For some borrowers, adjustable rate mortgages are the key

The New York Times’ Maryann Haggerty writes about The Appeal of Adjustable Rates

“THE 30-year fixed-rate loan has earned its reputation as the sensible, conservative move in the aftermath of the financial crisis, especially with near-low interest rates. But despite risks, some borrowers still are getting or keeping adjustable-rate loans, which have even lower rates.”

“Adjustable rate mortgages generally attract borrowers when rates are high. The rate is set for a specific time — generally one, five or seven years — and then it adjusts to prevailing rates within boundaries. That means payments can go up. Payment shock has caused plenty of problems over the years. [From the Ed – shows us the cases.] Rates can also go down, as borrowers who took out ARMs five to seven years ago are finding now. But it’s tough to imagine how rates could get much lower than now, short of Japan-style negative rates.”

 According to Sari Rosenberg of Manhattan Mortgage Company whom we’ve worked with, “If a person is debt-averse and has a history of paying off his or her mortgage within 5 to 10 years, then he or she would definitely consider an ARM.”

Who else would benefit?  According to Ms. Rosenberg, “I have another client who knows he is selling his home within the next few years and even with the closing costs he will be saving money,” so he took out a three-year ARM.

“Keith Gumbinger, a vice president of HSH Associates, a financial publisher in Pompton Plains, N.J., said, “ARMs are good for borrowers with short-term time frames, usually seven years or less.”

“Conversely, ARMs aren’t wise for borrowers who plan to stay put, Mr. Gumbinger said, or those who would have trouble managing rising payments. That includes people who expect cash-flow strains, such as those starting a family.”

Is an ARM right for you?  A savvy mortgage counselor can help.  Read the full story.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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Foreclosed? How long before the new mortgage?

The New York Times writes about “The Post-Foreclosure Wait.” The good news is that, “mortgage troubles won’t necessarily shut you out of the housing market forever.”

As the economy and real estate market continue to struggle, millions of Americans have lost their homes through foreclosure, short sale (when a property is sold for less than is owed) or a deed in lieu of foreclosure (when the bank takes ownership without foreclosure).

Even if you think you never want to own a home again, clean credit is important. Bad credit can make it more expensive to rent. In some fields, especially financial services, it can make it difficult to find or keep a job.

What affects recovery speed?

In a short sale where the balance is forgiven and no deficiency is recorded in public records, recovery can be quick.

A foreclosure or bankruptcy can weigh you down for years.

As long as 7 years.

But if someone has gone through foreclosure and still has a mountain of debt and not enough income, bankruptcy is worth considering, said Tracy Becker, the founder of North Shore Advisory, a credit-restoration company based in Tarrytown, N.Y. Sure, it will be another hard blow to your credit rating — but your credit most likely is already “wrecked,” at least for now, she said.

OK, so you have pushed the plunger,

And what about a future mortgage? Fannie Mae, Freddie Mac and the Federal Housing Administration set guidelines for how long a borrower must wait after a “significant derogatory event.”

There are plenty of asterisks and conditions. But to generalize, the wait is longest after a foreclosure. Extenuating circumstances like a job loss, illness or divorce reduce the wait.

With such circumstances, Fannie and Freddie specify a two-year wait after a short sale, deed in lieu, or discharge or dismissal of bankruptcy, and three years after foreclosure. Without extenuating circumstances, waits can extend to four years after bankruptcy and seven years after foreclosure.

Read the full report.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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Rediscovering Israel 2011

Realty Times has a fascinating article by Clifford A. Hockley, President of Bluestone & Hockley Real Estate Services, who writes about rediscovering Israel. It’s worth reporting in full, so here it is.

I have just returned from a three week trip to Israel. I had many wonderful experiences, too many to chronicle, but I will try to summarize some of my key impressions here:

Residential Real Estate

What struck me the most about this visit (my fourth), was the amount of construction activity occurring.

In one city close to Tel Aviv we counted eighteen (18) cranes building apartments (read condominiums). In Israel, the vast majority of construction is completed in rebar reinforced concrete (much like Mexico). In the large cities, due to land shortages, multistory buildings are being built to house the growing number of inhabitants.

In some cases throughout Israel, four story buildings are being jacked up and bomb shelters and parking is being added on the bottom and two or three more stories are being added on top. There is no lack of construction or architectural creativity.

In speaking with a residential real estate agent in Kfar Saba, a suburb of Tel Aviv, I discovered that the demand for housing keeps pushing up the apartment (condominium) prices.

This is confirmed in a January 19, 2011 article in the Global Property Guide: “Strong price increases were seen throughout the country. In Tel Aviv, the economic centre, the average house price rose 17.75% y-o-y to ILS 1.778 million (US $499,245). In Jerusalem, the 17.5% price increase pushed average prices to ILS1.42 million (US $398,216). Annual price increases in other administrative regions ranged from 15% in the South, to 20% in Haifa.

The current upswing in house prices has pushed the national average price, at ILS1.05 million (US $294,660) up by 37% during the period from Q4 2008 to Q3 2010. Over the same period, the average price in Tel Aviv has risen by an astonishing 46%, and in Jerusalem by 30%.

A housing bubble much like the American bubble seems possible. Banks have been tightening up their lending requirements. Israeli Banks look for a 20 – 40% down payment. Very few people actually own a free standing home in the major cities. Typically housing is townhouse style or condominiums in large multistory buildings. About 67 – 68% (according to 2008 survey) of the Israeli population lives in an apartment or home they own. One can estimate, the balance live either at with parents, in rentals or senior living facilities.

Due to the strength of the rental market and a law that allows Israeli’s to receive tax free income on their first rental, 33% of the current buying market is made up of real estate investors.

Parking

Why would I address parking? There is a huge shortage of parking especially in Tel Aviv and Jerusalem. Even though the purchase of a vehicle is taxed at 100% and fuel costs exceed $ 8 per gallon, there are a lot of autos in Israel. They are small fuel efficient vehicles, but they need to be parked. In one area of Tel Aviv (Bloch Street, close to Rabin Square), there are over 30,000 registered cars with only 25,000 parking spaces.

The cities have very aggressive parking enforcement, with frequent enforcers, walking or moped inspecting the cities. Permits are purchased throughout the country for long term or short term parking. Short term double parking is common as people load and unload. Many roads are narrow and vehicles squeeze through the traffic, honking horns and weaving in and out. The night we left Israel, we tried to move our car from a paid parking lot to street parking to be closer to the apartment we were renting. We spotted four spaces; I rushed to get my car, by the time I returned (six minutes later) all of the spaces, but one, were taken. As we left that evening, multiple drivers were circling the streets, looking for evening parking. Overnight parking in a parking lot can cost $20 a night.

Most people commute by train, bus, taxi, motorcycle, moped, bicycle or on foot.

Commercial Retail Real estate is expensive, especially in the big cities. In the densely packed areas, you might find many small neighborhood stores, ranging anywhere from 50 to 400 sq ft large.

These stores are typically in mixed use buildings with apartments on top and commercial spaces on the ground floor. It is not unusual to find a shoe maker in a 25 sq ft space, or a hardware store in a 300 sq ft space, filled to the ceiling with all sorts of random goods from toilet seats to light bulbs. In the suburbs, you can find shopping centers and malls filled with small and larger stores, but land as space is still a premium, and so is parking. Parking spaces in shopping malls are usually about 8’ by 8’. It is not unusual to have cars marred up while opening the doors in such tight spots.

Clearly, Israel still has significant security concerns. 120 missiles and mortars were shot into southern Israel from Gaza while we were there. Just the week before we arrived, a bomb went off at the Central Jerusalem bus station. On the other hand, weapons are less visible than they were during our last visit in 2007. All large stores, restaurants and office buildings have security guards, most of them are armed. Bags, backpacks and purses are searched. Shopping centers are fenced and you have to drive through a security check before you can park your vehicle. Smaller villages in the north are fenced and gated. The army is still visible throughout the countryside. However, compared to our last visit, we felt much safer this time.

The challenge of national security unifies the nation. After high school, all Israeli men and women get drafted to military service, men for three years and women for two years. After military service all men serve an annual reserve commitment (of one to four weeks) until they are forty. Most women are exempt from this reserve commitment. Orthodox Haredi Jews and Israeli Arabs typically do not serve in the military. Druse, Checker and Beduin do serve in the Israeli military. This military service is the great homogenizer of the Israeli state and helps solidify the commitment to the country. Taxes are high, but in exchange there are many social services including world class medical services. Israel has some of the same problems the US has including a looming physician shortage and lack of medical care in rural areas. Israel is a small country. I was able to drive from Tel Aviv to Jerusalem in 45 minutes and from Tel Aviv to Tiberias in the north on highway Six in an hour and 45 minutes. So, for critical medical care, many Israelis drive to Haifa, Tel Aviv, or Jerusalem or Beersheva.

I was fortunate to be able to cover a lot of ground on our three week trip. The economy is booming, or so it seems. But it is a very expensive country to live in. One sector after another, strikes for more wages. Innovation is king. Israeli’s are creative, constantly looking for answers outside of the box, to solve their issues. Will there ever be peace? Who knows? The issue polarizes all Israeli’s Arab, Jewish and Christian alike. After Gaza hand back and the continued security threat from Gaza, the political minds will have a hard time giving up the West Bank to the Palestinian Authority without some iron clad guarantee for safety, security and the recognition of Israel as a state.

As a visitor, I had a great time. This is truly the land of the Bible… and the coffee shop. Like America, it is the land of the melting pot. You will find Russian, French, English, Amharic, Arabic and Hebrew speakers there. If you can, I encourage you to visit; you will never forget your stay.

Read the article on line - Rediscovering Israel 2011

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

http://www.vested.com/

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Looking to refi? Avoid these 5 blunders

From Bankrate.com’s Michele Lerner, “5 refi blunders to avoid”

“When interest rates are low, plenty of homeowners rush to refinance before evaluating the true consequences of their actions. A mortgage refinance can benefit some homeowners, particularly if they intend to stay in their home for the long term or if they can significantly reduce their interest rate. Sometimes, though, a mortgage refinance can be the wrong move.”

1. Not comparing the real rate.

Compare the true cost of the new loan with the APR of your current loan. If you are saving less than one-half point, don’t waste your time or money. Remember that Fannie Mae and Freddie Mac have added fees to loans where there’s little equity in the property.

“Borrowers who have little or no equity may qualify for a refinance under the government's Home Affordable Refinance Program, or HARP, available to those with a current mortgage owned or guaranteed by Fannie Mae or Freddie Mac.”

2. Choosing the wrong loan

What’s the purpose of the refinance? Afraid about losing your job, then lower your overall payment. If you want to be debt-free by a certain year, pick a loan that meets that objective.

Remember, closing costs can increase your payback.

3. Not shopping around

“While many borrowers compare loan offers from more than one lender, they can also shop for title services and save hundreds or sometimes thousands of dollars on their loan.”

Check at least three lenders. Start with the servicer that has your loan now.

4. Refinancing when you shouldn't

If you don’t plan on staying in your home for several years, refinancing may be a waste of money. Know your break even point where the savings outweigh the costs of refinancing.

5. Not keeping up with borrower responsibilities

Keep up your credit score throughout the refi process. A lender can pull your credit report right before closing. So avoid adding new debt.

Read the full article.

For your next title transaction, contact

Stephen M. Flatow, Vice President and Counsel

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

973-808-6130 * 973-227-0645 Fax

VTI at Vested.com

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Losing sleep over a short sale

Readers of this blog know about the pitfalls and benefits of short sales where a home is sold for less than the amount of its mortgage.

Since a short sale cannot occur without the consent of the lender, sellers are completely subject to the lender’s whims and ineptness.

The New York Times reports on one New Jersey homeowner who lived the short sale nightmare in “A 30-Month Short-Sale Saga” by Antoinette Martin.

“MELANIE BROWN sits at the breakfast bar of the Teaneck house she will soon surrender to new owners and says the pain of that is piercing, but at least the “mental torture” at the hands of bankers and their computerized bureaucracy is finally done, after two and a half years.

“They would demand information, and then delay any response, demand and delay, over and over,” said Ms. Brown, 42, a school administrator, about her lender, Bank of America, and its Equator software system. “I got to feel like a mouse that a cat just kept smacking around.”

“This was a short sale. It took 30 months. And it might not have happened at all — despite Ms. Brown’s sustained effort to meet every shifting deadline for documents, and her real estate agent’s campaign to get help — except that the agent finally contacted an aide to a ongressman, who contacted an aide to the president of Bank of America.”

What was it like dealing with Bank of America? Ms. Brown says,

“No one ever actually talks to you,” “they just send threatening e-mails, saying things like: ‘If you don’t refile those documents for the third time giving the entire history of your life by the end of the business day, then this process is terminated. You will have to start over at the beginning.’ ”

“Ms. Brown’s original loan was from Countrywide Savings Bank, acquired by Bank of America in 2008. When she began asking Bank of America about loan modification, she said, she was told it was impossible, because she was current with her payments.

“They told me I had to stop paying for three months before they could even consider helping me,” she said. “I was shocked. I thought that was drastic, but they said it was the only way.”

Sound drastic, but a common step.

Do you have a short sale nightmare to share? We’d love to hear from you.

Read the full story here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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