Bank of America has begun a pilot program in Florida offering extra incentive payouts to distressed homeowners who agree to and successfully close on a short sale.

Incentive payments for relocation assistance range between $5,000 and $20,000. The program is being offered on a limited basis for investor-approved, pre-offer short sales.

Bank of America is calling it a pilot “test-and-learn” program.

A spokesperson for the bank explained that Florida is experiencing higher foreclosure rates than other parts of the country, and is therefore seen as a “viable market to gauge incremental short sale response and completion rates when presenting homeowners with relocation assistance at closing.”

If successful in Florida, Bank of America says the “test-and-learn” could be expanded to other states.

The short sale must be initiated between September 26 and November 30, 2011 and close by August 31, 2012.

Florida homeowners who qualify for the “test-and-learn” program will receive a solicitation mailer directly from Bank of America, or may learn about the program if they are working with a real estate agent who handles pre-approved short sales for BofA.

The bank has a dedicated team of short sale specialists standing by to help agents determine if their homeowner client qualifies for the short sale relocation assistance at: 877.459.2852.

Bank of America has already been offering short sale payouts in the state of Florida, albeit for smaller amounts.

Click on Link below for Full story

http://on-msn.com/qzyPXw

How can would-be buyers afford their first house or condominium on their own? For many buyers, the answer involves a combination of personal savings, a low-down-payment loan with mortgage insurance, seller-paid closing costs or a first-time homebuyer down-payment assistance program.

Stock and savings

Dan Nainan, a comedian and voice-over actor in New York, used cashed-in corporate stock options and personal savings to buy a 750-square-foot co-op apartment in Manhattan this year.

About half of his $85,000 down payment and closing costs came from stock options he sold five years ago. The rest came from a lifestyle that he says includes a lot of library books and dining-out coupons, but no cars, cocktail hours or cable television.

“It’s important to live well but also watch your expenses,” he says. “It’s possible to do both.”

Nainan, 29, says he never expected homebuying help from his parents. Although the prospect of buying a home was “somewhat daunting,” he says he still felt confident he could achieve his goal.

“I had to pay for my own college by myself, and I had to pay for my first car,” he says. “A lot of my friends, their car was paid for, their college was paid for and their home was paid for. But my dad has always stressed for my sister and myself to do things independently.”

Down payment help

Homebuyers who aren’t in a position to save tens of thousands of dollars typically turn to loan programs that allow a small down payment, relative to the home’s purchase price.

A loan insured by the Federal Housing Administration, known as an FHA loan, requires a down payment of only 3.5% for eligible borrowers. Granted, 3.5% isn’t nothing, but it’s a relatively modest amount compared with the property’s value and can be affordable in a low-cost housing market. All FHA loans involve extra costs for mortgage insurance, which protects the lender if the borrower defaults on the loan. Private mortgage insurance, or PMI, also allows buyers to buy a home with a small down payment. Today, a loan with PMI might even be cheaper than an FHA loan, says Jay Dacey, a mortgage broker at Metropolitan Financial Mortgage Co. in Minneapolis. PMI can be paid monthly or wrapped into a higher interest rate. PMI also can be financed as part of the loan amount. Dacey cites a hypothetical example of a $4,000 premium added to the loan.

“Say you borrowed $200,000,” Dacey says. “That extra $4,000 (for PMI) will wind up on the loan side, so that’s $204,000. That’s why it’s called a ‘single-financed.’ And then, you never have to pay a monthly mortgage-insurance premium.”

First-time homebuyer down-payment programs, which local and state housing agencies offer, extend grants and loans to first-time homebuyers who meet certain guidelines.

Greg Cook, a loan consultant at Guild Mortgage Co. in Temecula, Calif., says he is a fan of the programs in his area. Dacey is less enthusiastic, saying that these programs tend to have strings attached, such as income restrictions and payback requirements.

Buyers and sellers traditionally share the closing costs of a home sale. But sometimes a seller will pick up most or all of the buyer’s costs as part of the deal. For example, a bank that owns a property outright because of a foreclosure or agrees to take a loss on the seller’s mortgage in a short sale often will pay the buyer’s closing costs, Cook says.  Still, buyers typically need some money of their own.  “If nothing else,” Cook says, “they have to have enough to write the earnest money check.”

That initial deposit can be several thousand dollars, depending on the home’s price.
First-time buyer tips

Regardless of whether mom and dad contribute, prospective buyers should meet with a lender upfront to find out how much they can borrow. Buyers also should clean up any errors on their credit report and try to build up emergency savings, in addition to their down payment and closing-cost funds, loan officers say.  “It’s not a bad thing to have too much money at closing,” Cook says.

“The first week she moved in, she emailed me in a panic that there are mice, she needs a new furnace, and the ducts, bathtubs and kitchen cabinets need to be replaced,” said Curtis. Total cost to fix everything: tens of thousands of dollars. “I’m surprised that more of this didn’t come up in the inspection,” she said.

Home inspections, it turns out, are much more limited than many first-time buyers realize.

“The purpose of a home inspection is to look for material defects of a property: things that are unsafe, not working, or that create a hazard,” explained Kurt Salomon, president of the American Society of Home Inspectors and an inspector based in Salt Lake City. Homebuyers, however, “think we can see through walls and predict the future,” he said.

Home inspectors don’t test for environmental safety, such as lead in the paint or radon in the air, although they might recommend that a potential buyer do so. Inspectors can also overlook mold or vermin, if evidence of their existence is hidden behind floorboards or otherwise obscured.  Nor do they examine more pedestrian child-safety issues, such as how easy it is to get into cabinets or fall down staircases. And most inspectors lack specific expertise in pool safety, one of the biggest risks for young children.

That means buyers not only need to take matters into their own hands, they should also budget for unexpected expenses post-purchase. Here are five ways to eliminate, or at least mitigate, those surprise costs:

1. Interview your home inspector. Many buyers, especially first-timers, accept their real estate agent’s recommendation for a home inspector. After all, how different could two inspectors be? Very different, it turns out.
“The value an inspector brings is his knowledge, and not every inspector is as educated as the next one,” said Curtis Niles, president of the National Association of Home Inspectors and a home inspector in Upper Darby, Pa.  Niles said buyers should ask potential inspectors how much experience they have, whether they get on the roof of the home, and whether they have particular expertise in child safety, environmental friendliness or any other special concerns. If the property has a pool, the inspector should have specific knowledge and experience about pool safety.

2. Look for common hazards. Older homes often have outdated railings, with spaces so wide that babies and toddlers can crawl through them.

“Back in the ’50s, the space between railings was over 6 inches. An infant can crawl through that and fall down. Now, the rule is 4 inches,” said Salomon.  Backyard pools should be enclosed by gates that are at least 6 feet tall, with self-closing hinges and latches at least 54 inches off the ground, out of reach of young children.

Home inspectors generally don’t test for environmental toxins such as lead paint, asbestos and radon, all of which pose significant risks and can be costly to remove, although they might point out that homes are at risk for such dangers.  Homes built before 1978, for example, often contain lead, and 9-by-9 floor tiles in basements are likely to contain asbestos.

If buyers are aware of these toxins before closing, they can ask the seller to pay for all or some of the abatement, containment or removal costs. A radon system, for example, can cost about $1,500, Salomon said. Lead paint abatement, which requires an EPA-certified professional, can be similarly expensive, costing double or triple a standard paint job.  Older houses also often have outdated electrical systems, which can require upgrades ranging from costly new wiring to simple outlet covers. Every bedroom should have a smoke detector, too, and every floor a carbon monoxide detector.  While these additions are relatively inexpensive, buyers can shorten their own to-do lists by asking the sellers to make the updates.

3. Think about your current, and future, lifestyle. So much of home safety comes down to who’s living there. A three-floor home with outdated railings and electrical systems that was perfectly safe for empty-nesters in their 60s can be filled with dangers for a young couple with an infant, seniors who can no longer make their way upstairs easily or a Chihuahua.

When Julie Lowe, 38, and a mother of two in Seattle, bought her first house pre-parenthood, she didn’t consider child safety because it wasn’t on her radar. But as she and her husband shopped for their second house as parents, they focused more on safety. She also wanted all three bedrooms on one floor for easy access to babies in need of comforting in the middle of the night, as well as for security.  When her daughter’s bedroom was on the lower level and at the front of the house, Lowe says she “had a paranoia about someone breaking in and snatching her.” But in the new house, she says, “she and her brother are steps away. It won’t be so great when they’re older, but for small children, having three bedrooms grouped at the back of the house is a luxury,” she says.

Inspectors often tailor their checklist to what they perceive to be the buyers’ specific needs. If a couple with children is purchasing a Victorian house with widely spaced railings, Salomon says he wouldn’t make as big a deal about the safety hazard as he would if the buyers had young children. “I’ll write it up different for a single person with kids, versus a couple with kids,” he
says.

4. Consider bringing in additional safety experts. In addition to paying a home inspector for extra services such as lead testing, some buyers decide to work with electricians, chimney inspectors or child safety professionals in advance.

Larry Stone, founder of Safety Matters, a Chicago-based childproofing company, said he often works with buyers before they move into a new house to make sure it’s safe for little ones. (While buyers will want to wait until they close on a house to make any improvements, they can get cost estimates before making their final purchase decision.)
Some of the most common solutions include covering railings with custom-fit plexiglass so children can’t fit through them or get their heads stuck, installing alarms and covers around pools, and installing window bars or stops on low windows.  Stone also installs high locks on doors, out of reach of small children, and covers electrical outlets with safety plates.

5. Spread out costly repairs and updates. While things posing an immediate danger need to be addressed right away, other changes can happen more slowly.

“My job is to talk her out of doing all this right now,” said Curtis of her client with the many unexpected problems. Instead, Curtis recommends spreading out repairs and updates over time, so budgets don’t have to survive the simultaneous shock of a down payment, new mortgage payments and contracting work.

Bottom line: To avoid unexpected costs after closing, homebuyers should consider going beyond a standard home inspection, especially if they’re living with seniors, children, or pets. Then they can ask the seller to cover some of the costs or at least factor them into their budget, and avoid ugly surprises after the move-in date.

Distributed by Tribune Media Services

Copyright© 2011, Chicago Tribune

The Home Price Expectations Survey, conducted by Pulsenomics LLC on behalf of MacroMarkets, is based on the S&P/Case-Shiller index over the next five years.

Pulsenomics surveyed 111 individuals, ranging from economists and real estate experts to investment and market strategists.

“Expectations for home price performance in 2011 has become somewhat less negative,” commented Robert Shiller, MacroMarkets cofounder and Yale University professor of economics. “Unfortunately, the average projection is somewhat more negative for each of the following four years.”

On average, respondents expect prices to decrease 2.53 percent this year and 0.13 percent in 2012. They expect increases the following three years starting in 2013 with a 1.77 percent increase, according to survey results.

“Markets and government institutions are visibly struggling to respond consistently to an unprecedented rash of crises and conflicts. These struggles diminish confidence, which compounds the underlying economic stresses and lowers expectations,” Shiller stated.

In addition to documenting home price projections, Pulsenomics asked respondents for their views on the government’s role in the housing market.

Seventy-three percent of respondents believe the government is “highly likely” or “likely” to implement new policies within the next 12 months.

Almost half – 49 percent – said further government intervention in the market is unnecessary, and 57 percent said further action by the government is “undesirable.”

“This data suggests that regardless of when and how housing recovers, controversy will persist regarding the role of government in the market,” said Terry Loebs, founder of Pulsenomics.

Those who stated that more government intervention in the market is necessary or desired cited refinancing, modifications, rental programs, and home equity conversions as ways the government can improve the market.

MacroMarkets LLC is a financial technology company. Pulsenomics is an independent research and consulting firm.

http://www.dsnews.com/articles/index/survey-home-prices-expected-to-increase-11-over-next-five-years-2011-09-21

Click Here for the full story

That tally represents a 17 percent contraction from 574,000 REOs on the books just 10 months earlier, in September of 2010, just as the robo-signing scandal began grabbing headlines.

At the same time, the research firm estimates there were 1.57 million home loans 90-plus days delinquent but not yet in foreclosure at the end of July of this year, and another 1.91 million already in the foreclosure process.

Barclays says the rise in processing times has been driven almost entirely by the time that loans spend in delinquency and foreclosure. The average period that loans spend in REO has risen only modestly since 2007, suggesting that any lengthening in disposition timelines has been a function of weaker demand for homes than of processing delays, Barclays explained.

While processing timeframes have been trending up since 2007 as a result of the industry’s modification efforts and the deluge of delinquent loans, the research firm notes that timelines increased even more dramatically once mortgage documentation issues were uncovered in late 2010.

According to Barclays’ analysis, the average number of months a loan has spent in foreclosure has climbed from around 10 months just before October 2010 to more than 12 months today.

The firm’s analysts point out that whether a loan is located in a judicial or non-judicial state has a “considerable impact” on the amount of time the loan is likely to remain in the foreclosure process. Still, even within the judicial state population, loans in certain areas are showing much longer processing delays.

For example, Barclays’ research shows that among the judicial foreclosure states, New York, New Jersey, and Florida all display longer-than-average foreclosure delays, with defaulted borrowers in New York currently remaining in the foreclosure bucket for an average of around 17 months.

A buyers market isn’t necessarily a free-for-all. Here are tips on how you can score a great bargain in your next home purchase.

click on the link below for the FULL STORY!

http://realestate.msn.com/real-estate-on-the-cheap-how-to-craft-a-lowball-offer

Nearly 11 million properties, roughly 22.5% of all U.S. homes, were worth less than the underlying mortgage in the second quarter, according to CoreLogic (CLGX: 11.89 +0.42%).

The percentage of properties in negative equity declined slightly from 22.7% the previous quarter and down from 24% one year ago. Another 2.4 million borrowers held less than 5% equity in their home, what analysts call near-negative equity. CoreLogic also showed nearly three-quarters of all underwater borrowers are paying above-market interest on their home loans.

“High negative equity is holding back refinancing and sales activity and is a major impediment to the housing market recovery,” said Mark Fleming, CoreLogic chief economist.

More borrowers could be in danger of falling underwater. JPMorgan Chase (JPM: 33.53 +2.23%) analysts expect home prices to drop another 5% by the beginning of 2012, pushing the amount of underwater borrowers to 15 million, according to a research note released earlier in the month. If prices drop more, possibly 10% further, the number of borrowers in negative equity would approach 20 million.

The Obama administration continues working on a proposal to boost refinancings, which many include eliminating some negative equity restrictions on Fannie Mae and Freddie Mac loans. Some analysts believe such a program would have only modest impact, but CoreLogic showed nearly 28 million outstanding mortgages hold above-market rates and, in theory, should be able to refinance.

Of these, 8 million borrowers are in negative equity.

Some believe the new plan from the administration will be a revamp of the Home Affordable Refinance Program, which allows Fannie and Freddie borrowers with up to 125% LTV to refinance.

But more than 40% of borrowers with LTVs above that limit are trapped with mortgage rates above 6%. Only 17% of borrowers with positive equity have rates at that level.

Negative equity also affects sales. Traditional home sales in areas with low negative equity numbers dropped 61% since the peak in 2005, compared with an 83% drop in areas with more underwater borrowers.

Roughly 60% if borrowers in Nevada were underwater in the second quarter, the highest percentage of any state but down from 68% one year ago. It was followed by Arizona at 49% and Florida at 45%.

“The hardest hit markets have improved over the last year, primarily as a result of foreclosures. But nationally, the level of mortgage debt remains high relative to home prices,” CoreLogic said.