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Technology Policy
Progresses
Tips for a Happy Fourth
Fannie Toughens Up and Lenders Lighten Up
Today, more than ever, home sellers
must focus on making their home competitive.
The home resale market continues to be difficult in most
areas, despite some positive signs, including the lowest
mortgage interest rates in decades. Freddie Mac reported
recently that the average 30-year fixed-rate mortgage
interest rate is now 4.69%, the lowest since it began
mortgage rates in 1971. The Federal Housing Administration
has stepped in to make financing more affordable. While
prices continue to drop in many areas, this also means that
homes are becoming more affordable.
On the negative side, there’s still a glut of unsold homes
and shadow inventory in most areas. Foreclosures continue to
increase in spite of a variety of programs intended to stem
the tide. The glut is likely to continue because 5.3 million
homeowners have held off putting their homes up for sale
until the market improves, according to
Zillow’s Q1 Homeowner
Confidence Survey.
Financing for buyers who have less than stellar credit will
still be challenging. Pernicious high unemployment also
limits the pool of home buyers. The federally backed flood
insurance program expired in May, dealing a blow to buyers
and sellers who need it. The first time buyers’ tax credit
also expired at the end of June. Economists are calling for
a further drop in home values in most areas and are
predicting an additional wait for appreciation to return to
the market.
For all these reasons there are relatively fewer buyers out
there and many of those that are ready to buy are
understandably very cautious. Holding a home off the market
until prices improve is a flawed strategy in many respects.
Some homeowners are underwater and have no choice. Those who
can afford to sell in most cases will buy a replacement home
in the same community or another whose home prices are also
depressed. The result is a wash, and today’s low mortgage
interest rates are good argument for selling and buying now,
while they are still available.
The competition for buyers means that home sellers need to
make their homes competitive in every respect, from pricing
to presentation. There is time honored advice in that regard
in the Foundations
Free Top Ten
Home Sellers Tips.
Some of them bear emphasis.
Pricing is key. It is a moving target, so get the latest
pricing data from online sources, county/city records, or a
local real estate agent. Since about 90% of today’s buyers
search for homes on the Internet, you also need to maximize
Internet exposure. Your home needs to be in the local
multiple listing service (MLS), which will distribute the
listing through the consumer-facing websites of all its
member brokers in the area.
There are ways to reduce selling costs if you have little or
no equity in your home, or just want to maximize the
proceeds. Some “discount” brokers will provide an MLS
listing service for a few hundred dollars. You can buy
additional services from them or other service providers on
an a la carte basis, and/or do some of the work yourself.
Alternative Internet market avenues, such as Craigslist and
Zillow.com are becoming more important, and should be a part
of your marketing plan.
This is not to suggest that you shouldn’t also consider an
experienced full service real estate agent. Many have deep
connections in the community and repeat customers. Even
though the typical 5-6% sales commissions are about twice
the going rate in other developed countries, many sellers
must sell their homes and need every market advantage they
can get.
Cleaning up, sprucing up, and thinning out remain mantras to
home sellers. The latter can be a welcome revenue source as
well. EBay and Craigslist are becoming the online garage
sale vehicle of choice for many home sellers, and may types
of products sell for good prices. For items that don’t sell
online, the federal tax deduction for donations to the
Salvation Army and other charities might be quite welcome
next April.
Your house must be clean and uncluttered. The concept of
staging also helps sell a home. After you’ve decluttered, it
may make sense to hire a stager or rent some designer
furniture if your own tastes are unique or its styles is
outdated. You can get ideas from home design magazines and
visits to open houses for other homes for sale in your area.
The latter will also help you get a better feel for selling
prices and the competition.
Curb appeal is critical, so start with the outside. Make
sure the siding and windows are clean, the shrubs pruned and
replaced (or added) if needed, and the lawn is presentable.
Don’t skimp here – landscaping consistently shows the best
rate of return to a home’s selling price – often over 100%.
Fresh paint and trim, such as new door knobs, can do much to
help the curb appeal.
Don’t forget maintenance needs. Home inspectors will report
this information to prospective buyers. There is usually
only a few days between when the purchase offer is accepted
and when the home inspector arrives to do the prepurchase
inspection that most buyers expect. You probably won’t have
time to do everything in the interim, and you don’t want an
inspection to raise any red flags in a prepurchase home
inspection. So change furnace air filters, drain water
heater tanks to get rid of sediment, and do the other normal
home maintenance tasks before you put your home on the
market.
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Technology
Policy Progresses
Homeowners are increasingly technology dependant and
will benefit from new initiatives.
Several June developments will mean that American
homeowners will continue to see improvement in the
ability of technology to serve their growing demand
for video and other cutting-edge applications on
laptops and mobile devices. On June 28, President
Obama announced a plan to double the amount of
Federal and nonfederal spectrum suitable for both
mobile and fixed wireless broadband use over the
next 10 years. In the face of dramatic growth in
mobile spectrum consumption, we will soon run out of
available spectrum suitable for mobile applications
unless the inventory is expanded. The expansion is
critical to support the forthcoming myriad of
wireless devices, networks, and applications that
facilitate teleworking, telehealth, and many other
services and options critical to the lifestyle and
economic opportunities for American homeowners. The
plan will contribute substantially to Federal
Communications Commission's national broadband plan
to provide high-speed Internet access to all
Americans, especially those in rural areas where the
construction of landline networks are much more
expensive and are likely to remain uneconomical to
build well into the future.
Under President Obama’s directive, the Secretary of
Commerce, working through the National
Telecommunications and Information Administration (NTIA),
will collaborate with the Federal Communications
Commission (FCC) to make available a total of 500
MHz of Federal and nonfederal spectrum over the next
10 years, suitable for both mobile and fixed
wireless broadband use. As part of the effort,
these agencies will repurpose nonfederal Government
spectrum as appropriate, create and implement a plan
to facilitate research, development,
experimentation, and testing by researchers to
explore innovative spectrum-sharing technologies,
including those that are secure and resilient.
While much of the spectrum will have to come from
the federal government, the Administration hopes to
convince TV stations to allow the government to
auction some of their unused spectrum in exchange
for a share of the auction proceeds. The proceeds
would be used to reduce the deficit, invest in
infrastructure projects, and build an integrated
wireless broadband network that would facilitate
communication between emergency workers. “Although
there is not likely to be enough revenue to fund all
those goals, the plan is nevertheless a positive and
important step forward,” observed American
Homeowners Grassroots Alliance President Bruce Hahn.
Both Congress and the FCC are also moving forward on
efforts that will repurpose the Universal Service
Fund (USF) to promote broadband build-out and
affordability. The USF was originally focused on
insuring that all consumers had access to wireline
telephone service, but it is clear consumers are
rapidly abandoning that earlier technology in favor
of wireless service, which today can also provide
increasingly sophisticated Internet access.
On June 23rd, the Federal Communications
Commission's Wireline Competition Bureau hosted
discussions on how to provide USF subsidies for
broadband access to low-income consumers. The FCC
hopes to find a consensus regarding goals,
eligibility, and technologies. Congress has also
begun hearings on how to modify the USF, and will
provide the FCC needed direction and authority in
that area.
In the House of Representatives, Internet
Subcommittee Chairman Rick Boucher (D-VA.) and
Ranking Member Cliff Stearns (R-FL) are meeting with
stakeholders to develop a new framework for
broadband Internet service regulation. That effort
is necessary in light of a recent court decision
that casts question regarding the FCC’s current
scope of authority in that area. The FCC also
recognizes the challenge, and in June hosted a
meeting with key stakeholders to explore the
possibility of developing a consensus approach that
the business community would be willing to support
on one of the key issues while the legislative
process moves forward.
That issue is “network neutrality”, the principle
that consumers are entitled to unrestricted access
to Internet information, including products and
services. The FCC established network neutrality
principles several years ago, and consumers continue
to enjoy the benefits. If the FCC can establish a
consensus it will help Congress craft legislation,
while setting standards for business in the
meantime, and hopefully enable the FCC to pursue any
violations of the consensus agreement.
All of these developments are positive. They address
the real major challenges and are likely to
accelerate their resolution. There will be strong
differences of opinion among stakeholders during the
process, but many can be avoided or minimized by a
more collaborative process in the beginning. While
some public interest groups have been upset about
the private meetings with industry lobbyists, AHGA
believes that it is important to get the ball
rolling. There are competing issues between segments
of the business community, just as there are
different perspectives among consumer groups.
Ultimately, every consumer group can find a business
stakeholder who agrees with their view on one aspect
or other of the telecom debate and vice versa. Any
possible consensus agreement, whether the proponents
are congressional leaders or the FCC, will
ultimately be reviewed by all the stakeholders and
the media.
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Tips for a Happy
Fourth
It’s
the biggest summer holiday, but can also be the most
dangerous.
 When many people think of the 4th of July, they
think of our nation's independence, fireworks,
cook-outs, family gatherings, and vacation trips.
But what most people don't think of is that it is
also a very dangerous holiday. With July 3rd and
July 4th being two of the deadliest days to drive.
Insurance.com offers these Top Ten 4th of July
Driving Tips:
1. Check your tires.
The last thing you want is your own
"fireworks display" while on the highway.
Check your tire pressure before you leave
for a road trip. Low tire levels can
potentially reduce fuel efficiency, as well
as being a safety issue.
2. Make sure your battery
has enough juice.
If it has been a few years since you
replaced your car battery, you might want to
do so before you leave on your 4th of July
vacation. It is better to be safe than sorry
when you are traveling far from home. If
your battery is old, toss the jumper cables
in the trunk before you leave.
3. Turn on your lights.
Check your headlights, tail lights and turn
signals before you start a trip. To ensure
everything is working properly, have a
friend walk around the car while you test
the car lights and signals from the inside.
4. Pack a first aid kit
and roadside assistance kit.
While you're at it, consider packing a
cooler of water, a flash light,
non-perishable food and extra batteries.
Make sure your cell phone has enough charge,
and bring your phone's charger or extra
battery along – just in case.
5. Don't drink and drive.
Whether you are at a cook-out close to home
or traveling to see fireworks, drinking and
driving don't mix. Play it safe this 4th of
July with a designated driver or call for a
cab.
6. Buckle Up.
Wearing seatbelts every time you drive is
the easiest way to help keep you and your
family safe in the event of an accident. If
you are traveling with small children, make
sure they are in a proper car or booster
seat for their age group and height.
7. Watch your speed.
State and local police officers will be out
in full force during the 4th of July week.
So watch the local speed limits and keep a
safe distance from the cars in front of you.
A speeding ticket can mean points on your
driver's license and a potential increase in
your auto insurance rate.
8. Don't let rain ruin
your trip. Check the weather
before you leave and during your trip. If
you do get caught in a torrential downpour,
pull off to the side of the road until the
rain stops. And never drive through a
flooded area. Try to find an alternative
route – a slight delay beats being stranded
in a flooded car.
9. Think twice about
fireworks at home.
Even sparklers are dangerous and
unpredictable when kids light them. While
your home insurance may cover injuries, we
suggest leaving fireworks to the pros.
10. Pack proof of car
insurance.
Whether you are traveling close to home or
out-of-state, you should always have your
proof of car insurance in your wallet or
glove box. If you don't have a cell phone or
other portable device that takes pictures
and video, it's a good idea to keep a
disposable camera, note pad and pen in your
car, just in case an accident occurs.
If
you are traveling over the 4th,
remember that it is also a busy holiday for burglars
and other criminals. The Department of
Transportation’s Bureau of Statistics reports that
in recent years, Americans have taken around 650
million long distance summer trips averaging 284
miles each way between Memorial Day and Labor Day
weekends.
With all that time away from your home, vacationers
may be opening the door to potential thieves who
look for telltale signs indicating no one is around.
Those looking to take advantage of unsuspecting
travelers might also target you and your family
while on vacation.
“You can help make family trips more enjoyable by
taking a few simple steps to reduce the possibility
you’ll become an easy target for thieves preying on
tourists or your empty home,” says Allstate
Insurance Company spokesperson John Heid. To ensure
a safe summer vacation for you and your family,
Allstate recommends the following tips:
Make sure your home is protected while you're
away:
• Stop mail and newspapers, or ask a neighbor to
pick them up every day.
• Put several household lights on timers so they
turn on and off at appropriate times.
• Arrange to have grass mowed while you're gone.
• If you are not leaving a second car in your
driveway ask a neighbor to park in your driveway
overnight - anything that might suggest someone's
home.
Make sure you don’t pack unnecessary items and
that your valuables are protected:
• Clean out your wallet or purse before you go; take
only essential credit cards.
• Carry your purse close to your body, or wallet in
an inside front pocket. Better yet, take a "fanny
pack" or wear a money pouch under your clothes.
• Pack as lightly as possible. Lots of heavy,
cumbersome bags will slow you down and make you more
vulnerable to getting robbed.
• Keep a separate record of the contents of checked
luggage. Keep anything of value such as medicine and
jewelry in a carry-on that stays with you.
Try to blend in with the crowd and not look too
many like tourists:
• Don't display expensive jewelry, cameras, bags,
and other items that might draw attention.
• Check maps before you go out so you can tour
confidently.
• Stick to well-lit, well-traveled streets at all
times.
• Leave an itinerary of your trip with someone at
home in case you need to be contacted. If you are
traveling internationally carry an extra passport
photo with you just in case you need to replace a
stolen passport.
• Don't use your
home address on your luggage tags. You don't need to
let anyone know where your empty house is located.
Consider using your business card instead.
Many burglars now use technology, so don’t mention
your beach trip on your Facebook wall unless the
site is blocked to those you do not know (this will
also help prevent identity theft and is a good idea
even if you’re not traveling over the holiday).
If you are going to the beach or lake follow safe
water safety practices:
• Swim in designated areas supervised by lifeguards.
•
Always swim with
a buddy; do not allow anyone to swim alone.
•
Ensure that
everyone in the family learns to swim well. Enroll
in age-appropriate water orientation and
Learn-to-Swim courses.
•
Never leave a
young child unattended near water and do not trust a
child’s life to another child; teach children to
always ask permission to go near water.
•
When at the
beach or lake, have young children or inexperienced
swimmers wear U.S. Coast Guard-approved life jackets
around water, but do not rely on life jackets alone.
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Fannie Toughens Up and Lenders Lighten Up
In a bit of role reversal, Fannie is getting tougher on
borrowers, while lenders are becoming more sensible.
On June 23, Fannie Mae announced new policy changes it
claims is designed to encourage borrowers to work with their
servicers and pursue alternatives to foreclosure. Defaulting
borrowers who walk away and had the capacity to pay, or did
not complete a workout alternative in good faith, will be
ineligible for a new Fannie Mae-backed mortgage loan for a
period of seven years from the date of foreclosure.
Borrowers who have extenuating circumstances may be eligible
for new loan in a shorter timeframe – as little as two years
in some cases. About 9 million homeowners owe at least 20%
more on their mortgage than their home is currently worth,
and they are more likely to consider a strategic default.
"We're taking these steps to highlight the importance of
working with your servicer," said Terence Edwards, executive
vice president for credit portfolio management. "Walking
away from a mortgage is bad for borrowers and bad for
communities and our approach is meant to deter the
disturbing trend toward strategic defaulting. On the flip
side, borrowers facing hardship who make a good faith effort
to resolve their situation with their servicer will preserve
the option to be considered for a future Fannie Mae loan in
a shorter period of time."
Fannie Mae will also take legal action to recoup the
outstanding mortgage debt from borrowers who strategically
default on their loans in jurisdictions that allow for
deficiency judgments. The company will be instructing its
servicers to monitor delinquent loans facing foreclosure and
put forth recommendations for cases that warrant the pursuit
of deficiency judgments.
Troubled borrowers who work with their servicers, and
provide information to help the servicer assess their
situation, can be considered for foreclosure alternatives,
such as a loan modification, a short sale, or a deed-in-lieu
of foreclosure. A borrower with extenuating circumstances
who works out one of these options with their servicer could
be eligible for a new mortgage loan in three years and in as
little as two years depending on the circumstances.
The American Homeowners Foundation believes that it will be
difficult to implement the policy in a fair manner. “We have
heard many stories from homeowners who have sent multiple
sets of documentation to lenders or loan servicers in hopes
of getting a modification, only to be told that the
information was lost or wasn’t received,” observed AHF
President Bruce Hahn. Mortgage counselors and many others
have heard the same stories. That being the case, how are
homeowners to prove that they have made a good faith effort
to work with their servicers and pursue alternatives to
foreclosure? Another problem is that many subprime and other
loans were made to very unsophisticated buyers, some of whom
neither read nor speak English. Many of them would not have
received those loans and wouldn’t be in trouble today if
lenders had applied sound underwriting principles to their
applications. Is it fair to punish them as well?
This is not to justify strategic defaults by homeowners who
understood their obligations and the risk and have the
ability to pay, but simply refuse to do so. They deserve the
punishment, but it will be a challenge for Fannie to sort
them out from the innocent. It would be nice if there was
also a similar punishment for the corporate CEO’s who made
the policy decisions that created toxic mortgages in the
first place. Perhaps they should be prohibited from working
in the financial services sector for seven years as well.
While Fannie is getting tougher on borrowers, some lenders
are finally coming to their senses. They are allowing
underwater homeowners in hopeless or near hopeless financial
situations to give the deeds to their home back to the
lender without penalty. The lender agrees not to foreclose.
While their credit rating does get dinged, the damage is not
nearly as a foreclosure.
The American Homeowners Foundation has been calling for
actions like this for several years. It is in the best
interest of the lenders, stockholders, as well as the
homeowners. Part of the problem is that lenders and loan
servicers weren’t able to keep up with the growth in
troubled loans. Another part was a state of denial mentality
on their part. Many chose not to face the fact that the
problem was only getting worse over time. As strategic
defaults increased (in part caused by homeowners’
frustration over repeated loss of loan modification support
documents or other bureaucratic inefficiencies), the need
for a new response has increased.
Many lenders are also stuck with an ever-growing portfolio
of nonperforming real estate assets. A deed in lieu of
foreclosure enables the lender to resolve the ownership
issue, and put the property on the market quickly. In some
cases, the process can be completed in a month. Bank of
America sent 100,000 deed-in-lieu solicitations over the
past two months, and the response has been overwhelming.
Helping to drive the growth are incentives that are part of
Home Affordable Foreclosure Alternatives program. The bank
is also offering $3,000-15,000 incentives per transaction to
increase response rates.
There are both limitations and downsides to the expansion of
the use of the deeds in lieu of foreclosure process. It is
hard to do when more than one lender is involved, such as
when there is a second trust of the property. Since many of
these homes will be on the market in the near future they
are unfortunately going to put a downward pressure on resale
values, often in areas where home values are currently
dropping.
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Please take the time to contact your legislators and express your
views on pending policy issues covered in this
month’s Home Base. It's easy - you can reach your
legislators by email in a couple of mouse clicks,
and you can use the content in Home Base and
elsewhere on our website to help you develop your
message.
To look up the phone number, email, and/or postal address of your
U.S. Representative or your two U.S. Senators, (or
your state representative or state senator)
click here. You can also look up which
legislators represent your zip code if you don’t
recall their names.
A personal meeting is a particularly effective way
to get their attention and reinforce your message.
Many legislators are also happy to meet personally
with their constituents when they are back home on
weekends or when Congress is not in session. This
summer Congress will be in recess
July 5 - 11; and August 9 - September 12.
Please consider also requesting a follow up
face-to-face meeting in their home state or home
district offices near you when you contact their
Washington DC offices on policy issues.
Is there a policy issue that is particularly
important to you which significantly impacts
homeowners or home ownership? Any member may propose
a position on a policy issue, so please check the
American Homeowners Grassroots Alliance's 2010 Issue
Guide.
If it isn't on the list, we invite you to send us an
email and tell us why you think the American
Homeowners Grassroots Alliance should take a
position and work on it.
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