priorities for the small towns: small business incentives, special events and facade grants.

Then she shared a personal reality that she guessed was shared by many in that room.

"We have a lot of traffic going through my office, particularly in the summer," she said. "They're asking, 'what's there to do for the day?' or 'we're staying at the St. Clair Inn, but we want to see what the surrounding areas have.' It dawned on me yesterday that if somebody said, 'What is there to do in Algonac?' I could tell them some of the great restaurants; I could probably tell them about Algonac State Park, but I don't know that much and that's really unfortunate and that's my fault."

Skonieczny suggested they may need a "Be a tourist in your own region" program instituted to have those answers readily available.

"So if I want to send folks south to spend the day, what do you guys want them to see; what is the story you want me, in St. Clair, to be telling about your community?" she said. "That's an area that we can work together."

An April 12 meeting at 8:30 a.m. is planned, but the location has yet to be determined. Each meeting builds on the next one, but first-timers are still welcome to come. For more information on the summit meetings, go to

Contact Jeri Packer at (586) 716-8100, ext. 302 or

Lisa Ekanger Your Hometown Realtor & Community Leader!

Wednesday, March 23, 2011

Michigan Association of REALTORS - Featured News - Website

Michigan Association of REALTORS - Featured News - Website

Lisa Ekanger Your Hometown Realtor!

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Lisa Ekanger Your Hometown Realtor!

Tuesday, March 22, 2011

Cash for Keys: Why Banks Pay Homeowners to Move Out

Cash for Keys: Why Banks Pay Homeowners to Move Out

Cash for Keys Keeps Foreclosures From Being Trashed

By , Guide
hand holding set of house keys
Banks Often Pay Homeowners to Move
© Big Stock Photo
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Two of the biggest problems banks face when taking back a home in foreclosure are the condition of the home and getting rid of its occupants. This is why cash for keys is a quick and easy solution for many banks. Cash for keys is a term that had been kept under wraps by the banks for years, but the subprime mortgage meltdown of 2007 -- which led to an onslaught of foreclosures -- forced many banks to initiate a cash for keys policy as standard procedure.

What is Cash For Keys?

Cash for keys is a way for homeowners in foreclosure -- or for tenants who are victims of foreclosure -- to receive cash in exchange for surrendering the keys and vacating. Banks generally reach an agreement with the occupants of a foreclosed home, which stipulates the home will be left in good condition and cleaned. The agreements typically set forth a specific date that the home will be left vacant, including a promise from the occupants that they will not:

Why Banks Pay Cash for Keys

Although banks are not in the business of owning property, once they get title to the home through foreclosure proceedings, the bank is now responsible for the home. If the bank has to spend a ton of money to repair damage caused by the occupants, that money increases the bank's loss.
It can also cost thousands of dollars to evict a homeowner or tenant. It's also time consuming to go to court.

How Much Do Banks Pay to Exchange Cash for Keys?

The sum is negotiable. Banks typically do not automatically offer cash for keys unless the occupant first approaches the subject. To move out, these are reasonable expenses you may expect to recover:

  • A security deposit and first / last month's rent
  • Movers
  • Rental truck
  • Utility deposits
  • Temporary living quarters such as a motel
Sometimes, if the occupant agrees to an immediate move out, banks might pay a bonus.
Do not try to extort the bank or the offer might be withdrawn. Be pleasant, courteous and reasonable, and you could get lucky by receiving cash to leave the premises.
Lisa Ekanger Your Hometown Realtor!

Monday, March 21, 2011

******AWESOME CONDO****** A MUST SEE******MAKE OFFER!******

The property is a lovely, very unique & spacious condo with water views at: 1930 River Road in Marysville Michigan.  Please review this information and make an appointment to show it to your buyers.  Built by the late Ron Lendzion of Port Huron, its crazy cool!  It will appeal to someone who likes high end finishes, a unique layout and is in love with the idea of living in a resort-like area.....yet with easy access to highway 94.

The condo is has more than 2000 finished sq. ft. and is just steps from the beautiful blue waters of the St. Clair River.  In addition, it is only one of eight freestanding condos in the area, has a large deck, will accept small pets, has low HOA fees and is within walking distance to the beach, city park, junction bouy restaurant and golf course.

Check it out!

Thank you!
Lisa Ekanger
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Lisa Ekanger Your Hometown Realtor!