Friday, December 27, 2013

Could Interest Rates Get Buyers Off the Fence?

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Higher interest rates, along with higher home prices, may prompt more home buyers to pull the trigger to act quickly before costs rise even more. Every one percent increase in rates equates to about $30,000 in buyer power. That's a huge variable to keep in mind.

Could Interest Rates Get Buyers Off the Fence?

Though borrowing costs are increasing as interest rates have lifted from their historical lows, some real estate professionals believe the rise may boost home sales.

“It will get people sitting on the fence to decide, ‘We better do something or it’s going to cost us money,’” says Margaret Dixon, a real estate sales associate with Crye-Leike in Tennessee.
At the end of 2012, 30-year fixed-rate mortgages averaged 3.52 percent. Last week, Freddie Mac reported that 30-year rates averaged 4.47 percent.

“A 1 percent increase usually lands around $30,000 in buying power,” says Todd Reynolds, a real estate professional with Goodall Homes. “That’s the difference between a starter home and a bigger home — or a bonus room.”

Higher interest rates, along with higher home prices, may prompt more home buyers to act quickly before costs rise any more.

“They realize the house of their dreams may never be cheaper than it is today,” says Reynolds. “It creates a sense of urgency.”

Economists are predicting that mortgage rates will likely rise to 5 percent or 5.5 percent in 2014.
“Most people realize the [3 percent-range interest rates] are gone, and they’d better be glad to get 4.5 percent,” Jay Bradshaw, an agent in Cumberland, Tenn., told The Tennessean.

Source: “Rising interest rates may boost real estate market,” The Tennessean (Dec. 24, 2013)

Thursday, December 12, 2013

500-page mortgage applications are the new normal

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New mortgage requirements make seeking a mortgage a daunting task. Minimum of two years of tax returns, two month's of bank statements, sourcing of every deposit on every file are just a few things to keep in mind when planning to acquire a mortgage these days. It's best to have your documentation ready before you even apply. Apparently, cash is still king!

 500-page mortgage applications are the new normal

mortgage application file


  @CNNMoney December 12, 2013: 6:59 AM ET


Years after the housing market melted down, lenders are lamenting the loss of thin, sleek mortgage application files.

Once easy to carry in one hand, the average mortgage application file has now ballooned to 500 pages, according to David Stevens, CEO of the Mortgage Bankers Association.

"Since the housing bubble burst, file size has grown steadily and dramatically," said Peter Grabel, a loan officer for Luxury Mortgage in Stamford, Conn.

Just seven or eight years ago, the typical application file ran to about a hundred pages, he said. Some for "no-doc" loans were thin indeed, not much more than a credit report, plus an appraisal and property information

But now files are more jam-packed than ever, with income and asset records, tax returns and other financial documents.

"We now need two years tax returns, two months' bank statements, sourcing of every deposit... on every file," said Grabel.

A middle-income worker financing a median-priced house may get away with just a few hundred pages, but business owners or wealthy people with several income streams can generate paperwork better measured with yardsticks than page numbers.

What gives? After the housing meltdown, tighter rules were put in place, requiring an explosion of disclosures to be included in mortgage applications. Those alone account for nearly 50 pages, said Grabel.

One disclosure even invokes the Patriot Act, the post-9/11 legislation designed to combat terrorists. The Feds require lenders to verify the borrower's identity to make sure they're not suspected of funding or laundering money for terrorist groups.

All this amassing and analyzing of documents costs both time and money. And new mortgage lending rules that are going into effect in January will make it even more complicated.

"New rules require you to triple-check everything," said Jeff Taylor of Digital Risk, a mortgage processing company. "The best thing you as a borrower can do to help yourself is to have all your documentation together before you apply. Get needed items like your credit report and get any errors corrected so you can get through the process as smoothly as possible."

Some of the documentation that's required can seem silly. An applicant may have $1 million in the bank, for example, but if there has been a recent deposit of, say $5,000, he is required to show where that sum came from.

The rationale, explained Grabel, is that Fannie Mae and Freddie Mac frown upon buyers who use loans from friends or family to apply to the downpayment. If borrowers have to repay those private loans, it can make it harder to pay off the mortgage. So every deposit coming into an account has to be accounted for and scrutinized.

The checklist lenders use to manage the application can run three pages long (and is also added to the file). The one Grabel uses has four categories: disclosures, credit package, appraisal package and items needed prior to closing. There are 55 separate boxes to check, covering such items as the good faith estimate, asset statements, and the original appraisal report.

No one ever said borrowing hundreds of thousands of dollars should be easy, but today's requirements are a far cry from the days of the housing boom. "Seven years ago, you signed your name and got your check," said Grabel.

Of course, you can always pay cash instead. That's what Taylor's brother did recently and it certainly simplified the transaction. "There were only three pieces of paper at the closing," said Taylor. 


Tuesday, December 3, 2013

Silicon Beach housing prices surge as techies move in

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Techies moving into the silicon beach areas of Santa Monica, Venice, Marina Del Rey, Playa Vista and surrounding areas. This is driving prices up! It's the new hot, cool space to live. Landlords have benefited with rising rents as well. For homeowners, median price in the area has risen to $925,500 last quarter, 19.2 % higher than in the same period last year.

Silicon Beach housing prices surge as techies move in

Home prices in Santa Monica, Venice Beach and surrounding areas have risen sharply this year, pricing even some tech workers out of that Westside market.

Housing demand from techies causing a price surge in ‘Silicon Beach’ 

As more techies move into the Westside, there are fears that the area -- and especially the eclectic, funky vibe in Venice -- could go from charmingly quirky to overly techie. Above, a bicyclist rides past Google's offices on Main Street in Venice. (Genaro Molina, Los Angeles Times / November 20, 2013)


Wednesday, November 27, 2013

U.S. Average on 30-Year Mortgage Rises to 4.29%

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Mortgages rates are creeping up again but they are still at historically low rates.

Mortgage Rates (In this Thursday, Aug. 22, 2013,  photo, an existing home is listed as sold,  in Gilbert, Ariz. Freddie Mac Thur
Nov 27, 12:11 PM EST

WASHINGTON (AP) -- Average U.S. mortgage rates rose modestly this week, a move that makes home-buying a bit less affordable. Still, rates remain near historically low levels.

Mortgage buyer Freddie Mac said Wednesday that the average rate on the 30-year loan increased to 4.29 percent from 4.22 percent last week. The average on the 15-year fixed ticked up to 3.3 percent from 3.27 percent.

Rates have risen nearly a full percentage point since May after the Federal Reserve signaled it might slow its bond purchases by the end of the year. Rates peaked at nearly 4.6 percent in August. But the Fed held off in September and most analysts expect it won't move until next year.

The increase in mortgage rates has contributed to a slowdown in home sales over the past two months.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan also was unchanged at 0.7 point.

The average rate on a one-year adjustable-rate mortgage edged down to 2.60 percent, from 2.61 percent last week. The fee was unchanged at 0.4 point.

The average rate on a five-year adjustable mortgage edged down to 2.94 percent this week, from 2.95 percent last week. The fee was unchanged at 0.5 point.

Friday, November 15, 2013

‘Runway’ at Playa Vista Takes off with Six New Restaurant and Store Lease Announcements

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Great news for our local area... the new "Runway" project is to be completed by the holiday season 2014 in Playa Vista in an area dubbed the "lower Westside" or  "Silicon Beach 2.0". Many new tenants which include Whole Foods, CVS Pharmacy, Veggie Grill, Chase and Wells Fargo Bank, Lyfe Kitchen, Panini Cafe, Hopdoddy Burger Bar and Sol Cocina. More than 50% of the space has already been leased. In addition, a Cinemark multiplex with nine screens with an open plaza as well as a cocktail lounge will complete the center. Looks like a nice upscale, unique shopping and dining experience which will fit our areas needs well. It will also serve the new tech companies which have also located there which include Facebook, YouTube, Konami, Electronic Arts, Microsoft, Fox Sports, Belkin and TMZ.

November 12, 2013 11:00 AM Eastern Standard TimePLAYA VISTA, Calif.--(BUSINESS WIRE)--With construction of Runway at Playa Vista well underway, developers Lincoln Property Company, Phoenix Property Company and Paragon Commercial Group announced today the addition of six new tenants to the mixed-use center that will soon offer unique shopping, dining, entertainment and living space in Playa Vista. Chase Bank and Wells Fargo Bank will open their doors at Runway, along with several new restaurants, including Lyfe Kitchen, Panini Café, Hopdoddy Burger Bar and Sol Cocina. In all, these deals comprise nearly 25,000 square feet of additional leased space at Runway.
“With more than 50% of the retail space at Runway currently leased, we are pleased to see that the original vision for Runway at Playa Vista is becoming a reality”
These new tenants will join several additional top brands that have already signed on to be a part of the action at Runway, including upscale grocer Whole Foods, CVS Pharmacy and Veggie Grill. Cinemark will also open a multiplex at Runway with nine screens and the company’s NextGen design concept with RealD 3D capability, self-serve concession stands and an open plaza with a cocktail lounge.

“With more than 50% of the retail space at Runway currently leased, we are pleased to see that the original vision for Runway at Playa Vista is becoming a reality,” said David Binswanger, Executive Vice President of Lincoln Property Company. “This group of newly announced retailers will ensure Runway is a real gathering spot in the community. We look forward to sharing more exciting news about additional tenants in the months ahead.”

Hopdoddy Burger Bar at Runway will offer a large variety of beers from local, small batch and artisan brewers as well as handcrafted burgers made from extremely fresh ingredients, including fresh-baked buns, fries cut in-house and humanely raised beef. The Playa Vista location will be the first California restaurant for Hopdoddy, which has four other locations across Texas and Arizona.

Also coming to Runway is Lyfe Kitchen, a new fast casual restaurant concept spreading across the country that features healthy food and a focus on sustainability, with all dishes containing less than 600 calories along with locally and sustainably sourced ingredients. SOL Cocina at Runway will specialize in fresh, seasonal dishes and authentic Mexican flavors, and feature a bar that honors the flavors of the Baja region with more than 60 artisan tequilas.

Panini Café, a popular Italian and Mediterranean concept with restaurants across Southern California, will offer an incredible variety of healthy, fresh foods for breakfast, lunch and dinner. The restaurant is known for using the finest quality ingredients, including the best imported olive oil and low fat cheeses, with all produce and breads delivered fresh daily.

“We are continuing to see a tremendous amount of interest from both nationally recognized and regional retailers, who are excited by the opportunity to be located in the heart of Playa Vista,” said Mark Harrigian, Principal of Paragon Commercial Group. “We anticipate our next wave of tenants at Runway will be focused in the fashion, speciality retail and fitness space.”

“These six new tenants will be a fantastic addition to Playa Vista and will help ensure that Runway becomes the true heart of our community, as it was originally envisioned,” said Randy Johnson, Executive Vice President at Brookfield Residential, the community developer of Playa Vista. “Residents, potential new homeowners and our neighbors are extremely enthusiastic about the expanding tenant line-up at Runway, and are looking forward to having such unique shopping, dining and entertainment options at their fingertips in just over a year.”

Construction is anticipated to be completed next year,with tenants opening their doors before the holiday shopping season in 2014. When complete, Runway at Playa Vista will include approximately 220,000 square feet of retail, 420 apartments and 35,000 square feet of office space spread across three separate buildings. The architectural design will play a large role in the vibrant, yet relaxing atmosphere at Runway. The retail complex, designed by Johnson Fain, will feature wide sidewalks for outdoor dining, soothing water features, communal seating areas, firepits and a direct connection Playa Vista’s Linear Park. A lantern-shaped tower with a steel mesh exterior and dramatic lighting will house a central lanai lounge that anchors the center and serves as Runway’s central meeting place.

In addition to Runway, the final development area in Playa Vista’s build-out will include 2,600 for-sale and apartment homes, 200 independent/assisted living homes, additional office space, a second resident activity club and new parks and open space.

Playa Vista, recently dubbed the “lower Westside” and “Silicon Beach 2.0,” and nearby areas are home to growing technology, internet and entertainment companies, including Facebook, YouTube, Konami, Electronic Arts, Microsoft, Fox Sports, Belkin and TMZ as well as leading ad agencies 72andSunny, Chiat/Day and Deutsch, socially conscious manufacturers like Tom’s Shoes, and legendary Hercules Studio — the film stage for Avatar and Iron Man 3.



Tuesday, November 5, 2013

Banks offering mortgages with only 5% down payments

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Market opportunity is allowing some banks to allow low 5% down payments with an allowable 2% of the sale price to be a gift, so borrower may really only need 3% down. Banks think they can offer a better deal than the FHA (Federal Housing Administration) loan which requires only 3.5% down.  Private lenders are offering to require PMA (private mortgage insurance) for only up to 20% equity in the home while FHA this year began requiring it for life of the loan. While the loans were far too risky for private lenders to take on before, rising home prices have made them less of a gamble. Plus, the banks think they can offer a better deal than FHA. This is just another option available for potential homeowners who cannot come up with the traditional 20% down.

Banks offering mortgages with only 5% down payments

  @CNNMoney November 5, 2013: 11:30 AM ET

mortgage payment calculator


Good news for homebuyers who don't have a lot of cash on hand: Banks are offering loans with down payments of just 5%.

After the housing bubble burst, buyers needed to come to the table with as much as 20% down or they had to turn to the Federal Housing Administration for a low down-payment loan.

But now banks like TD Bank, Bank of America (BAC, Fortune 500), and Wells Fargo (WFC, Fortune 500) are loosening the purse strings, offering loans with down payments that are as low as 5%.

TD Bank's "Right Step" mortgage, for example, allows borrowers to secure a loan with a 5% down payment. It also allows them to receive as much as 2% of the sale price as a gift from a relative or other third party, so they would really only need 3% down.

Why the change of heart? Market opportunity for one thing.

FHA dominated the market for low down payment loans during the housing bust. Taking on all those risky loans, however, depleted the agency's reserves and has forced it to increase costs.

Over the past couple of years, the FHA has been raising premiums. And this year, it started requiring borrowers to buy private mortgage insurance for the life of the loan -- an expensive proposition that has sent many prospective borrowers looking elsewhere.

While the loans were far too risky for private lenders to take on before, rising home prices have made them less of a gamble. Plus, the banks think they can offer a better deal than FHA.

"As the FHA selectively reduced market share by increasing premiums, we introduced a substitute for FHA loans," said Malcom Hollensteiner, the director of retail lending sales for TD Bank.

While the private lenders that are offering the 5%-down loans are also requiring borrowers to buy private mortgage insurance, they are only requiring them to do so until they build up 20% equity in the home.

The difference can really add up. Paying an insurance premium over the life of a $200,000, 30-year fixed-rate loan from FHA that carries an effective mortgage rate of 4.4% (5.75% when you tack on the insurance premium), can add up to nearly $60,000 over the life of the loan.

Of course, homeowners can always refinance to end their FHA insurance, but rates are so low that by the time an FHA borrower is able to refinance to a lower rate, it may not be worth it. To top of page


Friday, November 1, 2013

Home prices continue to climb

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The housing recovery continues to be strong. There are many factors making positive contributions like low mortgage rates, an improving economy, and a drop in foreclosures. The slow down we are now experiencing is a good thing to help reduce the chance of another housing bubble.

Friday, October 25, 2013

Mortgage Rates Fall to 4-Month Low

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Mortgage rates have improved over the past week with further declines predicted. The partial government shutdown has led to speculation that the government will continue its bond-buying stimulus program which should keep rates down. Rates are expected to continue to trend down in the coming week so it may be a good time to lock in a rate.

Mortgage Rates Fall to 4-Month Low

Mortgage Rates, Real Estate News  Oct 24, 2013 By: Neal J. Leitereg


Key fixed-mortgage rates fell to their lowest levels in four months this week, with further declines predicted in the short term. 


The federal government’s shutdown and ongoing concerns with the economy’s recovery, particularly the Federal Reserve’s decision to continue its bond-buying stimulus program, were cited as factors in the declines of the key mortgage rates.

The drop in rates comes after the federal government shutdown drew to a close last week. Averages on fixed-rate mortgage previously spiked by more than a percentage point since early May; however, both the 30-year and 15-year fixed-rate loans are now trending at their lowest levels since June 20.

The average rate on a 30-year fixed-rate mortgage saw a 0.15 percentage point decrease over the last week, according to the latest survey by mortgage buyer Freddie Mac. The rate is currently trending at 4.13 percent, down from last week’s 4.28 percent. A year ago, the average on a 30-year fixed mortgage was 3.41 percent.

The average rate on a 15-year fixed loan saw a decrease of 0.09 percentage point, dropping from 3.33 percent to 3.24 percent week over week. Compared to a year ago, the 15-year fixed has gained 0.52 percentage point. It previously peaked in August, hitting a high of 3.6 percent, and has remained above the 3.00 percent mark since early June.

“Mortgage rates slid this week as the partial government shutdown led to market speculation that the Federal Reserve will not alter its bond purchases this year,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Following a 0.02 percentage point increase a week ago, the average rate on a five-year adjustable-rate mortgage saw a slight drop. Previously at 3.07 percent, the five-year ARM settled at 3.00 percent this week. The one-year ARM also registered a decline, falling 0.03 percentage point from 2.63 percent to 2.60 percent this week.

Sales of existing homes saw a 2 percent decline in September from the previous month, according to October data released by the National Association of Realtors. However, sales of existing homes have increased 11 percent year-over-year. First-time homebuyers represented 28 percent of the real estate purchases while 39 percent of the homes sold in September were on the market for less than a month.

Looking ahead, homebuyers hoping to lock in a lower rate may want to hold off for a week or two. In the latest Mortgage Rate Trend Index, 77 percent of the analysts and loan experts polled believe that mortgage rates will continue to trend downward.

Mortgages have improved greatly over the last week. Bond-market participants now think any tapering by the [Federal Reserve] has been pushed back to well into 2014,” opined WCS Funding Group mortgage banker Michael Becker. “I think the weak employment report of this week only reinforced that sentiment. Because of this, I expect bonds to rally and mortgage rates to improve slightly in the coming week.”




Tuesday, October 22, 2013

3 Hurdles Home Sales are Facing Right Now

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There are several challenges to the housing recovery this month. The 16-day government shutdown's affects on housing market will be revealed in next month's housing report. I'm guessing it will have a negative impact as it has most likely slowed down the pace of closed sales. Less affordability also plays a major factor as mortgage rates are rising too.

3 Hurdles Home Sales are Facing Right Now

Daily Real Estate News | Tuesday, October 22, 2013 

Existing-home sales are hitting a snag because of several constraints that the housing market is grappling with, according to the National Association of REALTORS®' latest housing report. NAR officials note several challenges for the housing recovery:
  1. Less Affordability: “Affordability has fallen to a five-year low as home-price increases easily outpaced income growth,” says Lawrence Yun, NAR’s chief economist. “Expected rising mortgage interest rates will further lower affordability in upcoming months.” Interest rates for 30-year fixed-rate mortgages increased to 4.49 percent in September from 4.46 percent in August, according to Freddie Mac. Rates are at the highest level since July 2011. Just a year ago, 30-year rates averaged 3.47 percent.
  2. Government shutdown: The effects that the 16-day federal government shutdown had on the housing market will likely be revealed in next month’s housing report, NAR says. “Just one impact of the recent government shutdown — delays in tax transcripts needed for approval of mortgage loans — put a monkey wrench in the transaction process and could negatively impact sales closings in next month’s report,” says NAR 2013 President Gary Thomas. 
  3. Rising flood insurance premiums: Higher flood insurance rates went into effect Oct. 1 and could impact future sales in flood zones, NAR reports. The Biggert-Waters Act gradually removes and reduces federal subsidies for flood insurance on more than a million homes nationwide. It has caused premiums for flood insurance to skyrocket in some areas. “REALTORS® report that approximately 10 percent of transactions in September were located in flood zones, and that nearly one out of 10 of those transactions were delayed or canceled due to concerns over rising insurance rates," NAR's report says.
—By Melissa Dittmann Tracey



Thursday, October 17, 2013

How Will Retiring Boomers Affect The Real Estate Market?

My website:

Hmmm.... baby boomers with families were a driving force for the demand of large single family housing in suburbia between 1990 and 2010. Now with the aging population depending on when they decide to retire and downsize their homes this will affect demand for these homes. The housing preferences of 25 to 35 yr olds are radically different than their parents. Also, younger generation are having fewer kids than their parents as birth rates decrease. This may translate to less demand for large homes with increasing demand for condos and multi-family housing. The effects are something to think about.

How Will Retiring Boomers Affect The Real Estate Market?

Friday, October 11, 2013

Where Can the Middle Class Buy a Home?

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Guess unless you want to move to Ohio where homes are within reach for the middle-class we will have to accept the high prices of the west coast. The most unaffordable is not New York City as many may have thought but rather in California's  San Francisco, Los Angeles county and Orange County. Six of the seven least affordable places in the country all land in California. Affordability is better in the Midwest and South. No surprise there.

Where Can the Middle Class Buy a Home?

Real estate news and analysis from The Wall Street Journal 

 Conor Dougherty October 10, 2013, 12:01 AM


San Francisco is the least affordable place to be a middle-class home buyer, Trulia says.

If you’re in the middle class and want to buy a home here’s a piece of advice: Move to Ohio (if you’re not already there).

Some 86% of homes in the Akron, Ohio area are within reach of middle-class buyers in the area, the highest share in the nation, according to a report from Trulia, the real estate listings site. The next two cities on the list, with 85% of homes affordable to middle class, are Dayton and Toledo, respectively.

For those of you in the coastal elite who are reading this post for the perverse pleasure of finding out just how unaffordable your city is, you might be surprised to hear that New York isn’t No. 1. San Francisco is the least affordable place to be a middle-class buyer, with only 14% of homes within reach of those making the median San Francisco household income of $78,840, according to Trulia.*

However, we were slightly surprised by the next two most unaffordable places, Orange County and Los Angeles, respectively. New York was the fourth least affordable place to be middle class. After that were San Diego and San Jose and Ventura County.

For those keeping score, that means six of the seven least affordable places in the country are in California.

That said, for all the doom and gloom that’s been piled on the middle class of late, they are still able to buy a home in the lion’s share of U.S. metro areas. Among the 100 largest metro areas, in 87 at least half of the homes were within reach of those making the area’s median household income, according to Trulia. Most of the most affordable places were in the Midwest and South.




Tuesday, October 8, 2013

Realtors group expects more homes to go on market, moderating prices

My website:

The volume of California homes are predicted to increase next year as inventory should increase as with the dramatic price gains this year it has helped bring back home equity for homeowners. That means many homeowners no longer owe more on their mortgages than their home is worth. Therefore, more sellers will be able to put their homes on the market. This should further help to cool down prices. Overall, home prices will still rise even with higher mortgage rates in our future. Since 2012, median home prices have risen in the past year by 28%. Next year the median is forecast to rise another 6% as there is such a strong demand for homeownership.

Realtors group expects more homes to go on market, moderating prices 

Home inventory 

The California Assn. of Realtors predicts that more homes will go on sale next year as more homeowners find they are no longer "underwater" on their mortgages. (Reed Saxon / Associated Press)

Thursday, October 3, 2013

Tighter mortgage rules will soon squeeze these groups even more

My website:

New rules take effect  on January, 10, 2014 for mortgage loans and refinancing which will limit people to overall household borrowing at no more than 43 percent of their income. Also, even tighter rules on documentation will be required. Mortgages are already eight times harder to get than years prior to the housing collapse. It may be a good idea to get that loan for a home now before the end of the year. The hardest hit most likely to young adults and baby boomers because of their low income even if they have high credit scores. Meanwhile, for those who can afford it half of all housing sales are made with cash compared with only 20 percent before the collapse.

Tighter mortgage rules will soon squeeze these groups even more

Five years after the housing collapse, the new Consumer Financial Protection Bureau is closing the barn door on the loose lending that caused the crisis. But as homebuyers struggle to get financing for new homes, some critics fear the door could be permanently nailed shut for many people seeking affordable housing.

The new lending rules will limit people from taking out a mortgage or refinancing an existing one that puts their overall household borrowing at more than 43 percent of their income. That new debt cap also includes a wide swath of common forms of debt that count toward the total, including student loans, most fees and points related a home purchase, and property taxes. It also tightens rules on documentation, and lenders who improvise to give customers easier terms will be open to consumer lawsuits if the loans go bad.

"It will tighten things further. The largest constraint is the 43 percent threshold," says Sam Khater, senior economist at housing data provider CoreLogic. "It will hit more refinances than purchases because a lot of them use a high debt-to-income ratio. It will also hurt home borrowers in distressed environments."

Mortgage lenders say the rules could make loans especially elusive for some classes of borrowers, even those with strong credit scores. Baby boomers entering retirement and young adults will feel a disproportionate impact because of their lower income levels. (Related on Why Even Rich People Are Having Trouble Getting Mortgages.)

Based on interviews with mortgage lenders, real estate trade groups and market research firms, these groups are most likely to find borrowing more difficult when the rules take effect Jan. 10, 2014:

• First-time homebuyers, especially those who are carrying college loans that count toward the debt limit.

• Those who lost jobs in the recession or have had career disruptions in the past five years. Verification of job history and employment standing are key requirements at a time when unemployment has been historically high.

• People who live in either high-priced housing markets or places hit hard by the housing collapse.

The most populous U.S. state is among those most at risk: California, hit hard by foreclosures, still has some of the costliest U.S. real estate. Jumbo loan caps under federal housing guidelines have been reduced from over $700,000 to just above $400,000. In California, the average median home price was $352,000, up nearly 30 percent in a year, according the San Diego housing research firm DataQuick.

• Small businesses or independent contractors whose incomes fluctuate, or people who have chosen to shift into lower-paying jobs. This is one of the fastest-growing workplace populations. Recently divorced or widowed people could also face added scrutiny even if they are qualified to borrow.

• Retirees with adequate savings to finance home purchases or refinance. Lack of current income makes borrowing more difficult.

• Homeowners who wish to refinance but have lost some or all of their equity in the real estate bust.

• Those who live in regions hit by Hurricane Sandy, which have experienced sharp increases in flood insurance. Second-home and rental-property buyers are already having trouble getting financing in many areas. Newly designated Quality Mortgages will encourage lenders to seek more kinds of mortgage and homeowner coverage.

All told, private research firms say that from 10 percent to 50 percent of borrowers who now qualify will lose out. The CFPB, which authored the new rules, concedes that more borrowers will be rejected. But the consumer agency says the people who fail to reach Qualified Mortgage, or "QM" status, tend to be either "very marginally qualified" low-income borrowers or wealthier ones with private lending alternatives, and the exclusions amount to less than 10 percent of those currently eligible.

"Some of the stringent guidelines are going to mean that some very qualified borrowers will be turned down. I do fault [the CFPB] for that," says Jordan Roth, senior branch manager of GFI Mortgage Bankers, a New York-area housing lending firm. "The landscape is being reshaped. But you will still search around and find a lender if your loan makes sense."

Critics point out that the new lending rules are being introduced into a home finance market that is barely functioning as it is. Loan originations have dropped to an annual rate of about $500 billion a year from $1.5 trillion before the housing collapse, according to industry data. (Related on Should You Worry About More Bad Housing Numbers?)

Mortgages are already eight times as difficult to get now than they were in the years prior to the housing collapse, the Mortgage Bankers Association says. The MBA estimates that loan originations will drop 10 percent this year, even before the new rules take effect in 2014.

How, then, is the housing market recovering? Half of all housing sales are made with cash, according to a new Goldman Sachs report, compared with just 20 percent before the housing collapse. Those are not necessarily wealthy people who can afford to buy homes without financing help. Some cash deals result from foreclosure eliminations.

Federal agencies now hold the tab for 90 percent of outstanding home loans, in large part because the government's role expanded under the federal bank bailout. But the government-sponsored entities like Fannie Mae and Freddie Mac are gradually reducing loan purchases, hoping the private sector eventually picks up the slack. The new rules also add restrictions such as fee caps and paperwork for lenders, and some may be discouraged from re-entering a market with new costs and legal risks.

The CFPB says it will monitor the housing market to see if credit has been restricted too much by the new rules. Both congressional critics and Federal Reserve members say they will do the same, since the Washington policymakers are worried about putting more stress on a fragile housing market so critical to the overall economy.

"It could turn lending into a cut-and-dried question about income," says Charles Dawson, a housing finance policy specialist for the National Association of Realtors. "But there are a lot of other things underwriters can consider in what makes a good loan."

The CFPB acknowledges that "there many instances in which consumers can afford a debt-to-income loan above 43 percent." Moreover, it says banks "initially" may be reluctant to lend because of uncertainty over how to implement the rules. But it argues that it is carrying out its Dodd-Frank legal mandate by providing "bright lines for creditors who wish to make qualified loans."

The new credit restrictions aimed at cleaning up debt problems come at a time when consumers are doing a better job than ever in repaying their debt, according to S&P/Experian. Its monthly consumer credit measure shows overall debt defaults at or near all-time lows in a "healthy" credit environment. (Related on 50 Smart Money Moves to Make Now.)

In a vastly changed landscape, banks are skimpy and consumers frugal. That leads some critics to ask if the consumer agency is "still fighting the last war." They fear the "bright lines" that the consumer agency is using to guide risk-averse lenders may be too harsh for the consumers the agency is supposed to help. The result could be more expensive, harder-to-arrange loans for consumers, or outright rejections for qualified borrowers. With interest rates rising, the uncertainty is compounded for borrowers and lenders. In such an environment, default could leap, and that could threaten a repeat of the last crisis.

"The pendulum has swung from way too crazy to too conservative now," says CoreLogic's Khater. "That's human nature. The rules are aimed at protecting consumers from hurting themselves. Now that there is a hard-and-fast rule being used in place of traditional underwriting standards, ironically, the market will not be deciding [who is creditworthy]. No one knows what the impact will be."

Wednesday, October 2, 2013

Four Ways Government Shutdown Impacts New Mortgages

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Record low falling mortgage rates but due to government shutdown hard to access those loans as limited services to IRS and Social Security Services and Federal Housing Authority to obtain records required for processing loans.

Four Ways Government Shutdown Impacts New Mortgages

Real Estate News Oct 2, 2013  By: Brian O'Connell 

Mortgage rates are sliding as October gets rolling, but will rates – and the entire mortgage market – be sidelined by the U.S. federal government shutdown?

For the record, 30-year fixed mortgage rates fell to 4.32% for the week of September 26, 2013, down from 4.50% on September 19, according to data from Freddie Mac.

Under normal conditions, home buyers would be leaping off the fence to grab lower mortgage rates, but with the shutdown, there’s enough uncertainty in the air to keep mortgage consumers on the sideline until Uncle Sam is open for business again.

Some of that uncertainty over the mortgage market and the government stoppage is linked to facts on the ground, and some is closer to fiction.

“Watching the markets, mortgage rates did waver a little but we didn’t see massive movement some expected,” says David Hall, President of Shore Mortgage, a Troy, Mich.-based mortgage services provider. “This shutdown does come at an especially bad time as new home sales and home construction are building back up. More uncertainty is not what we need.”

With that uncertainty as a backdrop, let’s clear the air and point to four ways the shutdown really does impact the mortgage market:

1) Lower rates may be due to the shutdown – By and large, mortgage rates move with the direction of the economy. If banks and mortgage lenders think the economy is slowing – as it likely will under a prolonged shutdown – they will lower rates to attract more business.

In fact, rates remain fairly unscathed at this point, although there is an upward bias,” says Bob Van Gilder, a mortgage broker at Finance One Mortgage. “There may be some bumps in the road as the I.R.S. and the Social Security Administration have limited services, which will affect the mortgage process. But if you are being offered a rate that is attractive to you take it. You can’t lose by being able to sleep at night.”

2) FHA loans will be affected – If you’re a consumer waiting on a Federal Housing Authority (FHA) loan, you could be out of luck for now. In fact, approved mortgages will certainly be slowed while the FHA is shut down, even as it provides other services to the public.
The reason is this. With any FHA loan, mortgage services firms have to order a FHA case number, prior to an appraisal on the home. With the FHA’s lights out, those case numbers can’t be processed. Expect that process to take longer with fewer hands on deck.

3) I.R.S. documents out of reach – Another consequence of the U.S. government shutdown is the inability of mortgage firms to verify a borrower’s income via his or her U.S. tax returns. By law, any mortgage loan approval is subject to the review by the mortgage lender of at least one year’s worth of federal tax returns, and must be verified by the I.R.S. through a 4506 Transcript. With I.R.S. staffers at home, that process is stalled as tax agency workers would be unable to verify tax return documents.
Some industry experts say the damage here may be minimal, depending on the size of the lender.

“One of the biggest impacts to the mortgage market is that the ability to obtain a 4506 and Social Security Number Verification has been halted,” says Jason Auerbach, an LPO manager at New York city-based First Choice Bank/Lending. “The 4506 IRS Transcript is verification from the IRS that the income documentation, specifically tax returns, provided by a client match with what they filed.” Auerbach adds that the 4506 mandate does not impact lenders who are selling loans directly to Fannie Mae so many of the large lenders will see little disruption. However, smaller lenders who sell adjustable rate mortgages to investors may have to halt that lending,” he says.

4) A weaker U.S. housing market – The U.S. Housing and Urban Development, which runs the Federal Housing Authority, only has 337 out of 8,709 managers and staffers on the job this week. The longer that HUD is blacked out, the more potential problems for the U.S. housing market.

“If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market. We could also see a decline in home sales during an extended shutdown period, reversing the trend toward a strengthening market that we’ve been experiencing,” HUD said in a recent report, entitled HUD 2013 Contingency Plan for Possible Lapse in Appropriations released last week (find it at , under “Featured News.”

HUD does report that essential services, like HUD homeless assistance grants, housing services for veterans and housing for disabled people and AIDs patients will continue running.

The birds-eye view?

The mortgage market should largely remain up and running during the government shutdown, and homebuyers may even get a bonus, if mortgage rates keep falling while government agencies are shuttered.

By no means it is a perfect scenario, but for homebuyer, sellers, and real estate professionals, it’s certainly a survivable one.



Wednesday, September 25, 2013

LA Home Prices Still Going Up, But Not Quite So Crazily

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Los Angeles real estate market still hot based on July's Case-Shiller Index with prices up 20.79 percent compared to a year ago and up a little 2.1 percent over June. Prices seem to be stabilizing. While home prices still up rate of increase has slowed.

LA Home Prices Still Going Up, But Not Quite So Crazily

Tuesday, September 24, 2013, by Eve Bachrach


Standard & Poor's is out with the July edition of the Case-Shiller index, which tracks home prices in 20 cities across the country. Today's report follows the trend we saw over the summer: in Los Angeles, prices are way up compared to a year ago (20.79 percent) and up a little (2.1 percent) over June--pretty much mirroring competitor DataQuick's report. But for the third straight month, the gain was smaller than the previous month's. And, as the chart above shows, we're now about 18 months into vertiginous price increases, but still well below the peak of seven years ago. Nationally, all 20 cities saw home prices go up in July compared to June, but 15 saw the rate of increase slow down, just like LA.

· State O' The Market Archives [Curbed LA]


Friday, September 20, 2013

Lower Westside' booms with new homes, creative firms, entertainment

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Beach areas on the lower westside continue growing due to influx of positive grow in both housing and jobs. Good news for the area. Many new venues coming soon to accommodate the growth.

The area north of LAX and southeast of Marina del Rey that real estate brokers have dubbed 'the lower Westside' is drawing an influx of new housing, young-skewing firms and entertainment outlets.

'Lower Westside' is thriving 

The Promenade at Howard Hughes Center, a prominent mall next to the 405 Freeway, will replace stores with restaurants, arcades and other venues that favor recreation over commerce, its owners said. The mall already has a luxury theater complex. (Ricardo DeAratanha / Los Angeles Times / September 5, 2013)



Monday, September 16, 2013

With new technology center, Microsoft expands its turf on 'Silicon Beach'


'Silicon Beach' is southern California's technology zone which currently includes YouTube, Google, Netflix and Facebook . Microsoft recently just opened up offices in Playa Vista. They will also now be closer to Xbox their entertainment venue in Santa Monica. With all these technology oriented companies it will boost the local economy and further increase the demand for housing in these areas.

With new technology center,  Microsoft expands its turf on 'Silicon Beach'
Brian Watt |

Microsoft opened new offices in Playa Vista Thursday, adding to its presence in the technology zone known as Silicon Beach.

Elected officials, including Los Angeles Mayor Eric Garcetti and Congresswoman Maxine Waters were on hand to cut the ribbon on the new Microsoft Technology Center.  The center will be the base for about 130 Microsoft employees and replace offices in downtown Los Angeles.

“If you think through where our offices have resided, it’s always been where growth is,” said Mark Kornegay, the new General Manager of Microsoft, Southern California.  He said the company opened offices in downtown Los Angeles during a period of revitalization there.  “Now, Silicon Beach is where a number of companies have invested, a number of our customers are, so this is the area where there’s a tremendous amount of growth and Microsoft continues to follow that growth.”
Scott Case , the Director of the new technology center said the company needs to be closer to its customers in the entertainment industry. The list of those customers will look familiar to anyone who follows Hollywood.

“SONY Entertainment, Warner Brothers, Disney, these are all entertainment companies and large organizations, and we want to enable their thousands of employees,”said Case.

The Playa Vista offices are also closer to Microsoft’s own entertainment venture: the Xbox Entertainment Studios,  which opened earlier this year further north on the shores of ‘Silicon Beach’ in Santa Monica.  There, the company is working on interactive TV and other original content for the Xbox console.

The new offices feature several spaces where business customers can experience Microsoft's software and gadgets and make plans for how to use them.  Meeting rooms are named for Los Angeles County beaches:  Hermosa, Zuma, Venice.  The offices and cubicles are all unassigned and available to employees on a first-come, first-served basis. 

YouTube, Google, Netflix and Facebook are among the well-known tech names that have set up shop within Silicon Beach, along with hundreds of lesser-known start-ups. Amazon is also reportedly working on a deal to move its studios to Santa Monica.

“Silicon Beach is absolutely the real deal,” L.A. Mayor Eric Garcetti said at the ribbon cutting. “More and more in technology, people are looking at the content of technology, and we know content in Los Angeles.”  

Garcetti said he’s focused on helping video-game maker Riot Games  move down the beach from Santa Monica to Playa Vista.  That would bring at least 1,000 more employees. Garcetti said he wants to “create the infrastructure for technology to succeed in L.A.," so he’s also pushing to get computer coding taught in public school classrooms.