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Orlando Real Estate News – US News

Existing-home sales rose for the third consecutive month with inventory easing and home prices declining less sharply in June, according to the National Association of REALTORS®.

Existing-home sales — including single-family, townhomes, condominiums, and co-ops — increased 3.6 percent to a seasonally adjusted annual rate of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2 percent lower than the 4.90 million-unit level in June 2008.

Inventory Declines

Total housing inventory at the end of June fell 0.7 percent to 3.82 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, down from a 9.8-month supply in May. Raw inventory totals are 14.9 percent below a year ago. A NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May, and that the number of buyers looking at homes is up nearly 12 percentage points from June 2008.

The national median existing-home price for all housing types was $181,800 in June, which is 15.4 percent below June 2008. Distressed properties, which accounted for 31 percent of sales in June, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.32 million in June from a level of 4.22 million in May, and are 0.2 percent higher than the 4.31 million-unit pace a year ago. The median existing single-family home price was $181,600 in June, which is 15.0 percent below June 2008. Existing condominium and co-op sales jumped 14.0 percent to a seasonally adjusted annual rate of 570,000 units in June from 500,000 in May, but are 3.1 percent below the 588,000-unit level in June 2008. The median existing condo price was $183,300 in June, down 18.9 percent from a year ago.

By Region

Northeast: Regionally, existing-home sales in the Northeast rose 2.5 percent to an annual pace of 820,000 in June, but are 4.7 percent below a year ago. The median price in the Northeast was $249,400, down 5.9 percent from June 2008.

Midwest: Existing-home sales in the Midwest increased 0.9 percent in June to a level of 1.10 million but are 1.8 percent lower than June 2008. The median price in the Midwest was $157,000, which is 9.1 percent below a year ago.

South: In the South, existing-home sales rose 4.0 percent to an annual pace of 1.81 million in June but are 3.7 percent below a year ago. The median price in the South was $163,200, down 11.9 percent from June 2008.

West: Existing-home sales in the West improved by 6.4 percent to an annual rate of 1.16 million in June, and are 11.5 percent higher than June 2008. The median price in the West was $214,800, which is 24.9 percent below a year ago.

Source NAR

Orlando Real Estate News

Mortgage rates across the board fell this week, a welcoming sign to potential buyers and home owners looking to refinance.

The 30-year fixed-rate mortgage averaged 5.04 percent this week, a drop from last week’s 5.16 percent. Last year at this time, the 30-year rate averaged 6.04 percent, Freddie Mac reports.

Freddie Mac reported the following for other rates for the week:

• 15-year mortgage rates: averaged 4.68 percent, down from last week’s 4.81 percent. Last year at this time: 5.64 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 5.04 percent this week, a drop from last week’s 5.23 percent. Last year at this time: 5.37 percent
• 1-year ARMs: averaged 4.8 percent, down from last week’s 4.94 percent. Last year at this time: 4.98 percent

“Mortgage rates followed bond yields lower this week as recent economic reports suggest the economy is still slowing, which reduces the future threat of inflation,” says Frank Nothaft, Freddie Mac’s chief economist.

Source: Freddie Mac(02/19/09)

Mortgage Information

US real estate news – Orlando real estate

Pending home sales increased as more buyers took advantage of improved affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®. Big gains in the South and Midwest offset modest declines in other regions.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.

Lawrence Yun, NAR chief economist, says the index shows a modest rebound. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” says Yun. “The biggest gains were in areas with the biggest improvements in affordability.”

NAR’s Housing Affordability index rose 10.9 percent in December to 158.8, the highest on record.² The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.

“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” adds Yun.

The PHSI in the Northeast slipped 1.7 percent to 62.1 in December and is 14.5 percent below a year ago. In the Midwest the index jumped 12.8 percent to 83.7 but remains 1.2 percent below December 2007. The index in the South surged 13.0 percent to 96.8 in December and is 1.6 percent above a year ago. In the West, the index fell 3.7 percent to 97.5 but remains 17.5 percent higher than December 2007.

NAR President Charles McMillan, says the rise in contract signings is encouraging. “However, housing activity remains weak compared with potential demand, and the market is fragile given the economic backdrop,” he said.

“We can’t take our eye off the need to stimulate housing, which can set the foundation for an economic recovery,” McMillan says. “Last week’s actions in the House to eliminate the repayment feature on the first-time home buyer tax credit, and to raise mortgage loan limits, are helpful. However, we need to take additional steps to meaningfully draw down inventory and stabilize home prices.”

McMillan says some enhancements that could bring more buyers into the market include expanding the $7,500 tax credit to all home buyers and extending it until the end of 2009, and making loan limit increases permanent. “We also need to direct funds in the Troubled Asset Relief Program to add liquidity to the mortgage market, buy down mortgage interest rates and increase other forms of credit,” he says

Yun says the outlook for housing and the economy is murky. “Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,” Yun says.

Source: NAR

The House Ways and Means Chairman has voted out the tax portion of the economic stimulus on a party-line vote, 24 – 13. It contains a provision that would eliminate the repayment feature of the $7500 first-time homebuyer tax credit for purchases between January 1, 2009 and June 30, 2009. An amendment that would have significantly modified the credit was offered (Heller, R-NV) but failed on a party line vote. During the course of debate on the Heller amendment, however, senior Committee member John Lewis (D-GA) offered vigorous support for extending the effective date of the credit through year-end. NAR continues to push to have the credit extended and expanded. A vote on all the parts of the economic stimulus (tax and non-tax) is expected in the House on January 28.

The Senate Finance Committee is expected to mark up its tax stimulus on Tuesday, January 27. The repayment provision will likely be included. NAR continues to beat the drums to have the credit expanded and extended.

Renters in Fannie Mae-Owned Foreclosed Properties
Eligible to Stay in Their Homes

WASHINGTON, DC — Fannie Mae (FNM/NYSE) today announced the establishment of a new National Real Estate Owned (REO) Rental Policy that will allow qualified renters in Fannie Mae-owned foreclosed properties to stay in their homes. The company currently has an eviction suspension in place through the end of January which will allow for the new policy to be fully operationalized prior to the suspension concluding.

“Renters in foreclosed properties have often been a casualty of the foreclosure crisis the country is facing,” said Michael Williams, chief operating officer of Fannie Mae. “This policy will allow qualified renters to remain in Fannie Mae-owned properties should they choose to do so, mitigate the disruption of personal lives that foreclosures can cause, and help bring a measure of stability to communities impacted by high foreclosure rates.”

The new policy applies to renters occupying foreclosed properties at the time Fannie Mae acquires the property. Renters occupying any type of single-family property will be eligible including residents of two- to four-unit properties, condos, co-ops, single-family detached homes and manufactured housing. Eligible renters will be offered a new month-to-month lease with Fannie Mae or financial assistance for their transition to new housing should they choose to vacate the property. The properties must meet state laws and local code requirements for a rental property.

While the company markets the properties for sale, Fannie Mae will manage the properties through a real estate broker or a property management company. The company will not require security deposits to be posted in connection with this program.

Renters in the foreclosed properties will be asked to pay market rate rent under the new leases. Rates may be determined by reviewing local comparable rents, conducting a neighborhood survey, or through other relevant indicators. Rates will also be subject to any legal rent control restrictions. The company will review each instance where the market rate may require a tenant to pay additional rent and will work to reach an equitable resolution.

On behalf of the company, property managers are contacting renters in Fannie Mae-owned foreclosed properties to notify them of their options.

SUBJECT: Fraud Alert

The U.S. Department of Treasury, Office of Inspector General (OIG), is investigating incidences whereby individuals are using fraudulent promissory notes and bonds to attempt to purchase vehicles and real estate. The OIG has been notified of numerous occurrences throughout the United States where fraudulent documents were used to attempt to purchase vehicles. Treasury OIG has also been made aware of incidents in Arizona and Colorado where similar fraudulent documents were used to attempt to purchase homes and an office building.

The fraudulent documents are not referenced as “U.S. Treasury” bonds or promissory notes. They are referenced as “personal promissory note” and “private offset bond;” however, they have the name of Henry Paulson, Secretary, U.S. Treasury, on the face of the documents.

Treasury OIG has learned that the only type of hard-copy bond issued by the U.S. Treasury that a citizen can purchase today is a savings bond. All other bonds are electronic and the buyer would not receive a hard-copy document. Finally, Paulson’s name should not appear on any document listed as a private bond or promissory note since these items are not backed or guaranteed by the U.S. Treasury.

If you have any information regarding this type of fraudulent activity, we request that you contact the U.S. Department of Treasury, Office of Inspector General (OIG), Office of Investigations Hotline, at 800/359-3898 or e-mail Hotline@oig.treas.gov. REALTORS® approached by a person giving these or similar circumstances should consider the potential for fraud. Should you suspect fraudulent activity, it is recommended that you contact the OIG Hotline and your local law enforcement agency immediately. Additional information regarding this and other similar fraud schemes can be found at
the following Department of Treasury Web site:

http://www.treasurydirect.gov/instit/statreg/fraud/fraud_bogussightdraft.htm

Source: REALTOR® Magazine Online

By Jerry Giovaniello
NAR Senior Vice-President, Government Affairs

As we race toward the finish line of the 2008 election, NAR is continuing to press Congress to act on a new stimulus package to help stabilize the housing market and give a boost to the sagging economy.

NAR has presented a four point stimulus plan to Congress for consideration either after the election or in the early days of the new 111th Congress. The current economic crisis is, at its core, the result of problems in the nation’s housing and mortgage markets. This circumstance, along with the fact that housing has always lifted our economy out of downturns, makes it imperative that efforts be taken immediately to foster a housing recovery, so that a recovery of the overall economy can occur.

NAR’s plan includes features such as consumer-driven provisions that eliminate repayment of the first-time homebuyer tax credit and expands it to all homebuyers, makes higher mortgage loan limits permanent, focuses the economic stabilization efforts once again on the housing and mortgage markets as opposed to providing banks with capital with no strings attached and prohibits banks from entering into real estate.NAR strongly believes that inclusion of these priorities in a stimulus package is imperative to move our nation out of this economic crisis:

1. Remove the requirement in the current law that first-time homebuyers repay the $7,500 tax credit, and expand the tax credit to apply not only to first-time buyers but also to all buyers of a primary residence. This will help address inventory issues in many markets.
2. Revise the FHA, Fannie Mae and Freddie Mac loan limit increases to reflect the higher temporary level enacted in February. Although subsequent legislation made loan limit increases permanent, the permanent loan limits were reduced from the February levels. This has broad implication for homebuyers in high cost areas.
3. Urge the government to use a portion of the allotted $700 billion that was provided to purchase mortgage-backed securities from banks to provide price stabilization for housing. The Treasury department should be required to use the newly enacted Troubled Assets Relief Program to push banks to:
   • Extend credit down to Main Street, making credit more available to consumers and small businesses;
   • Expedite the process for short sales;
   • Expedite the resolution of banks’ real estate owned (REOs) properties.
4. Make permanent the prohibition against banks entering real estate brokerage and management, further protecting consumers and the economy.

NAR has presented this plan to Congress and will continue to strongly pursue a special session of Congress to enact this vital housing stimulus legislation package after the national election. Housing has always help lift the economy out of downturns. It is imperative to get the housing market moving forward as quickly as possible. Congress must take immediate and specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans.

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August. Home sales are 1.4 percent higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains.

“The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri, and Rhode Island,” he says. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

NAR President Richard F. Gaylord says low home prices and low interest rates have helped attract buyers.

“This is the first time since November 2005 that home sales have been above year-ago levels,” Gaylord says. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04 percent in September from 6.48 percent in August; the rate was 6.38 percent in September 2007.

Yun says there may still be market disruptions.

“The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac,” Yun says. “Inventory remains high, and price declines are pressuring owners.”

Yun says that an additional housing stimulus would stabilize prices more quickly and help bring faster stability to Wall Street.

“Removing the repayment feature on the [$7,500] first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory,” Yun says.

A Closer Look at the Numbers

• Total housing inventory: at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.

• National median existing-home price: $191,600 in September, for all housing types. That’s down 9 percent from a year ago when the median was $210,500.

“Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions,” Yun says. “These are pulling the median price down because many are being sold at discounted prices. The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”

• Single-family home sales: increased 6.2 percent to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8 percent above the 4.45 million-unit level a year ago. The median existing single-family home price was $190,600 in September, which is 8.6 percent below September 2007.

• Existing condominium and co-op sales: were unchanged at a seasonally adjusted annual rate of 560,000 units in September, but are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price was $199,400 in September, down 10.2 percent from a year ago.

By Region

Here’s a breakdown across the country of existing-home in September:

• West: sting-home sales in the West jumped 16.8 percent to an annual rate of 1.25 million in September, and are 34.4 percent higher than September 2007. Median price: $253,600, down 18.5 percent from a year ago.

• Midwest: sales increased 4.4 percent to an annual pace of 1.19 million in September, but are 2.5 percent below a year ago. Median price: $152,500, which is 7.9 percent lower than September 2007.

• South: sales rose 2.2 percent in September to a pace of 1.9 million but remain 7.8 percent below September 2007. Median price:$167,200, down 4.1 percent from a year ago.

• Northeast: sales slipped 1.2 percent to an annual pace of 840,000 in September, and are 7.7 percent lower than a year ago. Median price: $246,800, down 5.4 percent from September 2007.

Source: NAR

The Downward Spiral of Home Values

By Michael W. Smith

Home market values have dropped significantly in most markets. In many cases, home values have dropped below the mortgage encumbering the property. When homeowners in this situation go into default, they often contact a real estate agent who suggests selling the property as a short sale. Short sales are homes listed at a sales price which is lower than the mortgage encumbering the property. Short sales pose many challenges; long processing times, lack of pricing guidance, poor procedural guidance and procedural uniformity among many banks. To handle these challenges agents have adopted techniques which are indirectly contributing to the downward pressure on home values. Unfortunately, if these techniques are not used, short sales would be nearly impossible for agents to handle. Individuals who understand these techniques and bank procedures are in a unique position to view the market from a much broader prospective. These individuals can provide much needed insight into the planning for a market recovery.

In the early stages of the housing downturn, many banks thought short sale listings should generate higher sales prices and resisted granting approvals. Agents responded with a technique that provides evidence to the bank supporting the reasons the bank should accept the offered price. Real estate agents who employed this technique asked home sellers to sign a release granting the agent full control over the properties listing price. This control is freely granted since sellers are informed that they will be unable to receive any proceeds from the homes sale. The agent prices the property at or slightly above other listings in the area. From this start price, the agent systematically reduces the price of the home until a buyer comes forward with an offer. The listing agent maintains a history of all price changes and a corresponding log to track buyer activity. These logs are used as evidence to convince the bank that the offer received is the highest and best offer. The unfortunate side effect of continuous price lowering worked to undermine buyer confidence; buyers became convinced that home values were in a freefall state with no bottom in sight.

As time progressed and the market continued to deteriorate the number of short sales and foreclosures increased dramatically, overwhelming banks. The time needed to process short sales increased often requiring 8 weeks or more. With increased processing times and the uncertainty that the short sale will be approved, most agents working with buyers began to avoid showing short sales. Agents who list short sales realized a new technique was needed and worked to develop what is now called the pre-approved short sale. Unfortunately, banks are unable to pre-approve short sales but are able to provide a counter offer on contracts that have been declined. The counter offer indicates the price the bank is willing to accept. Listing agents quickly learned to submit any offer (no matter how low) just to get the banks counter offer. To attract buyers, short sale listing agents began to price properties artificially low. Artificially low pricing has skewed buyer’s expectations. Buyers pursue short sales, which are priced much lower and are often far superior to listings that have been priced realistically. Competition has developed between agents to have the lowest price listing to attract buyers. Buyers who choose to enter a contract at the artificially low prices are obligated to wait until the bank responds; a response that is often a decline. Once the contract is declined, the listing agent places the property back on the market and advertises the property as a pre-approved short sale. Buyers agents are happy to show pre-approved short sales knowing that their concerns about the short sale approval and the long processing time have been remedied. While both the listing and buyers agents are happy with this technique the consequences to the market have been dire. Homeowners with large amounts of equity who wish to sell their homes, price match listings that have been priced artificially low by agents seeking bank pre-approval even though these short sales would not likely be approved. When one of these homes sells, the lower price reduces the market value of the entire community forcing agents to further lower their short sale listings. Another side effect that’s not hard to see is banks are forced to process short sale offers that have little or no chance of being approved. This further increases processing time and labor costs incurred by the banks.

Still more problems exist in the way banks determine market value of properties. Banks use broker price opinions called BPO’s (a condensed appraisal) ordered from real estate agents, brokers, and appraisers (BPO providers). These BPO’s aide banks in their pricing decisions for both short sale approvals and foreclosure properties. Banks, in an effort to be competitive, prices foreclosure listings just below the homes currently listed to ensure a quick sale. To accomplish this, BPO providers are given guidelines for performing BPO’s. These guidelines direct BPO providers to give more consideration to active short sale and foreclosure listings which are known to be the lowest priced listings; the very same listings that agents have priced artificially low. The banks assumption is that properties are listed at fair market value, however due to the techniques real estate agents are using to market short sale properties, these properties are priced well below market. The bank unknowingly uses faulty information to determine foreclosure pricing and whether or not to accept a short sale offer.

As the market continues to erode banks have become more desperate to unload properties and have begun selling properties and accepting short sales not based on their value but based on the amount owed. In many cases, properties are being sold at the loan payoff, which is far less than the value of the property. This practice has caused a rapid decline in home values.

The following measures must be enacted immediately to curb our economic downturn:

Increase the number of buyers who are willing and able to purchase homes.

Solutions:

1. Increase FHA’s loan to value ratio to allow for 100% financing. Risks to overcome include collaboration between homebuyers and sellers to increase the price of the home to cover costs associated with the homes purchase referred to as closing costs. During the housing boom sellers often offered to pay all buyer costs with proceeds a seller would receive from an increased price. Sellers can also agree to increase the real estate commission paid to a real estate agent so that the agent can rebate the buyer for his/her closing costs. These arrangements can lead to rapidly escalating home values and the risks can be managed by eliminating seller concessions and rebates. No rebates or concessions may be given by any party involved in the transaction that would be used to defray the buyers out of pocket cost to include those made after closing.

1. Increase the availability of FHA loans by removing the net worth requirement to and the prohibition against real estate licensees who also hold a mortgage license from selling FHA loans. Many mortgage professionals are unable to offer FHA loans to their clients due to HUD restrictions which many mortgage professionals cannot meet. During the housing boom, many homebuyers were sold mortgage products with undesirable terms (subprime mortgages) because the mortgage professional was unable to offer the superior FHA product.

1. Repeal the $7500 tax credit for first time home buyers in favor of a $7500 first time homebuyer grant. The grant must be repaid if the home is sold in less than 10 years. First time homebuyers lacking upfront funds to make a home purchase are not able to take advantage of a tax credit.

1. Current homeowners must sell and close current property before closing on a property to be insured.  This prevents homeowners from buying another property and defaulting on current property.

Curb the tide of foreclosures and short sales.

Solutions:

1. Freeze all foreclosures for a period of 90 days. This will allow the market time to stabilize.

1. Offer mortgage refinances up to 105% of the current mortgage balance. 100% to cover the mortgage balance with 5% additional available to be used to cover loan closing costs or may be used to pay down other debts to reduce debt to income ratios. To accomplish this, the U.S. Government must guarantee the mortgage loan or banks will not be unable to sell the mortgages in the secondary mortgage market. Much discussion has been made as of late regarding mortgages being written down and the U.S. Government using bailout funds to pay these write downs. What has been overlooked is that while homeowners who have defaulted would benefit, homeowners who are not in default who paid the high prices during the housing boom would be left paying the full mortgage on a home worth far less. Many of these homeowners may then decide to default so that they too can benefit from this plan. A second problem with the write down plan is that homeowners who have had their mortgages written down could then sell having a much lower cost basis further causing market deterioration. Offering Government guaranteed refinance mortgages is a far less costly option and helps to support market values. Some risks to this plan include banks giving refinances to borrowers who could default once again. Qualifying guidelines designed to manage and insure this risk can be established as follows:
   1. To insure the risk a mortgage insurance fund must be created.
   2. 1% of the amount financed must be paid to the fund by the bank being relieved of a defaulted mortgage.
   3. An annual mortgage insurance premium of .5% is paid by the homeowner for the life of the loan, collected monthly by the mortgage lender and deposited to the fund.
   4. FHA may not insure Adjustable Rate Mortgages. Adjustable rate mortgages (ARMs) helped to inflate home values during the housing boom. ARMs allow homebuyers to purchase a more expensive home than they otherwise would not be able to afford at the higher rates on fixed rate loans. Mortgage lenders offering subprime mortgages are primarily responsible for the housing market collapse we are now in. These subprime loans by mortgage lender design forced homeowners to refinance after a very short fixed rate term. The terms of these mortgages allowed for a very short fixed rate term most often 2 or 3 years after which the rate would adjust wildly even when the market interest rates remained the same. To understand how this was accomplished ARM loans are based on two underlying rates the banks profit margin (margin) and the banks cost of funds (index). The margin rate can be found in the mortgage note and is a rate that is fixed for the life of the loan. The index rate is quoted in many financial publications and is constantly changing with market conditions. Subprime mortgages work by giving borrowers an initial start rate which is generally slightly higher than market for the fixed period of two to three years. After the fixed period, the rate on the mortgage changes to a new rate and is calculated by adding the margin to the index. Unfortunately subprime lenders used an artificially high margin on these loans often and in some cases higher than the start rate on the mortgage. Let’s assume that you have a start rate of 6% and the index rate at the time the loan was closed was 2%. This means at the very minimum on the date the fixed rate period ends homeowners will see their rate increased to 8%. Since index rates did not remain constant this 2% increase was far less than the increases most homeowners experienced. To make matters worse most of these mortgages only required interest only payments for the fixed period adding still more increases to the payment. Many have implied that the credit rating and the fact that these mortgages were 100% financing are the primary reasons these borrowers defaulted. This is simply not true unfair and predatory lending practices must bare the majority of the blame. I propose the following regulation to correct this issue: At the time of rate lock the margin and index must equal the start rate on the mortgage.
   5. Investment and second homes are not eligible.
   6. Increase loan limits to allow more loans to be encompassed into the program.
   7. Consumer credit is not a factor to be considered.
   8. Applicants must show an ability to repay loan.
   9. Applicants must have stable employment or income. 
   10. Maximum debt to income ratio of 45%.

As more Americans lose confidence in our financial markets we slip further and further into what could be our next depression. With banks posting massive financial losses, investment firms collapsing, unemployment rates rising, budget deficits climbing coupled with our national debt there is no end is in sight. Measures need to be taken to counter these problems immediately. Our leaders have worked hard to pass a bailout bill which should help to relieve and restore our credit markets. This bill is the first step toward correcting our nation’s economic woes. Steps taken now, without delay, can have a major impact on correcting the housing market which is the main underlying cause for our financial troubles.

Written by

Michael W. Smith

Broker / Owner

CENTURY 21 Solutions Realty

http://www.c21solutionsrealty.com

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