House passes bill to protect borrowers
2009/05/08, 6:54 pm
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House Passes Bill to Protect Borrowers
A bill passed by the U.S. House of Representatives on May 7 requires mortgage lenders to take borrowers’ repayment ability into account. It also makes it possible for borrowers to take legal action against entities that pool mortgages and sell them as securities on the secondary market.

The bill also will force lenders to retain a 5 percent interest in mortgages other than standard 30-year fixed and adjustable-rate loans. However, adjustable-rate mortgages that carry prepayment penalties or fees greater than 2 percent do not qualify for the exemption.

Source: Washington Post, Dina ElBoghdady (05/08/09)


Rate of Bank Repossesions Falls in Q1
2009/04/16, 3:30 pm
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The rate of bank repossessions of homes in South Carolina declined by nearly half in the first quarter of 2009 compared with the fourth quarter of 2008, data released this morning show. South Carolina saw 157 more bank repossessions of homes in Q1 2009 than in Q4 2008, an increase of 6.9%. But that was a drop from the 12.5% increase seen between Q3 and Q4 2008. Possibly more striking in the latest numbers is the increasing number of homes that are being fed into the foreclosure pipeline. Homes that are in distress go through several steps before being repossessed by a bank or mortgage holder. In the last quarter of last year, 2,004 homes were entering the early stages of the process in South Carolina. In the first quarter of 2009, that number jumped 59.5% to 3,196 homes, according to RealtyTrac, a national real estate data tracking firm. The number of homes in jeopardy of foreclosure increased by 27.1% statewide when compared with the fourth quarter of 2008, according to RealtyTrac data. The number of homes across South Carolina in some state of foreclosure increased to 7,016 in the first quarter of this year, from 5,520 in the fourth quarter of 2008. Some lenders put a temporary stop on foreclosures during the first part of this year. That could account for both the drop in the rate of bank-repossessed homes – known in the industry as REOs – and the increased number of homes entering the earliest stages of distress, as banks might have held off on any filings. Today’s report follows positive news from the Charleston Trident Association of Realtors that showed a 36.2% increase in the number of home closings from February to March. The association’s president said a new batch of first-time homebuyers in the Lowcountry indicated that consumer confidence is on the rise for the Charleston residential real estate market. “People are realizing the incredible selection and value in this market and making the smart decision to invest in real property,” association President Gettys Glaze said Monday. The uptick was a positive indicator for the home market, but sales were still down 24.4% when compared with February to March a year ago. The Upstate saw a similar increase between Feburary and March. “Let’s hope April is up from March,” said Nick Sabatine, CEO of the Greater Greenville Association of Realtors. “It gives me a little hope that we’ve hit the bottom. I’m looking for it (sales data) to pick up each month.” Other major home markets across South Carolina saw similar increases in actual repossessions by banks, including a 25.4% increase in Lexington County. Spartanburg County saw a decrease, at 39.6%. In the Lowcountry, Berkeley County dropped by 1% and Charleston REOs increased by more than 150%, going from 119 to 304. Nationally, RealtyTrac found that foreclosure activity increased 9% in the first quarter and was up 12% compared with the first quarter of 2008. RealtyTrac CEO James J. Saccacio said the number of households that received a foreclosure filing was more than 12% higher than the next-highest month on record. “Since much of this activity was in new foreclosure actions, it suggests that many lenders and servicers were holding off on executing foreclosures due to industry moratoria and legislative delays,” Saccacio said. “It’s also likely that the drop in REO activity can be attributed to these processing delays, rather than to any of the foreclosure prevention programs currently in place.” Saccacio said he expects to see REOs increase again now that the moratoriums on foreclosures have been lifted. Foreclosure numbers for last two quarters in South Carolina by county Region/County Q4 2008 REOs* Q1 2009 REOs* Percent change Upstate Anderson 94 110 17.0% Greenville 313 334 6.7% Spartanburg 202 122 -39.6% Midlands Lexington 118 148 25.4% Newberry 30 21 -30% Richland 265 303 14.3% Orangeburg 50 52 4% Sumter 68 37 -45.5% Lowcountry Berkeley 91 90 -1.0% Charleston 119 304 155.4% Dorchester 110 124 12.7% Grand Strand Horry 90 99 10% Georgetown 9 22 144.4% Pee Dee Darlington 20 26 30% Florence 31 40 29.0% Statewide Property w/filings 5,520 7,016 27.1% REOs* 2,262 2,419 6.9% *REOs are homes that have actually been repossessed by a lender. Source: RealtyTrac

Drop in mortgage rates trigger race to buy and refinance
2009/03/26, 2:22 pm
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Tumbling interest rates are setting off a mortgage-refinancing scramble among homeowners and pulling undecided buyers into the market.

Loan terms for 30-year fixed-rate mortgages fell to 4.63% from 4.89% for the week ending March 20, the Mortgage Bankers Association (MBA) reported Wednesday. That’s the lowest in the history of the survey, which began in 1990.

Refinancing accounted for 78.5% of all mortgage applications last week.

Applications are up in part because of a federal refinancing program through Freddie Mac and Fannie Mae that is part of the Obama administration’s housing rescue plan.

Rates have been driven down by the Federal Reserve’s decision last week to buy up to $300 billion of long-term government bonds and $750 billion in mortgage-backed securities held by Fannie and Freddie.

The falling rates are jolting homeowners and buyers:

•Homeowners who had been waiting to refinance say they’re now getting great deals. Nancy Hemenway, 58, of Arlington, Va., is closing on a refinance in a couple of weeks.

“We were watching the rates and didn’t see how they could go much lower,” says Hemenway, executive director of a non-profit. “We thought there might be a problem because banks weren’t lending, but that didn’t happen at all. We just filled out some paperwork and faxed it.”

•Low prices on foreclosed homes are luring buyers into the market. Up to 45% of existing home sales in February were distressed properties, according to a report this week by National Association of Realtors.

Michael McCullough, a public relations specialist in Atlanta, is closing today on a 3,000-square-foot home with a large yard and four bedrooms.

“My wife and I have no business buying this large a home, but we can afford it because it was a foreclosure, and we secured a 4.6%, 30-year fixed” loan, says McCullough. “There are tons of deals out there.”

•Realtors such as Leslie McDonnell at Re/Max Suburban in Libertyville, Ill., are seeing sudden pickups in business. Enticed by low prices and rates, McDonnell has bought several properties herself this year. “We’ve definitely seen an impact. Things have gotten busier for sure,” McDonnell says. Low rates “are compelling people into action. I do feel like we’ve hit bottom.”

Overall mortgage applications last week were 20% above their year-ago level, according to the MBA.

Washington report on loan limit laws and more
2009/02/18, 5:26 pm
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These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply. In addition, the bill includes language providing the HUD Secretary with the discretion, if warranted, to increase the loan limit for any “sub-area”, area smaller than a county. The Secretary’s discretion is again limited by the $729,750 cap. These 2009 limits will expire December 31, 2009.

The inclusion of these loan limit provisions in the final bill is a victory for homeowners, buyers and REALTORS(R). While these new limits were included in version of the original stimulus bill approved by the House, the bill first approved by the Senate did not. NAR’s Call for Action to both the House and the Senate prior to the final vote advocated strongly for the provisions which were then included in the final bill approved by both Chambers. NAR has estimated the new 2009 Loan Limits by county.

Neighborhood Stabilization — Division A, Title XII of the bill provides $2,000,000,000 in additional funding for the Neighborhood Stabilization Program (NSP). The NSP was created by the Housing and Economic Recovery Act of 2008 (Public Law 110-289) to provide grants through the Community Development Block Grant program (CDBG) to states and localities to address the problems that can be created when whole neighborhoods are decimated by foreclosures. The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. In addition, the funds can also be used by states and localities to establish financing methods for the purchase and redevelopment of foreclosed properties. After purchase the homes must be used to assist individuals and families with incomes at or below 120% of area median income. Twenty-five percent of funds must be used for households with incomes at or below 50% of area median income. By leveraging their expertise in partnership with others from both the public and private sector, REALTORS(R) in many communities have been making important contributions to their local communities’

Commercial Real Estate — Commercial real estate is impacted primarily through those provisions of the bill focused on green building and energy efficiency as well as business tax incentives. H.R. 1 provides significant funds for state energy programs, which could be used to support commercial property owners’ investment in energy efficiency upgrades while commercial property owners seeking to invest in alternative energy systems for onsite power generation would benefit from the Department of Energy Renewable Energy Loan Guarantees Program. Of particular benefit to small businesses would be certain provisions of the bill that provide tax relief in the area of bonus depreciation and capital expenditures, as well as the 5-Year carryback of net operating losses for small businesses.

Rural Housing Service — The bill provides an additional $500 million to existing USDA Rural Housing programs. The RHS provides both a guaranteed loan program and a direct housing loan program for those meeting the program’s eligibility criteria. The direct loan program will receive $270 million while $230 million will be allocated for unsubsidized guaranteed loans. It has been reported that this level of funding would provide for an additional 192,000 homeowners.

Low Income Housing Grants — Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations.

Tax Exempt Housing Bonds — Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT). In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds.

Energy Efficient Housing Tax Credits & Grants — To promote green jobs and energy independence, ARRA invests significantly in efforts to make homes and buildings more energy efficient. The bill provides state and local governments with $6 billion in energy efficiency and conservation grants for energy audits, retrofits and financial incentives. Through 2010, homeowners will be able to claim a 30% tax credit (up from 10%) for purchases of new furnaces, windows and insulation. Another $5 billion will be available to modernize the nation’s electricity grid and install smart meters on homes that help to save consumers money. There is also $5 billion for weatherization assistance for low income households and $2 billion for federally assisted housing (section 8) efficiency efforts.
neighborhood stabilization programs.

House and Senate drops repayment requirment on the home buyer tax credit
2009/02/12, 8:00 pm
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Stimulus Advances With Tax Credit Changes
The $790 billion stimulus package hammered out by House and Senate conferees late yesterday afternoon drops the repayment feature on the home buyer tax credit.

The NATIONAL ASSOCIATION OF REALTORS ® has sought removal of the repayment requirement because it discourages buyers from taking advantage of the tax credit.

The legislation also extends the effective date of the tax credit, which is for up to $7,500, to September 1 from June 30. Households that purchase in 2009 using financing assistance from state and local mortgage bonds will be permitted to use the credit as well.

Other provisions reportedly in the bill that could help housing markets and communities include:

* FHA and conforming loan limits. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the secretary of the U.S. Department of Housing and Urban Development.

* Foreclosure mitigation and neighborhood stabilization. Funding for states and localities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized. Some news reports put the funding level at $2 billion.

* Rental assistance. Up to $1.5 billion to provide short-term rental assistance and other aid for families during the economic crisis.

* Transportation infrastructure. Up to $29 billion for highway construction projects, $8 billion for rail projects, and $5 billion to weatherize low-income homes.

* Rural housing development. Increased funding for the Rural Housing Service direct and guaranteed loan programs.

* Low-income housing grants. Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations

* Tax-exempt housing bonds. Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT). In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds

* Energy efficient housing. Grants for energy retrofits for federally assisted housing (Section 8), funding for energy efficiency and conservation block grants to states, and Increases in the residential tax credit through 2010 for certain energy efficient upgrades.

Source: NAR, AP, Washington Post, New York Times, Bloomberg, and Wall Street Journal.