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Home Value Highwire

August 15, 2010 - 9:29am

Darci Marchese, WTOP Radio

August 9 - Dramatic changes in local housing market since 2009

WASHINGTON - What a difference a year makes.

The summer housing market is certainly off to a strong start, at least when you compare it to last year. We check it out in this week's Home Value Highwire.

Fairfax County, Montgomery County and The District all saw more homes selling compared to a year ago.

In Fairfax, homes are selling faster and at higher prices than a year ago. Days on the market decreased by 45 percent, while prices went up 10 percent.

Prince George's County saw a 62 percent spike in the number of homes selling in June.

"It was good for the buyers, it was good for the housing stock, and we're certainly on an upward swing," says Joanne Darling with the Prince George's County Association of Realtors.

While the frequency of sales was a positive sign in Prince George's, the prices were not. The average price of homes dropped 17 percent, because many of the homes were foreclosures.

The picture is rosier in Montgomery County, where prices and the number of homes are holding steady. Last June, a home took an average of 94 days to sell in Montgomery County. This June, it took only half that long at 54 days.

* All statistics are courtesy of MLS Real Estate Listings.

August 2: Foreclosures: A Good Investment? Or A Money Pit?

WASHINGTON - A good investment or a money pit? Times can be tough for an investor who buys and sells foreclosures in today's market.

Buddy Cox has purchased at least three foreclosed homes on the courtroom steps.

"We take a pig pen and turn it into something nice," he says.

The latest 'pig pen' Cox purchased is a home in Laurel.

The retired landscape contractor says he dumped $80,000 into the home and has added "all new hardwood floors, all new carpet, all new stainless steel appliances."

But the home has been up for sale since February, when all the snow was on the ground.

He's lowered the price to $310,000 but knows that's still a tough price in today's market.

"If we were in the $200,000 brand, we'd sell it tomorrow morning. But once you get over $300,000, you're in a different ballpark," he says.

The first foreclosed home Cox purchased was three years ago and he sold it in three days.

"I guess I got spoiled," he admits.

The second foreclosure he purchased also sold pretty quickly and netted him a decent profit.

He's still waiting for his profit with his latest investment.

June 7 - More People Are Purposely Foreclosing On Homes

WASHINGTON - Why pay your mortgage when so many people aren't?

That line of thinking is leading to a new trend: mortgage walkaways.

Bank of America recently announced it's getting more aggressive with offering loan modifications in response to more borrowers simply walking away from their mortgages.

Bank of America's Jack Schakett says they're seeing more strategic defaulters than they've ever experience before.

A strategic defaulter is someone who can pay their loan but opts not to.

Dan Rochon of Keller Williams Realty in Virginia says it's becoming a common trend.

"We definitely have dealt with individuals that have taken a strategy of doing a strategic default," he says.

In one instance, Rochon had one owner who didn't pay his mortgage for more than two years while waiting for the foreclosure and eviction process to take place.

Since courts are so backed up, that process can take several months and even up to one year or more.

But Rochon says foreclosing on your property to save some money upfront is not a good idea.

"In the long term, they're still going to incur their foreclosure and have negative consequences that are associated with foreclosure," he says.

Rochon recommends an upside down homeowner to pursue a short sale over a foreclosure.

May 24 - Foreclosures Continue To Flood Local Market

WASHINGTON - Which local area has the highest number of foreclosures?

Virginia takes the cake with more than 7,000 new foreclosures in April.

Fairfax County had the greatest amount with 959. It's followed by Prince William County, Virginia Beach and Loudoun County.

More than 1,132 foreclosures were purchased in Virginia for the average price of $314,981.

In Maryland, there were 5,446 new filings for foreclosure in April. Prince George's County had the greatest number with 1,373. It's followed by Baltimore, Montgomery County and Anne Arundel County.

More than 640 foreclosures were purchased for an average price of $298,649.

The District had much smaller numbers. There were 256 new foreclosures in April with just seven homes sold. The average price of foreclosed homes in D.C. was a little bigger than Virginia and Maryland at $441,724.

May 17 - Buying a Foreclosed Home? Stay Smart With These Tips

WASHINGTON - Thinking about buying a foreclosed property? Keep your eyes wide open.

Dan Rochon of Keller Williams Reality specializes in distressed properties. He says vacant homes usually sit empty for months before real estate companies manage them and put them on the market.

With lower-end homes, Rochon says real estate companies are "seeing a lot more of the mold issues and damage from water coming in."

But don't assume that more expensive foreclosed homes will be free of problems.

"The highly vandalized properties - those are actually in the higher priced properties that we see that happen more often," Rochon says.

Foreclosures are also sold "as is" so anything that's broken, missing or damaged is the buyer's responsibility.

Potential buyers also need to remember the seller is a bank.

"They're dealing with an institution. They're not dealing with a typical seller, somebody that they can have communication with and connect on an emotional level," Rochon says.

Rochon says if you're flexible with the time line and handy with a hammer, a foreclosure may be a good fit.

While home prices are comparable, a foreclosure doesn't always offer the lowest price in a neighborhood, Rochon says.

May 3 - Homebuyer Tax Credits Are History - What Now?

WASHINGTON - Those homebuyer tax credits are now history.

The credits for $6,500 and $8,000 expired April 30.

So what will happen to the housing market now?

Some local real estate agents have expressed anxiety, thinking that home sales could come to a screeching halt.

But other agents and mortgage lenders seem to think the steam of spring will help keep the market fairly healthy.

"We know we're going to have some kind of a bump but it may not be very big," says John McClain, senior fellow at George Mason University.

McClain says the "bump" may result from homeowners who would have purchased a home in the summer but instead rushed to buy in time for the expiring tax credit.

But the improving economy may keep numbers strong.

"The economy is doing well... there's the possibility out there that interest rates are going to start to go up," McClain says.

Plus, home prices may have bottomed out locally, McClain says.

He thinks people will continue to see this as a really good time to buy.

April 26 - Are Short Sales Helping The Housing Market

WASHINGTON - It's been three weeks since a federal program was unveiled to encourage the approval of short sales. Is it making a difference?

The Home Affordable Foreclosure Alternative Program was introduced on April 5. It's designed to encourage lenders to approve sales of homes, even when the asking price is short of what is owed on a mortgage.

Traci and Dan Rochon with Keller Williams Realty have been dealing with short sales, long before they were popular or easy.

The Rochons became certified experts in short-sales when they saw what was going on in the struggling housing market.

Short sales still involve a complicated process, but thanks to the new program, "they are coming along faster and more streamlined," Traci says.

It's not uncommon for a short sale to take more than a year to be finalized. And even then, it can fall apart.

But just this month, Traci says she "got an approval that was under two months."

Dan is glad to see lenders more receptive to short sales. He says it's much better for an upside down homeowner to go the short sale route versus foreclosing on a property.

"The impact that a foreclosure has on a homeowner is just devastating," Dan says.

Traci says homeowners need to realize they may have to come up with cash at settlement.

Sellers typically have three options: The bank fully forgives the deficiency on what's owed on the home; The lender asks for a cash contribution, or they request a promissory note.

In one recent case, a homeowner was asked to give the lender $15,000 at settlement. However, since the lender was forgiving the $200,000 she owed on the home, it was a huge relief for the seller.

April 19 - New Partnership Aims to Reduce Local Foreclosures

Foreclosures have hit another record high.

In March, more than 367,000 people faced foreclosure across the nation.

A new partnership in the D.C. area hopes to chip away at the number of people losing their homes.

The Capital Area Foreclosure Network (CAFN) is a regional partnership led by the Metropolitan Washington Council of Governments and the Nonprofit Roundtable of Greater Washington.

CAFN Director Peggy Sand says it "can be the glue that brings together the grassroots, the local, the regional, state and federal players" to combat foreclosures.

The network, which is getting financial support from Fannie Mae and Freddie Mac, will give overwhelmed housing counselors better tools and funds to help families in trouble.

Will it really make a difference?

"I think that it really will help, but I also want to be realistic that we don't believe we are going to stop foreclosures in the region," Sands says.

"We know that even if a family is going through foreclosure, they will benefit from meeting with a housing counselor and having them figure out the best option among what may not be very good options."

April 12 - Interest Rates Begin to Climb

WASHINGTON - Interest rates are creeping up and it's having an impact on the local housing market. For several months, mortgage rates have been at historic lows -- below 5 percent.

In December, rates had dropped to a record low of 4.71 percent, helped by a Federal Reserve campaign to reduce borrowing costs for consumers.

Steve Cohen with First Place Bank is noticing a couple of trends now that rates are above 5 percent.

"Refinancing has slowed down tremendously," Cohen says.

He says 2009 was an enormous year for homeowners, taking advantage of re-financing their mortgage. Many even re-financed more than once in a short period of time.

Cohen says that phenomenon has come to a stop.

The $8,000 first-time homebuyer tax credit is also about to expire, and Cohen isn't seeing the rush that occurred when the tax credit was set to expire last fall.

"Since it has been extended, I haven't seen the same sense of urgency now that it's going to expire again April 30."

But Cohen says applications for new mortgages are "still steady this spring."

Interest rates on a 30-year fixed rate mortgage are currently about 5.25 percent.

WASHINGTON - Have you been told to avoid the headache of a short sale?

They may become more appealing for potential homebuyers in the future.

A short sale has become a tool for borrowers underwater on their mortgages who want to sell their homes for short of what they owe.

But it can be a very long and messy process.

However, a new government program starting April 5 will eliminate some of the hassles of a short sale.

The Home Affordable Foreclosure Alternatives (HAFA) program will provide financial incentives to lenders to conduct more short sales and create new guidelines for short sales.

Under the HAFA program, banks will have to order an appraisal of a property and determine what is an acceptable offer first.

Marketwatch.com real estate reporter Amy Hoak says in the past "that was kind of a guessing game, what the lender was going to accept."

The lender could take several months before turning down an offer.

A new deadline would also help eliminate the waiting. Under the new guidelines, a lender must accept a viable offer within 10 days.

Hoak says if the plan catches on, it could keep homes from going into foreclosure, which benefits neighborhoods and the real estate market in general.

Short sales typically sell for 91 percent of the listing prices, so they can be great deals for homebuyers, Hoak says.

But she warns potential buyers "have to be very patient because they do usually take longer than a traditional sale."

A short sale may not be ideal for someone trying to take advantage of the $8,000 first time homebuyer tax credit, which expires April 30.

It's difficult to predict if lenders will embrace short sales. At the completion of a sale, servicers may receive compensation of up to $1,000. Up to $3,000 of proceeds are available to distribute to subordinate lien holders, making it possible to compensate the lenders of second mortgages.

Borrowers may also receive up to $1,500 for relocation expenses.

March 22- Will forced mediation keep people in their homes?

WASHINGTON - Hundreds of thousands of desperate homeowners are hoping for loan modifications, but the help isn't getting to them fast enough.

To ease the problems, Gov. Martin O'Malley is continuing to push for legislation that would establish a foreclosure mediation process in Maryland.

The bill would require mortgage loan servicers to use the time period prior to filing a foreclosure action to work with homeowners to achieve loan modifications.

"It would force those big mortgage servicing companies and banks to the mediation table before they could throw a family out of their home," O'Malley tells WTOP.

But will it work? Michael Chelst of America Home Key thinks it would help keep more homeowners in their homes.

He says it shifts the burden from the homeowner to the lender. He says banks and servicers will be forced to hire more staff, to review each case.

Lenders would be forced to make an affidavit before they file for foreclosure, noting they've tried all other options first.

Nevada, Maine, Rhode Island and Delaware are trying similar programs.

Critics say loan modifications just prolong the pain, with homeowners defaulting on their loans at a later date.

March 8 - Why Aren't More Homes Selling?

WASHINGTON - It's supposed to be a home buyers market.

The $8,000 home buyer tax credit is still available. There's low interest rates and lower home prices.

So why aren't more homes selling?

In part, you can blame the rise of foreclosures.

Typically, first time home buyers are essential to keeping the rest of the market healthy.

"They buy people's homes and allow those existing owners to sell and then trade up," Walter Molony with the National Association of Realtors explains.

It's known as the trickle up effect.

"That hasn't been happening like we've seen in past recoveries because we've had so many foreclosures in the market," Molony says.

Molony explains that when you buy a foreclosed property, no other potential seller benefits.

He says another impact: strong home sales have only existed in the lowest price ranges.

The area is finally starting to see more expensive homes selling, but there's a long way to go, Molony says.

March 1 - Condo Sales Heat Up Market

WASHINGTON - It looks like a lot of your neighbors purchased condos in the new year.

Condo sales went up nearly 92 percent in Montgomery County from January 2009 to January 2010, data from the Greater Capital Area Association of Realtors show.

When you break it down further, 83 condos, priced at less than $150,000 were sold in January 2010. That compares to 23 sales in the same price range the year before.

In the same time period, 51 condos priced from $200,000 to $299,000 were sold. Compare that to 34 sales the year before.

The number of condos in the $300,000 range saw a 100 percent increase from January to January.

D.C. saw a similar spike in condo sales. Sales were up 64 percent when comparing January 2010 to January 2009. Like Montgomery County, the hottest selling condos were in the $200,000 to $600,000 range.

Some real estate agents say the $8,000 first-time home buyer tax credit is definitely one reason behind the boost in sales. But it's difficult to predict if this trend will continue beyond the credit's April 30 deadline.

Feb. 1 - Changes Coming to FHA Loans

WASHINGTON - Many homebuyers rely on Federal Housing Administration loans instead of traditional loans so they can purchase a home with less money down.

But there's a change coming to FHA loans that could make homes less affordable for would-be buyers.

The FHA is proposing to drop the amount of money a seller can contribute to a buyer's closing costs. Currently, a seller can contribute up to 6 percent. But under the new proposal, the maximum would be 3 percent.

"Unfortunately, this disproportionately affects lower-income first-time homebuyers," says Michael Chelst, vice president of America Home Key.

Here's why: If a buyer purchased a home for $100,000, he or she would have to put $3,500 down under current rules. But under the proposed change, the buyer would have to put down $6,500 -- nearly double the amount.

Chelst also believes the change would stall home sales, especially foreclosed, vacant homes that are clogging up the market.

"It's really going to be very difficult for those low priced houses to get re-sold," Chelst says.

The rule is currently in what's considered a "public comment period" but many expect the change to be approved and go into effect this summer, possibly in August.

Other changes going into effect by FHA:

The Upfront Mortgage Insurance that FHA requires on most of their loans will be increased from 1.75% to 2.25%. This amount is added to the final loan amount, so there will not be additional funds needed at closing from the borrower. This change will go into effect in the spring of 2010.
FHA is also requesting legislative authority to raise the annual monthly mortgage insurance rate. This could be very detrimental to borrowers who just meet the income cutoff guidelines now because an increase in the monthly M.I.P. could keep them from qualifying. It could be implemented sometime before the summer is over.
FHA is also setting new guidelines on credit scores. Borrowers with credit scores below 580 will be required to put at least 10% down. Chelst says this will not be a big deal, since most lenders refuse to accept credit scores below 620.

Jan. 18 - 2009 Home Sales End In Positive Territory

WASHINGTON - The final month of 2009 may give us a glimpse of what's ahead for our local housing market.

Home sales for 2009 ended in positive territory -- something that hasn't happened in a while, says John McClain of George Mason University.

"For the year, the metropolitan area was up about 5 percent in sales compared to 2008," McClain says.

Across the region, sales were down by 5 percent from 2008 to 2009. Prices from 2007 to 2008 were down by 22 percent.

McClain says home sales are increasing mainly because home prices plummeted over the past couple of years but are now starting to rebound.

In December 2009, home sales in D.C. increased by 22 percent compared to December 2008. Home sales were up 35 percent in Maryland in the same time period. But sales were slightly down in Northern Virginia.

Depending on the location, the situation can be quite different. For example. home prices are up in Montgomery County, but they are down 18 percent in Prince George's County, compared to the year before.

McClain says the high number of foreclosures is to blame in Prince George's County.

Jan. 11 - Prediction: Housing Market Will Heat Up In Spring

WASHINGTON - The cold may be putting a chill on area home sales, but many real estate experts are predicting a busy spring market.

Why? The $8,000 first-time home buyer tax credit is still available. It's been extended through April 30.

Ron Sitrin of Long and Foster thinks it will help the market pick up earlier than normal.

"My suspicions are that a lot of people are going to jump in early this year in the spring market to take advantage of that tax credit before it expires."

But what will happen once the tax credit expires is anyone's guess.

Analysts are predicting that by March- April time frame, interest rates may start to rise as some federal government policies expire.

Interest rates have remained low for many months, hovering below 5 percent.

Sitrin thinks both factors will entice people who may be on the fence to buy -- and soon.

Dec. 14 - Local housing market: Who's rebounding and who's stabilizing?

WASHINGTON - The local housing market is gaining steam.

But it feels like there are two housing markets in one, says John McClain, senior fellow at George Mason University.

According to new numbers being analyzed by McClain, existing home sales are up an average of 40 percent in the metropolitan region, when comparing sales from November with sales from November 2008.

Sales are up 98 percent in D.C.; 78 percent in Maryland and 16 percent in Northern Virginia.

McClain says lower prices are fueling big spikes in sales.

Home prices are in the positive territory for the first time since early 2007. McClain says overall in the region, home prices were up 3 percent in November, compared with November 2008.

But the price increase relies heavily on Northern Virginia, where prices spiked by 10 percent. Home prices have gone up for three consecutive months.

In the rest of the region, home prices are still down. In Maryland, home prices are down by 9 percent. In D.C., they're down by 7 percent.

However, people should put the Northern Virginia numbers in perspective. Last year, prices were down by 30 percent when compared with 2007 data.

"Northern Virginia went up the most and went down the most, but has come out the earliest," McClain says.

He says Maryland and D.C. should soon follow suit, rebounding in home prices as well as home sales.

Dec. 7 - County Offers Cash Incentives To Buy Foreclosed Homes

CHARLES COUNTY, Md. - Another county in our area is offering cash incentives in an effort to get existing foreclosures off of the housing market.

Charles County is joining Prince George's and Frederick counties by offering the Neighborhood Conservation Initiative (NCI) Down Payment Assistance Program.

Rita Wood, the housing authority chief in Charles County, says foreclosures "impact the whole neighborhood, and property values and so forth" and she's anxious to get the program started.

The county was awarded more than $1 million to encourage residents to purchase foreclosed homes by providing help with their down payments.

Residents who are at 50 percent of the county's median income can receive up to $39,999. Residents at 120 percent of the median income can receive up to $14,999.

Wood says residents who receive the maximum amount of assistance have to live in the home for 10 years, in order to avoid paying the money back. Residents who receive the lower amount have to stay in their homes for five years.

There are currently seven lenders participating in the program.

Applicants must be U.S. citizens, qualify for a 30-year fixed rate mortgage and complete eight hours of HUD approved housing counseling.

Anyone interested in the program can call (301) 934-0119.

Nov. 30 - Foreclosures Are Like Boxes of Chocolates

WASHINGTON - When a "For Sale" sign also reads "Foreclosure," you never know what you're going to find inside.

A Northern Virginia couple quickly found that out.

Julia and John Landry looked at dozens of foreclosures while shopping for a well-priced home.

Julia says she couldn't believe what they found at some of the homes.

"Floor boards that were ripped to shreds. We saw kitchens where the ovens had been bashed in, walls that were completely missing," she says. "It was like wild animals had been living in there."

John says it was obvious the homes were vandalized in many instances.

"Oh, they were so nasty. And the thing was, we had to be ready to go in and put $50,000 of our own money, just to make the home liveable."

Experts say if you consider buying a foreclosed home, you need to understand there's no wheeling and dealing. The buyer has to pay for all the inspections and improvements.

Another tip -- if the home has been sitting empty for months, get a thorough inspection and look specifically for mold.

Nov. 23 - Good Deals May Be Too Hard To Come By

WASHINGTON - We keep hearing that it's a home buyer's market, fueled by low interest rates and lower prices. But one local couple found out it's not easy to land a really good deal.

Julia and John Landry started looking for a home in April of this year, in the $300,000 range in Northern Virginia, in the Annandale, Falls Church and Fairfax areas.

Julia says they soon found out, "basically everything was foreclosures and short sales as far as what was in our budget."

So they went after foreclosed homes with a vengeance. They put in as many as 20 bids over the next seven months, losing every single one of them.

Then they decided to go for broke. On one home they fell in love with, Julia says the couple offered "$100,000 more than the list price, and we lost it to an investor."

That was a common theme.

She says their real estate agent followed up on all the bids they lost out on, and typically an investor won the bid, many times paying in cash.

After months of frustration, the couple decided to ditch the idea of purchasing a foreclosed home and started looking for a traditional sale.

Finally, they made a successful bid on a townhouse. They spent a little more than they hoped for, but the search is over. They close in just a few days.

Nov. 16 - The Health of the Local Housing Market

WASHINGTON - How healthy is our housing market? It depends where you look.

Ron Sitrin of Long and Foster says "it's all about location."

In Fairfax County for example, for every 10 homes on the market right now priced below $500,000, seven homes are under contract. That's a very strong number in any market.

But when you look at homes above a half million dollars in the county, there are about five homes under contract for every 10 homes on the market.

Sitrin says that number shows "this market is really being driven by the first-time homebuyer."

D.C.'s market is not as strong as Fairfax County.

Sitrin says for every 10 homes on the market, only three to four homes are under contract in the District - and that's in any price range.

Montgomery County is seeing a wide range of variations. Sitrin says in Bethesda for example, homes are worth as much as they were last year.

But in Gaithersburg - an area impacted by foreclosures - home prices are down by around 10 percent. But Sitrin says that's leading to an uptick in sales.

He says it's getting a lot of people - who used to be priced out of the market -the opportunity to buy.

Sitrin says across Montgomery County, home prices are down on average by about 10 percent.

Last week, the National Association of Realtors reported home prices nationally fell 11 percent from a year ago.

Nov. 2 - Changes to the Homebuyer Tax Credit

WASHINGTON - The tax credit for first-time homebuyers will live on - and there will be more incentives for homeowners.

The tax credit is getting an extension and a facelift.

The U.S. Senate version - which is nearing a compromise - would extend the $8,000 first-time homebuyers tax credit through April 30, 2010.

The credit was set to expire on Nov. 30.

The legislation also offers up a $6,500 tax credit to homeowners who have lived in their homes for five years and purchase another home.

There are some restrictions: homeowners with incomes above $125,000 for single filers and $225,000 for married couples won't be eligible. The homes also need to cost less than $800,000.

Oct. 26 - Looking To Rent? Now's a Great Time

WASHINGTON - It's a good time to be a renter.

Rental vacancy rates have hit their highest level in 23 years, according to Reis Inc., a New York real estate research firm. The rate is expected to climb even further in the fall and winter months, when rental demand is typically weaker.

The No. 1 reason for the nearly 8 percent vacancy rate is believed to be the lack of jobs.

With unemployment at nearly 10 percent, would-be-renters are ditching their apartments to temporarily move in with family or friends.

The positive side for renters? Rents are dropping by around 3 percent nationwide, compared to one year ago. One New York landlord says right now, renters are the ones with the power and deals are to be made.

Cities with the highest vacancy rates are the ones with the highest unemployment rates and where foreclosed homes and condominiums have been competing with the rental market.

Oct. 19 - Low rates keep mortgage industry busy

WASHINGTON - It's a busy time for the mortgage industry.

Across the country, applications for mortgages were up last week more than 16 percent. Mortgage rates continue to hover below 5 percent.

Many taking advantage of the low rates are first-time home buyers, trying to beat the Nov. 30 deadline for the $8,000 first-time home buyer tax credit. They need to be pre-approved and have a housing contract by the end of this month.

"We had a huge wave of first-time home buyers coming in, trying to get pre-approved and sure enough, contracts are coming in," Steve Cohen of First Place Bank says.

Cohen says it's not only first-time home buyers seeking mortgages. He says thanks to a new change by Fannie Mae, people with jumbo loans are able to take advantage of lower interest rates, which is rare.

"This is the first time interest rates have gone into the fours (4 percent range) where people whose loans are between $417,000 and $729,750 can take advantage of those rates," Cohen says.

Of course, the larger the loan, the larger the savings for the mortgage-holder.

Cohen expects business to stay brisk, especially with interest rates remaining low.

Oct. 5 - Will Controversial Rules Crush Condo Market?

WASHINGTON - New controversial rules are about to go into effect -- and some say they may crush the condominium market.

Starting Nov. 2, only 30 percent of condo buyers in any one given project will be able to get FHA loans, which allow you to put 3.5 percent down.

The remaining 70 percent will have to use conventional loans, which require at least 10 percent down. That could be difficult, since condominiums typically attract first-time home buyers, who don't have as much cash up front.

The deadline was originally Oct. 1, but got pushed back to Nov. 2.

The news is prompting "somewhere between panic and concern from the builders in our area," says Michael Chelst, vice president of America Home Key

"The first-time home buyer condo market could collapse," Chelst says. "Sales at condos are going to be slowed or stopped as a result of this change."

The new rules are intended to make the condo-approval process easier and simpler. Lenders themselves can now approve a project and complete the warranty process for HUD, instead of HUD getting involved.

Direct endorsement lenders will not only be able to approve the project, but will also provide the financing to close on the condominium.

Chelst worries condominium projects could fold midstream, leaving those who already purchased a unit in jeopardy.

The rules also hope to cut down on condo foreclosures. No more than 15 percent of condo owners can be overdue with their homeowner's association dues, which often times leads to foreclosures.

Zillow.com says the new rules should have people thinking twice about buying a condo, and asking whether the property will be more difficult to sell down the road.

Sept. 21 - The Do's and Dont's of Loan Modifications

WASHINGTON - Many people think loan modifications are a cure-all, but in some cases, they can actually increase your mortgage payments.

Homeowners should keep in mind that mortgage servicers often make offers to homeowners who aren't likely to succeed, says Alan White, assistant professor of law at the Valparaiso University School of Law in Indiana.

In those cases, homeowners are just putting off the pain by trimming interest rates, instead of coming up with a permanent debt reduction.

Instead, White suggests getting help from a housing counselor.

"It's extremely valuable to have a housing counselor help you prepare and submit a request," White says.

What about all those fees added into the loan modification?

"One could certainly ask the servicer to justify their fees. You can also ask them to waive the fees, which some of them will do," White says. "It can never hurt to ask."

Sept. 14 - Wronged By An Appraiser? Here's What You Can Do

WASHINGTON - If you've had a bad experience with a home appraiser, there are people you can to turn for help.

There are watch dog departments that investigate complaints against appraisers.

Liz Williams with the Maryland Department of Labor, Licensing and Regulation urges people to speak up.

"We want to ensure that the bad actors are found -- and cannot conduct business," Williams says.

What do people usually complain about?

"Sometimes they feel that the comps were not comparable. Sometimes they feel the appraisers should have actually entered into the home," Williams says.

Complaints are on the rise in Maryland, Williams says.

The Maryland Department of Labor, Licensing and Regulation had 79 complaints in fiscal year 2008 (from July 1, 2008 to June 30, 2009). So far in fiscal year 2009, they've had 20 complaints, which is on pace to beat last year's numbers.

In Maryland, you can file a complaint online. Homeowners will get notification that their complaint was received in two to four weeks.

In D.C., you can call the D.C. Board of Real Estate Appraisers at 202-442-4320 to receive a complaint form, and then mail it back in.

In Virginia, complaints go through the Department of Professional and Occupational Regulation. A Real Estate Appraiser Board then investigates the complaints. In fiscal year 2008, Virginia had 161 complaints. So far, they've had 169 complaints in fiscal year 2009.

You can download a complaint form online and mail it in. Homeowners should get an initial acknowledgement within two weeks. The entire investigation could take six months to a year.

Mary Vaughan with the Virginia Department of Professional and Occupational Regulation says if they prove the appraiser did something fraudulent or negligent, they can "fine the license, suspend or revoke the license."

Fines are up to $5,000 each per violation.

Sept. 7: Home sales prices up in July

WASHINGTON - Home sales rose in July, but the prices of homes sold continued to be weaker, compared with a year ago.

In Prince George's County, where foreclosures are rampant, home sales were up 76 percent. In July, 720 homes sold. Both the average price and the median price of homes sold declined 24 percent. The average sale price was $229,756 and the median sale price, $215,000. Homes lingered on the market an average of 138 days in Prince George's County, the longest in the region. A year ago, homes spent an average of 127 days on the market.

In Montgomery County, the the number of homes sold was up by 30 percent to 1,130 homes, according to Metropolitan Regional Information Systems resale data. But the average price of a home was down 13.54 percent, while the median price of homes declined 8 percent. The average price declined to $459,258 and the median price to $375,000. Sales on average were just over 92 percent of their average listing prices.

D.C.'s home sales increased 28 percent in July, compared to a year earlier. In D.C., 648 homes sold. The average price declined 16.66 percent to $483,477, while the median price declined 8.57 percent to $386,000. On average, sales were almost 93 percent of the average listing prices.

In Fairfax County and much of Northern Virginia, home prices are flat. John McClain, senior fellow at George Mason University who studies the region's housing market, says that means a stabilization is occurring.

Figures show Fairfax County home sales were up by 6.61 percent. The average price of a home went down 4 percent, while the median price rose 2.65 percent. The average price of a home sold was $447,845. The median price was $390,000. Homes on average spent 61 days on the market, compared with 94 a year ago. Average sales prices were 94 percent of their list prices.

Bank ignoring your mortgage requests? Be persistent

WASHINGTON - Homeowners are struggling to pay their mortgage payment each month, but help is difficult to come by if you're stuck in the middle and don't qualify for federal stimulus programs.

WTOP listener Deloris has a two-mortgage loan. She paid $420,000 for her home, but it's now worth around $300,000.

Deloris is making her mortgage payments, but her other bills - like her utilities and car loans - are going unpaid. She knows she can't continue in that direction.

She has been trying to get the larger loan modified to a lower interest rate, but she says the bank is very slow to respond.

In an email she asks, "Is there any true relief?"

Steven Cohen of First Place Bank says it can be difficult to get the attention of banks and lenders.

While there's a new, bolstered effort to work with mortgage holders, the reality remains it could take "weeks or maybe even months" to get a response.

"There's a lot of calls coming in and I don't think they could hire enough people to turn things around as quickly as we'd all like them to," Cohen says.

The best thing homeowners can do is be persistent and prepared when asking for help.

"Show them absolutely everything - every bill that you have," Cohen says.

Some officials are advising homeowners to stop paying their mortgage altogether to get the bank's attention. Cohen does not advise that personally but says, "I know many people who did stop paying their mortgage and were then able to get modified."

Cohen says the big risk is watching your credit score tumble.

Hoping to refinance? It depends on where you live

WASHINGTON - It can be pretty tough to qualify for refinancing. But there's one factor that's completely out of your control -- and it has to do with where you live.

WTOP Radio listener Reinaldo wanted to take advantage of the low interest rates. He and his wife have a credit score of 785, so he didn't think he'd have any problems.

However, his first setback came when his appraisal was valued at less than what he paid for his home, so he would had to pay an additional 10 percent, to make up for the new home to value ratio.

Then when the loan was approved by the bank, the mortgage underwriter rejected it, because his home is located in a targeted zip code.

Steve Cohen of First Place Bank explains that Fannie Mae and Freddie Mac have declared certain regions in the country as declining markets. If you live in one of those targeted zip codes, you'd have to pay an additional 10 percent to refinance.

It's part of a year-old program designed to protect the lenders against plunging home prices.

But after this second blow, Reinaldo backed out and decided it wasn't worth it to refinance.

Update: Pete demanded a new, free appraisal and got one. He also got the answer he was hoping for.

The new appraisal matched what he paid for the property. He says the appraiser used 9 comparable sales in his immediate subdivision. The first appraiser only used foreclosures, since he said he couldn't find any new homes in the subdivision.

Pete is very happy and back on track. He says he will use his original lender and will reach settlement in just a few days. That means he can move out of his hotel and into his new home!

Appraisals from out-of-town companies draw ire

WASHINGTON - Low appraisals seem to be common place in a bad housing market -- just ask WTOP listeners like Peter:

Peter was all set to settle on his newly built Accokeek home, until the appraisal came back $85,000 less than what he paid for the home. He's been trying to re-work the loan and has been forced to live in a hotel for five weeks.

"I had to go through the trouble of finding another lender, willing to start the process all over again."

He has been able to find a new lender.

In the meantime, he has been begging the Indiana appraisal company to conduct a second appraisal. Peter says when he questioned the appraiser about his work, he says the appraiser only used foreclosures as comparable sales because he couldn't find any new home sales. Peter demanded another appraisal when the two new houses right next to him settled on the target price.

"I feel like this was someone not familiar with the local market."

WTOP Radio reported that appraisal management companies, hired by the banks, are using out-of-town appraisers more and more, resulting in lower appraisals.

Peter's appraisal company has agreed to conduct another free appraisal. He's now waiting to see the outcome.

Trouble when trying to refinance

Linda, who lives in Oakridge wanted to refinance, so she paid for an appraisal. However, "when the appraisal came back at $190,000 I was shocked," she says.

She says homes in her neighborhood are selling for more than $200,000 -- and to make matters worse -- she says the bank told her "since it came in so low, she had to charge me $950. And I'm like where did that come from."

A mortgage lender tells WTOP the fee may have been added, to make up the difference for the new loan to value ratio but says she should have been warned about it upfront.

After hearing our stories on appraisals, Linda says "I'm definitely going to try to appeal it."

Homeowners appeal assessments in record numbers

WASHINGTON - It's a key piece of paper that determines what you pay in property taxes.

But this year, more people than ever are challenging their property tax assessments, because of falling home values.

More than 20,000 Maryland homeowners are currently challenging their property tax assessments.

In Montgomery County alone, there are 4,000 people appealing their 2009 assessments. 40,000 others are petitioning their assessments that were done one or two years ago.

Maryland re-assesses property every three years. (Virginia and D.C. re-assess annually.)

John Brennan, Supervisor of Assessments for Maryland, says in a typical year there are only a few hundred appeals in Montgomery County.

Brennan says the 8,000 appeals and petitions this year are the most he's seen in 35 years.

"It's probably record numbers," Brennan says.

On average, Montgomery County homeowners saw their properties decrease in value by 16 percent in 2009.

However, Brennan says "since we sent out notices back in December, values in some areas have continued to decline and we're looking at even more current data that suggests that we'll probably be even lower for this next re-assessment group."

Brennan can't say how many of the new appeals will be successful, but last year, 20 percent to 25 percent of the appeals were successful, meaning the value of homes were adjusted. However, it doesn't necessarily translate into a tax reduction.

In a typical year it takes six to eight weeks for the entire appeal process. But Brennan says due to the overwhelming response, it will take longer this year.

In the District, the number of appeals also increased for 2009. There were 11,829 appeals in 2009 compared to 10,717 in 2008. In 2007, there were even fewer -- 9,777 appeals.

However this trend was not seen in Fairfax County. Janet Coldsmith, the Director of Real Estate Division in the Department of Tax Administration, says the number of appeals actually decreased slightly. On average, home values decreased by 12.5 percent from the year before. Coldsmith says the assessments closely mirrored the current housing market.

Changes to Home Appraisals May Have Unintended Effects

Part 1

WASHINGTON - There are new rules to make home appraisals more accurate and fair, but some say it's having the opposite effect.

First, how does your home get appraised?

Appraisers will "want to find all the comparable sales that sold on the street, active listings and pendings -- just on that street," says Stephen Rochkind, owner of Area Appraisal Services, a company that serves Maryland, Virginia and the District.

Rochkind, who has been in the appraisal business for 20 years, says he'll then look at sales in the entire neighborhood -- dating back 18 months.

But because the market is so tight, appraisers may not be able to find a similar home sold.

If that's the case, appraisers will take the next closest type of home and "take into account what the market is giving per square foot," Rochkind says.

For example, if you compare a three-bedroom condo with a four-bedroom condo, appraisers will add to the price by square foot, versus per room.

If an appraiser is good, they'll go inside and "really do an extensive survey of the home," Rochkind says.

Renovations and upgrades can impact the price, but don't expect to get "dollar for dollar" on home improvements. A new roof or a newly-remodeled kitchen should make a different in the appraisal price.

New rules, known as the Home Valuation Code of Conduct, went into effect in May. An appraisal that used to cost $275 to $300 now runs around $375 to $500. The cost depends on the cost of the home.

The Home Valuation Code of Conduct was created to ensure homes are appraised correctly and fairly, but a bill in Congress is proposing a moratorium on the code, saying it would slow a housing-market recovery.

The cost of an appraisal has gone up around $200, because management companies now have to serve as middlemen between brokers and appraisers.

But Rochkind says bank-owned management companies are taking the higher fees and then searching for "the cheapest and fastest possible appraiser."

WTOP called Wells Fargo Bank to comment on the situation, but received no response.

Rochkind and representatives from the Appraisal Institute, an association of real estate appraisers, say these cheaper, inexperienced appraisers are often from out of town.

"Somebody from West Virginia probably has no business coming to the Washington area and appraising real estate," Rochkind says.

But they are.

Part 2:

In many cases, home appraisals are coming in lower than ever and impacting home deals and re-finance options.

The National Association of Realtors says that 17 percent of its members have recently lost one sale due to an appraisal coming in way below a purchase price. And, 20 percent of members say they have lost more than one deal because of low appraisals.

Stephen Rochkind, owner of Area Appraisal Services, says this scenario is playing out because many of the bank-owned appraisal management companies are hiring cheaper, inexperienced appraisers from out of town.

Knowing the market is crucial. Rochkind gives the Edgemoor neighborhood of Bethesda as an example:

"In this area of Bethesda, you could have Edgemoor, which sells for 10 percent more than the house across the street, which is not in Edgemoor. It's happening all over."

In another example, an appraiser from West Virginia "came in $70,000 or $80,000 lower than the sale price and there was no arguing, the guy would not budge."

So if you get an appraisal you don't agree with, what are your options?

There aren't many.

"The best way to fight it is if the appraiser missed something," Rochkind says.

A good appraiser will reconsider if he or she missed a comp. But if they refuse, you can appeal your appraisal to the state -- only if you can prove he or she missed something.

Rochkind says another option is to get your home loan through a local lender, who will likely use a local appraiser.

But the reality: Home prices are down and today's appraisals will reflect that. Some say super high appraisals helped feed the housing frenzy of 2005.

Program Makes Buying Foreclosed Homes Even More Appealing

WASHINGTON - Looking to buy a foreclosed home? There are new incentives.

Starting this month, the U.S. Department of Housing and Urban Development is kicking off a new program to sell vacant, bank-owned foreclosed properties that are weighing down neighborhoods across the country.

It's called the Neighborhood Stabilization Program. Counties, such as Prince George's County received the largest pile of money - $11 million dollars - to entice home buyers to purchase foreclosures in certain zip codes.

Fairfax, Prince William and Loudoun counties also received grant money from HUD.

Using the federal dollars, counties will loan home buyers up to 3.5 percent of the sale price of the home or a maximum of $15,000 as part as your down payment.

In only a dozen designated zip codes in Prince George's County, a potential home buyer would receive up to 7 percent, or $20,000.

Michael Chelst with America Home Key says depending on income, "some potential home buyers can get into a home, with only a $1,000."

Chelst says you don't have to re-pay the loan if you keep the house for at least 10 years. If you do sell, you only have to pay back the loan, interest free.

Who qualifies? You need to be a first-time home buyer and receive under 120% of the median income of your area.

Chelst says he believes this program will succeed in selling more bank-owned foreclosures.

But an un-intended consequence may be making it more difficult for other sellers to sell their homes. Chelst says people with short sales will likely lose out to a foreclosed property in the neighborhood.

"Homebuyers will almost feel like they have to let it go to foreclosure, in order to get it sold," Chelst says.

A previous program was introduced earlier in the year. But it never got off the ground, due to certain restrictions.

For more information, click here.

The Pros and Cons of Buying Under 'Third Party Approval'

WASHINGTON - You're hoping to find a great deal, so you turn to foreclosed homes for a bargain.

But what happens if you see "third party approval" stamped on the paperwork?

A third party approval involves what's called a substitute purchaser.

Gary Hoffer, a Century 21 broker with offices in Gaithersburg, says more and more investors are buying foreclosed properties, then selling them before they have to pay taxes on the purchase.

Here's how it works:

An investor goes to the courthouse and purchases a foreclosed property. The investor tells the judge they would like permission to sell the contract to somebody else.

The investor then has approximately 90 days to renovate the home, if necessary, put the home back on the market and find a potential buyer.

If they find a buyer to transfer the contract to, they avoid paying taxes on the entire transaction. Purchasers of foreclosed properties would normally have to pay the sellers' and buyers' taxes, which could total 3 to 5 percent of the home.

This is a legal way to transfer a contract from one person to another, Hoffer says. And investors can make a decent profit.

So what does this mean for home buyers?

Hoffer says there are risks, "but there's risks to any foreclosure or short sale."

The biggest hurdle may be the lender or bank, who may immediately reject the deal because it's so different.

Hoffer says many times, a lawyer may have to get involved to help convince lenders to sign off.

It could also be a lengthy process, waiting for a judge to ratify the contract. It could take a minimum of 90 days, once a buyer gets involved.

On the plus side, Hoffer says buyers will be getting a home at foreclosed prices with the benefits of renovation paid for by the investor.

Hoffer says he's been a substitute purchaser 20 to 25 times out of nearly 300 foreclosed property purchases.

Need an Extra Incentive to Buy a Home? How About $15,000?

WASHINGTON - You may have heard about the $8,000 tax credit for first-time home buyers.

Now, some members of Congress are proposing a $15,000 credit for anyone who wants to purchase a new home.

The tax credit would be given to any home buyer regardless of income, type of loan, or number of times they have purchased a home.

Several housing and mortgage groups say this is the type of bill needed to really boost the housing market.

The Mortgage Bankers Association says the credit would spur about 400,000 home purchases.

However, critics say lawmakers may be hesitant to back another federal handout, especially one that would cost $32 billion in the first year.

The bill's sponsor, Sen. Johnny Isakson (R-Ga.) says it could have the hardest time passing in the House.

Mollie Kehoe contributed to this report.

Drowning in Your Mortgage? Here's How to Get Out

WASHINGTON - People are continuing to lose their homes in near-record numbers. In May, one in nearly 400 homeowners filed for foreclosure.

Mary Hunter, director of a housing counseling program at the Housing Initiative Partnership in Maryland, says many lenders remain overwhelmed -- even with the stimulus.

"Even though they've amplified a lot of their staff, they still don't have enough to address the problem," Hunter says.

That leaves homeowners frustrated and getting further behind on their payments.

Hunter says the key is reaching out early for help.

"One of my clients saw their ARM was going to reset in six months, and we were able to get a modification for her before she ever had that hit to her credit," Hunter says.

For more information, visit these sites:

D.C. homeowners, click here
Maryland homeowners, click here
Virginia homeowners, click here

Expert Gives Bleak Outlook On Housing Market

WASHINGTON - Despite the promising news that home sales are on the rise, one expert says it doesn't mean home prices are stabilizing.

"I'm still rather pessimistic about the [housing] market. We have quite a bit of downward momentum," says leading housing expert and Yale University economics professor Robert Shiller.

Shiller says consumers should expect home values to continue to fall. One predictor has prices declining by around 15 percent by November 2010.

When the housing market does begin to turn around, "it's not going to be an exciting market, just because the economy is still terrible," says Shiller, who is also the creator of the S&P/Case Shiller index.

Shiller says the current state of the economy will ultimately lead to more home foreclosures, a larger inventory of un-sold homes and anxious buyers.

The psyche of home buyers is also key to the housing market improving.

"The housing market has becoming very speculative. It wasn't that way in the past," Shiller says.

Mollie Kehoe contributed to this report.

Appraisals Become A New Challenge to Selling Homes

WASHINGTON - Just as home sales are starting to pick up in our area, sellers are running into a new challenge.

It's happening more and more -- homes are appraising for less than the agreed upon price.

"It's causing a lot of problems for both the sellers and the buyers," says Ron Sitrin of Long and Foster Realtors.

Sitrin says the seller can drop the price further or risk losing the contract. And if a buyer gets the house for the lower price, he or she has to come up with the difference in cash at settlement.

So what's the reason behind the lower appraisals?

"These appraisers are just looking back to sales that happened several months before that, when the prices were lower," Sitrin says.

Steve Rockhind, a D.C. metropolitan region-certified appraiser with Area Appraisal Services, says there are other reasons why lower appraisals are occurring:

There are fewer sales to be used when determining an appraisal
There are more inexperienced appraisers working
Real estate agents are pricing homes too high

First-Time Home Buyers Make Up More Than Half of Recent Sales

WASHINGTON - The real estate market is nudging along, thanks to first-time home buyers.

In a typical year, first time home buyers make up 40 percent of the total market. But in the first quarter of this year, first-time home buyers accounted for more than half of all home purchases.

The National Association of Realtors says nearly half of those purchases involved short sales and foreclosed properties.

"First-time home buyers are instrumental in moving the market because if you have a property to sell and no one is buying it, you can't move up," says Lucien Salvant with the National Association of Realtors.

Salvant says the three factors motivating first-time home buyers are low prices, historically low interest rates and the $8,000 first-time tax credit.

While Salvant is encouraged, he doesn't believe the market has "hit the bottom or turned the corner or anything like that."

But, "the descent is slowing down a bit," Salvant says.

Found a Deal on a Home But Can't Afford the Property Taxes?

WASHINGTON - Can you afford to buy the house, but not the property taxes? It's a growing problem many people are facing.

One Maryland family was looking for a home under $170,000. They ended up finding a beautiful foreclosed property on sale for $149,000.

But Michael Chelst of America Home Key had to tell the potential buyers they couldn't afford it.

"It had been assessed for $330,000 and had taxes that were $5,876," Chelst says.

Unfortunately, there's nothing you can do about an overblown property tax assessment before you own the home.

But if you purchase it, you can appeal. And to give yourself an edge, you can hire a company like Advantage Title.

"They'll guarantee that your house is re-assessed at a lower price-- or they won't charge you the fees," Chelst says.

Why should you think about hiring a company?

"You're not just saying, 'Hey, I think my tax bill is too high -- please lower it.' They're actually taking the time and researching what the values of the properties are," Chelst says.

In Maryland, homes are assessed every three years. Maryland homeowners can appeal their assessments online.

The District and most Virginia counties assess properties every year. D.C. homeowners can also appeal their assessments online.

Bank Won't Help With Your Mortgage? There Are Other Options

WASHINGTON - Banks and lenders are getting bombarded by people asking for a break. But if you are struggling to make your payments, there are other alternatives.

Shirley Russell contacted her bank one month before her interest rates were about to shoot up 13 percent because of an ARM come due.

But her mortgage company wouldn't budge.

Then she saw an ad in a Prince George's County newspaper touting groups that provide foreclosure prevention counseling.

So Russell called Kairos Community Housing Development Organization.

After six months of Kairos talking to her bank, her interest rate was knocked down to 6 percent.

"It really is a godsend for us," Russell says. "We were able to save almost $600 [each month]."

Russell can now afford to stay in her home of 22 years.

"We're so grateful for them. Because had it not been for them, I don't know what we would have done," Russell says.

Maryland is using $2.5 million in stimulus funds to bolster foreclosure counseling services. Maryland homeowners can find more information here.

Foreclosed Homes to be Sold Below Value Under New Program

WASHINGTON - A big part of stabilizing the housing market is getting rid of all of those foreclosed homes. Starting May 1, one county will try to do just that.

With close to 7,000 foreclosed properties, Prince George's County is among the hardest hit areas.

"In order to stabilize these neighborhoods, we need to first get rid of these vacant homes," says Michael Chelst, vice president of America Home Key.

Prince George's County is teaming up with HUD and using federal dollars to sell vacant foreclosed homes at 15 percent less than the appraised value, Chelst says.

Selling homes less than the appraised value gives buyers instant equity.

Chelst says similar programs will be popping up in other areas with high rates of foreclosures.

The program in Prince George's County starts May 1. While the homes aren't limited to people with low incomes, there is a salary cap.

Most major lenders are participating in the program. If you're interested, you should contact your lender and ask if they're participating in the neighborhood stabilization program.

A similar program is available in Montgomery County, where the county provides a closing cost and down payment assistance program for eligible borrowers who work in the county and are buying their first home in the county. The program is also available to borrowers who are Montgomery County employees.

For more information about the Montgomery County program, click here.

Road To Buying A Foreclosed Home Can Be Filled With Obstacles

GAITHERSBURG, Md. - You can get a good deal if you buy a foreclosed home. But you can also expect a very bumpy road.

Dorothy found her dream home in Gaithersburg in Thanksgiving 2008. Wells Fargo, the bank that owned the property, approved the bid right away and wanted to close in weeks.

"So we scrambled and got everything together," Dorothy says.

But the date came and went. Weeks, then months passed due to an issue with a lien taken out on the deed of the property.

"It was basically a hurry-up-and-wait process," she says.

Then, her lender had a change of heart.

"It was in February they told us, 'We're not loaning any money to anybody,'" she says.

So Dorothy had to find a new lender.

Finally, four months after the process started, she and her fiance closed and can move in at the end of April.

Another challenge of buying a foreclosed home is once you perform a home inspection, there's no bartering with a seller if there are problems.

"Nobody's been living it for a year and a half," Dorothy says.

Her advice if you're thinking of buying a foreclosed home?

"The bank operates on its time. It doesn't operate on your time," Dorothy says.

But in the end, was it worth it?

"I think so," she says.

Dorothy's rent on her three-bedroom townhome is $300 more a month than her rent on her Gaithersburg one-bedroom apartment.

Crunch the numbers before refinancing

WASHINGTON -- With rates low, should you refinance?

"The determination of whether or not you should refinance is math," says Steve Cohen of National City Bank.

"Anybody who hasn't refinanced in the last 30 days has a rate higher than what we can offer today."

But Cohen says you have to consider the fees you pay upfront and the return on your investment

He says you have to weigh how long you plan to stay in your home to determine whether the refinancing would be worthwhile.

"If someone is at 5 3/4 (percent) and they're going to refinance to 4 7/8 today, then that return investment is going to be around 7 to 8 months, depending on their loan amount," Cohen says.

A mortgage calculator can help you. BankRate and CNN both offer calculators.

New Refinancing Guidelines Take Effect May 1

WASHINGTON - With interest rates at historic lows, it seems everyone wants to refinance their home loans.

A person who would never qualify today to refinance just may be able to in a couple of weeks.

Guidelines through the federal stimulus package will make it easier for homeowners with a Fannie Mae or Freddie Mac loan.

"The new underwriting guidelines aren't going to look as heavily at the value of the home, they're going to loosen up on credit scores and even on debt to income ratio," Steve Cohen with National City Bank says.

Homeowners with a Fannie Mae or Freddie Mac loan may have their appraisal fees waived, get away with a lower credit score and be able to have less equity in their home because of the new rules.

"Even people who are upside down are going to have an opportunity to refinance," Cohen says.

The changes take effect May 1, but don't wait until then to fill out a loan application, Cohen advises.

That Home Looks Like It's On The Market, But It's Really a Nightmare

WASHINGTON - That home with a "for sale" sign on the front lawn may not really be up for sale.

"There are a lot of houses for sale that are short sales that aren't really for sale," says Ron Sitrin of Long and Foster.

A short sale is when a seller owes more than what the house can sell for. So when the homeowner sells, the amount of cash they receive is "short" of what they need to pay off the mortgage in full.

Many sellers use short sales as a way to avoid foreclosure.

The seller will likely accept an offer from a potential buyer immediately, but then the bank drags its feet for weeks -- even months -- since it has nothing to gain from the sale.

"It could take months to get a response from the bank that they're willing to move forward with you," Sitrin says. "It could also take months to find out they're not willing to work for you and you've wasted all that time."

Sitrin says another problem with short sales is that they create a false supply of inventory on the market, and too much inventory feeds a stalled market.

UPDATE: Kate's bank, Vanderbilt, has just agreed to a loan modification. The bank agreed to lower her interest rates to 6.99% on $300,000 for 30 years. Kate says the change will make her payments go down significantly, about $1600 a month. She had been paying 9%. The bank's decision comes after Kate hired "Right Start" to fight for her lower interest rates. Kate says the bank's attitude changed dramatically, once WTOP contacted Vanderbilt about her case. Kate is grateful to now be dealing with a more manageable interest rate and stay in her Reston home.

What Will It Take To Get Your Lender to Listen to You?

WASHINGTON - Last week, WTOP told you about a homeowner who's been unsuccessfully fighting for lower interest rates on her home loan.

But there's been some good news in the past week.

For nine months, Kate has been struggling to make her payments and begging Vanderbilt Bank to lower her 9 percent interest rates, but they wouldn't budge.

Kate says Vanderbilt told her, "don't pay your other bills and go try to find money at a church or someplace like that."

So Kate hired attorneys through Right Start Lending. They told her to stop making her mortgage payments.

"Because if I make payments, then it doesn't look like we're in a hardship," Kate says.

When WTOP called Vanderbilt, bank employee Chris Nissely said they're always willing to work with struggling homeowners and will lower interest rates when needed, since it's in everyone's interest to keep people in their homes.

While Kate's rates haven't been lowered yet, she says the bank's tone has changed since attorneys and WTOP got involved.

Modifying A Loan Isn't Always Easy

RESTON, Va. - If a homeowner is drowning, they're told to speak up and ask for a modified loan. But it's not that easy.

Kate is struggling to keep up with payments on her Reston home. She could only qualify for a 30-year loan with 9 percent interest rates.

After paying it on time for years, she's finding herself under water.

"I paid $22,000 in interest last year," she says.

Since she just went through a debt consolidation, she couldn't get a traditional loan. The loan she could get has been sold twice and is now in the hands of Vanderbilt.

Kate has been pleading with Vanderbilt for lower interest rates for more than a year.

"I don't want money. I don't want a hand out. I just want my interest rate lowered," Kate says.

Kate says if she were to get around 6 percent, she could make her payments on time.

But she says Vanderbilt wouldn't budge, and only came up with 8 percent on a 40-year loan -- after she hired attorneys through Right Start Lending to fight for her.

Kate is still trying for 6 percent interest rates and is waiting to see what happens.

How Many Local Homes Have Delinquent Mortgages?

WASHINGTON - A record 12 percent of mortgages are in trouble across the country, with homeowners either behind on their payments or in foreclosure. So how are the numbers in our area?

Mortgage Bankers Association Chief Economist Jay Brinkmann says Maryland has the worst in the percentage of delinquent mortgages.

Virginia faired better, but still not great. The District ended up right in between the two states.

Brinkmann says our area got in trouble when so many of those unconventional loans with ARMS were used to fuel new subdivisions.

"Things had gotten so overheated and development took place that we just didn't have sustainable demand to fill these units," Brinkmann says.

Outlying areas of Maryland and Virginia are seeing the biggest problems, Brinkmann says.

Here are the numbers from the Mortgage Bankers Association as of Dec. 31, 2008:

Maryland: Of the 1,075,000 total loans serviced, 8.5 percent are "passed due" (meaning at least one payment was missed) and 5.5 percent are considered seriously delinquent loans.

Virginia: Of the 1,423,000 total loans serviced, 6.6 percent are passed due and 3.8 percent are seriously delinquent.

D.C.: Of the 95,503 total loans serviced, 6.5 percent are passed due and 4.4 percent are seriously delinquent.

To compare with other states, 13.3 percent of total loans are passed due in Florida; 11.2 percent of total loans are passed due in Nevada; 1.67 percent of total loans are passed due in North Dakota, 1.72 percent of total loans are passed due in Alaska.

Will $8,000 Tax Credits Lure First-Time Home Buyers?

WASHINGTON - Will the multi-billion dollar foreclosure package really help move homes off the market?

Century 21 CEO Tom Kunz says part of the mega stimulus plan should inspire first-time home buyers to get out there and purchase.

"This is a true tax credit," Kunz says.

The stimulus offers an $8,000 maximum tax credit for first-time home buyers and people who have not purchased a home in three years. And home buyers don't have to pay the money back unless they sell the property within three years.

"This is actually something we've never seen before," says Nick Pasquini, co-founder of Century 21 Redwood Realty.

There are income qualifications, but Pasquini says it's a great deal.

"This is actually a dollar for dollar credit from the government," Pasquini says.

To qualify for the tax credit, you must buy a home before Jan. 1, 2010. If you settle by April 15, you could use the deduction for your 2008 taxes.

Kunz is disappointed the package doesn't include an interest buy down to help get rid of all that sitting inventory.

"As inventory reduces, pricing starts to level out and we get back to a more normalized type of market," Kunz says.

Kunz says there needs to a be a bigger incentive to get people who are too afraid to buy off the fence.

Trying to Refinance a Condo? Some Factors May Be Out of Your Control

WASHINGTON - It can be tough to refinance any property, but there are some challenges out of your control if you're dealing with condominiums.

A homeowner trying to refinance her beach home recently discovered great credit isn't all you need.

"There are other issues besides 'are you approvable,'" says Steve Cohen, mortgage banker with National City Bank.

Cohen says other tenants play a key role. For instance, Fannie Mae won't refinance your loan if more than 15 percent of the units are past due 30 days or more on condo fees.

Other factors taken into consideration are the percentage of units owned by investors and whether the condo owner is in litigation.

To get premium rates, Cohen says you should put down 25 percent when you buy a condo. If you don't put 25 percent down, you won't get the best interest rate.

Before you buy a condo, Cohen suggests you read important documents.

"Make sure you go over it with a fine tooth comb, and if there's anything you don't like, you should take advantage of the fact you can back out for any reason," Cohen says.

Once you sign the contract and read over the document, you typically have three to five days to legally back out of the deal.

New Policies Help Unemployed Manage Their Mortgages

WASHINGTON - New policies may help thousands of people who've lost their jobs and need help paying their mortgages.

Just a couple months ago, homeowners could only contact their banks once they got behind on their mortgage.

"Now banks will talk to you before you miss payments," says Steve Cohen, a mortgage consultant for National City Bank.

Cohen says people who've lost their job should contact their bank immediately.

"Maybe they will not require payments for a 3-month period. Maybe they'll modify to a lower rate," Cohen says.

But don't expect your situation to be solved with one call. Banks are overwhelmed, and getting someone on the line won't be easy.

"It's up to you to be diligent and keep calling," Cohen says. "Never give up."

Cohen says it's in everyone's best interest to re-work the loan.

Wave of Upside Down Homeowners Slams Area

WASHINGTON - It's an ugly but growing trend: millions of homeowners are upside down, meaning they owe more on their homes than they're actually worth.

Some statistics show as many as 29 percent of mortgages are upside down in D.C. metro area.

George Mason University Professor of Public Policy Stephen Fuller says he doesn't think the numbers are that high, but says negative equity is a major problem in the area.

"This is a common problem in a weak economy," Fuller says.

How did we get there?

Fuller says it's a perfect storm: people who bought overpriced homes in '04 and '05 are now seeing home values continue to decline. That, combined with interest rates spiking dramatically from non-traditional mortgages and unemployment rising.

Now, millions of people can't afford to stay in their homes, nor can they afford to sell.

But if you can afford your mortgage, Fuller recommends you "just stick with it" since your home will eventually gain its value back - usually around 7 percent each year.

Fuller says homeowners saw a similar situation in '94 and '95.

Local Home Values - What a Difference a Year Makes!

WASHINGTON - How much is your home worth today? Chances are, a lot less than it was a year ago.

Fairfax County saw a 25 percent decline in the average price of homes sold in 2008. The average price of a home sold in December of 2008 was $403,000 -- compared to $540,00 in December of 2007.

Homeowners in Fairfax County also saw a 25 percent decline in the average list price of a home, going from $595,870 in December 2007 to $444,292 in December 2008.

In Montgomery County, homeowners saw a decline of more than 16 percent in the average price of homes. The average price of a home sold in December of 2008 was $431,397 -- compared to $519,017 in December of 2007.

Homeowners in the District saw a decline of nearly 19 percent in the average price of homes. The average price of a home sold in December of 2008 was $446,852 -- compared to $550,041 in December of 2007.

D.C. also saw a 20 percent decline in the average list price of a home, going from $606,898 in December of 2007 to $482,592 in December of 2008.

One silver lining is that homes are selling a bit faster compared to a year ago. In Montgomery County, the average of days on the market was 108 days in 2008, compared to 113 days in 2007.

Metropolitan Regional Information Systems statistics also show December of 2008 saw a 10 percent increase in the number of home sales in the region, compared to December of 2007. Experts believe continued lower prices will lure in more buyers.

Group Provides 'Hope' to Homeowners at Risk

WASHINGTON - Foreclosures are continuing to crush the housing market.

Last year, there were more than 3 million home foreclosures across the country - and the number is expected to remain high again this year.

But one group is trying to keep people in their homes.

Hope Now is a group of servicers, investors and non-profit housing counselors who reach out to at-risk borrowers and provide free foreclosure prevention assistance.

Its goal is to do everything possible to keep people in their homes and avoid foreclosure.

Since 2007, Hope Now has assisted 2.5 million homeowners.

Hope Now Executive Director Faith Schwartz says people who are most likely to receive help are homeowners who can pay most of their housing payment but need a little help.

Other candidates are people facing a temporary financial bump in the road with light at the end of the tunnel, Schwartz says.

Schwartz says at least 50 percent of homeowners working with Hope Now receive some sort of help. More than 200,000 people are helped each month.

In just one year, Schwartz says they've mailed 2.9 million letters to borrowers at risk - homeowners who are at least 60 days behind in mortgage payments.

Many of those were able to get their loans modified, Schwartz says.

In addition to reaching out to borrowers at risk, Hope Now also offers a hotline through the Home Ownership Preservation Foundation. The number is 1-888-995-HOPE.

The free hotline handles 8,000 calls a day - mostly from borrowers who fear they're at risk of losing their home. People can expect to receive an answer in 45 to 60 days.

Heartbreaking Foreclosure Teaches Lessons About Home Loans

UPDATE: Ratana Ninmag died Tuesday, Jan. 13 surrounded by her family.

HERNDON, Va. - A heartbreaking foreclosure case may encourage every homeowner to ask questions about their own home loan.

You may recall the Ninmags, a Herndon family desperately fighting foreclosure while the wife and mom, Ratana, is losing her battle with cancer.

First, Mark Ninmag was laid off from his job of 18 years. Then he got way behind on his payments when he gave up his new job to care for his dying wife and their two children, ages 7 and 14.

Family advocate Laura Maschler of Weichert Realty has been able to get the Ninmags' foreclosure on hold.

But it's been a complicated battle since Maschler learned that the Ninmags' original lender is gone.

The Ninmags' original home loan has been sold and bundled, and now it's a tangled web to figure out who can actually help modify the loan.

Maschler doesn't know how long the foreclosure can be put off, and is working closely with Wells Fargo and Countrywide. She says she hopes "they'll do the right thing."

Maschler says there's a lesson to be learned when it comes to your home loan: Call and specifically ask who your loan service provider is and find out the status of your loan.

Since WTOP first aired the Ninmags' story in November, $14,000 has been raised to help the family stay in their home. Mark Ninmag, an electrician, is desperately looking for a new job. Hospice has been called in for 38-year-old Ratana, as she battles Stage 4 colon cancer.

If you'd like to help the Ninmag family, please visit this Web site.

Cash-strapped seniors turn to reverse mortgages

WASHINGTON - Reverse mortgages have really taken off in the last few years. But there are benefits and risks to this trend.

AARP says a growing number of seniors are house-rich but cash-poor.

"In this last two or three years, the number of reverse mortgages has increased dramatically," says David Certner, legislative policy director at AARP.

Certner says more seniors are turning to reverse loans, which allow homeowners age 62 and older to tap into their equity to pay off the balance.

People whose homes are completely paid off can take out the equity and turn it into cash.

"The advantage is you can get an ongoing payment stream to give you the income to help you stay in the home and maintain the home," Certner says.

The homeowner can stay in the home indefinitely, but reverse mortgages may not be the best option for people who want to pass the home down to other family members because the lost equity is gone forever.

The three factors that determine the amount a homeowner can borrow are: the value of the house, the current interest rate and the age of the homeowner.

You do not lose the title of your home if you take out a reverse mortgage.

The only reverse mortgages available now are through the FHA.

To qualify for a reverse loan, homeowners are required to meet with an HUD-approved counselor and obtain a certificate from the counselor.

Click here to learn more about reverse mortgages.

Home Values Are Down - What About Your Property Taxes?

WASHINGTON - Home values are down across our region, but don't expect a break when it's time to pay your property taxes.

In Fairfax County, an early prediction shows homeowners will see property assessments decrease by 10 percent.

In Prince William County, values could drop 15 percent, after a 30 percent decline the year before.

Officials in the D.C. Office of Tax and Revenue couldn't say if property assessments will increase, decrease, or stay the same.

Maryland homeowners will see a decrease in home values by about 15 percent.

But John Brennan, Supervisor of Assessments for the State of Maryland, says the decline typically won't translate into lower tax bills.

A cap has protected homeowners from the wild increases of the past few years, so it will take a few years of a decline until homeowners see a decrease in tax bills, Brennan says.

Brennan expects a record number of homeowners to appeal their tax assessments for 2009. He says many people may think their home values should be lower than the assessed figure because they watched foreclosed homes in their neighborhood sell at a very low price.

When determining fair market value, the state does not account for any foreclosed homes or short sales.

If you don't agree with your property tax assessment, you can appeal no matter where you live.

Maryland re-assesses homes every three years, but you can appeal an year as long as you do so by Dec. 31.

D.C. residents can click here to appeal.
Fairfax County residents can click here to appeal.
Montgomery County residents can click here to appeal.

Brennan says 5 to 8 percent of Maryland homeowners typically appeal their assessments. Of them, 30 percent win the appeal process and receive a reduction in their assessment. Only 5 percent of them see a reduction in taxes.

Maryland residents get three chances to appeal.

So when should you get your assessment in the mail?

Virginia determines property tax assessments annually. The 2009 figures will be determined by Jan. 1, and homeowners should receive tax assessments in the mail by the end of February or early March.
D.C. determines property tax assessments annually. Residents will get their new assessments in the mail at the end of February.
Maryland re-assesses property values and taxes every three years. The next tax rate is for 2009-2012. Homeowners in Silver Spring, Gaithersburg, Olney, Sandy Spring, parts of Rockville and parts of Montgomery County Village will receive their tax assessments in January.

Days of Easy Buying Are Gone

WASHINGTON - If you want to buy in today's housing market, you may not be able to seal the deal or get a loan, unless you have cash and good credit.

You need cash to close the deal. The days of zero-down are gone. That's the new reality of the housing market.

For Federal Housing Administration loans, buyers need to put down 3 percent or 10 percent, plus pay a mortgage insurance premium.

Doug Wood with Samson Reality says he's seen buyers walk when they learned the mortgage insurance premium meant they had to come up with another $5,000.

"That was something they were not able to do, so they had to withdraw their offer, so my client was pretty disappointed," he says.

Lenders also are demanding higher credit scores. Banking analysts say the era of getting easy credit to buy a house is over and stricter lending standards are here to stay.

Wood says you'll need a 580 credit score to qualify for an FHA loan and a 700 for a conventional loan.

"This is an incredible time to buy. If you have good credit, banks still are lending money," Wood says.

A Warm Response to a Hearbreaking Story

On Monday, we featured the Ninmag family in our weekly Home Value Highwire.

Mark Ninmag gave up his new job to care for his wife who had colon cancer that spread to her liver. He's now received the second foreclosure notice on his Herndon home.

"At the same time losing my job, losing the house, losing my wife, it's hard," says Ninmag.

He wrote a hardship letter to Countrywide-- pleading with them to re-structure his loan so he can keep his house of 16 years.

"I'd spend my last dollar on trying to keep my family together. If the bank doesn't go through, I don't know what else to do."

All the while, he's grappling with his biggest hurdle of all with his children.

"I just don't have a heart to tell them, to explain that their mother may not make it," he says.

He doesn't know if he'll get any help from the federal bail out program or what will happen next.

Since we aired that story, the phones have been ringing - with you asking how you can help.

A group of Bible school children dropped off food and turkeys to the Ninmag family so they can better enjoy their Thanksgiving.

I've received several e-mails, including one from a cancer survivor. He says he represents a group of people that have a proud tradition of helping others during Christmas. He hopes to help the family financially - even medically, offering the name of his surgeon - saying he's the best there is. Other emails gave advice on loan assistance, and offered to help themselves.

And the family is embracing the well wishes and help - after suffering yet another setback. Countrywide denied his hardship letter and can't re-structure his loan, but they told him they'd see what they could do and call him back.

Ninmag is now on a list for housing assistance through Fairfax county, but there's no telling how long he'll sit on that list.

But the family is so thankful for your assistance and on this Thanksgiving, and I, too, thank you for your interest and generosity.

If you would like to help, donation information can be found here.

Heartbreaker: Wife Has Cancer; Family May Lose Home

HERNDON, Va. -- A husband fights to keep his home while his wife fights to survive.

It's a heartbreaking story, and it's happening to Mark Ninmag in Fairfax County.

First, Ninmag was laid off from his job of 18 years. He takes a new job. He then finds out his wife has colon cancer that has spread to her liver.

He gives up his new job to take care of her and their two children.

"I just don't have a heart to tell them, to explain that their mother may not make it," Ninmag says.

But because Ninmag isn't working, the mortgage isn't getting paid, and his wife's work benefits are just about depleted.

The family in Herndon could lose its home to foreclosure. Ninmag has already received a second foreclosure notice.

"At the same time losing my job, losing the house, losing my wife, it's hard," he says.

He wrote a hardship letter to Countrywide, pleading with the company to restructure his loan so he can keep his house of 16 years.

"I'd spend my last dollar on trying to keep my family together. If the bank doesn't go through, I don't know what else to do."

Ninmag's home has been on the market for year, but there are no offers. If it did sell, he says his family would have nowhere else to go.

He also doesn't know whether he'll get any help from the federal bailout program.

If you'd like to help the Ninmag family, send donations in care of the Valarkon Mark Ninmag family to the following address:

Wat Yarnna Rangsee Buddhist Monastery
c/o Valarkon Mark Ninmag Family
21950 Shaw Rd.
Sterling, VA 20164

Buyers Are Saving Big In This Housing Market

WASHINGTON - More new and existing homes are being sold in our region and across the nation. This week's Home Value Highwire looks at the benefits of a buyer's market.

When Diana discovered her mortgage payment would be about the same as her rent, she began looking for a home to buy.

"We saw a lot of homes. In just the two months we were looking, prices began dropping $10,000 to $20,000," Diana says.

Diana and her boyfriend decided to put an offer on a townhome in Odenton, Maryland. The home was on the market for at least eight months.

"We offered them $260,000 on a house that was $290,000 -- and they basically took it, which was a surprise -- a good surprise," Diana says.

And despite hearing how difficult it can be to get a loan, Diana says "getting a loan wasn't really that big of a deal."

The 24-year-old says her good credit and low debt made it pretty easy to secure a 30-year fixed loan.

Still Living In A Foreclosed Home? It's Not Uncommon

WASHINGTON - Last week, WTOP told you about a woman who has been living in her foreclosed home for years, without paying a cent.

Her situation is not that unusual.

Montgomery County attorney Bruce Stern says the reality is that "most people try and stay in their property for as long as possible."

Stern says it's common for people going through a foreclosure to file for bankruptcy to draw out the process.

Once the foreclosure sale is finalized, it becomes the responsibility of the person who buys the foreclosed home to evict the former owner.

U.S. taxpayers and banks are losing the most when homes become foreclosed, because they guarantee the debt and help the banks through the process, Stern says.

Foreclosed -- And Proud Of It?

GAITHERSBURG, Md. - A Maryland woman is among the thousands of people losing their homes to foreclosure. But she's actually using the situation to her advantage. While she foreclosed a couple of years ago, she's still living in the home - and paying nothing

Deborah was renting a townhouse in Gaithersburg in the north Montgomery Village area in August 2005, when the owner decided to sell the home.

Although Deborah was making less than $32,000 a year and had just been through a divorce, she decided to purchase the home. She was told she could qualify for a home in the $200,000 - $250,000 range, but the townhouse was $379,000 -- and escalated to $405,000 at closing.

In order to buy the home, Deborah got what's called a No-Document Loan, meaning she did not have to document any income as long as she got a certain credit score.

Deborah combined the No-Document Loan with another loan and was able to buy the townhouse. (MarketWatch real estate editor Steve Kerch says most lenders shy away from No-Document Loans, and only unscrupulous lenders would lend such a loan. Kerch says when these types of loans are used to hide the fact that there isn't enough income to handle the loan, it's considered "mortgage fraud.")

She bought the house in September 2005, at the hight of the real estate market boom. Deborah knew she couldn't afford it but says she planned on finding someone to rent the basement of the home. She never found someone to rent.

Deborah tried to refinance in April, but didn't qualify. She tried to sell the home in June 2006, but didn't receive any offers.

In September 2006, her home went to foreclosure auction. She filed for Chapter 13 to slow things down. In March 2007, she filed for Chapter 7.

Wells Fargo bought the home for $166,324 in December 2007, but Deborah continued to live in the home.

Deborah's case is now in the court's hands. She says it's been a lengthy process and she has at least 30 more days to stay in the house before the sheriff's deputies will physically move her out of the house.

"It's very hard to repossess a house and get someone out of it," Deborah says. "It just means I'm smart."

It's been 42 months since Deborah moved into the home, and she has not paid a single penny for her mortgage. She says her situation is fair.

"I made my choice fully knowing what I was doing and knowing it was a gamble," Deborah says.

Deborah plans to rent next, and says she has a deposit down on a building under construction.

How Is The Financial Crisis Funneling Down To The Housing Market?

WASHINGTON - How is the financial meltdown impacting the local housing market?

Long and Foster Real Estate Agent Ron Sitrin is concerned about the impact of all the doom and gloom.

"Of course I worry about it, I'm human," Sitrin says.

Sitrin says he's already seeing nervous potential buyers.

"They don't want to buy if there's a sense that the property they are buying could go down in value," he says. "And that's not an unfounded fear, based on everything that's happening in the market right now."

So they look and they look, but are hesitant to buy -- unless "the house is extremely well priced," Sitrin says.

Potential buyers also worry that they won't be able to qualify for a mortgage. Sitrin says $1 million loans are hard to come by, but traditional loans less than $730,000 are readily accessible for people with good credit.

Sitrin says he is working twice as hard these days and making half as much.

What Happens When Your Home Bucks The Housing Trend?

SILVER SPRING, Md. - Being unable to sell your home can be a challenge. But there are inconveniences when your home sells too quickly.

Jessica's family outgrew their two-bedroom condo in Silver Spring, so they decided to put it on the market and find a bigger home.

"We thought it would take six months to a year, because that's the nightmare stories we've been hearing," Jessica says.

Two and half months after sprucing it up and taking a chance with a brand new real estate agent, they received two offers.

Jessica's home sold so quickly, her family didn't have another place to live.

"It was sort of a panic of 'Oh my god, what are we going to do now? Where are we going to live?'" Jessica says.

Since they didn't have another home lined up, they moved into a friend's basement before renting another apartment.

Despite the inconvenience, Jessica still ended up making a profit.

So why the quick, successful sale?

Jessica thinks the condo was priced right, and just like many other hot properties, it was just a few miles from a Metro stop.

Leasing Offers Another Option in Tight Market

GAINESVILLE, Va. - Linda knew selling her mom's home in an over-55 community would be a hard sell.

"We were told by the agents it was going to take a long time," she says.

The villa was on the market eight months, and there were "no offers at all in that whole period of time."

"We dropped the price twice," Linda says.

She even offered agents a 10 percent commission. More agents took an interest, but no one was buying.

So, she opted to rent the home. Within a week, she received two lease applications. A couple signed a one-year lease.

"Selling would have been very preferable, but this is a nice second option," she says. "Maybe the market will look a lot different in a year."

The latest numbers show nationwide, the number of vacant homes for sale has reached a record.

The number of vacant for-rent housing units also hit a record of more than 2 million units, as owners who couldn't sell put places up for rent.

Home Sales Are Strong, But Still Stalling

WASHINGTON - The decline in home prices is starting to ease across the country. But what's going on in our area?

Inside the Beltway, things are looking pretty good.

"Closer-in markets have stabilized," says Stephen Fuller, professor of public policy at George Mason University.

In Arlington, home sales were up 5 percent in July, while home sales across the region were down by 16 percent.

Fuller says Loudoun and Montgomery counties and D.C. are all looking strong.

But Fuller calls Prince George's County the most "depressed market."

"[There's a] very large inventory of homes to pick from -- there's also a very high foreclosure rate," Fuller says.

Bargain prices are really turning things around in Prince William County.

"Since March, four months in a row, Prince William County has had more sales for the same month, the year before," Fuller says. "In Loudoun County, the turnaround has been a bit more gradual - but it also has recovered."

Fuller says bargain prices and more confidence will help the entire area correct itself.

Buying a Home for a Bargain Price Comes With Challenges

BURTONSVILLE, Md. - You can save tens of thousands of dollars by buying a foreclosed home. But that doesn't mean the experience will be easy.

Mike Parris bought a foreclosed home in Burtonsville for what he calls "a bargain price."

"The condo that we owned was settling on the same day, so this was going to be the perfect scenario," Parris says.

But then things got tricky.

The bank's real estate agent bumped up the closing date, so Parris rushed to close the sale on his condo. When the sale of his condo was complete, they were nowhere near ready to move into the home.

"Not knowing if there was going to be a house, or where we were going to be at the end of the month, was kind of stressful," Parris says.

The closing date changed several times over the next month because of one un-signed document. Parris and his pregnant wife had to rent back their condo until the closing date finally came.

They have since moved into their new home.

Parris says if you're planning on bidding on a foreclosed home, "you have to have patience and you have to make sure they are ready."

The foreclosed home the Parrises bought sold a couple years ago for $632,000. The bank asked for $499,000, but the couple got it for even less.

The family who foreclosed the home disappeared, and the house was put up for sale by the bank about six months later.

A New Way To Buy A Home: Online

WASHINGTON - Homes are sitting longer on the market, and the inventory is piling up. One man sees it as a business opportunity.

At bidEup.com, people can actually buy or sell a property with the click of a mouse.

David McNairy, a former attorney, says he invented bidEup after seeing all the inventory sitting on the market unsold.

Just like eBay, you can choose a buy-now option -- or put in an offer that is legally binding. You can also email the seller questions, apply for a mortgage or put in an offer.

"For the first time, an online transaction of a high price good is as legally binding as if it took place off-line," McNairy says.

The site has only been up for a few months, so there are just a few properties up for sale. But McNairy says the concept is "a real powerful tool for the future."

Sellers Aren't Willing to Give to Charity

WASHINGTON - Some homebuyers with non-conventional loans are finding it difficult to get into their dream homes because the sellers aren't willing to abide by their loan terms.

After bidding on 13 homes in Sterling since March, Betty McDaniel still hasn't sealed the deal.

"I had no idea it would be this stressful," says McDaniel who is getting down payment assistance from the Nehemiah Progressive Housing Development Corp.

The Nehemiah program is privately funded. It provides buyers with gift funds of up to 6 percent of the sales price. The buyer doesn't have to repay the money, which can be used for payments and closing costs.

McDaniel is using this program because she can't afford to pay the needed 20 percent down on a home. She says her price range will force her to buy a fixer-upper and will need the cash to improve the home.

The catch with the program: The seller has to donate 6 percent of the home's sale to charity.

Sellers aren't jumping at the donation opportunity, especially after home prices have dropped significantly over the past year.

McDaniel says over and over, she's losing out to conventional loans, even when her bid is substantially higher.

She admits she is bitter that people caught up in the foreclosure mess are getting all the help - instead of someone who refuses to go beyond her means.

"We pay our bills on time, we're working, making all this honest effort and nothing is happening," she says. "Why can't I get some help?"

The big housing bill just approved on Capitol Hill bans such down payment assistance programs beginning in 2009.

Heather Bartholomew contributed to this story.

Happy Ending Update: Betty McDaniel says she ended up getting the last house she initially lost out on. Her new home is a five-bedroom house with a big backyard. The seller accepted their offer with the Nehemiah program.

Have Your Home Stand Apart From The Rest

FALLS CHURCH, Va. - You don't just hammer the for-sale-sign in the front yard to sell a home anymore. Some are going above and beyond to make sure their home has an edge.

Trish Kim, an accredited staging professional with Staged Interior, transformed a once-vacant Falls Church house into a beautifully furnished and decorated home.

"We do as little or as much as they want," Kim says.

Kim's company charges a $1,200 staging fee, then they determine what needs to shine: paint, landscaping, new décor.

Many times, they take items out of the home.

"We go in and help them de-clutter and get the pieces of furniture out that aren't going to work," Kim says.

Kim says it typically costs one percent of the asking price to stage a home. Her statistics show nationally, it takes at least 180 days to sell a home. But when a home is staged, it sells in 30 days or less.

For more information about staged homes, click here.

Several other organizations came together to stage the Falls Church home as part of a fundraiser for the Fisher House.

Million-Dollar Homes Aren't Selling, Either

FALLS CHURCH, Va. - Average-priced homes aren't the only ones facing challenges in this downturn housing market. High-end homes are sitting longer, too.

A 7,000-square foot home in Falls Church has been up for sale for at least six months. The asking price is down to about $1.5 million from nearly $2 million. The house - built to sell - used to be vacant. But not anymore.

"It didn't get the recognition without someone really having a good visual today of what it could look like furnished," Weichert Realtors real estate agent Laura Maschler says.

So Maschler brought in thousands of dollars of top-of-the-line rented furniture to create masterpiece show rooms.

"All of the elements that maybe weren't required in a faster market are absolutely vital," Maschler says.

The home - which has has five bedrooms, seven full bathrooms, hardwood and marble flooring - is open to the public.

Slow Housing Market? Depends On Where You Live

WASHINGTON - Some counties are taking more of a hit when it comes to the slowing housing market in our area.

The housing market in Loudoun, Prince William, Prince George's and Charles counties is tough, but homes inside the Beltway -- areas like Arlington, Alexandria, Bethesda and Northwest, D.C. -- are faring much better.

Homes near mass transit are moving quicker off the market. George Mason University Senior Fellow John McClain says homes in zip codes near Metro stations are selling in 70 to 80 days, compared with homes outside the Beltway taking up to 200 days to sell.

Inside the Beltway, home prices are stabilizing or even increasing. But outside the Beltway, home prices are down as much as 20 percent.

When You Can't Sell Your Home in More Than a Year

ACCOKEEK, Md. - The home at 15209 Livingston Road in Accokeek, Maryland in Prince George's County has been up on the market for more than a year now.

The original asking price was $424,900. After lowering it three or four times, the asking price is now $359,950. Ruth lives in the house with her daughter and son-in-law, who own the home. She says the experience is very daunting and frustrating.

Ruth says her daughter is not willing to drop the price of the home anymore. So, now the remodeling begins. They just put in hardwood floors in the dining room, a new kitchen floor, new appliances and a fresh coat of paint. The home, which was built in the 1970s, has a pool in the backyard along with new landscaping. The owners hope the newer look of the home will entice someone to finally purchase it.

Just last week Century 21 Real Estate Agent John Revell held an open house for the home as well as others in the area. Only two people showed up. He says "things are starting to pick up," but there are "For Sale" signs up and down Livingston Road in Accokeek as well as in surrounding neighborhoods. Most are older, smaller homes. Several new homes are also being built nearby but Ruth says the new homes aren't hurting them most, it's the foreclosed homes. She says people want houses "for nothing" these days and they just can't compete with foreclosed homes.

Ruth says they did have an interested buyer, but he couldn't get approved for a mortgage in five months. After five months of waiting, they had to give up on the person because they couldn't come up with the proper financing.

Having a home on the market for more than a year has been disruptive for Ruth's family, to say the least. She says her son-in-law has been postponing a trip to see his elderly father because of the constant work of trying to sell the home. She says her daughter is "working herself to death" over this house. And so far, there has been no payoff.

The couple says they want to move to Calvert County. Ruth says they found a lovely home they wanted to buy there, but they certainly can't take on another mortgage until this house sells. And that may not occur. They say they'll finally pull the home off the market in September if no offer comes by then.

Housing Market Success Stories

WASHINGTON - There are many homeowners caught on the wrong side of the housing market. But there are others who are asking themselves, "What slow housing market?"

Gary Rupprect sold his Rockville home in just three months. Rupprect and his wife were able to sell their home for $310,000 more than what they paid for it 17 years ago.

"My wife and I did very, very well," says Rupprect, who now lives in Florida. "It sold relatively quickly."

Brett Parks' only challenge was deciding which of the four offers to accept on his Columbia townhome.

Parks' home sold in 10 days with enough profit to pay for his new home in South Carolina twice over.

Parks isn't sympathetic to people who are caught up in the foreclosure mess.

"They knew what they were getting into or at least they should have because they do have the ability to read," Parks says. "Don't sign up for payments that are higher than you can make."

Floating Two Mortgages Because Condos Aren't Selling

STERLING, Va. - Beth Stewart thought her lovely Sterling, Va. condominium would sell in a few months, so when she decided to take a job in Dayton, Ohio, she opted to buy there instead of rent.

But after five months on the market, her condo on Lost Trail Terrace -- right off Route 28 -- hasn't sold.

"Now I'm floating two mortgages," Stewart says. "I've been dipping into my retirement."

Stewart had no other choice but to rent out her condo. The first renter ruined her hot tub, and after spending $1,000 to fix it, she decided to find a new renter.

Stewart's situation isn't unique. Stewart's neighbor, Amna Qaderi, says condos in their neighborhood sit on the market for up to a year now when they used to sell in weeks.

"We don't see a lot of people moving out, moving in that sort of thing, which used to be a trend here before," Qaderi says.

Using Home Equity to Fund a Business

Jeannette Rozada lives in a beautiful home in the Garrisonville area of Stafford County. The house has a 4 bedrooms, 2 1/2 bathrooms, a 3-car garage, a nice deck and is in a safe area for children. Rozada lives at the home with her 30-year-old daughter and her daughter's two children. They are very happy in their home, but the housing market isn't being kind.

What Went Wrong: Rozada and her husband purchased the home in 2003 for $380,000. One year later, they refinanced their home in order to buy a business, and used equity in the home. They thought they could replace the money in three to five years, but the business failed. After losing their business, they also lost their car and now, will very likely lose their home.

Price Depreciation: When Rozada refinanced her home in 2003, the home was appraised at $525,000. Now, the home is valued at $370,000 and her mortgage is about to dramatically increase. She cannot afford the payments. "Who can pay $4,000 a month? We're not rich," she says.

On The Market: Rozada put her house on the market for four to five months and had a real estate agent, but no one ever came to see the house. Other homes in the neighborhood were on sale, but not selling either. New homes that were being built in the area didn't help her situation, because the prices kept going down.

Now What?: Rozada is talking with her bank and they aren't being very helpful, she says. She is considering a quick sale on her home, but says foreclosure is likely inevitable, even though she hates the thought of losing her good credit.

A Year on the Market

Al knows the home selling blues. He tried selling his beautiful 2-story brick home in Waldorf for one year.

On The Market: Despite keeping his home immaculate 24 hours a day, seven days a week for 12 months, he received no credible offers.

"The offers were insulting. It's like having a second job. I had had enough," Al says. "I had inexperienced realtors coming through and people who fell in love with the house, but no contract ever came."

Now What?: Al took his home off the market after a year, and says he has no immediate plans to put it up for sale again.