The first article, Loan firms urged to ward off mortgage defaults, from the Arizona Republic, reports that the Federal Reserve and other banking regulators issued special guidance Tuesday urging loan companies to work with borrowers in danger of defaulting on their home mortgages. The guidelines are not mandatory, but regulators expressed hope that the companies who collect payments on mortgages will heed the advice. The guidance said appropriate strategies to ward off defaults could include modifying the terms of the loan or deferring payments, converting adjustable rate loans into fixed rate mortgages, and extending the length of the loan. An estimated 2 million adjustable-rate mortgages are scheduled to reset by the end of 2008. "More and more consumers with subprime and hybrid mortgage products are facing the very real prospect of losing their homes through foreclosure as their payments reset and become unaffordable," said Sheila Blair, chairman of the FDIC. "It is vital that mortgage servicers work proactively with borrowers facing much higher payments as their interest rates reset," she added.
The second article, Renting rather than selling your home means making the leap to landlord, from the Arizona Republic, reports that many home sellers who cannot sell their home are considering renting it, thereby becoming a landlord. But before you take that leap, think carefully about the implications. "It's not as simple as just setting out a "for rent" sign, said Stephen Phillips, a Phoenix man who owns rentals in Phoenix and San Diego with his brother. "You need tolerance for calls at 10:30 at night." You need to have a good understanding of landlord-tenant laws, you should be familiar with credit and background checks for applicants, and you'd be wise to develop a network of handymen, plumbers, electricians and alike. You should also know how to keep good reports and have a cash reserve for unanticipated problems. There are tax benefits to renting also, but be aware that if you rent your primary residence before you own it for two years, you could eliminate your $250,000 tax exemption on primary residences.