Desperate Home Owners Use Plastic...

Some months ago, I wrote a blog entry on how mortgage companies were thinking of offering credit cards with a very small percentage in rewards going toward paying off the mortgage (kind of like an mileage card for an airline). For homeowners who pay off their credit cards monthly (and don't fly), this might make sense. But now, the word is out that some desperate people have taken to using plastic to avoid foreclosure--and they're not paying the cards off. Uh, oh...

Is this better or worse than the people who pay off their credit cards but lose their houses? A general rule of thumb is, do what you can to keep the house and give up on the cards. But using the unpaid cards to pay the mortgage is definitely scary. I suppose it could work if someone is fairly sure that s/he will get a million dollars in 2 months. But what if the lottery gods are frowning then? If the lender okays a lower monthly payment for now to stave off foreclosure, that unpaid credit card has a nasty interest rate. I suppose that if the house is at least saved, one could then sacrifice the card and then try to negotiate with that company later... Of course, after the late payments on the house, one's credit is already shot, so what's an unpaid card? That is, so long as the roof overhead isn't going to get taken away!

The article goes on to mention the fatal holidays fast approaching (at least, the Mission Inn put up its unlit Christmas decorations in September!). Ooh, think home made gifts! They're ... priceless! (That's what we'll be doing a lot of at my house--mostly from our 5-year-old but also quite a few from me. We're also going to make all our own Christmas cards. And hey, I think my clients will like the personal touch!)

Do I have any wise words for people in such desperate straits? Unfortunately, not really, other than that they need to go to debt counseling (real, non-profit counseling and not another con artist), and they need to get into a situation that they can afford right now. And for those who are starting out and thinking of buying a home, I highly recommend that start with what they can afford, and if it's not available, stay with family or rent, and learn how to save--which means not using those cards very much!


Article on Credit Cards and Mortgages

San Bernardino Tax Relief: Fires and Declining Value

San Bernardino County will be reassessing residential properties that have lost significant value. This will be a little help to those who've had fire damage in recent days. They're also offering tax relief for items such as boats, planes, and business personal property. There's none for home furnishings as these aren't taxable. IVAR has a page with info and links to county sites at:


http://www.ivaor.com/sbtaxrelief.pdf

Once a home is rebuilt, it will be reassessed at where it was when the damage occurred unless additions are made. Such additions will be assessed at full-market value.

For homeowners who haven't had any damage, they should see if they can have their properties reassessed due to lower home sales in the neighborhood. The form to fill out can be found at:

http://www.sbcounty.gov/assessor/documents/arp068.pdf

Fires are part of the California environment

As a child, I once read a book about settlers in the west who had to keep a strip of land cleared around their home in case of fires. Of course, what I know now, living in California, is that keeping the brush cleared is only the most basic line of defense and not much help when gale-force Santa Ana winds are carrying sparks far and wide. As people move further out into the desert, both low and high (our higher altitudes are dry here, too), they need to be aware that fires are a fact of life here and be prepared to live accordingly.


After the Northridge quake, southern Californians became very aware of needing earthquake supplies. But we also need plans on how to react to a big fire. The other evening, a couple on the news said that they decided to leave when their dual pane windows got hot to the touch. They were extremely lucky that firefighters managed to bring that section under control just in time. Quite frankly, I would have been gone before then. Yes, I love my house, but my family (2 and 4-legged members) are more important. Also, firefighters are more important than my house. If homes are still occupied, firefighters no longer have the option of getting out and looking for a better spot to hold the line. They have to waste their time rounding up the stragglers.


Some people think it's a good idea to stay behind and water their property. Well, a few people have survived with their homes intact, and some haven't. Since our property has a number of trees, I don't think I'd take the chance. After all, when trees are exploding in flames, I don't think a garden hose is going to do much.


So when you're looking at a home on the side of a hill with a gorgeous view and only wilderness behind, look to see how you'd get out in a hurry if you had to and ask about insurance deductibles. Buy it if you love it, but don't forget the terrain, the drought, and the winds are here to stay.

30% off of WHAT?

There's a house for sale in Riverside that has extra red lettering on the sign, stating in big letters 30% REBATE. However, when you look more closely, there are smaller letters in-between that explain "off commission." So it's not 30% off the sale price, but rather the agent is promising to put 30% of her commission toward the buyer's closing costs. This means that it's not even 30% of 3% off of the sales price. The sales price is the same, but assuming that the buyer has to get a loan, the agent (not the seller) will help with closing costs. It's an expensive house, so this comes out to about $8700, which is a lot of money to the agent but not actually so much for the seller and definitely nothing for the buyer, who wouldn't have to pay the commission anyway.

Is this a good tactic? Well, it gets attention at first, but then buyers immediately feel put off that it's not a significant amount and doesn't affect the price. Buyers' agents might assume that they'll be asked to throw in 30% of their commission (after all, it's not clear who is supposed to do it, and it may in fact be 30% of each agent's commission...).

In the end, the only way to get serious attention that might result in some offers would be to lower the price in a meaningful way. But for whatever reason, the sellers have chosen to pay the mortgage on a house that has sat empty for about a year. The only way I can make sense of this is to think that the sellers must have tremendous pride of ownership and don't want to sell their house for a penny less than what they think it's worth. Certainly, the listing agent wants to get rid of it if she's willing to give up nearly a third of her commission...