^[1]
RISMEDIA, July 23, 2010—(MCT)—With a broad smile and the stroke of a
pen, President Barack Obama capped a contentious 18-month struggle and
signed into law the broadest revamp of financial regulation since the
Great Depression.

“Passing this bill was no easy task. To get there, we had to overcome
the furious lobbying of an array of powerful interest groups and a
partisan minority determined to block change,” Obama said in a
pre-signing speech, surrounded by cheering congressional leaders and
administration members.

Alternating between hitting Wall Street and acknowledging its economic
importance, the president said that the historic Restoring American
Financial Stability Act of 2010 seeks to strike a balance that would
protect consumers while allowing the vital financial sector to prosper.

“The fact is the financial industry is central to our nation’s ability
to grow, to prosper, to compete and to innovate. This reform will foster
innovation, not hamper it. It is designed to make sure everybody follows
the same set of rules,” he said. “Unless your business model depends on
cutting corners or bilking customers, you’ve got nothing to fear from
reform.”

The signing marked the third major legislative accomplishment for Obama,
after an $800 billion stimulus and tax-cut package and a regulatory
revamp of the health care sector. Still, the president has slumped in
the opinion polls, dragged down by a sluggish economy. Polls also
suggest that the broader public is ambivalent about the new measure.

To combat that, Obama and congressional Democrats went to extremes to
highlight all the consumer provisions in the legislation. There are
numerous measures to combat predatory lending, and the president invited
borrower Robin Fox of Rome, Ga., to the speech. She’d been hit with
unexpected interest rate increases on a credit card balance. “With this
law, unfair rate hikes, like the one that hit Robin, will end for good,”
Obama said.

Underscoring the historic nature of the legislation, which updates many
rules that date to the 1930s, the televised signing ceremony wasn’t at
the White House but at the Ronald Reagan Building, in a large auditorium
where about 400 invited guests could bask in the accomplishment.

The legislation seeks to fix much of what went wrong in the lead-up to
the nation’s deep financial crisis. It gives regulators the power to
dissolve large, interconnected financial institutions and allows the
Federal Reserve to break up companies that it thinks are so large that
their failure would pose a risk to the U.S. and global economy.

The lack of this authority forced the Bush administration and a
Democratic-led Congress to choose unpopular bank bailouts over a
disruptive bankruptcy process that Fed Chairman Ben Bernanke warned
could have led to a global economic depression.

“The bill isn’t perfect, since it represents what was politically
achievable in an election year. But it sets some important starting
points for more detailed work in areas where oversight has been lacking,
such as viewing risk from a systemic point of view and increased
consumer protection,” said Scott McCleskey, the author of the new book
When Free Markets Fail, which seeks to explain the crisis in layman’s
terms. “In the end, though, the crisis made abundantly clear the fact
that we need more regulation because the markets have become too complex
to regulate themselves.”

For ordinary Americans, the legislation will be felt most directly
through the creation of a new and independent Bureau of Consumer
Financial Protection. It will police credit extended to consumers, be it
mortgages, credit cards, student loans, auto loans or even payday loans.

“For the first time, families will have a tough, independent cop in
Washington to help clear out the tricks and traps hidden in consumer
credit agreements,” Elizabeth Warren, a Harvard University professor
who’s credited with developing the idea of the bureau, said in a statement.

Gail Hillebrand, a senior attorney for the advocacy group Consumers
Union, added that “millions of Americans have been hit by shady loans,
hidden fees and surprise rate increases, and this Consumer Financial
Protection Bureau will take dead aim at these kinds of problems.”

Business groups frowned on the new law. “This legislation, while drafted
with the best intentions, paints the U.S. business community with a
broad brush and will have many unintended consequences for the more than
12,000 nonfinancial publicly traded companies,” Larry Burton, the
executive director of the Business Roundtable, said in a statement.

The U.S. Chamber of Commerce, which aggressively lobbied against the
legislation, didn’t pull punches in its statement upon signing. “Such a
broad, sweeping bill epitomizes a law with unintended consequences that
creates more uncertainty for American businesses,” said Thomas J.
Donohue, the chamber’s president and CEO. “For years the chamber has
called for reform that modernizes our financial system. Yet this law is
like adding new paint on an old car; it’s still not going to run at the
pace and with the agility that is currently demanded.”

Regulators will sit together on a special council to collectively study
risks to the broader financial system. They’ll be empowered to order
that banks keep more capital on hand to guard against future losses, and
they’ll have knowledge that they didn’t have before about the complex
financial instruments called over-the-counter derivatives. The size of
the market for these private bets between parties is valued in the
trillions of dollars, yet these deals largely have been hidden from
regulators.

Now, most trading in these complex instruments will be done on public
exchanges or clearinghouses, and regulators will have the authority to
limit a financial player’s overall holdings in contracts for oil,
natural gas, wheat or other commodities if it appears that anyone is
seizing so much of the market that prices could be manipulated.

“It gives us the transparency, tools and teeth we need to better
regulate the markets we already oversee and to bring light to the more
than $600 trillion over-the-counter markets which are currently
unregulated,” said Bart Chilton, a commissioner on the Commodity Futures
Trading Commission (CFTC). “Many key items will be decided in the near
future: How do we actually oversee and regulate the OTC markets? How do
we implement position limits? And how are we going to use some of these
new professional-grade regulatory tools to police these markets? For
example, CFTC has had only one successful manipulation prosecution in 35
years. The law was broken but the bill gives us new authority to go
after disruptive trading practices.”

(c) 2010, McClatchy-Tribune Information Services.

–
Bojana (Bo) Foster, Broker
Voted Best Agent 2006 ~ 2009 in the Best of Nisqually
Signature Service Real Estate, Rainier
360 446-4646 ext 11
Bo@SignatureService.com
www.SignatureService.com

“…Buy Land. They’ve stopped making it”.
Mark Twain

“It’s a hot item,” said Scott Redmon, owner of Alfresco Living in
Maitland, Fla. “And the outdoor kitchen is becoming a lot more than a
grill and a sink in the corner of the porch. It’s a whole entertainment
system. People have a higher expectation for their exterior spaces since
HGTV came around.”

Outdoor kitchens are popular because they are fun to live with, said
Russ Faulk, vice-president of product development at Kalamazoo Outdoor
Gourmet in Kalamazoo, Mich. “They add to the quality of life for the
homeowner. Preparing a meal outdoors is not a chore, it’s an occasion, a
reason to have friends over and enjoy the process.” In addition, an
outdoor kitchen expands a home’s living space and adds to its value, he
said. “The return on your investment is comparable to an indoor kitchen
redo.”

Since the economic downturn, “People have been unable to sell their
homes, so they are starting to upgrade with better landscaping and
outdoor kitchens, spending more time at home,” said Sue Fern, manager of
the Florida chapter of the American Society of Landscape Architects.

The built-in grill was the start of the outdoor-kitchen trend, said
Faulk. “Then came the sink, the refrigerator, a counter for food prep,
cabinets for storage—pretty much what you’d have in an indoor
kitchen.” As more equipment is added, outdoor “rooms” are becoming
larger and more covered, he said. Seating areas are added, along with
outdoor TV sets, fire pits and water features.

The grill—fired by gas, wood or charcoal—is still the heart of the
outdoor kitchen. Especially popular are hybrid grills, which can be
switched from gas to wood or charcoal, depending on what is being
cooked, said Faulk. “There’s nothing like grilling fish over an oak fire.”

Pizza ovens are starting to threaten the grill’s reign as king of the
outdoor kitchen. Oven designs range from large, wood-fired brick and
clay ovens that take several hours to heat up, to compact countertop
models fired by gas that are ready for baking pizzas in 20 minutes.

Also gaining popularity in outdoor kitchens are keg-tappers, wine
chillers, ice makers and warming cabinets.

When designing an outdoor kitchen, be sure to look for low-maintenance
equipment, said Faulk, “or you defeat the purpose of carefree outdoor
cooking.”

Also, make sure any cabinetry is designed to keep the contents clean and
dry in inclement weather; install good task and ambient lighting and
choose counter-top material that is stain- and grease-resistant and
stays cool in direct sunlight.

“Get counter-top samples, leave them in the sun and see how hot they
get,” advised Faulk. “Heat-retention is not always related to color.
Some light colors get hotter than dark colors.”

He also offers these cost-cutting tips: “Design the outdoor kitchen
against the house to reduce the cost of getting utilities to the space.
And buy the best grill you can afford.”

When designing an outdoor kitchen, “Consider how the space will be used:
as a personal refuge or a place to entertain and be social; as a place
to cook and eat, or to drink and socialize,” said Eduardo Xol, exterior
designer on Extreme Makeover: Home Edition and celebrity designer for
hayneedle.com.

And remember, indoor-outdoor living helps balance the soul. It keeps you
connected with nature and helps you become more aware of living green.

–
Bojana (Bo) Foster, Broker
Voted Best Agent 2006 ~ 2009 in the Best of Nisqually
Signature Service Real Estate, Rainier
360 446-4646 ext 11
Bo@SignatureService.com
www.SignatureService.com

“…Buy Land. They’ve stopped making it”.
Mark Twain

^[1] RISMEDIA,
July 14, 2010—(MCT)—Courtney Zinter doesn’t have a big house with
rooms full of stuff, a fancy car or a manicure habit. But she still has
it all. Just not how the Joneses next door would define it. With a
well-paying job, Zinter had no problem paying the mortgage on her
1,600-square-foot townhouse in Chaska, outside Minneapolis. But at 29,
she sold it and moved to a $590-a-month studio apartment that overlooks
a freeway on the outskirts of downtown Minneapolis.

She could have certainly afforded a rental that had at least a bedroom
and separate living space in a hipper part of town. But she didn’t
because she’s realized something that it takes many people decades, if
not a lifetime, to figure out: Money and stuff don’t equal happiness.

Growing up in Silver Bay, Minn., with a dad who worked as a financial
associate for Thrivent Financial for Lutherans, Zinter was schooled
early on about the value of a dollar. And when she graduated from
college in 2002, she followed in Dad’s footsteps, starting as a
financial representative for the company. With a job in place, she
checked off the next thing on the ‘you’re an adult now’ to-do list:
homeownership. “I thought the thing to do was buy a house as soon as I
could. You grow up thinking that’s what you do,” she said.

The townhouse she found was spacious, complete with a wet bar and patio.
But over the years, her two-hour bus commute to downtown Minneapolis
gave her plenty of time to think “What am I giving up for this place?”

Then a trip to El Salvador in November 2008 for a Habitat for Humanity
project made her realize just how many things she owned and how little
most of it meant to her. “I decided I had to make some changes in my
life,” she said. So she sold her townhouse last fall for a bit less than
she owed, found a good family for her piano and gave away a lot of her
things.

Zinter set a goal to find an apartment for $500 per month—$1,000 less
than her old mortgage payment. (The new place isn’t quite that low, but
she no longer needs a bus pass). And that’s on top of her already
impressive savings habits. She has more than $130,000 in retirement
accounts, despite starting to invest during a decade when the stock
market hasn’t been kind to aggressive young investors like herself. Her
emergency savings is fully funded as well.

Many of us only realize after we buy the big house and the closets of
clothing and toys that we have too much stuff and too many financial
obligations. Unwinding ourselves from the financial burdens of a big
house payment or car lease can be difficult, especially in this economy.

*If you’re inspired by Zinter’s decision to downsize at a time in life
when most people are trading up, how should you start?*

-Make incremental changes. Zinter didn’t chuck all of her stuff at once.
“I would often take laps around my house and ask myself ‘what I could
get rid of without regretting my decision?’ If she realized she was only
keeping something for sentimental value—like that large collection of
T-shirts from high school that she never wore—she took pictures before
chucking the stuff. She admits that she sometimes misses the oversized
chair that went with her couch. “But I can only sit in one place at a
time,” she said.

-Think about what you want, not what you think you’re supposed to want.
When she decided to sell her townhouse, “It felt like in society’s eyes
I was going backwards. I went from owning a nice place to renting this
very small space.” Even today, she feels as if she needs to explain
herself. Otherwise, people assume she’s forced to live below her means
because she’s deep in debt.

-Save your money. “Even if you earn little interest, at least you saved it.”

-Fewer fixed expenses equals more freedom. “In my mind, if I get
dependent on spending money every week or two on something, it becomes a
fixed expense and I try to minimize those as much as possible. I guess
it’s the freedom issue again. I’ve minimized what I have to spend each
month, and the rest is mine for whatever I want to do with it.”

(c) 2010, Star Tribune (Minneapolis)

The Pending Home Sales Index, a forward-looking indicator, dropped 30%
to 77.6 based on contracts signed in May 2010 from a reading of 110.9 in
April, and is 15.9% below May 2009 when it was 92.3. The falloff comes
on the heels of three strong monthly gains as home buyers rushed to take
advantage of the tax credit.

The data reflects contracts and not closings, which normally occur with
a lag time of one or two months. However, many closings have been
delayed recently from a rush of buyers into the system and slow
processing of short sales, in addition to the heavy volume and a more
thorough loan underwriting process. As many as 180,000 buyers who signed
contracts by April 30 may have missed the June 30 closing deadline for
the tax credit. However, Congress passed legislation recently to extend
the deadline for delayed contracts and President Obama is expected to sign.

NAR chief economist Lawrence Yun said, “Consumers are rational and they
rushed to meet the tax credit eligibility deadline in April. The sharp
decline in contract signings in May is a natural result with similar low
levels of sales activity anticipated in June,” he said. “Surprisingly,
though, some local markets such as Portland, Maine and Jacksonville,
Fla., actually experienced an increase in contract signings from a year
ago without the tax credit. Existing-home sales that close in June will
remain elevated, but we’ll then see a notable decline for July and August.”

Congress also reauthorized the National Flood Insurance Program. Many
lenders were hesitant to approve mortgages on homes needing flood
insurance without congressional action and numerous sales have been on
hold. The action is retroactive to a temporary authorization that
expired May 31, and also is expected to be signed by the president.

Yun noted the tax credit has broadly stabilized home prices. “Without
the tax credit, there will be more aggressive price negotiations between
buyers and sellers. The key test on whether the housing market can stand
on its own without stimulus medicine will depend critically on private
sector job creation in the second half of the year. We’ll also keep a
close eye on market conditions on the Gulf Coast.”

Through May of this year, 495,000 net private sector jobs have been
created; NAR’s forecast for employment growth is about 1 million
additional net new jobs over the balance of the year and another 2
million in 2011.

“If jobs come back as expected, the pace of home sales should pick up
later this year and reach a sustainable level of activity given very
favorable affordability conditions,” Yun said.

“In most areas of the country, there will be no sharp snap back in home
prices in the upcoming years, although some local markets have
experienced double-digit gains this year,” Yun said. NAR forecasts the
national median home price to rise only 4% cumulatively over the next
two years.

“One factor that could lead to price acceleration in upcoming years for
some markets is if the very low levels of new home construction were to
persist for another year or two,” he added.

The PHSI in the Northeast fell 31.6% to 67.0 in May and is 14.8% lower
than May 2009. In the Midwest the index dropped 32.1% to 70.8 and is
20.2% below a year ago. Pending home sales in the South fell 33.3% to an
index of 82.5, and are 14.4% lower than May 2009. In the West the index
declined 20.9% to 85.3 and is 15.1% below a year ago.

For more information, visit www.realtor.org ^[2] .

The National Association of Realtors estimates that as many as 180,000
homebuyers have qualified for the tax credit and met the contract
deadline of April 30, 2010, but might not be able to close their
transaction by the June 30, 2010 deadline due to the sheer volume of
loan applications in the pipeline.

If you have any questions about how the federal tax credits and the
extension may benefit your clients, please call me today. I’m available
for consultation with your customers. Please feel free to share this
news, forward this email, or have them call me directly.

/The above content is for informational purposes only and should not be
used as a substitute for consultation with a tax advisor./

Click here to visit my website and apply on line:
http://www.myprospectmortgage.com/ckuck

Cheryl Kuck

Loan Officer
Prospect Mortgage
NMLS# 247809
4275 Executive Square, Suite 700
La Jolla, CA 92037
Office: (858) 550-2523
Cell: (858) 395-3863
Fax: (877) 272-2097
Cheryl.Kuck@prospectmtg.com

^[1]
RISMEDIA, June 10, 2010—If you’re like most homeowners, there is never
a shortage of options when it comes to projects around the house. But
studies have shown that some of the highest return on household
improvements can come from those on the outside, not the inside.

A primary reason is that outside investments can produce curb appeal,
which is especially important if you are planning to sell your home.
Those same improvements can enhance the enjoyment factor if you and your
family plan to stay in your home.

For example, one national industry resource—the National Association
of Realtors, reported recently their experience shows a new wood deck
produces the second highest return on home improvement investment of any
common addition, remodel or replacement project.

However projects don’t have to be big to add value or enjoyment,
according to Jimmy Rane, president of Great Southern Wood Preserving, a
leading producer of pressure-treated lumber products and maker of
YellaWood brand products.

*The following popular outside improvement projects will increase the
curb appeal or value of a home:*

*Adirondack chairs*—Uniquely-American classic outdoor furniture is
made entirely of wood and has a straight back and seat, which are set at
a slant to sit comfortably on a hillside or mountain incline, but still
be comfortable at any angle.

*Gazebo*—A gazebo can be freestanding or attached to a garden wall,
roofed and open on all sizes to provide shade or shelter.

*Planters and window boxes*—Planters have become popular because they
are both functional and ornamental. Additionally, some can be moved
frequently to account for seasonal weather or just to create a change in
scenery.

*Picnic table*—Picnic tables go well on a patio or a deck, but equally
as well on the grass or under a tree in the yard. A traditional picnic
table is all in one piece so that it wears well without a lot of
maintenance.

*Trellis*—A trellis can function as a unique sun screen or it can be
the framework for an outdoor hanging garden. Building it with pressure
treated lumber can add life by minimizing rotting and other threats.

*Trash can corral or compost b*in—While many outdoor projects tend to
be cosmetic in nature, here are two ideas that are both practical and
pretty. With a trash can corral, you can hide unsightly trash cans and
with a compost bin, you can reduce your own carbon footprint in a way
that doesn’t take away from the visual appeal of the place.

For more information, visit www.greatsouthernwood.com

*1. Don’t buy if you don’t plan to stay*
If you can’t commit to remaining in one place for at least a few years,
then owning is probably not for you, at least not yet. With the
transaction costs of buying and selling a home, you may end up losing
money if you sell any sooner — even in a rising market. When prices are
falling, it’s an even worse proposition.

*2. Start by shoring up your credit*
Since you probably will need to get a mortgage to buy a house, you must
make sure your credit history is as clean as possible. A few months
before you start house hunting, get copies of your credit report. Make
sure the facts are correct, and fix any problems you discover.

*3. Choose carefully between points and rate*
When picking a mortgage, you usually have the option of paying
additional points- a portion of the interest that you pay at closing- in
exchange for a lower interest rate. If you stay in the house for a long
time- say three to five years or more- it’s usually a better deal to
take the points. The lower interest rate will save you more in the long run.

*4. Hire a home inspector*
A home inspector can let you know if you’re about to buy a lemon of a
house or warn you about potential problems. At best, you can move into
the house confident that it’s in good shape; at worst, the inspector’s
report can let you back out of the deal if the house has major,
unexpected problems. Most typically, the home inspection can allow you
to negotiate the home price to account for necessary repairs.

*5. Get professional help*
Even though the Internet gives buyers unprecedented access to home
listings, most new buyers (and many more experienced ones) are better
off using a professional agent. Look for an exclusive buyer agent, if
possible, who will have your interests at heart and can help you with
strategies during the bidding process.

*6. Bonus Tip: Be patient*
Buying a home is one of the largest purchases most people will make in
their lifetime. The key to avoiding buyer’s remorse is to be completely
comfortable before signing on the dotted line.

Lawrence Yun, NAR chief economist, said favorable affordability
conditions have been working with the tax credit. “Clearly the home
buyer tax credit has helped stabilize the market. In the months
immediately following the expiration of the tax credit, we expect
measurably lower sales,” he said. “Later in the second half of the year,
and into 2011, home sales will likely become self-sustaining if the
economy can add jobs at a respectable pace, and from a return of buyer
demand as they see home values stabilizing.”

The PHSI in the Northeast declined 3.3% to 75.1 in March but remains
27.2% higher than March 2009. In the Midwest the index increased 1.2% to
98.9 and is 18.5% above a year ago. Pending home sales in the South
jumped 12.7% to an index of 121.2, which is 28.3% higher than March
2009. In the West the index rose 1.9% to 99.9 and is 8.8% above a year ago.

“Another encouraging sign is the improvement in the availability for
jumbo and second-home mortgages,” Yun said. “As bank balance sheets
strengthen, it is just a matter of time before lending of
non-government-backed mortgages steadily opens up.”

The National Association of Realtors, “The Voice for Real Estate,” is
one of America’s largest trade associations, representing 1.1 million
members involved in all aspects of the residential and commercial real
estate industries.

The Pending Home Sales Index is a leading indicator for the housing
sector, based on pending sales of existing homes. A sale is listed as
pending when the contract has been signed but the transaction has not
closed, though the sale usually is finalized within one or two months of
signing.

The index is based on a large national sample, typically representing
about 20% of transactions for existing-home sales. In developing the
model for the index, it was demonstrated that the level of monthly
sales-contract activity parallels the level of closed existing-home
sales in the following two months. There is a closer relationship
between annual index changes (from the same month a year earlier) and
year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity
during 2001, which was the first year to be examined as well as the
first of five consecutive record years for existing-home sales.

For more information, visit www.realtor.org ^[2] .

RISMedia welcomes your questions and comments. Send your e-mail to:
realestatemagazinefeedback@rismedia.com

More young people are living with their parents instead of moving out,
postponing the creation of their own households. Meanwhile, more
families are combining households for economic reasons, including the
loss of a home due to foreclosure, said Gary Painter, associate
professor in the School of Policy, Planning and Development at USC.
“With such a significant drop in households nationwide, it is clear the
most recent recession impacted individuals’ decisions to move out on
their own and caused many Americans to join already formed households,”
Painter said in a news release.

The decline in the number of households contributed to the excess supply
of apartments and single-family homes on the market. “The housing and
mortgage industries will feel the impact of this reduction in the number
of households for years to come,” Painter said in the report, which was
sponsored by the Mortgage Bankers Association’s Research Institute for
Housing America, a trust fund that aids research on mortgage markets and
real estate finance. Also, the recession caused a fivefold increase in
the rates of overcrowding, he said. A household that has more than one
person per room indicates overcrowding.

While the analysis incorporates data only through 2008, Painter said the
decline in household formation likely continued through 2009. “Clearly,
given the depth of the downturn in 2009, and the ongoing weakness in the
job market through the beginning of this year, this study gives no
reason to expect that household formation has picked up at all,” he said.

There’s a strong tie between unemployment and household formation rates,
Painter said. The national unemployment rate was 9.7% in March 2010, but
the recession hit younger workers much harder. Workers between the ages
of 16 to 24 peaked at a record high of 19.2% in September 2009, up from
11.8% in December 2007, according to a recent report from the Economic
Policy Institute.

Household formation should begin a return to a more normal level by
2012, as unemployment rates decline, Painter said. But he said there
isn’t a “demographic silver bullet” to solve the overhang of housing
supply in many markets.

However, when conditions do improve, there could be more young adults
becoming homeowners instead of moving into a rental unit, he said.
“Young adults need not only a paycheck, but also a sense that they have
sustainable employment before striking out on their own,” Painter said.
“Typically, many new households are renters, but if young adults
postpone moving out, some may have the ability to save for a down
payment, causing them to skip the rental stage and move right to
homeownership.”

The study, which analyzes data from the past 40 years, examines the
historical impact of recessions and elevated unemployment rates on the
formation of households. Findings include:

-The likelihood of a young adult forming an independent household falls
up to 4% in a recession, depending on the person’s age and the severity
of the changes in unemployment rates.

-The national homeownership rate has fallen to just above 67%, from
above 69%. Renter household formation dropped even more than the
formation of homeownership households.

-Native-born Americans showed a larger decline in household formation
and a larger increase in overcrowding rates than immigrants.

-Parents with higher incomes are more likely to have young adults living
with them instead of moving into the rental market. But children with
parents who have higher financial wealth are more likely to form their
own new rental households.

(c) 2010, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

A terse letter from a lawyer came eight months ago, telling them that
their lender now owned the house. Three months later, the bank told them
to pay up or get out by the end of the week.

Still, they remain in the yellow ranch-style home they bought seven
years ago for $128,000, with its views of the San Jacinto Mountains.
They’re not planning on going anywhere.

“We’re kind of on pins and needles, but who’d want to leave when you put
this kind of energy into a house?” said Eugene Harrison, gesturing
toward a bucolic mural of mountains, stream and flowers the couple
painted on the living room wall.

Throughout the country, people continue to default on their home
loans—but lenders have backed off on forced evictions, allowing many
to remain in their homes, essentially rent-free.

Several factors are driving the trend, industry experts say, including
government pressure on banks to modify loans and keep people in their
homes. And with a glut of inventory in places like Southern California’s
Inland Empire, Nevada and Arizona, lenders are loath to depress housing
prices further by dumping more properties into a weak market.

Finally, allowing borrowers to stay in their homes helps protect the
bank’s investment as it negotiates with the homeowners, said Gary
Kirshner, a spokesman for Chase bank, a major lender. “If the person’s
in the property, there’s less chance for vandalism, and they’re probably
maintaining the house,” he said.

Economists say the situation won’t last forever, but in the meantime the
“amnesty” may allow at least some homeowners to regain their financial
footing and avoid eviction.

In the Inland Empire, an estimated 100,000 homeowners are living
rent-free, according to economist John Husing, who based that number on
the difference between loan delinquencies and foreclosures. Industry
experts say it’s difficult to say how many families are in that
situation nationally because only banks know for sure how many customers
have stopped paying entirely.

But Rick Sharga of Irvine, Calif., data tracker RealtyTrac notes that
the number of loans in which the borrower hasn’t made a payment in 90
days or more but is not in foreclosure is at 5.1% nationally, a record
high. And yet the number of foreclosures last year was 2.9 million,
below the 3.2 million that RealtyTrac economists predicted.

More evidence is provided by another firm, ForeclosureRadar, which says
it now takes an average of 229 days for a bank to foreclose on a home in
California after sending a notice of default, up from 146 days in August
2008.

“For some reason, banks are being more lenient with homeowners who are
behind on their loans,” Sharga said. “Whether it’s a strategy to try and
slow down the volume of foreclosures or simply a matter of the banks
being able to keep up with volume is something that banks only know for
sure.”

Lenders say the trend reflects their efforts to work with borrowers to
modify loans to avoid foreclosure. Bank of America “continues to exhaust
every possible option to qualify customers for modification or other
solutions,” spokeswoman Jumana Bauwens said.

Some lenders are making it a policy to partner with delinquent
borrowers. Citibank said this month that it would let borrowers on the
brink of foreclosure stay at their homes for six months, whether or not
they make payments, if they turn over their property deed. Such policies
may partly reflect the fact that lenders can’t keep up with all the
foreclosures, some say. “The mortgage lenders are so backlogged that
some people are able to slip through the cracks,” said Kathryn Davis, a
real estate agent at America’s Real Estate Advocates in Corona.

That was apparently the case for the Harrisons, who were told at various
times that their house had been sold, that it belonged to someone else
and that it was empty. “It’s been frustrating,” said Eugene Harrison.

The Harrisons missed their first payment in October 2008, shortly after
Patricia Harrison lost her job as a healthcare aide and her husband’s
part-time towing work dried up. They said they applied for a loan
modification but were told that they couldn’t receive one until they
were three months behind on their payments. So they stopped paying.

In April 2009, they received a notice warning them that their property
“may be sold at a public sale,” and in July, they were told their house
was a bank-owned property.

The bank sent a notice by FedEx in October demanding $3,000, and when
the Harrisons called to discuss this notice, they were told they had
four days to vacate the house.

Panicked, they arranged to stay with family in New Mexico and started
packing their things, filling their garage with boxes of books, camping
equipment and art. But no one came to kick them out. “We were afraid to
leave the house, afraid the sheriff was going to come,” said Patricia.

After contacting consumer advocates about their situation, the Harrisons
decided to stay put. Soon after, two men in a white pickup truck showed
up at the house and peeped in the windows, telling the Harrisons that
they thought the house was abandoned. The Harrisons suspected they were
planning to move in themselves and chased them away.

As they wade through the red tape, the Harrisons can’t imagine
abandoning a house where they’ve left their mark in the goldenrod and
potpourri rose walls, the new fixtures and stenciling in the bathrooms,
the fruit trees planted in the yard.

Although the Harrisons’ future is uncertain, industry observers agree
that the rent-free life can’t last forever. As home values climb, banks
will find it financially advantageous to foreclose on delinquent
borrowers and sell their properties.

“In many cases, particularly in California, people owe a boatload of
payments, and no bank is going to forgive that,” said Guy Cecala, editor
of Inside Mortgage Finance, a trade publication.

In Diamond Bar, the Fraguere family is finally moving on after living
rent-free for 18 months. Job loss and other setbacks prevented them from
paying their mortgage, but they say they didn’t hear anything from the
bank until a real estate agent showed up at their door last month saying
she was going to sell their house.

Sandy Fraguere wasn’t surprised that it had taken the bank so long to
ask them to move. “I don’t think they really knew what was going on or
who was there,” she said.

Next stop for the Fragueres is a hotel, where they plan to stay for two
weeks until their apartment in Chino Hills is ready for them to move in.
Their dogs are being boarded and their belongings stored until they can
retrieve them someday. The Fragueres have started saying goodbye to
their neighbors, adding yet another empty house to a block that has
already seen two other families forced to pack up and leave.

(c) 2010, Los Angeles Times.