We’ve all the seen the show Extreme Home Makeover. Every episode a particular family in need is helped out by the kind producers ABC, creating riveting television with a heartwarming ending. But for the homeowners, the ending is not always so charming.
A problem has arisen: homeowners who receive the makeover can’t keep up with their new mortgage payments. One particular family of orphans helped out by the show are actually suing the producers because they could no longer afford to pay for their house. Check out this video here.
Archive for July, 2010
Extreme Home Makeover: Gone Extremely Wrong
Friday, July 30th, 2010A Week in the Life of Luxury
Monday, July 26th, 2010The game of real estate has afforded many people a chance at a luxurious life. After all, if you put all of your eggs in the right basket, real estate business can really pay off. Also, the rich and wealthy make it very clear how much loot their toting around—just look at the mansion they’re constructing on what used to be the abandoned lot down your street. So this week, I wanted to take a moment and examine how the wealthy are handling the current housing market downturn and if they are having to forego extravagance to cover their losses like the rest of the world. We’re going to talk about everything—from resort real estate, to second homes, maybe even pick on a few celebrities. Who knows…
A Delayed Reaction to Ben Bernanke’s Second Day of Talks with Congress on Budget Deficits
Sunday, July 25th, 2010What I’ve managed to uproot from the endless forums and news posts is that Ben Bernanke’s second day in talks with Congress were more positive. If the first day was the presentation of America’s budget problem, then the second was the proposed solution to it. The Dow Jones even closed up 201 points on Thursday, July 22 easily compensating for Wednesday’s 100 point loss.
It seems that there is a debate between the Obama Administration and the Treasury on what exactly to do with our trillions of dollars in deficit. The Obama Administration would like to cut down on our exceeding debts. Coincidentally, this is exactly what Britain and the “eurozone” are doing. Foregoing short-term gains in hopes that the long term will yield a more substantial outcome seems like the most responsible thing to do. But Bernanke thinks otherwise.
Fiscal retrenchment, as the UK Guardian so delicately put it, isn’t really a viable option for the American economy. Letting go of the pursuit of short-term growth and moderate, possibly impermanent health in our economy was deemed to risky by Chairman Bernanke. The fear is that we may incur a double dip recession without immediate relief from compounding debt, stimulus, and benefits for those in financial dismay.
Instead, Bernanke insists that we keep pumping more and more money into the system to help suffering home owners and produce more jobs. And should the economy still not show any signs of improvement, Bernanke is ready and waiting with measures that will bolster and such downturns. Speculations point to the Fed’s habit of “Quantitative Easing”, method commonly used by central banks to pump money into a deflated economy.
So for the time being it looks like we as a country are still going to try and bolster this struggling economy. This is good news for homeowners, especially the 1 in 4 that are under water on their mortgage. Bernanke’s plan means continued relief efforts and low interest rates for home buyers.
“Unusually Uncertain”
Wednesday, July 21st, 2010According to CNNPolitics, Bernanke’s speech to Congress today was mostly foreboding of more depressed economic growth, stubborn unemployment numbers, and low interest rates. He in fact used the words “unusually uncertain” to describe the nation’s financial outlook. A glib speech overall, however, he did manage to mention a few methods by which the Fed plans to improve out economic standings. It’s all a bunch of financial jargon that I will allow you to sift through yourselves. Here ya go!
Ben Bernanke, Fed Chairman, to Report of State of Economy
Wednesday, July 21st, 2010It can’t be an easy job to be the guy that’s going to have to tell everyone how poorly the economy is doing. Lucky for us, we’re not Ben Bernanke
Scheduled for Wednesday and Thursday are a series of reports Mr. Bernanke will deliver to Capitol Hill on the state of the economy. According to NPR, he is expected to downplay the fears of a double dip recession.
Given that unemployment continues to stagnate at the 10% line, home sales are still on the decline since the end of the tax incentives, and credit card debt is slowly working its way towards the “crippling” line, Bernanke has quite a feat to accomplish at putting Congress’s woes at ease.
I will try to have updates for you later today…
Home Foreclosures Could Reach 1 Million by End of Year
Monday, July 19th, 2010It’s unsettling news, I know. In 2009 nearly 900,000 homes went to foreclosure. In 2010, the housing market is projected to beat that number and hit the 1 million mark.
Recent statistics released on the second quarter of the housing market showed foreclosures at a record high. According to Realty Trac, Inc., a real estate statistic research firm, 269,952 homes went into foreclosure, up 5% from the previous quarter. These numbers are even more alarming considering the effort on behalf of banks to put a stipend on foreclosures through short sales and loan modifications. Alas, it is to no avail.
Rick Sharga, presient of Realty Trac, has been quite vocal recently about the numbers, but manages to remain moderately positive: “It is almost a certainty that we will see over a million over the course of the year, and that would definitely be a record,” he said. “It’s serious, but it doesn’t appear to be that these levels will crater the housing market if the economy at least stabilizes and we do start to see some job creation.”
So despite the staggering numbers, a few talking heads are remaining positive in face of the “1 million” tick mark. As to how this will effect 2011’s housing market, only time will tell…
A Case for Principal Reductions
Friday, July 16th, 2010The banks have put it off as long as possible because—let’s face it—it’s a desperate measure. But, given recent obstructions in loan refinancing efforts from HAMP and the failures of banks to aid “underwater” homeowners with deflated home prices, decreasing incomes, and negative equities, we could see the dawn of a new era.
It’s a little thing called PRINCIPAL REDUCTIONS. Basically, this means that the refinancing process will incorporate the reduction of the principal balance on a loan closer to the home in question’s actual value. This means a forgiveness of debt on the part of the banks—something that they were previously unwilling to do. The problem arose when loan re-modification programs weren’t taking the brunt out of negative equity mortgages. It became apparent from banks that it was difficult to modify existing mortgages, especially when homeowners are losing income, and many times, re-modification still resulted in homeowners under water. So nothing changed.
Banks were unprepared for the major influx of modification requests. So far, only 30% of mortgages that have requested modification have received one—a total of about 98,000. Also, modifications are only available to homeowners that are in arrears. This means that any homeowner still making payments, even though it may be sucking up life savings, cannot receive a modification…yet.
It seems that the Treasury will have to take principal reduction into serious consideration as a way for banks to alleviate outstanding debt, save shareholders, and not lose a whole lot of money. Depending on how much debt is forgiven, banks will be paid a fee in compensation for alleviating the outstanding balance, thus repaying them some of their losses.
Steps are also being taken to decrease the pressure on homeowners underwater, or heading in that direction. The Treasury began initiatives concerning a 3-month forbearance period for unemployed homeowners, as well as allowing modifications for loans not yet underwater. The minor adjustments in bankruptcy policy could help ease the pain of a lot of homeowners.
There is a catch: these proposed principal reductions, under current legislation, remain completely voluntary on behalf of the banks. So I guess we shall see…
A Heart-Warming Story About Short Sales
Tuesday, July 13th, 2010Hey there FSBOers! I was taking a walk out in the blogosphere and came across this pertinent testimony about one family’s experiences with a short sale in the midst of the housing crunch.
Writer, Matthew Strozier, was relocated from New York to Tampa, Florida and purchased a condo. In 2006. Then the market collapsed and Florida home prices plummeted. Florida was one of the biggest bubble states in the country and hardest hit by the housing collapse.
Instead of getting angry, like many homeowner would about their loss of equity, Strozier seems to feel very strongly that it was all a matter of timing and he caught the short end of the stick. He even relates the problem back to early 2002 before the housing market hit its huge upswing—had he bought then, he would have very little return on his investment.
To read the testimony, click here.
The Art of Bird-Dogging
Monday, July 12th, 2010You learn something new every day my friends.
I have recently come across an interesting bit of real estate business nomenclature: Bird-Dogging.
(I used to think that was only when a best buddy stole his other best buddy’s girl, but apparently it has a more housing-relative meaning.)
In the business of real estate entrepreneurship, one of the most important aspects of getting your business off the ground is the acquisition of potentially-sellable properties or real estate opportunities—especially if you are going for a “fix and flip” business model.
Your bird-dogger (this could be you, or someone who works for you) is going to keep an eye out for any opportunity they can find: foreclosures, damaged properties, short sales, and yes, even divorces and deaths. All of these opportunities can make a great real estate investment. You can fix and flip it or purchase at incredibly low rates for a short sales and foreclosures. Now I’m not saying go and stick your nose into someone’s life that recently incurred a nasty divorce, but know this: a lot of times, real estate is tied up into divorces and when people pass away, their homes have to go somewhere. So have common sense and approach opportunities like that with the utmost care and sensitivity. That being said…
Bird-dogging is a real do-it-yourself, work intensive job. The more time you put in, the more you are certain to get out of it. For Sale by Owner could do well to have an attitude like a bird-dogging, gun-slingin’, real estate-savvy entrepreneur. Sometimes it is difficult to get noticed in this market and you are left wondering where you went wrong. Well, the more voracious of a salesman you are (this doesn’t mean to forego integrity in your pursuits), the more your house will get noticed, maybe even by a bird-dogger! In fact, if your FSBO endeavors go well, you might be considering full-on real estate investments. So there ya go!
