Oct. 17, 2018

Zero-down loan program aims to expand mortgage access

MIAMI – Oct. 16, 2018 – A new effort is underway to raise the low homeownership rate among underserved groups of homebuyers.

The Neighborhood Assistance Corp. of America (NACA) is hosting several events across the country to help borrowers with low credit scores apply for 15- or 30-year mortgages with cheaper interest rates. One recent event in Miami drew thousands looking for a chance to get a no-downpayment, low-interest-rate mortgage. NACA officials say more than 10,000 potential borrowers have attended various NACA events in cities such as Charlotte, N.C., and Atlanta.

"The low rate of homeownership and number of mortgages for low- and moderate-income people, and for minority home buyers, is a national disgrace," NACA CEO Bruce Marks told CNBC. "There have been zero foreclosures among the loans that we've originated in the past six years." Bank of America is backing the NACA program with $10 billion in mortgage commitments.

To qualify, borrowers must go through an education session about the program, as well as counseling for budget planning, to make sure they can afford a mortgage payment. They also must submit all necessary documents, including income statements and phone bills.

The program serves only those who are buying a primary residence, not an investment property. The loans for 15- or 30-year fixed-rate mortgages are below market, at around 4.5 percent.

"That's what's going to help people who've been locked out of homeownership really become homeowners and build wealth," Marks told CNBC.

However, critics of the program worry that loans with a no-downpayment requirement could carry too much risk.But program officials say buyers have "skin in the game in a real way," meaning it's their home and an investment for their family.

"We have seen significant wins in this partnership," A.J. Barkley, senior vice president of consumer lending at Bank of America, said. "Just to be clear, when we get those loans with all the heavy lifting here, we're over a 90 percent approval, meaning we actually underwrite the loans for 90 percent of the people who go through this program."

Source: "Thousands Line Up for Zero-Down Payment, Subprime Mortgages," CNBC (Oct. 12, 2018)

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688  

Oct. 12, 2018

Mortgage rates hit 7-year highs – 30-year at 4.9%

WASHINGTON (AP) – Oct. 11, 2018 – Long-term U.S. mortgage rates leaped this week to their highest levels in seven years amid global anxiety over rising interest rates that has gripped financial markets.

Costs for would-be homebuyers are climbing. Mortgage buyer Freddie Mac said Thursday the rate on 30-year, fixed-rate mortgages jumped to an average 4.90 percent this week from 4.71 percent last week. That's the highest level for the benchmark rate since April 2011. A year ago, it stood at 3.91 percent.

The average rate on 15-year, fixed-rate loans rose to 4.29 percent this week from 4.15 percent last week.

The Federal Reserve recently signaled its confidence in the economy by raising a key interest rate for a third time this year. It was the central bank's third increase in short-term interest rates this year, with one more expected before year's end. Strong economic data and a positive outlook from Fed officials have spurred a sell-off in U.S. Treasury bonds, especially longer-term bonds, stoking concerns over even higher interest rates.

As anxiety over higher rates spiraled, financial markets around the world suffered a massive sell-off. U.S. stocks marked their biggest drop since February on Wednesday, as the Dow Jones industrial average slid 831 points. Stocks sank again on Wall Street on Thursday morning.

President Donald Trump stepped in to assert that the Fed "is making a mistake" with its rate increases and accused the central bank of having "gone crazy."

Interest rates on Treasury bonds have climbed to the highest levels in seven years as their prices have dropped. The yield on the key 10-year Treasury note, which tends to influence mortgage rates, was at 3.16 percent Thursday morning.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week.

The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates.

The average fee on 30-year fixed-rate mortgages rose to 0.5 point from 0.4 point last week. The fee on 15-year mortgages also increased to 0.5 point from 0.4 point.

The average rate for five-year adjustable-rate mortgages jumped to 4.07 percent from 4.01 percent last week. The fee was unchanged at 0.3 point.

Posted in National News
Oct. 11, 2018

First comes a home, then (maybe) love and marriage

CHARLOTTE, N.C. – Oct 10, 2018 – Millennials are straying from the norm. A new survey finds that 23- to 40-year-olds value homeownership above almost everything all else, with 72 percent of millennials saying that homeownership is a top priority.

While marriage and children have historically been considered stepping stones leading to homeownership, millennials have changed the formula: Only "being able to retire" (80 percent) beat homeownership (72 percent) as a millennial desire. Getting married (50 percent) and having children (44 percent) lagged.

In addition, many millennials equate homeownership with personal (53 percent) and financial (45 percent) success. Prospective millennial buyers also associate the purchase of a home with being mature (47 percent), acting like an adult (47 percent), and feeling independent (36 percent).

"Younger generations tell us that owning a home has become a milestone that defines their success, and it's promising to see them aspiring to homeownership," says D. Steve Boland, head of Consumer Lending at Bank of America.

The findings are from the latest Bank of America Homebuyer Insights Report, which explores the attitudes, preferences and behaviors of the modern homebuyer. For the first time, the survey also took a closer look at current renters who plan to someday own a home.

Renter's reservations: a reality check on common homebuying myths

The age-old question – to own or to rent – still looms for many. Current renters are torn, with 49 percent believing renting long-term will be more expensive than buying a home. The other half of renters say renting will be just as or less expensive than owning. Yet, 69 percent believe their rent will continue to rise every year or every other year.

Furthermore, renters acknowledge that finances remain one of the top barriers to homeownership, with nearly half (44 percent) feeling they don't have enough money for a downpayment; 23 percent cite they cannot afford the home they want.

Top renter misconceptions

·Forty-nine percent believe that 20 percent down is required to buy a home.

·Forty-three percent believe they must pay private mortgage insurance if they don't put 20 percent down.

·Nearly one in four believe they need to have a "perfect" credit score to be considered for a mortgage.

"Interestingly, we see renters rethinking the long-term impact of renting vs. owning. They say renting will be just as or less expensive, but at the same time acknowledge their rental costs will continue to go up over time," says Boland.

Prospective buyers are being purposeful in first home purchase planning

Those ready to leave renting behind aren't going into homebuying blindly; they're thinking through who to buy with, when to buy and where to buy. While 57 percent of all first-time buyers plan to buy with a spouse or partner, others are increasingly venturing out on their own, with 37 percent saying they plan to purchase their first home solo.

Regardless of who they're buying with, first-time buyers are ready to act soon: Nearly two in five plan to buy in the next two years, and 60 percent of soon-to-be buyers are already saving for a down payment.

Location is also a big part of the plan. Ninety percent of first-time buyers would rather pay more for their preferred location than be in a less desirable location with lower home prices (10 percent). And 45 percent are looking to stay within their current neighborhood, city, county or township/school district, while just one in five is planning to buy out of state.

© 2018 Florida Realtors®

Oct. 10, 2018

Is Florida looking at a renter crisis if Amendment 2 fails?

TALLAHASSEE, Fla. – Oct. 9, 2018 – Vote by mail (Absentee) ballots have been mailed for the 2018 general election, which means Florida is just over a month away from choosing a new governor, a new cabinet, new congressional representatives and a host of other elected officials.

It also means Floridians will soon be considering a number of constitutional amendments that could drastically impact the state and its approximately 21 million residents. Chief among those ballot considerations is Amendment 2, which seeks to preserve the 10 percent cap on annual increases of non-homestead property taxes that has been in place for the last 10 years.

Non-homestead properties are properties that don't serve as a person's primary residence – and rental homes are one of the largest segments of non-homestead properties in Florida. According to the most recent Census estimates, rental homes house more than one-third of the state's population currently – the highest amount since the 1980s.

"The really scary thing about Amendment 2 failing is the domino effect that will start to ripple through our communities, starting with our renters," says Zach Sanchez, a broker for THINK Real Estate in Panama City Beach. "Many renters live on fixed incomes and don't have much room in their budget to absorb a rent increase that is sure to come if property owners start seeing tax increases in excess of 10 percent a year."

Florida voters approved the current 10 percent cap in 2008 as a way to solve an ongoing property tax crisis that was punishing non-homestead property owners and renters. According to data contained in a Revenue Estimating Conference analysis conducted in 2011, 30 percent of all non-homestead Florida properties were hit with an 80 percent tax increase in just one year – from 2005 to 2006. This meant a property valued at $300,000 in one year could be taxed at $540,000 or more the next. That same year, nearly 75 percent of all non-homestead properties in the state suffered an increase of more than 10 percent in value.

"Imagine you are renting a home, trying to save up some money so you can eventually buy a home of your own," says Sanchez. "You've been making some progress over the last several years because things have been relatively stable. Now the new year rolls around and your landlord is telling you the rent is going up because they just got hit with a massive property tax increase. At best, your homeownership dream is now on hold. At worst, you are packing up your family and heading to another state because Florida has become unaffordable."

To aid in the effort to pass Amendment 2 and help avoid the looming renter crisis, Florida Realtors developed a tool kit filled with supportive images, social media content, videos and news media templates that Realtors can share with their family, friends, clients, colleagues and social media networks.

Realtors are encouraged to use these resources throughout October and early November to help educate voters in advance of the Nov. 6, 2018, general election.

Oct. 5, 2018

Mortgage rates edge lower – 30-year rate at 4.71%

WASHINGTON (AP) – Oct. 4, 2018 – Long-term U.S. mortgage rates edged slightly lower this week, taking a pause after five straight weeks of increases.

Costs for would-be homebuyers have been climbing, and the key 30-year rate has been running at its highest levels in more than seven years. Mortgage buyer Freddie Mac said Thursday the average rate on 30-year, fixed-rate mortgages ticked down to 4.71 percent this week from 4.72 percent last week. The average benchmark rate has risen from 3.85 percent a year ago.

The average rate on 15-year, fixed-rate loans slipped to 4.15 percent this week from 4.16 percent last week.

The Federal Reserve signaled its confidence in the economy last week by raising a key interest rate for a third time this year, forecasting another rate hike before year's end.

The strong economy and anticipation of more short-term rate hikes by the Fed are helping drive the increase in mortgage rates.

Against the backdrop of economic strength, interest rates on U.S. Treasury bonds have been rising as their prices have fallen. The yield on the key 10-year Treasury note climbed Thursday to 3.18 percent, its highest level in more than seven years.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week.

The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates.

The average fee on 30-year fixed-rate mortgages fell to 0.4 point from 0.5 point last week. The fee on 15-year mortgages also declined to 0.4 point from 0.5 point.

The average rate for five-year adjustable-rate mortgages rose to 4.01 percent from 3.97 percent last week. The fee was unchanged at 0.3 point.

Posted in National News
Oct. 4, 2018

Realtor.com: Inventory crisis appears to be ending

SANTA CLARA, Calif. – Oct. 3, 2018 – Realtor.com's September housing report shows national inventory has started to flatten, signaling a crucial inflection point for the inventory crisis. The numbers are based on listings submitted to realtor.com for the month, and it refers to realtor.com listing prices rather than actual selling prices.

According to the realtor.com report, inventory declined a small 0.2 percent from a year ago, but it's poised for positive growth ahead thanks to an 8 percent increase in new listings – the largest yearly jump since 2013.

"After years of record-breaking inventory declines, September's almost flat inventory signals a big change in the real estate market," says Danielle Hale, chief economist for realtor.com. "Would-be buyers who had been waiting for a bigger selection of homes for sale may finally see more listings materialize.

"But don't expect the level to jump dramatically," Hale warns. "Plenty of buyers in the market are scooping up homes as soon as they're listed, which will keep national increases relatively small for the time being."

Florida cities cited in realtor.com's September study

  • Jacksonville: Current inventory up 14%; new inventory up 54%
  • Tampa-St. Petersburg-Clearwater: Current inventory up 7%; new inventory up 65%
  • Miami-Fort Lauderdale-West Palm Beach: Current inventory up 3%; new inventory up 79%
  • Orlando-Kissimmee-Sanford: Current inventory down 1%; new inventory up 50%

In September, the U.S. median listing price remained at $295,000, a 7 percent increase year-over-year, but lower than last year's 10 percent increase, according to realtor.com. Homes continued to sell at a relatively rapid pace of 65 days on average – 4 days faster than last year.

More than 465,000 new listings entered the market in September. The new listings were 8 percent ($25,000) cheaper than existing inventory in the market, and 10 percent (200 square-feet) smaller than homes already in the market, on average.

Although single-family home inventory remained relatively flat, declining by only 1 percent, new inventory growth was found in condominiums and townhomes, which are now up 3 percent year-over-year.

The inventory recovery is particularly visible in larger cities. In September, 22 of the 45 largest markets in the U.S. saw year-over-year inventory increases. The five markets that saw the largest inventory jumps were San Jose, Calif.; Seattle; Jacksonville, Fla.; San Diego, and San Francisco, all posting increases of 31 percent or more.

Inventory also rose over last year in Chicago, Miami, Dallas, Boston, Los Angeles, and New York.

Combined inventory in the 45 largest markets increased 5.6 percent year-over-year on average.

© 2018 Florida Realtors®

Oct. 3, 2018

Florida homeowners’ equity increased by $1.50 per hour

ORLANDO, Fla. – Oct. 2, 2018 – The average Florida homeowner saw a $13,009 year-to-year equity gain in the second quarter, which is slightly less than the national average of $16,200, according CoreLogic. Overall, Florida home equity appreciated almost $1.50 an hour.

However, the state also has a notable number of homeowners who are still underwater, owing more on their home loan that the current value of their house. CoreLogic reports that 7.2 percent of Florida homes are underwater, with only one other state reporting a higher number: In Louisiana, 10.7 percent of homeowners are still underwater.

Florida's underwater rate varies notably by location, and CoreLogic found that the Miami-Miami Beach-Kendall area has the nation's highest level of negative home equity at 11.4 percent.

Nationwide, West Coast homeowners saw the biggest home equity gain, with California owners gaining $5.57 in equity every hour, or a total of $49,000 – the nation's highest gain. Washington homes gained an average $41,000 in equity; Utah homes gained $32,000.

"This wealth gain will support additional consumption spending and home improvement expenditures in coming years," says CoreLogic Chief Economist Dr. Frank Nothaft.

However, homeowners in three U.S. states lost equity over the year. Home equity in Louisiana, North Dakota and Connecticut dropped about $1,000 or 11¢ per hour.

© 2018 Florida Realtors®

Oct. 3, 2018

New-to-Florida homebuyers should update their estate plan

FORT MYERS, Fla. – Oct. 2, 2018 – There are good tax reasons to move to Florida: State residents don't have to pay state income tax, they enjoy property tax caps through the state's Save Our Homes Amendment, and Florida also doesn't have a death tax.

However, it's essential for new Florida residents to update their Revocable Trust documents because of the state's descent and devise laws surrounding Florida homesteads.

Under that law, if a homeowner is survived by a spouse, absent any nuptial agreement waiving certain rights, it becomes necessary to devise the home outright in fee simple to the spouse. Otherwise, the will or trust contains what is known as an "invalid devise," in which event the spouse receives a "life estate" interest in the home, and the children of the deceased receive a present "remainder" interest.

Also, if the homeowner wants to sell the home, the children must agree and sign any listing agreements, contracts to sell or deeds.

Further, the children are entitled to part of the proceeds of the sale of the home.

Source: Fort Myers News-Press (09/28/18) Hersch, Craig R.

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

Oct. 2, 2018

Americans’ FICO scores hit record-high average

BOSTON – Oct. 1, 2018 – 704! That's the new, record-high average FICO credit score among millions of Americans, and it's positive news for homebuyers, sellers, lenders and the economy overall.

What it signifies, according to Ethan Dornhelm, FICO's vice president of scores and analytics, is that 10 years out from the housing bust and the global financial crisis, Americans are "making more judicious use of credit." They're using less than the maximum amount of credit available to them, paying their monthly mortgages on time and exhibiting fewer glaring negatives in their credit bureau files.

FICO scores predict the probability that a borrower will default on a loan. They run from 300 – indicating that the individual is extremely high risk – to 850, meaning almost no risk of default. A score of 704 is considered good and, along with other favorable factors in your application, will help get you approved for a mortgage – though not necessarily at the lowest interest rate and fees available.

A score of 750 will get you primo rates and terms but a 450 will probably get your application tossed. In the mortgage arena, FICO scores are used by virtually all lenders and are the only scores that mega-investors Fannie Mae and Freddie Mac accept. They are also used extensively for credit card, auto loan and other loan applications.

FICO periodically studies a 10-million-persons sample of the 200 million-plus consumers whose credit histories are on file at the three national credit bureaus. In 2009, the average score of consumers nationwide was 686. Since then, average scores have been improving gradually along with the economy, lower unemployment and rising incomes. The 5-point increase from 699 in 2016 to 704 this year is one of the largest two-year improvements on record.

A few noteworthy trends jump out of FICO's latest data on Americans' scores:

  • Age matters. Young people age 18 to 29 tend to have lower scores than other age groups – they score an average 659. Part of the reason might be that many of them have "thin" files with relatively few credit accounts or transactions. When they fail to make payments or pay late on a credit card, the event weighs more heavily on their score than it would if they had longer histories. The average score for people ages 40 to 49 is 690 and, for seniors 60 and older, it's 747.
  • Fewer people are hobbled with collection accounts. When you don't pay back what you borrowed, your lender might hire third-party collectors. That gets reported to the credit bureaus and can depress your FICO score for years. Twenty-eight percent of all Americans had collection accounts on their credit files in 2015; today, it's just 23 percent.
  • Rock-bottom FICO scores are fewer. In 2009, 7.3 percent of American consumers had terrible scores, ranging between 300 and 499. Now that's down to 4.2 percent. In 2009, 8.7 percent of consumers scored between 500 and 549; today, it's down to 6.8 percent. Overall, fewer Americans now have FICO scores below 650. In 2009, 35 percent scored 649 or less; today, it's 28.7 percent.
  • Super scorers are increasing. A record number of Americans – nearly 22 percent – have FICO scores of 800 and higher. Forty-two percent score between 750 and 850.
  • Mortgage borrowers' scores are dropping. Though FICO scores for most categories of consumers are up, average scores for people taking out home mortgages are sliding in the opposite direction. In 2009 and 2013, borrowers had average scores of 745; now, they're down to about 733. This might seem odd, but FICO says it shows that lenders are relaxing their approval standards slightly to include a broader range of borrowers. Think millennial first-time buyers and people who hit a rough patch during the Great Recession.

What to make of the latest FICO numbers? Lessons learned from the housing bust and the recession are clearly having impacts on consumers' scores and behavior. Dornhelm thinks more Americans have access to – and understand – their credit scores, and they're avoiding doing things that can depress them, such as maxing out on credit cards. If you're smart, you've been doing the same.

© Copyright 2018, Richmond Times-Dispatch, Richmond, VA, Kenneth R. Harney. Kenneth R. Harney heads his own consulting firm in Chevy Chase, Md.

Posted in National News
Sept. 24, 2018

Survey: Married LGBT couples swarm ‘move-up’ market

CHICAGO – Sept. 21, 2018 – More lesbian, gay, bisexual, and transgender couples are purchasing homes since the U.S. Supreme Court ruled to legalize same-sex marriage more than three years ago, according to the second annual LGBT Real Estate Report produced by the National Association of Gay and Lesbian Real Estate Professionals.

Nearly 50 percent of NAGLREP members reported an increase in married LGBT couples buying homes. Further, 41 percent of the real estate professionals said they expect a significant number of LGBT clients to "move up" as opposed to downsizing in the near future.

The LGBT community also appears to be showing a greater interest in undergoing a major home renovation with their current home or buying a second home.

"Homebuying and selling decisions are often predicated on such life events as marriage, children, new jobs, death and divorce, yet our members believe LGBTs have a more pragmatic approach based on financial security," says Jeff Berger, NAGLREP founder. "It will be interesting to see over time how marriage and engagement drive interest in homeownership along with children, since 62 percent of our members believe the number of LGBTs with kids is increasing since marriage equality."

The survey found that the LGBT people choosing to remain renters is mostly due to concerns about their financial status or living in an area where the cost of homeownership might be too high.

"These findings are eye-opening for us and we hope for all of the real estate community," Berger says. "There are a variety of reasons LGBTs may not be as aware of the emotional and financial benefits of homeownership, but we now recognize the need for further, and potentially more targeted, education and enlightenment."

NAGLREP was founded in 2007 to advocate on the behalf of the LGBT community and is a corporate partner with the National Association of Realtors®.

Source: "LGBT Real Estate Report 2018-19," National Association of Gay and Lesbian Real Estate Professionals (Sept. 13, 2018)

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688