The Fourth Straight Year Of Housing Market Happiness
A weekend topic on lending. “RealtyTrac released its Q2 2015 U.S. Residential Loan Origination Report, which shows that 1,950,267 loans were originated on single family homes and condos in the second quarter, up 22 percent from the previous quarter and up 23 percent from a year ago to the highest level since the third quarter of 2013. ‘The rise in loan originations particularly the sharp rise in FHA purchase originations indicates the FHA premium reduction at the end of January really is having a big impact, pushing people off the fence to purchase,’ said Daren Blomquist, VP at RealtyTrac. ‘The average loan amount for FHA purchase loans increased from $187,718 in the first quarter of 2011 to $197,315 in the second quarter of 2015 (a 16 quarter high), as the lower FHA premium gave those buyers more buying power.’”
“There were a total of 326,143 Federal Housing Administration (FHA) loan originations – typically low down payment loans utilized by first time homebuyers in the second quarter. FHA loan originations increased 50 percent from the previous quarter and were up 46 percent from a year ago. There were a total of 118,807 Veterans Administration (VA) loans originated in the second quarter, representing 6.1 percent of all loan originations. VA loan originations in the second quarter were up 12 percent from the previous quarter and up 39 percent from a year ago.”
“There were a total of 118,807 Home Equity Lines of Credit (HELOC) originated in the second quarter, representing 14.4 percent of all loan originations. HELOC purchase originations were up 21 percent from the previous quarter and up 78 percent from a year ago while HELOC refinance originations were up 20 percent from the previous quarter and up 20 percent from a year ago.”
The Friday Flyer in California. “More of the Same. If you remember last month (and who doesn’t), the region celebrated a month of sales and price appreciation not seen for nearly a decade. Indeed the whole country seemed to experience the same boosted level of housing market happiness in June, leaving housing prognosticators salivating over the prospect that the housing market has finally hit it’s stride. That may be. After all we’re coming up on the fourth straight year of year-over-year price appreciation and that’s good news.”
“Of course, having recently heard radio commercials advising homeowners to borrow against their ‘future equity,’ I do appreciate the necessity of keeping some degree of oversight on the banking industry. But the banking industry can always hire pricier attorneys and they’re usually still at least a step ahead of the government boys.”
The Santa Cruz Sentinel in California. “Buying a home is a longtime commitment, it takes a lot of money both up front as well as monthly and owning a home requires maintenance and financial responsibility. While it is considered a long term investment, it is certainly not liquid. That is, when it comes time to sell it, it is not so easy to cash in on your investment like, say, stocks would be. On the other hand, if you don’t own a home, you are making the mortgage payments for your landlord; you could be forced to move out at the whim of the landlord and you are more than likely to experience rent increases.”
“Even in the wake of the mortgage crisis that we all experienced some years ago, the mortgage industry has stepped up to make buying a home as easy as financially possible. The mortgage industry allows borrowers to buy a home with just 3 percent down and to spend up to 45 percent to 50 percent of their monthly income on their principal, interest, taxes, insurance or PITI.”
“Perhaps this fear of buying lies in the fact that paying 45 to 50 percent of your monthly gross income cuts into the family budget too much. The other consideration is how much will your home increase in value through the years. A $500,000 home that is purchased with $50,000 down and appreciates 5 percent per year will grow in value $25,000 per year which is not bad for the $50,000 investment.”
“Buying a home is clearly not right for everyone. In fact only 60 to 65 percent of Americans own their own home and nationwide, according to Wikipedia, of these homes, owners have about 50 percent equity. In other words, the average mortgage held by these homeowners is about 50 percent of the value of the home, which probably sounds pretty good to the first-time homebuyers who must borrow more than 80 percent of the value of their homes.”
Mortgage Professional America. “Future growth and profitability in the real estate industry are looking good according to a survey by the National Association of Realtors. Its annual report shows that 95 per cent of real estate firms expect profits to increase or remain the same in the next year. Concerns about the ability of homebuyers to make a purchase include 54 per cent who fear that millennials will be unable to afford to buy in the next two years due to stagnant wage growth, slow jobs market and debt-to-income ratios.”
“Mortgage credit was easier to obtain in July according to the Mortgage Bankers’ Association. Its index based on analysis of Ellie Mae data showed a 2.9 per cent rise in the month with conventional mortgages loosening restrictions the most followed by jumbo, government and conforming. ‘Credit availability increased in July, mainly driven by higher-balance loan programs,’ said Mike Fratantoni, MBA’s Chief Economist. ‘Many investors are fine tuning their cash-out refinance requirements to meet increasing borrower demand for home equity financing. Some investors increased the availability of low down payment loans.’”
The American Banker. “Studies showing the economic and societal benefits of homeownership have not changed in the years since they left office. Yet throughout the presidency of Barack Obama, the homeownership rate has fallen steadily and now stands at its lowest point since 1967. More troubling still, a recent report from the Urban Institute predicts that this trend will continue for another 15 years and that the decline will be experienced disproportionately by African American families. As more and more Americans write rent checks instead of gradually paying off their mortgages, the wealth gap will continue to widen.”
“How did the hard-fought gains in homeownership slip away? Ironically, much of the blame can be laid on many of the policies meant to protect borrowers in the aftermath of the housing crisis. These policies were intended to prevent Americans from getting loans they can’t afford to repay and to rein in lenders who were too aggressive in extending credit. But policymakers failed to anticipate harmful consequences of these regulations.”
“The changes implemented under the Dodd-Frank Act include the creation of the Consumer Financial Protection Bureau and the introduction of “qualified mortgages” and complicated formulas that lenders must use to determine borrowers’ ability to repay. The Department of Housing and Urban Development’s inspector general has teamed up with the Justice Department to use a 150-year-old statute called the False Claims Act, never before applied to mortgage lenders, to extract billions of dollars in settlements from those who make loans insured by the Federal Housing Administration. Many large lenders have backed away from FHA-insured loans, which are targeted at first-time homeowners and lower-income borrowers. FHA lending on single family homes has plummeted since 2009.”
“The result is a ‘zero-defect’ lending environment, wherein lenders agonize over each loan and appear willing to make only the safest loans to borrowers who have pristine credit histories. In our zeal to protect consumers, we have deprived many of them of one of their best chances to climb the economic ladder.”
“But there are alternatives. Recent events suggest that private capital stands ready to take on credit risk in the mortgage markets. For instance, new entrants into the mortgage insurance industry have been able to raise significant amounts of capital. In addition, according to the U.S. Mortgage Insurers Association, established players in the private mortgage insurance industry have raised about $9 billion in new capital since 2007.”
“Just as telling is the robust demand for credit risk recently packaged and sold by the government-sponsored enterprises. For the past several years, Fannie and Freddie have been required by the Federal Housing Finance Agency to sell to private capital sources significant slices of the credit risk associated with their mortgage portfolios. Each has now created new forms of securities that tie the bond’s return to the actual credit losses incurred on specific pools of underlying residential mortgages. Recent offerings of these securities have been oversubscribed, and, as a result, the prices bid on the securities have risen.”
“What is the conclusion to be drawn from all of these transactions? Private capital hasn’t given up on the mortgage markets. It just needs to find ways to earn reasonable returns for assuming the risks. The next administration should make a fresh assessment of the utility of the new regulatory framework. The data suggest that those who have fallen behind on their mortgages may have realized some advantage from new CFPB rules that prolong the foreclosure process and provide layers of protection to delinquent borrowers. However, new borrowers are paying higher rates for a more limited range of mortgages after undergoing a dramatically longer and more difficult lending process. The net result: fewer homeowners.”
“Most importantly, candidates in the next presidential race should support building a system that will give any family that has a reasonable chance of sustaining homeownership a chance to pursue that course. By definition, such a system will result in some defaults. But if the losses are predominantly sustained by private capital and if the lender is able to price the loan according to the risk it assumes, more loans will be made. The net result will be a rise in homeownership levels. The nation will be the better for it.”
Have they finally engineered the Goldilocks scenario where things are just right? (Neglecting the massive govt intervention)
From the Realtytrac link:
‘Metro areas with a population of at least 500,000 and the biggest increase in loan originations from a year ago were Birmingham, Alabama (up 197 percent), Oxnard, California (up 58 percent), Minneapolis, Minnesota (up 51 percent), San Jose, California (up 50 percent), Los Angeles, California (up 50 percent), San Diego, California (up 49 percent) and Richmond, Virginia (up 48 percent).
Other major markets among the top 20 for biggest year-over-year increase in loan originations included San Francisco, California (up 47 percent), Sacramento, California (up 46 percent), Denver, Colorado (up 46 percent), Riverside, California (up 41 percent) and Seattle Washington (up 39 percent).’
“Total loan originations year-over-year are higher in the Seattle area primarily due to refinancing rather than home purchases. Many homeowners are scrambling to refinance before interest rates rise, as they’re expected to do in the fall,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “The growth in FHA loans in the Seattle region tells us two things. First, it’s indicative of a market where prices are rising at a rapid rate. It also tells us that first time buyers, buoyed by a thriving economy and a belief in the housing market, are now dipping their toes into the water.”
‘Metro areas with a population of at least 500,000 and the biggest increase in purchase loan originations from a year ago were in Birmingham, Alabama (up 190 percent), Cape Coral, Florida (up 31 percent), Richmond, Virginia (up 30 percent), Augusta, Georgia (up 30 percent), Tampa, Florida (up 30 percent) and Minneapolis, Minnesota (up 29 percent).’
‘Other major markets among the top 20 for biggest year-over-year increase in purchase loan originations included Orlando, Florida (up 28 percent), Sarasota, Florida (up 27 percent), Dayton, Ohio (up 24 percent), Atlanta, Georgia (up 22 percent) and Miami, Florida (up 19 percent).’
“Our second quarter South Florida written contracts are at a record pace, up 16 percent from a year ago,” said Mike Pappas, CEO and president of Keyes Company, covering the South Florida market. “This should translate into a surge in loan originations in the third quarter. First time home buyers are picking up the slack from the decline in investors and taking advantage of the reduced FHA fees.”
‘Sacramento, California (up 46 percent)’
JM, keep telling yourself how smart you were to buy those houses.
I am very satisfied with my SFR investments. The cash flow after PITI+M will be about $2,300/mon this year. The principal reduction will be another $2,100/mon. The overall LTV on my portfolio is now sub 50%, partly thru appreciation and partly by 7 years of principal reduction.
What’s not to like?
Well… You’ve admitted to defaulting on two of them already. You paid how much for them? $100/sqft when you could have built and bought them brand new for under $60/sq ft?
Any claim for them to be owner occupied to get a lower loan rate?
I have never defaulted on any loan. You’re so full of fiction. My FICO is over 800.
I bought 3 of the houses to live in, so I used O.O. loans for those. The rest were invester loans w/ 25% down. Interestingly, they have all been refinanced at least once, if not twice in the last 7 years anyway, as rates kept dropping. The rates went from the low 5% range to the mid 3% range, which really improved my cash flow and increased my amortization repayment.
‘they have all been refinanced at least once, if not twice in the last 7 years’
The REIC is pleased to receive the fees. How many times have I refinanced a property? Not once, because there are no loans.
The Santa Cruz Sentinel in California. “Buying a home is a longtime commitment, it takes a lot of money both up front as well as monthly and owning a home requires maintenance and financial responsibility. While it is considered a long term investment, it is certainly not liquid. That is, when it comes time to sell it, it is not so easy to cash in on your investment like, say, stocks would be. On the other hand, if you don’t own a home, you are making the mortgage payments for your landlord; you could be forced to move out at the whim of the landlord and you are more than likely to experience rent increases.”
Observations:
Long term commitments are for the previous millennia. They no longer make sense.
I refuse to make small landlords rich by making their mortgage payments, I prefer multiple units and at least I could get dividends from apartment REIT to offset my rent. Equity residential has reasonable rents and is a REIT. Pay yourself to rent an apartment. Don’t pay a landlord.
Unless you quit paying rent or deal drugs from your apartment you will not be evicted by he whims of management. No worries.
It is funny how RE cheerleaders assume anyone who does not own a house must be renting a house.
A couple of months being greedy with the asked for rent too high and the whole thing goes plop. That extra hundred bucks a month you want will cause you to lose many thousands.
My rent I pay for my place in Orange County is among the lowest in my zip code. $1350 per month (probably $1400 this Fall) and surrounded by $600,000 houses. To rent a house in my neighborhood would cost me around $2500.
‘For more than a year, real estate agents and bankers have been preaching the power of the mortgage.’
‘This is something old that is new again in an industry that saw money and lending guidelines tighten up after banks across the country failed in the wake of the subprime mortgage collapse in 2007 and 2008. The cash game that the housing market became for several years thereafter kept many prospective homeowners from buying for years.’
‘But it’s not like that anymore, particularly in Manatee County. A recent statistical analysis by the online financial technology company SmartAsset.com ranks Manatee County as the fourth-best place in Florida to get a mortgage in terms of getting approved for a loan. According to SmartAsset’s ranking, nearly 64 percent of home loan applicants in the county get approved by banks and other lenders.’
‘The top-ranked Florida mortgage market in the analysis was Sumter County, with a nearly 75 percent success rating. Sarasota County was seventh at 62.6 percent. Peter Minarich, a mortgage banker with Homebridge Financial Service’s office in Bradenton, said the numbers bear truth. Manatee County mortgage applicants working through his office are currently approved at a 90 percent rate.’
‘Lisa Morrison, a Bradenton loan officer with MSC Mortgage, said financially qualified home-buyers are in the market as home sale volumes head into record territory. Up to 70 percent of her clients prequalify for home loans. “I think more people are coming back to the mortgage world,” she said.’
‘Stafford Starcher, president of the Realtor Association of Sarasota and Manatee, said the recovery of the mortgage market has been a big part of the resurgence of home sales in the two counties. During May and June, sales approached the highest volume in a decade.’
‘A better mortgage climate has opened homeownership to some buyers who have been out of the market for years. “We have people coming back from short sales that are eligible again,” Starcher said.’
‘While Manatee and Sarasota counties ranked well within Florida, the national mortgage picture reveals that there are some locations where it’s almost impossible to fail to qualify for a home loan.’
‘Several counties in the Dakotas, Nebraska and Texas saw loan approval rates of over 80 percent in the SmartAsset data.Two of those counties, both in Nebraska, saw a 100 percent loan funding rate.’
Sounds an awful lot like 2003, to me.
I agree, remembering how I shook my head in 2003 watching the market overheat. It became goofier in 2004, and ridiculous in 2005. It didn’t bubble over and start to crash until 2006. 2007 was the true turning point in the Sacramento foothills.
So az, are you suggesting we have 3-4 years to run before a correction? That means we must add another 3-4 years to another bottom.
I guess I should prepare to buy a dozen or so houses between 2021-2023. I am adding to my reserves in preparation!
Prices are already 3x long term trend and 2x replacement costs(lot, labor, materials and profit) which have driven demand to 20 year lows. Nobody is buying because of it Jingle_Fraud.
Remember….. You can ask $50k for your rund down 15 year old Chevy pickup but where is the buyer at that price? So it is will all depreciating assets like houses.
Yeah, it’s easy to get a mortgage in Flyover, where the asking price on my mom’s two bed/two bath condo is less than the current sticker price of an F-250.
(Any BTW, STILL waits for someone to even make an offer)
The American Banker article is a hoot.
Yeah, sure, the drop is homeownership is because of all those draconian measures put in place after the government had to bale out all those people that gave out “fog a mirror” mortgages.
Naw, it couldn’t have to do with the fact that the kids are broke, and/or have gazillions in student loans to repay, or that gazilllions of other people are unemployed, or can only get part time work at or close to minimum wage, or signing a 20-30 year mortgage in an environment with zero job security isn’t exactly the smartest thing to do.
And…..I love how the guy whines about all of those “formulas” and “calculations” they have to make, to determine mortgage eligibility.
“You see Mr. Bankster, over the past 25 years they have developed this thing called a “computer”………all you need to do is pay someone a few bucks for some software to load on your computer, then all your loan officers have to do is punch in a few numbers, and the computer calculates this for you !!!”
‘Could that shiny new car you just financed with a big dealer loan or lease put a damper on your ability to refinance your mortgage or move up to a different house? Could your growing debt load —for autos, student loans and credit cards —make it tougher to come up with all the monthly payments you owe?’
‘Absolutely, and some mortgage and credit analysts are beginning to cast a wary eye on the prodigious amounts of debt American homeowners are piling up. New research from Black Knight Financial Services, an analytics and technology company focused on the mortgage industry, reveals that homeowners’ non-mortgage debt has hit its highest level in 10 years.’
‘New debt taken on to finance autos accounted for 81 percent of the increase — a direct consequence of booming car sales and attractive loan deals. The average transaction price of a new car or pickup in April was $33,560, according to Kelly Blue Book researchers.’
‘Student loan debt also is contributing to strains on owners’ budgets. Those balances are up more than 55 percent since 2006. Credit card debt is another factor, but it has not mushroomed like auto and student loans. Nonetheless, homeowners carrying balances on their cards owe an average $8,684, according to Black Knight data.’
‘The jump in non-mortgage debt is especially noteworthy among owners with Federal Housing Administration (FHA) and Veterans (VA) home loans. These borrowers, who typically have lower credit scores and make minimal down payments — as little as 3.5 percent for FHA, zero for VA — now carry non-mortgage debt loads that average $29,415. By contrast, borrowers using conventional Fannie Mae and Freddie Mac financing have significantly lower debt loads — an average $22,414 — but typically have much higher credit scores and have made larger down payments.’
‘Is there reason for concern here? Bruce McClary, vice president at the National Foundation for Credit Counseling, believes there could be if the debt-gorging pattern continues.’
“Some people have lost sight” of the ground rules for responsible credit and are “pushing the boundaries,” he told me last week. For example, McClary says auto costs — monthly loan payments plus fuel and maintenance — shouldn’t exceed 15 percent to 20 percent of household income. Yet some people who already have debt-strained budgets are buying new cars with easy-credit dealer financing that knocks them well beyond prudent guidelines.’
‘According to a recent study by credit bureau Equifax, total outstanding balances for auto loans and leases surged by 10.5 percent in the past 12 months. Of all auto loans originated through April of this year, 23.5 percent were made to consumers with subprime credit scores.’
‘Ben Graboske, senior vice president for data and analytics at Black Knight Financial Services, cautions that although rising debt loads may look ominous, there is no evidence that more borrowers are missing mortgage payments or heading for default. Thanks to rising home-equity holdings and improvements in employment, 30-day delinquencies on mortgages are just 2.3 percent, he said in an interview, the same level as they were in 2005, before the housing crisis.’
‘But Graboske agrees that there are other consequences of high debt totals that could limit homeowners’ financial options: They “are going to have less wiggle room” when it comes to refinancing their current mortgages or obtaining a new mortgage to buy another house.’
Enjoy the debt-fueled consumption binge while it lasts!
OFF THE CHART
The near $1-trillion rise in U.S. student loan debt
The Globe and Mail
Published Friday, Aug. 14, 2015 11:38AM EDT
Last updated Friday, Aug. 14, 2015 12:37PM EDT
Student loan debt in the United States climbed to $1.19-trillion (U.S.) in the second quarter, according to a new report from the Federal Reserve Bank of New York. That debt has increased by roughly $930-billion (or 358 per cent) since the opening quarter of 2004. Student debt is the biggest source of non-housing debt in the U.S., according to the report. Meanwhile, auto loan debt now tops $1-trillion.
…
‘A Rochester man evicted from his home moves back into the foreclosed house with the help of a community group called Take Back the Land. Joe Woods has lived at the home on Webster Avenue in Rochester for 25 years. He says he ran into some financial difficulties and says now the bank won’t work with him.’
‘Woods was evicted from this house in June but today he’s back living in it. He says he’s prepared to defend his home against another eviction.’
‘Members from Take Back the Land Rochester rallied in front of the house today. They say housing is a human right and banks need to work with people instead of just evicting them leaving behind empty houses.’
‘Woods says he tried to modify is mortgage with Midfirst Bank based out of Oklahoma City but ran into hard times. He says Midfirst demanded $108,000 cash. Woods tells us his house is assessed at $28,000. He’s hoping today’s protest can help him get on the path to home ownership again. “Let’s just go to the table work something out reasonable that I can afford to pay and be happy. It helps everyone. If the house goes vacant, it doesn’t just affect me, it impacts the whole community.”
‘Ryan Acuff of Take Back the Land said, “Midfirst owns this property, Joe doesn’t. So being inside is trespassing. I mean we think this house should go back to Joe and if he’s going to move back to make a statement, I think maybe that’s what it’s going to take to get his house back.”
(1-28000/108000)*100% = 74% underwater. How on God’s earth can the lender reasonably expect a homeowner to pay off a loan on an asset whose price has cratered?
How on God’s earth can the lender reasonably expect a homeowner to pay off a loan on an asset whose price has cratered?
How about a cast iron prison cell located along a foggy coastline?
Oh Gawrsh, not these entitlement people again! That’s the REAL zombie apocalypse in this country IMO.
It’s MY house (that I bought 45 years ago and should have been paid off by now but I used it as a piggy bank until it didn’t rattle any longer waaa waaaaa poor me).
You don’t get to grossly inflated housing prices without appraiser, realtor, mortgage and bank fraud at every step of the process and on a massive, wholesale level nationwide.
Why would all these parties want housing prices to increase? Oh yes, their livelihood and income growth depend on it. It’s not going to change.
Fraud charges change things quite rapidly Jingle_Fraud. You’ll have first hand experience with it.
Don’t forget the buyer’s fraud. Lies on the mortgage application and maybe some back end tax fraud also. Bankruptcy fraud when it goes belly up.
‘First, it’s indicative of a market where prices are rising at a rapid rate. It also tells us that first time buyers, buoyed by a thriving economy and a belief in the housing market, are now dipping their toes into the water’
‘Our second quarter South Florida written contracts are at a record pace, up 16 percent from a year ago…First time home buyers are picking up the slack from the decline in investors and taking advantage of the reduced FHA fees.’
Yes, the investors like Blackstone, whose business model included paying 10-15% over asking. Recall the investor in Sarasota who paid over asking even though he was the only bidder. And the one in the IE who did the same, telling the agent he did it because he owned multiple houses in the area and wanted to drive up the comps.
MBA’s Action Alliance Adding Members; NAR’s Well Done Letter to Mel Watt; PennyMac in Forbes; Non-QM Loans Not Illegal!
Dec 24 2013
‘Communication is important, and here is an early present for many in the biz. Per a source close to Congressman Mel Watt who wrote to me, he is suspending all three changes: the LLPA increase, the base gfee increase, and elimination of the adverse market charge. “He views them as a package.”
‘Of course, anyone who locked in a long-term lock during the last week or so has a right to be miffed. Some correspondent reps are sending out notes saying things like, “Some of the changes that you noticed last week in the rate sheet for best efforts that were related to G Fee increases are being unwound. You should see this within the next few days.” Of course clients and LOs always wonder why the reaction time seems to be different based on the event, and whether it is a positive or a negative. But those who set prices are there to protect companies from loss, and although encouraging production is important, breaking even on a small volume is better than taking a loss on any volume, right?’
‘One can’t help but see the similarities between the NFL and the Mel Watt comments & the FHFA announcement raising gfees, LLPAs, and removing the adverse market charge. “The ruling on the previous play is unsportsmanlike conduct. Mel Watt has challenged the ruling of the FHFA. The play is under further review.” Rep. Watt will be sworn in early next month, after which we’ll all hear, “After further review, the ruling on the field is confirmed.” Or maybe we’ll hear, “After further review, the ruling is overturned, since the current book of business of the Agencies does not justify penalizing future borrowers, and current gfees and LLPAs will encourage private capital to enter residential lending. Therefore…” And while things are under review, there are many who remind us that the QM criteria are not set in stone…’
‘Our National Association of Realtors knows a thing or two about lobbying, as was recently evidenced by the loan fee news. And it is worth repeating a portion of its President Steve Brown’s letter to Mel Watt. “On behalf of the over one million members of the NAR I am writing to share our concerns about the most recent increase in fees at both Fannie Mae and Freddie Mac (the government sponsored enterprises, or Enterprises) that either includes a specific rate of return for the Enterprises or is based on a policy decision that seems to lack performance measures. What is clear is that the higher fee structure imposes new costs on home-buying taxpayers and home owners seeking fair and affordable mortgage loans. We are also concerned that the new fees will reduce access to an ever increasing amount of borrowers. We believe that the Enterprises must continue to play a vital role in the success of our nation’s housing market by serving as a reliable source of liquidity for housing finance.”
http://www.mortgagenewsdaily.com/channels/pipelinepress/12242013-cfpb-mortgage-mel-watt-nar.aspx
‘FHFA head Mel Watt spoke to the National Mortgage Bankers Association at their annual convention “offering more reassurances to mortgage banks that fear they could suffer unpredictable losses on the loans they sell to the government.” Yet he won’t meet with people affected by his policies, although we’ve been requesting it since January 2014. Keep an eye on this page to see how we plan to take our message to him….’
https://www.facebook.com/citylifeboston/posts/10152837644884161
Then they link to this article:
‘Federal Housing Finance Agency Unveils Plan to Loosen Rules on Mortgages’
OCT. 20, 2014
‘For years, politicians, housing advocates and potential home buyers have complained that tight credit policies after the housing market crash have kept too many deserving people from qualifying for mortgages. Now the government is taking steps that it says it hopes will allow more first-time buyers and lower- and middle-income Americans to get home loans at low rates.’
‘On Monday, Melvin L. Watt, the nation’s chief housing regulator, announced a program offering more reassurances to mortgage banks that fear they could suffer unpredictable losses on the loans they sell to the government.’
‘Separately, he disclosed that efforts are underway to allow borrowers to receive government-backed loans with much smaller down payments than are now required. “We know that access to credit remains tight for many borrowers, and we are also working to address this issue in a responsible and thoughtful manner,” said Mr. Watt, director of the Federal Housing Finance Agency, which regulates the mortgage finance giants Fannie Mae and Freddie Mac.’
‘The move in large part is intended to reassure banks that have had to pay tens of billions of dollars to settle legal cases arising from the housing boom and bust and buy back bad loans sold to Fannie and Freddie. To avoid having to make those payments again, many lenders now demand that borrowers meet stricter requirements for loans, known in the industry as overlays.’
‘“We know that this issue has contributed to lenders’ imposing credit overlays that drive up the cost of lending and also restrict lending to borrowers with less-than-perfect credit scores or with less conventional financial situations,” Mr. Watt said in a speech on Monday to the Mortgage Bankers Association convention in Las Vegas.’
‘Some economists, with mortgage bankers, welcomed the new plan, saying that it, with more gains in the job market and a recent dip in mortgage rates, could put the housing recovery back on track. Ben S. Bernanke, the former chairman of the Federal Reserve, recently told an audience that even he could not get a loan to refinance his mortgage.’
“Creditworthy borrowers who have been locked out of the housing market will finally have an opportunity to become homeowners,” said Mark Zandi, chief economist at Moody’s Analytics.’
‘But some housing finance analysts contend that tight credit does not sufficiently explain the weakness in the housing market. Instead, they say, an aging population, stagnant wages and a wariness of taking on new debt have all reduced demand for mortgages.’
OK, note the reference to a weak market. Housing was way slow at the end of last year. Flippers were heard to say they “overpaid” in the bay area of CA. Boy, Mel blew the doors off that! Further:
‘With the new plan, the government is trying to strike a balance between the frenzied years of the housing bubble, when mortgages were approved with little regard for the ability of borrowers to repay them, and the tight grip on mortgages after it burst. “It requires a lot of fine-tuning to get a national mortgage market that achieves all the objectives we want,” said Stan Humphries, chief economist for Zillow.’
‘To reassure mortgage lenders, the housing finance agency intends to further relax the agreements that determine when Fannie and Freddie may require banks to buy back bad loans. The terms that are being loosened involve loans that show evidence of fraud or other flaws in the underwriting process.’
‘Under the new agreements, for instance, Fannie and Freddie would demand buybacks only when there was a pattern of misrepresentations and inaccuracies in the loans. In addition, if problems are later discovered in loans, the deficiencies would have to be significant enough to have made the loans ineligible for purchase by Fannie and Freddie in the first place.’
‘These changes follow other recent adjustments by the housing finance agency to calm mortgage lenders. But mortgage banks did not increase lending to less creditworthy borrowers. Now, some housing specialists are more hopeful that the overhaul announced on Monday will prompt the banks to lend more. “It will be helpful in moving the needle,” Jim Parrott, a senior fellow at the Urban Institute, said.’
‘Mr. Watt said he would give specifics in a few weeks about a plan for borrowers that could include down payments of as little as 3 percent.’
http://www.nytimes.com/2014/10/21/business/economy/federal-housing-finance-agency-unveils-plan-to-loosen-mortgage-rules.html?_r=1
‘a national mortgage market that achieves all the objectives we want’
Who is this “we” Stan?
“Creditworthy borrowers who have been locked out of the housing market will finally have an opportunity to become homeowners,” said Mark Zandi, chief economist at Moody’s Analytics.’
It’s interesting how communist economists always find a way to get a sound bite into the MSM to support federally-financed bubble reflation efforts.
I am amazed at this:
https://www.redfin.com/CA/South-Pasadena/1127-Beech-St-91030/home/7007643
Almost a million for a 90-year old very ordinary 1724 sq. ft. 3 BR house on a small 6700 sq ft lot. This is nuts!
I’m not sure you need to lose any sleep over it.
Remember…. You can ask $50k for your run down 15 year Chevy pickup but where is the buyer at that price?
…. So it is with any depreciating asset like houses.
Dude, you seriously need to come up with a new one there. The fact is, if it’s a 15-year-old run down Dodge pickup with a quarter million miles on it and a Cummins diesel, it will still sell for an insanely-high amount of money. Because Cummins.
The buyers are setting these prices, and you can’t seem to wrap your mind around that. It doesn’t matter whether it is a house or a truck.
1990s Cummins diesel truck prices have doubled in the past few years.
So all I have to do to make your crummy truck analogy fall completely apart is to add ‘Cummins’ to it.
“1990s Cummins diesel truck prices have doubled in the past few years.”
… and not a buyer in sight at that price.
Remember…. you can ask $250k+ for your 50 year old run down depreciating shack but where is the buyer at that price?
Add in the costs of private schools to the mortgage there also.
I like the impressionist filter =wow
“Almost a million for a 90-year old very ordinary 1724 sq. ft. 3 BR house on a small 6700 sq ft lot.”
This was probably a blue-collar home when it was first sold.
Happy hour,the problem “Who is happy”?
Mortgage brokers, UHS, appraisers, bankers.
Who all happen to be neck deep in crime.
It’s a not-too-happy rental market in San Diego.
San Diegans pay 43.7% of income on rent
By THOR KAMBAN BIBERMAN, The Daily Transcript
Friday, August 14, 2015
Apartment-dwelling San Diegans paid an average of 43.7 percent of their income on rent in the second quarter of 2015 — and mortgages aren’t relatively affordable here either, according to a new report from Seattle-based Zillow Group.
Given the oft-stated rule that no more than a third of a person’s income should be paid for rent, San Diego is less affordable than many other markets in the western United States.
Along with San Diego, “Denver, Los Angeles, San Francisco [and] San Jose are unaffordable for both renters and buyers,” the report stated.
“Our research found that unaffordable rents are making it hard for people to save for a down payment and retirement, and that people whose rent is unaffordable are more likely to skip out on their own healthcare,” said Svenja Gudell, Zillow (NASDAQ: Z) chief economist. “There are good reasons to rent temporarily — when you move to a new city, for example — but from an affordability perspective, rents are crazy right now. If you can possibly come up with a down payment, then it’s a good time to buy a home and start putting your money toward a mortgage.”
“Renters in the U.S. can expect to put an average 30.2 percent of their monthly income toward rent – the highest percentage ever. Before the real estate bubble and bust, U.S. renters could expect to spend about 24.4 percent of their incomes on rent,” the report stated.
…
History has shown over and over those conditions result in some very painful and irrecoverable financial losses…
So far as I am aware, nobody has put a gun to any San Diego renter’s head to force them to rent at 43.7% of income.
Is that 43.7 % number due to rents getting higher, or incomes of renters shrinking?
I’m betting a little of both.
It’s due to an epic flood of people into the U.S. that we absolutely refuse to have a reasonable discussion about. Meanwhile all over CA more no growth public policy is enacted. It is utter madness. Price can only continue to rise. Brilliant.
…….. further driving demand lower. How low will demand go? 40 year lows? 50 year lows?
Mercer Island, WA Housing Prices Crater 7% YoY
http://www.movoto.com/mercer-island-wa/market-trends/
Renting on Mercer now. Watching daily as the slide continues.
Alameda, CA Housing Prices Dive 12% YoY; Housing Inventory Balloons 76%
http://www.movoto.com/alameda-ca/market-trends/
Two Brothers Guilty In 2012 “Operation Family Affair” Mortgage Fraud
http://www.app.com/story/news/crime/jersey-mayhem/2015/08/03/two-brothers-guilty-mortgage-fraud/31072215/
“Mortgage Fraud Still A Problem In Arizona”
http://www.kpho.com/story/29576620/mortgage-fraud-still-a-problem-in-arizona
There isn’t a single state where it isn’t a problem.
“Go Straight To Jail, Jude Tells Convicted Collier Real Estate Appraiser”
http://www.post-gazette.com/local/west/2015/08/14/Collier-appraiser-asks-for-delay-in-reporting-to-prison/stories/201508140279
Chicago Realtor Sentenced In 2013 Mortgage Fraud Scheme
http://chicago.suntimes.com/crime/7/71/774892/real-estate-broker-gets-16-months-mortgage-fraud-scheme
Attorney Sentenced In 2007-2010 Mortgage Fraud Scheme
http://www.mycentraljersey.com/story/news/crime/jersey-mayhem/2015/06/04/mortgage-fraud-scheme/28500185/
Aptos(Santa Cruz), CA Housing Prices Dive 6%
http://www.movoto.com/aptos-ca/market-trends/
Florida’s 2nd Quarter was hot but something changed in July, particularly with construction (referencing Palm Beach County, Fl). It was over-the-top and then went to nothing and has not picked up again yet. And they were all in a panic with developments going up in weeks, for sale. More than one intelligent person I know basically told me they believed it would go up forever. And bought in.
It is still to soon to tell about July sales from the records, but the prices look higher while the number of sales looks lower. The number of foreclosure sales they are having look to be the lowest I have seen in the last two years I have been watching them. But they are still processing cases from 2008.
The SWAY rental next door has a lawn that has turned into a garden of weeds and is causing me problems with my lawn. Where is the HOA?
Harry Dent is predicting a bottom for Florida real estate in 2017. For right now I am staying in my cheap rental, lawn and all.
hrrmmm.. prices higher but sales lower. Where have we seen this before?
Westchester County, NY Housing Prices Fall 9% YoY; Bust Spreads From NYC
http://www.zillow.com/westchester-county-ny/home-values/
wow, zillow w a neg -2% prediction
that’s pretty radical for them
Our forecasting is far more accurate.
since they’re 99% realtor funded calling a big are negative has to cause some pucker