Housing Big Part of Nation's Economic Wellness
MSNBC.com featured an article yesterday about Americans being spooked about the economy. The housing market, as usual, is a cornerstone of the nation's financial health. Lots of economists are watching the housing market closely this spring to see how foreclosures and regular listings are priced as they come on the market:
A lot depends on how well the housing market holds up for the coming spring selling season, usually the busiest months for home sales. A flood of new listings — on top of foreclosed homes now being prices aggressively for quick sale — could further depress the market.
Read the article here.
Labels: economy, home sales
Is Your (Financial) Broker a Crook?
I saw this link at the
Consumerist and thought it very helpful.
So I'm sharing it here.
Labels: consumer
Yeah Baby!
According to Sunday's Murfreesboro Post,
home sales are on the increase... in Murfreesboro at least. I've been seeing it as well on the west side of Rutherford County - Smyrna and LaVergne. After several very quiet months in the real estate industry, the phone has started to ring again. People are beginning to list their homes and other folks are looking to buy.
With spring, hope also blossoms for a great real estate year!
Labels: home sales
Williamson, Rutherford Counties Growth Astounding
Williamson and Rutherford counties are remarkable places to live. With superb dining, schools, and shopping, affordable housing, easy access to Nashville, and no state income tax, people are flocking to these areas.
Both counties are among the top in the nation for growth.
Read the article from today's Tennessean!Labels: growth
Up with People Work in Middle Tennessee
I didn't post much last week because I was busy with some volunteer work. My family agreed to be a host family for two young ladies doing community service work around the world.
Here's an article in the Smyrna AM newspaper about what we did.
Labels: Up with People
FHA Loans May Get a Boost
I received this today from Billy Carver, a lender with Pinnacle Financial Partners in Smyrna, TN:
Dems Want To Help Borrowers By Boosting FHA Loan ProgramMonday March 19, 7:00 pm ET
By Jed Graham
With subprime mortgage defaults and foreclosures on the rise, Congress is ready to get tough on "predatory" lenders. But some industry experts warn that new laws to curb aggressive lending practices could worsen the subprime credit crunch and raise the risk of foreclosures. So where will borrowers with shaky credit turn? Possibly to the federal government.
At the same time that lawmakers are looking to restrain subprime lending, they also want to loosen restrictions at the Federal Housing Administration, which backs loans for borrowers with modest incomes.
"We need to expand the role of the FHA to issue more mortgages at better rates," Sen. Hillary Clinton, D-NY, said last week.
The Bush administration also supports steps to revitalize the New Deal-era agency. It backed a bill last year that would have eliminated the minimum 3% down payment requirement for FHA loans. The bill easily passed the House, but stalled in the Senate.
Easing restrictions at the FHA might help future borrowers, but wouldn't do much for those in danger of defaulting. But last week the National Community Reinvestment Coalition urged Congress to rewrite FHA rules to let the agency refinance subprime loans in default.
"As this crisis worsens, mortgage tsunamis will ravage working-class neighborhoods across this country," said John Taylor, NCRC president.
Taylor's ideas for FHA intervention and "a national rescue fund" may be well received on Capitol Hill. Senate Banking Committee Chairman Christopher Dodd, D-Conn. said Monday he asked executives at five big subprime lenders to testify at a Thursday hearing, along with financial regulators.
Dodd said last week that he "will use all the powers and tools at my disposal to keep families victimized by predatory loans in their homes."
Bloomberg News reported last week that Dodd said a few billion dollars in aid "may be a lot less costly" than $164 billion in lost wealth due to foreclosures.
The $164 billion figure came from a report by the Center for Responsible Lending, which projected the cost of foreclosures on subprime loans made from 1998 to 2006.
While subprime lenders are going bankrupt or tightening standards, and regulators have issued more restrictive guidance, Congress also appears likely to act.
"We're going to pass a bill that will substantially diminish the likelihood of people being given loans that they should not be given," Rep. Barney Frank, D-Mass., who chairs the House Financial Services Committee, said last week.
Legislation proposed by Rep. Carolyn Maloney, D-N.Y., would require lenders to consider the ability of borrowers to pay back mortgages after a "teaser" introductory rate expires.
Federal regulators proposed guidelines earlier this month along the same lines, instructing lenders to assess how borrowers could cope with payments once higher rates kick in.
Clinton said she would also "propose a stop to prepayment penalties designed to trap borrowers."
Lawmakers seem to be following "the typical pattern" in targeting aggressive lending practices, said Alex Pollock, a resident fellow at the American Enterprise Institute and former CEO of the Federal Home Loan Bank of Chicago.
Once the mistakes have become clear, then you clamp down on them when the market is already going down and push it further down," Pollock said.
But at the same time, Clinton wants to raise the $363,000 limit on FHA-backed mortgages to help buyers in more expensive markets.
The FHA doesn't lend directly, but it provides a guarantee that encourages lenders to give decent rates to borrowers they might otherwise shun. Back in the 1990s, FHA-backed loans accounted for about 12% of the market.
But as subprime lenders have pushed the envelope, the FHA's share has fallen to 3%. While the new foreclosure rate on subprime loans hit 2% in the fourth quarter, the rate was just 0.93% for FHA loans. But the delinquency rate was about the same: 13.46% for FHA loans vs. 13.33% for subprime. The data suggest the FHA provides "more forbearance or mitigation" than subprime lenders, Pollock said.
Delinquencies on prime mortgages were just 2.57% in the fourth quarter, with new foreclosures at 0.24%. Would the government take on undue risk by allowing the FHA to refinance loans in default? Not necessarily, as long as the original lender had to take a substantial haircut, Pollock said.
Ronald Utt, senior research fellow at the Heritage Foundation, said an expanded FHA role is unwarranted. "One could only marvel," he said, when Congress "sees a disaster sweeping through financial markets and tries to figure out how it can be a part of it."
Lowering the minimal down-payment requirements would attract borrowers who are "living on the edge," thereby putting the program at risk, Utt said. As Congress tackles the subprime sector, it's also weighing tougher regulations for Fannie Mae and Freddie Mac. The government-supported firms inject liquidity by investing in mortgages and bundling them into securities.
The Federal Reserve and the Bush administration have argued that Freddie and Fannie are so large that they present a systemic risk to the broader economy. Both firms have said they will facilitate loans that would help rescue borrowers faced with sharply rising payments they can't afford. They've also warned that Congress could exacerbate weakness in the housing market if it puts restrictions on how the firms deploy capital.
Labels: Federal government, Loans
Stricter Subdivision Guidelines May be Coming
The Rutherford County Planning Commission is considering stricter guidelines for new subdivisions, including wider roads. The Daily News Journal reported today that issues being considered include
"overcrowding of schools, community amenities, sidewalks, trees, street lights and common areas."
Let us take these concerns and apply them to all areas, communities, and cities where people live in Rutherford County.
Read the whole article here.
Labels: subdivisions
Stocks Plummet
I'm hoping my bigger picture economic analysis is not coming true, but after seeing the stock market plummet today I worry. On the plus side, we live in a nation that has bounced back so many times from bumps in the stock market and mini-recessions. I hope for the best.
Here's what
Comcast is reporting tonight on the effects of the subprime slump.
Labels: economy
More About Late Mortgage Payments
After yesterday's announcement by Countrywide home loans, more information is coming about how late payments have hit a historical high. According to
MSNBC.com news:
The Mortgage Bankers Association, in its quarterly snapshot of the mortgage market released Tuesday, reported that the percentage of payments that were 30 or more days past due for all loans tracked jumped to 4.95 percent in the October-to-December quarter.That marked a sharp rise from the third-quarter’s delinquency rate of 4.67 percent and was the worst showing since the spring of 2003, when the late-payment rate climbed to 4.97 percent.
It appears that much of the cause is due to subprime loans - or that second loan needed to make it to a 100% loan (typically an 80-20 loan split between two lenders). One problem experienced by a friend of mine is that that second loan was an adjustable rate mortgage. After her two-year guarantee was up at a lower rate, the second mortgage jumped by over $200 p/month. When you're on a bare-bones (or bare-pantry in this case) budget already, that $200 becomes nearly impossible to pay. So people pay that first, more expensive mortgage and let the second slide for several weeks (until next payday) or month(s).
In my bigger economic picture (and let me stress that I'm NOT an economist), I worry that we are heading into a recession. Some more articles:
Subprime lendings next act
Weak housing market weighs on job growth
Will subprime mess ripple through economy?
Treasury: Subprime issues manageable
Freddie Mac refuses some subprime loans
More homes, fewer buyers
Subprime apocalypse? or not
New foreclosures at record high
So you see the lending industry is reeling, at least for subprime lenders.
Labels: lenders, mortgages
Zero Down Ends
Countrywide has ended its no-money down option for home loans, according to CNN.com. This policy change results from an increase in delinquent loan payments.
Read the article here. This means that buyers will need to start saving money again to pay for a down payment on home loans through Countrywide. Other lenders may still be offering 100% loans, but they may not last long.
In other news, the FBI is warning lenders to look out - they're watching them for mortgage fraud. If found guilty of mortgage fraud, lenders can face severe fine and prison. Remember the good ol' advice: If it seems too good to be true, it probably is. If it makes you uneasy, there's probably a reason.
In other news, a mortgage lender I know said his company is now offering $5,000 towards closing costs between March 15th and April 15th (or when the money runs out). If you're interested in learning more, contact me at (615) 491-2161 or ktyson(at)realtracs(dot)com.
Labels: Loans
Up with People Coming!
This bears repeating on all the blogs I contribute to or author:
The world-famous "Up with People" troupe is coming to LaVergne, Smyrna & Nashville! Following a week of volunteer work (they are helping to build a playground at Wherry Housing on Weakly Road in Smyrna), they will be performing two concerts at Opryland's Acuff Theatre. I have tickets available for the 3:00 p.m. and the 7:30 p.m. concerts. Tickets are $50 VIP and $20 general admission.
All proceeds will go to Vanderbilt Children's Hospital. My family will be hosting at least one "Up with People" student. I'm a little bit nervous, but I think it will be a fantastic opportunity for my daughters to meet with people from other cultures and countries. Here's what the "official" word from the
Up with People website says:
"Through travel and cultural immersion, Up with People has provided students with a renowned international education and an unmatched passageway to see the world. And we've been doing it for four decades.
"As the world has changed, so too has the Up with People program. Once primarily impacting communities through its musical productions, the current Up with People program addresses the very real need for young adults and leaders who have global perspectives, intercultural understanding, knowledge of worldwide social issues, leadership skills and a dedication to community service. Today, through its distinct 22-week program, Up with People students experience personal growth, leadership training, service learning and performing arts as they travel through three continents. For many students, it's a global education that lasts a lifetime; for others, it's a life-transforming experience."
So if you're looking for something fun to do on St. Patrick's Day, give me at shout at 491-2161 to buy tickets for Up with People! It's for a great cause!
Labels: Up with People
FANTASTIC New Web Site
Move over Martha Stewart... there's a new gal in town. My good, dear friend
Bad Bad Ivy is destined to be one of the web's most-read, best-loved online do-it-yourself, homemaker goddess personalities with the launch of her brand spanking new web site:
Home Ec 101.
This site is teaches you "What you wish your mama taught you" and explores subjects including getting those tricky grease stains out of clothing, cleaning the ultra-gunk from you bathtub, what to do with that leftover Kroger rotisserie chicken, and how to make dinner from a bare pantry. Home Ec 101 also features a forum allowing readers to interact, share ideas, ask questions, and converse about those "pesky" children.
Dont' walk, RUN to this snarky new site! Bookmark it! You'll thank me later.
HOME-EC 101.
Labels: home care
Technorati Testing
Installing some software here. Testing 1,2,3.
Technorati Profile
Subprime Loans + Naypayers = Foreclosure
I know this post will go all over the place, but bear with me. Let's start with some numbers. I searched for homes listed by Progressive Real Estate, the company that handles the HUD foreclosures. In our region, there are currently:
46 homes listed on the market in foreclosure.
94 homes pending on the market in foreclosure.
725 homes closed last year as the result of foreclosure.
701 homes closed in 2005 as the result of foreclosure.
That means 1,426 people and families lost their homes in the last two years in this area - and these are only the homes that are insured by the Federal Housing and Urban Development (HUD) Commission - not other bank foreclosures. There are probably 1,426 different reasons these folks lost their places to live: illness and subsequent medical bills, lost jobs, relocation and home didn't sell so couldn't afford two mortgages, death, bad money manager, etc. But key is the inability to pay and I'd venture to guess that many can't afford to pay because they are paying a much higher interest rate than people with good credit scores. They pay higher interest because that are at-risk borrowers.
When you become a licensed real estate agent in Tennessee, you must follow very strict regulations by the Tennessee Real Estate Commission, governed by state law. Agents have to keep the clients' interests above their own (by law). This means if it's better for the buyer to NOT BUY, then that's what we need to suggest and therefore not push the buyer into a situation where foreclosure may be down the road.
Therein lies a key difference between real estate agents and lenders. We are regulated... STRICTLY regulated. Lenders do have some oversight, but their regulation isn't written as law with constant oversight. Instead, they get the following (
via MSNBC article on 3/3/07):
Federal bank regulators, worried about a surge in defaults on high-risk home mortgages, on Friday called on lenders to exercise caution in making subprime loans and strictly evaluate borrowers’ ability to repay them.
The proposed guidance issued by the Federal Reserve and the other four federal agencies that regulate banks, thrifts and credit unions, comes in an increasingly troubled market for subprime mortgage loans. Home-mortgage delinquencies and foreclosures are spiking, especially for people who took out subprime mortgages — higher-interest loans for those with blemished credit records or low incomes who are considered higher risk — during the sizzling housing boom that waned in the second half of 2005.
Now I think these guidelines are absolutely necessary and I'm very happy to see them. My suggestion, though, is for bigger government (radical, I know).
I think the focus on consumer protection also needs to include the money people, not just the Realtors who show homes and write contracts, but also on the people who have the ability to break a family financially by shoving through a loan that they can't afford to pay.
I do want everyone to be able to purchase a home, but not at the risk of ruining their credit in the future. I know before I bought my first home, I grieved every time I drove by any house - small, medium or large. I so desperately wanted my own home. But my husband and I waited until we could afford it and have gradually moved up so that we have plenty of room for us, our daughters, his Mom, two cats, and two dogs. And our credit is still good because we waited six years until we could afford it.
At the risk of being labeled a crazy Realtor,
I urge first-time home buyers to wait until they can afford it, wait until they have great credit. (And here's where my own personal commercial starts) (sorry!) Be strong. Wait. And when you're ready, call! And I will introduce you to lenders who are honest, trustworthy, and who also look out for your best interests.
Labels: lenders
