A Way Out Of a Bind for Older Homeowners

Reverse mortgages used to be a way for homeowners to get extra cash during retirement. Now they're also being used for a more-pressing purpose: helping people who are struggling to meet payments on high-interest-rate loans to keep their homes.

The strategy, which is relatively novel but gaining popularity among legal-aid attorneys and housing advocates around the country, calls for persuading lenders to take the cash generated by a reverse mortgage in lieu of foreclosing on older homeowners.

With a reverse mortgage, the bank makes payments to the homeowner instead of the homeowner making payments to a bank. The loan is repaid, with interest, when the borrower sells the house, moves out permanently or dies. The products are complex and have high fees -- typically about 7% of the home's value -- and they make it difficult for homeowners to leave the property to their heirs. But they may be the best option for people who have built up equity in their home and would otherwise lose it.

Most of these older homeowners in trouble had refinanced their home into so-called subprime mortgages. Such loans -- many of which feature adjustable rates that can tack sharply higher after an initial teaser period -- have roiled the mortgage industry and credit markets this year as default rates have shot up, and analysts expect hundreds of thousands of additional subprime loans to go bad over the next several years.

While no one tracks subprime mortgage holders by age, the approximately 30 million Americans 65 and older who own their homes are routinely targeted by subprime lenders with refinancing deals, borrower advocates say. Given that the rescue plan recently proposed by the Bush administration and the mortgage industry doesn't provide relief for individuals who can't afford their current loan terms, reverse mortgages are currently one of the few tools available to help older homeowners facing foreclosure.

The strategy worked recently for Gloria Forts, a 62-year-old retired federal worker in Forest Park, Ga., a suburb of Atlanta. After refinancing her home in August 2006 with a $106,500 mortgage from Fremont Investment & Loan in Brea, Calif., Ms. Forts was facing monthly payments of $950.41. That consumed 70% of her monthly income from Social Security and a pension. Intending to start a new job, she found herself kept at home by diabetes complications and back surgery. In June, she sought help from the Atlanta Legal Aid Society.

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The Real Mortgage Fraud

Nothing is more fun than doing noble deeds with someone else's money, and right now, Democrats are getting ready for a rollicking good time. Contemplating the subprime mortgage problem, with numerous borrowers unable to pay their debts, the party's presidential candidates and congressional leaders have a simple solution: Fleece the lenders.

The troubles arose because banks and finance companies offered mortgages to millions of people who, despite their imperfect credit histories, yearned to buy homes. The loans generally start out with a low interest rate that, after a couple of years, rises substantially. Some homebuyers now discover that the reset payments are more than they can handle. On top of that, falling real estate prices mean some can't recoup by selling, because the home is now worth less than the mortgage.

This spectacle has brought forth recriminations from politicians who picture the lenders as James Bond villains, cackling at the chance to toss hard-working families out on the street. In fact, this course is almost as bad a deal for lenders as it is for borrowers. They typically lose up to half the value of the mortgage on foreclosures.

From listening to the critics, you'd never guess that. Barack Obama denounces "predatory lenders" for "driving low-income families into financial ruin." Barney Frank (D-Mass.), who chairs the House Financial Services Committee, blames everything on an epidemic of "abusive lending."

But lenders who made bad decisions are already paying the price. Many mortgage companies have gone bankrupt. And if these loans are so unconscionable, the question is not why the foreclosure rate is so high but why it's so low.

According to the Mortgage Bankers Association, less than 5 percent of subprime adjustable-rate mortgages are in the process of foreclosure. The vast majority of borrowers are making their payments, keeping their homes and asking no one for a bailout.

Nor is it clear that soaring payments are the chief culprit. Foreclosures are most common in places where home prices are falling—such as California, Florida, Michigan and Ohio, which account for half of all foreclosures this year.
Apparently many borrowers, seeing no point in paying off a $200,000 debt for the privilege of owning a $170,000 home, have elected to walk away from their obligations.

The remedies urged by Hillary Clinton, John Edwards and the like include placing a moratorium on foreclosures, freezing teaser rates for five years or more, and forcing lenders to reduce loan amounts to reflect deflated home values. These options are conspicuous for a couple major defects.

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Fed Tightens Lending Rules

The central bank is proposing regulations that offer greater protections for home buyers and curtail abusive lending.

WASHINGTON (CNNMoney.com) -- The Federal Reserve on Tuesday proposed a much stricter set of rules for mortgage lenders as part of the central bank's effort to avert abusive lending.

Some of the rules would apply to borrowers with what the Fed called "higher-priced mortgage loans," which it defined as first-lien mortgages that carry interest rates 3 percentage points higher than the yield on comparable Treasury securities - basically, subprime loans.

Another set of proposals Tuesday would apply to all mortgage loans. The rules are subject to public comment for 90 days, after which the Fed will review comments and consider whether to make changes to them before issuing final rules.

Subprime plan

"Our goal is to promote responsible mortgage lending, for the benefit of individual consumers and the economy," said Federal Reserve Chairman Ben Bernanke. "We want consumers to make decisions about home mortgage options confidently, with assurance that unscrupulous home mortgage practices will not be tolerated."

The Fed's proposals would:

Prohibit giving people unaffordable loans. The new rules would bar lenders from extending credit without considering the consumer's ability to repay.

One reason for the spike in foreclosures among those with subprime adjustable-rate mortgages (ARMs) was that lenders measured a borrower's ability to repay the loan based on the low introductory loan rate, but not on the higher rate that the loan would reset to. The Fed proposed that lenders base affordability on a borrower's ability to repay loan at the reset rate.

Restrict use of 'liar' loans. The Fed wants to restrict the use of so-called "liar loans" or "stated income loans."

When lenders make such a loan, they don't verify the income of the potential borrower. The end result: Home buyers end up with homes they never could afford in the first place, let alone when their rate resets.

It is now insisting on verification both on borrower's income and assets.

Prohibit or limit prepayment penalties. Homeowners who want to refinance into more affordable loans are often prevented from doing so because of punitive prepayment penalties - which can amount to the equivalent of six months of mortgage payments.

The new Fed rules require that lenders waive any prepayment penalties for 60 days prior to a loan rate resetting.

Require or encourage escrowing of taxes and insurance. Subprime lenders often did not disclose the true cost of a home. They might have excluded home insurance and property taxes, for example. Nor did they collect taxes and insurance along with the mortgage payment and hold them in escrow for the borrower until they came due.

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US Federal Reserve targets 'abusive' mortgages

THE US Federal Reserve proposed tough new rules overnight in a broad crackdown on abusive mortgage lending practices almost two years into one of America's worst housing downturns in decades.
The central bank is racing to tighten up the rules governing the trillion-dollar mortgage market as US home sales continue to fall and property foreclosures spike across the country.

Fed chairman Ben Bernanke said the central bank was moving to clean up mortgage lending while also aiming to protect unwary home buyers from potential fraud.

"Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities and, indeed the economy as a whole," Mr Bernanke said.

Some of the Fed's proposed rules specifically address "subprime" home loans granted to Americans with patchy credit and scant savings.

Defaults on subprime mortgages have been responsible for hundreds of thousands of home foreclosures this year that could create shockwaves for the US and global economies.

Treasury plan

Bernanke unveiled the Fed's proposals a week after US President George W. Bush endorsed a Treasury-brokered plan that could help up to 1.2 million distressed homeowners at risk of losing their homes to foreclosure.

The Treasury-backed initiative would help struggling homeowners refinance subprime loans or freeze the interest rates on their loans for up to five years.

"We do expect that the housing market turbulence will take some time to work through, and that there will be some penalty on our short-term economic growth," Treasury Secretary Henry Paulson said.

The Fed said it was acting because the mortgage market and its financing had become more complex in recent years, especially as big Wall Street banks had sliced up and traded large mortgage loan portfolios.

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Mortgage Applications Rise

Despite a jump in interest rates, the Mortgage Bankers Association's application index increases in latest week to 811.8 from 791.8.

WASHINGTON (AP) -- Mortgage application volume increased 2.5 percent for the week ending Dec. 7, according to the trade group Mortgage Bankers Association's weekly application survey.

The MBA's weekly application index rose to 811.8 from 791.8 the previous week.

Refinance volume increased 4.3 percent, while purchase volume grew 1.7 percent. Refinance applications accounted for 57.6 percent of total mortgage applications during the week ending Dec. 7, compared with 56 percent during the prior week.

The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 811.8 means mortgage application activity is 8.118 times higher than it was when the MBA began tracking the data.

The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50 percent of all residential retail mortgage originations each week.

Mortgage applications rose despite a jump in interest rates. The average interest rate for traditional, 30-year fixed-rate mortgages grew to 6.07 percent during the week ending Dec. 7, from 5.82 percent during the prior week.

The average interest rate for one-year adjustable-rate mortgages increased to 6.31 percent from 6.28 percent.

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Factory-Built Houses

It may not be cheaper, but it might be better, to have your next house built off-site and trucked in.

If you'd like to build a new house, whether it's right now or 10 years from now, you probably know most of the choices you'll face. Selecting your financing, building lot, house design, builder and contractors may be the big decisions. But there will be plenty of smaller ones that can drive you to distraction too, like what color to paint the powder room downstairs ("We need to know right now, pal") or whether a 1/2-hp garage door opener is the right size for you. In fact, the logical people in your life have probably warned you off the whole idea already, at least twice. But...

Saying that there are a lot of decisions to make, though, is not the same as saying none of them are fun. For most of us, selecting the house design is one of the high points. This is the time when everybody gets to dream a little, and there's nothing wrong with that. Usually these dreams are focused on traditional designs built in more or less traditional ways.

But this isn't true for everyone. Today, more and more buyers are opting for houses that are built on factory floors and then transported to the building site for final assembly. These factory-built homes have something for nearly everyone, and their quality is often better than you'll find in their site-built brothers and sisters–including those from the right side of the track.

The major problems with site-building are best seen during a building boom, like we've had for the last few years. Every component of the system gets stretched to the limit, especially job management. No-shows and unreturned phone calls become chronic. In most markets, you can also throw in bad-weather delays, skilled-labor shortages and a general decline in lumber quality.

What you end up with is a witches' brew of hard-to-control variables, most of which would be manageable in a factory environment.

Click title for full story. It's a long, detailed, excellent report on factory-built homes. Anyone already building, or just thinking about building a home will find this article informative.

Housing sellers expect stronger market in '08

Realtors believe both number, prices of existing-home sales are on the rise

Job growth and better mortgage conditions are among the reasons a national real estate trade group has improved its outlook for the housing market.

The National Association of Realtors on Monday projected existing-home sales to rise to 5.7 million in 2008, up from the 5.67 million expected this year.

And while existing-home prices are expected to be down 1.9 percent to a median of $217,6000 for 2007, the group expects the price to rise 0.3 percent to $218,300 in 2008.

Lawrence Yun, the association's chief economist, said that "the unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was under performing.

"Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels."

Yun said home price growth in the "vast affordable midsection of America will help the national median existing-home price growth slightly in 2008.

"I then expect price appreciation to return to more normal patterns in 2009, perhaps rising one of two percentage points above the rate of inflation."

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Price: Does it matter?

It seems that housing prices have become quite an obstacle for the real estate market. Personally, I think most people need to take a fresh look at prices. I know, I know... the price of your home is a very emotional thing, and the "media" has everyone frightened of a coming crises of Biblical proportions, but price is what it is. It's just price.

First, let's talk about current homeowners. The real estate market is not unlike any other market, prices go up and prices go down. Look at the stock market. We all know that if you make your investment decisions on every upswing or downswing, not only would we all go bonkers riding that roller coaster, but we'd end up losing money too. Right? Isn't that why a diversified portfolio and a long-term strategy is the most certain way to make money in the stock market? I should know, I was an investment advisor for better than a decade. (Man I'm gettin' old).

Employing a long-term strategy in the stock market doesn't mean you don't make decisions from time to time. Sometimes you have to move your assets due to a number of variable reasons. It's the same with owning a home. The house you're living in today may be your long-term strategy, but for variable reasons, you need to make changes. Maybe you thought you were done having kids, but now your wife is pregnant with twins. This happens! As crazy as it sounds, this exact scenario happened to two of my close friends (apparently the odds are better than you think). You may change jobs, or want a different school district. You see, sometimes you have to move your family (assets) for variable reasons. And those reasons are more important than current market conditions to your long-term strategy, which is really, your life.

Now back in my investment days, I'd often be down 20-30% on a position, and I'd sell it to buy something else. Emotionally, what would go through my head is "oh no, I just lost 30%". Being a professional, I quickly reminded myself that I didn't just lose 30%, I just moved my assets from one stock that was down 30%, to another that was down 30% or possibly more. In other words, I may have been selling at a discount, but I was buying at a discount too! Not only that, the stock I was buying at a discount had a better potential for gain than the previous one did. It may have "felt bad", but it was good medicine.

Maybe you need a bigger home, but you're worried you will "lose" money on your current home. First, think about it from the perspective of what you actually paid for your home, not from what you perceive it's high point was. The high point never matters, because in reality, it's only myth. Most people I work with are usually up quite a large percent from purchase price versus today's (discounted) price. They may be down from the high, but that doesn't matter. The only thing that matters is what you originally paid. Second, think about that new home you'd like to buy. If you would have bought it last year, or the year before, how much more would you have had to pay? Probably a lot more! So you may be selling your current home at a discount, but you're picking up your new home at a discount too. And the new home might have a better potential for gain than the old one too.

The real estate market will turn. Markets run in waves. What is is. So if you're selling low, you're also buying low, and if you're selling high... guess what? You're buying high too! And let me tell you from my investment advisor experience, the more the "media" convinces you things are going to keep getting worse, once they have you convinced it's Real Estate Armageddon, the downswing will be over. The "media" are always the last in line. No offense to the many teriffic people in the news business, but they just report news, they don't actively work in the financial, real estate, etc. markets. Their primary goal is to keep you tuned in so they can sell as many commercials as they can for the max price they can get, not to help you predict and/or navigate markets.

In summary, live your life! If you need or want to move, then do it! Don't let "market conditions" get in your way. Trust me, worrying about things like that will hurt you in the long run more than it will ever help. This is your life! The market is just an abstract, it doesn't have a real life like you do, so don't let an abstract dictate your decisions!

Unfortunately for some people, I do understand that you really can't sell because you just bought your home in the last couple of years, and you are down too much. Or maybe you took too much equity out while the price was sky-high. That sucks. It does, and there is no better way to say it, than to say that it sucks. I feel for you. I really do. I'm human, and I've made even bigger mistakes than that. Oh, well. Keep your chin up, and have a little faith, because markets always turn, and it won't be too long before you have a whole bunch of equity in that house to roll into your new one.


A quick note for first-time home buyers:

What are you waiting for? Are you hoping Santa Claus will drop one down your chimney? Oh, that's right, you have to have a chimney first (they come with many homes). The Easter Bunny?

Let's get real here. Talk about no time like the present! Get out of that apartment, or out of your mom's garage, and buy yourself a home! Now is the time. This is the place. You are the one.

Any one of the amazing real estate professionals here in the Active Rain Network would be more than happy to help you. Working with first time home buyer is a blast! And click the link on my profile, or give me a call. I work for an old-fashioned bank and we have plenty of money to lend. I'm pretty creative when it comes to purchasing a home, and if you need 100% financing, that's no problem for us either, we're happy to help. I lend in all 50 states. End of commercial. :-)

AC in the winter? Brrrr-rilliant!

It's one of the best investments you can make in your home. And the best time to put it in is the dead of winter. From Money Magazine's Josh Garskof

(Money Magazine) -- Nobody thinks much about air conditioning this time of year. Heck, depending on where you live, your heat may already be on for the season and your flannel pajamas pulled out of storage.

But if your house doesn't have central air, or if the system you have is about 15 years old (and therefore probably nearing the end of its life span), you should get the job done this winter. Not only will it automatically raise the value of your property, but you'll snag an iceberg-size seasonal discount.

Winter is a slow time for contractors. "In December we're trying to find enough work to keep our crews busy, so our pencils are a lot sharper," says Robert Wilkos, general manager of Peaden Air Conditioning in Panama City, Fla.

How sharp? Like many contractors around the country, Wilkos typically knocks 10 percent and sometimes as much as 20 percent off his wintertime bids. That's a savings of up to $3,000 on the $6,000 to $15,000 central AC costs.

Even at full price, adding a well-designed central air system is a no-brainer. Not only does a system cool and dehumidify the air far more effectively than window units, but it filters out allergens and dust and lets you use your whole house, instead of confining you to a couple of rooms.

What's more, central AC instantly increases the value of your house by at least as much as it costs to install, and in warm climates by up to 10 percent more, according to appraiser Alan Hummel, a spokesman for the Appraisal Institute, a national standards-setting organization.

"It's not just in the South, where air conditioning is expected," he says, but anywhere summers get hot.

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Uncreative Destruction

Why is the nation that came up with the iPod, Prozac and La-Z-Boy so unimaginative when it comes to its biggest product of all--home mortgages?

Halfway through a rather predictable speech before Congress on housing woes in September, Federal Reserve Chairman Ben S. Bernanke suggested something radical for the mortgage industry: Why not show a little creativity in financing home purchases?

He's got a point. It's just possible that variations on the standard 30-year home mortgage might have facilitated homeownership without precipitating the collapse in subprime lending that is now killing borrowers and lenders alike.

Recent years have, to be sure, seen some novelties in mortgages--letting buyers pay interest only, for example, or giving them low teaser rates to start out--but the new terms served more to foment speculation and risk-taking than to dampen it. What if, instead, buyers had been given ways to reduce risk, just as they can easily do with their stock portfolios? Then they would have sacrificed some of the gains in a bull market, but they would have been better equipped to survive the housing bear market.

"The U.S. has been creative in mortgages but only in a very narrow way," says New York University professor Andrew Caplin. "[We have] lost ambition for the large ideas."

Here are five ways banks could reduce the risk of foreclosures.

Share the appreciation. In return for a payment from an investor, the homeowner agrees to share the profit on the home if and when he sells at a profit. This is like buying some stock and then reducing your risk in it by selling call options against your position. The payment could go into an escrow to be tapped in an emergency.

Hedge with a short sale. The idea is that after buying, the homeowner would short a regional index of home prices of the sort traded on the Chicago Mercantile Exchange (nyse: CME - news - people ). If the bank held the futures position in escrow, it could reduce its risk of losing money on a foreclosure; presumably, if the homeowner had to sell in a downturn, he'd make enough on the short sale to cover the decline in his home's value.

Offer puts. The homeowner buys insurance against a decline in regional home prices. In effect, he's buying a put option. The risk reduction is similar to that for the futures short sale. A nonprofit called NeighborWorks America has sold dozens of insurance policies on home-price drops in Syracuse, N.Y., but the idea hasn't caught on elsewhere.

Vary duration, not monthly payment. The risk with an adjustable-rate mortgage is that the monthly payment can shoot way up when it resets. Why not keep payments fixed but translate a higher interest rate into a longer term for the mortgage? Adjustable-length mortgages apparently aren't offered in the U.S.

Make TIP-like mortgages. Treasury inflation-protected bonds have each coupon and the principal tied to the Consumer Price Index. A mortgage version, as proposed by the late Nobel economist Franco Modigliani, would have monthly payments that creep up slowly even in times of tumultuous increases in the inflation rate (and therefore interest rates). Modigliani mortgages never caught on, and in some places (New York, for example), they are prohibited.

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Bush Aims to Prolong Expansion With Subprime Freeze

Dec. 6 (Bloomberg) -- President George W. Bush today announced a freeze on some subprime mortgage rates in an effort to stop a wave of foreclosures from undoing the six-year expansion.

Treasury Secretary Henry Paulson and regulators forged the agreement with lenders that will fix interest rates on some loans for five years. The deal is focused on borrowers who will fall behind once initially low rates reset to higher levels through July 2010.

"We face a difficult problem for which there is no perfect solution," Paulson said at a news conference in Washington. "The current system for working out those problem loans would not be sufficient to handle the anticipated 1.8 million owner-occupied subprime mortgage resets that will occur in 2008 and 2009."

The housing slump, now in its third year, is pushing home values down and restraining economic growth, which economists estimate will be less than 1 percent this quarter. The collapse in the market for securities backed by subprime mortgages cost the chief executive officers of Merrill Lynch & Co. and Citigroup Inc. their jobs, roiled markets from Auckland to New York and forced the Federal Reserve to cut interest rates twice.

The agreement addresses homeowners unable to afford higher interest rates once starter rates increase, and offers help in one of three ways, a White House official said. The options are freezing rates or refinancing into either a new private mortgage or a Federal Housing Administration-backed loan, he said on condition of anonymity.

The measures may help more than 1 million subprime borrowers avoid foreclosure over the next two years, the official said.

"There are a couple of problems with it,'' Frank, a Massachusetts Democrat, said at a hearing on housing today. It's a ``grave error that there's a cutoff at a 660 FICO score," he said. That penalizes those who struggled to maintain good credit profiles, he said. Frank also faulted the plan for failing to address the penalty for prepaying many subprime mortgages.

"My biggest concern is that there are a lot of Americans who are making their mortgage payments, they are current, and the benefit won't go to them," Representative Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee, told reporters after a meeting with Paulson yesterday.

One challenge has been to craft a deal minimizing lawsuits from investors in bonds backed by the mortgages being rewritten, analysts said. The longer that lower rates are extended, the more risk posed to the bonds' values. Republican Representative Mike Castle of Delaware has proposed legislation offering a "safe harbor from legal liability" to mortgage servicers.

'Be Careful'

"The things that make the U.S. mortgage market the capital-market success that it is are property rights and the sanctity of contracts, so they have to be careful to not damage either one of those," said Scott Simon, head of mortgage- and asset-backed bond investing at Pacific Investment Management Co.

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Economists React: Foreclosures Pick Up Speed

December 6, 2007, 3:21 pm
The number of mortgage loans at least 30 days past due reached its highest point since 1986 during the third quarter as foreclosure starts increased across all loan types, according to a Mortgage Bankers Association survey released Thursday. Here are economists’ reactions.

Subprime delinquencies
Source: MBA via Lehman Brothers

Foreclosures are likely to continue to surge, particularly for subprime ARMs. According to our mortgage strategists, about 2.8 million subprime mortgages are scheduled to reset in 2008 and 2009 to a mortgage rate about 30% higher. This will ultimately lead to a jump in foreclosures as many of these borrowers cannot afford the higher payment and will have a difficult time refinancing or selling their home. Rising foreclosures add to already-bloated inventory and crowd out regular sales. Since foreclosures typically sell at about a 25-30% discount from market clearing prices, this will put downward pressure on home prices. We look for national home prices to fall at least 15% from peak to trough as the housing recession continues to weigh on the economy. – Michelle Meyers, Lehman Brothers

Not surprisingly, delinquency and foreclosures rates posted their largest rise of the current downturn in 3Q. Subprime loans are naturally much more problematic than prime loans, but prime adjustable-rate loans are showing increasing problems. Meanwhile, started foreclosures have soared, and the foreclosure rate for all mortgages is now considerably greater than at any time in the twenty-eight year history of the series. … Fixed-rate prime and subprime mortgages are performing no worse than they were in the 2001 recession, but adjustable-rate mortgages are considerably worse. – Abiel Reinhart, J.P. Morgan Chase

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Extreme Retirement: Retire in Your 30's!

Could retirement before you're even eligible to join AARP be the quintessential impossible dream? Not if you're consistently disciplined, focused, driven and don't give a hoot about what the Joneses think of that beat-up Chevy in the driveway, say experts.

Whether you work to live or live to work is a question increasingly answered in favor of living by couples who have opted out of the daily grind before the traditional "early" retirement age of 50-something. What's more, they're not going quietly, but instead are springing up on Web sites and in media interviews, telling their stories and encouraging others to follow suit.

Bankrate found two such couples who were eager to share their tales of extreme early retirement: Billy and Akaisha Kaderli, and Sandy Aldridge and partner Dale Lugenbehl. Though their lifestyles are vastly different, they share many traits.

Set free to roam the world
The Kaderlis can count themselves as members of a small group of founders of the extreme early retirement trend among baby boomers. Now in their 17th year of retirement, the couple ditched their 9-to-5 jobs when they were 38 years old.

At 55, they say they would have made the same choice again, only investing sooner and with more confidence. The Kaderlis' initial $500,000 nest egg has grown steadily, partly because they hung in the stock market through the '90s boom and the historic bust that followed, and partly because they've lived on an average of just $24,000 a year. Initially, they put all their savings in a low-cost index fund.

Retiring at 38, they say, was an excellent age because they had accumulated life experiences through their careers: He was a former restaurant chef and owner, and at one time, the youngest branch manager at brokerage Dean Witter, while she continued to run the restaurant.

"We retired with youth, vigor and plenty of enthusiasm to venture out into traveling the globe. Retiring earlier, we would not have acquired enough skill or self knowledge about how we are able to interact with the world," the couple wrote from Thailand.

The Kaderlis sold their home when they retired, and remained homeless while they explored the world, spending time in the Caribbean island of Nevis, as well as in Venezuela, Mexico and Thailand. They recently purchased a small home in an Arizona retirement community, and now split their time between Chiang Mai, Thailand, and Mesa, Ariz., when not traveling to other countries.

Their Web site, www.retireearlylifestyle.com/, gives them the opportunity to communicate with other early retirees, as well as educate the younger generation. Their advice to 20-somethings who want to follow the same path is simple: Save everything and stay out of debt.

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Iconic Daredevil Evel Knievel Dies at 69

CLEARWATER, Fla. (AP) - Evel Knievel, the red-white-and-blue-spangled motorcycle daredevil whose jumps over crazy obstacles including Greyhound buses, live sharks and Idaho's Snake River Canyon made him an international icon in the 1970s, died Friday. He was 69.

Knievel's death was confirmed by his granddaughter, Krysten Knievel. He had been in failing health for years, suffering from diabetes and pulmonary fibrosis, an incurable condition that scarred his lungs.

Knievel had undergone a liver transplant in 1999 after nearly dying of hepatitis C, likely contracted through a blood transfusion after one of his bone-shattering spills.

Longtime friend and promoter Billy Rundel said Knievel had trouble breathing at his Clearwater condominium and died before an ambulance could get him to a hospital.

"It's been coming for years, but you just don't expect it. Superman just doesn't die, right?" Rundel said.

Immortalized in the Washington's Smithsonian Institution as "America's Legendary Daredevil," Knievel was best known for a failed 1974 attempt to jump Snake River Canyon on a rocket-powered cycle and a spectacular crash at Caesar's Palace in Las Vegas. He suffered nearly 40 broken bones before he retired in 1980.

Though Knievel dropped off the pop culture radar in the '80s, the image of the high-flying motorcyclist clad in patriotic, star-studded colors was never erased from public consciousness. He always had fans and enjoyed a resurgence in popularity in recent years.

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Retirement: How much you'll really need

(Money Magazine) -- Question: My wife and I are both 55 and plan to retire in two years.

Our combined yearly income is approximately $240,000, and I keep reading that you need 70 percent to 80 percent of your pre-retirement income when you retire.

I may be naive, but I don't think that's true for us. What do you think?

The Mole's Answer: You're referring to an old rule of thumb that financial planners toss around quite a bit, and may I suggest you pretend you never heard it.

Clients often come to me with this same question, and I can't answer it without knowing how much they are spending. Some clients making $100,000 per year are only spending $50,000, while others are earning $110,000 and getting further in debt.

So you should really ask, What percent of my current annual expenditures should I expect to spend in retirement?

The best place to start is determining how much you are spending in pre-retirement. If you're not doing advanced tracking with a software program, then at least have a look at your checking account.

Your current annual expenditures amount to all your income (take-home pay, dividends, etc...) less what you put into savings.

Then you should think about what adjustments you'll make in retirement. Here are just a few life changes that might dramatically reduce expenditures:

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Foreclosure Predators

Constance Smith Bridgewater was in default on her mortgage payments, and she was desperate to keep the snug two-bedroom house in San Francisco's Portola district where she lives with her teenage grandson.

It seemed providential when an acquaintance proposed a solution, claiming that it had worked for him: A network of investors would save her house from foreclosure by taking over ownership then renting it to her, promising that she could buy it back.

Sure, the plan involved deeding the home to someone else, but Bridgewater was told that was just temporary so a person with good credit could get a mortgage at a favorable rate - which would help Bridgewater, too, because her rent would be half of the mortgage payments.

The promised advantages were appealing: up to $100,000 from the sale, lower monthly housing costs, assistance in improving her credit score and the chance to make money referring other people for similar lease-back plans. She said the investors assured her she would be able to buy back the house after two years. Bridgewater signed documents last December believing that she was saving her house. But the promised benefits didn't happen, she said.

"I signed away my house and got nothing," she said.

Bridgewater thinks she fell victim to a classic foreclosure rescue scam. She has filed a civil suit against the investors alleging that they used "predatory bait-and-switch tactics ... designed to take both her money and her home." An attorney representing many of the investors denied the allegations.

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The Fifth Royal Oak

I started this blog because I enjoy real estate. I'm into the financing, the construction, the marketing, the transactions (buy/sell), deal making, money making, market trends, gaining equity, investment... so much to love. I have to tell you though, being based out of MI, the real estate market sucks. At least, so it appears. (Btw, I've declared the word "sucks" as an official economic term).

Still toying around with what I want this blog to be, and the more I think about it, maybe consistency isn't what I'm after, my interests are broad, so this blog is going to be about what I want it to be about. (That's gotta be a run-on sentence). And that way nobody gets bored. (At least I don't anyway). It should get pretty interesting in here from time to time. Anyways, why I'm posting tonight...

I like a happy story, a positive story, something going good. And a project here in Royal Oak, MI is really setting the town on fire. Every builder in town is slashing prices. Not this one. They're all giving huge deals, seller concessions, no money down, anything to move the units. Nope, not these guys, they're taking large deposits because their units are in demand.

Alright, you've seen The Fifth Royal Oak featured a few times in this blog already. Well, like I said, I like a positive story (especially considering how negative the rest of the news is lately). I've toured the building dozens of times as it was built, and since it's been completed. Not a penny was spared in getting it right. It's simply magnificent!

Click on the title to view their new website, and if you live in the area, get down to Royal Oak to experience it for yourself! Tour the amazing condos at The Fifth, have lunch or dinner at one of Royal Oak's incredible restaurants and, I'll tell you this, your wife will officially count it as a full date, and you can sit around the house, or do whatever you want for the rest of the weekend. Just keep your mouth shut about it being a date. She'll know.

Homes that still stand surprise some owners

Warren Allen had the hose out Sunday afternoon, wetting down his roof again just to be sure.

Allen and his wife escaped their Malibu home in front of a fast-moving wildfire early Saturday morning, grabbing their three dogs and two cats, along with Allen's childhood baseball glove and his grandfather's violin. As word of the fire's damage spread, they began to fear the worst.

"We thought we'd lost the house," Allen said, "but our house was actually standing, which I couldn't believe."

"There's no rhyme or reason to what burned."

A change in winds, rising humidity and cooler temperatures helped firefighters get the upper hand on the Malibu wildfire Saturday afternoon, and by Sunday, the only visible flames were from backfires set by firefighters to burn off brush.

A day after the Corral fire chased them out, the Allens returned to their Lockwood Road home in the Malibu Bowl area to find several of their neighbors' homes reduced to ash and twisted metal. A neighbor's classic car collection, including a 1965 Shelby Mustang GT-350, was a charred, mangled mess nearby.

"We know everybody on this street who lost a home," Allen said. "I looked into that garage, and literally I cried.

"It's odd; you're so happy your home is here, but then you look up the street."

Investigators said the fire, which broke out early Saturday along a dirt road off a paved highway, was caused by humans, but they had not determined if it was started intentionally, Los Angeles County Fire Department Inspector Rick Dominguez said.

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Holiday Party Buzz: Get a New Job, Not a Hangover

One of the most common job-hunting mistakes people make is putting the search on hold from Thanksgiving to New Year's. It might seem like entire offices are hibernating, but the truth is, they're at holiday parties. Join them there.

The holiday season, with all its socializing and merry-making, is prime time for networking. Since managers tend to hire people they--and their colleagues--know, networking should play a major role in any job seeker's process.

But don't go blindly to every holiday party you're invited to. To get the most out of each one, you need to develop a strategy.

Start by doing your homework about each event. What type of people are attending--are they likely the type of people you want to meet? If it's for a trade association or professional group, ask the organizer to forward you the list of people who are attending, says Lynne Waymon, co-author of Making Contacts Count. Peruse it to see if anyone's name stands out.

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The Fifth Luxury Condos

Royal Oak is redefining the notion of Detroit's 'burbs, fashioning a downtown that appeals to urban dwellers and cultural creatives. It's latest addition --and the community's tallest building-- brings a touch of the metropolitan to this Metro Detroit hotspot.

With stunning (or dizzying, depending on your stomach) views, top-of-the-line features and a choice locale, this 18 story midrise is the next evolution in RO's walkable, workable downtown.

Tom Hendrickson takes you on a tour. All you have to do is click the magic YouTube link below!

As New Home Sales Stall, Deals Abound

On Nov. 20, the residential real estate industry seemed to finally get an unexpected dose of much-needed good news. After four consecutive months of declines, the number of new homes being built crept up by a stronger-than-expected 3% in October, according to the Commerce Dept.

But on closer look, the October numbers may just be an aberration. Building permits, an indicator of future construction, plunged 6.6% as homebuilders faced mounting inventories of unsold homes and sluggish demand from buyers.

The annual rate for houses and apartments rose to just over 1.2 million in October. But the rate for single-family homes dropped 7.4% to 884,000 -- the lowest level since the early 1990s. Overall, the pace of groundbreaking dropped 16.4% from October, 2006. The small increase in overall housing starts in October was driven by multi-family dwelling starts, which tend to fluctuate widely from month to month.

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Survivor's guide to a slowdown

The credit market is still in turmoil, economic growth on both sides of the Atlantic looks likely to be weak in 2008, and the prices of a variety of assets are worryingly high. Asset prices should already have discounted that negative outlook for next year, and it is foolish to try to predict their path too precisely, but for the average investor trying to manage their wealth, it is worth considering a scenario in which the slowdown becomes worse.

A shock in the US housing market has hit construction, produced losses for banks and lenders, and caused a reappraisal of the right price for risk. Financial sector profits have been hit and credit will be harder to come by. The next stage could be a wider slowdown in investment and consumption that hurts corporate profits still further, causing layoffs and rising unemployment, and therefore still weaker US demand. In the worst case, the result could be a global recession.

Central banks will cut interest rates in a recession, so the obvious place to hide is government bonds, but those markets have already reacted. Five-year UK gilts yield only 4.5 per cent and three-year US Treasuries less than 3 per cent. Given the inflationary risks of high oil prices and the falling dollar, the Federal Reserve's ability to cut interest rates may be limited, and cash may produce better returns.

The risk of further falls in the dollar is severe. Currencies have a marked tendency to follow trends and to overshoot estimates of "fair value" once they start moving. The great danger - to which the pound sterling is also exposed - is foreigners losing confidence and selling assets. East Asian currencies still look cheap, however, as do those of oil exporters that peg to the dollar.

Adjusted for the economic cycle, equities look too expensive, and if a slowdown hits corporate profits, they are likely to fall. Lower prices are good for long-term investors who buy regularly for their pensions, but for short-term investors, buying is hard to justify. The S&P 500 index is up this year in spite of the flow of bad economic news.

That leaves property: the asset class at the centre of the US slowdown. Real estate prices look high relative to incomes and rents in many countries, and while that has been true for several years, it means they are at risk of falls. It will always make sense to own a residential property - it hedges our own demand for somewhere to live - but as a pure investment, real estate looks vulnerable. Investors should note that new risk-management tools, such as house price contracts listed on the Chicago Mercantile Exchange, are now available.

After 20 years of strong growth and benevolent markets, few assets look cheap. For those investors worried about tougher times there are a few simple rules: avoid leverage, keep cash to hand and remember that lower asset prices are an opportunity as well as a cost.

Copyright 2007 Financial Times

Foreclosure lists long, grim

Counties publish property tax delinquencies

From the well-heeled streets of the Pointes to the desolate neighborhoods of Detroit, thousands of people are facing foreclosure of their properties because they haven't paid taxes for at least two years.

In 121 printed pages of the Sunday Free Press, Wayne County Treasurer Raymond Wojtowicz listed more than 18,000 properties across Wayne County facing foreclosure. Notices sent to homeowners since March have whittled the list from 161,000 properties that had been delinquent on tax payments.

The advertisement will run the next two Sundays. The printed pages cost the county more than $400,000, and are required by law. It's just one more way the county tries to make sure property owners know that they're facing foreclosure.

"No one should ever be embarrassed if they have some debt," Wojtowicz said. "We all get into a scrape every so often, and during these tough economic times, we want to do everything we can to keep people in their homes."

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Real Estate Weekly -- Nov. 23

It wasn't the "average" home buyer who got us into the current real estate mess. Most folks buying a house in the last five years or so, even if they knew they were paying prices that seemed just a bit over the top, were buying for any of the reasons that make perfect sense in any market: they needed a bigger house for a growing family, they relocated for a better job, they wanted more modern amenities and remodeling the old house didn't make economic sense, they wanted better schools for their kids, they retired, etc.

Who did get us into this mess? Real estate investors flipping condos they never intended to buy, mortgage lenders pushing inappropriate products on overly stretched borrowers, Wall Street investors who in their greed snapped up those questionable loans, home builders rushing to construct units ahead of real demand, banking regulators who sat and watched, etc.

You know, though, who is going to pay the most for the debacle. It will be "average" homeowners, who now will be lucky to get a mortgage of any kind if they need to move up or move on, assuming they even can move at all, given how chilly the market has become and how shaky their home price is looking. The only bailout for most people will come in the form of years of waiting for a return to normalcy.

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Rodents Head Indoors for Fall and Winter

(ARA) - A cozy home is the perfect escape when temperatures begin to dip. Unfortunately, rodents think so too.

According to pest control professionals, cooling temperatures and dwindling food sources send rodents scurrying into 21 million American homes each winter.

"Rodents normally feed on seeds and plant life, but when these are eliminated by freezing temperatures or drought, rodents are forced to invade human structures in search of food," says Stoy Hedges, entomologist and director of technical services for Terminix.

Mice and rats enter homes through small exterior openings. A 1/2-inch opening is large enough for a rodent, and mice can squeeze through voids as small as a 1/4 inch.

Rodents are also great climbers and can scale rough surfaces like trees or vertical pipes to gain entry to homes through vents and utility openings.

Living with rodents can be harmful. They are considered a fire hazard because of their habit of gnawing through electrical wiring, and they are a health threat because of the diseases they spread through their bites and excrement.

Rodents are known to carry more than 200 human pathogens. Some of these diseases, such as Hantavirus Pulmonary Syndrome and the plague, are potentially deadly.

According to the Centers for Disease Control and Prevention, HPS, which is spread through the airborne urine, saliva or fecal material of infected deer mice, has been identified in 30 states during the last 14 years. Of the 465 reported cases, nearly 35 percent have been fatal.

Although rare, approximately 12 cases of the plague are reported in the United States each year.

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Ignoring root causes of Freddie Mac fiasco won't fix anything

The markets did their best to treat Freddie Mac as an isolated incident yesterday. It isn't. Freddie Mac is just the latest turn in the expanding spiral of trouble for financial markets, one that won't go away just because investors stuck their heads in the sand for a day.

Freddie Mac is a publicly traded company created by U.S. Congress to provide funds to mortgage lenders. It does so by buying existing mortgages from these lenders and repackaging them to investors as mortgage-backed securities, guaranteed by Freddie Mac itself. In the current environment, that's the business equivalent of playing road hockey on a freeway.

Freddie Mac yesterday reported that it lost $2-billion (U.S.) in the third quarter, took a $1.2-billion provision for credit losses and absorbed $3.6-billion in mark-to-market losses. Now it is threatening to cut its dividend in half and is seeking other sources of financing, just to keep its capital levels above mandated minimums.

The news sent shares of Freddie Mac and its larger government-created mortgage cousin, Fannie Mae, off a cliff. Freddie opened down 33 per cent, Fannie down 23 per cent, and they stayed around there all day.

Play the currency game to pay your mortgage

If you had put a £1m mortgage into US dollars at the start of the year and left it without making a single payment, then thanks to the falling dollar that mortgage would have decreased in value by more than £70,000.

Such is the beauty of foreign currency mortgages, and the reason that a growing number of high-net- worth individuals are employing them. If you back the right currency, you can significantly reduce the capital value of your debt.

With the pound at its strongest against the dollar for more than a quarter of a century, multi-currency mortgage specialist ECU Group has converted its entire loan book into US dollars.

Cormac Naughten, director, says ECU Group expects the dollar to weaken even further against sterling.

But rather than convert a loan into a currency you think has hit rock bottom, the way to benefit from foreign currency-denominated loans is to catch the currency on its way down, says Ray Boulger of John Charcol mortgage brokers.

Foreign currency mortgages change the underlying currency of your mortgage loan to a different mainstream currency such as US dollars, Japanese yen or euros. Monthly repayments are made by you in sterling, which is then converted to the currency the mortgage is in and used to pay it off.

Loans managed by a debt manager can be switched regularly between currencies such as the pound, dollar, Canadian dollar, Swiss franc and euro, based on macroeconomic views.

Random Thoughts

I've been working on this blog and a few other internet ideas non-stop, 16 hours a day, 7 days a week, for the past month or so. Maybe that doesn't sound like much, but previous to this adventure, I was just an internet user. I'm a complete developer neophyte. HTML, Java script, etc. are foreign languages to me. I might as well be deciphering the text from an ancient Egyptian tablet.

My blog here is still trying to find its identity. I've hooked it up with technorati and uploaded it to google. I even have a few (3) people who subscribed to my blogs feed. So the blog is out there a bit, and hopefully some of you reading this are blog and internet geniuses who will provide me with a few tips, ideas and strategies. And for others, such as people who simply use the internet for information, and/or are in the real estate or mortgage business, your advice would be invaluable as well.

I'm going to take a few days off to let my brain relax from everything digital, and allow my mind to catch up and process all the new information I've learned. Going to a friend's cabin, he and another buddy are up there deer hunting (tis the season). I didn't get my deer license this year, and they'll be a little surprised (and disappointed) that I'm not going hunting with them, but I'll enjoy the peace and quiet while they're out, watch some football games, read a book or two, and take nice, long naps. And when they get back, I'll enjoy all the camaraderie too.

Where the cabin is, there will be no internet, the cell phone barely works, and the tv comes in via satellite. No internet and phone for a few days will feel really good. And I'll be back to the project in a few days refreshed, and better than ever.

Thanks for stopping in and reading my blog. I'm excited about it, and grateful for having you as a visitor.

HOME: FIRE SAFETY

Pioneer Press

Article Last Updated: 11/09/2007 04:20:38 PM CST

Colder weather is upon us, and more people will be spending time indoors. According to the United States Fire Administration (part of the Department of Homeland Security), residential fires occur more often during the chillier months because of portable or area heating equipment, cooking equipment and cigarettes or other smoking materials.

With all these chances to spark a fire, here's a reminder to make sure your home is prepared to avoid a potential catastrophe. Here are some tips:

-- Check the batteries in your smoke detectors often and keep batteries on hand to replace them every six months.

-- Replace smoke detectors that are more than 10 years old.

-- Position detectors on every level of your home and near areas where your family sleeps, but away from heating and cooling ducts and at least six inches from where walls and ceilings meet.

-- Make sure everyone in your house can recognize the alarm sound.

-- Keep at least one fire extinguisher on each floor of your home, with extras near the kitchen, garage, laundry room and workshop.

-- Talk with your family about what to do in case of a fire. Have at least two ways out of your house, and be sure everyone knows them. Create a fire safety plan, with a designated meeting place, and practice the plan regularly.

- Courtney Sinner

Smaller change, bigger payoff

CHICAGO -- Homeowners interested in getting the biggest bang for their remodeling buck might want to shelve the idea of full-blown room remodels and instead opt for more practical replacement projects that reduce home-maintenance needs, increase energy efficiency or improve curb appeal, according to a report released this month.

Remodeling magazine's annual Cost vs. Value Report found that seven out of the top 11 projects that paid off the most at resale were replacement projects, said Sal Alfano, editorial director for the magazine. That includes window and siding replacements.

Also, minor remodeling of rooms are paying off more than expansive room improvements, according to the 2007 report. The report compares construction costs for common remodeling projects against the share of those costs recovered at resale, with projects broken down into "midrange" and "upscale" categories. National, regional and city data can be viewed at the magazine's Web site, costvalue.remodelingmagazine.com/index.html

This year, returns on remodeling projects are looking more modest -- and more normal -- than in years when the remodeling market was "white hot," Alfano said.

"The way I see it, we're getting back to normal here," he said.

From 2004 through 2006, some projects paid back returns between 90 percent and 100 percent of their costs -- and sometimes even more, prompting some improvements to be worth more at resale than the homeowner actually paid, he said. That was due to a rapid appreciation of housing prices as demand for housing was strong.

In fact, it wasn't uncommon to hear stories of people doing substantial improvements merely for the payoff at resale, said Kermit Baker, director of the Remodeling Futures Program at Harvard University's Joint Center for Housing Studies.

Today, however, there's been a shift to "do the things that make sense," Baker said.

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How I Finally Sold My House After 9 Months

Trying to sell a house these days is like watching a ticking financial clock.

As time passes, we sink more mortgage payments into a home that hasn't sold. I had almost given up hope of selling my home.

In fact, after eight months of trying, waiting and hoping a buyer would make an offer that would at least pay the home loan balance, I had decided to take a loss. It was a dramatic financial acceptance, especially after purchasing the home more than two years ago and expecting a return on that investment.

I remember making that decision on a Saturday night in early May. I planned to call my real estate agent on Monday to tell him.

But Sunday brought new hope. My agent surprised me with an early-morning phone call telling me that he expected an offer on the house that day.

To my surprise, I received another call from my agent less than two hours later. "We're getting a second offer today," he said.

If that's not enough, while reviewing the two offers that came in that Sunday afternoon, my agent called to tell me that a third potential buyer had expressed interest in the house.

By Monday, I had two offers, both of which could yield a small profit. At least one of them offered a $10,000 incentive.

I went from preparing to take a loss to making a small profit in less than 24 hours. So how did things turn around for my sale? What worked for me may not work for everyone, but it's worth a shot.

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Forecast: Resilient U.S. Economy Will Rebound

Newswise - Despite a slumping housing market, rising oil prices, flat auto sales, a weak U.S. dollar and waning consumer confidence, America's economy will not slip into recession, say University of Michigan economists.

"There is enough resilience in the economy to keep output expanding," said Saul Hymans, U-M professor emeritus of economics. "The Federal Reserve's recent action to contain the credit crisis stemming from problems in the subprime mortgage market appears to be averting the development of a system-wide credit crunch, and lower interest rates are lending support to economic activity."

In their annual forecast of the U.S. economy, Hymans and colleagues Joan Crary and Janet Wolfe say, however, that national economic output growth (as measured by real Gross Domestic Product) will remain sluggish in the short term---due to the ongoing decline in residential construction and subdued growth in consumer spending.

They say the rate of economic growth will be just 2.1 percent this year, down from 2.9 percent in 2006. But output growth will increase to 2.4 percent next year and accelerate to 3.4 percent in 2009.

U.S. Mortgage Rates Show Little Change

MCLEAN, Va., Nov. 15 (UPI) -- U.S. mortgage rates, buffeted by mixed economic signals, were basically flat this week, the Freddie Mac market survey said Thursday.

The 30-year fixed rate mortgage averaged 6.24 percent with an average 0.4 points, unchanged from last week.

The 15-year FRM this week averaged 5.88 percent with an average 0.4 points, down from last week's 5.90 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.96 percent this week, with an average 0.4 points, up from last week's 5.89 percent.

One-year Treasury-indexed ARMs averaged 5.50 percent this week with an average 0.5 points, unchanged from last week.

Freddie Mac is a stockholder-owned corporation established by the U.S. Congress in 1970 to support homeownership and rental housing.

Mortgage Applications Increase

Nov. 14 (Bloomberg) -- Mortgage applications in the U.S. rose last week as refinancing jumped to the highest level in more than two years and filings for purchases rebounded.

The Mortgage Bankers Association's index of applications to buy a home or refinance a loan increased 5.5 percent to 707.3, the highest this year. The group's refinancing gauge rose 6.4 percent and its purchase index climbed 4.8 percent.

Even with the rise, economists foresee little chance of recovery in the two-year housing slump until at least mid-2008, as stricter lending practices and a glut of unsold homes for sale prompt buyers to wait for further prices declines. A jump in subprime mortgage foreclosures could further weaken housing and the broader economy, Federal Reserve Chairman Ben S. Bernanke said in congressional testimony last week.

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After the Housing Bust

THERE'S A SAYING whispered among grizzled real estate vets: Don't try to catch a falling knife. It's a tricky move, and if it's not timed perfectly, the results can be bloody.

The housing market's current woes are tied, in part, to potential buyers' fears of getting nicked. The national median home price is widely expected to decline this year, for the first time since 1950, but many forecasters believe that prices have further to fall — and nobody wants to buy a "bargain" house only to see its price keep sinking.

Anyone who's recently tried to sell a home, of course, has already felt the pain. The pace of sales slowed to an eight-year low in September, and rate cutting by the Fed isn't expected to turn things around very quickly. For starters, there's too much supply in the housing market. Homebuilders are sitting on 10 months of inventory, and the deluge of foreclosures, up 115% this year over 2006, only aggravates matters by flooding the market with cheap housing stock.

It all may sound like a real estate shopper's paradise, but it still has buyers wary. Wall Street's aversion to mortgage risk is shrinking the pool of potential buyers even among the affluent, by making it more costly to obtain jumbo mortgages, loans of more than $417,000 that Freddie Mac and Fannie Mae won't guarantee. Jumbo rates typically run a quarter of a point higher than smaller loans, but the spread has exploded to close to a full point on average. On a $500,000 30-year mortgage, that point can cost an extra $125,000 or more over the life of the loan — erasing some of the savings a buyer might see from falling prices.

All real estate is local, of course, and not all the news is grim.

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Luxury Homes Selling as Briskly as Ever

WASHINGTON - What housing market crash?

That’s what the developers of a spectacular — and spectacularly expensive — luxury home community in Loudoun County are saying when they look at their sales log.

“Our goal this year was to sell 30 lots, and we’ve sold 26 so far,” said Robert Shiels, vice president of sales and marketing for Creighton Farms, which sits on 906 acres just west of Leesburg. An additional five home sites have been reserved, he said.

Creighton Farms, which started selling in January, offers buyers three- to six-acre lots, Ritz Carlton property management services and access to the community’s Jack Nicklaus Signature golf course for prices between $850,000 to $2 million, before monthly dues. That excludes the house, which is custom-built for a separate fee.

The development’s success is emblematic of a regional trend — as overall home sales lag, buyers and sellers dealing with the highest-end residences seem above the fray.

“The housing market slows down [at and below] the $2 million mark, but it doesn’t really affect the $3 million [homes and] on up — where Creighton farms is,” said Jim Brown, owner of local development company Creighton Enterprises. “At the income level they’re at, they’re a little bit immune to the downturn.”

Editors's Note: Link in the title doesn't function properly and has been removed. Please copy and paste the link below into your browser to get full story.

http://www.examiner.com/a-1045017~Luxury_homes_selling_as_briskly_as_ever.html

Mortgage Reform and Anti-Predatory Lending Act of 2007

This week the House will debate H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007. It would amend the Truth in Lending Act to reform consumer mortgage practices, establish licensing and registration requirements for residential mortgage originators, and create minimum standards for consumer mortgage loans. Its passage would cost a little over $4 per U.S. family.

H.R. 3915

The Mortgage Reform and Anti-Predatory Lending Act of 2007

Costs $4.15 per family

What People Think: 12% For, 88% Against

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Editor's Note: Link in title doesn't function properly, and has been removed. Please copy and paste the link below into your browser to get full story.

http://www.washingtonwatch.com/bills/show/110_HR_3915.html

Home Buyers Look for Smaller Options

A growing number of Americans are finding they have more home than they want or need.

The reasons are numerous. Baby boomers, 77 million strong, are looking to downsize in retirement. Young home buyers find it increasingly difficult to afford or maintain larger homes. Urban land is at a premium. Smaller homes in desirable neighborhoods are scarce or outlawed by covenant. And environmental concerns about a residence’s “carbon footprint” have further dampened enthusiasm for spacious showpieces.

In some cases, the small-house trend goes to the extreme Lilliputian end of the scale.

Jay Shafer lives quite comfortably in a 100-square-foot house in Sebastopol, Calif. You may have a tool shed or a master bath about the same size.

Shafer’s home is on the small end of a line of compact, ready-made dwellings he designs for his Tumbleweed Tiny House Co. His designs have won numerous awards for energy efficiency and green building. The homes cost between $20,000 and $48,000, excluding land.

Though many customers use them as vacation homes or mother-in-law cottages, there are those smaller-is-better devotees who, like Shafer, simply prefer to live within their means.

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Giving to Charity, Through Real Estate

SIDNEY AND ELISABETH GARVAIS had a lifetime of memories tied up in their second home, a small cottage on 4 ½ acres on Block Island, R.I. They paid around $20,000 for it in 1965, and used it for summer vacations and to entertain guests on weekends. Of course, it also turned out to be one of their best investments.

But when it came time to move on about three years ago — “the upkeep became too much; there was always brush to clear, stone walls to rebuild,” Mr. Garvais explained — there was no one to pass the property along to. (Simply cashing out would mean a sizable capital-gains tax.)

With no children and only one niece and one nephew, neither of whom cared to own the place, the Garvaises decided to give it to a charitable foundation. But the couple, both in their 80s and living in a senior community in Bloomfield, Conn., didn’t leave empty-handed. In return for turning over the property, which sold for $1.1 million, they receive monthly income and significant tax savings. At the same time, they remain content in knowing that their donation will help certain causes like health care reform.

From town houses to warehouses, just about any type of real estate asset can be donated to a qualified charitable organization, and estate planners say the gifts can be structured to provide tax benefits as well as income.

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Affordable College Towns

Most affordable college football towns.

NEW YORK (CNNMoney.com) -- Muncie, Indiana, ranks as the most affordable big football town for housing in the United States, according to an annual survey released Tuesday by Coldwell Banker.

Home prices in Muncie, home to the Ball State University Cardinals, average $150,000 for a 2,200-square-foot single-family house with four bedrooms, two-and-a-half baths, family room and two-car garage.

The Coldwell Banker College Home Price Comparison Index looks at the hometowns of 119 Division 1-A college football programs to see how much the same type of house costs in each market of a middle-management type neighborhood.

"College towns remain a popular living destination - whether they are first time homeowners or alumni looking for great retirement spots," Jim Gillespie, Coldwell Banker's chief executive, said in a release.

"School spirit draws many alumni back to their alma mater and for others, continuing their education, pursuing jobs, enjoying cultural activities and following college sports make these communities ideal homes," he said.

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German Steeple Challenges Leaning Tower of Pisa

BERLIN (Reuters) - The Guinness Book of World Records has ruled that a church steeple in Germany, not the famous leaning tower of Pisa, is the most tilted tower in the world.

The 25.7-metre steeple tilts at an angle of 5.07 degrees, while the tower of Pisa tilts at just 3.97 degrees, said Olaf Kuchenbecker, head of Guinness's German edition.

"When you lay photos of the two next to each other you can see it relatively clearly," Kuchenbecker said.

The new record, scheduled to appear next autumn in the 2009 edition of the Guinness Book of World Records, could strip the Pisa tower of its iconic status, Kuchenbecker said.

The 15th century German church tower stands in Suurhusen, a small village near Emden in northwestern Germany. Although its tilt angle is greater than Pisa's tower, it has less than half the Italian tower's height and none of its ornate beauty.

Kuchenbecker will present the village with a certificate commemorating the record on Thursday.

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Why You Haven't Heard of Citigroup's New CEO

The CEOs of two of the largest financial institutions in the country have resigned in recent weeks: Stanley O'Neal of Merrill Lynch and Charles Prince of Citigroup. These rock-star CEOs, both undone by the festering fallout of the subprime mess, have been replaced by operating executives with far lower profiles. On Monday, when Prince stepped down, he was replaced as chairman by 1990s icon Robert Rubin and as chief executive officer by Win Bischoff, a European banking executive whom resurgent CNBC anchor Maria Bartiromo would probably not recognize. When O'Neal resigned from Merrill last week, the company didn't name a replacement CEO but instead named board member Alberto Cribiore, a private-equity executive who could walk anonymously onto the floor of the New York Stock Exchange, to be the interim non executive chairman.

In time, both firms will likely bring in high-profile CEOs, probably from outside the company, to right the ship. But in the meantime, both banks have swapped household names for no-names. Rubin aside, the new bosses are unknown quantities even to many within the investment banks. It would be like the Yankees firing Joe Torre and declaring that the best person to run the show on an interim basis is the manager of the Class A Staten Island Yankees.

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The Dangers of Banking on Risk

The resignation of Chuck Prince as chairman and chief executive of Citi­group, a week after that of Stan O’Neal at Merrill Lynch, shows just how much damage the credit squeeze is doing. The loss of two heads of Wall Street banks has turned 2007 into the industry’s most traumatic year since the 1987 crash.

Other downturns, including the bond upheaval of 1994 and the collapse of Long-Term Capital Management in 1998, prompted reappraisals of banks’ trading risks. But this year’s write-downs and resignations (or retirements, as they are termed in Mr Prince’s and Mr O’Neal’s case) will cast a longer shadow.

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Real Estate: Seven Smart Strategies

For millions of Americans approaching retirement, a big part of their fortune is tied up in something they might never want to sell: their homes.

Even with the recent drop in home prices, the real value of a single-family house in the U.S. has more than doubled in 10 years, according to the Standard & Poor's Case-Shiller index, and home values in some markets have tripled.

Many who bought midpriced houses in the mid-1990s now find themselves living in homes worth a small fortune. They could retire comfortably if they could somehow tap into that. But it's easier said than done.

Ya Gotta Live Somewhere

Unlike stocks and bonds, a home can't be sold quickly for a profit. The costs to sell a home and move are high, and the declining real estate market makes it doubly difficult these days. And even if you can find a buyer, many longtime homeowners simply don't want to sell. Too many memories and hard work are tied up in their houses. And after a sale, they know they'll still need a place to live.

We asked financial advisers for some tips on how to handle real estate as you approach retirement. Their advice is aimed at those age 55 to 65, but it can be used by anyone investing in real estate.

1. Figure out how much your home is worth—to you.

For most people, a home "becomes an integral part of their identity, of who they are," says Avani Ramnani, of New Jersey-based Athena Wealth Advisors. Their status in the community is linked to their home, which also holds memories of raising children and the "sweat and hard work" that went into improving it.

All this can make it difficult to sell, even if it's financially smart. Some people will pay almost any price to stay in their homes for as long as possible.

If you know you need to sell, Ramnani advises first going out and finding a new place where you'd love to live. That may make it easier to load up the moving trucks. While lamenting the home you're losing, you can also get excited about the one you'll be gaining.

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Size Matters

What Ann Arbor once was and what it is becoming can be found on ether side of Huron Street near the city's downtown.

The Ann Arbor of old, on the north side of Huron between Glen Ann and Main streets, is often referred to as the Old Fourth Ward. Resplendent with two- and three-story Victorian-era homes, it creates a quiet, quaint neighborhood composed of a mix of long-time residents and older graduate students at the nearby University of Michigan.

New Ann Arbor, on the other hand, is sprouting up around the fringes of the Old Fourth Ward in the form of new mid- and high-rise buildings. Adjacent to downtown, these high-density dwellings tower over the neighborhood, allowing more new residents and workers to take advantage of the city's thriving core. None is bigger than the university's 10-story North Quad development, which will loom over the Old Fourth Ward just outside its boundary at State Street and Huron. It will house 500 students in a university that is rapidly growing and constantly improving its building portfolio.

In theory these two worlds should coexist peacefully. In reality they clash, with one side saying the other is spoiling their neighborhood while the other responds that such obstructionism stands in the way of progress. This leaves Ann Arbor in the precarious spot of a college town trying to balance its small-town charm with the kind of blossoming downtown development that attracts companies like Google.

"There is a place for all of that," says Ann Arbor Mayor John Hieftje, who has voted both in favor of and against high-rise developments in downtown. "We certainly don't want to become overwhelmed by tall buildings, but there is a core area downtown that can stand a few tall buildings. There has to be a balance."

It's an issue that is starting to pop up in Metro Detroit's reviving suburban downtown areas now that developers are recognizing the demand for vertical, urban lifestyles. The problem is diversifying the metro area's largely horizontal housing stock while respecting the character that makes each city attractive in the first place.

"A 12-story building next to a two-story building can be problematic," says Will Wittig, an associate professor of architecture at the University of Detroit Mercy and the co-director of its masters of community development program. "A good design will take into account the context of the surrounding neighborhood."

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How Can I Sell My House?

Like I said, there are going to be op-ed pieces from me, so let's start with this question that was posed on an internet forum:

I have had my house for sale for eight weeks and have had ONE couple look at it. We are in a sought after neighborhood and we are the cheapest in the neighborhood. We hired a stager just for a consultation who said our house looked "amazing".

And here is my answer:

First of all, in this market, 8 weeks isn't that long. If you have a purchase agreement you have to honor, then 8 weeks is a long time. Second, I don't know where your general geographical location is. Each market is a little different. But the following is some good basic advice. I hope it helps.

Either the price isn't right, or the seller isn't doing a good job. If you are the seller, don't take it personally, what is is. If you are using an agent, tell him/her to step up the online marketing. Get your house listed all over the place! There are tons of resources for realtors and FSBO's alike. Most are even free! Spend a few bucks on an Adwords campaign. Open houses are a dinosaur.

Price: I don't know if you are buying a home that already exists, or a new build, but I have a feeling you're buying something at a really good deal. So think of your house more like a stock. You might be selling your current home for a 20-30% discount (and that hurts), but you're also buying the new home at a similar discount (and that feels good). When the market turns (and it will), you'll make just as much, if not more. Sell at the price the market gives, and buy the same way.

Then again, if you don't really need/want to move. Don't. Give it some time, the market will turn around. It always does. And trust me, the media is always the last in line. When they finally convince you it's real estate Armageddon, it's time to buy, because things are turning around.

I hope I helped. Good luck selling your home!