Michael Mergell

Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

It was coming in from all sides yesterday ...... by air, by land, by sea, by attachment. I ended up with some 14 separate "documents", all pertaining to the HASP in one way or another. Executive Summaries, Fact Sheets, Remarks, Guidelines, Case Studies, Details, Elements, Blogs, Examples, Scripts, Job Aids ...... all of it good stuff. Sent out on a day when the stock market didn't tank, to boot!

The HASP -- huh? The Homeowner Affordability and Stabilization Plan is one part of the ARRA (American Recovery and Stabilization Act), which President Obama signed into law on February 17th. HASP is just one of many "initiatives" the ARRA covers -- and it's the one that is of the greatest interest to us. Why? Because it is here to solve the housing crisis. It is here to stem the spread of foreclosures and falling home values. It is here to keep responsible homeowners in their homes. Basically, we have three HASP initiatives to look at:

1) The Home Affordable Refinance -- A refi program for solid homeowner's who have an existing mortgage with Fannie Mae (FNMA) or Freddie Mac (FHLMC). The property must be owner-occupied, must be a conforming loan ($417,000 and up to $729,750 in certain areas), must have an LTV no greater than 105% of the current value of the home -- yes, you read that right, 105%. The whole reason for this initiative is to make it so that some homeowner's who are current on their payments (now and historically) can take advantage of today's low interest rates and/or to refi into a fixed rate (30 or 15 year) mortgage. While those folks have been ready, willing and able -- they've not been able to move forward because of their LTV ..... many owe more on their home than what the home is valued at these days. And while some borrower's fall into an LTV bracket we allow (80-95% on some programs in some areas), getting the necessary mortgage insurance is a "whole 'nuther story". So they're sunk -- correction ..... they WERE sunk. NOW, if they fit the bill as mentioned above and their value isn't TOO far into the tank, they will be able to refi WITH THE LENDER WHO CURRENTLY SERVICES THE SUBJECT FANNIE OR FREDDIE MORTGAGE. Let's look at a current $300K mortgage balance ..... on a property that is now worth $286K -- can we refi? Yes ($300K / $286K = 104.9%); however, there would be NO room to roll in any cc's, pp's, or extra payoff costs. Let's look at a current $147K balance on a $152K value -- can we refi? Yes ($147K / $152K = 96.7%); and there is room to roll in costs. Lastly, let's look at a current $224K balance on a $190K value -- can we refi? No ($224K / $190K = 117.9%), because this LTV is over the 105% max. Wondering where our current soft market policy fits into all this? Me too, but I am assuming that there IS no fit ..... because all bets will be off relative to soft vs non-soft markets. (The reason FOR this initiative is to address property refi's in those very "soft market" areas.) Wondering where mortgage insurance fits into all this? Me too, but I am assuming that there will be either 1) no "new" MI at all (for those loans that are refi'ing and that did not carry MI to begin with), or 2) the existing MI on the current loan will carry over (with the gov't working out some kind of arrangement with the MICO regarding coverage). This type of detail is what is being hammered out, as we speak. This types of detail is why we can't let 'er rip immediately to the public.
2) The Home Affordable Modification -- A mod program for homeowner's who are struggling to afford their mortgage payments because of the recession -- yet can't sell their home because of fallen/falling prices. Look at this as a shared partnership between the homeowner, the lender and the Government ..... because all three participate in this mod effort. I'm not going to go into the detail on this one -- waayyyyyy too much to present here. But, nutshell: For owner occ borrower's only (max LA of $729,750 conf); the borrower does not have to be behind already, but must demonstrate imminent risk of default. The lender first gets the DTI down to 38%; then the government (Treasury) gets the DTI further down, to 31%. How? By a combination of lowered interest rates, increased loan terms (ex: a 40-year term), possible forebearance of principal at no interest, or lender foregiveness of principal. The government has made it attractive to lenders, servicers, and even borrowers via varied "incentives" to participate. A much lower monthly payment will keep many IN their homes. When modification doesn't work, Treasury is incenting to take alternatives to foreclosure -- like short sales or deeds in lieu. (By doing so, there is a reduction in vacancy, neighborhood decline, and overall costs for lenders and borrowers.)
3) Support of lower rates by strengthening confidence in Fannie and Freddie -- which will create forward confidence, funds, and special programs (such as support to State HFA's). The "beefing up" of the GSE's ...... for our future.
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HASP = Homeowner Affordability and Stabilization Plan
ARRA = American Recovery and Reinvestment Act (2009)
EESA = Emergency Economic Stabilization Act
HERA = Housing and Economic Recovery Act (July 30, 2008)
TARP = Troubled Assets Relief Program
TALF = Term Asset-Backed Securities Loan Facility
FSP = Financial Stability Plan
I'm sure there is more new to come.

Michael Mergell www.MichaelMergell.com michaelmergell@remax.net

I did that fun thing again today where I call the IRS & wait on hold for an hour while their music drives me insane. Of course, I did it for all of you & your clients, so you can send a thank you card to my office address any time :)
I asked two scenario questions today:
1. Married Couple, but Hubby is a first time buyer. Wife is not, but she is NOT going to be on the loan or title to the new home. Can hubby claim the tax credit (thinking he may have to file "seperately" and only get half the credit, but hey, its something, right?). I was told that whether they file jointly or seperately, it does not matter. He cannot claim the credit at all. "If they are married, BOTH must qualify for the credit for either to take advantage of it."
2. Married Couple ("Mr. & Mrs. Youngcouple"), but need Dad (a NON-first time buyer) to co-sign. Dad will be on the loan & title with Mr. & Mrs. Youngcouple. Now...Dad will not be filing taxes with Mr. & Mrs. Youngcouple; he is only on title/mortgage to the real estate that is their first home. Can Mr. & Mrs. Youngcouple claim the FTHB Tax Credit? Answer: "That's a great question. We don't know. We will research it & call you back within 15-days. If you don't get a call back within 15-days, please call with your message number."

Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

Many people make the assumption that since they have less than perfect credit, they are barred form owning their own home. They are under the impression that no one will trust them with a mortgage; while this may have once been the case, the rules have loosened up somewhat in the last several years. Rather than eschewing providing mortgages to people with a poor credit rating as they were traditionally prone to doing, banks and other mortgage providers have instead come up with mortgage products which are great for people with bad credit. These bad credit mortgage loans can help families who otherwise would be unable to buy a home.loan, however.

You could have ended up with a bad credit rating for any number of reasons. You may have overextended yourself financially with a credit card, had emergency medical expenses which you were unable to repay or a variety of other reasons. However it happened, you can still qualify for bad credit mortgage loans. There are some very important differences between these bad credit mortgage loans and an ordinary mortgage

Most noticeable is the difference in interest rate between a traditional mortgage loan and bad credit mortgage loans. While persons who have a good credit history can get loans with an interest rate ranging between 5-7%, your interest rate will be significantly higher if your credit history is a poor one. The bank does this as a way of protecting themselves from the risk of default. You should shop around to find the lowest possible interest rate. This can take a while, but will pay for itself in the savings you will see.

You should be mindful of the down payment percentage when shopping around for bad credit mortgage loans. This is a small percentage of the total payment, usually around 5% - this may be higher with some bad credit mortgage loans however - this is something else to keep in mind as you look around.

The monthly mortgage payments can be rather high with these loans. You can reduce this by choosing a 30 year mortgage rather than a15 year one. For example, if you buy a home which costs $150,000, you will pay about $800 per month on a 15 year mortgage, as opposed to a little over $400 on a 30 year mortgage. This amount, it should be noted, does not include interest.

MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET

Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

Are you thinking about investing in real estate? It can be a great way to make money. Some of the world's richest people-Donald Trump and Suleiman al-Fahim, for example-made their fortunes in real estate. Real estate is a great way to generate passive income. If you have enough passive income streams, you can quit your job and live off the residual income from your investment properties! It is worth bearing in mind, however, that like anything with huge potential payoffs, real estate investment is risky. There are no guarantees in the world of real estate investment, but if you learn good business principles and sound real estate investment strategies, you can dramatically increase your odds of succeeding in the difficult yet rewarding world of real estate investment.

Don't have a lot of money? Credit score so-so? No savings to speak of? Don't give up on learning real estate investment strategies; you can still get in on the game and in on the profits, and you just might improve your credit score in the process. There are ways to approach real estate investment that don't require a lot of money for the initial investment. The one thing you cannot do without when you approach learning real estate investment is knowledge. It's vey important to acquire a broad knowledge of real estate investment strategies, so that as you progress in your real estate career you can adapt to your circumstances and the fluctuations of the economy and the real estate market.

There are many different possible strategies to real estate investment. For example, you could choose to pursue foreclosure opportunities. Investing in foreclosures can be an incredibly lucrative experience. To master this real estate investment strategy, you have to know the various distressed property types, as well as the laws regarding them in each state, so that you can evaluate these potentially lucrative opportunities.

Foreclosure opportunities are far from the only possible type real estate investment opportunity, however. There are lease options, rent to own options, real estate flipping opportunities, real estate control strategies, government sponsored programs, For Sale By Owner (FSBO) options and a host of other real estate investing strategies for you to learn and master. As a beginner it's important that you understand all of these options and then narrow it down to a real estate investing strategy that best suits your needs.

The best way to master these investment strategies is by receiving the best possible training from knowledgeable, successful real estate investors.

Reading is great, but it will not be enough. You need first hand feedback from real live experts. You may consider taking a class, this can be an option especially for beginners. However, the best way to learn these strategies is to have an expert, successful real estate investor as your coach or mentor. Once you learn strategies, you will have to implement them if you hope to make money, and you will be likely to ramp up faster if you have a coach who gives you feedback on the fly.

MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET

Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

With house prices continuing to fall and a recession looming here we look at your property, not merely bricks and mortar but your property being your home for you and your family.

Buying a property is likely to be the largest investment you will make and your largest asset. If you bought at the peak of house prices in 2007 then you may be despairing at the almost daily reports of house price falls, repossessions on the rise and the likelihood of negative equity. If you are thinking of selling and moving on, it is likely that you may choose to delay putting your house on the market and instead, choose to get more satisfaction from your current property. It may be helpful to take a step back and look at your property in terms of how to make it your unique home for you and your family.

What makes a house a home? Owning a property gives you the freedom to make your house into the home that you want it to be. A home is so much more than just property - it can support you in what you want to do and provide the space that your family needs. A home can increase your sense of well-being and happiness. Let's look at how to change your property into your perfect home.

Firsly, arrange your home to match your priorities.

An upstairs room would generally be a bedroom but you could furnish it to make into an office or study. You could use it to work from home or help you study the course you've always wanted to do. You can decorate your new study accordingly without any need to confer with a landlord or wait for any approval to install new phone lines. You have the freedom to make it into what you want it to be.

A bathroom need not only be functional but also can be a place to relax and indulge in luxury. A new bath, shower, dimming lights and decor to meet your moods can be added to match your style and taste. Or simply, upgrade your bathroom by decorating it - it doesn't take an expensive refit to lift your property to the status of Home.

A loft can be converted into another room, sometimes with an extra shower room, or even two rooms. You may also be interested in extending your house. It could be more cost-effective to convert or extend rather than move. You can prioritise your use of space according to your own interests. If you have a separate dining room you could make this into a playroom for your children. Or you could use it as your own hobby room or a music or movie room. And in doing so, you can add your own specific detail and requirements that will increase your attachment to your home.

Secondly, maximise the outside space to create your own oasis. Again, let the garden mirror your interests and priorities. Consider and make a choice. For example, you could have a safe play area for children, a neat wood pile for a cosy fire, a space for your bikes or motorbikes, a space for animals, a small or large plot for vegetable growing, for flowers, or simply a patio with pots for easy living.

If you have plans to sell in the future then make the most of your property now. By making your property your home, you will enjoy your time more and as a bonus you are likely to increase it's value and make it more appealing to would-be buyers in the future.

MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET