Real Estate

On the cusp of Christmas, Santa's real estate bag offers goodies and some lumps of coal.

First, the good news: First-time buyers taking advantage of the government's tax-credit incentive helped yank sales of previously owned homes up by 7.4% in November from October, according to the National Association of Realtors, a trade association. Sales are up 44.1% from a year ago, with about half of them generated by first-time buyers.

When it comes to the economy, there's no silver bullet. However, if you're trying to formulate a plan to bring your personal finances out of a recession, experts say you've got to do some number crunching.

Tracking certain economic indicators can help you decide the most opportune time to buy or sell a home, expect a raise, or how to distribute your 401(k). With hundreds of indicators fighting to garner your attention it can be confusing to know which ones mean the most to you.

2009 may go down in history as the year many real estate agents grew tired of twiddling their thumbs and began using them for a more-profitable if not higher purpose: texting. A slow-to-embrace-technology industry if ever there was one, the nation's real estate sales force stands poised to embrace some even newer technologies in 2010.

How about having buyers use their cell phone cameras to scan a bar code on a for-sale sign which then downloads all the home's details? Or an iPhone app to serve as a lockbox smartkey? Or mobile video text-messaging to send virtual tours and slideshows to would-be buyers?

All are coming.

Joseph Ferrara of TheClozing.com, a real estate news aggregator site, predicts increased reliance on technology in the property sales industry in the coming year.

Ferrara says a new cell phone from AT&T with an attachable projector will enable agents to show slide shows, photos, and videos to clients in the field. He expects a new iPhone or BlackBerry app for the National Association of Realtors Property Resource will become a must-have.

Among other technologies we can expect to gain popularity next year, Ferrara predicts video e-mail, web sites that allow agents to bid on listings, and services that allow buyers to quickly obtain home details by pointing cell phone cameras at a bar code on the "For Sale" sign or magazine ad. Now if he could only predict some buyers.

Add to home loan modification woes the latest missive from the federal government: serious delinquencies reached 6.2% in the third quarter, up nearly 17% from the previous quarter.

The release begins to add some context to earlier complaints that few of the temporary modifications under the government's Home Affordable Modification Program (HAMP) were being converted into permanent modifications. Though banks' sloth in getting folks into meaningful long-term adjustments remains a major factor worthy of scrutiny -- only 1% of the loans have been converted after all -- borrowers clearly share some responsibility.

In all, more than six in 10 loans in the first wave, modified a year ago, are now in default, according to the report released Monday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision. However, lenders take note: among modifications that actually reduced payments, the default rate was significantly lower. For instance, when payments dropped by 20%, defaults fell to 39% of loans modified in the third quarter of 2008. (see chart after jump).

Consider this headline from CNNMoney: Lower loan payments = fewer redefaults for homeowners

I'm not sure which is scarier. Is it that this incredibly obvious fact is being reported as news or that the federal government actually spent money researching and presenting the data to confirm that it's true.

Many economists have long maintained that the only way for mortgage loan modifications to really work is for banks to reduce the actual principal rather than just the interest payments, which tend to simply prolong the torture for many and increase the amount they owe. Getting most lending institutions to do this has been difficult, if not impossible.

This may be starting to change. Best for you to be armed with some key information.

A brand new government survey is showing that 13% of loan modifications in the third quarter of this year "offered a reduction in the principal balance," reports the Christian Science Monitor. That is an increase.

Here's the catch (come on, you knew there had to be one, right?) -- the banks offering the reductions in principal tend to be the ones that actually own the mortgage on the house; mortgages owned by a group of investors usually did not have their principal balance reduced, says the report.

Housing sales up. Housing sales down. Home prices up. Home prices down. Mortgage rates higher. Mortgage rates lower. It's a wonder the entire country isn't suffering from motion sickness by now!

Since the fiscal mess began, we have been "treated" to seemingly non-stop reporting giving us monthly and often daily temperature readings of the nation's economic state. Sometimes we feel reassured. Sometimes we feel like we've been hit over the head with a sledgehammer.

The truth is, no one set of figures does a trend make, and we shouldn't get too up or too down by any one particular set of reports.

Here is a gift that can keep on giving. But it may be as elusive as landing a Zhu Zhu toy for your kid by Christmas.

If you're struggling to make home-mortgage payments and losing your home is a real possibility, some banks are offering sweet deals on loans, some with rates as low as 2%, according to CNNMoney. About 80% of loan modifications in the second quarter of this year resulted in lower payments, according to the Office of the Comptroller of the Currency. Three months ago that number was about 50%. Unbelievably, only 4% of all homeowners in need of so-called "workouts" are getting them.

Why? One reason is that not all banks are on board the loan-modification train. Also, many people are unaware of programs to help struggling homeowners, and some prefer to just walk away, thinking they can't possibly get a new loan, brokers say. That's a shame, because borrowers who lower their monthly payments by 20% or more re-defaulted only 34% compared with the 63% who didn't.

The deals are enticing for first-time home buyers and glimpses of recovery add a dose of urgency, but now may not be the right time for newbies to get into the market, according to attorney and real estate broker Dale Robyn Siegel.

Siegel, whose new book, The New Rules for Mortgages, expands on this premise, warned that the burst real estate bubble has left more than wet suds in its wake. Home buyers with limited credit will find their interest and down payments higher and their access to second loans to help with the down payment virtually nil.

To complicate matters, changes are being contemplated in FHA assistance, she said, including a possible increase in required down payment to 5% and a decrease in the allowed seller concession to the buyer from 6% to 3%.

You have to give it to the attorney general of Ohio. The dude's got ... well ... he's just got 'em.

One by one, step by step, he has been going after mortgage servicing companies. These are the firms that collect monthly loan payments and also manage foreclosures.

Just since this past summer, Richard Cordray has brought suit against both Carrington Mortgage Services and American Home Mortgage Servicing.

Now, he has turned his attention to HomeEq, a unit of Barclays Capital. He claims the firm is "using unfair and deceptive agreements and violating state consumer law," according to a Reuters dispatch.

Among other things, the Ohio AG alleges that HomEq came up with schemes that "released itself of all liabilities and required borrowers to waive their rights to defenses and pay more fees," says the Reuters report.

For its part, a HomEq spokesman dismisses the suit as "meritless" and vows an aggressive defense.

Pity the poor celebrity whose umpteen-square-foot manse on a property large enough to house a small municipality just won't sell. Or it's unloaded for a song. That realty reality is unfolding on both coasts (and even the Midwest), according to a Street.com report.

Despite a hopeful uptick in existing-home sales nationwide -- they rose 10.1% in October from September and are up 23.5% from the October before, according to the National Assn. of Realtors -- some luxury landmarks with your standard twin swimming pools and a ballroom are languishing.

Who's hurting the most? Let's start with the Greenwich, Conn., estate of the late Leona "Queen of Mean" Helmsley, onetime real estate heiress and convicted felon. This 22,000-square-foot summer home on 40 acres, dubbed Dunnellen Hall (what, is it in West Sussex, England?), can't move even at a bargain-basement $60 million. Last year it was listed for $125 million. You do get a million-dollar dance floor, a 70-foot marble reflecting pool and a 1,125-square-foot living room. So what's the problem?

As Christmas time approached, Derek Frazier got the bad news from his bank: his Fort Lauderdale house was being placed in foreclosure, like so many other houses in the Sunshine State. Frazier had been out of work for months.

It didn't take long for the electricity to stop surging though the modest home; it had been turned off by the electric company.

To keep his family warm , Frazier reportedly started using an indoor gas generator to provide power. It also provided an atmosphere saturated with carbon monoxide.

This week, Frazier's four young children were rushed to an area hospital suffering from carbon monoxide poisoning.

The recent extension of the $6,500 federal home buyer tax credit to existing homeowners stands to help the economy, according to a new survey by Coldwell Banker.

Only 6% of those 1,000 surveyed said they would splurge -- on shopping or vacations. Though no one wants to appear frivolous in a survey, especially in this era of frugality, the fact that 83% said they would put the money toward more humdrum expenses implies maybe they really meant it.

In all 34% said they would pay off debts, 29% would make improvements to their home and 28% even said they would put the $6,500 into savings.

As part of a political compromise, the credit -- originally reserved for first-time home buyers -- was extended early last month to anyone buying a home before April 30, 2010.

The survey also found that 20% of homeowners were more motivated to buy a home than they were six months ago because of the credit.

Adding an entertaining dimension to the appeal of energy-saving home improvements and building on the promise of new tax incentives for homeowners, President Barack Obama termed insulation "a sexy subject" during a Home Depot visit in Alexandria, Va., on Tuesday.

"Here's what's sexy about it. It saves money," Obama noted in comments aimed at encouraging Congress to pass incentives for homeowners who insulate and otherwise upgrade their homes to make them more energy efficient.