The Charlottesville Real Estate Market Report was release yesterday. I have shared the information with you below:
CAAR Market Report
2009 Mid-Year
Published by the Charlottesville Area Association of REALTORS®
Where Are We Now?
The pace of home purchases in the Charlottesville area continues to improve from the dismal 4th quarter of 2008, but sales lag well behind compared to last year. The sale of homes has been increasing month to month for six months in a row. The steady improvement is easy to predict with the seasonal upswing the market naturally experiences this time of year, but based on pending sales in the MLS, we may continue to see sales increase beyond the seasonal selling season. For the first time in many months, the number of contracts in June was up from the previous year. It will be interesting to see if this trend continues.
Fueling these homes sales is the significant decrease in real estate prices. This report will detail some statistics that indicate that home prices have fallen steeply (20% or more) and this has resulted in an increase in sales. There is some evidence that sellers are starting to embrace the current market environment and price their home accordingly. The average Days on Market (DOM) has been dropping in recent months, and the median time a property takes to sell is now only 75 days. That indicates that many homes – likely the ones priced correctly – are selling quickly.
Mid-Year Home Sales
There were 1131 homes sold in the Charlottesville area during the first six months of 2009, which was down 28% (-440 sales) from 2008. After the 1st quarter, annualized sales were down 33.9%, which demonstrates the 2nd quarter improvement. All local areas were down from last year: Albemarle -15.6%, Charlottesville -35.2%, Fluvanna -34.7%, Greene -24.5%, Louisa -38.4%, Nelson -39%, and Orange – 47.1%. Monthly sales for the region have improved slightly each month since November 2008, but much of that can be attributed to seasonal swings.
Sales in the Central Valley region were generated from the Greater Augusta MLS, which has more complete data on the Valley market than the CAAR MLS. Sales were down in the Valley by 25.5 % compared to last year.
Have Home Prices Slipped?
Based on the data from the CAAR MLS, we believe that the numbers clearly show a significant decrease in home prices. The median prices listed below are the middle of the market of properties that sold. Simply put, this is an indication of what buyers were willing/able to pay and is not a true reflection of individual home prices. It is probably safe to assume that a steady, year-to-year decrease in the median price is a good indication that prices are going down, but it is not an exact measurement.
We believe the number displays below provide compelling evidence that our local real estate market has experienced a noteworthy drop in home prices. The CAAR market reports have been discussing this trend since the Fall of 2007, but this report finally shows clear evidence of the decline. The one caveat that we need to make is that part of this median price decline is a reflection of an increase in home sales in the lower price ranges. Of the 719 homes that sold in the 2nd quarter, 509 were sold for $300,000 or less. This surge in the lower end of the market will naturally pull the median price down.
Each property is affected differently by this price decline. The only way to know what your home will sell for is to have a REALTOR® or appraiser prepare a comparative market analysis (CMA) for your property. This market is changing very quickly and to be up-to-date, you need to do a CMA every two weeks. Pricing a property correctly is the best way to sell it!
Overall, the median home price (including attached homes) declined $22,900 (-8.5%) compared to the first half of last year. All areas covered in this report showed a decline. Median prices for other locales include: Albemarle (-9.4%), Charlottesville (-6.8%), Fluvanna (-19.6%), Greene (-3.4%) Louisa (-20.8%), Nelson (-6.7%) Orange (-29.7%) and the Valley (-8%).
Median Sales Prices
Price Per Square Foot (Finished)
Another indicator that allows us to see the drop in home prices is a major drop in the price per square foot numbers. The average price per square foot of finished space in homes is not a scientific number, but a downward trend over the years clearly indicates a decrease in prices (and vice versa). According to the chart below, prices peaked in 2006 and have declined for the past three years. The $18 per square foot drop in 2009 is by far the largest decline we have experienced in recent years.
Inventory Heading in the Right Direction
The inventory of homes for sale in the Charlottesville area generally increases in the first half of the year, with many homes coming on the market for the spring selling season. The good news is that in 2009 we have seen the inventory of homes shrink – not enough, but it is heading in the right direction. Having this excess of inventory is causing many of the problems with our local housing market. Until we are able to reduce the number of homes for sale, we will continue to be in a strong buyer’s market with soft home prices and very creative incentives. That’s good for buyers, but it is not any better for the long-term housing market than the strong seller’s market we experienced just a few years ago.
Currently, we have 3,602 homes on the market, compared to 3,761 at this time last year. This small decrease from last year is a positive sign, but we have a long way to go before we see appropriate inventory levels in the 2,000 to 2,500 range. The median price of homes currently for sale is $299,000, which is $9,900 less than last year. The average DOM (days on market) of these homes is 155 days, which is four days more than last year and 30 days more than homes that have sold. The most telling statistic related to homes currently on the market is that the average price per square foot is $203 compared to $143 for homes that have sold in the first 6 months of 2009.
Housing affordability is the positive aspect of this market. There are 871 homes for sale $200,000 or less with an average DOM of 141 and an average price per square foot of $143. There are 289 homes currently on the market priced at a million dollars or more with an average DOM of 226.
Days on Market (DOM)
The average number of days a property is on the market is a great indicator of a housing market’s strength. The average DOM for the Charlottesville area has been steadily increasing for the past several quarters. This trend continued in the 2nd quarter, but the increase was just 3 days more than 2008’s mid-year number. Although the increase was only a modest 3 days, it still supports the fact that we have too many homes on the market for the amount of sales. Until we work the inventory of available homes down to a more manageable number, DOM will stay high. A balanced market should have a DOM of approximately 90, but we have not been in that range since 2007.
New Construction Still Slow
It is important to note that many “new” homes are not included in CAAR MLS statistics. It is very common for a buyer to contact a builder directly to custom build a home. With that said, the historical perspective of the pace of new home sales gives us a reasonably good picture of the market for new construction. As the chart below shows, new home sales are still struggling and until the inventory of homes for sale declines, new construction will lag.
Condos and Townhomes (Attached Homes)
The sale of attached homes is only reported in Charlottesville and Albemarle because very few properties in this category are located in other counties, except Nelson. Since the condos in Nelson are primarily in the Wintergreen Resort market, we have decided not to include them in this report. One of the more interesting numbers in this report is the small increase in the sale of attached homes in Albemarle that first showed up in the 2009 1st Quarter Market Report. Charlottesville attached home sales are down 33.3%, while Albemarle sales edged up 1.8% compared to 2008. The chart below shows the attached homes sold in 2009 compared to past years. Inventory levels of attached homes for sale are still high, with an average DOM of 174 for properties currently on the market. The median price of an attached home currently on the market is $219,900. The median price for an attached home that sold in the first six months of 2009 is $223,000 for Albemarle and $239,388 for Charlottesville.
Conclusions and Predictions
Although we have been recommending the need for sellers to reduce their prices under the current market conditions, evidence of these price reductions has not shown up until this quarterly report. There is a direct relation between lower prices and higher sales. As more and more sellers price their properties according to the current market, sales should continue to increase. Increased sales is not something we normally see in the second half of the year, but this year, fueled by realistic prices, low interest rates, tax credits, and pent-up demand, may be an exception. We should see a slow but steady improvement in the number of sales for the balance of the year.
By the 4th quarter of 2009, we will likely see a year-to-year sales improvement, but only because the 4th quarter of 2008 was so bad it will be hard not to beat. 2009 is slowly heading in a positive direction in terms of sales and inventory levels and we expect that trend to continue. We may see more evidence of price declines in future market reports as more and more sellers accept the reality of this market. Additional declines in prices are possible, but it will be hard to tell if these price drops are a result of more sellers finally pricing their properties based on the current market, or a real decline in home values. Only time, and future market reports, will reveal this to us.
This Quarterly Market Report is produced by the Charlottesville Area Association of REALTORS® using data from the CAAR MLS and the Greater Augusta MLS where noted. For more information on this report or the real estate market, pick up a copy of the CAAR Real Estate Weekly, visit www.caar.com, or contact your REALTOR®.
Rob Alley, Realtor at Keller Williams Charlottesville
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
http://www.theaverygroup.com
Showing posts with label Roy Wheeler. Show all posts
Showing posts with label Roy Wheeler. Show all posts
Friday, July 10, 2009
Charlottesville Real Estate Market 2009 Mid Year Report
The Charlottesville Real Estate Market Report was release yesterday. I have shared the information with you below:
CAAR Market Report
2009 Mid-Year
Published by the Charlottesville Area Association of REALTORS®
Where Are We Now?
The pace of home purchases in the Charlottesville area continues to improve from the dismal 4th quarter of 2008, but sales lag well behind compared to last year. The sale of homes has been increasing month to month for six months in a row. The steady improvement is easy to predict with the seasonal upswing the market naturally experiences this time of year, but based on pending sales in the MLS, we may continue to see sales increase beyond the seasonal selling season. For the first time in many months, the number of contracts in June was up from the previous year. It will be interesting to see if this trend continues.
Fueling these homes sales is the significant decrease in real estate prices. This report will detail some statistics that indicate that home prices have fallen steeply (20% or more) and this has resulted in an increase in sales. There is some evidence that sellers are starting to embrace the current market environment and price their home accordingly. The average Days on Market (DOM) has been dropping in recent months, and the median time a property takes to sell is now only 75 days. That indicates that many homes – likely the ones priced correctly – are selling quickly.
Mid-Year Home Sales
There were 1131 homes sold in the Charlottesville area during the first six months of 2009, which was down 28% (-440 sales) from 2008. After the 1st quarter, annualized sales were down 33.9%, which demonstrates the 2nd quarter improvement. All local areas were down from last year: Albemarle -15.6%, Charlottesville -35.2%, Fluvanna -34.7%, Greene -24.5%, Louisa -38.4%, Nelson -39%, and Orange – 47.1%. Monthly sales for the region have improved slightly each month since November 2008, but much of that can be attributed to seasonal swings.
Sales in the Central Valley region were generated from the Greater Augusta MLS, which has more complete data on the Valley market than the CAAR MLS. Sales were down in the Valley by 25.5 % compared to last year.
Have Home Prices Slipped?
Based on the data from the CAAR MLS, we believe that the numbers clearly show a significant decrease in home prices. The median prices listed below are the middle of the market of properties that sold. Simply put, this is an indication of what buyers were willing/able to pay and is not a true reflection of individual home prices. It is probably safe to assume that a steady, year-to-year decrease in the median price is a good indication that prices are going down, but it is not an exact measurement.
We believe the number displays below provide compelling evidence that our local real estate market has experienced a noteworthy drop in home prices. The CAAR market reports have been discussing this trend since the Fall of 2007, but this report finally shows clear evidence of the decline. The one caveat that we need to make is that part of this median price decline is a reflection of an increase in home sales in the lower price ranges. Of the 719 homes that sold in the 2nd quarter, 509 were sold for $300,000 or less. This surge in the lower end of the market will naturally pull the median price down.
Each property is affected differently by this price decline. The only way to know what your home will sell for is to have a REALTOR® or appraiser prepare a comparative market analysis (CMA) for your property. This market is changing very quickly and to be up-to-date, you need to do a CMA every two weeks. Pricing a property correctly is the best way to sell it!
Overall, the median home price (including attached homes) declined $22,900 (-8.5%) compared to the first half of last year. All areas covered in this report showed a decline. Median prices for other locales include: Albemarle (-9.4%), Charlottesville (-6.8%), Fluvanna (-19.6%), Greene (-3.4%) Louisa (-20.8%), Nelson (-6.7%) Orange (-29.7%) and the Valley (-8%).
Median Sales Prices
Price Per Square Foot (Finished)
Another indicator that allows us to see the drop in home prices is a major drop in the price per square foot numbers. The average price per square foot of finished space in homes is not a scientific number, but a downward trend over the years clearly indicates a decrease in prices (and vice versa). According to the chart below, prices peaked in 2006 and have declined for the past three years. The $18 per square foot drop in 2009 is by far the largest decline we have experienced in recent years.
Inventory Heading in the Right Direction
The inventory of homes for sale in the Charlottesville area generally increases in the first half of the year, with many homes coming on the market for the spring selling season. The good news is that in 2009 we have seen the inventory of homes shrink – not enough, but it is heading in the right direction. Having this excess of inventory is causing many of the problems with our local housing market. Until we are able to reduce the number of homes for sale, we will continue to be in a strong buyer’s market with soft home prices and very creative incentives. That’s good for buyers, but it is not any better for the long-term housing market than the strong seller’s market we experienced just a few years ago.
Currently, we have 3,602 homes on the market, compared to 3,761 at this time last year. This small decrease from last year is a positive sign, but we have a long way to go before we see appropriate inventory levels in the 2,000 to 2,500 range. The median price of homes currently for sale is $299,000, which is $9,900 less than last year. The average DOM (days on market) of these homes is 155 days, which is four days more than last year and 30 days more than homes that have sold. The most telling statistic related to homes currently on the market is that the average price per square foot is $203 compared to $143 for homes that have sold in the first 6 months of 2009.
Housing affordability is the positive aspect of this market. There are 871 homes for sale $200,000 or less with an average DOM of 141 and an average price per square foot of $143. There are 289 homes currently on the market priced at a million dollars or more with an average DOM of 226.
Days on Market (DOM)
The average number of days a property is on the market is a great indicator of a housing market’s strength. The average DOM for the Charlottesville area has been steadily increasing for the past several quarters. This trend continued in the 2nd quarter, but the increase was just 3 days more than 2008’s mid-year number. Although the increase was only a modest 3 days, it still supports the fact that we have too many homes on the market for the amount of sales. Until we work the inventory of available homes down to a more manageable number, DOM will stay high. A balanced market should have a DOM of approximately 90, but we have not been in that range since 2007.
New Construction Still Slow
It is important to note that many “new” homes are not included in CAAR MLS statistics. It is very common for a buyer to contact a builder directly to custom build a home. With that said, the historical perspective of the pace of new home sales gives us a reasonably good picture of the market for new construction. As the chart below shows, new home sales are still struggling and until the inventory of homes for sale declines, new construction will lag.
Condos and Townhomes (Attached Homes)
The sale of attached homes is only reported in Charlottesville and Albemarle because very few properties in this category are located in other counties, except Nelson. Since the condos in Nelson are primarily in the Wintergreen Resort market, we have decided not to include them in this report. One of the more interesting numbers in this report is the small increase in the sale of attached homes in Albemarle that first showed up in the 2009 1st Quarter Market Report. Charlottesville attached home sales are down 33.3%, while Albemarle sales edged up 1.8% compared to 2008. The chart below shows the attached homes sold in 2009 compared to past years. Inventory levels of attached homes for sale are still high, with an average DOM of 174 for properties currently on the market. The median price of an attached home currently on the market is $219,900. The median price for an attached home that sold in the first six months of 2009 is $223,000 for Albemarle and $239,388 for Charlottesville.
Conclusions and Predictions
Although we have been recommending the need for sellers to reduce their prices under the current market conditions, evidence of these price reductions has not shown up until this quarterly report. There is a direct relation between lower prices and higher sales. As more and more sellers price their properties according to the current market, sales should continue to increase. Increased sales is not something we normally see in the second half of the year, but this year, fueled by realistic prices, low interest rates, tax credits, and pent-up demand, may be an exception. We should see a slow but steady improvement in the number of sales for the balance of the year.
By the 4th quarter of 2009, we will likely see a year-to-year sales improvement, but only because the 4th quarter of 2008 was so bad it will be hard not to beat. 2009 is slowly heading in a positive direction in terms of sales and inventory levels and we expect that trend to continue. We may see more evidence of price declines in future market reports as more and more sellers accept the reality of this market. Additional declines in prices are possible, but it will be hard to tell if these price drops are a result of more sellers finally pricing their properties based on the current market, or a real decline in home values. Only time, and future market reports, will reveal this to us.
This Quarterly Market Report is produced by the Charlottesville Area Association of REALTORS® using data from the CAAR MLS and the Greater Augusta MLS where noted. For more information on this report or the real estate market, pick up a copy of the CAAR Real Estate Weekly, visit www.caar.com, or contact your REALTOR®.
Rob Alley, Realtor at Keller Williams Charlottesville
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
http://www.theaverygroup.com
CAAR Market Report
2009 Mid-Year
Published by the Charlottesville Area Association of REALTORS®
Where Are We Now?
The pace of home purchases in the Charlottesville area continues to improve from the dismal 4th quarter of 2008, but sales lag well behind compared to last year. The sale of homes has been increasing month to month for six months in a row. The steady improvement is easy to predict with the seasonal upswing the market naturally experiences this time of year, but based on pending sales in the MLS, we may continue to see sales increase beyond the seasonal selling season. For the first time in many months, the number of contracts in June was up from the previous year. It will be interesting to see if this trend continues.
Fueling these homes sales is the significant decrease in real estate prices. This report will detail some statistics that indicate that home prices have fallen steeply (20% or more) and this has resulted in an increase in sales. There is some evidence that sellers are starting to embrace the current market environment and price their home accordingly. The average Days on Market (DOM) has been dropping in recent months, and the median time a property takes to sell is now only 75 days. That indicates that many homes – likely the ones priced correctly – are selling quickly.
Mid-Year Home Sales
There were 1131 homes sold in the Charlottesville area during the first six months of 2009, which was down 28% (-440 sales) from 2008. After the 1st quarter, annualized sales were down 33.9%, which demonstrates the 2nd quarter improvement. All local areas were down from last year: Albemarle -15.6%, Charlottesville -35.2%, Fluvanna -34.7%, Greene -24.5%, Louisa -38.4%, Nelson -39%, and Orange – 47.1%. Monthly sales for the region have improved slightly each month since November 2008, but much of that can be attributed to seasonal swings.
Sales in the Central Valley region were generated from the Greater Augusta MLS, which has more complete data on the Valley market than the CAAR MLS. Sales were down in the Valley by 25.5 % compared to last year.
Have Home Prices Slipped?
Based on the data from the CAAR MLS, we believe that the numbers clearly show a significant decrease in home prices. The median prices listed below are the middle of the market of properties that sold. Simply put, this is an indication of what buyers were willing/able to pay and is not a true reflection of individual home prices. It is probably safe to assume that a steady, year-to-year decrease in the median price is a good indication that prices are going down, but it is not an exact measurement.
We believe the number displays below provide compelling evidence that our local real estate market has experienced a noteworthy drop in home prices. The CAAR market reports have been discussing this trend since the Fall of 2007, but this report finally shows clear evidence of the decline. The one caveat that we need to make is that part of this median price decline is a reflection of an increase in home sales in the lower price ranges. Of the 719 homes that sold in the 2nd quarter, 509 were sold for $300,000 or less. This surge in the lower end of the market will naturally pull the median price down.
Each property is affected differently by this price decline. The only way to know what your home will sell for is to have a REALTOR® or appraiser prepare a comparative market analysis (CMA) for your property. This market is changing very quickly and to be up-to-date, you need to do a CMA every two weeks. Pricing a property correctly is the best way to sell it!
Overall, the median home price (including attached homes) declined $22,900 (-8.5%) compared to the first half of last year. All areas covered in this report showed a decline. Median prices for other locales include: Albemarle (-9.4%), Charlottesville (-6.8%), Fluvanna (-19.6%), Greene (-3.4%) Louisa (-20.8%), Nelson (-6.7%) Orange (-29.7%) and the Valley (-8%).
Median Sales Prices
Price Per Square Foot (Finished)
Another indicator that allows us to see the drop in home prices is a major drop in the price per square foot numbers. The average price per square foot of finished space in homes is not a scientific number, but a downward trend over the years clearly indicates a decrease in prices (and vice versa). According to the chart below, prices peaked in 2006 and have declined for the past three years. The $18 per square foot drop in 2009 is by far the largest decline we have experienced in recent years.
Inventory Heading in the Right Direction
The inventory of homes for sale in the Charlottesville area generally increases in the first half of the year, with many homes coming on the market for the spring selling season. The good news is that in 2009 we have seen the inventory of homes shrink – not enough, but it is heading in the right direction. Having this excess of inventory is causing many of the problems with our local housing market. Until we are able to reduce the number of homes for sale, we will continue to be in a strong buyer’s market with soft home prices and very creative incentives. That’s good for buyers, but it is not any better for the long-term housing market than the strong seller’s market we experienced just a few years ago.
Currently, we have 3,602 homes on the market, compared to 3,761 at this time last year. This small decrease from last year is a positive sign, but we have a long way to go before we see appropriate inventory levels in the 2,000 to 2,500 range. The median price of homes currently for sale is $299,000, which is $9,900 less than last year. The average DOM (days on market) of these homes is 155 days, which is four days more than last year and 30 days more than homes that have sold. The most telling statistic related to homes currently on the market is that the average price per square foot is $203 compared to $143 for homes that have sold in the first 6 months of 2009.
Housing affordability is the positive aspect of this market. There are 871 homes for sale $200,000 or less with an average DOM of 141 and an average price per square foot of $143. There are 289 homes currently on the market priced at a million dollars or more with an average DOM of 226.
Days on Market (DOM)
The average number of days a property is on the market is a great indicator of a housing market’s strength. The average DOM for the Charlottesville area has been steadily increasing for the past several quarters. This trend continued in the 2nd quarter, but the increase was just 3 days more than 2008’s mid-year number. Although the increase was only a modest 3 days, it still supports the fact that we have too many homes on the market for the amount of sales. Until we work the inventory of available homes down to a more manageable number, DOM will stay high. A balanced market should have a DOM of approximately 90, but we have not been in that range since 2007.
New Construction Still Slow
It is important to note that many “new” homes are not included in CAAR MLS statistics. It is very common for a buyer to contact a builder directly to custom build a home. With that said, the historical perspective of the pace of new home sales gives us a reasonably good picture of the market for new construction. As the chart below shows, new home sales are still struggling and until the inventory of homes for sale declines, new construction will lag.
Condos and Townhomes (Attached Homes)
The sale of attached homes is only reported in Charlottesville and Albemarle because very few properties in this category are located in other counties, except Nelson. Since the condos in Nelson are primarily in the Wintergreen Resort market, we have decided not to include them in this report. One of the more interesting numbers in this report is the small increase in the sale of attached homes in Albemarle that first showed up in the 2009 1st Quarter Market Report. Charlottesville attached home sales are down 33.3%, while Albemarle sales edged up 1.8% compared to 2008. The chart below shows the attached homes sold in 2009 compared to past years. Inventory levels of attached homes for sale are still high, with an average DOM of 174 for properties currently on the market. The median price of an attached home currently on the market is $219,900. The median price for an attached home that sold in the first six months of 2009 is $223,000 for Albemarle and $239,388 for Charlottesville.
Conclusions and Predictions
Although we have been recommending the need for sellers to reduce their prices under the current market conditions, evidence of these price reductions has not shown up until this quarterly report. There is a direct relation between lower prices and higher sales. As more and more sellers price their properties according to the current market, sales should continue to increase. Increased sales is not something we normally see in the second half of the year, but this year, fueled by realistic prices, low interest rates, tax credits, and pent-up demand, may be an exception. We should see a slow but steady improvement in the number of sales for the balance of the year.
By the 4th quarter of 2009, we will likely see a year-to-year sales improvement, but only because the 4th quarter of 2008 was so bad it will be hard not to beat. 2009 is slowly heading in a positive direction in terms of sales and inventory levels and we expect that trend to continue. We may see more evidence of price declines in future market reports as more and more sellers accept the reality of this market. Additional declines in prices are possible, but it will be hard to tell if these price drops are a result of more sellers finally pricing their properties based on the current market, or a real decline in home values. Only time, and future market reports, will reveal this to us.
This Quarterly Market Report is produced by the Charlottesville Area Association of REALTORS® using data from the CAAR MLS and the Greater Augusta MLS where noted. For more information on this report or the real estate market, pick up a copy of the CAAR Real Estate Weekly, visit www.caar.com, or contact your REALTOR®.
Rob Alley, Realtor at Keller Williams Charlottesville
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
http://www.theaverygroup.com
Wednesday, June 24, 2009
Dumping Your Debt
Dumping your debt
Millions of Americans set a goal for and succeed in paying off their credit card debt each year – is this one of your goals? With a little determination and a plan, you can take control of your credit, and improve your credit score in the process. Here’s how:
Cut the Cards
The first step toward reducing your credit card debt is to stop adding to it. While you don’t have to literally shred your cards, you do need to stop using them routinely. Try one (or all) of the tips below to break this habit:
a) Carry Cash – give yourself a weekly cash allowance for expenditures. You’ll be more aware of how much you actually spend; plus, once you run out of money, you’re more apt to stop spending
b) Use debit, not credit – for times when only plastic will do, use your debit card instead of a credit card.
c) Out of sight, out of mind – keep your credit cards at home and you’ll be less likely to use them.
d) Think strategically – decide on two to four credit cards with which you have a lengthy, positive history, and close any other accounts. Having a few good accounts will boost your credit score, but having too many will hurt it (and may also keep you tempted to spend money you don’t have).
Lower Rates/Cut a Deal
Once you’ve got your spending under control, focus on reducing your interest rates:
a) Negotiate rates – call up your credit card issuers and ask for a better rate. Explain that your plan to transfer the balances to another card unless your rates are lowered. Usually, borrowers with good credit scores can cut their rates by a few points – sometimes as much as 10%.
b) Transfer balances – consider transferring balances from cards with high interest rates to a different card. Look for offers with low introductory rates that are good for at least a full year, with relatively low rates thereafter. Read the fine print and pass up offers from cards with hidden fees or costs.
c) Shop around – do a little investigative work to find the best card offers. Check out www.cardweb.com for current offers.
Reduce Your Debt
Now it’s time to start chipping away those balances. Develop a strategy and make it happen, using the following tips:
a) Sort it out – make a list of each credit card you have, its existing balance, minimum payment and interest rate. Use any of the online calculators listed here to help you determine which card to pay off first: CNN Money Magazine at http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp or Quicken at http://www.quicken .com/planning/debt/
b) Develop a plan – pay as much money as you can on your card with the highest interest rate, while paying the minimum on the other cares. This additional payment on the high-rate card will help to pay off the principal faster.
c) Build a debt snowball – once your highest interest rate card is paid off, take the same amount you’ve been paying on that card and add it to the minimum on the card with the next highest interest rate (this is commonly referred to as “snowballing” or a debt-reduction rollover of your payments). Continue to pay the minimum on the remaining accounts, repeating the process until you are debt-free.
d) Have a back-up – keep one low-interest card put away for emergencies, but maintain a zero monthly balance at all times by paying it off when due.
Think Ahead
Now that you’re debt-free, start thinking even further ahead:
a) Invest – begin to invest the same amount of money you’ve been applying to debt every month. You’ve trained yourself to live on less by paying as much as possible toward your debt each month, now take that philosophy and use it to your advantage, reinforcing that thrift must continue in order to develop a mindset of abundance.
b) Visualize – spend a few moments each day imagining what it will feel like to be debt-free, paying cash for every purchase and looking forward to a comfortable retirement!
TIP: Call 1-888-5-OPTOUT to stop the flood of credit card offers from reaching your mailbox.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Millions of Americans set a goal for and succeed in paying off their credit card debt each year – is this one of your goals? With a little determination and a plan, you can take control of your credit, and improve your credit score in the process. Here’s how:
Cut the Cards
The first step toward reducing your credit card debt is to stop adding to it. While you don’t have to literally shred your cards, you do need to stop using them routinely. Try one (or all) of the tips below to break this habit:
a) Carry Cash – give yourself a weekly cash allowance for expenditures. You’ll be more aware of how much you actually spend; plus, once you run out of money, you’re more apt to stop spending
b) Use debit, not credit – for times when only plastic will do, use your debit card instead of a credit card.
c) Out of sight, out of mind – keep your credit cards at home and you’ll be less likely to use them.
d) Think strategically – decide on two to four credit cards with which you have a lengthy, positive history, and close any other accounts. Having a few good accounts will boost your credit score, but having too many will hurt it (and may also keep you tempted to spend money you don’t have).
Lower Rates/Cut a Deal
Once you’ve got your spending under control, focus on reducing your interest rates:
a) Negotiate rates – call up your credit card issuers and ask for a better rate. Explain that your plan to transfer the balances to another card unless your rates are lowered. Usually, borrowers with good credit scores can cut their rates by a few points – sometimes as much as 10%.
b) Transfer balances – consider transferring balances from cards with high interest rates to a different card. Look for offers with low introductory rates that are good for at least a full year, with relatively low rates thereafter. Read the fine print and pass up offers from cards with hidden fees or costs.
c) Shop around – do a little investigative work to find the best card offers. Check out www.cardweb.com for current offers.
Reduce Your Debt
Now it’s time to start chipping away those balances. Develop a strategy and make it happen, using the following tips:
a) Sort it out – make a list of each credit card you have, its existing balance, minimum payment and interest rate. Use any of the online calculators listed here to help you determine which card to pay off first: CNN Money Magazine at http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp or Quicken at http://www.quicken .com/planning/debt/
b) Develop a plan – pay as much money as you can on your card with the highest interest rate, while paying the minimum on the other cares. This additional payment on the high-rate card will help to pay off the principal faster.
c) Build a debt snowball – once your highest interest rate card is paid off, take the same amount you’ve been paying on that card and add it to the minimum on the card with the next highest interest rate (this is commonly referred to as “snowballing” or a debt-reduction rollover of your payments). Continue to pay the minimum on the remaining accounts, repeating the process until you are debt-free.
d) Have a back-up – keep one low-interest card put away for emergencies, but maintain a zero monthly balance at all times by paying it off when due.
Think Ahead
Now that you’re debt-free, start thinking even further ahead:
a) Invest – begin to invest the same amount of money you’ve been applying to debt every month. You’ve trained yourself to live on less by paying as much as possible toward your debt each month, now take that philosophy and use it to your advantage, reinforcing that thrift must continue in order to develop a mindset of abundance.
b) Visualize – spend a few moments each day imagining what it will feel like to be debt-free, paying cash for every purchase and looking forward to a comfortable retirement!
TIP: Call 1-888-5-OPTOUT to stop the flood of credit card offers from reaching your mailbox.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Dumping Your Debt
Dumping your debt
Millions of Americans set a goal for and succeed in paying off their credit card debt each year – is this one of your goals? With a little determination and a plan, you can take control of your credit, and improve your credit score in the process. Here’s how:
Cut the Cards
The first step toward reducing your credit card debt is to stop adding to it. While you don’t have to literally shred your cards, you do need to stop using them routinely. Try one (or all) of the tips below to break this habit:
a) Carry Cash – give yourself a weekly cash allowance for expenditures. You’ll be more aware of how much you actually spend; plus, once you run out of money, you’re more apt to stop spending
b) Use debit, not credit – for times when only plastic will do, use your debit card instead of a credit card.
c) Out of sight, out of mind – keep your credit cards at home and you’ll be less likely to use them.
d) Think strategically – decide on two to four credit cards with which you have a lengthy, positive history, and close any other accounts. Having a few good accounts will boost your credit score, but having too many will hurt it (and may also keep you tempted to spend money you don’t have).
Lower Rates/Cut a Deal
Once you’ve got your spending under control, focus on reducing your interest rates:
a) Negotiate rates – call up your credit card issuers and ask for a better rate. Explain that your plan to transfer the balances to another card unless your rates are lowered. Usually, borrowers with good credit scores can cut their rates by a few points – sometimes as much as 10%.
b) Transfer balances – consider transferring balances from cards with high interest rates to a different card. Look for offers with low introductory rates that are good for at least a full year, with relatively low rates thereafter. Read the fine print and pass up offers from cards with hidden fees or costs.
c) Shop around – do a little investigative work to find the best card offers. Check out www.cardweb.com for current offers.
Reduce Your Debt
Now it’s time to start chipping away those balances. Develop a strategy and make it happen, using the following tips:
a) Sort it out – make a list of each credit card you have, its existing balance, minimum payment and interest rate. Use any of the online calculators listed here to help you determine which card to pay off first: CNN Money Magazine at http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp or Quicken at http://www.quicken .com/planning/debt/
b) Develop a plan – pay as much money as you can on your card with the highest interest rate, while paying the minimum on the other cares. This additional payment on the high-rate card will help to pay off the principal faster.
c) Build a debt snowball – once your highest interest rate card is paid off, take the same amount you’ve been paying on that card and add it to the minimum on the card with the next highest interest rate (this is commonly referred to as “snowballing” or a debt-reduction rollover of your payments). Continue to pay the minimum on the remaining accounts, repeating the process until you are debt-free.
d) Have a back-up – keep one low-interest card put away for emergencies, but maintain a zero monthly balance at all times by paying it off when due.
Think Ahead
Now that you’re debt-free, start thinking even further ahead:
a) Invest – begin to invest the same amount of money you’ve been applying to debt every month. You’ve trained yourself to live on less by paying as much as possible toward your debt each month, now take that philosophy and use it to your advantage, reinforcing that thrift must continue in order to develop a mindset of abundance.
b) Visualize – spend a few moments each day imagining what it will feel like to be debt-free, paying cash for every purchase and looking forward to a comfortable retirement!
TIP: Call 1-888-5-OPTOUT to stop the flood of credit card offers from reaching your mailbox.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Millions of Americans set a goal for and succeed in paying off their credit card debt each year – is this one of your goals? With a little determination and a plan, you can take control of your credit, and improve your credit score in the process. Here’s how:
Cut the Cards
The first step toward reducing your credit card debt is to stop adding to it. While you don’t have to literally shred your cards, you do need to stop using them routinely. Try one (or all) of the tips below to break this habit:
a) Carry Cash – give yourself a weekly cash allowance for expenditures. You’ll be more aware of how much you actually spend; plus, once you run out of money, you’re more apt to stop spending
b) Use debit, not credit – for times when only plastic will do, use your debit card instead of a credit card.
c) Out of sight, out of mind – keep your credit cards at home and you’ll be less likely to use them.
d) Think strategically – decide on two to four credit cards with which you have a lengthy, positive history, and close any other accounts. Having a few good accounts will boost your credit score, but having too many will hurt it (and may also keep you tempted to spend money you don’t have).
Lower Rates/Cut a Deal
Once you’ve got your spending under control, focus on reducing your interest rates:
a) Negotiate rates – call up your credit card issuers and ask for a better rate. Explain that your plan to transfer the balances to another card unless your rates are lowered. Usually, borrowers with good credit scores can cut their rates by a few points – sometimes as much as 10%.
b) Transfer balances – consider transferring balances from cards with high interest rates to a different card. Look for offers with low introductory rates that are good for at least a full year, with relatively low rates thereafter. Read the fine print and pass up offers from cards with hidden fees or costs.
c) Shop around – do a little investigative work to find the best card offers. Check out www.cardweb.com for current offers.
Reduce Your Debt
Now it’s time to start chipping away those balances. Develop a strategy and make it happen, using the following tips:
a) Sort it out – make a list of each credit card you have, its existing balance, minimum payment and interest rate. Use any of the online calculators listed here to help you determine which card to pay off first: CNN Money Magazine at http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp or Quicken at http://www.quicken .com/planning/debt/
b) Develop a plan – pay as much money as you can on your card with the highest interest rate, while paying the minimum on the other cares. This additional payment on the high-rate card will help to pay off the principal faster.
c) Build a debt snowball – once your highest interest rate card is paid off, take the same amount you’ve been paying on that card and add it to the minimum on the card with the next highest interest rate (this is commonly referred to as “snowballing” or a debt-reduction rollover of your payments). Continue to pay the minimum on the remaining accounts, repeating the process until you are debt-free.
d) Have a back-up – keep one low-interest card put away for emergencies, but maintain a zero monthly balance at all times by paying it off when due.
Think Ahead
Now that you’re debt-free, start thinking even further ahead:
a) Invest – begin to invest the same amount of money you’ve been applying to debt every month. You’ve trained yourself to live on less by paying as much as possible toward your debt each month, now take that philosophy and use it to your advantage, reinforcing that thrift must continue in order to develop a mindset of abundance.
b) Visualize – spend a few moments each day imagining what it will feel like to be debt-free, paying cash for every purchase and looking forward to a comfortable retirement!
TIP: Call 1-888-5-OPTOUT to stop the flood of credit card offers from reaching your mailbox.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Tuesday, May 19, 2009
Extreme Makeover House not foreclosed yet
From the AJC
“A Clayton County couple living in an “Extreme Makeover” home delayed foreclosure Tuesday for a second time by filing for bankruptcy.
It appears Milton and Patricia Harper and their three sons will continue living for now in the 5,300-square-foot home constructed four years ago by the ABC television show that rebuilds or refurbishes homes for families in need.”
Bankruptcy, as we’ve often noted, rarely preserves homeownership, it simply delays the foreclosure
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
“A Clayton County couple living in an “Extreme Makeover” home delayed foreclosure Tuesday for a second time by filing for bankruptcy.
It appears Milton and Patricia Harper and their three sons will continue living for now in the 5,300-square-foot home constructed four years ago by the ABC television show that rebuilds or refurbishes homes for families in need.”
Bankruptcy, as we’ve often noted, rarely preserves homeownership, it simply delays the foreclosure
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Extreme Makeover House not foreclosed yet
From the AJC
“A Clayton County couple living in an “Extreme Makeover” home delayed foreclosure Tuesday for a second time by filing for bankruptcy.
It appears Milton and Patricia Harper and their three sons will continue living for now in the 5,300-square-foot home constructed four years ago by the ABC television show that rebuilds or refurbishes homes for families in need.”
Bankruptcy, as we’ve often noted, rarely preserves homeownership, it simply delays the foreclosure
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
“A Clayton County couple living in an “Extreme Makeover” home delayed foreclosure Tuesday for a second time by filing for bankruptcy.
It appears Milton and Patricia Harper and their three sons will continue living for now in the 5,300-square-foot home constructed four years ago by the ABC television show that rebuilds or refurbishes homes for families in need.”
Bankruptcy, as we’ve often noted, rarely preserves homeownership, it simply delays the foreclosure
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
How the housing crisis will be resolved
Kind of a snarky article at the NY Times about Countrywide executives being involved with the purchase of distressed loans from the government. The “bad” loans, or toxic assets as some call them are a significant part of the problem with the financial industry in the United States. There really is only one way to clear up that problem, and that’s to get rid of the assets at a price that makes sense for the purchaser, not the value most banks seem to feel the assets are worth.
The “fire sale” prices are what’s necessary to attract private capital to the product, and that private capital is certainly going to be more efficient than a government bureaucracy at turning that product into either a producing loan or selling the underlying home at it’s true current market value.
So why does the Times seem to feel it’s problematic to have major lending executives in charge? The tone seems to be the executives made money through greed on the market’s way up, and now they’re trying to make more greedy money on the way down. Who else is going to have the experience to run that kind of an operation? Reality dictates the need for experienced executives who can quickly determine which loans are salvagable and which properties need to be taken back. There aren’t years available for on-the-job training on how to do this, it’s got to be done quickly and accurately.
I never thought I’d be defending lending executives, but I think the Times has it wrong in this case.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
The “fire sale” prices are what’s necessary to attract private capital to the product, and that private capital is certainly going to be more efficient than a government bureaucracy at turning that product into either a producing loan or selling the underlying home at it’s true current market value.
So why does the Times seem to feel it’s problematic to have major lending executives in charge? The tone seems to be the executives made money through greed on the market’s way up, and now they’re trying to make more greedy money on the way down. Who else is going to have the experience to run that kind of an operation? Reality dictates the need for experienced executives who can quickly determine which loans are salvagable and which properties need to be taken back. There aren’t years available for on-the-job training on how to do this, it’s got to be done quickly and accurately.
I never thought I’d be defending lending executives, but I think the Times has it wrong in this case.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
How the housing crisis will be resolved
Kind of a snarky article at the NY Times about Countrywide executives being involved with the purchase of distressed loans from the government. The “bad” loans, or toxic assets as some call them are a significant part of the problem with the financial industry in the United States. There really is only one way to clear up that problem, and that’s to get rid of the assets at a price that makes sense for the purchaser, not the value most banks seem to feel the assets are worth.
The “fire sale” prices are what’s necessary to attract private capital to the product, and that private capital is certainly going to be more efficient than a government bureaucracy at turning that product into either a producing loan or selling the underlying home at it’s true current market value.
So why does the Times seem to feel it’s problematic to have major lending executives in charge? The tone seems to be the executives made money through greed on the market’s way up, and now they’re trying to make more greedy money on the way down. Who else is going to have the experience to run that kind of an operation? Reality dictates the need for experienced executives who can quickly determine which loans are salvagable and which properties need to be taken back. There aren’t years available for on-the-job training on how to do this, it’s got to be done quickly and accurately.
I never thought I’d be defending lending executives, but I think the Times has it wrong in this case.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
The “fire sale” prices are what’s necessary to attract private capital to the product, and that private capital is certainly going to be more efficient than a government bureaucracy at turning that product into either a producing loan or selling the underlying home at it’s true current market value.
So why does the Times seem to feel it’s problematic to have major lending executives in charge? The tone seems to be the executives made money through greed on the market’s way up, and now they’re trying to make more greedy money on the way down. Who else is going to have the experience to run that kind of an operation? Reality dictates the need for experienced executives who can quickly determine which loans are salvagable and which properties need to be taken back. There aren’t years available for on-the-job training on how to do this, it’s got to be done quickly and accurately.
I never thought I’d be defending lending executives, but I think the Times has it wrong in this case.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Bank Bulk REO Sales
I’ve seen quite a bit of email and postings about bulk bank REO sales and most of it, in my opinion, is wishful thinking and promotional rather than being based on actual portfolios available. An interesting article from the North County Times (hat tip Calculated Risk) talks about one property as part of a bulk sale:
For example, a unit of Citigroup, the troubled financial giant, sold a foreclosure in Temecula to an Arizona investment firm for $139,000 when comparable homes in the area were selling for $240,000 to $260,000.
The firm listed the home for $249,000, received multiple offers and the property has entered escrow, said Amber Schlieder, the real estate agent who handled the listing.
CR Capital was the firm that flipped the Temecula foreclosure property, an investment group based in Tucson, Ariz. Calls to CR Capital were not immediately returned.
The group typically purchases 200 to 350 foreclosures at a time from banks for $50 million to $100 million, said Schlieder, a Riverside real estate agent. Schlieder said her business has turned entirely to representing such foreclosure resales for bulk investors.
While the numbers seem rather amazing, and it doesn’t seem to make a lot of sense from the banks perspective, it doesn’t seem too out of line to me. A portfolio of 300+- foreclosed properties will have some properties with very good profit margins, some properties will be breakeven and some will be lucky to breakeven. That’s why a portfolio is sold in bulk, and at a discount to the face value of the notes/property. Cash now almost always gets a discount.
If my memory is correct, the last major downturn had distressed portfolio purchasers paying something around 65% of face value, so this really isn’t a new phenomenon.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvillevarealestate.blogspot.com/
http://www.charlottesvilleshortsale.com/
For example, a unit of Citigroup, the troubled financial giant, sold a foreclosure in Temecula to an Arizona investment firm for $139,000 when comparable homes in the area were selling for $240,000 to $260,000.
The firm listed the home for $249,000, received multiple offers and the property has entered escrow, said Amber Schlieder, the real estate agent who handled the listing.
CR Capital was the firm that flipped the Temecula foreclosure property, an investment group based in Tucson, Ariz. Calls to CR Capital were not immediately returned.
The group typically purchases 200 to 350 foreclosures at a time from banks for $50 million to $100 million, said Schlieder, a Riverside real estate agent. Schlieder said her business has turned entirely to representing such foreclosure resales for bulk investors.
While the numbers seem rather amazing, and it doesn’t seem to make a lot of sense from the banks perspective, it doesn’t seem too out of line to me. A portfolio of 300+- foreclosed properties will have some properties with very good profit margins, some properties will be breakeven and some will be lucky to breakeven. That’s why a portfolio is sold in bulk, and at a discount to the face value of the notes/property. Cash now almost always gets a discount.
If my memory is correct, the last major downturn had distressed portfolio purchasers paying something around 65% of face value, so this really isn’t a new phenomenon.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvillevarealestate.blogspot.com/
http://www.charlottesvilleshortsale.com/
Bank Bulk REO Sales
I’ve seen quite a bit of email and postings about bulk bank REO sales and most of it, in my opinion, is wishful thinking and promotional rather than being based on actual portfolios available. An interesting article from the North County Times (hat tip Calculated Risk) talks about one property as part of a bulk sale:
For example, a unit of Citigroup, the troubled financial giant, sold a foreclosure in Temecula to an Arizona investment firm for $139,000 when comparable homes in the area were selling for $240,000 to $260,000.
The firm listed the home for $249,000, received multiple offers and the property has entered escrow, said Amber Schlieder, the real estate agent who handled the listing.
CR Capital was the firm that flipped the Temecula foreclosure property, an investment group based in Tucson, Ariz. Calls to CR Capital were not immediately returned.
The group typically purchases 200 to 350 foreclosures at a time from banks for $50 million to $100 million, said Schlieder, a Riverside real estate agent. Schlieder said her business has turned entirely to representing such foreclosure resales for bulk investors.
While the numbers seem rather amazing, and it doesn’t seem to make a lot of sense from the banks perspective, it doesn’t seem too out of line to me. A portfolio of 300+- foreclosed properties will have some properties with very good profit margins, some properties will be breakeven and some will be lucky to breakeven. That’s why a portfolio is sold in bulk, and at a discount to the face value of the notes/property. Cash now almost always gets a discount.
If my memory is correct, the last major downturn had distressed portfolio purchasers paying something around 65% of face value, so this really isn’t a new phenomenon.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvillevarealestate.blogspot.com/
http://www.charlottesvilleshortsale.com/
For example, a unit of Citigroup, the troubled financial giant, sold a foreclosure in Temecula to an Arizona investment firm for $139,000 when comparable homes in the area were selling for $240,000 to $260,000.
The firm listed the home for $249,000, received multiple offers and the property has entered escrow, said Amber Schlieder, the real estate agent who handled the listing.
CR Capital was the firm that flipped the Temecula foreclosure property, an investment group based in Tucson, Ariz. Calls to CR Capital were not immediately returned.
The group typically purchases 200 to 350 foreclosures at a time from banks for $50 million to $100 million, said Schlieder, a Riverside real estate agent. Schlieder said her business has turned entirely to representing such foreclosure resales for bulk investors.
While the numbers seem rather amazing, and it doesn’t seem to make a lot of sense from the banks perspective, it doesn’t seem too out of line to me. A portfolio of 300+- foreclosed properties will have some properties with very good profit margins, some properties will be breakeven and some will be lucky to breakeven. That’s why a portfolio is sold in bulk, and at a discount to the face value of the notes/property. Cash now almost always gets a discount.
If my memory is correct, the last major downturn had distressed portfolio purchasers paying something around 65% of face value, so this really isn’t a new phenomenon.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvillevarealestate.blogspot.com/
http://www.charlottesvilleshortsale.com/
Housing Prices, Securitization and Foreclosure
Anyone who has been following the news about the Treasury and the various bank bailout problems probably has some idea that fairly large financial institutions are holding quite a bit of toxic legacy assets which are based on the home loans produced over the past few years. The Treasury and the financial institutions are saying those assets can’t be properly priced due to a lack of liquidity in the financial system. Thus we have the various forms of “bailout” providing taxpayer funds to improve liquidity in the financial sector.
Everything has a price and in a fairly balanced system buyers determine what the price will be. If a seller asks too much, the buyer won’t complete a purchase but will look for a better opportunity.
Memphis Commercial Appeal has an interesting article regarding foreclosure purchases in the Memphis, TN area and the prices at which those purchase were made. Their first example is a 5,000 square foot house that was purchased several years ago for $600,000. Last fall, a buyer purchased the property, which was in foreclosure and in need of repair, for $350,000. That’s a little over 50% of the previous sale price.
A second example is a home that had listed at $714,000 two years ago. The home was foreclosed upon and the bank sold it for $361,000. That’s also about 50% of what someone thought the value was several years ago.
Those stories, while not being conclusive evidence of a trend, will provide some basis for the belief markets will survive and thrive when values are at a level buyers find appropriate. Real estate is local in nature so there will be areas that did not see much upswing, and those areas really won’t see much downswing either. There are other places where the corrections aren’t anywhere near complete.
There is a level, though, where buyers will buy, it’s just a matter of finding the price. Which brings me back to the “legacy assets” and the Treasury/Financial company pricing concepts. Taxpayer funds aren’t going to make the securities based on home loans worth any more than the market buyers have already determined those securities are worth. Taxpayer funds can delay the sale of those securities by providing capital to the banks and taxpayer funds might take enough risk out of a transaction to allow a buyer to increase their potential offer on those securities, but taxpayer funds aren’t going to increase “legacy asset” values significantly.
Unless, of course, taxpayer funds are used to cover the losses on the values of those legacy
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Everything has a price and in a fairly balanced system buyers determine what the price will be. If a seller asks too much, the buyer won’t complete a purchase but will look for a better opportunity.
Memphis Commercial Appeal has an interesting article regarding foreclosure purchases in the Memphis, TN area and the prices at which those purchase were made. Their first example is a 5,000 square foot house that was purchased several years ago for $600,000. Last fall, a buyer purchased the property, which was in foreclosure and in need of repair, for $350,000. That’s a little over 50% of the previous sale price.
A second example is a home that had listed at $714,000 two years ago. The home was foreclosed upon and the bank sold it for $361,000. That’s also about 50% of what someone thought the value was several years ago.
Those stories, while not being conclusive evidence of a trend, will provide some basis for the belief markets will survive and thrive when values are at a level buyers find appropriate. Real estate is local in nature so there will be areas that did not see much upswing, and those areas really won’t see much downswing either. There are other places where the corrections aren’t anywhere near complete.
There is a level, though, where buyers will buy, it’s just a matter of finding the price. Which brings me back to the “legacy assets” and the Treasury/Financial company pricing concepts. Taxpayer funds aren’t going to make the securities based on home loans worth any more than the market buyers have already determined those securities are worth. Taxpayer funds can delay the sale of those securities by providing capital to the banks and taxpayer funds might take enough risk out of a transaction to allow a buyer to increase their potential offer on those securities, but taxpayer funds aren’t going to increase “legacy asset” values significantly.
Unless, of course, taxpayer funds are used to cover the losses on the values of those legacy
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Housing Prices, Securitization and Foreclosure
Anyone who has been following the news about the Treasury and the various bank bailout problems probably has some idea that fairly large financial institutions are holding quite a bit of toxic legacy assets which are based on the home loans produced over the past few years. The Treasury and the financial institutions are saying those assets can’t be properly priced due to a lack of liquidity in the financial system. Thus we have the various forms of “bailout” providing taxpayer funds to improve liquidity in the financial sector.
Everything has a price and in a fairly balanced system buyers determine what the price will be. If a seller asks too much, the buyer won’t complete a purchase but will look for a better opportunity.
Memphis Commercial Appeal has an interesting article regarding foreclosure purchases in the Memphis, TN area and the prices at which those purchase were made. Their first example is a 5,000 square foot house that was purchased several years ago for $600,000. Last fall, a buyer purchased the property, which was in foreclosure and in need of repair, for $350,000. That’s a little over 50% of the previous sale price.
A second example is a home that had listed at $714,000 two years ago. The home was foreclosed upon and the bank sold it for $361,000. That’s also about 50% of what someone thought the value was several years ago.
Those stories, while not being conclusive evidence of a trend, will provide some basis for the belief markets will survive and thrive when values are at a level buyers find appropriate. Real estate is local in nature so there will be areas that did not see much upswing, and those areas really won’t see much downswing either. There are other places where the corrections aren’t anywhere near complete.
There is a level, though, where buyers will buy, it’s just a matter of finding the price. Which brings me back to the “legacy assets” and the Treasury/Financial company pricing concepts. Taxpayer funds aren’t going to make the securities based on home loans worth any more than the market buyers have already determined those securities are worth. Taxpayer funds can delay the sale of those securities by providing capital to the banks and taxpayer funds might take enough risk out of a transaction to allow a buyer to increase their potential offer on those securities, but taxpayer funds aren’t going to increase “legacy asset” values significantly.
Unless, of course, taxpayer funds are used to cover the losses on the values of those legacy
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Everything has a price and in a fairly balanced system buyers determine what the price will be. If a seller asks too much, the buyer won’t complete a purchase but will look for a better opportunity.
Memphis Commercial Appeal has an interesting article regarding foreclosure purchases in the Memphis, TN area and the prices at which those purchase were made. Their first example is a 5,000 square foot house that was purchased several years ago for $600,000. Last fall, a buyer purchased the property, which was in foreclosure and in need of repair, for $350,000. That’s a little over 50% of the previous sale price.
A second example is a home that had listed at $714,000 two years ago. The home was foreclosed upon and the bank sold it for $361,000. That’s also about 50% of what someone thought the value was several years ago.
Those stories, while not being conclusive evidence of a trend, will provide some basis for the belief markets will survive and thrive when values are at a level buyers find appropriate. Real estate is local in nature so there will be areas that did not see much upswing, and those areas really won’t see much downswing either. There are other places where the corrections aren’t anywhere near complete.
There is a level, though, where buyers will buy, it’s just a matter of finding the price. Which brings me back to the “legacy assets” and the Treasury/Financial company pricing concepts. Taxpayer funds aren’t going to make the securities based on home loans worth any more than the market buyers have already determined those securities are worth. Taxpayer funds can delay the sale of those securities by providing capital to the banks and taxpayer funds might take enough risk out of a transaction to allow a buyer to increase their potential offer on those securities, but taxpayer funds aren’t going to increase “legacy asset” values significantly.
Unless, of course, taxpayer funds are used to cover the losses on the values of those legacy
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Wednesday, May 6, 2009
Your Mortgage is Stealing Your Future - What Banks Don't Want You to Know
Did you know that on your typical 30-year mortgage, it takes approximately 21 years just to pay down less than half of the principal of your loan?
The Mortgage industry's big secret has been kept away from the public since the Roosevelt administration. This little known secret has been taking you (and every other homeowner) for a very costly ride. Your 6% LOW INTEREST MORTGAGE IS REALLY costing you upwards of 60% or more!
You might be asking how you could possibly be paying THAT much without knowing it? It is because ALL mortgages are front end loaded, meaning you're paying off the interest first. So during all of those first years, you aren't paying down the principle. Instead, you're buying the banker a new Mercedes. Most of us realize how a mortgage works, and we are aware that we're paying off the interest first, but no one has come out and spelled out exactly what affect that has on the total interest you end up paying. This withholding of information is the biggest “little white lie” in the banking world today.
Does this scare you at all? Hopefully it makes you a bit angry as well. We have been led to believe, that this is simply the way mortgages work, and that we have no choice. After all, who has the cash to just go out and pay cash for their home? The banking industry is perfectly content with the way things are. Have you noticed that in virtually every town in the US, there seems to be a bank on every corner? Have you ever stopped to think that the banking industry is a business that earns money by using money? Your Money!
What's more of an eye opening statistic is that in just 5 years now, the bank has already made a great profit on the average mortgage. Let's look at a traditional 30 year fixed mortgage for $150,000 at 6%. Let's take a good look at what is happening here: (If you would like a visual, there are many online mortgage calculators that will allow you to print the amortization table and see these facts :) Each year, the consumer pays $10,792 but a different portion of that total gets credited to Principal and to Interest. In the first year, $8950 of the payments goes straight to the lender and the remaining $1842 gets credited back to the consumer.
Here are some other facts gleamed from this schedule: - It takes 19 years before just half the monthly payment goes to Principal, the consumer ($5482 to Principal, $5309 to Interest). - After 7 years, the consumer has paid $75,600 but only $15,541 goes to Principal. - After 10 years, over 84% of the starting balance is still owed. - After 21 years, half of the starting balance is still owed. At that point, the consumer will have paid $226,800 with only $75,000 of it going to Principal. The numbers are heavily skewed in favor of the lender because they are designed to be.
It's due to something many consumers are familiar with, front-end loaded interest. Even though the monthly payment is fixed, each payment has a different contribution to Principal than Interest, and the contribution to Interest in the first years is much greater than in the last years. The result of this system is that the lender collects their interest first, up front!
Most consumers know that the interest on mortgage loans is front-end loaded, purposely stacked against them. But we also found that those same consumers, no matter how educated, as well as mortgage industry experts, do not realize that the front-end loaded interest completely throws off the fixed interest rate schedule. Take a close look back at Year 1. The consumer pays $10,792 but only $1842 of it gets credited back to Principal. That's all?
What if he sold his house after that first year? Would it seem like he paid a 6.0% rate? Even after 10 years, the consumer pays the lender almost $108,000 but less than $25,000 of that is going back to pay off the Principal. That's not a 6.0% rate is it? The same holds true for even longer periods of time like 20 and 25 years. So if a 30-year fixed is kept for even 1 month less than 30 years, the rate consumers really wind up paying on it is higher. How much higher?
The Effective Rate Formula reveals what the actual, real interest rate would be if a front-end loaded loan was kept for less than the entire 30-year term. Holding on to that low 6.0% fixed-rate 30-year loan for 10 years results in paying an actual 43.48% interest rate. Keeping it for 7 years results in paying a staggering 68% interest rate to the lender. Keeping it for only 5 years results in the equivalent of a 102% rate. Holding it for 3 years yields an actual 182% rate and 1 year a 580% rate! The numbers prove that the 30-year fixed rate mortgage is equivalent to a giant credit card with an astronomical APR. Millions upon millions of American consumers have this credit card, this massive liability, which serves as nothing but a giant mountain standing in the way of their financial hopes and dreams. The mountain's bigger than Mount Everest yet remains invisible due to the deceptive nature of the game. And no matter how much more consumers earn at work and no matter how much their other investments return, it winds up being meaningless in the long run because that home loan, that 107% APR'd “credit card” is sucking all the wealth-building power out of them.”
Homeowners are being taken on a 30-year cab ride with the meter running. There must be a better way! It's a week night, and after a hard day's work you have plopped down on the couch to watch a little TV. You are making payments on your 30 Mortgage and the television commercials are telling you it's time again to refinance. “Consolidate that Credit Card Debt”, “Lower Your Monthly Payments…..“Refinance NOW & Save”, “It's Easy…No Closing Costs”. You've heard it all before, right?? Do you think it's possible that the banking industry wants you to refinance so that they can sell you yet another frontloaded mortgage and leaving you with a principal to pay off in another 20 – 30 (and now even 40 & 50) years?
Do you see how their game has them raking in that interest. They have the wonders of compound interest working FOR the bank, and against YOU the homeowner. So how do we beat the banks at their own game? Well I believe that United First Financial is certainly taking a step in the right direction with their Money Merge Account.
The Money Merge Account (MMA) System is a work-around solution designed to achieve an accelerated pay down of home loan mortgages in the United States, and is provided by United First Financial. It is based on the Current Account Mortgage concept based in the UK, Australia and Europe (see: http://en.wikipedia.org/wiki/The_One_account ) which results in homeowners paying less than half (on average) of the normal interest they would have paid on a normal amortization schedule. This concept has been around for over 10 years and 1/3 of all mortgages in these countries are current account mortgages. There is much misinformation about this concept among the American public... and especially by those who have not actually used the software themselves, and who do not understand the varying impacts of a closed end loan, versus an open-ended line of credit. Because this program achieves dramatic results, many are naturally skeptical.
However this concept is based on math, and once the math is understood, the concept is understood. In the US, banks make a huge amount of money off of "money float." Consumers pay 6% for a mortgage, but get 2-3% for a savings account, and usually 0-1% interest for a checking account. That money sitting in the bank results in profits for the bank (money float), but the money is not being put to work efficiently for the account holder.
A CAM - Current Account Mortgage - puts the money float to work for the customer. One of the most heavily praised (and awarded) CAM mortgages is the One Account - now owned by the Royal Bank of Scotland, but started by Richard Branson of Virgin Airline fame. The concept of the One Account / CAM is that the homeowner finances the home in an equity line of credit, deposits income into it and writes checks out of it. This puts every penny, not being spent, to work to keep the principle balance of the loan down, thus saving interest.
This is NOT exactly how the Money Merge Account works... but because the exact concept of the Current Account Mortgage cannot be achieved in the US easily, due to US banking laws, The Money Merge Account utilizes two accounts to achieve the beneficial effects of the CAM. An opened ended line of credit is used, in conjunction with the closed ended primary mortgage, and a software program makes specific calculations based on the homeowner's own financial variables.
The software that is part of the Money Merge Account is sophisticated... recalculating the variables with each new transaction recorded into the software (outgoing bills, dates and amounts paid, interest rates, income and dates received, etc.) The algorithm used for the software is designed to optimize the results of the Money Merge Account and, in effect, it learns from the client's history, thus becoming even more efficient at producing targeted results. The Money Merge account will pay off a 30 year mortgage (on average) in as little as 8 to 11 years, saving thousands in interest.
This pay down is accomplished without the homeowner changing their lifestyle, or the way they spend their money. It often has no effect on the current cash flow at all… and accomplishes the acceleration of the mortgage by simply putting the homeowner's money float to work FOR the homeowner, instead of for the bank. Results will vary from client to client based on debts rolled into equity line account, discretionary income and individual money float. All clients are given a detailed financial analysis prior to purchasing the software and the company (United First Financial) provides a MONEY BACK GUARANTEE based on the software performing as good, or better, than the Analysis.
When the Analysis shows the mortgage paid off... this also INCLUDES all debt included in the numbers. The Analysis also shows the total interest paid... which includes all interest on the Equity Line of Credit side as well. The program is about becoming debt free... not just mortgage free. For homeowners who do not keep their home or mortgage more than a few years, the Money Merge Account is simply an equity-building program. Since homes only appreciate through 2 methods... principal pay down or rising RE values. In slow market conditions, where homes are not appreciating, building equity through principle pay down is the only means of building equity at all.
This is important to know for people who financed their homes with Adjustable Rate Mortgages, or Negative Amortization mortgages. Right now, in the US there are two conditions coming together that are perilous for some homeowners... a slow real estate market in many areas (keeping real estate values flat, or even dropping in some cases), as well as a period when ARM's are about to have a rate adjustment. Experts are predicting that 1 in 4 ARM's will go into foreclosure. In any market conditions... building equity faster means homeowners have more financial stability. If the homeowners income has not risen to where they can easily handle the interest rate increases for the ARM... the equity in the home can be tapped through several means (including the MMA - Money Merge Account), OR simply having more equity means the homeowner can move into their next home even faster. Real estate investors are also finding the software tool invaluable in building a portfolio more quickly.
Faster equity building in property 1, means that the property can be leveraged to get property 2 even faster. Savvy investors and financial planners are combining the power of the MMA with their investment know-how to build wealth much faster for themselves, and their clients.
For more information about this program... ask someone who actually OWNS the software to show you their results. Have an Analysis run on YOUR numbers, attend a product education seminar or webinar. See if the MMA is right for you... and if you can qualify. This is not magic... it is math.
The truth lies in the bottom line. Knowledge is power.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
http://www.charlottesvillevarealestate.blogspot.com
The Mortgage industry's big secret has been kept away from the public since the Roosevelt administration. This little known secret has been taking you (and every other homeowner) for a very costly ride. Your 6% LOW INTEREST MORTGAGE IS REALLY costing you upwards of 60% or more!
You might be asking how you could possibly be paying THAT much without knowing it? It is because ALL mortgages are front end loaded, meaning you're paying off the interest first. So during all of those first years, you aren't paying down the principle. Instead, you're buying the banker a new Mercedes. Most of us realize how a mortgage works, and we are aware that we're paying off the interest first, but no one has come out and spelled out exactly what affect that has on the total interest you end up paying. This withholding of information is the biggest “little white lie” in the banking world today.
Does this scare you at all? Hopefully it makes you a bit angry as well. We have been led to believe, that this is simply the way mortgages work, and that we have no choice. After all, who has the cash to just go out and pay cash for their home? The banking industry is perfectly content with the way things are. Have you noticed that in virtually every town in the US, there seems to be a bank on every corner? Have you ever stopped to think that the banking industry is a business that earns money by using money? Your Money!
What's more of an eye opening statistic is that in just 5 years now, the bank has already made a great profit on the average mortgage. Let's look at a traditional 30 year fixed mortgage for $150,000 at 6%. Let's take a good look at what is happening here: (If you would like a visual, there are many online mortgage calculators that will allow you to print the amortization table and see these facts :) Each year, the consumer pays $10,792 but a different portion of that total gets credited to Principal and to Interest. In the first year, $8950 of the payments goes straight to the lender and the remaining $1842 gets credited back to the consumer.
Here are some other facts gleamed from this schedule: - It takes 19 years before just half the monthly payment goes to Principal, the consumer ($5482 to Principal, $5309 to Interest). - After 7 years, the consumer has paid $75,600 but only $15,541 goes to Principal. - After 10 years, over 84% of the starting balance is still owed. - After 21 years, half of the starting balance is still owed. At that point, the consumer will have paid $226,800 with only $75,000 of it going to Principal. The numbers are heavily skewed in favor of the lender because they are designed to be.
It's due to something many consumers are familiar with, front-end loaded interest. Even though the monthly payment is fixed, each payment has a different contribution to Principal than Interest, and the contribution to Interest in the first years is much greater than in the last years. The result of this system is that the lender collects their interest first, up front!
Most consumers know that the interest on mortgage loans is front-end loaded, purposely stacked against them. But we also found that those same consumers, no matter how educated, as well as mortgage industry experts, do not realize that the front-end loaded interest completely throws off the fixed interest rate schedule. Take a close look back at Year 1. The consumer pays $10,792 but only $1842 of it gets credited back to Principal. That's all?
What if he sold his house after that first year? Would it seem like he paid a 6.0% rate? Even after 10 years, the consumer pays the lender almost $108,000 but less than $25,000 of that is going back to pay off the Principal. That's not a 6.0% rate is it? The same holds true for even longer periods of time like 20 and 25 years. So if a 30-year fixed is kept for even 1 month less than 30 years, the rate consumers really wind up paying on it is higher. How much higher?
The Effective Rate Formula reveals what the actual, real interest rate would be if a front-end loaded loan was kept for less than the entire 30-year term. Holding on to that low 6.0% fixed-rate 30-year loan for 10 years results in paying an actual 43.48% interest rate. Keeping it for 7 years results in paying a staggering 68% interest rate to the lender. Keeping it for only 5 years results in the equivalent of a 102% rate. Holding it for 3 years yields an actual 182% rate and 1 year a 580% rate! The numbers prove that the 30-year fixed rate mortgage is equivalent to a giant credit card with an astronomical APR. Millions upon millions of American consumers have this credit card, this massive liability, which serves as nothing but a giant mountain standing in the way of their financial hopes and dreams. The mountain's bigger than Mount Everest yet remains invisible due to the deceptive nature of the game. And no matter how much more consumers earn at work and no matter how much their other investments return, it winds up being meaningless in the long run because that home loan, that 107% APR'd “credit card” is sucking all the wealth-building power out of them.”
Homeowners are being taken on a 30-year cab ride with the meter running. There must be a better way! It's a week night, and after a hard day's work you have plopped down on the couch to watch a little TV. You are making payments on your 30 Mortgage and the television commercials are telling you it's time again to refinance. “Consolidate that Credit Card Debt”, “Lower Your Monthly Payments…..“Refinance NOW & Save”, “It's Easy…No Closing Costs”. You've heard it all before, right?? Do you think it's possible that the banking industry wants you to refinance so that they can sell you yet another frontloaded mortgage and leaving you with a principal to pay off in another 20 – 30 (and now even 40 & 50) years?
Do you see how their game has them raking in that interest. They have the wonders of compound interest working FOR the bank, and against YOU the homeowner. So how do we beat the banks at their own game? Well I believe that United First Financial is certainly taking a step in the right direction with their Money Merge Account.
The Money Merge Account (MMA) System is a work-around solution designed to achieve an accelerated pay down of home loan mortgages in the United States, and is provided by United First Financial. It is based on the Current Account Mortgage concept based in the UK, Australia and Europe (see: http://en.wikipedia.org/wiki/The_One_account ) which results in homeowners paying less than half (on average) of the normal interest they would have paid on a normal amortization schedule. This concept has been around for over 10 years and 1/3 of all mortgages in these countries are current account mortgages. There is much misinformation about this concept among the American public... and especially by those who have not actually used the software themselves, and who do not understand the varying impacts of a closed end loan, versus an open-ended line of credit. Because this program achieves dramatic results, many are naturally skeptical.
However this concept is based on math, and once the math is understood, the concept is understood. In the US, banks make a huge amount of money off of "money float." Consumers pay 6% for a mortgage, but get 2-3% for a savings account, and usually 0-1% interest for a checking account. That money sitting in the bank results in profits for the bank (money float), but the money is not being put to work efficiently for the account holder.
A CAM - Current Account Mortgage - puts the money float to work for the customer. One of the most heavily praised (and awarded) CAM mortgages is the One Account - now owned by the Royal Bank of Scotland, but started by Richard Branson of Virgin Airline fame. The concept of the One Account / CAM is that the homeowner finances the home in an equity line of credit, deposits income into it and writes checks out of it. This puts every penny, not being spent, to work to keep the principle balance of the loan down, thus saving interest.
This is NOT exactly how the Money Merge Account works... but because the exact concept of the Current Account Mortgage cannot be achieved in the US easily, due to US banking laws, The Money Merge Account utilizes two accounts to achieve the beneficial effects of the CAM. An opened ended line of credit is used, in conjunction with the closed ended primary mortgage, and a software program makes specific calculations based on the homeowner's own financial variables.
The software that is part of the Money Merge Account is sophisticated... recalculating the variables with each new transaction recorded into the software (outgoing bills, dates and amounts paid, interest rates, income and dates received, etc.) The algorithm used for the software is designed to optimize the results of the Money Merge Account and, in effect, it learns from the client's history, thus becoming even more efficient at producing targeted results. The Money Merge account will pay off a 30 year mortgage (on average) in as little as 8 to 11 years, saving thousands in interest.
This pay down is accomplished without the homeowner changing their lifestyle, or the way they spend their money. It often has no effect on the current cash flow at all… and accomplishes the acceleration of the mortgage by simply putting the homeowner's money float to work FOR the homeowner, instead of for the bank. Results will vary from client to client based on debts rolled into equity line account, discretionary income and individual money float. All clients are given a detailed financial analysis prior to purchasing the software and the company (United First Financial) provides a MONEY BACK GUARANTEE based on the software performing as good, or better, than the Analysis.
When the Analysis shows the mortgage paid off... this also INCLUDES all debt included in the numbers. The Analysis also shows the total interest paid... which includes all interest on the Equity Line of Credit side as well. The program is about becoming debt free... not just mortgage free. For homeowners who do not keep their home or mortgage more than a few years, the Money Merge Account is simply an equity-building program. Since homes only appreciate through 2 methods... principal pay down or rising RE values. In slow market conditions, where homes are not appreciating, building equity through principle pay down is the only means of building equity at all.
This is important to know for people who financed their homes with Adjustable Rate Mortgages, or Negative Amortization mortgages. Right now, in the US there are two conditions coming together that are perilous for some homeowners... a slow real estate market in many areas (keeping real estate values flat, or even dropping in some cases), as well as a period when ARM's are about to have a rate adjustment. Experts are predicting that 1 in 4 ARM's will go into foreclosure. In any market conditions... building equity faster means homeowners have more financial stability. If the homeowners income has not risen to where they can easily handle the interest rate increases for the ARM... the equity in the home can be tapped through several means (including the MMA - Money Merge Account), OR simply having more equity means the homeowner can move into their next home even faster. Real estate investors are also finding the software tool invaluable in building a portfolio more quickly.
Faster equity building in property 1, means that the property can be leveraged to get property 2 even faster. Savvy investors and financial planners are combining the power of the MMA with their investment know-how to build wealth much faster for themselves, and their clients.
For more information about this program... ask someone who actually OWNS the software to show you their results. Have an Analysis run on YOUR numbers, attend a product education seminar or webinar. See if the MMA is right for you... and if you can qualify. This is not magic... it is math.
The truth lies in the bottom line. Knowledge is power.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
http://www.charlottesvillevarealestate.blogspot.com
Your Mortgage is Stealing Your Future - What Banks Don't Want You to Know
Did you know that on your typical 30-year mortgage, it takes approximately 21 years just to pay down less than half of the principal of your loan?
The Mortgage industry's big secret has been kept away from the public since the Roosevelt administration. This little known secret has been taking you (and every other homeowner) for a very costly ride. Your 6% LOW INTEREST MORTGAGE IS REALLY costing you upwards of 60% or more!
You might be asking how you could possibly be paying THAT much without knowing it? It is because ALL mortgages are front end loaded, meaning you're paying off the interest first. So during all of those first years, you aren't paying down the principle. Instead, you're buying the banker a new Mercedes. Most of us realize how a mortgage works, and we are aware that we're paying off the interest first, but no one has come out and spelled out exactly what affect that has on the total interest you end up paying. This withholding of information is the biggest “little white lie” in the banking world today.
Does this scare you at all? Hopefully it makes you a bit angry as well. We have been led to believe, that this is simply the way mortgages work, and that we have no choice. After all, who has the cash to just go out and pay cash for their home? The banking industry is perfectly content with the way things are. Have you noticed that in virtually every town in the US, there seems to be a bank on every corner? Have you ever stopped to think that the banking industry is a business that earns money by using money? Your Money!
What's more of an eye opening statistic is that in just 5 years now, the bank has already made a great profit on the average mortgage. Let's look at a traditional 30 year fixed mortgage for $150,000 at 6%. Let's take a good look at what is happening here: (If you would like a visual, there are many online mortgage calculators that will allow you to print the amortization table and see these facts :) Each year, the consumer pays $10,792 but a different portion of that total gets credited to Principal and to Interest. In the first year, $8950 of the payments goes straight to the lender and the remaining $1842 gets credited back to the consumer.
Here are some other facts gleamed from this schedule: - It takes 19 years before just half the monthly payment goes to Principal, the consumer ($5482 to Principal, $5309 to Interest). - After 7 years, the consumer has paid $75,600 but only $15,541 goes to Principal. - After 10 years, over 84% of the starting balance is still owed. - After 21 years, half of the starting balance is still owed. At that point, the consumer will have paid $226,800 with only $75,000 of it going to Principal. The numbers are heavily skewed in favor of the lender because they are designed to be.
It's due to something many consumers are familiar with, front-end loaded interest. Even though the monthly payment is fixed, each payment has a different contribution to Principal than Interest, and the contribution to Interest in the first years is much greater than in the last years. The result of this system is that the lender collects their interest first, up front!
Most consumers know that the interest on mortgage loans is front-end loaded, purposely stacked against them. But we also found that those same consumers, no matter how educated, as well as mortgage industry experts, do not realize that the front-end loaded interest completely throws off the fixed interest rate schedule. Take a close look back at Year 1. The consumer pays $10,792 but only $1842 of it gets credited back to Principal. That's all?
What if he sold his house after that first year? Would it seem like he paid a 6.0% rate? Even after 10 years, the consumer pays the lender almost $108,000 but less than $25,000 of that is going back to pay off the Principal. That's not a 6.0% rate is it? The same holds true for even longer periods of time like 20 and 25 years. So if a 30-year fixed is kept for even 1 month less than 30 years, the rate consumers really wind up paying on it is higher. How much higher?
The Effective Rate Formula reveals what the actual, real interest rate would be if a front-end loaded loan was kept for less than the entire 30-year term. Holding on to that low 6.0% fixed-rate 30-year loan for 10 years results in paying an actual 43.48% interest rate. Keeping it for 7 years results in paying a staggering 68% interest rate to the lender. Keeping it for only 5 years results in the equivalent of a 102% rate. Holding it for 3 years yields an actual 182% rate and 1 year a 580% rate! The numbers prove that the 30-year fixed rate mortgage is equivalent to a giant credit card with an astronomical APR. Millions upon millions of American consumers have this credit card, this massive liability, which serves as nothing but a giant mountain standing in the way of their financial hopes and dreams. The mountain's bigger than Mount Everest yet remains invisible due to the deceptive nature of the game. And no matter how much more consumers earn at work and no matter how much their other investments return, it winds up being meaningless in the long run because that home loan, that 107% APR'd “credit card” is sucking all the wealth-building power out of them.”
Homeowners are being taken on a 30-year cab ride with the meter running. There must be a better way! It's a week night, and after a hard day's work you have plopped down on the couch to watch a little TV. You are making payments on your 30 Mortgage and the television commercials are telling you it's time again to refinance. “Consolidate that Credit Card Debt”, “Lower Your Monthly Payments…..“Refinance NOW & Save”, “It's Easy…No Closing Costs”. You've heard it all before, right?? Do you think it's possible that the banking industry wants you to refinance so that they can sell you yet another frontloaded mortgage and leaving you with a principal to pay off in another 20 – 30 (and now even 40 & 50) years?
Do you see how their game has them raking in that interest. They have the wonders of compound interest working FOR the bank, and against YOU the homeowner. So how do we beat the banks at their own game? Well I believe that United First Financial is certainly taking a step in the right direction with their Money Merge Account.
The Money Merge Account (MMA) System is a work-around solution designed to achieve an accelerated pay down of home loan mortgages in the United States, and is provided by United First Financial. It is based on the Current Account Mortgage concept based in the UK, Australia and Europe (see: http://en.wikipedia.org/wiki/The_One_account ) which results in homeowners paying less than half (on average) of the normal interest they would have paid on a normal amortization schedule. This concept has been around for over 10 years and 1/3 of all mortgages in these countries are current account mortgages. There is much misinformation about this concept among the American public... and especially by those who have not actually used the software themselves, and who do not understand the varying impacts of a closed end loan, versus an open-ended line of credit. Because this program achieves dramatic results, many are naturally skeptical.
However this concept is based on math, and once the math is understood, the concept is understood. In the US, banks make a huge amount of money off of "money float." Consumers pay 6% for a mortgage, but get 2-3% for a savings account, and usually 0-1% interest for a checking account. That money sitting in the bank results in profits for the bank (money float), but the money is not being put to work efficiently for the account holder.
A CAM - Current Account Mortgage - puts the money float to work for the customer. One of the most heavily praised (and awarded) CAM mortgages is the One Account - now owned by the Royal Bank of Scotland, but started by Richard Branson of Virgin Airline fame. The concept of the One Account / CAM is that the homeowner finances the home in an equity line of credit, deposits income into it and writes checks out of it. This puts every penny, not being spent, to work to keep the principle balance of the loan down, thus saving interest.
This is NOT exactly how the Money Merge Account works... but because the exact concept of the Current Account Mortgage cannot be achieved in the US easily, due to US banking laws, The Money Merge Account utilizes two accounts to achieve the beneficial effects of the CAM. An opened ended line of credit is used, in conjunction with the closed ended primary mortgage, and a software program makes specific calculations based on the homeowner's own financial variables.
The software that is part of the Money Merge Account is sophisticated... recalculating the variables with each new transaction recorded into the software (outgoing bills, dates and amounts paid, interest rates, income and dates received, etc.) The algorithm used for the software is designed to optimize the results of the Money Merge Account and, in effect, it learns from the client's history, thus becoming even more efficient at producing targeted results. The Money Merge account will pay off a 30 year mortgage (on average) in as little as 8 to 11 years, saving thousands in interest.
This pay down is accomplished without the homeowner changing their lifestyle, or the way they spend their money. It often has no effect on the current cash flow at all… and accomplishes the acceleration of the mortgage by simply putting the homeowner's money float to work FOR the homeowner, instead of for the bank. Results will vary from client to client based on debts rolled into equity line account, discretionary income and individual money float. All clients are given a detailed financial analysis prior to purchasing the software and the company (United First Financial) provides a MONEY BACK GUARANTEE based on the software performing as good, or better, than the Analysis.
When the Analysis shows the mortgage paid off... this also INCLUDES all debt included in the numbers. The Analysis also shows the total interest paid... which includes all interest on the Equity Line of Credit side as well. The program is about becoming debt free... not just mortgage free. For homeowners who do not keep their home or mortgage more than a few years, the Money Merge Account is simply an equity-building program. Since homes only appreciate through 2 methods... principal pay down or rising RE values. In slow market conditions, where homes are not appreciating, building equity through principle pay down is the only means of building equity at all.
This is important to know for people who financed their homes with Adjustable Rate Mortgages, or Negative Amortization mortgages. Right now, in the US there are two conditions coming together that are perilous for some homeowners... a slow real estate market in many areas (keeping real estate values flat, or even dropping in some cases), as well as a period when ARM's are about to have a rate adjustment. Experts are predicting that 1 in 4 ARM's will go into foreclosure. In any market conditions... building equity faster means homeowners have more financial stability. If the homeowners income has not risen to where they can easily handle the interest rate increases for the ARM... the equity in the home can be tapped through several means (including the MMA - Money Merge Account), OR simply having more equity means the homeowner can move into their next home even faster. Real estate investors are also finding the software tool invaluable in building a portfolio more quickly.
Faster equity building in property 1, means that the property can be leveraged to get property 2 even faster. Savvy investors and financial planners are combining the power of the MMA with their investment know-how to build wealth much faster for themselves, and their clients.
For more information about this program... ask someone who actually OWNS the software to show you their results. Have an Analysis run on YOUR numbers, attend a product education seminar or webinar. See if the MMA is right for you... and if you can qualify. This is not magic... it is math.
The truth lies in the bottom line. Knowledge is power.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
http://www.charlottesvillevarealestate.blogspot.com
The Mortgage industry's big secret has been kept away from the public since the Roosevelt administration. This little known secret has been taking you (and every other homeowner) for a very costly ride. Your 6% LOW INTEREST MORTGAGE IS REALLY costing you upwards of 60% or more!
You might be asking how you could possibly be paying THAT much without knowing it? It is because ALL mortgages are front end loaded, meaning you're paying off the interest first. So during all of those first years, you aren't paying down the principle. Instead, you're buying the banker a new Mercedes. Most of us realize how a mortgage works, and we are aware that we're paying off the interest first, but no one has come out and spelled out exactly what affect that has on the total interest you end up paying. This withholding of information is the biggest “little white lie” in the banking world today.
Does this scare you at all? Hopefully it makes you a bit angry as well. We have been led to believe, that this is simply the way mortgages work, and that we have no choice. After all, who has the cash to just go out and pay cash for their home? The banking industry is perfectly content with the way things are. Have you noticed that in virtually every town in the US, there seems to be a bank on every corner? Have you ever stopped to think that the banking industry is a business that earns money by using money? Your Money!
What's more of an eye opening statistic is that in just 5 years now, the bank has already made a great profit on the average mortgage. Let's look at a traditional 30 year fixed mortgage for $150,000 at 6%. Let's take a good look at what is happening here: (If you would like a visual, there are many online mortgage calculators that will allow you to print the amortization table and see these facts :) Each year, the consumer pays $10,792 but a different portion of that total gets credited to Principal and to Interest. In the first year, $8950 of the payments goes straight to the lender and the remaining $1842 gets credited back to the consumer.
Here are some other facts gleamed from this schedule: - It takes 19 years before just half the monthly payment goes to Principal, the consumer ($5482 to Principal, $5309 to Interest). - After 7 years, the consumer has paid $75,600 but only $15,541 goes to Principal. - After 10 years, over 84% of the starting balance is still owed. - After 21 years, half of the starting balance is still owed. At that point, the consumer will have paid $226,800 with only $75,000 of it going to Principal. The numbers are heavily skewed in favor of the lender because they are designed to be.
It's due to something many consumers are familiar with, front-end loaded interest. Even though the monthly payment is fixed, each payment has a different contribution to Principal than Interest, and the contribution to Interest in the first years is much greater than in the last years. The result of this system is that the lender collects their interest first, up front!
Most consumers know that the interest on mortgage loans is front-end loaded, purposely stacked against them. But we also found that those same consumers, no matter how educated, as well as mortgage industry experts, do not realize that the front-end loaded interest completely throws off the fixed interest rate schedule. Take a close look back at Year 1. The consumer pays $10,792 but only $1842 of it gets credited back to Principal. That's all?
What if he sold his house after that first year? Would it seem like he paid a 6.0% rate? Even after 10 years, the consumer pays the lender almost $108,000 but less than $25,000 of that is going back to pay off the Principal. That's not a 6.0% rate is it? The same holds true for even longer periods of time like 20 and 25 years. So if a 30-year fixed is kept for even 1 month less than 30 years, the rate consumers really wind up paying on it is higher. How much higher?
The Effective Rate Formula reveals what the actual, real interest rate would be if a front-end loaded loan was kept for less than the entire 30-year term. Holding on to that low 6.0% fixed-rate 30-year loan for 10 years results in paying an actual 43.48% interest rate. Keeping it for 7 years results in paying a staggering 68% interest rate to the lender. Keeping it for only 5 years results in the equivalent of a 102% rate. Holding it for 3 years yields an actual 182% rate and 1 year a 580% rate! The numbers prove that the 30-year fixed rate mortgage is equivalent to a giant credit card with an astronomical APR. Millions upon millions of American consumers have this credit card, this massive liability, which serves as nothing but a giant mountain standing in the way of their financial hopes and dreams. The mountain's bigger than Mount Everest yet remains invisible due to the deceptive nature of the game. And no matter how much more consumers earn at work and no matter how much their other investments return, it winds up being meaningless in the long run because that home loan, that 107% APR'd “credit card” is sucking all the wealth-building power out of them.”
Homeowners are being taken on a 30-year cab ride with the meter running. There must be a better way! It's a week night, and after a hard day's work you have plopped down on the couch to watch a little TV. You are making payments on your 30 Mortgage and the television commercials are telling you it's time again to refinance. “Consolidate that Credit Card Debt”, “Lower Your Monthly Payments…..“Refinance NOW & Save”, “It's Easy…No Closing Costs”. You've heard it all before, right?? Do you think it's possible that the banking industry wants you to refinance so that they can sell you yet another frontloaded mortgage and leaving you with a principal to pay off in another 20 – 30 (and now even 40 & 50) years?
Do you see how their game has them raking in that interest. They have the wonders of compound interest working FOR the bank, and against YOU the homeowner. So how do we beat the banks at their own game? Well I believe that United First Financial is certainly taking a step in the right direction with their Money Merge Account.
The Money Merge Account (MMA) System is a work-around solution designed to achieve an accelerated pay down of home loan mortgages in the United States, and is provided by United First Financial. It is based on the Current Account Mortgage concept based in the UK, Australia and Europe (see: http://en.wikipedia.org/wiki/The_One_account ) which results in homeowners paying less than half (on average) of the normal interest they would have paid on a normal amortization schedule. This concept has been around for over 10 years and 1/3 of all mortgages in these countries are current account mortgages. There is much misinformation about this concept among the American public... and especially by those who have not actually used the software themselves, and who do not understand the varying impacts of a closed end loan, versus an open-ended line of credit. Because this program achieves dramatic results, many are naturally skeptical.
However this concept is based on math, and once the math is understood, the concept is understood. In the US, banks make a huge amount of money off of "money float." Consumers pay 6% for a mortgage, but get 2-3% for a savings account, and usually 0-1% interest for a checking account. That money sitting in the bank results in profits for the bank (money float), but the money is not being put to work efficiently for the account holder.
A CAM - Current Account Mortgage - puts the money float to work for the customer. One of the most heavily praised (and awarded) CAM mortgages is the One Account - now owned by the Royal Bank of Scotland, but started by Richard Branson of Virgin Airline fame. The concept of the One Account / CAM is that the homeowner finances the home in an equity line of credit, deposits income into it and writes checks out of it. This puts every penny, not being spent, to work to keep the principle balance of the loan down, thus saving interest.
This is NOT exactly how the Money Merge Account works... but because the exact concept of the Current Account Mortgage cannot be achieved in the US easily, due to US banking laws, The Money Merge Account utilizes two accounts to achieve the beneficial effects of the CAM. An opened ended line of credit is used, in conjunction with the closed ended primary mortgage, and a software program makes specific calculations based on the homeowner's own financial variables.
The software that is part of the Money Merge Account is sophisticated... recalculating the variables with each new transaction recorded into the software (outgoing bills, dates and amounts paid, interest rates, income and dates received, etc.) The algorithm used for the software is designed to optimize the results of the Money Merge Account and, in effect, it learns from the client's history, thus becoming even more efficient at producing targeted results. The Money Merge account will pay off a 30 year mortgage (on average) in as little as 8 to 11 years, saving thousands in interest.
This pay down is accomplished without the homeowner changing their lifestyle, or the way they spend their money. It often has no effect on the current cash flow at all… and accomplishes the acceleration of the mortgage by simply putting the homeowner's money float to work FOR the homeowner, instead of for the bank. Results will vary from client to client based on debts rolled into equity line account, discretionary income and individual money float. All clients are given a detailed financial analysis prior to purchasing the software and the company (United First Financial) provides a MONEY BACK GUARANTEE based on the software performing as good, or better, than the Analysis.
When the Analysis shows the mortgage paid off... this also INCLUDES all debt included in the numbers. The Analysis also shows the total interest paid... which includes all interest on the Equity Line of Credit side as well. The program is about becoming debt free... not just mortgage free. For homeowners who do not keep their home or mortgage more than a few years, the Money Merge Account is simply an equity-building program. Since homes only appreciate through 2 methods... principal pay down or rising RE values. In slow market conditions, where homes are not appreciating, building equity through principle pay down is the only means of building equity at all.
This is important to know for people who financed their homes with Adjustable Rate Mortgages, or Negative Amortization mortgages. Right now, in the US there are two conditions coming together that are perilous for some homeowners... a slow real estate market in many areas (keeping real estate values flat, or even dropping in some cases), as well as a period when ARM's are about to have a rate adjustment. Experts are predicting that 1 in 4 ARM's will go into foreclosure. In any market conditions... building equity faster means homeowners have more financial stability. If the homeowners income has not risen to where they can easily handle the interest rate increases for the ARM... the equity in the home can be tapped through several means (including the MMA - Money Merge Account), OR simply having more equity means the homeowner can move into their next home even faster. Real estate investors are also finding the software tool invaluable in building a portfolio more quickly.
Faster equity building in property 1, means that the property can be leveraged to get property 2 even faster. Savvy investors and financial planners are combining the power of the MMA with their investment know-how to build wealth much faster for themselves, and their clients.
For more information about this program... ask someone who actually OWNS the software to show you their results. Have an Analysis run on YOUR numbers, attend a product education seminar or webinar. See if the MMA is right for you... and if you can qualify. This is not magic... it is math.
The truth lies in the bottom line. Knowledge is power.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
http://www.charlottesvillevarealestate.blogspot.com
US Foreclosures Up 24 Percent In 1st Quarter 2009
The number of American households threatened with losing their homes grew 24 percent in the first three months of this year and is poised to rise further as major lenders restart foreclosures after a temporary break, according to data released Thursday, April 16th, 2009.
The big unknown for the coming months, however, is President Barack Obama's plan to help up to 9 million borrowers avoid foreclosure through refinanced mortgages or modified loans. The Obama administration expects its plans to make a big dent in the foreclosure crisis. But it remains to be seen whether the lending industry will fully embrace it, despite $75 billion in incentive payments.
The faltering economy is causing the housing crisis to spread. Nationwide, nearly 804,000 homes received at least one foreclosure-related notice from January through March, up from about 650,000 in the same time period a year earlier, according to RealtyTrac Inc., a foreclosure listing firm. During the quarter, Ohio was the state with the seventh highest number of homes seeing foreclosure activity with about 31,600 receiving at least one filing, up 1 percent from a year earlier.
In March, more than 340,000 properties were affected nationwide, up 17 percent from February and 46 percent from a year earlier. Ohio had 12,600 homes receiving foreclosure notices during the month, 12 percent more than during March 2008. Foreclosures "came back with a vengeance" last month and are likely to keep rising. Nearly 191,000 properties completed the foreclosure process and were repossessed by banks in the quarter. While the number was down 13 percent from the fourth quarter of last year, it is expected to rise through the summer and then possibly taper off.
Fannie Mae and Freddie Mac, the big mortgage finance companies, together with many banks had temporarily halted foreclosures in advance of Obama's plan. Now armed with the details about which borrowers can qualify, the mortgage industry has begun foreclosing on ineligible borrowers. The Treasury Department has signed contracts with six big loan servicing companies — including Citgroup, Wells Fargo and JPMorgan Chase. Many have already started processing loans as part of the government's "Making Home Affordable" plan.
In the coming months, there are still likely to be increased foreclosures, especially from vacant houses, second homes and those owned by speculators. None of those properties will qualify for a loan modification. However, overall foreclosures could start to decrease this summer. But even industry executives who emphatically support the plan emphasize that its success isn't guaranteed. Plus, the lending industry has been swamped by the unprecedented wave of calls from distressed borrowers.
In RealtyTrac's report, Nevada, Arizona, California and Florida had the nation's top foreclosure rates. In Nevada, one in every 27 homes received a foreclosure filing, while the number was one in every 54 in Arizona. Rounding out the top 10 were Illinois, Michigan, Georgia, Idaho, Utah and Oregon.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
The big unknown for the coming months, however, is President Barack Obama's plan to help up to 9 million borrowers avoid foreclosure through refinanced mortgages or modified loans. The Obama administration expects its plans to make a big dent in the foreclosure crisis. But it remains to be seen whether the lending industry will fully embrace it, despite $75 billion in incentive payments.
The faltering economy is causing the housing crisis to spread. Nationwide, nearly 804,000 homes received at least one foreclosure-related notice from January through March, up from about 650,000 in the same time period a year earlier, according to RealtyTrac Inc., a foreclosure listing firm. During the quarter, Ohio was the state with the seventh highest number of homes seeing foreclosure activity with about 31,600 receiving at least one filing, up 1 percent from a year earlier.
In March, more than 340,000 properties were affected nationwide, up 17 percent from February and 46 percent from a year earlier. Ohio had 12,600 homes receiving foreclosure notices during the month, 12 percent more than during March 2008. Foreclosures "came back with a vengeance" last month and are likely to keep rising. Nearly 191,000 properties completed the foreclosure process and were repossessed by banks in the quarter. While the number was down 13 percent from the fourth quarter of last year, it is expected to rise through the summer and then possibly taper off.
Fannie Mae and Freddie Mac, the big mortgage finance companies, together with many banks had temporarily halted foreclosures in advance of Obama's plan. Now armed with the details about which borrowers can qualify, the mortgage industry has begun foreclosing on ineligible borrowers. The Treasury Department has signed contracts with six big loan servicing companies — including Citgroup, Wells Fargo and JPMorgan Chase. Many have already started processing loans as part of the government's "Making Home Affordable" plan.
In the coming months, there are still likely to be increased foreclosures, especially from vacant houses, second homes and those owned by speculators. None of those properties will qualify for a loan modification. However, overall foreclosures could start to decrease this summer. But even industry executives who emphatically support the plan emphasize that its success isn't guaranteed. Plus, the lending industry has been swamped by the unprecedented wave of calls from distressed borrowers.
In RealtyTrac's report, Nevada, Arizona, California and Florida had the nation's top foreclosure rates. In Nevada, one in every 27 homes received a foreclosure filing, while the number was one in every 54 in Arizona. Rounding out the top 10 were Illinois, Michigan, Georgia, Idaho, Utah and Oregon.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
US Foreclosures Up 24 Percent In 1st Quarter 2009
The number of American households threatened with losing their homes grew 24 percent in the first three months of this year and is poised to rise further as major lenders restart foreclosures after a temporary break, according to data released Thursday, April 16th, 2009.
The big unknown for the coming months, however, is President Barack Obama's plan to help up to 9 million borrowers avoid foreclosure through refinanced mortgages or modified loans. The Obama administration expects its plans to make a big dent in the foreclosure crisis. But it remains to be seen whether the lending industry will fully embrace it, despite $75 billion in incentive payments.
The faltering economy is causing the housing crisis to spread. Nationwide, nearly 804,000 homes received at least one foreclosure-related notice from January through March, up from about 650,000 in the same time period a year earlier, according to RealtyTrac Inc., a foreclosure listing firm. During the quarter, Ohio was the state with the seventh highest number of homes seeing foreclosure activity with about 31,600 receiving at least one filing, up 1 percent from a year earlier.
In March, more than 340,000 properties were affected nationwide, up 17 percent from February and 46 percent from a year earlier. Ohio had 12,600 homes receiving foreclosure notices during the month, 12 percent more than during March 2008. Foreclosures "came back with a vengeance" last month and are likely to keep rising. Nearly 191,000 properties completed the foreclosure process and were repossessed by banks in the quarter. While the number was down 13 percent from the fourth quarter of last year, it is expected to rise through the summer and then possibly taper off.
Fannie Mae and Freddie Mac, the big mortgage finance companies, together with many banks had temporarily halted foreclosures in advance of Obama's plan. Now armed with the details about which borrowers can qualify, the mortgage industry has begun foreclosing on ineligible borrowers. The Treasury Department has signed contracts with six big loan servicing companies — including Citgroup, Wells Fargo and JPMorgan Chase. Many have already started processing loans as part of the government's "Making Home Affordable" plan.
In the coming months, there are still likely to be increased foreclosures, especially from vacant houses, second homes and those owned by speculators. None of those properties will qualify for a loan modification. However, overall foreclosures could start to decrease this summer. But even industry executives who emphatically support the plan emphasize that its success isn't guaranteed. Plus, the lending industry has been swamped by the unprecedented wave of calls from distressed borrowers.
In RealtyTrac's report, Nevada, Arizona, California and Florida had the nation's top foreclosure rates. In Nevada, one in every 27 homes received a foreclosure filing, while the number was one in every 54 in Arizona. Rounding out the top 10 were Illinois, Michigan, Georgia, Idaho, Utah and Oregon.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
The big unknown for the coming months, however, is President Barack Obama's plan to help up to 9 million borrowers avoid foreclosure through refinanced mortgages or modified loans. The Obama administration expects its plans to make a big dent in the foreclosure crisis. But it remains to be seen whether the lending industry will fully embrace it, despite $75 billion in incentive payments.
The faltering economy is causing the housing crisis to spread. Nationwide, nearly 804,000 homes received at least one foreclosure-related notice from January through March, up from about 650,000 in the same time period a year earlier, according to RealtyTrac Inc., a foreclosure listing firm. During the quarter, Ohio was the state with the seventh highest number of homes seeing foreclosure activity with about 31,600 receiving at least one filing, up 1 percent from a year earlier.
In March, more than 340,000 properties were affected nationwide, up 17 percent from February and 46 percent from a year earlier. Ohio had 12,600 homes receiving foreclosure notices during the month, 12 percent more than during March 2008. Foreclosures "came back with a vengeance" last month and are likely to keep rising. Nearly 191,000 properties completed the foreclosure process and were repossessed by banks in the quarter. While the number was down 13 percent from the fourth quarter of last year, it is expected to rise through the summer and then possibly taper off.
Fannie Mae and Freddie Mac, the big mortgage finance companies, together with many banks had temporarily halted foreclosures in advance of Obama's plan. Now armed with the details about which borrowers can qualify, the mortgage industry has begun foreclosing on ineligible borrowers. The Treasury Department has signed contracts with six big loan servicing companies — including Citgroup, Wells Fargo and JPMorgan Chase. Many have already started processing loans as part of the government's "Making Home Affordable" plan.
In the coming months, there are still likely to be increased foreclosures, especially from vacant houses, second homes and those owned by speculators. None of those properties will qualify for a loan modification. However, overall foreclosures could start to decrease this summer. But even industry executives who emphatically support the plan emphasize that its success isn't guaranteed. Plus, the lending industry has been swamped by the unprecedented wave of calls from distressed borrowers.
In RealtyTrac's report, Nevada, Arizona, California and Florida had the nation's top foreclosure rates. In Nevada, one in every 27 homes received a foreclosure filing, while the number was one in every 54 in Arizona. Rounding out the top 10 were Illinois, Michigan, Georgia, Idaho, Utah and Oregon.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
No Bankruptcy Help For Homeowners
The Obama administration lost a bid to add a powerful weapon in its fight against foreclosure on Thursday, April 30th, 2009 after the Senate voted down a proposal to allow bankruptcy judges to modify mortgages. The defeat left many housing advocates questioning the effectiveness of the president's loan modification plan. The so-called cramdown provision, which would allow judges to reduce mortgage principal, would have put pressure on servicers to modify loans before borrowers file for bankruptcy.
The financial industry lobbied hard against the bill, arguing that letting judges change mortgage contracts would add instability to the market and raise interest rates. Senate Republicans and some moderate Democrats were concerned about the bill's impact and about the growing resentment among homeowners in good standing.
The bill was defeated by a 51-45 vote. The House had passed similar legislation last month.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
The financial industry lobbied hard against the bill, arguing that letting judges change mortgage contracts would add instability to the market and raise interest rates. Senate Republicans and some moderate Democrats were concerned about the bill's impact and about the growing resentment among homeowners in good standing.
The bill was defeated by a 51-45 vote. The House had passed similar legislation last month.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
No Bankruptcy Help For Homeowners
The Obama administration lost a bid to add a powerful weapon in its fight against foreclosure on Thursday, April 30th, 2009 after the Senate voted down a proposal to allow bankruptcy judges to modify mortgages. The defeat left many housing advocates questioning the effectiveness of the president's loan modification plan. The so-called cramdown provision, which would allow judges to reduce mortgage principal, would have put pressure on servicers to modify loans before borrowers file for bankruptcy.
The financial industry lobbied hard against the bill, arguing that letting judges change mortgage contracts would add instability to the market and raise interest rates. Senate Republicans and some moderate Democrats were concerned about the bill's impact and about the growing resentment among homeowners in good standing.
The bill was defeated by a 51-45 vote. The House had passed similar legislation last month.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
The financial industry lobbied hard against the bill, arguing that letting judges change mortgage contracts would add instability to the market and raise interest rates. Senate Republicans and some moderate Democrats were concerned about the bill's impact and about the growing resentment among homeowners in good standing.
The bill was defeated by a 51-45 vote. The House had passed similar legislation last month.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
Foreclosure Filings In Record Jump
Lenders continued to rewrite troubled mortgages at a fast clip during March, 2009 but the weakening economy still sent foreclosure starts soaring to a record high.
Repayment plans merely postpone payments for delinquent borrowers without making them any more affordable. Mortgage modifications are changes in the terms of loans that reduce or freeze interest rates, extend the life of the loan, reduce loan balances or any combination of those three, to, ideally, lower the amount borrowers pay monthly. Modifications are considered more effective that repayment plans. The lending industry is steadily working out solutions for homeowners and keeping as many as possible in their homes. We expect that these numbers will continue to increase as servicers work with the Obama Administration to implement its Homeowner Affordability and Stability Plan.
Despite the efforts, however, more homeowners fell into default in March. Servicers initiated foreclosure proceedings against 290,000 mortgage borrowers, a jump of nearly 20% from February's 243,000, and the highest monthly total since the coalition began tracking data in mid-2007. Starts have risen by more than a third since January.
On the other hand, completed foreclosure sales, transactions in which lenders have actually taken back homes from defaulting borrowers, dropped by 39% in March. Banks repossessed only 53,000 homes compared with 87,000 taken over during February.
Since the mortgage meltdown hit in July 2007, 1,447,866 homes have been lost to foreclosure. It is too early to say this is a trend. But anecdotal reports from servicers do indicate that they are taking this extra step to help homeowners who qualify stay in their homes. Once the program is fully in place, servicers will have more tools to be able to make successful modifications to unaffordable mortgages. In the meantime, they're allowing a kind of grace period for homeowners until the government program can be applied to individual cases.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
Repayment plans merely postpone payments for delinquent borrowers without making them any more affordable. Mortgage modifications are changes in the terms of loans that reduce or freeze interest rates, extend the life of the loan, reduce loan balances or any combination of those three, to, ideally, lower the amount borrowers pay monthly. Modifications are considered more effective that repayment plans. The lending industry is steadily working out solutions for homeowners and keeping as many as possible in their homes. We expect that these numbers will continue to increase as servicers work with the Obama Administration to implement its Homeowner Affordability and Stability Plan.
Despite the efforts, however, more homeowners fell into default in March. Servicers initiated foreclosure proceedings against 290,000 mortgage borrowers, a jump of nearly 20% from February's 243,000, and the highest monthly total since the coalition began tracking data in mid-2007. Starts have risen by more than a third since January.
On the other hand, completed foreclosure sales, transactions in which lenders have actually taken back homes from defaulting borrowers, dropped by 39% in March. Banks repossessed only 53,000 homes compared with 87,000 taken over during February.
Since the mortgage meltdown hit in July 2007, 1,447,866 homes have been lost to foreclosure. It is too early to say this is a trend. But anecdotal reports from servicers do indicate that they are taking this extra step to help homeowners who qualify stay in their homes. Once the program is fully in place, servicers will have more tools to be able to make successful modifications to unaffordable mortgages. In the meantime, they're allowing a kind of grace period for homeowners until the government program can be applied to individual cases.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
Foreclosure Filings In Record Jump
Lenders continued to rewrite troubled mortgages at a fast clip during March, 2009 but the weakening economy still sent foreclosure starts soaring to a record high.
Repayment plans merely postpone payments for delinquent borrowers without making them any more affordable. Mortgage modifications are changes in the terms of loans that reduce or freeze interest rates, extend the life of the loan, reduce loan balances or any combination of those three, to, ideally, lower the amount borrowers pay monthly. Modifications are considered more effective that repayment plans. The lending industry is steadily working out solutions for homeowners and keeping as many as possible in their homes. We expect that these numbers will continue to increase as servicers work with the Obama Administration to implement its Homeowner Affordability and Stability Plan.
Despite the efforts, however, more homeowners fell into default in March. Servicers initiated foreclosure proceedings against 290,000 mortgage borrowers, a jump of nearly 20% from February's 243,000, and the highest monthly total since the coalition began tracking data in mid-2007. Starts have risen by more than a third since January.
On the other hand, completed foreclosure sales, transactions in which lenders have actually taken back homes from defaulting borrowers, dropped by 39% in March. Banks repossessed only 53,000 homes compared with 87,000 taken over during February.
Since the mortgage meltdown hit in July 2007, 1,447,866 homes have been lost to foreclosure. It is too early to say this is a trend. But anecdotal reports from servicers do indicate that they are taking this extra step to help homeowners who qualify stay in their homes. Once the program is fully in place, servicers will have more tools to be able to make successful modifications to unaffordable mortgages. In the meantime, they're allowing a kind of grace period for homeowners until the government program can be applied to individual cases.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
Repayment plans merely postpone payments for delinquent borrowers without making them any more affordable. Mortgage modifications are changes in the terms of loans that reduce or freeze interest rates, extend the life of the loan, reduce loan balances or any combination of those three, to, ideally, lower the amount borrowers pay monthly. Modifications are considered more effective that repayment plans. The lending industry is steadily working out solutions for homeowners and keeping as many as possible in their homes. We expect that these numbers will continue to increase as servicers work with the Obama Administration to implement its Homeowner Affordability and Stability Plan.
Despite the efforts, however, more homeowners fell into default in March. Servicers initiated foreclosure proceedings against 290,000 mortgage borrowers, a jump of nearly 20% from February's 243,000, and the highest monthly total since the coalition began tracking data in mid-2007. Starts have risen by more than a third since January.
On the other hand, completed foreclosure sales, transactions in which lenders have actually taken back homes from defaulting borrowers, dropped by 39% in March. Banks repossessed only 53,000 homes compared with 87,000 taken over during February.
Since the mortgage meltdown hit in July 2007, 1,447,866 homes have been lost to foreclosure. It is too early to say this is a trend. But anecdotal reports from servicers do indicate that they are taking this extra step to help homeowners who qualify stay in their homes. Once the program is fully in place, servicers will have more tools to be able to make successful modifications to unaffordable mortgages. In the meantime, they're allowing a kind of grace period for homeowners until the government program can be applied to individual cases.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
http://www.charlottesvilleshortsale.com
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