For more of this story, tune in to CNBC's On The Money, tonight, starting at 9pm.

PREVIOUSLY: Consumerist Attends Robert Allen's Get Rich Quick In Real Estate Seminar
Despite Subprime Implosion, Robert Allen's Troops Still Pitch "Get Rich Quick In Real Estate With No Money Down"

Massive Effort to Save Mortgages [WSJ] (Photo: respres)

* Maintain a healthy credit score
* Inquire about discounts
* Increase your deductible
* Disaster-proof your home
* Monitor neighborhood changes
* Pay promptly

Simple tips for sure, but they can save you a bundle. Heck, the first tip alone can save you almost half on your homeowners insurance.

A few other worthwhile thoughts:

* Be sure to shop around every year or two for all your insurance needs. Many insurance companies slowly raise fees to the point where their competitors offer much cheaper options. And yet most consumers don't look around for alternatives because the increases are so gradual. Doing a little extra work to check prices can save you a boatload in premiums.

* If you raise your deductible, be sure to increase the amount in your emergency fund to cover the difference. This way, if you ever need to make a claim you'll have enough to cover your larger-than-average portion of the bill.

* Paying promptly is not only a good money saving tip, but can also keep your insurance from being canceled. Be sure you are never late on any sort of insurance payment or you could find your coverage dropped.

6 Ways to Save on Homeowners Insurance [Smart Money]

— FREE MONEY FINANCE (Photo: Groovnick)

Graham says:

Our mortgage is with Countrywide. They keep sending us notices with bold type that say:
"YOUR MORTGAGE IS NEARING ITS NEXT ADJUSTMENT!"

Of course ... we have always had a fixed rate and they know that. There isn't anything that could possibly adjust.

They know we don’t have a variable rate. It has always been a fixed rate and never been refinanced. It strikes me as fear based tactics to get you to shoulder an expensive refi.

The text reads:
"As a valued Countrywide customer, you shouldn't have to worry about rising monthly payments."

Except ... It would never have crossed my mind to worry about my Fixed Rate Mortgage payments rising if I hadn't received this mailer from them.

Oh, but Graham, didn't you realize that "If you have available home equity, you may be able to access it to pay off bills or take care of unexpected expenses." Don't you know that your house isn't really a house? It's an ATM! Isn't that nifty? It must be true, too, because it says "official" up there at the top.

We thought Bank of America was going to try to clean up Countrywide's image, but apparently not.

From Bloomberg:

"Yes, I found a flaw,'' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``That is precisely the reason I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.''
...
The admission that free markets have their faults was a shift for the former Fed chairman who declared in a May 2005 speech that ``private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.''

Today Committee Chairman Henry Waxman, a California Democrat, said Greenspan had ``the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis.''

``You were advised to do so by many others,'' he told Greenspan. ``And now our whole economy is paying the price.''

Waxman and other lawmakers repeatedly interrupted Greenspan as he answered their questions, in contrast to deference to his testimony while he was Fed chairman.

Greenspan then claimed that the Fed had no idea how large the subprime mortgage market had become until late 2005, says Bloomberg.

Greenspan Concedes to `Flaw' in His Market Ideology (Update2) [Bloomberg]

The way they're able to set up people who have no job or money down or credit score or clue what they're doing is to avoid the banking system entirely. Instead, they have a book of private lenders who will invest in your deal. These lenders are themselves "graduates" of the Robert Allen institute. According to the presenter, these graduates just have made so much money in real estate that they don't need to deals anymore, they just need places to invest their money.

The whole thing hinges around you finding properties in preforeclosure and then negotiating with the desperate owner and the lender to get a short sale. Then you're supposed to clean up the curb appeal and turn around and sell it for a little bit more. Basically the good ol' fix n' flip scenario. But wait, you ask, how do I find houses in preforeclosure?

Luckily the Robert Allen institute has a database they give you access to that shows you all the houses across the country in preforeclosure status. They charge $240 a year for this database, but you can get it for a year free if you sign up for a 3-day workshop class. The 3-day workshop costs $3995. Except today you can get a one-time discount of $1000. And if you get a friend or companion to sign up with you, they get 50% off. The presenter encouraged us to put it on Mastercard and only pay $40 a month. Within 4 months, he promised we would close a deal with a net profit of tens of thousands of dollars, and we could just pay off the Mastercard then. He had this overworked manner of emphasizing the syllables in polysyllabic words. Mastercard became Master-Card. He said things like "that strat-e-gy was very at-trac-tive."

The presenter talked about how important it was to put together the perfect short-sale package with all the right forms in the right order. He clasped that blue plastic binder and believed in it like it was the newly discovered epistles of Jesus. But I felt pretty confident that whatever was in that binder, or in his special CDs packed with legal documents, I could find for free online.

So what was in the seminar? Very basic information that teased to the prospect of learning more basic information at an inflated price tag, along with a pitch to join the Robert Allen multi-level-marketing real-estate pyramid, just like I figured. I'll give a more thorough analysis in a future post.

There's an ad for a free seminar. The crowd gets hyped with tales of fabulous wealth. High-pressure sales staff are on hand to sign you up for more courses for thousands of dollars. Each successive "course" has little information, just fluff and hype and a push to get to the next level where the real secrets will be revealed. There's a few thousand for the 3-day course. Some more thousands for the mentor hot-line and one-on-one coaching. More thousands for the at-home study course. Many more thousands for the weekend retreat where Robert Allen himself might appear. Then, if you really want the big juicy secret that will make you millions instantly, it'll just be $29,999 for the mastery class. Don't worry, you'll make that all back, they say

What actual info is in the materials? Little, it seems, but lots of promises about all the wealth you can generate. One person complained the books he paid over $5,000 for were:

"Thin on substance, but very thick on all the other classes and courses that I could enroll in to help further my dream of becoming a Certified Real Estate Specialist"

Another:

"massive books of crap with empty costly paid promises"

There's supposed to be a 100% money-back guarantee, but people complain about getting the runaround when they try to get refunds. Only chargebacks and complaints to the state's attorneys general work.

According to the complaints, once your email and phone number is in the database, the constant stream of calls to enroll in more classes and services begins. Probably the list gets sold around to the various sub-companies and they all take their crack at shaking your wallet.

I worked with a trainer for approximately 15 weeks, then was given a number for a coaching hotline after the 15 weeks. During that time, I made over 30 offers in 3 states, all with my coach's instruction. None of the offers ever came to fruition, mostly because you can't (legally) get something for nothing. In other words, many of the techniques for acquiring real estate were ethically questionable, particularly when trying to finance real estate deals with little or no money down.

When consumers get mad, the common tactic they write about is for the people they're talking to to say, oh yes, the parent organization is sleazy, we're trying to break away, we don't like them, now, THIS is the class that you need to sign up for.

From how it all smells cruising online, Robert Allen has little to do with the system anymore. Somewhere along the way, the rights to his name and aura were purchased and they slapped his likeness on top of a seminar/education scam and a multi-level-marketing scam. There seem to be an endless parade of "companies" which have bought the rights to use the Robert Allen name and resell his information. Places with names like: Enlightened Millionaire Institute, Business Skills Corporation, Emerald Capital Group, Inc, Go2Trade Corporation, International Acceptance Corporation, Life Skills Corporation, MyMediaWorks.com Corporation, Saris TEchnologies, Inc, Securities Trading Corporation, Timeshare and Vacation Properties Online, Inc., Life Skills Corp., Market Place Pro, The Institute of Commercial Real Estate and so forth.

They talked us into spending our severance pay to pay for mastery classes. They promised 'are you dumb enough to be rich?' and how easy it would be. We spent over $19,000 for classes and had to fly to other states to get some of the training. Two classes were cancelled and we had to choose different classes. Our field training was constantly postponed. They never teach you enough to be successful. We have not met anyone at these classes who has made money the 'Robert Allen' way. Everyone says they just are pressured into buying more classes. When you try to talk to customer service, they tell you to listen to more calls and make more offers. The calls are very vague and they try to sell you something else. No one is just going to 'give' you their house.

How does it work? MSNMoney wrote when they looked into Robert Allen, "They operate according to a tried-and-true principle of behavioral psychology called the variable ratio reinforcement schedule. Basically, people (and rats) will persist in doing something, even with little or no return, if they are given the tiniest bit of hope of a coming reward," In that same article, they also spoke with Mark Wilson, who said he had made lots of money using the Robert Allen system. He paid just $5,000 for a one-year course, and already had lots of experience in real estate.

I'm not sure what the final secret is. Robert Allen crows in his book "Multiple Streams of Income" about how he flew to LA, hooked up with a LA Times Reporter, handed over his wallet, and in 57 hours bought 7 seven properties worth $722,215 without putting any money of his own down at all. The title of the article supposedly was "Buying Home without Cash: Boastful Investor Accepts Time Challenge-and Wins." I Googled and looked on Lexis/Nexis but the only references I could find to it were reams of get-rich-quick webpages reselling the Robert Allen system, some of which, in oh irony of ironies, you'll likely find being advertised in the Google Ad Words block on the left side of the very page you're reading right now.

If I had to guess, it sounds like the big reveal is get a 0% down loan and then flip the house. Hmm, where have we heard this before? Oh yes, it was the lifeblood of the sub-prime meltdown. Right. Got it. There's also all this talk of "using other people's money," which I guess involves convincing other people to give you money to buy the house and then everyone gets their money back plus a bit of profit when turn around and sell it.

Even though banks are only loaning to people with stellar credit who can put solid money down, I still saw a full-page ad in the Daily Post last weekend for more of Robert Allen's seminars. Though, from what I hear, he doesn't actually do them anymore. No, they're now run by various coaches who are part of the Robert Allen institute and figured out the real money is in selling the schlock to the next sucker who believes you can get something for nothing. Hm, maybe we should go to one of these, just to find out how they operate and what the people who show up look like...

The words painted on a wall near the front door are hard to make out but it appears to declare: "Brought to you by Deutsche Bank... Eat it."

Details are sketchy, but NBC says:

Williams said his financial troubles began when he got behind on his mortgage payments then signed a deal that promised to help him stay in his home. The deal failed.

Just last week, Williams said he found out that his home had been sold without his knowledge to a bank and he had to get out.

The front yard of Williams' home is strewn with boxes, furniture and trash cans. There's even some of the home's air conditioning duct work lying on the lawn. That's not the only part of the property left in shambles. The inside of the house is just as messy.

Obviously, we have no idea what really happened, but it sounds like Mr. Williams may have fallen victim to a foreclosure "rescue" scam. The FTC says:

Fraudulent foreclosure “rescue” professionals use half truths and outright lies to sell services that promise relief and then fail to deliver. Their goal is to make a quick profit through fees or mortgage payments they collect from you, but do not pass on to the lender. Sometimes, they assume ownership of your property by deceiving you, the homeowner. Then, when it’s too late to save your home, they take the property or siphon off the equity. You’ve lost your home to foreclosure despite your best intentions.

Whatever the real story is, the house is in pretty bad shape.

If you're facing foreclosure, be sure to acquaint yourself with rescue scams and avoid them. If you've been taken in by such a scam, report it to the Federal Trade Commission and your state Attorney General. If you're looking for help with your mortgage, the FTC recommends first contacting your lender. If you need more assistance, they also recommend speaking with a credit counselor through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates the national 24/7 toll-free hotline (1.888.995.HOPE) with free, personalized assistance to help at-risk homeowners avoid foreclosure.

Take This Home And Shove It [NBC Bay Area via Buzzfeed]

"Crate Expectations" [Treehugger via Digg]

The company that auctioned the home wasn't available for comment, so we'll be curious to see whether they try to squirm out of the deal. Like, oh, maybe saying a bunch of Canadianized killer bees moved in.

"$1.75 eBay bid gets abandoned Michigan home" [MSNBC.com] (Thanks to Scott!)
(Photo: MSNBC)

Here's a quick summary of the article, which can be found here:

1. A much less leveraged economy — Cash will be the thing to have.

2. More modest rewards — Less risk-taking means slower growth, slower appreciation of property value, etc.

3. A feast for bottom fishers — If you've got patience and cash, there will be a feast for you amongst the wreckage.

4. Fewer financial firms — Big banks are swallowing the smaller ones.

5. More government oversight of financial markets. — They're gonna be watching.

6. But a revival of private financial firms — Kiplinger's doesn't think that investment banks are gone for good.

7. Simpler forms of securitizing debt — Nor do they think that the secondary mortgage market is gone for good. They say it will be back, but it won't be as 'exotic'

8. Greater scrutiny of executive compensation — Shareholders are annoyed. Very annoyed.

9. Higher taxes and/or a bigger federal deficit — Someone has to pay to run the bilge pump.

10. Higher long-term interest rates — You saw that one coming, didn't you?

Hey, it turns out that the new post-apocalyptic economy is pretty much just the old traditional economy — but with a debt hangover.

10 Things That Will Change [Kiplinger's]
(Photo: Joy of the Mundane )

Republican officials said Treasury Secretary Henry M. Paulson Jr. had agreed to demands from lawmakers in both parties to limit the pay of executives whose companies benefit from the bailout. The enormous pay packages of some Wall Street executives, coupled with the realization among nonwealthy Americans that the crisis could affect their financial foundations, have created an incendiary issue on Capitol Hill.

That's a good term! It's inclusive and condescending at the same time. "Nonwealthy Americans." I'm a "Nonwealthy American," how about you?

Paulson Said to Give Way on C.E.O. Pay; Bush to Speak [NYT]
(Photo: spinadelic )

The story begins several years ago, when Vijay and Supriti Soni were found guilty of forgery, falsifying real estate documents, identity theft and grand theft. According to court documents, the Sonis "obtained confidential information from various people – one of whom worked for Vijay and the rest who were clients for properties or mortgages – and then used it to acquire furniture, loan proceeds and commissions, real estate deeds and commissions, a Mercedes Benz automobile and cash for themselves."

So when the real estate bubble began to collapse, the Sonis saw an opportunity, and WaMu didn't do a criminal background check.

From the OC Register:

In July 2007, Vijay and Supriti Soni of Corona del Mar paid $440,000 for a home at 2129 W. Civic Center Drive in Santa Ana.

Five weeks later, they resold the house to Javier Hernandez – the family gardener and handyman – for $660,000. That's a 50 percent gain in 38 days – at a time when real estate prices in Santa Ana were plunging.

But the lender that financed both mortgages – Washington Mutual Bank – took a bath. In March of this year Hernandez's loan went into default and in July the bank foreclosed. On the trustee's deed, the bank listed the home's value at $377,137 – $220,000 less than the outstanding loan.

Records show that Washington Mutual, America's largest savings and loan and one of its most precariously perched lending institutions, financed at least 43 mortgages worth $24.5 million on properties bought and sold by members of the Soni family since early 2007.

So why didn't WaMu's new, stricter lending policies exclude the Sonis?

Experts told the OC Register that WaMu:

* Allowed financing of property flips that occur less than 90 days after purchase. The Federal Housing Administration imposed a ban on financing 90-day flips in 2006. The FHA also requires a second appraisal for homes sold at a 100 percent gain less than 180 days after purchase.
* Relied heavily on imperfect fraud detection software. Computers are good at flagging statistical aberrations – such as unrealistic income statements – but can be deceived by knowledgeable and determined insiders.
* Did not check criminal backgrounds. The Sonis had been convicted in 2003 of numerous felonies for a real estate fraud scheme. WaMu checks criminal backgrounds of loan originators, such as outside mortgage brokers, but not borrowers.

Last month, District Attorney investigators raided the family's homes and business offices. Now, prosecutors are investigating the Sonis and other members of their family for criminal behavior.

"Unfortunately, we are back looking at these characters again," said Doug Brannan, the deputy Orange County District attorney who prosecuted the Sonis in 2003.

The OC Register says that the Soni's effectively created their own market in Santa Ana, selling so many homes to each other for inflated prices that the sales were "later used by appraisers to give credibility to high asking prices for other properties in the area."

Here's an example:

Lohia bought the bank-owned house at 827 S. Flower for $249,500 on Jan. 4. She sold it 20 days later for $575,000 to her daughter, Suniti Shah, who financed the purchase with a $488,750 Washington Mutual mortgage.

That was a 121 percent increase in less than three weeks.

"Selling to each other, that's something an appraiser should definitely discover," said Mike Sanders, a Laguna Beach real estate appraiser and expert witness in property value litigation cases. "If the appraiser finds all the same people's names on transactions, then that's something suspicious."

WaMu loaned millions to O.C. home flippers with fraud history [OC Register]
(Photo: JOHN GITTELSOHN, THE ORANGE COUNTY REGISTER)

Hello Rick,
I just left you a message on your phone but will also confirm in writing.

There was a misunderstanding on our part when one of the staff looked at the monies disbursed and saw $125 had been paid out, she assumed it was to Jim Breer which in fact it was for the inspection instead. As this money was to have been paid from the seller's escrow, we will attempt to have it paid from there, if not, we will pay it ourselves. I do apologize for the time it has taken to get this resolved and assure you that our staff were well intended and generally get high marks from our members for the work they do.

I am available should you need to chat further and thank you for your
business!

Cheryl

Go back to Jim's letter in the original post and use it as a guideline in the future. It's polite, to the point, focuses on facts, explicitly states the desired outcome. Best of all, it worked. He himself used the complaint letter template in this post as an outline, it, too, should be inspiration for your next letter of complaint.

PREVIOUSLY: Man Feels Opportunities Credit Union Screwed Him Over For $125

(Photo: Getty)

The $50 & Up Underground House Book [Official Site]
$50 and Up Underground House Book [KK.org]

Tara Flannery, a 25-year-old college student in Seattle, plans to move within the next few months from the Craftsman-style two-story house she shares with roommates into a Tumbleweed house. The decision was largely financial.

“I wanted to buy my own place by 30, and the way the housing market is going that’s not going to happen,” she said, referring to the tightening credit market and the fact that home prices remain high in Seattle, despite the mortgage crisis.

In a way, Ms. Flannery’s tiny house, which will be about 100 square feet with a sleeping loft and will cost roughly $40,000, is a modern twist on the starter homes of the 1950s suburbs; it offers her a way into home ownership, of a sort, without the debilitating costs. “I can spend my money traveling instead,” she said.

Of course, if you live somewhere like New York City or Tokyo then you know this "movement" was already well established decades before, only with apartments, and it does nothing for your finances. We can see it working out as a more cost-efficient, back-to-basics approach elsewhere, though.

Or if you're really serious about saving money, you can always build a dirt house underground.

"The Next Little Thing? " [New York Times]

RELATED
www.smallhousestyle.com
www.tumbleweedhouses.com
(Photo: Adulau)

This will come as a serious blow to a number of our commenters, but we have a bad story about a credit union. Gasp, shock, horror, it's true. Opportunities Credit Union of Vermont, where reader Rick has his mortgage, told Rick that they wouldn't be paying for his home inspection because they never got the bill. However, Rick's inspector's online billing system shows when people look at the bills he sends. It shows that Opportunities Credit Union accessed the bill. Whoopsies. Here's Rick's letter to the Credit Union president, asking them to pay the $125 for the home inspection:

Caryl Stewart
President
Opportunities Credit Union
92 North Avenue
Burlington, VT05401

Dear Ms. Stewart,

I am writing to make you aware of an incident regarding my mortgage with your organization [address redacted]. Let me first say that this is my first mortgage, and after falling in love with our new property, it seemed very unlikely that we would be able to get a mortgage at all - the mobile home in question had been rejected by several traditional mortgage agencies, and Opportunities Credit Union was there for us when we needed you. We're very grateful for this, yet feel that we received poor service recently regarding a mandated home inspection.

Prior to applying for our mortgage, we had an excellent local inspector, Mr. Jim Breer of Better Home Inspections in Barre, conduct an inspection of the home. Based on this inspection and an appraisal, Erika Glidden sent a list of repairs to complete. After the repairs, the appraiser and inspector would return to verify the repairs. I'm sure this is all common practice, but as this is our first home, we asked Erika to explain it all in detail. One of the details discussed was payment for the post-repair appraisal and inspection. Erika was clear with us that these bills would be submitted to Opportunities, and that the credit union would pay them. I verified this again in mid-June, prior to scheduling the follow-up inspection with Mr. Breer. When I contacted Mr. Breer, I informed him that he should get a list of required repairs directly from Ms. Glidden, and that he should verify with her that Opportunities would be paying his fee. We were very clear about this, and he had no trouble getting the list for his inspection from OPPSVT.

On June 26, 2008, Jim Breer complete his inspection, and on June 27th, he submitted his report electronically to myself and to Natalie Aiuto at Opportunities, as instructed by Erika Glidden. The invoice for his services was attached to the report (as with the appraisal, which was paid without issue).

Mr. Breer's electronic report system assigns a specific username and password to each recipient, and allows him to track access to his reports. He reports that Ms. Aiuto viewed the report on July 1st. On July 3rd, Ms. Glidden contacted me via email to report that she "still had not received" the inspection report, and that Mr. Breer "never sent... a copy..." At this point (also on 7/3/08), I provided Ms. Glidden with my user name and password to access the report - both copies included invoices. After finishing two small repairs, on 7/28/08, Ms. Glidden emailed to let me know that everything was "all set."

Nearly a month later, on 8/19/08, Ms. Glidden forwarded me a copy of an email from Jim Breer, complaining that he had not yet been paid his $125 fee, and threatening a lien on the property. Included in the forwarded email was the following:

From: Natalie Aiuto
Sent: Tuesday, August 19, 2008 8:43 AM
To: 'Erika Glidden'
Subject: FW: Past due balance

Erika, on 8/5 I sent you an e-mail that you replied to on 8/11, asking if the home inspector's bill for $125 for Young was paid, and you replied that the file was "all set."

Please see Jim Breer's e-mail to Rick Young, cc'ing me...

Ms. Glidden explained to me that "escrow had been closed out," and that the bill was now my responsibility. In this same 8/19/08 email, she explained that she "never received a bill," and therefore bore no responsibility. The bill was attached to the report, which she had viewed.

When I was able to get the report tracking data from Mr. Breer, and provide it to Ms. Glidden, she protested that, "the only part of the report that was looked at was parts that pertained to repairs on the home." There was no such confusion with the appraiser's report, which I have a copy of and which is laid out very similarly - and even so, failure to notice a bill does not mean that it needn't be paid. Further, in the body of the 8/19 email, it is made clear in the email between Ms. Aiuto and Ms. Glidden that Opportunities was aware of the fee, and acknowledged responsibility for payment prior to the release of escrow funds.

Ms. Stewart, I recognize that $125 isn't a lot of money, but your organization made a commitment to me, and to Mr. Breer that you would compensate him for his services. The consequences of Ms. Glidden's failure to follow through and the fact that she provided false information to Ms. Aiuto shouldn't fall on your customer. To resolve this issue, I would appreciate it if Opportunities would pay Mr. Breer the $125 that he is owed. The ball was dropped here, and responsibility lies with OPPSVT. If needed, I will gladly provide copies of all emails and records that I have access to.

I look forward to your reply and a resolution to my problem, and will wait one week before seeking help from a consumer protection agency or the Better Business Bureau. Please contact me vie this email address, or at xxx-xxx-xxxx [redacted]

Sincerely,

Rick Y.
[address redacted]

Maybe they accessed it and just didn't look at the right parts, but how is that Rick's fault? The crux isn't Ms. Glidden's or Aiuto's reading and comprehension skills, it's whether they got the bill. By their own admission, they did....so what's the problem?

(Photo: Getty)

From ABCNews:

Eble owes $334,000 on his first house, which is now worth only $219,000 and is still dropping in value. He has an adjustable rate mortgage that has doubled to more than $4,000 a month, more than Eble can afford to pay.

So before the bank forecloses on his first house he is taking advantage of falling real estate prices to buy a new home for $285,000, with a fixed rate mortgage he can afford. Once inside the new home, he can either sell the first property for a huge loss to the bank or walk away completely and let it slip into foreclosure.

This exit strategy only helps homeowners who can afford the down payment on the second home as well as carry both mortgages until they are in their new home.

Like Jim Eble, homeowner Kim Hinske just bought a new home — for $280,000 — as a way to get out of an expensive mortgage.

"Yes, it's a scary thing, but I know that my family's taken care of 'cause we have another house, a bigger house and a mortgage that's less," Hinske said.

ABCNews says that the practice is prompting lenders to improse more strict guidelines for approving a second mortgage. A spokesperson from RealtyTrac, the firm that compiles foreclosure statistics, says that the trend is caused by desperation on the part of both borrowers and lenders.

"Desperate people do desperate things and again, we're at a point now where the relationships between the borrowers and lenders really seem to have devolved into a survival of the fittest mode," said Rich Sharga, a spokesman for RealtyTrac, an online marketplace for homes in foreclosure.

In Foreclosure? Buy a Second Home [ABCNews]
(Photo: stirwise )

"The properties smell," said Eve Alexander, an agent in Orlando. "You find maggots. The swimming pools are green. The lawns dry up. They're eyesores. Neighbors yell at us to water the lawn."

From the P-I:

They allege in the complaint that the lender misrepresented the terms of ARMs (adjustable-rate mortgages), marketed risky complex loans by emphasizing low teaser rates while misrepresenting later steep monthly payments and routinely encouraged borrowers to refinance only months after an affiliated broker sold them a loan.

The plaintiffs in this case include June Taylor, a Renton resident, who refinanced a home loan with Countrywide in 2006. She didn't receive a good faith estimate or a truth-in-lending statement before she closed on the loan — both required by law, according to the complaint. In addition, her truth-in-lending statement listed her monthly payments, but failed to note that it represented only the minimum payment that Countrywide was willing to accept rather than the actual amount she owed. Thus, she ended up with a loan that actually grew over time, the suit alleges.

Oh June, who doesn't want a mortgage that grows over time? You're just not looking at the bright side of things. Like... um... never mind. Nobody wants a growing mortgage. Good luck with your lawsuit.

Homeowners sue Countrywide [P-I]
(Photo: So Cal Metro )

From CNNMoney:

After flirting with aggressive promotions earlier in the housing downturn, both retailers have backed away. The moves indicate a recognition by the retailers that it will be several quarters before demand picks up - with or without big discounts, according to industry experts.

And while the approach might cost the retailers some customers in the near term, it's the right one longer term, said Sanford Bernstein analyst Colin McGranahan.

Even though Lowe's and Home Depot this week expressed hope that housing sales may bottom soon, few industry watchers expect homeowners in the next year or two to resume the kind of major kitchen and bath renovations that fueled home- improvement sales earlier this decade.

$50 and $99 Carpet installation deals are a good example of the type of promotion that the big two will no longer be offering:

The Atlanta company, which a year earlier provided whole-house carpet installation for $99, is now charging $199. It has also pulled back on some of its credit promotions - offering a standard no payment, no interest promotion on purchases of at least $299 on its proprietary credit card for a 6-month term instead of the 12-month offer it has occasionally made.

Home Depot's "judicious" use of promotions and improved forecasting of sales, margins and inventory helped it expand gross margin despite weak demand and rapidly escalating costs, Lehman Brothers analyst Michael Lasser said.

Lowe's, meanwhile, recently raised the price on its whole-house carpet installation deal by $50 to $249 after the promotion hurt gross margins in the first and second quarters. President and Chief Operating Officer Larry Stone told investors and analysts that the No. 2 home-improvement retailer is focusing on "easy-to-understand promotions with a fewer, bigger, better approach."

Home Depot, Lowe's Pull Back on Promotions To Guard Margins [CNNMoney]
(Photo: meghannmarco )

No longer must potential home buyers and sellers actually speak to real estate professionals to meet them. Instead, consumers are accessing agents' ever-more-common blogs, social network pages or viral video campaigns — all of the burgeoning options that have been called Web 2.0 — to tap their expertise and get a sense of their personalities. Some meet agents who quickly feel like buddies; others go with discount brokers and don't have any direct contact with their agent until they're ready to put a bid on a house.

"In this type of environment the cream rises to the top," said Jonathan Washburn, chief executive of ActiveRain, a popular real estate blogging site that boasts membership of more than 100,000 real estate professionals. Traditional advertising provides limited information, he said, but online, agents "get a chance to demonstrate their actual expertise by writing about things that are relevant to the consumer."

Judging a realtor online takes the same amount of research as finding one offline. Don't take assertions at face value, and give greater weight to content the realtor doesn't necessarily control.

For instance, when she was in the market for a home two years ago, Fernandez found a potential agent through some online social networks, and then searched through her LinkedIn account for mutual contacts. She found two of the agent's former clients and contacted them. They gave him rave reviews, and so she went ahead and worked with him.

If you're sufficiently web savvy to judge someone's character by their internet presence, you might want to jettison the broker altogether and find your house through the multiple listing service with Redfin.

Making Connections [The Washington Post]

"I don't know the man, but I grew up watching him on TV," Trump told The Times. "When I was at the Wharton School of Business," Trump said, "I'd watch him every night. How could this happen?"

McMahon originally bought the home in 1990 for $2.6 million, and owed $4.8 million to Countrywide at the time that he defaulted. Earlier articles claimed that he was unable to sell the house because it was too close to property owned by Britney Spears and that the constant helicopters and paparazzi were scaring off buyers.

Donald Trump to buy Ed McMahon's house [LA Times]
(AP Photo/Damian Dovarganes)

Even at the low, low price of a double cheeseburger at McDonald's, it took 19 days to find a buyer for a gutted house on Detroit's east side, says the Detroit News. The house in question used to be the nicest house around. After foreclosure, however, vandals stripped the property of everything valuable from the wiring to the kitchen sink.

The home, at 8111 Traverse Street, a few blocks from Detroit City Airport, was the nicest house on the block when it sold for $65,000 in November 2006, said neighbor Carl Upshaw. But the home was foreclosed last summer, and it wasn't long until "the vultures closed in," Upshaw said. "The siding was the first to go. Then they took the fence. Then they broke in and took everything else."
...
"It about doesn't make sense to put the family out," Upshaw said. "Once people are gone, you're gonna lose the house in this neighborhood."

Empty houses are becoming more and more of a problem in Detroit and other cities hard hit by the foreclosure crisis. Banks are so desperate to rid themselves of these properties that they're willing to pay $10,000 to sell a house for $1.

So desperate was the bank owner of 8111 Traverse Street to unload the property that it agreed to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer's closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000.

"It doesn't make sense in some neighborhoods to keep paying costs and costs," Colpaert said. "It can make more financial sense to give it away."

While a $1 house is certainly unusual, even for Detroit, houses can be had for as little as a few hundred dollars these days.

"My 14-year-old son could buy a block of Detroit property," said Ann Laciura, senior servicing specialist for the Bearing Group.

Foreclosure Fallout: Houses Go For $1 [Detroit News]

...expenses related to foreclosures and other credit losses increased to $5.3 billion from $3.2 billion in the previous quarter. And the company signaled that those losses would probably accelerate.

The loss “is a reflection of the extraordinary pressures at work in the housing and mortgage markets,” Fannie Mae’s chief financial officer, Stephen M. Swad, said in a statement. “The credit picture remains very difficult.”

“We estimate that average home prices declined by 6 percent on a national basis during the second quarter of 2008, which translates to an 8 percent total national decline since the beginning of the downturn in the second quarter of 2006."

Two days ago Freddie Mac, the second largest lender, told investors that it had experienced a loss that was 3 times what they were expecting.

Fannie Mae says they will stop offering Alt-A mortgages and cut operating costs by 10%.

A $2.3 Billion Loss for Fannie Mae [NYT]

Stan Humphries, Zillow’s vice president of data and analytics, said in a statement that the gap between what consumers believe their homes are worth and actual values is due to “a combination of inattention and a fair bit of denial that causes people to believe their home is insulated from the woes of the market that affect others, but not them.”

“Although many homeowners may believe the worst is over, we think this level of optimism is out of sync with actual market performance,” Dr. Humphries said.

The survey also found that more than 90 percent of homeowners report that foreclosures have occurred in their local market already.

Are you in denial about the value of your home?

Zillow Finds Homeowners Confident in Own Home Value [Wall Street Journal Development Blog]
(Photo: Joy of the Mundane )

The Indiana Association of Mortgage Brokers worked with Rokita's office and lawmakers in drafting the new law, said the group's president, Mike Monaco of Merrillville.

"Make no mistake about it, we had one of the easiest entrance barriers in the country," Monaco said. He said many of the brokers who have lost their licenses likely already had left the business because of the housing industry downturn.

The low standards likely were among the factors leading to Indiana consistently having one of the 10 highest foreclosure rates in the nation, Monaco said.

When you add in the 143 brokerages who voluntarily gave up their licenses, the total number of mortgage brokerages in Indiana has shrunk by half since July 1st.

If you're interested in seeing a list of all the brokerages whose licenses have been revoked, you can click here (PDF).

40 percent of Ind. mortgage brokers lose licenses [BusinessWeek]
(Photo: stirwise )

The faxed scam says, "We are happy to info you that you have emerged a winner under the F&F EQUITY DRAW, which is part of a promotional draws organized by all crediting lending partners to enable home owners who owned a home all over the United States of America have more money, and at the same time buy more homes in the area where they live. The funds were drawn from part of the total Fifty Billion US Dollars ($50 Billion) release to the financial institutions and creditros by the Government and other donor nations who have so much interest and investments in the United States of America."

Here's the BBB's report on investigating the scam:

After faxing my official “Equity Draw” information sheet to a number in Idaho, I called the 778 number and had the pleasure of speaking to “Jorge Marcelo”, at Fannie n Freddie Prize Headquarters. He said he had my fax right there in front of him, which is interesting since I never told him who I was nor did he ask. But he did tell me that to collect my big prize I was required to wire a “processing fee” of $850 to the Vegas address in my documents via Western Union, call him with the WU control number and then I could collect my riches.

Obviously I’m excited, so I invited the FBI to share in my excitement. I’m not sure if there’s anything here worth law enforcement pursuit, but that’ll be up to them. My guess is Jorge is probably not in BC, and that the WU office in Vegas will forward my $850 to another location, and it may be bounced several times.

Fraudsters have a core set of scams that they just keep putting new hats on old scams to fit the zeitgeist. Most of us wouldn't fall for this iteration, rife with spelling and grammatical errors. But a few, like the desperate, elderly, ignorant, non-native-English-speaking, or some combination thereof, might. The scammers, will, however, try another variant on the lottery scam. For them, it's all a numbers game, and their auto-dialers just keep ringing up one more.

(Photo: ptaff)

What does this mean for you? Bank seizures, the final "worst case scenario" of the foreclosure process, depress the values of surrounding properties. One analyst quoted by Bloomberg estimates that 25 million homeowners have properties that are in danger of being worth less than they owe on them.

Bank seizures in the first half of the year increased by 154 percent to 370,179 from the same period in 2007, RealtyTrac said. Last year's second-quarter data on bank repossessions was not available, according to RealtyTrac.

Forty-eight of 50 states and 95 of the 100 largest U.S. metropolitan areas had year-over-year increases in foreclosure filings in the second quarter, RealtyTrac said.

U.S. Foreclosures Double as House Prices Decline [Bloomberg]
(Photo: Getty)

CNN says:

Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 40% of their gross monthly income on all household debt to be eligible for the program.

They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.

Before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it's to pay for necessary upkeep on the home.

To get a new home equity loan, borrowers will need approval from the FHA, and total debt cannot exceed 95% of the home's appraised value at the time.

Once the legislation passes, Rep. Barney Frank, D-Mass., one of the authors of the bill, says that help could come "within days of Bush signing the bill," because lenders are familiar with the details.

How housing rescue bill can help you [CNNMoney]
Homeowners to get aggressive bailout [Star-Tribune]
(Photo: Getty)

100 Things to Do During a Money Free Weekend [The Simple Dollar] "One hundred fun ways to spend a money free weekend."

8 Home Improvements That Pay Off [Smart Money] "The home improvement projects that offer the biggest payoff."

10 most and least expensive cars to insure [Bankrate] "Stay away from small, fast cars."

— FREE MONEY FINANCE

(Photo: me and the sysop)

"These bottom-line results are disappointing and unacceptable," Chairman Lanty Smith said in a statement. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility."

Hang in there, Lanty.

Wachovia loses $8.9B, cuts 6,350 workers, dividend [BusinessWeek]

To get a mortgage now, "you'd better walk on water," says San Diego mortgage broker Victoria Johnson. And she's only half kidding. Lenders acknowledge that their credit tightening is really a return to normal lending standards, last seen in about 2000.

Patricia McClung, of Freddie Mac, says that getting back to basics means a renewed emphasis on the "three C's of credit": credit history, capacity (the depth and continuity of your resources) and collateral (the value of your property and your down payment or equity). "If you're down on one of those, you don't want to be down on the other two," says McClung.

Basically, what you need in order to get the best deal is: a high credit score, a down payment or equity, documentation, and financial reserves, says Kiplinger's. You can still get a mortgage without all of those things, but it will be more difficult and you'll pay more in interest. The article answers several questions you might be having, such as: "How big should my down payment be?", "Can I still get nontraditional financing?", and "Is this a good time to refinance?"

What It Takes to Get a Mortgage Now [Kiplinger]
(Photo: qshio )

"If you go online and you only have one choice of a subsidiary of one of these companies, it's not one-stop shopping," [Ev Liebman of New Jersey Citizen Action] said. "It's simply misleading. Consumers need to be aware that there are other companies providing similar services and possibly at lower prices."

Movearoo's sponsors disagree, saying it's just useful advertising for their services and not misleading.

"It's not unlike what other industries do when they provide services," said Frank Kellam, business development manager for Verizon. "You won't find the traditional phone companies on a similar site (cablemover.com) set up by the cable companies. It's not unique and it's not out of line."

They're right. But that's also why you should look for more comprehensive online help when you move.

Interestingly, you don't have to look very far: the company responsible for Movearoo's backend has a similar site called WhiteFence.com which offers a much broader list of companies to compare. (Although we see no mention of companies like Vonage on their site.)

Do you know of other websites that offer help with moving, and aren't just fronts for a few key players? Add them to the comments below.

"Aid or ad? New telephone hookup website blurs the line, critics say" [New Jersey Star-Ledger]
(Photo: Getty)

Do Shingle Warranties Matter? [Roofery]

(Photo: Getty)

Attention Customer Service:

Subject: [Your loan number]
[Names on loan documents]
[Property and/or mailing address]

This is a "qualified written request" under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I am writing because:

* Describe the issue or the question you have and/or what action you believe the lender should take.

* Attach copies of any related written materials.

* Describe any conversations with customer service regarding the issue and to whom you spoke.

* Describe any previous steps you have taken or attempts to resolve the issue.

* List a day time telephone number in case a customer service representative wishes to contact you.

I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.

Sincerely,

[Your name]

Send it to the customer service address, do not include with your payment. Continue making mortgage and escrow payments until the situation is fixed. LoanSafe also has an example of a real letter written by one of their readers.

Sample Written Complaint To Letter [Hud.gov via NYT]

12 usc section 2605 servicing of mortgage loans and administration of escrow accounts

(e) Duty of loan servicer to respond to borrower inquiries

(1) Notice of receipt of inquiry

(A) In general

If any servicer of a federally related mortgage loan receives a qualified written request from the borrower (or an agent of the borrower) for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 20 days (excluding legal public holidays, Saturdays, and Sundays) unless the action requested is taken within such period.

(B) Qualified written request

For purposes of this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that—
(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and
(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

(2) Action with respect to inquiry

Not later than 60 days (excluding legal public holidays, Saturdays, and Sundays) after the receipt from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any action with respect to the inquiry of the borrower, the servicer shall—
(A) make appropriate corrections in the account of the borrower, including the crediting of any late charges or penalties, and transmit to the borrower a written notification of such correction (which shall include the name and telephone number of a representative of the servicer who can provide assistance to the borrower);
(B) after conducting an investigation, provide the borrower with a written explanation or clarification that includes— (i) to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower
is correct as determined by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower; or
(C) after conducting an investigation, provide the borrower with a written explanation or clarification that includes— (i) information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower.

(3) Protection of credit rating

During the 60-day period beginning on the date of the servicer's receipt from any borrower of a qualified written request relating to a dispute regarding the borrower's payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency (as such term is defined under section 1681a of title 15).

(f) Damages and costs

Whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure in the following amounts:

(1) Individuals

In the case of any action by an individual, an amount equal to the sum of—
(A) any actual damages to the borrower as a result of the failure; and
(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000.

(2) Class actions

In the case of a class action, an amount equal to the sum of—
(A) any actual damages to each of the borrowers in the class as a result of the failure; and
(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not greater than $1,000 for each member of the class, except that the total amount of damages under this subparagraph in any class action may not exceed the lesser of—
(i) $500,000; or
(ii) 1 percent of the net worth of the servicer.

(3) Costs

In addition to the amounts under paragraph (1) or (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees incurred in connection with such action as the court may determine to be reasonable under the circumstances.

(4) Nonliability

A transferor or transferee servicer shall not be liable under this subsection for any failure to comply with any requirement under this section if, within 60 days after discovering an error (whether pursuant to a final written examination report or the servicer's own procedures) and before the commencement of an action under this subsection and the receipt of written notice of the error from the borrower, the servicer notifies the person concerned of the error and makes whatever adjustments are necessary in the appropriate account to ensure that the person will not be required to pay an amount in excess of any amount that the person otherwise would have paid.

(g) Administration of escrow accounts

If the terms of any federally related mortgage loan require the borrower to make payments to the servicer of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer shall make payments from the escrow account for such taxes, insurance premiums, and other charges in a timely manner as such payments become due.

(h) Preemption of conflicting State laws

Notwithstanding any provision of any law or regulation of any State, a person who makes a federally related mortgage loan or a servicer shall be considered to have complied with the provisions of any such State law or regulation requiring notice to a borrower at the time of application for a loan or transfer of the servicing of a loan if such person or servicer complies with the requirements under this section regarding timing, content, and procedures for notification of the borrower.

(Photo: Getty)