08/31/2007 2:14 PM ET
WASHINGTON (CBS/AP)- President Bush on Friday outlined ways to help homeowners facing foreclosure - the administration's first effort to deal with an expected wave of defaults fueled by the mortgage crisis. The initiatives, which are not aimed at bailing out lenders or speculators, are designed to help homeowners with risky mortgages keep their houses. In remarks in the Rose Garden, Mr. Bush also discussed efforts to keep the problems from arising in the future. "The government's got a role to play, but it is limited," Mr. Bush said. "A federal bailout of lenders would only encourage a recurrence of the problem." The president insisted that the U.S. economy was strong and could weather recent turbulence in the financial markets. He said the mortgage market, especially the subprime sector, has shown particular strain. One of the most troubling developments has been an increase in adjustable-rate mortgages, which start out with low interest rates, then reset to higher rates after a few years. "This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market," Mr. Bush said. "Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure." A key element of Mr. Bush's plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting. Earlier this month, Mr. Bush predicted that the ongoing decline in the housing market wouldn't become precipitous, but would result in a "soft landing." He rejected any direct government aid to homeowners losing their houses to foreclosures, saying he only supported federal government help that would encourage refinancing and educate prospective home buyers about risky mortgage terms "Anybody who loses their home is somebody with whom we must show enormous empathy," the president said at an Aug. 9 news conference. "The word `bailout,' I'm not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no, I don't support that." On Friday, Bush: - Urged Congress to pass legislation that would give the Federal Housing Administration more flexibility to help mortgage holders with subprime mortgages. - Pledged to work with Congress to reform the tax code to help troubled borrowers rework their loans. - Called for rigorously enforcing predatory lending laws and strengthening lending practices. Meanwhile, Federal Reserve Chairman Ben Bernanke pledged Friday that the central bank will "act as needed" to keep the credit crisis that has unhinged Wall Street from hurting the national economy. In anxiously awaited remarks, Bernanke didn't specify what the Fed's next move will be but made clear policymakers are keeping close tabs on the problem, which has roiled investors in the United States and around the globe. Even as Bernanke vowed Fed action, he sought to temper investors' expectations. "It is not the responsibility of the Federal Reserve nor would it be appropriate to protect lenders and investors from the consequences of their financial decisions," Bernanke said. "But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy." Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their homes. Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches. The economy enjoyed a strong revival in the spring although growing troubles in housing and credit markets have darkened prospects considerably since then. The Commerce Department reported Thursday that the gross domestic product grew at an annual rate of 4 percent in the second quarter - the strongest showing in more than a year. But that growth could be the best showing for some time as the economy continues to be battered by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller-coaster ride in recent weeks.
Friday, August 31, 2007
Del. home prices up in spring
But bad news may be in wings as mortgage crunch affects salesBy J.L. MILLER, The News Journal
Posted Friday, August 31, 2007Read Comments-->08/31/2007 -->
It's common knowledge that housing values in Delaware and across the nation are sinking.
And like so much other common knowledge, it's wrong.
The Office of Federal Housing Enterprise Oversight's quarterly report on housing prices, released Thursday, shows that U.S. home prices this spring increased by 0.1 percent from the previous quarter and 3.2 percent from the same quarter last year.
While the quarterly national appreciation rate was essentially flat, the report shows that housing prices in Delaware appreciated by 1.34 percent in the second quarter of 2007 and by 4.94 percent for the previous 12 months.
That puts the First State in 19th place for home appreciation for the 12-month period. Utah is at the top of the list, with a one-year appreciation rate of 15.28 percent. The once-booming state of Nevada ranked 50th, with a one-year decline of 1.45 percent.
For the quarter that ended June 30, values in Maryland climbed only 0.83 percent. Pennsylvania values lagged behind Maryland at 0.67 percent, with New Jersey -- a previously hot market -- posting a decline of 0.35 percent.
"These newest data show price declines in many areas that were once at the center of the housing boom," said Patrick Lawler, the federal office's chief economist.
"Nevertheless, in most states, prices held their ground or increased slightly," he said.
The report would seem to come as good news to an industry that has been roiled by the collapse of the market for subprime loans, rapidly mounting mortgage foreclosures and a dramatic tightening in credit, even for creditworthy borrowers.
But those problems are significant, and bad news on the home-price front may be waiting just off in the wings.
James B. Lockhart, director of the federal agency, said the recent mortgage market instability is likely to show up in the office's next quarterly report.
Delaware's increase in prices may be a surprise to some, but it isn't to those who are in the industry. And it shows that Delaware's market is more stable than some areas that have swung between bubble and bust.
"Those are excellent statistics. I think it shows that the market in Delaware is secure," said Camilla Conlon, president of the Delaware Association of Realtors.
"Although we had a lot of appreciation here, at the end of the day people in Delaware are business-wise and think that we still have room to grow here," said Conlon, an agent with Jack Lingo Inc. in Rehoboth Beach.
People who have owned their homes for five or more years have seen a healthy appreciation in value, according to the report, which is based on data from sales and refinance transactions.
The five-year appreciation rate in Delaware is 66.39 percent, and a whopping 419.88 percent since 1980. The national five-year average was 50.76 percent and national home prices saw a 309.40 increase since 1980.
Karen Kimbleton, a broker with Re/Max Avenues in Dover, said many people mistakenly believe that housing prices are dropping simply because the rate of appreciation has slowed.
"You have such a multitude of houses on the market right now that [buyers] have more to choose from," Kimbleton said.
"It causes sellers to have to create incentives to make theirs more attractive over another property," she said. "It is, bar none, a buyer's market."
She said such incentives could include closing costs, home warranties or price reductions.
Kimbleton and Conlon both said the credit crunch is having an impact in Delaware for buyers and sellers alike.
Foreclosure filings in Delaware increased in July by 34 percent in New Castle, 43 percent in Kent and 54 percent in Sussex from the previous year.
And people who have been preapproved for a mortgage can discover at the closing table that the program under which they had qualified has been terminated by the lender. Would-be buyers who have already signed a contract can find themselves out of luck.
"If they haven't settled, tough buns," Kimbleton said.
Posted Friday, August 31, 2007Read Comments-->08/31/2007 -->
It's common knowledge that housing values in Delaware and across the nation are sinking.
And like so much other common knowledge, it's wrong.
The Office of Federal Housing Enterprise Oversight's quarterly report on housing prices, released Thursday, shows that U.S. home prices this spring increased by 0.1 percent from the previous quarter and 3.2 percent from the same quarter last year.
While the quarterly national appreciation rate was essentially flat, the report shows that housing prices in Delaware appreciated by 1.34 percent in the second quarter of 2007 and by 4.94 percent for the previous 12 months.
That puts the First State in 19th place for home appreciation for the 12-month period. Utah is at the top of the list, with a one-year appreciation rate of 15.28 percent. The once-booming state of Nevada ranked 50th, with a one-year decline of 1.45 percent.
For the quarter that ended June 30, values in Maryland climbed only 0.83 percent. Pennsylvania values lagged behind Maryland at 0.67 percent, with New Jersey -- a previously hot market -- posting a decline of 0.35 percent.
"These newest data show price declines in many areas that were once at the center of the housing boom," said Patrick Lawler, the federal office's chief economist.
"Nevertheless, in most states, prices held their ground or increased slightly," he said.
The report would seem to come as good news to an industry that has been roiled by the collapse of the market for subprime loans, rapidly mounting mortgage foreclosures and a dramatic tightening in credit, even for creditworthy borrowers.
But those problems are significant, and bad news on the home-price front may be waiting just off in the wings.
James B. Lockhart, director of the federal agency, said the recent mortgage market instability is likely to show up in the office's next quarterly report.
Delaware's increase in prices may be a surprise to some, but it isn't to those who are in the industry. And it shows that Delaware's market is more stable than some areas that have swung between bubble and bust.
"Those are excellent statistics. I think it shows that the market in Delaware is secure," said Camilla Conlon, president of the Delaware Association of Realtors.
"Although we had a lot of appreciation here, at the end of the day people in Delaware are business-wise and think that we still have room to grow here," said Conlon, an agent with Jack Lingo Inc. in Rehoboth Beach.
People who have owned their homes for five or more years have seen a healthy appreciation in value, according to the report, which is based on data from sales and refinance transactions.
The five-year appreciation rate in Delaware is 66.39 percent, and a whopping 419.88 percent since 1980. The national five-year average was 50.76 percent and national home prices saw a 309.40 increase since 1980.
Karen Kimbleton, a broker with Re/Max Avenues in Dover, said many people mistakenly believe that housing prices are dropping simply because the rate of appreciation has slowed.
"You have such a multitude of houses on the market right now that [buyers] have more to choose from," Kimbleton said.
"It causes sellers to have to create incentives to make theirs more attractive over another property," she said. "It is, bar none, a buyer's market."
She said such incentives could include closing costs, home warranties or price reductions.
Kimbleton and Conlon both said the credit crunch is having an impact in Delaware for buyers and sellers alike.
Foreclosure filings in Delaware increased in July by 34 percent in New Castle, 43 percent in Kent and 54 percent in Sussex from the previous year.
And people who have been preapproved for a mortgage can discover at the closing table that the program under which they had qualified has been terminated by the lender. Would-be buyers who have already signed a contract can find themselves out of luck.
"If they haven't settled, tough buns," Kimbleton said.
Bush outlines mortgage aid plan for homeowners
By DEB RIECHMANN, Associated Press
Posted Friday, August 31, 2007 at 2:33 pmRead Comments-->08/31/2007 -->
WASHINGTON -- President Bush outlined ways the federal government can help troubled borrowers keep their homes today in an effort to address rising foreclosures fueled by the mortgage crisis.The administration's first attempt at dealing with a wave of defaults is not aimed at bailing out lenders, however."It's not the government's job to bail out speculators or those who made the decision to buy a home they knew they could never afford," Bush said in the Rose Garden. "Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders or a little help from their government."The U.S. economy enjoyed a strong revival in the spring but since then has been threatened by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller coaster ride.The president insisted that the economy was strong and could weather turbulence in the markets.He said the mortgage market, especially the subprime sector, has shown particular strain. One of the most troubling developments has been an increase in adjustable-rate mortgages, which start out with low interest rates, then reset to higher rates after a few years."This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market," Bush said. "Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure."Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their homes.Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches.Bush said the Federal Housing Administration, a government agency that provides mortgage insurance to borrowers through lenders in the private sector, would launch in coming days a program called FHA Secure. The program would let homeowners who have good credit histories but can't afford their current mortgage payments to refinance into mortgages insured by the FHA."This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes," Bush said.Bush also urged Congress to modernize and improve the FHA so more homeowners could qualify for the mortgage insurance provided by the agency. Last year the House passed legislation to modernize FHA, but Congress has not yet sent a bill to the White House. "I look forward to signing a bill as quickly as possible," Bush said.Bush also pledged to work with Congress to reform a key housing provision of the federal tax code, which will make it easier for homeowners to refinance their mortgages."Let's say the value of your house declines by $20,000 and your adjustable rate mortgage payments have grown to a level you cannot afford," Bush said. "If the bank modifies your mortgage and forgives $20,000 of your loan, the tax code treats that $20,000 as taxable income. When your home is losing value and your family is under financial stress, the last thing you need to do is to be hit with higher taxes."Bush also said the administration would launch a new foreclosure avoidance initiative to help homeowners figure out a way to refinance. He said Housing Secretary Alphonso Jackson and Treasury Secretary Henry Paulson would reach out to groups that offer foreclosure counseling and refinancing assistance for homeowners.And he said the federal government was taking actions to make the mortgage industry more transparent, more reliable and fair to reduce the likelihood of these lending problems happening again.Sen. Charles Schumer, D-N.Y., said he was pleased to hear Bush and Federal Reserve Chairman Ben Bernanke address the escalating crisis in the mortgage market. "The current situation is simply out of hand. It's bad and it's getting worse," he said.He said Bush's proposals-- increasing FHA loans, reducing down payment requirements on loans to be insured by the FHA, eliminating tax liabilities for foreclosure victims -- were all Democratic proposals.Schumer said additional steps must be taken -- increased funding for non-profits that help people facing foreclosure to refinance, allowing Freddie-Fannie to spend more, federal regulation of mortgage brokers.John M. Robbins, chairman of the Mortgage Bankers Association, said the president's attention to turmoil in the mortgage markets and the plight of homeowners facing foreclosure will help push Congress to reform FHA."It is essential that the Federal Housing Administration have the tools and flexibility to adjust its products and programs to meet the evolving needs of borrowers," Robbins said.
Posted Friday, August 31, 2007 at 2:33 pmRead Comments-->08/31/2007 -->
WASHINGTON -- President Bush outlined ways the federal government can help troubled borrowers keep their homes today in an effort to address rising foreclosures fueled by the mortgage crisis.The administration's first attempt at dealing with a wave of defaults is not aimed at bailing out lenders, however."It's not the government's job to bail out speculators or those who made the decision to buy a home they knew they could never afford," Bush said in the Rose Garden. "Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders or a little help from their government."The U.S. economy enjoyed a strong revival in the spring but since then has been threatened by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller coaster ride.The president insisted that the economy was strong and could weather turbulence in the markets.He said the mortgage market, especially the subprime sector, has shown particular strain. One of the most troubling developments has been an increase in adjustable-rate mortgages, which start out with low interest rates, then reset to higher rates after a few years."This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market," Bush said. "Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure."Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their homes.Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches.Bush said the Federal Housing Administration, a government agency that provides mortgage insurance to borrowers through lenders in the private sector, would launch in coming days a program called FHA Secure. The program would let homeowners who have good credit histories but can't afford their current mortgage payments to refinance into mortgages insured by the FHA."This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes," Bush said.Bush also urged Congress to modernize and improve the FHA so more homeowners could qualify for the mortgage insurance provided by the agency. Last year the House passed legislation to modernize FHA, but Congress has not yet sent a bill to the White House. "I look forward to signing a bill as quickly as possible," Bush said.Bush also pledged to work with Congress to reform a key housing provision of the federal tax code, which will make it easier for homeowners to refinance their mortgages."Let's say the value of your house declines by $20,000 and your adjustable rate mortgage payments have grown to a level you cannot afford," Bush said. "If the bank modifies your mortgage and forgives $20,000 of your loan, the tax code treats that $20,000 as taxable income. When your home is losing value and your family is under financial stress, the last thing you need to do is to be hit with higher taxes."Bush also said the administration would launch a new foreclosure avoidance initiative to help homeowners figure out a way to refinance. He said Housing Secretary Alphonso Jackson and Treasury Secretary Henry Paulson would reach out to groups that offer foreclosure counseling and refinancing assistance for homeowners.And he said the federal government was taking actions to make the mortgage industry more transparent, more reliable and fair to reduce the likelihood of these lending problems happening again.Sen. Charles Schumer, D-N.Y., said he was pleased to hear Bush and Federal Reserve Chairman Ben Bernanke address the escalating crisis in the mortgage market. "The current situation is simply out of hand. It's bad and it's getting worse," he said.He said Bush's proposals-- increasing FHA loans, reducing down payment requirements on loans to be insured by the FHA, eliminating tax liabilities for foreclosure victims -- were all Democratic proposals.Schumer said additional steps must be taken -- increased funding for non-profits that help people facing foreclosure to refinance, allowing Freddie-Fannie to spend more, federal regulation of mortgage brokers.John M. Robbins, chairman of the Mortgage Bankers Association, said the president's attention to turmoil in the mortgage markets and the plight of homeowners facing foreclosure will help push Congress to reform FHA."It is essential that the Federal Housing Administration have the tools and flexibility to adjust its products and programs to meet the evolving needs of borrowers," Robbins said.
Mortgage Rates for Metrocities Mortgage August 31, 2007
Loan Program
Loan Amount
Interest Rate
30 Year Fixed
$417,000
6.375%
15 Year Fixed
$417,000
6.125%
7/1 ARM
$417,000
6.675%
5/1 ARM
$417,000
6.675%
3/1 ARM
$417,000
6.675%
6-Month Interest-Only ARM
$417,000
6.675%
1-Month Interest-Only ARM
$650,000
6.675%
30 Year Fixed
$650,000
7.500%
FOR MORE INFORMATION, CONTACT:
Ronald TennantSenior Mortgage ConsultantDirect Phone: 302.644.7964 Mobile Phone: 302.858.2289 Fax: 610.290.1937Email: rtennant@metrocitiesmtg.comWeb: www.ronaldtennant.com17316 Costal Highway Lewes, DE 19958
Loan Amount
Interest Rate
30 Year Fixed
$417,000
6.375%
15 Year Fixed
$417,000
6.125%
7/1 ARM
$417,000
6.675%
5/1 ARM
$417,000
6.675%
3/1 ARM
$417,000
6.675%
6-Month Interest-Only ARM
$417,000
6.675%
1-Month Interest-Only ARM
$650,000
6.675%
30 Year Fixed
$650,000
7.500%
FOR MORE INFORMATION, CONTACT:
Ronald TennantSenior Mortgage ConsultantDirect Phone: 302.644.7964 Mobile Phone: 302.858.2289 Fax: 610.290.1937Email: rtennant@metrocitiesmtg.comWeb: www.ronaldtennant.com17316 Costal Highway Lewes, DE 19958
Some home buyers gain edge from credit crisis
By Christine Dugas and Sandra Block, USA TODAYAugust 27, 2007
What credit crunch? Home buyers with solid credit and money for a down payment are now better positioned than they were a few weeks ago.
The average 30-year fixed mortgage rate is at a three-month low. Home prices in many areas have fallen. And despite the meltdown in non-traditional mortgages, many community banks still offer jumbo loans (above $417,000), though rates have risen.
"If you want to move up to a bigger house or buy a home for the first time, and you have the credit and qualifications to do so, it's an excellent time to buy," says Gerri Detweiler of FreeRateSearch.com.
Contributing to a buyer's market:
•Lower long-term mortgage rates. The average 30-year fixed rate reached 6.52% last week, the lowest since May 31, according to Freddie Mac (FRE). Frank Nothaft, Freddie Mac's chief economist, says declining yields for Treasury securities and the housing slowdown helped produce lower mortgage rates.
•Falling home prices. Nationwide, median home prices fell 1.5% in the second quarter, according to the National Association of Realtors. In addition, sales were down in most states, the NAR said.
That's given buyers with sound credit a lot of bargaining power. James Aberle, 38, of Phoenix recently paid $288,870 for a home originally listed at $350,000. The builder, through its mortgage arm, arranged 100% financing and paid for private mortgage insurance, which typically kicks in for buyers who put down less than 20%. The builder also paid $7,400 toward closing costs, Aberle says.
And for some buyers, real estate appraisals are producing lower home values, allowing them to renegotiate the price, says Kyle Kilpatrick of LendingTree.com.
•Available jumbo loans. Many lenders have abandoned non-traditional loans, including jumbos. That's because investors, fearful that the crisis in the subprime market is spreading, are reluctant to buy jumbos and other loans that mortgage investment giants Fannie Mae (FNM) and Freddie Mac won't buy. But now, many community and national banks have stepped in to offer jumbo loans. They're better positioned than some other lenders to make those types of loans because they can fund them with customer bank deposits, says James Chessen of the American Bankers Association.
•Lower rates on adjustable-rate mortgages. Rates on ARMs are often based on Treasury yields, which have fallen, notes Keith Gumbinger of HSH Associates
What credit crunch? Home buyers with solid credit and money for a down payment are now better positioned than they were a few weeks ago.
The average 30-year fixed mortgage rate is at a three-month low. Home prices in many areas have fallen. And despite the meltdown in non-traditional mortgages, many community banks still offer jumbo loans (above $417,000), though rates have risen.
"If you want to move up to a bigger house or buy a home for the first time, and you have the credit and qualifications to do so, it's an excellent time to buy," says Gerri Detweiler of FreeRateSearch.com.
Contributing to a buyer's market:
•Lower long-term mortgage rates. The average 30-year fixed rate reached 6.52% last week, the lowest since May 31, according to Freddie Mac (FRE). Frank Nothaft, Freddie Mac's chief economist, says declining yields for Treasury securities and the housing slowdown helped produce lower mortgage rates.
•Falling home prices. Nationwide, median home prices fell 1.5% in the second quarter, according to the National Association of Realtors. In addition, sales were down in most states, the NAR said.
That's given buyers with sound credit a lot of bargaining power. James Aberle, 38, of Phoenix recently paid $288,870 for a home originally listed at $350,000. The builder, through its mortgage arm, arranged 100% financing and paid for private mortgage insurance, which typically kicks in for buyers who put down less than 20%. The builder also paid $7,400 toward closing costs, Aberle says.
And for some buyers, real estate appraisals are producing lower home values, allowing them to renegotiate the price, says Kyle Kilpatrick of LendingTree.com.
•Available jumbo loans. Many lenders have abandoned non-traditional loans, including jumbos. That's because investors, fearful that the crisis in the subprime market is spreading, are reluctant to buy jumbos and other loans that mortgage investment giants Fannie Mae (FNM) and Freddie Mac won't buy. But now, many community and national banks have stepped in to offer jumbo loans. They're better positioned than some other lenders to make those types of loans because they can fund them with customer bank deposits, says James Chessen of the American Bankers Association.
•Lower rates on adjustable-rate mortgages. Rates on ARMs are often based on Treasury yields, which have fallen, notes Keith Gumbinger of HSH Associates
Monday, August 27, 2007
Trying to Sell Your Home? Offer Seller Concessions
Aug 17, 2007, 1:12 pm PDT
News provided by Quicken Loans
Lowering the asking price on your home isn't the solution to making it stand out in today's crowded housing market. Right now there is nearly a nine-month supply of homes for sale, according to the National Association of Realtors.
How will you make your home stand out among all those other 'For Sale' signs?
The experts say that instead of slashing your asking price, a unique way to attract more offers is to propose lowering the rate on a potential buyer's mortgage by providing seller financing incentives.
Consider this example showing the difference in cost and savings for lowering a home's price vs. offering seller concessions. In the case of lowering price, a motivated seller might reduce their $300,000 asking price by 5% or $15,000. For less money, the seller could pay up to three discount points on the buyer's mortgage, lowering the buyer's interest rate and monthly mortgage payment. A discount point is considered 1/100 of the buyer's loan amount - about $3,000 per point in this example.
The math is simple. Seller concessions cost the seller $9,000 in this example (vs. $15,000 to lower the price of the home) and the deal is actually more enticing for the buyer. At today's 30-year fixed rate, three points off a mortgage rate can potentially save a buyer more than $32,000 in mortgage payments over the life of the loan! And, points paid through seller concessions may even be tax deductible.
Bob Walters, chief economist of Quicken Loans, says seller financing incentives offers a win for both seller and buyer.
"By offering a concession to lower the interest rate, the seller makes their home more affordable, without dropping their price. This gets them to the closing table sooner. The buyer actually may save more in reduced interest over the life of the loan than they would have via a lower home price, depending on the rate and terms of their mortgage."
Other examples of seller concessions that buyers can offer, according to Walters, include paying some or all of the buyer's closing costs, and providing an allowance for the buyer to landscape or make improvements to the home.
Seller concessions can be an inexpensive and innovative way to move a house in a slow market. Both the buyer and seller may benefit from seller concessions. If you're interested, most real estate or mortgage professionals can offer assistance in setting up seller concession's properly for maximum benefit to both parties.
News provided by Quicken Loans
Lowering the asking price on your home isn't the solution to making it stand out in today's crowded housing market. Right now there is nearly a nine-month supply of homes for sale, according to the National Association of Realtors.
How will you make your home stand out among all those other 'For Sale' signs?
The experts say that instead of slashing your asking price, a unique way to attract more offers is to propose lowering the rate on a potential buyer's mortgage by providing seller financing incentives.
Consider this example showing the difference in cost and savings for lowering a home's price vs. offering seller concessions. In the case of lowering price, a motivated seller might reduce their $300,000 asking price by 5% or $15,000. For less money, the seller could pay up to three discount points on the buyer's mortgage, lowering the buyer's interest rate and monthly mortgage payment. A discount point is considered 1/100 of the buyer's loan amount - about $3,000 per point in this example.
The math is simple. Seller concessions cost the seller $9,000 in this example (vs. $15,000 to lower the price of the home) and the deal is actually more enticing for the buyer. At today's 30-year fixed rate, three points off a mortgage rate can potentially save a buyer more than $32,000 in mortgage payments over the life of the loan! And, points paid through seller concessions may even be tax deductible.
Bob Walters, chief economist of Quicken Loans, says seller financing incentives offers a win for both seller and buyer.
"By offering a concession to lower the interest rate, the seller makes their home more affordable, without dropping their price. This gets them to the closing table sooner. The buyer actually may save more in reduced interest over the life of the loan than they would have via a lower home price, depending on the rate and terms of their mortgage."
Other examples of seller concessions that buyers can offer, according to Walters, include paying some or all of the buyer's closing costs, and providing an allowance for the buyer to landscape or make improvements to the home.
Seller concessions can be an inexpensive and innovative way to move a house in a slow market. Both the buyer and seller may benefit from seller concessions. If you're interested, most real estate or mortgage professionals can offer assistance in setting up seller concession's properly for maximum benefit to both parties.
Plans for 547 new homes in Millville approved
By NICK ROTH, The (Salisbury, Md.) Daily Times
Posted Monday, August 27, 2007 at 6:25 amRead Comments-->08/27/2007 -->
MILLVILLE -- The final site plans for the proposed 547-residential unit Barrington Park development were unanimously passed by the Millville Town Council.The development will include many different home styles, including 287 single-family homes, 148 town homes and 112 condominiums, said Lincoln Davis, director of land development for Beazer Homes.The new development will be built just west of Bear Trap Dunes south of Burbage Road and east of Substation Road. Work on the site could begin as soon as this fall, with model homes being built by February of next year, Davis said.Amenities will include a 6,400-square-foot clubhouse, outdoor pools and sports courts, Davis said. On the 158 acre development, 69 acres will be open space -- approximately 44 percent of the total acreage.While the developers ultimately received the backing of council, some residents are concerned the development will not reflect the current plans."Everything looks nice in pictures, but what about reality?" said resident Robert Linett. "So, I'd like to understand how you know these commitments will be lived to for this development or any development."Councilwoman Joan Bennett shared similar concerns about the developers sticking to the number of trees and other plants indicated on the plans."More than anything, we need our project to be marketable and plants and sod and irrigation make a project marketable," Davis said. "First and foremost, we need our homes to look good, landscaping is probably the best way for curb appeal."The town of Millville currently doesn't have an ordinance requiring a minimum amount of plants on a single property. Davis urged Millville to consider a regulation specifying a number that he and future developers can follow.Mayor Don Minyon said the town recently adopted a new regulation about landscaping but did not outline specifics."Prior to this time, we did not have landscaping as a part of our final site developments," he said. "Past administrations had not required that. However, under new codes and regulations we do require it."The Town Council was not in favor of considering a regulation specifying a minimum number of plants.
Posted Monday, August 27, 2007 at 6:25 amRead Comments-->08/27/2007 -->
MILLVILLE -- The final site plans for the proposed 547-residential unit Barrington Park development were unanimously passed by the Millville Town Council.The development will include many different home styles, including 287 single-family homes, 148 town homes and 112 condominiums, said Lincoln Davis, director of land development for Beazer Homes.The new development will be built just west of Bear Trap Dunes south of Burbage Road and east of Substation Road. Work on the site could begin as soon as this fall, with model homes being built by February of next year, Davis said.Amenities will include a 6,400-square-foot clubhouse, outdoor pools and sports courts, Davis said. On the 158 acre development, 69 acres will be open space -- approximately 44 percent of the total acreage.While the developers ultimately received the backing of council, some residents are concerned the development will not reflect the current plans."Everything looks nice in pictures, but what about reality?" said resident Robert Linett. "So, I'd like to understand how you know these commitments will be lived to for this development or any development."Councilwoman Joan Bennett shared similar concerns about the developers sticking to the number of trees and other plants indicated on the plans."More than anything, we need our project to be marketable and plants and sod and irrigation make a project marketable," Davis said. "First and foremost, we need our homes to look good, landscaping is probably the best way for curb appeal."The town of Millville currently doesn't have an ordinance requiring a minimum amount of plants on a single property. Davis urged Millville to consider a regulation specifying a number that he and future developers can follow.Mayor Don Minyon said the town recently adopted a new regulation about landscaping but did not outline specifics."Prior to this time, we did not have landscaping as a part of our final site developments," he said. "Past administrations had not required that. However, under new codes and regulations we do require it."The Town Council was not in favor of considering a regulation specifying a minimum number of plants.
'Big houses' OK'd near Burton Pond
Fifteen buildings that resemble huge single-family homes, but actually contain six or eight condominium units apiece, are acceptable near Burton Pond, Sussex County Council has decided.
The council voted 3-2 July 31, with Lynn Rogers and George Cole dissenting, to allow construction of 102 such condominiums, which would complement 265 single, detached homes around the pond that were approved earlier as part of the same project.
The Angola-area 367-unit project is the creation of Burton's Pond Communities LLC, which includes developer Mike Lynn, the Ocean Atlantic real estate firm and the David G. Horsey & Sons development and construction company, all of Sussex County.
Ocean Atlantic was involved in the development of an existing coastal Sussex community featuring "big houses" -- Paynters Mill, off Del. 1 at Cave Neck Road, near Milton.
Rogers and Cole criticized the "big house" units as inappropriate in an area dominated by single, detached homes. Council President Dale Dukes, who cast the deciding vote, said he, too, would prefer single dwellings, but more trees would be destroyed to create single-family housing lots than if homes are concentrated in the proposed 15 buildings.
Councilman Finley Jones noted that 20 homes in the project will be sold through a county program to provide discount-priced housing to teachers, police officers and other middle-class workers in Sussex.
As part of its approval of the project, the council specified that Burton Pond cannot be closed to the public. It also adopted a recommendation by Burton's Pond Communities LLC to allow no more than 30 boats on the environmentally troubled pond at any time.
Burton's Pond Communities is to initiate a maintenance program for the pond. Homeowners eventually will take over the program.
The development company also will pay for creation of an intersection of Del. 24 and Hollymount and Sloan roads. Currently, the roads meet Del. 24 at different points.
The council voted 3-2 July 31, with Lynn Rogers and George Cole dissenting, to allow construction of 102 such condominiums, which would complement 265 single, detached homes around the pond that were approved earlier as part of the same project.
The Angola-area 367-unit project is the creation of Burton's Pond Communities LLC, which includes developer Mike Lynn, the Ocean Atlantic real estate firm and the David G. Horsey & Sons development and construction company, all of Sussex County.
Ocean Atlantic was involved in the development of an existing coastal Sussex community featuring "big houses" -- Paynters Mill, off Del. 1 at Cave Neck Road, near Milton.
Rogers and Cole criticized the "big house" units as inappropriate in an area dominated by single, detached homes. Council President Dale Dukes, who cast the deciding vote, said he, too, would prefer single dwellings, but more trees would be destroyed to create single-family housing lots than if homes are concentrated in the proposed 15 buildings.
Councilman Finley Jones noted that 20 homes in the project will be sold through a county program to provide discount-priced housing to teachers, police officers and other middle-class workers in Sussex.
As part of its approval of the project, the council specified that Burton Pond cannot be closed to the public. It also adopted a recommendation by Burton's Pond Communities LLC to allow no more than 30 boats on the environmentally troubled pond at any time.
Burton's Pond Communities is to initiate a maintenance program for the pond. Homeowners eventually will take over the program.
The development company also will pay for creation of an intersection of Del. 24 and Hollymount and Sloan roads. Currently, the roads meet Del. 24 at different points.
Friday, August 24, 2007
Sheriff Announces New Fees for Sales
From Friday’s Addition of the Cape Gazette
Sheriff Announces New Fees For Sales
Sussex County Sheriff announced recently that new fees will mean some changes for future sheriff’s sales in Sussex County.
Beginning Wednesday, August 22, 2007, all sheriffs’ sales will be subject to a 4 percent fee, up from 3 percent, on the total selling price of real property. The minimum amount to be collected by the sheriff’s office will increase from $300 to $500, but the cap will remain at $10,000. Also for the first time, a one-time set-up fee will be charged on all sheriffs’ sales. The fee will be $75.00.
For a copy of the ordinance establishing the new fees, visit www.sussexcountyde.gov or contact the sheriff’s Office at 855-7830.
Sheriff Announces New Fees For Sales
Sussex County Sheriff announced recently that new fees will mean some changes for future sheriff’s sales in Sussex County.
Beginning Wednesday, August 22, 2007, all sheriffs’ sales will be subject to a 4 percent fee, up from 3 percent, on the total selling price of real property. The minimum amount to be collected by the sheriff’s office will increase from $300 to $500, but the cap will remain at $10,000. Also for the first time, a one-time set-up fee will be charged on all sheriffs’ sales. The fee will be $75.00.
For a copy of the ordinance establishing the new fees, visit www.sussexcountyde.gov or contact the sheriff’s Office at 855-7830.
50+ Housing Council
INDUSTRY EXPERTS DISCUSS THE FUTURE OF ACTIVE ADULT COMMUNITES & CONTINUING CARE RETIREMENT COMMUNITIES AT FALL BREAKFAST PROGRAM
The PennDel 50+ Housing Council will host a Fall networking breakfast and interactive panel discussion on Friday, September 28, 2007 at Shannondell at Valley Forge, located at 10000 Shannondell Drive, Audubon, PA 19403. Four area experts will discuss "Emerging and Converging Trends in Active Adult & Continuing Care Retirement Communities: Succeeding Side by Side".
The panelists include: Anthony J. Mullen, Senior Fellow of National Investment Center & Partner, Royal Star Properties; Jim Sorom, CEO, Shannondell at Valley Forge; Kathy Hagan, Sales Manager, Terrazza at Newtown Square; Kevin E. McLaughlin, Senior Vice President of Business Development and General Counsel, The McKee Group. Points of discussion consist of target age groups, marketing and selling strategies, amenities, and financial feasibility. Audience members will be invited to ask questions at the conclusion of the presentation.
The event will be held in the 130,000 Square Foot Bradford Clubhouse on the campus of Shannondell at Valley Forge. The networking breakfast kicks off the program at 8:00 a.m. and is followed by the panel discussion from 9:00 a.m. until 10:30 a.m. A guided tour of the clubhouse will be offered after the program.
Registration Fees for this event are: $25 for Members of the PennDel 50+ Housing Council; $35 for Members of regional Home Builders Associations & Building Industry Associations; $50 for general public and registration after September 26, 2007. --->
The PennDel 50+ Housing Council will host a Fall networking breakfast and interactive panel discussion on Friday, September 28, 2007 at Shannondell at Valley Forge, located at 10000 Shannondell Drive, Audubon, PA 19403. Four area experts will discuss "Emerging and Converging Trends in Active Adult & Continuing Care Retirement Communities: Succeeding Side by Side".
The panelists include: Anthony J. Mullen, Senior Fellow of National Investment Center & Partner, Royal Star Properties; Jim Sorom, CEO, Shannondell at Valley Forge; Kathy Hagan, Sales Manager, Terrazza at Newtown Square; Kevin E. McLaughlin, Senior Vice President of Business Development and General Counsel, The McKee Group. Points of discussion consist of target age groups, marketing and selling strategies, amenities, and financial feasibility. Audience members will be invited to ask questions at the conclusion of the presentation.
The event will be held in the 130,000 Square Foot Bradford Clubhouse on the campus of Shannondell at Valley Forge. The networking breakfast kicks off the program at 8:00 a.m. and is followed by the panel discussion from 9:00 a.m. until 10:30 a.m. A guided tour of the clubhouse will be offered after the program.
Registration Fees for this event are: $25 for Members of the PennDel 50+ Housing Council; $35 for Members of regional Home Builders Associations & Building Industry Associations; $50 for general public and registration after September 26, 2007. --->
Tuesday, August 21, 2007
DEMOCRATS CONSIDER LEGISLATION TO STOP FORECLOSURES
Democrats, Blaming a Hands-Off Approach, Press for Action to Aid HomeownersNew York Times (08/21/07) P. C3; Andrews, Edmund L.Democrats continue to criticize the White House over the way it has responded to the problems in the housing market, and say its hands-off approach is responsible for the troubles that many homeowners face. Senate Banking Committee Chairman Christopher Dodd, D-Conn., is scheduled to meet with Treasury Secretary Henry Paulson Jr. and Federal Reserve Chairman Ben Bernanke on Tuesday to discuss ways to shore up the markets and keep homeowners from losing their properties to foreclosure. Other presidential hopefuls Sen. Hillary Rodham Clinton, D-N.Y., and John Edwards, a former senator from North Carolina, have proposed funds to bail out families that have fallen behind on their mortgage payments and legislation that would require lenders to restructure the terms of their loans. Meanwhile, Democrats in Congress argue that tougher rules are needed on deceptive and unfair practices such as teaser rates and that Fannie Mae and Freddie Mac should be able to buy and hold more mortgages; some lawmakers also believe lenders should be forced to rewrite the terms of loans that are unsuitable for borrowers.
Great Ideas to get Started
Surviving in a Down Market
Everyone's saying, "it's a really bad market." They shake their heads and think that maybe they should consider getting a part-time job until the market comes back. Well, that's one approach. I think that we are made of stronger stock than that, though. I think that we just need to put our creative minds together and come up with some tried-and-true ideas, along with some new thoughts, to generate some business.
Here are some ideas to get you thinking:
If you're not busy, then your weekends should be free. Hold an Open House every weekend you don't have something on your calendar. Don't forget, you have to plan for a "good" Open House. Invitations, ads, signs, balloons, sign-in register, give-away gift. Make sure the open house is in a highly visible location.
Send a letter to everyone in your database. Get other people working on your behalf! Don't be afraid to ask them to help you get business. Email and save some money, don’t be afraid to let people know how hard you are working in this market. Your contacts will remember this and feel more secure about referring you new business.
Contact site representatives at new home communities. Work out a referral program with them for both the buyers who are not interested in their product, and for sellers who are interested but need to sell their home.
Work the expired and withdrawn from the MLS. Maybe the Sellers just need to adjust their pricing, and you can put a new face on the listing with your Marketing Plan. Use our marketing plan to get the listing. If you think you’re not going to get the full listing pull out the FSBO program.
There are more foreclosures happening. Contact one or more of the local banks and ask if you could do the BPO (Broker Price Opinion) on the properties they're getting ready to foreclose upon. You could end up with listings that are now priced right, along with some extra cash for the BPOs. We are currently working on this. Sone to be released.
Plan and hold a seminar for First Time Buyers, or How to Sell Your Home in a Down Market, or invite a mortgage person and advertise attendees can get a free credit report and be qualified for a mortgage. This is what the showroom is for. Free to any agent who wants to do a seminar.
Get a list of people interested in your area from your local Chamber of Commerce. Send them a letter telling them all the reasons they should consider moving to your area. Good luck L
My additional suggestions are in red. If we use some of these ideas we will be very successful!
Everyone's saying, "it's a really bad market." They shake their heads and think that maybe they should consider getting a part-time job until the market comes back. Well, that's one approach. I think that we are made of stronger stock than that, though. I think that we just need to put our creative minds together and come up with some tried-and-true ideas, along with some new thoughts, to generate some business.
Here are some ideas to get you thinking:
If you're not busy, then your weekends should be free. Hold an Open House every weekend you don't have something on your calendar. Don't forget, you have to plan for a "good" Open House. Invitations, ads, signs, balloons, sign-in register, give-away gift. Make sure the open house is in a highly visible location.
Send a letter to everyone in your database. Get other people working on your behalf! Don't be afraid to ask them to help you get business. Email and save some money, don’t be afraid to let people know how hard you are working in this market. Your contacts will remember this and feel more secure about referring you new business.
Contact site representatives at new home communities. Work out a referral program with them for both the buyers who are not interested in their product, and for sellers who are interested but need to sell their home.
Work the expired and withdrawn from the MLS. Maybe the Sellers just need to adjust their pricing, and you can put a new face on the listing with your Marketing Plan. Use our marketing plan to get the listing. If you think you’re not going to get the full listing pull out the FSBO program.
There are more foreclosures happening. Contact one or more of the local banks and ask if you could do the BPO (Broker Price Opinion) on the properties they're getting ready to foreclose upon. You could end up with listings that are now priced right, along with some extra cash for the BPOs. We are currently working on this. Sone to be released.
Plan and hold a seminar for First Time Buyers, or How to Sell Your Home in a Down Market, or invite a mortgage person and advertise attendees can get a free credit report and be qualified for a mortgage. This is what the showroom is for. Free to any agent who wants to do a seminar.
Get a list of people interested in your area from your local Chamber of Commerce. Send them a letter telling them all the reasons they should consider moving to your area. Good luck L
My additional suggestions are in red. If we use some of these ideas we will be very successful!
Friday, August 17, 2007
Homeowners are Still "Cashing Out" Billions in Equity Through Refinancings
by Kenneth R. Harney
If you are refinancing this year, the odds are good that you are also tapping your home equity -- "cashing out" additional money for investment, large consumer purchases or for other purposes.
And you are probably paying at least a slightly higher interest rate on the new mortgage compared with the old -- a complete reversal of the traditional reason for refinancing, lowering the interest rate.
Those are some of the findings of the latest "Cash-Out Refi" study conducted by mortgage giant Freddie Mac. In the second quarter of 2007, according to the study, more than four out of five refinancers -- 83 percent -- took out replacement loans that were at least 5 percent larger than the original.
A cash-out works like this: Say you have a $200,000 first mortgage on a home appraised for $400,000. In order to pay for college tuition expenses and a major kitchen rehab, you decide to pull out $50,000 of your $200,000 net equity.
You refinance into a new $250,000 first mortgage. Although the new loan comes with a higher interest rate than the previous, and monthly payments are higher, the deal makes financial sense for you because (1) you've now got $50,000 cash to pay your bills, and (2) the interest rate on the new $50,000 of debt is lower than it would be if you took out a home equity credit line or loan.
According to Freddie Mac chief economist Frank Nothaft, $76.7 billion of equity withdrawals were pumped into the economy through cash out refis during the April-May-June period. The 83 percent rate for cash-outs is near the upper end of the historical scale: As recently as the second quarter of 2003, for example, just 33 percent of refinancings involved equity withdrawals.
By mid 2004, as the housing boom began raising equity holdings rapidly, the cash-out ratio jumped to 43 percent. It then rose steadily, quarter by quarter, into 2006, when it hit its all-time peak of 88 percent. The ratio has backed off slightly since then, according to Freddie Mac, as equity growth has slowed.
Equity withdrawals are likely to drop even further in the coming months, said Amy Crews Cutts, deputy chief economist. "Because the refinance share of mortgage originations is expected to decline by as many as 10 percentage points in the second half … we expect the volume of cash out activity to decline by roughly a third later this year."
However, she added, "Overall there remains a large amount of equity in homes that owners can tap if they wish"-at least as long as rates remain relatively favorable. The latest Federal Reserve estimates put homeowner net equity at around $11 trillion, giving Americans a giant asset to convert to spendable money should they need to.
The latest study also found that the median ratio of homeowners' new, post-refi interest rates on their new loans was higher than their previous loan rate by about one-eighth of a percentage point.
If you are refinancing this year, the odds are good that you are also tapping your home equity -- "cashing out" additional money for investment, large consumer purchases or for other purposes.
And you are probably paying at least a slightly higher interest rate on the new mortgage compared with the old -- a complete reversal of the traditional reason for refinancing, lowering the interest rate.
Those are some of the findings of the latest "Cash-Out Refi" study conducted by mortgage giant Freddie Mac. In the second quarter of 2007, according to the study, more than four out of five refinancers -- 83 percent -- took out replacement loans that were at least 5 percent larger than the original.
A cash-out works like this: Say you have a $200,000 first mortgage on a home appraised for $400,000. In order to pay for college tuition expenses and a major kitchen rehab, you decide to pull out $50,000 of your $200,000 net equity.
You refinance into a new $250,000 first mortgage. Although the new loan comes with a higher interest rate than the previous, and monthly payments are higher, the deal makes financial sense for you because (1) you've now got $50,000 cash to pay your bills, and (2) the interest rate on the new $50,000 of debt is lower than it would be if you took out a home equity credit line or loan.
According to Freddie Mac chief economist Frank Nothaft, $76.7 billion of equity withdrawals were pumped into the economy through cash out refis during the April-May-June period. The 83 percent rate for cash-outs is near the upper end of the historical scale: As recently as the second quarter of 2003, for example, just 33 percent of refinancings involved equity withdrawals.
By mid 2004, as the housing boom began raising equity holdings rapidly, the cash-out ratio jumped to 43 percent. It then rose steadily, quarter by quarter, into 2006, when it hit its all-time peak of 88 percent. The ratio has backed off slightly since then, according to Freddie Mac, as equity growth has slowed.
Equity withdrawals are likely to drop even further in the coming months, said Amy Crews Cutts, deputy chief economist. "Because the refinance share of mortgage originations is expected to decline by as many as 10 percentage points in the second half … we expect the volume of cash out activity to decline by roughly a third later this year."
However, she added, "Overall there remains a large amount of equity in homes that owners can tap if they wish"-at least as long as rates remain relatively favorable. The latest Federal Reserve estimates put homeowner net equity at around $11 trillion, giving Americans a giant asset to convert to spendable money should they need to.
The latest study also found that the median ratio of homeowners' new, post-refi interest rates on their new loans was higher than their previous loan rate by about one-eighth of a percentage point.
Realty Exchange News Summer 2007
Realty Exchange Corporation
"Your Nationwide Qualified Intermediary for Tax-Deferred Exchanges since 1990"
FEA Takes Lead in QI Regulation
The Federation of Exchange Accommodators (FEA) has submitted a petition to the Federal Trade Commission (FTC) asking them to adopt uniform nationwide rules that would apply accepted industry standards and conduct to protect property owners who use the services of a Qualified Intermediary (QI). The petition calls for the FTC to adopt rules to ensure QIs register with the FTC and pass background checks, safeguard exchange funds, and demonstrate competency to act as a QI. It is highly unusual for an industry to take the lead with a request for federal regulations and standards. The FEA is taking this action to ensure the continuing trust and confidence of investors in the QI industry.
Misappropriation of Escrow Funds
Recently there were reports of misappropriation of exchange escrow funds by two qualified intermediary holding companies. These two companies had recently become the new owners of a number of established qualified intermediaries. Such reports raise questions as to the security and safety of escrow funds within the entire exchange industry and motivated the FEA to take the action to propose federal regulation.
Assuring the security and safety of exchange escrow funds is the primary mission of Realty Exchange Corporation. We have in place the AlwaysSafe™ exchange escrow funds security system. This system includes separate bank accounts for each exchange, 24/7 on-line viewing of account status, and a $5 million fidelity bond, as well as additional security features. Our web site, www.1031.us/SSEF, provides a full explanation of the security procedures we follow to ensure the security and safety of the exchange escrow funds entrusted to us. It is apparent from the two current cases that the stable long-term ownership of a QI firm contributes in a positive manner to the security of the exchange escrow funds. Realty Exchange Corporation was established by Ed Horan in 1990, and is one of the oldest family-owned QIs in the country.
IRS Approves Related Party Transfer Within Two Years
The circumstances in Private Letter Ruling (PLR) 200712013 are that the related party wished to acquire the relinquished property from the taxpayer but did not plan to hold it for two years. The taxpayer had a contract on a more expensive replacement property that needed to go to settlement before the transfer of the relinquished property to the related party. The taxpayer entered into a reverse exchange agreement with an Exchange Accommodation Titleholder (EAT) in accordance with Revenue Procedure 2000-37. The EAT purchased the replacement property with funds loaned by the taxpayer. Subsequently, the taxpayer wrote a contract to transfer the relinquished property to the related party. The contract was assigned to the qualified intermediary (QI). At settlement the taxpayer transferred the relinquished property to the related party, who paid the purchase price to the QI. The EAT then transferred the replacement property interest to the taxpayer, and the QI paid down the loan from the taxpayer to the EAT.
Normally IRC Section 1031(f)(1) requires in a related party exchange that the relinquished property be held by the related party buyer for two years. However, in this PLR the IRS concluded that IRC Section 1031(f)(1) did not apply because the taxpayer and the related party did not engage in a like-kind exchange. The IRS stated that the related party’s disposal of the relinquished property within two years does not result in “cashing out” of an investment or shifting of basis between the taxpayer and the related party. Note that this PLR applies only to this taxpayer and may not be cited as a precedent.
Mississippi Law Now Conforms to Federal 1031 Exchange Rules
In March 2007 Mississippi law was changed so that its 1031 rules conform to IRC Section 1031. Prior to the change, the state only allowed deferral of the state capital gains tax if the replacement property was in Mississippi.
Presidentially Declared Disasters
If a taxpayer is doing an exchange and is impacted by a Presidentially declared disaster the taxpayer is granted relief to perform certain exchange time-sensitive acts. When there is a Presidentially declared disaster the IRS issues a News Release to advise the counties covered and the start and end of the extension period. To check a News Release go to www.irs.gov/newsroom/index.html. On the Newsroom page, click on the Tax Relief in Disaster Situations heading and then scroll down to the appropriate News Release. For exchanges that qualify, any reverse exchange, 45-day or 180-day deadlines falling within the extension period are extended for 120 days. An exchange may qualify if (1) the taxpayer is located in the disaster area, and (2) the relinquished property was transferred, or the EAT acquired title in a reverse exchange, before the start of the extension period. Other liberal 1031 exchange qualifying conditions, including the relinquished or replacement property being located in the disaster area, are listed in Section 17 of IRS Revenue Procedure 2005-27 (I.R.B. 2005-20, May 16, 2005).
A new development is that for reporting purposes the IRS computer systems now automatically identify taxpayers located in a covered disaster area. But other affected taxpayers who reside, or have a business or exchange property located outside the covered disaster area are required to call the IRS disaster hotline 1-866-562-5227 to self-identify for disaster relief.
In Memory
Jerry Long, a long-time friend and colleague, passed away on March 6, 2007. Prior to his passing Jerry was honored by the FEA with a lifetime achievement award. Jerry was the co-author of the text “Tax-Free Exchanges Under §1031,” which is considered the bible of the 1031 exchange industry. Jerry will be missed by all his friends in the exchange world to whom he so freely gave his valuable time and advice.
Realty Exchange Corporation Call Bill Horan, CES® or Cindy Dove, CES® at 800-795-0769 Trust your exchange to a Certified Exchange Specialist®14540 John Marshall Highway, Suite 207, Gainesville, VA 20155 office 703-754-9411 or 800-795-0769 fax 703-754-0754 Contact Bill Horan, CES® or Cindy Dove, CES® by Email www.1031.us Member of the Federation of Exchange Accommodators Bonded and Insured
This publication is designed to provide accurate information on tax-deferred exchanges.The publisher is not engaged in rendering legal or accounting services. If legal or tax advise is required the services of a competent professional should be sought.
"Your Nationwide Qualified Intermediary for Tax-Deferred Exchanges since 1990"
FEA Takes Lead in QI Regulation
The Federation of Exchange Accommodators (FEA) has submitted a petition to the Federal Trade Commission (FTC) asking them to adopt uniform nationwide rules that would apply accepted industry standards and conduct to protect property owners who use the services of a Qualified Intermediary (QI). The petition calls for the FTC to adopt rules to ensure QIs register with the FTC and pass background checks, safeguard exchange funds, and demonstrate competency to act as a QI. It is highly unusual for an industry to take the lead with a request for federal regulations and standards. The FEA is taking this action to ensure the continuing trust and confidence of investors in the QI industry.
Misappropriation of Escrow Funds
Recently there were reports of misappropriation of exchange escrow funds by two qualified intermediary holding companies. These two companies had recently become the new owners of a number of established qualified intermediaries. Such reports raise questions as to the security and safety of escrow funds within the entire exchange industry and motivated the FEA to take the action to propose federal regulation.
Assuring the security and safety of exchange escrow funds is the primary mission of Realty Exchange Corporation. We have in place the AlwaysSafe™ exchange escrow funds security system. This system includes separate bank accounts for each exchange, 24/7 on-line viewing of account status, and a $5 million fidelity bond, as well as additional security features. Our web site, www.1031.us/SSEF, provides a full explanation of the security procedures we follow to ensure the security and safety of the exchange escrow funds entrusted to us. It is apparent from the two current cases that the stable long-term ownership of a QI firm contributes in a positive manner to the security of the exchange escrow funds. Realty Exchange Corporation was established by Ed Horan in 1990, and is one of the oldest family-owned QIs in the country.
IRS Approves Related Party Transfer Within Two Years
The circumstances in Private Letter Ruling (PLR) 200712013 are that the related party wished to acquire the relinquished property from the taxpayer but did not plan to hold it for two years. The taxpayer had a contract on a more expensive replacement property that needed to go to settlement before the transfer of the relinquished property to the related party. The taxpayer entered into a reverse exchange agreement with an Exchange Accommodation Titleholder (EAT) in accordance with Revenue Procedure 2000-37. The EAT purchased the replacement property with funds loaned by the taxpayer. Subsequently, the taxpayer wrote a contract to transfer the relinquished property to the related party. The contract was assigned to the qualified intermediary (QI). At settlement the taxpayer transferred the relinquished property to the related party, who paid the purchase price to the QI. The EAT then transferred the replacement property interest to the taxpayer, and the QI paid down the loan from the taxpayer to the EAT.
Normally IRC Section 1031(f)(1) requires in a related party exchange that the relinquished property be held by the related party buyer for two years. However, in this PLR the IRS concluded that IRC Section 1031(f)(1) did not apply because the taxpayer and the related party did not engage in a like-kind exchange. The IRS stated that the related party’s disposal of the relinquished property within two years does not result in “cashing out” of an investment or shifting of basis between the taxpayer and the related party. Note that this PLR applies only to this taxpayer and may not be cited as a precedent.
Mississippi Law Now Conforms to Federal 1031 Exchange Rules
In March 2007 Mississippi law was changed so that its 1031 rules conform to IRC Section 1031. Prior to the change, the state only allowed deferral of the state capital gains tax if the replacement property was in Mississippi.
Presidentially Declared Disasters
If a taxpayer is doing an exchange and is impacted by a Presidentially declared disaster the taxpayer is granted relief to perform certain exchange time-sensitive acts. When there is a Presidentially declared disaster the IRS issues a News Release to advise the counties covered and the start and end of the extension period. To check a News Release go to www.irs.gov/newsroom/index.html. On the Newsroom page, click on the Tax Relief in Disaster Situations heading and then scroll down to the appropriate News Release. For exchanges that qualify, any reverse exchange, 45-day or 180-day deadlines falling within the extension period are extended for 120 days. An exchange may qualify if (1) the taxpayer is located in the disaster area, and (2) the relinquished property was transferred, or the EAT acquired title in a reverse exchange, before the start of the extension period. Other liberal 1031 exchange qualifying conditions, including the relinquished or replacement property being located in the disaster area, are listed in Section 17 of IRS Revenue Procedure 2005-27 (I.R.B. 2005-20, May 16, 2005).
A new development is that for reporting purposes the IRS computer systems now automatically identify taxpayers located in a covered disaster area. But other affected taxpayers who reside, or have a business or exchange property located outside the covered disaster area are required to call the IRS disaster hotline 1-866-562-5227 to self-identify for disaster relief.
In Memory
Jerry Long, a long-time friend and colleague, passed away on March 6, 2007. Prior to his passing Jerry was honored by the FEA with a lifetime achievement award. Jerry was the co-author of the text “Tax-Free Exchanges Under §1031,” which is considered the bible of the 1031 exchange industry. Jerry will be missed by all his friends in the exchange world to whom he so freely gave his valuable time and advice.
Realty Exchange Corporation Call Bill Horan, CES® or Cindy Dove, CES® at 800-795-0769 Trust your exchange to a Certified Exchange Specialist®14540 John Marshall Highway, Suite 207, Gainesville, VA 20155 office 703-754-9411 or 800-795-0769 fax 703-754-0754 Contact Bill Horan, CES® or Cindy Dove, CES® by Email www.1031.us Member of the Federation of Exchange Accommodators Bonded and Insured
This publication is designed to provide accurate information on tax-deferred exchanges.The publisher is not engaged in rendering legal or accounting services. If legal or tax advise is required the services of a competent professional should be sought.
Fed Cuts Discount Rate
Fed cuts discount rate The central bank, citing market conditions that have 'deteriorated,' cut the symbolic discount rate by a half of a percentage point.
August 17 2007: 8:41 AM EDT NEW YORK (CNNMoney.com) -- The Federal Reserve, reacting to concerns about the subprime lending crisis and the volatility in the financial markets that have resulted from it, announced Friday that it is cutting its so-called discount rate temporarily by a half percentage point, to 5.75 percent.
The discount rate is the rate the Federal Reserve banks across the country charge qualified lenders - mainly banks - for temporary loans. It is largely symbolic.
The central bank did not change its more closely watched federal funds rate, which affects rates that consumers pay on various types of loans. That rate remains at 5.25 percent.
The Fed last met Aug. 7 and decided to leave both the federal funds and discount rates unchanged. But since then, stocks have plunged further due to fears that some financial institutions and hedge funds were in serious trouble because of the mortgage meltdown.
In a statement, the Fed said that it took the move to "promote the restoration of orderly conditions in financial markets."
In another statement, the central bank indicated that "financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward."
The Fed added that "although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably" and that the Fed was prepared to take more action if necessary.
Stock futures, which were initially trading lower Friday following another wild day Thursday, surged higher following the Fed's announcement.
August 17 2007: 8:41 AM EDT NEW YORK (CNNMoney.com) -- The Federal Reserve, reacting to concerns about the subprime lending crisis and the volatility in the financial markets that have resulted from it, announced Friday that it is cutting its so-called discount rate temporarily by a half percentage point, to 5.75 percent.
The discount rate is the rate the Federal Reserve banks across the country charge qualified lenders - mainly banks - for temporary loans. It is largely symbolic.
The central bank did not change its more closely watched federal funds rate, which affects rates that consumers pay on various types of loans. That rate remains at 5.25 percent.
The Fed last met Aug. 7 and decided to leave both the federal funds and discount rates unchanged. But since then, stocks have plunged further due to fears that some financial institutions and hedge funds were in serious trouble because of the mortgage meltdown.
In a statement, the Fed said that it took the move to "promote the restoration of orderly conditions in financial markets."
In another statement, the central bank indicated that "financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward."
The Fed added that "although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably" and that the Fed was prepared to take more action if necessary.
Stock futures, which were initially trading lower Friday following another wild day Thursday, surged higher following the Fed's announcement.
Tuesday, August 14, 2007
172 Buckingham Drive, Rehoboth Beach Yacht and Country Club, Rehoboth Beach, DE 19971
Address:REHOBOTH BEACH, DE 19971MLS ID# 551962$629,9004 Bed, 3 Bath
var objContentHeader = $get('ctl00_ctl00_cphMain_cphContentHeader');
Single Family Property, Subdivision: REHOBOTH BEACH YACHT AND CC, County: SUSSEX, Year Built: 2000, Garage, Central air conditioning, Fireplace(s)
To access this page directly, use http://homes.realtor.com/prop/1087199653
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: REHOBOTH BEACH YACHT AND CC
Year Built: 2000
4 total bedroom(s)
3 total bath(s)
3 total full bath(s)
Style: Contemporary
Fireplace(s)
Garage
Central air conditioning
Interior features: Breakfast bar, Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Fireplace(s), Great rm, Microwave, Range and oven, Security feats, Tile flrs, Wood flrs
Exterior features: Clear lot, Deck, Fenced, Porch, Public sewer srvc
Approximate lot is 115X120
School District: Cape Henlopen
Up LeftRightDown Recenter
StreetCityStateCountry
ZoomIn
ZoomOut
1
Road
Aerial
Bird's eye
N
E
S
W
Show labels
See this location in bird's eye view.
600 yds
600 yds
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
L = new MV.RDC.Data.Listing("1087199653", "1","","38.699018","-75.102130","$629,900","0","","","REHOBOTH BEACH, DE 19971","4 Bed, 3 Bath","True","","","","","","");
MV.RDC.Data.mapMarkers.push(L);
var $oLatLon = MV.RDC.LDP.Map.oLatLon = new MV.Mapping.LatLong(38.699018, -75.102130);
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
var dBetaLM = document.getElementById('ctl00_ctl00_cphMain_pnlBetaLM');
Presented By! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127Office: (302) 644-3133Mobile: (302) 841-2127
Brokered ByBEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex Countybroker: (302) 644-6880Fax: (302) 644-6881Toll Free: (866) 639-4287
var s_account ="homeglobal,homerealtor";
s.pageName = "FAH: Printable Brochure";
s.channel = "FAH";
s.prop13=s.pageName;
if(s.pageName){s.prop21="RDC: " + s.pageName};
if(s.channel){s.prop22="RDC: " + s.channel};
s.prop23="Realtor.com";
s.prop27="homes.realtor.com";
s.prop26="Not Registered";
/************* DO NOT ALTER ANYTHING BELOW THIS LINE ! **************/
var s_code=s.t();if(s_code)document.write(s_code);
_uacct = "UA-2250041-3"; urchinTracker();
var objContentHeader = $get('ctl00_ctl00_cphMain_cphContentHeader');
Single Family Property, Subdivision: REHOBOTH BEACH YACHT AND CC, County: SUSSEX, Year Built: 2000, Garage, Central air conditioning, Fireplace(s)
To access this page directly, use http://homes.realtor.com/prop/1087199653
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: REHOBOTH BEACH YACHT AND CC
Year Built: 2000
4 total bedroom(s)
3 total bath(s)
3 total full bath(s)
Style: Contemporary
Fireplace(s)
Garage
Central air conditioning
Interior features: Breakfast bar, Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Fireplace(s), Great rm, Microwave, Range and oven, Security feats, Tile flrs, Wood flrs
Exterior features: Clear lot, Deck, Fenced, Porch, Public sewer srvc
Approximate lot is 115X120
School District: Cape Henlopen
Up LeftRightDown Recenter
StreetCityStateCountry
ZoomIn
ZoomOut
1
Road
Aerial
Bird's eye
N
E
S
W
Show labels
See this location in bird's eye view.
600 yds
600 yds
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
L = new MV.RDC.Data.Listing("1087199653", "1","","38.699018","-75.102130","$629,900","0","","","REHOBOTH BEACH, DE 19971","4 Bed, 3 Bath","True","","","","","","");
MV.RDC.Data.mapMarkers.push(L);
var $oLatLon = MV.RDC.LDP.Map.oLatLon = new MV.Mapping.LatLong(38.699018, -75.102130);
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
var dBetaLM = document.getElementById('ctl00_ctl00_cphMain_pnlBetaLM');
Presented By! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127Office: (302) 644-3133Mobile: (302) 841-2127
Brokered ByBEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex Countybroker: (302) 644-6880Fax: (302) 644-6881Toll Free: (866) 639-4287
var s_account ="homeglobal,homerealtor";
s.pageName = "FAH: Printable Brochure";
s.channel = "FAH";
s.prop13=s.pageName;
if(s.pageName){s.prop21="RDC: " + s.pageName};
if(s.channel){s.prop22="RDC: " + s.channel};
s.prop23="Realtor.com";
s.prop27="homes.realtor.com";
s.prop26="Not Registered";
/************* DO NOT ALTER ANYTHING BELOW THIS LINE ! **************/
var s_code=s.t();if(s_code)document.write(s_code);
_uacct = "UA-2250041-3"; urchinTracker();
Saturday, August 11, 2007
Mortgage Rates for Metrocities Mortgage August 10, 2007
Rates have been falling on the conforming market, but have gone through the roof on non-conforming loans. You may want to discuses with the seller paying points to drive down the rates on jumbo loans.
If you have any questions please call Ron at 858 2289
Loan Program
Loan Amount
Interest Rate
Points
30 Year Fixed
$417,000
6.500%
0
15 Year Fixed
$417,000
6.250%
0
7/1 ARM
$417,000
6.875%
0
5/1 ARM
$417,000
6.750%
0
3/1 ARM
$417,000
6.875%
0
6-Month Interest-Only ARM
$417,000
6.875%
0
1-Month Interest-Only ARM
$650,000
7.125%
0
30 Year Fixed
$650,000
7.500%
1
FOR MORE INFORMATION, CONTACT:
Ronald TennantSenior Mortgage ConsultantDirect Phone: 302.644.7964 Mobile Phone: 302.858.2289 Fax: 610.290.1937Email: rtennant@metrocitiesmtg.comWeb: www.ronaldtennant.com17316 Costal Highway Lewes, DE 19958
If you have any questions please call Ron at 858 2289
Loan Program
Loan Amount
Interest Rate
Points
30 Year Fixed
$417,000
6.500%
0
15 Year Fixed
$417,000
6.250%
0
7/1 ARM
$417,000
6.875%
0
5/1 ARM
$417,000
6.750%
0
3/1 ARM
$417,000
6.875%
0
6-Month Interest-Only ARM
$417,000
6.875%
0
1-Month Interest-Only ARM
$650,000
7.125%
0
30 Year Fixed
$650,000
7.500%
1
FOR MORE INFORMATION, CONTACT:
Ronald TennantSenior Mortgage ConsultantDirect Phone: 302.644.7964 Mobile Phone: 302.858.2289 Fax: 610.290.1937Email: rtennant@metrocitiesmtg.comWeb: www.ronaldtennant.com17316 Costal Highway Lewes, DE 19958
Thursday, August 9, 2007
Beach Real Estate Caught in an Undertow
Beach Real Estate Caught in an Undertow
Along Delmarva Coast, Buyers Are Scarce and Tourism Slows Slightly
By Anita HuslinWashington Post Staff WriterMonday, August 6, 2007; Page D01
REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.
But to a newly minted real estate agent, just six months into the job, the hottest and sunniest days are also the most frustrating signs of a different economic reality: one spent hours on end sitting in model homes and waiting for buyers, who are harder to find this year.
Bruce E. Plummer, left, of Coldwell Banker and Pat Campbell-White, right, with Re/Max Realty showed a Rehoboth Beach condo to Susan Gordon, center. With sales falling in the region, the developer is offering to pay Gordon's mortgage for six months, plus other incentives, if she buys. (Grant L. Gursky)
var technorati = new Technorati() ;
technorati.setProperty('url','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221_Technorati.html') ;
technorati.article = new item('Beach Real Estate Caught in an Undertow','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221.html','REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.','Anita Huslin') ;
document.write( technorati.getDisplaySidebar() );
Who's Blogging?
Read what bloggers are saying about this article.
DC Livin
DC Home and Condo Prices
tude dogs Views on News and Entertainment
#technorati_link a {color:#339900;}
Full List of Blogs (8 links) »
Most Blogged About Articles
#technorati_link a {color:#339900;}
On washingtonpost.com On the web
Save & Share Article
What's This?
Digg
Google
del.icio.us
Yahoo!
Reddit
Facebook
If 2006 was the year the boom market began to fade, 2007 is shaping up to be the year that beach communities along the Delaware, Maryland and Virginia shorelines see their economic engines -- largely driven by tourism and real estate -- downshift from overdrive, economic and tourism analysts say.
That means job and income growth is slowing, vacations are being scaled back, and real estate opportunities have shifted in favor of buyers.
For Steve Conlon, who graduated last year from the University of Delaware with a degree in criminal justice but then decided to join his mother in selling real estate, any notion of boom times might as well be a dusty historical reference. He's a sales representative for two new residential projects on the edges of this popular beach town. To lure buyers and ameliorate losses, developers have slowed their pace of construction, dropped prices, advertised upgrades as standard features and then offered discounts on land they haven't built on yet.
Between the four days a week he or another agent sits in the sales office of Heritage Village and the seven days a week they staff the Seasons, they've sold three units this summer.
On a slow afternoon last week, he checked out the competition -- a cement-clad bay-front hotel in nearby Dewey Beach that has been converted to condos. The developers are offering to pay the 3 percent real estate transfer tax, homeowner association fees for two years, a free boat slip for two years and then a 20 percent discount. Plus, they're guaranteeing owners will get at least $12,000 for the rental of their unit each year.
"The market got soft," the young saleswoman said with a shrug, pointing out the rooftop swimming pool. It was her first day on the job and she was sanguine about the market. "It was a choice between working here or in Milton," a nearby village of fewer than 2,000 people. "I thought, hmmm, I can sit in an office there, or be here and look at the bay all day."
Of the 17 condos sold in Dewey Beach the first five months of the year, seven were in this building, she said. A couple walked through and left with a price list. One person signed the guest book. It was the saleswoman.
This year, Sussex County, where Rehoboth and Dewey Beach are located, collected $13 million less in transfer taxes than last year, according to the recorder of deeds. At the same time, hotels, motels and bed-and-breakfasts sold 6.3 percent fewer rooms than during the first six months of last year, according to an analysis by Smith Travel Research, a firm in Hendersonville, Tenn., that tracks hospitality-industry statistics.
In the Hampton Roads-Virginia Beach area, the value of single-family homes for which building permits have been issued declined about 16 percent, according to an analysis by Old Dominion University. On the other hand, hotel revenue has increased about 12 percent, Smith Travel data show. In Ocean City, the pace of development has slowed considerably; the city has approved new construction worth $69.9 million for the first seven months of the year, down 32 percent from $102.6 million during the comparable period last year. And though the city's hotels reported a 4 percent increase in revenue, occupancy fell during the first seven months of the year.
"Some would say that business is great from looking at those numbers; however this is truly not the case," said Susan Jones, executive director of the Ocean City Hotel-Motel-Restaurant Association. "Several small properties were torn down and larger, newer facilities built in their place."
The trends, at least in the real estate market, are working in the favor of Susan Gordon, a former Bethesda resident in the market for a condominium or townhouse in Rehoboth. She is a sure buyer, within a field of lookers these days.
She's considering a property along the canal, Blue Point Villas, where the developer is offering to pay her mortgage for six months, plus six years of condo association fees, $5,000 toward closing and a 15 percent "developer closeout" discount on the sale price.
Bruce E. Plummer, left, of Coldwell Banker and Pat Campbell-White, right, with Re/Max Realty showed a Rehoboth Beach condo to Susan Gordon, center. With sales falling in the region, the developer is offering to pay Gordon's mortgage for six months, plus other incentives, if she buys. (Grant L. Gursky)
var technorati = new Technorati() ;
technorati.setProperty('url','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221_Technorati.html') ;
technorati.article = new item('Beach Real Estate Caught in an Undertow','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221.html','REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.','Anita Huslin') ;
document.write( technorati.getDisplaySidebar() );
Who's Blogging?
Read what bloggers are saying about this article.
DC Livin
DC Home and Condo Prices
tude dogs Views on News and Entertainment
#technorati_link a {color:#339900;}
Full List of Blogs (8 links) »
Most Blogged About Articles
#technorati_link a {color:#339900;}
On washingtonpost.com On the web
Save & Share Article
What's This?
Digg
Google
del.icio.us
Yahoo!
Reddit
Facebook
"Builders are getting so low on prices, it's getting down to materials," Conlon said. "They're already dropping prices 20 percent, then people come in and think they're going to get 25 percent off that."
Vinod Agarwal, an economics professor at Old Dominion University who studies the tourism economy in the Virginia Beach area, estimates that sellers are overvaluing their properties by at least 10 percent, presumably assuming that the market is what it was a year and a half ago.
As a result, properties are on the market longer and often going for less than what sellers are asking, echoing broader trends in the housing sector nationwide.
This disconnect will realign, said Anirban Basu, chief executive of Sage Policy Group, a Baltimore economic research firm, though it may take some time. It could take even longer in beach communities like Rehoboth, Ocean City and Virginia Beach, where tourism is fueled by real estate, and sales of second homes are generally luxury purchases, analysts and real estate agents said.
Tara Zaiser, a Realtor with Prudential Carruthers whose ex-husband owns an umbrella concession business in Ocean City, said the talk on the street is that crowds are down -- an impression borne out by the city's monthly population estimates. There's also a sense among locals that more tourists are renting condos, which have kitchens, suggesting that visitors eat out less often, she said.
"Talk to people who've owned businesses for years and years and years, and they will tell you that people are just holding onto their money a little more," Zaiser said. "So if real estate is down, then the hardware stores are down. And if hardware stores are down, those people are not going to the deli for lunch."
Since beach communities rely on outsiders to bring in money, their economies will continue to reflect what's happening in areas they draw from, Basu said.
Earlier this year, realizing that many of her clients were looking but not buying, Zaiser found work in another industry.
"When you don't sell houses, you've got to do something," she said. "I'm doing ad sales for a local newspaper. It's not something I like to tell people. It's just something I do to pay the bills."
Along Delmarva Coast, Buyers Are Scarce and Tourism Slows Slightly
By Anita HuslinWashington Post Staff WriterMonday, August 6, 2007; Page D01
REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.
But to a newly minted real estate agent, just six months into the job, the hottest and sunniest days are also the most frustrating signs of a different economic reality: one spent hours on end sitting in model homes and waiting for buyers, who are harder to find this year.
Bruce E. Plummer, left, of Coldwell Banker and Pat Campbell-White, right, with Re/Max Realty showed a Rehoboth Beach condo to Susan Gordon, center. With sales falling in the region, the developer is offering to pay Gordon's mortgage for six months, plus other incentives, if she buys. (Grant L. Gursky)
var technorati = new Technorati() ;
technorati.setProperty('url','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221_Technorati.html') ;
technorati.article = new item('Beach Real Estate Caught in an Undertow','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221.html','REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.','Anita Huslin') ;
document.write( technorati.getDisplaySidebar() );
Who's Blogging?
Read what bloggers are saying about this article.
DC Livin
DC Home and Condo Prices
tude dogs Views on News and Entertainment
#technorati_link a {color:#339900;}
Full List of Blogs (8 links) »
Most Blogged About Articles
#technorati_link a {color:#339900;}
On washingtonpost.com On the web
Save & Share Article
What's This?
Digg
del.icio.us
Yahoo!
If 2006 was the year the boom market began to fade, 2007 is shaping up to be the year that beach communities along the Delaware, Maryland and Virginia shorelines see their economic engines -- largely driven by tourism and real estate -- downshift from overdrive, economic and tourism analysts say.
That means job and income growth is slowing, vacations are being scaled back, and real estate opportunities have shifted in favor of buyers.
For Steve Conlon, who graduated last year from the University of Delaware with a degree in criminal justice but then decided to join his mother in selling real estate, any notion of boom times might as well be a dusty historical reference. He's a sales representative for two new residential projects on the edges of this popular beach town. To lure buyers and ameliorate losses, developers have slowed their pace of construction, dropped prices, advertised upgrades as standard features and then offered discounts on land they haven't built on yet.
Between the four days a week he or another agent sits in the sales office of Heritage Village and the seven days a week they staff the Seasons, they've sold three units this summer.
On a slow afternoon last week, he checked out the competition -- a cement-clad bay-front hotel in nearby Dewey Beach that has been converted to condos. The developers are offering to pay the 3 percent real estate transfer tax, homeowner association fees for two years, a free boat slip for two years and then a 20 percent discount. Plus, they're guaranteeing owners will get at least $12,000 for the rental of their unit each year.
"The market got soft," the young saleswoman said with a shrug, pointing out the rooftop swimming pool. It was her first day on the job and she was sanguine about the market. "It was a choice between working here or in Milton," a nearby village of fewer than 2,000 people. "I thought, hmmm, I can sit in an office there, or be here and look at the bay all day."
Of the 17 condos sold in Dewey Beach the first five months of the year, seven were in this building, she said. A couple walked through and left with a price list. One person signed the guest book. It was the saleswoman.
This year, Sussex County, where Rehoboth and Dewey Beach are located, collected $13 million less in transfer taxes than last year, according to the recorder of deeds. At the same time, hotels, motels and bed-and-breakfasts sold 6.3 percent fewer rooms than during the first six months of last year, according to an analysis by Smith Travel Research, a firm in Hendersonville, Tenn., that tracks hospitality-industry statistics.
In the Hampton Roads-Virginia Beach area, the value of single-family homes for which building permits have been issued declined about 16 percent, according to an analysis by Old Dominion University. On the other hand, hotel revenue has increased about 12 percent, Smith Travel data show. In Ocean City, the pace of development has slowed considerably; the city has approved new construction worth $69.9 million for the first seven months of the year, down 32 percent from $102.6 million during the comparable period last year. And though the city's hotels reported a 4 percent increase in revenue, occupancy fell during the first seven months of the year.
"Some would say that business is great from looking at those numbers; however this is truly not the case," said Susan Jones, executive director of the Ocean City Hotel-Motel-Restaurant Association. "Several small properties were torn down and larger, newer facilities built in their place."
The trends, at least in the real estate market, are working in the favor of Susan Gordon, a former Bethesda resident in the market for a condominium or townhouse in Rehoboth. She is a sure buyer, within a field of lookers these days.
She's considering a property along the canal, Blue Point Villas, where the developer is offering to pay her mortgage for six months, plus six years of condo association fees, $5,000 toward closing and a 15 percent "developer closeout" discount on the sale price.
Bruce E. Plummer, left, of Coldwell Banker and Pat Campbell-White, right, with Re/Max Realty showed a Rehoboth Beach condo to Susan Gordon, center. With sales falling in the region, the developer is offering to pay Gordon's mortgage for six months, plus other incentives, if she buys. (Grant L. Gursky)
var technorati = new Technorati() ;
technorati.setProperty('url','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221_Technorati.html') ;
technorati.article = new item('Beach Real Estate Caught in an Undertow','http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501221.html','REHOBOTH BEACH, Del. -- The "no vacancy" signs outside hotels, sunburned families packing boardwalk amusement rides and thousands of students working in surf shops and souvenir concessions along the avenues suggest that the beach economy is booming this summer.','Anita Huslin') ;
document.write( technorati.getDisplaySidebar() );
Who's Blogging?
Read what bloggers are saying about this article.
DC Livin
DC Home and Condo Prices
tude dogs Views on News and Entertainment
#technorati_link a {color:#339900;}
Full List of Blogs (8 links) »
Most Blogged About Articles
#technorati_link a {color:#339900;}
On washingtonpost.com On the web
Save & Share Article
What's This?
Digg
del.icio.us
Yahoo!
"Builders are getting so low on prices, it's getting down to materials," Conlon said. "They're already dropping prices 20 percent, then people come in and think they're going to get 25 percent off that."
Vinod Agarwal, an economics professor at Old Dominion University who studies the tourism economy in the Virginia Beach area, estimates that sellers are overvaluing their properties by at least 10 percent, presumably assuming that the market is what it was a year and a half ago.
As a result, properties are on the market longer and often going for less than what sellers are asking, echoing broader trends in the housing sector nationwide.
This disconnect will realign, said Anirban Basu, chief executive of Sage Policy Group, a Baltimore economic research firm, though it may take some time. It could take even longer in beach communities like Rehoboth, Ocean City and Virginia Beach, where tourism is fueled by real estate, and sales of second homes are generally luxury purchases, analysts and real estate agents said.
Tara Zaiser, a Realtor with Prudential Carruthers whose ex-husband owns an umbrella concession business in Ocean City, said the talk on the street is that crowds are down -- an impression borne out by the city's monthly population estimates. There's also a sense among locals that more tourists are renting condos, which have kitchens, suggesting that visitors eat out less often, she said.
"Talk to people who've owned businesses for years and years and years, and they will tell you that people are just holding onto their money a little more," Zaiser said. "So if real estate is down, then the hardware stores are down. And if hardware stores are down, those people are not going to the deli for lunch."
Since beach communities rely on outsiders to bring in money, their economies will continue to reflect what's happening in areas they draw from, Basu said.
Earlier this year, realizing that many of her clients were looking but not buying, Zaiser found work in another industry.
"When you don't sell houses, you've got to do something," she said. "I'm doing ad sales for a local newspaper. It's not something I like to tell people. It's just something I do to pay the bills."
Alternative Lending Group - Metrocities Mortgage
For your information; Metrocities Mortgage is still in the sub prime world with the credit-flex loan. These are the general guidelines. Please call if you have any questions.
M-14 is back with a new name: The Credit-Flex Loan
ALG presents the Credit-Flex Loan—the new version of the M-14. In a time of tightening guidelines, you again have the flexibility to give clients with less-than-perfect credit the opportunity to finance their dream home.
Highlights:
· Mortgage/Rental History:
Full Doc: Unlimited 30’s and 60’s – no 90’s – in
the last 12 months (cannot be 60 days down
from time of credit decision to funding).
Stated Doc: No more than 1X30 or 0X60
within the last 12 months
· Reserves:
< or = $550,000 none required with .25% add
to fee
>$550,000 2 months PITI seasoned for 30 days
· Cash-Out Refi:
<90% LTV (per credit matrix) Unlimited C/O
· Properties Recently Listed:
Must be removed from MLS for 90 days prior to
application date.
· DTI
55% for Fixed Rate Loans
50% for IO and ARM Products
· Loan Products:
40/40 Year Fixed
30/30 Year Fixed
IO available Minimum 620 Score (not available on 40 year amortized products)
Full Doc/Bank Statement Program (Purchase-Rate Term Refi)
95% LTV $450,000 590 Credit Score
90% LTV $450,000 560 Credit Score
85% LTV $450,000 530 Credit Score
100% LTV $650,000 620 Credit Score
100% LTV $750,000 660 Credit Score
80% LTV $1,000,000 640 Credit Score
70% LTV $1,500,000 640 Credit Score
Stated Income (Purchase-Rate Term Refi)
90% LTV $550,000 620 Credit Score
90% LTV $750,000 640 Credit Score
75% LTV $1,000,000 640 Credit Score
Call ALG today for program details at (877) 457-4707 or visit Member’s Only Button 41 for more product information.
M-14 is back with a new name: The Credit-Flex Loan
ALG presents the Credit-Flex Loan—the new version of the M-14. In a time of tightening guidelines, you again have the flexibility to give clients with less-than-perfect credit the opportunity to finance their dream home.
Highlights:
· Mortgage/Rental History:
Full Doc: Unlimited 30’s and 60’s – no 90’s – in
the last 12 months (cannot be 60 days down
from time of credit decision to funding).
Stated Doc: No more than 1X30 or 0X60
within the last 12 months
· Reserves:
< or = $550,000 none required with .25% add
to fee
>$550,000 2 months PITI seasoned for 30 days
· Cash-Out Refi:
<90% LTV (per credit matrix) Unlimited C/O
· Properties Recently Listed:
Must be removed from MLS for 90 days prior to
application date.
· DTI
55% for Fixed Rate Loans
50% for IO and ARM Products
· Loan Products:
40/40 Year Fixed
30/30 Year Fixed
IO available Minimum 620 Score (not available on 40 year amortized products)
Full Doc/Bank Statement Program (Purchase-Rate Term Refi)
95% LTV $450,000 590 Credit Score
90% LTV $450,000 560 Credit Score
85% LTV $450,000 530 Credit Score
100% LTV $650,000 620 Credit Score
100% LTV $750,000 660 Credit Score
80% LTV $1,000,000 640 Credit Score
70% LTV $1,500,000 640 Credit Score
Stated Income (Purchase-Rate Term Refi)
90% LTV $550,000 620 Credit Score
90% LTV $750,000 640 Credit Score
75% LTV $1,000,000 640 Credit Score
Call ALG today for program details at (877) 457-4707 or visit Member’s Only Button 41 for more product information.
Saturday, August 4, 2007
30926 Genes Way, Paynters Mill, Milton, DE 19968
Address:MILTON, DE 19968MLS ID# 542771$469,9004 Bed, 3.5 Bath2,400 Sq. Ft.
var objContentHeader = $get('ctl00_ctl00_cphMain_cphContentHeader');
Single Family Property, Subdivision: PAYNTERS MILL, County: SUSSEX, Year Built: 2005, Garage, Central air conditioning, Fireplace(s), Dining room, Laundry room
To access this page directly, use http://homes.realtor.com/prop/1086199478
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: PAYNTERS MILL
Year Built: 2005
4 total bedroom(s)
3.5 total bath(s)
3 total full bath(s)
1 total half bath(s)
Approximately 2400 sq. ft.
Dining room
Family room
Laundry room
Fireplace(s)
Garage
Heating features: Gas
Central air conditioning
Interior features: Breakfast bar, Cable TV avail., Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Fireplace(s), Formal dining rm, Laundry rm/area, Microwave, Range and oven, Tile flrs
Exterior features: Clear lot, Irrigation well, Porch
School District: Cape Henlopen
Up LeftRightDown Recenter
StreetCityStateCountry
ZoomIn
ZoomOut
1
Road
Aerial
Bird's eye
N
E
S
W
Show labels
See this location in bird's eye view.
600 yds
600 yds
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
L = new MV.RDC.Data.Listing("1086199478", "1","","38.760675","-75.211909","$469,900","0","","","MILTON, DE 19968","4 Bed, 3.5 Bath2,400 Sq. Ft.","True","","","","","","");
MV.RDC.Data.mapMarkers.push(L);
var $oLatLon = MV.RDC.LDP.Map.oLatLon = new MV.Mapping.LatLong(38.760675, -75.211909);
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
var objContentHeader = $get('ctl00_ctl00_cphMain_cphContentHeader');
Single Family Property, Subdivision: PAYNTERS MILL, County: SUSSEX, Year Built: 2005, Garage, Central air conditioning, Fireplace(s), Dining room, Laundry room
To access this page directly, use http://homes.realtor.com/prop/1086199478
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: PAYNTERS MILL
Year Built: 2005
4 total bedroom(s)
3.5 total bath(s)
3 total full bath(s)
1 total half bath(s)
Approximately 2400 sq. ft.
Dining room
Family room
Laundry room
Fireplace(s)
Garage
Heating features: Gas
Central air conditioning
Interior features: Breakfast bar, Cable TV avail., Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Fireplace(s), Formal dining rm, Laundry rm/area, Microwave, Range and oven, Tile flrs
Exterior features: Clear lot, Irrigation well, Porch
School District: Cape Henlopen
Up LeftRightDown Recenter
StreetCityStateCountry
ZoomIn
ZoomOut
1
Road
Aerial
Bird's eye
N
E
S
W
Show labels
See this location in bird's eye view.
600 yds
600 yds
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
© 2006 Microsoft Corporation © 2006 NAVTEQ© AND
L = new MV.RDC.Data.Listing("1086199478", "1","","38.760675","-75.211909","$469,900","0","","","MILTON, DE 19968","4 Bed, 3.5 Bath2,400 Sq. Ft.","True","","","","","","");
MV.RDC.Data.mapMarkers.push(L);
var $oLatLon = MV.RDC.LDP.Map.oLatLon = new MV.Mapping.LatLong(38.760675, -75.211909);
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Friday, August 3, 2007
Economic Update - 07/30/07
The economy grew at a 3.4% pace in the second quarter, a big
> improvement over the 0.6% showing in the first three months of 2007
> and better than the 3.2% growth rate economists were expecting, the
> Commerce Department reported July 27. Also in the second quarter, core
> prices -- excluding food and energy -- rose at a rate of just 1.4%, sharply down from a 2.4% pace in the
> first quarter and the smallest increase in four years.
>
> Meanwhile, consumer sentiment registered 90.4 in July, a shade below
> the median forecast of 91.2, but well ahead of June's reading of 85.3,
> a 10-month low. The gain was tied to consumers' favorable outlook
> about the economy, particularly regarding future employment and income prospects, the
> Reuters/University of Michigan Survey of Consumers said July 27.
>
>
> Orders for durable goods -- manufactured to last three years or more
> -- increased by 1.4% in June, the best performance in three months,
> the Commerce Department reported July 26. Soaring demand for commercial
> airplanes helped fuel the rise.
>
> Sales of new single-family homes dropped by 6.6% last month, a decline
> more than triple what analysts had expected, the Commerce Department reported
> July 26. New home sales are 22.3% below the level of a year ago.
>
>
> Sales of existing homes fell 3.8%, a decline about twice what had been
> anticipated. Yet the median price of an existing home edged up to
> $230,100, 0.3% more than a year ago, the National Association of Realtors said July
> 25.
>
> This week look for updates on personal income on July 31 and the
> unemployment rate on August 3.
> improvement over the 0.6% showing in the first three months of 2007
> and better than the 3.2% growth rate economists were expecting, the
> Commerce Department reported July 27. Also in the second quarter, core
> prices -- excluding food and energy -- rose at a rate of just 1.4%, sharply down from a 2.4% pace in the
> first quarter and the smallest increase in four years.
>
> Meanwhile, consumer sentiment registered 90.4 in July, a shade below
> the median forecast of 91.2, but well ahead of June's reading of 85.3,
> a 10-month low. The gain was tied to consumers' favorable outlook
> about the economy, particularly regarding future employment and income prospects, the
> Reuters/University of Michigan Survey of Consumers said July 27.
>
>
> Orders for durable goods -- manufactured to last three years or more
> -- increased by 1.4% in June, the best performance in three months,
> the Commerce Department reported July 26. Soaring demand for commercial
> airplanes helped fuel the rise.
>
> Sales of new single-family homes dropped by 6.6% last month, a decline
> more than triple what analysts had expected, the Commerce Department reported
> July 26. New home sales are 22.3% below the level of a year ago.
>
>
> Sales of existing homes fell 3.8%, a decline about twice what had been
> anticipated. Yet the median price of an existing home edged up to
> $230,100, 0.3% more than a year ago, the National Association of Realtors said July
> 25.
>
> This week look for updates on personal income on July 31 and the
> unemployment rate on August 3.
Changes Ahead for Boomers; Fall Board Schedule
Big Changes Ahead for Boomers, Symposium Speakers SayBaby Boomers will see their family structures change as their parents age, according to experts who spoke at Building for Boomers & Beyond: 50+ Housing Symposium 2007. [more]
Make Your Plans for Fall Board in Seattle! [more]
Make the Most of Your 50+ Housing Awards Win [more]
How to Earn CAASH [more]
Offer Residents an Alternative to Security Deposits [more]
Around the Industry [more]
AARP Names Five Great Places to Live [more]
Member Advantage: Hertz Goes Green [more]
New-Home Sales Slide 6.6 Percent In June [more]
For more information or to contact us directly, please visit www.nahb.org
Make Your Plans for Fall Board in Seattle! [more]
Make the Most of Your 50+ Housing Awards Win [more]
How to Earn CAASH [more]
Offer Residents an Alternative to Security Deposits [more]
Around the Industry [more]
AARP Names Five Great Places to Live [more]
Member Advantage: Hertz Goes Green [more]
New-Home Sales Slide 6.6 Percent In June [more]
For more information or to contact us directly, please visit www.nahb.org
American Home Mortgage's survival in Doubt
NEW YORK (Reuters) -- American Home Mortgage Investment Corp. said on Tuesday it can no longer fund home loans and may liquidate assets, putting its survival in doubt and sending its shares plummeting 90 percent.
The large U.S. mortgage provider and real estate investment trust said its lenders cut off access to credit, leaving it without cash on Monday to fund $300 million of loans it had agreed to make.
Video
More video
The dream of home ownership has become a nightmare for millions of Americans. CNN's Bill Tucker explains. (April 3)
Play video
cnnad_createAd("308674","http://ads.cnn.com/html.ng/site=cnn_money&cnn_money_position=220x200_ctr&cnn_money_rollup=business_news&cnn_money_section=quigo¶ms.styles=fs","200","220");
It also expected to be unable to fund $450 million to $500 million of loans on Tuesday.
Melville, New York-based American Home (Charts) hired Milestone Advisors and Lazard to help evaluate options and advise on "the sourcing of additional liquidity, including the orderly liquidation of its assets."
With the developments, worries about credit quality and homeowner defaults have spread beyond subprime lenders, which lend to people with weaker credit, to lenders that make higher-quality loans.
American Home offers "Alt-A" mortgages, which fall between prime and subprime in quality, and recently held a roughly 2.5 percent share of the U.S. mortgage market.
"The chances are pretty high that the company either goes bankrupt or materially restructures, leaving little value for shareholders," said Bose George, an analyst at Keefe Bruyette & Woods Inc. in New York.
Prime borrowers catching subprime ills
"The business model of non-bank, mortgage lenders is challenging, and may be unstable, because they are so dependent on the willingness of the capital markets to fund operations," he added.
Mary Feder, a spokeswoman for American Home, did not respond to an e-mail seeking comment. Her telephone mailbox did not accept messages.
American Home did not return calls on Monday, after it delayed paying a scheduled common stock dividend and announced "major" writedowns.
American Home shares closed down $9.43 at $1.04 on the New York Stock Exchange Tuesday. They traded as high as $36.36 last Dec. 6.
Margin calls
Many U.S. mortgage providers have struggled with a housing slump that has caused home prices to stall, borrowing costs to rise and defaults to soar. Dozens have tightened lending policies, quit the industry, or gone bankrupt.
American Home relies on bank financing to help fund home loans.
In its statement, American Home said it could not borrow from its credit lines and had "substantial" unpaid margin calls pending to lenders, even after meeting "very significant" calls in the last three weeks.
According to its most recent quarterly report, American Home had obtained financing from several lenders. Among them were Bank of America Corp. (Charts, Fortune 500), Bear Stearns Cos. Inc. (Charts, Fortune 500), Credit Agricole SA's Calyon affiliate and UBS AG. None immediately returned calls seeking comment.
If it sought bankruptcy protection, American Home would join New Century Financial Corp. and several other home lenders in seeking protection from creditors this year.
Most of those lenders, however, catered to subprime borrowers, rather than borrowers considered better credit risks.
More traditional lenders, such as Countrywide Financial (Charts, Fortune 500), and banks, such as Wachovia (Charts, Fortune 500) and Wells Fargo (Charts, Fortune 500), have been hurt by weakness in the housing market caused in part by subprime loans.
Foreclosure filings skyrocketHome prices continued slide in May
The large U.S. mortgage provider and real estate investment trust said its lenders cut off access to credit, leaving it without cash on Monday to fund $300 million of loans it had agreed to make.
Video
More video
The dream of home ownership has become a nightmare for millions of Americans. CNN's Bill Tucker explains. (April 3)
Play video
cnnad_createAd("308674","http://ads.cnn.com/html.ng/site=cnn_money&cnn_money_position=220x200_ctr&cnn_money_rollup=business_news&cnn_money_section=quigo¶ms.styles=fs","200","220");
It also expected to be unable to fund $450 million to $500 million of loans on Tuesday.
Melville, New York-based American Home (Charts) hired Milestone Advisors and Lazard to help evaluate options and advise on "the sourcing of additional liquidity, including the orderly liquidation of its assets."
With the developments, worries about credit quality and homeowner defaults have spread beyond subprime lenders, which lend to people with weaker credit, to lenders that make higher-quality loans.
American Home offers "Alt-A" mortgages, which fall between prime and subprime in quality, and recently held a roughly 2.5 percent share of the U.S. mortgage market.
"The chances are pretty high that the company either goes bankrupt or materially restructures, leaving little value for shareholders," said Bose George, an analyst at Keefe Bruyette & Woods Inc. in New York.
Prime borrowers catching subprime ills
"The business model of non-bank, mortgage lenders is challenging, and may be unstable, because they are so dependent on the willingness of the capital markets to fund operations," he added.
Mary Feder, a spokeswoman for American Home, did not respond to an e-mail seeking comment. Her telephone mailbox did not accept messages.
American Home did not return calls on Monday, after it delayed paying a scheduled common stock dividend and announced "major" writedowns.
American Home shares closed down $9.43 at $1.04 on the New York Stock Exchange Tuesday. They traded as high as $36.36 last Dec. 6.
Margin calls
Many U.S. mortgage providers have struggled with a housing slump that has caused home prices to stall, borrowing costs to rise and defaults to soar. Dozens have tightened lending policies, quit the industry, or gone bankrupt.
American Home relies on bank financing to help fund home loans.
In its statement, American Home said it could not borrow from its credit lines and had "substantial" unpaid margin calls pending to lenders, even after meeting "very significant" calls in the last three weeks.
According to its most recent quarterly report, American Home had obtained financing from several lenders. Among them were Bank of America Corp. (Charts, Fortune 500), Bear Stearns Cos. Inc. (Charts, Fortune 500), Credit Agricole SA's Calyon affiliate and UBS AG. None immediately returned calls seeking comment.
If it sought bankruptcy protection, American Home would join New Century Financial Corp. and several other home lenders in seeking protection from creditors this year.
Most of those lenders, however, catered to subprime borrowers, rather than borrowers considered better credit risks.
More traditional lenders, such as Countrywide Financial (Charts, Fortune 500), and banks, such as Wachovia (Charts, Fortune 500) and Wells Fargo (Charts, Fortune 500), have been hurt by weakness in the housing market caused in part by subprime loans.
Foreclosure filings skyrocketHome prices continued slide in May
'Green' Lawns SpurNeighborhood Wars
By Gwendolyn Bounds From The Wall Street Journal Online
Finally the grass is greener on my side of the fence.
I've spent the past year converting my lawn to organic care. After some early setbacks, my lawn looks pretty great, and the only herbicide I've used is an all-natural corn substance that's safe enough for my dog to eat.
The same scene is playing out in yards around the country -- but it's not a peaceful transition. As the organic lawn movement grows, so are tensions in some communities. The latest front is over whether lawn-care methods are the horticultural equivalent of secondhand smoke: a choice that affects the whole community. Neighborhood activists argue that using pesticides on one lawn exposes everyone nearby to the chemicals, including kids and pets.
Related Links
Watch Wendy Bounds in a video about her efforts to have an organic lawn.
Podcast: Ms. Bounds with tips on maintaining a completely "green" lawn.
See a step-by-step guide to going pesticide-free.
Enthusiasts are trying to shame their neighbors into joining them with pro-organic lawn signs, prompting some residents to apply their chemicals covertly. Homeowners who want to stick with pesticides say how they groom their lawns is their own business. Even spouses are facing off over which comes first -- eliminating chemicals or creating a dazzling no-fuss lawn. The lawn-care industry, meanwhile, is walking a tightrope, hoping to profit from organics without turning against their traditional products.
In Wisconsin, the village of Whitefish Bay has become a microcosm of the new turf wars. Intent on switching the community over to an organic approach, a citizens' group is hanging tags on residents' doors urging them to lay off pesticides and posting "All Living Creatures Welcome" signs in their own yards.
"It's really dicey, and some people are receptive and some are hostile," says Sandy Hellman, age 37, a member of the Healthy Communities Project. "I look at it as the secondhand-smoke issue. Kids run back and forth between the yards and windows are open all the time."
Organic supporters say data are slowly building to cause concern. Last year, researchers at the Harvard School of Public Health found that individuals reporting exposure to pesticides had a 70% higher incidence of Parkinson's disease than those not reporting exposure. The report notes that among individuals who are not farmers, the significant association is "most likely explained by use of pesticides in home or in gardening."
That study echoes findings of a Parkinson's-pesticide link in men reported last year by the Mayo Clinic. There have been other studies, including one in the Journal of the American Veterinary Medical Association, suggesting that exposing dogs to some herbicide-treated lawns and gardens may increase their chances of developing cancers.
The pesticides used in lawn-care products found on shelves nationwide are considered legal by government standards. But broader research on health risks from such chemicals has prompted general warnings. The Environmental Protection Agency, which regulates pesticide use, notes on its own Web site that kids are at greater peril from pesticides because their internal organs and immune systems are developing.
In addition to the scientific debate, lawn care is also highlighting questions about personal-property rights. Some critics say the organic push is a nanny-state attempt to tell people what they can do on their own land.
Ms. Hellman's group convinced Whitefish Bay officials to stop spraying pesticides on medians near an elementary school, but didn't initially get funding for the pricier organic weed-control or fertilizer products. When dandelions returned in droves, neighbors balked, fearing the seeds would spread to their properties. Money was later approved to hire an organic lawn-care service, but not soon enough for some residents.
One year after switching to organic yard products, Gwendolyn Bounds has one of the greenest, lushest lawns on her block.
"I don't want those weeds -- that's the bottom line," says Gloria Tylicki, who has written Whitefish Bay town officials complaining about the organic results near her home. She hires a service to spray her lawn with herbicides three times a year, and doesn't like the trend of neighbors telling her what to do on her own property. "Can I not plant a certain flower because someone blocks away doesn't care for that?"
Elsewhere, similar battle lines are being drawn. This spring, 7-foot billboards were erected on the platforms of New York area railroads depicting a young father standing on the lawn of his home, cradling his young daughter. The caption: "I've got one great reason not to use chemicals on my lawn." The ad campaign was part of a larger pesticide reduction program being pushed by the Grassroots Environmental Education organization, a Port Washington, N.Y.-based nonprofit.
Fundamentally, "going organic" simply means getting grass and soil healthy enough to crowd out weeds without pesticides, the umbrella term for chemical substances that destroy unwanted pests or weeds. (A herbicide is a pesticide targeting plants; an insecticide kills insects.) Pesticide opponents say homeowners unwittingly bring the toxics into homes via shoe soles and pet feet, tracking it into carpets where kids play. They also worry about runoff into streams, rivers and groundwater -- and into their own yards.
Organic supporters also advocate using natural fertilizers instead of synthetic ones. Most packaged fertilizers contain three key ingredients -- nitrogen, phosphorus and potassium -- which are listed in a familiar N-P-K ratio. In organic versions, the nutrients come from plant, animal or mineral sources, such as blood meal, seaweed extract, bone meal and sulfate of potash. Because the soil's microorganisms must first digest the organic nutrients to make them useful to the grass, it takes longer to get that dark greening effect many homeowners are accustomed to seeing after they fertilize. A 3,000-square-foot lawn costing $200 to treat traditionally might be double using organic solutions, at least initially.
Dueling yard signs in the pesticide battle.
Currently, nothing on the market annihilates existing weeds as fast as chemical solutions. So while many people like the idea of going organic, they don't so much like living with some weeds while they convert.
"We used to accept a few weeds," says Jay Feldman, director of Beyond Pesticides, a nonprofit group that runs the National Coalition for Pesticide-Free Lawns. Now, uniform swaths of green, weedless grass are the standard. The rise of pesticides, says Mr. Feldman, "redefined our aesthetics."
In some cases, families themselves are split about whether to switch. Last year, Mary Beth Nawor of Highland Park, Ill., marched through town in a Fourth of July parade promoting safer pesticide use. "It was all the women taking the info we had and the men brushing us off," she says. But that wasn't the biggest surprise. When Ms. Nawor later recounted to her husband how a friend had marveled at their chemical-free lawn, he sheepishly admitted to putting down an herbicide.
"It's a point of pride for men," says Ms. Nawor, a high-school environmental-science teacher. "They like to be out there showing their grass off."
Andrew Sprung of South Orange, N.J., grew his lawn from seed and uses a four-step annual lawn program that includes pesticides and fertilizers. His wife wants him to stop using chemicals, he says, and he's moderated a bit. Still, he says, "I find it hard to believe that the legal chemicals I drop on my lawn in moderate quantities is harming anything."
Today the organic movement is a bright growth spot in an otherwise lackluster $24 billion U.S. lawn and garden market, growing at double digits over the last five years while overall sales stagnated in 2006, according to Marketresearch.com. This January, Scotts Miracle-Gro launched its first organic lawn fertilizer. It has a natural bio-herbicide in development and aims for half its product line to be naturally derived in coming years. The nation's largest lawn-care company, TruGreen-ChemLawn, this year shortened its name to just TruGreen, in part to deflect criticism about its pesticide use. Home Depot is carrying organic landscape products in every store, and executives insist they are here to stay.
But the split in public sentiment makes it tricky for companies to navigate the divide. Homeowners often tell professionals they want organic products, says TruGreen's chief marketing officer, Vic Yeandel, then complain when it costs more or takes longer. "They say, 'I don't want the weeds to grow -- do you have a weed control that is not a pesticide?' And the answer is, 'No, we don't.' That defines what the issue is.'"
To try to make everyone happy, In Harmony Sustainable Landscapes in Bothell, Wash., offers three tiers of weed programs: "No Weeds," "Minimum Pesticides," and "Completely Organic." When new customers call up, co-owner Mark Gile says he subtly encourages the latter two programs.
Community peer pressure is one thing. It's another to mandate organic care by law. In 2001, Canada's Supreme Court ruled that the nation's communities can restrict cosmetic pesticide use on private as well as public property. To date, more than 129 have done so.
That ruling mobilized the U.S. pro-pesticide movement like never before both on a grassroots and legislative levels, says Allen James, president of the Responsible Industry for a Sound Environment, a trade group representing makers and suppliers of pesticides and fertilizers. "Canada was the warning shot for us," he says.
Partly due to RISE's efforts, today all but nine states currently forbid local lawmakers from enacting such residential bans, because it would pre-empt state laws.
As a result, organic activists to date have instead concentrated on getting pesticides banned in public properties where municipalities have control. Just last month, Connecticut extended a ban on lawn pesticides through the eighth grade. Currently at least 20 U.S. towns have pesticide-free parks and several hundred school districts have laws or policies designed to minimize kids' exposure to pesticides.
Such actions unnerve homeowners such as John Schmaltz in Cromwell, Conn., who fears private property could be next. He sees a hypocritical undercurrent to organic lawn enthusiasts' pleas. "People put on deodorant, perfume and cosmetics, and who's to say about those?"
Given homeowners' passions, things can get tense. Philip Dickey runs the Washington Toxics Coalition, a Seattle-based environmental health organization, and estimates his group has distributed nearly 5,000 Pesticide Free Zone signs with ladybugs on them. To get a sign, homeowners must promise to speak with at least three people about organic care. On the coalition's Web site are talking tips, including playing the kid card (they often run barefoot on grass) and avoiding a "holier-than-thou attitude."
Still, not-in-my-backyard brawls do surface, Mr. Dickey says. "I got a photograph back from a guy who put up a pesticide-free sign and his neighbor then put up a sign that said Hazardous Material Storage. There is no dialogue going on there." Nor in Harvard, Ill., where Andrew Cook showed his neighbor a note from his wife's doctor explaining she was highly sensitive to pesticides. No dice, his neighbor refused to change her lawn-care regimen. Mr. Cook then aimed one of the ladybug signs squarely at her house. "You can only lead a horse to water," he says.
To keep peace for now, some homeowners are brokering their own land resolutions. Tihamer Toth-Fejel uses no lawn-care treatments whatsoever on most of his Ann Arbor, Mich., yard, but throws down an herbicidal Weed and Feed product on the portion abutting his neighbor's property so "he won't think I'm trying to infect his perfect lawn." Jim McNicholas of LaGrange, Ill., asked his organic neighbor to tell him when she's going on vacation so he can spread fertilizer without strife. And in Lyndhurst, Ohio, city councilman Joe Gambatese agreed to hire Good Nature Organic Lawn Care to treat his own home turf for a three-year trial after residents there pushed for pesticide reductions. So far, he says, "my yard looks fantastic."
As for my block, a couple of acres separate me from my neighbors so they haven't had to witness my battle with the weed brigades. After a frustrating summer fighting dandelions and plantains, last fall I plowed up the lawn, replanting it with new grass seed and 1,400 pounds of organic compost.
That did the trick. My grass was among the first up in my area this spring, which helped choke back any weeds. I spread corn gluten meal, a natural pre-emergent herbicide, just as the forsythia began blooming and have spent only a few hours total hand-weeding. As for fertilizer, this year I'm trying a worm waste product from a company called Terracycle as well as Scotts' new Organic Choice lawn food. I left a swath of old lawn for comparison and so far the difference is notable. In the meantime, there's not much to do other than mow.
Dueling yard signs in the pesticide battle.
Email your comments to rjeditor@dowjones.com.
-- July 12, 2007
Finally the grass is greener on my side of the fence.
I've spent the past year converting my lawn to organic care. After some early setbacks, my lawn looks pretty great, and the only herbicide I've used is an all-natural corn substance that's safe enough for my dog to eat.
The same scene is playing out in yards around the country -- but it's not a peaceful transition. As the organic lawn movement grows, so are tensions in some communities. The latest front is over whether lawn-care methods are the horticultural equivalent of secondhand smoke: a choice that affects the whole community. Neighborhood activists argue that using pesticides on one lawn exposes everyone nearby to the chemicals, including kids and pets.
Related Links
Watch Wendy Bounds in a video about her efforts to have an organic lawn.
Podcast: Ms. Bounds with tips on maintaining a completely "green" lawn.
See a step-by-step guide to going pesticide-free.
Enthusiasts are trying to shame their neighbors into joining them with pro-organic lawn signs, prompting some residents to apply their chemicals covertly. Homeowners who want to stick with pesticides say how they groom their lawns is their own business. Even spouses are facing off over which comes first -- eliminating chemicals or creating a dazzling no-fuss lawn. The lawn-care industry, meanwhile, is walking a tightrope, hoping to profit from organics without turning against their traditional products.
In Wisconsin, the village of Whitefish Bay has become a microcosm of the new turf wars. Intent on switching the community over to an organic approach, a citizens' group is hanging tags on residents' doors urging them to lay off pesticides and posting "All Living Creatures Welcome" signs in their own yards.
"It's really dicey, and some people are receptive and some are hostile," says Sandy Hellman, age 37, a member of the Healthy Communities Project. "I look at it as the secondhand-smoke issue. Kids run back and forth between the yards and windows are open all the time."
Organic supporters say data are slowly building to cause concern. Last year, researchers at the Harvard School of Public Health found that individuals reporting exposure to pesticides had a 70% higher incidence of Parkinson's disease than those not reporting exposure. The report notes that among individuals who are not farmers, the significant association is "most likely explained by use of pesticides in home or in gardening."
That study echoes findings of a Parkinson's-pesticide link in men reported last year by the Mayo Clinic. There have been other studies, including one in the Journal of the American Veterinary Medical Association, suggesting that exposing dogs to some herbicide-treated lawns and gardens may increase their chances of developing cancers.
The pesticides used in lawn-care products found on shelves nationwide are considered legal by government standards. But broader research on health risks from such chemicals has prompted general warnings. The Environmental Protection Agency, which regulates pesticide use, notes on its own Web site that kids are at greater peril from pesticides because their internal organs and immune systems are developing.
In addition to the scientific debate, lawn care is also highlighting questions about personal-property rights. Some critics say the organic push is a nanny-state attempt to tell people what they can do on their own land.
Ms. Hellman's group convinced Whitefish Bay officials to stop spraying pesticides on medians near an elementary school, but didn't initially get funding for the pricier organic weed-control or fertilizer products. When dandelions returned in droves, neighbors balked, fearing the seeds would spread to their properties. Money was later approved to hire an organic lawn-care service, but not soon enough for some residents.
One year after switching to organic yard products, Gwendolyn Bounds has one of the greenest, lushest lawns on her block.
"I don't want those weeds -- that's the bottom line," says Gloria Tylicki, who has written Whitefish Bay town officials complaining about the organic results near her home. She hires a service to spray her lawn with herbicides three times a year, and doesn't like the trend of neighbors telling her what to do on her own property. "Can I not plant a certain flower because someone blocks away doesn't care for that?"
Elsewhere, similar battle lines are being drawn. This spring, 7-foot billboards were erected on the platforms of New York area railroads depicting a young father standing on the lawn of his home, cradling his young daughter. The caption: "I've got one great reason not to use chemicals on my lawn." The ad campaign was part of a larger pesticide reduction program being pushed by the Grassroots Environmental Education organization, a Port Washington, N.Y.-based nonprofit.
Fundamentally, "going organic" simply means getting grass and soil healthy enough to crowd out weeds without pesticides, the umbrella term for chemical substances that destroy unwanted pests or weeds. (A herbicide is a pesticide targeting plants; an insecticide kills insects.) Pesticide opponents say homeowners unwittingly bring the toxics into homes via shoe soles and pet feet, tracking it into carpets where kids play. They also worry about runoff into streams, rivers and groundwater -- and into their own yards.
Organic supporters also advocate using natural fertilizers instead of synthetic ones. Most packaged fertilizers contain three key ingredients -- nitrogen, phosphorus and potassium -- which are listed in a familiar N-P-K ratio. In organic versions, the nutrients come from plant, animal or mineral sources, such as blood meal, seaweed extract, bone meal and sulfate of potash. Because the soil's microorganisms must first digest the organic nutrients to make them useful to the grass, it takes longer to get that dark greening effect many homeowners are accustomed to seeing after they fertilize. A 3,000-square-foot lawn costing $200 to treat traditionally might be double using organic solutions, at least initially.
Dueling yard signs in the pesticide battle.
Currently, nothing on the market annihilates existing weeds as fast as chemical solutions. So while many people like the idea of going organic, they don't so much like living with some weeds while they convert.
"We used to accept a few weeds," says Jay Feldman, director of Beyond Pesticides, a nonprofit group that runs the National Coalition for Pesticide-Free Lawns. Now, uniform swaths of green, weedless grass are the standard. The rise of pesticides, says Mr. Feldman, "redefined our aesthetics."
In some cases, families themselves are split about whether to switch. Last year, Mary Beth Nawor of Highland Park, Ill., marched through town in a Fourth of July parade promoting safer pesticide use. "It was all the women taking the info we had and the men brushing us off," she says. But that wasn't the biggest surprise. When Ms. Nawor later recounted to her husband how a friend had marveled at their chemical-free lawn, he sheepishly admitted to putting down an herbicide.
"It's a point of pride for men," says Ms. Nawor, a high-school environmental-science teacher. "They like to be out there showing their grass off."
Andrew Sprung of South Orange, N.J., grew his lawn from seed and uses a four-step annual lawn program that includes pesticides and fertilizers. His wife wants him to stop using chemicals, he says, and he's moderated a bit. Still, he says, "I find it hard to believe that the legal chemicals I drop on my lawn in moderate quantities is harming anything."
Today the organic movement is a bright growth spot in an otherwise lackluster $24 billion U.S. lawn and garden market, growing at double digits over the last five years while overall sales stagnated in 2006, according to Marketresearch.com. This January, Scotts Miracle-Gro launched its first organic lawn fertilizer. It has a natural bio-herbicide in development and aims for half its product line to be naturally derived in coming years. The nation's largest lawn-care company, TruGreen-ChemLawn, this year shortened its name to just TruGreen, in part to deflect criticism about its pesticide use. Home Depot is carrying organic landscape products in every store, and executives insist they are here to stay.
But the split in public sentiment makes it tricky for companies to navigate the divide. Homeowners often tell professionals they want organic products, says TruGreen's chief marketing officer, Vic Yeandel, then complain when it costs more or takes longer. "They say, 'I don't want the weeds to grow -- do you have a weed control that is not a pesticide?' And the answer is, 'No, we don't.' That defines what the issue is.'"
To try to make everyone happy, In Harmony Sustainable Landscapes in Bothell, Wash., offers three tiers of weed programs: "No Weeds," "Minimum Pesticides," and "Completely Organic." When new customers call up, co-owner Mark Gile says he subtly encourages the latter two programs.
Community peer pressure is one thing. It's another to mandate organic care by law. In 2001, Canada's Supreme Court ruled that the nation's communities can restrict cosmetic pesticide use on private as well as public property. To date, more than 129 have done so.
That ruling mobilized the U.S. pro-pesticide movement like never before both on a grassroots and legislative levels, says Allen James, president of the Responsible Industry for a Sound Environment, a trade group representing makers and suppliers of pesticides and fertilizers. "Canada was the warning shot for us," he says.
Partly due to RISE's efforts, today all but nine states currently forbid local lawmakers from enacting such residential bans, because it would pre-empt state laws.
As a result, organic activists to date have instead concentrated on getting pesticides banned in public properties where municipalities have control. Just last month, Connecticut extended a ban on lawn pesticides through the eighth grade. Currently at least 20 U.S. towns have pesticide-free parks and several hundred school districts have laws or policies designed to minimize kids' exposure to pesticides.
Such actions unnerve homeowners such as John Schmaltz in Cromwell, Conn., who fears private property could be next. He sees a hypocritical undercurrent to organic lawn enthusiasts' pleas. "People put on deodorant, perfume and cosmetics, and who's to say about those?"
Given homeowners' passions, things can get tense. Philip Dickey runs the Washington Toxics Coalition, a Seattle-based environmental health organization, and estimates his group has distributed nearly 5,000 Pesticide Free Zone signs with ladybugs on them. To get a sign, homeowners must promise to speak with at least three people about organic care. On the coalition's Web site are talking tips, including playing the kid card (they often run barefoot on grass) and avoiding a "holier-than-thou attitude."
Still, not-in-my-backyard brawls do surface, Mr. Dickey says. "I got a photograph back from a guy who put up a pesticide-free sign and his neighbor then put up a sign that said Hazardous Material Storage. There is no dialogue going on there." Nor in Harvard, Ill., where Andrew Cook showed his neighbor a note from his wife's doctor explaining she was highly sensitive to pesticides. No dice, his neighbor refused to change her lawn-care regimen. Mr. Cook then aimed one of the ladybug signs squarely at her house. "You can only lead a horse to water," he says.
To keep peace for now, some homeowners are brokering their own land resolutions. Tihamer Toth-Fejel uses no lawn-care treatments whatsoever on most of his Ann Arbor, Mich., yard, but throws down an herbicidal Weed and Feed product on the portion abutting his neighbor's property so "he won't think I'm trying to infect his perfect lawn." Jim McNicholas of LaGrange, Ill., asked his organic neighbor to tell him when she's going on vacation so he can spread fertilizer without strife. And in Lyndhurst, Ohio, city councilman Joe Gambatese agreed to hire Good Nature Organic Lawn Care to treat his own home turf for a three-year trial after residents there pushed for pesticide reductions. So far, he says, "my yard looks fantastic."
As for my block, a couple of acres separate me from my neighbors so they haven't had to witness my battle with the weed brigades. After a frustrating summer fighting dandelions and plantains, last fall I plowed up the lawn, replanting it with new grass seed and 1,400 pounds of organic compost.
That did the trick. My grass was among the first up in my area this spring, which helped choke back any weeds. I spread corn gluten meal, a natural pre-emergent herbicide, just as the forsythia began blooming and have spent only a few hours total hand-weeding. As for fertilizer, this year I'm trying a worm waste product from a company called Terracycle as well as Scotts' new Organic Choice lawn food. I left a swath of old lawn for comparison and so far the difference is notable. In the meantime, there's not much to do other than mow.
Dueling yard signs in the pesticide battle.
Email your comments to rjeditor@dowjones.com.
-- July 12, 2007
Subscribe to:
Posts (Atom)