Saturday Reporter-Herald April 24, 2010 D1
Real Estate Matters
www.realtyguide.com • Saturday, April 24, 2010 • Reporter-Herald
It may be wise to keep money in account ILYCE GLINK TRIBUNE MEDIA SERVICES
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uestion: I have $50,000 sitting in a money market account. I owe approximately that amount on my mortgage. I have a 401(k) of about $325,000 and another retirement account worth approximately $400,000. Should I pay off my mortgage? Answer: Even with the economy on an upswing, I’d hate to see you use up every last cent of your liquid cash paying off your mortgage, particularly if you have a low interest rate or are at the point in your loan that your monthly payments go mostly toward reducing the principal balance on the loan. But if you can immediately start socking away into a savings account the cash you won’t be using to pay down your loan each month, and if you have other cash available in case your car breaks down, you need to buy a new hot water heater or some other immediate reason, that would work. One final thought: If you’re near the end of your loan, you’re paying principal only and not really any meaningful amount of interest. So if you want the cash flow each month, pay off your mortgage. Otherwise, just make sure it’s paid off by the time you retire. Question: I have owned my home by myself since 1976. In 1989, I married. My name is I See GLINK/Page D2
Inside this week’s Home & Real Estate
Director y Page D7
Realtor of the Week Diane Iwanicki of Prudential Rocky Mountain, Realtors
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Loveland Historic Homes Tour Six historic sites will be available for tour next weekend
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ThinkStock photo
State of foreclosures in Loveland HAFA program has potential to help local organizations combat foreclosures RHEMA MUNCY SPECIAL SECTIONS
cessing costs. Up to $2,000 for investors who will be available and up to $6,000 in short sale proceeds will be distributed to n April 5, the HAFA program went into effect na- subordinate lien holders on a tion-wide. This new HUD one-for-three matching basis. “One of the key components is initiative extends the HAMP prothat in order to participate, the gram which looked at helping people who were behind on their lien holders have to give up all of their deficiency rights, so they payments do a possible loan can’t pursue you for lost dollars,” modification. Downing said. “They would either work with To check if a defaulted home their lender directly or via a loan might apply for the prohousing counselor to try and gram, Downing recommended modify their loan in some way,” said Billie Jo Downing of Re/Max contacting the lender and then working with a licensed Realtor Alliance. The HAMP program was offered immediately to get the process initially by Freddic Mac and Fan- going. nie Mae and then adopted by other lenders. The program was de- STATE OF FORECLOSURES IN LOVELAND signed to help 4 million homeowners. It fell short of its goal beThe community saw a 23 percause many loans did not qualify cent decline in foreclosure sales for the assistance offered by the first quarter of this year, HAMP, and according to Freddie Downing said. According to Mac, there are currently 4.7 mil- Larimer County public trustee lion loans in serious default naDebbie Morgan, the filings to betion-wide. gin the foreclosure process in HAFA was designed to address Loveland were 174 for the first this issue, although the program quarter compared to 207 for the first quarter of 2009. Larimer is off to a slow start and not many loans in Loveland are quali- County overall had 455 filings, down from 535 the first quarter fying, Downing said. Another purpose of the HAFA program is of last year. In the first quarter, to try and redefine short sale and foreclosures that went to final sales numbered 91 for Loveland deeds in lieu processes. and 270 for Larimer County, “It is an attempt to make a both up from 2009’s first quarter short sale a smoother process,” where Loveland had 64 forecloDowning said. sures go to sale and Larimer According to Realtor.org, the HAFA program complements the County had 174. The final sales are not from the filings regisHAMP program and allows bortered during the same time perirowers to receive pre-approved od, Morgan said. short sales terms before listing the property including the miniImprovement has been slow, mum acceptable net proceeds. mainly driven by the poor job economy, according to Borrowers are fully released Meaghanne Oresjo, a housing from future liability for the first counselor for Neighbor to Neighmortgage debt and it also provides financial incentives such as bor in Loveland. If people can’t find employment, they can’t pay $3,000 for borrower relocation their mortgages, contributing to assistance, $1,500 for servicers to cover administrative and pro- the foreclosure problem. Oresjo
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FORECLOSURES COSTLY TO CITIES A 2005 study at the University of Colorado-Denver by graduate student Christi Icenogle found that 99 foreclosed properties in Denver that were vacant and neglected cost the city at least $480,000 a year in known costs. The cost was calculated from 35.5 percent of the salaries of two employees in the Neighborhood Inspection Services department and the crews that mow lawns and pick up trash at neglected buildings. Boarding up the buildings, conducting hearings for the foreclosed properties and proportionate policing costs also contributed to the sum. Significant crime can also occur at the properties with the damages passed onto the city government. has watched lenders step up to the plate for the last couple of years and proactively help their borrowers tackle problems before they turn into foreclosures, but sometimes situations slip through the cracks and homeowners are the ones who suffer. In 2009, Neighbor to Neighbor counseled over 400 households, and about half of those were in Loveland. “We have seen consistent numbers,” Oresjo said. “We are always busy with foreclosure calls. A lot of people are calling before they experience trouble, which is really good. People are calling as soon as they know they will get laid off or if their overtime will get cut.” One significant change that has happened over the past couple of years is that more and more business professionals and higher end homes are experiencing financial pressure. “A lot of times they are facing job loss or a lot of self-employed homeowners are having problems,” Oresjo said. “Or maybe they were in a loan product they were hoping to refinance but because their home value isn’t what is used to be, it is hard to get out of the original loan. A lot of times these people have never had to ask for help at all — they have always been the ones giving and they don’t know where to turn when they are struggling.” Amy Irwin, the manager of home ownership programs at the Housing Authority of the City of Loveland has helped the city implement a down payment assistance and a Home Match program.
The Home Match program helps buyers get pre-qualified and ready to go for buying a house. They then work with a Realtor that specializes in foreclosures. Once a property is found, the program helps the buyer by purchasing the home that needs serious rehab. The Loveland Housing Authority buys the home for a price well below value and then pours money into the home up to the point of the buyer’s purchase point. Then the buyer only has to take out one loan and they do not have to face all of the repairs on their own or try to negotiate with a lender over the repairs, Irwin said. FORECLOSURE HOTLINE The state-wide number offers a connection point for struggling homeowners. Since its inception 31/2 years ago, the Hotline has helped homeowners reach over 20,000 positive solutions with 7,783 of those happening in 2009. Brothers Redevelopment and Foreclosure Hotline communications coordinator Sarah Noel said that when callers enter a Larimer County zip code they are directed to HUD approved loan counselors in Larimer County. “We have seen an increase in calls,” Noel said. “The call volume increases year over year. We are seeing a decrease in sales, so people aren’t actually going through with foreclosures. They may be entering the process, but something happens to stop the foreclosure. People are finding solutions before losing their home to foreclosure or selling the property.”