Mortgage woes? Tell it to them!

Well, now you have a place to complain, gripe, and deal with all your mortgage issues and woes.  Developed by the Obama administration, the Consumer Financial Protection Bureau is now open for business.  And they want to hear all about your mortgage problems.  This government agency has been mostly dealing with credit card complaints (talk to them about that, too) but now want to hear about mortgages.  

When you get to their page, you can easily submit your complaint, watch a YouTube video from their director, and connect with them via Facebook or Twitter.  According to this Chicago Tribune article, when they initially opened up to hear credit card complaints, they received over 5,000 and were able to resolve over 3,100!  They’re hoping to handle complaints through the end of this year.  

As I mentioned, the easiest way to contact them is via their Web site.  However, they’re also reachable via postal mail at P.O. Box 4503, Iowa City, IA 52244, fax 855-237-2392, or telephone 855-411-2372.  Please be aware that it is not a toll-free number.  But they did mention that they’re hoping for virtually no wait time to speak to a representative.

You can also create an account through the site and visit often to check the status.  You can also view correspondence between CFPB officials and members of Congress as well as recent press releases regarding the bureau.  

I’d love to hear if anyone has submitted a complaint through you and whether they were successful in resolving it or not.  I hope that this is another avenue the government has established to take care of those underwater and remove some of the excess inventory we’re seeing on the market.  Please post your story if you have one in the comments!

Possible water bill increases for Evanston residents

Evanston, IL residents may be faced with a dilemma in the near future, and no matter what, it could equal an increase in water bills, sewer bills, and even property taxes.

Because residents have been great at conserving water over the past few years, the city is left without much of the revenue it normally generates from water bills.  Evanston had a City Council meeting this past week to discuss the options to generate more money for the city.  All of the options included a property tax hike and either an increase in water or sewer bills.  Based on the last fiscal year, water usage was down 19% from what was used back in 2005.  And the 2005 year is what they based the current budget on.

So what are the possible outcomes to this?  How would residents’ bills increase?  The first scenario would only increase property taxes by less than 1% each year over a three-year period.  This wouldn’t begin until January 1 of 2011 and it would also include a hike in the sewer bill of 6, 7, and 8%.  So you’d be paying an increase of about $160 over five years in your tax bill and around $300 in your sewer bill.

The second possibility is to leave the sewer rate as it is now, with no increase in the immediate future.  However, they’d bump the property taxes by less than 1% over four years instead of three.  If costs are added to property taxes, they can all be deducted.  In terms of water, the most expensive option would cost a homeowner would be around $192 in property taxes and $158 for water.

Evanston currently charges Skokie, IL and other cities like Buffalo Grove and Palatine in the Northwest Water Commission for water.  They’re looking to expand this service to be able to make more money off of other cities.   Thanks to the Evanston Review for this great information. 

You can always visit me on my Web site for any real estate related needs.  Have a great week!

Energy conscious homeowners get rewarded

You may all remember the famous Cash for Clunkers program offered by the government last year.  Well, Obama wants to do for homeowners what he did for car owners and that is offer a similar program called Cash for Caulkers.  He’s proposing a bill where homeowners can earn tax credits and receive money back for purchasing energy-efficient appliances.  Up to $12,000 per home!

Congress is currently working on drafting a bill that would be twofold.  First, homeowners would receive reimbursement for energy-efficient equipment and insulation.  Second, the government would reward small businesses and companies.

Included would be appliances such as refrigerators, washing machines, dryers, and even air conditioning, heaters, windows, and insulation.  They’re currently looking at reimbursing homeowners 50% of the purchase price PLUS installation.  So without an income cap, you could spend up to $24,000 to get $12,000 back.  Congress is still working out the kinks as to how the money would get returned.  It’s possible that it would come in the form of a tax credit (there is a current tax credit for energy-efficient appliances already, but not this much) or they might set it up where you can fill out information for a rebate and receive a check.  The government is looking at a cost of about $10 billion to fund this.

They’re trying to model it similar to New York State’s energy efficiency program.  How that program works is homeowner’s contact a contractor who is licensed to perform an energy audit from the State’s Web site of a toll free number.  The contractor arrives to determine how much energy is wasted in that specific home.  It costs the homeowner several hundred dollars.  When the contractor generates a list of what could be replaced, the cost, and how much energy could be saved, the homeowner chooses what he wants done and negotiates a price.  The contractor gets paid directly, submits paperwork to the state, and the homeowner receives about 10% back in the form of a check.

So do you think it is another program that could invite fraud?  Will homeowners take advantage of it?  Is the government wasting $10 billion that could be spent elsewhere?  I’d love to hear your thoughts.  Please leave me a comment or visit me online.

More information on the program can be found here, here, and here.

Mortgage modification plan may help you save money

rescueJust introduced by the Obama administration, the Homeowner Affordability and Stability plan was created to prevent foreclosures and to help out homeowners with unaffordable mortgages.  Obama’s plan is asking lenders to help out homeowners who are facing a hard time paying their mortgages because of a hardship.  Hardship is defined loosely as: lost income, increased expenses, payment shock from an adjustable-rate mortgage, and “other indications of being at risk of default.”

Payments would be reduced to 31% of a household’s income before taxes.  After five years, payments would climb back up.  You would need to meet this requirements to be eligible:

1. Must be the homeowner’s primary residence and be occupied and habitable.

2. The balance on the first mortgage can’t be more than $729,750 for a single-family home.

3. Even if foreclosure proceedings have become, you can still qualify.

4. If the borrower qualifies then the creditor has to figure out how to get the payments to 31% of the income.  To see how this works:

…House payments include principal, interest, taxes, homeowners insurance, and homeowners or condo association fees.  Mortgage insurance premiums ARE NOT included.

…Late fees have to be waived and past due interest, taxes, and insurance are added back into the mortgage balance.

…The first step is for the creditor to drop the interest rate to as low as 2%.  If dropping the rate to 4%, for example, brings the mortgage to 31% of the income, then the rate doesn’t go any lower.

…If dropping the rate to the lowest threshold of 2% doesn’t work then the next step is to extend the loan out to 40 years at a maximum.  Again, if it works to bring the payments to 31% at 33 years, that’s what they’ll do.

…If neither of those work, the third step is what’s called “forbear principal.”  This means that the borrower owes the same amount as before but pays interest on only part of the mortgage balance.  For example, someone might owe $150,000 on their mortgage but pay 2% interest for 40 years on only $90,000.  The entire $150,000 must be paid back when the home is sold or refinanced.

Those lower interest rates offered are only good for five years.  After that, the creditor has the right to increase the rates by 1% per year until the rate is back to what it was when the modification was made.

More information can be found in this article.

For more questions on this new program or any other real estate questions, please visit me online.