Demystifying the real estate and mortgage market

In these uncertain times, the folks at Consumer United thought it would be a good idea to conduct a free information session on various topics related to real estate and mortgage for our members.

So, if you're looking for answers when it comes to buying or selling a home, facing a foreclosure or refinancing your property, the seminar will be well worth your time.

The panel in Stoughton features professionals with years of experience in real estate and mortgage and will be accessible to answer any questions.

When: 6:30 p.m. Wednesday, Nov. 12, 2008

Where: Re/Max Landmark, 630 Park Street (Rt. 27), Stoughton, MA 02072

This info session is sponsored by Consumer United in association with Re/Max Landmark. Light refreshments will be served. RSVP preferred at kevin.pelissier@consumerunited.com or call Kevin Pelissier at 617-440-5937.

Bigger homes aren't necessarily better

For many suburban homeowners, maintaining a large house and lawn after the kids have moved out can be a problem.

Property owners could pay high energy bills for the large house and owe taxes on space they aren't utilizing anymore. At some point, it may make sense to move to a smaller home. The right time to make such a move, however, could be difficult to determine according to a CNN report by Carla Fried.

Although the market is good for buyers, sellers face more of a challenge especially with larger homes. One consideration that tempts many would-be downsizers is the likelihood that as the property shrinks, so will the expenses associated with it.

Chuck Petitti, a Boston-area real estate agent, tells CNN that his clients want to move after coming to understand that"I could be traveling or doing something else with all the money I am paying for utilities and property tax on this big house."

Due to the large number of families with grown children or teens about to leave the house, the competition for smaller properties could eventually drive prices up.

In addition, CNN cites research from Zillow.com which suggests that smaller properties retain their value with more efficiency. Another major issue facing potential downsizers is that in some areas,s ome as popular metropolitan downtown areas, smaller properties cans still be very expensive.

The savings associated with getting rid of a second car, for example, may quickly be overshadowed by high maintenance fees. If you do plan to relocate, be sure to contact Consumer United to find out about all of the great savings opportunities on services thatcould be available at your new home.

Click here for the lowdown.

--Bridget O'Sullivan

Liar loans prolong mortgage crisis

Crippled by the downward spiral of real estate prices, homeowners who signed up for "liar loans" in better times are now unable to qualify for legitimate mortgages.

Liar loans are types of mortgages taken out with little or no amount of documentation. In other words, they're quick-fix loans approved without requiring proof of the borrower's assets or income.

Ninja loans, which is short for "no income, no job and no assets," is an extreme example of a liar loan that's causing major turmoil in the already tumultuous mortgage market.

According to the Associated Press, agencies like Fannie Mae and Freddie Mac have lost a combined $3.1 billion between April and June because of defaulted "liar loans."

Click here for more information.

Low interest mortgage deal from Consumer United

As a Consumer United member, you are eligible for a discounted 15- and 30-year regular fixed-rate mortgage. Nothing complicated or exotic, just a straight-forward mortgage where the payments don't change. Our closing cost rates are 25-40% cheaper when you factor in Consumer United's $500-$1000 closing cost discount. Click here to learn more.

Better deals together? Absolutely. Consumer United is a savings-driven, grassroots group that's spearheading a network of ordinary consumers, folks like you, who have joined together to identify the best service providers, negotiate better deals and simplify their lives.

Regional mortgage company under scrutiny

An increasing number of financial institutions are under scrutiny as state and local authorities investigate their lending practices.

The Mortgage Specialists Inc. of New Hampshire, with offices in Peabody and Worchester, received a temporary cease and desist order from the Massachusetts Division of Banks.

The Boston Business Journal reports here that the company cannot issue any new loans and must place all existing loans with a qualified lender or broker.

The Division of Banks became aware that the company was engaging in questionable practices by exaggerating borrowers’ income and fabricating documents in order to generate more loans.

The Mortgage Specialists became a household name around New England once Tim Wakefield, starting pitcher for the Boston Red Sox, endorsed the company.

A period of 20 days has been granted for the company to request a hearing. If they do not, the cease and desist order becomes permanent.

For more information or to read the original story, click here.

Housing repair kit is market band-aid

A sweeping house legislation was signed by President Bush July 30, 2008. This housing repair kit is designed to offer incentives for first time buyers and homeowners. With any luck, it will put a band-aid the current housing market.

The housing market needs help. The legislation was primarily created to help mortgage providers Freddie Mac and Fannie Mae, and to put a halt on foreclosures, but it does more that just that. It provides help to first time buyers and raises the mortgage allowances for high cost markets. It also creates tax relief, new disclosure requirements, mortgage help, federal aid, and affordable housing. Representative Barney Frank, Newton Democrat states, "There's enough for some, but not for everybody. If we had more money, we could do more."

The new legislation will provide a $7,500 tax credit for buying a home by next July 1, hoping to increase sales in home purchases. Lenders are now required to disclose the full costs of the loan over its lifetime, including payment increases and other types of adjustable rate mortgages.

More buyers should now be able to access lower cost federal backed mortgages, and Freddie Mac and Fannie Mae federal housing administration will increase loan amounts from $417,000 to $481,000. Communities hit hard will be able to share $4 billion in order to stabilize the neighborhood, and low income housing projects are increasing across the United States.

To read more on the Housing Legislation, click here.

CONSUMER WOES: Digging deep into the debt hole

Why do Americans continue to dig themselves into a hole?

Back in the day, people set money aside for personal purchases and saved for surprise expenses. Today, the average American household carries $8,565 in credit card debt, a 15% increase from the year 2000.

In total Americans have $2.56 trillion in consumer debt, up 22% since the year 2000 according to the Federal Reserve Board. For some reason, debt is increasing as most American's incomes are not. We have grown into a consuming society that believes it is OK to be in debt, in order to have that new phone, new outfit, or new car.

Disposable income that must be used for debt (credit card payments, car loans, mortgage interest, principle) is up to 14.5% from 11% just 15 years ago.

The New York Times tells the story of Diane McLeod and her debt hole.

McLeod began debt free, but a divorce caused her to spend and rack up $25,000 in credit card debt. She bought a home soon after with a $135,000 mortgage. Five years later illness and irresponsibility caused McLeod to owe $237,000 on her mortgage.

Now in foreclosure, it is hard for her to see light at the end of the tunnel.