We’re nearing the end of our First Annual “Best Real Estate Blog” Contest.  Sunday, June 1 marks the end of the voting.  We will be officially announcing the winners of the popular vote, editor’s choice, and random drawing awards next week.

I have yet to receive any entries for the Real Estate Blog World addition to our contest.  It’s disappointing but we understand you may be too busy to attend a conference or write your thoughts on FHA mortgages.  Keep in mind we will be giving away 3 passes in June so you still have the opportunity to win those!  All you have to do is write a post detailing your opinions on FHA mortgages and email it to me (brandon at fhamortgagecenter dot com) and you will automatically be entered for a free conference pass.  At this point, if you write anything you’re one of the winners–so go for it!

Thanks again for all of the support in our networking efforts and please contact us if you ever have any FHA mortgage questions/issues.

Wait just a minute. As I am catching up on all the various news in the home ownership arena, I had to read this story to see if it was going to tell me anything new that I did not know. Well of course it did. Title was Foreclosures Hit an All Time High. Well you better believe this is an all time high. Look at the subtitle below:

Over 900,000 borrowers are losing their homes, up 71% from a year ago, and a record number of home owners are behind on their payments. Stop the press – 900,000 borrowers. Before long that number will be over a million. Up 71% from a year ago wow! WOW! So how many of those people are getting help. Have any of these people tried to go into a FHA Loan of some sort? Remember there is the FHA Secure or any other FHA product.

There are clearly more people fighting the FORECLOSURE battle than initially suspected. I would even go so far as to say probably everyone knows at least one person that is facing foreclosure and that person knows someone. We have all heard of six degrees of separation which I continue to find out that is true and somewhat maybe even less than that.

Imagine for a moment if you will, I want to add the Colorado Rockies to this analogy because last year they made it to the World Series. Okay, let’s imagine that there are three men on base and there is a guy up to bat. The guy at bat is thinking if I hit a home run, everyone will go in. Bases are load and the first ball is thrown. It is clearly a ball. The second ball is thrown and it a strike. Everyone on the bases is thinking this guy has a history of hitting home runs. The third ball is thrown and he hits a homerun. It is so far out of the park the other team could not even think about trying to catch it. Think about this happening 900,000 times for all those borrowers that are losing their home.

Maybe they were on base 1 and attempted to contact someone before they became behind the first time. Well nothing happened. Then they made it to second base and became behind two months. Since no one contacted them they did not roll the dice. Then they got to the third base and became behind more than two months. Then they reached that crucial month and now it is too late. They are facing foreclosure. They just became one of the 900,000.

What you have to say to yourself is you do not know all the different situations that have led up to the foreclosure for these homeowners. It could have been job loss, health issues, predatory lending or something else. I want to say brace yourself because I believe those numbers are going to continue to rise. We have not even seen the worst of these headlines. Every day clearly someone is facing a choice that they do not want to make regarding housing.

Dr. Taffy Wagner

As I was reading more about the housing industry, I discovered that approximately a week ago E-Loan announced that it is going to offer FHA Loans to help millions of customers in this ever increasing tightening credit market. I can just see people now, getting online and going to e-loan and completing an application. We have all read about home values are declining all across the nation. This will give home owners the opportunity to keep their piece of the American Dream.

I applaud E-Loan fully for providing this opportunity to these millions of families. We all know what FHA has to offer such as lower down payments, the downpayment can also be gifted from a relative, they have borrowers from all across the credit spectrum and even more. Let’s face it, even with those few qualifications there are more people that should be able to qualify and get the desired assistance they are looking for.

Every day someone is facing impending foreclosure due to a lack of information, help and even fear of talking to someone about their financial situation. One thing that appears to me is that with E-loan you do not have to physically face a person and should be able to get the majority of this handled through an online source. I have to say this because I remember when I was dealing with difficulty in my finances and the last thing I wanted to do was talk to someone face-to-face that was near and dear to me because it hurt. It was easier to talk with someone who did not necessarily know me and there was no judgment being passed.

FHA Loans are available on many different levels – not only can the first time home-buyer get a FHA Loan, there are also products for people who are refinancing, FHA Secure and more. I strongly recommend you go through this blog and see the different products that FHA has to offer. The answers could literally be within your reach and you miss it because you are not taking the time to review each area. Take a deep breath and sit down and read all the information.

Let me give you a prime example of what I mean. I had a colleague share with me the other day about a foundation that could be of some interest to us on a project we are working together own. When I went to their website, I was very impressed and share with the colleague we should definitely speak with them. Tonight, I was looking through some of our local papers and community papers before throwing them away. Little did I know, when I was going through our community paper that same foundation was in there about them beginning a chapter in our neighborhood. That information was printed over a month ago but because I did not read the paper when it came, I did not have the information. Now that I know about them, sure it adds some credibility and I have to think maybe we were not ready at that time to get the information.

I am saying that to say, maybe you have looked at FHA information before and did not see how it worked into your situation. Stop and take the time to review it again and maybe your eyes will be opened.

Dr. Taffy Wagner

I finished my last blog sharing about Senator Clinton’s housing plan and discovered that Senator McCain’s was out. So I decided to go back and also include his proposed solutions. Once again this was taken from Mortgage Daily News.

He restated the history leading up to the current situation and placed the blame for the crisis on:

1. Speculators who moved into the housing market during the bubble and overwhelmed normal market forces with rampant speculation.
2. Lenders who became complacent because of the sustained period of rising home prices and consequently failed to maintain their lending standards.
3. The explosion of complex financial instruments that were not well understood even by sophisticated investors and were largely off-balance sheet and hidden from scrutiny.
4. A crisis of confidence arising out of initial losses in the market which has caused banks to no longer trust each other and credit to dry up.

Calling it “straight talk,” Senator McCain said, “I will not play election year politics with the housing crisis.”

“I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers. Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy.

The Senator said that no assistance should be given to speculators and that any aid should be limited to homeowners and their primary residences, must be temporary, and not reward people who were irresponsible at the expense of those who weren’t. “I will consider any and all proposals based on their cost and benefits.”

His most specific proposals include:

1. Reforms to the system including transparency and accountability. Homeowners should be able to easily understand the terms of their mortgages and in return should provide truthful financial information and be subject to a penalty if they do not.
2. Lenders should be held accountable for the quality and performance of those loans and strict standards should be required in the lending process.
3. The Senator said he opposes proposals to reduce the down payment requirement for FHA mortgages and that, as conditions allow, the existing down payment requirement should be raised.
4. Financial institutions should be encouraged to increase capital reserves to serve as a buffer against losses. Methods of encouragement should include removing regulatory, accounting, and tax impediments to raising capital.

These four, the Senator said, would be the principals against which he would examine and evaluate new housing proposals.

I have read his proposal and I have a question I want to ask the readers. When I read number 1 where he talks about reforming the system. He goes on to talk about homeowners understanding the terms of their mortgage and if not there should be a penalty. I want to ask the readers their thoughts on that? Send them in. We want to hear your thoughts and answer your questions.

Dr. Taffy Wagner

Is there any doubt to anyone that if people cannot keep up with their mortgage, it would spill over into other areas? If people are delinquent on their mortgages, you better believe that it will spill over into credit card payments and even auto payments. People do not become delinquent to become delinquent. That can mean several things (1) employment could have changed; (2) a husband and wife could have divorced and the person who keeps the house is not able to afford it; or (3) over the last few months they have really been trying to keep everything together but with the adjustable rate – adjusting they are not able to keep up.

The inability to keep up with the adjustable rate has spilled over into their car payment. The first time they are not able to make their car payment, they do not feel as bad because they already believe they will be able to catch up in the next couple of weeks. So the first time, they are actually accepting this happened. But the third time it happens, they are in a panic situation because they realize this is not the only bill they can no longer afford. The mortgage has turned into such a nightmare, they are desperate for resolution.

When you become desperate for resolution you do not see things as clearly as if you were level-headed and calm. You open yourself up to be taken advantage of and making unwise decisions. When I saw this story last week about the mortgage market having an actual melt down, I could not wait to see what was happening. Apparently as we all knew it, foreclosures is not over. Federal Reserve Chairman Ben Bernanke continues to pledge to do all that is possible to help struggling homeowners. Many people already think we are on the verge of a recession.

I have to tell you it seems that so many things are upside down, will homeowners truly be able to be helped. I continue to look in my neighborhood and more houses are having for sale signs in the neighborhood. Even those homes that I thought everything was okay, leads me to wonder why those homes are now for sale. It is because they are trying to get out before their homes no longer have any value or is it a job transfer? What would you think.

Bernanke shared which we already knew, “abusive, unfair or deceptive lending practices led some borrowers into mortgages that they would not have chosen knowingly.” What is the solution to this. Many are still feeling deeply the consequences of these lending practices. One of the bad parts is that these consequences are far reaching and could reach to the generations versus just the parent, aunt or uncle that is currently dealing with this.

When I said domino effect, sure it affects other items that must be paid on, but it can also affect a youth when making choices based on what they saw growing up.

Dr. Taffy Wagner

Is this supposed to be a surprise to anyone seeking to get a loan in this housing market? Seriously because almost day after day we are reading increasing stories on the number of foreclosures, the mortgage rate and even lenders. Maybe the actual fact the guidelines are being tightened is not a surprise but what they are saying is. I must admit I was stunned to find out this was happening.
I read a story that came out of Ohio that shared how the guidelines are being tightened on mortgage lending. It shared that basically due to the sharp increase in foreclosures nationwide, Fannie and Freddie are implementing tighter underwriting guidelines on approving a family for a home loan. Some changes are significant and have begun to take lenders, real estate agents and prospective homeowners by surprise.
I want to share a few of these that I know will affect homeowners: one of the biggies I would believe would be the Appraisal Guidelines. Why, because with the market being soft there is not in my opinion any way that your home could appraise at the same value today in 2008 that it might have appraised for at the end of 2006 or beginning of 2007, especially with homes in your neighborhood or area that have been foreclosed on. Foreclosure affects home owners that are not facing foreclosure because the number of foreclosures in the neighborhood brings down property value.

I remember when we were selling our home, we had the standard walk through appraisal. Now it seems, in addition to the standard walk through appraisals by a licensed appraiser, lenders now are requiring an automated valuation model which is statistical data from all the real estate sales that have taken place in that specific area. The rule now says whichever value comes in less will be the true market value. It goes on even further to say if the assigned appraiser declares your home to be in a declining market or should the new automated underwriting track your property as an area deemed to be in a declining area, the buyer cannot get 100 percent financing. I know that will affect some people.
We know that one of my favorite subjects is credit. Apparently it is one of the topics of discussion here as well.

From what I can gather, Fannie Mae and Freddie Mac’s major changes take place in March 2008 affecting how conforming mortgages are priced with an interest rate. The new guideline will (not optional) require lenders to review credit scores and down payment information before a mortgage rate can be offered. New interest rate adjustments will apply to high loan to value, low scores, cash out refinances and investment properties. Once again, credit score is important. A point that I found interesting was at the end of this story it said these changes have not affected programs from The Federal Housing Administration. In an FHA mortgage loan, the mortgage insurance is provided by the borrower and included in the loan. As I have said in previous blogs, do your research. Talk to a lender and see what your options are. If you are strictly seeking an FHA Loan, know that all lenders are not FHA approved. I cannot stress doing your due diligence enough.

Dr. Taffy Wagner

I must admit, I am one of those people that love creativity. What is happening with the housing market is literally forcing people to get creative. Think outside the box. If there has ever been a time, this is a good time. Why because when you think inside the box it is limiting to the way things are always done. Now, there is a world of opportunity. I was contacted by a friend and colleague who knew I was writing a mortgage blog. She briefly told me about this house-swapping story.

I was all too excited to go and find out about house-swapping. From what I understand, people that live in different places that have a house for sale and have not been able to sell, look for houses in the area they want to move that are for sale. You have to love modern technology. This is where the internet comes into play. You can search an online database (Domuswap.com) where people can go state by state. That is absolutely phenomenal. It also tells you how many properties available by state and then it shows you in the different cities or counties.

Even in this transaction, a realtor has to be used. What each party should agree is to utilize the same realtor which in return reduces fees. The realtor should be willing to work with lowering their fees or commission based on the transaction taking place. If the properties are of equal value it is a swap, if they are not there is some cash exchanged. I have to say, I would have to and see the property to make sure it would be conducive to my needs. Why do I say that? You do not get to choose your own furnishings and all those things. However, at the end of the day you also do not have that expense. Not necessarily a huge moving cost either. The more I write about this, it keeps getting better and better to me.

This could definitely solve those moves that need to happen quick due to job relocation, or even health concerns. If you are someone that has a house that has been on the market for a while and have not had any luck, I think this would be an option worth considering. Let your fingers do the walking and see if someone is looking for a home like yours.

We have looked at the advantages, are there disadvantages to this equation? The only questions which might not be disadvantages are the following: I would want to know about the neighborhood and school system. Something that came to mind is how do the utilities and other bills get handled that belong to the property. When you do a house swap, do you do it for a set period of time? Find out all the particulars before you do a house-swap.

Think about it, house-swapping is bartering coming back to life. Not that it has been non-existent in some fashion. However, I think it is being revived on a much larger scale.

Dr. Taffy Wagner

Every day we continue to read story upon story upon story about foreclosures. It is almost as if people who are decisionmakers are in a panic to find a solution. Instead of coming up with one viable solution, it appears that every couple of weeks there is a new solution on the table. Of course with each new solution comes requirements to qualify for that solution. Everyone will not qualify for every new program that becomes available. I encourage you right at the outset of this blog to find out which ones you are eligible for. Then compare the pros and cons of each.

I was not surprised to find out that The Bush administration and several major mortgage lenders recently unveiled “Project Lifeline,” a national program that is supposed to help some homeowners facing possible foreclosure. As a matter of fact, I remember the day this information came forth last week. I had finished writing on mortgages and thought to myself wow I can actually keep writing. There is so much happening in the housing industry foreclosures, FHA options and mortgage fraud. Let’s talk about Project Lifeline.

Project Lifeline targets those who are seriously delinquent on their mortgage. This program is a joint effort by six of the largest lenders. This should not be a surprise such as Countrywide, Bank of America, Wells Fargo, Citigroup and others. Let’s face it with as much as Countrywide has been in the news, there should be a step of good faith or solutions.

To qualify the following requirements must be met borrowers must be at least 90 days behind in their payment. They cannot be within 30 days of foreclosure sale. From what I read this new plan is not so limited to where it only applies to subprime loans. It should be interesting to see how many are able to qualify for this plan. We have had FHA Secure, HopeNow and a couple of others. Now is the time when you should literally sit down and write out on a sheet of paper a pro and con list for each of the different programs. Look at each of the requirements and do not be hasty in making your decision.

I do not want the readers to misunderstand what I am saying by listing the different programs. What I am saying is I definitely believe in solutions. My concern is that after a time there will be some many programs out there, the person who needs it the most will not be able to find one that fits them. They will just miss qualifying for one reason or another in this or that program. I understand that there are numerous foreclosures that no one could have anticipated what is currently happening all over the
United States. My recommendation to anyone that continues to remain in the real estate industry and are a realtor or even mortgage broker or lender, do something that your competition probably has not done 1) if you see the person’s income is not enough – then turn them down and explain to them in detail what needs to be done with their finances and 2) Establish and maintain relationships with your clients. Developing relationships for the long term versus short-term will be evident.

Dr. Taffy Wagner

Remember about a week or so ago I wrote about Countrywide being under a microscope. I felt it was owed to our readers to keep a watch on what is happening with Countrywide. Lo and behold as I was reading different stories regarding home ownership on Cnn.com today, I saw a story about Countrywide. I could not pass up the opportunity to share on current news.

Don’t you think with a title that says, “Countrywide Financial expands scope of mortgage workout”, I had to see what happened once they were placed in a bubble. Whether you have heard it before or not, sometimes people’s lives have been placed under a microscope or a fish bowl which means that every can see what you are doing. Do your actions change or even how do you handle yourself when everyone is watching? We know that Countrywide has been somewhat on the hot seat lately.

Countrywide has decided to expand its program to help borrowers manage their mortgage payments regardless of the type of subprime loan they have or whether they have fallen behind on payment. From what I understood after I read this story, this initiative has been brokered with ACORN, adds borrowers of subprime, fixed-rate loans. I have to ask you did they ever have a choice? Could they have continued to have story after story about them being written.

Let me share this number with you that I saw and could not help but say, “Big Brother does need to be watching on this one.” About 735,000 of the 9 million loans serviced by Countrywide fall into the subprime category, according to Michael Gross who is Countrywide’s managing director for loan administration. 735,000 is a lot of people and that says to me those people need tons of assistance. What I did not see in this article is how many people are going to be helped by this sudden initiative.

Clearly there are people out there in situations that ending marriages, disrupting families and even more. One thing that we need to consider is there are probably going to be even more people falling into the subprime category. Obviously all of these loans have not readjusted.

I would have to wonder if I were in this position could I trust the new program that is being offered since I was placed in a less than optimal position before. I recommend they look at all of their options whether it is Countrywide or are there better options through FHA loans or even the FHA Secure program. Do your homework before you end up in another undesirable situation.

Dr. Taffy Wagner

I was watching our local news yesterday and they were interviewing this couple about purchasing a house. I must admit, with all the foreclosures on the market I would not have thought it was a buyer’s market. But in all reality it could be seen as a buyer’s market. With the inventory on the market, you can take your time picking and choosing exactly what you want potentially for a more affordable price.

This story I watched on the news showed this young married couple with a child buying their first home. One thing that I found interesting was the wife said, they called it a short sale and it took them about five months to get it. One of her recommendations was to take your time. Even though the wife is working, she was saying it costs them a $100 more and they felt they should do it.

Another factor I think people in the market should look at is if it is a foreclosed house, what is the condition? How much work needs to be done to the house and also location? This is one of those circumstances where investigation will pay off. You do not want to overpay for a house and then have tons of repairs once you close on it. Weigh all of your decisions. I say this because if you do not do your homework ahead of time and purchase a house unwisely, you are going to regret it. The fact that you have to come there every day will make it worse. In order to prevent this feeling, take your time, do the research and talk to people in the neighborhood.

As you are preparing to purchase a house, let me caution you to not buy the first one you see. Take your time and shop around. You might be pleasantly surprised to know that you actually get the perfect house and a reasonable price. One that does not require exterior and interior work. If you purchase a house and are not happy with it, you will literally be miserable every time you drive up to your home. Do not be hasty in your decision making but careful and weighing all your options. Do not purchase a house before you are financially ready. Make better decisions to alleviate future problems. I invite you to share with our readers whether or not you think it is a buyer’s market.

Dr. Taffy