When millions of foreclosures suddenly flooded the market at the onset of the housing crash, home owners knew little to nothing about holding onto their homes or how to recover if they got the boot.

Misinformation and fraud compounded the effects of slow regulatory action and lackadaisical response from the lending industry.

Uncharted waters were submerged in rumors, speculation, conjecture and ignorance.

Years later, foreclosure myths endure.

Freddie Mac, one of the nation’s largest home loan investors, initially charged with expanding opportunities for home ownership and now focused on the liquidity needs of the mortgage market, is also about myth busting.

To set the record straight on foreclosures, it offers “Top Foreclosure Myths” and the truth behind those false beliefs.

To wit:

• Myth: You should stop paying your mortgage so you can leverage assistance with your mortgage payments.

The approach, called a “strategic default,” can become a tactical trap.

It isn’t necessary to default on your mortgage payments in order to qualify for help.

If you are struggling to stay current on your mortgage, you may be eligible for a loan modification or other assistance program.

You signed a contract that binds you to making regular mortgage payments. If you don’t make your payments, you will be exposed to foreclosure, subsequent black marks on your credit report and years of financial recovery.

If you can financially afford to make your mortgage payments, even if you’ve been declined a mortgage modification , short sale or other work out, do so to maintain your credit standing.

If you need help, contact your lender, contact a U.S. Department of Housing and Urban Development (HUD)-approved counselor online or call the Homeowner’s HOPE Hotline at 888-995-HOPE (4673).

• Myth: After a foreclosure, you’ll never get another mortgage.

Well, sure. You blew it. Perhaps you borrowed more than you could afford or your ability to pay for what you thought you could afford went away. You may not qualify for a home for as long as seven years, but that’s not “never.”

Work to create a spending and savings plan that will rebuild your credit. Get approved counseling that will reveal your effort to recover.

• Myth: Workout options are over once you get a foreclosure notice.

Lenders would prefer that you keep your mortgage and continue to make payments because they lose money when they foreclose on you. Even if foreclosure proceedings have begun, it’s not too late to be considered for a workout or other alternative.

• Myth: You need to leave your home as soon as you’re notified that your property is in foreclosure.

A notice of foreclosure is the first step in the foreclosure process. There are procedural and legal guidelines and applicable state and federal laws that servicers and lenders must follow in every foreclosure. Foreclosures take months to complete.

• Myth: If you’re late on your monthly payments, you’ll lose your house.

You will if you stick your head in the sand. If you have a financial hardship and fall behind, it’s possible to keep your house and get back on track if you tell someone who is able to help. Contact your lender to discuss your options that include forbearance, loan modification, reinstatement, repayment plans, even a short sale.

• Myth: All the offers for help are probably all scams. Scam artists do often target homeowners who are struggling to meet their mortgage commitment or who are anxious to sell their home.

Deal with your lender first, rather than an outside party. If you do deal with an outside firm avoid those that ask for a fee in advance to work with your lender to modify, refinance, or reinstate your mortgage. Ignore guarantees from outside firms that claim they can stop a foreclosure or modify your loan.

Legitimate offers will have specific information identifying your current mortgage, including the loan number of your mortgage. Shy from offers that come from a company other than your current lender or an authorized agent of your lender.

• Myth: Give up if your lender is not responding to your inquiries.

Never give up. Lenders are deluged. It make take longer than you’d like to reach your lender, which is why you should contact your lender at the first sign of trouble. The process of obtaining a loan modification or other foreclosure alternative may require diligence in the form of multiple calls and multiple submissions of documents between you and your lender. The process isn’t perfect, the procedures continue to change.

Qualifying and being approved for a mortgage are only part of the financial responsibility of buying a home. There’s also a host of closing costs that, as a buyer, you should expect. Affordability is a topic on the minds of today’s buyers, so researching each of the following costs, large and small, is important.

1. Down Payment. This amount ranges widely depending on the dollar price of your home, but many financial experts recommend a down payment be at least 20 percent of the total cost of the house.

2. Credit Report and Score: Before you even think about buying a home, you need to verify the accuracy of your credit report and score. You may access your credit report three times a year for free at annualcreditreport.com, but you generally must pay to view your credit score. This costs around $10 – $20.

3. Home inspection: It is imperative that you get a home inspection. Even newer homes may have hidden budget busters, such as termites, mold, or shoddy electrical work. Chances are your offer, unless you are buying “as is”, has a clause that allows you to back out of the deal if the home inspection comes back unfavorably. A home inspection takes a few hours, during which you should be present, and costs around $300 to $500.

4. Loan Origination and Points: You may have agreed to pay “points” in order to get a lower interest rate. Think of this as pre-paid interest. For each point purchased, the loan rate is typically reduced by 1/8%. An origination fee is what you must pay the lender to write and process your loan. This can be up to several thousand dollars.

5. Appraisal: An appraisal protects your lender from investing in a property that is over-priced. That means if the home appraises for $200,000, but the seller wants $225,000 … you will only be able to get financing for $200,000. An appraisal also helps you to know the real market value of the home you are interested in.

6. Private mortgage Insurance: According to the Federal Reserve Bank of San Francisco, “PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home’s value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.” PMI protects your lender if you default on a loan, something that weighs heavily on the minds of lenders in today’s economic climate.

7. Notary fees. Some states have a cap on the amount a notary may charge, while others don’t. But you should generally expect a fee less than $10.

The good news? Your lender and real estate agent will provide a “good-faith estimate” of your expected settlement costs. These are only a few of the many costs associated with closings. Planning ahead for these expenses is important, and it is another reason to examine whether or not you can truly afford to buy a home at this time.

If you go to the other side of the world and interact with people there, can you recognize the emotions they are feeling by looking at their facial expressions? Paul Ekman says the answer is yes. He has been studying emotions for many years and in different geographies and cultures. He has identified seven emotions that seem to be universal:

• Joy
• Sadness
• Anger
• Contempt
• Surprise
• Disgust
• Fear

What is an emotion? – Considering how important emotions are in our everyday life, there is not as much research on emotions as you might think. In order to study emotions it’s necessary to define them first. Scientists studying emotions contrast them with moods and attitudes:

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The New York City housing market continues to show signs of distress, especially in the outer boroughs.

Sales volume dropped by nearly 33% in the fourth quarter of 2010, compared with the fourth quarter of 2009, while median prices in the fourth quarter remained almost 9% below the same quarter in 2009, according to the Furman Center for Real Estate and Urban Policy's Quarterly Housing Update. Citywide median prices are still 28% below their peak in the fourth quarter of 2006.

Manhattan, not surprisingly, has fared best. Prices in the borough are down only 10% from their peak in the fourth quarter of 2008. What's more, they are showing some resilience, ending 2010 up 6% from year earlier levels.

In Brooklyn, prices fell 32%, compared with the fourth quarter 2009, and Brooklyn had the smallest decrease in sales volume of all the boroughs. Sales fell 25% compared with the fourth quarter 2009.

In contrast, Queens' housing prices finished 2010 down 20% from year-earlier levels and 42% from their peak in the fourth quarter of 2006. Sales volume in Queens last year was also weak, down 40% in the fourth quarter from year earlier levels.

The Bronx, too, took its lumps. There, median prices in the final quarter of 2010 were 7.3% lower than year-earlier levels and 27.5% beneath the 2006 peaks. Sales volumes in the Bronx last year were 38% off year-earlier totals.

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In the last blog post I talked about how groups end up making faulty decisions. How many times have you been part of a group discussion and decision-making process and there is one person who is dominating the conversation and the decision. Just because decisions are made in a group setting doesn’t mean that the entire group really made the decision. Many people give up in the presence of one or more dominant group members, and may not speak up at all.

Why does the leader become the leader? — Anderson and Kilduff (2009) researched group decision-making. They formed groups of four students each and had them solve math problems from the GMAT (a standardized test for admission to graduate business school programs).

Everyone agrees who the leader is – During the problem solving session the researchers videotaped the group conversations and reviewed them later to decide who was the leader of each group. They had multiple sets of observers view the videos to see if there was consensus about who the leaders were. They also asked the people in the groups who they thought was the leader of their group. Everyone agreed on who the leader was in each group.  Before the groups started, everyone filled out a questionnaire to measure level of dominance. As you might imagine, the leaders had all scored high on the dominance measure. But that still doesn’t say how they became leaders. Were they the people with the best math SAT scores? (No). Did they bully everyone else into letting them be the leader? (No).

The leaders speak first – For 94% of the problems the group’s final answer was the first answer that was proposed, and the people with the dominant personalities were the ones that spoke up first.

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NAR: Investors, cash deals boost January real estate sales

Plans to rebenchmark home sales data won't affect monthly trends

By Inman News, Wednesday, February 23, 2011.

Inman News™

Image courtesy of LuMaxArt.

Sales of existing homes edged up for a third month in a row in January as sales of distressed properties, investor purchases and all-cash deals picked up from December, the National Association of Realtors said today.

Sales of existing single-family homes, townhomes, condos and co-ops were up 2.7 percent from December, to a seasonally adjusted annual rate of 5.36 million homes, NAR said.

That’s up 5.3 percent from a year ago — the first year-over-year increase in sales since last spring, when sales were boosted by the federal homebuyer tax credit.

At $158,800, the national median price for all housing types was down 3.7 percent from a year ago, with distressed properties accounting for 37 percent of all sales. The median price of a single-family home was down 2.7 percent, to $159,400.

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