Improve Air Conditioner Efficiency

Heating and cooling comprise 40% of the average citizen's energy consumption. To reduce your electrical bills and increase efficiency, proper maintenance of your air conditioner is imperative.

Prevention is always smart. You don't want to have to replace an air conditioning unit due to neglect . Take these steps to maintain your system, so you don't end up with an added cost of a repairman when you could have intercepted the problem during its early stages.



How to Maintenance an Air Conditioner

Check the Controls:
Make sure that your AC unit starts, operates, and then shuts off properly. Get into this habit as soon as soon as possible.


Check Your Settings:

Turn your AC down when you leave. A timer that turns off when you leave and restarts right before you get back is a good investment.


Check the Drain:

A plugged drain can cause water damage.


Lubricate:

Any moving parts that are un-lubricated can cause friction and increase the amount of used energy.


Tighten All Connections:

Bad electrical connections are unsafe and can damage your appliance.


Measure Voltage and Currents:

Faulty currents can reduce the life of major components.


Adjust Blower Components:

This provides better airflow and thus more comfort. Airflow problems can reduce efficiency by 15%.


Change Air Filters Once a Month:

A dirty filter decreases efficiency, and reduces the life of your air-conditioner.


Clean Condenser and Evaporator Coils:

Dirty coils cause the system to run longer because the system cannot function as well, jacking up your electrical bill.

Senators Push To Expand & Increase Homebuyer Tax Credit

June 10 - Lawmakers are pushing to revive legislation in the Senate that would almost double an $8,000 tax credit for first-time homebuyers and expand the program to all borrowers.

Senator Johnny Isakson, a Georgia Republican, introduced a bill today that would increase the tax credit to $15,000 and remove income and other restrictions on who can qualify, according to his spokeswoman, Sheridan Watson. The Treasury Department declined to comment on the proposal.

The legislation, co-sponsored by Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, would extend the homebuyer credit to multifamily properties used as the borrower’s primary residence. It would also eliminate income caps of $75,000 and $150,000 on individuals and couples seeking to claim the credit.

“The housing market continues to be a drag on the economy, John Castellani, president of the Washington-based Business Roundtable, said in a telephone interview today. “We believe that if we don’t stabilize this vital sector, we can’t turn the tide on the recession.”

The Business Roundtable represents more than 100 chief executive officers including General Electric Co.’s Jeffrey Immelt and Exxon Mobil Corp.’s Rex Tillerson. The group and the National Association of Realtors are pushing to expand the tax credit and to lower mortgage rates to revive the housing market.

For All Borrowers

“One of the biggest problems facing the American people today is an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can,” Isakson said in a statement. Isakson said his legislation would spur demand in the housing market by giving homeowners the incentive to trade up to a more expensive home.

The bill would extend the tax credit, which now applies to homes purchased from Jan. 1 to Dec. 1, 2009, to one year after the new measure is signed into law, according to Watson. Isakson’s bill would make the credit available to all borrowers, not only borrowers who haven’t owned a home in the previous three years as is the case under current law. It would also let borrowers divide the credit over two years. The legislation wouldn’t be applied retroactively to purchases completed before the date of enactment, Watson said.

The bill is co-sponsored by Republican Senators Lamar Alexander of Tennessee, Saxby Chambliss of Georgia, David Vitter of Louisiana, James Risch of Idaho, Lisa Murkowski of Alaska, John Ensign of Nevada and Jim Bunning of Kentucky, according to a statement from Isakson.

Senator Joseph Lieberman, a Connecticut independent, has also signed on to the bill, according to the statement.

Using the First-Time Buyer Tax Credit Towards Your Down Payment --Clarification!

There has been a lot of confusion about whether or not first time homebuyers can use their tax credit to fund their downpayment. The answer is YES, but with a small catch. Only buyers who get FHA loans are eligible to do this, but they must have the required 3.5 percent down payment on their own. (The tax credit would be used on top of the 3.5 percent).

I hope that clarifies things for anyone who was confused. There also is a movement to expand the tax credit to all consumers and to increase it to $15,000 from the current $8,000. I will publish a post on this soon.

You can now use the $8000 First-Time Home Buyer Tax Credit as a Down Payment

Big Improvement to First-Time Buyer Tax Credit

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Other Solutions for Today's Market

During his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”

The morning session included a panel discussion that was moderated by CNBC’s Ron Insana. Panelists examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.

“Right now the Federal Reserve is the market,” said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.

“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” said NAR President Charles McMillan. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.”

The real estate summit is part of the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo. During the week ending May 16, more than 8,500 REALTORS® will attend meetings, visit lawmakers and inspire action on Capitol Hill.

Source: NAR

Act NOW to take advantage of today's historic low interest rates

You may not of heard but interest rates dipped to extremely low rates today.
A conventional 30-year-fixed is right about 4.875% and FHA 30-year-fixed is 5.125%

To lock in and take advantage of this, contact me asap!

Tired of hearing all the gloom and doom about our economy?

Believe it our not, there is a good deal of real estate news that is pretty good. You won't hear it on the tv news or newspapers these days because it doesn't sell. I figured I'd share it with you though -- click here to feel better today.

First-Time Homebuyer Tax Credit Form

As part of the American Recovery and Reinvestment Act of 2009, the IRS has officially released Form 5405 -- better known as the First-Time Homebuyer Credit Form.
True to tax code standards, the 10-field form is accompanied by 3 pages of instructions. Form 5405 is a helpful, go-to resource for home buyers with questions about the tax credit. For example, the form distinguishes tax consequences for homes bought in 2008 versus 2009, and clearly defines the term "first-time home buyer".
In addition, Form 5405 highlights the math behind the tax credit.

In general, the First-Time Homebuyer Credit is equal to the lesser of:
$8,000 for homes bought in 2009
10 percent of the home's purchase price

Married couples filing separately are entitled to half of the expected credit, and homes sold within 3 years are subject to a credit repayment in the year the home ceases to be the "main home".

Form 5405 is a comprehensive reference. However, be sure to check with your accountant for specific questions about your personal returns and how the First-Time Homebuyer Credit may impact your finances. There is no substitute for professional, paid advice.
Download the form here!
For more information vital to first-time buyers, click here!

First-time home buyer Tax Credit Explained!

The American Recovery and Reinvestment Act of 2009 features an $8,000 tax credit for first-time buyers who purchase a home on or after Jan. 1, 2009 and before Dec. 1, 2009.

For detailed information, contact me. For an overview, I have posted a brochure for you to read and share! To view the brochure, click here

Homeowner Affordability & Stability Plan announced

On February 18, 2009, President Obama announced his Homeowner Affordability and Stability Plan, designed to help up to 7-9 million families avoid foreclosure by restructuring or refinancing their mortgages. In doing so, the plan not only helps responsible homeowners behind on their payments or at risk of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs.

The key components of the plan are:
1. Government Sponsored Enterprises (GSEs) Refinancing for Up to 4 to 5 Million Responsible Homeowners with GSE loans to Make Their Mortgages More Affordable
2. A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners
3. Supporting Low Mortgage Rates By Strengthening Confidence in Fannie Mae and Freddie Mac

Below are some helpful links: Be sure to comment on this blog with your thoughts and questions.

Questions and Answers for borrowers:

Executive Summary of the plan:

Fact Sheet:

3 Housing examples:

Homebuyer tax credits part of new economic stimulus bill

The Senate voted February 4 to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry, a victory for Republicans eager to leave their mark on a mammoth economic stimulus bill at the heart of President Barack Obama's recovery plan.
Sen. Johnny Isakson, R-Ga., who advanced the homebuyers tax break, said it was intended to help revive the housing industry, which has virtually collapsed in the wake of a credit crisis that began last fall.
The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break for the purchase of new homes only.

It May Be Time to Think About Buying a House

From the NY Times. Dec. 6, 2008
By RON LIEBER
Five or 10 years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers.
Then, everyone who sat on their down payment savings accounts for a few years too long will kick themselves for not taking advantage of what may turn out to be the buying opportunity of a lifetime for those who can qualify for a mortgage.
Unfortunately, we do not know when this golden age will begin, because we will be able to identify a bottom to the housing market only with the benefit of hindsight. But as it does with the stock market, the moment will probably arrive when everyone is feeling the most pessimistic.
That moment is certainly getting closer. Housing prices have fallen drastically from their peak levels in many areas of the country. Rates on 30-year fixed-rate mortgages are already close to 5.5 percent, and this week there were suggestions that the federal government might try to drive them down to 4.5 percent, a truly incredible figure to be able to lock in for three decades.
Meanwhile, first-time home buyers have the same advantage they have always had, which is that they do not have to sell their old place before buying a new one. That is an added advantage in areas where many available houses simply are not moving, because the people trying to sell them will not be bidding against you.
If you’re hoping for a recovery in the housing market, you ought to be cheering on the first-time home buyers. When they purchase homes, their sellers are free to move on or move up, stimulating further sales.
But if you are a potential first-time buyer yourself, or lending or giving the down payment to one, you are probably as frightened as you are tempted by all the “For Sale” signs that have become “On Sale” signs. So let’s quickly review some of the still-grim pricing data in certain areas — and consider the reasoning offered up by first-time buyers who have forged ahead anyhow.
As is always the case with real estate, much depends on location. One study, “The Changing Prospects for Building Home Equity,” tries to predict where today’s first-time buyers in the 100 biggest metropolitan areas may actually have less home equity by 2012 as a result of continued price declines. The verdict was that buyers in 33 of the markets could see a decline by 2012, including potential six-figure drops on an average home in the New York City, Los Angeles, San Francisco and Seattle metropolitan areas.
This is obviously scary. (I’ve linked to the study, a joint effort of the Center for Economic and Policy Research and the National Low Income Housing Coalition, from the version of this article at nytimes.com/yourmoney.) It’s worth noting, however, that these predictions came before the government made its most recent move to reduce borrowing costs.
Also, the price projections in the study are based, in part, on the fact that the ratio of purchase prices to annual rents is still higher in many areas than the historical average, which is roughly 15 times rents. While past figures may well have some predictive value, I have never been convinced that first-time buyers compare a home that they could own and one that they would rent in purely or even primarily economic terms.
When Jaime and Michael Proman moved this fall to Minneapolis, his hometown, from New York City, they craved a different sort of life after two years together in a 450-square-foot studio apartment. “We didn’t want a sterile apartment feel,” said Mr. Proman, who is 28 (his wife is 26). “We wanted something that was permanent and very much a reflection of us.”
The fact is, in many parts of the country there are few if any attractive rentals for people looking to put down roots and enjoy the sort of amenities they may spot on cable television home improvement shows. Comparing a rental with a place that you may own seems almost pointless in these situations, especially for those who are now grown up enough to want to make their own decisions about décor without consulting the landlord.
Still, for anyone feeling the urge to buy, a number of practical considerations have changed in the last year or two. The basics are back, like spending no more than 28 percent of your pretax income on mortgage payments, taxes and insurance. Even if a lender does not hold you to this when you go in for preapproval, you should hold yourself to it.
You will also want to start now on any project to improve your credit score because it may take several months to get it above the 720 level that qualifies you for many of the best mortgage rates.
John Ulzheimer, president of consumer education for credit.com, a consumer credit information and application site, suggests starting to pay down and put away credit cards months before you apply for a loan. That is because the credit scoring system could penalize you if you use a lot of credit each month, even if you always pay in full. Also, check your three credit reports (it’s free) at annualcreditreport.com and dispute errors.
While no one can easily predict the likelihood of losing a job, Friday’s startling unemployment figures suggest the need for caution if you think you might be vulnerable. A. C. Panella, who teaches communications at Pasadena City College in California, waited until she had a tenure-track job before buying a home in the Highland Park section of Los Angeles with her partner, Amy Goldman, a lawyer for a nonprofit organization. “We could afford the mortgage payment on one salary, were something to come up,” Ms. Panella, 31, said. “It’s really about being able to stay within our means.”
For many first-time home buyers, that philosophy stretches to the down payment, too. Ms. Panella and her partner put down 20 percent when they bought their home in September, as did the Promans when they bought their home in the Lowry Hill neighborhood of Minneapolis.
Alison Nowak, 29, put just 3 percent down on a Federal Housing Administration-backed loan last month when she and her partner, Lacey Mamak, bought a $149,900, 800-square-foot home several miles south of where the Promans live. “Anything that is an opportunity also has a bit of risk,” she said. Her house was in foreclosure before a plumber bought it and fixed it up. “One way we mitigated it was that we bought a really tiny house in a very good neighborhood.”
One other strategy might be to buy new instead of used. Ian Shepherdson, chief United States economist for the research firm High Frequency Economics, says he believes that a steep drop-off in inventory of new homes is coming soon, thanks to a rapid decrease in home builder activity.
Since prices generally soften in the winter, it may make sense to start looking seriously once the mercury bottoms out. “If you look at new developments next spring, you may not have the choice you thought you would have or be in the bargaining position you thought you would be,” Mr. Shepherdson said. Also, if you wait after June 30, you will miss out on a $7,500 federal tax credit for income-eligible first-time home buyers that works like an interest-free loan.
Finally, allow yourself to consider how it would feel if you bought and then prices dropped another 10 or 15 percent. It might not bother you if you plan to stick around. Plenty of people seem to be making a longer commitment to their homes. According to a survey that the National Association of Realtors released last month, typical first-time buyers plan to stay in their home 10 years, up from 7 last year.
Perhaps people are more aware that they will not be able to build equity as rapidly as others did in the real estate boom. Or they simply have more confidence in hard, hometown assets now than in other markets.
“We wouldn’t let another decline bother us,” said Michael Proman. “You can never time a bottom. This is a long-term investment for us, and it truly is the best investment we have in our portfolio right now.”

Time to Appeal That Tax Bill?

If home price drops, so should property taxes. Home owners might be smart to initiate a property tax appeal.

In these uncertain times, many home owners have had to face the fact that the current market value of their homes is less than they once thought.

Yet, most of these home owners continue to pay property taxes based on that higher value.

Higher taxes may also make a property less appealing and affordable to buyers, since higher taxes will increase their overall costs, at least until the property is reassessed. That’s why it’s a smart strategy to advise past clients who might be considering a sale to appeal their property taxes at the next opportunity.

Evaluating Your Assessment

The vast majority of taxing jurisdictions throughout the United States assess residential property based on market value: the amount a willing buyer would pay a willing seller without duress. However, assessments are generally not reviewed on an annual basis, so a property’s assessment will never be 100 percent of market value.

To compensate, taxing bodies apply an equalization ratio, which is designed to ensure that assessments are relatively equal among different taxing districts to all assessed values. For example, a property worth $100,000 with an equalization ratio of 50 percent would be assessed at $50,000. Home owners can obtain their equalization ratio from local taxing authorities.

If, after a review with a residential broker or appraiser, a home’s assessed value seems out of line with current market values, the home owner should undertake an investigation to determine what might have caused the incorrect valuation. Here are some steps for your client to follow.

1. Arrange a visit with the local tax assessor and request a complete copy of the home’s tax records. Property record cards are public records and are universally available.

2. Pay particular attention to the market comparables listed on the property record card. These recently sold homes are the basis for the assessor’s valuation of your client’s home. Visit those houses or view them online, and compare them to the client’s house.

3. Take the appropriate equalization ratio and multiply the market value you believe appropriate for the home by that rate. If the number is lower than the current assessment, your client should file a tax appeal.


Filing an Appeal

Most home owners should be able to properly file the appeal without counsel, but most jurisdictions require a licensed real estate appraiser to prepare an expert analysis of local market values for the local tax board.

Home owners should work closely with the appraiser to review all the amenities and issues that might affect the valuation of their home. Many times an appraiser may not be aware of construction, zoning, or general neighborhood issues that negatively affect value.

Real estate brokers familiar with the property and the area may also be a valuable resource for this type of information. They may also be able to assist the appraiser in determining which properties are the best comparables for a particular home. All of the appraiser’s conclusions need to be properly documented with supporting evidence in the appraisal report that will be submitted with other supporting paperwork prior to the hearing.

In addition to compiling evidence, the taxpayer should take care to learn and follow the rules of the local board of assessment review. Each taxing jurisdiction has appropriate appeal forms. It is also critical to determine the deadline for filing an appeal.

The final step in an appeal is a hearing before the assessment appeal board. Proper preparation is the key to a successful hearing. The home owners and the appraiser should prepare a script detailing the important points that need to be made during the appraiser’s testimony in order to prove a lower market value and assessment.

The key focus should be comparing the home in question with every presented comparable. The appraiser should be prepared to analyze each important amenity and discuss how it positively or negatively affects value.

During uncertain economic times, the effort of appealing a property tax bill reduction may prove well worth the time and effort involved.

New home sales post unexpected increase as prices fall to lowest level in 4 years

By MARTIN CRUTSINGER
AP Economics Writer
9:24 AM CDT, October 27, 2008

WASHINGTON (AP) _ Sales of new homes recorded an unexpected increase in September as median home prices dropped to the lowest level in four years, the Commerce Department reported Monday.Sales of new single-family homes rose by 2.7 percent last month to a seasonally adjusted annual rate of 464,000 homes, Commerce said. Economists had expected sales would drop from the August level.The median price of a new home sold in September declined by 9.1 percent from a year ago to $218,400, the lowest price level since September 2004, a period when home prices were rising rapidly as the country experienced a five-year housing boom.The surprising increase in September sales still left them 33.1 percent below the level of a year ago as the country is battered by the worst slump in housing in decades.The report on a rise in new home sales followed news last week that sales of existing homes rose in September by 5.5 percent, the largest monthly gain in more than five years.Analysts are not convinced that the sales increases are signaling a bottom for the housing market. They note that the September gains came before the latest upheavals in financial markets which have raised new worries about the overall state of the economy.Many analysts believe the country has already entered a recession. They are forecasting significant increases in job losses which will make it even harder to mount a sustained rebound in housing.New home sales fell by 21.4 percent in the Northeast and were down 5.8 percent in the Midwest. However, sales rose by a sharp 22.7 percent in the West, a region of the country which has seen some of the biggest declines in prices, a development which has spurred sales. Sales were up 0.7 percent in the South.The rise in sales left a total of 394,000 unsold new homes on the market at the end of September, down a record 25.4 percent from the number of unsold homes on the market at the end of September 2007.Builders have been sharply cutting back on production, trying to get inventories more in line with sales.Even with the latest drop in total unsold new homes, the inventory represents a 10.4 months supply at the September sales pace, still a historically high level.The inventory of unsold existing homes is also remaining near historic highs as that market is being increased by a record wave of home foreclosures.The 2.7 percent rise in sales for September new home sales followed a big 12.6 percent drop in August, which was revised sharply lower from the government's initial estimate. Sales in July had risen by 3.6 percent.

United Mortgage Services Sheds Light on Government $

The government is offering a credit of up to $7,500 for First Time Homebuyers who purchase a new primary residence between April 9, 2008 and July 1, 2009. There is a misconception that these funds are a grant, they are not. In fact, it's a loan from Uncle Sam but it is interest free.
When you file your tax return you'll get a tax credit, which is applied to your income tax filings and you get a bigger refund or you owe less taxes. Although, at the onset it may seem more complicated than it's worth, it is actually quite simple and is a great way for new homebuyers to get some cash on hand just after the big purchase. Let me try to simplify it further. To start, the program is only offered to folks who make $75,000 maximum earnings per year if filing single, or $150,000 if filing jointly. If your income exceeds this there may still be the possibility of a partial credit, but nothing if you make more than $95,000 per person per year. To get the credit you would close on the property as usual. Then come tax time, if you fit that income bracket, you claim the available $7,500 credit on your tax return. For example, if you owed $1,000 on your federal taxes normally, your return would be $6,500. If you were getting $2,000, you would instead get $9,500. Going forward, over the course of the following 15 years you would pay back the credit, remember interest free, as part of your tax filings. The figure comes out to roughly $500 due per year. This works the same way, at tax time if you were getting back $1,000 normally, you would instead get $500, and pay back the other $500 towards the annual principal owed. Something to consider is that in the event that the property is sold before the 15 years, the balance would be due at the time of sale. However, if there is no appreciation the loan is forgiven. Likewise, if the property is converted to a rental or investment property the outstanding balance of the loan would be due at the time of conversion. This and other government programs exist to help homeowners. The trouble is that homeowners and especially new homebuyers aren¢t made aware or are often times confused by these programs. United Mortgage Services takes pride in educating and supporting our customers, and we would be happy to help you in any way we can. Please feel free to contact Geno Tucci for more information on this or any other loan related issues:


Geno A. Tucci, Sr. - Founding MemberResidential / Commercial Loan SpecialistUnited Mortgage Services, Inc.630-640-5031 (cellular) 630-396-3132 (fax) gtucci25@yahoo.com
www.unitedmortgageteam.com

First time buyers -- act now!

On Sunday, I was exhibiting at a Bridal expo in the Chicagoland area and was very privileged to meet several potential first-time buyers. Thinking of the excited couples, I am envious of them in one respect -- many of them are in a position to buy and do not have to worry about selling. Now I am not saying it is a bad time to sell --- I actually think it is a good time in many cases, but it is DEFINITELY A GREAT TIME TO BUY!

Why? Well, prices are at very low levels, with fall here and winter fast approaching, many sellers are getting nervous and will take any reasonable offer. Interests rates are still very low, and this is important because this is likely to change in the next year. Yes, I know, loans are tougher to get, but I work with a team of professionals who always do a great job.

So, for those of you who I met Sunday or others who are considering buying, please act now and contact me today so that you can take part in this wonderful buyer's market!

10 reasons why the fall/winter is the best time to Sell!

That's right, you did not read that wrong! There are several reasons why the fall and winter is the best time to sell.

Take a moment to consider all these. Why wait till spring -- when there is more and more competition! Make your move now and get on with your life!

1. Buyers looking are truly serious
2. Your house looks great decorated
3. People are always looking 365 days/year
4. Less competition (less homes on the market)
5. Moving costs are usually less expensive
6. Interest rates are still good
7. May be a tax benefit
8. Easier to schedule a closing
9. Be in your new home for the New Year
10. More time to shop while I show your home

Why it is essential to be represented by professionals in real estate transactions

When thinking about what duties Realtors perform in the sale of a home, many people assume our main job is marketing. And on the buying side, many assume our main duty is to set showing appointments. While marketing and setting up appointments are part of a Realtor’s job, it is hardly the main function or most important.

In my opinion, the most important function of a Realtor is to protect our client’s best interest.

Recently I represented a buyer in the purchase of a home in Bellwood. My client, whom I’ll call Vivian, was a first-time buyer. After showing her a few homes, she fell in love with a home in Bellwood. I then educated her about what similar homes recently sold for in that area and she made an offer. A day later, we received a contract back signed by the owner. Sounds pretty simple huh? Well, the simple truth is without a team of professionals, she would have never closed the deal and gotten the keys to her home.

That’s because of several factors. First, although we had a signed contract, it didn’t mean anything because the seller turned out to be in pre-foreclosure and had to get approval from their lender to sell their home. After explaining that the home was being sold “short,” Vivian wanted to move forward with the purchase. In situations where the home owner owes more than his home is worth, he must get permission from his lender to take a fair market price. In this case, I was told that the lender had approved the asking price and given an estimate of three weeks for approval. Knowing that short-sales typically take two-three months, I prepared Vivian that possibility. In the meantime, I recommended a mortgage broker to her and made sure she had everything lined up and ready to go. I also explained why it is imperative for her to work with a real estate attorney and put her in touch with an excellent attorney whom I work with often.

It took three months for lender approval, which was in line with the original timeframe that I estimated for Vivian. Once we received approval from the lender, we scheduled the closing date! Ironically, even though my client had a mortgage commitment and was ready to go weeks before, the seller’s lender told us that we had to close on the scheduled date or they would foreclose on its seller. I know it doesn’t make sense, but short-sales and the way lenders work is a discussion for another time. Regardless, we had a scheduled closing so the hard part was over….right?

Like many suburbs, the Village of Bellwood requires a city inspection before they will release tax stamps, and without the stamps, a closing cannot be completed. Once the closing was scheduled, I called the village to schedule the inspection but was told that the seller would have to schedule it. After checking with the village every so often, I was told that the seller had it scheduled and it would take place about 10 days before the closing.

Well the closing date arrived and Vivian, her attorney and I arrived on time. After a few minutes we were told that the seller’s attorney was at the Village of Bellwood picking up the tax stamp. [The seller never told us that the stamps were not issued after the village inspection 10 days before.] After another hour of waiting the title company informed both parties that they had to transfer funds within 15 minutes or the closing would not take place! Remembering that the seller’s lender said we had to close on that day or the deal would be off, I got on the phone to the seller's attorney and was told that he had the tax stamps in hand. He then called the title company representative, told her the same thing and we were done ….but not quite!

The title company representative took the seller’s attorney word and transferred the funds. At this point, my client was congratulated and we thought we were just waiting for the seller’s attorney to bring us keys when I received another call! This time, the seller’s attorney informed me that he did not actually have the stamps. He said that he was sure he’d get them and didn’t want to ruin the deal so he had told us a lie! He added that there was a “small problem.” When I asked what it was, he said the village wanted to hold money in escrow to ensure that my client brought the property up to city code. Then he told me how much the village wanted from my client -- $11,000. I knew that my client did not have an extra $11,000 and for a few minutes I thought the deal was dead. I told Vivian the situation and could see the disappointment on her face. In fact, I was surprised that she didn’t cry. I probably would have if I was in her position.

After huddling with my client’s attorney, her position was that the property was closed and that the title company should be on the line for the $11,000. They approved the transfer and now would have to go after the sellers’s attorney for the money! While this sounded good in theory, I knew in reality that the only way my client would get the home would be after a long legal battle. I knew there had to be another way.

Vivian’s attorney and I both made several calls and in the end we got the $11,000 escrow reduced to $160. That’s right --- we got it reduced by $10,840
How’d we do it? I could probably write a book about that, so all I’ll say here is that we were persistent and tenacious and I am very happy to report Vivian closed and moved in!

To me, it scares me that some people would attempt to buy a home without professional representation. I can’t imagine if my client forked over $11,000 for a ridiculous village escrow. Even if she would ultimately get the money back, she would have to make several costly repairs and upgrades that her attorney and I convinced the village were unnecessary. On the flipside, if Vivian didn’t pay the escrow, she would not have been able to close that day and the lender would have foreclosed on the seller. Either scenario would not have been good for Vivian.

I hope this example gives you a little insight into some of the ways Realtors and other professionals help their clients. If have any questions about short sales, foreclosure properties or other real estate issues, contact me anytime! Also, you can see a list of attorneys, mortgage professionals and home inspectors that I recommend by clicking here.

Your friend and Realtor,
Robert Chiarito

This is Not The Great Depression

Comparing the current crisis to the Great Depression is just plain wrong, say historians and veteran financial experts."The nomenclature of the word 'crisis' has cheapened," says Roy Smith, a professor at New York University's Stern School of Business and former partner at Goldman Sachs .

“The Great Depression had thousands of banks failing and people losing their life savings, 25 percent unemployment and social unrest and tent cities of the poor," says Allan Sloan, Washington Post and Fortune magazine columnist.

"With just 6 percent unemployment, we are having a debate as to whether we are even in a recession," says Richard Sylla, professor of the history of financial institutions and markets at New York University.

Rain, Rain, good for buyers? YES!

With the amount of rain that we've had over the last few days, you may be tempted to rent movies and be a couch-potato. Well, if you're thinking of buying real estate (and this is a great time for buyers!) this weekend is a great time to preview homes. After all, we've had nearly 10 inches in some areas and if you have any concerns or seepage, I would advise viewing homes in the next couple of days.

Give me a call and I'll hapily make appointments for you! I can be reached at 847.878.3724 or via email

Advice to help save your home

When you can't make payments, communication with lender is critical

Who's been facing foreclosure? Homeowners of every description.They range in age from 22 to 79; many either have no income or earn more than $100,000 a year, live in a modest or affluent community. Their ranks are multiplying fast, and if they seek the free counseling offered around the state, can usually avoid an adverse court judgment, according the DuPage Homeownership Center in Wheaton."Don't despair," said Sheila McCann, development director of the center, which offers free counseling for homeowners. The owner who misses some monthly mortgage payments should immediately contact the lender and a counselor approved by the U.S. Department of Housing and Urban Development. "The earlier they start working on the situation, the more options they have."Of 229 clients who sought counseling at the center since early 2007, only six have been foreclosed upon, said Judy Graves, a housing counselor at the DuPage center.
Usually, a combination of problems has brought distressed homeowners to the precipice. They have little equity in the property, an interest rate adjusting upward and a personal crisis such as a job loss, excessive debt, medical problem, divorce or other family upheaval."With easy credit, they built a house of cards, and with one breeze it all tumbles down," said Graves.The foreclosure process is predictable and gives the homeowner several months, sometimes nine or more, to resolve loan issues, Graves explained.Here's what to expect:•Typically, if you miss three monthly mortgage payments, the loan servicer will send you a letter stating the intention to foreclose.•Within 30 days, an attorney will file a complaint in court stating the loan servicer will foreclose. You will be served a complaint of foreclosure, which gives you 30 days to file an answer with the court. Filing a response ensures you will know of future proceedings and gives you a chance to dispute the lender's claim. •During a court hearing, the lender's attorney will file a motion requesting a default judgment against you. The court may then enter a judgment against you and set a foreclosure date, which may be three months after the court judgment or seven months after you were first served with the complaint, whichever is later. •If the residence is put up for sale, a public auction is held at which anyone can bid. The lender, seeking to recover the outstanding balance, often will purchase the house and sell it privately. •Once the house is sold by the lender, a court holds a hearing to enter an order declaring it sold. It then usually stays the order for 30 days to allow the original homeowner time to vacate.•If you remain in the house, a sheriff will post an eviction notice and date. If you have not left within that time, the sheriff will enter the house and remove your belongings.Delays in the process may arise if the borrower works out a repayment plan with the loan servicer after the default. Even up to setting a date for a sale, if you can resume loan payments, the lender may work with you to reinstate the mortgage."Lenders want people to stay in their houses, and they don't want the expense of foreclosure," Graves explained. A lender can work with a borrower by agreeing to partial or no payments if a resolution is in sight such as the homeowner starting a new job. The lender may modify loan terms to make it more affordable or set up a repayment plan. If the house has been on the market for more than 90 days, the lender may agree to a short sale, accepting a sale price that is lower than the mortgage balance or a deed instead of foreclosure, which absolves the borrower of further responsibility.But foreclosure can have serious repercussions. You may not be able to obtain another mortgage for as much as five years, and foreclosure can substantially reduce your credit score, said Graves.Jingle mail, meanwhile, is not as merry as it sounds. Mailing keys back to the lender, doesn't leave the mess behind. You may end up with credit problems, a court judgment rendered against you and a debt remaining after foreclosure."The only option is to pay [the remaining debt] or file for bankruptcy," said Graves.

Chicago Area Homes Sales Plunge 29 Percent

Sales of existing homes in the Chicago metrpolitan area plunged 29 percent in May from the year-ago number, and the median price slipped 0.5 percent to $251,000, the Illinois Association of Realtors said Thursday.
There were 6,927 homes sold in the nine-county region last month, compared with 9,751 sold in May 2007, the association said.
» Click to enlarge image
A worker walks in front of a sold sign in Palo Alto, Calif., Tuesday, June 24, 2008. Sales of existing homes edged up slightly in May although median home prices continued to fall, Thursday, June 26, 2008. (AP)
Month-over-month sales showed improvement, rising 13.7 percent in the metropolitan area from April. In the state, sales rose 17.3 percent, the fourth consecutive month-to-month increase.
“Forecasts for the next three months suggest continuing declines in home sales compared to the same months last year, but month-to-month forecasts suggest positive growth in June, declines in July, and almost no change in August,Ó said Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory of the University of Illinois.
Nationally, sales fell 14.5 percent in May from a year ago, and the price fell 6.3 percent to $208,600, the National Association of Realtors said. That was the fifth biggest year-over-year price decline on records that go back to 1999.
But month-over month sales rose by 2 percent from April to 4.99 million units. It was only the second sales increase in the past 10 months, but it was not viewed as a sustained rebound. Many economists believe that prices will have to decline more before the housing industry can mount a sustained recovery.
Paul Bishop, senior economist for the Realtors, said that for the past few months sales have been rebounding in parts of the country that had been hardest-hit by the housing bust, while sales have weakened in some areas that formerly had been immune from the overall downturn.
Distressed areas that now are seeing sales gains included Sacramento, the San Fernando Valley and Monterey in California; Sarasota, Fla.; and Battle Creek, Mich.
The inventory of unsold homes dropped by 1.4 percent to 4.49 million units, which represents a 10.8-month supply at the May sales pace, down from a 11.2-month supply in April. That’s still about double the inventory level that existed during the five-year housing boom.
‘‘Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets,’’ said Lawrence Yun, the Realtors’ chief economist.
However, rising mortgage foreclosures are dumping even more homes onto the already glutted housing market.
Many economists predict sales will keep falling through the summer and prices will not start to rebound until the spring of next year.

Contributing: AP

Foreclosures ousting renters, group warns

The Woodstock Institute, cruncher of foreclosure numbers in the Chicago area, has provided a glimpse at how the mortgage lending crisis is hitting renters.
In some neighborhoods, the majority of foreclosures involve small apartment buildings, the institute said. It found that the two- to six-unit buildings accounted for almost 87 percent of foreclosures in West Garfield Park last year. North Lawndale, the Lower West Side, East Garfield Park and New City had more than 70 percent of their foreclosures in those buildings.
The institute reports that 12 lenders are involved in at least 75 percent of all city foreclosures. The Lawyers' Committee for Better Housing used that data to check this year's eviction records in Cook County Circuit Court. It found that these are the lenders most active in eviction of renters: Deutsche Bank, Bank of New York, Wells Fargo & Co. and LaSalle Bank.
Without efforts to keep the units in foreclosed buildings rented, the institute warned that the loan crisis will diminish the supply of affordable apartments and destabilize communities.

US home prices fall at record pace

The gloom enveloping the US housing market intensified on Tuesday as home prices dropped at the fastest annual rate since records began 20 years ago.
The Standard & Poor’s/Case Shiller national house price index fell 14.1 per cent in the first quarter of this year, compared with the same period a year earlier, a decline that threatens to delay any recovery in the broader economy.
Recent data, including the latest jobs report, have painted a picture of a domestic economy that is slowing but not yet in recession territory, a point that may gain further ground on Thursday when the US government is expected to revise higher its initial estimate of first quarter economic growth.
But US consumers do not seem to be getting the message. Consumer confidence plumbed a 16-year low this month, as rising food and petrol prices combined with the housing slump to dampen expectations.
The consumer confidence index produced by Conference Board, the research body, fell to 57.2 in May from 62.8 last month, the lowest reading since October 1992.
This blow to consumer sentiment could cause spending to weaken further in the coming months in spite of the boost from more than $110bn in tax rebate cheques, the first of which began arriving this month. “Plainly, the pending tax rebates are viewed as a one-off and not enough to offset a slew of other negative factors,” said Alan Ruskin, strategist at RBS Greenwich Capital.
In an an interview with the Financial Times this week, Alan Greenspan, former chairman of the Federal Reserve, said house prices would fall by another 10 per cent from their February levels, for a total peak-to-trough decline of about 25 per cent.
The S&P/Case Shiller 10-city composite index fell a record 15.3 per cent in March compared with a year earlier, while the broader 20-city index fell by 14.4 per cent. Of scant consolation was a slight slowing in the pace of month-on-month price declines and an in-crease in prices in two metropolitan areas, Charlotte and Dallas.
House price depreciation remains most acute in areas that bore the brunt of a speculative property boom earlier this decade. Las Vegas, for example, recorded an annual drop of 25.9 per cent in March. “The steep downturn in residential real estate continues,” said David Blitzer, chairman of the index committee at Standard & Poor’s. “There are very few silver linings that one can see in the data.”
New home sales rose by 3.3 per cent in April to a 526,000 annual rate but the improvement owed much to a sharp downward revision in the previous month’s figures. On an annual basis new home sales have fallen by 42 per cent, the most in almost 27 years.

15 CHARGED In Building Bribe Case| 'We're talking a systemic culture of greed'

Cash bribes allegedly changed hands at the Starbucks across from City Hall, at a nearby Dunkin Donuts and in front of Oprah Winfrey's Harpo Studios.
The bribes were said to be as small as $100, and as large as $12,000, and some came in the form of box seats to a Chicago Bulls game.
Fifteen people were arrested and charged in an investigation involving allegations of corruption and bribery in the city’s Building and Zoning departments. Among those charged were Dumitru Curescu, Phyllis Mendenhall, Petru Cladovan, and MacArthur Milam.

They all went toward the same cause: fabricating or expediting city inspections, federal authorities charged Thursday.
Seven city employees -- and eight others -- who allegedly passed or pocketed bribes to grease city deals, were charged in a sweeping federal probe into what authorities called a "systemic" culture driven by greed.
Much of the investigation, led by the City's Inspector General, U.S. Postal Inspection Service and the FBI, stemmed through the work of a mole who caught incriminating conversations on tape. On several occasions, the mole, who acts as a bagman, takes the bribe after the person agrees he or she is "willing to pay what it takes."
While 15 people were charged, the mole told authorities of 15 others who were bribed.
"There's every reason to think there are more charges to come in the future," U.S. Attorney Patrick Fitzgerald warned. "There are people who have taken or given bribes who ought to be sweating."
City Inspector General David Hoffman said the bribes persisted despite a round of inspector arrests in 2007 on bribery charges. The employees taking the bribes are paid; "good salaries with excellent benefits," he said.
"We're talking systemic corruption," Hoffman said.
City employees charged include: plumbing inspector Mario Olivella, 40; zoning investigator William Wellhausen, 50; supervisory ventilation and furnace inspector MacArthur Milam, 56; inquiry aide Phyllis Mendenhall, 54; zoning department investigator Anthony Valentino, 65; ventilation and furnace inspector Thomas Ziroli, 62; and clerk Louis Burns, 52.
Two of the developers charged -- Beny Garneata, 43, of Lincolnwood and Teofil Scorte, 27, of Morton Grove -- are clients of James Banks, one of the city's top zoning lawyers whose uncle, Ald. William Banks, heads the City Council's Committee on Zoning.
Garneata was referred to on a recording as a "hot stud," by city employee who allegedly took his bribe as he awaited in a black SUV in front of "Oprah's place," according to a court filing. Garneata and his companies have donated $23,000 in campaign contrbutions since 1999 includong $5,600 to Gov. Blagojevich and $4,000 to the 36th Ward Democratic Organization run by Ald. William Banks.
Wellhausen is named on the clout list that came out during the trial of Mayor Daley's patronage director, Robert Sorich. Wellhausen landed a city job with the help of Ald. Bank's 36th Ward Demcractic Organization, according to the clout list.
Other property owners, developers and contractors charged include: Petru Cladovan, 48, who owns ABC Construction & Plumbing; Dumitru Curescu, 46, and his wife, Lavinia Curescu, 42, Vasile Fofiu, 57, Ronald Piekarz, 47 and Lucian Muresan, 34.
A series of criminal complaints, authored by postal inspector David Hodapp and FBI Special Agent Tom Simon, unsealed Thursday, outline a pattern of bribery to speed the city's permit wait time. In one case, a bribe ensured one developer could add "illegal dwellings" to a building, another ensured a faulty porch passed code. "Just tell him he had a number of ... issues and you know, he got passed anyway," Valentino is allegedly caught on tape saying.
Asked how taxpayers can have faith in the safety of Chicago buildings when so many employees are on the take, Mayor Daley said, "You're talking about a few. You cannot condemn everybody for a few."
Daley noted that the investigation originated with the former federal prosecutor he hired to root out City Hall corruption from within. Never mind that Daley and Hoffman have been at loggerheads for months and the mayor's office has apparently been undermining Hoffman behind the scenes.
Daley was hardpressed to explain why corruption in the Buildings Department continued more than a year after the first wave of indictments.
FBI chief Robert Grant said city inspectors hold the critical job of enforcing building code -- and that structures are built safely. Skirting the code means putting people's lives at risk, he said.
"You don't find that risk until something tragic happens," Grant said. Olivella, the plumbing inspector, who wore a yellow t-shirt in court that read: "It'll be ... SWEET AS SUGAR," seemed to take the charges in stride. Upon leaving the courthouse he joked with an acquaintance: "If you ever need plumbing -- don't call me."

Bill won't fix mortgage mess

Editorial from today's Chicago Tribune:

Paying a home mortgage is not easy for most people—it takes a big chunk of their income, and it means forgoing other spending. But the vast majority of homeowners manage to do it every month. For those people, the U.S. House of Representatives has a gift: the opportunity to rescue mortgage holders who face foreclosure because they took on a bigger debt than they can handle or bet that housing prices would keep rising forever. President George W. Bush has threatened to veto this legislation, and he should stick to that vow. The plan would make taxpayers atone for the sins of the least responsible borrowers and lenders, and it would push the federal government into a dangerously large role in the national housing market. It's been said that a government that robs Peter to pay Paul can always count on the support of Paul. But this time, objections from Peter may stand in the way. A recent Gallup poll, which asked if Americans support "the federal government taking steps to prevent people from losing their homes because they can't pay the mortgage," found 56 percent saying yes and 42 percent saying no—even though the question didn't mention that it might cost taxpayers money. But this package would. The Congressional Budget Office says the tab would come to $2.7 billion over the next five years. Given that information, a lot more of the Gallup respondents would no doubt reject the idea. The gist of the bill is simple: If lenders will agree to cut the balance by at least 15 percent and offer a 30-year fixed rate, the Federal Housing Administration would agree to guarantee repayment. This would theoretically help both homeowners and banks, since both lose in foreclosure. The rest of us are supposed to benefit because the aid would help halt the slide in home prices.In reality, that would be a mixed blessing at best. Falling real estate values are not a good thing for the economy, but they are an essential corrective to the housing frenzy of the last few years, and the sooner they bottom out, the better. Lower home prices will be painful for those who overextended themselves expecting just the opposite. But they will be a blessing to others who were priced out of the market. Once prices reach a new equilibrium, buyers can be expected to jump back in, and banks can be expected to offer financing. That process already may be under way: Mortgage applications jumped nearly 16 percent last week. The truth is, many of the loans eligible for the FHA guarantee will end up going bad anyway—to the detriment of ordinary taxpayers. Alex Pollock, former president of the Federal Home Loan Bank of Chicago, told Forbes.com, "FHA delinquencies tend to be quite high . . . You're in a sector of the market that is by definition risky." And that's before the FHA ventures into this risky new territory. Right now, amid this alleged crisis, more than 95 percent of mortgagees are not delinquent on their loans. This mortgage bill penalizes them for their good judgment and discipline, which is ample justification for the veto President Bush has promised.

WSJ columnist says the housing crisis is over!

The Housing Crisis Is Over
By CYRIL MOULLE-BERTEAUXMay 6, 2008; Page A23

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.
Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.

Important fire safety tip with video

We were always told that we shouldn't throw water on a fire in a frying pan because it could make it worse. But, wow! Did you ever really know what that meant or how much worse it could be? No, then take a look at this. The water, being heavier than the oil, sinks to the bottom where it instantly becomes superheated. The explosive force of the steam blows the burning oil up and out. Inside the confines of a kitchen, the fire ball hits the ceiling and fills the entire room. Also, do not throw sugar or flour on a grease fire. One cup creates an explosive force like dynamite.

Say goodbye to the specialized mortgage options

Like a spreading infection, restrictions on credit are moving into new and more specialized niches of the mortgage market. The latest to feel the pinch:
•Cash-out refinancings.
•Loans with anything less than full documentation of borrower income, credit and assets.
•Mortgages for certain second-home purchases.
•Investment loan applications for a buyer who owns at least three other rental properties.
•Mortgages to borrowers with scant information at the three national credit bureaus.
•Short-term construction loans that convert to permanent mortgages.
•Adjustable-rate mortgages where the first occurs within 60 months after closing.

In a lender bulletin issued April 22 and scheduled to take effect for all loans delivered after Aug. 8, Freddie Mac said it plans to restrict financing to second-home and investment real estate purchasers who have "individual or joint-ownership" interests in multiple properties. In the case of second-home buyers, they will be ineligible for new mortgages through Freddie Mac if they have ownership interests in more than a total of four properties securing debt, including the one they propose to finance.Similarly, loans for rental houses, rental condos and other investment properties will be ineligible if the borrower has ownership stakes in a total of four units. Previously, Freddie allowed investors to own up to 10 rental properties carrying mortgages. Freddie Mac also announced new reductions in refinancings where the property had secured a "cash-out" refinancing in the prior six months. The company defines a cash-out as any refinancing where the replacement loan balance exceeds the previous balance by 5 percent or more. Recently, according to the company's quarterly surveys, more than 80 percent of refinancings involved equity-depleting cash-outs.Meanwhile, private mortgage insurers, who provide loss coverage for lenders and investors on loans where down payments are less than 20 percent, also are rolling back a variety of products, especially in areas they define as distressed or declining.Genworth Financial, one of the largest insurers, recently told lenders that it no longer will consider applications for second-home purchases anywhere in Florida after May 5. Also as of that date, Genworth will not touch cash-out refis, investment properties, non-traditional credit applications, construction/permanent loans or adjustable-rate mortgages with initial adjustments within the first five years in all "declining/distressed" markets.PMI Group, another high-volume insurer, banned cash-out refis, limited-documentation loans and all mortgages secured by investment properties in "distressed" markets. In non-distressed areas, cash-out refis on second homes and rental houses no longer are eligible for coverage, nor are interest-only loans on investment real estate and all mortgages on properties containing three to four units.PMI boosted minimum credit score requirements for "jumbo" loans nationwide to a 700 FICO and will require at least 10 percent down. MGIC, the largest private mortgage insurer, recently eliminated coverage nationwide of "option-ARM" loans that have scheduled or potential negative amortization features that increase, rather than reduce, borrowers' principal monthly debt. In the boom years, option-ARMs were wildly popular in major metro markets. The company also no longer will insure cash-out refis using limited documentation, temporary rate buy-downs on investment real estate and non-traditional credit applications to buy second homes.Lenders and insurers are studying the sources of their greatest losses from mortgages made between 2003 and 2007. Where they see inordinate risk, they are eradicating it.