Reno Sparks Real Estate Today

Bank of America Announces Program To Reduce Loan Balances

Bank of America announced a program to offer homeowners who owe significantly more than their homes are worth the opportunity to have their loan balances reduced.  The program, set to roll out in May, would potentially help about 45,000 homeowners nationwide. With this program Bank of America is jumping into the debate about how to deal with the millions of homeowners whose mortgages are greater than the value of their homes and who have complicated efforts to prevent foreclosures. Bank of America’s plan is limited. Borrowers MUST have missed at least 2 payments and be severely underwater to qualify, owing 20 percent more than the market value of their home. It is also limited to borrowers with certain types of loans, including subprime mortgages or other loans with adjustable rates.  Bank of America expects to forgive about $3 billion in principal on loans as part of the program.

In my opinion, this program is a Pandora’s box. The biggest problem with loan modifications is the psychological effect of negative equity or being “upside down” has on a homeowner.   Tell an upside down homeowner, “we’ll lower your payment so you can stay in the house.” That’s great but I am still stuck in a home that is 20-40-60-100k or more upside down. Where is the motivation to service debt with negative equity, with no end in sight? This program does address this issue, to a certain extent.

Not sure how you explain this program to people that have been paying their payments on time and have been following all the “rules.” Meanwhile their equity has been evaporating or going negative. Maybe they would like to refinance their current mortgage to take advantage of the current historically low interest rates. At least they could lower their payment and hang on for the long term.  Nope, Can’t do it unless you have at least 20% equity. 

Fannie Mae Rolls Out Alternative HAMP Modification

In February, the number of modifications that were considered "permanent" increased 45% over January. But the cold fact is that some homeowners won’t qualify for long-term relief even after successfully making their trial payments – whether it’s because of insufficient documentation during the final application process or because once income is verified, their debt-to-income ratio pushes them out of the qualifying bracket.  To offer these homeowners another option, Fannie Mae is instituting the “Alternative Modification” (Alt Mod) and requiring all its servicers to evaluate a borrower for the new solution before proceeding with foreclosure.   In a letter to lenders Thursday, Fannie explained that the Alt Mod is “an alternative to the HAMP modification for those borrowers who were eligible for and accepted into a HAMP trial period plan but were subsequently not offered a permanent HAMP modification because of eligibility restrictions.”

For mortgage loans in active HAMP trials initiated prior to March 1, 2010, all Fannie Mae-approved servicers must consider the Alt Mod prior to the initiation of foreclosure for all eligible borrowers who were not offered a permanent HAMP modification after making all required trial payments.  In addition to HAMP evaluation and fulfillment of trial payments, one of the following is required for eligibility:

- The monthly mortgage payment ratio based on verified income was less than 31%.
- The target monthly mortgage payment ratio of 31% based on verified income could not be reached using the standard HAMP modification waterfall.
- The borrower failed to provide all income documentation required for a HAMP modification but meets the streamlined income documentation requirements outlined by Fannie.

Clocks Aren't The Only Thing You Should Change This Weekend

 Don’t forget to “spring” your clocks forward one hour this weekend. The official time to set your clock forward is 2:00 am Sunday morning March 14^th.  Did you know daylight savings time began in 1918? The original goal was to reduce the usage of incandescent lighting, a primary use of electricity at the time. Read more about day light savings time here.

Daylight savings time is a great reminder to take care of some home maintenance items. Chances are your furnace has been working hard all winter to keep you warm and comfortable. Now is a good time to change the filter and think about having your A/C serviced so it is ready for those hot summer days that are right around the corner.  You should test and change the batteries in your smoke detectors at least once a year. Many suggest twice a year. Make daylight savings time your “built-in” reminder. 

Save Money On Your Power Bill With Time Of Use Program

You see those water tanks around town and in the foothills?  Ever wonder what they are for?  Power rates   are cheaper at “off peek” times when people are not using as much power. This is usually the middle of the night. Instead of running water pumps all day to provide water when power is more expensive, water is pumped into those water tanks in the middle of the night. During the day water is delivered via gravity from those tanks to your home.  This saves power and is more efficient.

Now you save money on your power bill in a similar fashion by using cheaper power during off peak hours (see chart.) NV Energy has started a time-of-use savings program. You can sign up and get more info at www.NVEnergy.com/tou

Most modern dishwashers have a delayed start feature. Wash those dishes during off peak hours. Start the clothes washer and dryer later in the evening. Need to charge those boat or RV batteries? Charge them overnight.  

Fed proposed Homestar program gives homeowners incentive for energy efficiency.

The government released more details on the proposed “Homestar Energy Effiency Retrofit Program.” Here are some of the details.

 

·                        Rebates delivered directly to consumers: Like the Cash for Clunkers program, consumers would be eligible for direct HOMESTAR rebates at the point of sale for a variety of energy-saving investments in their homes. A broad array of vendors, from small independent building material dealers, large national home improvement chains, energy efficiency installation professionals and utility energy efficiency programs (including rural utilities) would market the rebates, provide them directly to consumers and then be reimbursed by the federal government.

·                        $1,000 - $1,500 Silver Star Rebates: Consumers looking to have simple upgrades performed in their homes would be eligible for 50% rebates up to $1,000 - $1,500 for doing any of a straightforward set of upgrades, including: insulation, duct sealing, water heaters, HVAC units, windows, roofing and doors. Under Silver Star, consumers can chose a combination of upgrades for rebates up to a maximum of $3,000 per home. Rebates would be limited to the most energy efficient categories of upgrades—focusing on products made primarily in the United States and installed by certified contractors.

·                        $3000 Gold Star Rebates: Consumers interested in more comprehensive energy retrofits would be eligible for a $3,000 rebate for a whole home energy audit and subsequent retrofit tailored to achieve a 20% energy savings in their homes. Consumers could receive additional rebate amounts for energy savings in excess of 20%. Gold Star would build on existing whole home retrofit programs, like EPA’s successful Home Performance with Energy Star program.

·                        Oversight to Ensure Quality Installations: The program would require that contractors be certified to perform efficiency installations. Independent quality assurance providers would conduct field audits after work is completed to ensure proper installation so consumers receive energy savings from their upgrades. States would oversee the implementation of quality assurance to ensure that the program was moving the industry toward more robust standards and comprehensive energy retrofit practices.

·                        Support for financing: The program would include support to State and local governments to provide financing options for consumers seeking to make efficiency investments in their homes. This will help ensure that consumers can afford to make these investments. 

 

For more details, you can visit http://www.whitehouse.gov/the-press-office/fact-sheet-homestar-energy-efficiency-retrofit-program