How to pump up your credit score:

To avoid another real estate bubble, many lenders have tightened their mortgage requirements. According to a report by the Federal Reserve, a majority of banks are less likely to offer loans to people with a FICO score of 620 and a 10 percent down payment than they were in 2006. Lenders were also less likely to do so even for those with a score of 720. The good news though is there are some tactics that consumers can employ to raise their scores.

Making sense of the story

• First, it is worth noting that median credit scores are rising, as people reduce debt and spend less in tight economic times. Some 18 percent of Americans now have scores of 800 to 850, while 15 percent are below 550, according to FICO data.

• Often lenders will review FICO scores from the three big credit agencies, and they use the middle number to evaluate the borrower. That number becomes the borrower’s “risk number.”

• Borrowers can figure out their risk number by obtaining their three credit reports, available free once a year at AnnualCreditReport.com, and studying them carefully for errors or omissions.

• According to FICO, the two biggest factors in a credit score are payment history, which accounts for 35 percent of the score, and the amounts owed, accounting for 30 percent.

• Knowing that information, one can raise his/her credit score by reducing balances on credit cards. However, if an account is in collection, it is too late to improve the credit score by paying it off. The notation that an account is in collection is what lowers the score, so consumers may get more mileage by paying down active credit-card balances and other debts first.

• Though mistakes and bankruptcies may stay on a credit report for seven years, lenders will generally be more likely to overlook late payments that happened two or more years ago than more recent ones.

• Improving one’s credit score could take three to four months, or it could take as long as 18 months.

Lenders are using a variety of tools to prevent mortgage fraud:

Borrowers considering inflating their income, even just a tad, checking the box to indicate they plan to live in the home when they’re not, or exaggerating their job description better think twice. Lenders are turning to websites and other tools to help nab fraudulent borrowers and perjurers looking to bilk lenders out of hundreds of thousands of dollars.

Making sense of the story

• During the height of the market, borrowers could get away with lying about their income, debt obligations, and the like to obtain financing. But not anymore. According to a representative from the Mortgage Bankers Association, there are “more fraud checks than ever, and it’s on every loan, not just a sample.”

• More important, perhaps, the focus now is on preventing fraud rather than dealing with it after the fact.

• Sometimes the fraud check is as simple as a quick call to the customer right before the loan is closed to verify information supplied on the loan application. Such a call to an otherwise unsuspecting borrower can sometimes uncover a lie perpetrated by a corrupt loan officer who’s in it for the commission – or more.

• In other cases, lenders are using sophisticated databanks to spot fraudsters. One website, for example, provides salary data on various industry positions so the lender can determine if the borrower is overstating his income.

• Another site provides historical wage data, and yet another checks the information supplied by self-employed borrowers, including whether the borrower’s company exists, who the principals are, the number of employees, and the annual revenue.

• There are also sites that will tell lenders where there are judgments against the borrower or liens against other properties the borrower might own.

Important Fed Meeting Ahead

With all the news about the economy and the potential concerns over future inflation, a big news item to watch is the Fed Meeting that will take place in June. Here's what you need to know! What is it? The Federal Open Market Committee (FOMC) consists of the seven Governors of the Federal Reserve Board and five Federal Reserve Bank presidents. The FOMC meets eight times a year in order to determine the near-term direction of monetary policy. Changes in monetary policy are now announced immediately after FOMC meetings. When will it take place? The next meeting is scheduled to take place June 19-20, 2012. Why does it matter? The Fed's Statement after its meeting in April was not a glowing endorsement of the economy, but they did admit that things are improving in most areas except housing, which remains "depressed." While improvement in our economy is good, if this trend continues home loan rates could edge higher. Why? Because Stocks often benefit in strong economic times at the expense of Bonds (including Mortgage Bonds, which home loan rates are based on). What to listen for? There are two important topics that some experts have been paying close attention to–one is the potential rise of inflation and the second is the possibility that the Fed will initiate another round of Bond buying (called Quantitative Easing or QE3). In terms of inflation, the Fed acknowledged that inflation has increased a bit. Remember: higher inflation is never good news for Bonds as inflation hurts the return of a fixed investment. If hints of inflation continue to pick up in the weeks or months ahead, this could hurt Bonds and home loan rates. In terms of QE3, the Fed didn't mention another round of Bond buying in their policy statement after April's meeting, though Fed Chairman Ben Bernanke did allude to it in his press conference following the meeting. The markets will be keeping a close eye on the Fed for any hints about either of those topics at the next meeting.

If you know anyone who is looking to buy, sell or refinance a home, please forward their name and telephone number to us. We will happily provide the same high level of service that we have provided to you. The greatest compliment you could possibly give us is the referral of your friends and family.

Housing and Industrial Data Point to Steady Growth:

Ground breaking for U.S. homes rebounded in April and factory activity gained momentum, suggesting a moderate pickup in economic growth early in the second quarter.

The reports on Wednesday were the latest in a series to dampen fears that the recovery in the world's largest economy was stagnating after tepid job growth last month.

The Commerce Department said housing starts increased 2.6 percent to a seasonally adjusted annual rate of 717,000 units.

In a separate report, the Federal Reserve said production at the nation's mines, factories and utilities rose 1.1 percent - the largest gain since December 2010.

"The economy is grinding its way forward, but it's not firing on all cylinders. There are plenty of reasons to be nervous; Europe is top on that list," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.

The reports came on the heels of data on Tuesday showing a strong rebound in factory activity in New York state and confidence among home builders hit a five-year high this month. Retail sales in April also showed underlying strength.

Analysts expect the economy to grow at around a 2.5 percent annual pace in the second quarter, although the government's 2.2 percent initial estimate for first-quarter growth is expected to be lowered to below 2 percent later this month.

Minutes of the Federal Reserve's April 24-25 meeting said several policymakers felt additional monetary easing by the U.S. central bank could be necessary if the recovery lost momentum or downside risks increased.

The jump in industrial production last month was driven by a 4.5 percent increase in utility output, a 1.6 percent gain in mining and a 0.6 percent rise in factory production.

Manufacturing has been one of the main pillars of the recovery from the 2007-09 recession and continues to show resilience even with Europe, a top destination for U.S. exports, teetering on the edge of recession.

The signs of life in the U.S. housing market were bolstered by upward revisions to housing starts and permits for March.

Consumer Sentiment Best Levels in 4 Years:

U.S. consumer sentiment rose to its highest level in more than four years in early May as Americans remained upbeat about the job market, a survey released on Friday showed.

The Thomson Reuters/University of Michigan's preliminary May reading on the overall index on consumer sentiment improved to 77.8 from 76.4 in April, topping forecasts for 76.2. It was the highest level since January 2008.

Despite the recent slowdown in job growth, nearly twice as many consumers reported hearing about new job gains than said they had heard about recent job losses, the survey said.

The data suggests that either more positive numbers on the labor market will be seen soon, or that consumers have ratcheted up their expectations too high, survey director Richard Curtin said in a statement.

Housing demand is very closely tied to Consumer Sentiment reading, so this is more great news to go along with fantastic mortgage rates as the busy purchase season ramps up

BofA extends modification offers:

Bank of America Home Loans has begun reaching out to customers who may be eligible for forgiveness of a portion of the principal balance on their mortgage under terms of a recent settlement among five major banks, 49 state attorneys general, and the federal government.

The first letters in a targeted outreach to more than 200,000 potential candidates for this assistance are arriving in homes this week; most of the letters will be mailed by the third quarter of this year. The bank estimates average monthly savings of 30 percent on mortgage payments of customers who qualify for this program.

Bank of America began making principal reduction offers under the program guidelines in March, initially concentrating on homeowners who were already in the modification review process. So far under this early initiative, about 5,000 trial modification offers have been mailed, providing a potential total of more than $700 million in forgiven principal. Homeowners are required to make at least three timely payments before the modification can become permanent.

The wave of mailings beginning this week will reach a broader base of customers who may be eligible for this principal reduction program. The letters provide each homeowner with a description of the program and an invitation to provide financial information to begin the review process.

To be eligible for this program, a homeowner must meet certain criteria, including:

• Owes more on the mortgage than the property is worth today.

• Was at least 60 days behind on payments on January 31, 2012.

• Has a contractual monthly payment for principal, interest, property taxes, hazard insurance, and any applicable homeowner association fees totaling more than 25 percent of gross household income.

• Has a loan that is owned and serviced by Bank of America, or serviced for another investor that has given the bank delegated authority to do such modifications.

For further information on the settlement programs, Bank of America Home Loans customers may call (877) 488-7814.

Avoiding mortgage relief scams:
The offers seem like answers to the prayers of a struggling homeowner: A promise of legal tactics to forestall foreclosure, reduce mortgage balances and interest rates, or restore credit. But these so-called mass joinder lawsuits being advertising in mailings are fraudulent – sent out by companies purporting to be law firms, according to a consumer alert by the Federal Trade Commission’s (F.T.C.) website.

Making sense of the story

• Consumers can lose valuable time to these dishonest players – not to mention money. The nonprofit Lawyers Committee for Civil Rights Under Law estimates that homeowners nationwide who reported scams to its database have lost more than $60 million in the last two years alone.

• There are many credible law firms around to help homeowners. But some businesses might be promoting themselves as providers of legal services, they might have only one lawyer on retainer, as a way around F.T.C. rules that allow only lawyers to collect upfront fees on mortgage aid.

• Such firms, and people posting as lawyers, are fueling a 60 percent jump in complaints about mortgage scams this year, according to a report by the homeownership Preservation Foundation, which helps distressed homeowners.

• When speaking with a lawyer, consumers might ask about the lawyer’s track record, including documentation of successes via media reports or signed court documents awarding borrowers money or relief.

• Consumers should beware of promises. According to the Homeownership Preservation Foundation, “legitimate lawyers don’t make guarantees, just like doctors don’t.”

• There are plenty of free services available at nonprofit groups certified by the Dept. of Housing and Urban Development.

• The CALIFORNIA ASSOCIATION OF REALTORS® also has information available about short-sale and foreclosure-prevention fraud. Visit http://www.car.org/aboutus/forconsumers/loanfraud/ for more information.

Home values post largest monthly gain since 2006:

Home values nationwide increased 0.5 percent from February to March, according to Zillow's first quarter Real Estate Market Reports. This marks the largest monthly increase in the Zillow Home Value Index since May 2006, when home values also rose 0.5 percent.

The Index fell 3.1 percent year-over-year to $146,200.

Nineteen of the 30 metro areas covered by the Zillow Home Value Forecast will reach a bottom in 2012, or have already reached a bottom. Several of those are expected to see significant home value increases in the next 12 months, including the Phoenix (6.5 percent), Miami-Ft. Lauderdale (5.6 percent), and Tampa (2.5 percent) metros, according to the forecast.

Twelve of the markets covered by the Zillow Home Value Forecast will experience home value declines in the next 12 months, although some of those are likely to reach a bottom in late 2012. Some metros, however, are anticipated to experience significant home value declines in the next 12 months, including the Atlanta metro, with home values falling 4.1 percent, and the Chicago metro, where values are expected to decline 3.8 percent.

Nationally, the Zillow Home Value Forecast shows that home values will fall 0.4 percent over the next 12 months, with many months showing no change or slight appreciation late this year, suggesting that U.S. home values could reach a bottom in late 2012.

Economists say housing outlook continues to slowly brighten:

Mirroring the uneven economic recovery, the housing market is expected to move in a slow, gradual upward path in 2012, while encountering its share of speed bumps along the road, according to a forecast presented by the National Association of Home Builders (NAHB) on the housing and economic outlook.

While the latest monthly housing data have shown signs of a slight softening, NAHB Chief Economist David Crowe said this is more reflective of typical month-to-month volatility in the numbers and unusual seasonal factors than they are an indication of any significant downward trend in the broader housing market.

Crowe noted that numerous other fundamentals remain positive for housing at this time, including demographic factors (with pent-up household demand expected to ramp up and echo-boomers heading into their prime household formation ages), historically favorable mortgage rates that are not expected to move higher than 5 percent by the end of next year, more than 100 local markets currently listed on the NAHB/First American Improving Markets Index, and the fact that house price-to-income ratio has now returned to its historical average of about three-to-one versus the nearly five-to-one to which it had previously risen during the height of the housing boom.

However, he cautioned that housing still continues to face formidable challenges of its own -- such as rising foreclosures, persistently tight lending standards for home buyers and builders and difficulties in obtaining accurate appraisals. Moreover, disappointing job growth numbers in March and uncertainty in the European economy are undermining prospects for a vigorous recovery.

It’s safe to sell your home again:
While analysts debate when the housing market will hit bottom, for a surprising number of cities the turnaround has already begun. In December, prices rose in 109 of the 384 metro areas tracked by data firm CoreLogic.

Making sense of the story

• There are certain signs to help determine if a particular neighborhood is on the verge of a rebound. For instance is local employment on the upswing? That’s a critical factor for a region to get itself on the path to recovery. Improving jobs picture has led to shrinking housing stock across the country, as investors and bargain hunters have started buying up foreclosures that have been preventing a recovery.
  
  
• For years, buyers were scared of overpaying for a home, but less so now. Many buyers have grown accustomed to thinking they’ll score deals, so they tend to act slowly, and typically start bidding around 10 percent to 15 percent below list price. However, a growing number of buyers are beginning to realize that if they wait too long in this market, they may miss out.
  
  
• Sellers can hold firm on price if they’re patient. The days of having to deal with low-ball offers are coming to an end. The higher the price, the more patient the seller must be. Cheaper homes are affordable to more buyers and appealing to investors, so recoveries usually start there.
  
  
• Sellers should keep in mind that while they don’t have to placate low-ball offers anymore, they also can’t shoot for the moon either. Working with a REALTOR® and setting a realistic price from the get-go is key.
  
  
• Sellers should know what they’re competing against. Homeowners should let their home’s value dictate the price. While this may seem self-evident, some owners may have lost sight of it during the bust. On the one hand, some sellers clung to the false hope of a return to boom prices, so they set prices unrealistically high. Others may have gone too far the other way, and set their price too low.
  
  
• It’s also important that sellers understand they’re no longer competing with gutted foreclosures. Buyers are tired of looking at worn-down, neglected, distressed properties and often don’t have much extra money to do a lot of fixing up. REALTORS® often report their clients are willing to pay a little more for a home that’s ready to move into.