Property managers considering renting to someone who lost a home to foreclosure should determine whether a potential tenant was a good renter prior to the foreclosure and could be again.
Maurice Ortiz, marketing director of Apartment People, a Chicago-based apartment-finding service, suggests setting up a procedure to consider applicants with extenuating circumstances individually. He suggests landlords consider these issues:
Did the tenant leave the foreclosure before he was evicted? Taking control of the situation and moving on is a sign of a reliable person who got in trouble because of the wrong mortgage.
Is the potential tenant upfront and honest about his problem? A tenant who admits his situation and explains it is likely to be a reliable tenant.
Ask for full, documented financial disclosure. Make sure the applicant has a job and a steady income and car and credit card loans are paid on time.
Ask for references and check them.
Seek a larger deposit – two months is not out of line – or ask for a lease co-signer.
Source: Chicago Tribune, Sharon Stangenes (01/25/2009)
Thursday, January 29, 2009
Friday, January 16, 2009
Tax Credit Changes Could Unleash Home Sales
If all home buyers become eligible for a tax credit without a repayment feature, it could result in an additional 555,000 home sales, enough to meaningfully draw down excess housing inventory, the NATIONAL ASSOCIATION OF REALTORS® says.
An evaluation of options for a home buyer tax credit by NAR shows wide ranging implications and benefits. A full credit to all buyers means an additional 2.22 million households would meet the income requirements for purchasing a home, but only one in four of those households would actually make a purchase.
Under the current $7,500 first-time home buyer tax credit, which must be repaid over 15 years, 264,000 households meet the purchase requirements. Using the same assumptions, with plans to hold their home for a median 10 years, it would mean only 66,000 additional sales.
Lawrence Yun, NAR chief economist, said NAR is advocating a tax credit for any home purchase meeting qualifying underwriting standards. “A home buyer incentive is critical to help reduce housing inventory and stabilize home prices,” he said. “The bigger the incentive, the faster housing can help pull the economy out of recession. The cost to the Treasury would be far less than the additional costs of a prolonged recession with insufficient housing stimulus.”
Analysis of other options shows that if only first-time buyers are eligible and the repayment feature is dropped, it could mean an additional 202,000 home sales. If extended to all home buyers but the repayment feature is retained, the gain would be 181,000 home sales.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said a flexible approach to the tax credit would have added benefits. “A home buyer tax credit also should be allowed to be used as a part of downpayment. This would instantly add an equity cushion for homeowners – a vested financial interest provides the foundation for sustainable homeownership, which helps improve economic stability,” he said.
NAR estimates only 25 percent of newly eligible households would become homeowners, and does not capture the effect of increased trade-up buying activity. As such, these projections may understate the full impact of a home buyer tax credit.
Source: NAR
An evaluation of options for a home buyer tax credit by NAR shows wide ranging implications and benefits. A full credit to all buyers means an additional 2.22 million households would meet the income requirements for purchasing a home, but only one in four of those households would actually make a purchase.
Under the current $7,500 first-time home buyer tax credit, which must be repaid over 15 years, 264,000 households meet the purchase requirements. Using the same assumptions, with plans to hold their home for a median 10 years, it would mean only 66,000 additional sales.
Lawrence Yun, NAR chief economist, said NAR is advocating a tax credit for any home purchase meeting qualifying underwriting standards. “A home buyer incentive is critical to help reduce housing inventory and stabilize home prices,” he said. “The bigger the incentive, the faster housing can help pull the economy out of recession. The cost to the Treasury would be far less than the additional costs of a prolonged recession with insufficient housing stimulus.”
Analysis of other options shows that if only first-time buyers are eligible and the repayment feature is dropped, it could mean an additional 202,000 home sales. If extended to all home buyers but the repayment feature is retained, the gain would be 181,000 home sales.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said a flexible approach to the tax credit would have added benefits. “A home buyer tax credit also should be allowed to be used as a part of downpayment. This would instantly add an equity cushion for homeowners – a vested financial interest provides the foundation for sustainable homeownership, which helps improve economic stability,” he said.
NAR estimates only 25 percent of newly eligible households would become homeowners, and does not capture the effect of increased trade-up buying activity. As such, these projections may understate the full impact of a home buyer tax credit.
Source: NAR
Thursday, January 15, 2009
30-Year Rates Fall Below 5 Percent
Mortgage rates dropped to their 11th straight weekly decline, reaching new record lows, according to Freddie Mac.
Interest rates on 30-year, fixed rate mortgages averaged 4.96 percent this week, down from a previous week's 5.01 percent.
The low rates have caused a spike in home refinancing loans and a welcome relief to cash-strapped home owners facing a slowing economy and rising unemployment rates.
"The fact that interest rates have dropped to a record low is an important development since more affordable home financing could help bring buyers back to the market and prevent some of these foreclosures," says Lawrence White, professor of economics at New York University's Stern School of Business.
Interest rates on 30-year, fixed rate mortgages averaged 4.96 percent this week, down from a previous week's 5.01 percent.
The low rates have caused a spike in home refinancing loans and a welcome relief to cash-strapped home owners facing a slowing economy and rising unemployment rates.
"The fact that interest rates have dropped to a record low is an important development since more affordable home financing could help bring buyers back to the market and prevent some of these foreclosures," says Lawrence White, professor of economics at New York University's Stern School of Business.
Other rates were mixed for the week:
- 15 year fixed rates: averaged 4.65 percent, up from 4.62 percent.
- 1-year adjustable rate mortgages: fell slightly averaging 4.89 percent from 4.95 percent last week.
- 5/1 ARMs: averaged 5.25 percent compared with 5.49 percent last week.
Mortgage rates have continued to drop ever since the Federal Reserve announced a plan in December to buy up $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae—the government-sponsored enterprises.
Freddie Mac started recording mortgages in 1971.
Source: Reuters, Julie Haviv (1/15/09)
Friday, January 9, 2009
Fannie Tries Short Sales Over Foreclosures
Fannie Mae has launched pilot projects in Phoenix and Orlando intended to reduce foreclosures by pre-approving short sales, agreeing on a price and the loss it will take prior to a deal even being made. It is hoped the program will improve the popularity of short sales among real estate agents.
Property professionals initially had welcomed short sales but soon found the process to be a frustrating one--due to squabbling about the sale price and slow approval times by the mortgage companies--that often ended with no sale at all.
"Short sales have received such a bad reputation among real-estate agents that, as a portion of the overall mortgage market, they have gone down," says Tom Popik of the research firm Campbell Communications, whose November survey of realty practitioners found that agents had to wait as long as 8.1 weeks to receive a response from the lender on a short sale. That was nearly double the 4.5 weeks the process took earlier in the year.
Fannie Mae's pilot will focus on homes that are listed at less than the mortgage balance and carry a Fannie Mae-backed loan serviced by Countrywide Financial Corp. If it proves successful, the concept could be expanded to other geographical areas and additional lenders. There are concerns, in the meantime, about the program's success, with real estate agents noting that property prices could decline before the pre-approval is issued.
Source: The Wall Street Journal, Nick Timiraos (01/09/09)
Property professionals initially had welcomed short sales but soon found the process to be a frustrating one--due to squabbling about the sale price and slow approval times by the mortgage companies--that often ended with no sale at all.
"Short sales have received such a bad reputation among real-estate agents that, as a portion of the overall mortgage market, they have gone down," says Tom Popik of the research firm Campbell Communications, whose November survey of realty practitioners found that agents had to wait as long as 8.1 weeks to receive a response from the lender on a short sale. That was nearly double the 4.5 weeks the process took earlier in the year.
Fannie Mae's pilot will focus on homes that are listed at less than the mortgage balance and carry a Fannie Mae-backed loan serviced by Countrywide Financial Corp. If it proves successful, the concept could be expanded to other geographical areas and additional lenders. There are concerns, in the meantime, about the program's success, with real estate agents noting that property prices could decline before the pre-approval is issued.
Source: The Wall Street Journal, Nick Timiraos (01/09/09)
Thursday, January 8, 2009
Banks Offer Mortgage Rates Below 5 Percent
The Federal Reserve earlier this week began purchasing $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae.
The move, to bolster the crippled residential property market, has resulted in some of the nation's biggest banks--including JPMorgan Chase & Co. and Wells Fargo & Co.--to offer fixed home loans under 5 percent.
While analysts expect the lower rates to prompt more borrowers to refinance, it may not kick-start home buying due to the bleak employment picture.
Source: Bloomberg, Dan Levy (01/08/09)
The move, to bolster the crippled residential property market, has resulted in some of the nation's biggest banks--including JPMorgan Chase & Co. and Wells Fargo & Co.--to offer fixed home loans under 5 percent.
While analysts expect the lower rates to prompt more borrowers to refinance, it may not kick-start home buying due to the bleak employment picture.
Source: Bloomberg, Dan Levy (01/08/09)
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