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Homeownership

4 million homeowners skip mortgage payments as forbearance requests slow

(REAL ESTATE) It is no surprise that mortgage payments are being skipped across the nation, but it’s not all a total loss…

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Over 4.1 million American homeowners are currently skipping their mortgage payments on a temporary basis as COVID-19 keeps the economy shut down, according to the Mortgage Bankers Association (MBA).

Meanwhile, forbearance requests have slowed – the MBA’s weekly survey indicates that 8.16 percent of total loans are now in forbearance plans, up from 7.91 percent the week prior, and while the share of loans in forbearance is rising, the trend is toward requests decreasing.

Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, said in a statement, “There has been a pronounced flattening in loans put into forbearance – despite April’s uniformly negative economic data, remarkably high unemployment, and it now being past May payment due dates.”

Congress passed the $2.22 trillion CARES Act (the Coronavirus Aid, Relief, and Economic Security Act), under which homeowners holding a federally backed home loan may delay mortgage payments for up to a year, but politicians are quick to remind folks that the money is still due, and fees may still apply during the forbearance period.

This relief effort is the primary reason so many did not pay their mortgage this month. People are still unsure of whether or not they will be employed in the near future, and are managing their finances accordingly, particularly while lenders are still in the mood to negotiate. Economists believe that difficulties will be ongoing, and homeowners will continue to struggle as a whole.

While our economy hasn’t been hit this hard since the Great Depression, and unemployment numbers reveal widespread economic devastation, slivers of hope remain. Forbearance requests slowing isn’t the only housing hope – new home construction levels are down, but nowhere near at the same pace as other sectors harder hit.

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Homeownership

As Boomers downsize, heirlooms are being rejected

(HOMEOWNERSHIP) As baby boomers downsize and capitalize on senior management, heirlooms and antiques are falling to the wayside (they just don’t spark joy).

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There’s nothing quite like moving to make you realize how much stuff you have. When every single item in your household has to be boxed up and carted elsewhere, it’s easy to be startled by the sheer volume of material possessions you own.

Often, when we move, we end up taking an opportunity to purge our belongings. Bags and boxes are donated to thrift stores. Hand-me-down clothes are passed to the neighbors. Keepsakes are re-gifted to friends.

This can be a painstaking process at any age, but a particularly emotional one for aging retirees.

The numbers show that, between the ages of 18 and 54, we tend to move into ever bigger houses. It makes sense – you start out with an affordable one bedroom place. You get married, have kids, and need to move into something bigger.

Retirees are on the opposite tip.

Their grown children have moved out, they are getting older and would like to lighten their load of housework and maintenance. After age 55, people typically move from larger dwellings into smaller ones.

A growing “senior move management” industry has arisen to fulfill the particular needs of the older set. The trade group, the National Association of Senior Move Managers boasts 950 member companies.

These companies handle everything from hiring the moving trucks to changing your address to renegotiating your cable contract for your new home.

Industry insiders say that one of the trickier aspects of their job is managing those precious items that won’t fit in the new home, but that the mover would like to keep “in the family.” Parents and grandparents often hope that their children and grandchildren will adopt their treasured heirlooms and collections. But the younger set isn’t having it.

The adult Millennial children of the Baby Boomer generation have their own style and taste that may not match their parents’. Many are living in small dwellings themselves with minimalistic aesthetics. An antique oak hutch simply isn’t going to mesh with a twenty-something’s Ikea-inspired bachelor pad.

The younger set also doesn’t entertain in the same formal style as the older generation, making silver flatware and fancy china obsolete. It’s not about being ungrateful, it’s about wildly different styles between generations.

What it boils down to is: Just because mom thought it was precious, doesn’t mean that daughter gives a damn.

Says Kate Grondin of the senior move management company Home Transition Resource, “We can help soften the blow if the kids don’t want anything but are afraid to tell their parents.” Sometimes the kids flatly refuse to inherit items like furniture, art, or dishware that their parents have held onto for decades, or even generations.

Other times, in order to avoid hard feelings, the kids might take items, only to turn around and throw or give them away.

When moving elders ask senior move manager Anne Lucas of Ducks in a Row, “‘What do I do with my crystal and china?’” she tells them “‘Drink your OJ out of it. Who cares if the gold comes off? The kids don’t want it.’”

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Homeownership

How to inform clients about scams that continue to victimize homebuyers

(HOMEOWNERSHIP) Real estate scams continue to victimize people, but Realtors are in a position to better protect homebuyers. Here are some tips.

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Despite warning after warning and news story after news story, homebuyers keep getting their money stolen in real estate wire transfer schemes. Some blame the mortgage and real estate industries for not doing enough to educate and protect their clients. Others say the people committing these crimes are getting more and more sophisticated. No matter who’s to blame, there’s no arguing that this crime is on the rise.

What exactly do these real estate scams look like? These criminals usually hack into a business’s emails, often a title company, and get all the pertinent information they need. They then steal and copy that company’s letterhead, and the email addresses, signature blocks and any other relevant information they will need to fool the homebuyer. The homebuyer then gets an email that appears to be from the title company, asking them to wire money, often tens or sometimes hundreds of thousands of dollars.

So, you’re probably wondering right now: What can I do? You want to know how to warn and protect your clients and keep your reputation intact (and avoid costly lawsuits). The following safeguarding tips can help keep cash out of cyberthieves’ hands:

1. Pick up the phone. If you’re closing on a home and receive an email with instructions on how to transfer money to your closing company or lender, take a few minutes to call your agent or broker to make sure it’s legit. Yes, this might be a bit annoying, but not as annoying as losing thousands of dollars in an email scam.

2. Be aware. These scammers usually send emails that look like the real thing. If you’re a homebuyer, look for weirdly timed emails (sent in the middle of the night) or spelling and punctuation errors. Is there a sense of urgency to the email?

3. Educate your clients. If you’re a real estate professional, make sure your clients know about this scheme. Not everyone is aware they could be a target (which is why it keeps happening). Set up a specific passcode for each client.

4. Consider using BuyerDocs and asking your title company to use this technology for all of their transactions.. What’s BuyerDocs, you ask? This tech startup provides secure document delivery for closing companies and homebuyers. The company says it has protected more than $5 billion in wire transfers in 2018 and works with big and small businesses across the country.

Scams will never be eradicated, but it is part of your job to know the current scams and how to protect transactions against shady folks.

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Homeownership

Why realtors shouldn’t use the term ‘Starter Home’

(HOMEOWNERSHIP) You see the term in the MLS for fixer uppers, you hear it when Realtors are working with first time buyers. But the term “starter home” shouldn’t be in anyone’s vocabulary. Here’s why.

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Just words

Collins English Dictionary defines a starter home as a “small, new house which is cheap enough for people who are buying their first home to afford.” You won’t find the phrase too often outside of the real estate industry.

There isn’t much about the etymology of the phrase, but most likely, it’s a marketing ploy to get people to buy into the idea of purchasing another home in a few years.

Grind your gears

Mark Greutman, husband to Lauren Greutman, believes that the term “starter home” should bother people. The phrase implies that you will upgrade later.

Your starter home isn’t good enough for the rest of your life. And not to get into how well Americans have it, what about people who will never be able to afford anything more? Is it an insult to them?

Do you really need two living rooms?

Older generations bought one home and lived in it until they could no longer be independent. In today’s world, we buy a starter home, then upgrade to have more space, to live farther away from our neighbors, to have rooms that are only used once or twice a year, and to make sure you have a 2 or 3 car garage to hold your vehicles and more stuff, some of which isn’t taken out very often.

But consider this: You could pay off your starter home in 15 to 20 years, if you budget right.

You could be out from under a mortgage and have money to travel, send the kids to college, or even retire early. When you think about what led to the financial crisis in 2008, isn’t it better to have a smaller house where you can make the payments than worry about losing your house?

Be content where you are

Realtors are motivated to make sure that they have customers. If people buy one home with the intent to stay, will the market dry up? Probably not, because people move and a new generation will be ready to purchase homes for their own family.

Let’s think about that phrase, “starter home.” It fuels consumerism and discontentment. Don’t call cheaper houses starter homes, but just a home.

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