For struggling borrowers in better financial shape, the outcome could be more positive: the deal would include incentives for mortgage servicers to help homeowners who have fallen behind on their payments and whose homes are worth less than they borrowed.

“The goal is to reinstate as many borrowers in a modification that performs well,” said Tony Meola, a servicing executive with Bank of America. “It also is likely to lead to faster resolution in those unfortunate situations where foreclosure is inevitable. While not a desirable outcome, the recovery of the housing markets depends on moving through the foreclosure process as quickly and fairly as possible.”

While powerful investors stand to benefit from the $8.5 billion settlement over the bank’s bundling of shoddy mortgages as securities, the fallout for the nearly 275,000 borrowers who took out those loans depends greatly on how deep they are in the foreclosure process and whether they earn enough money to dig themselves out.

While no exact income qualification has been set as part of the agreement, which was announced last month, many servicers use a formula in which borrowers can qualify for a modification as long as the new monthly payment does not exceed 31 percent of their monthly gross income. For borrowers who are unemployed or lack the income to cover even reduced mortgage payments, foreclosure and eviction could be much more immediate.

Continue reading “Bank’s Deal Means More Will Lose Their Homes” from the NY Times.

Lelia Chapman, vice president of field sales for one of the nation’s oldest and largest home warranty providers, American Home Shield, says that a reliable home warranty can help provide an important measure of confidence for the buyer and help set a seller’s home apart from the competition.

Still, even with advantages to both parties, many buyers and sellers remain uninformed about the purpose and benefits of home warranties, which cover the repair or replacement of many home-system components and appliances. Home warranties—which are available for single-family homes, condominiums, townhouses, vacation homes and multi-unit properties—address key consumer needs, typically covering the cost of replacing or repairing such things as heating and air conditioning components, dishwashers, water heaters, ovens, garbage disposals, and more.

Such items are not usually covered by homeowners insurance and can be very costly to repair or replace if not covered by a home warranty. Replacing the dishwasher alone can be more costly than an annual home warranty payment; the cost for a one-year home warranty from American Home Shield begins around $300.

“When a system or appliance breaks down unexpectedly, it can be very inconvenient and stressful to homeowners—not to mention potentially devastating to a household budget,” says Chapman.

While many of the home’s system components and appliances are covered as part of a standard home warranty, if home buyers wish for more household items to be covered, they should determine whether their home warranty provider offers an add-on package. American Home Shield offers plans allowing consumers to customize their home warranty to cover specific components and appliances, including ceiling fans, garage door openers, swimming pools and more.

Advantages for both buyers and sellers

Whether the home warranty is provided by the seller of the home or purchased by the buyer after the sale, there are numerous advantages to both parties.

“Home warranties are appealing to buyers because they cover appliances and system components that a new homeowner has no familiarity with,” says Chapman. Sellers benefit from offering a home warranty because it sets the home apart from the rest of the competition in today’s saturated market, often leading to faster sales at better prices.”

Get the plan that’s right for you

While home warranties are a popular addition to the home buying and selling process, they may be purchased at any time. Chapman encourages consumers to do their research before choosing a plan or provider, as costs, coverage levels, customer service and other factors vary. American Home Shield’s website offers homeowners an interactive experience where they can review a range of options and custom-design plans based on the cost and coverage level that is right for them.

“In today’s economy, home warranties make sense more than ever,” says Chapman. “Not only are they a great tool to help you sell your home, but they’re something you definitely want to insist on when buying one.”

(Source: rismedia.com and www.ahs.com)

The company said in a statement Wednesday that the settlement resolves “nearly all” of its repurchase exposure stemming from legacy first-lien residential mortgage-backed securities (RMBS) issued by Countrywide.

The agreement involves 530 trusts, five of which are second-lien trusts, and covers RMBS that carry a total original principal balance of $424 billion.

As part of the settlement, Bank of America has also agreed to implement certain servicing changes, including transferring high-risk loans owned by the trusts to subservicers and paying additional fees to the investors if benchmarked default-servicing timelines are not met.

The company estimates the costs associated with the supplementary servicing obligations to be approximately $400 million, and notes that the agreed upon actions are consistent with the consent orders issued in April by federal regulators.
In addition to the arrangement, which settles claims from 22 private institutional investors and is subject to final court approval, BofA says it will also be making a $5.5 billion provision to address expected loan buyback liability for both GSE and non-GSE exposures in the second quarter.

Bank of America acquired Countrywide, once the largest subprime lender in the country, in July of 2008. The company has paid out billions of dollars to settle lawsuits related to Countrywide’s business prior to the acquisition, including a multi-state settlement involving mandatory modifications and restitution for homeowners with Countrywide loans.

“This is another important step we are taking in the interest of our shareholders to minimize the impact of future economic uncertainty and put legacy issues behind us,” said Brian Moynihan, Bank of America’s CEO. “We will continue to act aggressively, and in the best interest of our shareholders, to clean up the mortgage issues largely stemming from our purchase of Countrywide.”

Bank of America says Wednesday’s settlement will eat into its second-quarter earnings, scheduled for release on July 19. Company officials are advising investors that the bank will report a loss for Q2 in the range of $8.6 billion to $9.1 billion, or 88 cents to 93 cents per share, as opposed to net income of 28 cents to 33 cents per share without the settlement outlay.

Still, financial markets and the investment community see the settlement agreement as a positive. Analysts say it eliminates a serious cloud of uncertainty that’s been hanging over one of the nation’s most prominent financial fixtures.

BofA’s stock price reportedly rose more than 5 percent in pre-market trading and has seen a steady rally throughout the day, with other shares of financials following suit on its coattails.

Fitch Ratings said it views the settlement as a “favorable development,” adding that the recognition of the cost associated with the agreement in the second quarter “decreases future financial uncertainty and considerably reduces the drag on future earnings from this issue.”

(Source: dsnews.com)

RISMedia, June 10, 2011—Despite the ups and downs of the housing market, home owners and non-owners alike consider owning a home essential to the American Dream.

That’s the key finding of a recent survey of people likely to vote in 2012 that was conducted on behalf of the National Association of Home Builders (NAHB) by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C.

“The survey results show that Americans see beyond the immediate housing market to the enduring value of home ownership,” says NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “An overwhelming 75 percent of the people who were polled said that owning a home is worth the risk of the fluctuations in the market, and 95 percent of the home owners said they are happy with their decision to own a home,” Nielsen says.

“Home ownership is worth the risk, pure and simple,” says Neil Newhouse, a partner and co-founder of Public Opinion Strategies. “Even though the market is weak, people who don’t own say they want to buy a house. Almost three-quarters of those who do not currently own a home, 73 percent, said owning a home is one of their goals. And among younger voters who are most likely to be in the market for a home in the next few years, the percentages are even higher,” Newhouse says.

One of the more striking aspects of the survey results is the intensity of sentiment among potential voters, according to Celinda Lake, president of Lake Research Partners. “People believe overwhelmingly that owning a home is an anchor to the American Dream,” she says. “It’s an anchor to your retirement, and it’s an anchor to your personal economic well-being.”

Among the other survey results:
• Home ownership and a retirement savings program are considered by voters to be their best investments.
• 80 percent of home owners would advise a close friend or family member just starting out to buy a home.
• Saving for a down payment and closing costs is the biggest barrier to home ownership.
• Americans believe that owning their own home is as important as being successful at their job or being able to pay for a family member’s education.

“Owning a home isn’t just a policy to people,” says Lake. “It isn’t just a commodity to people. It is a core value.”

Continue reading the article from RISMedia.com here.

Justin Sullivan/Getty Images

As the nation’s housing market continues to teeter, the Treasury Department on Thursday penalized three of the nation’s largest banks for subpar performance in administrating a government-sponsored program to modify mortgage loans for distressed homeowners.

As part of a new assessment of mortgage servicers, Treasury officials said they would withhold incentive payments for the three banks — Bank of America, JPMorgan Chase and Wells Fargo — until the problems are resolved. At that point, those payments would be made, a Treasury spokeswoman said.

In May, the three banks received $24 million in incentives as part of the modification program.

The Treasury Department has previously withheld payments from mortgage servicers, but Thursday’s action focused on some of the biggest players in the program. Called the Home Affordable Modification Program, or HAMP, it is voluntary for mortgage servicers. Nearly all of the nation’s largest banks have signed contracts to participate.

The Obama administration has long been criticized as being too easy on the mortgage servicers, and Thursday’s announcement did little to quiet that criticism.

Neil M. Barofsky, who resigned in March as special inspector general for the bank bailout, described the assessments and penalties as a “lost opportunity” to hold lenders more accountable.

Continue reading the article from NYTimes.com here.

Three-fourths of the some 400 housing counselors involved in the process characterized borrowers’ overall experience with the housing program as “negative” or “very negative,” according to the Government Accountability Office (GAO) study.

According to the study, 40 percent of approximately 300 counselors said they had experienced difficulties working with the mortgage servicers and said paperwork had been lost or needed to be resubmitted.

The Treasury Department defended its actions, noting that the survey was conducted in October 2010 before improvements were made.

Treasury also took issue with the parameters of the study and said because there was no readily reliable database of borrowers seeking help, the GAO surveyed housing counselors as a proxy for borrowers.

“The survey results do not characterize borrowers’ actual experiences with, but rather counselors’ interpretations of borrower experiences,” the department said in response to the study.

Through the counselors, the survey looked at the borrowers’ experience from the time they first inquired to the point where they received a decision under the program, which offers incentives for lenders to modify loans for distressed homeowners.

The congressional report is the latest criticism of the government’s Home Affordable Modification Program (HAMP), which has so far helped about 670,000 borrowers win lower mortgage payments.

Republican lawmakers have tried to kill program, saying it is ineffective and a waste of taxpayer money. The government watchdog for the $700-billion bank bailout program has also excoriated the Treasury Department for not revising goals.

The administration had initially forecast the program to help 3 million to 4 million homeowners.

Source: (reuters.com)

-James

LPS: More than 4M loans in foreclosure or at least 90 days late

By Inman News, Wednesday, June 1, 2011.
Inman News™

Foreclosure starts dipped below the 200,000 mark during April for the first time in years, but the foreclosure pipeline remained bloated by more than 4 million homes whose owners are in foreclosure or delinquent by 90 days or more.

That’s according to the latest numbers from loan data aggregator Lender Processing Services, which show foreclosure starts fell nearly 31 percent from March to April, totaling 187,423 — a 14.7 percent decline from a year ago.

LPS estimated that 2.18 million mortgages were in foreclosure, down nearly 2 percent from a record 2.22 million in March but up 9.5 percent from a year ago.

Another 1.96 million mortgages were delinquent by 90 days or more in April, down about 1.5 percent from the previous month and 29 percent from a year ago.

If you’re considering selling your home, there are a number of factors you should consider regarding the resale value of your property. Some of these issues may devalue your home or scare some potential buyers away entirely, even if your home is an otherwise outstanding property.

Consider these eight factors when listing your home:

1. Location, location, location
Many real estate television shows repeat this phrase over and over. Buying a home in an area that provides residents with access to services and effective transportation is important — though many buyers don’t wish to live too close to airports and busy roads for fear of noise.

Visual appeal is another concern. Cell phone towers and power lines can be seen as eyesores — or possibly even having potential health hazards. Local school closures can also deter potential buyers who have children or who are considering having children in the near future. Some buyers may be leery of purchasing homes that are on flood plains.

To ensure maximum resale potential, consider how many of these types of issues exist near the properties you’re considering. Remember, though, there’s no way of knowing exactly how a neighborhood will evolve over time.

2. Good renovations gone bad
If your home looks like a DIY nightmare, this can definitely devalue your home. Though putting money into renovations generally increases the value of a home, poorly done renovations can have the opposite effect. If buyers feel that the renovations will have to be redone, there’s a good chance they’ll make a lower offer or keep looking for a move-in ready home.

Continue reading “8 Factors That Devalue a Good Home“…

-J

(MONEY Magazine) — The road to bad remodeling is paved with good intentions. Anyone tackling a major project wants his home to look and work better — and to get a reasonable return on investment. But renov are packed with so much stress and emotion that it’s easy to go wrong.

“I see homebuyers discount brand-new kitchens and bathrooms all the time — especially in this market,” says Curt Schultz, a realtor-architect-builder in Pasadena.

1. Being a slave to fashion

The more up-to-the-minute your project is today, the more out-of-date it will seem in five or 10 years.

Skip trends such as glass tiles, wire-hung track lighting, and vessel sinks (the kind that sit on the countertop like a salad bowl), says Schultz.

Instead, go with classic choices that match the house’s original style.

For a bathroom in a 1920s colonial, for example, that might mean a white pedestal sink and subway-tile wainscoting, but those choices wouldn’t look so timeless in a 1980s contemporary.

You can find retailers specializing in period products at traditional-building.com.

Continue reading “Avoid 4 Common Remodeling Mistakes” on CNNMoney.com.

What do you call a mega bank who, just coming off robo-signing scandal issues, pays its CEO $17.56 million in compensation in 2010? The official answer is Wells Fargo. The more realistic answer is CLUELESS.

Is there a CEO on the planet worth that kind of money? Can I get h-e-l-l no! So why would a bank with a recent foreclosure scandal, not to mention tons of real estate inventory it cannot handle or unload, think this type of compensation is acceptable? Well apparently, if you’re a mega bank or Wall Street, you don’t have to think things through or even justify outrageous salaries, benefits and bonuses.

The average American worker makes just $25,000 in this country. The President of the United States—regardless of whether you like the person or the party in office—is on call virtually 24 hours a day, 365 days a year and gets paid less than a half million a year ($400,000). So clearly, if Donald Trump runs, he won’t be doing it for the compensation. He spends more money than that per year maintaining his private jet.

For the 2010 calendar year, Wells Fargo CEO John Stumpf was awarded a salary of $3.24 million, a performance-based stock bonus of $11 million, and a cash bonus of $3.3 million, according to documents just filed with the Securities and Exchange Commission. Don’t you just love the way his bonus was more than his salary? And yet none of my friends who are Wells Fargo customers are exactly raving fans. For that kind of salary, raving fans should be overflowing.

Continue reading “Wells Fargo…Still Clueless!” by Amy Ransdell at shortsaledailynews.com.