Getting the Most From Your Home Inspection

Getting the Most From Your Home Inspection
By Michele Dawson

***
Some 77 percent of all home sales in the United States last year involved a home inspection, according to a study by the American Society of Home Inspectors (ASHI) and the National Association of Realtors.

"It's clear from the study that more people are recognizing the importance of home inspections," said John Ghent, president of ASHI, the largest non-profit professional organization for home inspectors.

By following these pointers, you can maximize your home inspection benefits:

Know what it includes: Heating and central air conditioning systems, interior plumbing, electrical systems, the roof, attic, visible insulation, walls, ceilings, floors, windows, foundations, and basements are among the key inspection points. Inspections may also include appliances and outdoor plumbing.

Know what an inspection does not include. Inspections for a typical home require several hours, but they do not concern every dent and scratch. For details, speak with any inspector you are considering.

If you're selling, get a home inspection before you put your home on the market. This can avoid surprises down the road when potential buyers have the home inspected by their own professional. If major or potential problems are detected, they can be repaired before you try to sell.

Hire a qualified inspector. Try to get referrals from friends or anyone you know who has had a satisfactory experience with a home inspector. Also, look for affiliations with organizations like the American Association of Home Inspectors (AAHI) or ASHI. Both groups require its members to be certified, meet professional qualifications, and adhere to specific business ethics.

Be cautious about hiring someone who may have a conflict of interest or may not be impartial. For example, a retired roofing contractor who now does home inspections to make a few extra dollars may find a problem with -- you guessed it -- the roof. This person could take advantage of your need to find someone to make repairs in a hurry, leaving you to wonder if the repairs were needed.

Include a proper home inspection contingency in your purchase agreement. This is important. If an inspector finds that the home can't survive another rainy season without $20,000 worth of roof repairs, you'll want to have the option of bailing out of the deal, asking the seller to make the repairs, or lopping the appropriate amount off the purchase price.

Be there for the full inspection. Spending a few hours with the inspector could prevent headaches and save time in the future. As the home inspector examines the various systems and components of the home, ask him or her to explain what problems may be encountered down the road, what signs to look for, what repairs and replacements are likely to cost, and how to prevent big maintenance bills.

Try to learn how things work and how to maintain systems and equipment during the inspection process. The inspector may also point out little flaws or oddities that don't measure up to being mentioned in the report, but may warrant watching.

In the case of new construction, consider three inspections: At the time the foundation is first poured, when walls are up but not closed, and at the walk-through before closing. Yes, this is expensive, but in the context of a long-term investment -- and a big investment -- such as a home, the cost is easy to justify.

Once the inspection is complete, the inspector will write a report. If major problems are found, then you have the knowledge to better guide your negotiations. And, if your new home receives stellar findings, then you'll have the peace of mind that will be a welcome relief once you're settled into your new home -- priceless!





1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Understand "Presentation"

Understand "Presentation"
By M. Anthony Carr

***
During a real estate course I took years ago, the trainer used a fantastic example of how human nature dictates the selection process. She produced two $1 bills. One was fresh from the bank. You almost had to check to make sure you didn't have a second one pasted to the back it was so new. The second bill looked as if it had been gone through Desert Storm, been laundered several times and was nearly disintegrated.

She went to someone in the front row and asked, "Which one do you want?" The obvious answer was the clean, crisp, freshly printed bill. Why? The value of both was the same. They both are legal tender in any American retail outlet around the country and several countries around the world. But -- the clean one always got selected.

The requirements to get top dollar have and always will be the same:

Clean the house. Thoroughly -- before you put it on the market. If it's not clean, don't even consider putting it on the market. You will lose a contract just because of dust and scum.

Paint the interior. Paint is cheap, but cleans up any dwelling place.

Declutter. Get rid of everything you don't need to live on a day-by-day basis. You don't need your seasonal decorations. The kids can do without half their toys. You can probably live without a third of your furniture. Get it into storage or a friend's house. Space adds value.

Have handouts. With more properties on the market, you need to make sure your house is memorable -- with a good marketing plan that includes a flier the buyers can take with them.

Price right. Look at all the parameters of your house, not just the bedroom and bath count. One of the houses above is sitting on a half-acre lot with a 1-car garage and built in the same year as it's counterpart listed for about the same mount of money, but which has only half as much land and no garage -- not even a carport -- but they're in the same area. (This is mostly the Realtor's job, but a stubborn seller may cause an over-priced listing.)

When placing your house on the market, keep in mind it's more involved and requires more work than selling a used car. We're not talking a difference of a couple hundred dollars on price here. Missing the mark on price and condition could cost you tens of thousands of dollars.





1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Cashing In on a Second Home in Mexico

“Cashing In on a Second Home in Mexico”

How to Buy, Rent and Profit from Property South of the Border
By Tom Kelly and Mitch Creekmore


Mexico has it all . . . From lush and tropical mountainous municipalities perched on brilliant bays, to miles of white sand beaches merging into iridescent azure water, to quaint European-style houses lining cobblestone streets in picturesque villages and towns, our Spanish-speaking neighbor to the south is abundantly rich in geographic and natural diversification.

Cashing In on a Second Home in Mexico (Original Paperback, $19.95, ISBN 0-9770920-0-3) is a straightforward, informative guide that helps potential second home buyers, investors and renters easily understand the nuances of Mexican property, mortgage history and closing process, plus:

Discover how to safely hold property within Mexico’s “restricted zone”
Explore dynamic new locations South of the Border
Collect strategies on researching a Mexican property for purchase
How the fidecomiso, or Mexican trust, provides new ownership opportunities
Explore creative avenues of financing your dream retreat
Find innovative ways of attracting desirable, qualified renters
Understand tax benefits, ramifications of a Second Home in Mexico

Written by Tom Kelly, a nationally syndicated real estate columnist and talk show host, and Mitch Creekmore, senior vice president of Stewart International and one of the world’s foremost authorities on Mexican transactions, Cashing In on a Second Home in Mexico leads all consumers who are now working for a safe and profitable getaway property through the maze of options and possibilities of obtaining Mexican property. This useful book especially targets the Baby Boom generation - the largest, healthiest and wealthiest to enter its senior years in history – plus those in the real estate industry who assist them.

Al Heavens, longtime Philadelphia Inquirer real estate writer whose stories appear in newspapers and websites around the country, wrote “this book is as important to the first-time American second-home buyer as the Boy Scout Manual is to the tenderfoot.’’
Heavens, president of the National Association of Real Estate Editors, went on to write “it's true that much of this information can be found on the Internet. The difference is, of course, that Kelly and Creekmore have the kind of expertise that will help you sift through all of that information and make the kind of informed decision that will allow you to make a safe and sane investment in Mexican real estate.”

Cashing In on a Second Home in Mexico also contains real stories of how real people attained their dream of owning Mexican property. It includes helpful maps of some of the most popular areas, preparation checklists, capsule outlines of specific regions plus helpful websites and English-Spanish language tips and terms.

ABOUT THE AUTHORS

Tom Kelly is a nationally syndicated newspaper columnist and radio talk show host. He served The Seattle Times readers for 20 years - several as real estate editor – and his work now appears in The Los Angeles Times, The Houston Chronicle, St. Louis Post Dispatch, The Oakland Tribune, Kansas City Star, Louisville Courier-Journal and Des Moines Register plus more than two dozen other newspapers.

He is the author of “The New Reverse Mortgage Formula” (John Wiley & Sons) and co-author of “How a Second Home Can Be Your Best Investment” (McGraw-Hill) written with John Tuccillo, former chief economist for the National Association of Realtors.

In 2005, Tom’s award-winning radio show “Real Estate Today” began its 12th year on the CBS affiliate in Seattle. The show is syndicated by Business Talk Radio to approximately 40 domestic markets and airs on 450 stations in 160 foreign countries via Armed Forces Radio.

Mitch Creekmore is senior vice president and director of international business development for Stewart Information International, a world leader in title insurance and other real estate information services. He has been a licensed Texas real estate broker for more than 20 years. He has authored numerous articles on the Mexican system of real estate conveyance, Mexico’s foreign ownership requirements including Mexican land title matters, subdivision development procedures, escrow and tax considerations, ejido land and financing issues.

Cashing In on a Second Home in Mexico is distributed to the retail book industry by Partners Publishers Group, Inc.

Crabman Publishing
P.O. Box 4719
Rolling Bay, WA 98061






1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Foreclosures Soar 63 Percent Over Last Year

Foreclosures Soar 63 Percent Over Last Year
From RIS Media

RealtyTrac(TM) (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its March 2006 U.S. Foreclosure Market Report, which shows 101,597 properties nationwide entered some stage of foreclosure in March, a 13 percent decrease from the previous month but a 63 percent increase from March 2005. The report shows a March national foreclosure rate of one new foreclosure for every 1,138 U.S. households.

RealtyTrac publishes the largest and most comprehensive national database of pre-foreclosure and foreclosure properties, with more than 600,000 properties from more than 2,500 counties across the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate, AOL Real Estate and Knight Ridder Online.

"After rising more than 20 percent during each of the first two months of the year, foreclosure numbers experienced a fairly sharp correction in March," said James J. Saccacio, chief executive officer of RealtyTrac. "We saw a similar drop in March of '05, followed by four consecutive months of increases. Many buyers and investors typically start looking for properties in the spring, and that could have provided distressed homeowners a better chance of selling their properties to avoid default or foreclosure."

Colorado's foreclosure rate leapfrogged to highest among the states thanks to a 31 percent increase in new foreclosures from the previous month. The state reported 5,392 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 339 households -- more than three times the national average.

After spending the two previous months as highest in the nation, Georgia's foreclosure rate dropped to second highest behind Colorado thanks in part to new foreclosures decreasing 19 percent from the previous month. The state reported a total of 7,656 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 404 households and a 77 percent year-over-year increase.
With a total of 4,933 properties entering some stage of foreclosure in March, Indiana's foreclosure rate -- one new foreclosure for every 512 households -- ranked among the nation's five highest for the third month in a row despite a 17 percent decrease from the previous month.

Utah foreclosures increased 21 percent from the previous month and replaced Ohio, where new foreclosures dropped 52 percent, among the states with the five highest foreclosure rates. Utah reported a total of 1,437 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 535 households and a 32 percent year-over-year increase.

Michigan's foreclosure rate dropped from second to fifth place among the top state foreclosure rates thanks to a 25 percent decrease in new foreclosures from the previous month. The state reported 7,727 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 547 households and more than three times the number reported in March 2005.

Texas documented the most new foreclosures of any state for the fourth month in a row even though foreclosures there decreased for the second consecutive month. The state reported a total of 11,951 properties entering some stage of foreclosure, a foreclosure rate of one new foreclosure for every 674 households -- 1.7 times the national average.

California reported 11,073 properties entering some stage of foreclosure in March, the second most of any state, and the state's foreclosure rate registered slightly above the national average thanks to a 22 percent increase from the previous month.

Florida foreclosures decreased 7 percent from the previous month and 12 percent from March 2005, but the state still reported 9,283 properties entering some stage of foreclosure in March -- the third most of any state and a foreclosure rate 1.5 times the national average.






1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Google and Craigslist in RE Market

Google and Craigslist May Weaken
Realtors' Hold on Home Listings

By James R. Hagerty
From The Wall Street Journal Online

Craigslist.com and Google.com, two Web sites that have fundamentally altered the way consumers buy a broad range of products, are emerging as places to shop for residential real estate, a development that in the long term could weaken Realtors' hold on home selling.

Listings of real estate for sale on Craigslist, a popular Web site featuring free classified ads, rose to 335,126 in March, more than triple the level of a year earlier. Google Inc., meanwhile, is testing a tool to help users sort through listings of homes for sale. Several more specialized sites launched in the past year -- including Trulia.com, Oodle.com and Propsmart.com -- offer free access to substantial numbers of listings.

While their real-estate ventures are still relatively small, sites like Google and Craigslist have begun reshaping the advertising world as they offer a potent alternative to ad spending on traditional media such as newspapers and TV. Craigslist in particular has become a popular place to post classified listings for rental apartments, child care, jobs, furniture and personals. With household brand names and huge numbers of users -- Google had 89 million visitors in February, according to research firm NetRatings Inc. -- Google and Craigslist have the potential to draw large numbers of home-sale listings.

The proliferation of real-estate sites comes as brokers are under pressure from several directions. As home sales slow, an increasing number of discount brokers are vying for customers. In addition, the U.S. Justice Department and the Federal Trade Commission are investigating industry practices that they say deter competition.

Commissions on home sales have declined slightly over the past decade and now average around 5.1%, according to estimates from Real Trends, an industry publication.

The Web-site companies say they don't aim to revolutionize real-estate brokerage and indeed are working to cooperate with brokers in many cases. But the growth of the sites may embolden more consumers to try selling their homes themselves and, when they do use agents, to reduce their reliance on them. Abdullah Yavas, a real-estate professor at Pennsylvania State University, says these sites may encourage an "unbundling" of agents' services, with consumers paying for only the services they want, rather than a whole package. For instance, a consumer might list a home on Craigslist and arrange showings, but still hire an agent -- for a lower commission -- to help with negotiations or guide the paper work.

Craigslist's chief executive, Jim Buckmaster, sees a move toward even more public access to information about homes for sale. The information "isn't something that should be controlled or owned by brokers," Mr. Buckmaster says. "It's going to eventually happen" that all the brokers' listings become publicly available. "You can mark that down as done. It's just a matter of when."

Unlike buying books or airplane tickets, real-estate transactions are complicated, so most people still want agents' help to complete the process of buying or selling homes. For buyers, the new home-shopping sites promise to further erode the information advantage enjoyed by real-estate agents over consumers. Most of the new sites offer listings of homes being sold directly by owners, as well as those being sold through agents. (Trulia.com includes only agent listings.) That contrasts with the policy of Realtor.com, the popular real-estate Web site owned by the National Association of Realtors. Realtor.com excludes homes for sale by owners.

"As a buyer, you want to see everything that's available," not just the homes represented by agents, says Ron Hornbaker, co-founder and president of Propsmart Inc., Kansas City, Mo., which owns Propsmart.com.

Shoppers can't rely on agents to tell them about for-sale-by-owner offerings, because agents often don't earn commissions for introducing buyers to these properties and find such transactions more difficult to complete. Agents also may fail to tell potential buyers about homes being sold through discount brokers.

There are already a host of specialized for-sale-by-owner Web sites, but none of them can promise one-stop shopping. ForSaleByOwner.com, one of the biggest such sites, estimates that it has 10% of all owner listings. While Craigslist and Google won't be comprehensive either, their sheer size will likely attract more listings. Another attraction for sellers: They can post information on the new sites free, while some specialized FSBO sites charge fees.

Realtor.com still has a formidable advantage, with about three million listings -- around 10 times the number on Craigslist. Realtor.com gets listings from nearly all multiple-listing services -- the local firms that compile listings from brokers and are generally owned by local Realtor organizations. The National Association of Realtors says about 13% of home sales last year were FSBO and that often those were sales between people who already knew each other.

Google in November began allowing consumers and businesses to directly submit content such as real-estate listings for inclusion in some Google search results through a service called Base. Google previously included real-estate listings from sites it came across, but they weren't always up-to-date and couldn't easily be sorted by price and other attributes. In March, Google began on a test basis letting consumers who were searching terms such as "Los Angeles real estate" narrow their results by choosing various categories -- saying whether they want to rent or buy, for example -- and letting them see real-estate listings plotted on a map.

To keep up with the competition, a number of real-estate brokers are improving their own sites. Real Living Inc., a big regional broker based in Columbus, Ohio, recently upgraded its site to provide email alerts to buyers when there is new information about some properties and to let sellers see how many people have viewed their homes and what comments they have made.

Most sellers still want their homes listed on the local services operated by Realtors. Perry Ahmed, an investor with several properties for sale in the Washington, D.C., area, lists them through real-estate agents on a multiple-listing service but also puts them on Google and Craigslist. He has worked out a deal with his agent that will ensure that he pays lower fees if he finds a buyer without the agent's help.

Many of the ads on both Google and Craigslist are for homes whose owners are represented by real-estate agents. But some are from people like Leigh Chodos, a marketing consultant in Brookline, Mass., who isn't using an agent in his efforts to sell a condo. "I'd rather save myself the 6% commission," Mr. Chodos says.





1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Understanding Rates, Points and Fees

Understanding Mortgage Rates, Points, and Fees

By David Reed

March 31, 2006

Freddie Mac pushes a lot of numbers, and one of the numbers they push is perhaps one of the most widely published … their weekly interest rate survey. Freddie Mac has people who contact 125 lenders or so, get their rate quotes on different mortgage programs, specifically the 30 and 15 year fixed, 5/1 hybrid and 1-year ARM, then publish those averages for all to see.

Not a bad way for the consumer to get a handle on just how their current or quoted interest rate stacks up with the rest of the country. Just this past week for example, the 30 year fixed rate average as reported by Freddie Mac was 6.32 percent, with 0.6 percent in points and fees.

This means the "average" consumer in this poll got a 30 year fixed rate at 6.32 percent and paid $1,200, or 0.6 percent on a $200,000 loan, in either discount points or lender fees or any combination thereof. Okay, that's pretty neat by itself. Nice of Freddie to do that, don't you think? I do.

Freddie has been doing this for a long time, since 1971. I think Nixon was President then. The highest this rate has ever been was 17.48 percent in 1982 (can you believe it!) and the lowest recorded was 5.23 percent in 2003.

But looking a bit deeper into those numbers, one trend is also definite: People are paying less and less in points and fees to get those rates. In fact, if you go back twenty years, the average points paid on a 30 year mortgage was 2.3 points paid on every 30 year mortgage. On average.

Again on a $200,000 loan that's $4,600. Okay, yeah rates were higher then (10.89 percent) so people paid more to get a lower rate but that doesn't explain why when rates were 10.39 percent in 1979 consumers only paid 1.6 points. But enough of those numbers, the important point is … why pay any points at all?

Clearly, consumers are paying less at the mortgage pump. Point-wise. Why? I've got a good guess … because rarely does paying points, or origination fees for that matter, make good financial sense. At least in getting a return from the points paid. And more importantly, consumers might just be finding out that paying points is an option and not a requirement.

A discount point, at 1 percent of the loan amount, usually benefits the borrower by .25 percent. For each point paid, the borrowers rate is reduced by .25 percent. At least that's the way it should generally work. Some consumers get screwed right out of the gate by paying 2 or 3 points just because their loan officer told them they had to.

For instance, on a standard 30 year fixed rate today at 6.50 percent with a $300,000 loan the payment would be $1,896. At no points. Now pay one point and get a .25 percent lower rate at 6.25 percent and the monthly payment drops to $1,847, or $48 lower. But that lower payment costs $3,000. Tax deductible usually, but still $3,000.

If you divide that $3,000 by the $48 monthly savings it would take 62.5 months to "recover" that discount point paid at purchase. That's a long time in my book. One could take that $3,000 and put it into a retirement fund or something and get a better return. Or even take the $3,000 and make a principal pay-down with that same money.

But often the trade-off between discount points and lower payments rarely makes sense. For that matter, so does paying an origination fee. An origination fee is also typically 1 percent of the loan amount and is also an option and not a requirement.

Every loan that I know of doesn't automatically require you to pay an origination charge. Heck, in certain parts of the country origination fees are mostly unheard of. In certain parts of the country where origination charges aren't common the rates are the same there as they are anywhere else.

This means that when getting a rate quote or deciding whether or not to pay points or origination charges, think hard. Points and origination fees don't have to be a part of the equation. They can, and should be, a choice.






1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.

Homeowners Struggle to Keep Up...

Homeowners Struggle To Keep Up With Adjustable Rates

By Noelle Knox, USA TODAY
Mon Apr 3, 7:00 AM ET



For 45 years, Robert and Lorraine Brown have lived in their ranch-style home in Florissant, Mo. One of their four children was even born there. But for the past eight months, the couple have been locked in a sleep-wrecking race to keep up with their rising mortgage bills. They've switched to cheaper phone service, cut back on groceries and sometimes put off ordering medicine.


When they refinanced their home two years ago to pay off some bills, Robert, now 78, was working as a deliveryman. But his employer went out of business last April. Now he and Lorraine, 72, a retired nurse, are both seeking work. The rate on their mortgage has jumped from 7% to 10.5%.


"We were having a hard time meeting bills at the time we refinanced. It seems once you get behind, you do desperate things to catch up, and you never do," says Lorraine, trying to hold back tears. "At the time of the loan, they tell you, 'Well, it may go up, but it's probably going to go down.' You want it to be so, so you believe it."


They feel alone, but they're not. America's five-year real estate boom was fueled partly by a tempting array of cut-rate mortgages that helped millions of Americans qualify for home or refinance loans. To afford soaring home prices, many turned to adjustable-rate and other, riskier loans with low initial payments. The homeownership rate hit a record 70%.


Now, the real estate market is cooling, interest rates are rising and tens of thousands more Americans are starting to have trouble paying their mortgages. Nearly 25% of mortgages - 10 million - carry adjustable interest rates. And most of them went to people with subpar credit ratings who accepted higher interest rates, according to the Mortgage Bankers Association.


"Within the last year, I would say 60% to 70% of calls to our hotlines are issues related to ARM (adjustable-rate mortgage) loans," says Chris Krehmeyer, executive director of Beyond Housing, a non-profit group that offers homeownership support services in St. Louis. "That's significantly higher than in years past, because the ARMs are coming home to roost."


Last week, the Federal Reserve raised interest rates for the 15th time since June 2004 and signaled that at least one more increase is likely. That trend is ominous for borrowers who were seduced by adjustable-rate loans that offered interest-only payment options or teaser rates below 2% or that let the borrower pay less than the interest owed. They will face bigger payment shock once their loans reset to higher rates.


The number of borrowers in trouble will rise this year and peak in 2007 and 2008 as the largest number of mortgages reset to higher rates, according to First American Real Estate Solutions, a real estate data provider.


Already, in West Virginia, Alabama, Michigan, Missouri and Tennessee, about one in five homeowners with a high-interest (subprime) ARM was at least 30 days late at the end of last year, according to the Mortgage Bankers Association. After 90 days, the foreclosure clock starts ticking.


Most of those foreclosures are related to job losses in auto and garment factories; higher mortgage payments were often the last straw.


What worries experts such as Christopher Cagan at First American Real Estate Solutions are the adjustable-rate loans made in 2004 and 2005, at the end of the housing boom. These loans were concentrated in the hottest markets, such as California, where about 60% of all loans last year were interest-only or payment-option ARMs. That's the highest such rate in the country.


Of the 7.7 million households who took out ARMs over the past two years to buy or refinance, up to 1 million could lose their homes through foreclosure over the next five years because they won't be able to afford their mortgage payments, and their homes will be worth less than they owe, according to Cagan's research.


The losses to the banking industry, he estimates, will exceed $100 billion. That's less than the damage from the savings-and-loan crisis in the 1990s, which cost the country $150 billion. "It will sting the economy, but it won't break it," he says.


'What can we do?'


In the Atlanta area, credit counselors for The Impact Group say 85% of their calls are now related to ARM or interest-only loans. The calls start "when the statement hits them with the new monthly payment," says Marina Peed, executive director for the non-profit group, which offers homeownership education, counseling and financial services. "They are calling and asking, 'What can we do?' "


The call volume jumped after January, as holiday credit card bills, higher gas bills and rising mortgage payments hit some borrowers at the same time.


When Paul and Sandra Wilson moved from California, where they couldn't afford to buy a home, to Georgia in May 2004, they bought a house with an interest-only loan. But Paul, 52, has had a tough time finding work, and they lost most of their savings in a business venture. They refinanced to an ARM with a lower rate but one that reset every six months and that charges a $20,000 penalty if they refinance within three years.


The loan broker "convinced us that it was in our best interest, and in most likelihood within six months our financial situation would turn around and we were going to look at selling," says Sandra, 53, a former law enforcement officer who is disabled.

In less than a year, their loan payment jumped from $2,275 to more than $2,800. The couple filed for bankruptcy and will lose their home next month. "This was our fourth home," Sandra says. "It's not as if we weren't aware, but we'd never had an adjustable-rate mortgage before."

Banking regulators are concerned about risky loans made to people with precarious finances or those who didn't understand the complex terms and the peril they could face if interest rates rose.

In December, regulators proposed new guidelines for mortgage lenders to crack down on loose lending practices. The rules would require better risk disclosure and a fuller analysis of the borrowers' ability to repay the loan through maturity - and at the highest rates allowed under the loan terms.

Bank trade groups complained that concerns were overblown. "We do not believe it is appropriate or possible for the lender to dictate the best mortgage products for individual consumers," America's Community Bankers responded.

No matter what the final guidelines say, they will be too late to help people such as Susan Cambero. She got into trouble after she took out an equity line of credit on her home in Lilburn, Ga., to pay off her car and other bills. As a single mother with total income of $38,000 a year, including child support, she never would have been able to qualify for the $57,000 line of credit from a conservative lender. That line of credit, when added to the balance on her fixed-rate mortgage, totaled $10,000 more than her home was worth.

The monthly payments for the equity line have more than doubled in four years, to about $400. (She also has a $700-a-month mortgage and hefty credit card bills.) "I can pay it, but I have nothing left over to eat," says Cambero, a contract analyst for a computer company. "I'm going to lose my house."

Some success stories

There are few resources to help homeowners in dire financial straits, but there are some. The Homeownership Preservation Foundation offers free credit counseling and referrals, 24 hours a day, seven days a week (888-995-HOPE, or 888-995-4673). And NeighborWorks America, a national non-profit that supports homeownership and financial literacy, has member groups in every state.

One of its members, Neighborhood Housing Services of Chicago, has been receiving about five calls a day since January from borrowers who are falling behind on ARMs.

Marilyn Maxwell is one of their success stories. She refinanced her loan in 2002. Maxwell, 58, is a former U.S. postal worker who's living on disability payments from the government. She agreed to an ARM that reset every six months.

She kept up with her payments on her house on the southeast side of Chicago until last April, after her daughter, who was helping Maxwell pay the mortgage, lost her job. Last week, Maxwell refinanced her home with the help of Neighborhood Housing Services. She got a 6.8%, fixed-rate loan, plus grants to help make long-neglected repairs.





1Listing.com is a California fixed fee Multiple Listing Service (MLS) listing and marketing website for California For Sale By Owner (FSBO) sellers. 1Listing charges only $299 for a listing on the MLS. Visit us at www.1Listing.com or call (707) 693-0100.