What does the Government, Natural Disasters and the Mortgage Industry have to do with the impact on housing in 2011?

In a recent Time magazine article written by Jed Kolko, Trulia’s chief economist,  Kolko, highlights the key issues that had the greatest impact on the real estate market in 2011.

Here are a few of the issues having some of the greatest impact: 

1. The robo-signing scandal

The issue: Banks were accused of approving numerous foreclosures without proper reviews when a robo-signing scandal first broke in October 2010, continuing well-into 2011. 

The fallout: Banks slowed their processing of foreclosures greatly in 2011, making sure to take extra precautions. Regulators and states are working on a settlement with banks over the scandal — one that could include reducing loan balances of current home owners, if approved. Once a settlement is in place, housing experts predict the pace of foreclosures to pick up in 2012. 

2. Natural disasters

The issue: A series of natural disasters wreaked havoc on real estate in 2011, from tornados, floods, and hurricanes. The National Flood Insurance Program was pushed into the spotlight, a program still financially strapped after Hurricane Katrina. The program’s insurance premiums were not fully covering insurance claims in disasters this year, according to the Time magazine article. 

The fallout: For home owners living in flood-prone areas, “you can’t get a mortgage if you don’t have flood insurance,” the Time magazine article notes. “Without NFIP, housing markets in these areas would skid to a stop.” NFIP recently received an extension until May 2012 but experts say the future of the program still remains uncertain. 

3. The conforming loan limit 

The issue: In October, the government lowered the conforming loan limit for loans backed by Fannie Mae and Freddie Mac as well as those insured by the Federal Housing Administration from $729,750 to $625,500 in most areas. The real estate industry urged the government to keep the conforming loan limits higher. In November, the government raised the loan limits back up for FHA loans, but they left out Fannie and Freddie loans.

 

The fallout: “Mortgage lenders are willing to charge lower rates for loans that are backed by Fannie or Freddie; with a lower conforming loan limit, a small number of loans that used to qualify for federal backing no longer do,” the Time magazine article notes.

Read the Full Article 

Home Owners Try to Delay Tactics to Stall Foreclosures...

The average time it takes for banks to process a foreclosure -- from missed mortgage payment to the final part of the process -- has increased to 674 days, more than double the time frame foreclosures took just four years ago, according to LPS Applied Analytics. Four years ago, the average time nationally was 253 days.

Delinquent home owners are learning how to stay longer in their homes with some home owners taking advantage of delay tactics, according to a recent article at CNNMoney. Some stall tactics housing experts report more home owners are using to delay evictions are home owners’ challenging the bank’s foreclosure against them, requesting that lenders dig up original paperwork such as by asking for banks to produce paperwork that shows it is the legal holder of the mortgage note, or even, in some cases, home owners will declare bankruptcy, CNNMoney reports. 

Housing experts say the delays are continuing to throw a...MORE

The Benefits of Home Ownership - 2 of 10 Part Series

Buying Verses Renting A Home

When it comes to a home, you have two options: buy or rent.  What is right for one person may not be right for another, which is why it's important to know which is the best option for your individual situation.

Why People Rent

There are a number of reasons why someone may either choose or be forced to rent, including sporadic or unpredictable income, a high debt-to-income ratio, a bankruptcy or foreclosure within the last six months, unpaid collection accounts or judgments, frequent relocating for employment or the inability to save enough money for a required down payment on the purchase of a home.

Maintenance Matters

As a homeowner, you will be responsible for any maintenance or repair issues that arise.  This is a big consideration when choosing whether to rent or buy.  When you rent, the property owner is responsible for repairs and it may not always be obvious that these issues can be very costly.

How To Know When It's Time To Buy

If you have steady income with a good employment history, can provide a down payment of at least 5-10 percent of the purchase price and are current with all debts, it may be time to consider buying a home instead of renting.  In some cases, the cost of rent may even exceed that of a typical mortgage payment.

When deciding to buy, job stability is a big factor.  If your job does not require frequent relocation and you plan to live in the home for at least 5-10 years, you may want to consider making the purchase.  If you need to relocate after that, you may have enough equity from the sale to use as a down payment on another home.

Home Buyer's Checklist

If you can answer yes to the following questions, you may be ready for home ownership.  Your REALTOR® can help you to find the perfect home based on your individual needs.

·    Have you been steadily employed for at least one year, but preferably two years?

·    Do you plan to live in the home long enough to build equity?

·    Can you provide a down payment and still have enough money left to pay for closing costs, utilities and home furnishings?

·    Are you current on all debts, including auto loans, credit cards, etc.?

·    In addition to any current debts that you may have, can you afford a monthly mortgage payment which will likely include property taxes and insurance?

·    Do you have the time to devote to shopping for a home and comparing interest rates from various lenders?

·    Have you checked your credit reports for inaccuracies and disputed anything that needs correction with each of the three major credit reporting agencies? 

The decision to buy or rent is a very personal one that can only be determined after a careful evaluation of your situation. A REALTOR® can show you the perfect home and a lender can tell you whether or not you can afford it, but it's up to you to make the choice as to whether or not you are ready to make the move. 

Posted by ShirLee McGarry Author, Freelance Writer, Realtor® with All American Realty - Salt Lake County Area, Utah
Copyright© December 26, 2011 SJM Investments, LLC All Rights Reserved

November Existing Home Sales Continue to Climb

Washington, DC, December 21, 2011

Existing-home sales rose again in November and remain above a year ago, according to the National Association of Realtors®. Also released today were periodic benchmark revisions with downward adjustments to sales and inventory data since 2007, led by a decline in for-sale-by-owners.
Although rebenchmarking resulted in lower adjustments to several years of home sales data, the month-to-month characterization of market conditions did not change. There are no changes to home prices or month’s supply.
The latest monthly data shows total existing-home sales¹, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 4.0 percent to a seasonally adjusted annual rate of 4.42 million in November from 4.25 million in October, and are 12.2 percent above the 3.94 million-unit pace in November 2010.
Lawrence Yun, NAR chief economist, said More...

MORTGAGE RATES DROP - NEW RECORD LOWS

Fixed mortgage rates dropped even more this week, continuing the trend in reaching new record lows this year, Freddie Mac reports in its weekly mortgage market survey. The 30-year fixed-rate mortgage averaged 3.94 percent this week while 15-year rates sank to 3.21 percent — both all-time lows from their previous record lows set on Oct. 6. The 5-year adjustable-rate mortgage also set a new record this week.
The Federal Reserve at a meeting this week reaffirmed its commitment from this summer that it would keep interest rates low for the next two years.
Here’s a closer look at rates for the week ending Dec. 15.

• 30-year fixed-rate mortgages: averaged 3.94 percent — a new record low — with an average 0.8 point, dropping from last week’s 3.99 percent average. A year ago, 30-year rates averaged 4.83 percent.
• 15-year fixed-rate mortgages: averaged 3.21 percent — also a new record low — with an average 0.8 points, a drop from last week’s 3.27 percent average. Last year at this time, 15-year rates averaged 4.17 percent. 
• 5-year adjustable-rate mortgages: averaged 2.86 percent this week, with an average 0.6 point, dropping from last week’s 2.93 percent average. Last year at this time, 5-year ARMs averaged 3.77 percent. 
• 1-year ARMs: averaged 2.81 percent with an average 0.6 point, inching up slightly from last week’s 2.80 percent average. Last year at this time, 1-year ARMs averaged 3.35 percent. 

Source: Freddie Mac

Pending Home Sales Jump in Octob

Daily Real Estate News | Wednesday, November 30, 2011

Pending home sales rose strongly in October and remain above year-ago levels, according to the National Association of REALTORS®.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, surged 10.4 percent to 93.3 in October from 84.5 in September and is 9.2 percent above October 2010, when it stood at 85.5. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, said improved contract activity is a hopeful sign. “Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows, and there is a pent-up demand from buyer...MORE