UTAH REAL ESTATE INVESTOR

The Making Home Affordable (MHA) program has the ability to help assist home owners who are struggling to make ends meet in our current economic crisis.  This program gives the home owner a temporary reduction in their interest rate to allow them to recover from the economic downturn and keep their home.

The essense of the program works like this…the lender will modify the home’s first (1st)  mortgage to 31% of the household’s gross income.  This reduction remains in effect for 5 years.  After the 5th year the interest rate will rise 1% per year until it reaches the original mortgage interest rate where it remains fixed for the life of the loan.

In order to accomplish this modified mortgage payment the lender has 3 options:

1. Reduce the interest rate down to (as low as) 2%
2. Ammortize the loan out to (a maximum of) 40 years
3. Forgive a portion of the loan principle.

To determine if your income would justify a MHA modification you need to determine if 31% of your gross income is equal to (or greater) than the lowest minimum payment allowed by the lender under this program.  The lowest minimum payment is figured by taking your loan balance plus all accrued late fee, charges and missed payments and ammortizing that amount over 40 years at 2% interest.  Then add in your property taxes, hazard insurance and mortgage insurance (if applicable).  This represents the lowest minimum payment under the MHA program.

Example:  John Homeowner has a $100,000 mortgage with payments of $845/month ($125/mo for taxes and insurance).  John has missed 5 payments and the lender has begun foreclosure proceedings (late fees of $400 and attorney’s fees of $3,000).  So John now owes the lender:

• $100,000 principle balance
• $4,225 in missed payments
• $400 in late fees
• $3,000 for attorney’s fees
• $107,625 Now owed to the lender

John’s lowest possible payment under the MHA program ammortizes $107,625 over 40 years at 2% which equals $325.92/mo PLUS $125 ) for taxes and insurance) which equals $450.92/mo.

Most people understand this lowest payment calculation but fail to understand the gross income calculation.  In order to qualify for the modification John’s income must support $450.92 at 31% of his income.  So John must have a gross income of $1,454.58/month and be able to show that he can support the balance of his monthly obligations at that income after the mortgage modification.  Keep in mind that the more money John makes the higher the modification amount will be to keep it at 31% of his gross monthly income.

Should you find yourself facing a potential mortgage default or foreclosure be sure to contact your lender or a HUD-approved housing counselor.  Both are very interested in keeping you in your home and helping you find a solution to your current economic struggles.  And both will usually provide these services for FREE.

For more information on Foreclosure Prevention visit www.hud.gov or www.CommunityActionUC.org. To find a FREE HUD-approved housing counselor to explore your options call 1-800-569-4287 (TDD 1-800-877-8339).

Q: What Are My Alternatives?

If you are facing the possibility of foreclosure you may be considered for the following:

• Special Forbearance  Your lender may be able to arrange a repayment plan based on your financial situation and may even provide for a temporary reduction or suspension of your payments.  You may qualify for this if you have recently experienced a reduction in income or an increase in living expenses.  You must furnish information to your lender to show that you would be able to meet the requirements of the new payment plan.
• Mortgage Modification  You may be able to refinance the debt and/or extend the term of your mortgage loan.  This may help you catch up by reducing the monthly payments to a more affordable level.  You may qualify if you have recovered from a financial problem and can afford the new payment amount.
• Partial Claim (FHA Loans)  Your lender may be able to work with you to obtain a one-time payment from the FHA-insurance fund to bring your mortgage current.  If you are between 4-12 months delinquent but can afford the regular monthly mortgage payment you may get a loan (a lien on your property with 0 payments, 0% interest) to bring your mortgage current.  This lien must be paid off when you refinance or sell your home.
• Pre-Foreclosure Sale (Short sale)  This will allow you to avoid foreclosure by selling your property for an amount less than is necessary to pay off your mortgage loan.
• Deed-in-Lieu-of Foreclosure  As a last resort, you may be able to voluntarily “give back” your property to the lender.  This won’t save your house, but it is not as damaging to your credit rating as a foreclosure.  In order to qualify for this option you must be delinquent on your mortgage, not qualify or be successful with any other work out option and only have one (1) mortgage on your home.

For more information on Foreclosure Prevention visit www.hud.gov or www.CommunityActionUC.org. To find a FREE HUD-approved housing counselor to explore your options call 1-800-569-4287 (TDD 1-800-877-8339).

Q: What Should I Do If I Have Missed A Mortgage Payment?

1. Do Not Ignore The Letters From Your Lender!  If you are having problems making your payments, call or write to your lender’s “Loss Mitigation Department” without delay.  Explain your situation.  Be prepared to provide them with financial information, such as your monthly income and expenses.  Without this information, they may not be able to help.
2. Stay in your home for now.  You may not qualify for assistance if you abandon your property.
3. Contact a HUD-approved housing counseling agency.  Call 1-800-569-4287 or TDD 1-800-877-8339 for the housing counseling agency nearest you.  These agencies are valuable resources.  They frequently have information on services and programs offered by Government agencies as well as private and community organizations that could help you.  The housing counseling agency may also offer credit counseling.  These services are usually free of charge.

For more information on Foreclosure Prevention visit www.hud.gov or www.CommunityActionUC.org. To find a FREE HUD-approved housing counselor to explore your options call 1-800-569-4287 (TDD 1-800-877-8339).

Q: What Happens When I Miss My Mortgage Payments?

Foreclosure may occur.  This is the legal means that your lender can use to reposses (take over) your home.  When this happens, you must move out of your house.  If your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued.  If that happens, you not only lose your home, you also would owe your lender an additional amount.

Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future.  So you should avoid foreclosure if possible.

For more information on Foreclosure Prevention visit www.hud.gov or www.CommunityActionUC.org.  To find a FREE HUD-approved housing counselor to explore your options call 1-800-569-4287 (TDD 1-800-877-8339).

By Les Christie, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) — If you thought home prices were bottoming out, you may be wrong. They’re expected to head a lot lower.

Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices.

Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%.

In the past, Fiserv anticipated the rapid decline in home-sale prices over the past few years — though it underestimated the scope.

Mark Zandi, chief economist with Moody’s Economy.com, agreed with Fiserv’s current assessments. “I think more price declines are coming because the foreclosure crisis is not over,” he said.

In fact, those areas with high concentrations of foreclosure sales will experience the steepest drops, according to Fiserv. Miami, for example, is expected to be the biggest loser. Prices are forecast to plunge 29.9% by next June — after having already fallen a whopping 48% during the past three years.

If Fiserv’s forecast holds, Miami real median home price will tumble to $142,000 by June 2011.

In Orlando, Fla., the second-worst performing market, Fiserv anticipates a 27% price collapse by June 2010, followed by a less severe drop the following year. In Hanford, Calif., prices are estimated to drop 26.9% and continue falling 9.5% in 2011; in Naples, Fla., they’re expected to fall 26.8% and then flatten out.

Other notable losers include Las Vegas, where prices have already fallen 54.6% and are expected to lose another 23.9% by June 2010. In Phoenix values have already collapsed by 54% and could fall another 23.4%. In both cities, Fiserv anticipates the losses to continue into 2011, but they will be less than 5%.

The latest forecast is at odds with the past few months of the S&P/Case-Shiller Home Price index. That report has given hope that most housing markets may have already stabilized because the composite index of 20 cities rose in May, June and July. Nationally, it found that home prices have gained 3.6%.

Brad Hunter, chief economist for Metrostudy, which provides housing market information to the industry, however, expects a change in fortunes, however.

“I’m afraid Case-Shiller may be just a temporary reprieve,” he said.

He pointed out that the tax credit for first-time home buyers helped support prices during the three months of Case-Shiller gains. By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors. But the market assistance ends when the credit expires on Dec. 1.

Hunter also sees a new wave of foreclosure problems coming from higher priced loans and prime mortgages. He expects a high failure rate for option ARM loans that were issued to prime customers so they could buy homes in bubble markets, such as California and Florida. In those areas, prices for even modest homes had skyrocketed.

A handful of metro areas will buck the trend, according to Fiserv. Six markets will remain flat, and 33 will actually post gains. The biggest winner will be the Kennewick, Wash., metro area, where home prices have ramped up 8.9% over the past three years and are expected to increase another 3.4% by June 2010.

Fairbanks, Alaska, prices are anticipated to rise 2.5%, while Anchorage will climb 2.1%. Elmira, N.Y., prices may inch up 1.8%.

The nation’s biggest metro area, New York City, will underperform the nation as a whole over the next two years, according to Fiserv. Prices, which have already fallen 21.7% to a median of $375,000, are expected to fall 17.4% by June 2011.

Home values in the nation’s second largest city, Los Angeles, have fallen 43.3% since June 2006 to a median of $313,000. They are expected to dive another 20.2% over by June 2010, and then start to climb in 2011. Chicago prices, which have fallen 25.2% to $227,000, will drop only 4.1% over the next 12 months and then starting to climb.

The Detroit metro area now has the dubious distinction of having the lowest home prices in the country. Prices have dropped 51.7% to a median of $50,000. They’re expected to fall another 9.1% and then stabilize.

reprint: Realty Times

Realtors, home builders and consumers hoping not just for an extension of the $8,000 tax credit, but an expansion to all buyers in 2010, shouldn’t hold their breath.

That’s because it’s looking more likely that Congress will only agree to a continuation of the current credit beyond its scheduled November 30 termination date.

But that’s not bad news. Just a few weeks back the key question was: will Congress extend the credit at all? Now that looks like a pretty safe bet.

When it comes to tax issues, you’ve got to follow what New York Congressman Charlie Rangel is saying. He’s the chairman of the Ways and Means committee, and no tax legislation has even a chance of getting anywhere without his say-so.

On the other hand, bills he supports, they just about always make it at least to the House floor, and usually beyond.

Here’s what Rangel told reporters last week about the housing tax credit: “There’s no question I think it should be extended,” he said. How long, I haven’t discussed.” Rangel also said he doesn’t thing that “eligibility should be expanded beyond the first-time home buyers,” according to Dow Jones Newswires.

That’s probably the kiss of death for lobbyists pushing for an increase in the maximum credit to $15,000, and expansion of coverage to nearly all buyers of homes in 2010, and an increase in the income limits for eligible purchasers.

The National Association of Realtors and the National Association of Home Builders have been the most outspoken advocates of a year long extension and expansion of the credit, up to a maximum $15,000.

Informed of Rangel’s comments, home builders president Jerry Howard said he’s no longer as “optimistic about expansion” as he once was.

But, on the other hand, chairman Rangel’s endorsement of an extension of the credit — for a yet-to-be specified period of months — has got be a lifesaver for thousands of buyers who’ve been worried they’d miss out on this year’s credit because they can’t close their transactions by November 30.

The politics of the tax credit, and the likely rejection of a bigger credit, are all about the budget deficit. Lawmakers on both sides of the aisle are looking for ways to cover the multi-billion-dollar revenue costs of an extension of the credit. Some estimates go as high as $15 billion.

One idea advanced by Georgia Republican Sen. Johnny Isakson: tap into some of the unspent economic stimulus bill money still sitting in the $800 billion economic stimulus bill.

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In this video I walk through a brief property analysis to evaluate the potential of a property in American Fork, UT for subdivision (lot split) possibility. This property has been on the market for about 1 year because the asking price does not justify what the property can become.

This property needs 150 feet of frontage to subdivide into 2 lots. Many people have approached the neighbors about buying the missing land but the neighbors do not want to sell. Using Highest & Best Real Estate Investing techniques we uncover another option.

This video goes through the steps of the initial property analysis to determine if there is enough potential to pursue this property (and move to the next step in the evaluation process).

Below are the images of the properties used in the video. Click on each image to see a larger (more readable) picture.