Jerry LaRose, ABR, GRI, e-PRO, CLHMS Orlando, Windermere FL. Real Estate

Recently came across this information thought some of you might find it interesting.

The Senate Banking Committee has just passed the Federal Housing Finance Regulatory Reform Act of 2008 by an overwhelming and bipartisan vote of 19-2.

Buried in the proposed legislation is something new and revolutionary, an effort to stop mortgage walk-aways.

Walk-aways arise when a borrower can no longer make monthly mortgage payments or sell the property. Rather than wait for foreclosure, the borrower simply sends the keys back to the lender. This is not a minor matter. Fitch Ratings reports that "the apparent willingness of borrowers to 'walk away' from mortgage debt has contributed to extraordinarily high levels of early default, which is particularly noticeable in the 2007 vintage mortgages."

Unfortunately, sending back the keys is not the same thing as giving up title. The lender must get the public records changed, a process made both difficult and expensive when a borrower cannot be found.

Worse, while property ownership is in limbo the home can be damaged by weather, vandals and squatters.

The Senate legislation addresses the walk away issue by saying that before borrowers can get FHA financing they must certify that they have not intentionally defaulted on any debt, not just their current mortgage. Lying about this issue can be considered perjury, and perjury can result in a jail sentence.

No less important, if a homeowner has walked away from an FHA loan, then the borrower would have to repay the government for any loss on the property -- potentially tens of thousands of dollars. In the same way that we should hold lenders to certain standards, borrowers also have an obligation to meet certain requirements. Sending back the keys -- creating so-called "jingle mail" -- is not fair and it's not right. The Senate committee has the correct idea: Walking away from a mortgage should not be a free pass to new financing, especially financing insured by the federal government.

Sellers, pay attention to lowball offers

If home's been on market awhile, it's time to rethink your strategy

Selling a home can be an emotional experience because most sellers have a lot more than money invested in their homes. So, it's understandable that sellers might be reluctant to respond to an offer that is for less than the asking price.

Most sellers have a difficult time being objective about their homes. But, detachment is something sellers should strive for, particularly when the market favors buyers. To be a successful seller in a buyer's market, you need to be able to put yourself in the buyer's shoes. Ask yourself if you were a buyer if you would pay the price you would like to ask for your home.

In a soft market, like we are currently experiencing in many parts of the country, buyers are prone to make a low offer on any listing that doesn't receive offers from more than one buyer. The exception is when a listing is priced so competitively that a buyer recognizes a good deal and buys the property before others have a chance.

Some sellers might be inclined to inflate their asking price so that they will have room to bargain with a buyer. This is a risky strategy for serious sellers. In a buyers' market where there are a lot of homes for sale, the best listings at the best prices sell.

The listings that don't sell usually need price reductions to get them to a marketable range. If the market is trending downwards, this could mean selling for a lower price than might have been possible if the listing had been priced competitively to begin with.

HOUSE HUNTING TIP: Sellers whose homes are not competitively priced are prime targets for low offers. Even if your home is not badly priced, you could receive a lower-than-asking-price offer if market conditions are uncertain. Rather than being insulted by a low offer, sellers should view it as the beginning of a dialogue that could result in a sale.

Pay close attention to the buyer's financial capability. Gone are the days where buyers could buy a home with little or no cash down, and without verifiable income. Today's buyers are subjected to far more financial scrutiny by lenders than they were a year ago.

Ideally, buyers should be preapproved for the financing they need before they make an offer. If they are not, make sure there is a clause in the purchase contract that requires the buyers to apply for financing within a several days of acceptance.

Find out what kind of financing the buyers are applying for and which lender they intend to use. Some mortgage lenders recently failed to fund buyers' loans at the last minute. Make sure your buyers receive underwriting approval from a bona fide lender. The number of days for lender approval should also be included in the contract.

Sellers who receive an offer that is unacceptable regarding any of its terms and conditions -- not just the price -- should have their agent draft a counteroffer. Buyers and sellers often don't know in advance what price they'll accept until they're in the midst of a negotiation.

For example, a seller who bought another home before selling might accept a lower price if his house has been on the market awhile and the buyer's offer is not contingent on the sale of another property, and if the transaction will close quickly. Likewise, a buyer could agree to pay more than he thought he would if interest rates were to drop.

THE CLOSING: The counteroffer process can happen quickly or it can be long and tedious. Be prepared to explore all options before letting a negotiation fail.

Deciding how much house you can afford

Before you start house hunting, you need to determine how much house you can afford, which will entail getting either prequalified or preapproved for a home loan. A real estate agent can help you find a mortgage broker to begin the process. While getting preapproved is a more in-depth process, a preapproval letter lets both real estate agents and sellers know that you're a serious shopper who means business.

What do I do to get prequalified?

A prequalification can be done online or over the phone and does not require your submitting financial documents. You will be asked to provide basic information about your finances - for instance, your household income versus your debt load. With this information, the lender will estimate what your maximum loan amount could be if you were to apply.

What about getting preapproved?

A preapproval is more involved and a real estate agent can help you prepare your documentation. The lender will perform an extensive review of your finances, requiring pay stubs, tax records, credit accounts, bank statements and more. This figure will not only be a more reliable estimate of what you can afford, but your preapproval also indicates that a lender is willing to do business with you, pending the purchase price, market appraisal and the underwriting process.

What should I ask when shopping for a lender?

Your real estate agent should have a mortgage broker they are willing to put you in contact with - this lender will be someone they have done business with in the past, and feel comfortable recommending. However, if you decide to do a little comparison shopping and look for a lender on your own, here are a few important questions to ask.

1. What loan programs do you offer and which one do you think is best for me?
2. How long will the loan approval process take?
3. What line items of the loan agreement - if any - are negotiable?
4. What is your policy for locking in interest rates, and will you honor a lower rate if it declines during the lock-in period?
5. Are there fees for prepaying on my loan?

I just don't understand the course we're on.

Since when is it OK to just walk away from your responsibilities when things don't work out the way you wanted them to? Many people treated their homes like a day-trade on the stock market. Now that their ‘gamble' isn't working out, they seek government bailouts (not unlike their lenders and mortgage companies at my expense as a taxpayer) or the ability to just walk off into the sunset to live a carefree stress-free life. What about all the people that WERE responsible, who didn't wipe out every penny of their equity, who didn't run out buying three and four condos, who lived within their means? Why is it now our responsibility to bail these clowns out? It's just not right.

I find myself having a hard time feeling sorry for all these people, especially when Washington wants to tap my tax dollars to bail all these irresponsible people out of their irresponsible decisions. And I'm not falling for all the whining. "Oh, I didn't KNOW what was happening ... Oh, I had NO idea my loan was adjustable ... Oh, I didn't know housing prices would EVER go down..." Are you kidding me? Please spare me the melodramatics.

The marching masses of consumer zombies need to wake up and smell the toast burning, which just might be the two brain-cells they have left to rub together. You can't just live buying everything you want, the minute you want it, and spend more money than you earn. Many people now live like indentured slaves. They owe more than they will ever be able to payoff in a lifetime. Hopefully, they learned their lesson and will encourage others not to make the same mistakes they made.

I don't know how this is all going to end, but I can tell you it won't be pretty, and it will be a very long time until this whole mess is straightened out. You should forego your "now's the time to buy" campaign in lieu of a re-education program that explains to people what they can and can't afford on their salary - not some pie in the sky delusion on a suicide-loan with the hopes that the real estate market is going to take-off again at any moment. You're perpetuating an already bad situation.

Owning a home is NOT a given ‘right,' it's a ‘privilege' - one that has to be earned and that includes responsibilities. That's the message you need to be sending.

The nation's foreclosure hemorrhage slowed a bit last month, according to Foreclosures.com. Lenders repossessed 74,570 homes following foreclosure in April, down more than 5 percent from March. April pre-foreclosures dropped 7.52 percent from March too, according to California-based Foreclosures.com foreclosure information specialists.

"The sky isn't falling, and the bottom of the housing market is in sight," says Alexis McGee, president of Foreclosures.com.

Foreclosures.com says its analysis is based on the number of formal notices filed against a property during the foreclosure process. That can include notice of default, notice of foreclosure auction, and trustee's deeds/REOs (real estate owned by lender through foreclosure).

In the 1st quarter of the year, 2.8 of every 1,000 households ended up back in lenders' hands, up from 2.7 in 4th quarter 2007 (213,927 1st quarter filings vs. 197,736 in 4th quarter 2007). Quarter over quarter, 17 states actually had fewer REO filings in April.

"That's the good news. The bad news is that still 3.8 of every 1,000 households nationwide (288,497 REO filings) have been lost to foreclosure so far this year," "Another 696,925 pre-foreclosure filings - 9.4 of every 1,000 households - have been recorded year-to-date with 179,046 filings in April.

"The numbers tell us the economy isn't dead," "U.S. gross domestic product was not negative as many had speculated and grew 0.6 percent in the first quarter. Combine that with positive moves by government and industry - including the still-evolving FHA reform and tax credits, along with federal tax rebates - are making a difference. The S&P 500, after dropping nearly 19 percent Oct. 9 to March 9, has since rebounded 11 percent. New jobless claims were lower than expected, and even Treasury Secretary Henry Paulson is upbeat, predicting a pick-up in growth later this year."


REO filings YTD

· Florida, 24,764 (4 per 1,000)

Pre-foreclosure filings by household YTD

• Florida, 25.6 per 1,000 (162,316 filings, leading the nation in total number of filings)