Archive for the 'Real Estate News' Category
Lawsuit Boom
October 18th, 2008
Categories:Real Estate News
Call them blood suckers, vampires and everything else under the sun, lawyers have a way of being there at the right time to make things just a little worse. This is one of those few times I’m happy there are so many of them out there.
The New York Times reports the number of lawsuits are bound to boom as investors and others who were hurt in the financial crisis seek to recover their losses.
It’s understandable that investors who made decisions based off intentionally bad information would seek repercussions, let’s just hope they don’t go after the same institutions the government just bailed out.
Unfortunately lawsuits often take forever to come to an end, and often we’ve lost interest before we find out the results. I will admit however, it is a little easier to know the executives who ran their companies into the ground will see their day in court. Which brings me back to the word of the month… Karma
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Mortgage Crisis Maps
October 18th, 2008
Categories:Real Estate News
Are you wondering just how each state is doing in comparison to the rest of the country?
Here is a website that provides information on how each state is doing in terms of foreclosures, number of delinquent payments, adjustable rate mortgages (ARMs), in a map format, which can be zoomed in to the city level.
Here is a list of all the features you can select on this map:
- Loans per 1,000 housing units
- In foreclosure per 1,000 housing units
- REOs per 1,000 housing units
- Share ARMs
- Share current
- Share 90+ days delinquent
- Share in foreclosure
- Median combined LTV
- Share Low FICO and High LTV
- Share low or no documentation
- Share ARMs resetting in 12 months
- Share late payment last 12 months
Ready to Jump in and Check it Out?
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Bush Speaks… Money Moves
October 17th, 2008
Categories:Real Estate News
I was at the gym this morning and I made the occasional glance up to tv. Admittedly seeing Bush’s face at 5 am wasn’t the best way to start the day. He’s speech allthough long and often interrupted by the news shows went on to discuss the current state of the economy and all the wonderful things he had put in place for the economy to help move us along. I was hoping someone would put up a display of the stock market prices going up or down as he continued on and on and on.
All in all it sounds like Bush has put together dozens of new regulations and securities for banks to help the cash flow start moving again. Then CNN posted an article titled “Credit Squeeze Loosens“, and from what they report, it appears banks are feeling better about the economy, the dollar is acting stable and we are starting to move in the right direction.
Perhaps its too good to be true, or too soon to tell, but i’ll take the good news today. And i’ll be looking forward to the next presidential debate as the two candidates squirm from one policy plan to the next as this economy continue to evolve.
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Highest Mortgage Rate Jump Since '87
October 16th, 2008
Categories:Real Estate News
CNN Money states “Rate on 30-year fixed mortgage jump could climb higher still. One cause: Government’s rescue efforts.”
Freddie Mac reported the average rates for a 30-year-fixed-rate mortgage jumped from 5.94% last week to 6.46%, and it was the largest weekly increase since April 1987, when the jump was 0.84 points.
Ok, so now that we have the frightening news put aside, lets look at some numbers.
Lets assume you were to go out and get a 200,000 mortgage.
- Last week, your monthly mortgage payment would have been $1,225. This week, you’d be paying $1,295 at the 6.74% interest.
- If you were looking for a mortgage back in the 1980′s you’d be looking at 18% interest rate and a monthly payment of $3,014.
I think I’ll take today’s rate thank you. Ok, I’ll admit looking back into the 80′s is a bit of stretch, since after all that was the last time we had a real estate and economy crisis like this one.
Instead of randomly picking dates, I’ve provided a graph below that details our historical interest rate.
The green line is the historical rate with some highs and lows, our lowest being back in Jun of ’03 at 5.23%. The orange line represents a twelve month average trendline. To use this line, take month for example, Jan ’07. The orange line value is approximately 6.25%, this means that from Jan ’06 to Jan’07 the average interest rate is 6.25%.
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Housing Bailout?
September 18th, 2008
Categories:Real Estate News
Now that the government has “saved” Wall Street – at least for the moment – hasn’t the time finally come to save Main Street too? – The New York Times
The Treasury Department has spent $125 Billion dollars to bailout Wall Street, and is planning on spending another $125 Billion if need be to keep Wall Street on its feet. What about the housing marketing?
As housing prices continue to fall, more and more homeowners find themselves in “impaired mortgages”, meaning they owe more on their home than it is worth. With the continued outlook being bleak, many of these homeowners have to ask themselves, “is there any incentive to stay in this home?”. Perhaps its time to give them an incentive and keep the number of foreclosures from continuing to climb.
Of course, there are many out there with ethical concerns and complaints about bailing out homeowners, just like those who complained about bailing out Wall Street. Keep in mind, millions of people made the mistake of buying a home at the peak of a housing boom, a poor choice certainly, but mistakes do happen. As for the millions out there who took advantage of the “liar loans”… I rest soundly asleep knowing there are lawyers lined up, just waiting for the court house to clear up the countless lawsuits that have been piling up on Wall Street. And with that I have one word… Karma…
I can’t help but wonder, will the next generation be a conservative with their money and spending habits as those who saw the effects of the great depression first hand?
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Appraisers Call for More Federal Regulatory Power
September 9th, 2008
Categories:Real Estate News
An article published by the Associated Press and redistributed by MSNBC says appraisers want the government to have more power in regulating the state’s attempt to discipline appraisers. The push is being made largely by the big four appraisal associations, who say states know about appraisers who over valued homes in 2005 and have not properly disciplined them. Currently, the government’s only ability to discipline state’s for not properly supervising appraisers, is so severe it would halt all lending in the state. As a result, the associations want the government to have more options on how to discipline states who do not regulate their appraisers. Here is the full article
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Housing and Economic Recovery Act
September 7th, 2008
Categories:Real Estate News
There has been a lot of talk about the Economic Stimulus Act of 2008 that was recently passed. With over 700 pages of documentation and continued revisions, it can be difficult to see through the technical aspect and get to the meat and potatoes of the Act. Beth Wakeley has provided some excellent information to help home buyers and agents understand what is happening and what to expect down the road. Here is a current overview of the Act.
Subject: Conforming Loan Limit
- Changes:Permanently increases the limit and establishes a local area-based system.
- Description and Effective Date:The new limit will be based on 115 percent of the area median home price, but in no case will the limit be more than 150 percent of $417,000, or $625,500, or less than $417,000.
Subject:FHA Loan Limit
- Changes:Increases the percentage for determining local area loan limits; permanently increases the national cap and floor.
- Description and Effective Date:The new limit will be based on 115 percent of the area median home price, but in no case will the limit be more than 150 percent of $417,000, or $625,500, or less than 65 percent of $417,000, or $271,050. Will be effective upon the expiration of the Economic Stimulus Act of 2008, which means the new limits apply to loans endorsed for insurance on or after January 1, 2009.
Subject:Borrower Cash Requirement
- Changes:Increases the borrower’s required contribution
- Description and Effective Date:Requires that the borrower pay 3.5 percent or more of the appraised value of the property.
The borrower’s contribution may be loaned by a family member, however, the principal obligation of the mortgage and the amount loaned may not exceed the appraised value. The family loan must be secured by a subordinate lien. FHA says they will issue regulatory guidance by October 1 but have not yet determined the effective date. FHA says this provision will not be effective before November 1, 2008.
Subject:Seller-Funded Down Payment Assistance
- Changes:Prohibits seller funding of down payment
- Description and Effective Date:No party of interest can contribute any part of a borrower’s down payment either directly or through a third party.
Applies to mortgages for which the mortgagee has issued credit approval for the borrower on or after October 1, 2008.
Subject:Maximum Up-front Mortgage Insurance Premium (MIP)
- Changes:Increases Maximum Up-front MIP
- Description and Effective Date:Changes the statutory maximum up-front FHA mortgage insurance premium from 2.25 to 3 percent (2.75 percent for first-time home buyers who receive HUD-approved counseling). This change does not, in and of itself, increase the MIP that FHA charges. It gives FHA the authority to set premiums within a wider range.
FHA says, due to the moratorium described in the next section, a new, across-the-board, premium will go into effect on October 1, 2008, but has not yet announced the level of the MIP. FHASecure mortgages will have a separate, higher MIP.
Subject:Moratorium on risk-based premiums
- Changes:Temporarily keeps FHA from continuing risk-based MIPs
- Description and Effective Date:Prohibits FHA from implementing a structure of risk-based mortgage insurance premiums beginning on October 1, 2008. FHA implemented a structure of FHA risk-based mortgage insurance premiums on July 14, so it will temporarily have to suspend its use. FHA has not yet set a date for the suspension and has not established an alternative premium structure.
FHA has stated that a loan will be eligible for a risk-based premium under Mortgagee Letter 2008-16 as long as the mortgagee receives a case number before October 1.
Subject:Condominium Loans
- Changes:Moves virtually all singe family programs under the MMIF
- Description and Effective Date:These changes authorize FHA to insure loans secured by condominiums under the Mutual Mortgage Insurance Fund (MMIF), which should enable FHA to streamline its condo project approval requirements. FHA says they will issue regulatory guidance in 60 days, with an effective date of January 1, 2009.
Subject:Treatment of Up-Front Premiums
- Changes:Limits total of loan and MIP
- Description and Effective Date:Prohibits the maximum amount of the mortgage to be increased by the up-front mortgage insurance premium when the principal obligation equals 100 percent of the property value.
Subject:Pilot Program for Automated Process for Borrowers Without Sufficient Credit History
- Changes:Authorizes Pilot Program
- Description and Effective Date:Requires HUD to develop an automated program to make FHA-insured mortgages available to borrowers who have insufficient credit histories to obtain credit using current underwriting criteria. This pilot is authorized for five years from date of enactment.
Subject:Home Equity Conversion Mortgages
- Changes:Program Authority Expanded
- Description and Effective Date:Authorizes FHA to insure HECMs for home purchase transactions.
Ties the FHA’s HECM limit nationally to the base conforming loan limit authorized by the Freddie Mac Charter Act, which is currently $417,000. (Controversy has arisen over the new HECM limit – some are arguing that it should be $625,500 nationally and others are saying it is 115 percent of area median up to $625,500. FHA will make the determination shortly.) FHA says it will issue regulatory guidance in 60 days that will be effective November 1, 2008.
Even though this is a boiled down version of the act it can be confusing. Feel free to contact us with your questions on how this might affect your home purchase.
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