Tuesday, August 31, 2004

Today's Historical House

The William E. Martin House

Driving in Oak Park last Sunday I took this shot of the William E. Martin House by Frank Lloyd Wright. This stucco house was built in 1903 and shows powerful horizontal and vertical lines.

For more on the Martin House go to Citywide Services

The William E. Martin House, Frank Lloyd Wright architect Posted by Hello

Proposed bank program challenges Freddie Mac, Fannie Mae

Seattle bank seeks broader loan options for home buyers

The Federal Home Loan Bank of Seattle has filed an application with the Federal Housing Finance Board to purchase mortgage securities from cooperative bank members and resell them to bank system members, other federal home loan banks and investors outside the system.

This proposed MortgageChoice program, an extension of the bank's existing Mortgage Purchase Program, would give the bank a greater role in offering a secondary market alternative for mortgages, which would extend more options to home buyers seeking home loans through the bank's member financial institutions, according to an announcement today by the Federal Home Loan Bank of Seattle. The new offering could also enable the Seattle Bank to better manage its financial risk, bank officials announced.

Under its Mortgage Purchase Program, the Seattle Bank can purchase mortgage loans not securities and hold them in portfolio. With approval from the finance board, the bank could purchase mortgage securities from its members and resell them to a broad base of financial institutions and investors.

Read More

Monday, August 30, 2004

40-year fixed-rate mortgages appear

Pilot program targets first-time home buyers

A young woman in Minnesota was looking for the lowest possible monthly payment she could get with a fixed-rate mortgage. Instead of opting for the standard 30-year fixed-rate mortgage, she chose to stretch the loan an additional 10 years.

Now thanks to a 40-year fixed-rate mortgage, the woman can afford slightly more house than the first-time home buyer would've been able to purchase without it, said Brad Crandall, president of CU Mortgage Services. Owned by 54 Minnesota credit union organizations, CU Mortgage Services is one of about a dozen credit unions across the country to begin offering 40-year fixed-rate mortgages as part of a pilot program through Fannie Mae.

Interest in the loan has been slow so far, Crandall and others have said, but they expect it to pick up as interest rates increase and price out some first-time home buyers from the ever-appreciating housing market. Fannie Mae rolled out the pilot earlier this year to gauge how popular such a loan would be. The idea behind the extra 10 years is simple: Make houses more affordable to more consumers by extending the loan terms.

Still, the concept has been slow to catch on. Fannie Mae spokeswoman Sandy Cutts believes that's because interest rates are still so low.

"It's not quite the right time, ideal time, for it yet," Cutts said. "It's still building some momentum."

By the end of the year, Fannie Mae hopes to know how popular the 40-year mortgage is within the pilot programs, Cutts said. There is no timeline yet on whether Fannie will expand the pilot program to other lenders or make it a permanent offering.

Read more at Inman News

Lawsuits are seller's worst nightmare

How can I avoid being sued?

Two frequent after-closing problems involve claims regarding square footage misrepresentations and concealment of unfavorable reports. Sellers tend to round up the square footage of their home. For instance, a house that had 1,865 square feet when the sellers bought it suddenly has 1,900 square feet when they sell it.

A far better practice, is to round down, rather than up. This is hard for some sellers to do, because bigger is usually thought to be better. But, it's not better if you're sued later. If you feel you need to reference square footage at all be sure to include the word "approximate." It's also a good idea to reference the source of the square footage information, and include a statement that it might not be accurate and it won't be verified. This way, the buyers are put on notice to research this information, if it's important to them.

As a buyer, you do have a duty to protect yourself. Buying a home is a major investment. So, don't rely solely on a seller's disclosures. Have the property inspected and if you need more information from the seller, ask for it. Don't rely on the fact that the law may be on your side if you get into a dispute. A legal proceeding can exact an emotional toll, not to mention the time it may take out of your busy life.

Read MORE

Sunday, August 29, 2004

Today's Historical Home

The Charles Yerkes House, John Van Bergen architect

John Van Bergen worked in Frank Lloyd Wright's studio. He based his cube designs on Wright's $5,000,00 fireproof Prairie house. Built in 1912 the Charles Yerkes House is located at 450 Iowa in Oak Park, Illinois.

Charles Yerkes House 450 Iowa, Oak Park, IL Posted by Hello

Feds give $2.5 billion to public housing

Funding to cover capital improvements, new-unit construction

The U.S. Department of Housing and Urban Development will give the nation's 3,107 public housing authorities a total of $2.5 billion in funding to make major improvements to existing public housing units or to build or acquire new units for public housing, HUD Secretary Alphonso Jackson announced Thursday.

The funding, from HUD's Capital Fund program, is distributed annually to local public housing authorities (PHA) to fund major capitaInman News improvements, such as updating old plumbing or electrical systems, replacing roofs, installing new windows or any major modernization activities, or to construct or acquire new units.

"This funding is about the residents," said Jackson. "It is given to housing authorities to upgrade their developments to ensure their public housing are safe and decent for their residents."

In addition to capital improvement funds, HUD also gives PHAs annual funds to cover day-to-day operating and maintenance expenses of public housing developments. For 2004, HUD will distribute $3.5 billion to housing authorities from HUD's Operating Subsidy Program. HUD is a federal agency that implements housing policy.

Inman News

Saturday, August 28, 2004

RE/MAX Allegiance partners with First American

Joint venture will provide title, settlement services

RE/MAX Allegiance and First American Residential Group have created a joint venture partnership, Array Title & Escrow Services, which will provide full title and settlement services.

RE/MAX Allegiance is a brokerage of RE/MAX International. It has nearly 1,200 agents and 30 offices in Virginia, Washington, D.C., and Maryland, and was the largest RE/MAX brokerage in the world in 2003 in closed sales volume, according to a press statement.

First American Residential Group is a member of the First American Corp. family of companies.

"This is an outstanding opportunity for uswe expect this relationship to be very beneficial and rewarding to both our companies," said Bob Blount, CEO of RE/MAX Allegiance.

Joint ventures between brokerages and mortgage companies and real estate service providers have become increasingly common in the past few years. Brokerages see them as a way to provide more services to consumers, as well as offering another revenue stream, and mortgage companies and real estate service providers often feel they provide an opportunity to get closer to the point of purchase.
***
Send tips or a Letter to the Editor to samantha@inman.com or call (510) 658-9252, ext. 140.
Copyright 2004 Inman News

Friday, August 27, 2004

Selling ugly real estate

Unattractive homes perfect fit for an auction

By Bernice Ross Inman News

Do you have a listing you think would look best bulldozed to the ground? Don't despair! You can sell that ugly house!

You just received a "Come list my house!" lead. You are elated that is until you drive up and realize it's the ugliest property you have seen in months. What can you do to sell that ugly house?

In past columns, I discussed staging a property or using Feng Shui to attract the perfect buyer. Staging and Feng Shui can cure some problems, but when the house is beyond cosmetics, you must have a much more creative approach to obtaining a buyer.

Next time you are stuck with the ugliest listing you ever had, here are six strategies to place that ugly property under contract

Realtors file complaint against FSBO Web site

New Hampshire group alleges ISoldMyHouse.com acts as broker without license

The New Hampshire Association of Realtors has filed a complaint against ISoldMyHouse.com, asking that the for-sale-by-owner Web site be sanctioned for allegedly acting as a broker without a license.

The complaint, filed with the New Hampshire Real Estate Commission, asks that the commission require ISoldMyHouse.com to repay all fees collected from New Hampshire residents and "also sanction ISMH at a level commensurate with the scope of violations demonstrated."

ISoldMyHouse general manager John F. Gallagher on Thursday said the allegations are unfounded and not rooted in truth.

"We look at this as being totally frivolous," Gallagher said. "We feel it's a desperate move on the Realtors' trade group of New Hampshire to try and put up a smokescreen. We feel that the traditional real estate agent has a broken business model."

READ MORE

MLSNI CEO cleared of possible ouster

Directors take no action on shareholder demands

Four months of intense debate and controversy came to a close Wednesday at a seven-hour-long board meeting of the Multiple Listing Service of Northern Illinois in Chicagoland. MLSNI directors discussed and voted against shareholder recommendations made earlier this month regarding the results of a forensic audit of MLSNI and its CEO Jay Huffman.

Board members took no action on shareholder recommendations to resolve all issues related to Huffman's performance as CEO, according to sources present at the meeting. They also voted to keep Robert T. Cichocki as corporate legal counsel, rather than terminate as shareholders recommended.

During the meeting, Huffman answered more than 12 pages of detailed questions, said Karen Levine, Huffman's attorney with Chicago-based firm Novak and Macey. It was the first time Huffman had the opportunity to answer direct questions about the audit since results were given to shareholders more than three weeks ago.

"After these questions were answered, it was clear that Mr. Huffman had acted properly, with full board authority and full board participation with respect to all matters regarding REBIG," Levine said.

She added that board members and MLSNI legal counsel confirmed they were present when the decisions in question regarding MLSNI and REBIG were made.

Read More

Thursday, August 26, 2004

Mortgage rates nudge higher

30-year up at 5.47%; 10-year Treasury steady at 4.28%

Long-term mortgage interest rates were slightly higher Tuesday, and the benchmark 10-year Treasury bond yield held at 4.28 percent.

The 30-year fixed-rate average increased to 5.47 percent, and the 15-year fixed-rate held at 4.86 percent. The 1-year adjustable was up at 3.26 percent.

The 30-year Treasury bond yield remained at 5.07 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average was up 25.58 points, or 0.25 percent, finishing at 10,098.63. The Nasdaq was down 1.81 points, or 0.1 percent, closing at 1,836.89.

Stock and bond figures are current as of 7:30 p.m. Eastern Standard Time.

Wednesday, August 25, 2004

Gregor Affleck House, by Frank Lloyd Wright

1925 North Woodward Avenue Bloomfield Hills, MI

While in Detroit last weekend I had the opportunity to view the exterior of the Gregor Affleck House designed by architect Frank Lloyd Wright.

Built in 1940 this Usonian design is wedged into the side of a hill with its living area cantilevered over a small stream bed. The house achieves special significance as an example of Wright's pre-World War II Usonian residential designs.

Frank Lloyd Wright's argument that modern cities were no longer habitable led him to develop his solution for urban problems-- Broadacre City. Wright used "Usonia" as his substitute for the reformed, future "America" of Broadacre City, and he used the Usonians as his solution to the "small house problem." These Usonians-- and in particular the pre-World War II designs-- were a direct response to the changes in the lifestyles of his clients and their needs for a low-cost but satisfying dwelling.

The Affleck House was listed on the National Register on October 3, 1985

For other photographs and descriptions of Frank Lloyd Wright homes go to Citywide Services


Gregor Affleck House 1925 North Woodward, Bloomfield Hills, MI Posted by Hello

Existing-home sales dip

Midwest posts largest monthly decline

Existing single-family home sales dropped 2.9 percent from June to July, though sales were still the third best on record, the National Association of Realtors reported today. Home sales reached a seasonally adjusted annual rate of 6.72 million units in July, down from 6.92 million units in June. The seasonally adjusted annual rate projects the monthly sales total for a 12-month period. The July sales numbers were up 8.6 percent over July 2003, the association also reported.

David Lereah, chief economist at the association, said, "Prior to this year, the July sales pace would have been a real eye-popper. The fact is it remains so. The present level of home sales activity is considerably above last year's record, and the new benchmark we'll set in 2004 is a significant contributor to overall U.S. economic growth."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.06 percent in July, down from 6.29 percent in June. It was 5.63 percent in July 2003.

Read more at Citywide Services

Inside the Chicago MLS face-off

Meeting minutes reveal how the sides line up over forensic audit

At a contentious meeting of the Multiple Listing Service of Northern Illinois earlier this month, you could feel the tension in the room from a reading of the shareholder minutes, which were sent to Inman News this week.

A recent forensic audit of the MLS "appears to be a head-hunting expedition," said Earlene Williams, association executive for the West Towns Association of Realtors in the Chicago area. She believes some shareholders have used the audit to support a personal vendetta against MLSNI CEO Jay Huffman. Williams made a motion to immediately cease the audit, which she said already has cost MLSNI in excess of $400,000.

MLSNI is one of the largest association-owned MLSs in the country with more than 37,000 members in 6,000 offices throughout Chicagoland. The MLS has been in turmoil this year, with big brokers in the region pulling listings from some of their offices to instead exclusively list with a smaller, broker-owned MLS called MAP.

Read more at Citywide Services

Tuesday, August 24, 2004

Real estate sales rise in Illinois, Massachusetts

More buyers flock to condominiums

Home sales and prices in Illinois and Massachusetts posted healthy gains in July, according to Realtor associations in both states.

Home sales in Illinois rose 3.9 percent in July and the median price of an existing single-family home increased 5.6 percent compared to the same period a year ago, the Illinois Association of Realtors reported.

According to sales data, the median price of an existing single-family home in July was $192,600, up 5.6 percent from $182,400 in July 2003. The median is a typical market price where half the homes sold for more, half sold for less. July home sales totaled 13,155, up 3.9 percent from 12,662 homes sold in July of 2003. Year-to-date sales (January through July) showed an increase of 6.6 percent to 72,971 homes sold, compared to 68,424 in sales in the first seven months of last year.

There were a total of 5,593 condominium sales in July, up 11.1 percent from 5,032 sales in the same month last year. The statewide condominium median price for July was $191,000, up 6 percent from $180,200 one year ago.

In the Chicagoland Primary Metropolitan Statistical Area (PMSA), existing single-family home sales totaled 8,343, up 3.2 percent from 8,087 home sales in July 2003. The median existing single-family home price in the Chicagoland PMSA last month was $253,800 up 8.7 percent from $233,500 in July 2003. Condominium sales in the Chicagoland PMSA rose 12.4 percent in July to 5,321, while the condominium median sales price increased 5.5 percent to $195,400. In 2003 condo sales for the Chicagoland PMSA were 4,735; the median price was $185,300.

Read more at CItywide Services

How can I profit from new-home construction?

New book makes home building seem less daunting

This unusual new book, "Building Real Estate Riches," by Chris Condon is about building new houses as investments, selling tax-free, and then doing it all over again. That's a quick summary of this unique book.

The basic idea is to find a buildable lot, construct a new house on it, move in, live there for 24 months, and then sell for a tax-free principal residence sale profit up to $250,000 (up to $500,000 for a married couple filing jointly).

Read more at Citywide Services

Real estate technology adds bank-owned properties

Guru Networks platform includes support for REOs

Guru Networks has optimized its Enterprise real estate transaction platform to support the REO ("real estate owned") marketplace, which consists of bank-owned properties that have gone through foreclosure. Many industry experts predict the number of foreclosed properties likely will increase over the next year.

Guru said it has been working with RE/MAX Real Estate Concepts in Des Moines, Iowa, to add new features and functionality for the REO market.

The Enterprise system automates broker price opinions (BPOs), order forms and status reports. It features increased visibility for clients, lenders and asset managers, and facilitates the secure management of data between all parties. RE/MAX Real Estate Concepts is one of the first brokers in the REO space to implement the service.

Read more at Citywide Services

Monday, August 23, 2004

Overnight mortgage rates mixed

30-year down at 5.43%; 10-year Treasury up at 4.23%

Long-term mortgage interest rates were mixed Friday, and the benchmark 10-year Treasury bond yield rose to 4.23 percent.

The 30-year fixed-rate average slipped to 5.43 percent, and the 15-year fixed-rate remained at 4.84 percent. The 1-year adjustable was up at 3.23 percent.

The 30-year Treasury bond yield increased to 5.03 percent.

Rates are current as of 7:15 p.m. Eastern Standard Time.

Read more at Citywide Services

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

The Flori Blondeel House #3 on the market

A landmark Prairie School house designed by John Van Bergen
436 N. Elmwood Ave - Oak Park, Illinois

Not just a house, but a work of art, this magnificent example of John Van Bergen's architecture is well preserved and retains most of its historic fabric - very unusual these days. The design and floor plan is influenced by mentors, Walter Burley Griffin and Frank Lloyd Wright, but is uniquely his own. The house has been conserved and restored by Marty Hackl, an expert on Prairie School architecture and the foremost expert on John Van Bergen. He is also the author of the only book on the architect, "The Work of John Van Bergen, Architect"

See the full listing HERE

Do-it-yourself home-sale considerations

Should you represent yourself in a real estate deal?


A couple who was trying to save money buying a new home and selling the old one decided to do it on their own, without hiring a real estate broker. The husband figured it would be easy. He was commercial real estate salesperson. How difficult could it be to sell residential?

He wrote an offer on a listing that he and his wife wanted to buy. He told the sellers that he had already accepted an offer to sell his home. His buyers had already done their inspections, and there were no contingencies remaining in the contract. It was a sure thing.

The next morning, he had to call the listing agent of the home he wanted to buy to inform her that the buyers of his home were renegotiating the selling price of his home based on defects discovered during inspections. Unfortunately, he had to withdraw from the contract on the home he had wanted to buy. The deal on his house wasn't the sure thing that he thought it was.

More than four of every five sellers employ a real estate agent to sell their home, according to the National Association of Realtors. For those sellers who chose to represent themselves, the primary motivation for not using a real estate agent is to save money. However, more than half the sellers who try to sell their own home fail.

Read more at Citywide Services

Sunday, August 22, 2004

Rising oil prices keep lid on mortgage rates

'Deeper economic slowdown' could come soon

Mortgage rates are holding near 5.75 percent (30-year, fixed-rate, "conforming" amount with the lowest fees), and the financial market dynamic is straightforward: as oil goes up, then stocks, the economy, and rates go down.

Federal Reserve Chairman Alan Greenspan's transient "soft patch" is muddier and wider than he insisted a month ago. CPI actually fell .1 percent last month (in a stable-price environment, as the energy component of total prices rises, the aggregate of others must fall painful for business), industrial capacity in use is tailing, and everybody's leading indicators are going flat. The exception is housing, still very strong.

There are limits to oil as a benefit to interest rates. At any moment, high and rising prices for energy can percolate into the general price structure; that brew would bring higher rates from the Fed and a deeper economic slowdown a classic stagflation.

Read more at Citywide Services

Misguided home makeovers infiltrate suburbia

Some architectural styles best left alone


Thanks to the soaring price of real estate, growing numbers of modest postwar homes are being gutted and rebuilt, not just to make them larger, but to bring them into current vogue as well.

When done with care, such drastic makeovers occasionally succeed. More often, though, they just obliterate the very traits that give a home character, replacing them with a confused muddle of real estate sales clich├ęs.

The reason most makeovers fail is simple: Architectural style resides in the very bones of a building, not just on the surface. A home's original style can't just be stripped away and replaced with another one, as you might throw a slipcover over an old sofa. Like the sofa, the basic form beneath will always show through. The proportions of windows and doors, the pitch and style of the roof, and even the way a house occupies its site are all integral to its style, whether it be Victorian, Bungalow, Mediterranean or Rancher.

Short of eradicating every trace of these features, it's no easy task to credibly transform one style into another. Nor is there much point in an exercise, which, at great expense, usually sacrifices a home's long-term timelessness for a few brief years of fashion currency.

Read more at Citywide Services

Thursday, August 19, 2004

Architecture lecture

Ridge Historical Society, 10621 S. Seeley Ave., Chicago, invites members and visitors with a special interest in architecture to its 2004 lecture series, "In the Cool of the Evening," featuring Walter Burley Griffin, Frank Lloyd Wright and other Prairie School architects.

Two programs are scheduled for August and one in September.

Mati Maldre, professor of Photography at Chicago State University and photography teacher at the Beverly Art Center, will open the series Friday at 7 p.m. He is author of "Walter Burley Griffin in America." Many of his photos from that volume are on display. He will also demonstrate his rare Deardorff camera. Champagne and light refreshments will be served following the program. Admission is $5 for members, and $8 for others. For reservations, call (773) 881-1675.

Maldre had also created a map of Beverly and Morgan Park Prairie School homes. Copies are free to visitors. A tour group sponsored by the Chicago Architecture foundation will visit Ridge Historical Society Sunday, Sept. 12, and the exhibit has been extended until then.

Debra Nemeth's presentation on Frank Lloyd Wright's "American System-Built Homes' will be given Friday, Aug. 27. "The History of Our Historic Districts" will be given on Friday, Sept. 10.

The Ridge Historic District embraces most of Beverly Hills and Morgan Park, including the historic Metra railroad stations, Longwood Drive and Walter Burley Griffin 104th Place Historic Districts.

Web sites streamline foreclosure

Part 2: Managing for a real estate downturn

During the last wave of foreclosures in the late '80s, veteran real estate investor Alexis McGee often called banks to inquire about foreclosed properties and found that no one knew anything about the properties. There was no network in place for the banks to keep track of their foreclosed assets and it took weeks for them to locate a property they owned.

At that time, banks lacked efficient processes to track and sell the properties at the best possible price, so many ended up selling properties for low amounts in a frenzy to get rid of them.
McGee and others in the foreclosure business now anticipate an increase in foreclosures over the next year due to rising interest rates and slowing home-price appreciation. But McGee doesn't expect banks to be as desperate to unload their properties as they were in the 80s when foreclosures were rampant.

"I don't think we're going to see a firesale this time," said McGee, president of Foreclosures.com, a real estate investment advisory company that focuses on distressed properties. Banks are delegating their real estate assets more efficiently today, putting them on the market faster and selling at prices that nearly match the value

To read more go to Citywide Services

Wednesday, August 18, 2004

Cendant mortgage sale falls apart

Co. still looking for buyer of mortgage business

Cendant Corp. has ended talks with an unnamed potential buyer of its mortgage business, but the company is still looking to sell that unit, Cendant announced Tuesday afternoon.

Cendant had announced in July that it was in discussions with a potential buyer, but did not reveal the buyer's name then or in the current announcement. After the first announcement, some observers speculated that home loan giant Countrywide Financial was the expected buyer.

Cendant had anticipated that the potential transaction, if completed, would have resulted in net proceeds to the company at the time of sale of between $750 million and $1 billion, after repayment of about $5 billion to $6 billion of associated debt.

Cendant said it is continuing to receive proposals and holding preliminary discussions with other parties about the sale of its mortgage business. It also is continuing to consider other strategic alternatives to the business.

New York City-based Cendant primarily provides travel and residential real estate services. Cendant (NYSE: CD) stock slipped 18 cents to $21.58 Tuesday afternoon.

Read more at Citywide Services

Prudential gains Illinois real estate brokerage

Visions Realty takes on Pru name

Prudential Real Estate Affiliates today announced a merger with Northern Illinois-based Visions Realty, which now will operate as Prudential Visions Realty.

Prudential Visions Realty is located at 2020 Route 12, Suite M, and will serve customers in the northern McHenry and Lake counties, including such cities as Spring Grove, Richmond, Johnsburg, McHenry, Fox Lake, Antioch, Lakemoor, Wonder Lake and Woodstock.

Jean Carlson, broker/owner, Prudential Visions Realty, is a member of the McHenry Area Chamber of Commerce and the Spring Grove/Richmond Chamber of Commerce.

Prudential Real Estate and Relocation Services is Prudential Financial's integrated real estate brokerage franchise and relocation services business. As of Dec. 31, 2003, there were more than 1,700 franchise offices and 50,000 sales professionals in the franchise network in the U.S. and Canada.

Technology brings more competition to foreclosures

Part 1: Managing for a real estate downturn

Warren Adams, a Realtor at Security Pacific Real Estate in Fair Oaks, Calif., said the "technology" he once used to track pending foreclosures consisted of a pile of newspapers and a pair of scissors. The Internet has changed that.

"When I started doing this I was cutting out notices of trustee sales and putting them on my desk. It was a real time-consuming process," said Adams, who specializes in buying foreclosed properties at trustee sales and marketing the properties for banks. "The days of walking down to the county recorder's office and (then) going to the trustee sale are kind of a thing of the past," said Adams.

Now, Adams subscribes to an Internet-based service to learn about pending foreclosures. "Being current is everything. I can see what sales are coming up today. Within a matter of minutes I can do most of my homework online to determine if it's even worth looking at a property," Adams said, and sometimes an in-person visit is the last thing on his list when considering a property.

Though technology has placed foreclosure information at the fingertips of more agents and consumers, foreclosure can still be a time-consuming and costly process, and foreclosure specialists warn that not all foreclosed properties are a great deal, and not all foreclosure information that you find online is timely and accurate.

Read More

Overnight mortgage rates hold steady

30-year unchanged at 5.46%; 10-year Treasury up at 4.26%

Long-term mortgage interest rates were flat Monday, and the benchmark 10-year Treasury bond yield gained to 4.26 percent.

The 30-year fixed-rate average remained at 5.46 percent, and the 15-year fixed-rate nudged up to 4.88 percent. The 1-year adjustable was unchanged at 3.24 percent.

The 30-year Treasury bond yield climbed to 5.05 percent.
Rates are current as of 7:15 p.m. Eastern Standard Time.


Read More

Tuesday, August 17, 2004

Managing for a real estate downturn

Inman News

Editor's note: Tomorrow in Inman News, we'll publish the first of a three-part series on changes in the foreclosures and default management markets. Many experts expect foreclosures to rise in the next year. We'll explore how things will be different for lenders, investors and real estate agents working with these properties.

The worst-case scenario in a changing housing market is that the number of foreclosures goes through the ceiling and people get pushed out of their homes.

Nothing gets uglier than when people lose their homes. Hard-earned savings, home improvements and the family home are destroyed due to economic circumstances. Sometimes, homeowners are simply irresponsible, but more often job loss, divorce or personal tragedy is behind a foreclosure.

During the last market downturn, foreclosures were at record levels. During that low point in the cycle, the industry did a poor job of keeping homeowners in their homes and mitigating the risk associated with delinquent mortgage loans.

But this time around, thanks to technology, foreclosures should be less painful for both homeowners and the real estate and mortgage industries. This special three-part series examines how the loan default and foreclosure processes will be different this time around.

Read More

Monday, August 16, 2004

Lenders roll out no-cost-mortgage deals

Settlement costs guaranteed

No-cost mortgages in refinancing: In last week's column I explained that no-cost mortgages are a good deal for refinancing borrowers who don't expect to have their mortgage very long, and therefore won't be paying the higher rate very long. No-cost mortgages can also protect refinancing borrowers against being overcharged at the settlement table because the lender committing to no-cost at the outset has no opportunity to raise costs later in the process.

No-cost loans used to refinance are widely available because most lenders are prepared to assume full responsibility for settlement costs. Most of the settlement costs on a refinance are lender fees, and the third-party services that generate charges (such as appraisal or credit) are often waived. Guaranteeing settlement costs involves little risk.

On home purchases, in contrast, only one lender will guarantee settlement costs. Home purchases involve a number of third-party charges that lenders may have difficulty in pricing. The only lender who will guarantee settlement costs on a home purchase is ABN AMRO at www.mortgage.com.

Assuming you meet their underwriting requirements, finding a no-cost fixed-rate or balloon mortgage on www.mortgage.com is a snap. While AMRO does not quote rates on no-cost loans as such, you can find your own from their price tables. The top line in the price table for each type of loan shows their highest rate and lowest total cost. The total cost can be negative if the credit offered as quid pro quo for the highest rate more than covers total settlement costs.

Read More

Sunday, August 15, 2004

Real estate: The week ahead

Florida Realtors convene in Orlando

Inman News

The Florida Association of Realtors will host its annual convention Aug. 18-22, in Orlando.
A seminar on the New Jersey Homeownership Security Act amendments and their impact is slated for Aug. 17, at the Forsgate Country Club in Monroe Township, N.J. The event will be hosted by the Mortgage Bankers Association of New Jersey, League of Mortgage Lenders, New Jersey Bankers Association and the New Jersey League of Community Bankers.

The National Association of Housing Cooperatives will hold its annual conference Aug. 18-21, in Boston. The event will feature a keynote address by affordable housing and community development expert James Stockard, as well as educational sessions on multicultural and multigenerational co-ops, cooperative principles and their applications, mortgage planning payoff and co-op development.

The National Resident Empowerment Conference is slated for Aug. 19-22, in Philadelphia. The event will feature strategies for helping public and assisted housing residents build skills to become self-sufficient.

The next installment of the Latino New Urbanism 2004 Dialogue Series is slated for Aug. 20. More details about the series are available at Latinonewurbanism.org.

Real estate agents brace for hurricane

Charley bears down on Florida coast

Michael Bowers, a Realtor in Sarasota, Fla., has seven homes under contract that are scheduled to close within days. Normally that would be cause for celebration. But today, it's cause for worry. Hurricane Charley is bearing down on the western coast of Florida, with Sarasota and other communities potentially in its path.

"I have some real high-end listings," Bowers said today, including a $3 million home on the bay. "I'm (thinking), 'Oh no, here we go.' There's a lot of concern. It's a nervous time. I'm just hoping there is no damage to any of them," he said.

Bowers, who has lived in the Sarasota area for 12 years, isn't sitting still. He went to Boca Raton and set up a personal "command center" away from the storm's center. "We're one of the few people you can get a hold of," he said. Bowers has already contacted a work crew that will conduct any necessary repairs to the listed homes in the wake of the massive storm. "We'll be available to help all of our sellers afterward."

He has boarded up his own home in the Sarasota area and shut down the office, preparing for the worst. "This is the first time I've ever picked up and ran out," he said. He said he has been intently watching the Weather Channel with his relatives to monitor the storm's approach.
The Florida home market has been booming, and Bowers said there are probably 100 homes in the Sarasota area that were scheduled to close over the next week or so. The hurricane is a reminder about the importance of securing hurricane insurance as early as possible in the home-buying process, Bowers said.

Read More

Saturday, August 14, 2004

Second-home real estate prices climb

Despite concerns about rising interest rates, the second-home market remains strong, according to a recent study of top second-home markets from EscapeHomes.com.

The median year-over-year price increase for second homes in EscapeHomes.com's Price Index was 22 percent in the first half of 2004. Beach and mountain destinations led the way in appreciation with Holden Beach, N.C., and Park City, Utah, at the top of the list, but all destinations in the index showed robust price appreciation.

"We continue to see strong price appreciation and high consumer demand in our index markets for several reasons," according to EscapeHomes CEO David Hehman. "First, the large base of baby boomers entering retirement years is putting pressure on these markets. Second, the top vacation and retirement markets are limited in choice homes. And finally, people are choosing real estate to diversify their portfolios, especially since interest rates are still at historic lows."

Read more

OFHEO strengthens oversight of Fannie, Freddie

Federal agency chief testifies before Congress

The Office of Federal Housing Enterprise Oversight is strengthening its supervisory program of Fannie Mae and Freddie Mac, director Armando Falcon Jr., told U.S. House of Representatives subcommittees Friday.

OFHEO, which is designed to oversee those two government-sponsored entities, has been under fire since Freddie Mac announced it misstated financial earnings by billions of dollars due to accounting missteps. But Falcon said OFHEO is restructuring the agency by reorganizing the annual examination function into two fully staffed units, one for Freddie Mac and one for Fannie Mae. An examiner-in-charge heads each unit.

Read More

Chicago Title closes real estate loan electronically

Transaction finalized with e-signatures of borrower, notary

Chicago Title Insurance Co., part of the Fidelity National Financial family of title companies, successfully closed an "e-Note" mortgage on July 23, 2004, during a standard settlement conference in Lombard, Ill. The borrower, Audrey Edmiston, of Bolingbrook, Ill., affixed her e-signature to each page of the electronic closing package, which was also signed electronically by the notary who witnessed the transaction.

Chicago Title was part of a multiparty initiative that included mortgage lender 1st Advantage Mortgage and technology provider Document Processing Systems (DPS). When the loan closed, it was immediately registered on MERS, an electronic loan registry created by the real estate finance industry to maintain easy-to-access records on loan ownership.

Read More

Economy poised for slowdown

But Fed's moving swiftly toward a neutral funds rate


The Fed tightened another .25 percent, and mortgage rates are unchanged in the high fives. Ten-year T-notes, the market driver, have actually improved, down to 4.22 percent. Thus far, the Fed's cumulative action has added .5 percent to the cost of America's home equity lines of credit, but no one seems to mind.

The rate hike was expected, but many were surprised by the stubbornness of the Fed's post-meeting statement. "The Committee believes that, even after this action, the stance of monetary policy remains accommodativeThe economyappears poised to resume a stronger pace of expansion going forward." Might a slowing economy cause the Fed to suspend its march to a neutral Fed funds rate, somewhere north of 2.5 percent? No chance.

Read More

Friday, August 13, 2004

New record in real estate resale volume

Realtors association reports major gains in Nevada, Idaho

Total second-quarter sales of existing single-family homes, apartment condos and co-ops were up 16 percent nationwide from the second quarter of last year, setting a new record, the National Association of Realtors reported today.

The seasonally adjusted annual resale rate of home, condo and co-op units reached 7.79 million units in the second quarter of this year, compared with 6.72 million units in the second quarter of 2003. The previous record was 7.36 million units, set in the third quarter of 2003. The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter were maintained for four consecutive quarters. Total home sales include single-family, townhomes, condominiums and co-operative housing. This data differs from the association's monthly statistics on existing-home sales, which are based only on single-family homes (detached and townhomes).

Regionally, the West saw the biggest rise in resale growth a 19.8 percent increase in sales from the second quarter of 2003 to the second quarter of this year. And the South had the highest volume of sales, with 3.2 million units sold in the second quarter of this year for a 17.5 percent gain in sales over last year's second quarter. The Northeast had a 12.6 percent gain in sales of existing units, and Midwest had a 10.1 percent gain from the second quarter of 2003 to the second quarter of 2004.

Read more HERE

Thursday, August 12, 2004

Mortgage rates fall to 4-month low

30-year fixed averages 5.85% in Freddie Mac survey

Mortgage rates dropped further below 6 percent this week as weak job growth hinted at economic stagnation, according to surveys conducted by mortgage buyer Freddie Mac and Bankrate.

In Freddie Mac's weekly survey, the 30-year fixed-rate mortgage averaged 5.85 percent, down from 5.99 percent a week earlier. This average was the lowest since early April. The 15-year fixed-rate mortgage dropped to 5.24 percent from 5.4 percent last week. Points on both the 30- and 15-year averaged 0.6.

One-year Treasury-indexed adjustable-rate mortgages held steady at 4.08 percent this week, with an average 0.6 point

Read more HERE

Dusting off the 'Rust Belt'

Presidential candidates urged to solve Midwest metro woes

Metropolitan policy experts from the Brookings Institution, a non-partisan Washington, D.C., think tank, said presidential candidates George W. Bush and John Kerry have failed to address issues of sprawl and population stagnation in the "rust belt" states during campaigning in the region.
Bruce Katz, vice president and director of the institute's Metropolitan Policy Program, and Mark Muro, a senior policy analyst for the program, wrote an essay published in the Cleveland Plain-Dealer newspaper this week that states, "By failing to engage with the toughest questions about the rust belt's future, the candidates may be missing the chance to connect."

The rust belt is a term used to refer to a region in the Midwest and Northeast that was once a bustling center for steel and heavy industrial production but experienced major declines in manufacturing in the late 1970s and early 1980s.

Read the entire article HERE

Wednesday, August 11, 2004

Overnight mortgage rates barely budge

30-year up at 5.47%; 10-year Treasury up at 4.29%

Long-term mortgage interest rates were mostly flat Tuesday, and the benchmark 10-year Treasury bond yield rose to 4.29 percent.

The 30-year fixed-rate average rose slightly to 5.47 percent, and the 15-year fixed-rate held at 4.9 percent. The 1-year adjustable was unchanged at 3.26 percent.

The 30-year Treasury bond yield inched up to 5.07 percent.
Rates are current as of 7:15 p.m. Eastern Standard Time.

Read more HERE

MLSNI shareholders make demands

Request termination of company accountants, attorneys
After reviewing the results of a forensic audit, shareholders of the Multiple Listing Service of Northern Illinois today demanded its board of directors fire the company's accountants, auditors and attorneys and "resolve all issues regarding CEO Jay Huffman."

MLSNI shareholders adopted a resolution asking the board to terminate the company's auditors Mowery & Schoenfeld, it's public accounting firm Miller & Cooper and corporate counsel Robert T. Cichocki and Arnstein & Lehr, according to information released this afternoon by the Chicago Association of Realtors, MLSNI's largest shareholder.

Read the entire article HERE

Tuesday, August 10, 2004

Fed raises target rate by a quarter of a percent

Move is second hike in two months

The Federal Reserve's Open Market Committee today continued its course of raising its target for the federal funds rate by 25 basis points, bringing it to 1.5 percent.

In its policy statement, the Fed said it believes that, "even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity." In recent months, output growth and the pace of improvement in labor market conditions have slowed, which is likely due mainly to the substantial rise in energy prices.

Still, the Fed said, the economy "appears poised to resume a stronger pace of expansion going forward." The Fed kept its wording that policy accommodation can be removed "at a pace that is likely to be measured." However, it did add that it would respond to changes in the economic outlook as needed.

The federal funds target rate is essentially what banks charge each other overnight and does not directly impact mortgage rates. Fixed-rate mortgage rates tend to closely align with the 10-year Treasury bond, which generally reflects what the market is expected to do longer term, as well as any anticipated changes in the federal funds target rate.

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Mortgage rates plummet

Job gains weak in July


Mortgage rates fell a quarter-percent in the nanosecond after the release of July payroll data Friday, and 30-year low-fee deals are 5.75 percent for the first time since last winter.

The employment market is deteriorating, July worse than a poor June: only 32,000 new jobs, versus absurdly mistaken forecasts for a 300,000-plus gain.

Read the complete article HERE

Monday, August 09, 2004

Does rise in adjustable-rate mortgages mean more foreclosures?

Industry disagrees on market impact
In Alexis McGee's view, the trend toward adjustable-rate mortgages will lead to one thingmore mortgages in default and more foreclosures.

That's because as interest rates inch up, so will the cost of those riskier loans, which varies over time unlike fixed-rate mortgages. Consumers are often attracted to ARMs because they can cut borrowers' monthly payments, allowing them to save that money for other purposes.

"My concern is that too many people are opting for them," said McGee, president of Foreclosures.com. "And they're opting for them not to save money on the payments, but to get more house."
Read the entire article HERE

Real estate: The week ahead

Fed meets Tuesday; Mortgage bankers head to Las Vegas
Alan Greenspan and the Federal Reserve Board's Federal Open Market Committee will meet on Aug. 10 to discuss monetary policy and decide whether to raise, lower or leave the federal funds rate at its current 1.5 percent.
The California Mortgage Bankers Association's Ninth Annual Western States Loan Servicing Conference is slated for Aug. 8-9, at the Bellagio Hotel in Las Vegas
Read other news HERE

Sunday, August 08, 2004

Record quarter for Illinois home sales

Real estate prices, sales still booming in Chicago area

Illinois existing-home sales reached record levels in the second quarter of this year, and were up 9.8 percent from the second quarter of 2003, the state's association of Realtors reported today.

Existing-home prices in were up 7.2 percent from the second quarter of 2003 to the second quarter of this year, the Illinois Association of Realtors also reported today.

A total of 37,409 existing single-family homes were sold across the state in April through June 2004, up from 34,071 sales in the second quarter of 2003. Year-to-date home sales for the first six months of the year total 59,814, up 7.3 percent from 55,762 in 2003.

Read the entire article HERE

Saturday, August 07, 2004

Controversy in Chicagoland real estate heats up

MLSNI management on the ropes
A bitter and controversial political fight among real estate brokers, large and small local trade associations and a cast of other characters in the Chicago area has turned ugly, and could lead to the dumping of the management team of the Multiple Listing Service of Northern Illinois, according to Inman News sources.

The Chicago Association of Realtors yesterday voted to recommend the ouster of certain MLSNI management, including CEO Jay Huffman, sources said. However, the shareholder meeting scheduled for Monday ultimately will decide the outcome and the Chicago association may well change its plan before then. A spokesman for CAR would not comment on its actions, and neither would CAR CEO Darcy Dougherty.

Shareholders at Monday's meeting also will discuss the results of a recent forensic audit of MLSNI and Huffman that was ordered in April. The results were handed out at a meeting earlier this week, but no action was taken at that time. A forensic audit is different from most audits in that it involves auditing, accounting and investigating.
Read the entire article HERE

Friday, August 06, 2004

A new look at working where you live

Researchers propose 'enterprise' housing

Researchers at the University of San Francisco have a new approach to the popular practice of working where you live.
Their concept, dubbed "enterprise housing," is simple: Provide child care and elder care services, and communal work facilities such as studios and kitchens in affordable, condominium-type developments that allow people to work where they live while building equity.
Eugene J. Muscat, a business professor at the university, said enterprise housing is "work-live" housing as opposed to traditional "live-work" units.

Read the full article HERE

Thursday, August 05, 2004

Developer says do the math and buy when you find a valuable unit

BY JEFF BENNETTFREE PRESS BUSINESS WRITER

Mark Weiss lives what he preaches.

When it came time for this Chicago developer turned author to buy his first home, he chose a condo.

Now, even after 15 years of working as a real estate developer, landlord, investor, auctioneer and builder, Weiss still believes that condos are good investments for those looking to free themselves from the renting world.

The opportunity to own a home, even for young first-timers, is everywhere, Weiss writes in his book "Condos, Co-Ops & Townhouses" (Dearborn Trade Publishing, $18.95). "Home ownership may not be as free as the air but, like oxygen, it's out there so breathe it in."

Weiss shared some other insights and some tips to keep in mind when considering an apartment converted to a condo:

Do the math: If you are renting a unit and the price to buy, including fees, is less than your rent or even if it is a few hundred dollars more but still within your budget, buy it, Weiss said. The value of the unit will only appreciate.

In addition, when buying, Weiss says to always check the price per square foot compared to other properties in the area. Paying above the average may not be a good move.

Take a look and get it in writing:Most condo conversions will offer models and written details about what will take place to upgrade the unit. Weiss recommends reviewing the details and getting a copy of the document. He says buyers should not get carried away with the aesthetics. Make sure the work being done to upgrade the property is quality along with the roof, walls, siding, floor, heating systems, plumbing, appliances, walkways and elevators. All of these impact the value of the property.

Also, take pictures of the before and after to assure that you got what you paid for. If you have a real estate agent, have him or her agent do that work.

Don't wait it out: In any condo conversion, all units will undergo some type of renovation. Weiss recommends that you have a temporary place to stay while the work is being done. Renovation could involve everything from sanding floors and tearing out carpet to painting and some minor construction work. All of that means noise, dust and confusion. "It's a mess," Weiss says. "It's not worth trying to stay there if you can find some other place to be."

For those looking to buy into a conversion, Weiss says to check the delivery date. Sometimes developers will say the unit will be ready on a particular day and then hit a delay. If possible, ask the developer to sign a document in which they'll agree to pay a penalty for each day the unit is not finished.

Check it out: The one stunner for condo buyers can be association fees. Sometimes developers will entice buyers into the complex by advertising low fees. But once the complex is filled and an association takes over, the prices can skyrocket to reflect the real market value of the combined properties.

Weiss suggested doing some homework and checking other similar complexes to see what their fees are.

Home first, investment second: Although real estate is an investment, Weiss says he discourages people from buying a condo on that premise alone.

"It is your house and you should treat it that way," he says. "You shouldn't buy a condo thinking you can try and time the market. It won't work."

Frank Lloyd Wright-inspired Prairie-style homes

Construction starts on 16 residences

BY DAVID POLLARD STAFF WRITER

Bellwood Mayor Frank Pasquale said he always knew the village was a diamond - and that all it needs is a little polishing. He believes a new housing development will do just that.

A groundbreaking ceremony for the construction of 16 single-family homes at the location once known as Eugene Cernan Park took place last week. Many residents and village officials were on hand for the event.

"This is a much-needed addition to Bellwood," Pasquale said. "Most homes (in Bellwood) are 30 years old and they don't have enough room. "Bellwood is a diamond, but it was never polished."

He said the development is an effort to keep Bellwood residents in the village and attract people to buy homes in the community as well. It is nothing new for families in Bellwood to outgrow their homes and move out of the village because of the lack of space, he said.

Karry L. Young, president and chief executive officer of Young Development Corp., which will be building the homes, said the new homes will be the answer for growing families in Bellwood and help keep property values high. He lived in Bellwood for 13 years before leaving because he and his family had outgrown their house.

The new homes will be bordered on the east by Bellwood Avenue, Marshall Avenue on the west, Harrison Street on the south, and Jackson Boulevard to the north.

"This is something Bellwood needs," he said. "It's a blessing they chose me."
So far, 10 homes have already been bought, each costing around $250,000, Young noted. The homes are built after they are purchased.

The homes will range from 2,000 to 3,600 square feet and have four levels. The homes will be Frank Lloyd Wright-inspired Prairie-style homes and will feature a deck, patio, driveway and a multi-car garage. The homes can have up to five bedrooms and three bathrooms.

Bellwood Trustee Michael J. Ciavattone said making the development a reality was a group effort. "The administration is dedicated to serving Bellwood," he said. "It's been a long time since you've seen a new home in this community." "I'm delighted," said Trustee Annie N. Delgado. "I think this is a wonderful idea . "It's a very positive benefit for the community. In a few years, we'll be the envy of surrounding towns."

David Pollard can be reached at dpollard@pioneerlocal.com or (708) 524-4423.

The dark side of real estate bundling

Packaged services bad for consumers, consultant argues

Everett Ives doesn't mince words about his dislike of real estate bundling. He believes that instead of helping consumers as it's purported to do, bundling mortgage and closing services actually hurts them.

"It's used as a tool to steal, and more particularly a tool to trap the borrower," said Ives, a Texas-based consultant to mortgage brokers and bankers. He is actively involved with the Texas Association of Mortgage Brokers.

Bundling real estate services is the process of combining fees for credit reports, title reports and other items needed to close a mortgage. Many large lenders and settlement companies started bundling services as a way to offer borrowers a one-stop-shop experience when closing their home purchase

Read the full article HERE

Investors find shelter in real estate exchanges

Tenant-in-common deals provide attractive options

The latest wrinkle in the tax-deferred exchange arena called TICs, or tenant-in-common investments. This strategy allows investors who sell an investment property to buy ownership interests in another property (or properties) instead of buying an entire "like-kind" property to qualify for an exchange and defer capital gains taxes on the sale.

Read the full story HERE

Wednesday, August 04, 2004

Another Frank Lloyd Wright Sale!

The Peter A. Beachy House at 238 N. Forest in Oak Park has sold again, the second time this year. The MLS reports a sales price of $2,100,000 with a closed date of August 2, 2004 for this Frank Lloyd Wright design built in 1906. This same house sold previously this year for $2,300,000, confirmed by assessor records with a recorded date of June 11, 2004.

Thats a nice loss of $200,000.00 in a few months. I am sure there is a story in it somewhere.

Sell your home for $12.95

Home Depot sells for-sale-by-owner marketing kits with Owners.com

To read the full story click Here

Tuesday, August 03, 2004

Forgoing home inspection not recommended

Buyer will likely be liable for repairing future defects before selling . Read the full article Here

Monday, August 02, 2004

Assess the risks before taking that 'bargain' mortgage

Hunting for a bargain-rate mortgage? Better spend some time on the search.It won't take long to spot rates advertised in the low single digits. Choosing a "bargain" loan, though, could end up being a costly mistake.

More lenders are aggressively pushing mortgage products designed specifically so that borrowers' payments will hover below what they'd initially pay if they chose the industry standard -- the 30-year, fixed-rate mortgage, says Jack Guttentag, who dubs himself "the mortgage professor," and runs a consumer-oriented Web site. It could prove costly if a borrower grabs one of these mortgages without carefully examining the provisions in the contract for future payment hikes, notes Allegra Calder, research analyst at Harvard University's Joint Center for Housing Studies.

Calder worries that some home buyers are selecting the lower rate mortgages -- which are usually adjustable-rate mortgages (ARMs) -- so that they can afford payments on a house right now, without seriously pondering how they'll handle payment hikes later. Calder says her fear is borne out by the fact that "higher shares of ARMs are being made in cities where housing costs are relatively high. "As every consumer knows, however, a bargain should never be ignored.

Experts say that ARMs and other loans offering initial discounts are appropriate, as long as borrowers study key issues:- How does this loan really work? When a borrower applies for an ARM, lenders are required to provide them with a special disclosure sheet that outlines how the interest rate may change over time. The disclosure will detail how the rate can go up or down, based upon the movements of an index, like the one-year Treasury. The rate of the index at the time the mortgage comes up for adjustment, plus a margin, like 2 percentage points, is the new rate the borrower pays. "Different lending companies write their disclosures differently, and some of the disclosures are clearer than others," Guttentag says. It's not unusual for borrowers to ask for a copy of the disclosure to take to their financial adviser or to study at home before they sign it and formally apply, says Dave Mallon, vice president of the Midwest Financial Group Inc., Barrington.

At his Web site, www.mtgprofessor.com, Guttentag posts free tutorials and tables designed to help consumers make sense of ARM disclosures. "You print out a copy of the worksheet of ARM features and then get the loan officer to plug in the variables, " Guttentag says.- Can I handle the future risk? Suppose you choose a loan where the interest rate can rise each year, and by the end of the fourth year your rate is 5 percentage points higher than when you started.

Lenders won't give a mortgage to someone unless they're reasonably certain they'll be able to afford the payments, says Doug Duncan, economist at the Mortgage Bankers Association, a Washington D.C. trade group. Still, it's up to borrowers to ponder how comfortable they will be with a mortgage payment that may be much bigger in years ahead. In many cases, a lender will approve a borrower for ARMs that adjust each year based upon the highest possible rate on that first year adjustment, says Bill Silverthorne, loan officer, Ameritrust Mortgage Corp., Crystal Lake.

Still, it's up to the borrower to decide whether she or he will have the income to handle bigger payments year ahead.- Am I excited about the size of the first monthly payment? Borrowers tend to make mistakes if they choose a loan primarily because their initial monthly payment is lower than it would be with other mortgage options, Calder says.If lenders or others involved in the home-buying transaction aggressively tout how much the first monthly payment is, be especially wary, she warns.

Guttentag concurs that focusing on the size of the first monthly payment can distract borrowers from the actual cost of the mortgage. In particular, he's concerned about a mortgage type known as the "flexible payment ARM". "These are usually offered at a starting interest rate of less then 2 percent, but that jumps significantly by the second month," Guttentag notes. However, borrowers are able to keep the same payment throughout the first year, with the extra interest charge amounts added to the loan balance.But eventually, borrowers are required to catch up, and they could find that their monthly payments several years down the road are double what they started at, Guttentag warns. "I think 99 percent of the people who go into this, don't know [the details]," he concludes.

Sunday, August 01, 2004


Citywide Services Chicago Real Estate Blog Posted by Hello

Another Frank Lloyd Wright Sale

Paul Harding FAIA and Cheryl Harding have purchased the Davenport House in River Forest, Illinois from Jeannette Fields. The closing for the purchase took place on Friday July 23, 2004. Jeannette's vision that the house be sold to someone who will maintain the fidelity of the house and restore the residence has been realized. According to Paul Harding FAIA "The Frank Lloyd Building Conservancy played a critical role in our decision to purchase the house. The advice that we received from the Frank Lloyd Building Conservancy on available tax credits made the difference in our decision to purchase the house. We will use the tax credits to restore the house with maximum fidelity to the original design." Paul Harding is a Fellow of the American Institute of Architects. He is a Partner in Harding Partners Architects located in the historic Santa Fe Building in Chicago