• Breach of Good Faith and Fair Dealing Covenants.
  In some states, contract law contains a good faith and fair dealing covenant. If a buyer can afford to buy only one home yet makes multiple purchase offers on many homes, it is possible that the buyer has broken the good faith covenant, which may have legal ramifications. Buyers are advised to seek legal advice beforehand.

   

• Sending the Same Check With Each Multiple Purchase Offer Could Void the Contract.
  Sometimes buyers photocopy an earnest money deposit and submit a copy of the same check with each purchase offer. Since there is only one earnest money deposit check, only one offer actually has a deposit securing the purchase offer. The other offers have no deposits, which may invalidate and / or void the multiple purchase offers.

   

   

• Multiple Purchase Offers Could Result in Multiple Acceptances.
  If the offers contain no contract contingencies that would allow the buyer to cancel the transaction without consequences, a buyer could end up in contract on multiple purchase offers. In that event, all the sellers may expect the buyer to deposit funds and close each of the transactions. Buyers who refuse to perform could find themselves liable to the sellers and / or in court.

 

Protection Available for Multiple Purchase Offers

 

Many buyers are eager to buy bank-owned homes. One of the problems with foreclosure homes is REOs tend to draw a lot of interest from buyers, and the REO banks can take a long time to respond.

The answer for some buyers is to write a multiple purchase offer and submit on a bunch of bank-owned homes at the same time. These buyers might be able to write multiple purchase offers that could avoid liability for bad faith if they are written as conditional offers. This means the offer would contain language that makes the offer subject to the buyer's acceptance after the REO banks accepts the offer. It lets the REO banks know that the buyer has submitted multiple purchase offers.

For more information, please consult a real estate lawyer.

Buying a home is about to get cheaper for a whole new crop of homebuyers — $6,500 cheaper.

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House is scheduled to vote on the bill Thursday.

Some people say that ghosts walk the halls of Snowball Mansion. While the presence of supernatural spirits may be up for debate, one thing is certain: This 6,720-square-foot home in Knights Landing, Calif., is haunted by its past.

A foreclosure rattled the house, leaving it vacant for more than three years, the target of local vandals. Even more frightening, the home recently sold for a price that was 75% below its 2005 value.

Still, Mike and Nancy Stevens, the latest owners of the former bed and breakfast, are not deterred. "The moment I saw the photograph on the Internet, I knew it's what I wanted," Mr. Stevens says.

 

Many towns have a creeky old house that some locals believe to be haunted. Some are well-known. There's the Amityville Horror house in Long Island, N.Y., the inspiration for several horror movies and site of a gruesome murder in 1974. The residents who next occupied the Dutch Colonial home left in terror soon after moving in. Some even believe that the spirits of dead presidents haunt the White House.

A home's history and a juicy story can help bring tourists. Jerome, Ariz., bills itself as the "Largest Ghost Town in America" and offers ghost tours and haunted walks throughout the month of October. In Savannah, the Sorrel-Weed house, built by a merchant named Francis Sorrel in the 1840s, is thought to be haunted by Mr. Sorrel's wife and a servant with whom he is said to have had an affair, according to Orlin Reynolds, the manager of the Sorrel-Weed House Tours, which runs both historic and haunted tours of the home.

When James and Cheryl Fuhring ran the Snowball Mansion Inn starting in the late 1990s, they say a few guests reported seeing odd things, including a woman in period clothing walking into what was once the Snowballs' nursery, where their infant child is believed to have died in the night. According to HauntedTravels.com, Ms. Snowball sank into a deep depression and never overcame her grief. (The site also notes that the Snowball Inn had three "lavishly appointed" guest rooms and gourmet breakfasts.)

The evidence on any "haunting" is, of course, circumstantial. Several members of the Snowball family—including Mr. Snowball and his wife—are buried at a local cemetery, but some are missing birth dates and death dates; the story of the baby dying in the night could not be confirmed.

The Fuhrings, who now run a bed and breakfast in Durham, Calif., say they never saw ghosts in the home, but they felt Ms. Snowball's presence. "She was very kind and helpful, and she wasn't anything really to be afraid of," Mr. Fuhring says, noting that he and his wife did experience the erratic ringing of the doorbell, as well as rattling windows.

Mr. Fuhring says that they sometimes asked Ms. Snowball for financial help—and it often worked. Large parties booked the Inn several times after the Fuhrings made their appeal. Ms. Fuhring also asked Ms. Snowball for help selling the home, and they did so within a month of listing it in 2005— for $1.9 million, initially.

The buyer put down $1 million on the Snowball Mansion and financed the remainder with two loans. She never made a payment on those loans, and she never moved in: It turned out that the buyer was part of a multimillion-dollar real estate fraud scheme, and the house got tied up in an F.B.I investigation. Finally, earlier this year the mansion was returned to the lender and placed on the market.

The Snowball Mansion looked pretty eerie by the time Mr. and Ms. Stevens came on the scene: Vandals had broken windows and doors and had stolen the copper wiring and the air-conditioning unit. Insects had overtaken the facade. Windowpanes were cracked. Some fences needed mending.

Unfazed, Mr. Stevens, a 60-year-old entrepreneur, and his wife, Nancy, snapped up the house for $470,000 in September. They moved in with their 14-year-old son, 15-year-old daughter and Mr. Stevens' 89-year-old mother from Palm Springs, Calif., earlier this month.

With five bedrooms and five bathrooms, the house has enough room for his family, and he also thinks it will make a good restoration project. "It's actually gorgeous inside," says Mr. Stevens, noting that the wallpaper and plaster molding are in good shape. "By Thanksgiving, everything should be back to normal and looking good." Already the couple has brightened up the place: Pumpkins adorn the front steps, and life has returned to the bedrooms.

Often, tales of a resident ghost can affect the salability of a property. "I've had some people who really have had problems and won't buy a property because they think the karma thing is all wrong," says Dorian Bennett of Dorian Bennett Sotheby's International Realty in New Orleans, a city known for its ghost stories. The name "Marie Laveau" attached to the history of a home in New Orleans will often scare off potential buyers, he says, because of its association with a local 19th-century voodoo practitioner of that name. Unfortunately for local brokers, the name is as common as Jane Smith in the city, Mr. Bennett says.

Realtors are not required to tell prospective owners that a home is believed to be haunted, says Walter Molony, a spokesman for the National Association of Realtors. While Realtors must disclose information about known material factors that could affect a sale, in 44 states and Washington, D.C., hauntings fall under a category of "psychological stigmas," and are considered non-material factors that affect the desirability and salability of a home. (Other non-material factors include past use as a drug den or the site of a murder.) Of course, Mr. Molony points out, Realtors must respond truthfully to any question.

Gena Riede, the agent who represented the Stevenses in their purchase of Snowball Mansion, says she read about the supposed hauntings online and disclosed them to the couple.

Mr. Stevens has lived in the Snowball Mansion for just a few weeks, and says he has not seen anything out of the ordinary. His mother, who occupies a "granny apartment" on the ground floor, says she has.

"Mother often complains that we have been moving furniture above her," says Mr. Stevens, noting that he and the rest of the family have been asleep two floors above during those times. "It's probably due to her sensitivity to noise than to ghosts."

Banks and loan investors are starting to bite the bullet and lower the principal due on home mortgages for some struggling borrowers, a new report from bank regulators shows.

That's good news for some homeowners, but may portend more write-offs over the next few years for banks and other lenders now wading through hundreds of thousands of applications for loan modifications. The tradeoff for banks is that by taking the hit now they can boost their chances of being repaid.

Banks and loan servicers modify loans primarily by reducing interest rates or extending the term of the mortgage. These methods can temporarily help borrowers struggling to make payments without requiring lenders to lower the principal owed. Now, in a small but growing number of cases, banks are going further and writing off some of the loan altogether.

Part of this is due to prodding from the Obama administration, which has made saving homeowners from foreclosure a cornerstone of its economic-rescue strategy. The administration in March announced plans aimed at helping as many as nine million households struggling with mortgage debt through loan modifications or refinancings. The plans include financial incentives for mortgage-servicing firms that modify loans.

At the same time, banks now have more flexibility to modify loans because of their success in stabilizing their balance sheets and, in some cases, raising fresh capital. Banks can afford "to take the pain up front," said Kevin Fitzsimmons an analyst at Sandler O'Neill & Partners LP in New York. "If they want a legitimate chance of salvaging something out of the loans, they are better off taking the loss now."

The portion of loan modifications in the second quarter that involved reducing the principal jumped to 10% from 3.1% in the first quarter, according to the report released Wednesday by the Office of the Comptroller of the Currency, or OCC, which regulates national banks.

Alejandro Estrella, a mail carrier in Riverside, Calif., said he was surprised when his lender, the Wachovia unit of Wells Fargo & Co., agreed recently to reduce the principal he owed on two mortgages on his home by 18% to about $237,000. That will lower his monthly payments to less than $1,500 from about $2,100. "I wasn't expecting it," said Mr. Estrella, who started out seeking just a reduction in his interest rate and got counseling from Springboard Nonprofit Consumer Credit Management.

Principal reductions are still the exception, though. Tom Kelly, a spokesman for J.P. Morgan Chase & Co., said the lender first tries to make loans affordable by lowering the interest rate for borrowers who qualify for modifications. If that doesn't result in a low enough payment, the bank may extend the term of the loan or defer repayments on part of the principal. That deferred principal would come due if the home is sold or refinanced.

But banks and loan servicers are recognizing that modifications don't always work if the borrowers aren't given a big enough break. Of loans modified in this year's first quarter, 28% were in default again within three months, the OCC said. Among those modified in last year's second quarter, 56% were in default again a year later.

Although the Obama administration programs for averting foreclosures got off to a slow start, they are starting to result in larger numbers of modified loans. The OCC report tallied 439,574 agreements to help troubled borrowers, including loan modifications and other repayment plans, in the second quarter. That was up 75% from a year earlier. Of that total, 142,362 of the agreements were classified as loan modifications, and 10% of those involved reducing the principal.

Beyond Housing, a nonprofit in St. Louis that counsels distressed borrowers, recently won a principal reduction for Evone Lester, a prison employee who had fallen behind on her payments and faced foreclosure. The loan was being serviced by Wells Fargo & Co. but was owned by an investor, Beyond Housing said. The investor agreed to reduce the loan balance to about $48,800 from $72,000, said Chris Krehmeyer, chief executive of Beyond Housing. That helped cut the monthly payment to $761 from $1,039.

In spite of these efforts, foreclosures continue to rise. In a report last week, Amherst Securities Group, a New York research firm, estimated that about seven million homes -- representing 12% of U.S. homes with mortgages -- will end up changing hands in foreclosures or related transactions over the next few years. The company said it doesn't expect that loan-modification efforts will ease the problem significantly, largely because so many people default again.

The OCC's report, which covers about 64% of all U.S. home mortgages outstanding, found that 11.4% of those mortgage loans were at least 30 days overdue or in foreclosure at the end of the second quarter, up from 10.2% three months earlier and 7.4% a year before.

The OCC isn't requiring banks to reduce principal, said Joseph Evers, a deputy controller at the regulatory agency. But, he said, the OCC has told banks they need to make sure modifications are "more sustainable," giving borrowers a real chance to keep up with the new payments.

Separately, the Federal Reserve Board Wednesday released a report on mortgage data from more than 8,000 lenders under the Home Mortgage Disclosure Act, known as HMDA. The report showed that blacks and Hispanic whites were far more likely to be denied last year for refinancing conventional mortgages, those that aren't insured by the federal government.

The denial rate for blacks was 61%, compared with 51% for Hispanic whites and 32% for non-Hispanic whites. That may partly reflect the larger proportion of minority borrowers who got subprime loans during the housing boom and ended up in homes whose values have crashed.

—Dan Fitzpatrick contributed to this article.

When Lehman Brothers collapsed last year, the rental market for office space in London went to bust faster than anyone could turn the lights off.

A year later, prime office rents have plummeted and landlords have been offering big incentives to lure tenants into office space in the City financial district. But just as tenants are stepping back into the market, the window to lock in large leases at historically low rents may be closing.

The biggest lease so far this year in the City was the recent leasing of 541,000 square feet of new prime office space to Nomura Holdings Inc. The Japanese bank signed a 20-year lease for the Watermark Place building owned by UBS AG's UBS Global Asset Management and Oxford Properties, a unit of Ontario Municipal Employees Retirement System. Nomura will pay £40.50 ($67.10) a square foot and receive a net rent-free period of at least 50 months.

But there is a hitch: Watermark Place is one of the last large spaces available in the City. And as the supply of offices suitable for spacious headquarters for multinational corporations dries up, prime office rents are likely to stop falling and could soon begin to rise.

"We've probably seen the best of the best deals," says Mark Slim, chairman of City of London Agency at property consultants CB Richard Ellis.

To be sure, there are a few uncertainties that could dim landlord optimism. If the economy remains weak and there are more downsizings and business failures, rents could remain stagnant or fall.

Leasing activity in the second quarter rose to 704,800 square feet, twice the rate of the previous quarter, according to CB Richard Ellis. But that sign of resurgent activity in the market is still well below the average 1.2 million square feet leased per quarter over the past 10 years. The vacancy rate in the second quarter rose to 10% from 9.7% in the previous quarter and is up from 4.2% a year ago, according to CBRE.

Still, prospective tenants are beginning to come out from their hiding places -- especially those with large needs.

A report by commercial-property consultancy Drivers Jonas says that while overall supply is up, the supply of large spaces above 200,000 square feet is tight. What that means is that there is a two-tier market in the City, one of large blocks of prime office space that is becoming tighter and another tier of smaller offices where supply is more plentiful.

Prime office rent in the City peaked in 2007 at £65 a square foot and has fallen to about £40 now. Throw in an average three years rent-free on a 10-year lease, and the going net effective rent for prime office space in London's financial district is about £30 a square foot.

Agents and office owners say there are a number of companies shopping around the City for large spaces. But the only building in the City available now that could accommodate a large tenant is 200 Aldersgate, which is owned by Deutsche Bank AG's RREEF alternative-investments business and Allied London, and offers 200,000 square feet of continuous space.

If only the President’s foreclosure-prevention plan worked as well as “cash for clunkers”. But it hasn’t. When the Administration announced the Making Homes Affordable plan in February of 2009, officials said they hoped it would help 4 million distressed homeowners to stay in their homes. As of this writing (8/2/09), the Administration has acknowledged that there are only 200,000 trial loan modifications under way.

Clearly, lenders have been reluctant to modify loans. (Moreover, there are good reasons for their reluctance according to a recent study by the Boston Federal Reserve.) Also, many borrowers have turned out to be ineligible for the programs or – because they are so far ‘under water’ – uninterested. Whatever the cause, the result is the same: a distressed borrower typically needs to choose between (1) a short sale (where the lender agrees to take less than the amount owed) in which, among other things, a commission (paid by the lender) is generated. (2) a foreclosure, or (3) a deed in lieu of foreclosure (where the borrower ‘gives back’ the property to the lender without a foreclosure proceeding). Which is better for the borrower?

Many real estate agents will say and advertise that a short sale is clearly preferable. In support of this view, two claims are usually asserted. (1) A short sale is less damaging to the borrower’s credit than a foreclosure. (2) A short sale provides the borrower with a shorter ‘waiting period’ until the borrower will be able to purchase a home again.

It is important to note that these are two different claims. For example, in a period of time a borrower could become eligible for a purchase loan under Fannie Mae/Freddie Mac guidelines, but he or she might still not have sufficient credit or income to qualify for the loan.

While many say that a short sale is less damaging to one’s credit than is a foreclosure, documenting that claim is another story. This writer has looked hard, but can’t find any verification from Fair Issac (the developer of the FICO scoring system) or any of the major credit providers. That is probably no surprise, because their systems are proprietary. Nonetheless, one wonders what might be the source of the claim.

On the other hand, people who apparently should know deny that there is any difference. Greta Guest of the Free Press (Freep.com) quotes John Ulzheimer, president of consumer education for Atlanta-based Credit.com. Ulzheimer spent seven years at Fair Issac. “The credit bureau sees those all as equal,” Ulzheimer said. “They are all essentially in the eyes of FICO a major delinquency.” Elizabeth Razzi wrote in the Washington Post (July 20, 2008), “A foreclosure and short sale inflict equal damage to your FICO score, according to Fair Issac…” though she provides no specific citation.

Moving on from the credit score issue, there is the question of being again eligible to buy. More precisely, it is a question of when, in the future, the defaulting borrower could get a loan that would be purchased by Fannie Mae or Freddie Mac. The issue is dealt with in Fannie Mae Announcement 08-16, released June 25, 2008.

When it comes to foreclosures and deeds in lieu of foreclosure, the policy distinguishes between events that were precipitated by extenuating circumstances (e.g. job loss, major illness) and those that were not (e.g. financial mismanagement). If you’ve had a foreclosure without extenuating circumstances, you can’t purchase with a Fannie Mae – backed loan for five years. However, if there were extenuating circumstances, it drops to three years. Suppose you chose the deed in lieu of foreclosure option. If there were no extenuating circumstances, the period would be four years, but with such circumstances, it drops to two. Fannie Mae doesn’t draw the distinction when it comes to short sales: the period is two years, the same as doing a deed in lieu with extenuating circumstances.

May 15, 2009, the Treasury Department issued an update to the Making Home Affordable plan. Among other things, it provides for financial incentives (e.g. a $1,500 moving allowance) to distressed borrowers who meet the general eligibility requirements for a loan modification and who will engage in an approved short sale or who will give a deed in lieu of foreclosure.

Distressed and underwater borrowers face a minefield of options for resolving their problems. Not the least of their problems is the vast amount of misinformation floating around. They need to step very carefully.

Lenders are ramping up efforts to avoid home foreclosures, but a report by bank regulators says more than half of borrowers who get help fall behind again.

More than 50 percent of homeowners with loans modified in the first half of last year had missed at least two months of payments a year later, the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision said Wednesday.

But the results were better among those who saw their payments drop substantially.

About one in three borrowers whose monthly payments were reduced by 20 percent or more had fallen behind again within a year. That compares with more than 60 percent for borrowers whose loan payments were left unchanged or increased.

The report by highlights a significant challenge for the Obama administration's plan to tackle the foreclosure crisis, backed by $50 billion in money from the financial industry bailout fund.

High rates of redefault have typically plagued loan modification programs, and critics argue that there is little point to modify loans that will fall into trouble again.

Officials in the Obama administration, however, counter that their plan requires the lending industry to make far more substantive changes — for example, reducing a borrower's interest rate to as low as 2 percent — than was common in the past.

The administration's effort got off to a slow start, but has picked

up speed in recent months. As of last month, about 360,000 borrowers, or 12 percent of those eligible, have signed up for three-month trial modifications. They are supposed to be extended for five years if the homeowners make their payments on time. There is currently no data on redefaults within the plan.

 

Traditionally, most lenders have offered payment plans that allowed borrowers to catch up on missed payments. But those modifications often do not involve an interest rate reduction and result in a higher monthly payment.

But the bank regulators' quarterly report shows that lenders were shifting their focus to modifications that reduced borrowers' payments. They made up nearly 80 percent of new modifications in the April-June quarter, up from about half in the first three months of the year.

The report covers 34 million loans, representing more than 60 percent of primary home mortgages. Consistent with other reports, it showed borrowers are continuing to fall behind as job losses mount. More than 11 percent of borrowers covered by the report had missed at least one payment as of June 30, up from 10 percent in April.

It also highlighted mounting problems with an especially troubling category of loans — "pick-a-payment" or option ARM loans, which allowed borrowers to defer some of their interest payments and add them to the principal. At the end of June, 10 percent of these loans were in foreclosure, more than triple the rate for all mortgages in the survey.

Reclusive billionaire Howard Hughes was an only child, dying in 1976 with no will or children.

Mr. Hughes's estate now has more than 1,000 heirs and beneficiaries who are hoping for one last, big payout from a swath of Las Vegas land bought by the tycoon in the 1940s to establish an inland base for his aerospace operations.

They are likely to get little. The housing bust has shriveled the value of the 7,000 acres left in what is now called the Summerlin development in Las Vegas, once thought to be worth as much as $2 billion. The property also has gotten bogged down in the bankruptcy of mall giant General Growth Properties Inc., which controls the land and was supposed to make a final payment to the Hughes group early next year.

"There's terrible disappointment," says Platt Davis, a retired lawyer in Houston and second cousin of Mr. Hughes who leads the group of heirs along with two other beneficiaries. The 2010 payment is supposed to be equal to half the appraised value of the remaining land at the end of this year.

Summerlin represents the last chapter of the Hughes-estate saga, which is almost as extraordinary as the life of the aviator, film director and entrepreneur who set world speed records for flight, romanced Katharine Hepburn and founded Hughes Aircraft Co.

When Mr. Hughes died, his holdings encompassed 26 disparate companies that included seven Las Vegas casinos, a struggling helicopter maker, several aircraft, a television station, private airport, regional airline, mining claims and a bag of casino chips he neglected to redeem. Summerlin was then 22,500 undeveloped acres of desert and scrub.

Because Mr. Hughes had no will or children, his estate initially was divided among his cousins, aunts, uncles and other relatives. Law firms and other professionals that did the initial work to sort out the estate and fix up some assets for disposition accepted small shares of the proceeds as payment for their services.

The number of claimants and their beneficiaries has grown to more than 1,000 people, including more than 200 relatives of Mr. Hughes. They so far have collected more than $1.5 billion from the liquidation of his estate, according to figures provided by the group.

The heirs include schoolteachers, ministers, college professors, homemakers, architects, a federal judge and a rancher. Mr. Davis and the other co-leaders of the group, second cousin David Lummis and former lawyer David Elkins, say they have fielded questions and concerns by phone, email and even in person at reunions of various Hughes family branches.

Catherine Russell received her share of Mr. Hughes's estate in her 1986 divorce from her husband, a lawyer whose firm did work for the Hughes heirs. The money she received every year amounted to at least a few thousand dollars but never more than half her annual salary, helping to cover college for her son and daughter and medical costs after a drunken driver hit her in 1989.

Ms. Russell, a deputy commissioner in California's Department of Real Estate, also steered yearly proceeds toward the care of her son, now 38 years old and mentally disabled because of a 1994 motorcycle accident. She planned to use the final Summerlin payout to establish a trust for her son and put a deposit on a house.

Now that the payment is on hold with General Growth's other debts and obligations, Ms. Russell describes her situation as "very disconcerting and depressing." While many people assume that all of the beneficiaries of the Hughes estate are rich, she says, "it is very depressing to be 60 years old and no longer be able to afford a piece of property and to pass something on to my children, especially considering my son's disability."

General Growth, owner of more than 200 U.S. shopping malls, says it wants to resolve the Hughes claim.

"The company is optimistic that a fair resolution will be reached with the Hughes heirs, as with all of our stakeholders, as we proceed through the process of emergence from bankruptcy," President and Chief Operating Officer Tom Nolan says.

Mr. Hughes bought the Las Vegas land, which the heirs later named Summerlin after his grandmother, because he was concerned that the Japanese attack on Pearl Harbor in 1941 had exposed the vulnerability of the aircraft industry along coastal California.

By the mid-1990s, the area was hot real estate. In 1996, the Hughes group agreed to sell the property to Rouse Co., a large developer.

In the negotiations, Rouse and the Hughes group couldn't agree on a purchase price because so much of Summerlin had yet to be developed. Instead, they formulated a profit-sharing agreement, in which the heirs would receive half of each year's profits from sales of Summerlin land to home builders over 14 years. And instead of cash, the heirs decided to receive payments in stock, which helped them defer taxes.

Those payments amounted to roughly $570 million in stock as Summerlin was developed. Roughly 95,000 people live there now. But land values have fallen so drastically in Las Vegas that the Summerlin claim might now be worth less than $100 million, says analyst Kevin Starke of CRT Group LLC.

One other problem facing the Hughes group: General Growth bought Rouse in 2004, inheriting the pact with the heirs. In April, the mall owner, struggling under $27 billion of debt, sought Chapter 11 bankruptcy protection. Heirs who held on to General Growth stock from earlier payments saw its value fall 92% from its high of $67 in March 2007.

Now that General Growth is in bankruptcy, the Hughes group must get in line with the hundreds of other creditors, submitting a claim to U.S. Bankruptcy Judge Allan Gropper next month. Stuck in the pecking order with shareholders, Mr. Hughes's heirs and beneficiaries get nothing unless General Growth's lenders and debt holders recoup the full amounts of their claims.

As part of the process, General Growth and the Hughes group will need to decide whether to keep the old deal, revise it or strike a new one subject to the judge's approval.