Dealing With An Underwater Mortgage

Back during the real estate bust, we fell behind on our mortgage and worked with our lender to get a loan modification. The lender added the delinquent amount to the end of the mortgage. Now, almost 10 years later, we have retired and are looking to relocate to a smaller house. Although our home’s value has increased, we still are “underwater” on the mortgage due to the modification. We contacted our bank, but we were told that there was no help for our fairly unique situation. There’s nothing we can do?

Your bank’s representative gave you bad information. Your situation is far from unique. You can wait it out or try to complete a short sale. In a short sale, your lender will agree to accept less than it is owed and will release you from the mortgage.

Your house has regained most of the value it lost when the bubble burst. In a few more years, as long as values continue to rise, you no longer will be underwater. You could stay in your home and possibly refinance or move to a new home and rent this one. However, being a landlord is not for everyone. Consider whether you are willing to deal with a tenant and all that goes with that.

I think a better option would be to try for the short sale. You’ll need to list your property with a real estate agent and sign a contract with a buyer at market price. Then you apply to your lender for a short sale by filling out paperwork that is similar to the loan modification process. You’ll have to follow up consistently with the lender until the deal is approved.

Many people completed short sales during the housing collapse, and many complained that the process took too long and was fraught with bureaucracy. This still would take substantial time and effort, though it shouldn’t be as hard now that fewer people are seeking short sales. And it almost certainly would be faster than waiting out an underwater mortgage.

REPOST: Red vs. Blue States: What 8 Housing Differences Can Tell Us about the Election

By now, we’ve all come to grips with the fact that this is shaping up as the most monumental presidential election in (at least) a generation. The results in November will ultimately determine which way the Supreme Court will lean, who will be allowed into the country, how the nation will deal with Russia and China, even how we’ll pay for the roofs over our collective heads—or whether we’ll be able to. Conspiracy theories, email servers, taco bowls… Is there any aspect of American life that won’t be affected?

We’ve got it: It’s important. Even so, we’re getting just a little bit played out, seeing that ever-changing electoral map every time we turn on CNN, Fox News, MSNBC—maybe even Syfy, Oxygen, and GOD TV.

It seems that every political wonk is obsessively fixated on that darn map, and whether Republican-voting states will remain red, Democrat-voting states will stay blue and where swing states will, well, swing in the upcoming election.

The data team here at® has already examined the residential real estate and tax policies of both Democrat Hillary Clinton and Republican Donald Trump. So this time, we decided to indulge our other obsessions—digging deep into the differences in how folks in blue, red, and swing states (which we’ve not so creatively dubbed purple states) actually live.

Who has the biggest homes? How about the most expensive residences? And while we’re on the topic, where do millennials stand the best chance of becoming homeowners?

We looked at data from Nielsen Demographics, Nielsen Scarborough, and Nielsen Financial, as well as our own, of course, to come up with our findings. We used Politico‘s list of those critical 11 swing states where the election will likely be won or lost—Colorado, Florida, Iowa, Michigan, Nevada, New Hampshire, North Carolina, Ohio, Pennsylvania, Virginia, and Wisconsin—as well as its lists of established red and blue states.

Our analysis confirmed some long-held beliefs about the differences between the Grand Old Party and the Democratic Party of Franklin D. Roosevelt. But it also upended some of our preconceived notions, and may provide some insight into why each candidate can inspire fervent devotion in some, and sheer, unadulterated terror in others.

“It speaks to the diversity that is America,” says® Chief Economist Jonathan Smoke. “It’s really tough to see that there’s any one candidate who could appeal to all Americans. We reflect the cultures and the way of living from where we come from.”

1. Which states have the most expensive homes?

It’s long been known that Democratic strongholds, largely based in the Northeast and California, tend to be wealthier. Lucky them! The median household income in those states is $62,564—about 23 percent higher than red states, where it’s $50,820, and 13 percent more than in swing states, at $55,524.

And on top of that, 1.4 percent of households in left-minded blue states bring home $500,000 or more, which makes sense when factoring in all those six- and seven-figure bonuses on New York’s Wall Street and tech fortunes in California’s Silicon Valley. The percentage of folks making half-a-mil-plus bank may not sound all that high, but it’s 133 percent more than the percentage in right-leaning states and 75 percent more than in purple states.

Since liberal state denizens are earning more, it’s not exactly a tremendous leap of logic that their residences are also worth more. The median home value is $301,000—a whopping 91 percent more than more conservative swaths of the country and 59 percent more than those middle-of-the-road regions of America. Hawaii has the most expensive homes, followed by Washington, D.C., and California.

The ultra-critical swing state of Ohio has the least expensive homes, followed by the red states of Indiana and Kansas.

“What we’ve seen is a migration of people to the coasts of the country. It’s for jobs, it’s for amenities,” says Rachel Meltzer, an urban policy professor at the New School, in New York. “[But] there’s only so much land to build on—so prices are going to go up if people keep wanting to live there.”

2. Which states have the most homeowners?

Despite those higher incomes in liberal parts of the U.S., homeownership is highest in red states, where it simply costs less. About 67.9 percent of households in Republican-supporting states are homeowners—compared to 63.5 percent in Democratic strongholds and 67.8 percent in swing states.

“Owning a home is more attainable in red states, because the cost difference [in home prices] is substantially more significant than the income difference,”’s Smoke says. “[And] you also get more in terms of space.”

The state with the highest rate of homeownership was none other than Vermont, the blue-as-you-can-get home of onetime presidential contender Bernie Sanders.

And the city with the highest homeownership rate is in another liberal stronghold, San Jose, Calif. The Silicon Valley city is one of the most expensive markets in the nation, as the next big tech stars compete over the very limited number of homes on the market, pushing up prices. The median list price of homes is $767,000 in the city, according to

Washington, D.C., the blue district that isn’t quite a state, has the lowest homeownership rate, followed by New York. Miami, in the swing state of Florida, was the city with the lowest rate of homeownership.

Many buyers in red states may not be raking in a ton of dough, but achieving the American Dream of homeownership only requires them to fork over about 26 percent of their median household income. Meanwhile, it takes 32 percent of a household’s income to buy a place to live in a blue state.

In a purple state? It’ll run you about 25 percent of your income to purchase your own place.

3. Who’s paying the most rent?

Renting ain’t a cakewalk in the liberal swath of the nation either, at an average $1,381 a month.

That’s quite a chunk of change—52.1 percent more than those in red states, where tenants shell out an average $904 a month. And it’s 34.9 percent more than renters are paying in purple states, at $1,204 a month.

“The cost of housing is directly tied to how much land is available,”’s Smoke says. “The parts of the country that have an abundance of land have the lowest housing costs.”

4. Where are the biggest homes?

Homes are biggest where land is cheapest—and property is the least expensive down South and in rural America. You probably knew that. And those areas tend to vote Republican. You probably knew that, too.

For example, the median red state listing is about 2,000 square feet—about 210 square feet larger than in more left-leaning states and 100 square feet larger than homes in purple states.

The largest homes in the United States? You’ll find ’em in the red state of Utah. But the two cities with the most spacious digs were in a swing state: Colorado’s Denver and Colorado Springs.

Meanwhile, the smallest median square footage can be found in bluer-than-blue District of Columbia. That’s followed by the Hawaiian Islands, where space understandably goes for a premium.

The city with the tiniest median digs is Miami. (Notoriously cramped cities like New York likely didn’t make the list, as the only data available was at the metro level, which factors in surrounding suburbs.)

5. Where do folks own the most second homes?

Blue state buyers may not own as many homes, but residents in those areas are 14 percent likelier to own a second home. Got that? They’re also 9 percent more likely to own real estate as an investment.

It makes sense, since as we noted above, these folks are raking in more dough than their peers in more conservative swaths of the country.

6. Which states have the oldest houses?

Since many of the blue state cities are older than their red peers, the housing stock also has quite a bit more history. About 19 percent of all houses were built in or before 1939 in left-leaning hubs. That’s 95 percent more than red states, and 36 percent higher than in purple states.

Think about it: New York and Boston were founded more than 200 years before metros like Atlanta and Dallas were established in the mid-1800s.

7. Which states have the most mobile homes?

Those living in conservative states are 33 percent more likely to live in mobile homes, often found in trailer parks. They’re also most likely to wind up in manufactured abodes made in factories.

The highest concentration of mobile and manufactured homes are based in the red—and poor—state of Mississippi. The metro with the highest percentage of these lower-priced residences isJacksonville, FL.

The fewest mobile homes? Washington, D.C., and the blue state of New Jersey. The city with the lowest percentage of these homes is super-expensive San Francisco.

8. Who has the most solar panels?

Liberal states tend to have more eco-friendly residents, who are 12 percent more likely to have solar panels installed on the roofs of their homes than those living in other states.

The most panels by sheer number were installed in the blue state of California, whereas Hawaii has the highest percentage of residences with the eco-friendly power source. Silicon Valley’s San Jose, Calif., is the city with the highest percentage of homes with solar panels.

The fewest number of panels are in the red state of Wyoming. Memphis, Tenn., was the city where the smallest percentage of residents invested in them.

The bottom line?

“[The analysis] was a perfect statement of why there are such differences politically between red and blue states,”’s Smoke says. “The way of life is clearly different between the two.”

This article was originally posted on

How can a home inspection company add value to the real estate process?

A home inspection is now a common practice for clients who are looking to buy or sell a home. In addition to performing a high-quality inspection, a good home inspection company adds value for all parties involved in the transaction. How?

They Understand Your Time Is Valuable
Most real estate transactions are time sensitive, and the typical home inspection can last anywhere from 2.5 – 4 hours. HomeTeam Inspection Service cuts this time nearly in half by utilizing a team of inspectors. This approach allows for more time slots available each day, and greater availability when you need an inspection.

They Utilize Technology to Simplify the Process
The home inspection process—from scheduling to report delivery—should be convenient for you and your clients. Offering several scheduling options—over the phone, online or through an app—provides greater flexibility. HomeTeam offers real estate professionals an app on their mobile phone that allows them to call or email HomeTeam, schedule an inspection online and view all past inspection reports with the click of a button.

They Offer a Full-Service Solution
Home inspection companies offer a wide range of services, starting with the basic whole house inspection and then adding additional services that include items your client may or may not need. Since different homes, different clients and different regions require different types of inspections, choose a home inspection company that offers a la carte services like pest, radon or mold inspections.

They Handle Coordination for You
Valuable time is often spent calling and coordinating various types of inspections from several different service providers. HomeTeam schedules any additional inspections for you and your clients. Therefore, you only need to make one call, or indicate the services you would like in your online booking, and they’ll be scheduled at the same time as the home inspection.

They Present Themselves as a Professional
Recommending a home inspection company with a professional brand image serves as an extension of your professionalism. Home inspection companies that show up in uniform with branded vehicles help make the client feel at ease. Be sure the home inspection company your client chooses provides email and text message reminders of the inspection time, as well as a verbal introduction to the home. They should also review their findings and answer any questions.

Choosing a home inspection company that can add value results in a true benefit to the client, and ultimately, more referrals for all.

For more information, visit

Reverse Mortgage

A recent change added two steps to the process of obtaining a reverse mortgage. The goal is to reduce defaults on reverse mortgages by making certain that borrowers can pay property taxes or home insurance.

Steps to Determine Reverse Mortgage Eligibility

  • Do an assessment of your finances, specifically your credit history and income.
  • Set aside part of the mortgage proceeds, based on the results of the financial assessment, to help cover estimated tax and insurance payments over the expected life of the youngest borrower.

Decreasing the Default Rate

  • These requirements are the latest in a series of changes intended to decrease the default rate on reverse mortgages. In 2014, about 12 percent of reverse mortgages were in technical default, says Stephanie Moulton, associate professor at the John Glenn College of Public Affairs at Ohio State University. That is, the borrowers hadn’t paid taxes or insurance or both. On top of this, these borrowers had no proceeds remaining from their reverse mortgages.
  • What’s more, the percentage in default had actually increased from 2012, when it stood at 9.4 percent, according to a report by the Consumer Financial Protection Bureau.
  • In comparison, the delinquency rate for single-family residential forward mortgages — the mortgages most people use to buy homes — was 10 percent at the end of 2012 and had fallen to 6.6 percent two years later, according to the Federal Reserve.
  • A July 2016 study from the Center for Retirement Research at Boston College concluded that the new rules could cut the reverse mortgage default rate by as much as half.

Ensuring Financial Stability

  • Not every reverse mortgage in technical default will proceed to foreclosure. Lenders often work with borrowers to “cure” the default. About half are successful, she says.
  • Even so, the relatively high rate of technical defaults is a concern. Most reverse mortgages are federally insured through the Department of Housing and Urban Development, or HUD.

Are these reverse mortgage borrowers struggling to maintain financial stability? After all, reverse mortgages are intended to improve borrowers’ financial stability.

HUD has implemented a number of changes intended to improve and strengthen its reverse mortgage program over the past few years, such as limiting the portion of loan proceeds that could be disbursed at closing and over the first year of the loan.

The changes requiring the financial assessment and set-asides cover reverse mortgages issued on or after April 27, 2015.

The Financial Assessment

Each financial assessment includes an analysis of the borrower’s credit history, with special attention given to any foreclosures, defaults, late mortgage payments and late payments for property charges.

Research has shown prospective borrowers’ credit scores are “huge predictors” of their likelihood to default on reverse mortgages.

What is Residual Income?

It’s the amount of money the homeowner has after paying debts and personal expenses. The lender assesses whether there is enough of this money—residual income—to pay for property taxes and insurance.

Part of the assessment is an analysis of a borrower’s cash flow and residual income, since the borrower still owns the home and will be responsible for paying taxes, insurance and other housing-related expenses. The assessment helps to ensure someone can maintain the obligations of the loan.

This analysis looks at income from employment, self-employment, Social Security, alimony, child support, military income, pensions and retirement accounts, among other sources. If the lender determines the borrower isn’t willing or able to make tax and insurance payments, then a portion of the mortgage proceeds will be set aside to cover these future costs.


Calculating the life-expectancy set-aside requires estimating how much the cumulative property taxes and insurance will cost during the life of the youngest borrower. Property and flood insurance premiums are included.

The sum could be large enough that the reverse mortgage no longer makes sense.

Say a homeowner’s property taxes average $2,000 per year, and he or she is expected to live another 20 years. That could mean setting aside at least $40,000 from the proceeds of the reverse mortgage—and that’s before adjusting for any increases. In the end, it may no longer be a viable funding option.

Partially Funded Set-Aside

If the borrower has a clean credit history but doesn’t have enough income to make tax and insurance payments, it may be possible to do what’s known as a partially funded set-aside.

Still, the changes in the rules mean an estimated 10 percent-25 percent of potential borrowers will no longer qualify for reverse mortgages.

However, the regulations aren’t much different from the underwriting requirements in place for traditional mortgages, says Peter Bell, president of the National Reverse Mortgage Lenders Association. The goal is to avoid making loans to borrowers who have a high likelihood of failing.

Options besides Reverse Mortgage

If a reverse mortgage isn’t available, there could be other options to help seniors improve their financial footing. Some cities reduce property taxes for seniors.

In some families, a parent could sell the home to an adult child, who then would rent it back to the parent.

Even for individuals still able to obtain reverse mortgages, the financial assessment and set-aside requirements likely will lengthen the time between application and settlement.

But the idea of conducting a financial analysis of prospective borrowers and requiring set-asides for those at higher risk of default are steps many have said were needed. These are common-sense changes for a viable reverse mortgage market.

FHA Streamlines Process to Help Delinquent Homeowners Stay in Homes

The Federal Housing Administration (FHA) recently announced new procedures to strengthen the process mortgage servicers use to help struggling families avoid foreclosure and remain in their homes.  FHA is streamlining its loss mitigation protocols that servicers must use when evaluating and deploying ‘home retention options,’ foreclosure alternatives that allow delinquent borrowers to retain their home.

FHA’s revised procedures streamline the process servicers use to engage borrowers, specifically when evaluating them for the FHA-Home Affordable Modification Program (FHA-HAMP).  These changes will reduce the number of steps that a servicer and borrower must take to resolve a delinquency and enter into a loss mitigation home retention product.  In addition, FHA is removing certain obstacles that will allow servicers greater flexibility for evaluating an unemployed borrower for a special forbearance agreement.

Specifically, FHA will:

  • Require servicers to convert successful 3-month trial modifications into permanent modifications within 60 days instead of the average four-to-six months;
  • Allow borrowers with three missed mortgage payments to qualify for a partial claim to bring their arrearages current versus the previous requirement for a minimum of four missed payments;
  • End the traditional stand-alone Loan Modification option so struggling borrowers can access the FHA-HAMP option, with its greater payment relief, sooner; and
  • Eliminate the required 12-monthterm for FHA’s special forbearance option.  This will allow servicers to offer this option to more unemployed households.

For more information, visit

HUD and VA Work to Find Permanent Homes for Homeless Veterans

The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Veterans Affairs (VA) recently announced a second round of funding to help provide permanent homes to an estimated 108 veterans experiencing homelessness in seven states.  The rental assistance announced this week is provided through the HUD-Veterans Affairs Supportive Housing (HUD-VASH) Program which combines rental assistance from HUD with case management and clinical services provided by VA (see attached list of HUD’s voucher awards).

Recently, HUD, VA and the U.S. Interagency Council on Homelessness (USICH) announced the number of veterans experiencing homelessness in the United States has been cut nearly in half since 2010. The data revealed a 17 percent decrease in veteran homelessness between January 2015 and January 2016—quadruple the previous year’s annual decline—and a 47 percent decrease since 2010. Additionally, while answering the Obama administration’s Mayor’s Challenge to end Veteran’s Homelessness, several mayors have declared their cities have officially ended it.

“There is momentum across the nation as community after community effectively ends veteran homelessness,” says Secretary Julián Castro. “Today’s funding will help more cities reach this important goal and ensure that we serve the brave men and women who have served and sacrificed for us. HUD and its local partners are determined to give every veteran the opportunity to secure a safe, stable place to call home.”

“The dramatic reduction in Veteran homelessness in recent years would not have been possible without the pairing of housing choice vouchers with case management and supportive services under the HUD-VASH program to help the most vulnerable Veterans become and remain stably housed,” says VA Secretary Robert A. McDonald. “The HUD-VASH awards announced [this week] will support the ongoing and important work underway to ensure that homelessness among Veterans is rare and non-recurring.”

In June, HUD awarded nearly $38 million to help more than 5,200 homeless veterans find homes. That funding ensured that communities could provide the critically needed housing assistance and case management services to those veterans and their families experiencing homelessness.

In 2010, President Obama and 19 federal agencies and offices that form the U.S. Interagency Council on Homelessness (USICH) launched the nation’s first comprehensive strategy to prevent and end homelessness. Opening Doors: Federal Strategic Plan to Prevent and End Homelessness serves as a roadmap for how the federal government will work with state and local communities to confront the root causes of homelessness, especially among former servicemen and women. To support communities as they progress towards the goal of ending veteran homelessness, USICH has identified strategies that increase collaboration and coordination among programs serving veterans experiencing homelessness.

Since 2008, more than 79,000 vouchers have been awarded and approximately 111,000 homeless veterans have been served through the HUD-VASH program. Rental assistance and supportive services provided through HUD-VASH are a critical resource for local communities in ending homelessness among our nation’s Veterans.

In the HUD-VASH program, VA Medical Centers (VAMCs) assess veterans experiencing homelessness before referring them to local housing agencies for these vouchers. Decisions are based on a variety of factors, most importantly the duration of homelessness and the need for longer term, more intensive support in obtaining and maintaining permanent housing. The HUD-VASH program includes both the rental assistance the voucher provides and the comprehensive case management that VAMC staff offers.

Veterans participating in the HUD-VASH program rent privately owned housing and generally contribute no more than 30 percent of their income toward rent. VA offers eligible homeless veterans clinical and supportive services through its medical centers across the U.S., Guam, Puerto Rico and the Virgin Islands.

For more information, visit

How Data Collection Is Changing Real Estate

Every facet of the business world has been radically changed by the way data is collected, analyzed and transmitted. So much so, that past models of how major industries were run have now become largely obsolete. Data analysis is considered the “gold standard” by which companies look at the future.

To some people, this approach seems cold or overly “corporate.” However, it gives businesses and clients a direct advantage when finalizing transactions within an increasingly short period of time. This is because much of this “big data” is collected in response to issues as they occur.

Large amounts of information are compiled so that trends can be closely studied. Facts and figures are dissected, as if they were subjects in a scientific experiment. At that point, vital bits of information can be expertly chosen and designated for further investigation.


In the world of finance, the use of big data has made a significant impact on the methods in which purchases and investments are made. Nowhere is this more evident than when financial institutions look into real estate investments. By surveying trends as they form in data pools, decisions are made as to how banks can reduce their own risk. With their own financial risk lessened, commercial banks are therefore able to pass along favorable rates to their own clients.


Big data assists banks in understanding the needs of their customers. As data is closely scrutinized, ideas often emerge helping banks to better direct their marketing efforts to groups that might otherwise be underserved by their financial institution. This is true for their customers who merely want to open a basic checking account without fees, as well as necessary for major clients who require additional tools to manage their wealth.

Sorting through this data also works so lenders can better adhere to state and federal regulations. Experts in risk management are able to look at just how customers use services not only in past endeavors, but in real time transactions. This analytical awareness of financial models is the key to reducing and eliminating electronic fraud.

Real Estate

Banks are able to use this data wisely, especially when it comes to the purchase of real estate and how it is insured. Data gives out distinctive clues as to how new homebuyers, start-ups and business owners looking to purchase commercial property will further their investments. This is crucial before extending a risky loan or in cases where similar investments have failed in the past.

1) Insurance

It is possible to use big data tools when insuring a house, commercial space or property as well. Every variety of insurance coverage now depends on information gathered from digital data sources. While insurance companies are naturally looking for methods in which to increase their own profits, they are also looking for how to better serve their clientele.

To offer more comprehensive insurance policies for property owners, insurance companies need to analyze data from large numbers of users. They study what types of insurance are necessary for a particular geographic region or type of dwelling. This can come down to offering earthquake, flood or hurricane insurance as a standard part of their policies to attract new customers.

2) Investment

When looking at realty investment, this risk also extends to the gentrification of once forlorn neighborhoods in urban areas. Using the results of data surveys, insurance companies and financial institutions decide whether to involve themselves in new real estate projects. Using risk analysis, they are better able to estimate what future claims may occur now and in the distant future.

3) Statistics

Every homeowner knows that they must have homeowner’s insurance as a requisite for maintaining their mortgage. This is based on banks and mortgage lenders using data provided by insurance companies to protect their investments. While data alone is not able to ascertain whether a house at a certain address will suffer from calamity, it is usually able to serve probable warning.

4) Liability

Consumers benefit from how this data analysis determines their insurance rates. Current property values can both positively or negatively affect insurance premiums. Data that is gathered from reliable sources allows insurance adjusters to see value in properties that may not seem reliable on the surface. However after looking at long term data, such property or land investments may be worth a second look.

5) Risk

Investing in real estate has traditionally been seen as an educated gamble or game of risk. No matter how well planned a purchase may be, there is always a chance that things could go seriously wrong. With proper data evaluation tools, companies dealing in real estate sales, investment and insurance are better able to offer reliable predictions. In addition to improving their own profits, they are now able to better assist current and future clients.