Here are a couple of good articles about what our government is doing to help homeowners here in Virginia Beach, Chesapeake and around the country.

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/01/AR2010030102143.html

http://www.msnbc.msn.com/id/35756755/ns/business-the_new_york_times/

RISMEDIA, March 8, 2010—(MCT)—A smaller percentage of mortgages were delinquent and the rate of those entering the foreclosure process slowed in the fourth quarter of 2009, possible signs that the foreclosure crisis that has gripped many of the nation’s housing markets is finally starting to ease, a trade group has reported.

“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007,” said Jay Brinkmann, chief economist of the Mortgage Bankers Association, in a written statement.

The delinquency rate for mortgages on one- to four-unit residential properties was a seasonally adjusted 9.47% of all mortgages outstanding in the fourth quarter, down from 9.64% in the third quarter and up from 7.88% in the fourth quarter of 2008, according to the MBA’s quarterly delinquency survey.

Entire story hit the link below

http://rismedia.com/2010-03-07/is-it-the-beginning-of-the-end-for-housing-crisis/

The U.S. Department of Housing and Urban Development (HUD) and the U.S. Consumer Product Safety Commission (CPSC) issued guidance on how to identify the presence of problem drywall in homes.

http://www.cpsc.gov/info/drywall/InterimIDGuidance012810.pdf

http://realtytimes.com/rtnews/nlpages/20100122_repair.htm?open&Vol=134&ID=bobbarnum

“This is a traumatic time in this country and the future isn’t something we’re 100% sure about now either. What’s left? The answer for most home buyers is authenticity,” said Heather McCune, director of marketing for Bassenian Lagoni Architects in Park Ridge, Ill. Buyers today want cost-effective architecture, plans that focus on spaces and not rooms and homes that are designed ‘green’ from the outset,” she said. The key for home builders is “finding the balance between what buyers want and the price point.”

For many buyers, their next house will be smaller than their current one, said Carol Lavender, president of the Lavender Design Group in San Antonio, Texas. Large kitchens that are open to the main family living area, old-fashioned bathrooms with clawfoot tubs and small spaces such as wine grottos are design features that will resonate today, she said. “What we’re hearing is ‘harvest’ as a home theme—the feeling of Thanksgiving. It’s all about family togetherness—casual living, entertaining and flexible spaces,” Lavender said.

Paul Cardis, CEO of AVID Ratings Co., which conducts an annual survey of home buyer preferences, said there are 10 “must” features in new homes:

1. Large kitchens, with an island. “If you’re going to spend design dollars, spend them where people want them—spend them in the kitchen,” McCune said. 2. Granite countertops are a must for move-up buyers and buyers of custom homes, but for others “they are on the bubble,” Cardis said.

3. Energy-efficient appliances, high-efficiency insulation and high window efficiency. Among the “green” features touted in homes, these are the ones buyers value most, said Cardis. While large windows had been a major draw, energy concerns are giving customers pause on those. The use of recycled or synthetic materials is only borderline desirable.

4. Home office/study. People would much rather have this space rather than, say, a formal dining room. “People are feeling like they can dine out again and so the dining room has become tradable,” Cardis said. And the home theater may also be headed for the scrap heap, a casualty of the “shift from boom to correction.”

5. Main-floor master suite. This is a must feature for empty-nesters and certain other buyers, and appears to be getting more popular in general. That could help explain why demand for upstairs laundries is declining after several years of popularity gains.

6. Outdoor living room. The popularity of outdoor spaces continues to grow, even in Canada. The idea of an outdoor room is even more popular than an outdoor cooking area, meaning people are willing to spend more time outside.

7. Master suite soaker tubs. Whirlpools are still desirable for many home buyers, but they clearly went down a notch in the latest survey. Oversize showers with seating areas are also moving up in popularity.

8. Stone and brick exteriors. Stucco and vinyl don’t make the cut.

9. Community landscaping, with walking paths and playgrounds. Forget about golf courses, swimming pools and clubhouses. Buyers in large planned developments prefer hiking among lush greenery.

10. Two-car garages. A given at all levels; three-car garages, in which the third bay is more often than not used for additional storage and not automobiles, is desirable in the move-up and custom categories.

(c) 2010, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

The Navy's top commander in Hampton Roads, Adm. John C. Harvey, said Tuesday that he sees serious arguments for not keeping all East Coast nuclear-powered aircraft carriers in Hampton Roads but stopped short of endorsing moving a carrier to Mayport, Fla.  Harvey, who heads the Norfolk-based Fleet Forces Command, said the recent earthquake in Haiti shows how one unforeseen event can have a broad, dramatic effect. The comments echoed remarks he made last week at a symposium near Washington.  Click here for the full story from the Virginian-Pilot.

The Federal Reserve and Mortgage Rates
Understanding What Causes Interest Rate Movement

Consumers are often misled when it comes to the subject of the Federal Reserve and how it affects mortgage interest rates. Often the media is the culprit causing the confusion. Many times, the Fed has taken action that caused mortgage interest rates to move in a direction other than what consumers expected, because the media provided weak reporting on the subject.

The Federal Reserve affects short-term interest rate maturities, the Fed Funds rate, and the Overnight Lending rate. These factors have a direct impact on the Prime rate. If you took only this into consideration, you may mistakenly conclude that changes made by the Fed will cause a similar movement in mortgage interest rates. However, mortgage interest rates are dictated by the trading of mortgage-backed securities, which trade on a daily basis. The real dynamic at the heart of interest rate movement is the relationship between stocks and bonds.

Stocks and bonds compete for the same investment dollar on a daily basis. There is literally only so much money to be invested. When the Federal Reserve feels that interest rates need to be decreased in an effort to stimulate the economy, this reduction in rates can often cause a stock market rally. When the market becomes bullish, the money to invest in stocks comes from the selling of mortgage-backed securities.

Unfortunately, selling mortgage-backed securities to fuel stock market rallies causes interest rates to go up, not down.

Historically, there have been many times when the Federal Reserve has increased interest rates. Stocks then sell off in fear that the increase will affect corporate profit margins, and the liquidated stock assets need a place to park until the next rally comes along. The safe haven is found in mortgage-backed securities which cause mortgage rates to drop.

The daily ebb and flow of money is what matters most when it comes to the movement of mortgage interest rates. I make it a point to continuosly monitor interest rates for my clients, and advise them of opportunities to manage their mortgage debt at a better rate. This is the foundation of my business model as a Trusted Advisor.

Dave Michaud
Senior Mortgage Consultant
Union Mortgage Group
Phone: (757)321-2701
Fax: (757)351-6471
dave@teammichaud.com
www.teammichaud.com

1]RISMEDIA, January 19, 2010—(MCT)-The last thing many troubled homeowners want to hear is that they could be denied a car loan after they get a chance to modify their home loan. But credit scores can get dinged after a home loan modification, making it more costly or tougher to get a loan or credit card.

Hundreds of thousands of homeowners find themselves in a financial squeeze, thanks to the recession and the meltdown in the housing market. Lenders have offered trial loan modifications to more than 700,000 eligible borrowers. As of late November 2009, about 31,000 trial loans have been made permanent, which requires at least three on-time payments under the trial program and proof of income.

What these troubled homeowners don’t realize is that these attempts to avoid foreclosure may result in their credit scores taking a hit. A potentially damaged credit score is one of those hidden costs of home loan modification—and it varies significantly depending on your lender, as well as when you received your loan modification, your credit history and how your loan was altered.

“They need to tell people up front that this could happen,” said James Sperr, of Belleville, Mich. Sperr and his wife, Carol, received a trial modification that cut their house payment, including taxes and insurance to $957 a month from $1,140 a month. But it came with a hit to their credit score. “Our credit rating has gone from the 800s to 750,” Carol Sperr said. “It’s punitive to a consumer who is already scared, frustrated, mad,” said John Ulzheimer, president of consumer education for Credit.com. The Sperrs said they had never been late or missed a mortgage payment, but their bank had reported them as being behind on payments. Their credit score took a hit, falling from the 800s to 750. “They tell us that once the paperwork ‘catches up’ and the new loan is finalized, they will correct the credit reporting agencies,” Carol Sperr said.

No one saw this coming. “I didn’t find out about our credit until they did a check on this van we bought,” James Sperr said. He said his wife was able to provide more documentation that their mortgage was in compliance so they did not have to pay a higher rate or get shut out of a loan. Others aren’t so lucky.

Loan modifications remain a good thing, but they often come with that consequence. Homeowners who face hardships but cannot traditionally refinance their mortgages can try to get a loan modification. A modification temporarily reduces the monthly payment, which can be helpful if someone’s dealing with a pay cut. Typically, the principal amount owed on the loan is not reduced or changed and the amount of debt owed is not forgiven. The federal government has programs, and banks and credit unions have proprietary programs as well.

Yet many homeowners feel blindsided when they discover that their credit score has dropped by 50 to 100 points or even more after they entered a trial modification. “What’s the point of the additional credit damage? What have they just accomplished by doing that to the borrower?” asked John Ulzheimer, president of consumer education for Credit.com.

In the first few months after receiving a trial modification, Ulzheimer said, it is possible that the initial payments would show up as a “partial payment plan” on a credit report, which turns into a negative hit to a credit score. This can be a problem even for homeowners who never have missed a mortgage payment. “It really depends on how the mortgage company decides to report this to a credit agency,” said Julie Bos, group manager and certified credit counselor for GreenPath Inc. in Grand Rapids, Mich. A homeowner who is behind on payments will see credit score damage, and that won’t change from a modification. “If you’re already delinquent, your credit is already impacted,” said John Snyder, manager of foreclosure programs for NeighborWorks America. But consumers who are making their mortgage payments are getting modifications, too, perhaps because wages were cut or jobs were lost. They may be struggling to stay current, but their credit may not be bad when they start a modification.

Some might argue that it’s not a wise move to take on more debt, such as a car loan, if a person saw a cut in pay and needed a home loan modification. But many consumers often cannot control when their car breaks down. On top of that, lenders benefit from home loan modifications because potential foreclosures can be avoided.

Unknowingly though, many consumers discover themselves boxed in later when they try to get approved for credit. “They’re concerned about the damage to their credit. They’re not happy about it,” said Bos. “If you go out and try to purchase a car in two months, you could be denied,” she said. Or you might have to get a co-signer or put down a bigger down payment or accept a higher interest rate to get a loan.

What’s even stranger is that not all home loan modifications will hit consumers in the same way on their credit reports. Consumers who modify their mortgages under federal programs, such as the Making Home Affordable and the Home Affordable Modification Program, now can do so without hurting their credit scores since those modifications are listed as a “loan modified under a federal plan” as of Nov. 1. Here’s the sticking point: If you are able to modify your loan through an individual bank or credit union’s program and not a government plan, it’s likely your credit score will be hurt. To complicate matters further, eventually a “loan modified under a federal plan” on your credit report could hurt your score, too.

Ulzheimer noted that the only reason the new reporting guidelines do not damage your credit scores is because FICO, the company that created the FICO credit score, hasn’t had a chance to study the long-term predictive value of loan modifications to credit risk.

Still, homeowners who are in trouble must realize that a foreclosure or a short sale would be listed as a charge-off or settlement on a credit report and last seven years, Ulzheimer said, while a modification would typically last a few years.

If you do receive a loan modification, ask questions and be more careful about how you handle your credit elsewhere to try to combat any potential damage.

Before making any moves, talk to a nonprofit housing counselor.

(c) 2009, Detroit Free Press.

Distributed by McClatchy-Tribune Information Services.

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Property values are falling more than previously predicted, a situation that threatens to punch a bigger hole in the city’s budget.  The value of residential and commercial properties could drop an average of more than 6.5 percent, City Assessor Jerry Banagan warned city leaders in a memo. Banagan previously forecast a 5 percent fall.  The predicted drop is the latest bad news for city budget officials facing an $84.4 million shortfall between the city and schools. The predicted change is equivalent to a loss of about $7.5 million in city revenue, said Catheryn Whitesell, the city’s budget director.  Click here for the full story from the Virginian-Pilot.