New Mortgage Rules

A recent article release from Florida Realtors discusses whether the new mortgage rules are a positive change.  To read the article, click here, or read below.

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 A coalition of 51 consumer organizations, civil rights groups, housing organizations, lenders, real estate professionals and insurers – a group that includes the National Association of Realtors® (NAR) – issued a white paper supporting the latest version of Qualified Residential Mortgage (QRM) rules currently in comment period.

Following the mortgage meltdown, lawmakers and federal agencies looked for a way to make sure toxic loans no longer harmed the market. To do that, they focused one eye on the qualifications a potential homebuyer must have to get approved for a mortgage. At first, some of the proposals caused concern among Realtor groups who feared a second real estate meltdown if buyers had to follow strict new rules, such as a minimum 30 percent down payment.

However, a white paper issued by the Coalition for Sensible Housing Policy finds that the current proposed mortgage rules generally find a fair balance between protecting the U.S. economy without making homeownership unavailable to many Americans – it “effectively limits the risk of default without excluding large members of creditworthy borrowers.”

The Coalition will submit the white paper to regulators during the rule’s public comment period that ends Oct. 30.

Analysis by The Urban Institute, which looked at current loans and how they would have fared under the QM proposed rules, found that the proposed QRM would reduce the risk of default and delinquency by more than half:

• Loans purchased by Freddie Mac and Fannie Mae that met the re-proposed QRM standard had default rates of 4.1 percent compared to 8.7 percent for mortgages that did not qualify for QM status.

• The delinquency rate for mortgages in private label securities that did not meet the re-proposed QRM standard was 30.6 percent. The delinquency rate for purchase and refinance loans that met the new QRM proposal was nearly two thirds lower at 12.6 percent.

“In synchronizing the definition of QRM with QM, the revised rule will encourage safe and financially prudent mortgage lending, while also creating more opportunities for private capital to reestablish itself as part of a robust and competitive mortgage market,” the paper concluded. “Most importantly, it will help ensure creditworthy homebuyers have access to safe mortgage financing with lower risk of default.”

The white paper can be found online.
To read more about the Coalition for Sensible Housing Policy and its member groups, visit their website.

Condos in Orlando prices double in 3 years

A nice article was in the Orlando Sentinel this week regarding condo prices.  To read article, click here or see below. 

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Orlando-area condo prices have more than doubled in less than three years, a new report shows.

The median price for a condominium or townhouse in the four-county area during July was $104,000, according to a report released by Florida Realtors Wednesday. During 2010, the units traded for a median price of $50,400 -- making Orlando one of the cheapest condo markets in the state at the time.

"When the market went down so low, all of Florida was for sale," said Bethanne Baer, broker associate for Keller Williams Realty at the Parks. "The lenders have not been lending on units and the values dropped tremendously."

Real estate companies advertised cheap Florida condominiums to buyers in the Midwest and the Northeast, spurring a frenzy of cash buyers that quickly drove up prices from the market bottom, she added. By leasing out the units, many of the cash buyers were able to quickly get a 10 percent return. Historically, landlords have had to wait three years after purchasing a rental property before they might get a profit.

The Orlando-area condominium projects that have performed the best are established properties built before the real estate boom and bust, Baer added. Another issue has been that very few local condominium and townhouse developments have landed on the approval list for federal-backed mortgages -- killing buyers' chances of getting a loan. In many cases, she said, condominium associations have not filled out the paperwork required for the federal backing.

One area where condos seem to have struggled the most is the west Orlando community of MetroWest, which has had some crime issues.

Of all parts of the state, Orlando in particular experienced one of the most dramatic condo turnarounds. During just the last year, Metropolitan Orlando condo prices increased 29.5 percent during the last year while prices for Florida's 20 largest metro areas increased 22.9 percent. Statewide numbers do not reflect the most current Brevard County sales.

Consider that three years ago – during a time when darkened windows defined condo projects throughout the state – Orlando and Ocala had the lowest condo prices in the state. By July of this year, Orlando's condo prices had surpassed those of not only Ocala but also Gainesville, Tallahassee, Indian River County, Charlotte County, Polk County.

Boosted largely by relatively high-ticket condo prices in coastal counties, the median price statewide for the properties was $129,000 in July. The panhandle area of Okaloosa County, which includes Destin and Fort Walton Beach, had a median condo sales price of $202,000 during July – the priciest condo deals in the state.

mshanklin@tribune.com or 407-420-5538

Economic turns a psychological corner

An article from The Atlanta Journal - Constitution is a great discussion on the power of optimism in a struggling economy.  Have you noticed a difference in people's attitudes?  Enjoy the article.

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NORCROSS, Ga. – June 28, 2013 – For Rizwan Peera, the feeling hit when he spotted “Sold” stickers slapped on “For Sale” signs in his Norcross, Ga., neighborhood.

Lisa Tilt noticed that she was hearing fewer “yeah … but” conversations among other small business owners, conversations laced with statements like, “Yeah, we’re getting by, but you never know these days.”

Maya Miller noticed that the kids’ party business her husband created while he struggled to find a good job was fully booked every weekend.

Call them “exhale moments” – the point at which a person finally feels a loosening of that knot of dread that has gripped people’s gut since the onset of the economic downturn.

The past several months have generated enough good (if not great) economic news to change many people’s perception, economic experts say. Those people have turned a psychological corner, recognizing that while there is a long climb ahead – and periodic jolts in the stock market – they no longer feel as though they’re being swallowed by a giant sinkhole.

“We’re off the floor,” said Mercer University economist Roger Tutterow.

Or, to adopt Miller’s personal economic indicator: “I can now get my toenails done.”

The collective psychological shift could have major economic consequences, as people’s spending habits are often driven by their view of the economy, said James MacKillop, associate director of the University of Georgia’s Owens Institute for Behavioral Research.

“Certainly a lot of economic activity is predicated on optimism or pessimism,” he said. “You don’t throw yourself into a 30-year mortgage if you feel that things are unstable or that the future is perilous.”

For today, though, the change in perception has yet to translate into a major change in behavior, said Dorsey Farr, a partner in the Atlanta investment management firm French Wolf & Farr. Even though consumer confidence has grown, consumer spending continues to “muddle along,” he said.

“People feel a little bit better, but it is not showing up in a real significant change in personal spending,” Farr said.

That’s likely because much of the pain caused by the recession is still very much with us. Millions of people are still beset by long-term unemployment, depressed housing values and the residual effects of foreclosures, bankruptcies and government spending cuts.

Marsha Belflower has heard the good-news stories, but she’s hardly optimistic.

During the pre-recession boom years, she abandoned her career in social work and eventually opened her own spa. As the economy worsened, business drained away. Two years ago she started looking for another job, but the search so far has been fruitless. Worse, she had to shut down her spa last month.

“I’m kind of a lost lamb,” said Belflower, 39, of McDonough, Ga. “I am taking an emotional sabbatical.”

She can’t even go back to her former career, because many good social work jobs now require a master’s degree that she doesn’t have.

“I do not have the sense that the economy is improving,” she said. “My house is not worth more. It still takes $50 to fill up my two-door Honda. I lost my job and my business. No, I don’t see it.”

Numerous economic indicators, however, show the economy is moving in the right direction, though in fits and starts.

As a result, consumer confidence reached its highest level in five years this month, according to the Conference Board. But don’t get too jazzed: The nation’s other major gauge of consumer confidence, Thompson Reuters and the University of Michigan, recorded an unexpected dip in consumer confidence this month.

The push-and-pull pace of this recovery has created a kind of hybrid optimism, said Emily Sanders, managing director of United Capital Financial Advisers of Norcross.

People see improvement, she said, but can’t shake the lessons of the recession. They see that the local mall is no longer a ghost town, they see houses being built again, but they’re not ready to splurge on major purchases.

“You don’t hear anybody talking about ‘staycations’ anymore,” said Sanders, referring to the term used for stay-at-home vacations. “People are not staying home, but they may not be taking as expensive a vacation as before.”

People make all kinds of decisions based on the economy, experts say: whether to get married, have kids, get divorced. Entrepreneurs gauge the economy when deciding whether to start or expand a business.

Peera, having seen the real estate market in his neighborhood improve, decided it was time to launch his own marketing business.

“I thought maybe I could make more opportunities for myself, instead of waiting for other people to create opportunities for me,” said the 24-year-old, who is now living in Tucker, Ga.

Tilt, after hearing more optimism among her small-business peers, decided to add another employee to her Marietta, Ga., communications consulting firm.

“That is a big leap,” she said. “It is very personal for me if I bring someone into the company and I become responsible for their income.”

Some economists suspect that the exhale moment is less about a surge in confidence than about people simply adjusting to a new normal. Farr, the investment manager, is one.

“The experience of dramatic declines in asset prices, home values and negative economic reports is far enough in the past; it’s faded from people’s memory banks,” he said. “They’ve become accustomed to these conditions.”

But Tutterow, the Mercer economist, believes hope is alive and well – enough, perhaps, to revitalize consumer spending and even revive the region’s aspirations.

“Collectively, the community’s confidence is coming back,” he said.

Copyright © 2013 The Atlanta Journal-Constitution (Atlanta, Ga.) Distributed by MCT Information Services.

First Time Buyers Checklist

A great first time buyer checklist was published on FloridaRealtors this week. If you are considering buying a home, we hope this article will assist you in the process. 

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Need-to-know home buying info for first-timers

PROVIDENCE, R.I. – April 29, 2013 – Homeownership starts with a desire to achieve the American Dream – to have a home of one’s own. After that, however, pragmatic questions must be answered, such as how much a buyer can afford and whether a bank will be willing to lend them money.

“Buying a home can be one of the biggest purchases a consumer will make,” says Cheryl Nolda, president, Home Lending Solutions, RBS Citizens Financial Group. “A house is the foundation where individuals and families build their lives and make memories.”

Charter One Bank put together a list of home buying tips for consumers who have decided that homeownership is right for them:

• Determine purchasing power. Calculate how much you can afford to spend before you start looking to focus on houses in that price range. The answer depends largely on income and current monthly debt payments.

• Secure your credit report. If there are any credit issues, get them addressed before applying for a mortgage loan. A free annual credit report can be obtained by calling 1-877-322-8228 or going to:www.annualcreditreport.com.

• Do your mortgage homework. Take the time to learn important mortgage and home-buying terms; more importantly, understand what they mean. Investigate the details – What are the additional costs, such as origination or application fees?

• Get pre-approved. A mortgage pre-approval assessment tells you approximately how much money you can borrow from your lender. In addition, many sellers require a pre-approval letter before reviewing a buyer’s offer. (After applying, avoid doing anything that would negatively impact your credit score, such as opening a new credit card or making a large purchase until after the home closing.)

• Buyer’s checklist. Use a homebuyer’s checklist at each house to keep track of important features like amenities, neighborhood and schools. This helps you compare notes and remember the differences and characteristics of each house, especially if you visit several houses in different locations.

• Know the market. When you know local market and home values, you’re less likely to overpay for a property. Use the Comparative Market Analysis (CMA) and full MLS listing details of the most similar comparable properties to help you know how much you should offer. And be on the lookout for owners who are eager to sell and willing to negotiate – this can save you thousands of dollars.

• Home inspection. Hire a professional home inspector to determine if there are any potential problems that can be expensive to repair.

• Have a backup plan. You and a seller may reach a stalemate when negotiating. Consider developing a back-up plan, just in case you are unable to reach an agreement. Define your maximum offer and don’t go over it – there are almost always other homes that will meet your criteria.

© 2013 Florida Realtors®

To find the article, click here. 

Community Development Plan up for vote in Winter Park

One of the latest community projects in the Winter Park area, Ravaudage, and its Developer, Dan Bellows, is asking Winter Park leaders to establish a community development district for the remainder of the project.

Community Development Districts are a popular tool for financing development. 
The districts, known as CDDs, have become an extremely popular mechanism for financing development. A few of the successful CDDs in the area include The Villages, Baldwin Park, and Celebration.

The districts increase the tax base at no cost to municipal governments or citizens who don't live in the district. Those who move into the district pay assessments to the district to fund improvements. And after the developer completes the project and moves on, there's an entity in place — more powerful than any homeowners association — to deal with oversight and maintenance issues.

For developers, such as Bellows, the advantages include the ability to sell tax-free bonds and charge assessments.  This source of funding can lead to rapid infrastructure that might otherwise take years to build.

The 73-acre Ravaudage site at Lee Road and U.S. 17-92 currently has one tenant, Miller's Winter Park Ale House restaurant.  The Ravaudage project is envisioned to include 489 residential units, retail and office space, and a 320-room hotel.

U.S. housing starts dip but remain at solid pace

WASHINGTON – Feb. 20, 2013 – U.S. homebuilders began work at a slower pace in January, though the level was still the third highest since 2008. The pace of building was viewed as a sign of further strengthening in residential real estate.

The Commerce Department says builders started construction at a seasonally adjusted annual rate of 890,000 last month, down 8.5 percent from December, when activity had hit an annual rate of 973,000. The December performance was the best since June 2008.

Applications for building permits rose to an annual rate of 925,000 in January, 1.8 percent higher than December, which had been the high point since mid-2008.

The pace of construction of single-family homes rose 0.8 percent in January, but apartment construction, which is more volatile, dropped 24.1 percent.

The U.S. housing market is slowly regaining its health after stagnating for roughly five years after the housing boom collapsed. Steady job gains and near-record-low mortgage rates have encouraged more people to buy.

A steady rise in prices reflects, in part, fewer homes for sale. The supply of previously occupied homes for sale has reached its lowest level in more than a decade. And the pace of foreclosures, while still rising in some states, has slowed sharply on a national basis. That means fewer low-priced foreclosed homes are being dumped on the market.

Those trends, and the likelihood of further price gains, have led builders to step up construction. Last year, builders broke ground on the most homes in four years.

For all of 2012, builders started work on 780,000 homes. That was still only about half the annual number consistent with healthy markets. But it represents a 28 percent jump from 2011. And it was the most housing starts since 2008, when construction was still falling after the housing bubble burst more than six years ago.

Sales of new homes jumped nearly 20 percent last year to 367,000, the most since 2009. Still, many economists don’t foresee a full housing recovery before 2015 at the earliest.

The National Association of Home Builders said Tuesday that confidence among U.S. homebuilders slipped in February from a 6 1/2-year high in January. Many builders reported less traffic by prospective customers before the critical spring home-buying season begins.

The home builders’ sentiment index dipped to 46 in February from 47 in January. It was the first monthly decline in the index since last April.

Readings below 50 suggest negative sentiment about the housing market. The last time the index was at 50 or higher was in April 2006, when it was 51. It began trending higher in October 2011, when it was 17.

Many builders are facing higher costs for building materials and having trouble obtaining financing for construction. Some also are facing a shortage of workers in markets where residential construction has picked up sharply, such as Texas and Arizona.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the home builders.
Copyright © 2013 The Associated Press, Martin Crutsinger, AP economics writer. All rights reserved.

Fannie & Freddie have Good News for Underwater Mortgages

For homeowners with Fannie Mae and Freddie Mac loans, the much anticipated good news may have arrived this past week.  On March 1st, Fannie and Freddie will start allowing homeowners with underwater mortgages (they owe more than the property is worth) to give up the house and cancel their debt by a deed-in-lieu of foreclosure. 

Who qualifies for deed-in-lieu transactions?  Well according to the new rules:

• Homeowners must must be current or less than 90 days late on their mortgage payments. 
• Homeowners must by making payments of at least 55 percent of their monthly income for the house.
• Homewoners must be able to document a "hardship" that requires a move, such as loss of spouse.
• The home must be clean and not damaged.

Once a homeowner qualifies, they should know that it is not the perfect solution.  A few things to know about:

• Homeowners may have to surrender as much as 20 percent of personal assets, excluding retirement accounts, to partially meet the loan's unpaid balance.
• The program does not affect second mortgages.  Mortgage servicers can offer up to $6,000 for second-lien holders to release borrowers from the loans, but there's no requirement that the holders agree.
• A deed-in-lieu will still affect your credit, but not to the extent of a foreclosure.

Even with all of the restrictions, the new Fannie and Freddie program is a viable option and good news for homeowners who must move due hardship and have underwater mortgages.

For more information on the program, click here for the new rules.

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