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January 2008 Entries
Home Refinancing Questions And Answers (Part 1)
Find clear answers to common questions regarding home mortgage loan refinancing.
Question: Rates Are Low. Is Now A Good Time To refinance? When interest rates are lower than your current mortgage rate, a homeowner should definitely contact multiple lending institutions for competitive home mortgage loan refinancing rates.
Assess Your Financial Needs And Goals
Carefully assess your financial situation and goals before making any final decision. Answer the following questions:
1. Is your goal to lower your monthly payments?
2. Do you need to consolidate debt?
3. Do you need cash for large purchases?
4. Are you seeking to adjust your interest deduction expense for tax purposes?
Once you determine your reason for refinancing consider the amount of cash back your require. Using a mortgage refinance calculator determine the amount of savings per month and annually according to lowest available refinance rates. Seek lenders who offer the lowest refinance rates nationwide.
Countrywide CEO forfeits $37.5 million
Facing pressure over his payout, Angelo Mozilo says he is giving up severance pay and other perks.
January 28 2008: 1:40 PM EST
LOS ANGELES (AP) -- Countrywide Financial Corp. CEO Angelo Mozilo, under fire over the size of his potential payout from the proposed sale of his troubled mortgage company, says he is forfeiting some $37.5 million in severance pay, fees and perks he was scheduled to receive upon his retirement.
Mozilo, however, will still retain retirement benefits and deferred compensation that he has already earned, Countrywide said in a statement released Monday.
In addition to $36.4 million cash severance payments, Mozilo also walked away from $400,000 per year he was to be paid under an agreement to serve as a consultant to the company following his retirement, and perks including the use of a private airplane, the company said.
"I believe this decision is the right thing to do as Countrywide works toward the successful completion of the merger with Bank of America," Mozilo said in the prepared statement.
Damon Silvers, associate general counsel of the AFL-CIO, which operates a Web site that tracks executive pay, said that by giving up his severance pay Mozilo "seems to recognize that there's something wrong with this picture."
"It would be best if Countrywide and Bank of America froze all of his compensation until a thorough inquiry could be completed as to exactly what happened at Countrywide," Silvers said, referring to allegations raised in some shareholder lawsuits filed last year that the company failed to warn investors about the depth of its financial troubles.
Calabasas-based Countrywide (CFC, Fortune 500) agreed earlier this month be acquired by Bank of America Corp. (BAC, Fortune 500) for $4.1 billion in stock.
The spread between Countrywide's stock price and the value of Bank of America's offer has remained unusually large, a reflection some investors see a significant risk that Bank of America may turn its back on the deal or press for a lower price.
Countrywide shares closed at $6.02 on Friday, 19.5 percent below what each share would be worth in Bank of America stock if the deal was closed based on the bank's $39.48 closing share price Friday.
Bank of America has maintained its intent to acquire Countrywide.
Mozilo is not slated to receive any cash payments tied to the completion of the acquisition, Countrywide noted.
The chief executive has come under criticism since the deal was announced and media reports suggested he stood to receive a multimillion-dollar payout when he leaves the company.
Mozilo had been in line to receive a package, including his retirement pay and stock holdings, of nearly $66 million, according to estimates by The Hay Group, a compensation consulting company. Other estimates have suggested Mozilo's payout could exceed $110 million.
Under his employment agreement, Mozilo was entitled to a severance cash payment equal to three times his annual salary of $1.9 million, and three times his incentive cash bonus for the year preceding a change in the company's ownership or the average of two years' bonuses.
The size of his bonus depends on how well the company performs. His 2007 employment agreement sets a target of $4 million for his annual incentive compensation bonus and a cap of $10 million.
Now, he'll leave with a pension plan and supplemental executive retirement plan that totaled $23.8 million as of December 2006, according to the most recent proxy statement the company filed with the Securities and Exchange Commission.
Mozilo also accrued about $20.6 million in deferred compensation, according to the filing.
The executive has sold shares of the company's stock since last year but still has shares worth around $5.8 million.
Mozilo's decision to give up some of his pay comes amid increasing scrutiny over the size of pay packages for CEOs at some of the nation's largest financial institutions, many of which have sustained heavy losses during the mortgage market's downfall.
He is among several banking industry executives who have been asked to appear next month before the House Oversight and Government Reform Committee for a hearing to examine whether their compensation and severance packages are justified.
Mozilo's stock trades have also drawn negative attention.
He's been criticized for cashing in company stock options by switching his trading plans as the mortgage industry's woes multiplied last year. Some shareholders have called for his removal.
The SEC launched an informal inquiry last fall into his sales of Countrywide stock.
Mozilo has denied making any trading decisions based on material nonpublic information.
Countrywide rose to become the nation's largest mortgage lender but has been struggling since last year amid rising mortgage defaults, particularly subprime loans to borrowers with questionable credit histories.
The company, which posted a $1.2 billion loss in the third quarter ended Sept. 30, is due to report fourth-quarter and 2007 financial results Tuesday.
Countrywide shares fell 9 cents, or 1.4 percent, to $6.02 Friday. 
Mortgage mogul Angelo Mozilo made a killing
BY FROMA HARROP | Froma Harrop is a syndicated columnist based at The Providence Journal in Rhode Island. - January 29, 2008
As banks, money markets and stock exchanges convulse over a sinking American economy, we see the folks sprawled at the bottom of the smoking rubble - debt-crushed American consumers. It is they whose reckless or trusting natures enriched so many, at least for a while, and whose troubled loans have sent markets into panic.
But let us also note the operators creeping away from the disaster they helped create with their millions intact. None made a bigger pile off the pile than Angelo Mozilo, former head of Countrywide Financial.
All the planets lined up for Mozilo.
The government could have stopped the excesses of Mozilo and other pushers of ugly mortgages. But the Bush administration was never overly burdened by a conscience. If little people were being tricked into abusive loans - which were then unloaded on unsuspecting investors - well, that's the "free market" for you. The mortgage mongers were important. They kept the housing bubble going.
The American dream propaganda machine provided the background music: Real estate was played a "must own" for all respectable families and an investment that never fails. Foes of regulation defended the exorbitant fees and delayed-explosive interest rates as socially desirable. Without them, they argued, low-income people - read "minorities" - could not enjoy the blessings of homeownership.
Mozilo understood the rhetoric perfectly. In a Countrywide brochure titled "Working Together to Achieve the Dream," he pledged "our unflagging dedication to helping lower the barriers to homeownership." The pictures were a parade of American diversity, alongside references to black churches and Countrywide's extensive Spanish-language resources.
Despite Countrywide's slogan, "the best loan possible," the sales force was trained to sweet-talk customers into high-cost mortgages. The company software was rigged to steer borrowers with good credit into subprime mortgages, a trick played with considerable success in black and Hispanic neighborhoods. Salespeople were discouraged from offering Federal Housing Administration loans, which are generally the best deal for low-income borrowers.
The name of the game for mortgage makers was to pocket big fees upfront. Countrywide and others loaded borrowers with a plethora of fees - for flood certifications, appraisals, preparing the papers - even for e-mailing documents.
Shabby lending practices were a given. Many of the mortgages required no down payment or proof of income. None of this mattered, because Step Two was to pass the risky loans on to the next sucker.
So the mortgage brokers sold the mortgages to investment banks. The investment banks then packaged the loans into securities (and collected their own fees), which they palmed off on investors. (To make their loans more appealing to investors, Countrywide insisted on big prepayment penalties, making it hard to refinance and trapping borrowers into the high interest rates.)
The party couldn't last. When housing turned bad last year, Countrywide stock lost more than half of its value. But that didn't affect the estimated $414 million Mozilo had already made selling his Countrywide shares from 2004 to 2007.
You say the borrowers should have been more careful, but suppose, for example, you were an ordinary Latino working guy and saw Countrywide listed on the Congressional Hispanic Caucus Institute's "Hogar" (means "hearth") Web site as a "trusted friend." (Countrywide had paid $50,000 for that mention.) Wouldn't you have assumed its mortgages were fair?
Did we forget to add that Mozilo was named the National Housing Conference's "man of the year" in 2004? Or that the venerable American Banker newspaper gave him its 2006 "lifetime achievement award"?
If Countrywide gets sold to Bank of America as planned, Mozilo says he'll give up $37.5million in severance and consulting pay - not much compared with the wreckage he leaves behind. That's how things work in the Age of Bush.
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What's in the Tentative Stimulus Deal?
by Heidi Glenn
NPR.org, January 29, 2008 · House leaders and the Bush administration last week reached a deal on how to deliver an economic stimulus package to help jump-start the sluggish U.S. economy. The $150 billion agreement includes tax rebates for individuals, tax cuts for businesses and help for American homeowners. The stimulus plan now moves to the Senate, where it appears it will undergo some changes.
The head of the Senate Finance Committee on Monday challenged the agreement worked out by House leaders and the president with a $156 billion counteroffer. The move dashed hopes Bush had for moving his stimulus proposal quickly through Congress and to his desk.
Here, read about what happens next and when you might see a rebate check in your mailbox.
What kind of tax rebates would individuals get under the House bill?
House leaders and the White House have agreed to tax rebates worth more than $100 billion for individuals and families. The tax rebates would be:
- Up to $600 per person
- Up to $1,200 per couple
- An additional $300 per child
The rebates would go to 117 million families.
Who would be eligible for a rebate?
Under the agreement worked out by House leaders and President Bush, taxpayers earning less than $75,000 and couples earning less than $150,000 in adjusted gross income for the year would receive a rebate check. To be eligible for the income tax rebate, taxpayers would have to have earned at least $3,000 in 2007.
The agreement expands the scope of President Bush's original stimulus plan, which would have limited tax rebates only to those who pay income tax. The new agreement would provide $28 billion to 35 million families who wouldn't have been eligible under President Bush's original proposal, according to House Democrats.
When could I expect a check in the mail?
It's unclear when a final deal will be reached. Treasury Secretary Henry Paulson says the IRS could begin issuing rebate checks — either electronically or as paper checks — within 60 days of when the economic stimulus package is enacted. The lion's share of the rebates would then be delivered within a 10-week period, according to Paulson. But Paulson warns that the agency will need to focus for two weeks in April on the demands of the regular tax-filing season. If the bill is enacted in mid-February, as many lawmakers hope, then the process would be wrapped up by mid-summer.
What kind of tax cuts would businesses get?
The House package includes tens of billions in tax cuts for corporations.
It would allow all businesses to immediately write off 50 percent of the purchase cost of new plants and other equipment. In addition, small businesses would be permitted to write off other equipment purchases.
Does the deal address the mortgage crisis?
Yes. The House package would temporarily increase the size of mortgage loans — known as the conforming loan limit — that Fannie Mae and Freddie Mac can purchase: from the current $417,000 to a maximum of $729,750. It would also permanently raise the cap on Federal Housing Administration mortgage loans from $367,000 up to $729,750.
Why raise the conforming loan limits?
Supporters say raising the loan limits will deliver lower interest rates to a large number of homebuyers.
Right now, mortgages for more than $417, 000 carry higher interest rates than mortgages below that amount. That's because Fannie Mae and Freddie Mac are not allowed to back loans above that cutoff.
Higher loan limits will make many more homeowners eligible for lower rates, which could translate to savings of hundreds of dollars each month for those in high-cost areas of the country.
But some critics warn that higher loans limits will merely result in more — and bigger — bad loans being bought up by government agencies. And that means that when these loans go bad, taxpayers will be left holding the bag.
What's in the Senate version?
The proposal from Senate Finance Committee Chairman Max Baucus (D-MT) includes tax rebates and business tax cuts. It would also offer 13 weeks of additional unemployment insurance, a proposal that House Democrats dropped during negotiations with President Bush.
Under Baucus' plan, the tax rebates would be:
- Up to $500 per person
- Up to $1,000 per couple
- An additional $300 per child
Unlike the House bill, Americans receiving Social Security benefits would receive rebate checks. However, Baucus would not include upper-income limits as the House bill would, so wealthy taxpayers would also receive rebates.
Baucus' proposal also includes business tax cuts similar to those offered by the House, but he would also allow companies to write off losses going back five years.
What happens next?
The deal struck last week among Democratic and Republican House leaders and the White House was a major political breakthrough. However, now that the Senate has laid down its initial counteroffer, a conference between the House and Senate will be required to negotiate what is likely to be a delicate compromise.
During talks with President Bush and House Republicans, House Democrats had dropped demands to expand unemployment and food stamp benefits in exchange for extending the rebates to those who earn too little to pay income taxes. Conservative Republicans, meanwhile, may object to rebates going to those without income tax liability.
And House Democrats already have expressed displeasure with Baucus' plan to give wealthy taxpayers rebate checks.
The Associated Press and NPR contributed to this report.
Fed Makes Second Deep Cut to Interest Rates
NPR.org, January 30, 2008 · The Federal Reserve has voted to cut a key interest rate another half-percentage point to 3 percent on Wednesday, barely a week after the previous cut, signaling the central bank's desire to stabilize the faltering economy.
The move to pare the federal funds rate was announced at the end of a two-day meeting of the Fed's policy-setting Federal Open Market Committee. The cut had been widely anticipated on Wall Street, where analysts expected at least a quarter-percentage point cut but had hoped for more.
The move to cut the the federal funds rate by 50 basis points came on a unanimous decision.
The Fed's announcement comes close on the heels of last week's surprise three-quarter point cut in the same benchmark rate — its biggest single decrease in more than two decades.
In explaining its aggressive move last week, the Fed said the outlook for economic growth had weakened and downside risks had risen. Policy-makers also said businesses and households were beginning to feel the pinch of tighter credit.
In a statement, the Federal Reserve said that taken together, the two moves "should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain."
The economy's weaker-than-expected performance in the fourth quarter — an anemic 0.6 percent growth rate — along with housing and labor concerns, also played a role in the Fed's decision.
Fed Cuts Interest Rate to 3% as U.S. Growth Falters (Update6)
By Craig Torres
Jan. 30 (Bloomberg) -- The Federal Reserve lowered its benchmark interest rate by half a point to 3 percent, the second cut in nine days, and indicated its willingness to do so again to prevent a U.S. recession.
``Downside risks to growth remain,'' the Federal Open Market Committee said in a statement after meeting today in Washington. In a reference to the volatility of the past five months, the Fed added that ``financial markets remain under considerable stress and credit has tightened further for some businesses and households.''
The dollar tumbled and two-year Treasury notes rose after the decision as traders anticipated another reduction at the Fed's March meeting, if not before. The cumulative reduction in rates since Jan. 22 is the fastest easing of monetary policy since 1990. The Standard & Poor's 500 Index closed 0.5 percent lower and is down 7.7 percent this year.
``They're going full-bore trying to keep the economy from recession,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. ``Conditions in the market place are the driving force right now.''
Hours before the decision was announced, the Commerce Department reported that gross domestic product grew at an annual pace of 0.6 percent in the fourth quarter.
``The Fed has gotten religion and is going do what they need to do,'' said Mark Vitner, senior economist at Wachovia Corp. in Charlotte, North Carolina.
Readiness to Respond
Fed officials said they will continue to assess financial markets and the economy ``and will act in a timely manner as needed.''
``Recent information indicates a deepening of the housing contraction as well as some softening in labor markets,'' the central bank's statement also noted.
Chairman Ben S. Bernanke and the Fed's Board of Governors also voted to cut the discount rate, the cost of direct loans from the central bank, to 3.5 percent from 4 percent.
Dallas Fed President Richard Fisher dissented from today's decision, preferring no change.
Policy makers presented revised three-year economic forecasts at this week's gathering. The Fed will release the projections along with minutes of the meeting on Feb. 20.
Today's Commerce Department figures showed the Fed's preferred inflation gauge rose at a 2.7 percent annualized rate last quarter. Fed officials in October forecast the personal consumption expenditures price index minus food and energy would rise 1.6 percent to 1.9 percent in 2010, offering a measure of their longer-term inflation objective.
Inflation
``The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully,'' the Fed said in today's statement.
Wall Street firms including Morgan Stanley, Merrill Lynch & Co., Goldman Sachs Group Inc. and Citigroup Inc. are forecasting the first recession since 2001 this year. Still, executives at firms such as Dow Chemical Co. said they don't detect a downturn yet, while risks remain.
This year ``will be slower than 2007,'' Andrew Liveris, the chairman and chief executive officer of Dow Chemical, said yesterday. ``It is an inconvenience, not a catastrophe.''
United Parcel Service Inc., Caterpillar Inc. and General Electric Co. are relying on gains overseas to counter slower growth at home.
Evolution Since August
Fed policy makers have struggled since August to contain the economic damage sparked by the worst housing recession in a quarter-century. The world's largest banks and securities firms have recorded more than $133 billion in asset writedowns and credit losses since the beginning of 2007, which analysts blamed on weak and fragmented supervision and poor credit analysis.
``The Fed's move lowers the cost of financing for Wall Street which is struggling to raise capital after being hit with writedowns not seen since the Great Depression,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.
Foreclosure rates rose 75 percent in 2007 as a record amount of adjustable-rate loans to borrowers with weak or limited credit histories reset to higher rates, RealtyTrac Inc. data show. Home prices in 20 U.S. metropolitan areas fell 7.7 percent in November from a year earlier, the 11th consecutive decline, the S&P/Case-Shiller home-price index showed yesterday.
``We are in a historic housing bust right now, comparable to that of the Great Depression,'' said Robert Shiller, chief economist of MacroMarkets LLC in Madison, New Jersey, who co- founded the house-price index. ``The unraveling of that has unpredictable consequences.''
Delay in 2007
Fed officials waited until September to cut the benchmark lending rate, even though premiums on corporate bonds and lower- rated securities began to climb in late June.
By December, Fed policy makers had cut the benchmark lending rate 1 percentage point, yet still described the policy rate as ``somewhat restrictive'' as they deliberated whether to cut again that month, minutes show.
The government's December payroll report, which showed a loss of 13,000 private sector jobs, the first decline since July 2003, began to reshape Fed officials' views about risks.
Bernanke used a Jan. 10 speech to update the public. ``The baseline outlook for real activity in 2008 has worsened and the downside risks to growth have become more pronounced,'' he said, breaking with the Fed's statement a month earlier which only expressed ``uncertainty'' about the outlook. He pledged ``substantive additional action as needed.''
To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net
Last Updated: January 30, 2008 17:15 EST
Press Release
Release Date: January 30, 2008
For immediate release
The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent.
Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.
The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.
Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was Richard W. Fisher, who preferred no change in the target for the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco.
If you are thinking of selling your home, chances are you're caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures. Remember, we are here to help you with any of your needs. Check us out at www.askaboutrealestate.net.
So you’ve decided to sell your home and have a fairly good idea of what you think it is worth. Being a sensible home seller, you schedule appointments with three local listing agents who’ve been hanging stuff on your front doorknob for years. Each Real Estate Professional comes prepared with a "Competitive Market Analysis" on fancy paper and they each recommend a specific sales price.
Amazingly, a couple of the Real Estate Professionals have come up with prices that are lower than you expected. Although they back up their recommendations with recent sales data of similar homes, you remain convinced your house is worth more. When you interview the third agent’s figures, they are much more in line with your own anticipated value, or maybe even higher. Suddenly, you are a happy and excited home seller, already counting the money.
If you’re like many people, you pick Real Estate Professional number three. This is an agent who seems willing to listen to your input and work with you. This is an agent that cares about putting the most money in your pocket. This is an agent that is willing to start out at your price and if you need to drop the price later, you can do that easily, right? After all, everyone else does it!
The truth is that you may have just met an agent engaging in a questionable sales practice called "buying a listing." He "bought" the listing by suggesting you might be able to get a higher sales price than the other agents recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price.
Why do agents "buy" listings? There are basically two reasons. A well-meaning and hard working agent can feel pressure from a homeowner who has an inflated perception of his home’s value. On the other hand, there are some agents who engage in this sales practice routinely.
If you are thinking of selling your home, chances are you're caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures. Remember, we are here to help you with any of your needs. Check us out at www.askaboutrealestate.net.
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Most real estate advice tells you to work on the outside of the house first, but unless there is a major project involved, we believe it is best to do it last. There are two main reasons for this. First, the first steps in preparing the interior of the house are easier. They also help develop the proper mind set required for selling - beginning to think of your "home" as a marketable commodity. Second, the exterior is the most important. A homebuyer’s first impression is based on his or her view of the house from the real estate agent’s car.
So take a walk across the street and take a good look at your house. Look at nearby houses, too, and see how yours compares.
Landscaping
Is your landscaping at least average for the neighborhood? If it is not, buy a few bushes and plant them. Do not put in trees. Mature trees are expensive, and you will not get back your investment. Also, immature trees do not really add much to the appearance value of the home.
If you have an area for flowers, buy mature colorful flowers and plant them. They add a splash of vibrancy and color, creating a favorable first impression. Do not buy bulbs or seeds and plant them. They will not mature fast enough to create the desired effect and you certainly don’t want a patch of brown earth for homebuyers to view.
Your lawn should be evenly cut, freshly edged, well watered, and free of brown spots. If there are problems with your lawn, you should probably take care of them before working on the inside of your home. This is because certain areas may need re-soding, and you want to give it a chance to grow so that re-sod areas are not immediately apparent. Plus, you might want to give fertilizer enough time to be effective.
Always rake up loose leaves and grass cuttings.
House Exterior
The big decision is whether to paint or not to paint. When you look at your house from across the street, does it look tired and faded? If so, a paint job may be in order. It is often a very good investment and really spruces up the appearance of a house, adding dollars to offers from potential homebuyers.
When choosing a color, it should not be something garish and unusual, but a color that fits well in your neighborhood. Of course, the color also depends on the style of your house, too. For some reason, different shades of yellow seem to elicit the best response in homebuyers, whether it is in the trim or the basic color of the house.
As for the roof, if you know your house has an old leaky roof, replace it. If you do not replace a leaky roof, you are going to have to disclose it and the buyer will want a new roof, anyway. Otherwise, wait and see what the home inspector says. Why spend money unnecessarily?
The Back Yard
The back yard should be tidy. If you have a pool or spa, keep it freshly maintained and constantly cleaned. For those that have dogs, be sure to constantly keep the area clear of "debris." If you have swing sets or anything elaborate for your kids, it probably makes more sense to remove them than to leave them in place. They take up room, and you want your back yard to appear as spacious as possible, especially in newer homes where the yards are not as large.
The Front Door & Entryway
The front door should be especially sharp, since it is the entryway into the house. Polish the door fixture so it gleams. If the door needs refinishing or repainting, make sure to get that done.
If you have a cute little plaque or shingle with your family name on it, remove it. Even if it is just on the mailbox. You can always put it up again once you move. Get a new plush door mat, too. This is something else you can take with you once you move.
Make sure the lock works easily and the key fits properly. When a homebuyer comes to visit your home, the agent uses the key from the lock box to unlock the door. If there is trouble working the lock while everyone else stands around twiddling their thumbs, this sends a negative first impression to prospective homebuyers.
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If you are thinking of selling your home, chances are you're caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures. Remember, we are here to help you with any of your needs. Check us out at www.askaboutrealestate.net.
Plumbing and Fixtures
All your sink fixtures should look shiny and new. If this cannot be accomplished by cleaning, buy new ones where needed. If you don’t buy something fancy, this can be accomplished inexpensively and they are fairly easy to install. Make sure all the hot and cold water knobs are easy to turn and that the faucets do not leak. If they do, replace the washers. It is not difficult at all.
Check to make sure you have good water pressure and that there are no stains on any of the porcelain. If you have a difficult stain to remove, one trick is to hire a cleaning crew to go through and clean your home on a one-time basis. They seem to be wonderful at making stains go away.
Ceilings, Walls and Painting
Check all the ceilings for water stains. Sometimes old leaks leave stains, even after you have repaired the leak. Of course, if you do have a leak, you will have to get it repaired, whether it is a plumbing problem or the roof leaks.
You should do the same for walls, looking for not only stains, but also areas where dirt has accumulated and you just may not have noticed. Plus, you may have an outdated color scheme.
Painting can be your best investment when selling your home. It is not a very expensive operation and often you can do it yourself. Do not choose colors based on your own preferences, but based on what would appeal to the widest possible number of buyers. You should almost always choose an off-white color because white helps your rooms appear bright and spacious.
Carpet and Flooring
Unless your carpet appears old and worn, or it is definitely an outdated style or color, you probably should do nothing more than hire a good carpet cleaner. If you do choose to replace it, do so with something inexpensive in a fairly neutral color.
Repair or replace broken floor tiles, but do not spend a lot of money on anything. Remember, you are not fixing up the place for yourself. You want to move. Your goal is simply to have as few negative impressions upon those who may want to purchase your property.
Windows and Doors
Check all of your windows to make sure they open and close easily. If not, a spray of WD40 often helps. Make sure there are no cracked or broken windowpanes. If there are, replace them before you begin showing your home.
Do the same things with the doors – make sure they open and close properly, without creaking. If they do, a shot of WD40 on the hinges usually makes the creak go away. Be sure the doorknobs turn easily, and that they are cleaned and polished to look sharp. As buyers go from room to room, someone opens each door and you want to do everything necessary to create a positive impression.
Odor Control
For those who smoke, you might want to minimize smoking indoors while trying to sell your home. You could also purchase an ozone spray that helps to remove odors without creating a masking odor.
Pets of all kinds create odors that you may have become used to, but are immediately noticeable to those with more finely tuned olfactory senses. For those with cats, be sure to empty kitty litter boxes daily. There are also products that you can sprinkle in a layer below the kitty litter that helps to control odor. For those with dogs, keep the dog outdoors as much as possible. You might also try sprinkling carpet freshener on the carpet on a periodic basis.
Costs of Repairs
Do not do anything expensive, such as remodeling. If possible, use savings to pay for any repairs and improvements – do not go charging up credit cards or obtaining new loans. Remember that part of selling a house is also preparing to buy your next home. You do not want to do anything that will affect your credit scores or hurt your ability to qualify for your next mortgage.
If you are thinking of selling your home, chances are you're caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures. Remember, we are here to help you with any of your needs. Check us out at www.askaboutrealestate.net.
This is the hardest thing for most people to do because they are emotionally attached to everything in the house. After years of living in the same home, clutter collects in such a way that may not be evident to the homeowner. However, it does affect the way buyers see the home, even if you do not realize it. Clutter collects on shelves, counter tops, drawers, closets, garages, attics, and basements.
Take a step back and pretend you are a buyer. Let a friend help point out areas of clutter, as long as you can accept their views without getting defensive. Let your agent help you, too.
Kitchen Clutter
You see, homebuyers will open all your cabinets and drawers, especially in the kitchen. They want to be sure there is enough room for their "stuff." If your kitchen cabinets, pantries, and drawers look jammed full, it sends a negative message to the buyer and does not promote an image of plentiful storage space. The best way to do that is to have as much "empty space" as possible.
For that reason, if you have a "junk drawer," get rid of the junk. If you have a rarely used crock pot, put it in storage. Do this with every cabinet and drawer. Create open space.
If you have a large amount of foodstuffs crammed into the shelves or pantry, begin using them – especially canned goods. Canned goods are heavy and you don’t want to be lugging them to a new house, anyway – or paying a mover to do so. Let what you have on the shelves determine your menus and use up as much as you can.
Beneath the sink is very critical, too. Make sure the area beneath the sink is as empty as possible, removing all extra cleaning supplies. You should scrub the area down as well, and determine if there are any tell-tale signs of water leaks that may cause a homebuyer to hesitate in buying your home.
Closet Clutter
Furniture Clutter
Storage Area Clutter
Or have a garage sale.
Basements, garages, attics, and sheds accumulate not only clutter, but junk. These areas should be as empty as possible so that buyers can imagine what they would do with the space. Remove anything that is not essential and take it to the storage area.Many people have too much furniture in certain rooms – not too much for your own personal living needs – but too much to give the illusion of space that a homebuyer would like to see. You may want to tour some builders’ models to see how they place furniture in the model homes. Observe how they place furniture in the models so you get some ideas on what to remove and what to leave in your house.Closets are great for accumulating clutter, though you may not think of it as clutter. We are talking about extra clothes and shoes – things you rarely wear but cannot bear to be without. Do without these items for a couple of months by putting them in a box, because these items can make your closets look "crammed full." Sometimes there are shoeboxes full of "stuff" or other accumulated personal items, too.The kitchen is a good place to start removing clutter, because it is an easy place to start. First, get everything off the counters. Everything. Even the toaster. Put the toaster in a cabinet and take it out when you use it. Find a place where you can store everything in cabinets and drawers. Of course, you may notice that you do not have cabinet space to put everything. Clean them out. The dishes, pots and pans that rarely get used? Put them in a box and put that box in storage, too.
If you are thinking of selling your home, chances are you're caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures. Remember, we are here to help you with any of your needs. Check us out at www.askaboutrealestate.net.
Emotion vs. Reason
When conversing with real estate agents, you will often find that when they talk to you about buying real estate, they will refer to your purchase as a "home." Yet if you are selling property, they will often refer to it as a "house." There is a reason for this. Buying real estate is often an emotional decision, but when selling real estate you need to remove emotion from the equation.
You need to think of your house as a marketable commodity. Property. Real estate. Your goal is to get others to see it as their potential home, not yours. If you do not consciously make this decision, you can inadvertently create a situation where it takes longer to sell your property.
The first step in getting your home ready to sell is to "de-personalize" it.
The reason you want to "de-personalize" your home is because you want buyers to view it as their potential home. When a potential homebuyer sees your family photos hanging on the wall, it puts your own brand on the home and momentarily shatters their illusions about owning the house. Therefore, put away family photos, sports trophies, collectible items, knick-knacks, and souvenirs. Put them in a box. Rent a storage area for a few months and put the box in the storage unit.
Do not just put the box in the attic, basement, garage or a closet. Part of preparing a house for sale is to remove "clutter," and that is the next step in preparing your house for sale.
AgStar’s Fund for Rural America Awards Grant to GFW High School
MANKATO, Minn. – The AgStar Fund for Rural America is pleased to announce its recent grant award of $10,000 to the GFW High School. Through this grant the high school will purchase equipment for the Natural Resources, Plant Science and Exploring Ag Classes.
The GFW High School supports the importance of agriculture in the school by offering students educational experiences where they can do relevant coursework and apply what they have learned towards solving real world issues. “Ag education for our youth is vital and AgStar is proud to award this grant to ensure that students in the area are able to experience this innovative and hands-on learning environment,” said Jody Bloemke, AgStar Fund Administrator.
The AgStar Fund donated over $480,000 last year to organizations working to improve the future of rural America. Applications considered for funding and support must align with the Fund’s mission to “enhance the quality of life and future opportunities for rural residents and their communities” and focus in one of the four key areas of support: Education, Technology, Environment and Quality of Life.
About AgStar: AgStar Financial Services, ACA, headquartered in Mankato, Minn., operates in 69 counties in Minnesota and northwest Wisconsin serving rural communities and agribusinesses throughout the U.S. as part of the Farm Credit System. The company primarily serves the cash grain (corn and soybean production), swine and dairy industries. AgStar has also developed successful programs in loans, leases, crop insurance, tax services, accounting and rural home mortgages. Visit www.agstar.com for more information on the AgStar Fund.
Contact:
Jody Bloemke
507-345-56
NAR Pleased with Housing Components Included in Economic Stimulus Package
Jan. 28, 2008-The following is a statement by National Association of Realtors® President Richard F. Gaylord:
“NAR is pleased that the House of Representatives, along with President Bush, presented a bipartisan economic stimulus package today that includes important housing provisions. NAR has been actively advocating for many months FHA reform and increasing the conforming loan limits for Fannie Mae and Freddie Mac.
“The stimulus package announced today is a positive step toward strengthening the housing market and our economy. The increase in loan limits should provide liquidity to the mortgage market in all parts of the country allowing qualified home buyers who may have been on the sidelines to enter the market.
“In high-cost states, many home buyers with good credit could save $3,000 to $5,000 per year by not being forced into the current jumbo mortgage market. Currently, only families in lower cost areas are able to qualify for these types of affordable loans. Such a move would stimulate home sales and help stem the rise in foreclosures, reducing the number of foreclosures by as much as 210,000.
“There is still work to do and we urge the Senate to work with the House and the President to achieve quick enactment of a comprehensive stimulus package.”
Real Estate Terms (the W's)
what-if analysis
An affordability analysis that is based on a what-if scenario. A what-if analysis is useful if you do not have complete data or if you want to explore the effect of various changes to your income, liabilities, or available funds or to the qualifying ratios or down payment expenses that are used in the analysis.
what-if scenario
A change in the amounts that is used as the basis of an affordability analysis. A what-if scenario can include changes to monthly income, debts, or down payment funds or to the qualifying ratios or down payment expenses that are used in the analysis. You can use a what-if scenario to explore different ways to improve your ability to afford a house.
wraparound mortgage
A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.
Real Estate Terms (the V's)
VA mortgage
A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.
vested
Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn.
Department of Veterans Affairs (VA)
An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.
Real Estate Terms (the U's)
underwriting
The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.
unsecured loan
A loan that is not backed by collateral.
Criteria for Selecting A Real Estate Agent!
Consumers would be wise to select an agent:
1. who is professional in appearance, attitude, demeanor and capability.
2. whose company has a strong local reputation for service, ethical performance and available resources.
3. who is willing to prepare, present and commit to a written comprehensive marketing plan.
4. who is willing to commit to a schedule of communication, follow up activities and attending to details.
5. who has experience and knowledge of the local marketplace.
6. who is skilled and accomplished in formulating and implementing effective negotiating strategies.
7. who has a reputation for caring, committed and trustworthy service.
These are the traits that you should look for in a Real Estate Agent.
These are the traits we look for in the Real Estate Agents who are members of www.askaboutrealestate.net
Clinton seeks to smooth relations with Obama
Fri Jan 25, 2008 2:34pm EST
WASHINGTON (Reuters) - Former President Bill Clinton said he might have gone too far in attacking Barack Obama, Hillary Clinton said on Friday, adding that both Democratic presidential campaigns should focus on issues.
"He said several times yesterday that maybe he got a little bit carried away," Hillary Clinton said on CBS' "Early Show."
"So we're all going to, on both sides I think, you know, try to bring this debate and this campaign back to the issues that are important," said the New York senator, who would be the first woman U.S. president.
The campaigns of Clinton and Obama, the top two contenders for the Democratic nomination, have engaged in an increasingly bitter war of words, including a debate on Monday that featured sometimes personal attacks.
Obama, an Illinois senator who would be the first black president, has complained specifically about comments from Bill Clinton, including his charge that Obama's consistent opposition to the Iraq war was "a fairy tale."
Hillary Clinton, on ABC's "Good Morning America," said her husband "obviously is a passionate advocate for my cause, as are the wives of my two major opponents. But I think all of us just need to take a deep breath here because we know we'll have a united Democratic Party once this nomination is determined."
Former North Carolina Sen. John Edwards is the other major candidate vying for his party's nomination.
On NBC's "Today," she added, "It is perfectly legitimate to draw comparisons and contrasts ... It has been obviously an incredibly intense campaign."
(Reporting by Vicki Allen and Andy Sullivan)
Bank Of Missed Opportunity (BAC)
When The I-Banking Gets Tough, Just Get Rid of It
Bank of America's Q4 net income plunged to $268 million (5 cents per share) from $5.26 billion ($1.16 per share) one year earlier. In a press release covering the earnings numbers, CEO Kenneth Lewis said that the results were hurt by ongoing dislocations in capital markets and the slowing economy. He said that, even given the environment in the financial markets, "we certainly are not pleased with our performance."
Results included $5.44 billion of trading losses, down from profits of $460 million a year ago. This stemmed from $5.28 billion write-down related to collateralized debt obligations. These are really pitiful results, and I was a little surprised at how bad the numbers turned out. This poor performance has led the bank to announce a $6 billion preferred stock sale and given rise to the expectation of more job cuts. The bank has announced 3,650 job cuts since October, but this means that there will likely be many more. There is speculation that the bank has decided to largely exit the investment banking business and focus on what it does best, being a leading consumer bank.
Take Advantage of the Spread
I do not think the shifting of focus at Bank of America is a bad thing. Consumer banks generally get higher valuation multiples in the market, and Bank of America's pick-up of Countrywide also shows that it still has room to make big purchases and expand in the consumer arena. I think this was a smart purchase, and I think the deal has little downside with the price being paid. The deal was announced that stockholder's of Countrywide would receive 0.1822 shares of BAC for each one of their CFC shares. Assuming this goes through, it is a good value for Bank of America, and will help the bank save some face by expanding its consumer services, balancing out its shrinking I-Bank operations.
But it seems that the market is not pricing any of this in. Bank of America shares closed at $39.90 yesterday and Countrywide closed at $6.11. So, as of yesterday's close, 0.1822 shares of Bank of America was worth $7.27, or a 19% premium to Countrywide's share price. The deal closes in the third quarter, so there is potential for a nice profit with little risk. I wouldn't just buy CFC right now because considerable pressure could likely weigh down Bank of America shares more. But, if you have a margin account, you can short 1 share of Bank of America for every 5 shares of CFC you buy and take advantage of the spread. (For added insight, check out When To Short A Stock.)
The Bottom Line
Bank Of America has reported pitiful results with a 95% drop in net income for its fourth quarter. The company will most likely exit its investment banking business, which will allow it to focus on its stronghold consumer bank. I think the Countrywide deal is attractive, and while I would not buy shares of Countrywide flat out, there are ways to take advantage of the mispricing in the shares.
By Wayne Pinsent
At the time of writing Wayne Pinsent did not own shares in any of the companies mentioned in this article. Click here to read Investopedia's full disclosure policy.
January 25, 2008 | By Wayne Pinsent
On Tuesday, Bank of America (NYSE:BAC) gave us a glimpse into how well it has weathered the subprime storm. "Not well" would be an understatement. "Terribly" is a bit weak, too.
The Charlotte-based bank announced that fourth-quarter profits dropped 95%. Yes, 95%! The bank was hit by more than $7 billion in write-downs due to the deteriorating credit markets and massive trading losses. This comes on the heels of the bank's announcement to buy long suffering Countrywide Financial (NYSE:CFC), and a $6 billion preferred stock sale.
NYC sues Countrywide officers, underwriters
Fri Jan 25, 2008
Lawmakers urge Mozilo to pay back
Sen. Charles Schumer and Rep. Barney Frank call on Angelo Mozilo to give part of his severance package to help mortgage victims
NEW YORK (CNNMoney.com) -- Two lawmakers are calling on Countrywide CEO Angelo Mozilo to give a portion of his severance package to charities that could help families affected by the mortgage crisis.
According to The Corporate Library, a corporate governance and CEO pay tracker, Mozilo will be receiving a severance package worth about $101.3 million in cash and benefits.
Early Friday, Bank of America announced that it would purchase the troubled mortgage lender for $4 billion - opening the door to speculation that Angelo Mozilo's days as Countrywide CEO are numbered.
"The sale of Countrywide closes an ugly chapter in the subprime mortgage crisis," said Sen. Charles Schumer, D-N.Y.
"Mr. Mozilo could display some goodwill by donating any severance pay he stands to receive to the nonprofit housing counselors trying to prevent foreclosures," Schumer said in a statement.
He should "donate a substantial portion of the $150 million he has collected over the last several years," added Rep. Barney Frank, D-Mass., chairman of the House's financial services committee.
Frank also called on Countrywide to freeze interest rates to prevent the eviction of tenants living in foreclosed properties.
Countrywide boosts execs' bonuses
In filings, troubled mortgage lender discloses sweetened incentive to keep some from leaving before Bank of America deal is completed.
January 17 2008
LOS ANGELES (AP) -- Countrywide Financial Corp. has sweetened annual bonus awards for a handful of its top executives as an incentive for them to remain with the mortgage lender as it goes through the process of being acquired by Bank of America Corp., according to regulatory filings Thursday.
Countrywide (CFC, Fortune 500)'s compensation committee has approved retention awards of cash and cash-settled restricted stock units for David Sambol, president and chief operating officer; Eric Sieracki, executive managing director and chief financial officer; Ranjit Kripalani, executive managing director, Capital Markets; and, Carlos M. Garcia, executive managing director, Banking and Insurance, according to the filing with the Securities and Exchange Commission.
The bonus portion of the incentive packages range between $2.5 million for Kripalani and $1.45 million for Garcia. The executives must remain with the company through at least March 15, when the bonuses are to be paid, according to the filing.
In this latest action, Countrywide's compensation committee did not designate a retention incentive bonus for Countrywide Chairman and Chief Executive Angelo Mozilo.
Mozilo already stands to walk away from the company with $66 million in retirement pay and stock holdings, according to estimates by Hay Group. Other estimates have suggested Mozilo's payout could go even higher.
Calabasas, Calif.-based Countrywide agreed last week to be acquired by Bank of America (BAC, Fortune 500) for $4.1 billion in stock.
In recent years Countrywide rose to become the nation's largest mortgage lender but has been struggling since last year amid rising mortgage defaults, particularly subprime loans to borrowers with questionable credit histories.
In the filing, Countrywide also disclosed that should shareholders not approve the takeover by Bank of America, the two companies have agreed to restructure their agreement and resubmit it to Countrywide shareholders.
The agreement also includes a provision that calls under specific circumstances for Countrywide to pay Bank of America $160 million should the proposed acquisition fall through.
Countrywide shares slid 46 cents, or 7.7 percent, to $5.48 Thursday
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