Helen Oliveri

The U.S. Treasury is poised to announce a finalized plan to expand mortgage relief efforts to include short sales.

A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance.

It's a strategy to avoid foreclosure, but banks have been more likely to let a home go into foreclosure, rather than short sell it, even if it means holding the property during moratoriums set by some jurisdictions.

That's because short sale bids often come in well below the last appraisal, real estate agents don't want the extra work involved and buyers fear a four-to-five month transaction period that could end in a no-deal scenario.

To help move more distressed properties through the clogged pipeline, the Treasury, under the Making Home Affordable's Home Affordable Modification Program (HAMP) is expected to announce a $1,500 closing cost incentive for those who agree to short sales or deed-in-lieu deals (the deed is transferred to the lender, avoiding the more costly foreclosure proceeding).

The Treasury will also pay the lender $1,000 for accepting a short sale or deed-in-lieu deal.

Earlier this year when the plan was first announced, there was also a provision to pay second lien holders up to $1,000 to relinquish their claim in such transactions.

Thus far, Refinancing Fannie Mae or Freddie Mac mortgages under the Home Affordable Refinance Program (HARP) and HAMP mortgage modifications have been the "go-to" foreclosure options among federal mortgage relief programs.

Some 260,000 homeowners have refinanced under the HARP program since January, according to the Federal Housing Finance Agency.

FHFA also said during the second quarter this year there were 11,700 short sales and 202,200 trial loan modifications under government programs.

B. Perkins

There are few things more basic to a homeowners association than the fees it takes to keep the place running. When one or more owners default in the payment of fees, the impact is felt by all. And the longer the delinquency, the deeper the cut. It is a situation that many boards dread because of having to deal with neighbors. Here are a number of ways to reduce the impact of, cure or avoid collection problems in your community:

Establish a collection policy with teeth. While this sounds simple enough, many HOAs have nothing more in place than the often inadequate provisions of the governing documents. The collection policy needs to be clear and concise. Some of the basic provisions should include:

1. Date the fee is due

2. Date it's late

3. Penalty for late payments

4. How late payments will be applied to outstanding balances

5. Legal procedures that may be invoked after a certain period or level of delinquency is reached

6. Who pays collection costs

7. Lien filing rights on an owner's property if payment is not received and,

8. Foreclosure provisions.

The goal of the well written collection policy is to move the HOA's bill to the top of the payment pile. As with any policy enacted by the board:

Apply the policy consistently. Once the policy is agreed upon, do not deviate from it. While there are great excuses still to be heard, the board has a fiduciary duty to protect the HOA's rights. If one owner doesn't pay, other owners have to ante up the difference or services will need to be curtailed. The board must absolutely avoid selective enforcement due to a friend's, family member's or a personal default.

Apply the policy in its entirety. The typical collection policy is made up of a series of sequential events that are triggered by time and/or dollar amount. Once put into motion, allow it to run its course. This typically ends in placing a lien on a member's property. Garnishing wages, seizing property and foreclosure are possible but usually not invoked unless the case is extreme.

Use an attorney well versed in legal collection procedures. While attorneys should not be the first line of defense, the procedure should include them once the size or age of the balance due reaches a certain proportions. Liens and foreclosures are an attorney's domain. The impact of an attorney letter alone may be sufficient to turn the collection tide.

Hire a property manager. Collections and rules enforcement are the main reasons folks don't want to serve on the board. A manager doesn't live there and for them, collections are business as usual. If your HOA is experiencing greater than normal collection problems, this may be the best step to getting collections back in line.

Let's face it, collections are an unpleasant but necessary part of homeowners association living. Rather than reacting or overreacting, prepare for them with a strong yet fair policy. If the members know the will of the board, most won't tempt the process.

R. Thompson

The sad truth is that your home might be infested with termites and it may be years before visible signs of damage alert you.

Since these wood-eating social insects look like "white ants" to the untrained eye, termites have been confused with ants by those who do not understand the biology. Different species of termites have different habits, but they all relentlessly ingest more than their weight in wood—your wood—without leaving easily-detectable damage. (Here's a start on the biology: http://en.wikipedia.org/wiki/Termites)

Termites can cause significant structural damage to a property. Since Canadian homes are commonly wood-frame structures with brick or siding veneer, few properties are completely immune. Termites infestations are expensive:

* The cost of repairing structural damage caused by wood-devouring termites, coupled with the cost of "termite-proofing" the property by removing all wood-soil interfaces, wood piles and some types of landscaping, make termite attacks expensive, but the cost does not stop there.

* Current treatment for infestation requires chemical poisoning of the soil to dissuade termites from entering the home. This interior and exterior treatment of the soil under the house can involve thousands of dollars for the initial soil poisoning and may require follow-up treatments if spot attacks occur in the future.

* Property value may also be affected if proof of eradication and prevention are not provided to prospective buyers. In some cases, a stigma may remain.

The Location Factor The real estate value mantra of "location, location, location" also applies to termite invasions. The location of a property relative to its distance from existing infestations may be considered a value factor, particularly if the municipality involved does little or nothing to stop or at least slow the spread of these relentless wood-eating insects.

In a recent email, Dr. Timothy Myles, Canada's leading termite control research scientist and, currently, Termite Control Officer for the City of Guelph, Ontario, shared observations of termite management problems across the country, including:

* In Alberta, localized infestations were reported in Medicine Hat and as far north as Edmonton, but the details and status of spreading are unknown.

* In southern British Columbia, a native species is infesting Vancouver Island, the lower mainland and inland river valleys, including the Okanagan River basin. Improved control methods will help, but the existence of native populations place eradication out of reach.

* No conclusive reports from Manitoba, but a Winnipeg infestation detected in cursory sampling in 1991 has probably spread.

* In Ontario, the non-native subterranean species, which was first sighted 70 years ago on Point Pelee and in the City of Toronto, has "spread from these points of entry and continue to spread at an accelerated pace, now threatening almost all urban areas of southern Ontario."

With no natural predators and little or no municipal termite control activity, there is nothing to halt or slow the steady migration of subterranean termites. Although this species does not seem to create new colonies through a flying stage, termite migration is dramatically escalated by human intervention. What wood have you moved lately?

Decades ago, a wide-scale Ontario initiative launched by Toronto and involving many other cities and the provincial funding established termite control bylaws to slow the spread and to offer financial relief for affected property owners. This program ran for 20 years, until it fell victim to funding cuts a few years ago, leaving property owners to fend for themselves.

"We should go back in time to the point where [governments] realized that this is a huge problem—that this is probably equivalent to all the fire damage in all the municipalities across the province and it is just getting worse," said Myles, who is internationally recognized as a leading researcher on termite control and management. "It is preposterous that the government—both municipalities and the province, the [Ontario Ministry of the Environment]—got out of it. A lot more could be done for homeowners because, when they get [termites], they say, 'What do I do and what help is there?' The answer is, 'There is no help. Look in the phone book under exterminator.' That's it. There is absolutely nothing by the federal government, the province or cities any more."

Termite Truths

* These termites do not have recognizable nests or a central queen. This guerilla-like nature makes termites hard for individual property owners to control. Concerted efforts by municipalities can make a difference. In Guelph, termite infestations have been mapped to locate infected areas which are managed to achieve containment and reduction.

* When you first see a termite shelter tube, the insects have probably been in your house for at least a couple of years, if not longer. Regular investigation of basement areas and removal of clutter inside and out can reduce termite-friendly environments and aid early detection.

* Wood-soil contact outside and foundation cracks are two entry opportunities for termites, but termite-contaminated wood and furniture can also give termites access to your home.

* In the United States, there are a number of chemical treatments, but in Canada only one neurotoxin is available.

* Chemical treatment does poison the soil around the house and under the foundation, but it does not poison termites or disadvantage neighbours, according to Myles: "Isolate the ones in the house, which will then dry out, and the ones in the yard will just go away. When you say 'go away,' a lot of people say, 'Oh, you're chasing them to the neighbour's house, but that whole concept of chasing them to the neighbour's house I don't agree with. [Termites] are already at the neighbour's house and in extensive soil tunnelling throughout the entire block. You are not chasing them you're just saying, 'Instead of feeding on this house today, go back to the rest of the extensive tunnel system you've got on the whole block.' It is never going to be an isolated thing; it is going to be whole contiguous parts of neighbourhoods that have them."

Myles divides termite areas into two types based on treatment approaches:

1. Infested areas too large for area-wide management programs like British Columbia, Ontario's Essex County and Toronto where better control products will provide licensed pest control experts with improved tools.

2. Infested areas where area-wide management programs can contain, suppress and eradicate termites. These areas include Alberta, Winnipeg, GTA suburbs and southern Ontario towns including Guelph, Innisfil, Oshawa, Oakville and Mississauga. Guelph alone provides assistance and coordinates the needs of individual property owners with the community goal of eradication.

How can the human spread of termites be stopped?

* Have you moved firewood, a dog house or other wooden objects to or from your property? What garage sale goodies also transported termites to your home—it only takes a few in an infected piece of wood.

* Garden clubs and community groups can take special care that plants like rose bushes do not contain termites and educate homeowners in the process.

* Ratepayer groups can use the need for community-wide termite control as a local rallying cry to raise support and bring property owners together to fight a common enemy.

* New home construction includes some precautions against termite invasion, but above-code remedies like metal and sand barriers are required for extra protection.

* Rouse local politicians to champion this cause which threatens our homes and affordability.

Myles insists: "It is just insane not to do area-wide management because this [infestation] will just spread and engulf the city if we don't nip it in the bud. There are 20 municipalities that are in the position of nipping it in the bud...it makes more sense to be where we could actually eradicate them."

Myles continues to research control alternatives. Currently, his trap-treat-release program shows promise if he can find funding to continue the 20-year search for practical control alternatives to the current chemical solution.

"This is huge—this is people's homes and everybody is paying property taxes and what are they getting for that?" said Myles. "Well, 20% of all your property taxes are going to fire departments…and there should be just as many little termite labs…If you are a buyer, the main thing is you must be aware that this is a big problem that can impact the value of your property."

The take-home message is simple, according to Myles:

* Don't feed the termites, and

* Don't move the termites, and

* Don't sell a termite-infested house.

PJ Wade

The San Diego housing market is once again hot! Selling quickly and at above listed prices are the bank-owned foreclosure properties, both detached homes and condominiums. Alan Greenspan's term "irrational exuberance" is once again characteristic of the San Diego home buyer's behavior. Any property description using "bank-owned," "lender repossession," "foreclosure sale," etc., is drawing a crowd to see the property. If the property is in decent condition, there will be offers and multiple offers, at that.

Sounds like déjà-vu? Not quite. Adding my observation to the above facts, a number of lenders have hit on a marketing ploy to create a buying frenzy which guarantees an almost instant sale. In the majority of cases the offer(s) exceed what may have been realistically expected if the property was marketed the traditional way.

Here are some actual examples of this technique for San Diego home sales.

Example 1: On 4-8-09, a bank owned home in east Carlsbad was listed at $499,900. Based on the location, age and size of the home, I estimated the current value at $575,000 to just over $600,000. Within one day of the listing, the listing agent had multiple offers. According to the agent, the lender required it to be on the market one week before they would look at any offers. The agent speculated that based on the number of inquires, she would have 40 to 50 offers in the one week period. This home sold for $597,000. The sales price was almost 20% over the listed price. Doesn't a sale of $97,100 over the listed price suggest that it was listed way under the market?

Example 2: A bank-owned Little Italy one bedroom condominium was listed in March for $234,900. The estimated fair current value for this condo was approximately $275,000 to $280,000. The listing agent stated that within 3 hours of the MLS listing being submitted, he had an offer. Again, the lender would not look at any offer until the condo was on the market one week. This San Diego property generated 21 offers within the 1st. week, of these, 11 were at or above the $234,900, listed price. This Little Italy condo sold at $295,600, or $60,700, approximately 26% above the listed price! I was told the accepted price was $15,000 above the next highest offer.

Example 3: A San Carlos planned-unit-development, bank-owned 4 bedroom was listed at $344,900. The estimated fair value for this condo was approximately $410,000 to $425,000. Inside of one week, this San Carlos property had an accepted offer at $410,000. This was approximately 19%, or $65,100, above the listed price! Banks are purposely under listing property with the strategy of creating a buying frenzy to result not only in a very quick sale, but, a sale at or above the fair market value. Is this practice fair or even legal? It is on both counts. If the bank does not list it properly, they could end up with a sale way below the current fair market value.

On the other hand, it isn't fair to neophyte buyers/agents. Buyers and/or their agent who do not recognize the ploy, may be wasting quite a bit of time writing offers that in some cases, will not even be considered or countered. Also, what about shattered expectations? A number of buyers/agents may honestly believe that their full price offer has a chance of being accepted. In reality, they not only have zero chance of getting their offer accepted, but in the majority of cases, they will not even get a counter-offer.

This is not the time for buyers to be represented by neophyte agents. Bargains are available and buyers can position themselves to be one of the lucky ones by selecting an experienced agent familiar with the areas in which they are interested. A good agent will have reasonable advice about structuring offers and which properties are worth the work and wait. Follow that advice!

B Schwartz

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.92 percent with an average 0.7 point for the week ending October 15, 2009, up from last week when it averaged 4.87 percent. Last year at this time, the 30-year FRM averaged 6.46 percent.

The 15-year FRM this week averaged 4.37 percent with an average 0.7 point, up from last week when it averaged 4.33 percent. A year ago at this time, the 15-year FRM averaged 6.14 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.38 percent this week, with an average 0.6 point, up from last week when it averaged 4.35 percent. A year ago, the 5-year ARM averaged 6.14 percent.

The one-year Treasury-indexed ARM averaged 4.60 percent this week with an average 0.5 point, up from last week when it averaged 4.53 percent. At this time last year, the 1-year ARM averaged 5.16 percent.

"Mortgage rates rose slightly over the week, but rates on 30-year fixed mortgages remained below 5 percent for the third consecutive week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Homeowners are taking advantage of these low rates to refinance their current balances. Over the past five weeks ending October 9, more than three out of five mortgage applications were for refinancing, according the Mortgage Bankers Association."

"The outlook on economic growth in the second half of this year has improved over the past few months. At it's September 22-23 monetary policy meetings, the Federal Reserve increased its forecast for real GDP growth from the last meeting in mid-August. They noted that data from the housing sector indicated that a gradual recovery in activity was under way. The modest strengthening came about, in part, to improvements in housing affordability stemming from low interest rates for conforming loans and a lower level of house prices."