Fannie, Freddie May Lose Top Credit Rating is a post from: New York Real Estate Access Blog

Standard & Poor’s cautioned Fannie Mae and Freddie Mac that they may lose their top credit ratings if lawmakers don’t soon raise the government’s borrowing limit to avoid default.

The S&P also said that the government-sponsored enterprises could potentially default on their debts since they are so reliant on the U.S. government for funding. Fannie and Freddie own or guarantee about half of all U.S. mortgages.

Congress is frantically trying to come up with a solution to raise the $14.3 trillion borrowing limit to avoid a default by an Aug. 2 deadline. If they are unable to come up with a compromise, analysts say it could have a devastating effect on the U.S. economy, particularly the already fragile housing market.

If the government defaulted on its bonds, the government likely would have to raise interest rates dramatically, which in turn would hamper home ownership, analysts say.
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Source: “S&P Warns it May Downgrade Fannie, Freddie Credit,” Associated Press (July 15, 2011)

Help on the Way for Underwater Home Owners? is a post from: New York Real Estate Access Blog

A bill introduced in the Senate aims to remove barriers for underwater home owners looking to refinance. “The Helping Responsible Homeowners Act” would order Fannie Mae and Freddie Mac to waive fees and remove barriers that are keeping underwater borrowers from refinancing to lower mortgage rates.

The bill, authored by Sen. Barbara Boxer, D-Calif., has gained more momentum in Congress after Sen. Johnny Isakson, R-Ga., who ran one of the nation’s largest real estate brokerages, also signed on to sponsor it.

“The time to help struggling home owners is now while interest rates remain at near-historic lows,” Boxer says. “This legislation would help millions of responsible home owners who are making their payments, but are still struggling to make ends meet. By helping these home owners refinance at lower rates, we will put thousands of dollars back in the pockets of families and strengthen our economy.”

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Source: “Underwater Home Owners Refinancing Bill Gains Momentum,” Housing Predictor (July 15, 2011)

Bill Calls for Extending Jumbo Loan Limits is a post from: New York Real Estate Access Blog

A bill introduced late last week calls for extending the current conforming loan limits on government-backed mortgages at Fannie Mae and Freddie Mac for another two years.

The bill, introduced by Rep. John Campbell, R-Calif., and Rep. Gary Ackerman, D-N.Y., would allow the government-sponsored enterprises and the Federal Housing Administration to guarantee or buy mortgages worth up to $729,750 in many neighborhoods.

The current loan limits are set to expire Oct. 1. If an extension isn’t granted, the maximum mortgage amount in high-cost areas will drop from $729,750 to $625,500 (however, that limit will vary throughout the country).

“With the economy remaining fragile and the housing sector still struggling to recover, now is not the time to make the cost of mortgages more expensive,” Ackerman said.

The National Association of Home Builders has said it fears more than 17 million homes nationwide will become ineligible for more affordable federal funding if the loan limit expires. However, last week, Federal Reserve Chairman Ben Bernanke said he was confident that the private market, including investors and insurers, would fill the void if the conforming loan limits expired — although likely at a higher cost to borrowers.

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Source: “Lawmakers Introduce Bipartisan Bill to Extend Conforming Loan Limits,” HousingWire (July 15, 2011)
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Read more:

Mortgage Caps Are Just Part of the Problem

FTC No Longer Enforcing Parts of MARS is a post from: New York Real Estate Access Blog

The Federal Trade Commission announced on Friday that it would no longer enforce against real estate professionals most of a new rule in the Mortgage Assistance Relief Services (known as MARS). This had been a roadblock for practitioners trying to assist consumers in short-sale transactions.

“Real estate professionals will not have to make several disclosures required by the rule that, in the context of assisting with short sales, could be misleading or confuse consumers,” according to a statement by the FTC. “As more and more American home owners seek short sales, it is especially important that the rule not inadvertently discourage real estate professionals from helping consumers with these types of transactions.”

The MARS rule, which was proposed in 2009 and finalized and implemented in December 2010, targeted for-profit companies that charge high fees to consumers seeking mortgage assistance and required participants to disclose information about their services and barred companies from charging advance fees.

“After the [MARS] rule went into effect, a number of real estate professionals who help consumers with short sales raised concerns about complying with the rule,” according to an FTC statement. “These professionals pointed out that some of the required disclosures could confuse consumers or could be inaccurate in this context.”

As such, the FTC said it will no longer enforce most of the provisions of the MARS rule against real estate professionals who are completing short sale transactions. Regarding licensed real estate professionals who are also in good standing under state requirements, the FTC says they will now be exempt from the “obligation to make disclosures and from the ban on collecting advance fees.”
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Source: “FTC Will Not Enforce Provisions of MARS Rule Against Real Estate Professionals Helping Consumers Obtain Short Sales,” Federal Trade Commission (July 15, 2011); “FTC Decides Not to Enforce Part of MARS,” HousingWire (July 15, 2011); “U.S. Relaxes ‘Short Sale’ Rule for Real Estate Agents,” Dow Jones Newswires (July 15, 2011)
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REALTOR® Magazine’s Coverage of the 2011 Midyear Legislative Meetings

Can a New HUD Program Save Home Owners? is a post from: New York Real Estate Access Blog

In June, the Department of Housing and Urban Development launched a new grant program to help home owners who have fallen behind on their mortgage payments due to unemployment or unexpected medical bills.

The program offers eligible home owners $50,000 in interest-free loans for up to two years.

HUD has until the end of the government’s fiscal year, Sept. 30, to spend all of its $1 billion for the Emergency Homeowners’ Loan Program (or EHLP), which will provide 27 states with aid for the program. Home owners in eligible states have until July 22 to complete their applications.

HUD hopes that 30,000 home owners can be helped through the program.

However, while some are seeing the program as a last chance to help unemployed home owners stay in their homes, others aren’t as convinced the program will do much good in ultimately lessening foreclosures in the country.

“The best foreclosure mitigation program in America is a job,” argues Rep. Jeb Hensarling, R-Texas. “It’s not a government check, it’s a paycheck.” Earlier this year, Hensarling sponsored a bill to end EHLP, which was supported by the House. The Senate has yet to take up the bill, however.

For a full list of states and eligibility requirements for EHLP, visit the HUD Web site.

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Source: “HUD to Give Away $1 Billion to Struggling Home Owners,” The Washington Post (July 4, 2011)
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Read more:
Special Fund Would Help Owners Stay in Homes

Foreclosure Sales Drop, But Inventories Swell is a post from: New York Real Estate Access Blog

Foreclosure sales continue to drop, but foreclosure inventories remain high in many markets across the country. By the end of May, the number of mortgages that were 90 or more days delinquent, combined with the foreclosure inventory, outpaced foreclosure sales by 50:1, Lender Processing Services Inc. reports.

The biggest drop in foreclosure sales occurred in East Coast states. For example, foreclosure sales plummeted 96 percent in Washington, D.C., 80 percent in Maryland, and 79 percent in New York, according to Lender Processing Services’ monthly mortgage monitor report.

Mortgages that are 90 days or more delinquent, combined with the foreclosure inventory, totaled more than 4 million in May. Foreclosure sales at the end of May totaled 78,676.

The average time a home owner spends in foreclosure continues to get longer. More than 33 percent of home owners in foreclosure have not made a mortgage payment in more than two years.

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Source: “Foreclosure Sales Plummet in May,” RISMedia (July 5, 2011)

Read more:
New Homes Competing Against Foreclosures

Down Payment Plan May Price Buyers Out of Market is a post from: New York Real Estate Access Blog

How much a home buyer should have a for a down payment on a home has been up for dispute among policymakers. Some recent federal regulators and lawmakers calling for a 20 percent or 10 percent down payment in order for mortgages to be considered a “qualified residential mortgage” and not subjected to extra fees.

However, such stringent down payment requirements could price many home owners out of the housing market, argues a growing number of consumer housing advocates. (Read more about the National Association of REALTORS®’ stance).

In fact, for many creditworthy home buyers in occupations that don’t boast high median salaries, they might have to wait a decade or even longer to meet the down payment rule.

The Center for Responsible Lending, which has argued that 10 percent or 20 percent down payment requirements are too high, has a chart on its Web site boasting the length of time it would take borrowers of different occupations to save enough for a 10 percent down payment on a 2010 median-priced $172,900 home.

• U.S. Army Staff Sergeant: 16 years (median salary: $30,176)
• Public school teacher: Nearly 15 years (median salary: $33,530)
• Firefighter: 10 years (median salary: $47,730)
• Police officer: Nearly 9 years (median salary: $55,620)

“We’re not advocating for zero percent down,” Kathleen Day, spokesperson for the Center for Responsible Lending, told The New York Times. “We think down payments are good. But we think the market should set them, based on the underwriting.” (That is, based on the borrower’s credit history and income and debt levels.)

The down payment proposal comes as part of new rules for mortgage lenders in the Dodd-Frank law. Federal agencies are trying to set criteria for what should be considered a reasonably safe mortgage or QRM. Lenders issuing a QRM will be able to sell the loan to an investor and avoid retaining any of the risk. However, lenders will consider non-QRMs more risky since they’ll have to retain a 5 percent ownership. (Loans insured by the Federal Housing Agency would be exempt.) For borrowers who are unable to meet QRM, they would have to pay more for their loans because lenders would have to boost interest rates on their loans to cover the extra costs.

What You Can Do

Lawmakers have extended the public comment on the new down payment rules to Aug. 1. The REALTOR® Action Center has issued a call for real estate professionals to help ensure their clients have access to affordable mortgages. To send a letter to your state lawmakers, visit REALTOR.org.

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Source: “What’s a Reasonable Home Down Payment?” The New York Times (June 29, 2011) and REALTOR® Magazine online

7 Highest-Performing Major Housing Markets is a post from: New York Real Estate Access Blog

Several real estate markets are starting to show signs of improvement with home prices in the last quarter as the industry demonstrates more signs of stabilizing, according to Clear Capital’s latest monthly Home Data Index Market Report.

REO saturation rates have improved in the majority of the country’s largest markets. However, many areas are still battling year-over-year price declines. Clear Capital’s index reports that quarter-over-quarter home price declines were 2.3 percent in the latest quarter, which is less than half compared to the previous month.

“The latest market report results through May suggest that home prices are starting to ease back from the heavy declines seen over the winter,” says Alex Villacorta, director of research and analytics at Clear Capital. “We are still far away from the strong demand needed to fully turn things around for the housing market. However, it is clear from the initial spring sales data that prices are softening, suggesting stabilization in the market.”

The High Performers
Seven of the top 15 markets posted quarter-over-quarter property price gains in this month’s report, compared to none in last month’s, according to Clear Capital. Here are the seven highest-performing major real estate markets, according to the report.

1. Washington, D.C.-Arlington, Va.-Alexandria, Va.
Quarter-to-quarter home price change: 4.5%
Year-to-year price changes (May 2010-May 2011): 4.9%
REO saturation: 17.5%

2. St. Louis, Mo.
Quarter-to-quarter home price change: 2.2%
Year-to-year price changes: -11.4%
REO saturation: 35.3%

3. Pittsburgh, Pa.
Quarter-to-quarter home price change: 1.6%
Year-to-year price changes: 0.3%
REO saturation: 10.9%

4. New York, N.Y.-Long Island, N.Y.-No. New Jersey, N.J.
Quarter-to-quarter home price change: 1.5%
Year-to-year price changes: 1.4%
REO saturation: 9.6%

5. Virginia Beach, Va.-Norfolk, Va.-Newport News, Va.
Quarter-to-quarter home price change: 1.4%
Year-to-year price changes: -13.2%
REO saturation: 22.4%

6. Miami-Ft. Lauderdale-Miami Beach, Fla.
Quarter-to-quarter home price change: 0.6%
Year-to-year price changes: -5.2%
REO saturation: 39.6%

7. San Jose-Sunnyvale-Santa Clara, Calif.
Quarter-to-quarter home price change: 0.5%
Year-to-year price changes: -5%
REO saturation: 25%

Tthe lowest-performing market for the fifth straight month was Detroit-Warren-Livonia, Mich., with a 13.2 percent decrease in quarter-over-quarter home price change and a 58 percent REO saturation rate.

Source: “Clear Capital Reports Quarterly Home Price Decline Slows; Signs of Market Stability as Summer Approaches,”
Clear Capital (June 9, 2011)

Mortgage Rates Reach Another Low for 2011 is a post from: New York Real Estate Access Blog

For nearly two months, mortgage rates have been steadily dropping, and this week rates reached another low for the year, Freddie Mac reports in its weekly mortgage market survey.

Here’s a closer look at average mortgage rates for the week:

30-year fixed-rate mortgage: The most popular financing choice among buyers, the 30-year fixed-rate mortgage continued to drop this week, averaging 4.55 percent. Last week it had hit a 2011 low at 4.60 percent. Last year at this time, the 30-year rate averaged 4.79 percent.
15-year fixed-rate mortgage: It averaged 3.74 percent this week, down from last week’s 3.78 percent. Last year at this time, 15-year rates averaged 4.20 percent.
5-year adjustable-rate mortgage: It held steady at 3.41 percent this week. A year ago, the 5-year ARM averaged 3.94 percent.
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Source: “Fixed Mortgage Rates Continue Downward Slide,” Freddie Mac (June 2, 2011)

Real Estate’s ‘Clearance Sale’? is a post from: New York Real Estate Access Blog

For those who love a deal, now is the time to buy a home, experts say. Pete Flint, CEO of Trulia, predict a “clearance sale” in real estate.

“We don’t imagine a stampede of buyers, like outside of Macy’s on Black Friday,” he told CNN. “We see this more akin to January sales where retailers are trying to get rid of stock before it gets stale.”

Flint cites reasons such as home prices likely already reaching their lowest levels and a high number of inventory weighing on the market, many of which are distressed properties. Also, sellers may feel more pressure this summer to make deals instead of risk losing any more.

As for buyer urgency, “if people think we’re at the bottom of the market, they’ll act,” says Ken Johnson, a real estate professor at Florida International University.

Source: “Home Clearance Sale Coming From ‘Desperate’ Sellers,” CNN.com (June 1, 2011)