Just like real estate agents are not fortune tellers, lenders are also not psychics.  While they do have a pretty good idea of someone’s payment history thanks to credit reports,they can not predict what a property will be worth in the future.  Any lender or realtor worth their weight will confirm that a house is only worth what it is worth now, today, this moment.

However, Zillow is predicting home values will continue to decrease according to Bryan of Loan Rates,

Zillow, a real estate listing website, estimates that home values are going to fall another 3.7 percent before the end of this year.  Considering how low some asking prices already are in the current market, another decline in average values means that it may actually be worth waiting to buy a new home.

While this might be good news for buyers, it could also confuse them when they think we are already at the bottom. The good news is that mortgage rates are expected to be steady at 4 percent for the next several months.

Even the thought of rough credit reports has long been something people people have nightmares over.  That late payment to the credit card company when you were out of town for Grandpa’s funeral?  DING.  The time your kid had 10,000 text messages and you didn’t have an unlimited plan, so had to make payments on the cell phone bill?  DING.

However, there are some fallacies about credit reports that you should know about.  Here from The Wisdom Journal,

1. Credit Repair Firms are Worth the Money. False.

2. Getting Caught Up on Debts Will Instantly Clean Up My Credit Report.  False.

3.  I don’t Need to Check My Credit Report if I Pay My Bills Online. False.

Read why all of these are false over at the Wisdom Journal, along with other fallacies.

Although everyone acknowledges that a huge number of houses are not worth as much money that is owed on them, reducing the principal amount of loans for homes that are under water is proving to be a slow process.  One of the most significant delays is the resistance of Ed DeMarco of the Federal Housing Finance Agency.

According to CNN Money, DeMarco is not keen on this because reducing the amounts owed on homes would be too costly for Fannie Mae and Freddie Mac.

His primary worry is that providing principal forgiveness could prompt many of the 2 million borrowers who are current with their payments to fall behind. Having them default will hurt the housing market more than offering principal reduction will help it, he said.

“The far larger group of underwater borrowers who today have remained faithful to paying their mortgage obligations are the much greater contingent risk to housing markets and to taxpayers,” he said, adding these homeowners can lower their monthly payments through the government’s refinance program.

That’s fine and dandy for him to say, but for people who have legitimately suffered because of job loss or other economically triggered financial problems, he offers no solace.  Hopefully there will be some relief soon.

Many people face major financial trauma after losing jobs.  However, help is available from a number of sources if people opt to take advantage of the help available.  When someone experiences job loss through no fault of their own, a possible period of forbearance.

A friend of mine recently rode the modification roller coaster and was turned down. He turned to a HUD-approved financial planner and suddenly – with the authority given them by the power of the president – the ball is rolling again.   “Why wasn’t my client offered forbearance when you learned of the job loss? Are you familiar with what you are required to do by law?  Can you tell me where the citation is?”

For anyone not familiar with their mortgage right, especially if they have an FHA loan, read this from the NY Times,

Under the new rules, lenders are required to consider a forbearance plan among a number of options to prevent foreclosure. Most of the government programs intended to forestall or prevent foreclosure have not lived up to expectations, and many homeowners have lost their homes. Last year, foreclosures were filed against about two million properties, down from 2.9 million in 2010, according to RealtyTrac, a real estate data provider.

Seek a qualified financial counselor if you find yourself in trouble!

Taxes. No one likes them.   If you don’t agree with tax dollars are spent, your only repercussion is to vote in the next election and cross your fingers that the majority of voters made the right decision.  Yet property taxes are vitally important for the public safety and well being of a community.

What do taxes pay for, exactly?  Free From Broke outlines some of the expenses tackled by your hard-earned tax dollars,

Despite the fact that many of us think that police budgets are paid mostly with traffic citations, most is actually provided through property taxes (OK, let’s say in most jurisdictions and leave it at that!).  Again, this includes not only salary and benefits for police and support personnel, but also the acquisition of buildings and police cars.  Just as with a high local commitment to schools, a strong police presence can often have a positive influence on property values.

As a municipal employee, let me just say that police do NOT get paid enough for putting their lives on the line every day!  There are many other important services that people take for granted paid by taxpayers.  And the amount paid is very well worth it in my communities.

Credit requirements to qualify for home mortgages may be loosening, a signal that the housing market may also be on the mend after crashing in 2007.  Five years it’s been since the U.S. was riding high on the housing boom hog.  Don’t expect the housing market to improve to those levels anytime soon, but at least it is staggering back according to DS News.com,

Market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability. Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings. Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

This is definitely welcome news for market watchers!

Reducing the principal of money owed to mortgage lenders may be coming soon, however home owners should not expect lenders will be in a hurry to do this.

According to CNN Money, the settlement mandates lenders to reduce the principal on underwater loans,

Mortgage servicers will have a lot of work to do to prepare for the coming wave of principal reductions unleashed by the $26 billion mortgage settlement.

That’s because they haven’t been doing many of them up until this point.

Only 8.5% of loan modifications in the fourth quarter of 2011 involved principal reduction, according to the latest government data. That’s a mere 9,867 troubled homeowners for the quarter.

The down side is Fannie Mae and Freddie Mac loans are not included in the settlement.

Home buyers often debate when the closing of their new property should be – at the end of the month or the beginning.  For people who are cash strapped, the end of the month is the best option so they can avoid paying a full month of interest, taxes, and insurance.  However, buying at the beginning month is also has advantages according to Tim Bray of Sotheby’s Real Estate,

Let’s say that you closed on March 2^nd.  In this case, your first payment would not be due until May 1^st or 60 days later. In this case you would be responsible for paying 29 days of PITI.  Yes, closing costs will be a bit more but you will be in your home sooner giving you more time to clean, decorate, and enjoy your new home.

In my own part of the country, you get the month delay before your first house payment only if you wait until after the 10th of the month to close.  In the end, it depends a lot on how much time your lender needs to close the loan and how much of a hurry the buyer is in to occupy the house!

After remaining fairly steady (and low), mortgage rates increased this past week to 4.08 percent, the highest rate in nearly six months.

According to CNN Money,

The 30-year fixed-rate mortgage, a popular choice for most homebuyers, hit 4.08%, according to Freddie Mac’s weekly survey. That’s 0.16 percentage points higher than a week earlier and its first time over the 4% mark since October. The average rate for a 15-year loan also climbed, to 3.30% from 3.16% last week.

A friend of mine whose credit is sterling – no bumps or hiccups anywhere – is buying a new house at this time. Even with hungry lenders and a highly qualified buyer, she is struggling to get all her paperwork turned in that  is now required. It’s slow, but recovery will come.

There is a new kind of investor on the block – one that is stepping in to help homeowners in trouble with their mortgage. They want people who purchased their homes seven’ish years ago and have some equity built in.  They are there to take it off the homeowners hand and will in turn lease it to someone else until the housing market return.  From Jeff Pearl, a RE/MAX agent in Leesburg, Virginia,

They claim that there is no need for owner to worry about the ” Due on Sale” clause which is usually in mortgage docs. And in some cases they claim they will pay the owner $5000.00 to help them move out of the property. Oh, and their sales pitch to real estate agents is that they will let the agents that find them properties list the properties for sale 3-5 years down the road when they’re ready to sell.  I see many risks for both investors and owners. I think any owner that is approached with this should consult with an attorney…

Seeking legal advice is an outstanding suggestion, sir. Especially given the desperate state the homeowners must be in to prevent them from making a rash decision they’ll regret later.