FHA EXTENDS FINANCING FOR IMMEDIATE PURCHASE OF FORECLOSED HOMES
Measure seen to bring stability to home values and accelerate sale of vacant properties
by Lemar Wooley


WASHINGTON - In an effort to stabilize declining home values in certain neighborhoods, the Bush Administration today announced a temporary policy that will extend government-backed mortgage insurance and allow for the immediate sale of vacant foreclosed properties.

For one year, the Federal Housing Administration (FHA) will insure foreclosed properties marketed and sold by property disposition firms on behalf of lenders. The properties, which must purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period.

“A glut of foreclosed and abandoned homes harms neighborhoods, frustrates homebuyers and delays a community's recovery,” said Brian D. Montgomery, Assistant Secretary of Housing-Federal Housing Commissioner. “The action we take today will allow homebuyers to purchase these homes in much greater numbers and ease the excess supply of unsold homes in neighborhoods across the country.”

FHA’s new temporary policy will help stabilize neighborhoods experiencing high rates of foreclosure by reducing the inventory of unsold properties. Many foreclosed properties remain vacant for months, inviting vandalism and reducing values of surrounding homes. To address that sizeable inventory, lenders have hired companies that specialize in the marketing and disposition of foreclosed homes. It's reasonable and appropriate that these firms have the ability to sell the properties to borrowers using FHA financing.

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This prohibition is intended to prevent property “flipping,” a predatory practice that strips a home of its equity before being quickly resold at an inflated price to an unsuspecting buyer. FHA’s new policy will permit the immediate sale of foreclosed properties to legitimate borrowers wishing to use FHA-insured financing.

HUD.gov Newsroom Posted 13th June, 2008

REALTY VIEWPOINT: IF YOU THINK YOU’RE SAVING MONEY RENTING . . . THINK AGAIN  
by Blanche Evans

A new report by the National Association of Realtors shows the real reason why home sales don’t crash for long - rents. When purchase demands slow down, rentals speed up. Rents provide the floor that stops housing prices from major declines.

Home prices going down has been the big news lately, but in the shadows is a statistic that may surprise you. The first quarter of 2008 makes the 24th consecutive quarter that rental prices have escalated nationwide.

According to Reis Inc., a New-York based research firm, the soft home market and stricter loan terms are combining to turn more potential homebuyers into renters.

The troubling part is that renting isn’t necessarily better for consumer pocketbooks than owning. A new report by the National Low Income Housing Coalition’s annual report “Out of Reach,” suggests that one in seven U.S. households is using more than half their income for shelter. Low-income, minority and first-time homebuyers are the most impacted, suggests the study.

First-time homebuyers are approximately 40 percent of the housing market, so knocking them out knocks out move-up homebuyers who wish to trade up to larger and/or more expensive homes.

One bright spot following the release of the report was the weekly mortgage applications survey from the Mortgage Bankers Association. The trade organization’s Market Composite Index found that purchase loan applications increased 5.4 percent from a week earlier. And the Refinance Index found that refinance applications increased 3.4 percent.

Because mortgage interest rates rose slightly for the week, to 5.78 percent from 5.75 percent, the implication is that flat rates weren’t the reason for the rise in applications, but that consumers may simply be moving off the bench for the spring homebuying season.

We’ll know more as the weeks continue, if there is a relationship between rising rents, and rising home sales and mortgage applications.

Realty Times Posted 14th April, 2008

IS NOW A GOOD TIME TO BUY?  
by John Barker

You cannot imagine how often I hear this question nowadays. The answer I always give is a resounding YES! There are three main reason why this is a great time to purchase a home.

First, it’s a buyer’s market! Every day in the news we hear about how hard it is to sell a home and how far home prices have fallen. The buyer has a great opportunity to find the perfect home and negotiate a great deal for it.

Unfortunately, many would-be buyers have been scared out of the market by the falling home prices. They are afraid that the value of their home may continue to fall after they purchase it. This may be the case, but if you are looking at a home as a long-term investment, prices will stabilize and eventually rise giving you a nice return on your investment (There is a lot more risk if you are purchasing property as a short-term investment.). If this were any other purchase, falling prices and a wide selection would motivate people into buying now.

Second, mortgage interest rates are low. In the past few months, interest rates hit their lowest levels in the past few years. Low interest rates coupled with lower housing prices makes this market the most affordable home-buying market in years. Again, we hear in the news the problems in the mortgage market but the fact is, for borrowers, this is a great time to get a mortgage.

Third, nobody can predict the future. This is probably the biggest reason why I think now is the time to buy. Housing prices are low now – but for how long? Nobody can predict when the housing market will rebound. By the time we know, it is already begun to rebound. Trying to purchase at the exact bottom of a market is impossible – ask anyone who invests in stocks. And, housing markets are all local. Housing prices will rebound at different times in different parts of the country. Even neighborhoods within the same city will see their values move at different times. If there is a place you want to live, and you can afford it now, don’t wait until that changes.

Also, due to the problems in the mortgage market, it is getting more difficult and more expensive for many people to get a mortgage. Last year, if you had a 620 FICO Score and a 5% down payment, you would get the same rates as somebody with a 740 FICO Score and a 30% down payment. However, in the past few months, Fannie Mae and Freddie Mac have made a lot of changes that will increase the cost of people getting mortgage if they do not have a significant down payment and/or a great FICO Score. Please read “How much will my credit score cost me on my next mortgage?” and “Credit Score Affects Interest Rates Even More” for more information on this. If there continues to be problems in the mortgage market, these changes may continue. And, if you have credit issues and need a sub-prime loan, they are getting harder to find and more expensive all the time.

If you are ready, willing and able to purchase new home, now is the time to act. It has been a long time since housing has been so affordable and nobody knows how long it will last or how long it will be before it is this affordable again.

John Barker's Mortgage Blog Posted 28th March, 2008



FEBRUARY HOME SALES IN MAINE  
by Michael Sosnowski