Peter Middleton

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If your income slumped along with the economy, you've got plenty of company these days. So much so that the government has a program meant to help you out by cutting your mortgage payments to 31 percent of your gross income. But it turns out that qualifying for this benefit will probably take some fancy footwork, a sympathetic partner and a little luck. Here are some pointers for navigating the terrain.

Get to know the program
The program in question is the Obama administration's $75 billion Making Home Affordable program.

It applies to mortgages held by Fannie Mae and Freddie Mac, the two giant mortgage holders that the government took control of a year ago. Under the government's auspices, Fannie and Freddie are now cutting interest rates on mortgages they own to as little as 2 percent, with the aim of lowing payments to no more than 31 percent of a homeowner's gross income.

How do you know if Fannie or Freddie own your mortgage? The simplest way is to visit each of the lender's Web sites and type in the information requested about you and your residence. Remember: The giant home financing organizations buy loans that were originated by commercial banks and own a significant portion the nation's entire home loan assets. That means you may have taken out your mortgage through Bank of America, Wells Fargo or another private lender, and they may still be servicing your account, while ownership has actually been transferred to Fannie or Freddie (if not, you're out of luck).

If you do have a Fannie or Freddie loan, then figure out what portion of your gross monthly income your housing payment consumes. In this case, your "housing payment" means not only your mortgage costs but your PITI (principal, interest, taxes and insurance). Since you first took out your mortgage, it may have zoomed way up as a percentage of your household income, either because you and your spouse's income has fallen or because the adjustable rate of interest on the loan has ratcheted up. In either case, you should consider applying.

Navigating the process
Even when Fannie and Freddie own loans, they don't handle homeowner paperwork themselves. Instead, they rely on banks to service their loans and to decide who qualifies for the Making Home Affordable program. The banks have been both stingy about granting approvals and overwhelmed by the sheer volume of applications.

The key to receiving a modification seems to be convincing the bank that you're in its modification "sweet spot." That means you're in dire enough financial straits to need help but not so deeply in trouble as to be hopeless. After all, the point of the program is to modify loans in a way that borrowers will be able to keep up.

Disqualifiers
What might disqualify you? Savings, for one thing. We spoke with nearly a dozen homeowners who applied for modifications. Several were turned down because of their hefty savings accounts.

On the other hand, if you have no savings and no job or income, you'll likely be turned down for a modification too. The program requires that applicants show proof of current income and that the income is likely to continue for at least nine months. Since in most cases unemployment benefits are part of a six-month program, they're unlikely to qualify you.

Other variables that can influence the odds of getting approved include your other debts (credit cards and car loans) and fixed costs. Once again, banks are looking for modifications that borrowers can live with. If you're seeking to have your housing payment cut to 31 percent of your income but are spending another 60 percent on private school tuition and health club memberships, the bank is unlikely to be convinced that you're a viable candidate.

Showing just enough distress
It isn't pretty, but to go to the top of the list in your bank's loan modification department, it might help to miss a mortgage payment or two. "It feels terrible to say it, but go delinquent," says Ron Morgan, chief executive of Sterling Home Retention Services. Morgan's firm specializes in home-loan workouts, and many banks are outsourcing their problem loans to firms like his.

If you need help with the application process, it's probably available. The U.S. Department of Housing and Urban Development has a network of debt counselors, many available to work with you free of charge.

Tools on the Internet may also help you improve your chances at getting a modification. The owner of Homeowner's Toolbox is a former California mortgage broker who says he has consulted with the banks he used to source loans for and has a sense of each bank's modification "sweet spot." Homeowner's Toolbox is free to users and claims to estimate the probability that a homeowner will be approved for a modification.

The last thing you want to do is make your financial problems worse. That means avoiding any for-profit outfit that "promises" to get you a modification or that insists on a large payment upfront.

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Posted on September 30, 2009 13:56:40 by Middleton and Associates Posted in About Us, About Us, San Diego Coastal Neighborhoods, North Pacific Beach, Pacific Beach, Mission Beach, Crown Point, La Jolla Farms, La Jolla Shores, Beach Barber Tract, Hermosa, La Jolla Village, Bird Rock

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Tips to Organize your Home

Keeping your home organized can be a tough thing to do, especially when you are not the only one living in the home. Everyone focuses on spring cleaning, but many more people find the motivation in the fall. Any time of the year is a good time to organize a cluttered house. One of the best ways to organize clutter is to use the three pile system: Keep, Discard & Don't Know. Don't try and do this all at once, pick a small area to start, it will be easier to take on the next area once you see the benefit of a completed area. Go through and put everything in one of the three piles. When you have gone through everything, immediately take the discard pile to the trash with a box. Everything that is garbage should go into the trash everything that could be still useful goes into the box that you will donate or sell at a garage sale.

Back to the area that you are focusing on. Do you need additional storage? Everything in that space should have a home from the keep pile. It is okay to put items into the Don't Know pile, you may just realize that item doesn't belong in this space. Feel free to review the Don't Know Once you put everything away. Now take the Don't Know pile and place it next to the box you have of items to donate or sell. Get it out of the area that you have just organized. Take the time to do a through cleaning of the area and make it sparkle. This area will be your inspiration to take on the next area.

Move on to the next area of your home until you have gone through and removed all the unnecessary items, put things where they belong and removed the excess to an area that you can deal with later. Difficult areas for people to organize include closets and the kitchen. When it comes to closets, you should at least once a year physically look at each item. Have you worn it in the last 6 months? If not, put it in the don't know pile. The kitchen can become the repository for everything and can be difficult to keep clear of clutter. Try putting everything that doesn't belong in the kitchen at the end of the day in your Don't Know pile that you have in the Garage/Basement. It is amazing how much "stuff" is really not needed.

Once you are ready to deal with that Don't Know pile, decide if you are going to donate the excess and get a receipt for a tax write off or if you are going to have a garage sale. Although garage sales are more popular in the spring and summer, many folks have them in the fall too! Don't let the time of year stop you from having one. Anything left over from the garage sale? Donate it!

Thinking about moving to California?

With more than 40 million Americans moving each year, the Department of Transportation (DOT), which oversees the moving industry, receives up to 4,000 complaints each year. Most of these complaints stem from damaged goods and overcharging. If you have clients planning a move, here are some important tips they should consider.

Qualify the mover. Ask to see the movers' DOT registration. Most complaints involve "rogue movers," which are companies that operate without the proper certifications. Check their reputability on Angie's List (angieslist.com) and the Better Business Bureau (bbb.org). Avoid any mover that offers quotes over the phone or the Internet. Instead, get at least three written estimates from separate professional movers that require an in-home inspection before providing a quote. Be wary of any quote substantially lower than others you get. The tactic of low balling to get the job and then demanding additional charges to cover actual costs is all too common.

Know your estimate. Professional movers offer different kinds of estimates. They can include binding and, more often, non-binding estimates with a guaranteed not-to-exceed price. Discuss all options and identify in writing any exclusions to the guaranteed not-to-exceed price.

Get additional insurance. The default insurance that movers provide is called valuation coverage, which assumes liability for no more than 60 cents per pound per item. Meaning: The 32" Sony LCD HDTV that cost $497.99 will fetch $15 if found damaged upon delivery. Fortunately, movers offer additional insurance policies in which you can pay to cover depreciation value or even replacement cost. Regardless of the type of insurance, notify the mover in writing about any articles of high value.

Finally, do not sign a delivery receipt for your household goods if it contains any language about releasing the moving company from liability. By law, anyone moving has up to nine months to file a written claim. Strike out this kind of language or refuse delivery until a proper receipt is provided.

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SACRAMENTO - The pace of home sales at California new-home communities continued to level off in June, the California Building Industry Association reported today.

The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New-Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more were 26 percent below June 2008, the same percentage decline as in the prior month. During June, 2,607 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 3,528 in June 2008. Sales of single family homes were down by 38 percent, while sales of townhomes and "plexes" - duplexes, triplexes, etc. - were down 16 percent and sales of condominiums increased by 9 percent.

Compared with the same period last year, the median base price of homes sold dropped by 5 percent.

Non-seasonally adjusted total new-home sales were 14 percent lower than levels seen last month. This is a typical seasonal interval and similar to the same month-to-month decline seen last year. While sales volume is still approximately one quarter off year-ago levels, the stabilizing year-over-year sales declines suggest we'll see the market finally get back to even or positive territory at some point this year.

Jonathan Dienhart, Director of Published Research for HWMI, notes the June numbers are slightly less encouraging than prior months.

"We had been seeing year-over-year decline percentages steadily shrink, yet June's figures are essentially the same as last month so that's a bit of a stall in the trend," Dienhart said. "While we expect incremental market improvements should still get us back to the even year-over-year threshold some time in 2009, it will definitely take a longer time to start mounting a significant recovery with home purchase tax credits due to expire and the broader economy continuing to struggle."

Robert Rivinius, CBIA's President and CEO, agreed and cited the state new homebuyer tax credit as the catalyst for the improvements, and added that a continuation of the state tax credit will be critical to sustaining these incremental improvements in the marketplace.

"This is still the third highest monthly sales total for the year, with all of the highest monthly totals coming in after the tax credit was enacted," said Rivinius. "We need to keep this positive momentum going if our state hopes to start climbing out of this recession by year's end, and we hope lawmakers take note of the success of the new homebuyer tax credit and grant an extension when they return to wrap up this year's legislative session. The tax credit has proven to generate new-home sales, and in turn job generating new-home construction, and getting an extension would go a long way towards putting more people back to work and reinvigorating the overall economy."

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The U.S. housing market is rebounding faster than expected. The question is, can it last? Home resales in July posted the largest monthly increase in at least 10 years as first-time buyers rushed to take advantage of a tax credit that expires Nov. 30. Sales jumped 7.2 percent and beat expectations, the National Association of Realtors said Friday.

"We've got tens of thousands of homes perfect for the first-time homebuyer and we've taken advantage of that," said George Hackett, president of Coldwell Banker Real Estate in Pittsburgh.

Sales hit a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June. It was the fourth-straight monthly increase and the strongest month since August 2007. Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.

The risks to that healthy pace, however, are job cuts, mortgage rates and the looming end to the homebuyer tax credit. And the last one could be a doozy because first-time buyers are snapping up one out of every three homes.

First-time buyers get a credit of 10 percent of the purchase price of a home, up to $8,000. The credit phases out for singles earning more than $75,000 and couples earning more than $150,000. The real estate industry is lobbying to have the credit extended but its unclear if Congress will be swayed.

"I would not be at all surprised to see a dip at the end of the year once the tax credit expires," said Robert Dye, senior economist with PNC Financial Services Group.

The home sales report was another sign that the U.S. economy is on the verge of a long-awaited recovery after enduring a brutal recession and the worst financial crisis since the Great Depression.

Economic activity in both the U.S. and around the world appears to be leveling out and "the prospects for a return to growth in the near term appear good," Federal Reserve Chairman Ben Bernanke said Friday.

But fallout from the recession will linger for some time. Unemployment rose in July in 26 states and fell in 17, the Labor Department said Friday. That is driving up foreclosures, which are not expected to level off until sometime next year.

Sales of foreclosures and other distressed properties made up about a third of all transactions last month, down from nearly half earlier this year. In places like San Diego and Orlando, buyers are snapping up foreclosed properties at deep discounts, and inventories are low.

Those sales helped drag down the national median sales price by 15 percent to $178,400.

Stephen Stoyko hunted off-and-on for two years before he bought a four-bedroom, two-story foreclosure this week for $320,000. The home in Roswell, Ga., north of Atlanta, was initially priced at $335,000.

Stoyko expects to spend about $7,000 to replace missing kitchen appliances and light fixtures - a cost will be at least partially offset by the first-time homebuyer tax credit. "It's bigger than I needed, but the price was right," he said.

The inventory of unsold homes on the market rose to 4.1 million, from 3.8 million a month earlier as buyers who had held their homes off the market in the past decided to list them for sale. That's a 9.4-month supply at the current sales pace, unchanged from June.