Administration plans new efforts on foreclosures
WASHINGTON – Nov. 30, 2009 – With the foreclosure crisis showing no signs of relenting, the Obama administration plans to expand a program aimed at helping people remain in their homes.
The goal of the announcement, expected Monday, is to increase the rate at which troubled home loans are converted into new loans with lower monthly payments, Treasury spokeswoman Meg Reilly said over the weekend.
Industry officials said the new effort would include increased pressure on mortgage companies to accelerate loan modifications by highlighting firms that are lagging in that area.
The Treasury is also expected to announce that it will wait until the loan modifications are permanent before paying cash incentives to mortgage companies that lower loan payments.
Under a $75 billion Treasury program, companies that agree to lower payments for troubled borrowers collect $1,000 initially from the government for each loan, followed by $1,000 annually for up to three years.
The government support, which is provided from the $700 billion financial bailout program, is aimed at providing cash incentives for mortgage providers to accept smaller mortgage payments rather than foreclosing on homes.
The program has come under heavy criticism for failing to do enough to attack a tidal wave of foreclosures. Analysts said the foreclosure crisis is likely to persist well into next year as high unemployment pushes more people out of their homes.
Rising foreclosures depress home prices and threaten the sustainability of the fledgling economic recovery.
A report last week from the Mortgage Bankers Association found that 14 percent of homeowners with mortgages were either behind on payments or in foreclosure at the end of September, a record level for the ninth straight quarter.
The Congressional Oversight Panel, a committee that monitors spending under Treasury’s bailout program, concluded in a report last month that foreclosures are now threatening families who took out conventional, fixed-rate mortgages and put down payments of 10 to 20 percent on homes that would have been within their means in a normal market.
Treasury’s program, known as the Home Affordable Modification Program, “is targeted at the housing crisis as it existed six months ago, rather than as it exists right now,” the report said.
Treasury’s Reilly said the expanded program would, among other steps, make more aid available to struggling borrowers and expand the number of organizations providing help.
Copyright © 2009 The Associated Press
Monday, November 30, 2009
Wednesday, November 25, 2009
Q&A clears the air about homebuyer tax credits
McLEAN, Va. – Nov. 25, 2009 – If you’re in the market for a home, the world is your oyster. Interest rates are at record lows. Housing prices in many parts of the country are still depressed. And you may be eligible for a generous tax break, even if the home you buy isn’t your first.
On Nov. 6, President Obama signed legislation that provides a $6,500 tax credit for some current homeowners who buy another home. The law also extends the $8,000 tax credit for first-time homebuyers, scheduled to expire Nov. 30, until next spring.
A lot of people are interested in taking advantage of this tax break, but the expanded credit also has whipped up a lot of confusion. Here are some answers to frequently asked questions:
Q: How do I qualify for the $6,500 credit?
A: This credit is available for homebuyers who sign a binding contract on a new or existing home by April 30, 2010, and settle by July 1 (deadlines that also apply to the first-time homebuyer credit). You must have lived in your existing home for five consecutive years out of the last eight. The home you purchase must be your primary residence. However, the law doesn’t require you to sell your old home, says Bob Meighan, vice president at TurboTax, the tax software provider. You can use it as a second home or a rental and still claim the credit, he says.
Q: I sold a home I had lived in for more than five years and bought a new one in August. Do I qualify for a tax credit?
A: No. For existing homeowners, the $6,500 credit is limited to homes purchased after Nov. 6.
Q: Does the home I buy have to be more expensive than the one I own now?
A: No. While the real estate industry is hopeful that homeowners will use this credit to buy a nicer place, there’s no prohibition against using it to downsize, Meighan says. That makes this credit particularly useful for seniors who are interested in moving into a smaller home.
If you are planning to move up, keep in mind that you can’t claim the credit if the purchase price of the home exceeds $800,000. Unlike some other tax credits, this one doesn’t slowly phase out once you exceed the threshold, Meighan says. If you buy a home for more than $800,000 – and that refers to the purchase price, not the assessed value or the amount of your mortgage – you are ineligible for the credit, period.
The $800,000 cap also applies to first-time homebuyers, but only those who purchase a home after Nov. 6. First-time homebuyers who bought a home for more than $800,000 between Jan. 1 and Nov. 6 can still claim the credit, assuming they meet the other criteria, Meighan says.
Q: I’m an existing homeowner, and would like to build a new home. Can I claim the credit?
A: Yes, but make sure your builder is good at meeting deadlines. You can claim the credit as long as you have a binding contract in place by April 30 and close by July 1. In the case of a new home, the closing date is the day you move in, Meighan says. If your home isn’t habitable by June 30, you won’t be able to claim the credit, he says.
Q: I bought a home in 2008 and claimed the old $7,500 first-time homebuyers credit, which must be repaid over 15 years. Did the new law change that rule?
A: No. That credit, which was available for homes purchased between April 9, 2008, and Dec. 31, 2008, must still be repaid.
The $8,000 first-time homebuyer credit, available for homes purchased after Dec. 31, 2008, doesn’t have to be repaid as long as you remain in the home for at least three years. Existing homeowners who qualify for the $6,500 credit don’t have to repay that money, either, as long as they meet the three-year requirement.
Q: We have a rental home and would like to sell it to our son, who has never owned a home. Would he qualify for the first-time homebuyer credit?
A: No. The legislation specifically prohibits taxpayers from claiming the credit if the sale is between “related parties,” Meighan says. A home sale to a parent, grandparent, child or grandchild would fall into that category.
Q: I sold my home this year and have been renting since. If I buy a new home, do I qualify for the expanded credit?
A: Yes, as long as you meet all of the other requirements, says Mel Schwarz, partner with Grant Thornton in Washington, D.C. The eight-year period used to determine eligibility ends on the day you buy your new home, he says.
Copyright © 2009 USA TODAY
McLEAN, Va. – Nov. 25, 2009 – If you’re in the market for a home, the world is your oyster. Interest rates are at record lows. Housing prices in many parts of the country are still depressed. And you may be eligible for a generous tax break, even if the home you buy isn’t your first.
On Nov. 6, President Obama signed legislation that provides a $6,500 tax credit for some current homeowners who buy another home. The law also extends the $8,000 tax credit for first-time homebuyers, scheduled to expire Nov. 30, until next spring.
A lot of people are interested in taking advantage of this tax break, but the expanded credit also has whipped up a lot of confusion. Here are some answers to frequently asked questions:
Q: How do I qualify for the $6,500 credit?
A: This credit is available for homebuyers who sign a binding contract on a new or existing home by April 30, 2010, and settle by July 1 (deadlines that also apply to the first-time homebuyer credit). You must have lived in your existing home for five consecutive years out of the last eight. The home you purchase must be your primary residence. However, the law doesn’t require you to sell your old home, says Bob Meighan, vice president at TurboTax, the tax software provider. You can use it as a second home or a rental and still claim the credit, he says.
Q: I sold a home I had lived in for more than five years and bought a new one in August. Do I qualify for a tax credit?
A: No. For existing homeowners, the $6,500 credit is limited to homes purchased after Nov. 6.
Q: Does the home I buy have to be more expensive than the one I own now?
A: No. While the real estate industry is hopeful that homeowners will use this credit to buy a nicer place, there’s no prohibition against using it to downsize, Meighan says. That makes this credit particularly useful for seniors who are interested in moving into a smaller home.
If you are planning to move up, keep in mind that you can’t claim the credit if the purchase price of the home exceeds $800,000. Unlike some other tax credits, this one doesn’t slowly phase out once you exceed the threshold, Meighan says. If you buy a home for more than $800,000 – and that refers to the purchase price, not the assessed value or the amount of your mortgage – you are ineligible for the credit, period.
The $800,000 cap also applies to first-time homebuyers, but only those who purchase a home after Nov. 6. First-time homebuyers who bought a home for more than $800,000 between Jan. 1 and Nov. 6 can still claim the credit, assuming they meet the other criteria, Meighan says.
Q: I’m an existing homeowner, and would like to build a new home. Can I claim the credit?
A: Yes, but make sure your builder is good at meeting deadlines. You can claim the credit as long as you have a binding contract in place by April 30 and close by July 1. In the case of a new home, the closing date is the day you move in, Meighan says. If your home isn’t habitable by June 30, you won’t be able to claim the credit, he says.
Q: I bought a home in 2008 and claimed the old $7,500 first-time homebuyers credit, which must be repaid over 15 years. Did the new law change that rule?
A: No. That credit, which was available for homes purchased between April 9, 2008, and Dec. 31, 2008, must still be repaid.
The $8,000 first-time homebuyer credit, available for homes purchased after Dec. 31, 2008, doesn’t have to be repaid as long as you remain in the home for at least three years. Existing homeowners who qualify for the $6,500 credit don’t have to repay that money, either, as long as they meet the three-year requirement.
Q: We have a rental home and would like to sell it to our son, who has never owned a home. Would he qualify for the first-time homebuyer credit?
A: No. The legislation specifically prohibits taxpayers from claiming the credit if the sale is between “related parties,” Meighan says. A home sale to a parent, grandparent, child or grandchild would fall into that category.
Q: I sold my home this year and have been renting since. If I buy a new home, do I qualify for the expanded credit?
A: Yes, as long as you meet all of the other requirements, says Mel Schwarz, partner with Grant Thornton in Washington, D.C. The eight-year period used to determine eligibility ends on the day you buy your new home, he says.
Copyright © 2009 USA TODAY
Tuesday, November 24, 2009
Real estate market FAQs
NEW YORK – Nov. 24, 2009 – Do you have buyers and sellers with questions about where real estate is headed? Based on industry experts’ advice, here are informed answers to some of the most frequently asked questions about today’s housing market.
When will housing hit bottom?
There isn’t any single answer to this question. It depends on where you live. Home prices are rising again in the most convenient suburbs of such cities as New York and Washington, D.C. In other places that are in less demand, prices continue to fall.
How can I figure out the value of my home?
Talking to a real estate professional and/or hiring an appraiser is the best idea. But even after getting a professional opinion, it is hard to tell what a home will sell for until you put it on the market.
Is now a good time for a renter to buy a home?
It could be. Prices in many areas are down significantly from their peak a couple of years ago. Plus, Congress has extended the tax credit for first-time homebuyers and added a $6,500 credit for many previous owners of homes who sign a contract to buy by April 30, 2010.
Should I invest in foreclosed homes?
A foreclosure can be a risky buy, even for the most experienced real estate investors. Use caution.
Source: The Wall Street Journal
NEW YORK – Nov. 24, 2009 – Do you have buyers and sellers with questions about where real estate is headed? Based on industry experts’ advice, here are informed answers to some of the most frequently asked questions about today’s housing market.
When will housing hit bottom?
There isn’t any single answer to this question. It depends on where you live. Home prices are rising again in the most convenient suburbs of such cities as New York and Washington, D.C. In other places that are in less demand, prices continue to fall.
How can I figure out the value of my home?
Talking to a real estate professional and/or hiring an appraiser is the best idea. But even after getting a professional opinion, it is hard to tell what a home will sell for until you put it on the market.
Is now a good time for a renter to buy a home?
It could be. Prices in many areas are down significantly from their peak a couple of years ago. Plus, Congress has extended the tax credit for first-time homebuyers and added a $6,500 credit for many previous owners of homes who sign a contract to buy by April 30, 2010.
Should I invest in foreclosed homes?
A foreclosure can be a risky buy, even for the most experienced real estate investors. Use caution.
Source: The Wall Street Journal
Monday, November 23, 2009
Florida’s existing home, condo sales up in October 2009
Existing-home sales record another big gain, says NAR
ORLANDO, Fla. – Nov. 23, 2009 – Florida’s existing home sales rose in October, marking 14 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®. October’s statewide sales also increased over sales activity in September in both the existing home and existing condominium markets.
Existing home sales rose 45 percent last month with a total of 15,160 homes sold statewide compared to 10,444 homes sold in October 2008, according to Florida Realtors. Statewide existing home sales last month increased 5.1 percent over statewide sales activity in September.
Florida Realtors also reported an 82 percent increase in statewide sales of existing condos in October compared to the previous year’s sales figure; statewide existing condo sales last month rose 6.1 percent over the total units sold in September.
All of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales and higher condo sales in October. A majority of the state’s MSAs have reported increased sales for 16 consecutive months.
Florida’s median sales price for existing homes last month was $140,300; a year ago, it was $169,700 for a 17 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in September 2009 was $174,900, down 8.1 percent from a year earlier, according to NAR. In California, the statewide median resales price was $296,090 in September; in Massachusetts, it was $290,000; in Maryland, it was $261,718; and in New York, it was $213,900.
According to NAR’s latest industry outlook, the housing market is continuing its positive momentum. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth,” said NAR Chief Economist Lawrence Yun. “That, in turn, would help fully remove consumer fears, which would then revive the broader economy.”
In Florida’s year-to-year comparison for condos, 5,398 units sold statewide last month compared to 2,958 units in October 2008 for an 82 percent increase. The statewide existing condo median sales price last month was $105,200; in October 2008 it was $147,900 for a 29 percent decrease. The national median existing condo price was $175,100 in September 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 4.95 percent last month, a significant drop from the average rate of 6.20 percent in October 2008, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Gainesville MSA reported a total of 172 homes sold in October compared to 130 homes a year earlier for a 32 percent increase. The market’s existing home median sales price last month was $156,700; a year ago it was $173,300 for a 10 percent decrease. A total of 22 condos sold in the MSA in October, up 22 percent over the 18 units sold in October 2008. The existing condo median price last month was $116,700; a year earlier, it was $133,300 for a 12 percent decrease.
© 2009 Florida Realtors
Existing-home sales record another big gain, says NAR
ORLANDO, Fla. – Nov. 23, 2009 – Florida’s existing home sales rose in October, marking 14 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®. October’s statewide sales also increased over sales activity in September in both the existing home and existing condominium markets.
Existing home sales rose 45 percent last month with a total of 15,160 homes sold statewide compared to 10,444 homes sold in October 2008, according to Florida Realtors. Statewide existing home sales last month increased 5.1 percent over statewide sales activity in September.
Florida Realtors also reported an 82 percent increase in statewide sales of existing condos in October compared to the previous year’s sales figure; statewide existing condo sales last month rose 6.1 percent over the total units sold in September.
All of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales and higher condo sales in October. A majority of the state’s MSAs have reported increased sales for 16 consecutive months.
Florida’s median sales price for existing homes last month was $140,300; a year ago, it was $169,700 for a 17 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in September 2009 was $174,900, down 8.1 percent from a year earlier, according to NAR. In California, the statewide median resales price was $296,090 in September; in Massachusetts, it was $290,000; in Maryland, it was $261,718; and in New York, it was $213,900.
According to NAR’s latest industry outlook, the housing market is continuing its positive momentum. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth,” said NAR Chief Economist Lawrence Yun. “That, in turn, would help fully remove consumer fears, which would then revive the broader economy.”
In Florida’s year-to-year comparison for condos, 5,398 units sold statewide last month compared to 2,958 units in October 2008 for an 82 percent increase. The statewide existing condo median sales price last month was $105,200; in October 2008 it was $147,900 for a 29 percent decrease. The national median existing condo price was $175,100 in September 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 4.95 percent last month, a significant drop from the average rate of 6.20 percent in October 2008, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Gainesville MSA reported a total of 172 homes sold in October compared to 130 homes a year earlier for a 32 percent increase. The market’s existing home median sales price last month was $156,700; a year ago it was $173,300 for a 10 percent decrease. A total of 22 condos sold in the MSA in October, up 22 percent over the 18 units sold in October 2008. The existing condo median price last month was $116,700; a year earlier, it was $133,300 for a 12 percent decrease.
© 2009 Florida Realtors
Friday, November 20, 2009
Rates on 30-year mortgages remain below 5 percent
Mortgage Rate Trend Index
No expert polled by Bankrate.com this week expects further drops in the average mortgage rate as it flirts will all-time lows, but a hefty 55 percent also foresee no change over the next 30 to 45 days. The remaining 45 percent expect an increase.
McLEAN, Va. – Nov. 20, 2009 – Rates on 30-year mortgages stayed below 5 percent this week but remained above the record set earlier this year, Freddie Mac said Thursday.
The average rate for a 30-year fixed mortgage fell to 4.83 percent, down from 4.91 percent last week, the mortgage company said. Last year at this time, 30-year mortgages averaged 6.04 percent.
Rates hit a record low of 4.78 percent in the spring, and remain attractive for people looking to buy a home or refinance their existing mortgage. Still, credit standards remain tough, so the best rates usually are available only to borrowers with solid credit and a 20 percent downpayment.
The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit. Rates on 30-year mortgages traditionally track yields on long-term government debt.
Low fixed rates in the third quarter led to about $1.1 trillion in refinancing activity, saving borrowers about $10 billion in monthly payments over the first 12 months of their new loan, said Frank Nothaft, Freddie Mac’s chief economist.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, frequently in line with long-term Treasury bonds.
The average rate on a 15-year fixed-rate mortgage fell to 4.32 percent from 4.36 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.25 percent, down from last week’s 4.29 percent. Rates on one-year, adjustable-rate mortgages declined to 4.35 percent from 4.46 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans. The fee averaged 0.6 point for 15-year, five-year and one-year loans.
Copyright © 2009 The Associated Press
Mortgage Rate Trend Index
No expert polled by Bankrate.com this week expects further drops in the average mortgage rate as it flirts will all-time lows, but a hefty 55 percent also foresee no change over the next 30 to 45 days. The remaining 45 percent expect an increase.
McLEAN, Va. – Nov. 20, 2009 – Rates on 30-year mortgages stayed below 5 percent this week but remained above the record set earlier this year, Freddie Mac said Thursday.
The average rate for a 30-year fixed mortgage fell to 4.83 percent, down from 4.91 percent last week, the mortgage company said. Last year at this time, 30-year mortgages averaged 6.04 percent.
Rates hit a record low of 4.78 percent in the spring, and remain attractive for people looking to buy a home or refinance their existing mortgage. Still, credit standards remain tough, so the best rates usually are available only to borrowers with solid credit and a 20 percent downpayment.
The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit. Rates on 30-year mortgages traditionally track yields on long-term government debt.
Low fixed rates in the third quarter led to about $1.1 trillion in refinancing activity, saving borrowers about $10 billion in monthly payments over the first 12 months of their new loan, said Frank Nothaft, Freddie Mac’s chief economist.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, frequently in line with long-term Treasury bonds.
The average rate on a 15-year fixed-rate mortgage fell to 4.32 percent from 4.36 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.25 percent, down from last week’s 4.29 percent. Rates on one-year, adjustable-rate mortgages declined to 4.35 percent from 4.46 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans. The fee averaged 0.6 point for 15-year, five-year and one-year loans.
Copyright © 2009 The Associated Press
Thursday, November 19, 2009
Realtors help buyers attain short sales success
SAN DIEGO – Nov. 19, 2009 – Not all buyers are suited for a short sale. This was one of the messages delivered at “Short Sales from the Buyer’s Perspective” during the 2009 Realtors® Conference & Expo.
According to the latest Realtors Confidence Index, one out of 10 recent buyers purchased a home through a short sale. The survey also showed that Realtors are concerned about the hurdles buyers face in short sales.
“As short sales become more commonplace, both buyers and sellers need the help of seasoned, experienced professionals to help them navigate the complexities of a short sale transaction,” says National Association of Realtors President Charles McMillan. “As the first, best source for real estate information, Realtors provide valuable insights and experience that can help buyers realize their homeownership goals, whether through a short sale or other means.”
During the session, Realtor Lynn Madison, who co-authored NAR’s new Short Sales and Foreclosure Resource (SFR) Certification Program, detailed the primary reasons that short sales fail. Those include an incomplete short sale package, an offer that is too low and inaccurate appraisals. According to Madison, good short-sale buyer candidates are very patient – it can take some lenders four months or longer to approve a short sale – have their financing in order, and don’t have any contingencies in their purchase offer.
“Short sale buyers need to have the time to be able to wait for the lender’s approval; some lenders get several hundred contacts every day,” said Madison. “Buyers must also be willing to make an offer that has a reasonable chance of closing and take guidance from their agent. If the offered price is too low, there is a good chance the lender won’t approve the contract.”
To help Realtors address the evolving short sales market, NAR launched the SFR Certification Program (www.realtorsfr.org) earlier this year. Offered by the Real Estate Buyer’s Agent Council of NAR, the program includes training on how to manage short-sale, foreclosure and real-estate owned transactions; and provides resources to help Realtors stay current on national and state-specific information.
© 2009 Florida Realtors®
SAN DIEGO – Nov. 19, 2009 – Not all buyers are suited for a short sale. This was one of the messages delivered at “Short Sales from the Buyer’s Perspective” during the 2009 Realtors® Conference & Expo.
According to the latest Realtors Confidence Index, one out of 10 recent buyers purchased a home through a short sale. The survey also showed that Realtors are concerned about the hurdles buyers face in short sales.
“As short sales become more commonplace, both buyers and sellers need the help of seasoned, experienced professionals to help them navigate the complexities of a short sale transaction,” says National Association of Realtors President Charles McMillan. “As the first, best source for real estate information, Realtors provide valuable insights and experience that can help buyers realize their homeownership goals, whether through a short sale or other means.”
During the session, Realtor Lynn Madison, who co-authored NAR’s new Short Sales and Foreclosure Resource (SFR) Certification Program, detailed the primary reasons that short sales fail. Those include an incomplete short sale package, an offer that is too low and inaccurate appraisals. According to Madison, good short-sale buyer candidates are very patient – it can take some lenders four months or longer to approve a short sale – have their financing in order, and don’t have any contingencies in their purchase offer.
“Short sale buyers need to have the time to be able to wait for the lender’s approval; some lenders get several hundred contacts every day,” said Madison. “Buyers must also be willing to make an offer that has a reasonable chance of closing and take guidance from their agent. If the offered price is too low, there is a good chance the lender won’t approve the contract.”
To help Realtors address the evolving short sales market, NAR launched the SFR Certification Program (www.realtorsfr.org) earlier this year. Offered by the Real Estate Buyer’s Agent Council of NAR, the program includes training on how to manage short-sale, foreclosure and real-estate owned transactions; and provides resources to help Realtors stay current on national and state-specific information.
© 2009 Florida Realtors®
Wednesday, November 18, 2009
Court again upholds Fla. homeowner tax breaks
TALLAHASSEE, Fla. (AP) – Nov. 18, 2009 – An appeal court Tuesday rejected another challenge to state constitutional amendments that give property tax breaks to Florida’s primary homeowners, but not to owners of second homes.
A three-judge panel of the 1st District Court of Appeal disagreed with arguments that the amendments violate U.S. constitutional rights of travel and interstate commerce by favoring longtime Florida homeowners over those who have recently moved to the state.
The judges cited a July decision that also upheld the Save Our Homes Amendment, which limits annual assessment increases to no more than 3 percent for homesteads, in a case filed by out-of-state residents who own second homes.
In the new case filed by recently arrived Florida residents, the judges also for the first time upheld a new state constitutional amendment passed last year that includes a “portability” provision. It lets homeowners take at least part of their Save Our Homes benefits with them when they move.
The panel, though, returned a third appeal attacking both tax breaks to a trial judge for reconsideration because he erroneously dismissed the case on grounds that he lacked jurisdiction. That case also was filed by out-of-state residents who own second homes in Florida.
The appellate court in July ruled the tax benefit is based on the way the property is used, not on the status of the owner as a resident or nonresident. That case, now on appeal to the Florida Supreme Court, did not include the portability provision.
Former Florida State University President Tablot “Sandy” D’Alemberte, now a law professor at the school, represented the challengers in the two new cases. He argued the portability provision made Save Our Homes even more onerous and unfair to recent arrivals and nonresident owners.
D’Alemberte was disappointed but not entirely surprised by the ruling in the case filed by a Tallahassee couple and two other recent arrivals who had bought homes in Charlotte and Palm Beach counties.
“My guarded optimism may have been too guarded,” D’Alemberte said.
He had regaled the judges with a colorful oral argument last month that feature a “magic potion” tale and invitation to a “house of mirrors.” The court responded with two brief and dry but unanimous opinions that did not specifically address his portability argument.
D’Alemberte said his clients have not yet decided on a further appeal, but he said it’s likely they’ll also look to the Florida or U.S. supreme courts for relief.
He had been confident, though, the appellate court would reverse Circuit Judge William L. Gary’s dismissal of the nonresidents’ case.
“That’s not exactly a victory,” D’Alemberte said.
It now goes back to Gary’s Tallahassee courtroom for a decision on the merits with the other two appellate rulings serving as precedents.
Gov. Charlie Crist led the campaign for Amendment 1, which includes the portability provision. A Crist spokesman did not immediately return a call seeking comment.
Copyright © 2009 The Associated Press
TALLAHASSEE, Fla. (AP) – Nov. 18, 2009 – An appeal court Tuesday rejected another challenge to state constitutional amendments that give property tax breaks to Florida’s primary homeowners, but not to owners of second homes.
A three-judge panel of the 1st District Court of Appeal disagreed with arguments that the amendments violate U.S. constitutional rights of travel and interstate commerce by favoring longtime Florida homeowners over those who have recently moved to the state.
The judges cited a July decision that also upheld the Save Our Homes Amendment, which limits annual assessment increases to no more than 3 percent for homesteads, in a case filed by out-of-state residents who own second homes.
In the new case filed by recently arrived Florida residents, the judges also for the first time upheld a new state constitutional amendment passed last year that includes a “portability” provision. It lets homeowners take at least part of their Save Our Homes benefits with them when they move.
The panel, though, returned a third appeal attacking both tax breaks to a trial judge for reconsideration because he erroneously dismissed the case on grounds that he lacked jurisdiction. That case also was filed by out-of-state residents who own second homes in Florida.
The appellate court in July ruled the tax benefit is based on the way the property is used, not on the status of the owner as a resident or nonresident. That case, now on appeal to the Florida Supreme Court, did not include the portability provision.
Former Florida State University President Tablot “Sandy” D’Alemberte, now a law professor at the school, represented the challengers in the two new cases. He argued the portability provision made Save Our Homes even more onerous and unfair to recent arrivals and nonresident owners.
D’Alemberte was disappointed but not entirely surprised by the ruling in the case filed by a Tallahassee couple and two other recent arrivals who had bought homes in Charlotte and Palm Beach counties.
“My guarded optimism may have been too guarded,” D’Alemberte said.
He had regaled the judges with a colorful oral argument last month that feature a “magic potion” tale and invitation to a “house of mirrors.” The court responded with two brief and dry but unanimous opinions that did not specifically address his portability argument.
D’Alemberte said his clients have not yet decided on a further appeal, but he said it’s likely they’ll also look to the Florida or U.S. supreme courts for relief.
He had been confident, though, the appellate court would reverse Circuit Judge William L. Gary’s dismissal of the nonresidents’ case.
“That’s not exactly a victory,” D’Alemberte said.
It now goes back to Gary’s Tallahassee courtroom for a decision on the merits with the other two appellate rulings serving as precedents.
Gov. Charlie Crist led the campaign for Amendment 1, which includes the portability provision. A Crist spokesman did not immediately return a call seeking comment.
Copyright © 2009 The Associated Press
Tuesday, November 17, 2009
Frank floats loan plan for unemployed homeowners
FALL RIVER, Mass. – Nov. 17, 2009 – Rep. Barney Frank said Monday he is pushing a proposal to use some of the interest the government collects from the financial industry bailout to give loans to unemployed homeowners struggling to pay the mortgage.
The lack of aid to jobless homeowners has been identified as a big weakness in the Obama administration’s plan to tackle the mortgage crisis. A report by a congressional oversight panel said last month that the $50 billion program “was not designed to address foreclosures caused by unemployment,” which are now the main cause of default.
Frank, chairman of the House Financial Services Committee, said in Fall River and New Bedford at appearances with Housing and Urban Development Secretary Shaun Donovan that he favors providing government help in the form of federal loans to homeowners who have lost their jobs until they get another job.
“These are people who are very responsible, very thoughtful. They got a home, it’s above water, they’ve got equity, but they’re unemployed, and you can’t afford mortgage payments on unemployment,” said Frank, D-Mass.
Frank said the program would be funded using interest banks pay on the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program.
Frank spokesman Steve Adamske said the program was actually developed by Congress in the 1970s but never funded. The proposal is now part of legislation introduced in September, called the Main Street TARP bill.
It would provide $2 billion in TARP money for low-interest loans to homeowners who have lost their jobs but who have good prospects for being able to resume mortgage payments in the future. The emergency loans would be provided for up to 12 months with the possibility of extending them for another year.
A Treasury Department spokeswoman declined to comment on Monday when asked about Frank’s proposal.
On Capitol Hill, many lawmakers have complained about the slow pace of loan modifications. Sen. Jack Reed, D-R.I., said in an interview last week that his staff has been considering ways to make mortgage companies do more loan modifications.
Reed said the Obama administration’s foreclosure assistance program hasn’t been working fast enough for his home state. Thirteen percent of Rhode Island homeowners were delinquent or in foreclosure as of June 30, the same as the number nationally, according to the Mortgage Bankers Association.
The foreclosure crisis is increasingly tied to joblessness, Reed said, as more borrowers with good credit lose their jobs and their ability to make monthly payments.
Lenders, meanwhile, have modest programs to aid the unemployed. Citigroup, for instance, has been reducing payments to an average of $500 for three months for some customers who have recently lost their jobs. Other banks give homeowners a break from payments for as long as six months.
Copyright © 2009 The Associated Press
FALL RIVER, Mass. – Nov. 17, 2009 – Rep. Barney Frank said Monday he is pushing a proposal to use some of the interest the government collects from the financial industry bailout to give loans to unemployed homeowners struggling to pay the mortgage.
The lack of aid to jobless homeowners has been identified as a big weakness in the Obama administration’s plan to tackle the mortgage crisis. A report by a congressional oversight panel said last month that the $50 billion program “was not designed to address foreclosures caused by unemployment,” which are now the main cause of default.
Frank, chairman of the House Financial Services Committee, said in Fall River and New Bedford at appearances with Housing and Urban Development Secretary Shaun Donovan that he favors providing government help in the form of federal loans to homeowners who have lost their jobs until they get another job.
“These are people who are very responsible, very thoughtful. They got a home, it’s above water, they’ve got equity, but they’re unemployed, and you can’t afford mortgage payments on unemployment,” said Frank, D-Mass.
Frank said the program would be funded using interest banks pay on the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program.
Frank spokesman Steve Adamske said the program was actually developed by Congress in the 1970s but never funded. The proposal is now part of legislation introduced in September, called the Main Street TARP bill.
It would provide $2 billion in TARP money for low-interest loans to homeowners who have lost their jobs but who have good prospects for being able to resume mortgage payments in the future. The emergency loans would be provided for up to 12 months with the possibility of extending them for another year.
A Treasury Department spokeswoman declined to comment on Monday when asked about Frank’s proposal.
On Capitol Hill, many lawmakers have complained about the slow pace of loan modifications. Sen. Jack Reed, D-R.I., said in an interview last week that his staff has been considering ways to make mortgage companies do more loan modifications.
Reed said the Obama administration’s foreclosure assistance program hasn’t been working fast enough for his home state. Thirteen percent of Rhode Island homeowners were delinquent or in foreclosure as of June 30, the same as the number nationally, according to the Mortgage Bankers Association.
The foreclosure crisis is increasingly tied to joblessness, Reed said, as more borrowers with good credit lose their jobs and their ability to make monthly payments.
Lenders, meanwhile, have modest programs to aid the unemployed. Citigroup, for instance, has been reducing payments to an average of $500 for three months for some customers who have recently lost their jobs. Other banks give homeowners a break from payments for as long as six months.
Copyright © 2009 The Associated Press
Tax-credit extension renews buyer interest in buying a home
TAMPA, Fla. – Nov. 17, 2009 – Real estate agent Ken Brownlee’s phone stopped ringing last month once clients figured they would be unable to close before an $8,000 federal tax credit expired.
Most of his buyers were first-timers looking for a sweet deal on a short sale or foreclosed home.
“They all want to grab a deal,” said Brownlee, an agent with Keller Williams.
Those buyers now have another chance since Congress extended the program earlier this month. Real estate agents say it could mean a boon for sales.
First-time buyers can get a credit up to $8,000 and other buyers are eligible for a credit of $6,500, as long as they’ve lived in their home for at least five years. Congress also expanded it to include some buyers who already own homes.
Business picked up immediately, Brownlee said.
“As soon as it passed, I started to get a lot more phone calls and website hits on my listings,” he said. “This tax credit will likely carry us through the normally slow season.”
That’s good news for the Bay area’s fragile housing market. As the area continues to see improvement in home sales, real estate agents say the tax credit is essential in selling off inventory. Home prices have plummeted and that has enticed buyers to act, but many are still on the sidelines.
Home sales in the Tampa-St. Petersburg-Clearwater area increased 20 percent in the third quarter, which ended Sept. 30. Experts credit the increase mainly to first-time buyers trying to take advantage of the tax credit.
There were 7,795 sales in the quarter, up from 6,502 during the same period a year ago, according to the Florida Association of Realtors. At the same time, the median sales price fell 17 percent to $140,400.
One reason is that so many people feel stuck in their homes. They want to take advantage of deep discounts, but they have to sell their existing home in order to move up. With nearly half of Tampa Bay’s homeowners owing more than their home is worth, many can’t afford to move.
That’s why the tax credit will help, said Stephanie LeFew, a real estate agent with Tampa Home Buy Realty. She’s had a number of clients decide to stay in their homes because they couldn’t sell for enough to make a move worth it.
“For some people, the credit will be just enough of a boost,” she said.
Mike Larson, an analyst with Weiss Research, said home sales would likely continue to improve, even without the tax credit. Even so, he expects the credit to lure more people into the market.
“The credit is the icing on the cake, not the cake itself,” he said. “What’s really leading to improvement is that homes are affordable again. If you throw an expanded credit into a market that already has good fundamentals, the market will respond.”
To take advantage of the credit, a prospective buyer’s home has to be under contract by April 30 and the deal must close by June 30.
Copyright © 2009 Tampa Tribune
TAMPA, Fla. – Nov. 17, 2009 – Real estate agent Ken Brownlee’s phone stopped ringing last month once clients figured they would be unable to close before an $8,000 federal tax credit expired.
Most of his buyers were first-timers looking for a sweet deal on a short sale or foreclosed home.
“They all want to grab a deal,” said Brownlee, an agent with Keller Williams.
Those buyers now have another chance since Congress extended the program earlier this month. Real estate agents say it could mean a boon for sales.
First-time buyers can get a credit up to $8,000 and other buyers are eligible for a credit of $6,500, as long as they’ve lived in their home for at least five years. Congress also expanded it to include some buyers who already own homes.
Business picked up immediately, Brownlee said.
“As soon as it passed, I started to get a lot more phone calls and website hits on my listings,” he said. “This tax credit will likely carry us through the normally slow season.”
That’s good news for the Bay area’s fragile housing market. As the area continues to see improvement in home sales, real estate agents say the tax credit is essential in selling off inventory. Home prices have plummeted and that has enticed buyers to act, but many are still on the sidelines.
Home sales in the Tampa-St. Petersburg-Clearwater area increased 20 percent in the third quarter, which ended Sept. 30. Experts credit the increase mainly to first-time buyers trying to take advantage of the tax credit.
There were 7,795 sales in the quarter, up from 6,502 during the same period a year ago, according to the Florida Association of Realtors. At the same time, the median sales price fell 17 percent to $140,400.
One reason is that so many people feel stuck in their homes. They want to take advantage of deep discounts, but they have to sell their existing home in order to move up. With nearly half of Tampa Bay’s homeowners owing more than their home is worth, many can’t afford to move.
That’s why the tax credit will help, said Stephanie LeFew, a real estate agent with Tampa Home Buy Realty. She’s had a number of clients decide to stay in their homes because they couldn’t sell for enough to make a move worth it.
“For some people, the credit will be just enough of a boost,” she said.
Mike Larson, an analyst with Weiss Research, said home sales would likely continue to improve, even without the tax credit. Even so, he expects the credit to lure more people into the market.
“The credit is the icing on the cake, not the cake itself,” he said. “What’s really leading to improvement is that homes are affordable again. If you throw an expanded credit into a market that already has good fundamentals, the market will respond.”
To take advantage of the credit, a prospective buyer’s home has to be under contract by April 30 and the deal must close by June 30.
Copyright © 2009 Tampa Tribune
Monday, November 16, 2009
NAR Survey: First-time homebuyers set record in past year
SAN DIEGO – Nov. 16, 2009 – As a percentage of all buyers, first-time homebuyers reached 47 percent during the past year, its highest market share on record, according to a study released at the 2009 Realtors® Conference & Expo.
The 2009 National Association of Realtors® Profile of Home Buyers and Sellers is the latest in a series of national NAR surveys evaluating demographics, preferences, marketing and experiences of recent homebuyers and sellers.
Paul Bishop, NAR vice president of research, said several factors have been at play.
“Tax incentives, record high affordability conditions and pent-up demand brought a record share of first-time homebuyers into the market,” Bishop says. “These buyers are critical to housing and a general economic recovery because the market always heals from the bottom up – they absorb inventory, free existing owners to make a trade, and stimulate related goods and services.”
The number of first-time homebuyers rose to 47 percent of all home sales from 41 percent of transactions in last year’s study, and was the highest on record dating back to 1981. The previous high was 44 percent in 1991.
“It’s interesting to note the last cyclical peak of first-time homebuyers was during the last noteworthy economic downturn, with first-time buyers starting the chain reaction that led the nation out of recession,” Bishop says.
The profile shows the median age of first-time buyers was 30, and the median income was $61,600. The typical first-time buyer purchased a home costing $156,000, down from $165,000 in the 2008 study; and he or she plans to stay in that home for 10 years.
Fifty-five percent of entry-level buyers reported financing their purchase with an FHA loan, while another 8 percent used the VA loan program.
First-time buyers who made a downpayment used a variety of sources: 61 percent used savings and 22 percent received a gift from a friend or relative, typically from their parents. Six percent received a loan from a relative or friend, 6 percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds. Ninety-six percent chose a fixed-rate mortgage.
First-time buyers often make financial sacrifices to purchase a home: 39 percent cut spending on luxury items, 38 percent cut back on entertainment and 30 percent cut spending on clothes.
Only 12 percent said financing their first home was more difficult than expected, but 13 percent of successful buyers said they had experienced a purchase agreement that was canceled, terminated or fell through; and 8 percent had been rejected by a lender.
“This raises the question of how many potential buyers were unsuccessful because of problems with appraisals or loan qualifications,” Bishop says. “The market would be even stronger without these problems.”
“Some people were taking a housing recovery for granted, but we must acknowledge the abnormal situation from toxic loans that will keep foreclosures coming into the market over the coming year,” says NAR 2009 President Charles McMillan. “To help stem foreclosures we must first stabilize home prices, and the expansion of tax incentives should absorb enough inventory to restore balance. As the leading advocate for homeownership, NAR commends Congress for extending and expanding the tax credit because placing financially qualified buyers into affordable homes is the soundest way to heal our economy as fast as possible.”
Buyers searched a median of 12 weeks and viewed 12 homes. Among buyers who used an agent, 63 percent selected a buyer’s representative. Eighty-seven percent consider their home a good investment, and more than half see it as a better investment than stocks. Twelve percent of buyers own two homes, while another three percent own three or more homes.
The typical repeat buyer was 48 years old, earned $88,100, purchased a home costing $224,500 and plans to stay in that home for 12 years.
The median downpayment of all homebuyers was 8 percent, and the number purchasing with no money down fell from 23 percent in 2008 to 15 percent in the current survey; 8 percent of buyers paid all cash for their home.
The median age of home sellers was 46 and their income was $91,100. Typical sellers had been in their home for seven years, up from six years in the 2008 survey, moved a median distance of 19 miles, and their home was on the market for 10 weeks. Nearly half traded up in size, 30 percent bought a comparable home and 22 percent traded down.
Eighty-five percent of sellers used a real estate professional, and 64 percent of sellers chose their agent based on a referral or because they had used the same agent in the past. Eighty-one percent of sellers are likely to use the same agent again or recommend her to others.
Forty-two percent of sellers offered incentives to attract buyers, such as home warranties or assistance with closing costs. The typical home sold for 95 percent of the listing price, with a median increase over the seller’s original purchase price of $36,000. “Even with price declines in recent years, the typical home seller saw their equity increase 27 percent,” McMillan says.
Of sellers working with real estate agents, the study found that 80 percent used full-service brokerage, in which agents provide a range of services that include managing most of the process of selling a home from listing to closing. Nine percent of sellers chose limited services, which may include discount brokerage, and 11 percent used minimal service, such as simply listing a property on a multiple listing service.
All of these types of services are provided by Realtors as well as non-member agents and brokers, with comparable findings for each year since questions about brokerage services were added in 2006. Less than 1 percent of sellers chose an agent based on his or her commission.
Sellers largely want agents to price their home competitively, find a buyer, market the property and sell within a specific timeframe. Reputation was the most important factor in choosing an agent, cited by 36 percent of respondents, followed by trustworthiness at 21 percent.
Homebuyers thought the most important services agents offer are helping find the right house, and negotiating sales terms and price. The most commonly cited benefits of using an agent are helping buyers understand the process, pointing out unnoticed features or faults, negotiating better contract terms, and providing a better list of service providers. Comparable to sellers, buyers chose agents based on a referral or had used them in a previous transaction, with trustworthiness and reputation being the biggest factors in selecting an agent.
Buyers use a wide variety of resources in searching for a home: 90 percent use the Internet, 87 percent rely on real estate agents, 59 percent yard signs, 46 percent attend open houses and 40 percent look at print or newspaper ads. Although buyers also use other resources, they generally start the search process online and then contact an agent.
When asked where they first learned about the home purchased, 36 percent of buyers said a real estate agent; 36 percent the Internet; 12 percent from yard signs; 6 percent from a friend, neighbor or relative; 5 percent home builders; 2 percent a print or newspaper ad; 2 percent directly from the seller; and less than 1 percent a home book or magazine.
Eight out of 10 home buyers who used the Internet to search for a home purchased through a real estate agent, in contrast with 63 percent of non-Internet users who were more likely to purchase directly from a builder or from an owner they already knew in a private transaction.
Local metropolitan multiple listing service (MLS) Web sites were the most popular Internet resource, used by 60 percent of buyers; followed by Realtor.com and real estate company sites, each with 46 percent; real estate agent Web sites, 45 percent; other Web sites with real estate listings, 30 percent; for-sale-by-owner sites, 17 percent; and local newspaper sites, 9 percent; other categories were smaller.
Sixty percent of buyers are married couples, 21 percent are single women, 10 percent single men, 8 percent unmarried couples and 1 percent other. Fifteen percent are non-white, 9 percent were born outside of the United States, and 4 percent primarily speak a language other than English.
Seventy-eight percent of all respondents purchased a detached single-family home, 9 percent a condo, 8 percent a townhouse or rowhouse, and 5 percent some other kind of housing. Environmentally friendly features remain a significant factor: 88 percent of buyers said that heating and cooling costs were important, 72 percent desired energy efficient appliances, and 69 percent wanted energy efficient lighting.
Commuting costs continue to factor greatly in neighborhood selection, with 36 percent of buyers saying they were very important and another 42 percent saying transportation costs were somewhat important.
Fifty-four percent of all homes purchased were in a suburb or subdivision, 18 percent were in an urban area, 17 percent in a small town, 10 percent in a rural area and 1 percent in a resort or recreation area. The median distance from the previous residence was 12 miles. The typical home size was 1,800 square feet, ranging from 1,600 for first-time buyers to 2,100 square feet for repeat buyers.
The biggest factors influencing neighborhood choice were quality of the neighborhood, cited by 64 percent of respondents; convenience to jobs, 50 percent; overall affordability of homes, 43 percent; and convenience to family and friends, 37 percent. Other factors with relatively high responses include quality of the school district, 26 percent; convenience to shopping, 26 percent; neighborhood design, 23 percent; and convenience to schools, 21 percent.
The difficulty of for-sale-by-owner transactions increased with challenging market conditions over the past year. The level of FSBOs was a record low 11 percent, down from 13 percent in 2008. The share of homes sold without professional representation has trended down since reaching a cyclical peak of 18 percent in 1997.
Many of these properties were not placed on the open market – 42 percent were “closely held” between parties who knew each other in advance, such as family or acquaintances. Factoring out properties that were not placed on the open market, the actual number of homes sold without professional assistance was a record low 6 percent – the rest were unrepresented sellers in private transactions. The market share of open-market FSBOs is nearly half of what it was five years ago – 10 percent were sold on the open market in 2004.
The median home price for sellers who used an agent was $215,000 vs. $172,000 for a home sold directly by an owner, but there were important differences. The median income of unassisted sellers was $76,900, in contrast with $94,200 for agent-assisted sellers, and the homes were more likely to be in a rural area. Unassisted sellers also were more likely to be selling a mobile or manufactured home. These factors suggest a somewhat lower value for FSBO properties.
The most difficult tasks reported by unrepresented sellers are preparing and fixing the home for sale, getting the right price, understanding and performing paperwork, and selling within the planned length of time.
To conduct the study, NAR mailed an eight-page questionnaire in July 2009 to a national sample of 120,038 homebuyers and sellers who purchased their homes between July 2008 and June 2009, according to county records. It generated 9,138 usable responses; the adjusted response rate was 7.9 percent. All information is characteristic of the 12-month period ending in June 2009 with the exception of income data, which are for 2008. Because of rounding and omissions for space, percentage distributions for some findings may not add up to 100 percent.
The 2009 National Association of Realtors® Profile of Home Buyers and Sellers can be ordered by calling 800-874-6500, or online at www.realtor.org/newresearch. The study is free for NAR members but costs $125 for non-members.
© 2009 Florida Realtors
SAN DIEGO – Nov. 16, 2009 – As a percentage of all buyers, first-time homebuyers reached 47 percent during the past year, its highest market share on record, according to a study released at the 2009 Realtors® Conference & Expo.
The 2009 National Association of Realtors® Profile of Home Buyers and Sellers is the latest in a series of national NAR surveys evaluating demographics, preferences, marketing and experiences of recent homebuyers and sellers.
Paul Bishop, NAR vice president of research, said several factors have been at play.
“Tax incentives, record high affordability conditions and pent-up demand brought a record share of first-time homebuyers into the market,” Bishop says. “These buyers are critical to housing and a general economic recovery because the market always heals from the bottom up – they absorb inventory, free existing owners to make a trade, and stimulate related goods and services.”
The number of first-time homebuyers rose to 47 percent of all home sales from 41 percent of transactions in last year’s study, and was the highest on record dating back to 1981. The previous high was 44 percent in 1991.
“It’s interesting to note the last cyclical peak of first-time homebuyers was during the last noteworthy economic downturn, with first-time buyers starting the chain reaction that led the nation out of recession,” Bishop says.
The profile shows the median age of first-time buyers was 30, and the median income was $61,600. The typical first-time buyer purchased a home costing $156,000, down from $165,000 in the 2008 study; and he or she plans to stay in that home for 10 years.
Fifty-five percent of entry-level buyers reported financing their purchase with an FHA loan, while another 8 percent used the VA loan program.
First-time buyers who made a downpayment used a variety of sources: 61 percent used savings and 22 percent received a gift from a friend or relative, typically from their parents. Six percent received a loan from a relative or friend, 6 percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds. Ninety-six percent chose a fixed-rate mortgage.
First-time buyers often make financial sacrifices to purchase a home: 39 percent cut spending on luxury items, 38 percent cut back on entertainment and 30 percent cut spending on clothes.
Only 12 percent said financing their first home was more difficult than expected, but 13 percent of successful buyers said they had experienced a purchase agreement that was canceled, terminated or fell through; and 8 percent had been rejected by a lender.
“This raises the question of how many potential buyers were unsuccessful because of problems with appraisals or loan qualifications,” Bishop says. “The market would be even stronger without these problems.”
“Some people were taking a housing recovery for granted, but we must acknowledge the abnormal situation from toxic loans that will keep foreclosures coming into the market over the coming year,” says NAR 2009 President Charles McMillan. “To help stem foreclosures we must first stabilize home prices, and the expansion of tax incentives should absorb enough inventory to restore balance. As the leading advocate for homeownership, NAR commends Congress for extending and expanding the tax credit because placing financially qualified buyers into affordable homes is the soundest way to heal our economy as fast as possible.”
Buyers searched a median of 12 weeks and viewed 12 homes. Among buyers who used an agent, 63 percent selected a buyer’s representative. Eighty-seven percent consider their home a good investment, and more than half see it as a better investment than stocks. Twelve percent of buyers own two homes, while another three percent own three or more homes.
The typical repeat buyer was 48 years old, earned $88,100, purchased a home costing $224,500 and plans to stay in that home for 12 years.
The median downpayment of all homebuyers was 8 percent, and the number purchasing with no money down fell from 23 percent in 2008 to 15 percent in the current survey; 8 percent of buyers paid all cash for their home.
The median age of home sellers was 46 and their income was $91,100. Typical sellers had been in their home for seven years, up from six years in the 2008 survey, moved a median distance of 19 miles, and their home was on the market for 10 weeks. Nearly half traded up in size, 30 percent bought a comparable home and 22 percent traded down.
Eighty-five percent of sellers used a real estate professional, and 64 percent of sellers chose their agent based on a referral or because they had used the same agent in the past. Eighty-one percent of sellers are likely to use the same agent again or recommend her to others.
Forty-two percent of sellers offered incentives to attract buyers, such as home warranties or assistance with closing costs. The typical home sold for 95 percent of the listing price, with a median increase over the seller’s original purchase price of $36,000. “Even with price declines in recent years, the typical home seller saw their equity increase 27 percent,” McMillan says.
Of sellers working with real estate agents, the study found that 80 percent used full-service brokerage, in which agents provide a range of services that include managing most of the process of selling a home from listing to closing. Nine percent of sellers chose limited services, which may include discount brokerage, and 11 percent used minimal service, such as simply listing a property on a multiple listing service.
All of these types of services are provided by Realtors as well as non-member agents and brokers, with comparable findings for each year since questions about brokerage services were added in 2006. Less than 1 percent of sellers chose an agent based on his or her commission.
Sellers largely want agents to price their home competitively, find a buyer, market the property and sell within a specific timeframe. Reputation was the most important factor in choosing an agent, cited by 36 percent of respondents, followed by trustworthiness at 21 percent.
Homebuyers thought the most important services agents offer are helping find the right house, and negotiating sales terms and price. The most commonly cited benefits of using an agent are helping buyers understand the process, pointing out unnoticed features or faults, negotiating better contract terms, and providing a better list of service providers. Comparable to sellers, buyers chose agents based on a referral or had used them in a previous transaction, with trustworthiness and reputation being the biggest factors in selecting an agent.
Buyers use a wide variety of resources in searching for a home: 90 percent use the Internet, 87 percent rely on real estate agents, 59 percent yard signs, 46 percent attend open houses and 40 percent look at print or newspaper ads. Although buyers also use other resources, they generally start the search process online and then contact an agent.
When asked where they first learned about the home purchased, 36 percent of buyers said a real estate agent; 36 percent the Internet; 12 percent from yard signs; 6 percent from a friend, neighbor or relative; 5 percent home builders; 2 percent a print or newspaper ad; 2 percent directly from the seller; and less than 1 percent a home book or magazine.
Eight out of 10 home buyers who used the Internet to search for a home purchased through a real estate agent, in contrast with 63 percent of non-Internet users who were more likely to purchase directly from a builder or from an owner they already knew in a private transaction.
Local metropolitan multiple listing service (MLS) Web sites were the most popular Internet resource, used by 60 percent of buyers; followed by Realtor.com and real estate company sites, each with 46 percent; real estate agent Web sites, 45 percent; other Web sites with real estate listings, 30 percent; for-sale-by-owner sites, 17 percent; and local newspaper sites, 9 percent; other categories were smaller.
Sixty percent of buyers are married couples, 21 percent are single women, 10 percent single men, 8 percent unmarried couples and 1 percent other. Fifteen percent are non-white, 9 percent were born outside of the United States, and 4 percent primarily speak a language other than English.
Seventy-eight percent of all respondents purchased a detached single-family home, 9 percent a condo, 8 percent a townhouse or rowhouse, and 5 percent some other kind of housing. Environmentally friendly features remain a significant factor: 88 percent of buyers said that heating and cooling costs were important, 72 percent desired energy efficient appliances, and 69 percent wanted energy efficient lighting.
Commuting costs continue to factor greatly in neighborhood selection, with 36 percent of buyers saying they were very important and another 42 percent saying transportation costs were somewhat important.
Fifty-four percent of all homes purchased were in a suburb or subdivision, 18 percent were in an urban area, 17 percent in a small town, 10 percent in a rural area and 1 percent in a resort or recreation area. The median distance from the previous residence was 12 miles. The typical home size was 1,800 square feet, ranging from 1,600 for first-time buyers to 2,100 square feet for repeat buyers.
The biggest factors influencing neighborhood choice were quality of the neighborhood, cited by 64 percent of respondents; convenience to jobs, 50 percent; overall affordability of homes, 43 percent; and convenience to family and friends, 37 percent. Other factors with relatively high responses include quality of the school district, 26 percent; convenience to shopping, 26 percent; neighborhood design, 23 percent; and convenience to schools, 21 percent.
The difficulty of for-sale-by-owner transactions increased with challenging market conditions over the past year. The level of FSBOs was a record low 11 percent, down from 13 percent in 2008. The share of homes sold without professional representation has trended down since reaching a cyclical peak of 18 percent in 1997.
Many of these properties were not placed on the open market – 42 percent were “closely held” between parties who knew each other in advance, such as family or acquaintances. Factoring out properties that were not placed on the open market, the actual number of homes sold without professional assistance was a record low 6 percent – the rest were unrepresented sellers in private transactions. The market share of open-market FSBOs is nearly half of what it was five years ago – 10 percent were sold on the open market in 2004.
The median home price for sellers who used an agent was $215,000 vs. $172,000 for a home sold directly by an owner, but there were important differences. The median income of unassisted sellers was $76,900, in contrast with $94,200 for agent-assisted sellers, and the homes were more likely to be in a rural area. Unassisted sellers also were more likely to be selling a mobile or manufactured home. These factors suggest a somewhat lower value for FSBO properties.
The most difficult tasks reported by unrepresented sellers are preparing and fixing the home for sale, getting the right price, understanding and performing paperwork, and selling within the planned length of time.
To conduct the study, NAR mailed an eight-page questionnaire in July 2009 to a national sample of 120,038 homebuyers and sellers who purchased their homes between July 2008 and June 2009, according to county records. It generated 9,138 usable responses; the adjusted response rate was 7.9 percent. All information is characteristic of the 12-month period ending in June 2009 with the exception of income data, which are for 2008. Because of rounding and omissions for space, percentage distributions for some findings may not add up to 100 percent.
The 2009 National Association of Realtors® Profile of Home Buyers and Sellers can be ordered by calling 800-874-6500, or online at www.realtor.org/newresearch. The study is free for NAR members but costs $125 for non-members.
© 2009 Florida Realtors
Friday, November 13, 2009
Texting, talking bans popular this year
TALLAHASSEE, Fla. – Nov. 13, 2009 – Measures banning motorists from text-messaging and using cell phones are becoming one of the hottest topics this fall for Florida lawmakers intent on making a U-turn on legislation that formerly went nowhere.
Some kind of hand-held communication ban on has been proposed each of the past seven years; though the few bills filed last spring failed to draw even a committee hearing.
But as cell phone applications become more sophisticated and kids and adults appear increasingly tethered to keypads, a dozen bills have been filed in the House and Senate leading into the 2010 session of the Florida Legislature.
The measures spring from both Democrats and Republicans, with the latest two added to the pile earlier this month. Three of the bills’ sponsors are candidates for statewide office: Sens. Carey Baker and Paula Dockery, Republican contenders for agriculture commissioner and governor, respectively, and Sen. Dan Gelber, a Democratic candidate for attorney general.
“I would certainly hope that with the number of people interested in this legislation now, that we might at least get a hearing on these bills,” says Rep. Janet Long, D-Seminole, whose measure banning driving while texting (HB 323) recently came out of House bill-drafting. “But if we don’t, I think it’ll show how powerful the cell-phone lobby is.”
An industry spokesman, though, said cell-phone companies generally support such bans.
“We know that when people text while driving, you’ve got a recipe for serious disaster,” says Verizon spokesman Chuck Hamby. “A motorist’s first responsibility is to drive safely – that’s our position.”
Baker, R-Eustis, was an early advocate of banning texting while driving, introducing legislation two years ago. Legislation prohibiting cell-phone use without a headset was first proposed in Florida in 2002.
“It’s slowly been building,” Baker says of support for taking steps against hand-held devices behind the wheel. “But I think this year, something’s going to pass.”
Baker has two bills already filed (SB 324,326) that prohibit texting while driving, and he plans to come back with a repeat of earlier legislation that would ban motorists younger than 18 from using any kind of electronic wireless communications while driving – meaning no cell phones, laptops or handhelds. Baker doesn’t want young drivers to legally use headsets either.
By contrast, Sen. Frederica Wilson, D-Miami, has legislation (SB 244) that requires headsets for all drivers using cell phones and prohibits texting. She’s sponsoring the measure dubbed Heather’s Law, named after Heather Hurd, a 26-year-old woman killed in Polk County in 2008 when a texting driver’s tractor-trailer truck plowed into her vehicle at a stoplight.
Talking or listening on a cell phone is among the most frequently cited distractions affecting drivers involved in a serious auto accident, according to the Florida Department of Highway Safety & Motor Vehicles.
According to the National Conference of State Legislatures’ 14 states and Washington, D.C., have passed legislation banning texting while driving, while others have banned it for drivers with learner’s permits. Six states and the District of Columbia have banned hand-held phones while driving.
Sen. Andy Gardiner, R-Orlando, chairman of the Senate Transportation Committee, said he’s already spoken with some sponsors of hand-held legislation in the Senate about trying to converge on one bill addressing distracted driving.
Gardiner says he’d be willing to have the measure heard in his committee.
“I think if we can get together and work out one bill, we should at least have a vote on it,” Gardiner says.
Source: News Service of Florida
TALLAHASSEE, Fla. – Nov. 13, 2009 – Measures banning motorists from text-messaging and using cell phones are becoming one of the hottest topics this fall for Florida lawmakers intent on making a U-turn on legislation that formerly went nowhere.
Some kind of hand-held communication ban on has been proposed each of the past seven years; though the few bills filed last spring failed to draw even a committee hearing.
But as cell phone applications become more sophisticated and kids and adults appear increasingly tethered to keypads, a dozen bills have been filed in the House and Senate leading into the 2010 session of the Florida Legislature.
The measures spring from both Democrats and Republicans, with the latest two added to the pile earlier this month. Three of the bills’ sponsors are candidates for statewide office: Sens. Carey Baker and Paula Dockery, Republican contenders for agriculture commissioner and governor, respectively, and Sen. Dan Gelber, a Democratic candidate for attorney general.
“I would certainly hope that with the number of people interested in this legislation now, that we might at least get a hearing on these bills,” says Rep. Janet Long, D-Seminole, whose measure banning driving while texting (HB 323) recently came out of House bill-drafting. “But if we don’t, I think it’ll show how powerful the cell-phone lobby is.”
An industry spokesman, though, said cell-phone companies generally support such bans.
“We know that when people text while driving, you’ve got a recipe for serious disaster,” says Verizon spokesman Chuck Hamby. “A motorist’s first responsibility is to drive safely – that’s our position.”
Baker, R-Eustis, was an early advocate of banning texting while driving, introducing legislation two years ago. Legislation prohibiting cell-phone use without a headset was first proposed in Florida in 2002.
“It’s slowly been building,” Baker says of support for taking steps against hand-held devices behind the wheel. “But I think this year, something’s going to pass.”
Baker has two bills already filed (SB 324,326) that prohibit texting while driving, and he plans to come back with a repeat of earlier legislation that would ban motorists younger than 18 from using any kind of electronic wireless communications while driving – meaning no cell phones, laptops or handhelds. Baker doesn’t want young drivers to legally use headsets either.
By contrast, Sen. Frederica Wilson, D-Miami, has legislation (SB 244) that requires headsets for all drivers using cell phones and prohibits texting. She’s sponsoring the measure dubbed Heather’s Law, named after Heather Hurd, a 26-year-old woman killed in Polk County in 2008 when a texting driver’s tractor-trailer truck plowed into her vehicle at a stoplight.
Talking or listening on a cell phone is among the most frequently cited distractions affecting drivers involved in a serious auto accident, according to the Florida Department of Highway Safety & Motor Vehicles.
According to the National Conference of State Legislatures’ 14 states and Washington, D.C., have passed legislation banning texting while driving, while others have banned it for drivers with learner’s permits. Six states and the District of Columbia have banned hand-held phones while driving.
Sen. Andy Gardiner, R-Orlando, chairman of the Senate Transportation Committee, said he’s already spoken with some sponsors of hand-held legislation in the Senate about trying to converge on one bill addressing distracted driving.
Gardiner says he’d be willing to have the measure heard in his committee.
“I think if we can get together and work out one bill, we should at least have a vote on it,” Gardiner says.
Source: News Service of Florida
Texting, talking bans popular this year
TALLAHASSEE, Fla. – Nov. 13, 2009 – Measures banning motorists from text-messaging and using cell phones are becoming one of the hottest topics this fall for Florida lawmakers intent on making a U-turn on legislation that formerly went nowhere.
Some kind of hand-held communication ban on has been proposed each of the past seven years; though the few bills filed last spring failed to draw even a committee hearing.
But as cell phone applications become more sophisticated and kids and adults appear increasingly tethered to keypads, a dozen bills have been filed in the House and Senate leading into the 2010 session of the Florida Legislature.
The measures spring from both Democrats and Republicans, with the latest two added to the pile earlier this month. Three of the bills’ sponsors are candidates for statewide office: Sens. Carey Baker and Paula Dockery, Republican contenders for agriculture commissioner and governor, respectively, and Sen. Dan Gelber, a Democratic candidate for attorney general.
“I would certainly hope that with the number of people interested in this legislation now, that we might at least get a hearing on these bills,” says Rep. Janet Long, D-Seminole, whose measure banning driving while texting (HB 323) recently came out of House bill-drafting. “But if we don’t, I think it’ll show how powerful the cell-phone lobby is.”
An industry spokesman, though, said cell-phone companies generally support such bans.
“We know that when people text while driving, you’ve got a recipe for serious disaster,” says Verizon spokesman Chuck Hamby. “A motorist’s first responsibility is to drive safely – that’s our position.”
Baker, R-Eustis, was an early advocate of banning texting while driving, introducing legislation two years ago. Legislation prohibiting cell-phone use without a headset was first proposed in Florida in 2002.
“It’s slowly been building,” Baker says of support for taking steps against hand-held devices behind the wheel. “But I think this year, something’s going to pass.”
Baker has two bills already filed (SB 324,326) that prohibit texting while driving, and he plans to come back with a repeat of earlier legislation that would ban motorists younger than 18 from using any kind of electronic wireless communications while driving – meaning no cell phones, laptops or handhelds. Baker doesn’t want young drivers to legally use headsets either.
By contrast, Sen. Frederica Wilson, D-Miami, has legislation (SB 244) that requires headsets for all drivers using cell phones and prohibits texting. She’s sponsoring the measure dubbed Heather’s Law, named after Heather Hurd, a 26-year-old woman killed in Polk County in 2008 when a texting driver’s tractor-trailer truck plowed into her vehicle at a stoplight.
Talking or listening on a cell phone is among the most frequently cited distractions affecting drivers involved in a serious auto accident, according to the Florida Department of Highway Safety & Motor Vehicles.
According to the National Conference of State Legislatures’ 14 states and Washington, D.C., have passed legislation banning texting while driving, while others have banned it for drivers with learner’s permits. Six states and the District of Columbia have banned hand-held phones while driving.
Sen. Andy Gardiner, R-Orlando, chairman of the Senate Transportation Committee, said he’s already spoken with some sponsors of hand-held legislation in the Senate about trying to converge on one bill addressing distracted driving.
Gardiner says he’d be willing to have the measure heard in his committee.
“I think if we can get together and work out one bill, we should at least have a vote on it,” Gardiner says.
Source: News Service of Florida
TALLAHASSEE, Fla. – Nov. 13, 2009 – Measures banning motorists from text-messaging and using cell phones are becoming one of the hottest topics this fall for Florida lawmakers intent on making a U-turn on legislation that formerly went nowhere.
Some kind of hand-held communication ban on has been proposed each of the past seven years; though the few bills filed last spring failed to draw even a committee hearing.
But as cell phone applications become more sophisticated and kids and adults appear increasingly tethered to keypads, a dozen bills have been filed in the House and Senate leading into the 2010 session of the Florida Legislature.
The measures spring from both Democrats and Republicans, with the latest two added to the pile earlier this month. Three of the bills’ sponsors are candidates for statewide office: Sens. Carey Baker and Paula Dockery, Republican contenders for agriculture commissioner and governor, respectively, and Sen. Dan Gelber, a Democratic candidate for attorney general.
“I would certainly hope that with the number of people interested in this legislation now, that we might at least get a hearing on these bills,” says Rep. Janet Long, D-Seminole, whose measure banning driving while texting (HB 323) recently came out of House bill-drafting. “But if we don’t, I think it’ll show how powerful the cell-phone lobby is.”
An industry spokesman, though, said cell-phone companies generally support such bans.
“We know that when people text while driving, you’ve got a recipe for serious disaster,” says Verizon spokesman Chuck Hamby. “A motorist’s first responsibility is to drive safely – that’s our position.”
Baker, R-Eustis, was an early advocate of banning texting while driving, introducing legislation two years ago. Legislation prohibiting cell-phone use without a headset was first proposed in Florida in 2002.
“It’s slowly been building,” Baker says of support for taking steps against hand-held devices behind the wheel. “But I think this year, something’s going to pass.”
Baker has two bills already filed (SB 324,326) that prohibit texting while driving, and he plans to come back with a repeat of earlier legislation that would ban motorists younger than 18 from using any kind of electronic wireless communications while driving – meaning no cell phones, laptops or handhelds. Baker doesn’t want young drivers to legally use headsets either.
By contrast, Sen. Frederica Wilson, D-Miami, has legislation (SB 244) that requires headsets for all drivers using cell phones and prohibits texting. She’s sponsoring the measure dubbed Heather’s Law, named after Heather Hurd, a 26-year-old woman killed in Polk County in 2008 when a texting driver’s tractor-trailer truck plowed into her vehicle at a stoplight.
Talking or listening on a cell phone is among the most frequently cited distractions affecting drivers involved in a serious auto accident, according to the Florida Department of Highway Safety & Motor Vehicles.
According to the National Conference of State Legislatures’ 14 states and Washington, D.C., have passed legislation banning texting while driving, while others have banned it for drivers with learner’s permits. Six states and the District of Columbia have banned hand-held phones while driving.
Sen. Andy Gardiner, R-Orlando, chairman of the Senate Transportation Committee, said he’s already spoken with some sponsors of hand-held legislation in the Senate about trying to converge on one bill addressing distracted driving.
Gardiner says he’d be willing to have the measure heard in his committee.
“I think if we can get together and work out one bill, we should at least have a vote on it,” Gardiner says.
Source: News Service of Florida
Thursday, November 12, 2009
Foreclosures dip 3% in October from September
Florida foreclosures
While the Sunshine State ranked No. 3 nationwide for its foreclosure rate, RealtyTrac’s latest survey shows surprising strength. Overall, the number of homes in some stage of foreclosure dropped 4.44 percent since September, and also dropped 5.68 percent compared to October 2008.
NEW YORK (AP) – Nov. 12, 2009 – The number of homeowners on the brink of losing their homes dipped in October, the third straight monthly decline, as foreclosure prevention programs helped more borrowers.
But foreclosure filings are still up 19 percent from a year ago, RealtyTrac Inc. said Thursday, and rising job losses continue to threaten the stabilizing trend.
More than 332,000 households, or one in every 385 homes, received a foreclosure-related notice in October, such as a notice of default or trustee’s sale. That’s down 3 percent from September.
Banks repossessed more than 77,000 homes last month, down from nearly 88,000 homes in September.
New state programs, like one launched in Nevada in July, that require mediation before banks can seize a property have helped stem foreclosure activity, said Rick Sharga, senior vice president at RealtyTrac.
Also, anecdotally, lenders are delaying foreclosure as they evaluate which borrowers might qualify for the federal loan modification program, he said.
“That’s the reason there’s been a buildup of homes that are seriously delinquent but not foreclosed,” he said.
Despite Nevada’s legislative efforts to slow foreclosures, the state still clocked in the nation’s highest foreclosure rate for the 34th month in a row, followed by California, Florida, Arizona and Idaho. Rounding out the top 10 were Illinois, Michigan, Georgia, Maryland and Utah.
Among cities, Las Vegas had the highest rate, the report showed. One in 68 homes there received a foreclosure filing in October, more than five times the national average. Seven of the top ten metros were in California, led by Vallejo and Modesto at No. 2 and 3.
After three years of declines, home prices reversed course in June and have been rapidly climbing month-over-month. This will rebuild home equity and reduce the number of borrowers that owe more than their homes are worth.
Still, foreclosures remain near record highs and the mortgage industry is still struggling to manage the onslaught. The government has had to push many lenders to participate in the Obama administration’s loan modification plan.
The Treasury Department said Tuesday that more than 650,000 borrowers, or 20 percent of those eligible, had signed up for temporary trial plans lasting up to five months. But since the beginning of September, only about 1,700 modifications had been made permanent. The Treasury Department expects to release updated data later this month.
Congress last week also extended and expanded a key federal tax credit for homebuyers that has been credited for boosting home sales recently.
Buyers who have owned their current homes for at least five years are eligible for tax credits of up to $6,500, while first-time homebuyers - or anyone who hasn’t owned a home in the last three years - would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.
“Anything that stimulates buying activity,” Sharga said, “will go a long way to mediate the foreclosure problem.”
© 2009 The Associated Press
Florida foreclosures
While the Sunshine State ranked No. 3 nationwide for its foreclosure rate, RealtyTrac’s latest survey shows surprising strength. Overall, the number of homes in some stage of foreclosure dropped 4.44 percent since September, and also dropped 5.68 percent compared to October 2008.
NEW YORK (AP) – Nov. 12, 2009 – The number of homeowners on the brink of losing their homes dipped in October, the third straight monthly decline, as foreclosure prevention programs helped more borrowers.
But foreclosure filings are still up 19 percent from a year ago, RealtyTrac Inc. said Thursday, and rising job losses continue to threaten the stabilizing trend.
More than 332,000 households, or one in every 385 homes, received a foreclosure-related notice in October, such as a notice of default or trustee’s sale. That’s down 3 percent from September.
Banks repossessed more than 77,000 homes last month, down from nearly 88,000 homes in September.
New state programs, like one launched in Nevada in July, that require mediation before banks can seize a property have helped stem foreclosure activity, said Rick Sharga, senior vice president at RealtyTrac.
Also, anecdotally, lenders are delaying foreclosure as they evaluate which borrowers might qualify for the federal loan modification program, he said.
“That’s the reason there’s been a buildup of homes that are seriously delinquent but not foreclosed,” he said.
Despite Nevada’s legislative efforts to slow foreclosures, the state still clocked in the nation’s highest foreclosure rate for the 34th month in a row, followed by California, Florida, Arizona and Idaho. Rounding out the top 10 were Illinois, Michigan, Georgia, Maryland and Utah.
Among cities, Las Vegas had the highest rate, the report showed. One in 68 homes there received a foreclosure filing in October, more than five times the national average. Seven of the top ten metros were in California, led by Vallejo and Modesto at No. 2 and 3.
After three years of declines, home prices reversed course in June and have been rapidly climbing month-over-month. This will rebuild home equity and reduce the number of borrowers that owe more than their homes are worth.
Still, foreclosures remain near record highs and the mortgage industry is still struggling to manage the onslaught. The government has had to push many lenders to participate in the Obama administration’s loan modification plan.
The Treasury Department said Tuesday that more than 650,000 borrowers, or 20 percent of those eligible, had signed up for temporary trial plans lasting up to five months. But since the beginning of September, only about 1,700 modifications had been made permanent. The Treasury Department expects to release updated data later this month.
Congress last week also extended and expanded a key federal tax credit for homebuyers that has been credited for boosting home sales recently.
Buyers who have owned their current homes for at least five years are eligible for tax credits of up to $6,500, while first-time homebuyers - or anyone who hasn’t owned a home in the last three years - would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.
“Anything that stimulates buying activity,” Sharga said, “will go a long way to mediate the foreclosure problem.”
© 2009 The Associated Press
Wednesday, November 11, 2009
5% of Americans plan to buy a home next year
NEW YORK – Nov. 11, 2009 – One in 20 Americans say they plan to buy a home within the next year, and they’re most likely to be 34 years old or younger and living in the South or West, according to a survey released Wednesday.
Roughly a quarter of potential buyers said the No. 1 reason they would buy now is because prices appear to have bottomed out. That reason topped bargain-priced foreclosures, worries about rising interest rates and a wide selection of homes.
The survey, conducted for Move.com, a real estate listings site, reveals how Americans are responding to a nascent and fragile housing recovery after three years of staggering price declines. The percentage of buyers thinking of jumping into the market was down slightly from a March survey, but up about 1 point from a poll in June.
Home prices rebounded this summer at an annualized pace of almost 7 percent, according to the Standard & Poor’s/Case-Shiller home price index. But with high unemployment and foreclosures clouding the picture, economists debate whether prices will dip again.
Recent housing figures and homebuilder earnings support a stabilizing housing market, and concerns about the expiration of federal homebuyer tax credit are moot after Congress last week extended and expanded the credit.
Buyers who have owned their current homes for at least five years are eligible for tax credits of up to $6,500, while first-time homebuyers - or anyone who hasn’t owned a home in the last three years - would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.
The survey was conducted before the credit extension.
Those surveyed widely favored federal policies that kept interest rates low and helped troubled homeowners avoid foreclosure over those that helped first-time homebuyers purchase a home. And, overall, 48 percent of those polled didn’t think the government was doing enough to stabilize the housing market, whereas 42 percent thought it was.
Forty-five percent of Americans worry that they or someone they know will face foreclosure in the next year. And almost 30 percent of those with a mortgage have contacted their lender in the past year to reduce their payments.
One of the survey participants, Joe Handley of Harrington, Del., called his lender last December to consolidate a second mortgage and cut his interest rate from 6.75 percent to 5.25 percent.
“We wanted to build up our savings for emergencies,” the 37-year-old said.
His timing was prescient. In July, Handley, who works in the information technology department for the State of Delaware, took a pay cut and the $400 monthly savings from the new loan has helped cushion the blow.
Almost a quarter of Americans who refinanced their mortgages have used the savings for living expenses or paying down debt, the survey found. Less than 9 percent are putting the savings toward investment or retirement.
The telephone poll, which included about two-thirds homeowners and one-third renters, was conducted in October by market research firm GfK. It had a margin of error of plus or minus 3 percentage points.
Copyright © 2009 The Associated Press
NEW YORK – Nov. 11, 2009 – One in 20 Americans say they plan to buy a home within the next year, and they’re most likely to be 34 years old or younger and living in the South or West, according to a survey released Wednesday.
Roughly a quarter of potential buyers said the No. 1 reason they would buy now is because prices appear to have bottomed out. That reason topped bargain-priced foreclosures, worries about rising interest rates and a wide selection of homes.
The survey, conducted for Move.com, a real estate listings site, reveals how Americans are responding to a nascent and fragile housing recovery after three years of staggering price declines. The percentage of buyers thinking of jumping into the market was down slightly from a March survey, but up about 1 point from a poll in June.
Home prices rebounded this summer at an annualized pace of almost 7 percent, according to the Standard & Poor’s/Case-Shiller home price index. But with high unemployment and foreclosures clouding the picture, economists debate whether prices will dip again.
Recent housing figures and homebuilder earnings support a stabilizing housing market, and concerns about the expiration of federal homebuyer tax credit are moot after Congress last week extended and expanded the credit.
Buyers who have owned their current homes for at least five years are eligible for tax credits of up to $6,500, while first-time homebuyers - or anyone who hasn’t owned a home in the last three years - would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.
The survey was conducted before the credit extension.
Those surveyed widely favored federal policies that kept interest rates low and helped troubled homeowners avoid foreclosure over those that helped first-time homebuyers purchase a home. And, overall, 48 percent of those polled didn’t think the government was doing enough to stabilize the housing market, whereas 42 percent thought it was.
Forty-five percent of Americans worry that they or someone they know will face foreclosure in the next year. And almost 30 percent of those with a mortgage have contacted their lender in the past year to reduce their payments.
One of the survey participants, Joe Handley of Harrington, Del., called his lender last December to consolidate a second mortgage and cut his interest rate from 6.75 percent to 5.25 percent.
“We wanted to build up our savings for emergencies,” the 37-year-old said.
His timing was prescient. In July, Handley, who works in the information technology department for the State of Delaware, took a pay cut and the $400 monthly savings from the new loan has helped cushion the blow.
Almost a quarter of Americans who refinanced their mortgages have used the savings for living expenses or paying down debt, the survey found. Less than 9 percent are putting the savings toward investment or retirement.
The telephone poll, which included about two-thirds homeowners and one-third renters, was conducted in October by market research firm GfK. It had a margin of error of plus or minus 3 percentage points.
Copyright © 2009 The Associated Press
Tuesday, November 10, 2009
Florida's existing home, condo sales up in 3Q 2009
NAR: Existing home sales surge in many states
Read more
ORLANDO, Fla. – Nov. 10, 2009 – Sales of existing single-family homes in Florida rose 33 percent in third quarter 2009 compared to the same period a year earlier, according to the latest housing statistics from Florida Realtors®. A total of 44,345 existing homes sold statewide in 3Q 2009; during the same period the year before, a total of 33,311 existing homes sold. It marks the fifth consecutive quarter that Florida has seen higher existing year-to-year home sales, according to the state association.
Statewide sales of existing condominiums in the third quarter rose 56 percent compared to the same time the previous year. This marks the fourth consecutive quarter for increased statewide sales in both the existing home and condo markets compared to year-ago levels.
Statewide sales activity in 3Q 2009 also increased over 2Q 2009’s sales figure in both the existing home and existing condo markets, Florida Realtors’ records show. For 3Q 2009, statewide sales of existing homes rose 2.82 percent over the 2Q 2009 figure; existing condo sales statewide in 3Q 2009 increased 0.37 percent over the 2Q 2009 level.
To gain insight into current trends in Florida’s real estate industry, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a quarterly survey of industry executives, market research economists, real estate scholars and other experts.
“Most economists think the recession is over, but people are afraid to spend money as unemployment keeps going up, which creates problems for every sector of the real estate market,” said Tim Becker, the center’s director.
On the positive side, survey respondents expressed increasing optimism about their own business outlook, and predicted great opportunities for future investment. Becker noted that the euro’s favorable exchange rate against the dollar and the availability of desirable commercial property at low prices is encouraging international investors.
“Everybody thinks that Florida will rebound because we have so much going for us – the sun shines every day and there are a lot of advantages to living here,” he said. “Foreign investors see that too and believe their prospects are good for long-term investments.”
All of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in the third quarter compared to the same three-month-period a year earlier, while 17 MSAs showed gains in condo sales.
The statewide existing-home median sales price was $145,400 in the third quarter; a year earlier, it was $185,600 for a decrease of 22 percent. The 3Q 2009 statewide existing-home median sales price was 1.25 percent higher than 2Q’s statewide existing-home median sales price of $143,600. According to industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is a typical market price where half the homes sold for more, half for less.
In the year-to-year quarterly comparison for condo sales, 14,797 units sold statewide for the quarter compared to 9,488 in 3Q 2008 for a 56 percent increase. The statewide existing-condo median sales price was $106,100 for the three-month period; in 3Q 2008, it was $160,100 for a decrease of 34 percent.
Low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 5.16 percent in 3Q 2009; one year earlier, it averaged 6.32 percent.
© 2009 Florida Realtors®
NAR: Existing home sales surge in many states
Read more
ORLANDO, Fla. – Nov. 10, 2009 – Sales of existing single-family homes in Florida rose 33 percent in third quarter 2009 compared to the same period a year earlier, according to the latest housing statistics from Florida Realtors®. A total of 44,345 existing homes sold statewide in 3Q 2009; during the same period the year before, a total of 33,311 existing homes sold. It marks the fifth consecutive quarter that Florida has seen higher existing year-to-year home sales, according to the state association.
Statewide sales of existing condominiums in the third quarter rose 56 percent compared to the same time the previous year. This marks the fourth consecutive quarter for increased statewide sales in both the existing home and condo markets compared to year-ago levels.
Statewide sales activity in 3Q 2009 also increased over 2Q 2009’s sales figure in both the existing home and existing condo markets, Florida Realtors’ records show. For 3Q 2009, statewide sales of existing homes rose 2.82 percent over the 2Q 2009 figure; existing condo sales statewide in 3Q 2009 increased 0.37 percent over the 2Q 2009 level.
To gain insight into current trends in Florida’s real estate industry, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a quarterly survey of industry executives, market research economists, real estate scholars and other experts.
“Most economists think the recession is over, but people are afraid to spend money as unemployment keeps going up, which creates problems for every sector of the real estate market,” said Tim Becker, the center’s director.
On the positive side, survey respondents expressed increasing optimism about their own business outlook, and predicted great opportunities for future investment. Becker noted that the euro’s favorable exchange rate against the dollar and the availability of desirable commercial property at low prices is encouraging international investors.
“Everybody thinks that Florida will rebound because we have so much going for us – the sun shines every day and there are a lot of advantages to living here,” he said. “Foreign investors see that too and believe their prospects are good for long-term investments.”
All of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in the third quarter compared to the same three-month-period a year earlier, while 17 MSAs showed gains in condo sales.
The statewide existing-home median sales price was $145,400 in the third quarter; a year earlier, it was $185,600 for a decrease of 22 percent. The 3Q 2009 statewide existing-home median sales price was 1.25 percent higher than 2Q’s statewide existing-home median sales price of $143,600. According to industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is a typical market price where half the homes sold for more, half for less.
In the year-to-year quarterly comparison for condo sales, 14,797 units sold statewide for the quarter compared to 9,488 in 3Q 2008 for a 56 percent increase. The statewide existing-condo median sales price was $106,100 for the three-month period; in 3Q 2008, it was $160,100 for a decrease of 34 percent.
Low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 5.16 percent in 3Q 2009; one year earlier, it averaged 6.32 percent.
© 2009 Florida Realtors®
Monday, November 9, 2009
More walk away from homes, mortgages
PENNINGTON, N.J. ¬– Nov. 9, 2009 – When Sharon Sakson was laid off recently from her job as a television writer and producer, she burned through her savings to pay the $2,400 monthly mortgage on her home. But she soon decided it didn’t make sense: Her home was worth thousands less than the mortgage she carried on it.
The home had been appraised at $390,000 when she refinanced in 2006, but she estimates it’s not worth the $320,000 it initially cost in 2004. So Sakson did what a growing number of homeowners are doing today: She stopped paying and decided to let the bank take her home.
“I’m walking away from my house,” says Sakson, 57, who stopped making payments about six months ago on her home in Pennington, N.J. “The bank can have it.”
What Sakson did is called a strategic default, or a voluntary foreclosure, and it’s fast becoming a major challenge to the government’s $75 billion effort to keep distressed borrowers in their homes. Walking away from a mortgage is serious business – it can knock 100 points off your credit score and make you ineligible for a new mortgage for seven years. Yet, about 588,000 borrowers walked away from homes last year, double the number in 2007, according to a recent study by credit-scoring firm Experian and management consultants Oliver Wyman. While home prices are rising, the increases pale compared with overall drops in home prices since 2005 that threaten to push millions more homeowners into Sakson’s predicament, owing more than their homes are worth and seeing little chance of rebuilding equity soon.
More will walk away, which will hamper the housing recovery, reinforce lenders’ tight credit policies and drag on the economy’s recovery, economists say.
“It’s increasingly a more important factor driving the foreclosure crisis,” says Mark Zandi, of Moody’s Economy.com. “As we move forward, the job market will stabilize, and the big thing will be strategic defaults. People are going to determine it doesn’t make financial sense to hold on to their homes. That’s going to be a significant problem. Strategic defaults mean foreclosures could be high for a long time.”
It’s not just economists who are concerned about strategic defaults.
The mortgage unit of Citigroup says one in five borrowers who defaults does so willingly, even though they’re able to pay the mortgage. “It’s a very large number, and it’s a very, very significant risk to the housing recovery,” says Sanjiv Das, CEO of CitiMortgage, adding that new government programs to curb strategic defaults may be needed.
Waiting for prices to stabilize
How bad the strategic defaults issue gets may depend on how much more home prices fall and whether the government does more to help homeowners with mortgages larger than their homes’ value. Both Zandi and Das suggest further actions to reduce mortgage principal for underwater borrowers.
“A better way to do it may be an incentive to stay current for a period, and after two years of being current, they get a principal reduction,” says Das.
The government’s current Making Homes Affordable program for mortgage modifications disqualifies borrowers whose unpaid mortgages are more than 125 percent of the home’s market value.
Nationally, median prices have fallen about 25 percent from their peak in late 2005, although prices recently have risen compared with prior months this year. The median price in the second quarter – $170,000 – was at roughly the level it was in autumn 2003.
But price declines have been worse in some markets. A closely watched barometer of home prices, the Standard & Poor’s/Case-Shiller 20-City Composite Index, shows they have fallen more than 25 percent in 12 markets and more than 50 percent in two – Phoenix and Las Vegas – from peaks hit in 2006 or 2007.
Fifteen out of the 20 metro areas saw a rise in prices from July to August, but those increases are not anywhere close to the losses that have already occurred.
The number of borrowers who walk away is expected to increase, along with the rise in homeowners who owe more than their homes are worth. An unprecedented 16 million homeowners currently are underwater, according to Moody’s Economy.com. That’s about a third of all homeowners with a first mortgage.
Moody’s Economy.com estimates the number of underwater borrowers will peak at 17.4 million in the third quarter of 2010.
An even higher estimate comes from Deutsche Bank, which predicted in an August study that the number of homeowners underwater will grow from 14 million (or 27 percent of all homeowners with mortgages) in 2009 to 25 million homeowners, or 48 percent of all those with a mortgage, by the time home prices stabilize.
Not coincidentally, strategic defaults have been highest where prices have plunged most, such as California and Florida.
From 2005 to 2008, the number of strategic defaulters went up by 68 times in California, according to the Experian-Oliver Wyman study published in September. During that same time period, the median price for existing, single-family homes in California fell from $522,670 in 2005 to $346,410, according to the California Association of Realtors.
In other geographic regions, the increase in strategic defaulters ranged between 3 times and 18 times more.
The Experian-Wyman study found borrowers with higher credit scores when they applied for their loan were 50 percent more likely than other types of borrowers to walk away from a mortgage only because they were underwater, even though they could afford to pay. The study was based on an analysis of about 12 million borrowers.
No household would default if the equity shortfall is less than 10 percent of the value of the house, according to another study this year, done by the University of Chicago, Northwestern University and the European University Institute. But 17 percent of households would default, even if they could afford to pay their mortgage, when the equity shortfall reaches 50 percent of the value of their house. That means the market value of a mortgage property is that much below the amount of loan taken against it.
There also appears to be a contagion effect. Borrowers who know someone who defaulted are 82 percent more likely to declare their intention to do so.
Growing acceptance
“The most disturbing aspect of this is that it’s becoming acceptable to do,” says Joel Naroff, an economist with Naroff Economic Advisors. “What does that mean down the road for housing and the economy if people are happy to walk away and destroy their credit? They’re saying, ‘Why pay a high amount if they can get something, even a rental, for less?’ “
Because of the time and expense involved in completing a foreclosure, borrowers who decide to walk away often wind up staying in their homes for months after they stop paying their mortgage.
In most states, lenders can go after homeowners for past-due payments, but many fail to take such action when borrowers abandon their properties, because the legal costs are so high.
Short sales, in which lenders agree to the sale of a home for less than the balance of the mortgage, is an alternative to a strategic default. Many lenders are now encouraging them, but Zandi says that alternative may seem too time-consuming for borrowers who want to quickly get out from under their homes.
Janet Speer, 51, isn’t happy to be walking away from her 200-year-old home in Royersford, Pa., but she doesn’t feel ashamed. Speer says she was paying about $1,400 a month for her home, which was appraised at about $155,000.
After getting laid off last year, Speer said, she tried to modify her mortgage to more affordable terms but was denied because her unemployment benefits and alimony didn’t count as income. Speer stopped paying on her mortgage in September 2008.
She is still living in the home and waiting to be foreclosed upon. Speer is saving her unemployment benefits for an apartment once the bank takes over her home.
“I got letters and calls from the bank at first, but they stopped,” said Speer, who now earns commission income from a job in the health care industry. “I have a three-story house. It’s way too big. I just want a little two-bedroom apartment. I don’t want this place anymore. I would never have chosen to do this, but it’s going to work out.”
Copyright © 2009 USA TODAY
PENNINGTON, N.J. ¬– Nov. 9, 2009 – When Sharon Sakson was laid off recently from her job as a television writer and producer, she burned through her savings to pay the $2,400 monthly mortgage on her home. But she soon decided it didn’t make sense: Her home was worth thousands less than the mortgage she carried on it.
The home had been appraised at $390,000 when she refinanced in 2006, but she estimates it’s not worth the $320,000 it initially cost in 2004. So Sakson did what a growing number of homeowners are doing today: She stopped paying and decided to let the bank take her home.
“I’m walking away from my house,” says Sakson, 57, who stopped making payments about six months ago on her home in Pennington, N.J. “The bank can have it.”
What Sakson did is called a strategic default, or a voluntary foreclosure, and it’s fast becoming a major challenge to the government’s $75 billion effort to keep distressed borrowers in their homes. Walking away from a mortgage is serious business – it can knock 100 points off your credit score and make you ineligible for a new mortgage for seven years. Yet, about 588,000 borrowers walked away from homes last year, double the number in 2007, according to a recent study by credit-scoring firm Experian and management consultants Oliver Wyman. While home prices are rising, the increases pale compared with overall drops in home prices since 2005 that threaten to push millions more homeowners into Sakson’s predicament, owing more than their homes are worth and seeing little chance of rebuilding equity soon.
More will walk away, which will hamper the housing recovery, reinforce lenders’ tight credit policies and drag on the economy’s recovery, economists say.
“It’s increasingly a more important factor driving the foreclosure crisis,” says Mark Zandi, of Moody’s Economy.com. “As we move forward, the job market will stabilize, and the big thing will be strategic defaults. People are going to determine it doesn’t make financial sense to hold on to their homes. That’s going to be a significant problem. Strategic defaults mean foreclosures could be high for a long time.”
It’s not just economists who are concerned about strategic defaults.
The mortgage unit of Citigroup says one in five borrowers who defaults does so willingly, even though they’re able to pay the mortgage. “It’s a very large number, and it’s a very, very significant risk to the housing recovery,” says Sanjiv Das, CEO of CitiMortgage, adding that new government programs to curb strategic defaults may be needed.
Waiting for prices to stabilize
How bad the strategic defaults issue gets may depend on how much more home prices fall and whether the government does more to help homeowners with mortgages larger than their homes’ value. Both Zandi and Das suggest further actions to reduce mortgage principal for underwater borrowers.
“A better way to do it may be an incentive to stay current for a period, and after two years of being current, they get a principal reduction,” says Das.
The government’s current Making Homes Affordable program for mortgage modifications disqualifies borrowers whose unpaid mortgages are more than 125 percent of the home’s market value.
Nationally, median prices have fallen about 25 percent from their peak in late 2005, although prices recently have risen compared with prior months this year. The median price in the second quarter – $170,000 – was at roughly the level it was in autumn 2003.
But price declines have been worse in some markets. A closely watched barometer of home prices, the Standard & Poor’s/Case-Shiller 20-City Composite Index, shows they have fallen more than 25 percent in 12 markets and more than 50 percent in two – Phoenix and Las Vegas – from peaks hit in 2006 or 2007.
Fifteen out of the 20 metro areas saw a rise in prices from July to August, but those increases are not anywhere close to the losses that have already occurred.
The number of borrowers who walk away is expected to increase, along with the rise in homeowners who owe more than their homes are worth. An unprecedented 16 million homeowners currently are underwater, according to Moody’s Economy.com. That’s about a third of all homeowners with a first mortgage.
Moody’s Economy.com estimates the number of underwater borrowers will peak at 17.4 million in the third quarter of 2010.
An even higher estimate comes from Deutsche Bank, which predicted in an August study that the number of homeowners underwater will grow from 14 million (or 27 percent of all homeowners with mortgages) in 2009 to 25 million homeowners, or 48 percent of all those with a mortgage, by the time home prices stabilize.
Not coincidentally, strategic defaults have been highest where prices have plunged most, such as California and Florida.
From 2005 to 2008, the number of strategic defaulters went up by 68 times in California, according to the Experian-Oliver Wyman study published in September. During that same time period, the median price for existing, single-family homes in California fell from $522,670 in 2005 to $346,410, according to the California Association of Realtors.
In other geographic regions, the increase in strategic defaulters ranged between 3 times and 18 times more.
The Experian-Wyman study found borrowers with higher credit scores when they applied for their loan were 50 percent more likely than other types of borrowers to walk away from a mortgage only because they were underwater, even though they could afford to pay. The study was based on an analysis of about 12 million borrowers.
No household would default if the equity shortfall is less than 10 percent of the value of the house, according to another study this year, done by the University of Chicago, Northwestern University and the European University Institute. But 17 percent of households would default, even if they could afford to pay their mortgage, when the equity shortfall reaches 50 percent of the value of their house. That means the market value of a mortgage property is that much below the amount of loan taken against it.
There also appears to be a contagion effect. Borrowers who know someone who defaulted are 82 percent more likely to declare their intention to do so.
Growing acceptance
“The most disturbing aspect of this is that it’s becoming acceptable to do,” says Joel Naroff, an economist with Naroff Economic Advisors. “What does that mean down the road for housing and the economy if people are happy to walk away and destroy their credit? They’re saying, ‘Why pay a high amount if they can get something, even a rental, for less?’ “
Because of the time and expense involved in completing a foreclosure, borrowers who decide to walk away often wind up staying in their homes for months after they stop paying their mortgage.
In most states, lenders can go after homeowners for past-due payments, but many fail to take such action when borrowers abandon their properties, because the legal costs are so high.
Short sales, in which lenders agree to the sale of a home for less than the balance of the mortgage, is an alternative to a strategic default. Many lenders are now encouraging them, but Zandi says that alternative may seem too time-consuming for borrowers who want to quickly get out from under their homes.
Janet Speer, 51, isn’t happy to be walking away from her 200-year-old home in Royersford, Pa., but she doesn’t feel ashamed. Speer says she was paying about $1,400 a month for her home, which was appraised at about $155,000.
After getting laid off last year, Speer said, she tried to modify her mortgage to more affordable terms but was denied because her unemployment benefits and alimony didn’t count as income. Speer stopped paying on her mortgage in September 2008.
She is still living in the home and waiting to be foreclosed upon. Speer is saving her unemployment benefits for an apartment once the bank takes over her home.
“I got letters and calls from the bank at first, but they stopped,” said Speer, who now earns commission income from a job in the health care industry. “I have a three-story house. It’s way too big. I just want a little two-bedroom apartment. I don’t want this place anymore. I would never have chosen to do this, but it’s going to work out.”
Copyright © 2009 USA TODAY
More walk away from homes, mortgages
PENNINGTON, N.J. ¬– Nov. 9, 2009 – When Sharon Sakson was laid off recently from her job as a television writer and producer, she burned through her savings to pay the $2,400 monthly mortgage on her home. But she soon decided it didn’t make sense: Her home was worth thousands less than the mortgage she carried on it.
The home had been appraised at $390,000 when she refinanced in 2006, but she estimates it’s not worth the $320,000 it initially cost in 2004. So Sakson did what a growing number of homeowners are doing today: She stopped paying and decided to let the bank take her home.
“I’m walking away from my house,” says Sakson, 57, who stopped making payments about six months ago on her home in Pennington, N.J. “The bank can have it.”
What Sakson did is called a strategic default, or a voluntary foreclosure, and it’s fast becoming a major challenge to the government’s $75 billion effort to keep distressed borrowers in their homes. Walking away from a mortgage is serious business – it can knock 100 points off your credit score and make you ineligible for a new mortgage for seven years. Yet, about 588,000 borrowers walked away from homes last year, double the number in 2007, according to a recent study by credit-scoring firm Experian and management consultants Oliver Wyman. While home prices are rising, the increases pale compared with overall drops in home prices since 2005 that threaten to push millions more homeowners into Sakson’s predicament, owing more than their homes are worth and seeing little chance of rebuilding equity soon.
More will walk away, which will hamper the housing recovery, reinforce lenders’ tight credit policies and drag on the economy’s recovery, economists say.
“It’s increasingly a more important factor driving the foreclosure crisis,” says Mark Zandi, of Moody’s Economy.com. “As we move forward, the job market will stabilize, and the big thing will be strategic defaults. People are going to determine it doesn’t make financial sense to hold on to their homes. That’s going to be a significant problem. Strategic defaults mean foreclosures could be high for a long time.”
It’s not just economists who are concerned about strategic defaults.
The mortgage unit of Citigroup says one in five borrowers who defaults does so willingly, even though they’re able to pay the mortgage. “It’s a very large number, and it’s a very, very significant risk to the housing recovery,” says Sanjiv Das, CEO of CitiMortgage, adding that new government programs to curb strategic defaults may be needed.
Waiting for prices to stabilize
How bad the strategic defaults issue gets may depend on how much more home prices fall and whether the government does more to help homeowners with mortgages larger than their homes’ value. Both Zandi and Das suggest further actions to reduce mortgage principal for underwater borrowers.
“A better way to do it may be an incentive to stay current for a period, and after two years of being current, they get a principal reduction,” says Das.
The government’s current Making Homes Affordable program for mortgage modifications disqualifies borrowers whose unpaid mortgages are more than 125 percent of the home’s market value.
Nationally, median prices have fallen about 25 percent from their peak in late 2005, although prices recently have risen compared with prior months this year. The median price in the second quarter – $170,000 – was at roughly the level it was in autumn 2003.
But price declines have been worse in some markets. A closely watched barometer of home prices, the Standard & Poor’s/Case-Shiller 20-City Composite Index, shows they have fallen more than 25 percent in 12 markets and more than 50 percent in two – Phoenix and Las Vegas – from peaks hit in 2006 or 2007.
Fifteen out of the 20 metro areas saw a rise in prices from July to August, but those increases are not anywhere close to the losses that have already occurred.
The number of borrowers who walk away is expected to increase, along with the rise in homeowners who owe more than their homes are worth. An unprecedented 16 million homeowners currently are underwater, according to Moody’s Economy.com. That’s about a third of all homeowners with a first mortgage.
Moody’s Economy.com estimates the number of underwater borrowers will peak at 17.4 million in the third quarter of 2010.
An even higher estimate comes from Deutsche Bank, which predicted in an August study that the number of homeowners underwater will grow from 14 million (or 27 percent of all homeowners with mortgages) in 2009 to 25 million homeowners, or 48 percent of all those with a mortgage, by the time home prices stabilize.
Not coincidentally, strategic defaults have been highest where prices have plunged most, such as California and Florida.
From 2005 to 2008, the number of strategic defaulters went up by 68 times in California, according to the Experian-Oliver Wyman study published in September. During that same time period, the median price for existing, single-family homes in California fell from $522,670 in 2005 to $346,410, according to the California Association of Realtors.
In other geographic regions, the increase in strategic defaulters ranged between 3 times and 18 times more.
The Experian-Wyman study found borrowers with higher credit scores when they applied for their loan were 50 percent more likely than other types of borrowers to walk away from a mortgage only because they were underwater, even though they could afford to pay. The study was based on an analysis of about 12 million borrowers.
No household would default if the equity shortfall is less than 10 percent of the value of the house, according to another study this year, done by the University of Chicago, Northwestern University and the European University Institute. But 17 percent of households would default, even if they could afford to pay their mortgage, when the equity shortfall reaches 50 percent of the value of their house. That means the market value of a mortgage property is that much below the amount of loan taken against it.
There also appears to be a contagion effect. Borrowers who know someone who defaulted are 82 percent more likely to declare their intention to do so.
Growing acceptance
“The most disturbing aspect of this is that it’s becoming acceptable to do,” says Joel Naroff, an economist with Naroff Economic Advisors. “What does that mean down the road for housing and the economy if people are happy to walk away and destroy their credit? They’re saying, ‘Why pay a high amount if they can get something, even a rental, for less?’ “
Because of the time and expense involved in completing a foreclosure, borrowers who decide to walk away often wind up staying in their homes for months after they stop paying their mortgage.
In most states, lenders can go after homeowners for past-due payments, but many fail to take such action when borrowers abandon their properties, because the legal costs are so high.
Short sales, in which lenders agree to the sale of a home for less than the balance of the mortgage, is an alternative to a strategic default. Many lenders are now encouraging them, but Zandi says that alternative may seem too time-consuming for borrowers who want to quickly get out from under their homes.
Janet Speer, 51, isn’t happy to be walking away from her 200-year-old home in Royersford, Pa., but she doesn’t feel ashamed. Speer says she was paying about $1,400 a month for her home, which was appraised at about $155,000.
After getting laid off last year, Speer said, she tried to modify her mortgage to more affordable terms but was denied because her unemployment benefits and alimony didn’t count as income. Speer stopped paying on her mortgage in September 2008.
She is still living in the home and waiting to be foreclosed upon. Speer is saving her unemployment benefits for an apartment once the bank takes over her home.
“I got letters and calls from the bank at first, but they stopped,” said Speer, who now earns commission income from a job in the health care industry. “I have a three-story house. It’s way too big. I just want a little two-bedroom apartment. I don’t want this place anymore. I would never have chosen to do this, but it’s going to work out.”
Copyright © 2009 USA TODAY
PENNINGTON, N.J. ¬– Nov. 9, 2009 – When Sharon Sakson was laid off recently from her job as a television writer and producer, she burned through her savings to pay the $2,400 monthly mortgage on her home. But she soon decided it didn’t make sense: Her home was worth thousands less than the mortgage she carried on it.
The home had been appraised at $390,000 when she refinanced in 2006, but she estimates it’s not worth the $320,000 it initially cost in 2004. So Sakson did what a growing number of homeowners are doing today: She stopped paying and decided to let the bank take her home.
“I’m walking away from my house,” says Sakson, 57, who stopped making payments about six months ago on her home in Pennington, N.J. “The bank can have it.”
What Sakson did is called a strategic default, or a voluntary foreclosure, and it’s fast becoming a major challenge to the government’s $75 billion effort to keep distressed borrowers in their homes. Walking away from a mortgage is serious business – it can knock 100 points off your credit score and make you ineligible for a new mortgage for seven years. Yet, about 588,000 borrowers walked away from homes last year, double the number in 2007, according to a recent study by credit-scoring firm Experian and management consultants Oliver Wyman. While home prices are rising, the increases pale compared with overall drops in home prices since 2005 that threaten to push millions more homeowners into Sakson’s predicament, owing more than their homes are worth and seeing little chance of rebuilding equity soon.
More will walk away, which will hamper the housing recovery, reinforce lenders’ tight credit policies and drag on the economy’s recovery, economists say.
“It’s increasingly a more important factor driving the foreclosure crisis,” says Mark Zandi, of Moody’s Economy.com. “As we move forward, the job market will stabilize, and the big thing will be strategic defaults. People are going to determine it doesn’t make financial sense to hold on to their homes. That’s going to be a significant problem. Strategic defaults mean foreclosures could be high for a long time.”
It’s not just economists who are concerned about strategic defaults.
The mortgage unit of Citigroup says one in five borrowers who defaults does so willingly, even though they’re able to pay the mortgage. “It’s a very large number, and it’s a very, very significant risk to the housing recovery,” says Sanjiv Das, CEO of CitiMortgage, adding that new government programs to curb strategic defaults may be needed.
Waiting for prices to stabilize
How bad the strategic defaults issue gets may depend on how much more home prices fall and whether the government does more to help homeowners with mortgages larger than their homes’ value. Both Zandi and Das suggest further actions to reduce mortgage principal for underwater borrowers.
“A better way to do it may be an incentive to stay current for a period, and after two years of being current, they get a principal reduction,” says Das.
The government’s current Making Homes Affordable program for mortgage modifications disqualifies borrowers whose unpaid mortgages are more than 125 percent of the home’s market value.
Nationally, median prices have fallen about 25 percent from their peak in late 2005, although prices recently have risen compared with prior months this year. The median price in the second quarter – $170,000 – was at roughly the level it was in autumn 2003.
But price declines have been worse in some markets. A closely watched barometer of home prices, the Standard & Poor’s/Case-Shiller 20-City Composite Index, shows they have fallen more than 25 percent in 12 markets and more than 50 percent in two – Phoenix and Las Vegas – from peaks hit in 2006 or 2007.
Fifteen out of the 20 metro areas saw a rise in prices from July to August, but those increases are not anywhere close to the losses that have already occurred.
The number of borrowers who walk away is expected to increase, along with the rise in homeowners who owe more than their homes are worth. An unprecedented 16 million homeowners currently are underwater, according to Moody’s Economy.com. That’s about a third of all homeowners with a first mortgage.
Moody’s Economy.com estimates the number of underwater borrowers will peak at 17.4 million in the third quarter of 2010.
An even higher estimate comes from Deutsche Bank, which predicted in an August study that the number of homeowners underwater will grow from 14 million (or 27 percent of all homeowners with mortgages) in 2009 to 25 million homeowners, or 48 percent of all those with a mortgage, by the time home prices stabilize.
Not coincidentally, strategic defaults have been highest where prices have plunged most, such as California and Florida.
From 2005 to 2008, the number of strategic defaulters went up by 68 times in California, according to the Experian-Oliver Wyman study published in September. During that same time period, the median price for existing, single-family homes in California fell from $522,670 in 2005 to $346,410, according to the California Association of Realtors.
In other geographic regions, the increase in strategic defaulters ranged between 3 times and 18 times more.
The Experian-Wyman study found borrowers with higher credit scores when they applied for their loan were 50 percent more likely than other types of borrowers to walk away from a mortgage only because they were underwater, even though they could afford to pay. The study was based on an analysis of about 12 million borrowers.
No household would default if the equity shortfall is less than 10 percent of the value of the house, according to another study this year, done by the University of Chicago, Northwestern University and the European University Institute. But 17 percent of households would default, even if they could afford to pay their mortgage, when the equity shortfall reaches 50 percent of the value of their house. That means the market value of a mortgage property is that much below the amount of loan taken against it.
There also appears to be a contagion effect. Borrowers who know someone who defaulted are 82 percent more likely to declare their intention to do so.
Growing acceptance
“The most disturbing aspect of this is that it’s becoming acceptable to do,” says Joel Naroff, an economist with Naroff Economic Advisors. “What does that mean down the road for housing and the economy if people are happy to walk away and destroy their credit? They’re saying, ‘Why pay a high amount if they can get something, even a rental, for less?’ “
Because of the time and expense involved in completing a foreclosure, borrowers who decide to walk away often wind up staying in their homes for months after they stop paying their mortgage.
In most states, lenders can go after homeowners for past-due payments, but many fail to take such action when borrowers abandon their properties, because the legal costs are so high.
Short sales, in which lenders agree to the sale of a home for less than the balance of the mortgage, is an alternative to a strategic default. Many lenders are now encouraging them, but Zandi says that alternative may seem too time-consuming for borrowers who want to quickly get out from under their homes.
Janet Speer, 51, isn’t happy to be walking away from her 200-year-old home in Royersford, Pa., but she doesn’t feel ashamed. Speer says she was paying about $1,400 a month for her home, which was appraised at about $155,000.
After getting laid off last year, Speer said, she tried to modify her mortgage to more affordable terms but was denied because her unemployment benefits and alimony didn’t count as income. Speer stopped paying on her mortgage in September 2008.
She is still living in the home and waiting to be foreclosed upon. Speer is saving her unemployment benefits for an apartment once the bank takes over her home.
“I got letters and calls from the bank at first, but they stopped,” said Speer, who now earns commission income from a job in the health care industry. “I have a three-story house. It’s way too big. I just want a little two-bedroom apartment. I don’t want this place anymore. I would never have chosen to do this, but it’s going to work out.”
Copyright © 2009 USA TODAY
Friday, November 6, 2009
Obama signs bill: Homebuyer tax credit extended
Homebuyer tax credit program extended
Cynthia Shelton, 2009 Florida Realtors® president, shares the great news about the newly extended and expanded homebuyers tax-credit program.
Watch the video now
WASHINGTON – Nov. 6, 2009 – President Obama signed H.R. 3548 this morning, enacting into law an extension, and adjustment, of the $8,000 tax credit for first-time buyers. Among other things, the extension adds money for certain move-up buyers; creates one deadline for signing a contract and a later deadline for closing; changes income requirements; and limits a purchased home’s cost to $800,000.
“Extending the homebuyer tax credit and expanding it to reach more homebuyers is the right thing to do,” says 2009 Florida Realtors® President Cynthia Shelton. “It is critical to maintaining the positive momentum we’ve been experiencing in the housing market and in the overall economy. Florida Realtors applaud congressional leaders for taking action to extend the homebuyer tax credit into 2010, which will help Florida families realize their dream of homeownership, improve our communities and strengthen our economy.”
Adds John Sebree, Florida Realtors vice president of public policy, “Florida residents enjoy two additional advantages. The Florida Homebuyer Opportunity Program (FHOP), created by the Florida Legislature earlier this year, still has approximately $28 million that first-time homebuyers can access and use toward their downpayment. And move-up buyers now have the ability to ‘port’ their current property tax savings to a new home.”
First-time homebuyers
Most details for first-time homebuyers mirror the rules currently in existence. The maximum tax credit remains $8,000 ($4,000 for married individuals filing separately), and anyone who has not owned a home within three years is considered a “first-time buyer.”
• A purchase must be under contract by April 30, 2010.
• A purchase under contract by April 30 must close no later than June 30, 2010.
• After Dec. 1, 2009, income limits rise to $125,000 for singles and $225,000 for married couples; up from limits effective through Nov. 30 of $75,000 for singles and $150,000 for married couples. The tax credit phases out incrementally at each $20,000 increase in income.
• Effective immediately: The maximum home value purchased cannot exceed $800,000. Prior to the law being signed, first-time homebuyers had no limitation on a home’s cost.
Current homeowner tax credit
An existing homeowner who purchases a home may now claim a tax credit of up to $6,500. To qualify, that owner must have owned and used the same residence as a principal residence for any consecutive five-year period in the previous eight years.
• This new tax credit is effective immediately. Eligible homebuyers do not have to wait until Dec. 1 to close in order to qualify.
• Personal income limits, maximum home value, and contract/closing deadlines are the same as those for first-time homebuyers.
Long-time Florida homeowners who enjoy discounted property taxes resulting from the state’s Save Our Homes amendment qualify for property tax portability, notes Sebree. For more information or to calculate how much tax savings can be transferred to a new home, visit floridarealtors.org at: http://www.floridarealtors.org/LegislativeCenter/TopInitiatives/index.cfm
Florida Homebuyer Opportunity Program
Under FHOP, first-time Florida homebuyers can obtain interest-free bridge loans to access their federal tax credit before they complete a home purchase, enabling them to use that money upfront for downpayment and closing costs. Once buyers submit their returns to the IRS and receive their tax credit money, they repay their loans to the state.
The Florida Realtors-backed program came out of the 2009 session of the Florida Legislature. However, as part of the 2009-2010 budget year, did not become effective immediately. They tax credit extension will allow many first-time buyers to tap into the approximately $28 million in the program's remaining funds.
While funded by the state, the money is distributed through the city and county housing offices that operate the State Housing Initiatives Partnership (SHIP) program. There is no standardized program, and each local agency may operate under different rules for distribution. For more information, buyers should contact their local SHIP office.
To find a local SHIP office, go to: http://apps.floridahousing.org/StandAlone/FHFC_ECM/AppPage_SHIPLGContacts.aspx.
Additional changes
The tax credit extension includes other new rules, such as:
• The new law also impacts dependent purchases of homes, which weren’t addressed under the old rules.
• The new law requires a buyer to attach documentation about the home purchase to his or her income tax return. An audit found that some buyers are claiming the tax credit when they don’t deserve it, and investigators continue to seek out fraud. To minimize tax abuse going forward, buyers won’t receive the credit without submitting proof to the Internal Revenue Service (IRS).
The homebuyer tax credit is collected as part of the normal income tax process. As a credit, it’s calculated separately from an individual’s income tax, and paid regardless of taxes owed or withheld from income. As always, however, only a tax planner can render specific advice to anyone seeking the credit. For more information on the credit, contact a tax planner or visit the IRS website at: http://www.irs.gov.
Florida Realtors will update tax credit information and clarify details when available on the Homebuyer Center, part of floridarealtors.org at: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm.
© 2009 Florida Realtors
Homebuyer tax credit program extended
Cynthia Shelton, 2009 Florida Realtors® president, shares the great news about the newly extended and expanded homebuyers tax-credit program.
Watch the video now
WASHINGTON – Nov. 6, 2009 – President Obama signed H.R. 3548 this morning, enacting into law an extension, and adjustment, of the $8,000 tax credit for first-time buyers. Among other things, the extension adds money for certain move-up buyers; creates one deadline for signing a contract and a later deadline for closing; changes income requirements; and limits a purchased home’s cost to $800,000.
“Extending the homebuyer tax credit and expanding it to reach more homebuyers is the right thing to do,” says 2009 Florida Realtors® President Cynthia Shelton. “It is critical to maintaining the positive momentum we’ve been experiencing in the housing market and in the overall economy. Florida Realtors applaud congressional leaders for taking action to extend the homebuyer tax credit into 2010, which will help Florida families realize their dream of homeownership, improve our communities and strengthen our economy.”
Adds John Sebree, Florida Realtors vice president of public policy, “Florida residents enjoy two additional advantages. The Florida Homebuyer Opportunity Program (FHOP), created by the Florida Legislature earlier this year, still has approximately $28 million that first-time homebuyers can access and use toward their downpayment. And move-up buyers now have the ability to ‘port’ their current property tax savings to a new home.”
First-time homebuyers
Most details for first-time homebuyers mirror the rules currently in existence. The maximum tax credit remains $8,000 ($4,000 for married individuals filing separately), and anyone who has not owned a home within three years is considered a “first-time buyer.”
• A purchase must be under contract by April 30, 2010.
• A purchase under contract by April 30 must close no later than June 30, 2010.
• After Dec. 1, 2009, income limits rise to $125,000 for singles and $225,000 for married couples; up from limits effective through Nov. 30 of $75,000 for singles and $150,000 for married couples. The tax credit phases out incrementally at each $20,000 increase in income.
• Effective immediately: The maximum home value purchased cannot exceed $800,000. Prior to the law being signed, first-time homebuyers had no limitation on a home’s cost.
Current homeowner tax credit
An existing homeowner who purchases a home may now claim a tax credit of up to $6,500. To qualify, that owner must have owned and used the same residence as a principal residence for any consecutive five-year period in the previous eight years.
• This new tax credit is effective immediately. Eligible homebuyers do not have to wait until Dec. 1 to close in order to qualify.
• Personal income limits, maximum home value, and contract/closing deadlines are the same as those for first-time homebuyers.
Long-time Florida homeowners who enjoy discounted property taxes resulting from the state’s Save Our Homes amendment qualify for property tax portability, notes Sebree. For more information or to calculate how much tax savings can be transferred to a new home, visit floridarealtors.org at: http://www.floridarealtors.org/LegislativeCenter/TopInitiatives/index.cfm
Florida Homebuyer Opportunity Program
Under FHOP, first-time Florida homebuyers can obtain interest-free bridge loans to access their federal tax credit before they complete a home purchase, enabling them to use that money upfront for downpayment and closing costs. Once buyers submit their returns to the IRS and receive their tax credit money, they repay their loans to the state.
The Florida Realtors-backed program came out of the 2009 session of the Florida Legislature. However, as part of the 2009-2010 budget year, did not become effective immediately. They tax credit extension will allow many first-time buyers to tap into the approximately $28 million in the program's remaining funds.
While funded by the state, the money is distributed through the city and county housing offices that operate the State Housing Initiatives Partnership (SHIP) program. There is no standardized program, and each local agency may operate under different rules for distribution. For more information, buyers should contact their local SHIP office.
To find a local SHIP office, go to: http://apps.floridahousing.org/StandAlone/FHFC_ECM/AppPage_SHIPLGContacts.aspx.
Additional changes
The tax credit extension includes other new rules, such as:
• The new law also impacts dependent purchases of homes, which weren’t addressed under the old rules.
• The new law requires a buyer to attach documentation about the home purchase to his or her income tax return. An audit found that some buyers are claiming the tax credit when they don’t deserve it, and investigators continue to seek out fraud. To minimize tax abuse going forward, buyers won’t receive the credit without submitting proof to the Internal Revenue Service (IRS).
The homebuyer tax credit is collected as part of the normal income tax process. As a credit, it’s calculated separately from an individual’s income tax, and paid regardless of taxes owed or withheld from income. As always, however, only a tax planner can render specific advice to anyone seeking the credit. For more information on the credit, contact a tax planner or visit the IRS website at: http://www.irs.gov.
Florida Realtors will update tax credit information and clarify details when available on the Homebuyer Center, part of floridarealtors.org at: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm.
© 2009 Florida Realtors
Thursday, November 5, 2009
Tax credit extension passes House and Senate
WASHINGTON – Nov. 5, 2009 – The $8,000, first-time homebuyer tax credit has not yet been extended beyond its Nov. 30 end date, but it’s very close to gaining a longer life.
The extension was added as an amendment to an existing bill, HR 3548, that extends unemployment benefits. The U.S. Senate passed that bill on Wednesday and, after debate, the U.S. House passed HR 3548 this afternoon. It now needs only President Obama’s signature to become law, and the White House has indicated it will sign it, perhaps as early as tomorrow.
Until the president signs the bill, however, it is not law.
In addition to extending the tax credit for first-time homebuyers under the current rules, the bill adds a smaller tax credit for move-up homebuyers who have lived in the house for five of the past seven years. The bill also increases the income limits of homebuyers from $75,000 (single) to $125,000; and from $150,000 (married) to $225,000.
Florida downpayment assistance
After the president signs the bill and extends the tax credit, the Florida Homebuyer Opportunity Program – a downpayment and closing costs assistance program relating to the federal tax credit –automatically gets extended too. The state still has about $28 million available for homebuyers. The money is essentially a loan to first-time buyers; they receive it upfront, use it for a downpayment or other costs, and pay it back once they get their federal refund.
For more information on the Florida Homebuyer Opportunity Program, visit the Homebuyer Center on floridarealtors.org: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm
Also check floridarealtors.org for updates as they’re released; and, after the tax credit extension becomes law, details on the new program.
© 2009 Florida Realtors®
WASHINGTON – Nov. 5, 2009 – The $8,000, first-time homebuyer tax credit has not yet been extended beyond its Nov. 30 end date, but it’s very close to gaining a longer life.
The extension was added as an amendment to an existing bill, HR 3548, that extends unemployment benefits. The U.S. Senate passed that bill on Wednesday and, after debate, the U.S. House passed HR 3548 this afternoon. It now needs only President Obama’s signature to become law, and the White House has indicated it will sign it, perhaps as early as tomorrow.
Until the president signs the bill, however, it is not law.
In addition to extending the tax credit for first-time homebuyers under the current rules, the bill adds a smaller tax credit for move-up homebuyers who have lived in the house for five of the past seven years. The bill also increases the income limits of homebuyers from $75,000 (single) to $125,000; and from $150,000 (married) to $225,000.
Florida downpayment assistance
After the president signs the bill and extends the tax credit, the Florida Homebuyer Opportunity Program – a downpayment and closing costs assistance program relating to the federal tax credit –automatically gets extended too. The state still has about $28 million available for homebuyers. The money is essentially a loan to first-time buyers; they receive it upfront, use it for a downpayment or other costs, and pay it back once they get their federal refund.
For more information on the Florida Homebuyer Opportunity Program, visit the Homebuyer Center on floridarealtors.org: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm
Also check floridarealtors.org for updates as they’re released; and, after the tax credit extension becomes law, details on the new program.
© 2009 Florida Realtors®
Wednesday, November 4, 2009
Feds: More than 100 arrested for mortgage fraud
TAMPA, Fla. (AP) – Nov. 4, 2009 – A federal prosecutor says a crackdown on organized mortgage fraud this year has yielded 105 arrests from Jacksonville to Fort Myers.
A. Brian Albritton, the U.S. attorney for Florida’s middle district, announced the results of the nine-month investigation at news conferences Tuesday in Fort Myers and Tampa.
Albritton said the fraudulent loans totaled more than $400 million and involved more than 700 properties.
Defendants include mortgage brokers, real estate agents, lenders, sellers and buyers. Albritton called the problem an “epidemic.”
Florida’s middle district includes a swath that extends from Jacksonville to Fort Myers and includes the Orlando and Tampa areas.
Copyright © 2009 The Associated Press
TAMPA, Fla. (AP) – Nov. 4, 2009 – A federal prosecutor says a crackdown on organized mortgage fraud this year has yielded 105 arrests from Jacksonville to Fort Myers.
A. Brian Albritton, the U.S. attorney for Florida’s middle district, announced the results of the nine-month investigation at news conferences Tuesday in Fort Myers and Tampa.
Albritton said the fraudulent loans totaled more than $400 million and involved more than 700 properties.
Defendants include mortgage brokers, real estate agents, lenders, sellers and buyers. Albritton called the problem an “epidemic.”
Florida’s middle district includes a swath that extends from Jacksonville to Fort Myers and includes the Orlando and Tampa areas.
Copyright © 2009 The Associated Press
Tuesday, November 3, 2009
South Florida homebuyers leery about Chinese drywall
WEST PALM BEACH, Fla. – Nov. 3, 2009 – Home buyers in South Florida are petrified of tainted Chinese drywall.
Some rule out entire neighborhoods or houses and condos built within the past seven years. Others don’t want anything to do with builders known to have used Chinese drywall. And buyers who do sign contracts seek assurances that might not prove reliable.
Mike and Sandy Siegel are asking potential neighbors in the Tivoli Isles community west of Delray Beach about any evidence of the drywall. The couple had a handyman climb into the attic of the home they want to buy to make sure Knauf Plasterboard Tianjin, a Chinese maker of drywall and other building materials, is not written on any of the boards.
“There are no signs yet, but you never know,” Mike Siegel said. “Once you get this, it’s a son of a gun.”
As many as 100,000 homes in the nation, including 36,000 in Florida, could have the imported wallboard, which is thought to corrode wiring, copper pipes, appliances and metals and give off a “rotten egg” stench.
Worse, homeowners say, are the nosebleeds, respiratory problems and other symptoms they blame on the drywall.
However, state and federal officials said last week they had yet to link the drywall to any health risks.
Builders used the material from China because of a shortage of American-made drywall earlier this decade during the housing boom and after the busy hurricane seasons of 2004 and 2005. Even older homes renovated in recent years could have the suspect drywall.
Most builders have refused to fix the homes, and lenders and property insurers have offered little or no relief.
Homeowners who can afford to are moving into rental housing. Others are abandoning the properties.
Hoping to avoid any drywall-caused problems, “buyers are asking a lot more questions and doing a lot more research,” said Jon Klein, a real estate agent for Coldwell Banker in Broward County. “They’re very cautious. Very cautious. I would be, too.”
Some buyers refuse to consider homes that don’t have Chinese drywall if they’re in developments where the problem is prevalent.
“It’s fair to say that anyone who buys a home in a community with Chinese drywall is adversely affected as well,” Boca Raton attorney Allison Grant said. “It hurts everybody’s property values.”
The Broward County property appraiser is slashing assessed values of affected homes in half, and Palm Beach County also plans to cut values.
Based on those assessments, nearby homes without Chinese drywall also stand to lose value.
Drywall complaints in Broward and Palm Beach counties generally have come from Parkland, Pompano Beach, Davie, Miramar, Boca Raton and communities west of Delray Beach and Boynton Beach.
Parkland has been the unofficial epicenter for the drywall complaints in South Florida. About 150 homes there have it, Mayor Michael Udine said.
Heron Bay and Parkland Golf & Country Club are the two developments most affected in Parkland. Many people expected all home sales in those communities to decline, but that hasn’t been the case, Udine said.
Udine said he has heard that investors are trying to get deals on homes with the drywall and factoring in the cost to repair them, even though the federal government has not yet issued an official remediation plan.
But many buyers who intend to live near reported cases of Chinese drywall are trying to make sure they don’t inherit a major hassle.
Debbie Anderson, an agent for Prudential Florida Realty, held an open house recently for a new home in Parkland Golf & Country Club.
“I had a pretty good turnout – about 10 people,” Anderson said. “Almost every one, as soon as they walked in, asked, ‘Does this house have Chinese drywall?’ “
Some real estate agents note it in marketing materials if a home does not have problem drywall. Other agents prefer to exclude any mention of it.
Under Florida law, sellers and their real estate agents must disclose any known material defect or condition that would affect the value of a home.
The Florida Association of Realtors added a disclosure form for Chinese drywall, but there is no state law requiring sellers to use it.
Buyers are starting to hire inspectors such as Howard Ehrsam to test homes before they commit to the purchase.
“They’ve invested a lot of emotion and energy into finding homes, and if they’re tainted, they get pretty upset,” Ehrsam said. “But they’re also relieved that they’re finding out now versus later.”
Ehrsam, a civil engineer and general contractor from Port St. Lucie, said he saw a need for the niche business across Florida and beyond because many home inspectors don’t know how to detect Chinese drywall.
He and his workers check a home’s mechanical systems, electrical outlets and appliances for corrosion. They also dig into walls and ceilings.
They summarize their findings in a written report, but it does not come with a guarantee. Because so little is known about Chinese drywall, Ehrsam said all he can offer is a “professional opinion.”
Julie Fass cast a wide net across Broward County in her search for a home and was drawn to one development in Coconut Creek.
The curb appeal was striking, and the interior of the home had plenty of bells and whistles. But then she found out the builder was dealing with Chinese drywall elsewhere, so she reluctantly moved on.
Fass’ search continues, though she has narrowed it to Weston because most of the homes there were built before 2005, she said. When she does find a house, she will check the drywall in the attic to make sure it’s not from China.
“There are so many things you have to think about when you’re buying a home, and this is just one more,” Fass said. “It’s a pain.”
Copyright © 2009 Sun Sentinel,
WEST PALM BEACH, Fla. – Nov. 3, 2009 – Home buyers in South Florida are petrified of tainted Chinese drywall.
Some rule out entire neighborhoods or houses and condos built within the past seven years. Others don’t want anything to do with builders known to have used Chinese drywall. And buyers who do sign contracts seek assurances that might not prove reliable.
Mike and Sandy Siegel are asking potential neighbors in the Tivoli Isles community west of Delray Beach about any evidence of the drywall. The couple had a handyman climb into the attic of the home they want to buy to make sure Knauf Plasterboard Tianjin, a Chinese maker of drywall and other building materials, is not written on any of the boards.
“There are no signs yet, but you never know,” Mike Siegel said. “Once you get this, it’s a son of a gun.”
As many as 100,000 homes in the nation, including 36,000 in Florida, could have the imported wallboard, which is thought to corrode wiring, copper pipes, appliances and metals and give off a “rotten egg” stench.
Worse, homeowners say, are the nosebleeds, respiratory problems and other symptoms they blame on the drywall.
However, state and federal officials said last week they had yet to link the drywall to any health risks.
Builders used the material from China because of a shortage of American-made drywall earlier this decade during the housing boom and after the busy hurricane seasons of 2004 and 2005. Even older homes renovated in recent years could have the suspect drywall.
Most builders have refused to fix the homes, and lenders and property insurers have offered little or no relief.
Homeowners who can afford to are moving into rental housing. Others are abandoning the properties.
Hoping to avoid any drywall-caused problems, “buyers are asking a lot more questions and doing a lot more research,” said Jon Klein, a real estate agent for Coldwell Banker in Broward County. “They’re very cautious. Very cautious. I would be, too.”
Some buyers refuse to consider homes that don’t have Chinese drywall if they’re in developments where the problem is prevalent.
“It’s fair to say that anyone who buys a home in a community with Chinese drywall is adversely affected as well,” Boca Raton attorney Allison Grant said. “It hurts everybody’s property values.”
The Broward County property appraiser is slashing assessed values of affected homes in half, and Palm Beach County also plans to cut values.
Based on those assessments, nearby homes without Chinese drywall also stand to lose value.
Drywall complaints in Broward and Palm Beach counties generally have come from Parkland, Pompano Beach, Davie, Miramar, Boca Raton and communities west of Delray Beach and Boynton Beach.
Parkland has been the unofficial epicenter for the drywall complaints in South Florida. About 150 homes there have it, Mayor Michael Udine said.
Heron Bay and Parkland Golf & Country Club are the two developments most affected in Parkland. Many people expected all home sales in those communities to decline, but that hasn’t been the case, Udine said.
Udine said he has heard that investors are trying to get deals on homes with the drywall and factoring in the cost to repair them, even though the federal government has not yet issued an official remediation plan.
But many buyers who intend to live near reported cases of Chinese drywall are trying to make sure they don’t inherit a major hassle.
Debbie Anderson, an agent for Prudential Florida Realty, held an open house recently for a new home in Parkland Golf & Country Club.
“I had a pretty good turnout – about 10 people,” Anderson said. “Almost every one, as soon as they walked in, asked, ‘Does this house have Chinese drywall?’ “
Some real estate agents note it in marketing materials if a home does not have problem drywall. Other agents prefer to exclude any mention of it.
Under Florida law, sellers and their real estate agents must disclose any known material defect or condition that would affect the value of a home.
The Florida Association of Realtors added a disclosure form for Chinese drywall, but there is no state law requiring sellers to use it.
Buyers are starting to hire inspectors such as Howard Ehrsam to test homes before they commit to the purchase.
“They’ve invested a lot of emotion and energy into finding homes, and if they’re tainted, they get pretty upset,” Ehrsam said. “But they’re also relieved that they’re finding out now versus later.”
Ehrsam, a civil engineer and general contractor from Port St. Lucie, said he saw a need for the niche business across Florida and beyond because many home inspectors don’t know how to detect Chinese drywall.
He and his workers check a home’s mechanical systems, electrical outlets and appliances for corrosion. They also dig into walls and ceilings.
They summarize their findings in a written report, but it does not come with a guarantee. Because so little is known about Chinese drywall, Ehrsam said all he can offer is a “professional opinion.”
Julie Fass cast a wide net across Broward County in her search for a home and was drawn to one development in Coconut Creek.
The curb appeal was striking, and the interior of the home had plenty of bells and whistles. But then she found out the builder was dealing with Chinese drywall elsewhere, so she reluctantly moved on.
Fass’ search continues, though she has narrowed it to Weston because most of the homes there were built before 2005, she said. When she does find a house, she will check the drywall in the attic to make sure it’s not from China.
“There are so many things you have to think about when you’re buying a home, and this is just one more,” Fass said. “It’s a pain.”
Copyright © 2009 Sun Sentinel,
Monday, November 2, 2009
Congress extends higher mortgage loan limits
WASHINGTON – Nov. 2, 2009 – On Thursday, the U.S. Congress passed a congressional resolution to extend the current higher Fannie Mae, Freddie Mac and FHA loan limits through 2010. The present, higher loan limits expire at the end of 2009 and revert to previous lower limits. The move still needs to be signed by President Obama, which is expected shortly.
The National Association of Realtors® (NAR) thanked Congress for speedy action.
“NAR commends both houses of Congress for their quick action in continuing these higher limits during a time for recovery in the housing market and national economy,” says NAR President Charles McMillan. “The higher limits, along with the homebuyer tax credit extension, are necessary to keep the markets moving at this critical time.
“Home sales have shown significant movement upwards in the past six months, and reduced inventory in some segments of the housing market, but not in all. Home purchases in the middle-income and higher brackets have not moved much, and those markets must improve before we can experience a fully sustained housing recovery. These higher loan limits will help motivate qualified homebuyers to purchase in those markets,” McMillan said.
The resolution would extend the present loan limits for FHA, Fannie and Freddie through the 2010 calendar year at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas. The floor for FHA is $271,050; the floor for Fannie Mae and Freddie Mac conforming loan limits is $417,000.
© 2009 Florida Realtors®
WASHINGTON – Nov. 2, 2009 – On Thursday, the U.S. Congress passed a congressional resolution to extend the current higher Fannie Mae, Freddie Mac and FHA loan limits through 2010. The present, higher loan limits expire at the end of 2009 and revert to previous lower limits. The move still needs to be signed by President Obama, which is expected shortly.
The National Association of Realtors® (NAR) thanked Congress for speedy action.
“NAR commends both houses of Congress for their quick action in continuing these higher limits during a time for recovery in the housing market and national economy,” says NAR President Charles McMillan. “The higher limits, along with the homebuyer tax credit extension, are necessary to keep the markets moving at this critical time.
“Home sales have shown significant movement upwards in the past six months, and reduced inventory in some segments of the housing market, but not in all. Home purchases in the middle-income and higher brackets have not moved much, and those markets must improve before we can experience a fully sustained housing recovery. These higher loan limits will help motivate qualified homebuyers to purchase in those markets,” McMillan said.
The resolution would extend the present loan limits for FHA, Fannie and Freddie through the 2010 calendar year at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas. The floor for FHA is $271,050; the floor for Fannie Mae and Freddie Mac conforming loan limits is $417,000.
© 2009 Florida Realtors®
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