January 9, 2012 4:32 am
Unemployment and other factors have caused many homeowners to involuntarily default on their mortgages. At the same time, falling home prices, the possibility of being underwater for many years and advice from certain influencers, or "mavens," may have encouraged others to simply stop paying, with deleterious consequences in some markets, according to a study released today by the Mortgage Bankers Association (MBA).
The study entitled "Strategic Default in the Context of a Social Network: An Epidemiological Approach," conducted by Michael J. Seiler of Old Dominion University, Andrew J. Collins of the Virginia Modeling, Analysis and Simulation Center and Nina H. Fefferman of Rutgers University and sponsored by MBA's Research Institute for Housing America (RIHA), received the Governor's Technology Award for 2011 for Virginia in the category of "Cross-Boundary Collaboration in Modeling & Simulation." The study examines the factors that can lead to mortgage default, the role that influential members of our society play in people's decision to stop paying their mortgage, and the impact on the broader housing market. The award was presented at the 2011 Commonwealth of Virginia's Innovative Technology Symposium (COVITS) in Richmond on September 26, 2011.
"Recently, the overwhelming media coverage of the current financial crisis has made homeowners aware - or at least alerted them to become aware - of their equity position in their home," said Michael Seiler. "While the merits of such a choice can and will continue to be debated, what is indisputable is that the possibility to strategically default has certainly been brought to the attention of current homeowners like never before, with potentially negative consequences for housing markets," said Seiler.
Key findings from the study include:
• The study, citing other research, reviews the main drivers of default including unemployment, declines in home prices, life changes such as illness or divorce and other shocks to household income or wealth. Strategic default is a result of a borrower's unwillingness to pay, even if able. It can be very difficult to determine whether a borrower is unable or unwilling to pay.
• Ideas are transmitted through the population in ways similar to those in which diseases are transmitted. Thus, they can be modeled in a similar manner. Certain corrective factors may lead some borrowers to be resistant to the temptation to strategically default, including the ability of lenders to pursue deficiency judgments, provisions of the tax code and bankruptcy laws.
• The model shows that real estate experts can influence market dynamics, but not in all cases. Markets are strong or weak due to fundamentals, however, markets in between can be pulled down or lifted up depending upon individual and expert behavior.
The study highlights those factors that distinguish an "economic default" (caused by hardship) from "strategic default" (selected as an option by homeowners who may be underwater on their mortgage), and the methods by which an idea such as "strategic default" can be transmitted through a population by contact with individuals and through social networks. Through simulation modeling, the authors demonstrate that because defaults and foreclosures lead to lower home prices, an epidemic of strategic defaults initiated by advice from those who might be considered experts can lead to the collapse of a housing market.
"Housing pundits share their expert opinion with a large audience on a frequent basis through the media. These social networks create the potential for much faster disease spread/cure than in the past. They can greatly impact mortgage markets through their use of behavioral advocacy. In fragile markets, advice by those considered to be experts, can result in a flood of strategic defaults, causing a contagious downward spiral of home prices and potentially a market collapse," said Seiler.
"Whether by choice or necessity, as foreclosures increase, they have an increasingly negative impact on the price of the healthy homes around them," said Selier. "One default does little to negatively impact the price of surrounding homes. However, as more and more mortgages in the neighborhood go into default, the negative impact is felt at an increasing rate. Much the same way as a disease spreads throughout a population, so, too, do decisions to 'strategically' default."
Michael Fratantoni, MBA's Vice President of Research and Economics added, "Research has clearly shown the factor that is most predictive of a mortgage default - a borrower's inability to continue making mortgage payments. It is much more difficult to predict or even detect a strategic default - a borrower who has the ability to pay, but simply stops in expectation of a financial gain. This research illuminates the consequences of strategic defaults on housing markets, finding that they can be destabilizing, particularly in markets that are already on the edge. From a policy standpoint, the research supports the contention that opinion and information (or disinformation) can move markets. More specifically, that policymakers and Mavens have the ability to stabilize or de-stabilize markets."
To access a copy of the report, please visit the RIHA website at www.housingamerica.org.
January 9, 2012 4:32 am
Listing photos are crucially important for both listing and selling your home. The highest quality photos are the best tool sellers can use to lure buyers to view the home and hopefully make an offer. Consider these tips when taking photos - they could end up being a make-or-break factor for your transaction.
Removing clutter is the first step. Nobody wants to see pictures of a home filled with your personal junk. Hide stacks of papers, fluff your pillows, and clean your counters. A neat and organized home looks great in photos and can really bring buyers in.
Stay out of the frame. Beware of any reflections that may occur near windows or mirrors. Keep the image clean and make sure that you and your equipment are hidden from view.
Vary your shooting angles. While wide shots can really show off a home's spaciousness, focus in on some well-chosen areas for added detail as well. It can help paint a different picture for the prospective buyer, providing him or her with a different view than what listing photos usually offer. In addition, try to avoid shooting at downward or upward angles. These types of shots may not always convey what you want them too.
Be mindful of the sun. Shooting into the sun will not produce great shots. The best time to shoot outdoors is in the morning or early evening. You'll capture the ideal natural light backdrop for your home that way.
Listing photos hold lots of power. They are usually the deciding factor as to whether or not buyers want to visit and tour your home. Put your best foot forward and offer prospective buyers the best visual picture you can offer.
Source: AOL Real Estate
January 6, 2012 4:26 am
The International Window Film Association (IWFA), a non-profit organization, is educating the public on window film use for residential and commercial applications, to reduce harmful solar glare, while delivering significant energy savings.
"People often wear sunglasses outdoors during winter months to protect from glare and ultraviolet (UV) rays, but glare is ever-present inside too," said Darrell Smith, executive director of the IWFA. "With winter sun lower in the sky, it passes directly into windows with damaging effects on furnishings and art, along with unhealthy UV rays' impact on people's eyes and skin," he added.
In northern states, snow on the ground can reflect up to 85% of harmful UV rays upwards, according to the Vision Counsel of America. This magnifies the issue of glare coming into windows, added Smith. Professionally installed window film can be a cost-effective solution to make interior environments more enjoyable.
Glare issues can be ameliorated by window film, which uses advanced technology to deliver energy savings similar to low-e windows. Window film is available in a range of shades from clear to darker. It reduces glare and still allows adequate light in while blocking UV rays that can harm skin and eyes, and fade furniture, carpets and fabrics.
According to the IWFA, window films may also eliminate uncomfortable hot spots by blocking solar heat. This enables HVAC systems to work more efficiently. For larger commercial and office buildings, which run heating and cooling systems year-round, energy savings are even more significant.
For more information on protecting a home or office from glare, please visit www.iwfa.com.
January 6, 2012 4:26 am
For those who made the “nice list” last year and received an extra special gift for the holidays, like diamonds, furs, watches, or fine art, to name a few, it is important to insure the item in case of unforeseen situations that may cause damage.
Homeowner’s policyholders, including those with condo or renter’s insurance, who received gifts during this past holiday season, are automatically covered for losses such as fire, vandalism and wind, with some limitations. For those without homeowner’s insurance or with limitations to their policies, the following advice may be of help to make sure their most valuable gifts are protected in the New Year.
1. Review your homeowner’s policy for coverage limitations.
For those who are currently covered under a homeowner’s insurance policy, their gift will automatically be covered by the policy for losses such as fire, vandalism or wind damage; however, there may be situations in which the homeowner’s policy does not extend coverage to an expensive gift received during the holidays. Items such as jewelry, watches, coins, hand tools and guns have coverage limitations for certain types of losses, including theft. Additionally, accidental breakage of any item is typically not included in a homeowner’s policy. Policyholders should speak with their insurance agent to discuss broadening their coverage to include losses such as breakage, as well as increasing coverage limits for valuable gifts.
2. Get a stand-alone insurance policy for valuable gifts.
If you do not have a homeowner, condo or renter’s policy, consider investing in one. There may be value limitations for items including jewelry, furs, fine art, musical instruments, coins, guns, cameras and silverware. Often these limits are not an issue as the majority of gifts purchased fall below the value limitation, which can range from $5,000 to $100,000 depending on the state.
3. Ask the gift-giver for a receipt or bill of sale.
In order to insure a gift, the recipient should retain the proper information, including a receipt or bill of sale, and a detailed description of the gift. An appraisal may be required. Consult with your independent insurance agent regarding coverage. He or she will need to know exactly what the gift was, as well as its monetary value, in order to provide proper coverage.
For more information about which gifts may be covered under a homeowner’s policy, visit www.GrangeInsurance.com.
January 6, 2012 4:26 am
Builder confidence in the market for newly built, single-family homes edged up two points from a downwardly revised number to 21 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for December. This marks a third consecutive month in which builder confidence has improved, and brings the index to its highest point since May of 2010.
“While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev.
“This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend,” said NAHB Chief Economist David Crowe. “While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months.”
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
Each of the HMI’s three component indexes registered a third consecutive month of improvement in December. The component gauging current sales conditions rose two points in the latest month to 22, while the component gauging sales expectations in the next six months edged up one point to 26. The component gauging traffic of prospective buyers gained three points to 18, which is its highest level since May of 2008.
Builder confidence primarily gained strength in the South in December, where a four-point gain to 25 brought that region’s HMI score to its highest level since March of 2008. A one-point gain to 16 was registered in the West, while the Midwest held unchanged at 24 and the Northeast slipped one point to 15.
For more information, visit www.nahb.org.
January 5, 2012 4:24 am
Real Christmas trees are the clear environmentally friendly choice for the holidays. After the trees have been enjoyed, it’s important to choose a green disposal method to sustain the environmental benefits.
Recycling is the most common option. With more than 4,000 local Christmas tree recycling programs throughout the United States, there is sure to be one in your area. To find a recycling center in your area, visit earth911.com or christmas.recycle4recycling.com and search by city or zip code. Some cities offer curbside pickup. Check with your local municipal office.
Other recycling options include moving the tree outdoors to provide a bird habitat in your backyard. Remove the ornaments first and then secure the tree using stakes and twine. The birds will love the extra cover. Spread some large pine cones with peanut butter and bird seed and hang them from the branches, or just hang purchased suet.
If you have access to a wood chipper, you can also make your own mulch. Simply cut the tree into smaller pieces to fit into the chipper. The homemade mulch can be used in gardens, around plants and for garden paths.
Christmas trees are also used in lakes and streams to help stabilize the shoreline or provide fish habitat. Check with your lake association or fishing club to find out if they are in need of your tree.
Remember, the green benefits of real Christmas trees continue throughout the year. For every tree harvested, one to three seedlings are planted the following spring. Often, Christmas trees are planted on land that is unusable for other crops, helping to preserve green space.
Source: Wisconsin Christmas Tree Producers Association
January 5, 2012 4:24 am
As cold winter weather sets in across the country, many families are using portable space heaters to keep warm. Because more than half of all fire-related deaths result from items catching fire when placed too closely to heat sources like portable space heaters, the Federal Alliance for Safe Homes (FLASH) has compiled these life-saving tips for preventing house fires resulting from the use of portable space heaters.
Electric Portable Space Heaters
• Read the Labels
• Purchase a space heater with modern safety features such as an automatic shut off in the event the heater is tipped or turned over.
• Buy only electric portable space heaters that have been tested and labeled by a nationally recognized testing company such as Underwriter’s Laboratories (UL).
• Location, location, location -Keep the heater at least three feet away from drapes, furniture or other flammable materials.
• Place the heater on a level surface away from areas where someone might bump into it and knock it over. Be mindful of keeping children and pets away from the heater.
• Place electric space heaters only in areas where they can be plugged directly into the wall outlet. If an extension cord must be used, make sure it is a heavy duty cord marked with a power rating at least as high as that on the label of the heater itself.
• Keep electric heaters away from water. Never use them near a sink or in the bathroom.
• Never leave a space heater unattended or running while sleeping.
Gas-Fueled Portable Space Heaters
• Carefully follow the manufacturer’s fueling instructions using only the approved fuel. Never use gasoline. Never fuel a heater that is still hot. Do not overfill the heater; allow for the expansion of the liquid. Only use approved containers that are clearly marked for that particular fuel and store them outdoors.
• Have vented space heaters professionally inspected every year. If the heater is not vented properly, not vented at all, or if the vent is blocked, separated, rusted, or corroded, dangerous levels of carbon monoxide (CO) can enter the home causing sickness and/or death. CO also can be produced if the heater is not properly set up and adjusted for the type of fuel used and the altitude of the home in which it is installed.
For more information, visit www.flash.org.
January 5, 2012 4:24 am
U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan recently awarded $1.47 billion to renew funding to more than 7,100 local homeless programs operating across the country. The funding announced will ensure these housing and service programs remain operating in 2012 and are a critical part of the current administration’s strategic plan to prevent and end homelessness.
The funding announced is $62 million more than last year, the most homeless assistance ever awarded by the Department. HUD is renewing funding through its Continuum of Care programs to existing local programs as quickly as possible to prevent any interruption in federal assistance and will award funds to new projects in early 2012.
“The grants we’re awarding today will literally keep the doors of our shelters open and will help those on the front lines of ending homelessness do what they do best,” said Donovan. “It’s incredible that as we work to recover from the greatest economic decline since the Great Depression, the total number of homeless Americans is declining, in large part because of these funds.”
HUD previously announced its 2011 “point in time” estimate of the number of homeless persons in America. Approximately 3,000 cities and counties reported 636,000 homeless persons on a single night in January of 2011, a 2.1 percent decline from the year before. This documented reduction in homelessness was noticed among all population groups including individuals, families, and those experiencing long-term or chronic homeless. In addition, HUD’s estimate reveals a 12 percent reduction in homelessness among veterans.
HUD’s Continuum of Care grants provide permanent and transitional housing to homeless persons as well as services including job training, health care, mental health counseling, substance abuse treatment and child care. Continuum of Care grants are awarded competitively to local programs to meet the needs of their homeless clients. These grants fund a wide variety of programs from street outreach and assessment programs to transitional and permanent housing for homeless persons and families.
In addition to HUD’s annual grant awards, HUD continues to manage the $1.5 billion Homelessness Prevention and Rapid Re-housing (HPRP) Program. Made possible through the American Recovery and Reinvestment Act of 2009, this three-year grant program is intended to prevent persons from falling into homelessness or to rapidly re-house them if they do. To date, more than one million persons have been assisted through HPRP.
For more information, visit www.hud.gov.
January 4, 2012 4:24 am
After the kitchen, the most popular room in most homes is the family room. It can function as a media room, a game room, a music room, a reading room—and often a homework area too. Because this room is so lived in, there are lots of family rooms that could use a serious makeover. But where do you start?
Start by utilizing a design that reflects the interests of the family members. Use photos, children's artwork, mementos, maps, antiques and art collections to tell your family's story in this room. Consider having frames that can open to switch out kids' artwork or to showcase the latest photos from a family trip. Keep it personal, yet practical. Here are tips on how to create a family room that is both functional and attractive:
1. Comfortable seating is essential.
Sofas, sectionals and chairs for a family room should be chosen for reading and viewing comfort. Do you like to nap on the sofa? Be sure it's wide and deep enough. Chairs and sofas with an outside depth of 38 - 39 inches or more are ideal for both sitting and reclining.
2. Select furniture that's the right scale for the room.
If your room is oversized or has a cathedral ceiling, you probably need large-scale upholstered furniture that can stand up to the size of the room. Traditional sofas 72 to 78-inches wide will look diminutive in a big room. Look for large-scale sofas at least 88-92 inches wide with depth and height of about 38-39 inches for furniture with presence in a spacious room.
3. Consider sectional seating for design flexibility.
Sectional sofas with a variety of components are a good way to create more spacious seating that can be tailored to the size and shape of the room. If you want to pack more people into a tight space, your best choice is a sectional sofa. The L-shape creates a very strong line and utilizes every square inch, even the corner.
4. Vary the scale and visual weight of the furniture in the room.
For example, have large chairs, medium-size chairs and smaller slipper chairs. Incorporate ottomans and benches. Have firmer chair seats and cushier chair seats. Have a great reading chair or chaise. Be able to reconfigure the furniture and pull in extra seating for big family gatherings and parties. Furniture with a little variety creates a more interesting room than a matching suite that all appears to have come from the same source.
5. Ottomans are critical to reading and viewing comfort.
Ottomans should pull up easily to chairs or sectional components to support your legs. Will they be large enough for a long-legged spouse? Or will two people want to share one ottoman? Shop accordingly. If an ottoman will serve as both footrest and coffee table, consider a large 36" to 48" rectangular or square ottoman to serve all needs.
6. Find a fabric you love to pull out colors for pillows, window treatments, skirted tables and accessories.
If you have little ones, consider a more colorful combo for a family room as brighter colors really speak to kids. Start with the fabric, because there a million shades of paint and you can always find that later.
7. Lots of pillows are great for lounging, movie watching or support while reading.
Have pillows made in a variety of sizes and shapes--lumbar pillows to cradle your back while reading, smaller pillows to tuck under an elbow, larger pillows for napping--and even floor pillows for kids who love to lounge on the carpet.
8. Use window treatments to control glare on a television screen.
Light falling from a window onto a television screen creates sun glare. Window treatments that can be drawn, or shutters or shades that can be closed, will help to control glare and add privacy.
January 4, 2012 4:24 am
Most homeowners have a long list of things to get done around the house. However, very few are more important than making sure the residence foundation is in good shape and not threatened by issues that are easy to fix.
After the purchase of the house itself, one of the biggest expenses, especially in terms of out-of-pocket costs the homeowners may incur, is foundation repairs. Taking a pro-active approach to caring for the residence's foundation is economical, and the pay-off can be tremendous.
1. Homeowners should check the drainage around their residence by making sure gutters and spouts drain away from the foundation.
2. Plumbing leaks under the house foundation are not uncommon. The homeowner can have a plumbing pressure test done to make sure there are no leaks under the slab.
3. The ground moisture around the home's perimeter should remain as constant as possible. A periodical use of a sprinkler system and soaker hoses in the summer time is recommended, but can also be done in the winter time if the weather is dry.
If homeowners are pressed for time, they can contact any reputable foundation repair company to have an inspection conducted inside and outside the house. Most of the solutions are affordable and extremely important to the well-being of the structure.