Charlottesville Real Estate Blog– Avery Group, Keller Williams

Charlottesville Real Estate Blog

Foreclosure "Rescues" May Be Illegal

April 10th, 2009 5:42 AM

Here’s the situation: A beleaguered home owner is in bankruptcy, overwhelmed by debt. The mortgage lender had begun foreclosure proceedings, but they were stayed by the bankruptcy court. That stay, however, is about to end, and the lender may be allowed to proceed. The owner owes the mortgage lender about $170,000. Another $50,000 (representing 13 cents on the dollar) is owed to unsecured creditors under the approved bankruptcy plan.
Along comes a potential purchaser of the property – a person who just happens to be a real estate broker and owner of both a finance company and a company by the name of Innovative Real Estate Strategies, LLC – who offers her this deal: “I’ll pay you $220,000 for your property – enough to pay off the mortgage and to satisfy the creditors according to the bankruptcy plan. You and I acknowledge that the property may be worth more, but, given the exigencies of the situation, that is a satisfactory amount. It is deemed to be fair and equitable, and in the interest of the seller. [Note: This is not the exact language of the agreement, but it represents the substance.] Furthermore, I, the buyer, will let you remain in the property under a one-year leaseback agreement. Not only that, I will also grant you an option for the next twelve months that allows you to repurchase the property for the amount of $260,000.”
So how does that sound? Does it look like a win-win? The owner is given a way out of her debt, is allowed to stay in the property, and even has an opportunity to purchase it back. Meanwhile, the buyer has positive cash flow for at least a year (the lease amount more than covered expenses) and, if the option isn’t exercised, may be able to turn the property for a good profit.
Well, it sounded good to the bankruptcy trustee who approved the deal, paid off all the creditors, and ultimately discharged the homeowner from her bankruptcy debts.
Unfortunately, things did not turn out so well. Within nine months the former home owner had fallen behind in her rent. She tried to exercise the option, but couldn’t qualify for a loan. When the option expired, the broker/rescuer offered her the property for $315,000. Of course, she was unable to do that. He then listed the property for $369,950; and gave her a sixty-day notice to quit.
The above provides a summary description of the facts underlying the case of Spencer v. Marshall, recently decided by the California First Appellate District Court of Appeal. The home owner was Alanna Spencer and the purchaser was Ryan Marshall.
When Marshall began an unlawful detainer action against Spencer she filed a notice of recession of the sale. Subsequently, she filed a case asking for both compensatory and punitive damages. Spencer alleged that both the form and content of the purchase agreement drawn by Marshall had failed to meet the requirements of the Home Equity Sales Contract Act (HESCA), found at California Civil Code 1695 and following.
The California Legislature enacted HESCA upon a finding that “homeowners whose residences are in foreclosure have been subjected to fraud, deception, and unfair dealing by home equity purchasers.” (An equity purchaser is an investor buyer of an owner-occupied home for which a Notice of Default has been filed.) The purpose of the act is to enable defaulting homeowners “to make an informed and intelligent decision regarding the sale of his or her home…” and “to safeguard the public against deceit and financial hardship; to insure, foster, and encourage fair dealing in the sale and purchase of homes in foreclosure;” and to “prohibit representations that tend to mislead.”
The court determined that Marshall’s purchase agreement did not conform to HESCA requirements. Indeed, the lower court opined that, insofar as their dealings (Marshall had an associate) with Spencer, “defendants were in every respect the ‘archetypal predators’ that HESCA seeks to regulate.”
Marshall’s defense, in part, was that the bankruptcy court had approved the purchase. But the bankruptcy trustee testified that her sole concern was that the payment plan would be satisfied. It was not her concern whether Spencer would be receiving a fair price or a fair deal.
The appellate court upheld the decision against Marshall and the award of $70,000 actual damages and $210,000 exemplary damages.
There is a lesson here for California investors and real estate agents. Homeowners in default are protected by laws that very specifically detail what any contract offered to them must look like. It’s a good idea to pay attention to those laws.

Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com

Posted by The Avery Group on April 10th, 2009 5:42 AMPost a Comment (0)

Beware of Foreclosure Scams

April 10th, 2009 5:40 AM

Beware of Foreclosure Scams

Where there is money to be made, you will find the predators, salivating at a new opportunity to take people's money and run. Welcome to the homeowner loss mitigation business where the sharks are having a feeding frenzy on already wounded homeowners who are facing foreclosure.
Homeowners need to be aware of these scams and what to look out for.
IamFacingForeclosure.com plans to expose the predators and educate homeowners about the legitimate foreclosure prevention services that are available to them through our network of legal aid attorneys, non-profits and loss mitigation professionals.
These scam artists usually locate you by when your lender files a foreclosure notice with the public trustee (aka Notice of Default), and your local community is notified through the foreclosure listings in your newspaper. Many of these companies actually prescribe to services that provide daily data of these filings or they go to the court house themselves.
H0meowner Beware: Here are some of the tricks these scammers use. Get educated and don't become a victim!
Equity Stripping - These scams involve a lender or mortgage company (aka Hard Money Lender) that offers you an outrageous loan to "help" you avoid foreclosure. These loans are based solely on your equity and not your ability to pay. In other words, a loan made to "fail". The moment you default on payments, they play hard ball and will foreclose on you in a heart beat. You see, that's exactly what they want to happen and chances are heavily in their favor.
Loss Mitigation Consultant- There are many unqualified people offering to assist homeowners that are facing foreclosure. Theie attempt to be of service is actually a disservice and can seriously hurt the homeowner more than it can help. There in no licensing, regulation or policing of these consultants and "anyone" can become one and operate on their kitchen table over night.
Beware of anyone who offers to collect a fee up front to negotiate with your lender. Many are scammers and will take your money and run. Before you know it, the sheriff is knocking on your door and telling you to move out and the scammer is nowhere to be found. Make sure that if you are looking to hire a firm to represent you, that you do your due diligence and research the company before you sign any contract.
Loan Tranaction Scam- In these scams, a lender produces a refinancing loan document that claims to bring your delinquent mortgage current. This document will actually transfer the title of your home to the company's name for part equity in your home. Usually these loans will include huge fees with big prepayment penalties, balloon or interest only payments and an adjustable rate that shoots through the roof almost immediately.
Next thing you know, this lender that was bailing you out is now taking you out and your house. Not a good loan is it?
So, be very careful and read whatever it is till you understand the document 100% and if you don't, then hire trust worthy attoney or mortgage professional to examine the paperwork for you.
Government Foreclosure Scam Alert Links:
Department of Justice
Foreclosure Scam Articles:
Con-artists circling over homeowners in foreclosure
At the Legal Assistance Foundation of Metropolitan Chicago, the phone calls come nearly every day from yet another financially desperate homeowner who's become the victim of a "foreclosure rescue" scam. "This has become the No. 1 problem in terms of calls we're getting and cases we're filing," says Daniel Lindsey, supervising attorney for the foundation's Home Ownership Preservation Project.
And it's clearly a nationwide problem that's likely to get worse. The Better Business Bureau has received complaints from every state and has issued an alert to warn consumers to be cautious about foreclosure-rescue companies.
Springboro Man Pleads Guilty to Foreclosure Scam
DAYTON - A Springboro man pleaded guilty Tuesday in U.S. District Court to mail fraud for soliciting homeowners who were in danger of losing their homes through foreclosure.
Randall L. Webb, 50, was accused of "falsely promising homeowners he could provide affordable solutions and assistance to enable the homeowners to keep their homes and not put them in a more difficult position," said Fred Alverson, law enforcement coordinator for the U.S. Attorney Gregory G. Lockhart.
Webb faces up to 20 years in prison, although Webb will likely receive a shorter sentence. Webb also agreed to make full restitution to victims. The loss is estimated at $5,000.
‘Angels' hit desperate homeowners with foreclosure scam
Heartless scammers who call themselves "angels" are ripping off scores of desperate homeowners facing foreclosure, a Daily News investigation shows.Instead of rescuing them from the financial abyss, they steal their savings, their homes and their dignity.
One self-declared "angel" is Maurice McDowall, who ran a string of companies in Brooklyn, Manhattan and Long Island.
Presenting a business card that reads, "Helping you keep what's yours," McDowall promised to save homeowners from imminent foreclosure. Instead, his companies, which bore names like "Lost & Found Recovery" and "Home Mergers," stripped them of their deeds and the equity in their properties, The News found.

Where there is money to be made, you will find the predators, salivating at a new opportunity to take people's money and run. Welcome to the homeowner loss mitigation business where the sharks are having a feeding frenzy on already wounded homeowners who are facing foreclosure.
Homeowners need to be aware of these scams and what to look out for.
IamFacingForeclosure.com plans to expose the predators and educate homeowners about the legitimate foreclosure prevention services that are available to them through our network of legal aid attorneys, non-profits and loss mitigation professionals.
These scam artists usually locate you by when your lender files a foreclosure notice with the public trustee (aka Notice of Default), and your local community is notified through the foreclosure listings in your newspaper. Many of these companies actually prescribe to services that provide daily data of these filings or they go to the court house themselves.
H0meowner Beware: Here are some of the tricks these scammers use. Get educated and don't become a victim!
Equity Stripping - These scams involve a lender or mortgage company (aka Hard Money Lender) that offers you an outrageous loan to "help" you avoid foreclosure. These loans are based solely on your equity and not your ability to pay. In other words, a loan made to "fail". The moment you default on payments, they play hard ball and will foreclose on you in a heart beat. You see, that's exactly what they want to happen and chances are heavily in their favor.
Loss Mitigation Consultant- There are many unqualified people offering to assist homeowners that are facing foreclosure. Theie attempt to be of service is actually a disservice and can seriously hurt the homeowner more than it can help. There in no licensing, regulation or policing of these consultants and "anyone" can become one and operate on their kitchen table over night.
Beware of anyone who offers to collect a fee up front to negotiate with your lender. Many are scammers and will take your money and run. Before you know it, the sheriff is knocking on your door and telling you to move out and the scammer is nowhere to be found. Make sure that if you are looking to hire a firm to represent you, that you do your due diligence and research the company before you sign any contract.
Loan Tranaction Scam- In these scams, a lender produces a refinancing loan document that claims to bring your delinquent mortgage current. This document will actually transfer the title of your home to the company's name for part equity in your home. Usually these loans will include huge fees with big prepayment penalties, balloon or interest only payments and an adjustable rate that shoots through the roof almost immediately.
Next thing you know, this lender that was bailing you out is now taking you out and your house. Not a good loan is it?
So, be very careful and read whatever it is till you understand the document 100% and if you don't, then hire trust worthy attoney or mortgage professional to examine the paperwork for you.
Government Foreclosure Scam Alert Links:
Department of Justice
Foreclosure Scam Articles:
Con-artists circling over homeowners in foreclosure
At the Legal Assistance Foundation of Metropolitan Chicago, the phone calls come nearly every day from yet another financially desperate homeowner who's become the victim of a "foreclosure rescue" scam. "This has become the No. 1 problem in terms of calls we're getting and cases we're filing," says Daniel Lindsey, supervising attorney for the foundation's Home Ownership Preservation Project.
And it's clearly a nationwide problem that's likely to get worse. The Better Business Bureau has received complaints from every state and has issued an alert to warn consumers to be cautious about foreclosure-rescue companies.
Springboro Man Pleads Guilty to Foreclosure Scam
DAYTON - A Springboro man pleaded guilty Tuesday in U.S. District Court to mail fraud for soliciting homeowners who were in danger of losing their homes through foreclosure.
Randall L. Webb, 50, was accused of "falsely promising homeowners he could provide affordable solutions and assistance to enable the homeowners to keep their homes and not put them in a more difficult position," said Fred Alverson, law enforcement coordinator for the U.S. Attorney Gregory G. Lockhart.
Webb faces up to 20 years in prison, although Webb will likely receive a shorter sentence. Webb also agreed to make full restitution to victims. The loss is estimated at $5,000.
‘Angels' hit desperate homeowners with foreclosure scam
Heartless scammers who call themselves "angels" are ripping off scores of desperate homeowners facing foreclosure, a Daily News investigation shows.Instead of rescuing them from the financial abyss, they steal their savings, their homes and their dignity.
One self-declared "angel" is Maurice McDowall, who ran a string of companies in Brooklyn, Manhattan and Long Island.
Presenting a business card that reads, "Helping you keep what's yours," McDowall promised to save homeowners from imminent foreclosure. Instead, his companies, which bore names like "Lost & Found Recovery" and "Home Mergers," stripped them of their deeds and the equity in their properties, The News found.

Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com

Posted by The Avery Group on April 10th, 2009 5:40 AMPost a Comment (0)

Short Sale Hardship Letter Example

April 10th, 2009 5:39 AM

Short Sale Hardship Letter Example

Lender Name
Lender Address

Today's Date

Re: Hardship Letter/Short Sale for 123 Main Street, City, State 12345

To Whom It May Concern:

I purchased the property at 123 Main Street in March 2006. At that time, I had just
started my own antique resale business, which had great promise for generating profits
capable of supporting my mortgage. Unfortunately, sales were slow, which I attribute to
great declines in tourism after gas prices skyrocketed. I ran out of money, and began
working as a waiter to make ends meet. At the same time I was redoubling my efforts in
my own business, but to no avail. After struggling for months to make my expensive
mortgage payments, I had no choice but to put my house on the market. In August of
2006, I put my home up for sale by owner at an original listing price of $210,000. The
only people to look at the house ran when they saw the extensive damage to the pool and
the severe water damage from a leaking roof that had long needed a replacement. I
lowered the price, but still had no takers. Over the next couple of months I lowered the
home price three times, finally settling at $170,000. This price was the lowest I could list
the house at and still afford real estate agent commissions to be deducted, although it
leaves me with no profit. The home still has no offers. I am working with a real estate
agent now, who is listing my house and promises to push it to get it sold quickly. I believe
that using an actual agent will ensure that the home sells promptly.

I love my home, but I also understand that, at this point, I cannot afford it. I am a single
parent, now working as a waiter to survive. My financial situation cannot sustain a home
mortgage of nearly $2,000 per month. I would like nothing more than to sell my home,
avoid foreclosure, and salvage my credit. This is my main concern. I know that a
foreclosure on my record will affect me for years to come. I would ask that you please
assist me in avoiding this.

Please accept this offer as payment in full. My attorney has advised me to file
bankruptcy, but I prefer to avoid further destruction of my credit. I just want to move on
and start over.

I deeply appreciate your help and understanding in this matter. If you have any
questions, or need anything further from me, please contact me personally.

Kindest regards,

Home Owner Name

Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com

Posted by The Avery Group on April 10th, 2009 5:39 AMPost a Comment (0)

Understanding the Short Sale Process

April 10th, 2009 5:38 AM

Understanding the Short Sale Process

Before you consider a Short Sale be sure to contact your lender and any other agency that may be able to help you. Beware of anyone who approaches you to "solve your problems," or charges you any fees. Use only a licensed realtor who gets paid only when the property is sold. There may be important tax considerations. Be sure to contact a qualified tax accountant to understand how they may affect you. As soon as you get a Foreclosure Notice... If you have missed any mortgage payments the lender will contact you to warn you of a possibility of foreclosure. You will usually be given the option catch up with your payments or perhaps to work out some kind of payment schedule. This is called the REINSTATEMENT PERIOD. If you are unable to do this you will get a notice in writing, usually from an attorney acting on the lenders behalf, warning of the foreclosure and the impending SHERIFF'S SALE.

The SHERIFF'S SALE is scheduled and there is a public auction for the property conducted at the Sheriff's office or county courthouse. Usually it is the bank that wins the bid for the property. After the Sheriff's Sale, in Minnesota, you usually have six months, called the REDEMPTION PERIOD, during which the mortgage needs to be paid in full either by refinancing, a cash payment or selling the property to satisfy the mortgage(s). You do not need to move until the end of the redemption period or the sale of the property. In many cases the only option is to either let the property go to full foreclosure or sell the property. It is often better for your credit to sell the property and satisfy the mortgage than to let the bank foreclose. However, in this market the odds are very high that the value of the property is less than the mortgage(s). That brings us to the SHORT SALE.

SHORT SALES

A SHORT SALE is when the bank agrees to take less than what is owed, and to allow the property to be sold at a loss. This way the lender removes a non-performing loan from their portfolio and lessens the risk of selling the property at even a greater loss after a foreclosure. Not to mention all of the carrying costs the bank may have during and after a foreclosure. The seller is then released from the loan with less damage to their credit than a foreclosure.
Short Sale Process
A Letter of authorization to release information is sent to the lender. This allows the realtor to talk to lender. The property is listed on the MLS for sale. A Short Sale Package is assembled and sent to the lender. This includes a hardship letter, a financial statement, monthly bills, debts, income pay stubs, tax forms, etc. The realtor sends this to the lender for review. An offer/Purchase Agreement is received. The lender reviews entire package, including the offer. The lender may negotiate terms or price of offer. The property is sold & the owner is released of debt liability.

Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/

Posted by The Avery Group on April 10th, 2009 5:38 AMPost a Comment (0)

Fake HUD Website...Beware!!

April 10th, 2009 5:37 AM

Fake HUD Website...Beware!!

There is a deceptive website out there that is posing as HUD. This website tries to dupe people into giving out personal information (known as "phishing") - and because they've made their site appear to be an "official us government website", some people may fall prey to this scam.

The website is: http://bailout.hud-gov.us/

If anyone asks you about this website, advise them to stay away.

Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com

Posted by The Avery Group on April 10th, 2009 5:37 AMPost a Comment (0)

Stop Foreclosure - Let The Avery Group Help

April 10th, 2009 5:29 AM

Stop Foreclosure - Let The Avery Group Help

Let Us Help You Stop Foreclosure

Stop Foreclosure Help Available Today. Eliminate The Stress. Salvage Your Credit.

We specialize in helping our clients stop foreclosure. We understand that there are many reasons why homeowners sometimes are unable to pay their mortgages and every situation is unique. At The Avery Group we take the time to meet with our clients and explain all of their options to provide comprehensive foreclosure help. We help you determine if you can Keep Your Home or if you have to Sell Your Home to avoid foreclosure. We provide you with a personal consultation based on your unique situation. One of the reasons The Avery Group has been so successful is that we have local representatives in Central Virginia who can offer comprehensive solutions to foreclosure problems on a local level.

Call 434-975-9000

Posted by The Avery Group on April 10th, 2009 5:29 AMPost a Comment (0)

First Time Home Buyer Tax Credit Frequently Asked Questions

February 23rd, 2009 6:47 AM

First-Time Home Buyer Tax Credit

Frequently Asked Questions About the Home Buyer Tax Credit

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.

The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

1. Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

2. What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

3. How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

4. Are there any income limits for claiming the tax credit?
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

5. What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

7. Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

9. How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.

10. What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

11. I read that the tax credit is "refundable." What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?
Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.

13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.

15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.

16. I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.

17. Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

18. I bought a home in 2008. Do I qualify for this credit?
No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit.

19. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.

20. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

Posted by The Avery Group on February 23rd, 2009 6:47 AMPost a Comment (0)

Just Listed! 2315 Fontaine Ave Charlottesville, VA 22903

January 21st, 2009 2:54 PM

$249,900.00
2315 Fontaine Ave

Charlottesville, VA 22903

Beds: 2.0	Rooms: 8
Baths: 2.00	Sq. Ft.: 1176.00
Garage: 0	Built: 1924

Great Location!! Within walking distance to UVA! This two bedroom two bathroom home is exactly what you are looking for if you want to be close the UVA, the Corner, and downtown. Also, easy acess to 29 and 64!

This is a new listing that
I thought you might be
interested in. Visit this
listing online to see more
photos of the property,
Google Earth satellite
images, and much more.

If you have any questions
about this property or
require more information,
please feel free to call.

Avery Group
Roy Wheeler Realty Co.
4349759000
www.theaverygroup.com

Visit this listing at Here

Posted by Avery Group on January 21st, 2009 2:54 PMPost a Comment (0)

Daily Rate Advice

January 21st, 2009 2:42 PM

Wednesday's bond market has opened in negative territory again as investors continue to fret about upcoming debt sales. The stock markets are rebounding somewhat from yesterday's sell-off with the Dow up 77 points and the Nasdaq up 20 points. The bond market is currently down 15/32, which will likely push this morning's mortgage rates higher by another .250 of a discount point.

There is no relevant economic news scheduled for release today. Tomorrow brings us the release of both of this week's only reports. Neither are considered to be of high importance to the markets, but they are the week's only factual releases. Therefore, they may influence trading enough to slightly affect mortgage pricing.

The first is December's Housing Starts report early tomorrow morning. It gives us an indication of housing sector strength and future mortgage credit demand, but it is not considered to be a heavy influence on bond trading. It is expected to show a d ecline in starts of new homes from November's level.

The second is weekly unemployment figures from the Labor Department. They are expected to say that 548,000 new claims for benefits were filed. This would be an increase from the previous week, which would be considered favorable for bonds. If the report shows a much smaller number of claims, we may see bond prices fall and mortgage rates move higher again. However, a larger than expected number may lead to slightly lower mortgage rates tomorrow morning.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of a ll/any other borrowers.

Posted by Avery Group on January 21st, 2009 2:42 PMPost a Comment (0)

Stocks, Bonds and Mortgage Rate Update for Oct 23rd, 2008

October 23rd, 2008 1:30 PM

Thursday's bond market opened flat but has since slipped into negative ground following early gains in stocks. The stock markets are rebounding from yesterday's afternoon sell off that pushed the Dow down over 500 points and the Nasdaq down 80 points. I suspect that this morning's rally may be short-lived so we should be looking for afternoon volatility again.

The Dow is currently up 180 points while the Nasdaq has gain 13 points. The bond market is currently down 5/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point. If the stock markets due give back their current gains, we may see improvements to mortgage rates later in the day.

The only economic news released this morning was last week's initial unemployment claims from the Labor Department. They reported that new claims rose to 478,000 last week, which was an increase of approximately 15,000. Analysts were expecting to see lit tle change form the previous week, meaning that the employment sector is still showing signs of weakness. This is good news for bonds, but this particular report is not considered to be of high importance because it tracks only a week's worth of claims.

Tomorrow morning brings us the release of September's Existing Home Sales data from the National Association of Realtors. This report gives us an indication of housing sector strength and mortgage credit demand. I don't see it having much of an influence on the bond market or mortgage rates, but a reading that varies greatly from analysts' forecasts could lead to a slight change in mortgage pricing. It is expected to show a slight increase in sales from August to September.

The recent rapid improvement in bonds has me concerned that we may see profit taking by traders that could push prices lower and mortgage rates higher. It appears that there is no consensus in the markets regarding whether or not th is is the bottom for the stock markets. It appears there is still room for the major indexes to fall further, but this may not necessarily mean that rates will improve as a result. That means that the risk versus reward factor of continuing to float an interest rate is leaning heavily to the risk side in my opinion. Accordingly, please maintain constant contact with your mortgage professional if you have not locked an interest rate yet.

Posted by The Avery Group on October 23rd, 2008 1:30 PMPost a Comment (0)

Top Ten Tips for Avoiding Foreclosure

October 23rd, 2008 12:51 PM

Rob Alley of the Avery Group at Roy Wheeler Realty Co.

434-975-9000

Posted by The Avery Group on October 23rd, 2008 12:51 PMPost a Comment (3)

Bond Market Update for Thursday October 16th

October 16th, 2008 2:38 PM

Thursday's bond market opened in negative territory but has since rebounded as the markets continue their see-saw activity. The stock markets are posting sizable losses after yesterday's sell-off dropped the Dow 733 points. With the Dow down 190 points this morning, it has given back all of Monday's record gain of 936 points. The Nasdaq is currently down 30 points and is also below its Friday closing level. The bond market is currently up 2/32, but due to a significant rally late yesterday, we should see mortgage rates improve this morning by approximately .500 of a discount point or .125 of a percent in rate.

This morning's economic data added more concern about the status of the economy and the likelihood of a quick recovery. The Labor Department said that the Consumer Price Index (CPI) for September went unchanged from August's level and that the core data that excludes more volatile food and energy prices rose only 0.1%. Both of those readings were bel ow forecasts, indicating that inflationary pressures are weaker than thought at the consumer level of the economy. That is good news for the bond market and mortgage rates.

The biggest surprise came from September's Industrial Production data that showed a whopping 2.8% monthly drop in output. This was the biggest monthly decline in 34 years and points towards a quickly slowing manufacturing sector. That is also good news for the bond market and mortgage rates.

The Labor Department said that 461,000 new claims for unemployment benefits were filed last week. This was a smaller number than was expected but since the data tracks only a week's worth of claims, it had little impact on trading this morning.

The remaining two reports are both scheduled for release tomorrow morning. September's Housing Starts is the first, but is the week's least important piece of monthly data. It gives us an indication of housing sector strength and mortgage cre dit demand, but usually is not a mover of mortgage rates. It is expected to show a decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.

The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 65.0, down from September's final of 70.3.

Posted by The Avery Group on October 16th, 2008 2:38 PMPost a Comment (0)

Rate Lock Advisory

October 15th, 2008 11:29 AM

This week brings us the release of seven economic reports that are of interest to the mortgage market. The week also gets heavy in quarterly earnings releases for companies, which could cause significant movement in the stock markets again. The earnings results could affect bond trading as investors move funds into stocks if the reports are good. The other possibility is that the earnings reports would generally disappoint, meaning investors may move funds out of stocks and into bonds as a safe-haven. The latter would be good news for the bond market and mortgage rates.

The bond market is closed tomorrow in observance of the Columbus Day holiday and will reopen Tuesday morning. The first pieces of data come Wednesday morning, which are two of the week's more important releases. The first is September's Retail Sales report. This data is very important to the markets because it measures consumer spending by tracking sales at retail establishments in the U.S. S ince consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be highly important. If we see weaker than expected readings in this report, the bond market should respond favorably and mortgage rates should drop. However, stronger than expected sales could fuel a stock rally and push mortgage rates higher. Current forecasts are calling for a 0.4% decline in sales.

September's Producer Price Index (PPI) is the second report of the day. This index measures inflationary pressures at the producer level of the economy and is also considered to be of high importance to the markets. Analysts are expecting to see a decline of 0.3% in the overall index and a 0.2% rise in the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. A larger than expected increase could fuel inflation concerns in the bond market and push mortgage rates higher. But, weaker than expected readi ngs should lead to lower rates, especially if the sales report doesn't give us stronger than expected results.

Also scheduled for release Wednesday is the Fed Beige Book during afternoon trading. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings when determining monetary policy. If it reveals stronger signs of inflation from the last release, we could see mortgage rates revise higher shortly after its 2:00 PM ET release.

Thursday morning also brings us two economic releases. The first is September's Consumer Price Index (CPI) that measures inflationary pressures at the consumer level of the economy and is one of the most important reports that the bond market gets each month. Analysts are expecting to see a rise of 0.1% in the overall index and an increase of 0.2% in the core data reading. A larger than expected increase in the core reading coul d raise inflation concerns in the bond market and push mortgage rates higher Thursday. However, a smaller than expected reading should ease inflation concerns and lead to lower mortgage rates.

September's Industrial Production data is the second release of the day and will be released mid-morning. It gives us an indication of manufacturing strength by tracking orders at U.S. factories, mines and utilities. It is expected to show a 0.8% drop in output from August's level, meaning that manufacturing activity fell sharply. A smaller than expected decline or an increase in output would be negative for bonds and mortgage rates while a larger drop should help push mortgage rates lower, assuming that the CPI shows favorable results.

The remaining two reports are both scheduled for release Friday morning. September's Housing Starts is the first, but is the week's least important piece of data. It gives us an indication of housing sector st rength and mortgage credit demand, but usually is not a mover of mortgage rates. It is expected to show a decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.

The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 69.0, down from September's final of 70.3.

Overall, I am expecting to see a fair amount of movement in mortgage rates this week, but mostly the latter part of the week. The key reports are Wednesday's PPI and Retail Sales reports and Thursday's CPI data. But as we saw last week, we certainly don't need factual economic releases to see mortgage rates move. I am thinking we may still see plenty of volatility in the stock markets that may affect bond prices also. Accordingly, please proceed cautiously if you have not locked an interest rates yet.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Posted by The Avery Group on October 15th, 2008 11:29 AMPost a Comment (0)

700 Billion Dollar Bailout for who??

October 15th, 2008 11:28 AM

So Congress passes a seven hundred billion dollar bailout...but who is going to benefit from this "bailout"? It appears the bill is more designed to jumpstart a struggling world market and not individual homeowners. Foreclosures are rising, short sales are becoming more prominent, more homeowners are looking at ways to afford their payments and reduce their debt, and stocks continue to struggle. All in all, not good. What we are waiting for is a trickle down effect. We will probably see the government give money to banks to encourage lending between banks. This should increase confidence and make banks more willing to lend again. Hopefully, this extra capital will become available to people trying to make their payments, ease the burden, but only time will tell...

Posted by The Avery Group on October 15th, 2008 11:28 AMPost a Comment (0)

Credit Scoring Part IV

October 15th, 2008 11:28 AM

Credit Scoring

Part IV: Credit Remediation

If you are in need of credit remediation, and especially if you live in an area where this is an overall problem within the population, you should seek to align yourself with a credible referral source for credit repair. While government web sites will suggest that self-help may be the best option, keep in mind that for the most part people lack discipline when it comes to spending and making payments. They are not likely to have the diligence to research and remedy their own credit problems.

The Federal Trade Commission regulates credit repair services, and they provide free information to help consumer’s spot, stop, and avoid businesses with fraudulent, deceptive, or unfair practices. Be familiar with the Credit Repair Organization Act http://www.ftc.gov/os/statutes/croa/croa.htm as you seek out a genuine ally in this area. Research their background and make sure this company will cast a good reflection on you when you refer your clients to them.

written by Leonard Winslow, a Mortgage Loan Officer, of Gateway Bank Mortgage, INC. for The Avery Group Real Estate Blog

Posted by The Avery Group on October 15th, 2008 11:28 AMPost a Comment (1)

A Lenders Response to the Bailout Rescue Plan

October 15th, 2008 11:27 AM

The Chinese have a proverb: "May you live in interesting times." And we are living through interesting times indeed.

Whatever the political posturing regarding the rescue plan, a plan needed to be passed. Credit markets are frozen and banks are going bust every day. This is not totally because of "toxic" mortgages. This has a lot to do with FASB 157, also known as "mark to market".

Each day, lenders must mark their assets to the marketplace. It's like you having to appraise your home everyday and, if your neighbor was under duress because she got very ill, divorced, lost her job and was forced to sell her home quickly, she may have sold it super cheap. Now, does that mean your house is worth that super cheap price, too? Clearly not. Why? Because you are not under duress. You have the time to sell your home and get a more normal price, which more accurately reflects true market conditions. But "mark to market" does not allow for this, which creates a vicious cycle.

Why is this so bad? Because, as lenders mark down their assets the amount that they have previously loaned becomes much riskier in relation to their assets. For example, say a bank has $1 million in assets and say they have $15 million in loans outstanding. Their ratio is an acceptable 15 to 1. But should they take a paper write down of $500 thousand due to "mark to market" requirements, their ratio suddenly changes to 30 to 1. This is because their assets are now only $500 thousand after taking the paper loss, while their loans outstanding are still $15 million. And at 30 to 1 this bank is viewed as a risky investment. So the stock price starts to get hit, it becomes harder to borrow, and most importantly harder to make money. The bank is then forced to sell some of its loans to reduce its ratio...at cheap prices.

And this makes the vicious cycle continue. And a quick look at the holdings of these loans show that 95% are problem free. Additionally, the Credit Default Swaps (CDS) that are used with the pools of mortgages are relatively safe. But this requires a bit of understanding. You see, when a pool of mortgage loans is put together it isn't just A paper or B paper etc. it's everything. It's got some A paper, B paper, C paper...and even what looks like toilet paper. An "A" investor buys the whole pool but because they are an "A" investor their safety is greater because they can avoid the first 20% (an example) of defaults. So they own the whole pool but are sheltered from the first batch of defaults, and for this they get the lowest rate of return. As you can figure from here the more risk investors want to take, the higher the return. So the investments are relatively safe, but the accounting rules currently place undue pressure on the banking institutions.

Now add to all this, the opportunistic "shorting" done on the financial stocks, much of it illegal because those shorts did not legitimately borrow shares (called naked shorting), and you exacerbate this whole problem. Thank goodness for the recent temporary ban on shorting in the financial sector. As for the plan, the government is the only one who can step in to do this. And they have to do this. And they will do this. The nauseating political posturing from both sides is just part of the process.

This is not easy to understand for the general public. In fact most politicians don't get this either. That's why it is a difficult yet critical bill for them to vote on.

Once this is done, it will take some time but the markets will stabilize. As for the real estate and mortgage industries, it will take a bit of time but we will make it through this. Rates will remain attractive and the influx of credit availability will help the housing market gradually improve. This ultimately will be the medicine needed to improve the situation overall.

As always – please keep in touch during these volatile times. I am here to help you and your clients in any way that I can.

Sincerely,
Leonard Winslow
Gateway Bank Mortgage
434-220-3409
leonardwinslow@gwfh.com

Posted by The Avery Group on October 15th, 2008 11:27 AMPost a Comment (0)

Just Listed! 324 E Beverley St Staunton, VA 24401

October 8th, 2008 1:13 PM

$1,150,000.00
324 E Beverley St

Staunton, VA 24401

Beds: 6.0	Rooms: 6
Baths: 3.00	Sq. Ft.: 6500.00
Garage: 0	Built: 1847

The Thomas J. Michie house is a wonderfully renovated 6500+ square foot historic home located in Staunton’s highly sought after Gospel Hill Historic District. This Federal house design features 18 large rooms with 3.5 baths, high ceilings, period woodwork, and architectural elements including Doric columns, elaborate mantels, and 5 fireplaces. A true masterpiece. This home is listed in the National Register of Historic Places - Building #82004603.

This is a new listing that
I thought you might be
interested in. Visit this
listing online to see more
photos of the property,
Google Earth satellite
images, and much more.

If you have any questions
about this property or
require more information,
please feel free to call.

The Avery Group
Roy Wheeler Realty Co.
4349759000
www.theaverygroup.com

Visit this listing at Here

Posted by The Avery Group on October 8th, 2008 1:13 PMPost a Comment (0)

To finance or not to finance?

September 30th, 2008 2:24 PM

Tuesday's bond market has well in negative territory following a stock rebound that has shifted funds back away from bonds. The stock markets are rebounding after yesterday's walloping with the Dow up 260 points and the Nasdaq up 30 points. This means that the major stock indexes have recovered approximately one-third of yesterday's losses. The bond market benefited form yesterday's stock sell-off but is suffering today as investors move funds back into stocks. The result is the bond market down 13/32 that will likely push this morning's mortgage rates higher by approximately .250 of a discount point.

Today's only economic news was September's Consumer Confidence Index (CCI). It showed a reading of 59.8 that was much higher than forecasts had called for. Analysts were expecting to see a reading of 55.0, meaning that consumers had more confidence in their own financial situation than was expected. This is considered bad news for bonds and mortgage rates because it indicates that consumers are more willing to make large purchases in the near future.

Tomorrow only relevant data is the Institute for Supply Management's (ISM) manufacturing index for September. This index gives us an indication of manufacturer sentiment. Analysts are expecting to see a 0.4 decline from last month's 49.9 reading. The 50.0 benchmark is extremely important because a reading below that level means more surveyed executives felt business worsened than those who said it had improved. This data is important not only because it measures manufacturer sentiment, but it is very recent data. Some economic releases track data that are 30-60 days old, but the ISM index is only a few weeks old. If we get a smaller than expected reading, I expect to see the bond market rally and mortgage rates fall tomorrow morning.

We need to keep an eye on the stock markets and Fed bailout attempt. I don't think we will see much come today as the markets take a breather, but we probably will see more volatility in stocks before the end of the week. This could affect bond prices and mortgage rates. Generally speaking, look for stock weakness to lead to bond gains and lower mortgage rates as investors move funds into the safety of bonds. If the stock markets continue to move higher, we should see bonds suffer and mortgage rates move higher.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Posted by The Avery Group on September 30th, 2008 2:24 PMPost a Comment (0)

Credit Scoring Part III: Dealing with Challenges

September 30th, 2008 2:20 PM

Part III: Dealing with Challenges

Typically, a person with a low credit score is in this position because they lack structure in his or her life. There are, of course, cases where unplanned health or employment complications are to blame, but for the most part, these are individuals who lack the discipline to pay their bills on time or curb their spending.

Let's take a look at some examples that can help to quickly improve less-than-perfect credit scores for the potential homebuyer:

Let's say we have a borrower with a credit score of 664. She has a concentration of credit card debt on one card; let's say $17,000 on a card with a $20,000 limit. At the same time, she has four or five additional credit cards, all with a zero balance. I would advise the borrower to distribute the debt over a number of her cards. Remember, a borrower's credit to debt ratio represents 30% of his or her overall score. By simply changing the ratio of available credit to debt, the borrower in this example could possibly increase her credit score to something closer to 700, saving thousands of dollars on her mortgage.

Another thing to take into consideration in a case like this is what percentage each of the five factors measure in the resulting credit score. Let's say we have a borrower with a "credit high" (the maximum debt allowance on all cards, combined) of $20,000. He has one card that is used for business purposes that is pushing the limit. I would advise the client to get two new cards and, once again, spread the debt out over all of his cards, leaving at least 30% available credit on each card. This will positively affect his overall score, based on the five elements of the FICO scoring model.

Conversely, the borrower should be advised not to close any existing credit card accounts, even if they are at a zero balance. Some people think they are doing themselves a favor by having fewer cards, but they lose out on the credit history factor. Even if the borrower does not have a good rate on an old credit card, they are rewarded for having the long-term credit history, and from time to time they should make a small purchase to keep the account in an active status.

These are just a few examples of what borrowers can do to improve their credit scores when they consider buying a home. If you are disappointed by the fact that you cannot get the most desirable loan up front, monitor your payment history and in time your school will rise so that you can purchase a home or refinance at a more favorable rate.

Stay tuned for Credit Scoring, Part IV: Credit Remediation

written by Leonard Winslow, a Mortgage Loan Officer, of Gateway Bank Mortgage, INC. for The Avery Group Real Estate Blog

Posted by The Avery Group on September 30th, 2008 2:20 PMPost a Comment (0)

Credit Scoring Part II

September 26th, 2008 12:11 PM

Part II: The Five Factors of Credit Scoring

There are five factors that comprise the credit score. They are listed below in order of importance, just as an underwriter would look at the score:

· Payment History: 35% impact. Paying debt on time and in full has a positive impact. Late payments, judgments and charge-offs have a negative impact. Missing a high payment has a more severe impact than missing a low payment. Delinquencies that have occurred in the last two years carry more weight than older items.

· Outstanding Credit Balances: 30% impact. This factor marks the ratio between the outstanding balance and available credit. Ideally, the consumer should make an effort to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when trying to purchase a home.

· Credit History: 15% impact. This marks the length of time since a particular credit line was established. A seasoned borrower is stronger in this area.

· Type of Credit: 10% impact. A mix of auto loans, credit cards, and mortgages is more positive than a concentration of debt from credit cards only.

· Inquiries: 10% impact. This quantifies the number of inquiries that have been made on a consumer's credit history within a six-month period. Each hard inquiry can cost from 2 to 50 points on a credit score, but the maximum number of inquiries that will reduce the score is 10. In other words, 11 or more inquiries in a six-month period will have no further impact on the borrower's credit score.

Remember, a computer that's not taking any personal factors into consideration calculates these scores. When a credit report is generated, it is simply today's snapshot of the borrower's credit profile. This can fluctuate dramatically within the course of a week, depending on the individual's own activities. The borrower should be made aware of this when they enter into the loan process, and know that it's not in their best interest to go out on a shopping spree. They need to make sure they are not creating a negative impact on the score while the lender is reviewing their file.

Secondly, it is often beneficial to compile a tri-merge credit report. This provides scores from the three credit bureaus, Experian®, TransUnion®, and Equifax. The lender should be provided with this rounded profile because these three scoring systems can vary in their results. The lender is going to look at the middle score and throw out the other two. In many cases, this works to the borrower's advantage.

Stay tuned for Credit Scoring, Part III: Dealing with Challenges

written by Leonard Winslow, a Mortgage Loan Officer, of Gateway Bank Mortgage, INC. for The Avery Group Real Estate Blog

Posted by The Avery Group on September 26th, 2008 12:11 PMPost a Comment (0)

First Ever Video Walkthrough Tour by The Avery Group

September 18th, 2008 2:07 PM

As mentioned in a previous blog (Avery Group to Launch Video Tours), I have completed the first video walkthrough tour of one of our listings. The video represents 19408 Lovers Lane listed for sale in Gordonsville, VA.

I have noticed a couple of things that we need to work on. I think I moved too fast through some rooms. Maybe, I should record room by room and edit it all together? Hmm, or remove the times I have to around? Let me know what you guys have any input...

Posted by The Avery Group on September 18th, 2008 2:07 PMPost a Comment (0)

Good Credit Translates into Lower Rates for the Consumer

September 18th, 2008 12:34 PM

Credit Scoring

Part I: Good Credit Translates into Lower Rates for the Consumer

In the 1960s, Fair Isaac Corporation started working on a system lenders could use to evaluate the likelihood of receiving repayment on loans. Prior to that, it was really a matter of trusting an individual to be a "man of his word,"

so to speak. Fair Isaac sought to take human error out of the equation with a reliable system that could determine whether or not consumers were truly worthy of credit, and thus FICO was born. This evolved to become the

standard for lenders by the 1980s.

Credit scoring has an enormous impact on a borrower's ability to purchase a home. It can mean the difference between getting a good interest rate and the home of their dreams, or whether they even qualify at all. For this reason, it is important for borrowers to understand the credit scoring process, and to know what their credit score is when they look to obtain mortgage financing.

What the credit scoring model seeks to quantify is how likely the consumer is to pay off their debt without being more than 90 days late on a payment at any time in the future. Credit scores can range between a low score of 350 and a high of 850. The higher the client's score is, the less likely they are to default on their loan. Only a rare one out of approximately 1300 people in the United States has a credit score above 800. These are the clients that walk away with the best interest rates even though they may fall out of the box in some degree. On the other hand, one out of eight prospective home buyers are faced with the possibility that they may not qualify for the loan they want because they have a score between 500 and 600.

Stay tuned for Credit Scoring, Part II: The Five Factors of Credit Scoring

written by Leonard Winslow, a Mortgage Loan Officer, of Gateway Bank Mortgage, INC. for The Avery Group Real Estate Blog

Posted by The Avery Group on September 18th, 2008 12:34 PMPost a Comment (0)

Avery Group to Launch Video Tours!

September 15th, 2008 11:37 AM

With the addition of a Sony Full HD 1920x1080i Handycam to the Avery Group, we will start doing video walkthroughs of homes. This should be a serious step up from the old fashioned Virtual Tours. Especially since Virtual Tours are, more often than not, glorified slideshows. This should give more information and more detail of a home than still pictures stitched together. This will be a huge step forward for the technology that is already incorporated in the Real Estate Practices of the Avery Group. The first tour should be ready by the end of this week and we will be walking through 19408 Lovers Lane. I will keep you posted...

Posted by Rob Alley on September 15th, 2008 11:37 AMPost a Comment (0)

A Lender's Views on the Short Sale, Foreclosure, and Mortgage Crisis

September 9th, 2008 3:46 PM

I was speaking with a mortgage loan officer today about the short sale, foreclosure, and mortgage "crisis" and his point of view was so interesting, I got him to put it in writing so I could share it. Here it goes:

FANNIE MAE AND FREDIE MAC TAKE OVER:

"The government is spending our dollars again"

"The mortgage companies have caused this debacle"

"The loan officer is a cheat and thief"

"My Realtor made me do it"

"It wasn’t explained to me"

"ITS NOT MY FAULT"-----------BALONEY

Lets put the blame where it truly belongs. It was and is the general public who is at fault. More specifically all those poor little folks who are having their homes taken from them because they can’t make their payments because they bought more than they should have, never paid their bills on time and want to have everything handed to them on a silver platter. SORRY you have been screwed blued and tattooed. In other words you deserve what you got or are getting. Grow up. Learn to pay your bills on time; learn to be honest about how much income you make, disclose the proper income on your tax returns... In my 20 years I have never seen more people think they deserve to have a home and therefore it should be handed to them. How any times have you wondered how your friend who has all the expensive toys yet works with so you know what they make, yet they can buy the 500,000 home. Guess what they don’t have that home now do they. And guess again who is paying for it one way or the other. That’s right, YOU ARE. Whose fault is it? Not mine. It comes down to Greed. Greed of the homeowner for wanting the mansion, GREED of the Realtor for wanting the commission, GREED of the loan officer for making the sub prime loan for the commission, Greed of the investors you wanted more income and GREED of the bond traders that gave the loan officers the guidelines.

I may sound harsh and unfeeling, it some ways I am, but in others I want to show the compassion to the hard working folks that have worked for what they have and take pride in that. Those hardworking folks that are having there homes taken because of the dishonesty of others should be helped, those people that are having there homes taken due to a loss of job or medical reasons should be helped, but the greedy home owners, they have gotten what they deserve.

Leonard Winslow, Mortgage Loan Officer

Gateway Bank Mortgage, INC.

Wow, those are some powerful words. Let us know what you think by posting comments!

Charlottesville Real Estate

Avery Group

Forest Lakes Real Estate

Charlottesville Real Estate Blog

Posted by The Avery Group on September 9th, 2008 3:46 PMPost a Comment (0)

Choosing a Realtor for a Short Sale

August 29th, 2008 12:51 PM

When a homeowner makes the tough decision to do a short sale, there is another tough decision to make. Representation. Who are they going to use to represent them in the sale of their home, negotiate on their behalf, and do whatever it takes to close the sale (within legal parameters, of course). Most people would prefer to turn to a friend, but is that the right call? Sure, you trust them, you are more comfortable sharing personal information, and its easier. However, it takes a lot more to move a short sale than a regular home sale. Choosing the agent is crucial. The agent needs to be aggressive in both marketing and negotiating. The Realtor will not only have to negotiate offers that come in on the property, but the Realtor will also have to show, prove and negotiate with the bank to lose money. That is key. The Realtor will be on hold ALOT. The Realtor will need patience, and have the ability to be firm. This is not a case where you can leave a voicemail and expect a call back. The Realtor will have to be relentless at all hours of the day, especially if the bank is in California. This means negotiation during dinner, before bed, when the agent first wakes up. I have been on the phone negotiating offers at 1AM Eastern Standard Time. You have to seize every opportunity to reach an agreement, pushing them to voicemail is NOT an option. Think about these things when you think about calling someone to list a short sale. You need a bull dog, someone who will fight for you. If your friend can do that, great, if not, CALL SOMEONE ELSE.

Stop Foreclosure

Charlottesville Real Estate

Posted by The Avery Group on August 29th, 2008 12:51 PMPost a Comment (0)

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