Tough economic times for homeowner associations

Incorporate your uterous, baby

More than half of the nation's community associations struggle with financial issues associated with the mortgage foreclosure crisis and related economic downturn, according to a national survey by Community Associations Institute (CAI).

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - More than half of the nation's community associations struggle with financial issues associated with the mortgage foreclosure crisis and related economic downturn, according to a national survey by Community Associations Institute (CAI).

Forty-five percent of community managers for an estimated 310,000 developments say associations they serve face "serious" problems as a result of the housing and economic downturn, while 9 percent describe the impact as "severe."

The survey also says 38 percent of the estimated 310,000 developments have postponed planned capital improvement projects and 35 percent have reduced landscaping services to reduce budgetary shortfalls.

Homeowner associations (HOAs) are the fastest growing form of housing in the nation.

HOA home owners buy a home in a community governed by a non-profit association. The association's board of directors manage the care and upkeep of the community and they manage enforcing the rules and by-laws, often with the help of an outside management company hired to carry out the board's orders.

In most, but not all associations, owners typically own and care for their own homes, on their side of the wall. The HOA cares for common areas, infrastructure and other elements shared by all.

Also known as common interest developments (CIDs), they come in a variety of flavors with varying types of governance, including planned-unit developments (PUDs) of single-family homes, condominiums, townhome developments and cooperative apartments.

According to the Community Association Institute, in 2010 there were nearly 310,000 community associations, with nearly 25 million units and 62 million residents.

Associations rely upon monthly homeowner assessments or dues to fund a budget for services including utilities, trash pickup, snow removal, road and building maintenance and repair, landscaping and upkeep. Assessments also fund a wide variety of amenities like swimming pools, gardens and playgrounds.

Unfortunately, more and more often, home owners hit by a tough economy can't afford their dues and/or face foreclosure, like other home owners who don't live in an association community.

Assessment delinquency rates have more than doubled since 2005.

Today, 65 percent of associations have delinquency rates exceeding 5 percent, up from just 19 percent of associations in 2005. More than 30 percent have delinquency rates exceeding 10 percent, and for one in 10 -- nearly 30,000 associations -- the delinquency rate is more than 20 percent.

"High delinquency rates put a lot of pressure on associations to meet their obligations to the homeowners who are paying their fair share," says CAI Chief Executive Officer Thomas M. Skiba.

"When some owners -- including banks that have foreclosed on homes and now own them -- don't pay their share, other homeowners often must make up the difference in higher regular assessments or special assessments.

More than 70 percent of bank-owned association properties are not making timely assessment payments to associations.

A quarter of community managers say more than 5 percent of their units are vacant.

This is largely due to foreclosures, the inability of non-resident owners to sell or rent their properties or owners simply walking away from their mortgages -- and homes.

Another 29 percent report vacancy rates of 3 to 5 percent.

All of this has a negative affect on home values.

Associations are taking a number of steps to address budgetary shortfalls:

• Thirty-one percent have reduced contributions to their reserve accounts, funds that are set aside for major maintenance and repairs.

• Twenty-three percent have borrowed from the association's reserve account.

• Sixteen percent have levied special assessments.

• Twelve percent are allowing residents to perform minor tasks in the community.

• Six percent have borrowed from banks and other lenders.

Says Skiba, "They are making difficult choices because they have few alternatives. Board members in every community association manage the business of their communities, and businesses must pay their bills."


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Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

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Appraisers up next for 'Wall Street Reform' brand of regulatory do-over

Click back for 'text neck' cures

The interim final rule for appraisers, part of the massive "Wall Street Reform" federal regulatory overhaul, is designed to keep appraisers independent, free from third party pressure, honest and fairly compensated.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Tolling the death knell for the Home Valuation Code of Conduct (HVCC), the Federal Reserve Board recently announced final regulatory orders for real estate appraisers.

The interim final rule for appraisers, part of the massive federal regulatory overhaul known as "Wall Street Reform" (officially, the Dodd-Frank Wall Street Reform and Consumer Protection Act), is designed to keep appraisers independent, free from third party pressure, honest and compensated fairly.

We'll see.

Appraisers have been heavily pressured for years -- before, during and after the boom -- to do the home valuation bidding of mortgage lenders, real estate agents, even buyers, sellers and refinancing homeowners who needed home values based on risky assumptions rather than true worth factors.

Bowing to pressure to over-value homes was one of the factors contributing the housing market crash that spawned the greatest recession since the Great Depression.

Amid howls from appraisers and other real estate industry quarters, the Federal Housing Finance Agency (FHFA) implemented HVCC in May 2009, after the housing bust, purportedly to improve the independence of appraisers by prohibiting lenders and third parties from influencing appraisers' work.

Unfortunately, the code of conduct cut deeply into appraisers' income and, as the housing market floundered, it worsened working conditions for honest, hard working appraisers, who have since been looking forward to new regulations.

Appraisers deemed the HVCC as a bogus effort to clean up the industry, because it didn't focus enough on appraiser competency; it undercut professional relationships between honest appraisers and reputable mortgage professionals; it increased the influence of bottom-line oriented appraisal management companies; and it encouraged the use of glossed-over appraisals that didn't reflect the true value of a property.

By and large, for those and other reasons, real estate agents, new home builders, even mortgage brokers and others likewise detested HVCC.

In advance of the new interim rules, Fannie Mae, working FHFA and Freddie Mac released its own Appraiser Independence Requirements -- new rules for mortgage companies selling loans to the government-sponsored enterprises -- which also overwrite HVCC rules.

Fannie's rules are in line with the new federal regulations, but all conventional, single-family mortgage loans must still be in compliance with HVCC until the release of the final Federal Reserve rules, effective April 1, 2011. A public comment period on the new rules ends in December, but the interim rules will likely take hold with few changes.

The Fed's interim final rule:

• Prohibits coercion and other similar actions designed to cause appraisers to base the appraised value of properties on factors other than their independent judgment.

• Prohibits appraisers and appraisal management companies hired by lenders from having financial or other interests in the properties or the credit transactions.

• Prohibits creditors from extending credit based on appraisals if they know beforehand of violations involving appraiser coercion or conflicts of interest, unless the creditors determine that the values of the properties are not materially misstated.

• Requires that creditors or settlement service providers that have information about appraiser misconduct file reports with the appropriate state licensing authorities.

• Requires the payment of reasonable and customary compensation to appraisers who are not employees of the creditors or of the appraisal management companies hired by the creditors.

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Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

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Housing bust withered California's economy, job market

Nov. deadline looms for
emergency BP oil claims

New home construction contributed only $13.8 billion to California's economy in 2009 and nearly 77,000 jobs, down 80 percent from $67.7 billion in economic output and a whopping 84 percent from 487,000 jobs when the home-building boom peaked in 2005 statewide.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - When housing went down in the Golden State it took Californian jobs and a chunk of the economy with it.

The bust has cost the Golden State hundreds of thousands of jobs, and $54 billion in economic output.

According to "The Economic Benefits of Housing," study by the California Homebuilding Foundation, an economic research and consulting group, every newly constructed single-family home generates 3.24 jobs during construction and supports another 1.2 jobs, and each dollar spent building a home generates another 80 cents in total economic activity.

With deep fissures in the housing market, an economic cornerstone, new home construction alone contributed only $13.8 billion to California's economy in 2009 and nearly 77,000 jobs, down 80 percent from $67.7 billion in economic output and a whopping 84 percent from 487,000 jobs when the home-building boom peaked in 2005 statewide.

In Monterey County, in 2008, builders constructed 456 new homes and only 194 in 2009. Monterey's new home construction generated 811 jobs in 2008 but only 372 last year. New home construction generated nearly $140 million in economic output in 2008 in Monterey County, but only about $64 million in 2009.

At the peak statewide, the 205,000 new homes permitted accounted for almost 3 percent of the state's total economic output. That fell to 0.4 percent in 2009, when only 35,000 new homes were permitted statewide, the study says.

Even at the peak, the number of new homes permitted fell below the 220,000 that the state Department of Housing and Community Development said are needed annually to meet normal population growth.

It's not just the direct economic effects of the new home building industry's construction efforts.

Toss in a range of related services including remodeling, repair, brokerage, property management and financing and the industry generates more than $347 billion of economic output and supports nearly 1 million jobs statewide, according to the study.

Nearly 11 percent of California's total economic output is from the entire housing industry, ranking it first among the state's leading output industries. Even after the downturn the industry's economic output outpaces wholesale and retail trade; professional scientific and technical services and information.

While the output contributes to all counties, benefits are highest in the largest regions, including Los Angeles, Orange and San Diego Counties.

The study was designed to reveal the significance of the housing industry on two levels:

• The full range of economic impacts of new housing construction, including support industries and consumption of expenditures generated through the multiplier or ripple effect.

• The still greater significance of the entire housing industry including residential real estate, financing, maintenance and repair, additions and alterations, construction, homeowner expenditures, property manage and all other aspects of the entire stock of owner- and renter-occupied housing.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

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Most say it's a good time to buy, fewer see housing as a good investment

Peter Taffee, attorney
with firm restaurateurs
hired for BP claims

Most Americans believe the housing market has hit the bottom and that it's a good time to buy, but they are aware prospects for fast returns on a home as an investment are slim.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - Most Americans believe the housing market has hit the bottom and that it's a good time to buy, in part because many also think rents will rise faster than home prices.

Fannie Mae's latest nation housing survey found that 70 percent of Americans think it's a good time to buy a home, up from 64 percent in January.

By an overwhelming majority, 78 percent, also believe home prices will either hold steady or increase over the next year, compared to 85 percent believing the same thing about rental increases.

While Americans expect rents to rise by 3.6 percent on average, home prices are expected to turn up only by 0.9 percent, Fannie Mae found.

"Given the remaining level of shadow inventory, as well as the high number of adjustable rate resets still looming which could in turn lead to further defaults, it is difficult to see the supply of housing falling in an amount sufficient to move prices upwards in many parts of the country," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.

Also 67 percent believe housing is a safe investment, down three points since January and down 16 percentage points from a similar 2003 survey and the largest drop by far among all investment types tracked since then. Housing ranked second behind putting money into a savings or money market account (76 percent).

"Our survey shows that consumers see a mixed outlook for housing and homeownership," said Doug Duncan, Fannie Mae's vice president and chief economist.

"These findings indicate a return to a more balanced and realistic approach toward housing. While this will likely weigh on the housing recovery in the near-term, it should, over time, help to build a stronger and healthier market focused on sustainable homeownership," he added.

The Fannie Mae National Housing Survey polled homeowners and renters between June 2010 and July 2010 and compared the findings to similar surveys released earlier this year and 2003.

The survey also found:

• Mortgage borrowers (74 percent) and underwater borrowers (69 percent) are more likely to say owning a home is a safe investment than delinquent borrowers (57 percent) and renters (54 percent). However, this measure has fallen among all sub-groups since January, with delinquent borrowers and renters showing the largest declines, down eight and seven points, respectively.

• More than 70 percent of all respondents believe it will be harder for the next generation to buy a home, up three points from the beginning of the year.

• Fifty-four percent think it would be very difficult or somewhat difficult to get a home loan today, down six points since January.

• Thirty-three percent of all Americans said they would be more likely to rent rather than buy if they were going to move, up from 30 percent in January.

• Among renters, 60 percent said they would rent again if they were to move, up from 54 percent in January. However, 69 percent of renters think it makes more sense to buy a home than to rent.

• Mortgage borrowers (83 percent) and underwater borrowers (77 percent) remain bullish on housing and said they are more likely to buy in the future than rent — both groups increased two points from January.

"If you couple this (high inventories and rate resets) with the reality that it is far more difficult to obtain a mortgage as well as a job, when selling a home to someone who presumably needs financing to buy it, housing is still facing a conundrum." Osborne added.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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BofA halts foreclosures, states investigate

Oil spill impacts vacation rental owners

Forty-nine states are investigating charges that some mortgage lenders' employees, dubbed "robo-signers," have vouched for the accuracy of foreclosure documents without reading them.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - Bank of America recently became the first bank to stop sales of foreclosures in all 50 states as 49 states teamed up to investigate mortgage lenders' foreclosure procedures.

State attorneys general are concerned that lenders are kicking out homeowners with questionable foreclosure documents.

They are investigating charges that employees dubbed "robo-signers" had vouched for the accuracy of foreclosure documents without reading them, among other infractions.

Along with BofA, PNC Financial Services Inc., Ally Financial's GMAC Mortgage and JPMorgan Chase also recently halted foreclosures in some states amid evidence employees or legal staff signed foreclosure documents without verifying information.

A BofA statement reads: "Bank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus."

It's not known how many homeowners are affected, but California's Attorney General Edmund G. Brown called on all lenders in California to halt foreclosing on California homes until they can demonstrate that they are complying with state law.

Earlier, Brown sent letters to Ally Financial and J.P. Morgan Chase directing them either to prove they are in compliance with state law or stop foreclosures.

His office also has been in discussions with other lenders, including Wells Fargo, One West and Bank of America.

"While California continues its own vigorous efforts to ensure that homeowners facing foreclosure are treated fairly and lawfully, we are now working together with other attorneys general and regulators to seek solutions that reach across state lines to protect all borrowers at risk of losing their homes in this foreclosure crisis," Brown said.

The state level joint investigation is being headed by Iowa Attorney General Tom Miller and plans to review how lenders verify foreclosure documents nationally. States have already started examining whether mortgage servicers have submitted improper affidavits or other foreclosure documents.

Foreclosure laws vary by state. California law prohibits lenders from recording notices of default on mortgages made between Jan. 1, 2003, and Dec. 31, 2007, unless - with certain exceptions - the lender contacts or tries diligently to contact the borrower to determine eligibility for loan modification. Any notice of default must include a declaration of compliance with California law.

U.S. Sen. Christopher Dodd (D-CT), the chairman of the Senate Banking Committee, recently said he would hold a hearing on the matter next month.

Dodd told the Associated Press, "American families should not have to worry about losing their homes to sloppy bureaucratic mismanagement or fraud."

"Regulators at the federal, state, and local levels have a responsibility to uphold the law and protect consumers from unfair foreclosure, and lenders have a duty to not cut corners around the law," he added.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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CAI, CPCF: Don't ban private transfer fees

Read: "Feds plan ban
on private transfer fees
on home sales"

Two groups announce support of a fee opposed by federal regulators and real estate industry group. Also see: "Coalition, Congress joins Fed effort to ban private transfer fees on home sales"

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - CAI, CPCF: Don't ban private transfer fees

Banning private transfer fees on home sales could dam up the sale of some 11 to 12 million properties, according to a major homeowner association group and a new coalition supporting the fees.

That view is in direct opposition to other homeowner advocates and federal regulatory efforts that suggest the fees, attached to new homes, are a burden to both sellers and the housing market.

The Community Associations Institute, representing the interests of homeowner and community associations -- typically condo, townhome and other self-governed communities -- say private transfer fees (PTFs) are a boon to community associations' reserve accounts and community improvement projects.

They say as many as 11 million homeowners could find it difficult to sell their homes if the Feds move forward with plans to ban the fees.

According to the new Coalition to Stop Wall Street Home Resale Fees, builders and developers working with Freehold Capital Partners, sometimes attach to a new home sale deed something called a "private transfer fee" or "property transfer fee" (not to be confused with property transfer taxes).

The charge, about 1 percent of the selling price, typically paid by the seller, bounces back to the developer each time the property changes hands -- for 99 years.

The coalition also says disclosures about the tax aren't always clear.

The Federal Housing Finance Agency (FHFA), concerned that the fees are self-serving and used to fund private continuous streams of income, recently proposed a rule that would restrict federal housing agencies from purchasing mortgages on houses sold with the fees.

The FHFA overseas Fannie Mae, Freddie Mac and Federal Home Loan Banks, each of which plays a key role in the housing finance system.

The coalition says it's not just the exorbitant cost. The developer distributes profits to Freehold, which in turn is attempting to bundle the fees into securities, and sell them on Wall Street. Another deal, not unlike subprime securities, designed to allow investors to cash in on future earnings.

CAI says the fees have been used by community associations for decades to help fund reserve accounts or community improvement projects.

"We agree that private transfer fees should get regulatory scrutiny," said CAI CEO Thomas M. Skiba.

"The problem is that the FHFA regulation would apply to any and all deed-based fees. If implemented as drafted, it would be catastrophic," said Skiba.

Nearly half (49 percent) of the 1,252 communities responding to a CAI survey in September have deed-based fees. Extrapolating from that data, CAI estimates that as many as 11 million homes nationally are located in communities that rely on deed-based transfer fees.

Under the FHFA proposal, these homes would no longer be able to qualify for mortgages backed by Fannie Mae, Freddie Mac or any federal home loan bank, which account for up to 90 percent of all residential mortgages.

In addition, most community associations would be unable to comply with the proposed rule. That's because changing deed restrictions typically requires approval of two-thirds or more of all homeowners, which is difficult to achieve.

CAI says the transfer fees charged by community associations are nominal, ranging from a fixed fee (averaging $750) to a percentage of the sales price (averaging 0.25 percent). Also, such funds have allowed financially strapped community associations keep monthly assessments low.

Another new coalition, the Coalition to Preserve Community Funding (CPCF) says the fees, attached to some 12 million homes, aren't new but have been used more since the housing crisis to give developers a long-term revenue stream to help resolve negative equity, pay down development loans and restart stalled projects.

"There is nothing inherently inappropriate or anti-consumer about private transfer fees, though they have been cast in that light by an aggressive misinformation campaign by the National Association of Realtors and the American Land Title Association (members of the Coalition to Stop Wall Street Home Resale Fees)," said Hilary Richards, a spokeswoman for the CPCF.

Richards said much of the current debate is about proper disclosures -- buyers may not always be fully aware the transfer fee will be due at the time of a future sale. Current legislation, if signed into to law, would change that.

U.S. Rep. Phil Gingrey (R-GA), recently introduced "The Homebuyer Enhanced Fee Disclosure Act of 2010 (HEFDA)" which would require adequate disclosures and require that a notice of the fee be filed with the county recorder.

A few years ago, California adopted a similar standard under California Civil Code 1098.5.

"The proposed legislation provides important consumer protections nationwide by ensuring uniform transparency and disclosure of private transfer fees in all relevant real estate transactions, while preserving a valuable mechanism for spreading infrastructure costs, reducing negative equity, and making home ownership more affordable," says Richards.

"Further, the required disclosures help professionals, such as title agents and Realtors, to easily identify the fee through ordinary diligence and allows homebuyers and sellers, by being better informed, to factor the PTFs into their negotiations for a fair sales price," she added.


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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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Unsupervised risky business, greedy homebuyers tanked the housing market

Lot's of blame to spread around for the housing crash: insufficient regulatory oversight in D.C., excessive risk taking on Wall Street and greedy homebuyers.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Insufficient regulatory oversight leading to excessive risk taking and homebuyers biting off more than they could chew, spelled doom for the housing market, according to a Harvard University study from the school's Joint Center for Housing Studies.

"Understanding The Boom And Bust In Nonprime Mortgage Lending" says originating risky mortgages was "inextricably linked to demand on the secondary capital markets for mortgages with higher yields than prime mortgages, as well as the multiplication and magnification of this risk through actions taken in the capital markets."

"The combination of a glut of global liquidity, low interest rates, high leverage, and regulatory laxity in the context of initially tight and then overvalued housing markets triggered staggering risk taking," says Eric S. Belsky, managing director of the Joint Center and one of the study's authors.

"Capital markets supplied credit through Wall Street in large volumes for risky loans to risky borrowers and then multiplied these risks by issuing derivatives that exposed investors to risks in amounts much larger than the face amount of all the loans," he added.

Homebuyers didn't help.

Focusing on the monthly mortgage payment rather than the true value of the home, homebuyers used low mortgage rates to bid high in tight housing markets, the report said.

Once house price appreciation took off, the report suggests, backward looking price expectations led both equity grabbing homebuyers and salivating mortgage investors to bank on rapidly rising prices, further fueling the bubble.

Risky loans, the sheer volume of them and the share of them made to speculators and those who couldn't really afford a home, followed by bundling the mortgages into securities caused much damage to the US economy and global financial markets.

Regulatory lapses were many and included the failure to closely supervise nonbank financial intermediaries, the failure to prevent unprecedented risk layering in mortgage underwriting, the failure to adequately supervise the credit ratings agencies, the failure to impose greater transparency in the capital markets and the failure to require higher reserves against risks, the report said.

"One of the biggest problems s that the whole system created the illusion that risks were being adequately managed. This is because rating agencies assigned AAA-ratings to large portions of securities backed by subprime and Alt-A loan pools and synthetic derivatives based on them," said report co-author Nela Richardson.

Securities were over collateralized - the process of issuing a smaller face amount of securities than the total face value of loans in the pools - to hold aside reserves against losses.

"The fundamental underpinnings of the models used to rate these securities were deeply flawed and the capacity of third-party insurers and credit default swaps to make good on claims was inadequate," the report said.

The report also discovered that while high price loans as reported under the Home Mortgage Disclosure Act were disproportionately concentrated in low-income, predominantly minority census tracts, the vast majority of high-priced loans were issued to homeowners outside these communities.

It also finds that loans made by financial institutions regulated under the Community Reinvestment Act in areas where they were assessed for meeting the credit needs of low and moderate income communities constituted less than five percent of all high-price loans at the peak in 2005.

"Looking forward, it is encouraging that actions have been taken within the past two years intended to address many of the regulatory problems we found," commented Belsky.

So-called "Wall Street Reform," the new Restoring American Financial Stability (RAFS) Act of 2010" is heavily laden with strong mortgage regulations.

Said Belsky “But many of the details are left for regulators to work out and how they do so will determine the balance achieved between consumer protection and management of systemic risk on the one hand and financial innovation, efficiencies, and consumer access on the other."

The report says the bust could have been worse.

"The housing market would have struggled even more to recover, absent federal guarantees of mortgages and mortgage-backed securities, and both the cost and availability of mortgage credit moving forward would be negatively affected by any curtailment in the scope of the guarantees," the report says.

However, the report notes the importance of government charging for these guarantees rather than allowing unfunded implicit guarantees of the kind Fannie Mae and Freddie Mac offered.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

Other DeadlineNews Group Feeds are available from DeadlineNews.Com.

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Higher conforming loan limits for another year

High conforming loan limits mean homebuyers and homeowners in expensive housing markets will continue to get a break on interest rates when they buy or refinance. Conforming loans come with cheaper rates than non-conforming or so called "jumbo" mortgages, because they are backed by the government.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - In what's at least a year-long reprieve from some higher housing costs, President Obama is expected to sign legislation that comes with a provision to extend the current high-cost-area conforming loan limit through 2011.

The provision means homebuyers and homeowners in expensive housing markets will continue to get a break on interest rates when they buy or refinance.

Conforming loans come with cheaper rates than non-conforming or so called "jumbo" mortgages, because they are backed by the government.

Now that the federal homebuyer tax credit has expired, cheaper rates are crucial to the housing recovery.

Federal lawmakers recently voted to keep the maximum size of loans guaranteed by Fannie Mae and Freddie Mac and the Federal Housing Administration (FHA), for high-cost areas, at the current $729,750 level.

Real estate agents, mortgage bankers, homebuilders, and others, arguing the housing market would suffer with lower conforming limits, lobbied to keep the upper limit in high-priced markets.

The limit applies to areas that include California and New York. Alaska, Hawaii, Guam and the U.S. Virgin Islands get even higher conforming loan levels.

Without the change, the limits would have fallen to about $625,000. The limit was $417,000 before 2008 and remains at that level for most of the country.

"CAR applauds our congressional representatives for their actions to extend the higher loan limits through 2011," said CAR President Steve Goddard.

"Without the extension of the higher loan limits, many California borrowers would have a harder time refinancing homes and obtaining financing for new home purchases," he said.

On September 28, Erate.com reported the average rate for 30-year, non-conforming jumbo loans
came in at an average 5.18 percent. Meanwhile, conforming loan rates averaged 4.51 percent.

Many homeowners carry jumbo mortgages with interest rates in the mid to high 6s. Current conforming mortgages area available for much less to qualified homeowners who pay the standard .07 to 1 point origination fee.

If these homeowners had to refinance to a true jumbo loan of the past, they would be doing so at fixed rates in the low 5's. Even some homeowners burdened with two loans to avoid jumbo mortgage rates could benefit from refinancing both loans to today’s jumbo conforming fixed rate loan.

While borrowers must still qualify under the stiff current guidelines in today's market numerous borrowers are able to refinance to a conventional conforming jumbo loan for less, depending on their area.

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© 2010 DeadlineNews.Com

Advertise on DeadlineNews.Com | Shop DeadlineNews.Com

Get "News that really hits home!" for your Web site or blog from the DeadlineNewsGroup.Com.

You are reading a sample of "News that really hits home!" now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

Other DeadlineNews Group Feeds are available from DeadlineNews.Com.

DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime

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More than one in three say it's OK to walk away from mortgage

Oil disaster not off putting
for foreign tourists

The majority of Americans, say it's "unacceptable" for homeowners to stop making their mortgage payments and abandon their homes, but more than a third, 36 percent, say "walking away" is OK.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - The majority of Americans, say it's "unacceptable" for homeowners to stop making their mortgage payments and abandon their homes, but more than a third, 36 percent, say "walking away" is OK.

A Pew Research Center study found that 59 percent believe it is wrong for homeowners to deliberately stop paying their mortgages and surrender their homes to the mortgage lender.

Among those who said walking away is OK, 19 percent said it's acceptable outright and an additional 17 percent volunteered that it depends on the circumstances.

Either way, walking away can sink your credit score and come with an extra tax burden, not to mention the potential of a court suit.

The survey, conducted May 11 to May 31, queried 2,967 adults and found more than one-in-five homeowners (21 percent) say they owe more on their mortgages than their home is worth.

The "underwater" situation compels some homeowners to stop making their mortgage payments and let the bank foreclose on their homes.

Many homeowners, who can afford a mortgage payment, have nevertheless stopped making payments in what's called a "strategic default" and that's caused mortgage finance giant Fannie Mae, reeling from mounting losses, to sue them.

Alternatives to walking away, say a short sale, mortgage modification, a refinance (if possible), even an outright sale for less then the home is worth, are probably better ideas.

According to RealtyTrac.com, in August, lenders foreclosed on 95,364 U.S. properties in August, the highest monthly total in the half-decade history of the report.

Nearly half (48 percent) of all homeowners say the value of their home declined during the recession, and as a group they were more likely than those whose home did not lose value to say it's acceptable to bail out on a mortgage (20 percent vs. 14 percent).

The study also found:

• Twenty-five percent of renters said it was okay to walk away.

• Nearly one-in-four adults (24 percent) who say their families are just able to pay their monthly bills or can't meet expenses said it's okay to stop paying a mortgage, compared with 14 percent of those who say they "live comfortably."

• Eighteen percent of homeowners who say their homes are worth less than what they owe, vs. 17 percent those who would break even or make money on a sale said it's okay to stop mortgage payments.

• Among ethnic groups, 24 percent of all Hispanics say it's acceptable to abandon a mortgage, compared with 17 percent of whites and 21 percent of blacks. However, roughly similar majorities of Hispanics (58 percent), blacks (56 percent) and whites (61 percent) say abandoning a mortgage is wrong.

• More liberal Democrats were about twice as likely as more conservative Republicans to say it is acceptable to walk away (23 percent vs. 11 percent).

• Black homeowners vs. whites (35 percent vs. 18 percent); lower-income homeowners vs. upper-income homeowners (33 percent vs. 15 percent) and middle-aged homeowners vs. younger or older homeowners were more likely to be underwater.

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© 2010 DeadlineNews.Com

Advertise on DeadlineNews.Com | Shop DeadlineNews.Com

Get "News that really hits home!" for your Web site or blog from the DeadlineNewsGroup.Com.

You are reading a sample of "News that really hits home!" now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

Other DeadlineNews Group Feeds are available from DeadlineNews.Com.

DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime

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Seven selling sillies that sap home sales

Mixing the $10 'BP Martini'

Some of the home sales depression comes from home sellers who still just don't get it and make mistakes that tank the deal.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - At last count, nationwide, new home sales were down more than 12 percent and resale home sales down even more -- 27 percent.

In part, it's the economy. The rate of unemployment nationwide remains at just under 10 percent and some locales are still in double digits.

In the Gulf Coast area, blame the oil disaster for washing away more sales.

And, unless your state
is one of the few with a home buying tax credit, the end of the federal tax credit also took a bite out of home sales.

Some of the home sale depression, however, comes from home sellers
who still just don't get it and make mistakes that tank the deal.

To find help for sellers we went to Silicon Valley where, even as home sales dropped nearly 9 percent in August, home prices are up nearly 12 percent a year ago.

Some sellers, apparently, are making all the right moves.

We sought help from Julie Larsen Wyss, a hard core Silicon Valley Intero Real Estate Services broker associate in San Jose, CA.

Wyss, also a broker associate at North Star Mortgage Associates and short sale specialist offered these mistakes sellers ought not make if they want to move their home off the list of homes that languish unsold.

• Pricing too high. A high listing price will cause some buyers to lose interest sight-unseen. It may also lead other buyers to expect more than what you have to offer. Overpriced homes tend to take an unusually long time to sell, ultimately selling at a lower price.

"Every seller obviously wants to get the most money for his product. Ironically, the best way to do this is NOT to list your home at an excessively high price," Wyss advises.

• Mistaking refinance appraisals for the market value. Lenders often estimate the value of homes at a higher level than it's actually worth to encourage refinancing. Ask your real estate agent for the most recent information regarding property sales (similar to yours) in your community.

"This will give you an up to date and factually accurate estimate of your property value," she said.

• Forgetting to "showcase your home." When selling your home, make it look as pleasant and move-in-ready as possible. Make necessary repairs. Clean. De-clutter.

Says Wyss, "A poorly kept home in need of repairs will surely lower the selling price and will even turn away some potential buyers. In spite of how frequently this mistake is addressed and how simple it is to avoid, its prevalence is still widespread."

• Using the "hard sell" while showing. "Don't try haggling or forcefully selling. Allow prospective buyers to comfortably examine your property," Wyss said.

Buying a house is always an emotional and difficult decision. Instead, be friendly and hospitable. A good idea would be to point out any subtle amenities and be receptive to questions.

• Trying to sell to "looky-loos." A prospective buyer who shows up because they saw a for sale sign likely isn't interested in your property. Buyers who don't come through a real estate agent, typically are six to nine months away from buying. They just want to see what's available. Chances are, they still have to seller their house, haven't been to a lender and may not be able to afford a home yet.

"Your real estate agent can distinguish real potential buyers from lookers because they will take the time to determine a prospective buyer's savings, credit rating, and purchasing power. If your agent fails to do so, you should investigate on your own, avoid wasting time investigating and questioning on your own, and get a new real estate agent," Wyss said.

• Being ignorant of your rights and responsibilities. Know the details of the sales contract. They are legally binding documents that can be complex and confusing. Know your responsibilities before signing the contract. Can the property be sold "as is"? How will deed restrictions and local zoning laws affect your transaction? There's much more to know.

Wyss said, "Not knowing can end up costing you a considerable amount of money."

• Signing a listing contract with no escape clause. Hopefully you will choose the best real estate agent. However, stuff happens. Perhaps you misjudged your agent. Perhaps the agent has other priorities. In any case, you should have the right to fire your agent. You are the boss. He or she is your employee. You should also have the right to select another agent. Many real estate companies will simply replace one agent with another one from the same company, without consulting you.

"Take control before signing a real estate listing contract," Wyss said.

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© 2010 DeadlineNews.Com

Advertise on DeadlineNews.Com | Shop DeadlineNews.Com

Get "News that really hits home!" for your Web site or blog from the DeadlineNewsGroup.Com.

You are reading a sample of "News that really hits home!" now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

Other DeadlineNews Group Feeds are available from DeadlineNews.Com.

DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime

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Q&A with Karl Lee, President Santa Clara County Association of Realtors

Karl Lee, President SCCAOR

Silicon Valley's housing market is well on its way up, but it still has a long way to go before home values return to peak prices reached back in 2007. The market's transition prompted us to contact area real estate leaders, including Karl Lee, president of SCCAOR, to gain some market insight for homebuyers and sellers alike.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - Silicon Valley's housing market is well on its way up, but it still has a long way to go before home values return to peak prices reached back in 2007.

The market's transition prompted us to contact area real estate leaders to gain some market insight for homebuyers and sellers alike.

We recently sat down in a question-and-answer session with Karl Lee, president of the Santa Clara County Association of Realtors (SCCAOR) and a Santa Clara County native.

Lee also serves on San Jose's General Plan Task Force and the San Jose Foreclosure Prevention Task Force and is broker/owner of the family owned Realty World Results Pros in Milpitas.

Lee also has 13 years of experience in corporate banking finance and enjoys softball, volleyball, skiing, hiking and traveling.

Q: How would you describe today's housing market? Is it a buyer's market or a seller's market?

A: Santa Clara County has become a seller's market in 2010. Multiple offer situations have been common. Every month this year has seen 25 to 30 percent increases in closed sales volume compared to the same months last year. We've also seen double digit average sales price increases.

Q: What do today's housing market conditions mean for buyers and for sellers? How can they obtain the best deal, selling or buying in today's market?

A: The current Santa Clara County real estate market has ample opportunities, but buyers and sellers need to be patient and prepare for the unexpected. Closing a contract is more complicated than ever. We have also experienced delays due to the new federally mandated Good Faith Estimate guidelines.

To be a successful seller, you must make strong pricing and presentation efforts to offer the most attractive home on the market. The strategy reveals to buyers that your home is a better value than other homes. It also allows buyers to visualize how the home fits his or her lifestyle.

Buyers in today's market need to understand the competitive environment they face. Buyers need to carefully evaluate homes and contractual terms, particularly when it comes to short sales and bank-owned homes in poor condition or requiring repairs. Buyers must convince sellers that they have most competitive offer and the best chance to close the transaction.

Q: What do you tell buyers who may be waiting for home prices to fall further?

A: I don't sense that prices will fall significantly in our market. However, if prices do fall some, increasing financing costs will likely offset small savings from falling prices.

Q: What do you tell sellers waiting for home prices to rise?

A: Homeowners should base their selling decision on their life goals and lifestyles, not on a projected direction for the housing market. It is impossible to out-plan the market.

Q: Distressed properties account for a larger percentage of homes for sale than normal. These properties can be a good deal, price-wise, for home buyers looking for a bargain. They can also come with hidden problems. How do you advise buyers considering distressed properties?

A: Short sales represent approximately 42 percent of the market, while foreclosed, bank-owned homes represent a much smaller share, approximately 7.72 percent.

My recommendation for buyers is to focus on the best home for their goals and needs. The market perception that distressed properties are bargains has a created a frenzy for these homes and that's created more competition for them, more so than even for traditional listings.

Bank owned sales, short sales and traditional sales each have their own unique set of dynamics and complications which buyers need to consider and adjust to. When it comes to a distressed property, planning for hidden repair costs and legal issues is key.

Q: What's your advice for someone who has an "underwater" mortgage that's larger than the home is worth, but who is not having a problem making payments?

A: History has shown us that our market will work its way out of the current economic cycle. All indications are that we have already hit the bottom. If your lifestyle and goals make sense with your current home, if you can afford to make your payments, you should continue to make your payments.

Q: What's your advice for a homeowner with an "underwater" mortgage but is struggling to make payments or is soon to face a mortgage rate reset or other condition that could cause problems?

A: The first step is to consult appropriate experts including an attorney, a tax expert, a counselor who is certified by the U.S. Department of Housing and Urban Development (HUD) and a realtor. Each homeowner and each loan agreement have unique legal and tax implications.

A great resource for distressed homeowners in Santa Clara County is ForeclosureHelpSCC.org, created by the San Jose Foreclosure Prevention Task Force, a coalition of the City of San Jose, the Santa Clara County Association of Realtors, the Silicon Valley chapter of the California Association of Mortgage Practitioners, a number of HUD certified counselors and other non-profit agencies.

If a short sale is a viable option, experienced realtors with short sale home selling expertise can manage the marketing and contract negotiations.

Q: Given the market has put downward pressure are the value of homes since the peak of the boom, how can homeowners boost home value or shore up and retain the value of their homes?

A: Maintain upkeep, perform repairs, clean up, remove clutter. A home that shines always brings the most value. Home improvements typically don't provide an equal return on the investment, but their true value comes from living and using the improvements.

Paying down and lowering the principal more than what's required by the loan agreement is a good idea, depending upon your lifestyle and financial goals. Of course, the more you pay down the principal, the less mortgage interest you can deduct.

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© 2010 DeadlineNews.Com

Advertise on DeadlineNews.Com | Shop DeadlineNews.Com

Get "News that really hits home!" for your Web site or blog from the DeadlineNewsGroup.Com.

You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
• National Consumer News Examiner
• National Real Estate Examiner

DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime

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