Ken Lampton's Blog

Many consumers have reported being scammed by so-called "Foreclosure Rescue Companies" that collect up-front fees from homeowners in exchange for promises to help them obtain loan modifications or avoid foreclosure. Almost half the states have banned the collection of up-front fees. And federal regulators have decided to follow their lead.

The Federal Trade Commission proposed a rule on February 4th that would bar for-profit companies that work with lenders and servicers on behalf of homeowners to modify loans or avoid foreclosure from collecting payment until after such services are provided, and impose other restrictions on their practices.

The FTC said that in many cases, companies collecting advance fees told homeowners to stop communicating with their loan servicer and did not provide the services they promised. Some  falsely claimed to be affiliated with government programs, including the Making Home Affordable Program.

Foreclosure rescue companies have also misled consumers about their refund and cancellation policies, and the likelihood of obtaining a loan modification, the FTC said. The new rule would make it easier for the FTC to crack down on such practices.

The proposed rule would not apply to companies that own or service mortgage loans.

I get email solicitations every day from these companies, and I always wonder which ones are bogus and which ones actually perform useful services. I'm glad to see the federal government go after them.

If you have fallen behind on your home payments, contact the Homeownership Preservation Foundation (HPF) at 888-995-HOPE or www.hopenow.com. HPF is a nonprofit organization that partners with mortgage companies, local governments, and other organizations to help consumers get loan modifications and prevent foreclosures.

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Ken Lampton, RE/MAX About Dallas
CRS (Certified Residential Specialist)
CDPE (Certified Distressed Property Expert)
The expert on the Dallas M Streets
www.m-street-dallas.com

Bring your garden tools to Lee School and dig right in!

Installation of an expanded outdoor learning center at Robert E Lee Elementary School will take place on Friday, February 5, 2010. The community at large is invited to participate.

Lee  has been awarded a grant from Real School Gardens, a nonprofit organization based in Fort Worth, Texas. Real School Gardens is a grassroots gardening program that supports elementary schools as they design, install and sustain school gardens that engage children in hands-on learning. These gardens provide parents and community members with new opportunities to become involved in the public schools.

Dallas ISD students in the M Street and Lakewood neighborhoods have many opportunities to cultivate a deeper connection with nature by hands-on learning at outdoor learning centers. For several years lucky students at Stonewall Jackson Elementary have produced a variety of organic vegetables to harvest and take home. At Lakewood Elementary, grants from Texas Parks and Wildlife helped turn a creek into a living outdoor science lab where students learn about nature and wildlife.

The garden at Robert E. Lee Elementary got its start in 2006 due largely to the efforts of sixth-grade teacher Valerie Kaiser. It was developed with aid from the non-profit Dallas County Master Gardener Association. The school is the winner of a major Master Gardener state award.

With the aid of the Real School Gardens grant, Robert E. Lee will expand this garden to include a butterfly way-station on the Vanderbilt side of the school and an arbor/entrance on the Goodwin Avenue side. The present bird and butterfly garden is tucked away in a courtyard behind the school building where it is not visible to the public. But the new butterfly way station along Vanderbilt Avenue will signal Lee's commitment to outdoor learning to all who drive or walk past the school.

This expansion in the program will be a boon to students at the school. And your participation in the installation will help make it possible.

Lunch and snacks will be provided. For additional information call 972-749-7400.

What:   Help Install New Garden At Robert E. Lee Elementary School
Where:   2911 Delmar Avenue (corner of Delmar and Vanderbilt Avenue) in Dallas, Texas
When:   Friday, Feb. 5, 2010, 9AM-3PM and Saturday, Feb. 6, 2010, 9AM-12Noon
  (Come anytime and work for as long as you like.)

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Ken Lampton, RE/MAX About Dallas
CRS (Certified Residential Specialist)
CDPE (Certified Distressed Property Expert)
www.m-street-dallas.com

This from a January 27, 2010 blog posting by C.M. Watts (Garrett-Watts Report) on Mortgage News Daily:

"Exactly two years ago, January 2008, California had 16.6 months inventory of unsold homes.  Today, it’s down to only 3.8 months of unsold homes.  This is the sort of thing that is an absolute sign that housing prices have bottomed out.  With such low inventory, people have already started over-bidding, and if you believe California is  a bell-weather for the rest of the nation, better times are around the corner."

I think he's hit the nail right on the head.

And let me recommend Mortgage News Daily as a source of information for all who have an interest in the housing market.

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Ken Lampton, RE/MAX About Dallas
CRS (Certified Residential Specialist)
CDPE (Certified Distressed Property Expert)
The expert on the Dallas M Streets
www.m-street-dallas.com

Will new-home buyers still demand media rooms in America after the recent financial apocalypse?

Many consumer experts claim Americans want smaller houses in order to accommodate changing lifestyles. This is seen largely as a response to America’s ongoing economic crisis. And some of these experts claim home buyers are willing to strip away the recently-must-have media room if necessary in a tradeoff for other features.

Home builders attending the International Builders Show in Las Vegas last week were presented with the results of a survey conducted by AVID Ratings Company. The results took the form of a “top 10” list.

According to Avid Ratings (a customer loyalty management firm) here are the top 10 must-have features in today’s new homes:

1) The kitchen continues to be the gathering place for family and friends. People still want large kitchens with islands that open into the family room.

2) Energy-efficient appliances, high-efficiency insulation and high window efficiency are the “green” features that buyers value most. Consumers concerned about energy bills may be souring on the large windows that were recently popular.

3) The home office/study is seen as more desirable than a formal dining room or a media room.   

4) A main-floor master suite is a “must-have” for empty nesters and seems to be gaining in popularity with buyers in general.

5) Southerners have always enjoyed their time on the porch. Now outdoor living areas are soaring in popularity, not only in the United States but in neighboring Canada. 

6) Ceiling fans are back as a necessary amenity. 

7) The popularity of whirlpool tubs is going down a notch., but soaker tubs in the master bath are still deemed desirable. Oversized showers with seating areas are gaining in popularity.

8) Brick and stone exteriors continue to be in demand.

9) Community landscaping with walking paths and playgrounds has surpassed golf courses and club houses in popularity in planned developments.

10) The two-car garage is still a desired feature.  The three-car garage ranks high in move-up and  custom homes even though the third garage is often used for storage rather than housing an automobile.

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Ken Lampton, RE/MAX About Dallas
CRS (Certified Residential Specialist)
CDPE (Certified Distressed Property Expert)
The expert on the Dallas M Streets
www.m-street-dallas.com

The California Association of Realtors has released its report on the resale housing market in December of 2009. The report suggests the California housing market is gaining strength. That's good news for those of us who own homes right here in Dallas, Texas.

The numbers cover December closings of existing, single-family detached homes throughout California. Compared to December of 2008, the number of home sales was higher by 1.7%. The median price of a home was higher by 8.4%. The amount of inventory on the market was down from a 5.6-month supply to a 3.8-month supply.

These numbers may not seem impressive at first glance, but they suggest the California market has finally made a long-awaited turnaround. I don't think the Dallas housing market can get stronger until California gets stronger. As we hear better and better figures coming out of California, it's like hearing that little bird chirping just before the sun comes up.

I don't want to be a Pollyanna, so let me also mention that the gains in California are largely the result of investors jumping in to buy foreclosed homes. The rate of foreclosures in California dwarfs our small uptick in foreclosures here in Texas. But foreclosed homes are drawing multiple bids from investors now. The typical husband-and-wife home buyers are having a hard time competing with them.

If the investors are fighting each other to buy foreclosed homes, that's a signal that things are going to get better. How slowly? That's the question, isn't it?

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Ken Lampton, RE/MAX About Dallas
CRS (Certified Residential Specialist)
CDPE (Certified Distressed Property Expert)
The expert on the Dallas M Streets
www.m-street-dallas.com

The folks at FHA have been discussing alternatives for tightening lending standards. Last week they announced their plans.

I think we can all agree it is a shame to tighten lending standards for a program that supplied the loans for 50% of all first-time home buyers in 2009. But as more FHA-insured loans have gone into default the FHA capital reserve fund has fallen below the 2% ratio mandated by Congress. This raises fears that FHA might have difficulty meeting its obligations if loan defaults continue to accelerate.

As it turns out, thank goodness, the proposed changes are not as draconian as many people feared they would be.

The FHA up-front Mortgage Insurance Premium (MIP) will be raised in the spring from the present rate of 1.75% of the loan amount to 2.5% of the loan amount. As an example, the MIP for a $200,000 loan will be increased from $3,500 to $5,000. This change can be implemented quickly without any public review or comment period.

Other planned changes require a public comment period before they can be put into effect. They will be implemented in the summer. These include a reduction in the allowable seller concession and an increase in the down payment required from buyers with lower credit ratings.

The reduction in allowable seller concession is a big one. Under present rules a seller can contribute 6% to the buyer's costs. But that amount will be cut in half. Under the new rules a seller will only be able to contribute 3%. On a $200,000 home purchase a seller can now pay $12,000 of a buyer's closing costs and prepaid expenses (such as tax escrow and insurance bills). As a practical matter this is often enough to cover all costs beyond the buyer's down payment. Under the new rules this would be reduced to $6,000. Still helpful, but buyers will definitely be forced to bring more money to the table.

The final change involves down payments. FHA proposes to require borrowers to make 10% down payments if their credit scores are below 580. This is quite a change from the 3.5% presently required. But it may not have much immediate practical effect. For some time now, mortgage lenders have been refusing to loan money to prospective borrowers who have credit scores below 620.

Were you planning to buy a house using an FHA loan this year? Factor these changes into your plans.

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Ken Lampton, RE/MAX About Dallas
CRS (Certified Residential Specialist)
CDPE (Certified Distressed Property Expert)
www.m-street-dallas.com

RealtyTrac©, an oft-quoted data aggregator and foreclosure property search site, issued a press release today quoting year-end figures for foreclosure-related filings. According to the RealtyTrac© report, there were 2.82 million foreclosure-related filings (not actual foreclosed homes, see Note 1 below) in the United States in 2009.  This total is 21% more than 2008. It's 120% more than 2007.

It is worthwhile to view the press release in its entirety. The national figures are interesting, even alarming, but I wanted to know what is happening in my own home state of Texas.

Here's a comparison:

Texas had 100,045 properties with filings.
This represents 1 filing for every 94 housing units.
This is up by 4% compared to 2008 year-end figures.

Arizona had 163,210 properties with filings.
This represents 1 filing for every 16 housing units.
This is up by 40% compared to 2008 year-end figures.

California had 632,573 properties with filings.
This represents 1 filing for every 21 housing units.
This is up by 21% compared to 2008 year-end figures.-

Florida had 516,711 properties with filings.
This represents 1 filing for every 17 housing units
This is up by 34% compared to 2008 year-end figures.

Georgia had 106,110 properties with filings.
This represents 1 filing for every 37 housing units
This is up by 24% compared to 2008 year-end figures.

Illinois had 131,132 properties with filings.
This represents 1 filing for every 40 housing units
This is up by 32% compared to 2008 year-end figures.

We'd all like to see our foreclosure numbers get better. But I think a state-by-state comparison of these numbers helps to put things in perspective. Texas is not doing so badly after all. There's going to be less tendency for foreclosure sales to drive down housing prices in Texas.

(Note 1: Not all properties subjected to foreclosure-related filings—which include default notices, scheduled foreclosure auctions and bank repossessions—complete the process of foreclosure. Some homeowners negotiate loan modifications or workouts with lenders, and others get approval to negotiate "short sales" in which the sale price doesn't cover the total amount owed.)

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Ken Lampton, RE/MAX About Dallas
CRS (Certified Residential Specialist)
CDPE (Certified Distressed Property Expert)
www.m-street-dallas.com