Las Vegas has the most undervalued housing market in the nation says a report from IHS Global Insight and PNC Financial Services.  According to the report, Las Vegas is 41 percent undervalued.  Nationally, 242 of the 299 largest housing markets are selling for prices that even bankers think are less than fair market value.  The report uses a comparison of median home prices, interest rates, population densitites and income, as well as historic data.

It’s nice to be No. 1 in something other than foreclosures!

Those who make a close study of our local housing market have made their predictions for 2010.  Larry Murphy, of RealtyTrac, a respected local housing market expert, is looking at 2010 to be similar to 2006, when there was no appreciation in house values.  In 2009, there were 5,184 new home closings, the least since 1985; Murphy expects an increase in sales in 2010, but he foresees a decline in the median price of new houses, which was $212,883 in December.  That was a decline of 20 percent from 2008.   

Home equity loan and refinancing scams can cost you more than money–these scams can cost you your house.

Refinancing a mortgage to a lower interest rate can make sense for some homeowners. So too can taking out a home equity loan against the value you’ve built up, perhaps to finance a kitchen remodel or pay Junior’s college tuition. What doesn’t make sense is losing your home because you fall for home equity loan and refinancing scams such as loan flipping and equity stripping. Although scam artists can be very convincing, homeowners who know what to look out for are less likely to become victims.

Loan flipping

Loan flipping is a scam targeted at homeowners looking to get money back when they refinance a mortgage. This is often referred to as a cash-out refi. Scammers take advantage of this desire to tap the equity in a home to pay for things the homeowner couldn’t otherwise afford.

A cash-out refi in itself isn’t a scam. For some, it’s a smart way (http://www.houselogic.com/articles/a-guide-to-equity-loan-options/) to borrow. What is a scam is when a lender, after receiving a few payments, comes back to you with an offer of another refinance, this time to fund a vacation or a new car. The easy money is difficult for some homeowners to turn down.

Many borrowers don’t realize how much they’re paying in fees to refinance. The U.S. Federal Reserve estimates the settlement costs on a typical refi to be 3% to 6% of the loan amount. Loan flippers often charge much more, plus they may quietly roll the settlement costs into the loan to disguise the total charges. Take a day or two to get quotes from several lenders and compare terms.

Loan flipping ultimately leaves you with more debt and more years that you’ll owe on that debt. When the equity finally dries up, you might not be able to afford your higher monthly payments and another refinancing will be impossible. You could be forced to sell your home.

Equity stripping

Equity stripping can occur in several ways, but at its heart is a scam artist who gains ownership of your home, borrows against it or sells it, pockets the proceeds, and disappears. You’re often left with a hefty mortgage balance and no place to live.

A telling sign of equity stripping is a lender that offers more loan than you can afford or that encourages you to pad your income on a loan application. Homeowners with low incomes but a good amount of equity built up are prime targets because they otherwise would have a hard time borrowing. According to the U.S. Federal Trade Commission, a lender that’s pushing a home loan with too-high monthly payments is likely counting of foreclosing on the property when you fall behind.

A variation on equity stripping has a scam artist talking you into selling your home at a discount or signing over the deed, perhaps with a promise of securing better loan terms if your name isn’t on it. The scammer promises to let you stay in the home as a renter until the refinancing is finalized, then you can buy back the home. In reality, the scam artist drains equity by borrowing against the house or selling the house, perhaps after evicting you.

According to Consumers Union, don’t agree to a home equity loan if you can’t afford it. A good rule of thumb: Your combined home loan payments shouldn’t exceed 28% of your gross income. The nonprofit publisher of Consumer Reports magazine also warns against signing any documents unless you understand them and turning over you property to anyone without first consulting a trusted adviser.

Phantom help

Watch out for unsolicited offers to refinance from companies claiming government affiliations. In particular, don’t be fooled by the use of official-sounding acronyms like “TARP” or official-looking website addresses. Scammers use these to gain your trust. Once they do, they’ll likely try to charge you for access to government assistance. Worse, they might extract enough personal information to commit identity theft.

You never need to pay to find out about legitimate government programs. A housing counselor (http://portal.hud.gov/portal/page/portal/HUD/i_want_to/talk_to_a_housing_counselor) approved by the U.S. Department of Housing and Urban Development can point you in the right direction. For federal refinancing (http://www.houselogic.com/articles/making-home-affordable-refinance-option/) and loan modification (http://www.houselogic.com/articles/making-home-affordable-modification-option/) help, check out the Making Home Affordable (http://www.makinghomeaffordable.gov/) program.

New disclosure rules make spotting scams easier

Many unscrupulous lenders have relied on confusing paperwork to dupe borrowers into paying excessive upfront fees on loans. Others would pull last-minute rate switches at closing. Still others would disguise prepayment penalties, which can prove costly if you ever try to refinance again or retire a loan early.

Balloon payments, which come due at the end of a loan term, can also catch borrowers off-guard. A lender may offer a low monthly payment on an equity loan, but only because the payment is interest-only. The principal is due in one lump sum. Surprised homeowners must scramble to refinance again, tap other assets, or sell.

Disclosure rules (http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm) that went into effect Jan. 1, 2010, make spotting these types of deceptions easier. All lenders are required to use redesigned Good Faith Estimate (http://www.hud.gov/offices/hsg/ramh/res/gfestimate.pdf) and HUD-1 Settlement Statement (http://www.hud.gov/offices/hsg/ramh/res/hud1.pdf) forms that clearly disclose key loan terms–including interest rates, prepayment penalties, and balloon payments–and closing costs.

The GFE is an estimate of loan terms and closing costs, while the HUD-1 is a final accounting of terms and costs. The redesigned forms, cross-referenced by line number, must be used for mortgage refinancing and home equity loans (with the exception of home equity lines of credit (http://www.houselogic.com/articles/when-heloc-right-choice/), or HELOCs). The only fee a lender is allowed to collect to issue a GFE is a charge for a credit report, which averages $37.

If you don’t receive the new forms, don’t do business with the lender. If the estimates on the GFE don’t match the final figures on the HUD-1, ask why. Some, but not all, fees are allowed to increase within a fixed range.

Donna Fuscaldo has written about personal finance for Dow Jones, the Wall Street Journal, and Fox Business News for more than a decade. Like many homeowners, her mortgage is precariously close to being underwater.

There’s a new website (in full disclosure sponsored by the National Association of Realtors) which has information about protecting, maintaining and increasing the value of your home.  Information includes what to ask before hiring a contractor, advise on when to make an insurance claim and when to skip it, whether to fix or replace an appliance, how to take advantage of tax credits for home improvements.  The address is 

www.houselogic.com.

The Nevada Foreclosure Mediation Program passed during the last legislative session, is available to owner occupied residential properties that received foreclosure notices filed on or after July 1, 2009.  Commercial property foreclosures and non-owner-occupied residential properties are not eligible for the mediation program.  Requests for mediation must be filed within 30 days of the foreclosure notice filing.  The Foreclosure Mediation Hotline is 702-486-9380 or 775-687-9816 in Northern Nevada.  There is also information on the Nevada judiciary web site at

www.nevadajudiciary.us or

www.foreclose@nvcourts.nv.gov

It’s the time of year when everyone is making predictions for what may occur in the upcoming year.  While I’m a Realtor and not a fortune teller, or an economist, the continued high number of house sales does give us some indication of what the future may hold.  Inventories remain low and people seeking to purchase bank owned homes are competing with multiple offers.  More than 40 percent of sales are cash.  Demand is high.  Prices are no longer declining.  As long as the number of bank owned properties coming on the market each continues to equal the number of sales, it would not surprise me if prices were up by 10 percent by the end of 2010.  Feel free to comment!

Enjoy!

http://www.youtube.com/watch?v=SM7oWKgCVo4

Both the the Senate and the House of Representatives have voted to pass legislation which includes  extending the home buyer tax credit from December 1, 2009 until April 30, 2010.  The bill extends not only the $8000 tax credit for first time home buyers, but also makes available a $6500 tax credit to current homeowners who sell their houses and buy another.  They must have lived in their current residence for at least five years.

The qualifying income levels for these tax credits have been raised from  $75,000 for a single purchaser and $150,000 for couples to $125,000 and $225,000 respectively.  Above those limits there are diminishing credits available.

To search for homes available for purchase using these tax credits, visit LasVegasHomeSpecialist.com and click on the Home Search button.

I just received this quote from a client.  It seems so appropriate.

Hello Lisa,

A little humor

From John Steinbeck, The Grapes of Wrath.

“We’re sorry. It’s not us. It’s the monster. The bank isn’t like a man. ‘Yes,
but the bank is only made of men.’ No, you’re wrong there-quite wrong there.
The bank is something else than men.  It happens that every man in a bank hates
what the bank does, and yet the bank does it.  The bank is something more than
men, I tell you.  It’s the monster.  Men made it, but they can’t control it.”

The summer continues to show record number of sales, stimulated by the traditional busy summer season in real estate, the low prices and the first time home buyer tax credit.  Inventory remains low, with 11,347 properties listed for sale in the MLS, 8,575 single family residences and 2,651 condominiums and townhomes.  There are 2,439 bank owned properties for sale and 4,741 short sale listings.

There are a remarkable 10,430 properties in contingent status, meaning there are accepted offers on them, but contract contingencies, such as short sale approval, inspection or financing, have not been waived.  2,544 contingent sales are bank owned and 7,187 are short sales.

There are 3,606 pending sales.  These properties have waived contingencies and are awaiting close of escrow.  Of these 2,436 are bank owned and 547 are short sales.

3,966 sales closed in August.  Of these 2,795 were bank owned, 488 were short sales and 672 were regular resales.  70 percent of all sales were bank owned.  Short sales continue to close at a rate of around 10 percent.

The majority of sales remain under $200,000.  There were 1,566 sales $100,000 or less, 1,638 $200,000 or less and 465 under $300,000.  There were 293 sales over $300,000.

Investors and first time buyers are the primary purchasers.  According to the Review Journal today, using figures provided by MDADataQuick, a San Diego research firm, 58 percent of loans used to purchase homes are FHA, which requires only a 3.5% down payment and may only be used for owner occupied properties.  43 percent of buyers are using cash to purchase houses.  Sellers will often choose the cash offer over others which may require obtaining financing because of the speed and certainty of closing cash transacions.

If you are interested in taking advantage of the first time home buyer tax credit before it expires on December 1, contact us through http://www.lasvegashomespecialist.com