April 2009

Bank of America loosening short seller policy

Bank of America (BOA) says it will relax its policy on payoffs connected with short sales.  Large banks have been demanding money for home equity lines and second mortgages that would otherwise be worthless if the short sale property went to foreclosure.  BOA has been among the least cooperative of all banks in agreeing to short sale payoff terms, demanding 10 percent of what the homeowners owed on the equity line balance or second mortgage before signing off on the short sale, which is necessary for the deal to go through.  BOA spokesman Terry Francisco says the new policy is “less arbitrary, more rational.”

 

New policy

BOA’s new policy is to ask for five percent of the sale proceeds on the short sale, net of realty commissions, closing, and other costs. Some short sellers point to problems, though:  The bank’s previous 10 percent policy meant they’d demand $20,000 on a $200, 000 equity line balance, but under their new policy it will cost the short seller $15,000 if the net proceeds are $300,000″ on a short sale, even though the economic value of their holding may in fact be zero. Says the Realty Times:  “Bottom line for investors: If there’s a Bank of America second mortgage or credit line on the house you’re after in a short sale, work the new numbers.  At least some of the time you might be surprised that the answer from the big bank is now ‘yes.’”

What’s in Your FICO Score?

What’s in your FICO® score

FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your FICO score.

These percentages are based on the importance of the five categories for the general population. For particular groups – for example, people who have not been using credit long – the importance of these categories may be somewhat different.

Payment History

• Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
• Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
• Severity of delinquency (how long past due)
• Amount past due on delinquent accounts or collection items
• Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
• Number of past due items on file
• Number of accounts paid as agreed

Amounts Owed

• Amount owing on accounts
• Amount owing on specific types of accounts
• Lack of a specific type of balance, in some cases
• Number of accounts with balances
• Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
• Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History

• Time since accounts opened
• Time since accounts opened, by specific type of account
• Time since account activity

New Credit

• Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
• Number of recent credit inquiries
• Time since recent account opening(s), by type of account
• Time since credit inquiry(s)
• Re-establishment of positive credit history following past payment problems

Types of Credit Used

• Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)

Please note that:

• A FICO score takes into consideration all these categories of information, not just one or two.
  No one piece of information or factor alone will determine your score.
• The importance of any factor depends on the overall information in your credit report.
  For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your FICO score. Thus, it’s impossible to say exactly how important any single factor is in determining your score – even the levels of importance shown here are for the general population, and will be different for different credit profiles. What’s important is the mix of information, which varies from person to person, and for any one person over time.
• Your FICO score only looks at information in your credit report.
  However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.
• Your score considers both positive and negative information in your credit report.
  Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your FICO credit score

Porter Ridge Enrollement Cap Guidelines

From the Union County Board of Education:

Cap was effective March 18, 2009 and will remain in effect indefinitely.
 
Porter Ridge Middle currently has 1462 students enrolled.
 
Students new to the Porter Ridge attendance area (enrolled on or after 3-18-09) will be
reassigned to Piedmont Middle and Piedmont High. Union County Public Schools will
provide transportation to Piedmont Middle and High. 
 
Elementary students who move after March 18, 2009 into the Stallings, Poplin, Hemby
Bridge, Sardis, Porter Ridge, and Porter Ridge portion of Fairview Elementaries will,
upon completion of 5th
 grade, move to Piedmont Middle as long as the cap is in place. 
 
Students who move domicile from one home in the current Porter Ridge attendance area
to another home in the current Porter Ridge attendance and are already in attendance at
Porter Ridge Middle or High will remain in the Porter Ridge schools as they are already
occupying a seat there.
 
Children who are domiciled in the current Porter Ridge school district but have not
availed themselves of a public education (i.e. are in private, religious, home, or other
schools) must enroll in Piedmont Middle or High after the effective cap date.
 
NC Wise Managers at Stallings, Poplin, Hemby Bridge, Sardis, Porter Ridge Elementary,
and Porter Ridge portion of Fairview will keep a separate spreadsheet of students in
current grades 1-5 as to the enrollment date. They will also keep a list of kindergarteners
who enroll on or after September 8, 2009 as these kindergarteners would also fall under
the cap. If the cap is still in effect when said child is ready for middle school, any child
who enrolled on or after March 18, 2009 (or on or after September 8, 2009 for
kindergarteners) will attend Piedmont Middle or High.
 
NC Wise Managers at Piedmont Middle and High will keep a separate spreadsheet of
students who enroll in their schools by grade and enrollment date. They will have
enrolling students to complete a transportation form.  The NC Wise Manager will then
fax the transportation form to Mandy Benton at 704-283-9873.  The NC Wise Manager
should indicate on the form Porter Ridge Capping. When the cap is lifted, students will
return to Porter Ridge, possibly by enrollment date.
 
Students who are long-term suspended from either Porter Ridge Middle or High may
return to the school at the end of the long-term suspension.
 
Students who drop out of Porter Ridge High (or Porter Ridge Middle if they reach the age
of 16) and wish to re-enroll must re-enroll at Piedmont Middle or High.

Check out these new “Affordable Green Homes” from Clayton

From Popular Mechanics:

One of the largest manufacturers of mobile homes plans to enter the market of environmentally friendly, prefab homes with a model that is seriously affordable.

Prefab green homes get affordable (© Clayton Homes/Popular Mechanics)Click to enlarge picture

It looks like a house you’d order from Ikea. It sounds like a house designed by Apple. The I-House just might be the future, well, one future, anyway, of the housing market.

Clayton Homes, based in Maryville, Tenn., is one of America’s largest manufacturers of mobile homes and prefabricated housing. So when President Kevin Clayton wanted to go green, he gave his architects a free hand, instructing them to incorporate as many green products as possible and to produce a home that was super energy-efficient -  the only constraint was that it had to be something that could be built in existing facilities.

The result was the Clayton I-House (view Clayton’s online tour of it here), an innovative prefab home that can be powered for a dollar a day, thanks to Low-E windows, solar augmentation, high-efficiency appliances and superior insulation. The solar panels on the roof don’t supply all the home’s needs, but they do cut electricity consumption in half. There’s also a tankless water heater and a cistern that collects rainwater from the roof for use in gardening, car washing or other outdoor uses. Floors are made of fast-growing bamboo, and paint and insulation are low- or zero-emission.

The basic I-House is 992 square feet, though the design’s blend of indoor and outdoor space makes it seem bigger. Though final prices haven’t been set, Clayton hopes to deliver it for about $100,000. But the “core” unit can be expanded by adding additional rooms in different configurations to suit the buyer’s needs and the character of the lot -  placing rooms above one another to accommodate, for example, a hillside. Clayton Vice President Chris Nicely says the goal is to allow as much customization -  both in configuration and interiors -  as possible. It can be set on a traditional foundation, for example, or it can sit on piers driven into the ground.

Tell us: Would you consider buying a prefab home?

As innovative as the energy and environmental features are, though, it’s the design that draws attention. As Popular Mechanics toured a display model near the Knoxville airport, people were stopping in to look it over. “I’m not a mobile-home kind of guy,” one man said, “but I could see living in this.” That’s the idea.

The Clayton folks see the typical customer for the I-House as being younger and more affluent than traditional mobile-home buyers. The interior and exterior are attractive, looking like something from a high-end home show, not the kind of disposable mobile home you’d see coming from the Federal Emergency Management Agency.

The house more closely resembles a product that you might buy from Ikea. In fact, it is a house you might buy from Ikea: Kevin Clayton is a fan of the Scandinavian furniture company, and Clayton Homes is exploring a partnership with Ikea that would feature display models at Ikea stores and even allow people to design and order their own I-Houses from the Ikea Web site. (Clayton’s own Web site will allow this in a few months, via a build-your-own I-House feature. They’ll even let you visit the factory while it’s built.)

So where does the I-House fit in to the troubled times of the current housing market? Well, obviously, it’s not for everyone; even with several expansion modules added, large families will probably find it a bit small. But with big, expensive houses looking less attractive as investments -  since their values are actually plummeting in many markets -  and with energy costs virtually certain to climb in coming years, the market for a small but stylish house that has lots of high-end amenities with a low energy bill is likely to be pretty big. And if you’re like a lot of Americans, you spend most of your time in a couple of rooms anyway, regardless of how many rooms your house has.

But the I-House’s impact is likely to go beyond this particular home. What was learned in the process of designing and building this energy-efficient home has fed back into the rest of Clayton Homes’ product line, Nicely says. An ordinary mobile home that gets much lower energy bills may not be as exciting as the I-House, but multiplied by millions, it’s likely to have an impact. And the strong interest in the I-House’s look and “green” character is also likely to encourage other builders -  including the makers of traditional site-built homes -  to add green features as well.

Feds stand up to mortgage scams

From the Raleigh News and Observer:

WASHINGTON — Federal and state officials are cracking down on mortgage modification scams, accusing “criminal actors” of preying on desperate borrowers caught up in the nation’s housing crisis.

Government officials said Monday that scammers are seeking to take advantage of borrowers in danger of default by charging them upfront fees of $1,000 to $3,000 for help with loan modifications that rarely, if ever, pay off.

The frauds often involve companies with official-sounding names designed to make borrowers think they are using the Obama administration’s efforts to help modify or refinance 7 million to 9 million mortgages.

“If you are struggling to make your mortgage payment, or if you are facing foreclosure, stay away from anyone who says that they will save your home for money upfront,” Illinois Attorney General Lisa Madigan told reporters in Washington.

Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.

“These are predatory schemes designed to rob Americans of their savings and potentially their homes,” Treasury Secretary Timothy Geithner said. “We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.”

The Federal Trade Commission has sent warning letters to 71 companies it says were running suspicious advertisements. The agency also said it filed three new complaints against Northridge, Calif.-based Federal Loan Modification Law Center, Newport Beach, Calif.-based Bailout.hud-gov.us, and Clearwater, Fla.-based Home Assure, and the operators of those companies.

Bill Anz, founding partner of Federal Loan Modification Law Center, defended his operation, saying he will offer a refund to anyone who doesn’t get a modification. About 20 percent of the 5,000 customers have received a modification so far, he said, with more in the works.

“People might not like it,” Anz said, but “realistically, the problem is so large that the private sector must step in.”

Still, Anz, who advertises on TV and radio stations, said he would be willing to changing his company’s name. He conceded the name “might be aggressive.”

Thomas Ryan, the operator of Bailout.hud-gov.us, has agreed to take the Web site down. Ryan said he still operates another site — which he would not name — that generates leads for foreclosure rescue operations. “They’re providing a legitimate service,” he said.

A federal judge last month granted the FTC’s request for a temporary restraining order against two New Jersey companies: Hope Now Modifications and New Hope Modifications. The government said the companies mimicked the Hope Now alliance, which runs the mortgage industry’s foreclosure prevention effort.

The FBI is investigating about 2,100 mortgage fraud cases, a 400 percent increase from five years ago, Attorney General Eric Holder said.

“If you prey on vulnerable homeowners with fraudulent mortgage schemes or discriminate against borrowers, we will find you and we will punish you,” Holder said.

Over the past year homeowners have been flooding state attorneys general with complaints about for-profit loan modification consultants. Roadside billboards in places like Las Vegas scream, “Save my property!” and radio ads promise “expert help.” Some companies comb property records and send mail designed to look like it is from the homeowner’s lender.

Some of those offering help are former brokers, agents and appraisers who’ve seen their previous business evaporate. But consumer advocates say the legitimate consultants are no more effective than nonprofit credit counselors who also work with lenders at no charge.

The shadiest operators, consumer advocates say, can actually force borrowers out of their homes by persuading them to sign over the title or grant power of attorney.

While not every loan modification business is fraudulent, “swimming around in those waters are a lot of sharks,” said Jim Carr, chief operating officer at the National Community Reinvestment Coalition in Washington.

Some states recently have toughened penalties for perpetrating foreclosure scams, and some prosecutors have used existing fraud statutes to bring criminal charges. But many state prosecutors have not filed criminal cases, instead proceeding with civil lawsuits.

Changes to USDA 100% financing program

USDA Rural Development has confirmed that the proposed change in the proposed change in the income limit structure for the USDA Guaranteed Rural Housing Program will be implemented by USDA Rural Development as planned on April 20th. 

In summary, the current income limit structure that is based on household incomes from one to eight persons would be restructured as follows: 

·        1-4 person households would be qualified using only the 4-person limit.

·        5-8 person households would be qualified using only the 8-person limit. 

For example, the current base income limit for all non-high cost counties is: 

1 person – 49,550

2 person – 56,600

3 person – 63,700

4 person – 70,750

5 person – 76,400

6 person – 82,050

7 person – 87,750

8 person – 93,400

 Under the new income limit structure for non-high cost counties, those income limits would be: 

          *1-4 person – 70,750

          *5-8 person – 93,400 

Note: The same benefit pertains to all high-cost counties in that all 1-4 person households would be qualified for income eligibility based only on the 4-person limit, and all 5-8 person households would be qualified for income eligibility based only on the 8-person limit.