From Realtor Magazine Online, Daily Real Estate News February 26, 2009
Not as many homeowners as you might think are eligible for President Barack Obama’s housing stability plan.
The reason:
Eligible borrowers are only those whose loan is conforming--that is, a first mortgage backed by Fannie Mae or Freddie Mac, the two secondary mortgage market companies that are now under the direction of the federal government. Those loans are limited in size--$417,000 for most of the country, although they go up to $729,750 in high-cost areas.
Eligible borrowers are also limited to those with a loan-to-value ratio of 80 percent to 105 percent on their first mortgage.
Here are the percentages of mortgage holders in some hard-hit areas who meet the eligibility criteria to refinance under the plan, according to Zillow.com:
Miami-Fort Lauderdale: 17 percent
New York and North Jersey: 16 percent
San Diego: 12 percent
Los Angeles: 9 percent
San Francisco: 8 percent
San Jose-Santa Clara: 7 percent
Source: The Wall Street Journal, Nick Timiraos (02/24/2009)
Thursday, February 26, 2009
America's 5 Best and Worst Housing Markets
Where in the U.S. homes are most affordable?
5 BEST housing markets
1. New York
2. Washington, D.C.
3. Charlotte, N.C.
4. Portland, Ore.
5. San Diego
5 WORST housing markets
1. Las Vegas
2. Phoenix
3. Detroit
4. Minneapolis
5. San Francisco
Source: Forbes.com
5 BEST housing markets
1. New York
2. Washington, D.C.
3. Charlotte, N.C.
4. Portland, Ore.
5. San Diego
5 WORST housing markets
1. Las Vegas
2. Phoenix
3. Detroit
4. Minneapolis
5. San Francisco
Source: Forbes.com
All About "Homestead" Exemptions
What is the purpose of the homestead exemption?
The homestead exemption gives you rights against many debts you might incur through accident, illness or misfortune. However, there are limitations and exceptions. The policy underlying homestead laws is to provide a place for the family where they may live free from the anxiety that it may be taken from them.
How does the homestead exemption work?
Example: If the market value of your home is $120,000 and you have a first mortgage or deed of trust of $65,000 and a second mortgage of $25,000, you have an equity of $30,000 in your home. The homestead exemption protects this equity against creditors.
What is a judgment lien?
When you owe someone money he is considered your creditor. If a creditor sues and wins a judgment against you, he can file a lien against your home. The homestead exemption is protection against such liens.
What kind of property is covered?
A house, a condominium, a duplex, a mobile home, a community apartment project, or a planned development.
Who is eligible for this homestead exemption?
Every homeowner who resides in his or her home is entitled to this protection. A person can only have one valid homestead at a time.
Who may file a Declaration of Homestead?
Every homeowner may file. A homestead will remain in effect until the house is sold, or the homestead is abandoned by recording an Abandonment of Homestead.
Are there limits to the amount of equity protected?
Yes, for married couples, or single parents with dependents living at home, the homestead exemption is $75,000; unmarried individuals, $50,000. For persons 65 years or older, or for persons physically or mentally disabled, the exemption limit is $100,000.
What situations are not covered by the homestead exemption?
Judgment liens recorded before you have recorded your Declaration of Homestead will attach to the house. Loans or debts secured by the property (mortgages, deeds of trust, etc.) are not covered by the homestead exemption. When you voluntarily put up your home as security against a debt, a homestead will not protect it. When a contractor or laborer puts labor or materials into repairs or improvement on your property, and you do not pay him, the homestead exemption will not protect against the mechanic's lien. Tax liens by federal, state and local governments.
Can I remove the homestead exemption if I want to?
Yes. You can remove the homestead exemption at any time by filing a form called Abandonment of Homestead. Also, if you were to record a homestead on another property, it would remove the homestead on the first property. When you sell your home, the homestead on it is automatically removed.
The homestead exemption gives you rights against many debts you might incur through accident, illness or misfortune. However, there are limitations and exceptions. The policy underlying homestead laws is to provide a place for the family where they may live free from the anxiety that it may be taken from them.
How does the homestead exemption work?
Example: If the market value of your home is $120,000 and you have a first mortgage or deed of trust of $65,000 and a second mortgage of $25,000, you have an equity of $30,000 in your home. The homestead exemption protects this equity against creditors.
What is a judgment lien?
When you owe someone money he is considered your creditor. If a creditor sues and wins a judgment against you, he can file a lien against your home. The homestead exemption is protection against such liens.
What kind of property is covered?
A house, a condominium, a duplex, a mobile home, a community apartment project, or a planned development.
Who is eligible for this homestead exemption?
Every homeowner who resides in his or her home is entitled to this protection. A person can only have one valid homestead at a time.
Who may file a Declaration of Homestead?
Every homeowner may file. A homestead will remain in effect until the house is sold, or the homestead is abandoned by recording an Abandonment of Homestead.
Are there limits to the amount of equity protected?
Yes, for married couples, or single parents with dependents living at home, the homestead exemption is $75,000; unmarried individuals, $50,000. For persons 65 years or older, or for persons physically or mentally disabled, the exemption limit is $100,000.
What situations are not covered by the homestead exemption?
Judgment liens recorded before you have recorded your Declaration of Homestead will attach to the house. Loans or debts secured by the property (mortgages, deeds of trust, etc.) are not covered by the homestead exemption. When you voluntarily put up your home as security against a debt, a homestead will not protect it. When a contractor or laborer puts labor or materials into repairs or improvement on your property, and you do not pay him, the homestead exemption will not protect against the mechanic's lien. Tax liens by federal, state and local governments.
Can I remove the homestead exemption if I want to?
Yes. You can remove the homestead exemption at any time by filing a form called Abandonment of Homestead. Also, if you were to record a homestead on another property, it would remove the homestead on the first property. When you sell your home, the homestead on it is automatically removed.
Wednesday, February 25, 2009
Huge Loans Remained As Foreclosures Spiked
From Realtor Magazine Online, Daily Real Estate News February 25, 2009
About 9 percent of home buyers in 2007 borrowed an amount that was at least four times greater than their annual income, according to an analysis of lender data by USA Today.
Lenders don’t usually consider the size of the loan relative to total income, says Margot Saunders of the National Consumer Law Center, but that constituted a major mistake while writing an adjustable-rate loans where consumers can face sharp increases in monthly payments, she asserts. “It is like jumping off a bridge without knowing how high it is, and certainly without a parachute,” Saunders says.
Data from the Federal Financial Institutions Examination council shows that big loans were most common in East and West Coast cities. Mortgage Bankers Association Chief Economist Jay Brinkmann dismisses the analysis saying there is nothing inherently wrong with loans that are larger than a borrowers’ yearly income. In parts of the country where home prices spiked, ”that was what you had to pay to get into a house,” he says.
Source: USA Today, Brad Heath (02/25/2009)
About 9 percent of home buyers in 2007 borrowed an amount that was at least four times greater than their annual income, according to an analysis of lender data by USA Today.
Lenders don’t usually consider the size of the loan relative to total income, says Margot Saunders of the National Consumer Law Center, but that constituted a major mistake while writing an adjustable-rate loans where consumers can face sharp increases in monthly payments, she asserts. “It is like jumping off a bridge without knowing how high it is, and certainly without a parachute,” Saunders says.
Data from the Federal Financial Institutions Examination council shows that big loans were most common in East and West Coast cities. Mortgage Bankers Association Chief Economist Jay Brinkmann dismisses the analysis saying there is nothing inherently wrong with loans that are larger than a borrowers’ yearly income. In parts of the country where home prices spiked, ”that was what you had to pay to get into a house,” he says.
Source: USA Today, Brad Heath (02/25/2009)
Mortgage Applications Drop as Rates Rise
From Realtor Magazine Online, Daily Real Estate News February 25, 2009
Mortgage applications seesawed downward last week falling 15.1 percent on a seasonally adjusted basis to 743.5 from 875.3 the previous week, according to the Mortgage Bankers Association’s weekly survey.
When mortgage rates tick up, mortgage applications rise—and vice versa.
On an unadjusted basis, the index decreased 22.6 percent but was up 9.8 percent compared with the same week a year ago.
The refinance share of mortgage activity fell from 74.2 percent the previous week to 69.7 percent last week.
Mortgage rates were up slightly:
* 30-year fixed-rate mortgages increased to 5.07 percent from 4.99 percent
* 15-year fixed-rate mortgages increased to 4.71 percent from 4.66 percent
* 1-year ARMs increased to 6.13 percent from 6.10 percent
Source: Mortgage Bankers Association (02/25/2009)
Mortgage applications seesawed downward last week falling 15.1 percent on a seasonally adjusted basis to 743.5 from 875.3 the previous week, according to the Mortgage Bankers Association’s weekly survey.
When mortgage rates tick up, mortgage applications rise—and vice versa.
On an unadjusted basis, the index decreased 22.6 percent but was up 9.8 percent compared with the same week a year ago.
The refinance share of mortgage activity fell from 74.2 percent the previous week to 69.7 percent last week.
Mortgage rates were up slightly:
* 30-year fixed-rate mortgages increased to 5.07 percent from 4.99 percent
* 15-year fixed-rate mortgages increased to 4.71 percent from 4.66 percent
* 1-year ARMs increased to 6.13 percent from 6.10 percent
Source: Mortgage Bankers Association (02/25/2009)
America's Best and Worst Housing Markets
From Realtor Magazine Online, Daily Real Estate News February 25, 2009
As the housing downturn wears on, some cities are stabilizing and some aren’t.
In Las Vegas, the weakest market in the country, prices continue to drop.
"I don't know what those guys were drinking when they thought all this building made sense. If it does work out soon, then there's some force out there in the universe that I'm not aware of," Steve Cesinger, chief financial officer at Dewberry Capital, an Atlanta-based real estate investment firm.
Forbes magazine analyzed monthly declines as well as year-over-year declines in home prices. It also looked at how many months of equity homeowners have lost. With these figures in mind, it determined the 10 best and the 10 worst U.S. housing markets. Here they are::
10 Best
New York City
Washington, DC
Charlotte, N.C.
Portland, Ore
San Diego
Denver
Boston
Dallas
Los Angeles
Seattle
10 Worst
Las Vegas
Phoenix
Detroit
Minneapolis
San Francisco
Chicago
Cleveland
Atlanta
Tampa
Miami
Source: Forbes: Matt Woolsey (02/24/2005)
As the housing downturn wears on, some cities are stabilizing and some aren’t.
In Las Vegas, the weakest market in the country, prices continue to drop.
"I don't know what those guys were drinking when they thought all this building made sense. If it does work out soon, then there's some force out there in the universe that I'm not aware of," Steve Cesinger, chief financial officer at Dewberry Capital, an Atlanta-based real estate investment firm.
Forbes magazine analyzed monthly declines as well as year-over-year declines in home prices. It also looked at how many months of equity homeowners have lost. With these figures in mind, it determined the 10 best and the 10 worst U.S. housing markets. Here they are::
10 Best
New York City
Washington, DC
Charlotte, N.C.
Portland, Ore
San Diego
Denver
Boston
Dallas
Los Angeles
Seattle
10 Worst
Las Vegas
Phoenix
Detroit
Minneapolis
San Francisco
Chicago
Cleveland
Atlanta
Tampa
Miami
Source: Forbes: Matt Woolsey (02/24/2005)
Tuesday, February 24, 2009
Some Investors Are Gobbling Up Homes
From Realtor Magazine Online, Daily Real Estate News February 24, 2009
Home sales doubled in California in the fourth quarter of 2008 as investors and speculators bought foreclosed properties—cheap.
"This is the buying opportunity of our lifetime," said Bruce Norris, head of an investment group that expects to purchase at least 100 homes this year in Southern California.
Norris Investment Group prefers properties built between 1980 and 1990 that are smaller than 2,000 square feet. Norris says these homes usually don’t have too many maintenance issues and are the easiest to both rent and sell.
Typically, Norris pays somewhere around $50,000 for these properties and spends another $30,000 on repairs. He expect to rent these properties for at least $1,200 a month until the market for them turns. He expects that time won’t be too far away.
"You cannot have this (low) level of pricing be permanent because it costs too much to build a home [in California]," Norris said. "That's how you know you're making a logical decision when everything is falling around you. When you can buy a finished product someone will want to live in for $55,000, that just has to make somebody pretty wealthy someday."
Source: Reuters, Dan Whitcomb (02/23/2009)
Home sales doubled in California in the fourth quarter of 2008 as investors and speculators bought foreclosed properties—cheap.
"This is the buying opportunity of our lifetime," said Bruce Norris, head of an investment group that expects to purchase at least 100 homes this year in Southern California.
Norris Investment Group prefers properties built between 1980 and 1990 that are smaller than 2,000 square feet. Norris says these homes usually don’t have too many maintenance issues and are the easiest to both rent and sell.
Typically, Norris pays somewhere around $50,000 for these properties and spends another $30,000 on repairs. He expect to rent these properties for at least $1,200 a month until the market for them turns. He expects that time won’t be too far away.
"You cannot have this (low) level of pricing be permanent because it costs too much to build a home [in California]," Norris said. "That's how you know you're making a logical decision when everything is falling around you. When you can buy a finished product someone will want to live in for $55,000, that just has to make somebody pretty wealthy someday."
Source: Reuters, Dan Whitcomb (02/23/2009)
Law Offers Tax Relief for Small Businesses
From Realtor Magazine Online, Daily Real Estate News February 24, 2009
The economic stimulus bill contains several tax provisions that will help small businesses struggling in a tough economy. Here are some of the provisions that might prove especially significant to a real estate-related business.
Net operating loss carryback.
If your company lost money in 2008, but paid taxes on profits in the past five years, you can apply last year’s loss to prior-year taxes—and likely get a refund on taxes you’ve paid in the past.
Deduct and depreciate equipment.
Companies that bought new equipment in 2008 can treat it as an operating expense and immediately deduct the whole amount up to $250,000, a $117,000 increase over its previously scheduled limit.
Shorter holding period for S-Corps.
This shortens the period that S-corp assets can be sold without paying taxes on built-in gains. A built-in gain is the difference between the fair market value of the assets and their tax basis at the time the company put an S-corp in place. The impact of this is that many business owners will be able to retire earlier without facing two layers of taxation.
Source: BusinessWeek.com, Karen E. Klein (02/23/2009)
The economic stimulus bill contains several tax provisions that will help small businesses struggling in a tough economy. Here are some of the provisions that might prove especially significant to a real estate-related business.
Net operating loss carryback.
If your company lost money in 2008, but paid taxes on profits in the past five years, you can apply last year’s loss to prior-year taxes—and likely get a refund on taxes you’ve paid in the past.
Deduct and depreciate equipment.
Companies that bought new equipment in 2008 can treat it as an operating expense and immediately deduct the whole amount up to $250,000, a $117,000 increase over its previously scheduled limit.
Shorter holding period for S-Corps.
This shortens the period that S-corp assets can be sold without paying taxes on built-in gains. A built-in gain is the difference between the fair market value of the assets and their tax basis at the time the company put an S-corp in place. The impact of this is that many business owners will be able to retire earlier without facing two layers of taxation.
Source: BusinessWeek.com, Karen E. Klein (02/23/2009)
Monday, February 23, 2009
Jumbo Loans: Still Available, Tougher to Get
From Realtor Magazine Online, Daily Real Estate News February 23, 2009
Jumbo mortgages aren’t as easy to get as they were two years ago, but lenders say they are out there and available to those with the right income, credit scores and enough cash for a big down payment.
Large loans are more likely to be more available from small local banks than they are from big national ones because small banks keep the loans on their books instead of selling them.
"What we've really seen in many ways is the demise of the national lenders," says Guy Cecala, publisher of Inside Mortgage Finance.
While it can be hard to generalize, Ephraim Schwartz, a mortgage broker with O'Dette Mortgage Group, says borrowers should look at both small lenders and medium-size national ones.
Here’s what observers say is typical of what’s available:
* U.S. Bank, which operates in 24 states and is part of U.S. Bancorp, (USB) has been offering a one-year jumbo nonconforming ARM at under 4 percent for amounts up to $900,000. And he says even U.S. Bank's three- and seven-year ARMs have lately been under 6 percent.
*California Coast Credit Union and Alliant Credit Union in Chicago are both offering 30-year fixed-rate jumbo nonconforming loans starting at 6.25 percent.
Most jumbo loans require at least 20--and probably 25 percent down--and may involve paying at least one point.
Source: Investor’s Business Daily, Kathleen Doler (02/19/2009)
Jumbo mortgages aren’t as easy to get as they were two years ago, but lenders say they are out there and available to those with the right income, credit scores and enough cash for a big down payment.
Large loans are more likely to be more available from small local banks than they are from big national ones because small banks keep the loans on their books instead of selling them.
"What we've really seen in many ways is the demise of the national lenders," says Guy Cecala, publisher of Inside Mortgage Finance.
While it can be hard to generalize, Ephraim Schwartz, a mortgage broker with O'Dette Mortgage Group, says borrowers should look at both small lenders and medium-size national ones.
Here’s what observers say is typical of what’s available:
* U.S. Bank, which operates in 24 states and is part of U.S. Bancorp, (USB) has been offering a one-year jumbo nonconforming ARM at under 4 percent for amounts up to $900,000. And he says even U.S. Bank's three- and seven-year ARMs have lately been under 6 percent.
*California Coast Credit Union and Alliant Credit Union in Chicago are both offering 30-year fixed-rate jumbo nonconforming loans starting at 6.25 percent.
Most jumbo loans require at least 20--and probably 25 percent down--and may involve paying at least one point.
Source: Investor’s Business Daily, Kathleen Doler (02/19/2009)
Who Will be Eligible for Foreclosure Help?
From Realtor Magazine Online, Daily Real Estate News February 23, 2009
With the federal government hoping to finalize details for its $75 billion foreclosure prevention program by March 4, officials are fine-tuning eligibility requirements.
So far, they are targeting borrowers who spend more than 38 percent of their earnings to make loan payments on primary residences.
The Mortgage Bankers Association wants the Obama administration to broaden the refinancing component of the initiative, noting that the threshold of 105 percent of a home's current property value is inadequate to help home owners in battered housing markets like Arizona, California, and Florida.
Source: Washington Post, Renae Merle (02/20/09)
With the federal government hoping to finalize details for its $75 billion foreclosure prevention program by March 4, officials are fine-tuning eligibility requirements.
So far, they are targeting borrowers who spend more than 38 percent of their earnings to make loan payments on primary residences.
The Mortgage Bankers Association wants the Obama administration to broaden the refinancing component of the initiative, noting that the threshold of 105 percent of a home's current property value is inadequate to help home owners in battered housing markets like Arizona, California, and Florida.
Source: Washington Post, Renae Merle (02/20/09)
Sunday, February 22, 2009
What's In the Foreclosure Prevention Plan
From Realtor Magazine Online, Daily Real Estate News February 19, 2009
The Obama administration yesterday released its long-awaited plan to stem foreclosures. It's organized into three categories:
1.) Help for home owners making their payments but at risk of default and foreclosure.
Home owners with a Fannie Mae or Freddie Mac loan would be eligible to refinance as long as their mortgage doesn't exceed 105 percent of the home's current market value. Currently owners need to have at least 20 percent equity. Potential impact: 4-5 million households.
2.) Help for home owners already in default and in need of loan modification.
For lenders that voluntarily agree to lower a borrower's payment so that it makes up no more than 38 percent of the borrower's income, the government would share the cost of lowering the mortgage burden to 31 percent of income. Incentives to lenders to participate include a $1,000 payment.
Borrowers can receive up to $1,000 as an incentive to stay current on their new mortgage. Still in the works is a proposed provision that would allow bankruptcy judges to require loan modification (known as a cramdown) as part of a household's restructuring. That provision requires legislation by Congress. Estimated potential impact: 3-4 million households.
3.) Doubled resources to Fannie Mae and Freddie Mac.
To encourage investors to buy the secondary market companies' mortgage-backed securities, the government explicitly backstops them to up to $400 billion, twice the current amount.
The plan does not provide help to investors or to home owners who are in trouble with a second home, nor does it apply to homeowners whose mortgage is part of a private-label mortgage security that is not backed by Fannie Mae or Freddie Mac.
"The administration's proposed plan, combined with provisions like the $8,000 first-time home buyer tax credit in the just-enacted American Recovery and Reinvestment Act, will help minimize foreclosures, shrink housing inventory, stabilize home values, and move the country closer to an economic recovery," says NAR President Charles McMillan.
Source: REALTOR® Magazine Online
The Obama administration yesterday released its long-awaited plan to stem foreclosures. It's organized into three categories:
1.) Help for home owners making their payments but at risk of default and foreclosure.
Home owners with a Fannie Mae or Freddie Mac loan would be eligible to refinance as long as their mortgage doesn't exceed 105 percent of the home's current market value. Currently owners need to have at least 20 percent equity. Potential impact: 4-5 million households.
2.) Help for home owners already in default and in need of loan modification.
For lenders that voluntarily agree to lower a borrower's payment so that it makes up no more than 38 percent of the borrower's income, the government would share the cost of lowering the mortgage burden to 31 percent of income. Incentives to lenders to participate include a $1,000 payment.
Borrowers can receive up to $1,000 as an incentive to stay current on their new mortgage. Still in the works is a proposed provision that would allow bankruptcy judges to require loan modification (known as a cramdown) as part of a household's restructuring. That provision requires legislation by Congress. Estimated potential impact: 3-4 million households.
3.) Doubled resources to Fannie Mae and Freddie Mac.
To encourage investors to buy the secondary market companies' mortgage-backed securities, the government explicitly backstops them to up to $400 billion, twice the current amount.
The plan does not provide help to investors or to home owners who are in trouble with a second home, nor does it apply to homeowners whose mortgage is part of a private-label mortgage security that is not backed by Fannie Mae or Freddie Mac.
"The administration's proposed plan, combined with provisions like the $8,000 first-time home buyer tax credit in the just-enacted American Recovery and Reinvestment Act, will help minimize foreclosures, shrink housing inventory, stabilize home values, and move the country closer to an economic recovery," says NAR President Charles McMillan.
Source: REALTOR® Magazine Online
30-Year Rates Drop to Near 5%
From Realtor Magazine Online, Daily Real Estate News February 20, 2009
Mortgage rates across the board fell this week, a welcoming sign to potential buyers and home owners looking to refinance.
The 30-year fixed-rate mortgage averaged 5.04 percent this week, a drop from last week's 5.16 percent. Last year at this time, the 30-year rate averaged 6.04 percent, Freddie Mac reports.
Freddie Mac reported the following for other rates for the week:
* 15-year mortgage rates: averaged 4.68 percent, down from last week's 4.81 percent. Last year at this time: 5.64 percent.
* 5-year hybrid adjustable-rate mortgages: averaged 5.04 percent this week, a drop from last week's 5.23 percent. Last year at this time: 5.37 percent
* 1-year ARMs: averaged 4.8 percent, down from last week's 4.94 percent.
Last year at this time: 4.98 percent"Mortgage rates followed bond yields lower this week as recent economic reports suggest the economy is still slowing, which reduces the future threat of inflation," says Frank Nothaft, Freddie Mac's chief economist.
Source: Freddie Mac(02/19/09)
Mortgage rates across the board fell this week, a welcoming sign to potential buyers and home owners looking to refinance.
The 30-year fixed-rate mortgage averaged 5.04 percent this week, a drop from last week's 5.16 percent. Last year at this time, the 30-year rate averaged 6.04 percent, Freddie Mac reports.
Freddie Mac reported the following for other rates for the week:
* 15-year mortgage rates: averaged 4.68 percent, down from last week's 4.81 percent. Last year at this time: 5.64 percent.
* 5-year hybrid adjustable-rate mortgages: averaged 5.04 percent this week, a drop from last week's 5.23 percent. Last year at this time: 5.37 percent
* 1-year ARMs: averaged 4.8 percent, down from last week's 4.94 percent.
Last year at this time: 4.98 percent"Mortgage rates followed bond yields lower this week as recent economic reports suggest the economy is still slowing, which reduces the future threat of inflation," says Frank Nothaft, Freddie Mac's chief economist.
Source: Freddie Mac(02/19/09)
Friday, February 13, 2009
New Appraisal Regulations Under Fire
From Realtor Magazine Online, Daily Real Estate News February 13, 2009
Beginning May 1, the responsibility for managing home appraisals will move to a middleman, known as appraisal management companies or AMCs.
Under new federal regulations, mortgage brokers and loan officers can’t directly order appraisals. Instead, they are expected to go through third-party AMCs, which are supposed to prevent them from pressuring appraisers.
But critics of the new plan say nobody is watching the AMCs.
“[The new rules] have transferred the [improper influence] problem to these appraisal management companies, which are not regulated by anybody," says Bill Garber, director of government affairs at the Appraisal Institute, a nonprofit trade group.
"[The marketplace is] still vulnerable to appraiser pressure because the incentives are still there to get deals done and collect the fees," says Susan M. Wachter, professor of real estate at the University of Pennsylvania's Wharton School.
Federal housing officials, who helped write the new laws, say they will hold AMCs accountable.
James B. Lockhart, director of the Federal Housing Finance Agency, which oversees Fannie and Freddie, says, "If [AMCs] are applying undue pressure, that would be a violation of Fannie and Freddie rules, and we would take action.”
Source: Business Week, Chad Terhune (02/16/09)
Beginning May 1, the responsibility for managing home appraisals will move to a middleman, known as appraisal management companies or AMCs.
Under new federal regulations, mortgage brokers and loan officers can’t directly order appraisals. Instead, they are expected to go through third-party AMCs, which are supposed to prevent them from pressuring appraisers.
But critics of the new plan say nobody is watching the AMCs.
“[The new rules] have transferred the [improper influence] problem to these appraisal management companies, which are not regulated by anybody," says Bill Garber, director of government affairs at the Appraisal Institute, a nonprofit trade group.
"[The marketplace is] still vulnerable to appraiser pressure because the incentives are still there to get deals done and collect the fees," says Susan M. Wachter, professor of real estate at the University of Pennsylvania's Wharton School.
Federal housing officials, who helped write the new laws, say they will hold AMCs accountable.
James B. Lockhart, director of the Federal Housing Finance Agency, which oversees Fannie and Freddie, says, "If [AMCs] are applying undue pressure, that would be a violation of Fannie and Freddie rules, and we would take action.”
Source: Business Week, Chad Terhune (02/16/09)
Mortgage Rates Drop This Week
From Realtor Magazine Online, Daily Real Estate News February 13, 2009
A dip in the long-term mortgage rate this week offered home owners a refinancing opportunity, according to Freddie Mac.
This week's rates:
* Average interest on 30-year fixed loans fell to 5.16 percent from 5.25 percent last week.
* Interest on 15-year fixed loans also declined, slipping to 4.81 percent from 4.92 percent.
Source: Charleston Post and Courier (02/13/09)
A dip in the long-term mortgage rate this week offered home owners a refinancing opportunity, according to Freddie Mac.
This week's rates:
* Average interest on 30-year fixed loans fell to 5.16 percent from 5.25 percent last week.
* Interest on 15-year fixed loans also declined, slipping to 4.81 percent from 4.92 percent.
Source: Charleston Post and Courier (02/13/09)
Thursday, February 12, 2009
Foreclosures on Hold While Stimulus Crafted
From Realtor Magazine Online, Daily Real Estate News February 12, 2009
Home foreclosures are slowing as lenders wait for Congress to approve the stimulus package.
Foreclosures.com reported that foreclosures completed in January dropped 26 percent from December to 72,694, the fewest since April.
On Wednesday, the U.S. Office of Thrift Supervision told the savings and loans it regulates to suspend foreclosures on owner-occupied homes while the details of a plan to help borrowers reduce payments is worked out. The new plan is expected to hold monthly housing-related payments to 31 percent of income, as opposed to 38 percent, which was the previous standard. Workouts including lower payments will also be available to borrowers who are in danger of falling behind, but haven’t so far.
Meanwhile, Moody’s Economy.com predicts that 1.5 million homes will be lost to foreclosure in 2009, up from 1.4 million in 2008 and 750,000 in 2007.
"What the foreclosure-mitigation efforts will do is to keep the number of foreclosures from increasing substantially this year and next year," said Celia Chen, senior director of housing economics at the firm.
Source: The Wall Street Journal, James R. Hagerty and Ruth Simon (02/12/2009)
Home foreclosures are slowing as lenders wait for Congress to approve the stimulus package.
Foreclosures.com reported that foreclosures completed in January dropped 26 percent from December to 72,694, the fewest since April.
On Wednesday, the U.S. Office of Thrift Supervision told the savings and loans it regulates to suspend foreclosures on owner-occupied homes while the details of a plan to help borrowers reduce payments is worked out. The new plan is expected to hold monthly housing-related payments to 31 percent of income, as opposed to 38 percent, which was the previous standard. Workouts including lower payments will also be available to borrowers who are in danger of falling behind, but haven’t so far.
Meanwhile, Moody’s Economy.com predicts that 1.5 million homes will be lost to foreclosure in 2009, up from 1.4 million in 2008 and 750,000 in 2007.
"What the foreclosure-mitigation efforts will do is to keep the number of foreclosures from increasing substantially this year and next year," said Celia Chen, senior director of housing economics at the firm.
Source: The Wall Street Journal, James R. Hagerty and Ruth Simon (02/12/2009)
Stimulus Advances With Tax Credit Changes
From Realtor Magazine Online, Daily Real Estate News February 12, 2009
The $790 billion stimulus package hammered out by House and Senate conferees late yesterday afternoon drops the repayment feature on the home buyer tax credit.
The NATIONAL ASSOCIATION OF REALTORS ® has sought removal of the repayment requirement because it discourages buyers from taking advantage of the tax credit.
The legislation also extends the effective date of the tax credit, which is for up to $7,500, to September 1 from June 30. Households that purchase in 2009 using financing assistance from state and local mortgage bonds will be permitted to use the credit as well.
Other provisions reportedly in the bill that could help housing markets and communities include:
* FHA and conforming loan limits. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the secretary of the U.S. Department of Housing and Urban Development.
* Foreclosure mitigation and neighborhood stabilization. Funding for states and localities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized. Some news reports put the funding level at $2 billion.
* Rental assistance. Up to $1.5 billion to provide short-term rental assistance and other aid for families during the economic crisis.
* Transportation infrastructure. Up to $29 billion for highway construction projects, $8 billion for rail projects, and $5 billion to weatherize low-income homes.
* Rural housing development. Increased funding for the Rural Housing Service direct and guaranteed loan programs.
* Low-income housing grants. Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations
* Tax-exempt housing bonds. Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT). In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds
* Energy efficient housing. Grants for energy retrofits for federally assisted housing (Section 8), funding for energy efficiency and conservation block grants to states, and Increases in the residential tax credit through 2010 for certain energy efficient upgrades.
Source: NAR, AP, Washington Post, New York Times, Bloomberg, and Wall Street Journal.
The $790 billion stimulus package hammered out by House and Senate conferees late yesterday afternoon drops the repayment feature on the home buyer tax credit.
The NATIONAL ASSOCIATION OF REALTORS ® has sought removal of the repayment requirement because it discourages buyers from taking advantage of the tax credit.
The legislation also extends the effective date of the tax credit, which is for up to $7,500, to September 1 from June 30. Households that purchase in 2009 using financing assistance from state and local mortgage bonds will be permitted to use the credit as well.
Other provisions reportedly in the bill that could help housing markets and communities include:
* FHA and conforming loan limits. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the secretary of the U.S. Department of Housing and Urban Development.
* Foreclosure mitigation and neighborhood stabilization. Funding for states and localities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized. Some news reports put the funding level at $2 billion.
* Rental assistance. Up to $1.5 billion to provide short-term rental assistance and other aid for families during the economic crisis.
* Transportation infrastructure. Up to $29 billion for highway construction projects, $8 billion for rail projects, and $5 billion to weatherize low-income homes.
* Rural housing development. Increased funding for the Rural Housing Service direct and guaranteed loan programs.
* Low-income housing grants. Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations
* Tax-exempt housing bonds. Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT). In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds
* Energy efficient housing. Grants for energy retrofits for federally assisted housing (Section 8), funding for energy efficiency and conservation block grants to states, and Increases in the residential tax credit through 2010 for certain energy efficient upgrades.
Source: NAR, AP, Washington Post, New York Times, Bloomberg, and Wall Street Journal.
Wednesday, February 11, 2009
NAHB Consumer Poll Supports Buyer Tax Credit
From Realtor Magazine Online, Daily Real Estate News February 11, 2009
A $15,000 home buyer tax credit included in the financial stimulus package passed by the Senate this week would encourage more activity in the market, according to the National Association of Home Builders.
A nationwide poll conducted by the group shows that a third of all 1,200 respondents and 61 percent of renters would be more likely to purchase a home if the tax incentive becomes law.
"This is extremely significant because normally in any one year only about 5 to 7 percent of households purchase a home," says NAHB chief economist David Crowe. "This is more evidence that this temporary, timely and targeted tax credit would trigger home sales, end the free-fall in the housing market, generate new jobs and help lead the economy back to higher ground."
Source: Realty Times (2/11/09).
A $15,000 home buyer tax credit included in the financial stimulus package passed by the Senate this week would encourage more activity in the market, according to the National Association of Home Builders.
A nationwide poll conducted by the group shows that a third of all 1,200 respondents and 61 percent of renters would be more likely to purchase a home if the tax incentive becomes law.
"This is extremely significant because normally in any one year only about 5 to 7 percent of households purchase a home," says NAHB chief economist David Crowe. "This is more evidence that this temporary, timely and targeted tax credit would trigger home sales, end the free-fall in the housing market, generate new jobs and help lead the economy back to higher ground."
Source: Realty Times (2/11/09).
Tuesday, February 10, 2009
Fannie Eases Its Investor Loan Rules
From Realtor Magazine Online, Daily Real Estate News February 10, 2009
To speed recovery of the housing market, Fannie Mae in March will begin purchasing and guaranteeing mortgages for borrowers carrying loans on as many as nine other properties, up from the current limit of three. However, the number of months of reserve payments that must be held by investors will rise to six in June from two currently. "One of the things that leads the economy out of a housing crisis is when prices get cheap enough that investors start moving in and buying things," says Joe Garrett of the Berkeley, Calif.-based consulting firm Garret, Watts & Co.
Source: American Banker, Harry Terris (02/10/09)
To speed recovery of the housing market, Fannie Mae in March will begin purchasing and guaranteeing mortgages for borrowers carrying loans on as many as nine other properties, up from the current limit of three. However, the number of months of reserve payments that must be held by investors will rise to six in June from two currently. "One of the things that leads the economy out of a housing crisis is when prices get cheap enough that investors start moving in and buying things," says Joe Garrett of the Berkeley, Calif.-based consulting firm Garret, Watts & Co.
Source: American Banker, Harry Terris (02/10/09)
International Interest Grows in U.S. Lending
From Realtor Magazine Online, Daily Real Estate News February 10, 2009
The Association of Foreign Investors in Real Estate (AFIRE) reports that foreign real estate lenders could grow lending by as much as 58 percent in the United States this year, with interest in cross-border property investing especially robust.
In a recent AFIRE member survey, the top five most attractive U.S. cities in terms of investment dollars were the District of Columbia, New York City, San Francisco, Los Angeles and Houston.
Meanwhile, 53 percent ranked the United States as the nation providing the most secure property investments.
Respondents also listed multifamily housing, office space, industrial properties, retail, and hotels as the top five preferred property types.
Source: National Mortgage News, Bonnie Sinnock (02/09/09)
The Association of Foreign Investors in Real Estate (AFIRE) reports that foreign real estate lenders could grow lending by as much as 58 percent in the United States this year, with interest in cross-border property investing especially robust.
In a recent AFIRE member survey, the top five most attractive U.S. cities in terms of investment dollars were the District of Columbia, New York City, San Francisco, Los Angeles and Houston.
Meanwhile, 53 percent ranked the United States as the nation providing the most secure property investments.
Respondents also listed multifamily housing, office space, industrial properties, retail, and hotels as the top five preferred property types.
Source: National Mortgage News, Bonnie Sinnock (02/09/09)
Housing Inventories Fall in 29 Major Markets
From Realtor Magazine Online, Daily Real Estate News February 10, 2009
The inventory of existing homes for sale in 29 major markets covered by ZipRealty declined an average of 2.5 percent in January 2009, compared to December 2008 and down 13 percent compared to January 2008.
This is a good sign, especially when considering that typically inventories rise in January after the holidays. In the last 25 years, the average increase in inventory in January has been 8.7 percent, according to Ivy Zelman, CEO of research firm Zelman & Associates.
Housing-market analysis Altos Research reached similar conclusions, saying that the listings in its 10-city composite index declined 3.3 percent in January compared to December 2008.
This data doesn’t include New York City, where appraisal firm Miller Samuel Inc. reports that inventories were at the highest level in the last decade, up 6 percent from December and 36 percent from January 2008.
Source: The Wall Street Journal, James Hagerty (02/10/2009)
The inventory of existing homes for sale in 29 major markets covered by ZipRealty declined an average of 2.5 percent in January 2009, compared to December 2008 and down 13 percent compared to January 2008.
This is a good sign, especially when considering that typically inventories rise in January after the holidays. In the last 25 years, the average increase in inventory in January has been 8.7 percent, according to Ivy Zelman, CEO of research firm Zelman & Associates.
Housing-market analysis Altos Research reached similar conclusions, saying that the listings in its 10-city composite index declined 3.3 percent in January compared to December 2008.
This data doesn’t include New York City, where appraisal firm Miller Samuel Inc. reports that inventories were at the highest level in the last decade, up 6 percent from December and 36 percent from January 2008.
Source: The Wall Street Journal, James Hagerty (02/10/2009)
Experian Blocks Access to Scores at MyFICO.com
From Realtor Magazine Online, Daily Real Estate News February 10, 2009
Experian will no longer offer credit scores via MyFICO.com, but FICO scores based on data from Equifax and TransUnion will still be available through the Web site.
The change doesn’t affect lenders, but it makes it more difficult for potential borrowers to examine their score before they apply for a loan.
Experian said in a e-mailed statement: "Consumers will continue to have many choices for obtaining credit scores based on Experian data, including from Experian Web sites and our many resellers. Consumers can also assess their creditworthiness by purchasing credit scores developed by other credit reporting agencies or third parties, or FICO scores based on other bureaus’ credit data."
Source: The Wall Street Journal, Jane J. Kim (02/04/2009)
Experian will no longer offer credit scores via MyFICO.com, but FICO scores based on data from Equifax and TransUnion will still be available through the Web site.
The change doesn’t affect lenders, but it makes it more difficult for potential borrowers to examine their score before they apply for a loan.
Experian said in a e-mailed statement: "Consumers will continue to have many choices for obtaining credit scores based on Experian data, including from Experian Web sites and our many resellers. Consumers can also assess their creditworthiness by purchasing credit scores developed by other credit reporting agencies or third parties, or FICO scores based on other bureaus’ credit data."
Source: The Wall Street Journal, Jane J. Kim (02/04/2009)
Friday, February 6, 2009
Fannie Loosens Refinancing Rules
From Realtor Magazine Online, Daily Real Estate News February 6, 2009
Fannie Mae plans to eliminate some credit-score requirements, scale back income-documentation standards, and waive the need for appraisals in some cases, starting on April 4.
The mortgage finance company believes the changes will allow more home owners to refinance into new home loans at near-record low interest rates.
Analysts say the relaxed rules for loans that Fannie Mae owns or guarantees are unlikely to have a significant impact on mortgage-bond investors and mortgage insurers.
Source: The Washington Post, Jody Shenn (02/06/09)
Fannie Mae plans to eliminate some credit-score requirements, scale back income-documentation standards, and waive the need for appraisals in some cases, starting on April 4.
The mortgage finance company believes the changes will allow more home owners to refinance into new home loans at near-record low interest rates.
Analysts say the relaxed rules for loans that Fannie Mae owns or guarantees are unlikely to have a significant impact on mortgage-bond investors and mortgage insurers.
Source: The Washington Post, Jody Shenn (02/06/09)
Mortgage Rates Rise, Despite Fed's Efforts
From Realtor Magazine Online, Daily Real Estate News February 6, 2009
Despite the Federal Reserve's campaign to lower mortgage rates, Freddie Mac reports a jump in the 30-year fixed rate to 5.25 percent in the week ended Feb. 5 from 5.10 percent the prior week.
Experts say home-loan interest is on the rise because long-term Treasury bond yields have climbed and because mortgage lenders are upping rates to ease the flood of refinancing applications.
Source: The Los Angeles Times, Tom Petruno (02/06/09)
Despite the Federal Reserve's campaign to lower mortgage rates, Freddie Mac reports a jump in the 30-year fixed rate to 5.25 percent in the week ended Feb. 5 from 5.10 percent the prior week.
Experts say home-loan interest is on the rise because long-term Treasury bond yields have climbed and because mortgage lenders are upping rates to ease the flood of refinancing applications.
Source: The Los Angeles Times, Tom Petruno (02/06/09)
Thursday, February 5, 2009
Senate OKs $15,000 Bonus for Home Buyers
From Realtor Magazine Online, Daily Real Estate News February 5, 2009
Housing could get a big boost from the latest addition to the mammoth stimulus bill working its way through Congress.
Senate legislators unanimously approved a proposal Wednesday that would allow a tax credit for home buyers of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break but only for first-time homebuyers.
"It is time to fix housing first," said Sen. Johnny Isakson, R-G.
Isakson's office said the proposal would cost the government an estimated $19 billion. In all, the stimulus is now topping an estimated $920 billion.
In an op-ed that appears in Thursday’s Washington Post, President Barack Obama painted a dire picture if Congress fails to move quickly to pass the stimulus bill.
"This recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse," Obama wrote in the op-ed titled, "The Action Americans Need."
Source: The Associated Press, David Espo (02/05/09)
Housing could get a big boost from the latest addition to the mammoth stimulus bill working its way through Congress.
Senate legislators unanimously approved a proposal Wednesday that would allow a tax credit for home buyers of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break but only for first-time homebuyers.
"It is time to fix housing first," said Sen. Johnny Isakson, R-G.
Isakson's office said the proposal would cost the government an estimated $19 billion. In all, the stimulus is now topping an estimated $920 billion.
In an op-ed that appears in Thursday’s Washington Post, President Barack Obama painted a dire picture if Congress fails to move quickly to pass the stimulus bill.
"This recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse," Obama wrote in the op-ed titled, "The Action Americans Need."
Source: The Associated Press, David Espo (02/05/09)
Wednesday, February 4, 2009
It's Been Worse for the U.S. Housing Market
From Realtor Magazine Online, Daily Real Estate News February 4, 2009
Historically, this housing decline has been a bear, but not the worst of the bear housing markets.
The Winans International Real Estate Index calculates that new home prices in the United States are down 23 percent since March 31, 2007. New homes sales have fallen 71 percent and new property listings are down 34 percent in the same time period.
Sounds bad, but the worst decline of new home prices in the last 150 years was the 68 percent decline from 1929 to 1932. The longest housing bear market was from 1853 to 1858.
"This bear market will probably not end in 2009. Past real estate bear markets ended when the average time it took to sell a new house dropped to 3 1/2 months. Currently, it is taking over 9 months for transactions to close due to tight credit conditions," says company founder Ken Winans.
Source: Winans International (02/03/2009)
Historically, this housing decline has been a bear, but not the worst of the bear housing markets.
The Winans International Real Estate Index calculates that new home prices in the United States are down 23 percent since March 31, 2007. New homes sales have fallen 71 percent and new property listings are down 34 percent in the same time period.
Sounds bad, but the worst decline of new home prices in the last 150 years was the 68 percent decline from 1929 to 1932. The longest housing bear market was from 1853 to 1858.
"This bear market will probably not end in 2009. Past real estate bear markets ended when the average time it took to sell a new house dropped to 3 1/2 months. Currently, it is taking over 9 months for transactions to close due to tight credit conditions," says company founder Ken Winans.
Source: Winans International (02/03/2009)
Mortgage Volume Rebounds Despite Higher Rates
From Realtor Magazine Online, Daily Real Estate News February 4, 2009
The volume of loan applications rebounded last week, rising 8.6 percent on a seasonally adjusted basis to 795.4 from 732.1 the previous week, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the index rose 28.1 percent compared with the previous week and decreased 26.9 percent compared with the same week a year ago.
Refinances continued to drive the market. The refinance share of mortgage activity increased to 73.2 percent of total applications, up slightly from 72.8 the previous week.
Mortgage rates rose slightly last week:
* 30-year fixed-rate mortgages increased to 5.28 percent from 5.22 percent;
* 15-year fixed-rate mortgages increased to 5.15 percent from 4.98 percent;
* 1-year ARMs increased to 6.09 percent from 5.96 percent.
Source: Mortgage Bankers Association (02/04/2009)
The volume of loan applications rebounded last week, rising 8.6 percent on a seasonally adjusted basis to 795.4 from 732.1 the previous week, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the index rose 28.1 percent compared with the previous week and decreased 26.9 percent compared with the same week a year ago.
Refinances continued to drive the market. The refinance share of mortgage activity increased to 73.2 percent of total applications, up slightly from 72.8 the previous week.
Mortgage rates rose slightly last week:
* 30-year fixed-rate mortgages increased to 5.28 percent from 5.22 percent;
* 15-year fixed-rate mortgages increased to 5.15 percent from 4.98 percent;
* 1-year ARMs increased to 6.09 percent from 5.96 percent.
Source: Mortgage Bankers Association (02/04/2009)
Tuesday, February 3, 2009
The Rich Are Tanking Too
From Realtor Magazine Online, Daily Real Estate News February 3, 2009
Luxury homes used to be immune to market downturns, but this recession is different. The housing market is volatile at all levels.
Here are some reasons for caution when investing in high-end homes:
* Jumbo defaults. The delinquency rate for jumbo loans is 6.9 percent, three times higher than the rate for regular conforming loans.
* Fewer buyers. The number of buyers for $1 million-plus homes is shrinking as the economy falters.
* Wealthy areas are hard hit. Home prices in California, Nevada, and New York have fallen the farthest.
* The rich are in debt too. From 1995 to 2004, the top 1 percent of Americans in terms of wealth more than doubled their mortgage and residential debt to $494 billion.
Source: The Wall Street Journal, Robert Frank (02/02/2009)
Luxury homes used to be immune to market downturns, but this recession is different. The housing market is volatile at all levels.
Here are some reasons for caution when investing in high-end homes:
* Jumbo defaults. The delinquency rate for jumbo loans is 6.9 percent, three times higher than the rate for regular conforming loans.
* Fewer buyers. The number of buyers for $1 million-plus homes is shrinking as the economy falters.
* Wealthy areas are hard hit. Home prices in California, Nevada, and New York have fallen the farthest.
* The rich are in debt too. From 1995 to 2004, the top 1 percent of Americans in terms of wealth more than doubled their mortgage and residential debt to $494 billion.
Source: The Wall Street Journal, Robert Frank (02/02/2009)
Pending Home Sales Show Healthy Gain
From Realtor Magazine Online, Daily Real Estate News February 3, 2009
Pending home sales increased as more buyers took advantage of improved affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®. Big gains in the South and Midwest offset modest declines in other regions.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.
Lawrence Yun, NAR chief economist, says the index shows a modest rebound. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” says Yun. “The biggest gains were in areas with the biggest improvements in affordability.”
NAR’s Housing Affordability index rose 10.9 percent in December to 158.8, the highest on record.2 The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.
“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” adds Yun.
The PHSI in the Northeast slipped 1.7 percent to 62.1 in December and is 14.5 percent below a year ago. In the Midwest the index jumped 12.8 percent to 83.7 but remains 1.2 percent below December 2007. The index in the South surged 13.0 percent to 96.8 in December and is 1.6 percent above a year ago. In the West, the index fell 3.7 percent to 97.5 but remains 17.5 percent higher than December 2007.
NAR President Charles McMillan, says the rise in contract signings is encouraging. “However, housing activity remains weak compared with potential demand, and the market is fragile given the economic backdrop,” he said.
“We can’t take our eye off the need to stimulate housing, which can set the foundation for an economic recovery,” McMillan says. “Last week’s actions in the House to eliminate the repayment feature on the first-time home buyer tax credit, and to raise mortgage loan limits, are helpful. However, we need to take additional steps to meaningfully draw down inventory and stabilize home prices.”
McMillan says some enhancements that could bring more buyers into the market include expanding the $7,500 tax credit to all home buyers and extending it until the end of 2009, and making loan limit increases permanent. “We also need to direct funds in the Troubled Asset Relief Program to add liquidity to the mortgage market, buy down mortgage interest rates and increase other forms of credit,” he says.
Yun says the outlook for housing and the economy is murky. “Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,” Yun says.
Source: NAR
Pending home sales increased as more buyers took advantage of improved affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®. Big gains in the South and Midwest offset modest declines in other regions.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.
Lawrence Yun, NAR chief economist, says the index shows a modest rebound. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” says Yun. “The biggest gains were in areas with the biggest improvements in affordability.”
NAR’s Housing Affordability index rose 10.9 percent in December to 158.8, the highest on record.2 The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.
“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” adds Yun.
The PHSI in the Northeast slipped 1.7 percent to 62.1 in December and is 14.5 percent below a year ago. In the Midwest the index jumped 12.8 percent to 83.7 but remains 1.2 percent below December 2007. The index in the South surged 13.0 percent to 96.8 in December and is 1.6 percent above a year ago. In the West, the index fell 3.7 percent to 97.5 but remains 17.5 percent higher than December 2007.
NAR President Charles McMillan, says the rise in contract signings is encouraging. “However, housing activity remains weak compared with potential demand, and the market is fragile given the economic backdrop,” he said.
“We can’t take our eye off the need to stimulate housing, which can set the foundation for an economic recovery,” McMillan says. “Last week’s actions in the House to eliminate the repayment feature on the first-time home buyer tax credit, and to raise mortgage loan limits, are helpful. However, we need to take additional steps to meaningfully draw down inventory and stabilize home prices.”
McMillan says some enhancements that could bring more buyers into the market include expanding the $7,500 tax credit to all home buyers and extending it until the end of 2009, and making loan limit increases permanent. “We also need to direct funds in the Troubled Asset Relief Program to add liquidity to the mortgage market, buy down mortgage interest rates and increase other forms of credit,” he says.
Yun says the outlook for housing and the economy is murky. “Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,” Yun says.
Source: NAR
Government Struggles to Keep Interest Rates Low
From Realtor Magazine Online, Daily Real Estate News February 3, 2009
Mortgage rates are rising, despite the government’s efforts to hold them down.
The government can’t control all the factors that affect mortgage rates. Mortgage interest has climbed because more borrowers refinanced when rates fell and boosted the supply of mortgage bonds.
Experts also attribute rising rates to expanded borrowing by the government to pay for stimulus packages, worries about Fannie Mae and Freddie Mac, and concerns about whether the central bank will continue to purchase mortgage bonds after June.
The suggestion that the government solve the problem by creating an entity that offers 30-year mortgages at preset rates of 4 percent or 4.5 percent has drawn criticism.
"Not a lot of buyers are likely to want to buy a 3.5 percent mortgage-backed security, so the government may end up being a significant holder of these loans," said Nicholas Strand, a mortgage strategist with Barclays Capital. "And that number could run up to trillions of dollars."
Source: The Wall Street Journal, Prabha Nataraian (02/03/2009)
Mortgage rates are rising, despite the government’s efforts to hold them down.
The government can’t control all the factors that affect mortgage rates. Mortgage interest has climbed because more borrowers refinanced when rates fell and boosted the supply of mortgage bonds.
Experts also attribute rising rates to expanded borrowing by the government to pay for stimulus packages, worries about Fannie Mae and Freddie Mac, and concerns about whether the central bank will continue to purchase mortgage bonds after June.
The suggestion that the government solve the problem by creating an entity that offers 30-year mortgages at preset rates of 4 percent or 4.5 percent has drawn criticism.
"Not a lot of buyers are likely to want to buy a 3.5 percent mortgage-backed security, so the government may end up being a significant holder of these loans," said Nicholas Strand, a mortgage strategist with Barclays Capital. "And that number could run up to trillions of dollars."
Source: The Wall Street Journal, Prabha Nataraian (02/03/2009)
Monday, February 2, 2009
New Rules Can Make Getting a Mortgage Trickier
From Realtor Magazine Online, Daily Real Estate News February 2, 2009
Borrowers may have to actually visit the bank and sit down with a banker when they apply for a mortgage.
Some banks, including JPMorgan Chase have stopped using outside brokers and only accept applications submitted at their own branches.
Lenders say they have made this change because it helps them control costs. Observers say that the practice also makes it easier for banks to bundle profitable services, like checking and savings. “The bundled services are killing us,” said Pat Townsley, a broker at California Mortgage Advisors.
Practitioners said the new rules slow down the application process. Brock Harris, a practitioner with Silver Lake Real Estate in Los Angeles, said home-purchase loan closings are taking as long as 60 days.
"Finding a nice house, that's easy ... Getting a half-decent loan, that's going to take weeks," Harris said.
Source: Investor’s Business Daily, Kathleen Doler (01/29/2009)
Borrowers may have to actually visit the bank and sit down with a banker when they apply for a mortgage.
Some banks, including JPMorgan Chase have stopped using outside brokers and only accept applications submitted at their own branches.
Lenders say they have made this change because it helps them control costs. Observers say that the practice also makes it easier for banks to bundle profitable services, like checking and savings. “The bundled services are killing us,” said Pat Townsley, a broker at California Mortgage Advisors.
Practitioners said the new rules slow down the application process. Brock Harris, a practitioner with Silver Lake Real Estate in Los Angeles, said home-purchase loan closings are taking as long as 60 days.
"Finding a nice house, that's easy ... Getting a half-decent loan, that's going to take weeks," Harris said.
Source: Investor’s Business Daily, Kathleen Doler (01/29/2009)
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