Black and Buono Blog

Up! Again! It is refreshing to see home sales on the rise, consistently. Massachusetts single-family home sales were up in September for the third straight month when compared to the year-ago month.

Single-family home sales  jumped nearly 10% last month when compared to September 2010.

But on a month-to-month basis, sales dropped nearly 18% compared to home sales in August. Massachusetts Association of Realtors reported that it is typical to see a drop-off between August and September sales figures.

The Boston-based Warren Group, which tracks the state's real estate market, reported a 7% increase.

The boost was credited to historically low interest rates.

There was nearly a 2% increase in the median sales price to almost $295,000. Condominium prices were also up.

If this news give you the confidence and motivation to buy a new home or to sell your existing home, you need a real estate attorney to look out for your interests. Contact Black and Buono.

...by Kiley Black

When buying or selling property, it is important to have the expertise of a real estate attorney to help you through any obstacles that may come up along the way. The risk of not hiring a Real Estate Attorney can cost a buyer/seller thousands if not tens of thousands of dollars. Since the purchase or sale of your home may well be your most significant financial transaction, you want to take care when entering into a real estate transaction.

Most people don’t realize how complicated buying and selling a house can be. The procedure requires reading and drafting complicated legal documents and familiarity with real estate transactions. If you have bought or sold a home, or know anyone who has, than you understand that the amount of paperwork involved is legendary. Each step from negotiating terms to drafting and closing entails a significant amount of paperwork.

Most people buy or sell a home once or twice in their life. Real Estate Lawyers handle this transaction every day. And each transaction is different, with different obstacles and situations.

The process of buying or selling a home includes the following:

1. Negotiating the terms of the Sales Contract. Everyone wants the best deal and a lawyer can help you protect your interests.
2. Strict legal deadlines: Many transactions fall through because deadlines are not met.
3. You need financing: At closing the purchaser signs hundreds of loan papers that an attorney can best explain.
4. Home inspections: A real estate lawyer will conduct a title search to assure the seller is the owner of the property, has paid all the taxes, and there are no judgments existing against the property.
5. Property and mortgage insurance: Mortgage lenders require that the home is insured

...by Kiley Black

There are many people across Framingham, Marlborough, Worcester and Natick that think they cannot sell their homes because they owe more than their house is worth. This is called a short sale. You may also hear it referred to as “being underwater”. Many people think they can’t sell their home because the house prices are dropping in their town.

You are not alone in this situation. Due to the downturn in the housing market, there are many home owners who have found themselves in the same situation. The most vulnerable are those who bought their homes within the last five years or so and now need to sell either because of a life change or a financial problem. Home prices in many cities and towns across Massachusetts are much lower than they were at the peak of the market, and there are associated costs to selling your home.

Much of the time, your lender will want proof that you cannot sell the house for the amount that you currently owe on the property. The lender may require that you list your house for some amount of time, usually 90 days, before they will consider a short sale or reworking the terms of the note. Mainly, the bank is trying to minimize their loss and assess their risk in re-establishing a new loan for the new buyer.

You should first talk to your lender or bank to see what they require for a short sale. Get everything you can in writing.  A real estate attorney can help you with the process. You will need an attorney when the bank is ready or working on accepting the offer.

You most certainly need a realtor to give you a fair market value for your home and then list your home based on the bank requirements.

Short sales can take a lot of time. The negotiation could take months. If you are selling your home as a short sale, you may have a tax liability equal to the difference between your loan balance and today's market value. The debt may or may not be forgiven by the lender, depending on your assets and financial status. This is another reason you should have a real estate attorney involved; you certainly don’t want any surprises after the fact. 

Have you weathered the Great Recession fairly well?  Has your income and credit rating remained untouched?  Are you still paying your mortgage on time just fine?

Has the high rate of business failures or record job losses not affected your household directly?  Has the record number of foreclosures not affected your family directly?        

If you answered “yes” to these questions, you are fortunate in America today.   You may feel you have been smarter than those in trouble or lived within your means unlike them.  This may be true.

You may have little if any compassion for those in foreclosure.  Yet, as the ramifications of a prolonged recession and real estate market meltdown continue, it may also be true that for the grace of God go you.

As we all know, the housing market came crashing down around America in 2008.  It’s still in a smoldering heap of trouble in reality no matter the political spin.  The result is deep pain that will leave lasting scars mainly on the non-political and non-connected class of Americans.  

There is plenty of blame to go around – Congress, Wall Street, banks, mortgage lenders, and even some home buyers.   The sub-prime loans caused the first collapse along with the sub-prime adjustable rate mortgages (ARM).  With 80% of Option ARM, including interest only, loans allowing for homes to be  negatively amortized, top-tier borrowers can also end up in real trouble when the loan resets.

As more ARM loans reset, many homeowners will see their house payments double and even triple.  Add in the continued high unemployment going into 2011, and things could get a whole lot worse again before it gets better with the already record foreclosure reality of 2008-2010

The first cause of record foreclosures may very well be written off with little collective sympathy by many as a result of “those who lived above their means and should never have gotten the mortgages they did.”

The recession is moving into its third year, and the recovery has been the worst since the Great Depression.  The official unemployment rate has remained at or above 9% for a record setting 21 months.  The official rate only counts those that are collecting unemployment benefits.

On December 8, 2010, the Labor Department released its 2009 work report.  In 2009, there was an increase of 2.7M long-term unemployed Americans looking for jobs in 2009 over the 2008 total. There were 5.8M job seeking Americans that had no work at all in 2009.

In 2008 and 2009, there was a net loss of approximately 8 million jobs.  In 2010, it was first estimated 1.1 million jobs were created.  The Labor Department’s January 2011 report revised this figure down to report 950,000 jobs were actually created in 2010.  So far in 2011, the monthly net job growth has not kept up with population growth.

On March 4, 2011, the Labor Department reported the unemployment rate dropped to 8.9% in February 2011.  They reported a loss of 36,000 jobs in February.  Was this lower job creation number really due to “snow storms” as presented by the White House – no.  Is this .01% unemployment rate decrease great news as spun politically – not really.

Did you know the Labor Department’s February payroll employment figures counts people as employed if they receive only one hour of pay for the period?  Do you consider yourself employed if you worked one hour in February?  Can you make your mortgage payment on one hour of pay for the month?  

Most experts agree the estimated reality unemployment rate, which takes into account those that want jobs that do not qualify for unemployment benefits or have exhausted the 2 years of benefit eligibility, is between 15-20%.

The second cause of record foreclosures is a result of prolonged unemployment that has exhausted the assets, savings, and even retirement accounts of many trying to hold on to their home.  Some have just walked away and maybe some who have not should.  Others have become squatters in their homes waiting for the final foreclosure eviction notice.  Some are so cash strapped they simply can’t afford to move.

There is a lot of prolonged pain in America in 2011.  Digging out of the foreclosure mess may take 2-5 more years, but it must be done.  It must be well thought out and socially conscience while maintaining fairness and reality.  It can be done, and it must be done.

Bryan sums up the seriousness of the situation. “The statistics surrounding this crisis are staggering. Since 2007, over 3.2 million Americans have lost their homes to foreclosure, causing housing prices to fall 27%. However, this is just the tip of the iceberg. An additional 2.2 million homeowners are currently in foreclosure.”

He continues, “A further 4.7 million borrowers are at least 90 days delinquent on their mortgage, and it is only a matter of time before foreclosure proceedings are initiated against these homeowners. This means that we are potentially not even one-third of the way through the foreclosure process.”

He concludes, “Moreover, if housing prices stagnate or fall further, we could see many more defaults as more than one-quarter of all homeowners in America, about 15.7 million people, have no equity in their homes. As a result, if we do nothing, as many as 12.5 million more homes could potentially be lost to foreclosure. It is impossible to overestimate the impact this would have on the economy as a whole.”

Bryan and his wife Susan Ganz felt a personal calling to act for their community. "Scudder Bay was formed by me and Susan in late 2009 to help resolve the mortgage crisis in New England in a socially responsible manner.  Scudder Bay purchases nonperforming loans in New England from banks and other financial institutions and works with deserving and cooperative homeowners to make the best out of a bad situation.”

Bryan works with a philosophy to decrease the pain.  “At Scudder Bay we believe working with homeowners in a socially responsible manner, rather than in an adversarial manner, we can reach the best solution for both the homeowner and our investors.  We can shorten the time it takes to come to a resolution and avoid unnecessary legal fees.”

“In addition, by working constructively with the homeowner, in those cases where we have to take title to the home, it is generally in much better condition than it would be if we had to foreclose and evict the homeowner.”

Elliott has seen a divide in attitude toward helping homeowners facing the pain of foreclosure, even within the professional real estate community.  “I was shocked at the split on Active Rain.  Many people were sympathetic, and some were downright angry when I wrote about my failure in being able to assist borrowers in trouble who wanted to climb back on the bus and start paying.”

He explains, “About 75% shared their own stories with me, and they were touching. The other 25% were rude and unfeeling.  They responded I didn’t understand the workings of capitalism.  Some noted I was naïve in understanding the restrictive terms the banks are operating under.”

Elliott also notes, “Some asked why I was defending people who signed a contract and now want to get out of it. These were the timbre of their responses. I admit it was scary for me to hear so much anger.”

Bryan details opinions are mixed in his talking with friends and acquaintances on the subject too.  “Some people believe a contract is a contract and that those in foreclosure should be forcibly removed from their homes as quickly as possible”.

He notes, “Others believe that the lending institutions are to blame, and they should be forced to modify loans to keep homeowners in their homes.  As with most issues, the majority of people seem to be on the extreme ends of the spectrum with few people occupying the middle.”

Bryan concludes, “If our work at Scudder Bay has shown us anything, it is there is plenty of blame to go around.  There are bad actors on both sides of the issue, from shady lending institutions that made outrageous loans with no consideration for the borrower’s ability to pay to unscrupulous borrowers who refinanced their homes and then never made a single payment.”

One thing is for sure.  Not effectively addressing America’s foreclosure mess will only prolong the pain for everyone – people, business, and government.  A recovery plan must be realistic.  It must not create a whole new set of problems to deal with in digging out of the original mess.

Real solutions must also reflect the problem involves real homes, real people, real lives, and real pain.  As a part of the working solution, “shared sacrifice” will have to include true compassion in understanding the tragedy – even if you were spared directly.

Capitalism is not evil.  Not all profit is evil.  Not all politicians understand or care about the benefits only capitalism can bring to a situation.  This situation does call on capitalists to be leaders in creating lasting resolution.

We will explore these truths further in the coming articles in the series with the working insights of experts Elliott Topkins and Bryan Ganz.  Our 5-part series on the “Digging out of America’s Foreclosure Mess” will include:

Part 1 - Prolonged Pain
Part 2 - Failed Government Intervention
Part 3 - New Government Programs
Part 4 – Socially Conscious Private Investment
Part 5 – Working Investor Solution

By Brenda Krueger Huffman-AXcess News

The risk of venturing into home ownership has been keeping many potential buyers from entering the market and the housing sector continues to struggle as a result. Mortgage interest rates are currently on the rise and the last several weeks are revealing an upward trend for long term rates. American citizens are looking for stability and predictability to help them make the jump into the home buying process. Predictability however, may be taken away.

One carrot that has been dangled to help promote home ownership is the primary residence tax and interest deduction that new home owners could benefit from come tax time. That deduction is on the chopping block and homeowners may no longer be rewarded as they have been in the past for taking on the risks and responsibilities of owning and maintaining a home. The national deficit is swelling more than anyone wants and the income tax deduction for mortgage interest is now a potential provision that the government may extinguish. The cut back is one that the federal government is willing to entertain as a way of working towards lowering the national deficit. It is being considered by the National Commission on Fiscal Responsibility and Reform and it is among several trillion worth of deficit cutting ideas on the table for the government to consider. All in the housing sector will be closely monitoring this push as outcomes will affect the American dream of home ownership.

Source: Stephen Johnson, Author

...By Kiley Black

Despite the fact that mortgage rates rose for the third straight week, mortgage rates are still low. However, if you are thinking about buying or selling a home, now would be the time. Because even though rates are low, (in the mid fours for a 30-year fixed), they may continue to go up through the end of this year and into 2011.

But, coming off of slightly lower numbers in existing home sales, the National Association of Realtors announced a 10.4% increase in pending home sales. This number is 20% lower than the same time last year, but there was no tax credit this year for buying a home. This national number was led by the Midwest, but, good news for the Northeast, we saw a 19.6% increase in pending home sales. What does this mean? People are getting more confident about the economy and are reacting with confidence. With confidence comes the purchase of homes. Fewer people are worried about affording a new home, and more people feel like taking the plunge.

So even though rates are going up, they are still lower than this time last year, Bostonians are buying and selling homes. With an economy doing better than expected, the rates are bound to rise. Mortgage rates in the fours are still low. If you are thinking about buying or selling, contact your Realtor today because with pending sales rising in the Northeast, it means we are ready to buy and move on.