Home Warranty Blog

MyElderLawPlanning Michigan Probate Court

2011-10-27T14:09:00.000-07:00

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Lending Standards Hurt Housing Economy

2011-09-15T12:43:00.001-07:00

Story first appeared in USA TODAY.
Home buyers such as Bob and Janet Zych have fueled the U.S. housing market for decades. They have excellent credit with scores that top 800, life-long careers and investment portfolios that have set them up for a comfortable retirement, they say.
But this year, after faxing a ream of paper about their finances, they got so fed up applying for a home loan that they simply wrote a check for their new, $85,000 vacation condo in Phoenix.
Trying to get a loan was just a nightmare, says Bob Zych, 65, a manager for Mohawk Industries in Omaha.
Following the greatest housing crash since the Great Depression, home lending standards have tightened to their strictest levels in decades, economists say. And people such as the Zychs and others nationwide are paying the price.
Tight home loan credit is affecting everything from home sales to household finances. Many borrowers are struggling to qualify for loans to buy homes. Others can't take advantage of some of the lowest interest rates in 50 years because they don't have enough equity in their homes to refinance. Those who can get loans need higher credit scores and bigger down payments than they would have in recent years. They face more demands to prove their incomes, verify assets, show steady employment and explain things such as new credit cards and small bank account deposits.
Even then, they may not qualify for the lowest interest rates.
The National Association of Realtors says lending standards are too tight and are hurting the housing industry's recovery.
The lending industry counters that standards are where they need to be, given still-falling home prices and the shaky economy.
Down payment amounts rise
The change is evident in the higher quality of loans held by government entities, which now buy or guarantee most new home loans.
Lenders that originate loans seek to meet their standards so that they don't have to hold loans themselves.
Through June, single-family home loans bought by government-backed Freddie Mac, for example, had an average down payment of 29% and an average FICO credit score of 751, the agency says. That's up from average down payments of 23% for loans originated in 2007 and average FICO scores of 707, Freddie Mac says.
FICO scores top out at 850. The national median is 711, FICO says.
New Federal Housing Administration loans, popular with home buyers who lack big down payments, likewise are being made to borrowers with higher credit scores.
From January through March, those loans went to borrowers with an average credit score of 704, up from 631 four years ago, FHA data show.
Even the worthiest borrowers have to put down more money than a few years ago to get the best loan terms.
Real estate website Zillow analyzed 3.6 million loan inquiries made through its website to mortgage lenders since 2008.
In July, prospective borrowers getting the best loan rates had average down payments of 28%. Three years ago, before the worst of the financial crisis, such shoppers averaged down payments of less than 24%, according to data from Zillow Mortgage Marketplace.
A struggle to close
Sometimes, even borrowers with seemingly pristine finances are struggling to close home loans.
Stephanie, 45, and Brian Poore, 46, of Hubert, N.C., went through two lenders this year before the third extended them a loan on an $86,000 condominium in Wilmington, N.C. The couple bought the condo for their daughters, ages 19, 16 and 15, to use during college.
The first lender went overboard on income questions, Brian Poore says, asking him to prove that he didn't pay for room or board while living on an Army base in Iraq, where he works as a contractor.
Another lender qualified the couple for a loan, given their credit scores above 780 and other financial resources. But then the lender backed off, saying it couldn't resell the loan to Fannie Mae because the condominium homeowners association didn't have enough cash reserves for maintenance and repairs.
With the third lender, the Poores had to put 25% down — not the 15% they originally intended.
The process took five months. The loan was for $67,000. One of the Poores' relatives recently bought a new car and got a $55,000 loan in less than a day, Stephanie Poore says.
The Zychs were hamstrung by lenders' concerns about their previous investments.
During the past five years, they acquired three rental properties — all in Omaha — that were leased and produce a positive cash flow for the couple. When the Zychs went to buy the Phoenix condo, lenders balked, saying they had too many properties, even though their finances were solid.
Roberta Fernandes, 24, a first-time home buyer, got a loan. But not without help. She needed almost 50% down to get a loan to buy her Miami condo in June. Fernandes is an assistant to a financial adviser at a brokerage firm. Her short work history hindered her ability to get loans with smaller down payments.
Her parents put up more than half the required down payment. Without their help, getting a loan would have been impossible, Fernandes says.
Jose, 40, and Ivelte Hidalgo, 35, also recently bought in Miami. Jose started a medical research consulting business in 2007. Ivelte works in the business, too.
Because they were newly self-employed, the couple were turned down by two lenders for home loans in 2008 and 2009.
They finally secured an FHA loan for a $280,000 house, which they purchased this summer. The couple put 3.5% down, the FHA's minimum.
With higher down payment requirements and tighter standards for conventional loans, the FHA has become a major player in the home-lending market.
For the first six months of this year, almost 51% of loans to buy homes were done through the FHA. That's up from 3.4% in 2007, says Inside Mortgage Finance.
But FHA loans aren't always the best deal.
Although they have smaller down payment requirements than conventional loans and credit criteria that are not as strict, there are limits on how big FHA loans can get.
FHA borrowers also pay a 1% upfront fee that conventional borrowers don't pay. And if buyers have enough money for larger down payments, they can avoid higher FHA premiums for mortgage insurance, which protects against default.
It can also take longer to get rid of mortgage insurance on an FHA loan than on a conventional loan, says Keith Gumbinger of mortgage tracker HSH.com.
Conventional loans with less than 20% down are available. However, such borrowers need mortgage insurance. In general, the lower the down payment, the more one pays in mortgage insurance. Interest rates also rise as credit scores drop.
For some properties — including those needing bigger loans, condominiums and homes in areas hard hit by the real estate crash — 20% or more down payments are the norm, says Greg McBride of Bankrate.com.
Nearly all borrowers are facing more documentation requests.
Except for a few years leading up to the real estate crash — when some borrowers got loans while providing little if any documentation of their assets and income — borrowers have long had to supply two years of tax returns, pay stubs and financial statements when applying for home loans.
Now, lenders want tax records to come directly from the IRS, as well as from borrowers. The IRS releases the records after applicants sign forms giving it permission to do so. Instead of two months of bank statements and pay stubs, lenders may want them for each pay period until the loan closes.
Howard Landa, a California physician, purchased a $900,000 home in Moraga, Calif., last year and refinanced it this year. The refinance lender wanted pay stubs for every two weeks as the loan was in process, which took almost two months.
Landa also had to explain a new Macy's credit card line, which he opened to qualify for a discount on a suit he bought from the retailer.
When he bought the house, Landa had almost enough money to pay cash for it. He also had an outstanding credit score of 810. Even so, the lender carefully checked his income, even requiring copies — front and back — of several $500 and $1,000 checks he deposited in his checking account after being reimbursed for travel expenses.
Reduced risks = fewer defaults
Higher standards do appear to be reducing loan defaults, which means fewer foreclosures in the future.
Fewer than 1.3% of loans originated in 2009 that were resold to Freddie Mac and Fannie Mae went into default after 18 months, government data show. That's down from more than 22% default rates for 2007 loans and about 3% default rates in 2002.
Avoiding defaults has become a primary goal of wary lenders, says Walters, the Quicken Loans economist.
They fear loans will go bad and the investors that buy them — such as Freddie Mac, Fannie Mae or others — will discover mistakes and sue the originating lender.
Many such lawsuits are underway.
Walters says their line of defense is to cross T's 42 times and dot I's 52 times. With home prices continuing to fall across much of the nation, lenders realize that any mistake could be fatal, he says.
Yet, the National Association of Realtors, and a number of consumer groups, say the tight standards are also a drag on the economy.
The NAR estimates that home sales — stuck at anemic levels — would jump 15% to 20% if lending standards simply returned to where they were a decade ago, before they got so loose they helped create the real estate bubble that later popped.
However, lending standards are unlikely to loosen until home prices stabilize, says mortgage loan expert Jason Kopcak of investment bank Cantor Fitzgerald. Nationwide, home prices are down 30% from their 2006 peak and are expected to fall more this year.

ILLEGAL ROBO-SIGNING CONTINUES

2011-07-20T06:16:00.000-07:00

Lawmakers and enforcement agencies called for hearings and further investigation Tuesday after learning that the illegal practice known as robo-signing has continued in the mortgage industry.
The Associated Press reported on Monday that county officials in at least three states - Massachusetts, North Carolina and Michigan - say they have received thousands of mortgage documents with questionable signatures since last fall. That's when forged signatures and false affidavits - also called robo-signing - led to a temporary halt to foreclosures. Banks and mortgage processers promised to stop the practice. But the findings of the county officials indicate that robo-signing is still a widespread problem.
Sen. Sherrod Brown, D-Ohio., chair of the Financial Institutions and Consumer Protection Subcommittee, said the subcommittee will hold a hearing on the robo-signing issue.
Wall Street and some in Washington want the public to believe that robo-signing is a thing of the past, but the same risky practices that put our economy on the brink of collapse continue to infect the housing market.
Rep. Maxine Waters, D-Calif., a senior member of the House Committee on Financial Services said the lenders who continue the practice need to be investigated and prosecuted. She believed regulators should step in and that the absence of stronger regulation is the reason why the system broke down in the first place" She said the county officials' findings show lenders will not stop
County officials, who are responsible for keeping land records, including property deeds, say that they have received thousands of robo-signed documents filed in their offices since October.
In Essex County, Mass., the office that handles property deeds has received almost 1,300 documents since October with the signature of "Linda Green," but in 22 different handwriting styles and with many different titles.
In Guilford County, N.C., the office that records deeds says it received 456 documents with suspect signatures from Oct. 1, 2010, through June 30. And in Michigan, a fraud investigator who works on behalf of homeowners says he has uncovered documents filed this year bearing the purported signature of Marshall Isaacs, an attorney with foreclosure law firm.
Early Tuesday, an official from the office of Minnesota attorney general, Lori Swanson, contacted the Essex County's John O'Brien to get more information for its own investigation into robo-signing. The Massachusetts attorney general's office also confirmed that it is meeting with several of the state's 21 registers of deeds to assess the extent of robo-signing in the state.
Also on Tuesday, nine recorders of deeds in Illinois held a press conference to say they will assist the state's attorney general Lisa Madigan who is investigating robo-signing in her state.
Rep. Waters, meanwhile, says the Office of the Comptroller of the Currency, or the OCC, is the main federal regulator for banks. As such, it's the OCC's responsibility to investigate the banks.
The OCC has been criticized by lawmakers and consumer advocates for going easy on banks in the past. The same criticism has resurfaced since the robo-signing scandal broke in September. Last fall, The Associated Press found that robo-signed documents led to banks wrongfully foreclosing on people who had paid their mortgages in full. When asked about the issue, an OCC spokesman flatly denied that any such thing had ever occurred.
The OCC partnered with other federal regulators and conducted a review of bank procedures including robo-signing in December. In April, the 14 largest national banks entered into a consent decree with the OCC in which they vowed to submit action plans as to how they would address such systemic issues as robo-signing.
Last week, the banks delivered those action plans to the OCC, which is now reviewing them, a spokesman said.

U.S. Steps Up Help For Homeowners

2008-11-26T09:26:00.000-08:00

WASHINGTON -- The chief executives of Detroit's Big Three auto makers appealed in dire language for U.S. taxpayers to help their industry, but couldn't dispel doubts in Congress that have clouded prospects for a government-led rescue.

In appearances Tuesday before the Senate Banking Committee, the leaders of General Motors Corp., Ford Motor Co. and Chrysler LLC, together with the head of the United Auto Workers union, argued the shaky U.S. economy couldn't withstand a collapse of any of the companies.

The chief executives of GM and Chrysler said they could run out of funds without the government's support. GM CEO Rick Wagoner said the package is needed to "save the U.S. economy from a catastrophic collapse." Many markets however are doing well, these markets include; Raleigh Real Estate, Durham Homes, High Point Homes, Greensboro Homes, Home Inspection, Wilson Homes, Wilson NC Real Estate, Home Warranty, Raleigh Estate Homes, Triangle Homes, Chapel Hill Farms and Farms Chapel Hill.

That the companies were convening -- "hat in hand," as Sen. Christopher Dodd (D., Conn.) said -- before a congressional panel reinforced the depth of their difficulties and the possible diminishment of their political clout. Extending a helping hand to Detroit auto makers, long a central part of the nation's manufacturing base, doesn't appear to be a given.

One question is whether the auto makers can muddle through to January when a new Congress convenes with strengthened Democratic majorities and a Democrat in the White House. The complexity of a possible intervention -- and the political divisiveness it has wrought -- could be too great to overcome this week.

On Monday, Senate Democrats introduced legislation that would set aside $25 billion to help the industry, drawing from the $700 billion fund created to stabilize financial markets. The legislation would allow the auto companies and parts suppliers to receive "bridge home loans" of at least ten years with favorable interest rates. But there is resistance among many senior Republicans and the White House. If no decision is made this week, the issue will be kicked over to the new 111th Congress.

In the late afternoon session, Republicans largely condemned the industry's request. Even some Democrats committed to helping the auto makers showed little enthusiasm for the task at hand.

While noting he backs aid, Senate Banking Chairman Mr. Dodd denounced the companies for failing to move more aggressively to reverse their sharp declines in market share. "They're seeking treatment for wounds that, I believe, are largely self-inflicted," Mr. Dodd said, adding the industry has failed to adapt and "we're all paying the price for it."

As the hearing stretched past its third hour, the top executives disclosed how much they might each apply for if Congress approved the $25 billion loan package: $10 billion to $12 billion for GM; $7 billion to $8 billion for Ford; and $7 billion for Chrysler.

The companies said they would use the money to pay employees, cover current operating costs and develop new products.

Both GM and Ford are on a pace to use up $2 billion each a month, based on their third-quarter earnings. Not getting funding immediately threatens GM most directly because the firm is operating close to its minimal funding requirements. The supply chain is shared among the Big Three, so a bankruptcy filing of one could spell problems for the other two.

Some analysts suggest GM, Ford and Chrysler can cut costs enough to survive until January. But if the U.S. auto market continues to sink, the companies' cash drain could outpace their ability to cut costs.

GM has said that without government aid, the company would run out of operating funds as early as early 2009.

Chrysler joined GM for the first time in linking its survival to a federal bailout. "Without immediate bridge financing support, Chrysler's liquidity could fall below the level necessary to sustain operations in the ordinary course," Robert Nardelli, the company's chairman and CEO, said. He added that the company was currently spending about a $1 billion a month more than they were taking in, leaving the auto maker with slightly more than $6 billion cash on hand.

Only Ford says that while the loan package is necessary for the betterment of the U.S.-based auto companies, it could withstand the downturn without government assistance.

The auto makers and the union sketched their companies' far-reaching impact. They also argued that Chrysler, Ford and GM are on the right track to compete with foreign-based auto makers, but that turmoil in the broader economy foiled their good planning. The companies together employ 239,000 people in the U.S.

Under pressure from senators over the issue of executive compensation, Chrysler's Mr. Nardelli said he would be willing to accept a salary of $1 a year as part of a federal bailout. Lee Iacocca made the same commitment when he ran Chrysler and secured federal loan guarantees in 1979. The chief executives of GM and Ford declined to make the same commitment.

The Banking Committee testimony is part of a broader lobbying campaign that includes parts suppliers and dealers. The executives will appear before the House Financial Services Committee Wednesday. All told, the companies are seeking $25 billion to weather the weakening economy, which has dampened demand for autos and restricted consumer access to home loans.

In another indication of the industry's problems, the world's three dominant credit insurers now consider the U.S. auto industry among the riskiest sectors for default.

Few lawmakers in either party doubt the economic challenges facing the Big Three. At issue is how -- and whether -- Congress should get involved.

Sen. Jim Bunning (R., Ky.) said a rescue proposal by Senate Democrats would give the industry "virtually a blank check," and doesn't require the companies to improve productivity and lower labor costs. "Major changes are needed, if federal dollars are to be made available," he said.

Sen. Richard Shelby (R., Ala.) said he has doubts about whether the money will be enough to meet the industry's needs: "Is this the end, or just the beginning?"

Industry supporters, such as Sen. Carl Levin (D., Mich.) want action this week. "The stakes are great and time is short," said Sen. Levin, who is scrambling to find the 60 votes needed to overcome objections in the Senate. Sen. Levin drafted the legislation that would set aside $25 billion to help the industry using bridge home loans.

To qualify, companies would have to accept limits on executive compensation, allow the government to take stock in the firms, and submit a detailed plan showing how they intend to return to sound financial footing and improve their capacity to produce fuel-efficient vehicles.

It wasn't clear whether Congress would demand management changes as a condition to any bailout, although the topic was on the minds of some lawmakers. Sen. Bob Bennett (R., Utah) predicted the jobs of hourly workers and executives are on the line as the industry restructures itself. "Everybody's going to get hurt in the process," he said, adding that the idea "that we in the Congress can prevent that from happening is wishful thinking."

The proposed assistance would be on top of $25 billion in already-approved home loans intended to help the industry retool to meet higher fuel-efficiency standards. The White House is pushing a rival plan to speed release of the previously approved home loans, by removing certain restrictions.

In testimony before the House Financial Services Committee, Treasury Secretary Henry Paulson said Tuesday the collapse of one of the auto companies "would be something to be avoided." But he said giving the industry access to the $700 billion fund isn't the answer. "I don't see this as the purpose" of the bailout program, he said.

Some Democrats aren't showing enthusiasm. Sen. Dianne Feinstein (D., Calif.) said she has problems with helping the industry without first receiving "a new business plan" that shows how the companies will return to competitiveness.

Sen. Jon Tester (D., Mont.) said the idea of additional government intervention isn't popular with voters: "People in Montana are experiencing bailout fatigue."

'Underwater' Need Not Mean Foreclosure

2008-11-11T07:26:00.000-08:00

What does being "underwater" in your house really mean? Probably not that you're drowning.

The number of underwater homeowners -- those who owe more on their mortgages than their home is now worth -- has been growing sharply since 2006 as real-estate prices have tumbled. By some estimates, between one in six and one in eight homeowners are in that position, most of them people who bought homes in the past few years or who put down small or no down payments.

This worries economists and policy makers, since owing more than your home is worth is the first step toward foreclosure. And it's a concern to the rest of us because foreclosures are roiling the financial markets and, closer to home, they drag down our neighborhoods. (Most people who still have equity, by contrast, would rather sell their houses at a loss than lose what's left of their investment.)

In response to concerns about rising foreclosure and delinquency rates, federal regulators are studying possible new programs aimed at needy homeowners. There are concerns that such programs could attract a flood of applications from those who don't truly need assistance or encourage lenders to push homeowners into foreclosure. At the same time, lenders such as J.P. Morgan Chase and Bank of America have committed to working on new loan terms for the most-distressed homeowners.

But experts who have studied previous sharp housing downturns in Texas, California, New York and Massachusetts say that being underwater, while unpleasant, doesn't lead huge numbers of homeowners to default on their mortgages and end up in foreclosure.

Christopher L. Foote, Kristopher Gerardi and Paul S. Willen of the Boston Federal Reserve Bank studied more than 100,000 homeowners who were underwater in Massachusetts in 1991 and found that just 6.4% of them lost their homes to foreclosure over the next three years, according to a paper published in the September Journal of Urban Economics. The vast majority of homeowners simply continued paying as usual because they focused on the affordability of their payments, not on what they owed, and they believed home values would eventually recover.

The economists found that homeowners typically lost their homes only after at least two things happened: Their home values dropped and they either couldn't afford the payments or stopped making payments after losing hope that prices would eventually recover.

Homeowners in California also were more likely than expected to keep paying during the deep 1990s slump, says Richard Green, director of the Lusk Center for Real Estate at the University of Southern California. More people turned in their keys in Ohio and Michigan during the difficult 1980s downturn because they lost faith in an economic turnaround.

Typically, homeowners fall behind after a job loss, divorce or serious illness. In the current downturn, foreclosures are higher than in previous cycles because more homeowners reached beyond their means to buy their homes and simply can't keep up the payments. As a result, the Boston economists project that up to 8% of underwater Massachusetts homeowners could lose their homes between now and 2010 -- a significant amount, but still not catastrophic.

So what does this all mean for you?

If you have a low-interest fixed-rate loan, you have a valuable asset that might be hard to replace in the current market, no matter what your home's value is. Keeping that mortgage current has some value, even if it means cutting other household expenses.

In addition, the penalties for defaulting are great. In most cases, walking away from a mortgage can knock a top credit score down to the cellar, says Ethan Dornhelm, a senior scientist at Fair Isaac Corp., which sells credit-scoring formulas to credit bureaus.

A person with a stellar credit score from the high 700s to the top score of 850 would see it drop more than 200 points. A person whose credit score is lower may see it fall by fewer points, but still end up with a score in the mid 500s. At that level, reasonably priced new debt, from credit cards to car loans, will be out of reach. In addition, a default could lead landlords and utilities to require more cash up front and even affect your job prospects.

If the borrower continues to pay other debts on time, the score will climb gradually, though it may take three to five years to return to "good" scores, from the mid-600s and up. Scores of 790 or more -- which are rewarded with the lowest interest rates -- won't be attainable for at least seven years, when the default blemish finally disappears, Mr. Dornhelm says.

Fannie Mae requires borrowers who have lost their homes to foreclosure to wait five years before it will accept a loan from them, though borrowers who had extenuating circumstances, such as an illness or job loss, may requalify within three years.

What's more, lenders in most states can go after homeowners for an unpaid balance on a mortgage. That's a real risk, especially if you have other assets.

The longer you stay in your house, the better the chances of making it through this down cycle. Though a return to peak prices may take five or 10 years, some housing markets may start to bounce back once credit becomes more available. Meanwhile, you'll be reducing your mortgage as you make your payments.

Lenders aren't going to renegotiate just because prices have fallen, but if you truly can't afford your payments, contact your mortgage servicer to see if you can rework your interest rate or work out new payment options. The federal Hope for Homeowners program, which began Oct. 1, is intended to provide some relief if lenders will agree to reduce the loan amount to 90% of the home's current value.

If you can't get help from your lender, try contacting a credit counselor certified by the Department of Housing and Urban Development. These counselors have direct access to lenders' loss-mitigation departments, which consumers don't, says Natalie Lohrenz, counseling administrator for Consumer Credit Counseling Service of Orange County, Calif. A list of HUD-certified counselors is available through Hope Now, a consortium of lenders and counselors. (Call 888-995-HOPE or go to www.hopenow.com.)

If you need to sell the property and can't afford to cover the shortfall, your lender may agree to a "short sale," in which you sell at a price below the mortgage amount. This is a much more complicated transaction to pull off than a regular home sale, though, and it may hurt your credit score if the lender reports that you failed to pay off the whole obligation.

Sales at Meritage Homes Decline by 28% in Texas

2008-10-30T12:03:00.000-07:00

For months, Meritage Homes Corp. has counted on Texas to carry it through the housing slump. But in its third quarter, the home builder paid the price for that strategy: Sales plummeted 28% in the Lone Star State, contributing to the company's sixth consecutive quarterly loss. Sales aroung texas may be down, but the markets around Charlotte Condos, Winston Salem Homes For Sale and Wilson NC Real Estate are all fine.

The Scottsdale, Ariz.-based builder said its loss widened because of write-downs on its real estate because of the housing market's continued weakness. Also, sales in Texas were affected by Hurricane Ike, not so much by direct physical damage but by delaying construction, closings and sales as the credit crisis widened. Arizona was the only state where the company saw gains.

As it waits for the housing market to hit bottom, Meritage has become dependent on Texas, which didn't become frenzied during the housing boom and, until now, had benefited from surging oil prices.

In its second quarter, Meritage said orders fell 28% outside of Texas, but slipped just 4% in the state, where it operates in Dallas/Ft. Worth, Austin, San Antonio and Houston. That's why, as of Sept. 30, more than half of its roughly 21,000 lots were in Texas, compared with 29% in Arizona and 1% in Colorado, with 28% owned. Earlier this year, a home-building consultant labeled the state a "lifeline."

Not any more. "Unlike prior quarters, sales volumes in Texas were down in line with the company average and, in turn, didn't offset weakness in harder-hit housing markets," noted UBS' David Goldberg. "We expect this trend to continue over the near term, given the impact the slowdown in the economy is having on buyer sentiment."

JMP Securities noted Texas's margins could come under pressure in a weaker job market. "The relatively low wage level and FICO scores in the Texas market have also slowed that market, although we see only modest price corrections likely," noted analyst James Wilson.

Even so, company executives said no strategy shift is imminent.

As the credit crisis seems to have pushed the world into a recession, the already battered home-building industry is feeling a deeper pain. The industry's confidence is at a record low and, after some homes sold below replacement cost, new construction has largely been halted. Earlier this month, the Commerce Department said new construction dropped 6.3% in September to the slowest pace since January 1991.

Major builders -- including Pulte Homes, Ryland Group Inc. and NVR -- recently detailed grim quarters.

Meritage, which had delivered one of the industry's best year-to-date returns, reported a wider net loss of $144 million, or $4.69 a share, compared with a loss of $118.6 million, or $4.52 a share, a year earlier.

The latest results included $55 million of pretax real-estate-related charges and a $106 million deferred tax asset valuation allowance. Credit Suisse estimates $305 million in further charges.

Meritage's impairments were elevated in the third quarter, but well below last year's third and fourth quarters. Of the latest impairments, $29 million were in Arizona -- fueled by four underperforming projects in Phoenix -- followed by $11 million in California. Nevada and Florida each had $4 million, while Texas came in at $2 million. As inventory and land prices have plummeted, the top public builders have written off more than $25 billion since 2006, according to Standard & Poor's Equity Research.

"While Hurricane Ike hurt our Houston operations in early September, the financial crisis and slowing economy have damaged buyers confidence and resulted in further decline in home sales and asset values which prompted us to record further real estate impairment in our third quarter," said Steven J. Hilton, chairman and chief executive officer, during the earnings conference call.

The builder said closing revenue dropped 35% to $374.8 million. Net orders fell 29%, while closings dropped 25%. As jittery buyers abandon deals, cancellations came in at 40%, up from this year's two previous quarters. Its September net sales were about 30% lower than the July/August pace -- the cancellation rate jumped to 45% that month alone, executives said during the call.

Make your home look 10 years younger

2008-10-13T08:38:00.000-07:00

These tips brought to you by ORA Warranty. ORA Warranty is a leading home warranty firm
dealing in the home warranty industry. These tips will help bring value to your home and increase the need for a home warranty.

Paint a room: Do any of your rooms look drab and worn, with walls and woodwork full of scuffed or fading paint? Or perhaps your wall color is dated and could benefit from a hip new palette. Maybe you have antiquated and stained wallpaper that needs to come down. Take a critical look at the color and condition of your walls, then consider jazzing them up a bit with new paint or wallpaper.

Replace pillows: Are the accent pillows on your sofas or beds starting to look a bit tattered? Are they out of style, reminiscent of a look long gone? If so, it's time to get new ones. Check out your favorite home-interior stores to see what's new.

Freshen wood furnishings: In the hustle and bustle of daily life, wood furnishings get dented and dinged. Now is the time to get a stain stick and touch up all your wood pieces, covering up those boo-boos that make them look older than their years.

Do some deep cleaning: There's nothing like a thorough deep cleaning to make your home look newer. Put on your grubby clothes, turn on some great tunes and get to work. Scrub your walls and woodwork, polish your silver, scour the grout in your kitchen and bathroom, and wash windows.

Weed out artificial plants: While I love faux greens, they are dust magnets. After a few years, they get filthy and faded. So do some interior weeding, tossing the fakes you've had on display for years. When you replace them, you're going to be so blown away by how much better today's faux greens are that you'll wish you'd rooted out the old plants earlier.

Edit accessories: Today's trend in interior design is for a lighter and leaner use of accents, using fewer pieces to make a bold statement. As you evaluate your displays, remove pieces you aren't crazy about and find new ways to showcase the select items you are crazy about.

Replace fixtures. Take a long, hard look at your light fixtures, faucets and the hardware on your cabinets. Do you still love them as much as you did when you moved in? If not, it's time to replace them with today's new styles

Open yourself to new window treatments: Window coverings take a beating from sun and dust. And when they get dated, they age the look of your entire home. Sometimes simply hanging new curtains will dramatically update the look of a room. I'm in the process of doing just that in my kitchen. The window valance above my sink has gone limp, so this fall I'm going to replace it. I'm having as much fun thinking through my window-treatment options as I will looking at my new coverings once they are up.

Other things to consider:

- Do you have a home warranty?

- Is the house on a septic system?

- Does the home feature a custom bathroom design?

- Does the master bathroom feature a custom shower enclosure?

- Are you working with a home buyers agent?

Nervous About Buying Home?

2008-10-13T08:13:00.000-07:00

Home Buying Tips and Help for Home Buyers

The single most important step that any Raleigh home buyer can take is to contact get a home waranty from ORA Warranty. ORA Waranty is a leading Home Warranty Dealer and will work hard to ensure your home warranty is exactly what you are looking for.

They're a couple in their early 30s -- a computer technician married to a bank teller. They have stable jobs, a down payment in the bank and an intense desire to escape their Charlotte condo for a luxury home in Raleigh North Carolina.

In fact, the couple has picked out their ideal property -- a sprawling ranch-style house on a full acre. Plus they're convinced this is an opportune time to buy.

Still, the couple is racked with doubts and have yet to make a serious bid on the property. Are they crazy to consider buying in so tumultuous a real estate market? Their parents think so and call them often to urge that they hold off.

This couple's situation illustrates the pervasive confusion affecting prospective homebuyers at a time of economic uncertainty, says a real estate broker, who is also the author of "A Survival Guide to Buying a Home."

One manifestation of buyer ambivalence is a common phenomenon: the withdrawn bid.

"People search around and around for the perfect house at a bargain price. When they find it, they're super excited and run to their agent's office to write an offer. But an hour later they tell the agent to tear up their bid," the broker says.

Of course, buyer ambivalence is understandable -- given the economic situation in the country. Turbulence on Wall Street, along with high gas and food prices and job jitters are combining to cause insomnia for many once-confident members of the middle class.

"It's difficult to get a handle on home values now -- or to accurately project what real estate will be worth in the future," the real estate broker says. Even so, he insists that those who get a rock-bottom price on a home in a desirable community will one day be glad they acted now rather than waiting.

Here are pointers for those now contemplating a home purchase:

• Clarify your reasons for making a purchase.

Fear is a powerful force that can restrain people from going forward -- even when they believe it's in their interest to do so. But those convinced that now is a good time to realize a long-held housing dream shouldn't let ungrounded fears inhibit them, says another real estate broker and former president of the National Association of Exclusive Buyer Agents.

"The main thing is to go into a purchase with your eyes wide open, plus every piece of solid information you can obtain," the other broker says.

Keep in mind, though, that there could be reasons why it might be imprudent for you to buy now, including near-term employment prospects or perceived job security.

• Get a strong mortgage lender and RTP home buyers agent on your team to build confidenc e.

It's no secret that home lenders now want to be doubly sure any home loan they originate will be solid. This means you'll need to be unusually well-prepared to answer the lender's request for documents, the other broker says.

"All your paperwork must be in order. I recommend that even before you go look at homes, you sit down with a Ann Davis and get all of your paperwork in order."

Also, more lenders are now demanding proof that the funds you've amassed for your down payment have been in your savings or checking account for some time. That means you'll need to produce account statements showing the money is truly your own, which gives you a stronger stake in the home or real estate property you buy.

If you're self-employed, you can now expect your lender to do a rigorous review of documents related to your business.

But the time you spend documenting your eligibility for the home loan will be worth it if your lender gives you a "pre-approval" letter. This you can use as a bargaining chip when negotiating for the home or real estate property of your choice.

• Take your time choosing a home -- within reason.

Many neighborhoods now have an unusually large number of for sale signs. This huge array of choices gives homebuyers yet another reason to delay commitment to any one property.

"If this is the right time for your family to buy a house, don't let the negative atmosphere around real estate discourage you. Use the abundance of choices to help you get precisely what you want," the other broker says.

Here are some other things to consider when buying a home:

- Do you have a home warranty?

- Is the house on a septic system?

- Does the home feature a custom bathroom design?

- Does the master bathroom feature a custom shower enclosure?

Home and the Range

2008-10-09T12:39:00.000-07:00

Engineers are experimenting with bold ideas and minor tweaks to squeeze out new efficiency gains in household appliances.

Some improvements may go unnoticed, like new materials and adjustments to motors. But engineers are also rethinking basic ways in which traditional white goods work -- exploring how one appliance can harness heat produced by another, for instance, or using ambient warm air inside a home.

Appliances already have made substantial gains in energy efficiency over the past two decades, driven by government standards. A new refrigerator uses about half as much electricity as one bought in 1990, for instance, while a clothes washer requires nearly 70% less electricity per load, according to the Association of Home Appliance Manufacturers, an industry trade group based in Washington, D.C.

Small efficiency gains spread across millions of homes hold huge promise for energy savings as a nation. The trick is to keep coming up with products that reduce energy needs while still satisfying consumer demands.

Household efficiency is the biggest potential we have to reduce energy use in the U.S., says Jeff Christian, a researcher at Oak Ridge National Laboratory in Oak Ridge, Tenn. But whether that potential is fulfilled, he says, is "in the hands of 120 million individual decision makers."

Here are some of the ideas being discussed, and products being worked on.

Microwave Dryer?

One idea that's been kicked around for years is a microwave dryer. Drying towels with the same technology used to reheat leftovers has its attractions. A microwave dryer would work much faster than a traditional dryer, using less electricity. But serious hurdles exist: Metal buttons and zippers could spark, just like a fork accidentally left in a microwave oven, says Tom Reddoch, director of energy utilization at the Electric Power Research Institute, a nonprofit based in Palo Alto, Calif.

For the near future, consumers are more likely to see tinkering with existing types of appliances than whole new categories. Lighter materials in a washing machine, for example, will reduce the power needs of its electric motor, while improved insulation will cut the power a refrigerator needs to keep food cool, says John Weinstock, vice president of marketing for digital appliances at LG Electronics USA, a unit of LG Electronics Inc. of South Korea.

General Electric Co. plans to introduce a water heater in 2010 that it says will use half as much electricity as a standard electric water heater -- now the second-largest consumer of power in a home, after heating and cooling. The new water heater incorporates heat-pump technology to absorb heat from the air and transfer it to the water, says Kevin Nolan, vice president of technology for GE Consumer & Industrial.

Transferring heat requires a lot less power than generating it, the power research institute's Mr. Reddoch says, so heat pumps are likely to find other uses as well. He imagines one day there will be a "modern clothesline" that would draw on warm air from outdoors to dry clothes in a highly efficient dryer.

Refrigerators have already slimmed down their electricity needs. But further changes are in store, such as having several small doors instead of one big one. Each time a fridge door is opened, a blast of warm air enters, and a lot of electricity is required to bring the temperature back down. Having several smaller doors can provide quicker access to items and allow less cool air to escape. In Japan, such models are already on the market, but industry insiders say U.S. consumers may resist such a big change if it doesn't clearly make their lives easier in some way.

U.S. consumers have been cool to a new kind of energy-saving stove now popular in Europe. Induction stovetops, which feature a smooth, glass cooking surface, are one-third more efficient than either open flames or electric ranges, industry experts say. While range stoves heat coils that in turn heat the food, an induction stovetop creates an electromagnetic field that creates an electric current heating the metal pan or pot on top of it. A cook can change the desired temperature instantly. The food cooks faster and with more precise control. Despite a slow start, Whirlpool Corp. says it is starting to see increases in U.S. sales of induction stoves.

Looking at how appliances can work together may achieve much bigger energy savings than tinkering with individual pieces. For instance, the heat in a clothes dryer is currently wasted when it goes out the exhaust vent. Whirlpool engineers are looking at using that heat to warm water for the washing machine, thus reducing the load on a home's water heater, says Henry Marcy, vice president of global technology for the Benton Harbor, Mich., company.

Whirlpool is also exploring the possibility of a household system that captures and reuses heat that otherwise is wasted. But the company says it isn't ready to commercialize such a system, because for it to work, homes may require significant changes.

Smart Power Strips

Some new products try to help consumers themselves be smarter about their power usage.

While many major appliances use less electricity than they did two decades ago, households are using more, due to the boom in electronic equipment -- especially home-entertainment gear and chargers for personal electronic devices. The costs add up with each charger left plugged in or DVR running 24 hours a day.

Motion-sensitive power strips may help. Watt Stopper Inc., a Santa Clara, Calif., unit of France's Legrand SA, makes a power strip that works in combination with a motion detector to shut off all the electronics plugged into it after determining no one has been in the room for a predetermined length of time.

Another idea is "smart" appliances. Most households now pay a flat rate for electricity. But power prices actually fluctuate throughout the day, depending on usage levels. According to the power research institute's Mr. Reddoch, there are devices that alert customers to price changes in real time, as well as appliances that can be set to respond on their own to price shifts.

Some of these changes are starting to trickle into the market, such as a light that changes colors depending on power prices. Also, GE plans to release appliances next year with displays that indicate real-time power prices. The Fairfield, Conn., company says the appliances will be programmable to run when the rates are least expensive.

This kind of smart technology has huge potential, says Mr. Reddoch, who adds: "We don't convey to our consumers what it really means to use electricity."

A Quest for an Energy-Efficient House

2008-09-23T08:09:00.000-07:00

We Undertake Four Home 'Audits'; The Pros vs. DIY

Preventing energy waste has become a household preoccupation in the era of nearly $4-a-gallon gas and rising prices for everything from airline tickets to milk. Whether motivated by environmental impulses or a desire to reduce utility bills, many Americans are researching ways to create a more energy-efficient home.

Statistics from a range of sources provide plenty of motivation. The U.S. Department of Energy's office of Energy Efficiency and Renewable Energy (EERE) estimates that draft reduction within a home can lower energy costs anywhere from 5% to 30% annually. Meanwhile, according to Department of Energy data provided by the U.S. Green Building Council, homes account for 21% of U.S. carbon dioxide emissions. And claiming a green home remodel makes for great neighborhood bragging rights.

Eager to lessen our carbon footprint and plan a responsible remodel, we undertook four so-called "energy audits" on our 1966 Seattle home, which has a finished 1,100-square-foot main floor and a partially finished 1,100-square-foot basement. We wanted to learn both how to improve the finished portion of our home and how best to add insulation and factor energy efficiency into an eventual basement remodel.

Energy audits -- assessments of your home's energy efficiency -- run the gamut from free do-it-yourself audits offered online to paid inspections in which professionals with varying credentials spend up to three hours scrutinizing the home and determining what gestures will improve its energy efficiency and which fixes will reduce energy expenses. More sophisticated professional audits employ high-tech devices, including "blower door" fans, which lower indoor air pressure and enable technicians to measure draft levels, and infrared (thermographic) scanning, which can measure surface temperature variations and thus spot air leaks and poor insulation.

We started with two do-it-yourself energy audits offered free online, including the Home Energy Yardstick offered by Energy Star, the organization that promotes energy efficiency and endorses energy-efficient products, and Home Energy Saver, a free online audit from the Environmental Energy Technologies Division at Lawrence Berkeley National Laboratory, a Department of Energy lab operated by the University of California.

The free Home Energy Yardstick was disappointingly basic -- especially given how much data we had to provide from 12 months' worth of utility bills. However, it's not a bad starting point. The Yardstick calculated that we have a 1.7 efficiency score on a scale of 1 to 10 (oops). Tips for making changes were basic, such as using a programmable thermostat (already in use), energy-efficient bulbs (check), and Energy Star-endorsed appliances. Nice tips, but rather generic.

Next up, Home Energy Saver put us through more paces, asking us to answer 20 categories of questions ranging from insulation levels in attic walls to our furnace type. We had to guess at some answers, but, assuming we guessed right, the data provided were detailed: The program spat out nine pages worth of information on possible improvements, including the cost to implement each, and how much we would save in energy costs. For instance, insulating our basement to R-11 (insulation-speak for thickness levels -- the higher the better) would cost only $480 but could save us $115 per year in reduced bills. These were estimates, to be sure, but they helped us shape priorities.

The professional inspectors drilled deeper, looking more at the "building envelope" of our home and making more concrete recommendations. The Home Detective, a home-inspection company that also performs energy audits, sent an inspector who checked our exterior, climbed in our attic and perused our basement, but didn't bring out some of the higher-tech gear. The upshot? It suggested that we increase the "R" value of attic insulation to R-30 or more, insulate interior walls surrounding our non-insulated garage, and insulate the perimeter of the basement's ceiling -- an area known as the house's "rim joists." Minor fixes would include sealing ducts and any spot where pipes intersect with a floor or ceiling. The cost: $169.

Pinnacle Inspections used both a blower door test and infrared scanning to investigate how airtight our home is. The blower door test, which the technician ran twice to make sure results were solid, revealed that our home is relatively airtight for its age -- possibly due to our new windows. The technician seconded Home Detective's recommendation to insulate rim joists and walls adjacent to our garage, but also was able to use infrared scans to point out non-obvious sources of drafts on our main floor, all needing only minor fixes. These areas included the front door (which needs weather-stripping), switch plates (which need fireproof electrical insulation), window trim (which needs insulation), the attic trap door (which could use weather-stripping or other insulation), and a bathroom fan that is vented into the attic (and could be better insulated).

In the end, we felt that Pinnacle's high-tech energy audit was worth the $550 price tag, since it gave us short-term and low-cost repairs we could make now as well as guidance for future insulation projects. Now, we're ready to tackle that basement.

By: Jane Hodges
Wall Street Journal; September 18, 2008

How to Choose a Mortgage Lender

2008-09-23T06:16:00.000-07:00

When choosing a mortgage lender, the first thing one usually thinks of is getting the lowest interest rate available. While interest rates are important, there are other notable considerations, such as choosing a lender you can trust and with whom you can work. Take time to research area lenders.

As you will see in this brief outline, obtaining a mortgage can be a lengthy and complex process. Along the way, there are many opportunities for problems and misunderstandings.
Select a lender in whom you can have confidence and trust - one you can depend on to help you make decisions for your long term benefit. Taking time to research the lenders in your area just may prove to be the most valuable investment you will make toward the purchase of a new home.

The Best Mortgage

All lenders offer a variety of home financing options. A good lender will work with you to find what best suits your individual circumstances.

Most loan rates will not differ widely. However, differences in loan structure can result in large savings of costs to you. Loans may differ in such items as: Term (length of the loan), prepayment options or penalties, processing fees, no credit fees, etc.

While most mortgages are offered for terms of 15 and 30 years, other terms may be available. Keep in mind that the shorter the term, the less you will pay for your house over the life of the loan. However, the shorter the term, the higher your monthly payment will be. Your lender can help you decide which loan arrangements are best for you.

Finding A Lender

Build a list of lenders. Talk to people you know who have bought or refinanced a home recently.
professionals. Or simply look in the yellow pages under "Mortgages."
Talk to a loan officer. Call or visit the lenders on your list. Get a feel for what it will be like to work with them and how they approach your needs. If you're still uncertain, ask for references from recent home buyers like yourself. Ask about their experience with a particular lender.
Compare rates for similar loans. Among the things you'll want to discuss with prospective lenders are the rates they offer on mortgages. But when comparing rates between lenders, be sure the rates are for comparable loans, and remember to include fees and other costs so you're really comparing apples to apples.

It is important to verify that you lender is a member of a state association for mortgage lenders. This is a trade association made up of members engaged, either directly or indirectly, in the mortgage lending business. Each member is bound by a strict code of ethics to encourage the highest standards of conduct in dealing with the public and other members. The purposes of the association can be summed up as follows:

Encourage among its members sound and ethical business practices in making, marketing and servicing of real estate loans.
Inform the members of changes in government laws affecting real estate.
Provide education to the membership and the public on real estate matters.

In a continued effort to provide consumer education and assure compliance by all members to the canon of ethics, an ethics committee is in place to provide assistance to you. If you have a complaint or need general information, contact your state's mortgage lenders association.

Pre-Qualification

Before you start house hunting, it is wise to determine your price range. This can be done through the simple process ofpre-qualification. To become pre-qualified, a lender or real estate agent will use financial information you provide to estimate the maximum mortgage you should be able to obtain. The process doesn't guarantee that your mortgage application will be accepted, but it does help you narrow your search to homes you can afford.

Interest Rate Protection

When applying for a loan, you will be given an option to "lock in" a rate, thereby guaranteeing your interest rate during the processing and underwriting of your loan. It is wise to obtain a written, rather than verbal, interest rate agreement if you choose this option. The other option is to let the rate "float," allowing the final rate and fees to be set nearer the settlement date. This means your rate would be subject to market conditions at the time and date that your rate is locked in prior to the closing.

Loan Application Process

A loan officer will complete the application form and collect all information necessary to begin processing the loan. Discuss the loan program and terms best suited to your financial needs with the loan officer. Then a loan processor will verify your loan application information. The loan processor assembles your documentation for submission and final risk approval to the underwriter, who then forwards your package to a closer to prepare the closing documents. If denied, a letter outlining the reasons for denial is issued to you.

Loan Closing

When the lender approves your loan, it is time to close. Closing the loan and transferring the title to the property are the legal procedures that are handled by a real estate attorney.

Properly Fixing a Roof Now Will Save Time and Money Later

2008-09-22T10:16:00.000-07:00

Fall is upon us, and it won't be long before you look at your roof and see snow piling up. While that isn't an image many people enjoy, it reminds us that it is a good time to check your roof to make sure it is ready to handle the harsh winter weather.

While fall is often a time when homeowners focus on some indoor home improvements, one of the most important home improvements may be putting on a new roof (see if this is covered under your home warranty). Sure, a new roof doesn't have the "wow" factor that a new kitchen or finished basement has, but it is vital in eliminating the potential for serious water damage in your attic. If you have an older home, or even one built in the last 20 years, there is a good chance you need a new roof.

Of course, one of the most common questions I get from callers is, "How do I know if I need a new roof?" If you have any obvious leaks in your attic or ceiling, that's a sure sign that you need a new roof. Even if you don't have a problem with leaks, it doesn't mean your roof is fine. To determine if your roof is in need of repair or replacing, take a pair of binoculars and inspect your roof shingles. If they are cracked, discolored or curling, you should call a full-service roofing contractor to get it inspected.

Once you determine that you need a new roof, you should learn all you can about roofing and roofing products. For example, in the past, many homeowners that had one layer of shingles on their roof would elect to have the roof "re-covered." That's where the contractor would put a new layer of shingles over the old ones. While that is certainly cheaper than a complete "tear-off" of the old shingles, it is not the best solution to your roofing needs.

ORA Warranty is one company that doesn't recommend re-covering. According to experts, if you do a re-cover, it means you are assuming the wood underneath and the original shingles are in good shape. However, you can't really know that unless you tear off the old shingles and inspect the wood. If that wood is rotting or in need of repair, your roof could still leak even after a re-cover.

Home warranty and construction experts also say that re-covering a roof doesn't enable a roofer to address other important areas of the roof's integrity, such as flashing walls and areas around chimneys or stack-vent pipes.

When it comes to roofs, you get what you pay for. Therefore, saving some money by doing a re-cover could unfortunately lead to paying your deductible on an insurance claim when your ceilings are damaged by water leaks.

Cost of shingles

You also get what you pay for in terms of roofing products.

While most contractors may be similar in pricing for installation of a new roof, the bigger cost differences are in the type of shingle you choose. There are two categories where the cost for a shingle can vary dramatically. One is the style of the shingle, while the other is the shingle warranty.

In the past, most shingles were the flat, three-tab variety, and only came in a few basic colors, such as black, gray or brown. Fortunately, today's homeowners can choose from a variety of architecturally designed shingles in a several colors that complement the look and color scheme of your home.

So, today's shingles can actually bring better curb appeal.

Of course, these architectural shingles are more expensive than the flat, three-tab version, but there are various price points for you to choose from to help you stay within your budget.
Warranty

The other important price factor when considering roofing shingles is the warranty. Obviously, a shingle that is warranted for 50 years is going to cost more than one warranted for 25 years. But it also will be better then the 25-year warranted shingle, so it will last longer.

When it comes to warranties, you need to know what the warranty covers before you can decide whether it's worth the investment. The best warranty is one that has a "No Dollar Limit." Which means that no matter how bad the problem or the cost, the shingle manufacturer will take care of the problem.

If you are planning to get a new roof, it's important to familiarize yourself with the common terms used in the roofing industry to help you make an educated decision when choosing a contractor and roofing materials. See the accompanying story for some of the most common terms used in the roofing business.

Once you have settled on the type of roof shingles you want, make sure you have enough roof and soffit ventilation to improve the shingle's life. With the proper amount of insulation on your attic floor, your attic temperature is closer to the outdoor air temperature, which eliminates the potential to "cook" the underside of the shingles. Most roofing contractors will recommend and install the proper ventilation system for your roof.

Make Home Repairs Before Autumn Sets In

2008-09-22T08:50:00.000-07:00

When you're working, wrangling the kids and generally living a full life, it's easy to let taking care of your home fall to the bottom of the priority list. But you need to stay on top of maintenance chores if you want to keep your home and all the good things in it functioning smoothly.

As fall approaches, it's time to start thinking about a top-to-bottom inspection to check for any damage and to prepare for the upcoming cold winter months.

Bite-sized projects

When it comes to staying one step ahead of maintenance headaches, we have to admit, our preference would be to bury our heads in the sand and hope that someone else takes care of any problems. Fortunately, we learned a trick that helps us overcome that mental block. If we break a big task down into smaller tasks, and then put one task on our to-do list each week, we will surprise ourselves by tackling something we didn't think was possible.

For example, Sarah recently moved into a new house and there were about 50 little maintenance issues, such as a knob that had fallen off the dresser drawer and a leaky faucet that was keeping her up at night, which she knew she had to deal with. So she broke it down. Week one, she created a checklist. Week two, she went to the hardware store for all the supplies she'd need to fix the broken things. Week three, she fixed the broken knob. And so on. When you're feeling overwhelmed, break the project down into smaller bite-sized steps, and you'll be off to the races in no time.

Getting help

If you keep putting off maintenance tasks because you're too busy, reach out to others who can help you. I am happy to admit that I am out of my depth in many areas of home maintenance. Why? Because that means my job as a homeowner is really about finding the right people to help me for the right price.

Here are three essential chores to tackle this week to get your home ready for the transition to fall.

No. 1. Change esssential batteries

Don't wait until your smoke and carbon-monoxide detectors chirp at you to be changed, since that usually happens when you're busy doing something else (like sleeping). Buy a few extra batteries when you're at the grocery store this week and swap out the old batteries for new ones in all of your detectors.

No. 2. Change the filters

As much as half of the energy used in your home goes to heating and cooling. A dirty filter will slow down air flow and make the system work harder to keep you warm or cool -- thus wasting energy. A clean filter will also prevent dust and dirt from building up in the system, leading to expensive maintenance and/or early system failure. If it's been more than three months, buy some new filters and put them in your heating and cooling systems this week.

No. 3. Sweep the chimney

Chimneys need periodic examination and thorough cleaning to maintain efficiency and to reduce the chance of a chimney fire. Book an appointment with a chimney sweep to have yours professionally cleaned and checked for loose or missing mortar.

By: Sarah Welch and Alicia Rockmore
Detroit News; September 20, 2008

Creating a Wonderful Master Bedroom And Bath

2008-09-22T08:47:00.000-07:00

Enlisting the help of a professional could be a saving grace

To shorten their extremely long commute, many Americans are moving out of the suburbs and into the city. However, this also means trading in a brand-new, spacious dig for a 100-year-old row house that needed lots of work.

To save money, the many intrepid couples decided to don safety glasses and sledgehammers and do it themselves. But after a certain length of time goes by, couples have realized they have bitten off more than they can chew. Their houses are still in shambles, and they often run out of money, ideas and patience.

Many couples often grow weary, and consider abandoning their projects. However, if they can afford to hire a professional to finish their kitchen remodel, for instance, the couples' sanity can be saved. Couples also might want to consider simplifying their projects, like purchasing a bath enclosure rather than completely redoing a bathroom.

Here is a professional's account of a typical couple who has enlisted help:

The couple wanted their third-floor bedroom to be an open space with a bright, airy loft feeling. They had gutted it with that in mind, but the shell of a room lay unfinished in a heap of dust and debris. So the first order of the day was drywall -- a lot of drywall. I created walls and ceilings, and lay down a sub-floor covered with beautiful dark vinyl that has the look of wood.

Once the basics were in place, I chose a color palette for the space. When searching around for inspiration, I found a box labeled "Barb's favorite fabrics." In it, I discovered a gorgeous sage-and-gold cloth that gave me the jumping-off point I needed for the paint, fabrics and tiles.

I then got busy dividing the loft into two zones: a bedroom and a bathroom. I separated the two areas with a wall of closets that provide storage, privacy and soundproofing. In addition, I closed off the smaller entrance to the bathroom with a series of woven panels on a track system that will slide across the space when privacy is needed.

In the bedroom, I put in a king-sized bed with a chocolate-brown upholstered headboard.

For added warmth and ambience, I put in gorgeous linens and throw pillows in a variety of textures and colors. And, for a touch of romance, I installed a beautiful crystal chandelier above the bed.

In the bathroom, I created a little closed-off space for the toilet, but left the rest of the space open.

In this open area, I installed a gorgeous old-style tub with cast-iron feet (after I reinforced the floor to accommodate this 700-pound beauty); a glass-enclosed shower, complete with solid white quartz walls and a feature wall in a beautiful green rippled tile; and a stylish vanity with a quartz countertop, a stunning sink in a gold-and-green paisley pattern, a mirror and two sconces.

After adding a variety of accents and accessories, this third-floor bed and bath were complete. With some high-end fixtures and finishes, a mixture of textures and colors and creative planning, Barb and Evan got the loft space they desired.

Now, with their bedroom-renovation woes behind them, the couple can finally get a good night's sleep -- and start dreaming about finishing the other rooms in their house. How divine!

Luxurious Condo Life

2008-09-22T08:44:00.000-07:00

Glenmore Garden Villas offers luxury living at affordable prices

In today's market, homebuyers have more options – especially when it comes to purchase price.

That's why several developers are building homes and luxury condos that are more affordable than many of the luxury-prices dwellings that came to market a couple of years ago. Yet at the same time, they're not skimping on luxury details.

Elaine Burgin, Marketing Vice President at Glenmore Garden Villas, says there has never been a better time to buy a new condominium, with extremely low mortgage interest rates and great values in the housing industry.

One example is Glenmore Garden Villas, located right off of I-485 on McKee Rd. in Charlotte, North Carolina. Glenmore Garden Villas is being developed as an attached-condo community with units starting from the low $400s.

“Our condos are close to I-485 for easy access to other popular areas of South Charlotte like Ballantyne, Southpark, Center City and the Charlotte Douglas Airport CLT for easy flight arrivals and departures with quick access to the CLT airport parking and terminal.,” says Burgin.

But even with such reasonable pricing, “These units definitely offer luxury-line amenities,” Burgin says. “For example, they all have high vaulted ceilings and cultured marble countertops in Master Bath and Guest Bath rooms. They also include hardwood floors, arched openings, top of the line appliances, and granite countertops in the kitchen.”

Buyers choose one of two floor plans, both equipped with a flex room and office. The Highland Villa is a 2,899 square feet condo, with three bedrooms, two and a half baths, and an open living/dining area. The Forest Gate Villa is also 2,899 square feet and has three bedrooms and two and a half baths, but the dining area is separated and slightly more secluded.

The Glenmore community has 16 acres on which it offers peaceful fountains, gardens, elegant pools, a cabana, and pergola covered lounging areas.

For more information regarding luxury condos, visit Glenmore Garden Villas' website.

Burning Issue

2008-09-17T09:02:00.000-07:00

As wood stoves gain popularity, air-quality concerns rise

The soaring prices of heating oil and natural gas are prompting many Americans to warm their houses with a less expensive fuel -- wood.

Consider Julia and Jim Fusari of Freeport, Maine. Last year, they burned 500 gallons of oil to heat their 2,000-square-foot home. They hope to cut that figure in half by supplementing their oil furnace with a new stove that burns pellets of compressed wood waste. Relying solely on oil is "just too expensive," Ms. Fusari says. "We can't afford it.".

But increased reliance on wood stoves is worrying many environmental regulators and activists, who say the practice emits harmful pollutants. Around the country, local environmental regulators are limiting the use of stoves when pollution is especially bad, and in some cases they're offering incentives to get people to buy the cleanest models possible.

"People conceive of burning wood as being natural. Tobacco is natural, too -- until it burns," says Julie Mellum, president of Take Back the Air, an organization concerned with neighborhood air pollution, and Midwest director of Clean Air Revival, a group concerned with the medical hazards of wood-smoke exposure. "When many people are burning wood, the effect is all the more hazardous."

Burning Money

Many homeowners feel they have little choice but to switch to wood stoves. Residential heating oil, an energy source for 8.1 million U.S. households, will average $4.13 per gallon this winter, according to a projection from the Energy Information Administration, a federal agency that tracks energy statistics. The average household can expect to pay $2,524 for heating oil this season, up more than 30% from last year. And natural-gas bills will increase 19% to $1,017, the agency predicts.

The threat of high heating costs is pushing up stove sales across the country. Second-quarter shipments to dealers of pellet-burning stoves and stove-like inserts that fit inside fireplaces rose 212% over the same period last year, reports the Hearth, Patio and Barbecue Association, a trade group in Arlington, Va. Shipments of wood-burning stoves and inserts were up 54%.

Burning wood offers consumers sharply lower fuel bills. In some cases, adding a wood stove can reduce oil consumption by half or more, and the cost of fuel can be as low as about $1,380 per season for a pellet stove in a midsize house. The problem? Wood burning produces toxins such as dioxin, arsenic and formaldehyde, and emits fine particles into the air -- known as particulate matter -- that can become embedded in the lungs.

Heat Source

Particulates can aggravate respiratory conditions and lead to cardiac problems and lung disease, according to Janice E. Nolen, a policy advocate for the American Lung Association in Washington, D.C.

In 1988, an Environmental Protection Agency regulation required new stoves to keep particulate emissions below certain levels. Some states and municipalities require that all stoves sold and installed carry an "EPA certified" designation.

But some clean-air advocates say the EPA's certification standards aren't stringent enough to curb runaway pollution. Even wood stoves that are certified as "clean burning" by the EPA still emit 107 times more fine particulates than an oil-fired furnace.

Earlier this year, the Western States Air Resources Council in Seattle and Northeast States for Coordinated Air Use Management in Boston, both of which are groups of air-quality agencies, urged the EPA to tighten its certification standards with stricter particulate requirements. The EPA says it's reviewing the information it needs to revise the standards.

State by State

In the meantime, local regulators are cracking down. In July, the Bay Area Air Quality Management District in San Francisco approved its first mandatory controls on indoor residential wood burning. The air district can prohibit burning on nights when particulate matter exceeds 35 micrograms per cubic meter -- something that occurred seven times during the 2007-08 winter season. Violators could incur fines of up to $1,000.

Similar measures are in effect elsewhere in California, including Sacramento and the San Joaquin Valley, as well as in other states. The Puget Sound Clean Air Agency in Seattle bans indoor burning of any type of wood or pellet stove -- unless it's the only adequate heat source -- when pollution reaches its highest levels. (That's on top of Washington State's stringent emissions standards for wood stoves, which are tougher than the EPA's.) In Colorado, residents can use only stoves certified by the EPA or state when pollution is high in the wintertime.

Other states are trying to get residents to replace older stoves with cleaner-burning models or other heating sources. The state of Washington this summer awarded $1.5 million in grants to local clean-air agencies for one such effort. Last year, a Puget Sound Clean Air Agency program offered consumers in three communities incentives ranging from $200 to $750 to make the switch. A total of 238 households participated, and more than 100 switched to cleaner-burning wood or pellet stoves.

A similar program in Libby, Mont., saw 1,130 stoves replaced between 2005 and 2007. The result: a 28% reduction in fine particulates during winter months, according to the Hearth, Patio and Barbecue Association. But Montana air officials say the state needs three years of data in order to be more certain of the program's effects.

Some states with a wealth of forestry resources are trying to balance their convenient fuel source with cleaner air. In Maine, for instance, Gov. John Baldacci has established a Wood to Energy Task Force to explore a transition to cleaner-burning stoves and pellet fuels.
What to Look For

So, what's the best move for consumers interested in heating cleanly with wood? First, do your homework. Standards vary among states and local jurisdictions, so make sure you know what's legal for your area. And look carefully at performance levels, which can vary even among certified stoves.

Hearth Condition

* The Popular Alternative: As oil and gas prices soar, people are flocking to stoves to help heat their homes.
* The Drawback: Burning wood releases harmful pollutants -- leading lots of states to crack down on wood-burning stoves.
* The Smart Solution: Before you buy, do your homework on local rules and figure out what size stove you need. Also, look into ways to keep the heat in your house, such as an efficient shower enclosure, to prevent drafts.

"Look at the emissions numbers and try to purchase the cleanest-burning unit you can," says Lisa Rector, a senior policy analyst with the Northeast States air-quality group.

EPA-certified stoves carry a label that that shows how a particular stove performs on a scale of acceptable emissions and its wood-burning efficiency. The lowest particulate emissions among stoves are generally between 1.8 and 3.0 grams per hour; the EPA limit for wood stoves with the most popular type of combustion system is 7.5 grams per hour.

Also bear in mind that some wood stoves and fireplaces are exempt from the EPA standards, which apply mainly to appliances not intended for residential heating, such as cook stoves, decorative fireplaces and outdoor wood-fired boilers. But it's illegal to install noncertified stoves in places with strict standards, such as Washington State.

Adding to the confusion, many pellet stoves don't require EPA certification at all if they already meet certain standards required for certified wood stoves. They are also relatively clean because the pellets burn more efficiently than regular wood, producing more heat and less pollution (generally about 1.2 grams of particulate emissions per hour). Stoves that burn coal, corn and other organic waste are also unregulated.

It's also important to work with a reputable dealer who can help you choose a properly sized stove. If it's too big, for example, it will overheat the room unless you reduce the air flow -- which causes a low, smoldering fire and excessive smoke. What's more, wood selection can play an important role in pollution reduction. Burning dry, seasoned wood reduces smoke output.

Ultimately, says Ms. Rector of the clean-air group, the burden falls on consumers to do research prior to purchasing a stove. "You can burn wood," she says. "But you have to find out how to do it right."

By: Suzanne Barlyn
Wall Street Journal; September 15, 2008

Home-inspection Checklist Helps Prevent Problems

2008-09-05T11:22:00.000-07:00

When people buy a home, it is advisable to have it inspected by a professional home inspector to ensure there are no major issues with the home before buying it, and to help determine which items might need repair or regular maintenance.

But once people have lived in their homes for a few years, they usually don't bother about putting many of the same items on a home-inspection checklist to ensure there are no developing problems.

It's smart to use regular-home inspections to ensure your home is properly maintained. Certainly having a professional home inspector perform an annual inspection of your home is a great idea, but you can do your own inspections and save a lot of money.

While I wouldn't advise you to crawl into your attic or up on your roof if you don't feel comfortable doing that, there are plenty of other items you can check and repair if needed.

The weather at this time of year is ideal for doing an exterior inspection of your home. When that's done, check the interior as well so you can fix things before additional problems occur.

When doing your home inspection, focus on these key areas that many professional home inspectors find most often are in need of maintenance:

• Gutters and downspouts. Make sure gutters are clear of debris and aligned properly so they can do what they were made to do -- keep rain water from seeping into your basement and causing potential flooding or structural problems. While you are inspecting your gutters, look for leaks in the seams that can be repaired with silicon caulk. If you pull on the gutters and they give way, your fascia boards may be rotting and need replacing.

• Improper grading around the home. Besides leaky gutters, one of the other common reasons people have basement leaks is because the grading is sloping toward the home, rather than away from it. If you have an area of your yard that slopes toward your home, re-grade it with topsoil.

• Shingles and chimney flashing. Loose or missing shingles are a sure sign your roof may be wearing or is damaged. The safest way to do a sight inspection of your roof is to use a pair of binoculars. Look for worn, curling, or discolored shingles, and check the valleys (where rooflines come together).

Cracks in the valleys can lead to leaks in the attic. They need to be sealed immediately. Then, check the flashings around your chimney to see if they need to be caulked or repaired. This will also help prevent water from leaking into your home.

• Exterior caulking and weather stripping. Lack of proper caulking or weather stripping around door and window exteriors can cause air to seep into and out of the home, which increases heating and cooling bills. Replace hardened or cracked caulk and window putty. Make sure all openings where pipes and wires enter the home are sealed and the caulk is still flexible.

• Gas leaks at valves on appliances. Gas valves on appliances, such as dryers, stoves, or hot-water tanks, can begin to leak over time. There have been many incidents where a gas leak in a home resulted in an explosion.

By doing the simple smell test, you can ensure this catastrophe won't happen to you. If you smell gas, call the gas company immediately.

• Dryer vent systems. Every year, thousands of families experience home fires that are caused by cheap or clogged dryer vents. Unfortunately, many homeowners use vinyl tubing rather than hard metal for the dryer vent, or they don't clean the vents regularly. Both can lead to dryer fires.

If your clothes dyer has a vinyl or foil dryer vent, replace it with a solid-metal vent. And make sure you clean your dryer vent at least twice a year.

• Inoperative smoke detectors. Most people have smoke detectors in their home, but don't clean them or change the battery regularly. I recommend cleaning smoke detectors and replacing the batteries twice a year -- on Memorial Day and on Labor Day. Remember, a smoke detector's life span is 10 years.

Building your own home inspection routine into your annual maintenance schedule is a cost-effective way to protect one of the biggest investments of your life.

Also consider getting a professional home inspector to perform an in-depth inspection every five to ten years to help you determine if you have been missing items that need repair and get a home warranty to cover regular maintenance costs.

It is always more economical to repair or upgrade according to your schedule rather than having to repair or replace on an emergency basis. The more carefully you inspect your home, the less you'll have to worry about in the future.

By: Glenn Haege
Detroit News; August 30, 2008

Dream Homes At Prices You Can Afford

2008-08-25T08:53:00.000-07:00

Is buying a new home a good idea in today's economy? As a long-term investment, homeownership is still one of the best investments for individual households.

Housing, like all markets, has its ups and downs. Homeownership has a track record that is virtually unmatched by any other purchase in terms of its real benefits.

If you have good credit, a job, and a steady income, you'll find there's still plenty of mortgage credit to be had at good rates. For well-qualified buyers, rates are running at near historic lows.

Based on the housing stimulus program recently signed into law, you might even qualify for a first-time homebuyer tax credit, if you purchase a new home now.

Homeownership's Real Value

Dollar for dollar, homeownership is a solid stepping-stone to a future of financial security and the single largest creator of wealth for many Americans.

Over time, real estate has consistently appreciated, even through periodic adjustments in response to economic conditions. In the state of North Carolina, home appreciation has stayed at a solid 8% annually, with Raleigh real estate at a 6.4% annual home appreciation rate, compared to the national home appreciation rate or 5% annually.

The returns of such high appreciation rates are much more than an equal investment into the stock market. For instance, at the national appreciation rate of 5%, if you put 10% down on a $200,000 house, for an investment of $20,000. At a 5% annual appreciation rate, that $200,000 home would increase in value by $10,000 during the first year. Earning a $10,000 on an investment of $20,000 is an extraordinary 50% annual return. As you can imagine, an even better investment return occurs with an 8% home appreciation rate.

In contrast, putting that $20,000 down payment into the stock market and getting a 5% gain would only yield a $1,000 profit.

Should I Wait to Buy Until Home Prices Go Even Lower?

If you wait for what you think is the absolute best deal, you could end up waiting for years and missing out on your dream home. All the market fundamentals show that now is a good time to buy – prices are down, interest rate are near historic low levels, and there are lots of homes to choose from.

There are many things to consider when “shopping around” for a new home, and waiting for something that might now happen will only prolong that process. In addition to taking advantage of currently offered incentives, one of the most important things you can do when looking to buy a new home is to hire a home inspector to make sure the home is safe. A home inspector focuses on the condition and structure of the house and points out observed safety concerns. However, a home inspector will not do and destructive testing and will not inspect what they cannot see, leaving your new home in stable condition.

Therefore, if you buy now, you'll not only be in the driver's seat during the buying and home inspection process, you'll also reap the gains of price appreciation. Remember, those who purchased homes in the early 1990s during the last big economic and housing downturn came out as big winners.

The Advantage of New Construction

Today's new homes are better than ever. When you buy a new home, you get quality, new construction, the latest technological advances, and low-maintenance, money-saving, energy-efficient appliances. Many new-construction homes are built to Green Building standards. Homes are designed to fit your lifestyle, featuring larger kitchens for family gatherings, bigger closets, ample storage space, and more bathrooms.

In addition to cutting edge construction, it is easier than ever to get a home warranty. A home warranty will provide a new homeowner with coverage that will help curb the costs for common frequent household breakdowns. A home warranty will help keep the house looking and functioning like new, and is also a good selling point down the road.

So it's a good time to buy – if you're a first time buyer and qualify for the tax credit, it's an even better time to buy – and there are quality, new-construction homes and condos in every price range throughout North Carolina waiting for you. Don't wait and risk missing out on your dream home.

Teardowns Have Foes, But They Can Revitalize The Block

2008-08-18T12:13:00.000-07:00

The first part of Mark and Constance Eddy's home-ownership story is classic: In 1998, the newlyweds bought a starter home in a post-World War II subdivision in Prairie Village, Kan.
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The 900-square-foot, two-bedroom, one-bath house was dated, with 1950s metal cabinets and gold-flecked Formica counters in the kitchen, but cozy.

"It was all we needed," Mark Eddy said.

What really sold the couple on the home was the street. Prairie Lane is a winding street of tiny houses nestled close together under a canopy of large trees. The neighborhood is next to the Prairie Village Shops, which contains an urban mix of businesses -- gas station, hardware store, drugstore and diner, as well as upscale restaurants and boutiques.

"People live in their front yards. There's a mix of ages -- some neighbors are like grandparents to the children on the street. It really has a sense of community," Eddy said.

Seven years later, the couple had two small children and a third on the way. It was time to trade up. So the Eddys sold the house on Prairie Lane and bought a 1,900-square-foot ranch on a big lot in Leawood, Kan. They were living the American dream.

But in a 21st-Century twist to the tale, the Eddys were unhappy in the "better" neighborhood. The street was usually deserted and quiet, except for the distant hum of traffic on Interstate 435.

"We immediately missed the neighbors, and we missed walking to the shops," Mark Eddy said. Two years later, when the house next door to their first home came up for sale, the Eddys decided to buy it, tear it down and build a new house on Prairie Lane big enough for their family to grow into.

At 3,400 square feet, the Eddys' new home towers over its neighbors on Prairie Lane. The home is in compliance with city requirements for setback from the street, setbacks from the sides of the property, height and footprint on the lot. But shortly after groundbreaking, the Prairie Village Homes Association took the Eddys to court, claiming the proposed house design was in violation of deed restrictions that limited to homes to "1 1/2 " stories. The judge eventually ruled in favor of the Eddys.

Mark Eddy, co-owner of Gahagan-Eddy Building Co., says he talked with many neighbors on the street and showed them his house plans to try to gain their approval before moving ahead with the home teardown. A majority of homeowners on his street signed a petition in favor of allowing the house.

Bill Chinnery on the homes association board of directors says he thinks the chocolate-brown exterior paint and two tall trees on the lot help the house blend into the neighborhood in summer. But in winter he thinks the house sticks out too much.

"I like the house, but it's too big for the neighborhood," Chinnery said.

Jessamine Guislain, who has lived on the street since 1965, disagrees.

"It's a beautiful house, and I enjoy looking at it," Guislain said. "I'm happy to see a family who loved Prairie Lane able to move back to it."

Guislain said allowing home teardowns and home renovations on the street helps keep the community intact. "In my own experience with a house next door to me, every family who lived there, once they had their second child, moved."

Eddy says most of his neighbors have been supportive, but he acknowledges others think the house is too big. "I respectfully disagree. If a house is beautiful, I don't care if it's twice the size of the one next to it. It should only be a problem if it's ugly."

Prairie Village recently adopted an ordinance to notify homes associations of permit requests within their neighborhoods, says assistant city administrator Dennis Enslinger.

"Everybody has their own expectation of what the neighborhood is and what it should become, and the city is trying to balance those interests for everybody involved. But it is an ever-changing balance," Enslinger said.

Cydney Millstein, owner of Architectural & Historical Research LLC in Kansas City, says preserving historic neighborhoods is important, but it doesn't mean everything has to stay the same.

"If new designs are done tastefully with a tip of the hat to what was going on historically, that's OK. If it's bringing life back to a neighborhood that became kind of stale after a while, this is a good way to inject vitality back into the neighborhood."

By: Cindy Hoedel; McClatchy Newspapers
Detroit Free Press; August 17, 2008

Home-Equity Debt Lurks

2008-08-18T08:13:00.000-07:00

A recent improvement in beleaguered home-equity loans has been a rare sign of encouragement for banks. But bullish investors need to remove their rose-colored glasses.

Banks have about $700 billion of home-equity loans -- in which a bank lends money to a homeowner against the equity in his house. That includes both fixed-rate loans and floating-rate debt drawn from credit lines. Lenders usually can't collect on a defaulted home-equity loan by seizing a house unless the borrower has no mortgage, since mortgage lenders have first claim.

The so-called piggyback loans are the riskiest of this home-equity debt. Most were taken out during the raging real-estate market. These loans came on top of a first mortgage, aren't backed by insurance and enabled some borrowers to buy homes without making a down payment. These loans represent more than 8% of the value of outstanding home-equity loans, according to SMR Research.

Banks have been reducing unused credit lines, especially in areas with housing problems. James Dimon, chief of J.P. Morgan Chase, which has been hurt by losses in its home-equity portfolio, recently said delinquencies could be stabilizing. "It's a little ray of sunshine that is OK to grab onto for now," he said.

Many who were caught flat-footed when these loans turned sour now assume that home-equity loan risk already is factored into bank stock prices, which have tumbled. But investors may be too upbeat once again. For one thing, the recent news isn't exactly uplifting: 2.22% of all home-equity loans were charged off by banks in the second quarter, an all-time high. That is up from 1.69% in the first quarter and 0.9% in the fourth quarter of last year. Tax refunds and government-issued stimulus checks likely are at least partly responsible for why things aren't worse.

The losses likely will remain elevated for the foreseeable future. It isn't easy to see why home-equity losses would improve until there is a true bottom for housing. Analysts at Goldman Sachs predict home-equity losses won't peak until the first quarter of next year.

For investors, it would be best to avoid lenders with heavy exposure to home-equity loans written by outside mortgage brokers and other third parties that often employ lax underwriting standards. Instead, stick with banks that made their own loans during the real-estate surge.

Using this stance, investors should use caution when it comes to First Horizon National. According to a Goldman analysis, 15% of First Horizon's home-equity loans, or 5% of all its loans, were made by outside parties. Outsider-written loans represented 22% of Fifth Third Bancorp's portfolio, or 3% of its total loans. And 14% of Wells Fargo's home loans, or 3% of total loans, were written by third parties.

These three banks also have a relatively high number of home-equity loans that are at least 90% of the value of the underlying houses, which is worrisome. Some investors also are concerned about E*Trade, which also was a big buyer of home-equity loans.

On the flip side, Comerica, Regions Financial and BB&T Corp. hold almost no loans made by outsiders, which is a good sign.

By: Gregory Zuckerman
Wall Street Journal; August 1, 2008

Private Lenders Provide Option for Borrowers

2008-08-18T06:09:00.000-07:00

As lending standards have become tougher, a rising number of people and businesses are turning to an unlikely source for money: private lenders.

In recent years, the practice of borrowing money from private parties was rare, except among those who were unable to qualify for traditional loans. Banks were flush with cash and eager to lend, meaning even people with a tarnished credit history often could find quick sources of cash.

Now, even those with good credit are bypassing banks to borrow money -- despite interest rates that can reach 20% or more, and down payments of 35% or more.

These private funds -- which aren't from banks or credit unions -- are being used for everything from second homes to apartment construction. Many borrowers have excellent credit, but they are trying to avoid the added time, scrutiny and uncertainty of a conventional bank loan. Such transactions are "not as publicly available as one might expect," says Ron Phipps, a real-estate broker in Warwick, R.I., "but there is definitely money available."

Arrangements for such loans are equally low-key. While hedge funds and high-net-worth investors are providing cash, it isn't unusual for a private lawyer to get five friends to each throw in $100,000 for a home loan. Wealthy investors, hedge funds and private-equity firms are lending money in pursuit of consistently higher returns. The bear market for stocks may make alternative investments such as this type of lending more attractive.

Typically, borrowers hear about private loans from lawyers, mortgage brokers and real-estate agents. Borrowing and lending opportunities are even sometimes posted on Web sites or in newspapers.

For investors, well-structured deals could reap significant returns, because private lenders typically charge much higher closing costs and interest rates than traditional lenders. They also require a much higher loan-to-equity ratio. So if the borrower falls behind, the lender potentially could resell the property at a profit.

"For the investors, there's an opportunity," says Scott Haislet, owner of LEC Mortgage in Lafayette, Calif. "But you better know who is in charge and who's making the decisions about the property."

Borrowers "need to make sure they understand the way the loan works," says Allen Fishbein, director of housing for the Consumer Federation of America. Mr. Fishbein recommends that borrowers "seek out independent professional advice before committing themselves."

The tight credit market makes the loans especially appealing to borrowers, who a few years ago might not have considered the option. "In times like these, when money is tight, private money flourishes," Mr. Haislet says. Stricter lending standards make it more difficult for borrowers with good credit scores to get large loans or so-called bridge loans, which someone might use during a construction project. If you are considering a home-equity loan for a construction project, also consider a home warranty. A home warranty service contract will cover the repair or replacement of many common home repairs and replacements.

Even borrowers with excellent credit scores can wait weeks for a loan to be approved. Occasionally, those deals evaporate, leaving builders and home buyers scrambling for cash. That is where private lenders step in. It isn't unusual for these lenders to charge several points and interest rates of 12% or significantly higher. They also typically require borrowers to provide 35% or more of the down payment, so there is ample collateral if anything goes wrong.

Mr. Haislet, who arranges some private loans, warns that "they're not for everyone. If borrowers can find a better alternative, they should take it, but sometimes there are no other alternatives."

Mr. Haislet says most of the private loans are for less than five years -- and sometimes only six months, for those doing home-renovation projects who could otherwise not borrow the money.

He says his borrowers typically pay 9% to 11%, compared with many current bank rates of less than 7%. The loan-to-value ratios also are much larger.

By: Jilian Mincer
Wall Street Journal; July 31, 2008

How to Shake Off the Mortgage Mess

2008-08-13T15:17:00.000-07:00

Where are the hosannas for Congress's handiwork on housing? Nobody expected it to solve anything, but it's worth understanding why.

By CNBC's count, the federal government has already made roughly $1.4 trillion available to refinance mortgage debt since the housing meltdown began. That makes this week's bill, which adds another $300 billion to the pot, seem a mite anticlimactic. The key word is refinance. Even if this money helps prevent foreclosures, it's aimed at houses that people want and that would likely resell even if foreclosed. Hardly touched is the real problem of tens of thousands of houses financed during the subprime boom that are unoccupied, unwanted, falling apart, built on spec, mortgaged on spec and abandoned on spec.

Washington has practically monopolized the business of financing and refinancing home sales for willing buyers and sellers, but it does nothing about the homes going rancid on the shelf, souring the value of the nation's entire housing stock and mortgage debt.

Maybe that explains why we're finally getting some takers for a demolition strategy as the least-cost route out of the subprime mortgage aftermath. The Economist, in its July 10 edition, endorsed a "wrecking-ball response." Bill Gross, the Pimco bond king, says in an ideal world Washington would "buy one million new/unoccupied homes, blow them up, and then start all over again." Even Larry Lindsey, the former Reagan economist, concludes that a larger bailout is nearly inevitable -- though his fanciful solution is to recruit 100,000 immigrants who would agree to buy $10 million worth of housing each.

A surplus of homes is the key liability dragging down much of the collateral underlying the financial system. Any Lindsey whimsies aside, have no doubt where many of these losses ultimately will land.

Take Fannie Mae and Freddie Mac, which owned 62,000 homes in the first quarter and were acquiring houses twice as fast as they could sell them. Fannie and Freddie now are statutorily backed by taxpayers, so taxpayers now are the real owners of nearly as many foreclosed houses as the rest of the country's 8,500 banks and thrifts combined.

And that's just the beginning. In seizing IndyMac, a California lender in subprime heartburn country, the FDIC put its fingers in its ears and simply declared a moratorium on new foreclosures. Taxpayers will end up owning a lot of derelict homes through FDIC too.

None of this is reason to disregard glimmers of a bottom in housing. Housing markets are local. Even with an unprecedented 19 million empty single-family homes, apartments and condos hanging overhead, some 500,000 new houses a year continue to be built and sold -- because people want houses where they want them. *If you are building a new home, be sure to get a home warranty. Home warranty coverage is often of great value to a house, whether or not it is being sold.

The problem is the other places.

In California's Central Valley around Stockton, one household in 25 received a foreclosure filing last quarter. In the Inland Empire, one in 32 did. In greater Las Vegas, one in 35 households received a notice. We use household advisedly since nobody lives in many of these homes or collects the mail. Close to the ground, a growing suspicion is that the numbers even understate the troubles because banks see no point in foreclosing on empty, unsellable homes. Local governments complain of not being able to find anyone to dun for upkeep because the owner has absconded and yet no bank has filed foreclosure papers.

To be sure, the disaster is not entirely confined to vast tracts of exurban no-man's lands in the Southwest. The Star Ledger of Newark, where home prices once were rising 50% a year, describes 66 Norwood Street, financed by Countrywide for a speculative buyer who rented it out while never making a payment on her $325,000 mortgage. Fannie now owns the house, which burned twice between a final order evicting the tenant and Fannie's crew arriving to board the place up.

Multiply that by entire neighborhoods of brand new, large homes, built on cheap land far from town or amenities in the subprime ground zero of California, Arizona and Nevada. Failing an improvement on God's damp squib of an earthquake in subprime country yesterday, some sort of strategy is going be priority one for the next president.

So far, Washington has put its political capital into trying to refinance salvageable homes for unsalvageable homeowners, when a relevant policy would consist of judiciously buying unsalvageable houses and demolishing them. Fannie and Freddie's strength is housing market software: They could be put to work devising a least-cost, maximum-bang strategy for demolishing unoccupied homes to preserve as much value as possible for the homeowners and mortgage creditors who remain.

Of course, right now their overriding imperative is to avoid recognizing losses rather than rushing toward them -- which is why Fannie and Freddie should be nationalized (and later privatized). One way or the other, taxpayers will end up owning thousands of unwanted houses. It's not too soon to begin limiting our costs.

By: Holman Jenkins, Jr.
Wall Street Journal; July 30, 2008

Fed Extends Lending Programs as Threats Persist

2008-08-11T14:07:00.000-07:00

Move Reflects Worry Over 'Fragile' State Of Financial Market

A year after credit markets seized up, the Federal Reserve is still struggling with the crisis and expanding key lending programs that were designed as temporary measures to nurse the financial system back to health.

The central bank announced Wednesday that it is extending programs through January that allow investment banks to borrow from the Fed. The move is an effort to prevent a worsening in what the Fed described as "continued fragile circumstances in financial markets."

Troubles in the financial world continue to take the Fed deeper into new territory in its effort to prevent a larger credit crunch. The financial sector's weakness is a key reason why policy makers are likely to hold interest rates steady at 2% when they meet next week. A handful of officials are pushing for rate boosts in the near future to get ahead of inflation risks, but most policy makers appear to support staying on hold at least until financial markets can return to a more normal state of functioning. Continued weakness in housing and labor markets also is weighing on many officials.

For the past year, Fed officials have sought to separate their policy actions directed toward financial stability -- emergency lending to financial firms, for instance -- with their monetary-policy role of guiding the economy by setting interest rates. That distinction would allow the Fed to continue its aggressive lending role without being constrained on interest-rate policy if, for instance, it needed to respond to inflation risks.

For now, however, top Fed officials remain especially worried that today's market conditions could deepen the credit crunch by preventing banks from making loans to consumers and businesses. Banks' losses on mortgage loans in particular are wearing down their balance sheets, forcing them to raise large amounts of capital that would allow them to extend credit to consumers. A rate boost now could further aggravate markets while firms are trying to recapitalize. Even though credit markets have improved from their worst points over the past year, they remain far more strained than they were before the credit crisis started last August.

"Healthy economic growth depends on well-functioning financial markets," Fed Chairman Ben Bernanke told lawmakers this month. "Consequently, helping the financial markets to return to more normal functioning will continue to be a top priority of the Federal Reserve."

The Fed's extension of its loan program for securities firms, started in March after the collapse of Bear Stearns Cos., allows the investment banks to take overnight loans directly from the Fed's discount window. That program, known as the primary-dealer credit facility, was set to expire in September.

The Fed extended the program through Jan. 30, though it said "the facilities would be withdrawn should the board determine that conditions in financial markets are no longer unusual and exigent." The move extends the length of the Fed's support to investment banks into the next presidential administration and Congress, which is likely to restart the debate then over whether such firms should get direct lending support.

The Fed's timeline indicates officials believe markets could remain weak, needing a backstop into the beginning of the year. How and when to conclude the program remains in doubt.

"When does it end? It ends a little bit when the liquidity needs start to abate," said Ray Stone of Stone & McCarthy Research Associates. "It's certainly not going to happen soon."

The central bank altered or expanded several programs to address apparent needs of financial institutions and prevent further stress on financial markets.

The Fed extended through January a $200 billion program that allows investment banks to receive 28-day loans of Treasury securities through an auction. In addition, the Fed launched a new program to auction options of up to $50 billion under that program -- the term securities lending facility -- "for exercise in advance of periods that are typically characterized by elevated stress in financial markets, such as quarter ends." That may prevent further market stresses at turning points when firms are closely managing their books, and allows firms to effectively buy insurance instead of carrying the securities over the term. The Fed offered a related program at the turn of the millennium to maintain stability through the Y2K transition.

The Fed carried out a long-sought extension of its auctioned loans for commercial banks. Those will now be available for 84 days in addition to the 28-day loans under the term auction facility. That program was created as an alternative to the Fed's discount window, which is generally used by banks for last-minute funding needs but can carry a stigma because an institution fears being seen as troubled. The $25 billion auctions for 84-day loans will start Aug. 11 and alternate biweekly with $75 billion in 28-day loans. The total credit available under that program will be $150 billion.

The central bank also said it would increase the size of a swap line with the European Central Bank to $55 billion from $50 billion to accommodate a temporary increase in the amount of U.S. dollars the ECB can auction. The ECB and Swiss National Bank are extending 84-day loans in addition to 28-day funds. The Swiss central bank's swap line remains at $12 billion.

Demand for the dollar funding has been rising at each auction since May. In the most recent auction Tuesday, 63 banks bid more than $101 billion for the $25 billion auction. That was the highest number of institutions to bid, and the highest ratio of demand to the amount of funds available, since the ECB opened its swap line with the Fed in December.

Most Fed officials support the efforts to improve market functioning. But their views on the financial situation vary. On one end, officials view the latest market stresses as a source of concern but one that shouldn't stand in the way of raising rates to reverse the aggressive easing -- from 5.25% last September. Officials on the other end believe conditions have worsened dramatically in the past month -- as seen through higher mortgage costs, shrunken bank balance sheets and wider credit spreads -- and add risks to the economy.

While the second quarter delivered strong growth, activity may slow once the effect of economic-stimulus payments fades. High energy prices, a weakening labor market and continued troubles in the housing sector could join tightening credit conditions as restraints to growth into the end of the year.

At the same time, officials are bracing for high inflation readings. Oil this month has pulled off its record high by roughly $20, and gasoline has dropped back under $4 a gallon. Both developments could support a moderating inflation rate in the coming months. But prices remain volatile, and officials are putting little faith in the pullback.

GMAC's Other Headache

2008-07-16T14:50:00.000-07:00

The one bright spot for GMAC used to be its auto-loan business. Now, that, too, is dimming.

Declining values of gasoline-guzzling pickup trucks and sport utility vehicles are looming over the lender, adding to its existing problems with souring mortgages through its ailing home-loan unit. This leaves GMAC in worse shape than rival Ford Motor Credit.

And it is unlikely GMAC can look to General Motors Corp. for help. The auto maker, struggling to cope with a steep decline in sales of pickups and SUVs, announced production cuts Monday. The company has a 49% stake in GMAC after a consortium led by private-equity group Cerberus Capital Management LP, parent of Chrysler LLC, bought 51% of GMAC in 2006 for about $14 billion.

GMAC, set up in 1919 to provide financing to buyers of GM vehicles, made $50.8 billion in loans for new and used vehicles last year. The lender, which once propped up GM with steady profit during economic downturns, has been weakened by the billions of dollars it pumped into its struggling mortgage subsidiary, Residential Capital LLC. GMAC posted a net loss of $589 million in the first quarter, compared with a loss of $305 million a year earlier.

In addition, falling demand for pickup trucks and SUVs, which make up a sizable chunk of GM's production mix, amid $4-a-gallon gasoline, should further hurt GMAC. The value of gas guzzlers has dropped sharply in the used-car market. GMAC is saddled with inventories of thousands of these vehicles as they come off leases or are repossessed from owners unable to keep up with payments.

Typically, GMAC takes back vehicles at the end of leases and sells them to dealers at discounted prices based on estimated values. On average, auction prices on trucks and SUVs fell by more than 20% in May compared with year-earlier prices, according to data from Manheim, a wholesale auction company for used cars.

"GMAC is monitoring the market conditions closely," a GMAC spokeswoman says.

A representative of Cerberus said GMAC's management is "working hard to strengthen the balance sheet and emerge from this unprecedented economic environment better positioned for the future."

GMAC also faces rising delinquencies in loan payments and increasing numbers of repossessions as owners of pickups and SUVs owe more on the vehicles than they are worth.

Another worry is GMAC's high level of borrowings compared with its equity cushion. One measure of GMAC's leverage ratio, as calculated by Moody's Investors Service, shows that the company has 23 times its net worth in borrowings. Ford Credit has 11 times its net worth.

GMAC's leverage "is an aggressive measure and has negatively impacted GMAC's credit standing," says Mark Wasden, a debt analyst at Moody's.

GMAC has a hefty cash balance of $14.84 billion on hand, but steeper-than-expected declines in residual values mean GMAC won't ride to GM's rescue during this downturn.

By: Aparaijita Saha-Buena
Wall Street Journal; June 26, 2008

Employers Offer Aid To Avert Foreclosures

2008-06-23T14:34:00.000-07:00

Some Companies Provide Loans, Grants and Counseling To Workers Mired in Mortgage Debt; Co-Workers Pitch In

Last December, 36-year-old Marta Rosario was on the verge of losing her single-family home in Miami to foreclosure. That is, until her employer, Baptist Health South Florida, stepped in to help.

The five-hospital health-care system loaned Ms. Rosario $5,000 interest-free, allowing the cardiology nurse to catch up on her mortgage payments. She'd fallen two months behind after a work injury last year forced her to take a lengthy leave of absence at reduced pay. "If it wasn't for Baptist, I don't know where I'd be," says Ms. Rosario, a single mother of three who also cares for her elderly parents.

In the wake of the mortgage crisis, a small but growing number of workers are getting help avoiding or coping with foreclosure from an unlikely source: their employers. So far, a handful of companies -- from small manufacturers to large companies like home-financing behemoth Fannie Mae -- are offering assistance, such as interest-free loans, grants and support in securing rental properties. They're also beefing up their employee-assistance programs, or EAPs, and adding more educational seminars on personal finance.

A January survey of 329 human-resource professionals showed that in 2007, 20% of employers said they received more requests from workers for pay advances than the year before, reports from the Society of Human Resource Management. Thirty-nine percent of respondents also saw an uptick in withdrawals from retirement savings -- widely seen as an indicator of financial woes.

Productivity tends to wane when workers are suffering from financial or other pressures, says Laura Wallace, manager of work/life programs at SAS Institute Inc., a business-intelligence software company. Providing help "just makes really good business sense," she says. "If you're worried about losing your home, your creativity is going to go out the window."

Baptist Health executives say it became clear that many of its 12,000 employees were struggling with mortgage problems late last year, when requests for loans from its Sunshine Fund surged. Launched in 1986, the program, funded by employee and matching company funds, was designed as a way for workers to help their fellow colleagues through emergency financial hardships -- and it was in danger of drying up for the first time. "If we grant all these requests, we'll run out of money," Brian Keeley, Baptist Health's chief executive, says he recalls thinking.

The chain's hospitals are located throughout South Florida -- where foreclosure rates are among the highest in the nation, according to foreclosure-tracking firm RealtyTrac Inc.

Faced with a growing number of desperate employees, the nonprofit established a new fund dedicated to helping workers who face foreclosure. The fund now has $280,000 -- employees contributed $10,000 of that -- and has helped more than 100 employees with mortgage-assistance loans averaging between $3,000 and $5,000 in the first five months of 2008. Employees have two years to pay back the interest-free loans.

Quality Float Works Inc., a manufacturing concern with 28 employees, also recently loaned two workers at risk of losing their homes $2,000 each interest-free. The money is being repaid in weekly installments automatically deducted from their paychecks, says Jason Speer, vice president and general manager of the small maker of hollow metal balls and valve parts in Schaumburg, Ill. "We treat our employees like family," he says. "We try and do what we can to make their lives easier."

In February, Fannie Mae set up a confidential email "hotline" for its employees with mortgage woes, says Joy Cianci, vice president of grant, program and volunteer initiatives. Since Fannie Mae is in the mortgage business -- it buys mortgages from banks and other lenders and packages them as investment securities -- the company can help qualifying employees quickly pursue a mortgage restructuring.

For workers who must sell their homes, Fannie Mae in March began identifying low-cost rental properties near its Washington, D.C., headquarters. And since these workers could have trouble securing a lease because of credit problems, the company also works with landlords to ensure they'll be paid through a monthly payroll-deduction plan. Employees who can't afford a security deposit for a rental property may be eligible to receive a financial-hardship grant.

Many employees are seeking counseling to help them navigate financial issues. At Cary, N.C.-based SAS Institute, 665 SAS employees have attended the company's financial-advice seminars so far this year, twice as many as in the first half of 2007, says Ms. Wallace. In reaction to the housing crisis, the global software provider recently added lectures on the topic.

Zappos.com Inc., an online shoe and accessories retailer, also runs free on-site seminars about financial issues for its 800 Las Vegas-based workers. "We're hearing a lot of employees being concerned about their future," says Rebecca Ratner, director of human resources. "In Las Vegas, we have one of the highest home-foreclosure rates in the country." According to RealtyTrac, one in every 96 Las Vegas households received a foreclosure filing in May, more than five times the national average.

To that end, employee assistance program providers say they're seeing a notable increase in demand for confidential phone counseling. "Two years ago, we got one to two calls a week. Now we get two to three a day," says Zachary Meyer, senior vice president and general manager at the LifeWorks unit of Ceridian Corp., an EAP provider in Minneapolis that serves 38,000 corporations. "Housing concerns are the No. 1 financial reason people are calling us." In the past, callers seeking financial advice mainly asked about debt management, he adds.

Most U.S. employers -- about 87% -- allow workers to make hardship withdrawals from their defined-contribution retirement plans, according to the Profit Sharing/401k Council of America, a national association. But many of those that don't are now starting to consider offering the option, says Stacey Carter, vice president at Segal Co., a New York benefits and human-resources consulting firm. Helping workers avoid foreclosure is the primary reason, she adds.

Indeed, more workers have in recent months been making hardship withdrawals, which don't have to be paid back but are subject to taxes and penalties. In the first quarter of 2008, Fidelity Investments in Boston saw a 16% increase from the same period in 2007 in 401(k) hardship withdrawals. Still, this represents just a small fraction of Fidelity's 13 million plan participants, according to a spokeswoman for the financial-services provider.

Other employers, ranging from universities and technology firms to service providers say they're also grappling with how to help employees save their homes, but say they've yet to find a way to help.

Peter Ronza, a compensation and benefits manager at the University of St. Thomas in St. Paul, Minn., says at least six employees have approached him since April with concerns of losing their home or having to file for bankruptcy. "It's not that we don't want to help," he says, but creating a loan program would first require setting up a committee to determine who qualifies. Plus, rejections might cause friction among the school's 1,500 employees, he explains. He has also had to deny requests for cashing in accrued vacation time for mortgage assistance because it's against school policy.

Still, some employers say the mortgage problems workers face aren't a workplace matter. "If you got over your head in a mortgage because you were too uninformed to understand or you stretched too far, an employer doesn't have an obligation to fix your mess," says Jay Whitehead, president of Crossing Media LLC, a business-magazine publisher in Edison, N.J. The company has 20 employees and Mr. Whitehead says he recently rejected one person's request for help with a mortgage. "It's an equity and fairness issue," he says.

By: Sarah Needleman
Wall Street Journal; June 17, 2008

Home Mortgage Update

2008-06-13T12:41:00.001-07:00

The home-mortgage industry takes advantage of consumers' confusion to charge some people much higher fees than others, according to a study prepared for the Department of Housing and Urban Development.

The study by Susan Woodward, a former chief economist for HUD, also found that loans arranged by brokers typically carried higher fees than those obtained directly from lenders.

The report is based on an analysis of 7,560 fixed-rate home-purchase loans completed in May and June 2001 and insured by the Federal Housing Administration, an arm of HUD.

The study says lenders typically make better offers to borrowers in neighborhoods with higher general levels of education, and/or borrowers who obtain a home warranty.

Total fees paid to the lender and broker averaged nearly $3,400 on loans with an average initial principal balance of $105,000, the report said. For brokered loans, the average fees were $4,000, compared with $3,150 for loans made directly by the lender. Those fees are a combination of upfront charges and additional funds brokers and lenders get for selling loans with relatively high interest rates. However, homes with home warranty coverage may reduce interest rates, as the home becomes more reliable.

For brokers, these additional payments are known as yield-spread premiums. Brokers often defend yield-spread premiums as a way for borrowers to reduce their upfront fees in exchange for paying a slightly higher interest rate. But the study found that the yield-spread premiums mainly benefited the brokers. For every $100 extra they paid in higher rates, the borrowers on average received only a $7 reduction in upfront fees. Banks also typically kept most of the benefit when borrowers paid above-market interest rates, the study said.

Borrowers who paid "discount points" to lower their interest rates typically didn't benefit from a corresponding savings in their interest costs, the study said. It found that borrowers who chose "no-cost" loans -- in which all fees are built into the interest rate -- typically paid the lowest effective fees.

Roy DeLoach, executive vice president of the National Association of Mortgage Brokers, said that the study relies on "stale" seven-year-old data and that other studies have shown consumers save money by obtaining loans through brokers.

More Home Buyers Working More Closely With Home Inspector

2008-06-11T07:42:00.000-07:00

Is your home inspector a deal killer? I hope so, for your sake as a home buyer. But I doubt your real estate agent would agree.

A deal killer is a home inspector who reports everything found — everything — so you can make an informed decision about the house you are thinking of buying, and either negotiate a lower price with your eyes open or walk away from the deal.

Some real estate agents resent home inspectors who do "too good" a job. They feel that they have worked hard to present a home their buyers want to buy, or their clients want to sell. Then the home inspector screws up the deal.

Let's face it: If potential buyers are having an inspection done, they already love the house. If a home inspection reveals that minor fixes are necessary, then buyers will feel more confident paying the full price and won't walk away. But if it turns out that there is something more serious — and expensive — wrong that kills the deal, then real estate agents should be grateful for that information.

It will allow agent and client to either correct the problem before putting the house back on the market, or adjust the price so the cost of repair is reflected. No one wants to sell a home with hidden defects; that can lead to legal and insurance claims and damaged reputations.

Some buyers don't really want to believe the ugly truth about their dream homes. They'd prefer to stick their heads in the sand, and are receptive when an agent minimizes the problems.

But you need to listen to your home inspector, especially when he gives you bad news. Don't fall for a lipstick-and-mascara cover-up of a house that looks good but is rotten underneath.

Your home inspector isn't trying to scare you, he is educating you. And you need to listen.

A home inspection isn't just some game or a strategy to reduce the house price. This is your chance to learn about your home: what's good, what's bad, what needs repair now and what can wait a while.

In a seller's market, buyers often feel they have no time to wait for inspections. They might be in a bidding war and are afraid to lose. But what they should be afraid of is buying a house at an inflated price either without an inspection or not listening to what the inspector says.

But as the buyer, you need to take responsibility. Don't be rushed because your agent wants to close the deal or you think you'll lose your dream house in a bidding war. There are other houses. And if you don't slow down and check out the building before you purchase it, your dream home may end up a nightmare.

Pre-sale inspection

Sometimes a seller will have a pre-sale inspection done to make sure the house is up to standard, so that when it is evaluated by the buyer's home inspector it passes with flying colours.

This is not fluffing for sale or baking bread in the oven so the house smells good. This is real nuts-and-bolts stuff, solid information a seller can offer about what might need repair or improvement in the house.

Your home inspector can educate you about the deficiencies of your home, before potential buyers find them, so you can set a realistic price or fix the problems before you list the house.

Don't forget, most buyers of resale homes will want an inspection. They'll discover those deficiencies (if they have a good inspector, of course) and be able to use them as a bargaining tool to reduce the price.

New Home PDI

Many first-time buyers choose a new house, thinking it will be problem-free. They are afraid that a resale might present problems that must be repaired even before they unpack. The truth is, many new houses have all kinds of problems, big and small.

You shouldn't assume every new house is built properly. Many aren't. And if you move in and find problems, you'll need to take them up with the builder and the home warranty program.

How long do you have before the warranty is up on certain things in your new home?

Before buyers take possession of a home, they conduct a PDI (pre-delivery inspection) along with the builder. This is to make sure there is no outstanding work, and that any deficiencies are identified.

Many buyers do this on their own, but this is where it makes sense to hire a professional home inspector, with knowledge and experience in new-home PDI. Buyers might notice only the cosmetic problems, because they usually don't have technical construction knowledge and experience.

The problem is, some builders won't allow independent home inspectors to be present during the PDI. You have to wonder why. What are they trying to hide?

Do you think your builder's representative is going to disclose poor workmanship, building code violations or defects during your PDI? I doubt it.

If you haven't signed on with a builder yet, find one that allows a professional home inspector to accompany you on your PDI.

If it's too late and your house is being built, remember that until your new home changes hands, the builder still owns it.

Make sure you conduct an inspection as soon as you take possession, before it's too late to file a claim under the builder's warranty.

By: Mike Holmes
Globe and Mail; May 30, 2008

Secrets of the Home Sale

2008-06-04T10:14:00.000-07:00

With the inventory of unsold homes at continued high levels, homeowners are going to great lengths to differentiate and distinguish their home. According to experts, there are a few simple tricks that can help create a more appealing space and a more attractive listing in today’s increasingly competitive market.

* Listing: What’s in a word?

When putting your home on the market, the right phrasing in your listing can be the key to attracting potential buyers. According to the 2008 MSN article, “What’s ‘beautiful’ worth? About $12,500” researchers have found that listings with the words “beautiful” or “gorgeous” sold homes 15 percent faster, while “landscaping” bumped sales 20 percent faster and “move-in condition” expedited the sale by 12 percent.

Contrary to popular belief, sellers should steer clear of words that highlight desperation such as “motivated” and “must sell.” The study found the inclusion of those words in the listing slowed sales by up to 30 percent.

* Branding: If you’ve got it, flaunt it.

Brand names create a point of differentiation and should be used as selling points for your home. There is no doubt that buyers will put more weight in brands they trust. If choosing to make upgrades before listing your home, consider quality, recognizable products because they will ultimately provide the best return.

* Staging: The ultimate showcase showdown.

When getting your home tidied up for potential buyers, there are some specific tips that will help your home appeal to a wider range of buyers.

* Cleaning:

The number one rule of staging is to get rid of unwanted and unused items. Whether packed away until the sale or permanently donated, de-cluttering allows buyers to see more of the home. This also includes moving furniture out of rooms that may seem overcrowded. Less is always more.

* Neutralizing:

When getting your home ready to sell, going neutral is the best way to go to appeal to the most buyers. Painting is one of the most cost-effective ways to transform a room back to its natural state. Warm neutral colors tend to be a stager’s preference because it keeps walls inviting while adding a touch of color in the room. Buyers can better imagine themselves living in a home when it is neutral.

* Landscaping:

Although the inside of the home can create atmosphere, the first impression can be a lasting impression. The outside of the house will set the tone for what a buyer perceives is inside. Create a pleasant yard that is well-kept and full of life. Plants and flowers also should be brought inside the home to help accessorize and accent high traffic areas such as the kitchen and living room.

Drop in Home Prices Accelerates to 14.1%

2008-06-04T09:49:00.000-07:00

Fewer Americans Plan to Buy Soon, Putting Off Bottom

Home prices are falling at an accelerating pace, new data show, while a separate report found a shrinking share of Americans plan to buy a home anytime soon, suggesting more price declines in the months to come.

The Standard & Poor's/CaseShiller index for the first quarter showed prices for existing homes nationwide declined 14.1% from a year earlier, compared with a year-to-year drop of 8.9% in the fourth quarter.

A separate S&P index that tracks 20 major metropolitan areas on a monthly basis showed home prices dropped 14.4% in March from a year earlier and 2.2% from February.

Meanwhile, sales of new homes last month rose 3.3% from March. But sales remain well below year-earlier levels and, with a glut of unsold homes on the mar- . ket, any significant improvement in the market remains down the road.

The steepest declines in home prices came in cities that had experienced the sharpest run-ups this decade; prices in Las Vegas fell 25.9% in March from a year earlier, compared with declines of 24.6% in Miami and 23% in Phoenix.

Prices rose in just two cities: Charlotte, N.C., and Dallas. In Charlotte, prices increased 0:2% in March from February and 0.8% from a year earlier, the only annual increase among the 20 cities surveyed. In Dallas, prices increased 1.1% in March but declined 3.3% from a year earlier.

David Blitzer, who oversees indexes at S&P said a turnaround in prices won't be visible until several more cities start showing monthly price rises. "Given the massive amount of supply that's out there, I'm not convinced we're at the bottom yet," Mr. Blitzer said. "It'll be at least a few more months."

Home prices nationwide are now 16% below their peak in the second quarter of 2006. Prices rose almost 90% from the beginning of this decade to that peak and now are at levels seen in the third quarter of 2004.

Despite the declines, prices are still almost 60% higher than at the start of the decade.

Many analysts expect prices to decline an additional 10% or more before hitting bottom as the housing market is battered by tighter lending standards and a wave of foreclosures that is boosting supply.

The rise in sales of new homes, which is a smaller part of the market than existing homes, doesn't mean the housing market has hit bottom.

The 3.3% gain, to a seasonally adjusted annual rate of 526,000, was partly offset by a downward revision of the March figure, which dropped 11%, rather than the 8.5% initially reported. On a year-to-year basis, new-home sales were down 42% from April 2007, the Commerce Department said.

The median price of a new home rose 1.5% to $246,100 in April from $242,500 a year earlier. But the gains aren't expected to continue, given the glut of unsold homes. Inventories fell 11,000 to 456,000, but that still represents 10.6 months of supply.

Consumers' expectations about the economy has grown especially pessimistic. The number of people expecting their incomes to decrease during the next six months outweighed those expecting gains. Assessments of labor-market conditions also worsened, with fewer people saying jobs are plentiful.

Consumers' souring mood about the economy is contributing to the weak outlook for housing. In a survey of 5,000 households by the Conference Board, just 2.1% of respondents said they plan to buy a home in the next six months, down from 2.5% last month and 3.4% in March. However, if you are selling your home, many experts would recommend a home warranty. Home warranties make a home look better to a potential buyer, which retains and improves the value of a home. If the home you are selling is warrantied, the new home owners are protected against many unexpected repairs and replacements of items in the home.

The housing market in general may be weak at this point in time, but there are many individuals who are looking to buy a home, due to the major drop in pricing.

Home Sales Rise in Hard-Hit Areas

2008-06-03T09:34:00.000-07:00

Buyers Snatch Up Foreclosed Properties After Big Price Cuts

Home sales are rising in some U.S. metropolitan areas where lenders have slashed prices on foreclosed properties.

Generally, home sales remain weak. The National Association of Realtors reported last week that sales of previously occupied homes in April were down about 18% from the already depressed year-earlier level.

But sales are up sharply in some of the areas hit hardest by foreclosures and falling prices. They include: Las Vegas; Sacramento, Calif.; Fort Myers, Fla.; and inner-city Detroit.

Though Americans remain wary of further drops in housing prices, the data from these areas show that some buyers are trolling for bargains. Sellers "have moved into the acceptance mode" and are pricing homes more realistically, says Thomas Lawler, a housing economist in Leesburg, Va. "I think it is the first stage of good news for the market."

Lenders' inventory of foreclosed homes has steadily increased in the past couple of years and is believed to total around half a million homes. Many lenders initially were slow to slash prices, partly because they hoped to avoid huge losses. But more lenders have been capitulating as it becomes clear that delays often merely result in lower proceeds and higher costs for taxes, insurance and upkeep.

That doesn't mean housing is poised for a quick recovery. In much of the U.S., there is still a huge glut of homes for sale, and foreclosures continue to dump more property on the market. Realtors reported that the number of single-family homes on the market in April was enough to last 10.7 months at the current sales rate, the highest since 1985. During the housing boom of the first half of this decade, the supply typically was four to five months.

For the first four months of this year, home sales in Detroit, excluding suburbs, totaled 3,360, up 48% from a year earlier, according to the Michigan Association of Realtors. The average price dropped 56% to just $20,514. That average is so low because many of the sales involve decrepit homes in neighborhoods with few jobs.

Most of the recent sales in Detroit involve investors buying foreclosed homes, says Carl Williams, president of the local association of Realtors. The homes are selling, he says, because "the prices are dirt cheap."

Sales of "normal" homes, those that haven't been foreclosed, remain very slow, Mr. Williams says. Still, he sees it as a good sign that lenders are finding buyers for the foreclosed homes. To the extent that investors can renovate and find tenants for vacant houses, neighborhoods can start to heal.

In California's Sacramento County, sales of single-family homes totaled 1,669 in April, up 41% from a year earlier, according to DataQuick Information Systems, a research firm. The median sales price was $226,250, down 34%.

Alan Wagner, president of the Sacramento Association of Realtors, says the rise reflects more aggressive pricing by lenders. "They've got to liquidate inventory. They're taking that house and dropping $100,000 off the price, and all of a sudden they've got multiple offers," he says. Some homes that sold for more than $400,000 a couple years ago now go for $225,000 to $260,000, Mr. Wagner says.

That means some renters previously priced out of the market finally can afford homes -- if they can qualify for mortgages. That has become much tougher because lenders have tightened standards, but Mr. Wagner says the growing availability of U.S.-insured loans insured by the Federal Housing Administration is helping.

In the Las Vegas area, sales of single-family homes in April were up 30% from a year earlier. The Greater Las Vegas Association of Realtors says properties being sold by lenders account for more than half of recent sales.

By: James Hagerty
Wall Street Journal; May 27, 2008

Home Warranty To The Rescue

2008-05-30T10:21:00.000-07:00

Home Warranty Saves Ohio Homeowner Thousands on Appliance Repairs

Springfield, Ohio a suburb of blue collar Toldeo Ohio is a fairly large midewestern town full of hard working homeowners. Recently one Springfield family felt they had found the right home warranty company until their claim was denied forcing them to fork over more than $3000 for a new air conditioning unit. When the unmentionable company wouldn't help the family a quick phone call to ORA Home Warranty did the trick.

Homeowners have plenty of choices and many companies offer home warranty coverage there are plenty of choices out there but you want one that will give you the least trouble when you need the most help. When John Rickstan got an offer letter for a home warranty through from the high-pressure, unmentionable home warranty insurance outfit he decided to sign up. He had compared other prices and felt $30 a month was a competitive price to keep him safe if he had to replace a major appliance.

"We need our air conditioning my wife has COPD (Chronic Obstructive Pulmonary Disease) and if she gets real hot she could really be in trouble," said Rickstan.

But when their air stopped working he got to work on filing a home warranty claim. He says the company denied the claim because of pre-existing problems with the air conditioning unit...problems that Rickstan says he had the documentation to prove had been repaired.

"We fixed everything in this house before I ever took out a home warranty just so something like this wouldn't happen," said Rickstan.

Desperate to protect his wife's health as they waited for a final answer on their appeal, the couple spent more than $3000 on a new air conditioning unit. They also continued making phone calls to the dis-honest home warranty and continued making calls.

"I was calling them daily for about a week and a half and then I got aggravated and came to ORA Home Warranty," said Ricksan.

We wanted to know more about this company, but we couldn't even find them on the Internet. So we searched Google for Ohio Home Warranty and found ORA Home Warranty and they were also registered with the Better Business Bureau.

Meanwhile the Rickson's made persistent calls that led to their claim being settled for more than $2,800 dollars. ORA Home Warranty stayed with us through the entire process and made sure we got paid.

The Better Business Bureau lists some warnings to consider before signing up for a home warranty:
--Check out the company track record.
--For The Best Home Warranty Call: 800-472-7004.
--Do comparison shopping about cost and deductibles and make sure to contact ORA Home Warranty.
--Enlist a home inspector to determine if any pre-exisiting problems might not be covered.
--Call the home warranty company before you buy and see how they treat the customer.

To Sell Home Faster, Offer Some Incentives

2008-05-20T10:55:00.000-07:00

The glut of homes on the market in the Valley is making it harder for many people to sell their houses, and they may have to spend some money to sell.

Mortgage expert Dean Wegner says sellers can do some of the things home builders do, such as offering financial incentives.

"Right now, the majority of people buying are first-time home buyers. Well, guess what. Because now they have to come up with the down payment, they don't have any money for closing costs. And if they hear a seller's willing to pitch in 3 percent for closing costs, well, there's six houses to look at and yours is going to be the first on the list."

Other ideas include offering a home warranty or agreeing to pay a few monthly payments for the buyers.

Wegner says start by offering the incentive that is least costly to you, including home warranty coverage, and, if that doesn't work, add on some more. If your house has been on the market for a while, its value is dropping, he says.

You could nail down the sale by agreeing to a payment abatement plan.

"The seller can actually pay the first six months of mortgage payments, so that the buyer doesn't have anything but taxes and insurance to pay for the first six months."

Once you come up with some incentives, monitor the results, he advises.

"Did you add a buyer incentive that's being advertised and you notice that the traffic has doubled? If that's the case, then that's really good. You might want to stick with that campaign until you sell your house. If you've done a buyer incentive and the traffic has not doubled, maybe try something else."

One of the cheapest incentives, Wegner says, is a two-year home warranty, which will cost around $700.

by Bob McClay
KTAR; May 16th, 2008

My $1,200 Radon Job

2008-04-25T11:07:00.000-07:00

The Least Sexy Home Improvement Could Be a Lifesaver

It might be the ugliest home improvement. Last month, I finally did something about my radon problem.

Two men came and drilled a five-inch-wide hole in my home's bottom floor. They attached a suction system of white pipes and a big round fan to draw air -- and radon -- from underneath the house and vent it out through a black pipe stuck in the roof. The work took six hours and cost $1,200 -- about what I paid a pro to retile my bathroom.

Most homeowners have heard about the health hazards of radon, a radioactive gas that emanates from rocks, soil and water. Outside, it's relatively harmless, but inside it can collect in dangerous concentrations, seeping in through cracks in the home's foundation and other openings. Radon is the No. 1 cause of lung cancer among nonsmokers, and one in 15 homes has an elevated level prior to treatment, according to the Environmental Protection Agency. The agency estimates 750,000 to 1 million U.S. homeowners have taken radon-reduction steps over the years and says those steps, along with techniques in new construction, have helped prevent 6,000 deaths.

Despite the risks, radon until recently has ranked pretty low on many homeowners' action lists, including mine. You can't see, smell or taste it, which makes it -- unlike mold -- easy to ignore. The federal government recommends but doesn't mandate remediation for homes with elevated levels. And let's face it: In the scheme of renovations, there are sexier ways to drop 1,200 bucks than drilling a fat hole in the basement.

But as homeowners and builders rush to make dwellings healthier on all fronts -- from nontoxic paints and organic lawns to formaldehyde-free kitchen cabinets -- radon is emerging as a hot button in both new construction and resales. The National Association of Home Builders' Green Building rating program, which kicked off in February, requires installation of mitigation systems in certain radon-prone regions. Last year, the EPA launched a campaign encouraging the use of radon-resistant materials in new construction -- such as plastic sheeting under a home's slab and a built-in vent pipe where a fan can be attached. New studies are examining whether granite and other stone countertops play a role.

"As people become more interested in the green lifestyle, it encompasses radon as well," says EPA spokeswoman Kristy Miller. It has taken time to build public awareness, just as it did with smoking, she says. "We've been on that for 45 years or more. With radon, now we're seeing a culmination of all these issues."

In 2006, 10.6% of single-family detached homes were built with active radon-reduction systems in place, nearly double the percentage in 2001, according to the national home builders group. State and local building codes in nearly half the states mandate some level of radon control, and the number is on the rise, says Peter Hendrick, executive director of the not-for-profit American Association of Radon Scientists and Technologists. A number of local groups, like the Pennsylvania Builders Association, encourage members to spend a bit more up front to install radon-reduction systems. "I would encourage any builder that it's the right thing to do -- it's cheap to put in and it's in the client's best interest," says member Frank Thompson of Sweetwater Builders, near Pittsburgh.

RADON REMEDIATION
As part of Gwendolyn's renovation, a white pipe (top) was drilled through the garage floor, which shares her house's slab. The pipe then funnels up into the garage's attic (bottom) where a fan pulls the air out from underneath the home and vents it to the outside. The one downside: she can hear a whoosh whenever she parks the car.

As for resales, while no federal or state regulations mandate home radon testing, the U.S. Surgeon General issued an advisory in 2005 urging all Americans to have one done. The majority of states have some form of disclosure law requiring the home seller to inform the buyer about property defects, such as radon -- but only if the seller knows about them. Many experts believe this discourages testing and say a better model is an Illinois law that took effect this year. It requires sellers to provide information about radon risk in general, whether the home has been tested or not.

Meantime, some radon labs say they're seeing a steady rise in testing. Sales of radon test kits have jumped 40% in the past five years at Radon Testing Corp. of America, a major national testing lab in Elmsford, N.Y. "The number of prospective home buyers asking for tests has increased even though the real-estate market has dropped," says RTCA's president, Nancy Bredhoff.

There is concern, though, that the push for more testing and remediation is overkill, burdening home builders and potentially slowing sales in a tough housing market. And while most scientists agree about radon's long-term risks, some question the benefits of reduction efforts. "Only after many years would a successful radon abatement program begun today be likely to reduce the number of lung cancers, and then only by a very small percentage," according to the Web site of the Health Physics Society, a scientific and professional organization focused on radiation-safety issues.

Where I live, in a rocky New York county, the indoor radon average is slightly above the government's recommended take-action level of 4 picocuries per liter of air (pCi/L). My home was built in 1978. When I purchased it in 2003, the seller neglected to stipulate on the required disclosure form if the home had been tested for radon. (In the haste of the deal, I didn't notice.) When I tested, the levels came back between 5 and 13 pCi/L -- a level higher than the EPA standard but not off the charts, according to pros I talked with. Most suggested retesting down the road, and when I did, the levels still hovered around 5 to 6 pCi.

RADON ROADMAP

PROFESSIONAL TESTING: The U.S. Surgeon General and EPA recommend all homes be tested and fixed if the radon level is 4 pCi/L or more.

Find links to qualified testing and mitigation professionals in your state at www.epa.gov/radon and via the National Environmental Health Association (www.neha-nrpp.org) or the National Radon Safety Board (www.nrsb.org). The latter two groups offer proficiency listing/accreditation/certification in testing and mitigation.

DO-IT-YOURSELF TESTING: Inexpensive, easy-to-use radon test kits can be purchased in stores like Home Depot and online at sources .

HEALTH INFO: Studies about radon's health effects can be found through the nonprofit American Association of Radon Scientists and Technologists and the World Health Organization.

Since my score could present a selling problem later, I decided to take action. Unfortunately I had to start from scratch, installing an "active soil depressurization system," which pulls air from underneath the home and reroutes it outside, often through the roof. These types of systems reduce radon readings below the 4 pCi action-level in 99.9% of cases, according to Bill Angell, chairman of the World Health Organization's Radon Prevention and Mitigation Working Group, which plans this year to release standards for radon resistance in new homes and reduction in old ones. "Virtually never do we find a home we can't get below the threshold for action," he says. Other tactics include sealing basement cracks and installing a special ventilator.

The soil depressurization technique I used is called a "sub-slab suction" system, and involves a fan and piping that is drilled through the floor slab and routed up through hidden areas, like closets, and then typically into an attic and then outside. An alternative is to run the pipe up the home's exterior, where it is more likely to be visible. The cost of fixing an existing home typically ranges from $800 to $2,500; the cost to builders to install similar measures in new homes ranges from $350 to $500.

After checking reputations with local real estate agents, I called several pros for bids. (Many state health departments list qualified contractors; for those that don't, the EPA offers standards to be followed.) Each one pronounced my home "very difficult" because the lower level was all living space (hard to drill a hole inconspicuously) and I had no main attic (Where to put the fan?). The man I ultimately hired, David Barber of Acceptable Environment in Newburgh, N.Y., suggested drilling in my garage, which shares the home's concrete slab, and running the pipe and fan though a small attic space in there.

The upside: It isn't an eyesore. The downside: I can hear the fan's whoosh every time I park the car.

A week after Mr. Barber mitigated, I ran a new radon test. The result: 2.8 pCi/L -- about a point below the federal limit. I'm safer on the home-sale front, but because I am in my home's lower level a lot, I may pay Mr. Barber another $150 to run a second pipe from beneath a lower-level stairwell to the garage attic fan. My goal: getting down to at most 2 pCi/L, a level that puts my lifetime risk of radon-related lung cancer as a nonsmoker at 4 in 1,000, according to the EPA. Meantime, I'm focused on finishing a happier renovation project: the kitchen, where I hope the only gas I'll think about is from my new range.

By: Gwendolyn Bounds
Wall Street Journal; April 19, 2008

Many Worry About Mortgage Payments

2008-04-17T10:46:00.000-07:00

WASHINGTON(AP) -- One in seven mortgage holders worry they may soon fail to make their monthly payments and even more fret that their home's value is shrinking, according to a poll showing widespread stress from the nation's housing crisis.

In an ominous snapshot of how the sagging real estate market and sour economy are intersecting, the Associated Press-AOL Money & Finance poll also found that 60 percent said they definitely won't a buy a home in the next two years.

That was up from 53 percent who said so in an AP-AOL poll in September 2006. Only 11 percent are certain or very likely to buy soon, down from 15 percent two years ago.

In today's economic climate, even holding onto what they already have is a challenge and source of distress for significant numbers of homeowners. Nearly three in 10 said they are concerned their home's value will decline over the next two years, while 14 percent of mortgage holders expressed worry that they might miss payments in the next six months.

One nervous homeowner is Daniel Gallego, a warehouse worker in Stockton, Calif., who said in a followup interview that he may have to sell his house at a big loss.

"We may have to move in with my wife's parents or my parents," said Gallego, 30, who has two young children. "I could pay off some debt, then we could rent, and maybe buy another house in a few years."

He said the rising cost of gasoline and other expenses have made his adjustable rate mortgage unaffordable. Because he doesn't expect his home's value to recover soon, he said he may be better off moving now before his rates rise.

One in 10 have adjustable rate mortgages, half the number who said so two years ago. These mortgages generally start at a low interest rate and are later adjusted to market conditions - which has often meant steep, unaffordable boosts that have forced many to refinance or even lose their homes.

The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling - good if you're buying a house but bad if you have to sell one.

The number envisioning falling prices in their area has grown to one in four, while four in 10 think prices will rise, a decrease from two years ago. Expectations for rising prices are highest in the South, with Westerners likeliest to predict they will drop.

"This is a great time to buy, but not necessarily to sell," said Robert Jackson, who lives in a two-bedroom house in Ferguson, Mo., with his wife and four young children. He said he would love to purchase a larger home, but can't because even if he found a buyer, he would probably lose thousands on his house, which he bought less than two years ago.

"We're just going to have to slap a Band-Aid on it and stay here until the market gets a little bit better," said Jackson, 30.

Underscoring the public's unsettled feelings, the number saying local housing prices are about right has fallen to 35 percent. Half say homes are overpriced - especially in the Northeast - while those saying housing is underpriced have doubled to one in 10. Midwesterners were likelier than those in other regions to feel this way.

Some areas of the country buck regional trends. Laurie Jensen, a single mother of three, struggles to make payments on her home in Whitehall, Mont., by working as a seasonal road construction flagger and at times collecting unemployment. She said she'd like to move outside of town, but the area is popular and prices have surged.

"Things are pretty crazy," she said. "Places I don't consider that great are really expensive."

The public anxiety is in reaction to an economy that is veering toward recession and losing jobs even as the housing market sputters badly. Foreclosures have soared to record highs, mortgage rates have increased, sales of existing and new homes have fallen and home values have dropped.

Gus Faucher, director of macroeconomics for Moody's Economy.com, a consulting firm, estimated that 9 million homeowners owe more on their home than its worth. He said his company believes home sales are at or near bottom and home values will continue to fall until early next year.

Even so, he said, many people bought their homes before the run-up in values that started around 2001 and remain in good shape.

"So the value of your house goes down temporarily," he said. Unless the homeowner must sell now or can't afford the payments, "that doesn't have that much of an impact."

The poll also found:
The biggest worriers are those expecting to buy soon. Of that group 43 percent frets that their home's value will drop in the next two years, compared with 25 percent of those not expecting to buy soon.

Fifty-nine percent think now is a good time to buy.

Half think this is a very tough time for first-time buyers, an increase from two years ago. Nearly two-thirds think it's harder for first-home buyers than it was five years ago.

The AP-AOL Money & Finance poll was conducted from March 24-April 3 by Abt SRBI Inc. It involved telephone interviews with 1,002 adults nationwide, for whom the margin of sampling error is plus or minus 3.1 percentage points.

Included were interviews with 769 homeowners, for whom the sampling margin of error is plus or minus 3.5 points. The margin of sampling error for other subgroups was larger.