PMI company's plan provides cash incentives for homeowners who stay put and keep up with their mortgage payments. Is that a good idea?
When we talk about ways to stem the foreclosure crisis, people who are continuing to pay their mortgages, whether their homes are underwater or not, often feel left out. Why should people who quit paying be rewarded with mortgage modifications while people who keep paying get nothing?
A private mortgage insurer called PMI Group has a plan: cash rewards for people who pay their mortgages on time.
The Responsible Homeowner Award program wasn't created out of altruism but as a way to stem strategic defaults before they happen. Nearly a quarter of Americans owe more than their homes are worth, and the percentage is much higher in hard-hit areas such as Florida, California, Nevada and Arizona.
The program aims to stem strategic default before it happens, by offering homeowners an incentive to stay put and keep paying, a cash bonus equal to 10% to 30% of the balance of the mortgage in exchange for the homeowners making payments for a certain number of years. In most cases, the cash is paid out when the house is sold or the loan refinanced.
Unfortunately, you can't go out and apply for this program. The lender has to come to you. Is your lender participating? No one knows. The names of participating lenders are not public.
New index ranks 100 cities for investment potential, but cautions that some of the best markets also present some challenges.
Maybe owning your own home isn't a great investment, but many people believe owning rental property is.
The key to making money as a landlord is buying the right property in the right location at the right time. That's not as easy as it looks.
A new analysis by HomeVestors of America, a franchise real-estate investment company, ranks 100 U.S. cities on their potential for rental profits for investors in single-family homes.
Not surprisingly, many of the top 10 cities for rental-property investment are cities where property values have fallen significantly since the boom, starting with Las Vegas.
"Overall, the highest ratings are in markets where home prices have fallen substantially, including Las Vegas, Detroit, Tampa and Phoenix. Home prices in these markets also are below average, so empty homes are easily turned into competitive rental properties," David Hicks, co-president of HomeVestors, said in a news release. "But there is also extra risk in these markets."
Sales figures show that if you want to invest in some of these markets, you're going to have a lot of competition. All-cash sales to investors, many of whom plan to rent out their properties, account for a sizable share of home sales in some markets, including Las Vegas, Phoenix and Miami.
Yet another economic analysis says that if return on investment is the issue, you'd do better in the stock market.
An analysis of home-price data for the past 30 years in California indicates that the average single-family house is not a good investment, economics professor Robert Bridges writes in The Wall Street Journal.
He offers this analysis, using the value of a median-price single-family house in California: From 1980 to 2010, the value of the house rose an average of 3.6% per year, so a dollar used to pay the house in 1980 would have grown to $5.63 by 2007 or to $2.98 by 2010, after the bust. If you had invested the same dollar in the Dow Jones Industrial Average, you would have had $14.41 in 2007 and $11.49 in 2010.
Or, he says, if you had invested your $19,910 down payment plus homeownership costs that exceeded the cost of renting in stocks, you would have had a portfolio worth $1.8 million in 2010, compared with a house worth $296,820. The Wall Street Journal has a chart comparing the Dow Jones index and the median price of a California home over the years.
"Owner-occupied homes will always be the basis for healthy and stable neighborhoods," writes Bridges, aprofessor of clinical finance and business economics at the University of Southern California's Marshall School of Business. "But coming generations need to realize that while houses are possessions and part of a good life, they are not always good investments on the road to financial independence."
A month after their new decor is featured in Architectural Digest, Ozzy and Sharon Osbourne list their Los Angeles estate for $12.999 million. Their Malibu pad is also for sale or rent.
An article in the June issue of Architectural Digest talks about how much Sharon and Ozzy Osbourne love their Los Angeles home, especially after it was redecorated by designer to the stars Martyn Lawrence-Bullard.
But perhaps the love has worn off in the last month: The rocker and his TV host wife have listed the 11,000-square-foot home for $12.999 million. Considering all the money they've put into it, they'll be selling at a loss. They bought the home for$12,388,500 in 2007.
We're not sure why they decided to sell, but the article may provide a clue. Sharon is quoted as saying: "I get itchy feet. We’ve never stayed in any place longer than seven years."
The Osbournes also have their 4,500-square-foot home on the beach in Malibu on the market for $9.5 million. They sold the Goth-themed mansion in Beverly Hills that was host to their reality show to Christina Aguilera for $11.5 million in 2007. She now has it on the market for $13.5 million.
Some cities are seeing increasing prices or smaller declines, while others can expect significant price drops in the second half of 2011.
A new report fromClear Capital shows that home prices have fallen 3.2% so far this year and are projected to fall another 2.4% in the second half of 2011.
As usual, the picture varies by location. While some markets, such as Detroit, saw major price declines this year, some cities, such as those in hard-hit areas of Florida and California, saw increases or small declines.
Five U.S. markets are expected to show higher prices in the second half of the year: Washington, D.C., New York, Orlando, Dallas and San Francisco.
"At the mid-point of the year, it’s promising to see the overall market shake off the string of declines observed since late last year, especially in light of significant challenges for the industry," Alex Villacorta, director of research and analytics at Clear Capital, said in a news release. "However, we have yet to see the burst in consumer demand to avoid posting a net loss in national prices for the year."
Clear Capital publishes a monthly Home Data Index Market Report, based on public records and proprietary data.
Skinny townhouse, less than 9 feet wide inside, was home to Edna St. Vincent Millay, Margaret Mead, Cary Grant and John Barrymore.
The skinniest house in Manhattan is for sale for $4.3 million, a hefty price tag for a building that's only 9.5 feet wide.
The four-story townhouse has a recreation room in the basement, three bedrooms and two baths, in a total of 990 square feet, plus an expansive shared backyard. Inside, it's just under 8.5 feet wide on the first two floors and just under 7.5 feet wide on the top two floors.
For Manhattan, it's a large space in a very desirable neighborhood, the West Village. We'll have to assume that location explains the price tag, though the location hasn't changed since the property sold for about half that price just over 18 months ago.
The townhouse was built around 1850 and was at various times home to poet Edna St. Vincent Millay, anthropologist Margaret Mead and actors Cary Grant and John Barrymore, according to the real-estate listing. Before it was a home, the building was a shoemaker's shop and a candy factory.
Class-action suit sheds light on common practice of recommending such services, which are the subject of many consumer complaints. HUD says it's a violation of federal law, but some agents disagree.
Are you wondering why your real-estate agent suggested you get a home warranty when you sold your house?
Perhaps it's because he received a cut of what you paid from the warranty company. A class-action lawsuit alleging that American Home Shield Corp. violated federal law when it paid realty agents a fee for suggesting its products has been settled out of court. Similar suits against other warranty companies are pending.
No one denies that home-warranty companies pay real-estate agents a fee for selling their products to clients. The question is whether this commission violates the Real Estate Settlement Procedures Act. That law bars anyone connected with a mortgage transaction from receiving a fee for referrals of "settlement services." The law also prohibits compensation for parties who provided no substantive services.
Realtors and consumer groups say payments like these are rarely disclosed to buyers or sellers but have been common in the industry for years. Typical warranty policies cost from $400 to $500; fees to realty brokers and agents range from $60 to $90. Warranty companies took in an estimated $1.5 billion in sales during 2009, according to Warranty Week.
The suit was settled without either side admitting wrongdoing. You can find details here.
Trend toward smaller homes may be slowing, survey of architects suggests, with customers interested in outdoor rooms and aging in place.
The trend toward smaller homes may be leveling off, and more consumers are considering home improvements, according to the latest American Institute of Architects Home Design Trends Survey.
One remodeling trend that shows an increase since the last survey is outdoor living space, as well as indoor-outdoor space. Sixty percent of respondents reported an increase in requests for outdoor living space, up from 56% in 2010.