4 traits of unhappy homeowners

Mood of the Market

By Tara-Nicholle Nelson
Inman News®

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As the parent of a newly-minted adult, I can reflect on how much of my advice thus far has been delivered in the negative. "Son," I've said, time and time again, "I've been there and I've done that and here's what NOT to do."

I suspect this might be a theme of any great advice in any realm of life: it's critical to know from those who have gone before what you should do, and just as critical -- sometimes more so -- to know what not to do. In the interest of ensuring that the advice I gave last week on how to be a happy homeowner is comprehensive, then, it behooves me to share some insights on how to be an unhappy one -- in the hopes it will help you avoid this fate.

1. Move a lot. Moving house is stressful, in and of itself. Mention the prospect of moving to any cocktail party crowd, and you'll undoubtedly hear a chorus of moans and groans of "I hate to move!" Studies actually rank moving right up there with getting a divorce or being widowed in terms of stressfulness -- no joke! And that's just the moving part -- there's also the stress multiplier of selling your home, which includes such unhappy-making activities as:

• Deciding when to sell.
• Studying market data on recent sales in your area.
• Interviewing listing agents.
• Giving your home the deepest clean ever.
• Opening your home to strangers.
• Waiting for, fielding and responding to offers.
• Holding your breath, anxiously awaiting the appraisal and closing.

Homeowners who move a lot not only have to deal with the inherent stresses of moving, but also with each of these other attendant stresses of selling.

2. Make mortgage moves a lot. In a landmark study by Thomas Holmes and Richard Rahe ranking various life events in terms of their relative stress, taking out a mortgage was given a score of 30. And here's some context, having your home foreclosed was given a score of 31! For smart homeowners, taking out a mortgage can be a tense series of decisions that they don't always feel well-equipped to make, from selecting a mortgage broker to selecting a loan type and term to trying to ascertain whether they're getting the best deal on rates and fees. And there are also the uncertainties involved -- the feeling that an appraiser and an underwriter who you'll never meet are in control of your financial fate doesn't feel good.

Beyond that, it's highly worrisome to have to scurry around and meet seemingly nonsensical documentation requirements or show up to sign stacks of papers at weird times in weird places at the whim of the mortgage lender, which you must do on the principle my Dad leveraged so frequently during my childhood: "he/she who holds the cash makes the rules." And the biggest stresses around frequent mortgage moves come when they are being made because the current mortgage obligations are simply too burdensome or overwhelming, which just puts an even greater level of pressure on the unhappy homeowner to close the loan -- something that is not 100 percent within their control.

3. Try to time the market. Those who try to time the market, whether trying to lock in an interest rate at the precise bottom or trying to sell at the tippy-top of the market, rarely do. By the time you can register that a bottom is in the wind, it has usually passed -- and if you've been a homeowner in an ascending market, you know that the temptation is to hold in order to collect every penny of appreciation, not to get out while things are hot.

Those who are very emotionally invested in their timing games set themselves up not just to fail, but also to experience great distress. This is about fixating on things beyond your control -- at some point, with home ownership, as with investing in other asset classes, you have to make a decision and commit to feeling good about that decision. Fretting that rates went down after you locked yours or that you could have made an extra ten grand if you had held onto your place another few months is a sure-fire way to stress yourself into a premature spot on the Botox power user list.

4. View your home as a short-term investment. In light of recent market madness, this seems silly, but the reality is that a large number of homeowners who lost homes in the last wave of foreclosures were people who had bought homes planning to be in them a few years or less -- and who were counting on them to rise in value in the interim.

Not only does viewing your home as a short-term investment (vs. a long-term residence) make you more likely to take on mortgage obligations that are unsustainable in the long-term, it also positions you to select a home that is more of a Band-Aid for your living needs than a real solution. And that renders you less likely to pick a place that will be functional for your life over the long run if the market does decline and you need to stay put. I personally know at least three young men who lost urban lofts they had counted on to appreciate through short sales or foreclosure when they found themselves married with children at the bottom of the market.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

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Home buyers are unexpectedly finding more competition this spring in landing their dream home. Bidding wars are increasingly being reported in markets across the country, from California to Florida, The Wall Street Journal reports. 

"It's a little surprising because we thought bidding wars were done with," Andy Aley, a home shopper in Seattle, told The Wall Street Journal. Aley says he was outbid on a home earlier this year, even though he offered to pay $23,000 above the listing price and also waive inspections and other closing conditions.

Home buyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report. 

"We're writing a record number of offers, but we're not seeing a record number of closings and that's because it's so competitive," Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

Why are things getting so competitive? Many housing markets are seeing a drastic decrease in the number of homes listed for-sale, leaving home buyers with fewer options and more bidding on the same house. Housing analysts say the shortage in supply is from sellers unwilling to take much less for their home than what they originally paid for it and pulling their homes off the market. Also, a surge in investors has made the market more competitive, as investors snatch up homes in bulk in all-cash deals. 

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

Indeed, the National Association of REALOTRS® reported late last week that pending home sales in March reached their highest level in nearly two years and are up 12.8 percent from a year ago.

Source: “Stunned Home Buyers Find the Bidding Wars Are Back,” The Wall Street Journal (April 27, 2012)

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March Pending Home Sales Rise, Market Recovering

Has the Housing Market Finally Reached Bottom?

What can home buyers expect to face this selling season? An improving housing market has made it a different picture in many areas compared to recent years, housing experts say. A recent article at Bankrate.com notes some of the following trends taking shape in the housing market this spring:  

1. Fierce competition. 

Housing affordability is at record highs, due to falling home values and mortgage rates hovering near record lows. More buyers are taking notice and jumping off the sidelines. And mixed with sinking inventories of homes listed for sale, the competition is getting more fierce. 

Investors are snapping up bargain prices, often in all-cash deals, which means greater competition for traditional home buyers too. 

"Rents are going up, and as long as there are properties at the level where investors can get the positive cash flow, they will continue to invest," says Jed Smith, managing director of quantitative research for the National Association of REALTORS^®. Smith adds that first-time home buyers, in particular, may find increased competition from investors in trying to snag some of the best deals on the market. 

2. More renters show desire to become home owners. 

Recent surveys have shown that buying a home nowadays is more affordable than renting. As such, more renters are finding home ownership more enticing.

The signs are already starting to show: About 59.5 percent of tenants recently surveyed say they intend to renew their leases this year, which is the lowest rate since early 2009, according to a study by Kingsley Associates.

3. Mortgages may be a little pricier. 

Fannie Mae, Freddie Mac, and the Federal Housing Administration recently have raised their loan fees, which means home buyers can expect to pay a little more for their mortgage this spring. 

"Those who don't have credit scores in the high 600s to low 700s may be forced to go the FHA route," says Ed Conarchy, a mortgage planner at Cherry Creek Mortgage in Gurnee, Ill. "And they will be stuck with the higher fees."

Buyers with smaller down payments can expect to pay more for FHA mortgage insurance premiums, which have risen to 1.75 percent of the loan total. Bankrate.com cites an example illustrating the higher fees: A borrower who takes out a $200,000 FHA loan will likely have to pay about $3,500 for mortgage insurance upfront. Prior to the increase taking effect, borrowers would pay about $2,000 for that same loan amount. 

Borrowers with higher mortgages can expect higher fees too. The FHA announced that in June it’ll increase its annual insurance for mortgages more than $625,500. "A borrower who lives in a high-cost area and takes out the maximum $729,750 (which is the FHA limit for high-cost areas) will pay $912 each month in mortgage insurance alone," Bankrate.com reports. 

Read about more trends expected for the spring selling-season. 

Source: “5 Mortgage and Housing Trends in Spring 2012,” Bankrate.com (April 21, 2012)

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Low-Income Renters Struggle to Find Affordable Housing

The Year Ahead: Real Estate's Best Bets in 2012

WASHINGTON — If you're one of the estimated 11 million homeowners burdened with an underwater mortgage, a new federal policy change could be good news: Starting in June, when you want to do a short sale to shed your mortgage and avoid foreclosure, you may not have to wait for months to hear back from your bank when you submit an offer from a potential purchaser.

Instead, if your loan is owned or securitized by either of the dominant conventional mortgage market players — Fannie Mae or Freddie Mac — you can expect a response within 30 business days, with a final decision taking no more than 60 days. If you don't hear back during the first 30 days, the bank will be required to send you weekly updates telling you precisely where the holdups are and when they are likely to be resolved. None of this is typical of short-sale procedures today. Banks and loan servicers that don't comply will face monetary and other penalties.

The mandatory timelines, which real estate and mortgage industry experts say should help speed up what traditionally has been a glacial process, are being imposed by the Federal Housing Finance Agency, the regulatory overseer of Fannie and Freddie in conservatorship. Short sales, in which the lender or loan servicer agrees to accept less than the full amount owed by the borrower, represent an important alternative to foreclosure.

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• FHA rule change on 'collection' accounts could hurt home buyers
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• Builders highlight often-hidden costs of buying a foreclosed home
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Although short sales can be complex and messy, and can take anywhere from several months to more than a year to complete, they are turning into a mainstay of the real estate market. According to a report from the foreclosure data firm RealtyTrac, short sales jumped 33% in January compared with the same month the year before. In 12 states — including California, Arizona, Colorado, Florida, New York and New Jersey — there were more short sales recorded during January than sales of foreclosed properties.

This trend is welcome, regulators say, but the time required to complete short sales is still far too long. The 30-day and 60-day mandates address just one of the key points of delay in the process, but regulators promise a series of additional steps during the coming months designed to speed transactions. They include clearer guidelines on borrower eligibility, property valuations, compensation for lenders holding second liens and mortgage insurance issues. All of these are points of friction that can delay short sales for weeks or months.

Realty agents who specialize in short sales say setting mandatory timelines is a step in the right direction but won't solve all the problems. The new rules and promises of more "are great if they really happen," said broker Erik Berry of Erik Berry & Associates in Sacramento. Short sales that his firm handles take an average of "about six months" from start to finish on Fannie-Freddie loans. But FHA transactions, which will not be affected by the new regulations, average much longer, and sometimes drag on for a year.

Berry also is skeptical that banks and servicers will be able to reform their staffing practices quickly enough to meet the compressed timelines — even if penalties are imposed. In some cases, he said, banks switch personnel and negotiators five or six times over the course of a short sale.

"You're dealing with one person one day and they say, 'Don't worry, everything's fine,' then suddenly they're gone and you never hear from them again," Berry said, leaving the deal stalled for weeks.

Matt Battiata, whose Battiata Real Estate Group in Del Mar, Calif., handles hundreds of short sales a year, said a reliable, 60-day decision deadline for responses to offers will be helpful — 30 days better than the 90-day average he now sees from banks — but the whole process will still take longer than traditional sales. For clients seeking to do short sales today, Battiata estimates five to six months from offer to closing.

Some of the complications inherent in short sales are beyond the control of regulators or banks, he pointed out. For instance, buyers put in offers to purchase but then change their minds, forcing the sellers and brokers to come up with replacement offers and the bank to reset the clock to analyze the new package.

The take-away for potential short sellers: Be aware of the new moves afoot to streamline the process, but don't expect miracles.

kenharney@earthlink.net

Distributed by Washington Post Writers Group.

The average rate for a 15-year fixed-rate mortgage hit a record low of 3.88 percent for the week ending April 12, according to Freddie Mac.

The rate fell .10 percent from the previous week and is .01 percent below the previous 30-year mortgage rate of 3.87 record set in February. The average rate for 15-year mortgages fell to a record low 3.11 percent.

"Fixed mortgage rates eased for the third consecutive week following long-term Treasury bond yields lower after a weaker than expected employment  report for March,"  Frank Nothaft, vice president and chief economist at Freddie Mac, said in a statement.

"Although the unemployment rate fell to the lowest reading since January 2009, the overall economy added just 120,000 new jobs in March, nearly half that of the market consensus forecast," said Nothaft. "On a more positive note, the Federal Reserve reported hiring was steady, or showed a modest increase, across many of its Districts in its April 11th  Beige Book of regional economic conditions."

For the week ending April 6, the Mortgage Bankers Association saw a 2.4 percent drop in mortgage applications from the previous week.

But, there has been some bright spots in the real estate market.

"The mild winter has helped lift expectations for the housing market after four years of sluggish sales," according to the Associated Press.

"January and February made up the best winter for re-sales in five years, when the housing crisis began. And builders in February requested the most permits to construct homes in more than three years," according to the AP.

The Associated Press contributed to this story.

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Proactive Parenting: Use These Tips to Help Prevent Children from ever Being Abused

By Communications Division
SOUTH WILLIAMSPORT, Pa.
April 12, 2012

Jill Starishevsky knows the horrors of child abuse better than most – she’s a prosecutor of child abuse and sex crimes in New York City. The mother of three is also the author of My Body Belongs To Me (www.MyBodyBelongstoMe.com), a children’s book intended to prevent child sexual abuse by teaching children that their bodies are their own.

She shares the following 10 tips for keeping children safe from predators:

1. Safety in numbers. Find out what the policy is for one on one contact. Organizations can limit or eliminate the opportunity for abuse if there is a policy requiring a third person to be present (whether it is an adult or another child). In a sport such as tennis where there may not be a third person, parents should consider being present for the lessons.
2. Safe touching vs. unsafe touching. Have a discussion with your child about what types of touching are appropriate in that particular sport. With a contact sport such as football or wrestling, be explicit about what behavior is acceptable and what is not. Teach your child to come to you and ask questions if they are uncertain. Discuss whether there are other touches that you have not addressed.
3. Use a broad brush. While parents may have concerns about protecting their child from a coach, they should keep in mind that other children can be perpetrators of sexual abuse against a child as well. All lessons should apply to anyone who might touch the child inappropriately, whether adult or child.
4. No secrets. Period. Encourage your children to tell you about things that happen to them that make them feel scared, sad or uncomfortable. If children have an open line of communication, they will be more inclined to alert you to something suspicious before it becomes a problem. The way to effectuate this rule is as follows: If someone, even a grandparent, were to say something to your child such as "I'll get you an ice cream later, but it will be our secret", firmly, but politely say "We don't do secrets in our family." Then turn to your child and say "Right? We don't do secrets. We can tell each other everything." Secrecy is the most powerful weapon in a child abuser’s arsenal.
5. Identify a “safety zone” person. Teach your children that they can come to you to discuss anything, even if they think they will get in trouble. Convey to them that you will listen with an open mind even if they were doing something they should not have been doing. A safety zone person can be a neighbor, family member, religious official or anyone who your child feels comfortable confiding in should something happen to them and they are reluctant to discuss it with parents. The safety zone person should be advised that they have been chosen and should be instructed to discuss the situation with the parents in a timely manner. Keep in mind that child predators often “entice” their prey with something inappropriate such as allowing a child to watch an adult movie or miss school, letting them smoke a cigarette or drink alcohol. Children will often be reluctant to tell about inappropriate touching for fear they will get in trouble for the drinking or missing school. Explain to children that they if someone touches them inappropriately, they should tell the parent or the safety zone person, even if they did something that they were not allowed to do.
6. Teach your child the correct terms for their body parts. This will make them more at ease if they need to tell you about a touch that made them feel uncomfortable. Teaching children only the nicknames for their private parts can delay a disclosure. An 11-year-old who only knows the term hoo hoo for her vagina may be embarrassed to tell someone if she is touched there. If a 5-year-old tells her busy kindergarten teacher that the janitor licked her cookie, the teacher might give the child another cookie, not realizing she just missed a disclosure.
7. Practice “what if” scenarios. Say to your child, "What would you do if someone offered you a treat, or a gift when I wasn't there?" Help your child arrive at the right answer, which is to say no, and ask you first. Many parents also encourage children to walk or run away in this situation if the person is a stranger. Parents should note that giving a child a gift and asking them to keep it a secret is a very common step in the process of grooming a child for sexual abuse.
8. Teach children to respect the privacy of others. Children should learn to knock on doors that are shut before opening them and close the door to the bathroom when they are using it. If they learn to respect the privacy of others, they may be more likely to recognize that an invasion of their privacy could be a red flag meaning danger.
9. Let children decide for themselves how they want to express affection. Children should not be forced to hug or kiss if they are uncomfortable. Even if they are your favorite aunt, uncle or cousin, your child should not be forced to be demonstrative in their affection. While this may displease you, by doing this, you will empower your child to say no to inappropriate touching.
10. Teach children that No means No.
    Teach children that it is OK to say No to an adult. Without permission from you, many children may be reluctant to do so even if the adult is doing something that makes them feel uncomfortable. Teach children that all of these lessons apply to children as well. If another child is touching your child in a way that makes him or her uncomfortable, teach your child to say No, get away and tell someone. When someone tickles a child, if the child says No, all tickling should cease. Children need to know that their words have power and No means No.

Editor’s Note: This story is reprinted by permission of the author, Jill Starishevsky, and the National Alliance for Youth Sports’ SportingKid magazine, in which the story was published.

Also, check out Little League’s Parent Guide (PDF) on how to protect children from a potential child sex offender.

HOUSING: 'This is crazy': Home ownership cheaper than renting

By ERIC WOLFF ewolff@nctimes.com North County Times | Posted: Saturday, April 7, 2012 6:00 pm | (11) Comments

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ANDREW FOULK

Liz and Dan Bogdanski of Murrieta, had to short sell their last house, and now are renting the home they live in. The couple is in the process of buying a new house, also through short sale. ANDREW FOULK | For The Californian

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The housing market has gone cockeyed.

Monthly payments on a house are now cheaper than monthly rents on a similar house in most of North San Diego and Southwest Riverside counties, according to an analysis of county-supplied and Realtor data by the North County Times.

In a traditional housing market, mortgage payments plus taxes come in much higher than house rents: A mortgage interest tax credit and a long-held preference for buying create demand such that people pay more for home ownership, and landlords must hold down rents to attract customers.

But after a foreclosure crisis began in 2007, locals became leery of buying a home, and many former homeowners no longer had the credit to get a mortgage. Investors bought those foreclosed houses and in many cases rented them out. But they couldn't keep up with the demand, and rents for detached, single-family houses rose.

Meanwhile, prices for houses plummeted and interest rates fell below 4 percent, a 40-year low. The combination of factors has created a house market in North San Diego and Southwest Riverside county in which homeowners are getting a better deal than renters, at least after they've paid their down payment.

"I don't think this has ever happened before," said G.U. Krueger, a principal economist for HousingEcon.com. "It's a function of the huge housing price collapse which has left a lot of people in the lurch."

Or, as Carlsbad real estate agent Tyson Lund put it: "This is crazy."

Buyers who put down 20 percent of the cost of a median-priced house and pay 3.9 percent interest on a 30-year conventional loan will have a lower monthly mortgage payment than the median house rent in 23 out of 34 North County ZIP codes. Some homebuyers get loans backed by the Federal Housing Administration, allowing them to make a 3.5 percent down payment, which means they pay more in monthly payments. Despite that, those homeowners are still paying less than rent in half of all North County ZIP codes.

In Southwest Riverside County, homebuyers who make a 20 percent down payment to buy in 13 of 15 ZIP codes, pay less on a monthly basis than they would in rent. Even homebuyers with FHA loans still pay less in those same ZIP codes.

From boom to bust and back

Dan Bogdanski, a teacher, and his wife bought a house in French Valley for $600,000 in 2005, when house prices peaked.

Then the crash hit: Between 2005 and 2009, prices in Southwest Riverside County fell 55 percent, and prices in North San Diego County fell 40 percent, according to data from the San Diego and Riverside county assessor's offices. As a result of the rapid drop in price, foreclosures blossomed, with banks taking back 58,000 homes in North San Diego and Southwest Riverside counties between 2006 and 2011, according to data firm ForeclosureRadar. That period also saw a huge upswing in short sales, in which homeowners sold their properties for less than they were worth.

"A lot of people who lost their homes, they have to live somewhere. They're basically going into the rental market," Krueger said.

Bogdanski said he and his wife realized that with house values falling so fast and so many foreclosures around them, they wouldn't be able to sell their house for a profit in the few years he had left of teaching before he retired.

In 2009, they stopped making payments and conducted a short sale for $300,000.

For three years, they rented a house in Murrieta for $1,650 a month before deciding they wanted to buy again. Bogdanski much prefers the control of owning his own home, but he would never have jumped back into the market if it didn't make financial sense. Now he's in escrow on another French Valley home, this one for $200,000, with 3.5 percent down and a 3.85 percent interest rate on a 30-year mortgage.

"Our house payment will be less than our rent," Bogdanski said. "We're purchasing this house with the intention of renting it at some point. The house has to be rentable and hopefully have positive cash flow."

In Bogdanski's French Valley ZIP code, a house rents for a median of $2,055 a month, but a mortgage payment plus taxes on a median-priced house in his ZIP code on his FHA loan would cost $1,232, a 40 percent discount.

Analysis of rent vs. buy is tricky

The analysis comes from a North County times comparison of median house prices by ZIP code from transaction records collected by the San Diego County and Riverside County assessor's offices. Single-family house rents come from the Realtors' multiple listing service, as provided by Gregory Moser, a San Marcos Realtor, and from craigslist.

There are, of course, a host of caveats not included in the calculation. The analysis does not amortize the down payment on the house, nor does it include the maintenance costs that homeowners accrue to keep their homes in good repair, though many economists argue the mortgage interest tax deduction offered by the federal government balances those expenses. Still, the calculation depends on a homebuyer having enough money to make a down payment, and sufficient credit to get a loan. In 2011, banks raised the bar on those to whom they'd lend, making it difficult for many people to get mortgages.

Also, the rental data from the Realtors' database includes many house rentals but is far from a complete list: Homeowners often list rentals in newspaper classifieds or directly through property managers, and thus would not be included.

The trend reverses in the region's most expensive ZIP codes, notably Del Mar, Solana Beach, Rancho Santa Fe, and the priciest parts of Temecula. People who have just lost their homes to foreclosure tend not to be able to afford rents in those areas, so demand is lower. Also, there are fewer renters for properties with very high rents, as people with that much money tend to buy, said Len Baron, a professor of real estate at the Corky McMillin Center for Real Estate at San Diego State University. That pushes up purchase prices in those neighborhoods and suppresses rents.

"When you look at rents for higher-priced houses, it's not the same scenario," Baron said.

No one really knows how long this unusual market will persist. Already a shortage of listings is creating bidding wars that could propel prices up. But the key to the trend is sub-4 percent interest rates, according to Nathan Moeder, a principal at The London Group in San Diego.

"If rates were back to 5.5 percent or 6 percent, then the mortgages become more expensive than rents. I would not call 4 percent a normalized housing market," he said in an email. "Today, people are able to afford more home because of the interest rates."

Call staff writer Eric Wolff at 760-303-1927, follow him on Twitter at ericwolff, or find energy stories on Facebook at http://nctim.es/xXxAuI.>

Copyright 2012 North County Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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On February 9th of this year, both Federal and State officials announced a landmark $26-billion agreement with the nation's five biggest mortgage servicers, Bank of America, Citibank, JPMorgan Chase, Wells Fargo, and Ally/GMAC, in an effort to settle the many investigations involving foreclosure abuses as well as using this as a means to stabilize the housing market.

However, the settlement needed a judge's final approval which happened today clearing the way for the nation's five largest lenders to start helping homeowners.

The settlement has certain guidelines that the banks must follow while compensating homeowners who were wrongfully foreclosed upon which affected nearly one million homeowners.

Here is a breakdown on how the settlement money will be distributed:

- $17 billion will be used to modifying mortgages of currently delinquent borrowers which will include principal reductions for mortgages of $100,000 or more.

- $5 billion will be paid in cash to California and 40 other states to make amends for foreclosure paperwork issues and the inappropriateness taken by the servicers in the foreclosure process.

- Nearly 4 billion will go towards refinancing mortgages for homeowners who are current on their mortgage payments.

The banks will have immunity from any future claims by the state governments for wrongdoings in the processing of foreclosures as long as the 5 banks follow the terms of the settlement.

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