Posted by Annalisa Burgos | June 19, 2009
I’m in Washington, D.C., for a conference of the National Association of Real Estate Editors and got to hear from some of the key players in the federal government’s housing recovery efforts, including Housing and Urban Development (HUD) Secretary Shaun Donovan, Federal Housing Finance Agency Director James Lockhart and some of the congressional representatives on the banking and housing committees. We heard a lot about the Obama administration’s refinance and loan modification programs as well as the massive overhaul of the financial regulatory system.
Some of the notable stats from Thursday’s speakers:
–40% of those displaced by the foreclosure crisis are renters.
–16 mortgage servicers are participating in the federal government’s loan mod program. They handle about 80% of all mortgages.
–So far, 200,000 loan mod offers have been made under the federal program.
–Potential source of real estate growth is the rental market in college towns. That’s because each coming year, we’ll see a record number of high school graduates.
–Another potential demographic shift is the growing population of non-traditional households (”traditional” meaning a married couple with children).
Check out this video of HUD Secretary Shaun Donovan talking about the mission of Obama’s proposed Consumer Financial Protection Agency, a new watchdog agency that would protect consumers from the kind of predatory lending practices that got us into the current mortgage mess and foreclosure crisis.
Posted by Annalisa Burgos | March 18, 2009
After months of doom and gloom headlines, the housing market finally had a positive one: “Housing Starts Leap a Surprising 22.2% in February.” That’s the biggest gain in nearly two decades. Stocks of homebuilders Toll Brothers and Pulte Homes and home improvement retailer Home Depot shot up on the news, leading a nice market rally. And news outlets even started using the word everyone wants to hear — recovery.
But hold on. This”positive” housing news isn’t exactly the miracle turnaround we’re waiting for. Dig deeper and you’ll find that the new home construction market is simply stabilizing after a 17% plunge in January and three straight months of double digit drops. Housing starts were at a record low in January, so this recent surge is just the market gaining back some ground. Even the National Association of Home Builders downplayed the news in their press release:
“Nationwide housing starts turned upward for the first time in eight months this February, posting a 22.2 percent gain that was due primarily to a big bump on the often-volatile multifamily side, according to numbers released from the U.S. Commerce Department today.
“While welcome news, this gain only reflects a modest rebound from January, which was the worst month in history for new-home production,” said National Association of Home Builders (NAHB) Chief Economist David Crowe. “The majority of the gain was due to characteristic volatility on the multifamily side, while single-family housing starts were up just over one percent for the month.””
Year over year, new home starts are down 47%, so the industry has quite a long way to go before we can even think “recovery.” Market analysts and economists expect the housing market to continue to hurt through next year, with people losing their jobs, foreclosures flooding the market and inventory growing.
The good news is that homebuyers can great deals on the new homes already on the market. Builders are offering enticing financial incentives and upgrades to unload their excess inventory.
Posted by Annalisa Burgos | March 14, 2009
I never would have dreamed of buying real estate in Manhattan. But somehow in today’s market, I can actually afford it. And I’m not talking about million-dollar properties. I’m talking 1-bedrooms going for as little as 350K. What!?! Granted these are tiny co-ops/condos relative to the rest of the country, but still! When I first moved here in 2003, buying in “the city” was totally unheard of. I was resigned to life as a renter.
The tricky thing though is not finding a place, but finding a lender who’ll give me the loan terms I want. I know the process, but in today’s market, things are constantly changing. One minute, the Bank of America rep is saying I need to put 10 percent down, the next minute, I have to put 15 percent down. Mortgage officers are still trying to figure things out.
The great thing is you can educate yourself as much as you can. FrontDoor’s Home Finance and Home Value Guide features tips and advice on everything from getting a loan to refinancing to buying investment properties. See the 5 strongest housing markets in the country and find out which remodeling projects actually add value to your home.
Buying in Manhattan is different from other markets mainly because buyers at my level are typically limited to cooperative housing. Unlike condos, in a co-op, you’re buying a share of the building, which is legally owned by a corporation. Most co-ops require approval from a board before you can buy in the building. You also are required to pay monthly maintenance fees that cover the building’s mortgage payment, property taxes, a property manager and any amenities. Learn more about the process in FrontDoor’s Co-Op Buying Guide.
So this weekend, I’m hitting the pavement and looking for a Manhattan apartment. Who knew?!
Posted by Annalisa Burgos | March 4, 2009
Starting today, homeowners can apply for a loan modification with lenders under Obama’s $75 billion refinance and mortgage modification program. The Treasury Department says the “Making Home Affordable” program will help up to 9 million homeowners avoid foreclosure.
Lenders will receive financial incentives to modify mortgages of at-risk borrowers who have not yet missed payments and to remove second liens on loans. You can modify through Dec. 31, 2012.
Eligibility:
* Loans originated on or before Jan. 1, 2009
* First-lien loans on owner-occupied properties with unpaid balance up to $729,750. No investor-owned, vacant or condemned properties.
* Borrowers must show a recent tax return and two pay stubs and sign an affidavit of financial hardship.
The plan sets industry-wide standards for modifying a home loan, including using a “net present value” (NPV) test to determine the benefit of a loan modification. This test includes ways to determine property value, assume home price appreciation and estimate foreclosure costs.
Under the plan, a borrower’s monthly payment must be reduced to no more than 31 percent of gross monthly income.
To do this, the lender must go through a series of steps:
1) reduce the interest rate, at a floor of 2 percent
2) extend the life of the loan for a maximum of 40 years
3) forbear principal (i.e. offer interest-free forbearance on part of the principal)
Check with your lender to see if you qualify.
And don’t forget that borrowers with mortgages held by Fannie Mae and Freddie Mac are also eligible to refinance through June 2010.
Stay tuned for more exclusive real estate news, only on FrontDoor Unlocked!
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