Saturday, September 12, 2009
Saturday, September 5, 2009
Monday, August 17, 2009
SF Luxury Hotel approved for FHA financing @ 3.5%!
Soma Grand is the only project in San Francisco to have received approval from the FHA to offer buyers the option to purchase with a down payment as low as 3.5%.
This unique program will enable San Franciscans, who have previously been unable to purchase a home, a unique opportunity to buy at a time experts are increasingly referring to as the bottom of the housing market. Representatives of the luxury high-rise condominium building Soma Grand, located in San Francisco’s Mid Market neighborhood, announced this week that they had received approval on a unique government sponsored FHA program aimed at revitalizing the housing market nationwide. Debuting at a time that many industry experts are heralding as the bottom of the housing market, this unique program will allow thousands of residents to purchase a home with down payments as low as $20,000. For a city with some of the highest median home costs in the country, such low down payment requirements break down the savings hurdle that has prevented many high-income earners from purchasing homes in the past. Whereas previously, buyers would have to save cash amounts of $140,000 to purchase some of the most affordably priced homes in the city, now they can purchase a home with a deposit of roughly $20,000. As the only luxury condominium community project in the City offering this program and with 80% of the homes already purchased, Soma Grand is on-track to sell out by the end of this year.
This unique program will enable San Franciscans, who have previously been unable to purchase a home, a unique opportunity to buy at a time experts are increasingly referring to as the bottom of the housing market. Representatives of the luxury high-rise condominium building Soma Grand, located in San Francisco’s Mid Market neighborhood, announced this week that they had received approval on a unique government sponsored FHA program aimed at revitalizing the housing market nationwide. Debuting at a time that many industry experts are heralding as the bottom of the housing market, this unique program will allow thousands of residents to purchase a home with down payments as low as $20,000. For a city with some of the highest median home costs in the country, such low down payment requirements break down the savings hurdle that has prevented many high-income earners from purchasing homes in the past. Whereas previously, buyers would have to save cash amounts of $140,000 to purchase some of the most affordably priced homes in the city, now they can purchase a home with a deposit of roughly $20,000. As the only luxury condominium community project in the City offering this program and with 80% of the homes already purchased, Soma Grand is on-track to sell out by the end of this year.
Saturday, August 8, 2009
Tuesday, August 4, 2009
New Recycling Law Takes Effect October 21
The San Francisco Board of Supervisors approved, and Mayor Gavin Newsom signed into law, legislation that requires all persons and businesses located in San Francisco to separate recyclables, compostables and landfill trash and participate in recycling and composting programs. The new law takes effect on October 21.The new law contains the following mandate:“All persons in San Francisco shall source separate their refuse into recyclables, compostables and trash, and place each type of refuse in a separate container designated for disposal of that type of refuse. No person may mix recyclables, compostables or trash, or deposit refuse in a collection container designated for another type of refuse, except as otherwise provided….”The legislation was proposed by Mayor Gavin Newson who cited the California Integrated Waste Management Act of 1989 which requires cities and counties to reduce, reuse and recycle (including composting) solid waste generated in the State to the maximum extent feasible before any incineration or landfill disposal of waste, to conserve water, energy and other natural resources. The Act mandates that each local jurisdiction in the State divert 50 percent of discarded materials from landfill. Owners or managers of multi-family or commercial properties will be required to provide information and/or training for new tenants, employees and contractors, including janitors, on how to source separate recyclables, compostables and trash, and will be required to re-educate tenants, employees and contractors at least once a year.The fine for any violation at a dwelling or commercial property that generates less than one cubic yard of refuse per week may not initially exceed $100.If the Director of Public Health causes a dwelling or commercial property to be inspected to determine whether the owner has complied with the ordinance, the owner of the dwelling or commercial property will be required to pay an inspection fee equal to $167 per hour of staff time spent during the inspection.Both Sunset Scavenger and Golden Gate Disposal and Recycling will deliver a larger recycling cart, a composting cart or a kitchen pail at no additional cost. Call Sunset at 415-330-1300 or Golden Gate at 415-626-4000.
Thursday, July 23, 2009
Existing-home sales rose for a third month in a row
Existing-home sales rose for a third month in a row in June, and prices may stabilize in many areas by the end of the year if inventories continue to decline, the National Association of Realtors said today.
Sales of resale homes, including single-family homes, townhomes, condominiums and co-ops, rose 3.6 percent from May to June, to a seasonally adjusted annual rate of 4.89 million units -- virtually the same as a year ago, NAR said.
At that rate of sales, the 3.82 million homes on the market represented a 9.4-month supply, down from 9.8 months in May.
A six-month supply of homes is generally considered a healthier balance of supply and demand, but the "raw inventory" total, or number of homes on the market, is down 14.9 percent from a year ago.
A Wall Street Journal analysis of housing fundamentals in 28 major real estate markets during the second quarter showed considerable variation in inventory, ranging from a high of 18.1 months in Chicago to just 2.7 months in Sacramento, Calif.
"If we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” said NAR Chief Economist Lawrence Yun in a press release.
Distressed properties accounted for 31 percent of sales in June, a factor in the 15.4 percent decline in median home price from a year ago, to $181,800, the group said.
Sales of resale homes, including single-family homes, townhomes, condominiums and co-ops, rose 3.6 percent from May to June, to a seasonally adjusted annual rate of 4.89 million units -- virtually the same as a year ago, NAR said.
At that rate of sales, the 3.82 million homes on the market represented a 9.4-month supply, down from 9.8 months in May.
A six-month supply of homes is generally considered a healthier balance of supply and demand, but the "raw inventory" total, or number of homes on the market, is down 14.9 percent from a year ago.
A Wall Street Journal analysis of housing fundamentals in 28 major real estate markets during the second quarter showed considerable variation in inventory, ranging from a high of 18.1 months in Chicago to just 2.7 months in Sacramento, Calif.
"If we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” said NAR Chief Economist Lawrence Yun in a press release.
Distressed properties accounted for 31 percent of sales in June, a factor in the 15.4 percent decline in median home price from a year ago, to $181,800, the group said.
Blitz Report on Real Estate Markets
In the latest Blitz Report on Real Estate Markets, released July 13, economist Steve Blitz argues against the
notion that home prices are not going to recover on a national scale until the economy is growing and
unemployment is falling. He notes that changes in the labor market over the last two decades have made job
growth an increasingly less reliable indicator of whether the economy is turning up, and points out home prices
have recovered before the end of each recession since 1975. “Home prices are, in truth, rising before
consumers perceive the recession has ended and well before the employment rate starts to turn down,” says
Blitz. He predicts that home prices will recover in the coming months, and that 1-year average RPX prices will
gain 3.3% in 2010, 6.5% in 2011 and 10% in 2012.
notion that home prices are not going to recover on a national scale until the economy is growing and
unemployment is falling. He notes that changes in the labor market over the last two decades have made job
growth an increasingly less reliable indicator of whether the economy is turning up, and points out home prices
have recovered before the end of each recession since 1975. “Home prices are, in truth, rising before
consumers perceive the recession has ended and well before the employment rate starts to turn down,” says
Blitz. He predicts that home prices will recover in the coming months, and that 1-year average RPX prices will
gain 3.3% in 2010, 6.5% in 2011 and 10% in 2012.
Wednesday, July 15, 2009
Monday, July 13, 2009
the Anti-Checklist: What NOT to do when buying a home
Don't just pick up the phone, call the number on the sign, and go by yourself. First, it's unsafe. Second, you can end up looking at a bunch of properties that don't meet your search criteria or price range, wasting your time. Third, it can make sellers think you are unrepresented and, thus, that they have the greater bargaining leverage from the get-go. Let your Realtor do her job; if you drive by an interesting property your Realtor hasn't mentioned to you, call your Realtor with the property address and phone number from the sign, and let her research the asking price and property details, nine times out of 10, your Realtor hasn't sent it to you because the property doesn't meet one or more of your search criteria. The 10th time out of 10 - your Realtor can escort you there and show it to you while the seller is out of the house, and out of your hair.
Don't plan something for two hours later. You don't want to rush, you want to linger where necessary. Plus, if you find one you really like, you might spend more time there. And, with drive time, etc., it can easily take three hours to see seven houses - not to mention that you may find one you want to immediately write an offer on, which will take another hour or so.
Avoid taking separate cars on your buyer's tours. Every once in awhile a hot property will come up, your Realtor will call you from work, and you can meet her there. If you are going to be driving from house to house, get in the car with your Realtor -- even if it means you have to put the baby seat in your Realtor's car. This way, you don't get separated, no one gets lost, and you can spend the time between houses debriefing and providing your Realtor with the feedback she needs to narrow your search and hone in on your home.
Don't bring a triple Venti mocha frap with you on your buyer's tours. How can I say this? Uh, you don't want to be using everyone's bathroom, if you know what I mean -- especially if people still live in the house. Vacant houses are the best ones for pit stops, but because everyone knows that, they are also the most likely to have nothing in the way of toilet paper except a cardboard roll with a couple of spots of paper still stuck to the glue.
Plus, coffeehouse drinks usually have coffee and milk, not the most gastro-friendly substances. If you need to, plan ahead to stop in the middle of the tour for a snack and a pit stop, and do feel free to bring a bottle of water.
Don't wear lace-up shoes. Slip-ons, flip flops, etc. are ideal. Many well-prepared homes will have new carpet, and often the listing agent will have posted a "please remove shoes" sign to help keep the flooring clean. Having to untie and tie your shoes at every house can be a huge waste of time and really anti-climatic when you get to the front door of a house you really want to see. Note-those paper booties some "shoes off, please" agents provide can be slippery. Avoid them; if you can't stand the idea of walking barefoot through a house, make sure you wear socks with your slip on shoes.
Don't hesitate to look in drawers, cupboards and closets. If you really dislike a place, you needn't get really detailed in your viewing of a property. But if you don't hate it, you should open every door. I've had clients miss whole rooms and large storage areas by not opening a door they assumed went to a closet. Besides, you need to know how wide and deep the real closets are, which you can't find out without opening the door and having a look. If you really like a place, you should also open kitchen and bathroom drawers, cupboards and cabinets. You're not being nosy, you're gathering information. Rest assured that the sellers have had ample notice to straighten up those spaces in anticipation of your poking around.
Hold the trash talk. Sellers may be listening. I wish I was kidding, but often the seller just steps outside or next door. (I once represented a kooky seller who walked around with her purse on during the Open House "ooh"ing and "aah"ing like she was a prospective buyer.) And they don't always understand that it's the most interested buyers who pick the place apart to figure out exactly what they will need to do to it to make it theirs. If you end up in a multiple offer situation, you don't want to have an uphill battle because you badmouthed the sequined butterfly "artwork" the seller had hanging in the hallway. So, if you can't say something nice, don't say anything at all. Until you get in the car, and roll up the windows - then you need to let it rip so your agent can learn your likes and dislikes.
Don't think you can offend your Realtor. I always remind my clients that the house I'm showing them is not my house. So, if you like it, that's great. But if you hate anything about it, don't hesitate to say so. Don't be timid or polite and omit a criticism or concern you have. Doing so can result in you seeing more of the same, which is a waste of everybody's time.
Don't plan something for two hours later. You don't want to rush, you want to linger where necessary. Plus, if you find one you really like, you might spend more time there. And, with drive time, etc., it can easily take three hours to see seven houses - not to mention that you may find one you want to immediately write an offer on, which will take another hour or so.
Avoid taking separate cars on your buyer's tours. Every once in awhile a hot property will come up, your Realtor will call you from work, and you can meet her there. If you are going to be driving from house to house, get in the car with your Realtor -- even if it means you have to put the baby seat in your Realtor's car. This way, you don't get separated, no one gets lost, and you can spend the time between houses debriefing and providing your Realtor with the feedback she needs to narrow your search and hone in on your home.
Don't bring a triple Venti mocha frap with you on your buyer's tours. How can I say this? Uh, you don't want to be using everyone's bathroom, if you know what I mean -- especially if people still live in the house. Vacant houses are the best ones for pit stops, but because everyone knows that, they are also the most likely to have nothing in the way of toilet paper except a cardboard roll with a couple of spots of paper still stuck to the glue.
Plus, coffeehouse drinks usually have coffee and milk, not the most gastro-friendly substances. If you need to, plan ahead to stop in the middle of the tour for a snack and a pit stop, and do feel free to bring a bottle of water.
Don't wear lace-up shoes. Slip-ons, flip flops, etc. are ideal. Many well-prepared homes will have new carpet, and often the listing agent will have posted a "please remove shoes" sign to help keep the flooring clean. Having to untie and tie your shoes at every house can be a huge waste of time and really anti-climatic when you get to the front door of a house you really want to see. Note-those paper booties some "shoes off, please" agents provide can be slippery. Avoid them; if you can't stand the idea of walking barefoot through a house, make sure you wear socks with your slip on shoes.
Don't hesitate to look in drawers, cupboards and closets. If you really dislike a place, you needn't get really detailed in your viewing of a property. But if you don't hate it, you should open every door. I've had clients miss whole rooms and large storage areas by not opening a door they assumed went to a closet. Besides, you need to know how wide and deep the real closets are, which you can't find out without opening the door and having a look. If you really like a place, you should also open kitchen and bathroom drawers, cupboards and cabinets. You're not being nosy, you're gathering information. Rest assured that the sellers have had ample notice to straighten up those spaces in anticipation of your poking around.
Hold the trash talk. Sellers may be listening. I wish I was kidding, but often the seller just steps outside or next door. (I once represented a kooky seller who walked around with her purse on during the Open House "ooh"ing and "aah"ing like she was a prospective buyer.) And they don't always understand that it's the most interested buyers who pick the place apart to figure out exactly what they will need to do to it to make it theirs. If you end up in a multiple offer situation, you don't want to have an uphill battle because you badmouthed the sequined butterfly "artwork" the seller had hanging in the hallway. So, if you can't say something nice, don't say anything at all. Until you get in the car, and roll up the windows - then you need to let it rip so your agent can learn your likes and dislikes.
Don't think you can offend your Realtor. I always remind my clients that the house I'm showing them is not my house. So, if you like it, that's great. But if you hate anything about it, don't hesitate to say so. Don't be timid or polite and omit a criticism or concern you have. Doing so can result in you seeing more of the same, which is a waste of everybody's time.
Thursday, July 9, 2009
DRE LICENSE NUMBER MUST BE ON SOLICITATION MATERIALS
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®
The California Department of Real Estate (DRE) has recently adopted a new regulation clarifying the law that requires DRE license numbers on business cards and all other solicitation materials intended to be the first point of contact with consumers. The licensing law came into effect on July 1, 2009 as we previously reported.Under the new section 2773 regulation adopted by the DRE, the solicitation materials that must contain the license identification number include the following items:Business cards;Stationery;Websites owned, controlled, and/or maintained by the soliciting real estate license; andPromotional and advertising flyers, brochures, email and regular mail, leaflets, and any other marketing or promotional materials designed to solicit the creation of a professional relationship between the licensee and a consumer, or intended to induce a consumer to contact the licensee about any licensed services.DRE's new regulation also states that the following items are not solicitation materials under the license number requirement:Advertisements in electronic media, including radio, cinema, and television ads, and the opening section of streaming video and audio;Print advertising in any newspaper or periodical; and"For Sale" signs placed on or around a property intended to alert the public the property is available for purchase or lease.The eight-digit DRE license number must be in a type size no smaller than the smallest type size used in the solicitation material. If the name of more than one licensee appears in the solicitation, then each person's license number must be disclosed. However, the license number of employing brokers or corporate brokers whose names, logos, or trademarks appear on solicitation materials along with the names and license numbers of licensed employees or broker-associates, need not appear on those materials.In addition to solicitation materials, a licensee's DRE license number must also be disclosed on real property purchase agreements when the licensee is acting as an agent in those transactions. C.A.R.'s standard form purchase agreements already conform to this new requirement.Sources: California Business & Professions Code section 10140.6 (filed September 25, 2008); Section 2773 of Title 10 of the California Code of Regulation (filing with the Secretary of State still pending).
The California Department of Real Estate (DRE) has recently adopted a new regulation clarifying the law that requires DRE license numbers on business cards and all other solicitation materials intended to be the first point of contact with consumers. The licensing law came into effect on July 1, 2009 as we previously reported.Under the new section 2773 regulation adopted by the DRE, the solicitation materials that must contain the license identification number include the following items:Business cards;Stationery;Websites owned, controlled, and/or maintained by the soliciting real estate license; andPromotional and advertising flyers, brochures, email and regular mail, leaflets, and any other marketing or promotional materials designed to solicit the creation of a professional relationship between the licensee and a consumer, or intended to induce a consumer to contact the licensee about any licensed services.DRE's new regulation also states that the following items are not solicitation materials under the license number requirement:Advertisements in electronic media, including radio, cinema, and television ads, and the opening section of streaming video and audio;Print advertising in any newspaper or periodical; and"For Sale" signs placed on or around a property intended to alert the public the property is available for purchase or lease.The eight-digit DRE license number must be in a type size no smaller than the smallest type size used in the solicitation material. If the name of more than one licensee appears in the solicitation, then each person's license number must be disclosed. However, the license number of employing brokers or corporate brokers whose names, logos, or trademarks appear on solicitation materials along with the names and license numbers of licensed employees or broker-associates, need not appear on those materials.In addition to solicitation materials, a licensee's DRE license number must also be disclosed on real property purchase agreements when the licensee is acting as an agent in those transactions. C.A.R.'s standard form purchase agreements already conform to this new requirement.Sources: California Business & Professions Code section 10140.6 (filed September 25, 2008); Section 2773 of Title 10 of the California Code of Regulation (filing with the Secretary of State still pending).
Monday, June 22, 2009
Obama Administration Announces Financial Regulatory Reform Plan
The Obama Financial Regulatory Reform Plan, announced on June 17, 2009, would change the regulation of all lenders and their holding companies, give the Federal Reserve Board supervisory power over large and complex entities that pose a systemic risk to the financial system, create a new consumer protection agency, and provide for managing future financial crises. Key objectives include restoring consumer and investor confidence in the nation's financial system. Of particular interest to REALTORS®, the plan would strengthen the national policy against mixing banking and commerce and create a Consumer Financial Protection Agency to consolidate the regulation of consumer protection laws related to mortgage loans and other financial products, including the Truth in Lending Act and the Real Estate Settlement Procedures Act
.NAR Summary of the Plan
White House Press Release (including links to White Paper and Fact Sheets)
.NAR Summary of the Plan
White House Press Release (including links to White Paper and Fact Sheets)
Wednesday, June 17, 2009
Condo Developers Seek Out FHA Approval
Getting building-wide approval from the Federal Housing Administration is an increasingly popular way for builders to sell condos.The nationwide glut of new condos has made selling condo units a challenge, especially since Fannie Mae and Freddie Mac have tightened guidelines on condo mortgages. But if the entire building has the FHA sign-off, then buyers can get a mortgage in as little as two weeks with a down payment as low as 3.5 percent.To get FHA approval, developers must include a 10-year structural warranty and a reserve fund. Condo boards must waive the right to refuse potential buyers. In buildings with more than 30 units, no more than 10 percent can be financed with FHA loans. In buildings with 30 or fewer units, no more than 20 percent can be FHA financed.As hard as it is to sell condos now, the situation could still get worse, says real estate research firm Reis Inc. More than 93,000 new units are scheduled for completion this year, a 28 percent increase over last year.Source: The Wall Street Journal, Nick Timiraos (06/17/2009)
Tuesday, June 9, 2009
Monday, June 8, 2009
How to Use the Tax Credit for Downpayments
Potential first-time buyers have yet another reason to consider purchasing a home: the monetization of the tax credit. Here are four ways your clients can get access to those funds for upfront costs.
By Robert Freedman
June 2009
Short-term bridge loans are now available from a variety of lenders so that buyers can tap the benefits of the $8,000 Federal Housing Tax Credit for First-Time Home Buyers upfront. If your clients are eligible for the tax credit, these bridge loans will enable them to use the money for their down payment and closing costs with the credit as collateral. Consumers will have to pay the money back after they’ve filed their tax return and received a refund.
There are essentially four sources for this type of financing, and their terms can vary considerably.
1. State HFA Bridge Loans
As of early June 2009, 10 state Housing Finance Agencies offered tax-credit bridge loans, and more were planning to do so. The easiest way to learn whether one is offered in your state is to get your HFA’s phone number through a Housing Finance Agency list maintained by the National Council of State Housing Agencies (NCSHA). NCSHA also maintains a list of HFAs that already offer the bridge loans. The HFAs with loan programs already in place are Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee.
If your state HFA offers the loans, you should be able to get more information about them on the agency’s Web site. Look for “tax credit advance loan” or some variant of that, or else look for information on the HFA’s regular mortgage program, which should include info on the tax-credit advance loan somewhere. Although each state HFA loan differs, here are some typical characteristics:
You’ll need to make a minimum downpayment from your own funds, probably around $1,000.
You’ll have to go through local lenders approved by the HFA to actually originate the loan, since HFAs are not originators.
In some cases, the loans are interest-free; check with the state HFA to find out.
The HFAs have set aside a limited amount of funds for the loans, so they tend to be made on a first-come, first-served basis.
You’ll be expected to use HFA-backed financing for the mortgage on your home purchase. This financing typically comes with a below-market interest rate and usually requires borrowers to meet eligibility criteria. These criteria will vary greatly, but they often require borrowers to be first-timer buyers and meet income-eligibility requirements. For the bridge loans, there’s a good chance the criteria will be similar to what’s required for the tax credit.
Since the bridge loans are made in tandem with your HFA’s financing products, you apply for the loans when you apply with the HFA-approved lender for your mortgage financing. You should be able to find a list of approved lenders on the HFA’s Web site.
2. Local Government or Nonprofit Loans
If your state HFA doesn’t offer the loans, you can ask an HFA staff person to direct you to local nonprofits or state or local government agencies that do. If that person can’t help you, a good place to start a search is with a national nonprofit group called NeighborWorks, which maintains a list of more than 200 local affiliates that provide housing assistance. The loan programs for each of these affiliates differ, so you or your client will need to check with them on their underwriting standards and loan terms—and even on whether they make bridge loans repayable with the tax credit.
3. Local HFAs
Another source, if your state HFA can’t help you, might be the National Association of Local Housing Finance Agencies. Local HFAs are much like state HFAs but with jurisdictions limited to their locality. To learn whether there’s a local HFA in your area, call NALHFA at 202/367-1197.
4. FHA-approved Lenders
If you’re unable to identify a state or local HFA or other governmental agency or nonprofit to assist you, you can tap bridge-loan assistance if you work with a lender approved by the U.S. Department of Housing and Urban Development to originate FHA-backed loans. HUD maintains a database of FHA lenders on its Web site that’s searchable by a number of criteria including city, state, county, and service area.
In a difference with the assistance provided by state and local agencies or nonprofits, the bridge loans provided by private, for-profit FHA-approved lenders must be structured in the form of a personal loan or line of credit collateralized by the tax credit. The bridge loan can’t be structured as a second mortgage.
Also, although FHA allows you to use the bridge loan to cover your closing costs or to buy down your interest rate, you can use it for the down payment only after you’ve covered the 3.5 percent minimum that’s required on any FHA loan. Thus, you’ll have to come up with the 3.5 percent minimum down payment yourself or else tap another source of assistance for it. That can include gifts from family. Seller-funded down-payment programs are not permitted. HUD provides complete details in a May 29 Mortgagee Letter on “Using First-Time Homebuyer Tax Credits” (2009-15) that went to its approved lenders.
Since it’s the HUD-approved lender and not FHA itself that’s making the bridge loan, actual loan terms will vary. At a minimum, though, the bridge loan must meet certain restrictions, most of them imposed to weed out fraud or ensure borrowers aren’t getting in over their heads. These include:
Loans can’t result in cash back to the borrower.
The amount can’t exceed what’s needed for the downpayment, closing costs, and prepaid expenses.
If there’s a monthly repayment, it must be included within the qualifying ratios and, when combined with the first mortgage, can’t exceed the borrower’s reasonable ability to pay.
Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
There can be no balloon payment required before 10 years.
Start with the Deepest Assistance First
Since state HFA bridge loans are typically allowed for as much of the downpayment as possible (up to the credit limit of $8,000), your client’s best bet is to start with the state HFA. If it doesn’t have a program in place, learn what you can from it about other state or local programs, including nonprofits. If these sources don’t pan out, your buyer can work with an FHA-approved lender. However, since HUD requires borrowers to put down a minimum of 3.5 percent, they can access bridge-loan assistance only for other upfront expenses such as closing costs, an interest-rate buy-down, or a portion of the downpayment above 3.5 percent.
By Robert Freedman
June 2009
Short-term bridge loans are now available from a variety of lenders so that buyers can tap the benefits of the $8,000 Federal Housing Tax Credit for First-Time Home Buyers upfront. If your clients are eligible for the tax credit, these bridge loans will enable them to use the money for their down payment and closing costs with the credit as collateral. Consumers will have to pay the money back after they’ve filed their tax return and received a refund.
There are essentially four sources for this type of financing, and their terms can vary considerably.
1. State HFA Bridge Loans
As of early June 2009, 10 state Housing Finance Agencies offered tax-credit bridge loans, and more were planning to do so. The easiest way to learn whether one is offered in your state is to get your HFA’s phone number through a Housing Finance Agency list maintained by the National Council of State Housing Agencies (NCSHA). NCSHA also maintains a list of HFAs that already offer the bridge loans. The HFAs with loan programs already in place are Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee.
If your state HFA offers the loans, you should be able to get more information about them on the agency’s Web site. Look for “tax credit advance loan” or some variant of that, or else look for information on the HFA’s regular mortgage program, which should include info on the tax-credit advance loan somewhere. Although each state HFA loan differs, here are some typical characteristics:
You’ll need to make a minimum downpayment from your own funds, probably around $1,000.
You’ll have to go through local lenders approved by the HFA to actually originate the loan, since HFAs are not originators.
In some cases, the loans are interest-free; check with the state HFA to find out.
The HFAs have set aside a limited amount of funds for the loans, so they tend to be made on a first-come, first-served basis.
You’ll be expected to use HFA-backed financing for the mortgage on your home purchase. This financing typically comes with a below-market interest rate and usually requires borrowers to meet eligibility criteria. These criteria will vary greatly, but they often require borrowers to be first-timer buyers and meet income-eligibility requirements. For the bridge loans, there’s a good chance the criteria will be similar to what’s required for the tax credit.
Since the bridge loans are made in tandem with your HFA’s financing products, you apply for the loans when you apply with the HFA-approved lender for your mortgage financing. You should be able to find a list of approved lenders on the HFA’s Web site.
2. Local Government or Nonprofit Loans
If your state HFA doesn’t offer the loans, you can ask an HFA staff person to direct you to local nonprofits or state or local government agencies that do. If that person can’t help you, a good place to start a search is with a national nonprofit group called NeighborWorks, which maintains a list of more than 200 local affiliates that provide housing assistance. The loan programs for each of these affiliates differ, so you or your client will need to check with them on their underwriting standards and loan terms—and even on whether they make bridge loans repayable with the tax credit.
3. Local HFAs
Another source, if your state HFA can’t help you, might be the National Association of Local Housing Finance Agencies. Local HFAs are much like state HFAs but with jurisdictions limited to their locality. To learn whether there’s a local HFA in your area, call NALHFA at 202/367-1197.
4. FHA-approved Lenders
If you’re unable to identify a state or local HFA or other governmental agency or nonprofit to assist you, you can tap bridge-loan assistance if you work with a lender approved by the U.S. Department of Housing and Urban Development to originate FHA-backed loans. HUD maintains a database of FHA lenders on its Web site that’s searchable by a number of criteria including city, state, county, and service area.
In a difference with the assistance provided by state and local agencies or nonprofits, the bridge loans provided by private, for-profit FHA-approved lenders must be structured in the form of a personal loan or line of credit collateralized by the tax credit. The bridge loan can’t be structured as a second mortgage.
Also, although FHA allows you to use the bridge loan to cover your closing costs or to buy down your interest rate, you can use it for the down payment only after you’ve covered the 3.5 percent minimum that’s required on any FHA loan. Thus, you’ll have to come up with the 3.5 percent minimum down payment yourself or else tap another source of assistance for it. That can include gifts from family. Seller-funded down-payment programs are not permitted. HUD provides complete details in a May 29 Mortgagee Letter on “Using First-Time Homebuyer Tax Credits” (2009-15) that went to its approved lenders.
Since it’s the HUD-approved lender and not FHA itself that’s making the bridge loan, actual loan terms will vary. At a minimum, though, the bridge loan must meet certain restrictions, most of them imposed to weed out fraud or ensure borrowers aren’t getting in over their heads. These include:
Loans can’t result in cash back to the borrower.
The amount can’t exceed what’s needed for the downpayment, closing costs, and prepaid expenses.
If there’s a monthly repayment, it must be included within the qualifying ratios and, when combined with the first mortgage, can’t exceed the borrower’s reasonable ability to pay.
Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
There can be no balloon payment required before 10 years.
Start with the Deepest Assistance First
Since state HFA bridge loans are typically allowed for as much of the downpayment as possible (up to the credit limit of $8,000), your client’s best bet is to start with the state HFA. If it doesn’t have a program in place, learn what you can from it about other state or local programs, including nonprofits. If these sources don’t pan out, your buyer can work with an FHA-approved lender. However, since HUD requires borrowers to put down a minimum of 3.5 percent, they can access bridge-loan assistance only for other upfront expenses such as closing costs, an interest-rate buy-down, or a portion of the downpayment above 3.5 percent.
Friday, June 5, 2009
Existing Homes Sales Rise for April
The National Association of REALTORS today reports that existing homes sales increased in April, particularly for lower cost homes. According to NAR, 4.68 million single-family, townhomes, condominiums, and cooperatives sold in April. This represents a 2.9 percent increase (seasonally adjusted) over March but still below the 4.85 million unit-level of April 2008. Distressed properties accounted for 45 percent of all sales and, according to NAR, this continues to distort median sales price, which is down more than 15 percent below 2008.
Chief Economist, Lawrence Yun, said “Because foreclosed properties will likely be released into the market over the rest of year, it is critical that distressed homes be quickly cleared from the market." Mr. Yun also called on the Federal Reserve to restore liquidity to the jumbo market by purchasing these loans under TALF.
Chief Economist, Lawrence Yun, said “Because foreclosed properties will likely be released into the market over the rest of year, it is critical that distressed homes be quickly cleared from the market." Mr. Yun also called on the Federal Reserve to restore liquidity to the jumbo market by purchasing these loans under TALF.
Wednesday, May 20, 2009
SPECIAL REPORT Road to Rescue
$8,000 fast cash for first-time homebuyers
HUD plans to tweak $8,000 tax credit rules so first-time homebuyers can get instant down-payment assistance.
NEW YORK (CNNMoney.com) -- Home prices are cheap. Affordability is at a record high. And the market is littered with distressed properties looking for a buyer.
But there is one big obstacle for many first-time house hunters looking to take advantage of the market: cash for down payments. The typical first-time buyer has only saved enough to cover 4% of the purchase price, according to the National Association of Realtors.
As part of the stimulus package, Congress created a refundable first-time homebuyers tax credit in hopes of helping on-the-fence buyers to take the home-purchase plunge. But buyers couldn't collect the $8,000 credit until tax time, rather than at closing time - when it's needed.
Now the U.S. Department of Housing and Urban Development is planning to change that. The agency is working on a plan that will allow Federal Housing Authority-approved lenders to provide buyers with the tax credit cash up front.
"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment," said Shaun Donovan, HUD secretary, in a speech last Tuesday before the National Association of Realtors.
States first
Donovan did not reveal many details, but the plan could be modeled after programs in Colorado, Missouri, New Jersey, Pennsylvania, Tennessee and Washington. To quickly infuse cash into their housing markets, these states created "bridge loans" that allow buyers to borrow against the $8,000 credit and then repay it with their tax refunds.
The first state to launch such a plan was Missouri, which rolled out its Missouri Housing Development Commission Tax Credit Advance Loan program on January 14 - a month before Congress approved the stimulus package. Since then, Missouri has approved applications by more than 300 borrowers and closed on 128 of them.
Lamar Cherry and his wife, Chrishanna, used the program to augment their down payment when they bought their home in Kansas City.
The couple purchased a four-bedroom, three-bath split-level home for $150,000, putting about 6% down. Much of that $9,000 came from the loan program, which they tapped so they wouldn't have to drain their reserves.
"We had money saved up that we were going to use for the down payment," said Cherry. "Now we can use some of that to buy some things we need for the house."
At closing, the Cherrys, like all buyers in the program, signed for their first mortgage, plus a second mortgage issued by the state. The second note is good for 6% of the price of the home, up to $6,750; there is a $350 set-up fee, but no interest is charged if the debt is repaid by June 2010.
In Missouri, borrowers can only access $6,750 of the $8,000 credit for down payments. "We wanted them to have a cushion below that $8,000 in case other tax liabilities show up," said Greg Spurgeon, the single-family homeownership administrator for the Missouri Housing Development Commission.
If borrowers don't pay off the note, it becomes a 10-year fixed-rate mortgage with an interest rate one-half percentage point above that of their first mortgages. For example, borrowers paying 6% on their first mortgages would be charged 6.5% on the second.
So far, Spurgeon said, a significant proportion of participating homebuyers have repaid their loans. He expects most of the others to do the same before the deadline.
Cherry has claimed the federal tax credit on his 2008 taxes, but he hasn't gotten his refund yet. He definitely intends to repay the loan before the 2010 deadline because, he said, not doing so would add about $75 a month to his house payments. 
Housing Starts Hit Record Low in April
Housing Starts Hit Record Low in April
Housing starts hit a record low in April, the U.S. Commerce Department reported, but the news wasn't all bad as single-family construction rose 2.8 percent, the second straight month of gains in that sector.
Overall, housing starts fell 13 percent to an annual rate of 458,000, driven by the decline in construction of apartment buildings and condominiums. Building permits, an indicator of future construction, fell 3.3 percent to a record low of 494,000.
Here's a look at housing starts at the regional level:
● Northeast: fell 31 percent
● Midwest: dropped 21 percent
● South: declined 21 percent
● West: rose 43 percent
Analysts believe that while joblessness will keep some people from starting new households, increased demand for more housing is inevitable.
“Now that fewer homes are hitting the market for sale, the growing U.S. population will have fewer homes to choose from,” Tony Crescenzi, chief bond-market strategist at Miller Tabak & Co. in New York, wrote in a note to clients. “This will undoubtedly be a game changer for inventories and prices.”
Source: Bloomberg, Bob Willis (05/19/2009)
Housing starts hit a record low in April, the U.S. Commerce Department reported, but the news wasn't all bad as single-family construction rose 2.8 percent, the second straight month of gains in that sector.
Overall, housing starts fell 13 percent to an annual rate of 458,000, driven by the decline in construction of apartment buildings and condominiums. Building permits, an indicator of future construction, fell 3.3 percent to a record low of 494,000.
Here's a look at housing starts at the regional level:
● Northeast: fell 31 percent
● Midwest: dropped 21 percent
● South: declined 21 percent
● West: rose 43 percent
Analysts believe that while joblessness will keep some people from starting new households, increased demand for more housing is inevitable.
“Now that fewer homes are hitting the market for sale, the growing U.S. population will have fewer homes to choose from,” Tony Crescenzi, chief bond-market strategist at Miller Tabak & Co. in New York, wrote in a note to clients. “This will undoubtedly be a game changer for inventories and prices.”
Source: Bloomberg, Bob Willis (05/19/2009)
Wednesday, May 13, 2009
Price Stabilization Is First Step to Recovery
Price Stabilization Is First Step to Recovery
Home prices must stabilize before the broader economy can turn around, a panel of housing and economic experts said yesterday at a real estate summit hosted by the NATIONAL ASSOCIATION OF REALTORS® as part of its Midyear Legislative Meetings in Washington, D.C., this week.
Although there are encouraging signs in the housing market—including a pick-up of home sales in previously hard-hit markets, record affordability, and continuing low interest rates—prices have not yet hit bottom.
That’s keeping many households on the fence and making it hard for those who do jump in to get financing in the conventional market. What’s more, it’s making it harder for troubled homeowners to refinance, leading to more distressed sales, and thus further erosion in prices.
Tax Credit Bridge Loans on the Way
To put a floor under the market, the federal government must continue to intervene, panelists said, and expanding the first-time homebuyer tax credit is a good place to start. The credit should be expanded to all households, including those with higher incomes, increased significantly in value, perhaps to $15,000 to $16,000 instead of the current $8,000.
“Then it would start move real estate,” said Robert Sibcy, president of Sibcy Cline, REALTORS®, based in Ohio.
In a positive move, the U.S. Department of Housing and Urban Development is set to roll out guidelines permitting HUD-approved lenders, public housing finance agencies, and some nonprofit organizations to make bridge loans to home buyers. The loans would be collateralized by the $8,000 tax credit, giving buyers the upfront funds for a down payment.
The inability to use the credit for the down payment has been a major stumbling block for the tax credit. NAR has been calling for HUD to use its authority to allow the bridge loans.
During the summit, HUD Secretary Shaun Donovan announced that HUD has decided to allow bridge loans, sparking a loud cheer of appreciation from more than 1,000 REALTORS® attending the session.
“We want FHA consumers to access the credit to use as a down payment,” Donovan said. “I want to thank NAR for its partnership with FHA.” More details on the guidelines will be released in a few days, he said.
Donovan said the credit is expected to stimulate 100,000 first-time homebuyer purchases and 60,000 move-up purchases this year before it expires Dec. 1.
Further Government Actions Could Help
The credit alone isn’t enough to spur sales, many panelists said. Barry Bluestone, a professor of political economy at Northwestern University, called for the federal government to step in for a defined period of time, such as 18 months, to insure buyers’ home equity.
Providing protection against price drops would remove buyers’ reluctance to get into the market now, and since the program would be of limited duration, it could lead to a critical mass of households buying in the short-term and thereby shore up prices. Bluestone said he envisions the federal government insuring up to 85 percent of an owner’s home equity.
“This could stabilize prices over the next 18 months and cost the government practically nothing,” he said. “A small, temporary program can have a huge impact. It’s an idea whose time has come.”
Foreclosure Actions
The other way to stabilize prices is to finally get a handle on foreclosures, which exert heavy downward pressure on prices. Donovan said the administration is making gains in this effort with the voluntary cooperation of 14 of the country’s largest mortgage servicers, representing 75 percent of the market.
But several panelists said the voluntary effort hasn’t proven to be effective yet, and that a new wave of foreclosures is expected this summer.
“If modifications don’t work, we need to stop waiting for voluntary compliance,” said John Taylor, CEO of the National Community Reinvestment Coalition. “The government should buy [the loans] at fair market value, take them out of the market, modify them, and end the foreclosure crisis.”
The big worry about federal intervention among several panelists is the apparent lack of an exit strategy. It tends to be far easier for the government to get involved in the market, through interventions like the giant federal bank rescue plan, than it is to get back out.
“Right now the Federal Reserve is the mortgage-backed securities market,” said Jay Brinkmann, chief economist for the Mortgage Bankers Association. “I don’t know the exit strategy and how long this can continue. It’s scaring off other investors. If the Fed stops buying, [what happens?] How do we get out of it?”
Don't Skimp on Mortgage Modifications
Martin Feldstein, the noted deficit hawk who chaired the Council of Economic Advisors for President Ronald Reagan, said mortgage modifications are one area where the administration shouldn’t skimp, even at the cost of growing the federal deficit, so he was disappointed that the administration is balking at the cost of that.
Referring to comments made by HUD Secretary Donovan, he said, “I’m disappointed the HUD secretary said it’s too expensive for the government to deal with negative equity mortgages…. We still have not dealt with the overhang of underwater mortgages.”
Even without further federal intervention the housing market will turn around, the panelists agreed.
The unknowns are how long recovery will take, how much damage will be done to the economy, and how strong the recovery will be.
The Shape of Things to Come
When the recovery does take hold, the housing market will be very different from what it was before, panelists said. The boom years of 2002–2007 were fueled not by income growth but by debt. After what’s been learned from that debacle, any future growth will have to be based on income growth, said Sarah Rosen Wartell, executive vice president of the Center for American Progress. Such growth will likely be far more moderate, but also more sustainable.
Wartell said the Obama administration was right to focus both on short-term stimulus and investment in clean energy, education, and healthcare reform, because those are the kinds of investments that can lead to the long-term income growth.
—Robert Freedman, REALTOR® Magazine
Home prices must stabilize before the broader economy can turn around, a panel of housing and economic experts said yesterday at a real estate summit hosted by the NATIONAL ASSOCIATION OF REALTORS® as part of its Midyear Legislative Meetings in Washington, D.C., this week.
Although there are encouraging signs in the housing market—including a pick-up of home sales in previously hard-hit markets, record affordability, and continuing low interest rates—prices have not yet hit bottom.
That’s keeping many households on the fence and making it hard for those who do jump in to get financing in the conventional market. What’s more, it’s making it harder for troubled homeowners to refinance, leading to more distressed sales, and thus further erosion in prices.
Tax Credit Bridge Loans on the Way
To put a floor under the market, the federal government must continue to intervene, panelists said, and expanding the first-time homebuyer tax credit is a good place to start. The credit should be expanded to all households, including those with higher incomes, increased significantly in value, perhaps to $15,000 to $16,000 instead of the current $8,000.
“Then it would start move real estate,” said Robert Sibcy, president of Sibcy Cline, REALTORS®, based in Ohio.
In a positive move, the U.S. Department of Housing and Urban Development is set to roll out guidelines permitting HUD-approved lenders, public housing finance agencies, and some nonprofit organizations to make bridge loans to home buyers. The loans would be collateralized by the $8,000 tax credit, giving buyers the upfront funds for a down payment.
The inability to use the credit for the down payment has been a major stumbling block for the tax credit. NAR has been calling for HUD to use its authority to allow the bridge loans.
During the summit, HUD Secretary Shaun Donovan announced that HUD has decided to allow bridge loans, sparking a loud cheer of appreciation from more than 1,000 REALTORS® attending the session.
“We want FHA consumers to access the credit to use as a down payment,” Donovan said. “I want to thank NAR for its partnership with FHA.” More details on the guidelines will be released in a few days, he said.
Donovan said the credit is expected to stimulate 100,000 first-time homebuyer purchases and 60,000 move-up purchases this year before it expires Dec. 1.
Further Government Actions Could Help
The credit alone isn’t enough to spur sales, many panelists said. Barry Bluestone, a professor of political economy at Northwestern University, called for the federal government to step in for a defined period of time, such as 18 months, to insure buyers’ home equity.
Providing protection against price drops would remove buyers’ reluctance to get into the market now, and since the program would be of limited duration, it could lead to a critical mass of households buying in the short-term and thereby shore up prices. Bluestone said he envisions the federal government insuring up to 85 percent of an owner’s home equity.
“This could stabilize prices over the next 18 months and cost the government practically nothing,” he said. “A small, temporary program can have a huge impact. It’s an idea whose time has come.”
Foreclosure Actions
The other way to stabilize prices is to finally get a handle on foreclosures, which exert heavy downward pressure on prices. Donovan said the administration is making gains in this effort with the voluntary cooperation of 14 of the country’s largest mortgage servicers, representing 75 percent of the market.
But several panelists said the voluntary effort hasn’t proven to be effective yet, and that a new wave of foreclosures is expected this summer.
“If modifications don’t work, we need to stop waiting for voluntary compliance,” said John Taylor, CEO of the National Community Reinvestment Coalition. “The government should buy [the loans] at fair market value, take them out of the market, modify them, and end the foreclosure crisis.”
The big worry about federal intervention among several panelists is the apparent lack of an exit strategy. It tends to be far easier for the government to get involved in the market, through interventions like the giant federal bank rescue plan, than it is to get back out.
“Right now the Federal Reserve is the mortgage-backed securities market,” said Jay Brinkmann, chief economist for the Mortgage Bankers Association. “I don’t know the exit strategy and how long this can continue. It’s scaring off other investors. If the Fed stops buying, [what happens?] How do we get out of it?”
Don't Skimp on Mortgage Modifications
Martin Feldstein, the noted deficit hawk who chaired the Council of Economic Advisors for President Ronald Reagan, said mortgage modifications are one area where the administration shouldn’t skimp, even at the cost of growing the federal deficit, so he was disappointed that the administration is balking at the cost of that.
Referring to comments made by HUD Secretary Donovan, he said, “I’m disappointed the HUD secretary said it’s too expensive for the government to deal with negative equity mortgages…. We still have not dealt with the overhang of underwater mortgages.”
Even without further federal intervention the housing market will turn around, the panelists agreed.
The unknowns are how long recovery will take, how much damage will be done to the economy, and how strong the recovery will be.
The Shape of Things to Come
When the recovery does take hold, the housing market will be very different from what it was before, panelists said. The boom years of 2002–2007 were fueled not by income growth but by debt. After what’s been learned from that debacle, any future growth will have to be based on income growth, said Sarah Rosen Wartell, executive vice president of the Center for American Progress. Such growth will likely be far more moderate, but also more sustainable.
Wartell said the Obama administration was right to focus both on short-term stimulus and investment in clean energy, education, and healthcare reform, because those are the kinds of investments that can lead to the long-term income growth.
—Robert Freedman, REALTOR® Magazine
Thursday, May 7, 2009
Competitive Pricing Called Key to Timely Sales
One of the hardest things for a home seller to do is to agree to drop the price, but in this tough market, realistic pricing is crucial, experts say.Home sale price reports can be behind the curve because these reports are based on property closings that lag the market, says Gary Malin, president of Citi Habitats in New York City. He recommends monitoring current sale listings instead.Mollie Carmichael, senior vice president of John Burns Real Estate Consulting in Irvine, Calif., says that setting the initial asking price 15 percent to 20 percent below other listings from the very beginning can get things moving and even trigger a bidding war."If you close fast and sell fast, you have a better opportunity to retain value," Carmichael says. "Premiums are very, very difficult to achieve in a market like the one we have today."
Tuesday, May 5, 2009
NAR- Homes Sales on the Rise
The National Association of Realtors, in its latest economic forecast, anticipates that the nation's unemployment rate will hit 10.2 percent next year. The group also boosted its expectations for resale home prices and sales in 2010 from an earlier forecast.
In 2009, NAR expects the median price of resale homes to drop 4.9 percent compared to 2008, dipping to $188,500, before climbing 4.4 percent to $196,800 next year.
NAR's latest forecast also calls for 4.97 million resale home sales this year, a 1.1 percent rise compared to 4.91 million last year, with sales of resale homes projected to rise 6.3 percent in 2010.
In its previous forecast, released last month (see Inman News), NAR estimated that the median price of resale homes would drop 5.1 percent this year and rise 4.1 percent in 2010, and that sales of resale homes would rise 1 percent this year and climb another 5.8 percent in 2010.
NAR's affordability index, which measures how affordable homes are for households based on mortgage rates and income levels, decreased in March but remained near its record-high February level -- the index was up 30.8 percentage points from its March 2008 level.
Also Monday, the association released the Pending Home Sales Index, which is based on home-purchase contracts signed but not yet closed.
The index, for the month of March, gained 3.2 percent compared to February and was up 1.1 percent over the March 2008 index.
Regionally, the index experienced a monthly rise in the South (8.5 percent) and West (3.9 percent) regions while dropping in the Northeast (-5.7 percent) and Midwest (-1 percent). And the index rose in the Midwest (8.2 percent), South (7.7 percent) and West (1.7 percent) while plummeting in the Northeast (-24.1 percent) region in March 2009 compared to March 2008.
In 2009, NAR expects the median price of resale homes to drop 4.9 percent compared to 2008, dipping to $188,500, before climbing 4.4 percent to $196,800 next year.
NAR's latest forecast also calls for 4.97 million resale home sales this year, a 1.1 percent rise compared to 4.91 million last year, with sales of resale homes projected to rise 6.3 percent in 2010.
In its previous forecast, released last month (see Inman News), NAR estimated that the median price of resale homes would drop 5.1 percent this year and rise 4.1 percent in 2010, and that sales of resale homes would rise 1 percent this year and climb another 5.8 percent in 2010.
NAR's affordability index, which measures how affordable homes are for households based on mortgage rates and income levels, decreased in March but remained near its record-high February level -- the index was up 30.8 percentage points from its March 2008 level.
Also Monday, the association released the Pending Home Sales Index, which is based on home-purchase contracts signed but not yet closed.
The index, for the month of March, gained 3.2 percent compared to February and was up 1.1 percent over the March 2008 index.
Regionally, the index experienced a monthly rise in the South (8.5 percent) and West (3.9 percent) regions while dropping in the Northeast (-5.7 percent) and Midwest (-1 percent). And the index rose in the Midwest (8.2 percent), South (7.7 percent) and West (1.7 percent) while plummeting in the Northeast (-24.1 percent) region in March 2009 compared to March 2008.
Wednesday, April 29, 2009
20-city price index falls..
A monthly home-price index recorded unprecedented year-over-year drops in the price of resale single-family homes in February 2009 compared to the same month a year earlier in 10 of 20 market areas, with 15 markets showing double-digit percentage declines.
The composite index for the 20 metro areas, down 18.6 percent year-over-year in February, did not set a new record -- breaking a string of 16 record-setting months.
The Standard & Poor's/Case-Shiller 20-metro area price index, which compares repeat sales over time for thousands of U.S. homes, found a 35.2 percent year-over-year decline in the Phoenix, Ariz., market in February -- the steepest index drop among the 20 tracked areas.
Next on the list was Las Vegas (-31.7 percent), San Francisco (-31 percent), and Miami, (-29.5 percent).
The slightest year-over-year index declines were in Dallas (-4.5 percent), Denver (-5.7 percent), and Boston (-7.2 percent).
The largest price drop from January 2009 to February 2009 was in Cleveland (-5 percent), and the slightest drop was in Dallas (-0.3 percent).
The Case-Shiller price index has come under fire from critics -- some within and some outside the real estate industry -- who question whether the selected metro areas and the index data paint a clear picture of price changes across the U.S.
And where home-price charts are concerned there is often disagreement over their accuracy and questions about their methodology -- the Wall Street Journal last week reported on a challenge by economist Thomas Lawler over Yale University economist Robert Shiller's use of a chart showing U.S. home price trends since 1890.
The composite index for the 20 metro areas, down 18.6 percent year-over-year in February, did not set a new record -- breaking a string of 16 record-setting months.
The Standard & Poor's/Case-Shiller 20-metro area price index, which compares repeat sales over time for thousands of U.S. homes, found a 35.2 percent year-over-year decline in the Phoenix, Ariz., market in February -- the steepest index drop among the 20 tracked areas.
Next on the list was Las Vegas (-31.7 percent), San Francisco (-31 percent), and Miami, (-29.5 percent).
The slightest year-over-year index declines were in Dallas (-4.5 percent), Denver (-5.7 percent), and Boston (-7.2 percent).
The largest price drop from January 2009 to February 2009 was in Cleveland (-5 percent), and the slightest drop was in Dallas (-0.3 percent).
The Case-Shiller price index has come under fire from critics -- some within and some outside the real estate industry -- who question whether the selected metro areas and the index data paint a clear picture of price changes across the U.S.
And where home-price charts are concerned there is often disagreement over their accuracy and questions about their methodology -- the Wall Street Journal last week reported on a challenge by economist Thomas Lawler over Yale University economist Robert Shiller's use of a chart showing U.S. home price trends since 1890.
NAR Seeks Moratorium on Appraisal Rules
The National Association REALTORS® and the National Association of Mortgage Brokers are pushing hard to delay implementation of the new Fannie Mae and Freddie Mac rules governing real estate appraisals.The new rules are supposed to take effect May 1, but the REALTORS®, in a letter to the Federal Housing Finance Agency, argued that there hasn’t been enough time to properly implement the changes and the result would be higher costs for borrowers. They seek a one-year moratorium.The goal of the change is to eliminate alleged collusion between mortgage lenders and appraisers to pump up home values. Among other things, the rule change prevents mortgage brokers from ordering appraisals directly, requiring them to go through lenders. Mortgage brokers say this will make it hard for them to compete with lenders. Borrowers shopping for the best rate could be asked to pay for multiple appraisals, says Michael Carrier, an associate with the Mortgage Bankers Association.Read the NAR's letters to Fannie Mae and Freddie Mac on the issue. Source: The Wall Street Journal, Jessica Holzer (04/29/2009)
Monday, April 27, 2009
Four Perks of New Homes
It could be a great time to buy a brand now home because prices are down and builders are motivated to unload declining, but still significant, inventories. Marty Gillespie, president of Heartland Homes, a custom home builder in western Pennsylvania, offers these reasons for buying new rather than existing properties.● Buying new means new everything. New homeowners don’t have to replace carpeting, paint, or redo the kitchen.● Mortgages on new homes are often lower. That gives new homebuyers bargaining power.● Appreciation is greater. New homes tend to gain more value than existing homes during the first five to seven years.● New homes are often more energy efficient. Gillespie says his company’s research shows that new homes are 30 to 35 percent more energy efficient than a home built 10 years ago.
Fight Inflation: Buy a Home
Some economic analysts say that the possibility that the economy will go into overdrive and inflation will skyrocket is a much more frightening possibility than the current recession.One inflation hedge nearly all of them point to is real estate. Owning it outright is the best scenario, but if that’s not possible, a low-rate, 30-year fixed mortgage is the next best thing. As inflation drives up salaries, mortgage payments will stay the same, analysts point out. Source: USA Today, John Waggoner (04/24/2009)
Friday, April 17, 2009
Bay Area home sales climb above last year as median falls below $300K
March 19, 2009
La Jolla, CA.----Bay Area home sales beat the year-ago mark for the sixth straight month in February as the winter market sizzled in many foreclosure-heavy inland areas offering the deepest discounts. The median price dipped below $300,000 for the first time since late 1999, pushed lower by an abundance of inland distressed sales and a dearth of coastal high-end activity, a real estate information service reported.
A total of 5,032 new and resale houses and condos closed escrow in the nine-county Bay Area last month. That was essentially unchanged from 5,050 in January but up 26.1 percent from 3,989 in February 2008, according to MDA DataQuick of San Diego.
Last month’s sales were the fifth-lowest for a February since 1988, when DataQuick’s statistics begin, and 22 percent below the average 6,410 for the month. February sales have ranged from a low of 3,989 in 2008 to a high of 8,901 in 2002.
Only 321 newly constructed homes sold last month, down 55 percent from 713 a year ago, the lowest on record for a February, and the second-lowest for any month back to 1988. Many builders have had a difficult time competing with falling resale prices – especially foreclosures.
The allure of such discounted foreclosures helped lift sales of existing single-family houses to record levels for a February in Vallejo, Brentwood, Antioch, Pittsburg and Oakley.
The use of government-insured, FHA loans – a common choice among first-time buyers – represented a record 24.9 percent of all Bay Area purchase loans last month.
Conversely, use of so-called jumbo loans to finance high-end property remained at abnormally low levels. Before the credit crunch hit in August 2007, jumbo loans, then defined as over $417,000, represented 62 percent of Bay Area purchase loans, compared with just 17.5 percent last month.
The difficulties potential high-end buyers have had in obtaining jumbo loans helps explain why sales of existing single-family houses fell to record-low or near-record-low levels for a February in some higher-end communities. They included Orinda, Walnut Creek, San Rafael, San Francisco, Burlingame, San Mateo, Los Gatos, and Los Altos.
“A lot of Bay Area activity is basically on hold, waiting for the jumbo mortgage spigot to reopen. That could start to happen during the second quarter, although slowly. Yesterday’s move by the Federal Reserve to buy more mortgage securities could be a turning point,” said John Walsh, MDA DataQuick president.
Across the nine-county region, the median price paid for all new and resale houses and condos combined fell to $295,000 last month. That was down 1.7 percent from $300,000 in January and down a record 46.2 percent from $548,000 a year ago.
The February median stood at its lowest since it was $299,000 in December 1999 and was 55.6 percent below the peak median of $665,000 reached in June and July of 2007.
The median price – the point where half of the homes sold for more and half for less – has fallen on a year-over-year basis for 15 consecutive months. Its near free-fall in recent months overstates the decline in the value of the typical Bay Area home. The median’s plunge also reflects the sluggishness of high-end sales, which are now under-represented in the statistics; a shift toward more sales occurring in the less-expensive inland markets; and buyers’ preference for discounted foreclosures.
Last month 52 percent of all homes that resold in the Bay Area had been foreclosed on at some point in the prior 12 months, up from a revised 51.9 percent in January and 22.3 percent a year ago.
At the county level, foreclosure resales last month ranged from 12.1 percent of resales in San Francisco to 69.5 percent in Solano County. In the other seven counties, foreclosure resales were as follows: Alameda, 46.2 percent; Contra Costa, 65.1 percent; Marin, 18.9 percent; Napa, 63.1 percent; Santa Clara, 42.9 percent; San Mateo, 31.3 percent; and Sonoma, 57.1 percent.
San Diego-based MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales in late February were estimated in Alameda and San Mateo counties.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,286 last month, down from $1,297 the previous month, and down from $2,606 a year ago. Adjusted for inflation, current payments are 50.2 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 63.2 percent below the current cycle's peak in July 2007.
Indicators of market distress continue to move in different directions. Foreclosure activity has waned recently but remains near record levels, while financing with adjustable-rate mortgages is near the all-time low, as is financing with multiple mortgages. Down payment sizes and flipping rates are stable. Non-owner occupied buying activity is above-average in some markets, MDA DataQuick reported.
Sales Volume
Median Price
All homes
Feb-08
Feb-09
%Chng
Feb-08
Feb-09
%Chng
Alameda
753
971
29.0%
$486,500
$290,000
-40.40%
Contra Costa
753
1,283
70.4%
$450,000
$216,500
-51.90%
Marin
136
111
-18.4%
$775,000
$573,409
-26.00%
Napa
57
88
54.4%
$525,000
$322,500
-38.60%
Santa Clara
984
1,079
9.7%
$658,000
$408,750
-37.90%
San Francisco
431
272
-36.9%
$736,000
$640,000
-13.00%
San Mateo
343
311
-9.3%
$646,500
$502,250
-22.30%
Solano
278
557
100.4%
$350,000
$195,000
-44.30%
Sonoma
254
360
41.7%
$400,000
$282,000
-29.50%
Bay Area
3,989
5,032
26.1%
$548,000
$295,000
-46.20%
Source: MDA DataQuick Information Systems, www.DQNews.com
La Jolla, CA.----Bay Area home sales beat the year-ago mark for the sixth straight month in February as the winter market sizzled in many foreclosure-heavy inland areas offering the deepest discounts. The median price dipped below $300,000 for the first time since late 1999, pushed lower by an abundance of inland distressed sales and a dearth of coastal high-end activity, a real estate information service reported.
A total of 5,032 new and resale houses and condos closed escrow in the nine-county Bay Area last month. That was essentially unchanged from 5,050 in January but up 26.1 percent from 3,989 in February 2008, according to MDA DataQuick of San Diego.
Last month’s sales were the fifth-lowest for a February since 1988, when DataQuick’s statistics begin, and 22 percent below the average 6,410 for the month. February sales have ranged from a low of 3,989 in 2008 to a high of 8,901 in 2002.
Only 321 newly constructed homes sold last month, down 55 percent from 713 a year ago, the lowest on record for a February, and the second-lowest for any month back to 1988. Many builders have had a difficult time competing with falling resale prices – especially foreclosures.
The allure of such discounted foreclosures helped lift sales of existing single-family houses to record levels for a February in Vallejo, Brentwood, Antioch, Pittsburg and Oakley.
The use of government-insured, FHA loans – a common choice among first-time buyers – represented a record 24.9 percent of all Bay Area purchase loans last month.
Conversely, use of so-called jumbo loans to finance high-end property remained at abnormally low levels. Before the credit crunch hit in August 2007, jumbo loans, then defined as over $417,000, represented 62 percent of Bay Area purchase loans, compared with just 17.5 percent last month.
The difficulties potential high-end buyers have had in obtaining jumbo loans helps explain why sales of existing single-family houses fell to record-low or near-record-low levels for a February in some higher-end communities. They included Orinda, Walnut Creek, San Rafael, San Francisco, Burlingame, San Mateo, Los Gatos, and Los Altos.
“A lot of Bay Area activity is basically on hold, waiting for the jumbo mortgage spigot to reopen. That could start to happen during the second quarter, although slowly. Yesterday’s move by the Federal Reserve to buy more mortgage securities could be a turning point,” said John Walsh, MDA DataQuick president.
Across the nine-county region, the median price paid for all new and resale houses and condos combined fell to $295,000 last month. That was down 1.7 percent from $300,000 in January and down a record 46.2 percent from $548,000 a year ago.
The February median stood at its lowest since it was $299,000 in December 1999 and was 55.6 percent below the peak median of $665,000 reached in June and July of 2007.
The median price – the point where half of the homes sold for more and half for less – has fallen on a year-over-year basis for 15 consecutive months. Its near free-fall in recent months overstates the decline in the value of the typical Bay Area home. The median’s plunge also reflects the sluggishness of high-end sales, which are now under-represented in the statistics; a shift toward more sales occurring in the less-expensive inland markets; and buyers’ preference for discounted foreclosures.
Last month 52 percent of all homes that resold in the Bay Area had been foreclosed on at some point in the prior 12 months, up from a revised 51.9 percent in January and 22.3 percent a year ago.
At the county level, foreclosure resales last month ranged from 12.1 percent of resales in San Francisco to 69.5 percent in Solano County. In the other seven counties, foreclosure resales were as follows: Alameda, 46.2 percent; Contra Costa, 65.1 percent; Marin, 18.9 percent; Napa, 63.1 percent; Santa Clara, 42.9 percent; San Mateo, 31.3 percent; and Sonoma, 57.1 percent.
San Diego-based MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales in late February were estimated in Alameda and San Mateo counties.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,286 last month, down from $1,297 the previous month, and down from $2,606 a year ago. Adjusted for inflation, current payments are 50.2 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 63.2 percent below the current cycle's peak in July 2007.
Indicators of market distress continue to move in different directions. Foreclosure activity has waned recently but remains near record levels, while financing with adjustable-rate mortgages is near the all-time low, as is financing with multiple mortgages. Down payment sizes and flipping rates are stable. Non-owner occupied buying activity is above-average in some markets, MDA DataQuick reported.
Sales Volume
Median Price
All homes
Feb-08
Feb-09
%Chng
Feb-08
Feb-09
%Chng
Alameda
753
971
29.0%
$486,500
$290,000
-40.40%
Contra Costa
753
1,283
70.4%
$450,000
$216,500
-51.90%
Marin
136
111
-18.4%
$775,000
$573,409
-26.00%
Napa
57
88
54.4%
$525,000
$322,500
-38.60%
Santa Clara
984
1,079
9.7%
$658,000
$408,750
-37.90%
San Francisco
431
272
-36.9%
$736,000
$640,000
-13.00%
San Mateo
343
311
-9.3%
$646,500
$502,250
-22.30%
Solano
278
557
100.4%
$350,000
$195,000
-44.30%
Sonoma
254
360
41.7%
$400,000
$282,000
-29.50%
Bay Area
3,989
5,032
26.1%
$548,000
$295,000
-46.20%
Source: MDA DataQuick Information Systems, www.DQNews.com
California Home Prices Looking Steady
Median home prices in California slipped less than a half percent in March compared to February, a sign that the state’s troubled housing market is stabilizing, according to MDA Data Quick, which tracks housing prices.The firm said the market was similarly stable in January and February. "History suggests that these are the kinds of signs you see when a market is approaching stabilization in terms of pricing," Data Quick spokesman Andrew Lesage says. "Are we at the bottom? That's not clear."Source: The Associated Press, Jacob Edelman (04/16/2009)
Thursday, April 16, 2009
Open Houses: 6 Ways to Capture Clients on the Spot
Try these tips for turning your open houses into a dependable flow of income for your business.
By Rich Levin, Sales Coach
Levin, Sales Coach
If you're getting ready to hold an open house, lock the door. And forget about programming all your visitors' numbers on your phone's speed dial: You never want to call them back.
That may not sound like your traditional advice for holding open houses. After all, isn't the idea to land more clients—not to mention, a buyer for the listing? But this unconventional strategy can work. Here's why.
Open houses are the perfect opportunity to expand your potential buyer pool. But if you're not careful, you may come across as too pushy, and that can be a quick turnoff that sends buyers running for the door. (No, that's not the reason you should lock it. I'll get to that shortly.)
Try these six tips to make open houses a more effective business tool.
Rule #1: Never plan on calling people later.
Instead of telling visitors you'll give them a call afterwards to follow up, you should use the valuable in-person time at the open house to say what you need to say. You're much more likely to make a stronger impression face-to-face than during a phone call at a later time. When meeting visitors at open houses, these are the main questions you want them to answer for you:
Are they interested in the property?
What other properties may be of interest to them? What are they looking for?
Will they be willing to set up an appointment to talk further with you, or are they interested in viewing additional properties that may be a better fit?
Note, there is an exception to the no-callback rule: When you have a crowded open house, you may not have enough time to talk with everyone. In this case, it may make sense to pick up the phone and ask if they needed any additional information.
Rule #2: Welcome visitors at the door.
The best way to welcome visitors to the open house: Lock the door. Neither you nor the owners want people walking into the house unannounced. This won't only ensure you get to talk to everyone who wanders in but it's also a safety issue. (Read: 9 Open House Safety Tips)
Try this approach:
Greet people at the door.
Welcome and thank them for coming.
Hand them information on the property.
As they look at the information, talk about a special feature or two in the home that they may want to notice as they go through the property.
Ask for their name, phone number, and e-mail address, or have them fill out an open house register so you'll have their contact information. If they decline to give you their contact information (and they don't appear threatening), you should still let them view the property. You'll find most visitors are willing to give you their contact information.
Explain that there is additional information about the listing on the dining room or kitchen table that may be of interest to them.
Rule #3: Stage your informational packets.
The dining room or kitchen table can be a great spot to capture visitors' attention with extra information about the listing. Place a variety of items here, such as property details, school information, and community brochures. Don't forget to attach a bold label (in 24- to 48-point font) with your contact information on each type of information you provide.
The goal is to get visitors to pause and look at these resources, encourage them to speak with you, and build your credibility as an important resource—not only about the listing, but about the community too.
Rule #4: Approach visitors during the walk-through.
After you've allowed visitors to wander through the house on their own, you'll want to catch up to them and see if they have any questions and gauge what they like or dislike. Approach carefully; you don't want to be a pest. This can be your prime chance to land them as a client.
Rule #5: Get the house in showing-shape.
You'll want the house looking its best outside and in. Instruct your sellers to trim shrubs, unclutter rooms, shampoo rugs, add a fresh coat of paint, check the home's smell (Tip: Try fresh-baked cookies for a welcoming scent), and clean absolutely everything. (Provide sellers with a helpful checklist: "18 Simple Tips for Better Home Showings," part of REALTOR® Magazine's Handouts for Customers.)
Here's what you can do to prepare:
Send invitations to the neighborhood and to anyone in your sphere of influence who lives in the area.
Arrive early on open house day, turn on all the lights, open the curtains, and have soft, relaxing music playing in the background.
Display signs throughout the house that point to special features: “Look down, hardwood floors”; “Gas fireplace, push this button”; and “Walk-in closet, walk in.” These can help distinguish your listing as well as make it easier for you to engage visitors about certain qualities of the house.
Rule #6: Choose your open houses carefully.
Avoid holding an open house just because your seller wants it or another practitioner asks you to. Typically, open houses that garner the most traffic are newer listings, reasonably priced, and easy to access from main roads. (Not sure if an open house is right for your listing? Read what other practitioners had to say in the YPN Lounge blog—"Open Houses: Are They Worth It?)
When you invest the time and energy into conducting an open house, you'll be able to turn them into much more than just a neighbor snoop-fest. Open houses can serve as a dependable flow of leads for your other listings. And who knows, you may just find the perfect buyer for that listing.
By Rich Levin, Sales Coach
Levin, Sales Coach
If you're getting ready to hold an open house, lock the door. And forget about programming all your visitors' numbers on your phone's speed dial: You never want to call them back.
That may not sound like your traditional advice for holding open houses. After all, isn't the idea to land more clients—not to mention, a buyer for the listing? But this unconventional strategy can work. Here's why.
Open houses are the perfect opportunity to expand your potential buyer pool. But if you're not careful, you may come across as too pushy, and that can be a quick turnoff that sends buyers running for the door. (No, that's not the reason you should lock it. I'll get to that shortly.)
Try these six tips to make open houses a more effective business tool.
Rule #1: Never plan on calling people later.
Instead of telling visitors you'll give them a call afterwards to follow up, you should use the valuable in-person time at the open house to say what you need to say. You're much more likely to make a stronger impression face-to-face than during a phone call at a later time. When meeting visitors at open houses, these are the main questions you want them to answer for you:
Are they interested in the property?
What other properties may be of interest to them? What are they looking for?
Will they be willing to set up an appointment to talk further with you, or are they interested in viewing additional properties that may be a better fit?
Note, there is an exception to the no-callback rule: When you have a crowded open house, you may not have enough time to talk with everyone. In this case, it may make sense to pick up the phone and ask if they needed any additional information.
Rule #2: Welcome visitors at the door.
The best way to welcome visitors to the open house: Lock the door. Neither you nor the owners want people walking into the house unannounced. This won't only ensure you get to talk to everyone who wanders in but it's also a safety issue. (Read: 9 Open House Safety Tips)
Try this approach:
Greet people at the door.
Welcome and thank them for coming.
Hand them information on the property.
As they look at the information, talk about a special feature or two in the home that they may want to notice as they go through the property.
Ask for their name, phone number, and e-mail address, or have them fill out an open house register so you'll have their contact information. If they decline to give you their contact information (and they don't appear threatening), you should still let them view the property. You'll find most visitors are willing to give you their contact information.
Explain that there is additional information about the listing on the dining room or kitchen table that may be of interest to them.
Rule #3: Stage your informational packets.
The dining room or kitchen table can be a great spot to capture visitors' attention with extra information about the listing. Place a variety of items here, such as property details, school information, and community brochures. Don't forget to attach a bold label (in 24- to 48-point font) with your contact information on each type of information you provide.
The goal is to get visitors to pause and look at these resources, encourage them to speak with you, and build your credibility as an important resource—not only about the listing, but about the community too.
Rule #4: Approach visitors during the walk-through.
After you've allowed visitors to wander through the house on their own, you'll want to catch up to them and see if they have any questions and gauge what they like or dislike. Approach carefully; you don't want to be a pest. This can be your prime chance to land them as a client.
Rule #5: Get the house in showing-shape.
You'll want the house looking its best outside and in. Instruct your sellers to trim shrubs, unclutter rooms, shampoo rugs, add a fresh coat of paint, check the home's smell (Tip: Try fresh-baked cookies for a welcoming scent), and clean absolutely everything. (Provide sellers with a helpful checklist: "18 Simple Tips for Better Home Showings," part of REALTOR® Magazine's Handouts for Customers.)
Here's what you can do to prepare:
Send invitations to the neighborhood and to anyone in your sphere of influence who lives in the area.
Arrive early on open house day, turn on all the lights, open the curtains, and have soft, relaxing music playing in the background.
Display signs throughout the house that point to special features: “Look down, hardwood floors”; “Gas fireplace, push this button”; and “Walk-in closet, walk in.” These can help distinguish your listing as well as make it easier for you to engage visitors about certain qualities of the house.
Rule #6: Choose your open houses carefully.
Avoid holding an open house just because your seller wants it or another practitioner asks you to. Typically, open houses that garner the most traffic are newer listings, reasonably priced, and easy to access from main roads. (Not sure if an open house is right for your listing? Read what other practitioners had to say in the YPN Lounge blog—"Open Houses: Are They Worth It?)
When you invest the time and energy into conducting an open house, you'll be able to turn them into much more than just a neighbor snoop-fest. Open houses can serve as a dependable flow of leads for your other listings. And who knows, you may just find the perfect buyer for that listing.
Tuesday, April 14, 2009
Housing Recovery? Not This Year, Experts Say
Housing Recovery? Not This Year, Experts Say
One in every nine homes in the United States is sitting vacant, according to the U.S. Census Bureau. Economists predict that getting rid of this glut nationwide will take at least three years.
Here’s the math: The number of housing units in the United States increased by 8.65 million from 2002 to 2007. During that period, the number of U.S. households rose by only 6.7 million. Subtract a half-million homes that will be torn down or lost to fire, and that leaves an excess of 1.3 million units, not including vacation homes.
The country adds about 1.5 million households every year, but the recession and a slowdown in immigration is reducing that number. Additionally, Gen Xers, most of who are within the age range when people tend to have the most children, are relatively small in number and won’t create an enormous need for larger living space.
Factor in the number of new homes being built—about 700,000 this year, according to Arthur C. Nelson, director of the University of Utah’s Metropolitan Research Center— and the bottom line is a multi-year recovery.
As Robert Lang, head of the Metropolitan Institute at Virginia Tech, puts it, "Population is still growing, and sooner or later, you'll want to move out of relatives' basements."
Utah’s Nelson analyzed government and private housing data and predicts that hard-hit housing markets in the West and South will start to bounce back later this year and during the first half of 2010. The Northeast and Midwest will have the slowest comeback, possibly extending beyond 2012, he says.
Source: USA Today, Hava El Nasser (09/10/2009)
One in every nine homes in the United States is sitting vacant, according to the U.S. Census Bureau. Economists predict that getting rid of this glut nationwide will take at least three years.
Here’s the math: The number of housing units in the United States increased by 8.65 million from 2002 to 2007. During that period, the number of U.S. households rose by only 6.7 million. Subtract a half-million homes that will be torn down or lost to fire, and that leaves an excess of 1.3 million units, not including vacation homes.
The country adds about 1.5 million households every year, but the recession and a slowdown in immigration is reducing that number. Additionally, Gen Xers, most of who are within the age range when people tend to have the most children, are relatively small in number and won’t create an enormous need for larger living space.
Factor in the number of new homes being built—about 700,000 this year, according to Arthur C. Nelson, director of the University of Utah’s Metropolitan Research Center— and the bottom line is a multi-year recovery.
As Robert Lang, head of the Metropolitan Institute at Virginia Tech, puts it, "Population is still growing, and sooner or later, you'll want to move out of relatives' basements."
Utah’s Nelson analyzed government and private housing data and predicts that hard-hit housing markets in the West and South will start to bounce back later this year and during the first half of 2010. The Northeast and Midwest will have the slowest comeback, possibly extending beyond 2012, he says.
Source: USA Today, Hava El Nasser (09/10/2009)
Thursday, April 9, 2009
S&P/Case-Shiller Home Price Indices show continued declines
S&P/Case-Shiller Home Price Indices show continued declines Nationwide, prices of existing, single-family homes showed continued declines in January, with 13 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10 percent compared with January 2008, according to the S&P Case-Shiller Home Price Index.
“Home prices, which peaked in mid-2006, continued their decline in 2009,” says David M. Blitzer, chairman of the Index committee at Standard & Poor’s. “There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSAs falling more than 20 percent in the last year.”
As of January 2009, average home prices across the United States are at level similar to those in late 2003.
Mortgage rates bounce back
Mortgage rates bounce back
Still under 5% for borrowers with good credit
By Inman News, Thursday, April 9, 2009.Mortgage rates bounced back this week but remained below 5 percent for borrowers with good credit and 20 percent down payments, Freddie Mac said in releasing the results of its weekly survey of lenders.
Applications for conventional purchase mortgages are up 22 percent since the end of February, and demand for refinancings is up 129 percent, Freddie Mac said, citing data from the Mortgage Bankers Association.
Freddie Mac said 30-year fixed-rate mortgages averaged 4.87 percent with an average of 0.7 point for the week ending April 9, up from 4.78 percent a week ago and 5.88 percent a year ago.
The 15-year fixed-rate mortgage averaged 4.54 percent with an average 0.7 point, up from 4.52 percent last week and 5.42 percent a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.93 percent with an average 0.7 point, up from 4.92 percent last week and 5.56 percent a year ago.
One-year Treasury-indexed ARMs averaged 4.83 percent with an average 0.5 point, up from 4.75 percent last week and 5.18 percent a year ago.
Those rates were for mortgages eligible for purchase or guarantee by Freddie Mac. Borrowers taking out loans too large or risky for Freddie Mac, or providing down payments less than 20 percent, can expect to pay more.
Applications for both refinance and purchase loans were up last week, the Mortgage Bankers Association reported in a separate survey.
The MBA said loan applications were up 4.7 percent during the week ending April 3. Demand for purchase loans was up 11.1 percent, driven by a 17.1 percent jump in applications for government-backed loans, largely FHA. Demand for conventional purchase loans was up 7.7 percent.
Demand for refinance loans increased a more modest 3.2 percent. Refinance applications made up 77.9 percent of all mortgage applications during the week ending April 3, down from 79.1 percent the previous week.
Looking back one year, applications for purchase loans are down about 23 percent, while demand for refinance loans is up 150 percent. At this time a year ago, refinance applications made up 52.2 percent of mortgage applications.
Fannie Mae recently reported it nearly doubled the dollar volume of refinancings from February to March, to $77 billion -- the company's largest refinance month since 2003.
Monday, April 6, 2009
Fannie Mae Announces Guidelines for Loan Limits in High Cost Areas
Fannie Mae Announces Guidelines for Loan Limits in High Cost Areas
On March 30, 2009, Fannie Mae issued Announcement 09-08, implementing the 2009 conforming loan limits for high cost areas ("high-balance" loans above $417,000). The American Recovery and Reinvestment Act (ARRA) raised loan limits for high cost areas for 2009 to the higher of the permanent limits in effect for 2009 or the temporary limits in effect for 2008. In most cases the 2008 limits are higher. The guidelines apply to loans delivered to Fannie Mae starting May 1, 2009.
The Fannie Mae announcement specifies eligibility requirements for high-balance loans, including:
—Loan must be conventional, first-lien mortgages only.
—One to four unit properties are eligible.
—Loans must be fixed-rate or adjustable rate loans (no balloons).
—Loans must meet loan-to-value (LTV) and minimum credit score requirements. For one unit properties with a fixed rate mortgage, the maximum LTV is 90% and the minimum credit score is 700 for LTVs above 75% and 660 for LTVs at or below 75%. For one unit properties with an adjustable rate mortgage, the maximum LTV is 75% and the minimum credit score is 680. For second homes and investment properties, the maximum LTV is 65% and the minimum credit score is 740. Other rules apply to other categories.
Fannie Mae Announcement 09-08, Temporary High-Cost Area Loan Limits and Revised
www.freddiemac.com
Eligibility Requirements for High-Balance Mortgage Loans
On March 30, 2009, Fannie Mae issued Announcement 09-08, implementing the 2009 conforming loan limits for high cost areas ("high-balance" loans above $417,000). The American Recovery and Reinvestment Act (ARRA) raised loan limits for high cost areas for 2009 to the higher of the permanent limits in effect for 2009 or the temporary limits in effect for 2008. In most cases the 2008 limits are higher. The guidelines apply to loans delivered to Fannie Mae starting May 1, 2009.
The Fannie Mae announcement specifies eligibility requirements for high-balance loans, including:
—Loan must be conventional, first-lien mortgages only.
—One to four unit properties are eligible.
—Loans must be fixed-rate or adjustable rate loans (no balloons).
—Loans must meet loan-to-value (LTV) and minimum credit score requirements. For one unit properties with a fixed rate mortgage, the maximum LTV is 90% and the minimum credit score is 700 for LTVs above 75% and 660 for LTVs at or below 75%. For one unit properties with an adjustable rate mortgage, the maximum LTV is 75% and the minimum credit score is 680. For second homes and investment properties, the maximum LTV is 65% and the minimum credit score is 740. Other rules apply to other categories.
Fannie Mae Announcement 09-08, Temporary High-Cost Area Loan Limits and Revised
www.freddiemac.com
Eligibility Requirements for High-Balance Mortgage Loans
Sunday, April 5, 2009
Come Out and Play!
Come Out and Play!
--posted by irongrace on Mar 11, 2009
I thought it was rather odd when my friend from the nursing home asked me to motor her wheelchair through the puddles that formed from the melting snow. I didn't really get it, but I went along with it. We were out on one of our walks or what I like to call one of our"weekly strolls" because I stand and she rolls. Adhering to my friend's peculiar request, we were off on our watery wheelchair adventure! We splashed through each puddle together and came out of each experience, slightly damp and smiling. In fact, after a few puddle excursions, even I started looking out for larger and more daunting puddles to sail through until one day we were out on our stroll, and to our dismay, no puddles were to be found. They had all dried up.
Keen on keeping our strolling adventure alive, we discovered something new that awaited us. As we headed down the residential street, there was a small pile of leaves. My friend asked me to roll her through them and we did like two small children rushing into a cluster of autumn leaves which flew up into the air, softly floated around us and then made their way gently back to the earth.
It was at that moment that I reflected more deeply on my friend's predicament. My friend had been in a wheelchair her whole entire life. As a child she never gotten to splish and splash through puddles or sprinklers or fly into a pile of leaves or roll through snow or feel her toes wiggle in the warm grainy sand. Her family always instructed her to "be an adult" and as the obedient daughter, she did her best to fit the mold, but I now see that the spirit of the child had been locked inside her for all these years. So, all she wanted to be with me, was a child who was free, free to laugh and play and get wet.
From wheelchair speeding through puddles and leaves, and across lawns, to howling with laughter, and screaming for no particular reason, we were like two playmates realizing what it truly meant to enjoy life, despite the strange looks or grouchy remarks we would hear from those around us who had let the joy of life slip through their worn fingers.
Thanks to my friend, I am now on a mission to find all those children within us and make them come out and play!
Thursday, April 2, 2009
U.S. Treasury: Mortgage Rates 'as Low as 2 percent'
by Broderick Perkins
Some of the 3 to 4 million homeowners eligible for loan modifications could see interest rates as low as 2 percent under the Obama administration's new "Making Home Affordable" (MHA) initiative.
Originally dubbed the "Homeowner Affordability and Stability Plan," MHA contains a provision to modify mortgages for qualified homeowners struggling to make the monthly payment.
A loan modification, unlike a refinance, changes the terms of the existing loan without writing a new one. Modifications are designed to make mortgages more affordable.
Also called a "workout," this provision is open to anyone including those who haven't missed payments, but may be at risk of missing payments.
The modification plan is open to anyone with any loan that has a balance under Fannie Mae and Freddie Mac limits, which now as high as $729,750 in some high-cost areas.
The modification program, also designed to standardize a hodge-podge of modification efforts by lenders, comes with financial incentives for both homeowners and lenders.
Loan servicers get thousands of dollars for modifying mortgages and borrowers get a principal reduction also for thousands of dollars over five years for paying on time.
MHA modifications are designed to make the monthly cost of housing more affordable by reducing the mortgage payment to as little as 31 of household income. Lenders can accomplish that by reducing interest rates, extending the life of the loan and even reducing the principal -- though to date most lenders have balked on forgiving debt.
"To reach the target affordability level of 31 percent, interest payments will first be reduced down to as low as 2 percent. If at that rate the debt to income level is still over 31 percent, lenders then extend the term or amortization period up to 40 years, and finally forbear principal at no interest, until the payment is reduced to the 31% target," according to the Treasury's "Making Home Affordable Updated Detailed Program Description."
The program runs through 2012, allows borrowers to modify a loan only once and applies only to loans made on or before Jan. 1 2009. Mortgages for single-family homes worth more than $729,750 are excluded.
• Do you qualify? Visit FinancialStability.gov's modification area to find out.
• There's more mortgage modification news that really hits home by helping you make the right choices to get the lender on your side.
Refinancing help
MHA also includes a refinancing provision for those with loans held by Fannie Mae or Freddie Mac.
Homeowners with less than 20 percent equity in their homes, who now find it difficult if not impossible to refinance, may be eligible to get new loans at lower interest rates provided the new note doesn't exceed 105 percent of the home's value.
The refinanced loans can be as large as $729,750 in high cost areas and go to those who are current and on time with their mortgage payments.
• Do you qualify? Visit FinancialStability.gov's refinance area to find out.
• For more information on all the provisions of the Obama administration's MHA, visit Making Home Affordable on line.
Tuesday, March 31, 2009
Mortgage Interest Deduction Limits Not Included in Proposed Budget
Mortgage Interest Deduction Limits Not Included in Proposed Budget
The proposal in the Administration's FY 2010 budget to limit itemized deductions, including the mortgage interest deduction, for upper income taxpayers has found no champions in either the House or the Senate. The House and Senate Budget Committees have met to formulate a Budget Resolution to provide a guide for revenues and spending. NAR had been concerned that the Budget Resolution might include references to the Administration's proposal to use a portion of the mortgage interest deduction as a means of setting aside funds to "pay for" revisions to the health insurance and health care systems. In the end, neither the House nor the Senate included any reference to the proposal. The proposed Budget Resolutions did direct the tax-writing committees to set aside reserves for funding health care reform, but left the challenge of identifying the payment mechanism to the tax writers.
Visit www.realtor.org/2009housingtaxcredit
The proposal in the Administration's FY 2010 budget to limit itemized deductions, including the mortgage interest deduction, for upper income taxpayers has found no champions in either the House or the Senate. The House and Senate Budget Committees have met to formulate a Budget Resolution to provide a guide for revenues and spending. NAR had been concerned that the Budget Resolution might include references to the Administration's proposal to use a portion of the mortgage interest deduction as a means of setting aside funds to "pay for" revisions to the health insurance and health care systems. In the end, neither the House nor the Senate included any reference to the proposal. The proposed Budget Resolutions did direct the tax-writing committees to set aside reserves for funding health care reform, but left the challenge of identifying the payment mechanism to the tax writers.
Visit www.realtor.org/2009housingtaxcredit
Sunday, March 29, 2009
Existing-Home sales up in Feb. 09
Sales of existing homes rose 5.1 percent from January to February, to a seasonally adjusted annual rate of 4.72 million units, the National Association of Realtors reported today.
Distressed sales accounted for 40 to 45 percent of transactions, and total housing inventory grew 5.2 percent, to 3.8 million existing homes for sale.
At the current pace of sales, that's a 9.7-month supply of homes, unchanged from January but down from the record of 11.2 months seen in July. A six-month supply of housing is generally seen as a healthy balance between supply and demand.
The national median existing-home price for all housing types was $165,400 in February, down 15.5 percent from a year ago. The median home price was pushed down by sales of distressed homes, which are selling for 20 percent less than normal market price, said NAR Chief Economist Lawrence Yun.
The median condominium price was down 18.2 percent from a year ago, to $172,200, and sales of existing condos and co-ops were up 11.4 percent from January, to a seasonally adjusted rate of 490,000 units. Looking back a year, condo sales were down 13.1 percent.
The median existing single-family home price was down 15 percent from a year ago, to $164,600, and sales rose 4.4 percent from January to a seasonally adjusted annual rate of 4.23 million units. That's 3.6 percent below the pace of sales a year ago.
Regionally, California saw a strong gain in sales, with the median listing price on the rise for the first time in three years.
Existing-home sales in the West increased 2.6 percent from January to February, to an annual rate of 1.2 million, but were down 30.4 percent increase from a year ago. The West has also seen the greatest year-over-year price declines, with median price falling 30.3 percent from a year ago, to $204,600.
In the Northeast, sales were up 15.6 percent from January to an annual pace of 740,000, but are down 14.9 percent from a year ago. The median price in the Northeast was $251,200, down 4.8 percent from a year ago.
Existing-home sales in the Midwest increased 1 percent from January to an annual pace of 1.04 million, down 14 percent from a year ago. The median price in the Midwest was $131,000, down 7.8 percent from a year ago.
In the South, existing-home sales rose 6.1 percent from January to an annual pace of 1.74 million, but were down 11.2 percent from a year ago. The median price in the South was $146,700, down 10 percent from a year ago.
***
Friday, March 27, 2009
FHA Mortgage Limits Website
FHA Mortgage Limits Website
If you’re a mortgage lender or REALTOR, homebuyer or homeowner in one of the Northwest’s high-cost housing markets, the recently-enacted stimulus package has something very important to you – higher FHA mortgage insurance limits. The higher limits give homebuyers a larger inventory of homes from which to choose and give more homeowners in a volatile market the chance to refinance into, says HUD Secretary Donovan, FHA’s “safe, affordable mortgage products.” This website page allows you to look up the FHA mortgage limits for your area or several areas, and then list them by state, county, or Metropolitan Statistical Area.
If you’re a mortgage lender or REALTOR, homebuyer or homeowner in one of the Northwest’s high-cost housing markets, the recently-enacted stimulus package has something very important to you – higher FHA mortgage insurance limits. The higher limits give homebuyers a larger inventory of homes from which to choose and give more homeowners in a volatile market the chance to refinance into, says HUD Secretary Donovan, FHA’s “safe, affordable mortgage products.” This website page allows you to look up the FHA mortgage limits for your area or several areas, and then list them by state, county, or Metropolitan Statistical Area.
Homebuyer Credit Revised Form 5405
Homebuyer Credit Revised Form 5405
Following enactment of the American Recovery & Reinvestment Act, the Internal Revenue Service already has posted – at www.irs.gov - a revised Form 5405, First-Time Homebuyer Credit to incorporate Act’s provisions permitting qualifying taxpayers who buy a home this year before December 1 can claim up to $8,000, or $4,000 for married individuals filing separately, on either their 2008 or 2009 tax returns.
Following enactment of the American Recovery & Reinvestment Act, the Internal Revenue Service already has posted – at www.irs.gov - a revised Form 5405, First-Time Homebuyer Credit to incorporate Act’s provisions permitting qualifying taxpayers who buy a home this year before December 1 can claim up to $8,000, or $4,000 for married individuals filing separately, on either their 2008 or 2009 tax returns.
Thursday, March 26, 2009
Commerce: New-home Sales See Rise in February
Commerce: New-home Sales See Rise in February
The U.S. Commerce Department reported that new-home sales rose 4.7 percent in February to a seasonally adjusted annual rate of 337,000, up from a revised January figure of 322,000.
The January rate was the worst since records were first kept in 1963, and yesterday’s report was actually better than most economists feared it would be
The report is "another faint but nonetheless encouraging sign that the economic slide may be moderating," wrote David Resler, chief U.S. economist at Nomura Securities.
At the current sales pace, the government estimated that it would take a year to exhaust the inventory of new homes on the market.
Source: The Associated Press, Alan Zibel (03/25/2009)
The U.S. Commerce Department reported that new-home sales rose 4.7 percent in February to a seasonally adjusted annual rate of 337,000, up from a revised January figure of 322,000.
The January rate was the worst since records were first kept in 1963, and yesterday’s report was actually better than most economists feared it would be
The report is "another faint but nonetheless encouraging sign that the economic slide may be moderating," wrote David Resler, chief U.S. economist at Nomura Securities.
At the current sales pace, the government estimated that it would take a year to exhaust the inventory of new homes on the market.
Source: The Associated Press, Alan Zibel (03/25/2009)
Wednesday, March 25, 2009
Home Prices Edged up in January
Home Prices Edged up in January
Home prices rose 1.7 percent in January, up for the first time in 10 months, according to the Federal Housing Finance Agency, which only reports prices for conforming properties with mortgages backed by Fannie Mae and Freddie Mac.
Many analysts were skeptical about the results because the report excludes expensive homes with subprime loans and jumbo mortgages.
The government did note that sales numbers in January were low and that could skew the results.
Meanwhile, the Commerce Department is expected to report today that new home sales fell in February to a seasonally adjusted annual rate of 300,000 units from 309,000 units in January. This is the lowest level since 1963.
Source: The Wall Street Journal, Kelly Evans and the Associated Press (03/25/2009)
Home prices rose 1.7 percent in January, up for the first time in 10 months, according to the Federal Housing Finance Agency, which only reports prices for conforming properties with mortgages backed by Fannie Mae and Freddie Mac.
Many analysts were skeptical about the results because the report excludes expensive homes with subprime loans and jumbo mortgages.
The government did note that sales numbers in January were low and that could skew the results.
Meanwhile, the Commerce Department is expected to report today that new home sales fell in February to a seasonally adjusted annual rate of 300,000 units from 309,000 units in January. This is the lowest level since 1963.
Source: The Wall Street Journal, Kelly Evans and the Associated Press (03/25/2009)
Tuesday, March 24, 2009
'Psychological' Blueprint Helps House Hunters
This is a great piece that I wanted to share with you. I think we in SF got so wrapped up with Feng Shui, that we forgot to pay attention to the Psychological aspects of relating to a 'home'. ~ Suzanne
Environmental psychologist Toby Israel, author of a new book, Some Place Like Home: Using Design Psychology to Create Ideal Place, says people’s childhood homes have a profound effect on what kinds of homes they like best.
Before anyone buys, builds, rents or remodels, Israel believes they should consider what kinds of living spaces satisfy them, she says.
One exercise she recommends for anyone searching for a home is to draw a timeline of all the places they've lived for six months or more and circle those that they liked the best, then describe why. She calls the result a "design psychology blueprint" that can help a real estate professional identify what a client really wants.
Source: Star-Tribune, Jim Buchta (03/14/2009)
Read More
U.S. Expands Plan to Buy Banks Troubled Assets
The White House unveiled the details of a plan to buy up to $2 trillion in bad home loans and mortgage-backed securities from banks.
The U.S. government will match investments made by private investors and offer affordable, taxpayer-supported financing to encourage purchases of the troubled mortgage assets.
The Obama administration also plans to create public-private investment funds to buy mortgage-backed securities as well as expand the Term Asset-Backed Securities Loan Facility to include financing for purchases of existing distressed MBS, including those backed by commercial property loans.
Source: New York Times, Edmund, Andrews (03/24/09)
Friday, March 20, 2009
Major Banks Re-Enter Jumbo Arena -Great News for San Francisco!
Major Banks Re-Enter Jumbo Arena
Bank of America is among the major banks rolling out jumbo mortgage programs and holding the loans in their own portfolios.
It will offer loans from $730,000 to $1.5 million with 30-year fixed rates under 6 percent; but borrowers must make a 20-percent down payment, have good credit, provide proof of income, and hold six months' of principal, interest, property tax, and insurance payments in reserve.
Other banks offering jumbo loans include ING Group's ING Direct unit and Luxury Loans of San Diego.
Source: Chicago Daily Herald, Ken Harney (03/20/09)
Bank of America is among the major banks rolling out jumbo mortgage programs and holding the loans in their own portfolios.
It will offer loans from $730,000 to $1.5 million with 30-year fixed rates under 6 percent; but borrowers must make a 20-percent down payment, have good credit, provide proof of income, and hold six months' of principal, interest, property tax, and insurance payments in reserve.
Other banks offering jumbo loans include ING Group's ING Direct unit and Luxury Loans of San Diego.
Source: Chicago Daily Herald, Ken Harney (03/20/09)
Small Scale Investing Challenge
by Kenneth R. Harney
Small-scale investors who own condo units are facing tougher financing challenges as the biggest players in the market are imposing new restrictions -- worse, it seems, every month.
Fannie Mae and private mortgage insurers don't say it this way officially, but their actions make it clear: They don't want to finance condos in large numbers any more, and they are making it increasingly difficult for developers, unit owners and potential investors.
That wouldn't be a big a deal if Fannie were not the number one traditional source of financing for condominium units. Freddie Mac, its smaller rival, has been far less active as a buyer or guarantor of condo loans.
Fannie's latest moves, which took effect March first, ban mortgages in new condo developments where fewer than 70 percent of the units have been pre-sold. The previous cutoff point was 51 percent.
Also Fannie no longer will finance units in projects where more than 15 percent of unit owners are behind on their payment of condo dues, or where more than 10 percent of the units are owned by a single investor, individual or company.
On top of that, Fannie now declines to finance units in buildings where more than 49 percent of all units are owned by investors. Forget most resort area rental condos. Forget condo hotels.
Private mortgage insurers have joined the condo-avoidance bandwagon by either refusing to insure low-downpayment loans in any of dozens of local markets deemed to be "declining," or by charging exorbitant premiums on units in healthier markets.
Even Freddie Mac may soon be following Fannie in restricting condos sharply. It recently raised the minimum downpayment on condo unit loans to 25 percent, and added a three quarter point penalty on top of its regular fees for condos. Fannie also hits all condos with a three quarter point add on.
Fannie Mae now reserves the right to REJECT financing on condo units in projects where -- in its sole opinion -- developers or sellers are offering "excessive" come-ons to buyers, either on below-market financing or other subsidies designed to get buyers to sign contracts.
Fannie says such concessions distort the true market values of the condo units in the entire project.
One glimmer of possibly good news here: Fannie Mae says it is willing to review individual loan on a case by case basis in situations where condo projects don't quite make the grade --- for example, there are more investor units in the building than normally permitted, but lenders will need to submit documentation that the overall project is healthy economically and presents minimal risk.
Feds launch 'Home Affordable' site
Feds launch 'Home Affordable' site
Borrowers can check eligibility for a loan mod, refi
By Inman News, Friday, March 20, 2009.A new government Web site includes online tools that can help troubled borrowers determine whether they are eligible to participate in the "Making Home Affordable" loan modification and refinancing program.
The site, MakingHomeAffordable.gov, is intended to help communicate how the program works and who is eligible -- elements "critical to the program's success," Housing Secretary Shaun Donovan said in a press release.
The Making Home Affordable program includes $75 billion in incentives for loan servicers and borrowers intended to help up to 4 million homeowners negotiate loan modifications or short sales with their loan servicers. The refinance component of the program will rely on Fannie Mae and Freddie Mac to refinance up to 5 million loans they already own or guarantee (see story).
Fannie Mae and Freddie Mac have set up Web sites and toll-free hotlines to help borrowers determine whether their existing loan is owned or guaranteed by Fannie or Freddie.
The Fannie Mae form is at www.fanniemae.com/homeaffordable, and the company is accepting calls at (800) 732-6643. Freddie Mac's Web site for troubled borrowers is www.freddiemac.com/avoidforeclosure and calls are accepted at (800) 373-3343.
Borrowers can also apply for help from their mortgage servicer by submitting details about their financial situation using an online application form at HopeNow.com, the Web site operated by an alliance of mortgage servicers and nonprofit counselors, or by calling the HOPE NOW hotline, (888) 995-4673.
Tuesday, March 17, 2009
Fed Takes Center Stage This Week
The Federal Reserve holds its monthly meeting this week and will make its decision on interest rates Wednesday afternoon.
The Fed has already slashed the key rate to a record low, zero to 0.25 points.
One possibility that might help the economy include a decision by the Fed to buy long-term Treasury notes to further drive down mortgage rates. Another option is to increase the amount of debt issued or guaranteed by Fannie Mae and Freddie Mac. The risk to these action is the likelihood of stimulating the inflation.
During Sunday night’s interview on CBS’ 60 Minutes, Fed Chairman Ben Bernanke was optimistic that the end of the recession is in sight.
"We've seen some progress in the financial markets, absolutely," Bernanke said. "But until we get that stabilized and working normally, we're not going to see recovery.
"But we do have a plan. We're working on it," Bernanke said. "And, I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year."
Source: The Associated Press, Jeannine Avera, Ieva Augustums (03/16/2009)
Obama- Loan Modification Plan
by Ralph Roberts
The Treasury Department recently released a report, which include eligibility requirements to determine which homeowners qualify for relief under the plan. Following are the eligibility requirements as specified in the guidelines:
- Mortgage must have originated on or before January 1, 2009.
- Home must be an owner-occupied primary residence (verified with tax return, credit report, and other documentation such as a utility bill) – this program is not designed for investor-owned properties.
- Home must be a single family 1-4 unit property (including condominium, cooperative, and manufactured home affixed to a foundation and treated as real property under state law).
- Home may not be vacant or condemned.
- Borrowers in bankruptcy are not automatically excluded from consideration.
- Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
- First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) equal to or less than:
- 1 Unit: $729,750
- 2 Units: $934,200
- 3 Units: $1,129,250
- 4 Units: $1,403,400
- Foreclosure actions are suspended during the trial period or while borrowers are considered for alternative foreclosure prevention options. If homeowners fail to qualify, foreclosure proceedings may resume.
- No minimum or maximum LTV ratio for eligibility purposes.
- Loans are eligible for only one loan modification under the program.
- Subordinate liens (such as second mortgages or home equity loans or lines of credit) are not included in the Front-End DTI calculation, but they are included in the Back-End DTI calculation.
- Servicers should follow any existing express contractual restrictions with respect to solicitation of borrowers for modifications.
Applicants will be accepted into the program until December 31, 2012 (the program expiration date), but incentive payments will continue up to five years after the date of entry into the Home Affordable
Modification Program. Monitoring will continue through the life of the program.
Keep in mind that these eligibility requirements are simply government guidelines. Avoid the temptation to qualify or disqualify yourself based solely on what the eligibility requirements indicate. Consult a loan modification specialist who works with lenders on a daily basis to review your situation and determine whether you are likely to qualify. Sometimes the only way to determine whether you qualify is to actually submit your loan modification application.
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