Sandy Slinkard

FHA HEAD: DON'T RAISE DOWN PAYMENTS

2010-03-13T14:41:00Z

Daily Real Estate News | March 12, 2010

Now is not the time to raise the downpayment requirement on a Federal Housing Administration loan, warns FHA Commissioner David Stevens.

Stevens, testifying before a committee of the U.S. House, said his agency would probably insure 300,000 fewer home loans per year if the mandatory down payment was raised from 3.5 percent to 5 percent — a 40 percent increase.

Congress has been considering various ways to put FHA on a sounder financial footing. Besides increasing the downpayment requirement, another suggestion under discussion is raising the upfront mortgage insurance premium to 2.25 percent of the loan amount, up from 1.75 percent currently.

The National Association of REALTORS® also opposes the proposal to raise the mandatory down payment for an FHA loan. The FHA remains financially strong because it has taken steps to ensure solid underwriting standards and responsible lending practices, said Charles McMillan, NAR immediate past president, in testimony before the House Subcommittee on Housing and Community Opportunity.

“As the leading advocate for housing issues, NAR believes that one of the best ways Congress can help strengthen FHA is to quickly consider and pass legislation that would make current loan limits permanent,” McMillan said. “It’s important to note that higher balance FHA loans perform better than lower balance ones. While some argue that higher balance loans put taxpayers at risk, such loans actually strengthen the program and reduce risk to the fund.”

Explaining that FHA has played an important role in the recent housing and economic crisis by filing the gap left by private lenders, McMillan said FHA insured almost 30 percent of single-family mortgages in 2009 and more than 50 percent of first-time buyer loans. “Historically, FHA’s market share has hovered between 10 and 15 percent of all loans. And when the private market is strong enough to return, we welcome a reduced FHA market share,” he said.

McMillan said NAR was also concerned that FHA wanted to decrease seller concessions to 3 percent. Reducing seller concessions could put homeownership out of reach for many buyers, he said, because it could require buyers to pay more at closing.

Source: Associated Press, Alan Zibel, and NAR (03/11/2010

VACATION HOME INTEREST ON THE RISE

2010-03-09T18:18:00Z

Daily Real Estate News | March 9, 2010

The market for second homes is improving, but prices are still as much as 40 percent off the peak, Barron’s magazine observes.

Potential buyers include not only families but also investors, says Jan Reuter, who heads residential real estate at U.S. Trust Bank of America Private Wealth Management.

To entice its readers, Barron’s identified 10 locales with beautiful views, challenging golf, good fishing, fine restaurants and lots of good shopping.

Barron’s editors did warn its readers not to count on a quick flip. “Serious appreciation will require a better economy and, quite possibly, another big rally in stocks,” the magazine said.

Here are their favorites:

Maui
Kiawah Island, S.C.
The Hamptons
Park City, Utah
Aspen, Colo.
Pebble Beach, Calif.
Palm Beach
Captiva/Sanibel Island, Fla.
Asheville, N.C.
Gasparilla Island, Fla.

Source: Barron’s, Steven M. Sears (03/08/2010)

ZIPREALTY FINDS INVENTORY UP SLIGHTLY

2010-03-09T18:15:00Z

Daily Real Estate News | March 9, 2010

The inventory of homes for sale was up 4.2 percent at the end of February, compared to the prior month in the 27 major metropolitan markets covered by ZipRealty Inc.

On average, over the last 27 years, the increase of houses on the market in February has been 3.4 percent, according to Ivy Zelman, CEO of Zelman & Associates research firm.

Zip’s data includes all the residential properties listed on the local multiple-listing services where it does business. Compared with January 2009 in the Zip markets, inventory was down about 19 percent.

Source: The Wall Street Journal, James R. Hagerty (03/08/2010

FEDERAL PROGRAM TO ENCOURAGE SHORT SALES

2010-03-08T21:52:00Z

Daily Real Estate News | March 8, 2010 |

addthis_pub = 'rmostaff'; addthis_logo = 'http://www.addthis.com/images/yourlogo.png'; addthis_logo_background = 'EFEFFF'; addthis_logo_color = '666699'; addthis_brand = ''; addthis_options = 'delicious, digg, favorites, facebook, fark, google, reddit, magnoliacom, newsvine, furl, yahoo, technorati, twitter, icerocket'; document.write(' Share');Beginning April 5, the Obama administration will encourage delinquent borrowers to avoid foreclosure and instead give up their homes in short sales by streamlining the process.

The program will offer a cash payment to the home owner, as well as to the servicer and second-lien holder; and protect borrowers from future lender lawsuits for the unpaid mortgage balance.

To curtail fraud, lenders will have to consult real estate practitioners to assess home value and minimum acceptable offer; they then must accept any offer that is equal to or higher than that.

Source: The New York Times, David Streitfeld (03/08/10)

HOME OWNERS FIGHT PROPERTY TAX INCREASES

2010-03-08T21:49:00Z

Daily Real Estate News | March 8, 2010 |

addthis_pub = 'rmostaff'; addthis_logo = 'http://www.addthis.com/images/yourlogo.png'; addthis_logo_background = 'EFEFFF'; addthis_logo_color = '666699'; addthis_brand = ''; addthis_options = 'delicious, digg, favorites, facebook, fark, google, reddit, magnoliacom, newsvine, furl, yahoo, technorati, twitter, icerocket'; document.write(' Share');Taxpayers in high property-tax states all over the country are fighting back, including packing up and moving to states where the property tax burdens are lower.

They find it particularly galling that tax bills continue to rise as home values decline, a common phenomenon. A recent survey by the National League of Cities reported that 25 percent of municipalities raised property taxes in 2009 to replace declining revenues.

In New Jersey and New York, voters threw incumbents they viewed as tax-and-spend officials out of office. In Michigan, there have been so many tax appeals that the tax court has 24,000 pending cases.

Some observers like Ted Lanzaro, a certified public accountant who handles taxes for clients in Connecticut, predict that people are running out of savings and some are simply going to stop paying taxes.

Source: The Wall Street Journal, M.P. McQueen (03/06/2010

FORCLOSED BORROWERS MAY GET LOANS AGAIN

2010-03-07T16:10:00Z

Daily Real Estate News | March 5, 2010

Will people who currently face foreclosure or short sales or who walk away from their underwater properties ever be able to get financing to buy another home down the road?

Banks haven’t been very forthcoming on this issue. However, knowledgeable observers of the situation say that while it may take some time, the situation will right itself for most people.

Because bankrupt borrowers have eliminated their debts, they should "constitute attractive fodder for mortgage lenders," says University of Michigan law professor John Pottow, whose specialty is bankruptcy.

As home prices and the mortgage market stabilize, lenders will be motivated to lend to people who previously had financial troubles if they look like they can pay the next time around, says Alan Riegler, a consultant with CCG Catalyst, which advises banks.

"The lender who figures out how to do more of this case-by-case stuff cost-effectively is going to end up ahead of the pack," Riegler says.

Source: Inman News, Matt Carter (03/05/2010)

30-YEAR RATES DIP BACK BELOW 5 PERCENT

2010-03-07T16:06:00Z

Daily Real Estate News | March 5, 2010

Freddie Mac documented a decline in mortgage rates during the week ended March 4, with 30-year fixed home loans slipping to 4.97 percent from 5.05 percent and 15-year interest averaging 4.33 percent.

Also, the Mortgage Bankers Association reported that its index of home loan applications jumped 15 percent during the week ended Feb. 26. Refinancing activity was up 17 percent, and purchase demand rose 9 percent.

Source: Kansas City Star (03/05/10

BUYERS WHO WAIT MAY LOSE A LOT

2010-03-02T22:16:00Z

Daily Real Estate News | March 2, 2010

Potential home buyers who delay have a lot to lose.

First-time home buyer and move-up tax credits worth $8,000 and $6,500, respectively, expire April 30. Buyers who qualify get a dollar-for-dollar reduction in taxes or a cash payment if they don’t pay enough taxes to cover the credit.

Other factors that should spur buyers:

Low mortgage rates. If the Federal Reserve stops buying mortgage-backed securities at the end of March, 30-year rates will almost certainly rise to more than 6 percent.

Rising prices. About 30 percent of markets are already experiencing price increases. Prices are falling in 12 percent of markets, says Fiserv (but that only helps if you want to live there).

Source: Money Magazine, Beth Braverman (03/02/2010)

BUYERS SHOULD CONSIDER PREPAYING MORTGAGE

2010-03-02T14:02:00Z

Daily Real Estate News | March 1, 2010

Should home buyers with sufficient cash pay down their mortgages or put the extra money in investments or savings?

Financial experts say the choice depends on the home buyer's employment prospects, current savings, and investable assets.

If life looks a little uncertain, they advise putting the money in a safe place, like a savings account. But for people with more stable financial situations, paying down the mortgage can be a great investment, often providing a better return than a savings account.

Source: Washington Post, Ilyce R. Glink and Samuel J. Tamkin (02/27/2010)

FED: INTEREST RATES TO REMAIN LOW

2010-03-01T16:30:00Z

Daily Real Estate News | February 25, 2010

Investors breathed a sigh of relief Wednesday when Federal Reserve Chair Ben Bernanke told Congress that interest rates are likely to remain low for an extended period. The economy, he said, "still requires support for recovery."

Investors see these low rates as a boon to a recovery of employment and business.

Bernanke’s announcement also took the edge off the news Wednesday that housing sales hit a new low in January.

"Even though nothing he said was particularly new, it was just enough to calm the ruffled feathers that were out there," said Jim McDonald, chief investment strategist at Northern Trust in Chicago.

Source: Associated Press, Tim Paradis (02/24/2010)

30-YEAR MORTGAGE RATE TOPS 5%

2010-03-01T16:23:00Z

Daily Real Estate News | February 26, 2010

Average rates for conventional 30-year mortgages went up to 5.05 percent this week from 4.93 percent a week earlier, according to Freddie Mac. Interest on 30-year fixed loans had been below 5 percent for the past three weeks, close to the all-time low of 4.71 percent set in December.

The 15-year fixed rate also rose this week, with jumping to 4.40 percent from 4.33 percent.

Source: Columbus (Ohio) Dispatch (02/26/10

FRAUD DID NOT CAUSE HOUSING MELTDOWN

2010-02-25T20:18:00Z

Daily Real Estate News | February 24, 2010

The financial crisis was the result of home buyers’ rational reactions to misaligned incentives – not fraud, argues Todd Zywicki, a George Mason University law professor and a Mercatus Center senior scholar.

Zywicki, who has studied the financial meltdown, argues that taking out a risky bank loan looks like a foolish choice today, but at the height of the housing boom was actually a smart decision for many people.

He says the crisis began when the Federal Reserve pushed interest rates to extreme lows from 2001 to 2004, making adjustable rate loans very attractive. It wasn’t until the Fed pushed rates back up that people walked away from their loans.

In the next phase of the crisis, Zywicki says, the availability of foreclosed properties pushed down home prices, which led to more home owners walking away from their properties. Now in the current phase of the decline, unemployment has led to even more foreclosures.

Zywicki writes: “The problem isn't consumer gullibility or ignorance. Borrowers have shown they understand, and act on, the incentives they face all too well.”

Source: The Wall Street Journal, Todd Zywicki (02/19/2010)

NEW-HOME SALES HIT RECORD LOW

2010-02-25T20:15:00Z

Daily Real Estate News | February 24, 2010

Sales of new homes declined 11 percent in January from December to the lowest level since the U.S. began keeping records in 1963, according to a report from the U.S. Commerce Department released Wednesday.

Sales dropped to an annual pace of 309,000 with the median price falling to $203,500 in January, the lowest since December 2003. At the current sales rate, there is a 9.1 months' inventory of new homes.

New home purchases are 6 percent of the housing market.

“New-home sales may be at rock-bottom levels, but it looks like the housing correction is not over yet,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd., said before the report. “Everyone who was going to buy for the tax credit has already purchased a new home.”

Meanwhile Toll Brothers Inc., the largest U.S. luxury-home builder, narrowed its losses as new orders doubled. “The housing market took several years to recover, following the downturn of the late 1980s and early 1990s,” Chief Executive Officer Robert Toll said in the statement. “We expect this recovery to follow a similar pattern.”

Source: Bloomberg, Bob Willis (02/24/2010)

TREASURY PROPOSES PLAN TO HELP BORROWERS

2010-02-24T19:48:00Z

Daily Real Estate News | February 23, 2010

The U.S. Treasury Department is considering a plan to improve the chance that distressed home owners will get help from federal programs.

Among other things, Treasury proposes to give borrowers 30 days to respond when they are denied a loan modification under the Home Affordable Modification Program (HAMP). During that time, the lender couldn’t auction off the property or even put it up for sale.

The proposal would demand that lenders consider all requests and even contact all borrowers who are 60 days delinquent to determine if they qualify for HAMP. Their contact efforts would have to include multiple telephone and written notices. Lenders would also be required to certify in writing that the borrower isn’t eligible.

Lenders say these guidelines would further slow the foreclosure process past the year that it takes now.

A Treasury spokesperson says the guidelines are only in the proposal stage and haven’t been approved.

Source: The Wall Street Journal, James R. Hagerty, and Associated Press, Alan Zibel (02/22/2010)

SHORT SALES RISE IN POPULARITY, SURVEY FINDS

2010-02-24T19:46:00Z

Daily Real Estate News | February 23, 2010

Short sales accounted for 15.9 percent of home purchases in January, according to a survey by Campbell Surveys for Inside Mortgage Finance.

Before January, the peak in short sales had been 15.1 percent in October. They declined substantially in November, probably because of the number of first-time home buyers hoping to use the tax-credit that required them to close by December 1.

While short sales take a long time to close, they typically sell for only 91 percent of listing price, making them a popular option for bargain-hunting buyers who aren’t in a hurry, the survey said.

Source: Inman News (02/23/2010)