Administration shifts gears on mortgage modifications
WASHINGTON – Jan. 29, 2010 – Conceding that its initial mortgage relief program has been less than successful, the Treasury Department Thursday announced new rules to simplify and speed the decision-making process for struggling borrowers trying to modify the terms of their distressed mortgages.
The changes to last year’s Home Affordable Modification Program announced by the Treasury take effect on June 1, and are designed to address the continuing problem with borrower documentation that’s frustrated both homeowners and mortgage servicers, who act as bill collectors for investors that own pools of U.S. home loans.
The new HAMP requirements will force servicers to have in hand all the needed documents from borrowers before they extend a three-month trial modification. Currently, trial modifications can begin after authorization by phone, with related paperwork only needed sometime within the three-month trial period.
Servicers complain that borrowers often provide incomplete applications or lack sufficient proof of income, and that lack of upfront documentation provides false hopes that a solution is coming.
Borrowers counter that servicers routinely lose their paperwork and then use the lost paperwork as a reason to refuse to modify a mortgage and help them stay in their homes.
The confusion has led to a slow start for the administration’s effort, which began picking up speed in December. Several million homeowners may qualify for loan modifications, but as of December, only 110,000 permanent modifications had taken place, a fraction of the 3 million to 4 million sought by 2012.
“We’ve learned a lot along the way,” said Assistant Treasury Secretary Herb Allison, acknowledging that the program to help struggling borrowers stay out of foreclosure got off to a difficult start.
By getting the paperwork to servicers before the trial “mod” process begins, borrowers are likely to benefit, because once a HAMP trial begins, they’re guaranteed a permanent modification as long as they make the three trial payments on time. Right now, many are turned down even after making three trial payments.
“It’s clear they were having problems taking the initial mods and making them into permanent, sustainable mod, so something clearly needed to change,” said Evan Fuguet, senior policy counsel for the Center for Responsible Lending, a consumer advocacy organization in Durham, N.C.
The administration plan seeks to lower payments for troubled borrowers to 31 percent of before-tax income for five years, after which the interest rate on the mortgage begins rising. More than 900,000 trial modifications were offered through December, and to date some 43.2 percent of the permanent modifications have involved extending loan terms, many of them stretching the life of a loan to 40 years.
On the web:
Treasury announcement:
Latest program numbers:http://www.ustreas.gov/press/releases/tg516.htm
Government modification program: http://makinghomeaffordable.gov/
Supplemental Directive 10-01 is available at https://www.hmpadmin.com/portal/docs/hamp_servicer/sd1001.pdf
Copyright © 2010 McClatchy-Tribune Information Services
Friday, January 29, 2010
Thursday, January 28, 2010
Florida to get high-speed rail money
TALLAHASSEE, Fla. – Jan. 28, 2010 – Florida will receive federal money for a high-speed train between Orlando and Tampa, U.S. Sens. Bill Nelson and George LeMieux said Wednesday.
The formal announcement, expected today during President Barack Obama’s post-State of the Union visit to Tampa, comes weeks after state lawmakers approved a sweeping rail package to allow for the development of the SunRail commuter train in Orlando and provide about $15 million to the cash-strapped Tri-Rail train in South Florida. Lawmakers hoped that legislation would help as they tried to secure $2.5 billion in federal stimulus money for a Tampa to Orlando high-speed corridor, the first leg of a long-proposed Tampa-Orlando-Miami bullet train route.
Affordable transportation makes Florida smaller and opens up the possibility that Tampa residents could work full-time at Walt Disney World or Orlando residents could have an office with a view of the Gulf of Mexico. Historically, homebuyers who commute prefer houses located close to rail stations, which boosts demand, and selling prices, for those neighborhoods.
Neither Nelson nor LeMieux said Wednesday how much of Florida’s $2.5 billion request would be granted. They also said they were unsure about the fate of two other requests: $70 million for Atlantic Coast Amtrak passenger service between Jacksonville and Miami and $432 million for buying existing freight tracks for SunRail from CSX Corp.
State transportation officials also remained mum, saying that they were awaiting the big announcement like everyone. But Nelson, a Democrat, and LeMieux, a Republican, did not wait to hail the decision to award Florida the rail money.
“This will be one of the largest boosts to the state’s economy since Disney, since the interstate highway system,” Nelson said in a statement.
“This will be a transformative project for Florida,” LeMieux followed in a statement of his own. “It will connect Tampa and Orlando making it a mega region, making travel between the two cities much easier. I’ve got my fingers crossed that the President’s going to award Florida the full $2.5 billion.”
The Florida high speed rail corridor was one of 10 identified by the White House last spring for the beginning of a national network. Competing links include California between Sacramento, Los Angeles and San Diego; the Pacific Northwest; the Gulf Coast between Houston and Atlanta; Chicago; the southeastern U.S. between Washington, D.C. and Georgia; the south Central U.S. between Tulsa and Texas; Pennsylvania between Pittsburgh and Philadelphia; New York between New York City and upstate New York; and New England.
Even before Florida lawmakers approved the state rail bill, the Tampa-Orlando-Miami route was thought to be a prohibitive favorite because much of the preliminary surveying had been done when voters approved the plan in 2000 and the Florida High Speed Rail Authority was created in 2002. Federal transportation officials, however, hinted that a commuter rail deal was necessary before the state would be given any of the stimulus rail money.
One of Florida largest labor unions joined LeMieux and Nelson in lauding Obama’s expected announcement.
“We completely support high speed rail for Florida,” Florida AFL-CIO spokesman Rich Templin said Wednesday. “The state could use the high-skill, high-wage jobs it would bring, and Floridians would have a reliable system of public transportation.” The union initially opposed the SunRail bill, but turned around after receiving commitments that it would protect union jobs.
The leading Senate Sunrail critic said the expected windfall for Florida had not changed her position on SunRail.
“The (Sunrail) bill that was passed in special session had absolutely nothing to do with high speed rail,” state Senate and Republican gubernatorial candidate Paula Dockery, R-Lakeland, said after addressing newspaper editors and reporters in Tallahassee Wednesday. “The bill that passed this last session was a very brilliant attempt by the proponents of SunRail to get SunRail, which was unpopular, passed by tying it to … high-speed rail funding.”
Dockery said she expects Florida to get about $1.6 billion of the requested $2.5 billion. If the high-speed rail application is approved, construction on the Tampa-Orlando segment is scheduled to begin in late 2014 and the second segment by late 2017.
Source: News Service of Florida
TALLAHASSEE, Fla. – Jan. 28, 2010 – Florida will receive federal money for a high-speed train between Orlando and Tampa, U.S. Sens. Bill Nelson and George LeMieux said Wednesday.
The formal announcement, expected today during President Barack Obama’s post-State of the Union visit to Tampa, comes weeks after state lawmakers approved a sweeping rail package to allow for the development of the SunRail commuter train in Orlando and provide about $15 million to the cash-strapped Tri-Rail train in South Florida. Lawmakers hoped that legislation would help as they tried to secure $2.5 billion in federal stimulus money for a Tampa to Orlando high-speed corridor, the first leg of a long-proposed Tampa-Orlando-Miami bullet train route.
Affordable transportation makes Florida smaller and opens up the possibility that Tampa residents could work full-time at Walt Disney World or Orlando residents could have an office with a view of the Gulf of Mexico. Historically, homebuyers who commute prefer houses located close to rail stations, which boosts demand, and selling prices, for those neighborhoods.
Neither Nelson nor LeMieux said Wednesday how much of Florida’s $2.5 billion request would be granted. They also said they were unsure about the fate of two other requests: $70 million for Atlantic Coast Amtrak passenger service between Jacksonville and Miami and $432 million for buying existing freight tracks for SunRail from CSX Corp.
State transportation officials also remained mum, saying that they were awaiting the big announcement like everyone. But Nelson, a Democrat, and LeMieux, a Republican, did not wait to hail the decision to award Florida the rail money.
“This will be one of the largest boosts to the state’s economy since Disney, since the interstate highway system,” Nelson said in a statement.
“This will be a transformative project for Florida,” LeMieux followed in a statement of his own. “It will connect Tampa and Orlando making it a mega region, making travel between the two cities much easier. I’ve got my fingers crossed that the President’s going to award Florida the full $2.5 billion.”
The Florida high speed rail corridor was one of 10 identified by the White House last spring for the beginning of a national network. Competing links include California between Sacramento, Los Angeles and San Diego; the Pacific Northwest; the Gulf Coast between Houston and Atlanta; Chicago; the southeastern U.S. between Washington, D.C. and Georgia; the south Central U.S. between Tulsa and Texas; Pennsylvania between Pittsburgh and Philadelphia; New York between New York City and upstate New York; and New England.
Even before Florida lawmakers approved the state rail bill, the Tampa-Orlando-Miami route was thought to be a prohibitive favorite because much of the preliminary surveying had been done when voters approved the plan in 2000 and the Florida High Speed Rail Authority was created in 2002. Federal transportation officials, however, hinted that a commuter rail deal was necessary before the state would be given any of the stimulus rail money.
One of Florida largest labor unions joined LeMieux and Nelson in lauding Obama’s expected announcement.
“We completely support high speed rail for Florida,” Florida AFL-CIO spokesman Rich Templin said Wednesday. “The state could use the high-skill, high-wage jobs it would bring, and Floridians would have a reliable system of public transportation.” The union initially opposed the SunRail bill, but turned around after receiving commitments that it would protect union jobs.
The leading Senate Sunrail critic said the expected windfall for Florida had not changed her position on SunRail.
“The (Sunrail) bill that was passed in special session had absolutely nothing to do with high speed rail,” state Senate and Republican gubernatorial candidate Paula Dockery, R-Lakeland, said after addressing newspaper editors and reporters in Tallahassee Wednesday. “The bill that passed this last session was a very brilliant attempt by the proponents of SunRail to get SunRail, which was unpopular, passed by tying it to … high-speed rail funding.”
Dockery said she expects Florida to get about $1.6 billion of the requested $2.5 billion. If the high-speed rail application is approved, construction on the Tampa-Orlando segment is scheduled to begin in late 2014 and the second segment by late 2017.
Source: News Service of Florida
Wednesday, January 27, 2010
Home prices rise for 6th straight month in Nov.
MIAMI – Jan. 27, 2010 – U.S. home prices rose for the sixth straight month in November, fueled by tax credits for homebuyers.
The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday inched up 0.2 percent to a seasonally adjusted reading of 145.49. The index was off 5.3 percent from November last year, nearly matching analysts’ estimates that it would fall by 5.1 percent.
The index is now up more than 3 percent from its bottom in May, but still 30 percent below its peak in May 2006.
Rising prices are important to the economic recovery because they make homeowners feel wealthier and lead them to spend more money. Price increases also help restore home equity for the one-in-four homeowners who currently owe more on their mortgages than their homes are worth.
In a research note, Deutsche Bank analyst Joseph LaVorgna wrote that the price improvements should lead to a $1 trillion increase in homeowner equity by the current quarter.
Karl Case, a co-creator of the index, pointed to signs of stability that were in stark contrast to rapidly falling prices a year ago. “Flat is good,” he said.
Phoenix and San Francisco posted the highest month-to-month gains, on a seasonally adjusted basis, while New York and Chicago had the largest declines.
The tax credit for first-time homebuyers had been scheduled to end Nov. 30, but Congress extended the deadline through April, and expanded the program to include a tax credit for current homeowners.
“A lot of people are thinking now is the time to buy because they are going to get a great bargain or a steal,” said Bill Wilkerson, a real estate agent with ZIP Realty in Phoenix. “I’m looking forward to a very active springtime.”
Prices increased for the seventh straight month in San Francisco, where sales in the $500,000 to $750,000 were strong. Buyers took advantage of the tax credits and low interest rates, said Chuck Colliver, president of Century 21 Alliance in Daly City, Calif.
“Those people who have been thinking about buying a house this year are probably going to put it on the front burner” because of the low rates, Colliver said.
In Las Vegas, prices edged up 0.1 percent, the first month-to-month increase since January 2007. Still, prices are down 56 percent in Las Vegas since peaking in April 2006.
The list of cities with price increases, on a seasonally adjusted basis, also included Los Angeles, San Diego, Denver, Boston and Charlotte, North Carolina.
While prices have risen steadily on a national basis, some economists predict they will dip again early this year because of high unemployment and foreclosures.
“Until we get job growth, we won’t get complete healing of the housing market,” said Jeff Humphreys, an economist with the University of Georgia.
Data for December and January could show price declines due to a lull in buyer activity after the tax credit was extended, Humphreys said.
UBS analyst David Goldberg estimates that prices could drop another 3 to 5 percent before unemployment levels out, possibly in the second half of this year.
“We’re probably in the latter stages of seeing home price declines,” Goldberg said.
Home prices fell for the third straight month in Tampa, Florida, where sales of distressed properties comprise about half of total sales, said Cathleen Smith, a regional vice president with Coldwell Banker.
Prices also dropped in Washington – which had posted seven straight monthly increases – Miami and Detroit.
The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.
Copyright © 2010 The Associated Press
MIAMI – Jan. 27, 2010 – U.S. home prices rose for the sixth straight month in November, fueled by tax credits for homebuyers.
The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday inched up 0.2 percent to a seasonally adjusted reading of 145.49. The index was off 5.3 percent from November last year, nearly matching analysts’ estimates that it would fall by 5.1 percent.
The index is now up more than 3 percent from its bottom in May, but still 30 percent below its peak in May 2006.
Rising prices are important to the economic recovery because they make homeowners feel wealthier and lead them to spend more money. Price increases also help restore home equity for the one-in-four homeowners who currently owe more on their mortgages than their homes are worth.
In a research note, Deutsche Bank analyst Joseph LaVorgna wrote that the price improvements should lead to a $1 trillion increase in homeowner equity by the current quarter.
Karl Case, a co-creator of the index, pointed to signs of stability that were in stark contrast to rapidly falling prices a year ago. “Flat is good,” he said.
Phoenix and San Francisco posted the highest month-to-month gains, on a seasonally adjusted basis, while New York and Chicago had the largest declines.
The tax credit for first-time homebuyers had been scheduled to end Nov. 30, but Congress extended the deadline through April, and expanded the program to include a tax credit for current homeowners.
“A lot of people are thinking now is the time to buy because they are going to get a great bargain or a steal,” said Bill Wilkerson, a real estate agent with ZIP Realty in Phoenix. “I’m looking forward to a very active springtime.”
Prices increased for the seventh straight month in San Francisco, where sales in the $500,000 to $750,000 were strong. Buyers took advantage of the tax credits and low interest rates, said Chuck Colliver, president of Century 21 Alliance in Daly City, Calif.
“Those people who have been thinking about buying a house this year are probably going to put it on the front burner” because of the low rates, Colliver said.
In Las Vegas, prices edged up 0.1 percent, the first month-to-month increase since January 2007. Still, prices are down 56 percent in Las Vegas since peaking in April 2006.
The list of cities with price increases, on a seasonally adjusted basis, also included Los Angeles, San Diego, Denver, Boston and Charlotte, North Carolina.
While prices have risen steadily on a national basis, some economists predict they will dip again early this year because of high unemployment and foreclosures.
“Until we get job growth, we won’t get complete healing of the housing market,” said Jeff Humphreys, an economist with the University of Georgia.
Data for December and January could show price declines due to a lull in buyer activity after the tax credit was extended, Humphreys said.
UBS analyst David Goldberg estimates that prices could drop another 3 to 5 percent before unemployment levels out, possibly in the second half of this year.
“We’re probably in the latter stages of seeing home price declines,” Goldberg said.
Home prices fell for the third straight month in Tampa, Florida, where sales of distressed properties comprise about half of total sales, said Cathleen Smith, a regional vice president with Coldwell Banker.
Prices also dropped in Washington – which had posted seven straight monthly increases – Miami and Detroit.
The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.
Copyright © 2010 The Associated Press
Tuesday, January 26, 2010
Clearing up confusion regarding tax credits
Tax credit resources
To read more about the tax credit and find other materials, visit floridarealtors.org here.
TAMPA, Fla. – Jan. 26, 2010 – Federal tax credits for homebuyers have certainly boosted the Tampa Bay area real estate market.
The incentives have prompted nervous buyers to get off the fence, and that has helped the area shed thousands of homes from the region’s inventory of unsold properties.
But as these buyers prepare to cash in on their purchases by filing their tax returns, many are finding they may not qualify after all or don’t know how to file.
“There’s a lot of confusion,” said Greg Armstrong, a Coldwell Banker broker in Pasco County. “It’s so complex that if you’re not living it every day, like a CPA, you’re not in a position to direct someone.”
Even if the case seems straightforward, Armstrong encourages clients to seek guidance from an accountant.
There have been so many changes to the credit that IRS spokesman Michael Dobzinski had to consult his notes often to answer questions. Here are some helpful things the IRS wants you to know about the credits.
• The credits are available only to buyers purchasing primary residences. The IRS defines this has the residence where you spend most of your time.
• There are two credits available. One is for first-time buyers, or those who have not owned a home in the past three years. The maximum for this credit is $8,000 and, unlike a previous credit, this one does not have to be paid back. It applies to purchases made this year between Jan. 1 and April 30.
• The government broadened the credit in November to include some buyers who already own houses. Those buyers are eligible for a credit worth up to $6,500 for purchases made between Nov. 7 and April 30. In order to qualify, the buyer must have owned a primary residence for at least five consecutive years out of the past eight years. This credit also does not need to be paid back.
• There are income and price requirements. If the home was purchased after Nov. 6, it can cost no more than $800,000. Also, if purchased after that date, individuals cannot earn more than $125,000 and married couples filing jointly cannot earn more than $225,000.
• You don’t have to wait until 2010 to claim your credit, even if you buy this year. Purchase a home before the April 30 deadline and the credit can be claimed on this year’s taxes.
• If you’re claiming the credit, a paper filing is necessary. Only taxpayers not claiming the credit can file electronically. Dobzinski said buyers can still use electronic forms, but must print them out and mail them in, along with form 5405.
• Unlike last year, buyers claiming the credit must prove they are eligible. This is because some people filed for the credit last year, even though they had not purchased a home. You’ll need to send the HUD settlement statement along with the tax form. If you’re claiming the longtime owner credit, also include proof, such as copies of mortgage interest statements, property tax records or homeowner’s insurance records.
• Keep in mind that the credit is for your primary home. If you decide to rent or sell the home within three years, the credit must be repaid.
• Buyers claiming the credit will have to wait longer than usual to get the credit because of the need to file by paper. Expect to wait four to eight weeks, instead of the typical two weeks when filing electronically.
Copyright © 2010 Tampa Tribune, Fla
Tax credit resources
To read more about the tax credit and find other materials, visit floridarealtors.org here.
TAMPA, Fla. – Jan. 26, 2010 – Federal tax credits for homebuyers have certainly boosted the Tampa Bay area real estate market.
The incentives have prompted nervous buyers to get off the fence, and that has helped the area shed thousands of homes from the region’s inventory of unsold properties.
But as these buyers prepare to cash in on their purchases by filing their tax returns, many are finding they may not qualify after all or don’t know how to file.
“There’s a lot of confusion,” said Greg Armstrong, a Coldwell Banker broker in Pasco County. “It’s so complex that if you’re not living it every day, like a CPA, you’re not in a position to direct someone.”
Even if the case seems straightforward, Armstrong encourages clients to seek guidance from an accountant.
There have been so many changes to the credit that IRS spokesman Michael Dobzinski had to consult his notes often to answer questions. Here are some helpful things the IRS wants you to know about the credits.
• The credits are available only to buyers purchasing primary residences. The IRS defines this has the residence where you spend most of your time.
• There are two credits available. One is for first-time buyers, or those who have not owned a home in the past three years. The maximum for this credit is $8,000 and, unlike a previous credit, this one does not have to be paid back. It applies to purchases made this year between Jan. 1 and April 30.
• The government broadened the credit in November to include some buyers who already own houses. Those buyers are eligible for a credit worth up to $6,500 for purchases made between Nov. 7 and April 30. In order to qualify, the buyer must have owned a primary residence for at least five consecutive years out of the past eight years. This credit also does not need to be paid back.
• There are income and price requirements. If the home was purchased after Nov. 6, it can cost no more than $800,000. Also, if purchased after that date, individuals cannot earn more than $125,000 and married couples filing jointly cannot earn more than $225,000.
• You don’t have to wait until 2010 to claim your credit, even if you buy this year. Purchase a home before the April 30 deadline and the credit can be claimed on this year’s taxes.
• If you’re claiming the credit, a paper filing is necessary. Only taxpayers not claiming the credit can file electronically. Dobzinski said buyers can still use electronic forms, but must print them out and mail them in, along with form 5405.
• Unlike last year, buyers claiming the credit must prove they are eligible. This is because some people filed for the credit last year, even though they had not purchased a home. You’ll need to send the HUD settlement statement along with the tax form. If you’re claiming the longtime owner credit, also include proof, such as copies of mortgage interest statements, property tax records or homeowner’s insurance records.
• Keep in mind that the credit is for your primary home. If you decide to rent or sell the home within three years, the credit must be repaid.
• Buyers claiming the credit will have to wait longer than usual to get the credit because of the need to file by paper. Expect to wait four to eight weeks, instead of the typical two weeks when filing electronically.
Copyright © 2010 Tampa Tribune, Fla
Monday, January 25, 2010
Lifelines dry up for mortgage lending
WASHINGTON – Jan. 25, 2010 – For more than a year, the government pulled out the stops to revive homebuying by driving down mortgage rates.
Now, whether the housing market is ready or not, the government is pulling out.
The wind-down of federal support for mortgage rates, set to end in two months, is a momentous test of whether the Obama administration and the Federal Reserve have succeeded in jump-starting the housing market and ensuring it can hold its own. The stakes for the economy are massive: If the market again falls into a tailspin, homeowners could face another wave of trouble, and it would deal a body blow to President Obama’s efforts to get the economy on track.
Keeping the mortgage rates at historic lows, which required a commitment of more than $1 trillion, was viewed within the administration as a central plank of the economic strategy last year, senior officials said. Though the policy did not attract as much attention as rescue efforts to bail out banks, it helped revitalize homebuying in some parts of the country and put money in the pockets of millions of homeowners who were able to refinance into lower monthly payments, the officials added.
“We did what we thought was necessary to stabilize the market, but we don’t think the government should continue special efforts forever,” said Michael S. Barr, an assistant secretary at the Treasury Department. “As you bring stability, private participants come back in. We do expect this now that the market has stabilized. I’m not going to say there will be no effect on rates, but we do think you are seeing market signs and market signals that there should be an orderly transition.”
A few federal officials and many industry advocates disagree, saying the government is exiting too soon. They offer dire warnings of higher rates and a slowdown in home sales. Fed leaders say they will end a marquee program supporting the mortgage markets in March. Obama’s economic team, led by Treasury Secretary Timothy F. Geithner, has decided not to replace it and has been shutting down its own related initiatives.
Over the past year, these programs have enabled prospective homebuyers to get cheap loans, helping those buying and selling property as well as those eager to refinance existing mortgages. If the end of the initiative drives up interest rates, say from 5 percent to 5.5 percent, homeowners could be deterred from refinancing, industry officials say. A sharper increase in rates could make homes too expensive for many buyers, forcing them from the market and causing the recent pickup in home sales to stall.
“Mortgage rates are the lifeblood of the housing market, and we have cautioned the Fed about the sudden stoppage of this program,” said Lawrence Yun, chief economist of the National Association of Realtors.
But senior government officials said it could be hard to reverse course without damaging the credibility of the Fed and the administration. If the government loses the trust of the financial markets, preparing them for policy changes could be tougher, possibly resulting in economic disruptions. The officials said they also worry that the mortgage market is becoming overly dependent on federal support, inserting the government too deeply into private enterprise.
Only a new crisis would be able to persuade the administration and the Fed to change their minds, officials said.
“This is a worthy experiment to see if they can begin exiting after providing an unprecedented amount of money to one sector of the economy,” said Mark Zandi, chief economist at Moody’s Economy.com. “It’s a close call, though. I can see why they are debating it.”
The Fed’s policymaking body sets a key interest rate at periodic meetings, which in turn influences rates for all kinds of loans. But mortgage rates also are shaped by the health of the market financing these loans.
Banks typically create giant pools of home loans and turn them into securities that can be traded on the open market. When the system is working, many investors buy these mortgage-backed securities, providing a stream of money for lenders so they can make loans at relatively cheap rates. But the trading of these securities seized up when the financial crisis struck and panicked investors. Government officials feared that the mortgage market would collapse.
The Fed and the Treasury stepped into the breach, becoming the only major buyers of these mortgage-related securities, and they kept the mortgage market flush with cash. The Treasury spent about $220 billion, and the Fed pledged $1.25 trillion, the single largest foray the central bank has made into the markets since the onset of the crisis. In essence, the Fed has been printing money and funneling it to people looking to buy a house or refinance an existing mortgage.
At the same time, the federal government stood behind mortgage-finance companies Fannie Mae and Freddie Mac by taking them over and pledging to cover their losses. That helped the firms lower borrowing costs, since lenders know they can’t fail, and the companies passed on their savings to mortgage borrowers in the form of low rates.
Combined, these federal efforts helped push down the rates ordinary Americans pay for a mortgage. The 30-year fixed-rate mortgage declined from 6.04 percent in November 2008, according to Freddie Mac data, and hit an all-time low of 4.71 percent about a year later.
Refinancings surged, while homebuying perked up. Existing-home sales climbed nearly 10 percent in September, their highest level in more than two years.
The policy was the government’s most effective salve for the ailing housing market at a time when other initiatives, such as the administration’s attempts to modify the mortgages of struggling homeowners, produced far more disappointing results.
Now the government wants to end its support for low rates and has been striving to persuade others to buy mortgage securities.
The success of this approach hinges on the willingness of private investors, from China to big Wall Street funds, to buy large amounts of the mortgage securities and fill the void left by the government.
On Christmas Eve, Treasury officials announced a move that would cover losses suffered by investors who buy these securities from Fannie Mae and Freddie Mac, which together now back about half of the nation’s $12 trillion mortgage market. The goal was simple, officials said. They wanted private investors to be reassured that mortgage securities are safe to buy.
As the economy showed signs of recovery at the end of last year, the administration and the Fed decided to end their support.
The Treasury stopped buying mortgage securities in December. The Fed said it would taper off purchases gradually, ending them by March 31.
Obama’s economic team could have raised the limits on how much mortgage securities Fannie and Freddie can buy, allowing those firms to replace the Fed’s purchasing program. But Barr said the administration thinks the mortgage business will stand on its own without such special assistance, similar to the way the nation’s biggest banks weaned themselves off federal bailout funds by raising private capital.
“The basic goal is to implement a gradual process where the government’s role in the economy goes down,” Barr said. “It has to be consistent with the basic goal of stability, but it is appropriate.”
Administration and Fed officials expressed confidence that rates will rise only modestly – perhaps a quarter of a percentage point. They attribute their optimism to the lengthy notice they have given the market. The markets already should have anticipated the government’s exit by adjusting interest rates higher. Yet mortgage rates have been falling slightly the past few weeks.
The optimism at the White House and the Fed, however, is not shared across the government. A few senior policymakers at the central bank view the economic recovery as still too fragile, suggesting that purchases perhaps should expand further. These dissenters also warn that mortgage rates could shoot up, perhaps to 6 percent or higher, because private investors buying securities would demand a greater rate of return than the Fed. To reach it, lenders may have to raise rates for consumers.
“Presumably, there is pent-up demand from the private sector, but the question is: At what rate are they going to be interested?” said Eric S. Rosengren, the president of the Federal Reserve Bank of Boston, who has indicated that he supports expanding the Fed’s mortgage securities purchase program.
There also could be unintended consequences to the government’s pull-out. Last year, big investors such as Pimco sold their mortgage-backed securities to the government and used that money to buy bonds and stocks. That extra cash, which propped up stock prices, could drain away after federal support ends.
Real estate and mortgage finance officials said the timing of the government’s exit seems especially ill-conceived, since the Fed’s support would end just a month before a homebuyer tax credit program, which the real estate industry has credited with jump-starting home sales.
Given the importance of the housing market, some industry officials doubt whether the government will follow through with its pledge to exit the mortgage market in March. Fannie and Freddie officials say that the companies together can buy about $300 billion of mortgage securities by the end of the year before they hit their federally mandated limits. Though it appears reluctant to do so, the administration could use that buying power to cushion the blow after the Fed’s program ends, the industry officials said.
“I believe they do want to end it in March, but it’s like all New Year’s resolutions,” said Mark Vitner, a senior economist at Wells Fargo Securities. “The Fed’s New Year resolution is to go on a diet, go to the gym, give up drinking and clean the garage. They might be able to do one of those things, but to do all four is tricky. They have to drain all the liquidity they added to the financial market so we don’t see a resurgence in inflation, but do it in a way so that the economy does not slip into recession.”
Copyright © 2010 washingtonpost.com
WASHINGTON – Jan. 25, 2010 – For more than a year, the government pulled out the stops to revive homebuying by driving down mortgage rates.
Now, whether the housing market is ready or not, the government is pulling out.
The wind-down of federal support for mortgage rates, set to end in two months, is a momentous test of whether the Obama administration and the Federal Reserve have succeeded in jump-starting the housing market and ensuring it can hold its own. The stakes for the economy are massive: If the market again falls into a tailspin, homeowners could face another wave of trouble, and it would deal a body blow to President Obama’s efforts to get the economy on track.
Keeping the mortgage rates at historic lows, which required a commitment of more than $1 trillion, was viewed within the administration as a central plank of the economic strategy last year, senior officials said. Though the policy did not attract as much attention as rescue efforts to bail out banks, it helped revitalize homebuying in some parts of the country and put money in the pockets of millions of homeowners who were able to refinance into lower monthly payments, the officials added.
“We did what we thought was necessary to stabilize the market, but we don’t think the government should continue special efforts forever,” said Michael S. Barr, an assistant secretary at the Treasury Department. “As you bring stability, private participants come back in. We do expect this now that the market has stabilized. I’m not going to say there will be no effect on rates, but we do think you are seeing market signs and market signals that there should be an orderly transition.”
A few federal officials and many industry advocates disagree, saying the government is exiting too soon. They offer dire warnings of higher rates and a slowdown in home sales. Fed leaders say they will end a marquee program supporting the mortgage markets in March. Obama’s economic team, led by Treasury Secretary Timothy F. Geithner, has decided not to replace it and has been shutting down its own related initiatives.
Over the past year, these programs have enabled prospective homebuyers to get cheap loans, helping those buying and selling property as well as those eager to refinance existing mortgages. If the end of the initiative drives up interest rates, say from 5 percent to 5.5 percent, homeowners could be deterred from refinancing, industry officials say. A sharper increase in rates could make homes too expensive for many buyers, forcing them from the market and causing the recent pickup in home sales to stall.
“Mortgage rates are the lifeblood of the housing market, and we have cautioned the Fed about the sudden stoppage of this program,” said Lawrence Yun, chief economist of the National Association of Realtors.
But senior government officials said it could be hard to reverse course without damaging the credibility of the Fed and the administration. If the government loses the trust of the financial markets, preparing them for policy changes could be tougher, possibly resulting in economic disruptions. The officials said they also worry that the mortgage market is becoming overly dependent on federal support, inserting the government too deeply into private enterprise.
Only a new crisis would be able to persuade the administration and the Fed to change their minds, officials said.
“This is a worthy experiment to see if they can begin exiting after providing an unprecedented amount of money to one sector of the economy,” said Mark Zandi, chief economist at Moody’s Economy.com. “It’s a close call, though. I can see why they are debating it.”
The Fed’s policymaking body sets a key interest rate at periodic meetings, which in turn influences rates for all kinds of loans. But mortgage rates also are shaped by the health of the market financing these loans.
Banks typically create giant pools of home loans and turn them into securities that can be traded on the open market. When the system is working, many investors buy these mortgage-backed securities, providing a stream of money for lenders so they can make loans at relatively cheap rates. But the trading of these securities seized up when the financial crisis struck and panicked investors. Government officials feared that the mortgage market would collapse.
The Fed and the Treasury stepped into the breach, becoming the only major buyers of these mortgage-related securities, and they kept the mortgage market flush with cash. The Treasury spent about $220 billion, and the Fed pledged $1.25 trillion, the single largest foray the central bank has made into the markets since the onset of the crisis. In essence, the Fed has been printing money and funneling it to people looking to buy a house or refinance an existing mortgage.
At the same time, the federal government stood behind mortgage-finance companies Fannie Mae and Freddie Mac by taking them over and pledging to cover their losses. That helped the firms lower borrowing costs, since lenders know they can’t fail, and the companies passed on their savings to mortgage borrowers in the form of low rates.
Combined, these federal efforts helped push down the rates ordinary Americans pay for a mortgage. The 30-year fixed-rate mortgage declined from 6.04 percent in November 2008, according to Freddie Mac data, and hit an all-time low of 4.71 percent about a year later.
Refinancings surged, while homebuying perked up. Existing-home sales climbed nearly 10 percent in September, their highest level in more than two years.
The policy was the government’s most effective salve for the ailing housing market at a time when other initiatives, such as the administration’s attempts to modify the mortgages of struggling homeowners, produced far more disappointing results.
Now the government wants to end its support for low rates and has been striving to persuade others to buy mortgage securities.
The success of this approach hinges on the willingness of private investors, from China to big Wall Street funds, to buy large amounts of the mortgage securities and fill the void left by the government.
On Christmas Eve, Treasury officials announced a move that would cover losses suffered by investors who buy these securities from Fannie Mae and Freddie Mac, which together now back about half of the nation’s $12 trillion mortgage market. The goal was simple, officials said. They wanted private investors to be reassured that mortgage securities are safe to buy.
As the economy showed signs of recovery at the end of last year, the administration and the Fed decided to end their support.
The Treasury stopped buying mortgage securities in December. The Fed said it would taper off purchases gradually, ending them by March 31.
Obama’s economic team could have raised the limits on how much mortgage securities Fannie and Freddie can buy, allowing those firms to replace the Fed’s purchasing program. But Barr said the administration thinks the mortgage business will stand on its own without such special assistance, similar to the way the nation’s biggest banks weaned themselves off federal bailout funds by raising private capital.
“The basic goal is to implement a gradual process where the government’s role in the economy goes down,” Barr said. “It has to be consistent with the basic goal of stability, but it is appropriate.”
Administration and Fed officials expressed confidence that rates will rise only modestly – perhaps a quarter of a percentage point. They attribute their optimism to the lengthy notice they have given the market. The markets already should have anticipated the government’s exit by adjusting interest rates higher. Yet mortgage rates have been falling slightly the past few weeks.
The optimism at the White House and the Fed, however, is not shared across the government. A few senior policymakers at the central bank view the economic recovery as still too fragile, suggesting that purchases perhaps should expand further. These dissenters also warn that mortgage rates could shoot up, perhaps to 6 percent or higher, because private investors buying securities would demand a greater rate of return than the Fed. To reach it, lenders may have to raise rates for consumers.
“Presumably, there is pent-up demand from the private sector, but the question is: At what rate are they going to be interested?” said Eric S. Rosengren, the president of the Federal Reserve Bank of Boston, who has indicated that he supports expanding the Fed’s mortgage securities purchase program.
There also could be unintended consequences to the government’s pull-out. Last year, big investors such as Pimco sold their mortgage-backed securities to the government and used that money to buy bonds and stocks. That extra cash, which propped up stock prices, could drain away after federal support ends.
Real estate and mortgage finance officials said the timing of the government’s exit seems especially ill-conceived, since the Fed’s support would end just a month before a homebuyer tax credit program, which the real estate industry has credited with jump-starting home sales.
Given the importance of the housing market, some industry officials doubt whether the government will follow through with its pledge to exit the mortgage market in March. Fannie and Freddie officials say that the companies together can buy about $300 billion of mortgage securities by the end of the year before they hit their federally mandated limits. Though it appears reluctant to do so, the administration could use that buying power to cushion the blow after the Fed’s program ends, the industry officials said.
“I believe they do want to end it in March, but it’s like all New Year’s resolutions,” said Mark Vitner, a senior economist at Wells Fargo Securities. “The Fed’s New Year resolution is to go on a diet, go to the gym, give up drinking and clean the garage. They might be able to do one of those things, but to do all four is tricky. They have to drain all the liquidity they added to the financial market so we don’t see a resurgence in inflation, but do it in a way so that the economy does not slip into recession.”
Copyright © 2010 washingtonpost.com
Sunday, January 24, 2010
Realtors donate $550K so far to Haiti relief
WASHINGTON – Jan. 22, 2010 – The Realtors® Relief Foundation of the National Association of Realtors® (NAR) is contributing $550,000 to relieve victims of the Haiti earthquake, and is calling upon its 1.2 million members to help.
In partnership with NAR, Florida Realtors® made a $10,000 contribution and is currently collecting individual donations to help the Haitian people at its annual Mid-Winter Meetings running through Sunday.
“We have all been deeply touched by the horrific damage and loss of life caused by the earthquake in Haiti,” says Florida Realtors® President Wendell Davis. “It is in challenging situations such as this that Realtors come together to, once again, show that their compassion and devotion to community are unmatched.”
Florida Realtors’ Leadership Team, led by Davis, decided to contribute $10,000, earmarked for Haitian relief efforts, to NAR’s Realtors Relief Foundation.
“Our thoughts and feelings go out to the people made homeless by this disaster,” says NAR President Vicki Cox Golder. “Realtors have a history of helping people, as we did after the 2004 tsunami struck South Asia and in 2005 when Hurricane Katrina ravaged New Orleans and the Gulf Coast.”
The Foundation is donating $500,000 to the Clinton Bush Haiti Fund, which is supporting earthquake recovery efforts with immediate and long-term support to earthquake survivors. Former U.S. Presidents Bill Clinton and George W. Bush head the fund. A $50,000 contribution has already been made to The Harvest of Haiti, founded by a 2007 winner of Realtor Magazine’s Good Neighbor Awards, Patrick Moore.
Florida Realtors not attending the meetings this week may also contribute to the relief effort. Send checks, payable to “Realtors Relief Foundation,” to:
Dave Garrison, Vice President of Finance and Administration
Florida Realtors
P.O. Box 725025
Orlando, FL 32822-5017
© 2010 Florida Realtors®
WASHINGTON – Jan. 22, 2010 – The Realtors® Relief Foundation of the National Association of Realtors® (NAR) is contributing $550,000 to relieve victims of the Haiti earthquake, and is calling upon its 1.2 million members to help.
In partnership with NAR, Florida Realtors® made a $10,000 contribution and is currently collecting individual donations to help the Haitian people at its annual Mid-Winter Meetings running through Sunday.
“We have all been deeply touched by the horrific damage and loss of life caused by the earthquake in Haiti,” says Florida Realtors® President Wendell Davis. “It is in challenging situations such as this that Realtors come together to, once again, show that their compassion and devotion to community are unmatched.”
Florida Realtors’ Leadership Team, led by Davis, decided to contribute $10,000, earmarked for Haitian relief efforts, to NAR’s Realtors Relief Foundation.
“Our thoughts and feelings go out to the people made homeless by this disaster,” says NAR President Vicki Cox Golder. “Realtors have a history of helping people, as we did after the 2004 tsunami struck South Asia and in 2005 when Hurricane Katrina ravaged New Orleans and the Gulf Coast.”
The Foundation is donating $500,000 to the Clinton Bush Haiti Fund, which is supporting earthquake recovery efforts with immediate and long-term support to earthquake survivors. Former U.S. Presidents Bill Clinton and George W. Bush head the fund. A $50,000 contribution has already been made to The Harvest of Haiti, founded by a 2007 winner of Realtor Magazine’s Good Neighbor Awards, Patrick Moore.
Florida Realtors not attending the meetings this week may also contribute to the relief effort. Send checks, payable to “Realtors Relief Foundation,” to:
Dave Garrison, Vice President of Finance and Administration
Florida Realtors
P.O. Box 725025
Orlando, FL 32822-5017
© 2010 Florida Realtors®
Saturday, January 23, 2010
Rates on 30-year home loans fall to 4.99%
Mortgage Rate Trend Index
Almost half (46%) of the mortgage experts polled by Bankrate.com this week expect no rate changes over the next 30 to 45 days. About one third (36%) foresee an increase, while 18% anticipate additional declines.
WASHINGTON – Jan. 22, 2010 – Rates for 30-year home loans fell to a shade below 5 percent this week but remained above last month’s record lows.
The average rate on a 30-year fixed mortgage was 4.99 percent, down from 5.06 percent a week earlier, mortgage company Freddie Mac said Thursday.
It was the third-straight weekly decline. The drop comes after interest rates fell in the bond market this week as concerns about the economy increased demand for the safety of government debt, which is closely tied to mortgage rates.
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, often in line with long-term Treasury bonds.
Rates for 30-year loans had dropped to a record low of 4.71 percent in early December, pushed down by an aggressive government campaign to reduce consumers’ borrowing costs.
The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to try to bring down mortgage rates, but that money is set to run out next spring. The goal of the program is to make home buying more affordable and prop up the housing market.
While it’s possible that the program could be extended, analysts believe the Fed is reluctant to do so.
The average rate on 15-year fixed-rate mortgages fell to 4.4 percent, down from 4.45 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.27 percent, down from 4.32 percent a week earlier. Rates on one-year, adjustable-rate mortgages dropped to 4.32 percent from 4.39 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.
The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans and 0.6 point for 15-year, five-year and one-year loans.
Copyright © 2010 The Associated Press
Mortgage Rate Trend Index
Almost half (46%) of the mortgage experts polled by Bankrate.com this week expect no rate changes over the next 30 to 45 days. About one third (36%) foresee an increase, while 18% anticipate additional declines.
WASHINGTON – Jan. 22, 2010 – Rates for 30-year home loans fell to a shade below 5 percent this week but remained above last month’s record lows.
The average rate on a 30-year fixed mortgage was 4.99 percent, down from 5.06 percent a week earlier, mortgage company Freddie Mac said Thursday.
It was the third-straight weekly decline. The drop comes after interest rates fell in the bond market this week as concerns about the economy increased demand for the safety of government debt, which is closely tied to mortgage rates.
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, often in line with long-term Treasury bonds.
Rates for 30-year loans had dropped to a record low of 4.71 percent in early December, pushed down by an aggressive government campaign to reduce consumers’ borrowing costs.
The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to try to bring down mortgage rates, but that money is set to run out next spring. The goal of the program is to make home buying more affordable and prop up the housing market.
While it’s possible that the program could be extended, analysts believe the Fed is reluctant to do so.
The average rate on 15-year fixed-rate mortgages fell to 4.4 percent, down from 4.45 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.27 percent, down from 4.32 percent a week earlier. Rates on one-year, adjustable-rate mortgages dropped to 4.32 percent from 4.39 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.
The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans and 0.6 point for 15-year, five-year and one-year loans.
Copyright © 2010 The Associated Press
Thursday, January 21, 2010
Re-evaluating broker value
NEW YORK – Jan. 21, 2010 – The nature of today’s real estate market – where agents have the resources to conduct most of their business online, work remotely, advertise for less and keep in touch with clients through the Web – is calling the value of brokers into question. An expert panel appearing at the recent Real Estate Connect event, however, pointed out that brokers have a role in helping agents navigate these different tools available and distinguish themselves from the competition.
“There are all kinds of different [real estate] tools,” says Ken Baris, president of Jordan Baris Inc., “but if [agents] get lost – how are [they] going to effectively use them?”
One example, according to Jonathan Kauffmann of Virginia-based Nest Realty, is a Customer Relationship Management (CRM) system – one of six attributes that he said agents seek in a broker. “It’s so important for agents to stay in touch with past clients,” Kauffmann said. “[A CRM] is how you track what you’ve done. Not many brokers or agents use CRMs, but it’s a great way to make more money and be as efficient as possible.”
Both Kauffmann and Baris also cited branding – and the ability to differentiate it from other agents and companies – as a critical tool that brokerages offer to agents.
According to Kauffmann, the other four attributes are fiscal responsibility, education and information, technology and marketing tools.
In addition, panelists said brokers can show agents how to respond to market trends or crises that arise. Finally, they offer such benefits as alliances with major brands.
Source: Inman News
NEW YORK – Jan. 21, 2010 – The nature of today’s real estate market – where agents have the resources to conduct most of their business online, work remotely, advertise for less and keep in touch with clients through the Web – is calling the value of brokers into question. An expert panel appearing at the recent Real Estate Connect event, however, pointed out that brokers have a role in helping agents navigate these different tools available and distinguish themselves from the competition.
“There are all kinds of different [real estate] tools,” says Ken Baris, president of Jordan Baris Inc., “but if [agents] get lost – how are [they] going to effectively use them?”
One example, according to Jonathan Kauffmann of Virginia-based Nest Realty, is a Customer Relationship Management (CRM) system – one of six attributes that he said agents seek in a broker. “It’s so important for agents to stay in touch with past clients,” Kauffmann said. “[A CRM] is how you track what you’ve done. Not many brokers or agents use CRMs, but it’s a great way to make more money and be as efficient as possible.”
Both Kauffmann and Baris also cited branding – and the ability to differentiate it from other agents and companies – as a critical tool that brokerages offer to agents.
According to Kauffmann, the other four attributes are fiscal responsibility, education and information, technology and marketing tools.
In addition, panelists said brokers can show agents how to respond to market trends or crises that arise. Finally, they offer such benefits as alliances with major brands.
Source: Inman News
F.H.A. to Raise Standards for Mortgage Insurance
By DAVID STREITFELD
Published: January 19, 2010
Times Topics: Federal Housing Administration
Borrowers who get an F.H.A.-insured loan will soon have to pay a higher initial insurance premium. The new premium will be 2.25 percent of the value of the loan, up from 1.75 percent.
Starting this summer, sellers will not be able to offer as much help to buyers to pay their closing costs. The maximum amount of assistance will drop to 3 percent of the value of the property, from the current 6 percent.
Other changes will try to hold lenders who participate in the F.H.A. program more accountable by publicly reporting their performance rankings.
The new measures are aimed at shoring up the agency’s finances while also screening out unprepared borrowers.
For years, the F.H.A. operated largely out of the public view. But it has become a subject of controversy recently even as it has ballooned in size. Some of the agency’s critics want it to tamp down risk by insuring fewer loans; others think it should help the market by insuring even more.
As of December, the F.H.A. was insuring 5.8 million single-family residences that had a total loan balance of $750 billion. More than half a million of the loans were seriously delinquent and heading toward foreclosure.
Many of these troubled loans were made in 2007 and 2008 as the market was plunging. Last fall, the agency said its cash reserves had tumbled to 0.5 percent of its loans outstanding, far below the 2 percent mandated by Congress.
Left largely untouched by the changes is the most controversial aspect of the agency’s program: a provision allowing buyers to make a down payment as low as 3.5 percent. Private lenders these days require at least 15 percent.
Borrowers who want to put the minimum down will now be required to have credit scores of at least 580, a relatively poor figure. Previously, there was no minimum score. But this rule might have little effect. The agency says that in practice, new borrowers already have much higher scores.
F.H.A. critics argue that the agency is allowing people to become homeowners while requiring relatively little of them, which they see as a replay of the poor lending standards that created the housing boom and subsequent decline.
Agency officials have responded by saying that they have adequate safeguards in place to make sure that borrowers are creditworthy, and that these loans are saving the housing market from collapse.
Lou Barnes, a loan officer with Premier Mortgage Group in Colorado who is among those who think the government is not doing enough to support the housing market, said the changes were not unduly restrictive. He noted that the insurance premium was merely returning to its level of a decade ago.
“The F.H.A. has done its best to protect the taxpayer, and the least harm to the credit supply,” Mr. Barnes said.
An industry consultant, Howard Glaser, said that with “the F.H.A. hovering around 40 percent of new loan originations, even small rule changes echo.”
Mr. Glaser, a former official with the Department of Housing and Urban Development, which includes the F.H.A., said that “obtaining credit will be a little more expensive or it may be a little more difficult to qualify” but that the changes were “not enough to have a systemic impact on slowing home buying.”
By DAVID STREITFELD
Published: January 19, 2010
Times Topics: Federal Housing Administration
Borrowers who get an F.H.A.-insured loan will soon have to pay a higher initial insurance premium. The new premium will be 2.25 percent of the value of the loan, up from 1.75 percent.
Starting this summer, sellers will not be able to offer as much help to buyers to pay their closing costs. The maximum amount of assistance will drop to 3 percent of the value of the property, from the current 6 percent.
Other changes will try to hold lenders who participate in the F.H.A. program more accountable by publicly reporting their performance rankings.
The new measures are aimed at shoring up the agency’s finances while also screening out unprepared borrowers.
For years, the F.H.A. operated largely out of the public view. But it has become a subject of controversy recently even as it has ballooned in size. Some of the agency’s critics want it to tamp down risk by insuring fewer loans; others think it should help the market by insuring even more.
As of December, the F.H.A. was insuring 5.8 million single-family residences that had a total loan balance of $750 billion. More than half a million of the loans were seriously delinquent and heading toward foreclosure.
Many of these troubled loans were made in 2007 and 2008 as the market was plunging. Last fall, the agency said its cash reserves had tumbled to 0.5 percent of its loans outstanding, far below the 2 percent mandated by Congress.
Left largely untouched by the changes is the most controversial aspect of the agency’s program: a provision allowing buyers to make a down payment as low as 3.5 percent. Private lenders these days require at least 15 percent.
Borrowers who want to put the minimum down will now be required to have credit scores of at least 580, a relatively poor figure. Previously, there was no minimum score. But this rule might have little effect. The agency says that in practice, new borrowers already have much higher scores.
F.H.A. critics argue that the agency is allowing people to become homeowners while requiring relatively little of them, which they see as a replay of the poor lending standards that created the housing boom and subsequent decline.
Agency officials have responded by saying that they have adequate safeguards in place to make sure that borrowers are creditworthy, and that these loans are saving the housing market from collapse.
Lou Barnes, a loan officer with Premier Mortgage Group in Colorado who is among those who think the government is not doing enough to support the housing market, said the changes were not unduly restrictive. He noted that the insurance premium was merely returning to its level of a decade ago.
“The F.H.A. has done its best to protect the taxpayer, and the least harm to the credit supply,” Mr. Barnes said.
An industry consultant, Howard Glaser, said that with “the F.H.A. hovering around 40 percent of new loan originations, even small rule changes echo.”
Mr. Glaser, a former official with the Department of Housing and Urban Development, which includes the F.H.A., said that “obtaining credit will be a little more expensive or it may be a little more difficult to qualify” but that the changes were “not enough to have a systemic impact on slowing home buying.”
Wednesday, January 20, 2010
Sorting through the homebuyer tax credit
WASHINGTON (AP) – Jan. 20, 2010 – If you bought a home in 2009, you could be eligible for a tax credit. Figuring out which one can be confusing.
There’s one credit for first-time homebuyers and another that primarily benefits homebuyers who owned a home before. But don’t mix it up with the first-time homebuyer credit in 2008, which actually was a long-term loan.
There are maximum income levels and maximum sales prices. And vacation homes or rental property don’t qualify.
“If you want to spend two hours reading the instructions and translating them and finding out whether you qualify, yes, it’s relatively simple,” said Jeff Schnepper, an MSN Money tax expert and author of “How to Pay Zero Taxes.”
Some questions and answers about the homebuyers tax credit:
Q. What’s the purpose of the credit?
A. Congress passed the tax credits in an effort to boost the struggling housing industry and fight recession. Indications are that it’s had an impact. The National Association of Realtors reported that November sales of existing homes were up 44 percent from a year earlier. Although new home sales dropped in November, figures from the Commerce Department show that they’re up 8 percent from the low in January 2009.
Q. How many people are claiming the credit?
A. “In all, 4.4 million households are expected to claim the tax credit before it expires,” Lawrence Yun, the Realtors’ chief economist, said in December.
Q. How many versions are there?
A. There are actually three.
The first credit, for first-time homebuyers, was really a long-term, interest-free loan that has to be paid back over 15 years. The maximum credit was $7,500 for a principal residence purchased between April 9, 2008, and June 30, 2009.
The second iteration made the first-time homebuyers credit a true credit – it doesn’t have to be paid back – and raised the amount to a maximum $8,000. It applied to homes purchased between Jan. 1, 2009, and Nov. 30, 2009.
The third change extended the eligibility dates to homes purchased through April 30, 2010. It also added a credit for long-time homeowners who purchased a new residence between Nov. 7, 2009, and April 30, 2010, but at a reduced value – up to $6,500.
Q. Do I automatically qualify if I purchased a house during those periods?
A. No. To qualify, the house has to be used as a primary residence. If purchased after Nov. 6, 2009, it cannot have cost more than $800,000. If you’re a long-time homeowner, you had to have lived in the same house consecutively for five out of the last eight years, though you need not have lived in or owned that house at the time you buy your new home.
For homes purchased after Nov. 6, 2009, the credit also begins phasing out for individuals with modified adjusted gross incomes above $125,000, and for married couples filing jointly with incomes above $225,000.
Q. How does the Internal Revenue Service define a principal residence?
A. “Your main home is the one you live in most of the time,” the agency said. “It can be a house, houseboat, mobile home, cooperative apartment or condominium.”
Q. What if I’m living overseas and I buy a home there?
A. The home doesn’t qualify unless it’s in the United States.
Q. How do I claim the credit?
A. There’s a form, 5405, to fill out. You’ll also have to submit a copy of your settlement statement, usually Form HUD-1, with the names and signatures of all parties, the property address, the sales price and date of purchase.
To avoid refund delays, the IRS recommends that long-time homeowners who purchase a new home also provide documents to show they meet the requirement for consecutive years lived in their old house. These can include mortgage interest statements, or property tax or homeowner’s insurance records.
Q. Do I have to wait until I file my 2010 taxes to claim the credit for a home purchased before the deadline in 2010?
A. No. “You can choose to claim the credit on your 2009 return for a home you bought in 2010 that qualifies for the credit,” the IRS said.
Q. I purchased my home in 2008 and filed for a credit on my tax returns. Do I still have to pay it back?
A. Yes. When Congress did away with the repayment requirement, it did not do so retroactively.
Q. What if I purchase the property for business?
A. You’re not eligible. The house must be used as a primary residence to qualify.
Q. What if I want to keep my original house and use it as a rental property?
A. If you qualify for the credit as a long-time homeowner, nothing in the law requires you to sell the original house. However, you must make the new one your primary residence.
Q. What if I decide to sell the house I got the credit for or convert it to a rental property?
A. You will have to pay back the credit if you don’t keep the purchased house as your permanent residence for three years.
Copyright 2010 The Associated Press
WASHINGTON (AP) – Jan. 20, 2010 – If you bought a home in 2009, you could be eligible for a tax credit. Figuring out which one can be confusing.
There’s one credit for first-time homebuyers and another that primarily benefits homebuyers who owned a home before. But don’t mix it up with the first-time homebuyer credit in 2008, which actually was a long-term loan.
There are maximum income levels and maximum sales prices. And vacation homes or rental property don’t qualify.
“If you want to spend two hours reading the instructions and translating them and finding out whether you qualify, yes, it’s relatively simple,” said Jeff Schnepper, an MSN Money tax expert and author of “How to Pay Zero Taxes.”
Some questions and answers about the homebuyers tax credit:
Q. What’s the purpose of the credit?
A. Congress passed the tax credits in an effort to boost the struggling housing industry and fight recession. Indications are that it’s had an impact. The National Association of Realtors reported that November sales of existing homes were up 44 percent from a year earlier. Although new home sales dropped in November, figures from the Commerce Department show that they’re up 8 percent from the low in January 2009.
Q. How many people are claiming the credit?
A. “In all, 4.4 million households are expected to claim the tax credit before it expires,” Lawrence Yun, the Realtors’ chief economist, said in December.
Q. How many versions are there?
A. There are actually three.
The first credit, for first-time homebuyers, was really a long-term, interest-free loan that has to be paid back over 15 years. The maximum credit was $7,500 for a principal residence purchased between April 9, 2008, and June 30, 2009.
The second iteration made the first-time homebuyers credit a true credit – it doesn’t have to be paid back – and raised the amount to a maximum $8,000. It applied to homes purchased between Jan. 1, 2009, and Nov. 30, 2009.
The third change extended the eligibility dates to homes purchased through April 30, 2010. It also added a credit for long-time homeowners who purchased a new residence between Nov. 7, 2009, and April 30, 2010, but at a reduced value – up to $6,500.
Q. Do I automatically qualify if I purchased a house during those periods?
A. No. To qualify, the house has to be used as a primary residence. If purchased after Nov. 6, 2009, it cannot have cost more than $800,000. If you’re a long-time homeowner, you had to have lived in the same house consecutively for five out of the last eight years, though you need not have lived in or owned that house at the time you buy your new home.
For homes purchased after Nov. 6, 2009, the credit also begins phasing out for individuals with modified adjusted gross incomes above $125,000, and for married couples filing jointly with incomes above $225,000.
Q. How does the Internal Revenue Service define a principal residence?
A. “Your main home is the one you live in most of the time,” the agency said. “It can be a house, houseboat, mobile home, cooperative apartment or condominium.”
Q. What if I’m living overseas and I buy a home there?
A. The home doesn’t qualify unless it’s in the United States.
Q. How do I claim the credit?
A. There’s a form, 5405, to fill out. You’ll also have to submit a copy of your settlement statement, usually Form HUD-1, with the names and signatures of all parties, the property address, the sales price and date of purchase.
To avoid refund delays, the IRS recommends that long-time homeowners who purchase a new home also provide documents to show they meet the requirement for consecutive years lived in their old house. These can include mortgage interest statements, or property tax or homeowner’s insurance records.
Q. Do I have to wait until I file my 2010 taxes to claim the credit for a home purchased before the deadline in 2010?
A. No. “You can choose to claim the credit on your 2009 return for a home you bought in 2010 that qualifies for the credit,” the IRS said.
Q. I purchased my home in 2008 and filed for a credit on my tax returns. Do I still have to pay it back?
A. Yes. When Congress did away with the repayment requirement, it did not do so retroactively.
Q. What if I purchase the property for business?
A. You’re not eligible. The house must be used as a primary residence to qualify.
Q. What if I want to keep my original house and use it as a rental property?
A. If you qualify for the credit as a long-time homeowner, nothing in the law requires you to sell the original house. However, you must make the new one your primary residence.
Q. What if I decide to sell the house I got the credit for or convert it to a rental property?
A. You will have to pay back the credit if you don’t keep the purchased house as your permanent residence for three years.
Copyright 2010 The Associated Press
Tuesday, January 19, 2010
Education report ranks Fla. schools 8th nationwide
MIAMI (AP) – Jan. 19, 2010 – A new education report ranks Florida schools eighth nationwide.
Education Week magazine’s annual education report card looked at six areas of policy and performance, including school finance, student achievement and accountability. Florida earned a B-minus overall, the same grade it earned in 2009.
Florida was ranked fifth nationwide in academic standards and school accountability. Its lowest marking came in school finance, in which Florida ranks 31st.
Several parents and two advocacy groups have sued state officials, accusing them of violating a state constitutional provision to provide “high quality” education for Florida children and not spending enough money on public schools.
Gov. Charlie Crist and Education Commissioner Eric Smith praised the results.
Copyright © 2010 The Associated Press.
MIAMI (AP) – Jan. 19, 2010 – A new education report ranks Florida schools eighth nationwide.
Education Week magazine’s annual education report card looked at six areas of policy and performance, including school finance, student achievement and accountability. Florida earned a B-minus overall, the same grade it earned in 2009.
Florida was ranked fifth nationwide in academic standards and school accountability. Its lowest marking came in school finance, in which Florida ranks 31st.
Several parents and two advocacy groups have sued state officials, accusing them of violating a state constitutional provision to provide “high quality” education for Florida children and not spending enough money on public schools.
Gov. Charlie Crist and Education Commissioner Eric Smith praised the results.
Copyright © 2010 The Associated Press.
Monday, January 18, 2010
HUD takes action to speed resale of foreclosed properties to new owners
WASHINGTON – Jan. 18, 2010 – In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan announced a temporary policy that will expand access to FHA mortgage insurance to allow for a quicker resale of foreclosed properties. The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties or properties resold through private sales.
“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” says Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”
With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.
“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan says.
Acquiring, rehabilitating and reselling foreclosed properties to prospective homeowners often takes less than 90 days in today’s market; and FHA’s 90-day rule can adversely impact buyers if a seller is unwilling to hold a property 90 days thanks to holding costs and the risk of vandalism.
“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” says FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”
The waiver will take effect on Feb. 1, 2010, and be effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping,” the waiver is limited to those sales meeting the following general conditions:
• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
• Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website:
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
© 2010 Florida Realtors®
WASHINGTON – Jan. 18, 2010 – In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan announced a temporary policy that will expand access to FHA mortgage insurance to allow for a quicker resale of foreclosed properties. The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties or properties resold through private sales.
“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” says Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”
With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.
“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan says.
Acquiring, rehabilitating and reselling foreclosed properties to prospective homeowners often takes less than 90 days in today’s market; and FHA’s 90-day rule can adversely impact buyers if a seller is unwilling to hold a property 90 days thanks to holding costs and the risk of vandalism.
“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” says FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”
The waiver will take effect on Feb. 1, 2010, and be effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping,” the waiver is limited to those sales meeting the following general conditions:
• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
• Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website:
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
© 2010 Florida Realtors®
Friday, January 15, 2010
Florida Realtors announces Haitian relief
ORLANDO, Fla. – Jan. 15, 2010 – In partnership with the National Association of Realtors® (NAR), Florida Realtors® will make a contribution and collect individual donations to help the Haitian people following this week’s devastating earthquake.
“We have all been deeply touched by the horrific damage and loss of life caused by the earthquake in Haiti. It is truly incomprehensible how the Haitian people are suffering,” says Florida Realtors® President Wendell Davis.
Florida Realtors’ Leadership Team, led by Davis, decided to contribute $10,000, earmarked for Haitian relief efforts, to NAR’s Realtors® Relief Foundation.
In addition, Florida Realtors will collect individual monetary donations during its Mid-Winter Business Meetings next week, Jan. 20 – 24, at the Renaissance Orlando Resort (http://www.floridarealtors.org/NewsAndEvents/Mid-Winter-Meetings.cfm). Checks and cash – no credit cards, please – will be accepted at the Florida Realtors registration desk. All contributions will be forwarded to NAR’s Realtors Relief Fund for disbursement.
“It is in challenging situations such as this that Realtors come together to, once again, show that their compassion and devotion to community are unmatched,” says Davis.
Association members not attending the meetings next week may also contribute to the Florida Realtors’ Haitian relief effort.
Send checks, payable to “Realtors Relief Foundation,” to:
Dave Garrison, Vice President of Finance and Administration
Florida Realtors
P.O. Box 725025
Orlando, FL 32822-5017
© 2010 Florida Realtors®
ORLANDO, Fla. – Jan. 15, 2010 – In partnership with the National Association of Realtors® (NAR), Florida Realtors® will make a contribution and collect individual donations to help the Haitian people following this week’s devastating earthquake.
“We have all been deeply touched by the horrific damage and loss of life caused by the earthquake in Haiti. It is truly incomprehensible how the Haitian people are suffering,” says Florida Realtors® President Wendell Davis.
Florida Realtors’ Leadership Team, led by Davis, decided to contribute $10,000, earmarked for Haitian relief efforts, to NAR’s Realtors® Relief Foundation.
In addition, Florida Realtors will collect individual monetary donations during its Mid-Winter Business Meetings next week, Jan. 20 – 24, at the Renaissance Orlando Resort (http://www.floridarealtors.org/NewsAndEvents/Mid-Winter-Meetings.cfm). Checks and cash – no credit cards, please – will be accepted at the Florida Realtors registration desk. All contributions will be forwarded to NAR’s Realtors Relief Fund for disbursement.
“It is in challenging situations such as this that Realtors come together to, once again, show that their compassion and devotion to community are unmatched,” says Davis.
Association members not attending the meetings next week may also contribute to the Florida Realtors’ Haitian relief effort.
Send checks, payable to “Realtors Relief Foundation,” to:
Dave Garrison, Vice President of Finance and Administration
Florida Realtors
P.O. Box 725025
Orlando, FL 32822-5017
© 2010 Florida Realtors®
Thursday, January 14, 2010
‘Ugly Houses’ franchise brings in pretty penny
WEST PALM BEACH, Fla. – Jan. 14, 2010 – The ugly house business is booming.
Don Cameron, who owns a West Palm Beach franchise of Home Vestors, better known as “We Buy Ugly Houses,” was recently recognized with the company’s “Rising Star Award.”
The award is given to franchises that have seen significant increases in business.
Cameron’s company, Hi-Land Properties, buys, refurbishes and resells homes. Yes, he’s a flipper. But don’t hold it against him.
While flippers are largely blamed for the real estate price run-up that led to the historic market crash, Cameron said he’s learned from mistakes made during the boom.
He now hopes to help revitalize the market by fixing up vacant, abandoned and foreclosed homes – rehabilitations that will add value to neighborhoods.
“We’re giving people a lot more value for their money,” Cameron said. “We’re offering a yearlong warranty on all our fixes, and basically people are getting a brand new house at a discount.”
Cameron acknowledges there was a time when the market was going so crazy that his company would flip a home with few improvements.
“As soon as we got a property, people were interested in buying it,” he said.
Those days are long gone.
In 2007, Hi-Land did just 50 homes – less than half of its typical business.
In 2008, it managed to flip 75 homes. By the end of 2009, the company had done deals on 110 homes, beating its own projections.
Cameron, who has owned Hi-Land since 2000, said much of his business now is with first-time buyers spurred by the up to $8,000 tax credit.
Dallas-based Home Vestors has about 200 franchises in 33 states.
Copyright © 2010 The Palm Beach Post
WEST PALM BEACH, Fla. – Jan. 14, 2010 – The ugly house business is booming.
Don Cameron, who owns a West Palm Beach franchise of Home Vestors, better known as “We Buy Ugly Houses,” was recently recognized with the company’s “Rising Star Award.”
The award is given to franchises that have seen significant increases in business.
Cameron’s company, Hi-Land Properties, buys, refurbishes and resells homes. Yes, he’s a flipper. But don’t hold it against him.
While flippers are largely blamed for the real estate price run-up that led to the historic market crash, Cameron said he’s learned from mistakes made during the boom.
He now hopes to help revitalize the market by fixing up vacant, abandoned and foreclosed homes – rehabilitations that will add value to neighborhoods.
“We’re giving people a lot more value for their money,” Cameron said. “We’re offering a yearlong warranty on all our fixes, and basically people are getting a brand new house at a discount.”
Cameron acknowledges there was a time when the market was going so crazy that his company would flip a home with few improvements.
“As soon as we got a property, people were interested in buying it,” he said.
Those days are long gone.
In 2007, Hi-Land did just 50 homes – less than half of its typical business.
In 2008, it managed to flip 75 homes. By the end of 2009, the company had done deals on 110 homes, beating its own projections.
Cameron, who has owned Hi-Land since 2000, said much of his business now is with first-time buyers spurred by the up to $8,000 tax credit.
Dallas-based Home Vestors has about 200 franchises in 33 states.
Copyright © 2010 The Palm Beach Post
Selling your home? Realtors pick nine green improvements to close deal
WASHINGTON – Jan. 14, 2010 – A new poll of nearly 1,000 Realtors offers a glimpse at the top “green” improvements recommended by real estate professionals to help move a sale property off the market.
The upgrades – which include planting native greenery, replacing air filters, staging the home with recycled or reusable props, weather-stripping doors and windows, installing programmable thermostats, installing low-flow showerheads, using turn-off power strips, replacing standard lighting with CFL or LED bulbs, and choosing low-VOC paint – are all fairly inexpensive investments.
And while three of those nine options get back at least twice as much in sale price gains as they cost, none have a bigger return on investment (ROI) than the top five traditional upgrades suggested by realty practitioners in a November survey. Cleaning and de-cluttering a home before it goes on the market, for instance, will cost the owner less than $200 to complete but bumps up the property’s sale price by almost $1,700 – for a staggering ROI of 872 percent.
Other high-ROI traditional improvements recommended by the real estate community include home staging, lightening/brightening, landscaping and plumbing repairs.
Although they do not offer a great ROI, HomeGain says eco-improvements are becoming more popular; and with their energy savings and low cost of investment, they probably should be considered by all homeowners – not just those preparing their unit for sale.
Source: USA Today
WASHINGTON – Jan. 14, 2010 – A new poll of nearly 1,000 Realtors offers a glimpse at the top “green” improvements recommended by real estate professionals to help move a sale property off the market.
The upgrades – which include planting native greenery, replacing air filters, staging the home with recycled or reusable props, weather-stripping doors and windows, installing programmable thermostats, installing low-flow showerheads, using turn-off power strips, replacing standard lighting with CFL or LED bulbs, and choosing low-VOC paint – are all fairly inexpensive investments.
And while three of those nine options get back at least twice as much in sale price gains as they cost, none have a bigger return on investment (ROI) than the top five traditional upgrades suggested by realty practitioners in a November survey. Cleaning and de-cluttering a home before it goes on the market, for instance, will cost the owner less than $200 to complete but bumps up the property’s sale price by almost $1,700 – for a staggering ROI of 872 percent.
Other high-ROI traditional improvements recommended by the real estate community include home staging, lightening/brightening, landscaping and plumbing repairs.
Although they do not offer a great ROI, HomeGain says eco-improvements are becoming more popular; and with their energy savings and low cost of investment, they probably should be considered by all homeowners – not just those preparing their unit for sale.
Source: USA Today
Wednesday, January 13, 2010
Realtor.com launches iPhone real estate search app
LOS ANGELES – Jan. 13, 2010 – More than 40 million iPhone users can now have one-touch mobile access to 4 million properties nationwide by downloading the new Realtor.com Real Estate Search iPhone app. Launched today, the iPhone app makes it easy for buyers to get property details, find it using the GPS feature, take pictures, save notes with a Notes and Rating feature, and send a link to that property via email, Twitter or Facebook.
The free Realtor.com Real Estate Search iPhone app is compatible with iPhone OS 3.0 or higher and the iPod Touch, and can be downloaded here or by going to a consumer information page on Realtor.com here.
“By combining our unmatched search power with the ability to instantly share listings and feedback by email, Twitter or Facebook from an iPhone, millions now have mobile access to a phenomenal property search experience superior to other apps already on the market,” says Errol Samuelson, president of Realtor.com. “We expect Realtors and their clients will appreciate the ease and convenience that our app brings to their experience as they work together to find the ideal property.”
The Realtor.com iPhone app allows users to filter search results for every property on Realtor.com by price, location, property type, MLS ID number, square foot, lot size, upcoming open house events, distance from a user’s current location, and age of home. Only properties meeting the chosen criteria display in the map or list view.
If iPhone users select a nearby property, they can map their route with the aid of the built-in GPS. Users can also easily save a property or frequently used search criteria for access at a later time. In addition, the app automatically syncs with the user’s Realtor.com account after initial registration, giving the user mobile access to previously saved homes.
Visiting a property or an open house in an unfamiliar neighborhood is also easy using the Open Houses Nearby button.
If a property looks interesting, a one-tap call capability connects potential buyers with the listing agent. Or touch the “ask a question” button and buyers can instantly send an email to the listing agent. Homebuyers can also store their agent’s contact info within the iPhone app, making it easy to send personal notes, or comments and ratings about each property to an agent.
With more than half of all iPhone users between the ages of 26 and 40, Realtor.com expects first-time homebuyers to be one of the largest groups to use the new app as they seek to take advantage of the expanded federal homebuyer tax credit. The median age of today’s first time homebuyer is 30, with 53 percent between the ages of 25 and 34.
© 2010 Florida Realtors
LOS ANGELES – Jan. 13, 2010 – More than 40 million iPhone users can now have one-touch mobile access to 4 million properties nationwide by downloading the new Realtor.com Real Estate Search iPhone app. Launched today, the iPhone app makes it easy for buyers to get property details, find it using the GPS feature, take pictures, save notes with a Notes and Rating feature, and send a link to that property via email, Twitter or Facebook.
The free Realtor.com Real Estate Search iPhone app is compatible with iPhone OS 3.0 or higher and the iPod Touch, and can be downloaded here or by going to a consumer information page on Realtor.com here.
“By combining our unmatched search power with the ability to instantly share listings and feedback by email, Twitter or Facebook from an iPhone, millions now have mobile access to a phenomenal property search experience superior to other apps already on the market,” says Errol Samuelson, president of Realtor.com. “We expect Realtors and their clients will appreciate the ease and convenience that our app brings to their experience as they work together to find the ideal property.”
The Realtor.com iPhone app allows users to filter search results for every property on Realtor.com by price, location, property type, MLS ID number, square foot, lot size, upcoming open house events, distance from a user’s current location, and age of home. Only properties meeting the chosen criteria display in the map or list view.
If iPhone users select a nearby property, they can map their route with the aid of the built-in GPS. Users can also easily save a property or frequently used search criteria for access at a later time. In addition, the app automatically syncs with the user’s Realtor.com account after initial registration, giving the user mobile access to previously saved homes.
Visiting a property or an open house in an unfamiliar neighborhood is also easy using the Open Houses Nearby button.
If a property looks interesting, a one-tap call capability connects potential buyers with the listing agent. Or touch the “ask a question” button and buyers can instantly send an email to the listing agent. Homebuyers can also store their agent’s contact info within the iPhone app, making it easy to send personal notes, or comments and ratings about each property to an agent.
With more than half of all iPhone users between the ages of 26 and 40, Realtor.com expects first-time homebuyers to be one of the largest groups to use the new app as they seek to take advantage of the expanded federal homebuyer tax credit. The median age of today’s first time homebuyer is 30, with 53 percent between the ages of 25 and 34.
© 2010 Florida Realtors
Tuesday, January 12, 2010
New rules could speed short sales of distressed homes
WASHINGTON – Jan. 12, 2010 – The federal government is setting guidelines for short sales of homes, giving lenders a 10-day limit to respond to offers, freeing borrowers from debt and providing financial incentives to lenders.
The new rules seek to address the many criticisms of short sales and figure to play a significant role in South Florida, where distressed properties dominate the market as the housing slump meanders into a fifth year.
“The cloud could be lifted,” said Domenic Faro of the Fort Lauderdale Real Estate firm. “This could bring us back to some normalcy.”
In a short sale, the homeowner unloads the property for less than what’s owed on the mortgage, and the lender forgives the difference. Nearly half of all single-family mortgage holders in Palm Beach, Broward and Miami-Dade counties are “under water,” meaning they owe more than their homes are worth, according to third-quarter data from Zillow.com, a Seattle-based real estate firm.
While short sales are considered the perfect solution for “underwater” homeowners on the verge of foreclosure, the deals often drag on as lenders take weeks or months to respond to offers. Frustrated buyers walk away during the delays. In some cases, lenders insist that borrowers share in the financial loss, holding up the transactions even longer.
To speed up the process, the U.S. Treasury is calling for lenders to respond to short sale offers within 10 business days. Sellers are eligible for $1,500 moving allowances, and they will not be on the hook for repayment of any debt.
Also, lenders will get $1,000 to cover administrative and processing costs, while investors owning the mortgages will receive a maximum $1,000 for allowing up to $3,000 in short sale proceeds to be distributed to less senior lenders. Loan servicers participating in the Obama Administration’s Home Affordable Modification Program are required to follow the guidelines.
The rules do not specifically apply to loans guaranteed by Fannie Mae or Freddie Mac, which represent about half of all U.S. mortgage debt. The two government-run mortgage companies are working to finalize their own guidelines.
The Treasury plan, which must be implemented by lenders no later than April, is meant to help sellers like Dawn Sclafani, who has been waiting since October for her lender to approve a short sale offer on her Margate home. A buyer has offered $155,000, and she owes $233,000.
Sclafani, a 50-year-old psychologist, said she’s eager for the bank to approve the deal so she can put the experience behind her.
“I want to move on ... but I can’t until somebody gives me permission to,” she said. “I’ve heard that this is a horrendous process. The banks are just not very cooperative. I do believe these new rules will help.”
U.S. Rep Ron Klein, D-Boca Raton, agrees, saying the guidelines are meant to make short sales “a more usable tool.” Klein points out the rules provide standardized paperwork for all short sales and give buyers and sellers a more reasonable time frame for whether or not the sales will happen.
But Klein and others say the government may have to increase the financial incentives. The $3,000 cap on short sale proceeds is not sitting well with second lien holders, who have been demanding more money from sellers, the first lenders and real estate agents in exchange for releasing their claims and allowing the short sales to proceed.
“This is a great program if all these mortgages had only one lien holder,” said Travis Hamel Olsen, chief operating officer for Loan Resolution Corp., an Arizona company that helps lenders complete short sales. “But many of these properties have two liens.”
Meanwhile, some local real estate agents remain skeptical of the guidelines.
Broward County agent Ron Rosen, who urged Klein last summer to push for new regulations, said he thinks “the banks will still play their little games with people and make life difficult for everyone.”
Edward Goldfarb of RE/MAX PowerPro Realty in Davie doubts the Treasury will enforce the new rules. “There’s no teeth to them,” he said.
A spokeswoman for the Treasury says it will hand down “substantial” penalties to lenders that don’t comply. They can include the withholding or reduction of payments and requiring improperly rejected loans to be modified.
Lenders have blamed short sale delays on the complicated nature of the transactions, sheer numbers of deals and on borrowers who don’t submit proper paperwork in a timely manner.
In many cases, the banks are not to blame, said Ward Kellogg, chief executive of Boca Raton-based Paradise Bank. Still, he thinks the guidelines are necessary to force lenders to clear the market of so many distressed properties.
“I think the pressure on (the banks) is a good thing,” Kellogg said.
Copyright © 2010 Sun Sentinel
WASHINGTON – Jan. 12, 2010 – The federal government is setting guidelines for short sales of homes, giving lenders a 10-day limit to respond to offers, freeing borrowers from debt and providing financial incentives to lenders.
The new rules seek to address the many criticisms of short sales and figure to play a significant role in South Florida, where distressed properties dominate the market as the housing slump meanders into a fifth year.
“The cloud could be lifted,” said Domenic Faro of the Fort Lauderdale Real Estate firm. “This could bring us back to some normalcy.”
In a short sale, the homeowner unloads the property for less than what’s owed on the mortgage, and the lender forgives the difference. Nearly half of all single-family mortgage holders in Palm Beach, Broward and Miami-Dade counties are “under water,” meaning they owe more than their homes are worth, according to third-quarter data from Zillow.com, a Seattle-based real estate firm.
While short sales are considered the perfect solution for “underwater” homeowners on the verge of foreclosure, the deals often drag on as lenders take weeks or months to respond to offers. Frustrated buyers walk away during the delays. In some cases, lenders insist that borrowers share in the financial loss, holding up the transactions even longer.
To speed up the process, the U.S. Treasury is calling for lenders to respond to short sale offers within 10 business days. Sellers are eligible for $1,500 moving allowances, and they will not be on the hook for repayment of any debt.
Also, lenders will get $1,000 to cover administrative and processing costs, while investors owning the mortgages will receive a maximum $1,000 for allowing up to $3,000 in short sale proceeds to be distributed to less senior lenders. Loan servicers participating in the Obama Administration’s Home Affordable Modification Program are required to follow the guidelines.
The rules do not specifically apply to loans guaranteed by Fannie Mae or Freddie Mac, which represent about half of all U.S. mortgage debt. The two government-run mortgage companies are working to finalize their own guidelines.
The Treasury plan, which must be implemented by lenders no later than April, is meant to help sellers like Dawn Sclafani, who has been waiting since October for her lender to approve a short sale offer on her Margate home. A buyer has offered $155,000, and she owes $233,000.
Sclafani, a 50-year-old psychologist, said she’s eager for the bank to approve the deal so she can put the experience behind her.
“I want to move on ... but I can’t until somebody gives me permission to,” she said. “I’ve heard that this is a horrendous process. The banks are just not very cooperative. I do believe these new rules will help.”
U.S. Rep Ron Klein, D-Boca Raton, agrees, saying the guidelines are meant to make short sales “a more usable tool.” Klein points out the rules provide standardized paperwork for all short sales and give buyers and sellers a more reasonable time frame for whether or not the sales will happen.
But Klein and others say the government may have to increase the financial incentives. The $3,000 cap on short sale proceeds is not sitting well with second lien holders, who have been demanding more money from sellers, the first lenders and real estate agents in exchange for releasing their claims and allowing the short sales to proceed.
“This is a great program if all these mortgages had only one lien holder,” said Travis Hamel Olsen, chief operating officer for Loan Resolution Corp., an Arizona company that helps lenders complete short sales. “But many of these properties have two liens.”
Meanwhile, some local real estate agents remain skeptical of the guidelines.
Broward County agent Ron Rosen, who urged Klein last summer to push for new regulations, said he thinks “the banks will still play their little games with people and make life difficult for everyone.”
Edward Goldfarb of RE/MAX PowerPro Realty in Davie doubts the Treasury will enforce the new rules. “There’s no teeth to them,” he said.
A spokeswoman for the Treasury says it will hand down “substantial” penalties to lenders that don’t comply. They can include the withholding or reduction of payments and requiring improperly rejected loans to be modified.
Lenders have blamed short sale delays on the complicated nature of the transactions, sheer numbers of deals and on borrowers who don’t submit proper paperwork in a timely manner.
In many cases, the banks are not to blame, said Ward Kellogg, chief executive of Boca Raton-based Paradise Bank. Still, he thinks the guidelines are necessary to force lenders to clear the market of so many distressed properties.
“I think the pressure on (the banks) is a good thing,” Kellogg said.
Copyright © 2010 Sun Sentinel
Monday, January 11, 2010
Men who jump the picket fence
CHAPEL HILL, N.C. – Jan. 11, 2010 – For a number of reasons, both financial and personal, a growing number of men are shunning the revered institution of homeownership. The figures behind this phenomenon only hint at possible reasons.
A comprehensive nationwide study by the University of North Carolina at Chapel Hill’s Center for Community Capital found that men and women under age 40 report fairly comparable levels of contentment with homeownership. Yet the attitudes of bachelors and bachelorettes hint at underlying gender attitudes toward homeownership. Married couples comprise the majority of new homebuyers.
According to the National Association of Realtors® (NAR), the next-largest buying group is single women, who in the past year accounted for more than one in five home sales; single men represented just 10 percent.
The gap has widened since the turn of the century, confirms Paul Bishop, NAR’s vice president for research. Bishop’s survey leaves unanswered questions about the roots of the gender divide. Whatever the reasons, a number of men seem to grasp all too well what economists see as an enigma of homeownership: it has an asset, or investment, value, as well as a consumption value.
“Once upon a time, people bought houses to live in,” says UCLA geography professor William Clark, who writes frequently on homeownership. Today, “with the sudden run-up in foreclosures, you’re starting to see people ask: ‘Is housing a good investment?’” he explains.
Source: New York Times
CHAPEL HILL, N.C. – Jan. 11, 2010 – For a number of reasons, both financial and personal, a growing number of men are shunning the revered institution of homeownership. The figures behind this phenomenon only hint at possible reasons.
A comprehensive nationwide study by the University of North Carolina at Chapel Hill’s Center for Community Capital found that men and women under age 40 report fairly comparable levels of contentment with homeownership. Yet the attitudes of bachelors and bachelorettes hint at underlying gender attitudes toward homeownership. Married couples comprise the majority of new homebuyers.
According to the National Association of Realtors® (NAR), the next-largest buying group is single women, who in the past year accounted for more than one in five home sales; single men represented just 10 percent.
The gap has widened since the turn of the century, confirms Paul Bishop, NAR’s vice president for research. Bishop’s survey leaves unanswered questions about the roots of the gender divide. Whatever the reasons, a number of men seem to grasp all too well what economists see as an enigma of homeownership: it has an asset, or investment, value, as well as a consumption value.
“Once upon a time, people bought houses to live in,” says UCLA geography professor William Clark, who writes frequently on homeownership. Today, “with the sudden run-up in foreclosures, you’re starting to see people ask: ‘Is housing a good investment?’” he explains.
Source: New York Times
Friday, January 8, 2010
U.S. now a renters’ market
NEW YORK – Jan. 8, 2010 – Reis Inc. reports that the nation’s apartment vacancy rate ended the year at 8 percent, the highest level since the New York-based research firm began tracking such statistics in the top 79 U.S. markets thirty years ago.
Rents dipped 3 percent in 2009, led by declines in San Jose, Seattle and other cities that witnessed brisk growth until the recession. In New York City, the apartment vacancy rate improved by 0.1 percentage point for the second consecutive quarter.
More and more apartment owners find that they must now go the extra mile to entice residents to renew leases.
“We’ll shampoo their carpets. We’ll paint accent walls. We’ll add Starbucks cards,” says Camden Property Trust CEO Richard Campo. Campo expects the first and second quarters of 2010 to be “pretty ugly,” but he expressed optimism that the sector would gain steam in the second half of the year.
During the October-December quarter, vacancies rose in 52 markets, improved in 17 and remained flat in 10. Owners and managers were hit especially hard in 2009 by competition from new supply.
Reis reports that the approximately 120,000 new rental units added last year represented the most new construction since 2003.
Source: The Wall Street Journal
NEW YORK – Jan. 8, 2010 – Reis Inc. reports that the nation’s apartment vacancy rate ended the year at 8 percent, the highest level since the New York-based research firm began tracking such statistics in the top 79 U.S. markets thirty years ago.
Rents dipped 3 percent in 2009, led by declines in San Jose, Seattle and other cities that witnessed brisk growth until the recession. In New York City, the apartment vacancy rate improved by 0.1 percentage point for the second consecutive quarter.
More and more apartment owners find that they must now go the extra mile to entice residents to renew leases.
“We’ll shampoo their carpets. We’ll paint accent walls. We’ll add Starbucks cards,” says Camden Property Trust CEO Richard Campo. Campo expects the first and second quarters of 2010 to be “pretty ugly,” but he expressed optimism that the sector would gain steam in the second half of the year.
During the October-December quarter, vacancies rose in 52 markets, improved in 17 and remained flat in 10. Owners and managers were hit especially hard in 2009 by competition from new supply.
Reis reports that the approximately 120,000 new rental units added last year represented the most new construction since 2003.
Source: The Wall Street Journal
Thursday, January 7, 2010
Position yourself for short sale success
ORLANDO, Fla. – Jan. 7, 2010 – Short sales may be the number one niche in the real estate market right now, but many agents are loath to handle such transactions. They insist that banks do not want to approve short sales, the process is too time-consuming, and it’s difficult to get everyone to cooperate.
However, short sales experts say agents have a tough time because they often neglect BPOs and property valuations, fail to review the bank’s guidelines, submit incomplete files or lowball offers, and do not follow up.
To position themselves for success in short sales, agents must assemble a team of escrow officers, BPO specialists, processors, negotiators, and underwriters with experience in short sales. They should market to homeowners who might consider a short sale, obtaining lists of individuals behind on their mortgages and sending postcards or making in-person visits to let them know their options.
Additionally, they should look for new technologies to simplify the short sales process, determine how to assemble the right documents and deliver them to the right department.
Source: RISMedia
ORLANDO, Fla. – Jan. 7, 2010 – Short sales may be the number one niche in the real estate market right now, but many agents are loath to handle such transactions. They insist that banks do not want to approve short sales, the process is too time-consuming, and it’s difficult to get everyone to cooperate.
However, short sales experts say agents have a tough time because they often neglect BPOs and property valuations, fail to review the bank’s guidelines, submit incomplete files or lowball offers, and do not follow up.
To position themselves for success in short sales, agents must assemble a team of escrow officers, BPO specialists, processors, negotiators, and underwriters with experience in short sales. They should market to homeowners who might consider a short sale, obtaining lists of individuals behind on their mortgages and sending postcards or making in-person visits to let them know their options.
Additionally, they should look for new technologies to simplify the short sales process, determine how to assemble the right documents and deliver them to the right department.
Source: RISMedia
Wednesday, January 6, 2010
Fannie, Freddie proving too big to shrink
WASHINGTON – Jan. 6, 2010 – The government’s Christmas Eve pledge of unlimited financial aid to mortgage giants Fannie Mae and Freddie Mac is aimed at making sure the housing market doesn’t take another turn for the worse and cause the economic recovery to unravel.
This insurance policy taken out by the Treasury Department will help keep mortgage rates low, and may wind up being a gift of sorts to struggling homeowners and banks. But there’s a catch: the housing crisis is now likely to cost taxpayers much more.
The Obama administration’s latest lifeline to Fannie and Freddie will cover unlimited losses through 2012, lifting an earlier cap of $400 billion. It also eases restrictions on the size of the companies’ investment portfolios. That’s a reversal of the Bush administration’s September 2008 plan to shrink the size of the companies’ holdings of mortgage-backed securities.
The action, which didn’t need the approval of Congress, could position Fannie and Freddie to get more aggressive in dealing with the housing crisis, perhaps taking troubled mortgage investments off banks’ books.
“They’ve cleared the decks to use Fannie and Freddie as a vessel for whatever they want,” says Edward Pinto, a housing consultant who served as Fannie’s chief credit officer in the late 1980s.
Treasury could also lean harder on Fannie and Freddie to help troubled homeowners avoid foreclosures – and by extension the banks and other investors who own their mortgages. Many economists and housing experts say an existing $75 billion government program to prevent foreclosures isn’t working fast enough, threatening the emerging signs of home price stability in many cities across the nation.
Boosting the firepower of Fannie and Freddie, which finance three quarters of all new mortgages, also should help keep rates on home loans low just as the Federal Reserve starts dialing back its separate $1.25 trillion program aimed at doing just that.
That’s good news for the banking industry, which has benefited this year from homeowners refinancing their mortgages, says Jason O’Donnell, senior research analyst at Boenning & Scattergood Inc. “This is an initiative that spreads far beyond just Fannie Mae and Freddie Mac,” he says.
But the trade-off is that the Treasury will have to cover much more than the $111 billion in losses at Fannie and Freddie it already has funded. Barclays Capital predicts the losses will range from $230 billion to $300 billion.
Both companies provide vital funding for home loans, buying mortgages from lenders, pooling them into bonds and selling them to investors with a guarantee against default. While they traditionally backed loans to relatively safe buyers, they dramatically lowered their standards during the housing boom, and those loans are now defaulting in higher numbers.
If the administration does lean on Fannie and Freddie to expand its foreclosure-prevention program, it would be pricey. If Fannie and Freddie were, hypothetically, to start forgiving a quarter of borrowers’ mortgage debt, that would cost another $125 billion to help around 2.5 to 3 million borrowers, estimates Barclays analyst Ajay Rajadhyaksha.
The Treasury Department says its only motivation is to make sure investors remain confident that Fannie and Freddie can keep doing their jobs of buying the bulk of mortgages made in the U.S. and turning them into investments.
“These measures bring broad benefits to American homeowners and our economy,” says Andrew Williams, a Treasury spokesman.
Fannie and Freddie must convince everyone from the Chinese central bank to hedge funds to individual investors that it is still safe to buy their debt securities, which they sell partly through weekly auctions. The two companies have sold $2.7 trillion in debt this year, according to Credit Suisse calculations.
Still, by making the change before year-end, Treasury sidestepped the need for an OK from a bailout-weary Congress, infuriating Republicans on Capitol Hill.
Treasury gave Fannie and Freddie a bigger lifeline “without any involvement, notice (or) dialogue with Congress,” says Rep. Scott Garrett, R-N.J., a member of the House Financial Services committee, who called Wednesday for an investigation into the Treasury Department’s actions.
Fannie Mae was created in 1938 in the aftermath of the Great Depression. It was privatized 30 years later to limit budget deficits during the Vietnam War. In 1970, the government formed its sibling and competitor, Freddie Mac.
After the housing market started to unravel in 2006, mortgage defaults soared, and the companies’ losses mounted. By summer 2008, the companies weren’t able to raise money, and their shares plunged. The Bush administration’s hand was forced. It wound up taking over the pair a week before the collapse of investment bank Lehman Brothers. The government now has a 79.9 percent stake in each company, the maximum amount possible to still keep the companies off the federal budget.
Bush administration officials envisioned that Fannie and Freddie would ultimately be able to scale back their mortgage holdings by 10 percent a year, starting this year.
But the housing market remains shaky, with 11 out of 20 major cities showing price declines in October. Private investors remain wary of American mortgage investments. So Obama officials decided last week to give Fannie and Freddie more leeway, effectively allowing them to build up their portfolios this year, and then start cutting back in 2011.
Without this change, Fannie and Freddie would be forced to start selling mortgages from its portfolio early this year – just as the Federal Reserve begins to retreat from that market. That would push up mortgage rates and threaten the housing recovery.
Now they will be able to hold a combined $1.62 trillion in mortgage investments by the end of the year, compared with $1.36 trillion under the old rules. The result: Fannie and Freddie will have an additional $260 billion to invest next year, Credit Suisse calculates.
“They didn’t want Fannie and Freddie to be out there selling mortgages when the future of housing is uncertain,” says Credit Suisse mortgage strategist Mahesh Swaminathan.
Copyright © 2010 The Associated Press
WASHINGTON – Jan. 6, 2010 – The government’s Christmas Eve pledge of unlimited financial aid to mortgage giants Fannie Mae and Freddie Mac is aimed at making sure the housing market doesn’t take another turn for the worse and cause the economic recovery to unravel.
This insurance policy taken out by the Treasury Department will help keep mortgage rates low, and may wind up being a gift of sorts to struggling homeowners and banks. But there’s a catch: the housing crisis is now likely to cost taxpayers much more.
The Obama administration’s latest lifeline to Fannie and Freddie will cover unlimited losses through 2012, lifting an earlier cap of $400 billion. It also eases restrictions on the size of the companies’ investment portfolios. That’s a reversal of the Bush administration’s September 2008 plan to shrink the size of the companies’ holdings of mortgage-backed securities.
The action, which didn’t need the approval of Congress, could position Fannie and Freddie to get more aggressive in dealing with the housing crisis, perhaps taking troubled mortgage investments off banks’ books.
“They’ve cleared the decks to use Fannie and Freddie as a vessel for whatever they want,” says Edward Pinto, a housing consultant who served as Fannie’s chief credit officer in the late 1980s.
Treasury could also lean harder on Fannie and Freddie to help troubled homeowners avoid foreclosures – and by extension the banks and other investors who own their mortgages. Many economists and housing experts say an existing $75 billion government program to prevent foreclosures isn’t working fast enough, threatening the emerging signs of home price stability in many cities across the nation.
Boosting the firepower of Fannie and Freddie, which finance three quarters of all new mortgages, also should help keep rates on home loans low just as the Federal Reserve starts dialing back its separate $1.25 trillion program aimed at doing just that.
That’s good news for the banking industry, which has benefited this year from homeowners refinancing their mortgages, says Jason O’Donnell, senior research analyst at Boenning & Scattergood Inc. “This is an initiative that spreads far beyond just Fannie Mae and Freddie Mac,” he says.
But the trade-off is that the Treasury will have to cover much more than the $111 billion in losses at Fannie and Freddie it already has funded. Barclays Capital predicts the losses will range from $230 billion to $300 billion.
Both companies provide vital funding for home loans, buying mortgages from lenders, pooling them into bonds and selling them to investors with a guarantee against default. While they traditionally backed loans to relatively safe buyers, they dramatically lowered their standards during the housing boom, and those loans are now defaulting in higher numbers.
If the administration does lean on Fannie and Freddie to expand its foreclosure-prevention program, it would be pricey. If Fannie and Freddie were, hypothetically, to start forgiving a quarter of borrowers’ mortgage debt, that would cost another $125 billion to help around 2.5 to 3 million borrowers, estimates Barclays analyst Ajay Rajadhyaksha.
The Treasury Department says its only motivation is to make sure investors remain confident that Fannie and Freddie can keep doing their jobs of buying the bulk of mortgages made in the U.S. and turning them into investments.
“These measures bring broad benefits to American homeowners and our economy,” says Andrew Williams, a Treasury spokesman.
Fannie and Freddie must convince everyone from the Chinese central bank to hedge funds to individual investors that it is still safe to buy their debt securities, which they sell partly through weekly auctions. The two companies have sold $2.7 trillion in debt this year, according to Credit Suisse calculations.
Still, by making the change before year-end, Treasury sidestepped the need for an OK from a bailout-weary Congress, infuriating Republicans on Capitol Hill.
Treasury gave Fannie and Freddie a bigger lifeline “without any involvement, notice (or) dialogue with Congress,” says Rep. Scott Garrett, R-N.J., a member of the House Financial Services committee, who called Wednesday for an investigation into the Treasury Department’s actions.
Fannie Mae was created in 1938 in the aftermath of the Great Depression. It was privatized 30 years later to limit budget deficits during the Vietnam War. In 1970, the government formed its sibling and competitor, Freddie Mac.
After the housing market started to unravel in 2006, mortgage defaults soared, and the companies’ losses mounted. By summer 2008, the companies weren’t able to raise money, and their shares plunged. The Bush administration’s hand was forced. It wound up taking over the pair a week before the collapse of investment bank Lehman Brothers. The government now has a 79.9 percent stake in each company, the maximum amount possible to still keep the companies off the federal budget.
Bush administration officials envisioned that Fannie and Freddie would ultimately be able to scale back their mortgage holdings by 10 percent a year, starting this year.
But the housing market remains shaky, with 11 out of 20 major cities showing price declines in October. Private investors remain wary of American mortgage investments. So Obama officials decided last week to give Fannie and Freddie more leeway, effectively allowing them to build up their portfolios this year, and then start cutting back in 2011.
Without this change, Fannie and Freddie would be forced to start selling mortgages from its portfolio early this year – just as the Federal Reserve begins to retreat from that market. That would push up mortgage rates and threaten the housing recovery.
Now they will be able to hold a combined $1.62 trillion in mortgage investments by the end of the year, compared with $1.36 trillion under the old rules. The result: Fannie and Freddie will have an additional $260 billion to invest next year, Credit Suisse calculates.
“They didn’t want Fannie and Freddie to be out there selling mortgages when the future of housing is uncertain,” says Credit Suisse mortgage strategist Mahesh Swaminathan.
Copyright © 2010 The Associated Press
Tuesday, January 5, 2010
File early for tax exemptions
BARTOW, Fla. – Jan. 5, 2010 – It’s not too early to file for a property tax exemption for next year, according to Polk County Property Appraiser Marsha Faux, Faux said filing now will allow property owners to beat the rush that normally occurs early in the year as people try to beat the March 1 deadline.
Faux said her staff is accepting applications for homestead, portability, widow, widower, disability, veterans, senior, religious and charitable exemptions as well as applications for agricultural classification, also known as greenbelting.
Applicants filing for homestead exemption for the first time must apply in person and bring their recorded deed and proof of residency, which includes Florida driver license, Florida vehicle registration, Florida voter registration or resident alien card.
Persons filing for any exemption are required to present their Social Security cards.
A husband and wife must both have Florida driver licenses, if both drive.
Homestead exemptions are allowed on mobile homes if the landowner also is the owner of the mobile home. The mobile home registration must be provided at the time of filing.
A widow or widower must provide a copy of their late spouse’s death certificate.
Applicants for the disability exemption must provide a letter from a certified Florida physician verifying a total and permanent disability.
Veterans exemption applicants must provide documentation of percentage of service-connected disability from the U.S. Department of Veterans Affairs.
Copyright © 2010 The Ledger
BARTOW, Fla. – Jan. 5, 2010 – It’s not too early to file for a property tax exemption for next year, according to Polk County Property Appraiser Marsha Faux, Faux said filing now will allow property owners to beat the rush that normally occurs early in the year as people try to beat the March 1 deadline.
Faux said her staff is accepting applications for homestead, portability, widow, widower, disability, veterans, senior, religious and charitable exemptions as well as applications for agricultural classification, also known as greenbelting.
Applicants filing for homestead exemption for the first time must apply in person and bring their recorded deed and proof of residency, which includes Florida driver license, Florida vehicle registration, Florida voter registration or resident alien card.
Persons filing for any exemption are required to present their Social Security cards.
A husband and wife must both have Florida driver licenses, if both drive.
Homestead exemptions are allowed on mobile homes if the landowner also is the owner of the mobile home. The mobile home registration must be provided at the time of filing.
A widow or widower must provide a copy of their late spouse’s death certificate.
Applicants for the disability exemption must provide a letter from a certified Florida physician verifying a total and permanent disability.
Veterans exemption applicants must provide documentation of percentage of service-connected disability from the U.S. Department of Veterans Affairs.
Copyright © 2010 The Ledger
Monday, January 4, 2010
Home demand will be strong as buyers seek tax credits
WASHINGTON – Jan. 4, 2010 – So you want to sell a home in 2010? Think January, not June.
Not only are prices expected to keep falling, cutting into sellers’ profits the longer they wait, but demand will be strong early in the year from first-time and move-up buyers looking to qualify for tax credits that expire April 30.
“If I had a home that I wanted to get as much money for as I could, I’d sell it as soon as possible,” said Chris Lafakis, an economist for Moody’s Economy.com in West Chester, Pa.
Richard Griest, 58, is selling his three-bedroom home in Margate. It’s listed for $275,000, down from $299,000. “I’m a motivated seller, but I’m not going to give the thing away,” he said.
Griest’s real estate agent, Michael Citron, isn’t advocating any fire sale, but he has stressed to his client that time is of the essence.
Griest’s neighborhood is full of foreclosures and short sales, which will hurt prices of all neighboring properties. Even if Griest accepts an offer in the $250,000 range, that would be better than holding out and watching the distressed sales set a much lower standard for prices in the area, Citron said.
“More distressed sales are happening and will continue to happen in 2010,” said Citron of RE/MAX ParkCreek in Coconut Creek. “The market will continue to decline in value.”
While some real estate observers insist South Florida’s housing prices can’t fall much more than they have, others say the lingering recession and rising unemployment will hurt the market next year.
Potentially playing a large role will be a so-called shadow inventory of homes – repossessed properties that haven’t been put on the market for resale and mortgages that are in default and soon will be in foreclosure.
“Option ARM” adjustable-rate mortgages are due to reset higher in the next two years, leading to more foreclosures. And Miami-Dade, Broward and Palm Beach counties are among the leaders nationwide in first-mortgage defaults, according to Economy.com.
The firm expects South Florida home prices to bottom at the end of 2010, but not before they drop another 24 percent in Palm Beach County and another 30 percent in Broward. That would put Palm Beach County’s median price at less than $175,000 and Broward’s median in the $130,000 range.
Already, prices have plummeted by more than 40 percent in both counties since the housing markets peaked in November 2005.
Sales of existing homes have increased steadily for the past year, but half to two-thirds of the transactions involve foreclosures and short sales, agents say.
Scott Agran, head of Lang Realty in Broward and Palm Beach counties, said the housing recovery will happen once the economy improves.
“Not a lot of people are buying because it’s the right home on the right lot,” Agran said. “Most people are in the market to find a really good buy. There’s not a lot of normal purchasing.”
Still, some market followers take issue with the dire price forecasts for 2010.
Mike Pappas, president of the Miami-based Keyes Co., expects foreclosures will “seep out slowly” as lenders are careful not to deluge the market with more vacant homes.
“I think we’ll be able to handle it,” Pappas said.
Douglas Rill, broker/owner of Century 21 America’s Choice in West Palm Beach, also is optimistic. Lenders and borrowers are better prepared now than in previous years, which will lead to more people staying their homes, he said.
Rill said the large price declines have flattened over the past 12 months, and inventory of homes for sale has steadily decreased.
“I do not jump on the bandwagon of super declines in value,” Rill said. “I think that’s significantly overstated.”
Copyright © 2009 Sun Sentinel
WASHINGTON – Jan. 4, 2010 – So you want to sell a home in 2010? Think January, not June.
Not only are prices expected to keep falling, cutting into sellers’ profits the longer they wait, but demand will be strong early in the year from first-time and move-up buyers looking to qualify for tax credits that expire April 30.
“If I had a home that I wanted to get as much money for as I could, I’d sell it as soon as possible,” said Chris Lafakis, an economist for Moody’s Economy.com in West Chester, Pa.
Richard Griest, 58, is selling his three-bedroom home in Margate. It’s listed for $275,000, down from $299,000. “I’m a motivated seller, but I’m not going to give the thing away,” he said.
Griest’s real estate agent, Michael Citron, isn’t advocating any fire sale, but he has stressed to his client that time is of the essence.
Griest’s neighborhood is full of foreclosures and short sales, which will hurt prices of all neighboring properties. Even if Griest accepts an offer in the $250,000 range, that would be better than holding out and watching the distressed sales set a much lower standard for prices in the area, Citron said.
“More distressed sales are happening and will continue to happen in 2010,” said Citron of RE/MAX ParkCreek in Coconut Creek. “The market will continue to decline in value.”
While some real estate observers insist South Florida’s housing prices can’t fall much more than they have, others say the lingering recession and rising unemployment will hurt the market next year.
Potentially playing a large role will be a so-called shadow inventory of homes – repossessed properties that haven’t been put on the market for resale and mortgages that are in default and soon will be in foreclosure.
“Option ARM” adjustable-rate mortgages are due to reset higher in the next two years, leading to more foreclosures. And Miami-Dade, Broward and Palm Beach counties are among the leaders nationwide in first-mortgage defaults, according to Economy.com.
The firm expects South Florida home prices to bottom at the end of 2010, but not before they drop another 24 percent in Palm Beach County and another 30 percent in Broward. That would put Palm Beach County’s median price at less than $175,000 and Broward’s median in the $130,000 range.
Already, prices have plummeted by more than 40 percent in both counties since the housing markets peaked in November 2005.
Sales of existing homes have increased steadily for the past year, but half to two-thirds of the transactions involve foreclosures and short sales, agents say.
Scott Agran, head of Lang Realty in Broward and Palm Beach counties, said the housing recovery will happen once the economy improves.
“Not a lot of people are buying because it’s the right home on the right lot,” Agran said. “Most people are in the market to find a really good buy. There’s not a lot of normal purchasing.”
Still, some market followers take issue with the dire price forecasts for 2010.
Mike Pappas, president of the Miami-based Keyes Co., expects foreclosures will “seep out slowly” as lenders are careful not to deluge the market with more vacant homes.
“I think we’ll be able to handle it,” Pappas said.
Douglas Rill, broker/owner of Century 21 America’s Choice in West Palm Beach, also is optimistic. Lenders and borrowers are better prepared now than in previous years, which will lead to more people staying their homes, he said.
Rill said the large price declines have flattened over the past 12 months, and inventory of homes for sale has steadily decreased.
“I do not jump on the bandwagon of super declines in value,” Rill said. “I think that’s significantly overstated.”
Copyright © 2009 Sun Sentinel
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