Sarasota Real Estate Market News

Record low mortgage rates gone for good?

WASHINGTON – Feb. 1, 2013 – Mortgage interest rates have ticked up for three of the past four weeks, and while big increases are unlikely, further drops are, too.

The average for a 30-year, fixed-rate mortgage hit 3.53 percent this week, the first time rates pushed above 3.5 percent in more than three months, mortgage giant Freddie Mac reported Thursday.

“I do think that perhaps the all-time low is behind us,” says Freddie’s chief economist, Frank Nothaft.

That was set in November when 3.31 percent was the average for a 30-year fixed-rate loan, according to Freddie Mac’s weekly mortgage rate surveys.

For the rest of 2013, Nothaft expects rates to gradually rise, ending the year at about 3.75 percent and then moving above 4 percent next year. “There’s no point to dilly-dally” to wait for lower rates if someone is considering refinancing their home, Nothaft says.

Rising rates will affect homeowners looking to refinance more than home shoppers, says Jed Kolko, chief economist with real estate website Trulia. That’s because refinancing is mainly an interest-rate-driven decision, while home purchases have more to do with jobs and lifestyle changes, he said. Even though they’re up, rates are still near historic lows.

Along with an improving economy, rates have edged up, given less demand for “safe haven investments” such as bonds since Congress partly averted the so-called fiscal cliff of tax increases and spending cuts on Jan. 1, says Greg McBride, senior financial analyst for Bankrate.com.

McBride said mortgage interest rates may dip below current levels on occasion. He, too, expects them to hover between 3.5 percent and 4 percent for most of this year. That assumes no big shocks to the U.S. economy.

Except for a few weeks, mortgage rates have been below 4 percent for the past 14 months, Freddie Mac data show. The low rates have helped the housing market, which is showing signs of strengthening. Home prices were up 5.5 percent in November year-over-year, Standard & Poor’s/Case-Shiller data showed this week. New and existing home sales are also up. That is helping the overall economy.

“If the economy is getting better, slightly higher interest rates are a natural occurrence,” says Keith Gumbinger, vice president of mortgage tracker HSH.com. “But there’s no reason to believe that rates are headed upward in a straight line.”

© Copyright 2013 USA TODAY, a division of Gannett Co. Inc., Julie Schmit

February 9, 2013 Posted by | News related to Financing | Leave a comment

What’s the best season for home buying?

WASHINGTON – Feb. 1, 2013 – After the holidays, buyers tend to get more aggressive with their house hunting. Search activity usually peaks around March or April in most states, according to a new study of home searches from 2007 to 2012 conducted by Trulia.

In September, searches slow down. By December, buyer searches ebb to their lowest point of the year.

“Home-search activity swings with the seasons in every state,” says Jed Kolko, chief economist of Trulia. “Buyers and sellers can use these ups and downs to their advantage. Sellers looking for the most buyers should list when real estate search traffic peaks. Buyers, however, should think about searching off-season, when there is less competition from other searchers.”

Here are the months when online real estate searches peak in every U.S. state:

January: Hawaii
February: Florida
March: Arizona, California, Delaware, Georgia, Idaho, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Pennsylvania, Virginia, Washington
April: Colorado, Connecticut, District of Columbia, Illinois, Indiana, Kansas, Minnesota, New York, North Dakota, South Dakota, Utah, West Virginia, Wisconsin
May: Real estate activity does not peak in any state
June: Mississippi
July: Alabama, Alaska, Arkansas, Louisiana, Maine, New Hampshire, New Jersey, New Mexico, North Carolina, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Wyoming
August: Montana and Oregon
September-December: Real estate activity does not peak in any state

Source: “Trulia Reveals Best Home-Searching Season,” HousingWire (Jan. 29, 2013)

February 9, 2013 Posted by | News related to Buyers, News related to Sellers, News related to the Market | Leave a comment

FHA to tighten some loan rules

WASHINGTON – Jan. 31, 2013 – The Federal Housing Administration (FHA) announced a series of changes to be issued this week.

Commissioner Carol Galante calls the changes “essential and appropriate” as the administration tries to bolster its cash reserves in its Mutual Mortgage Insurance Fund (MMI Fund).

Changes to mortgage insurance premiums
FHA will increase the annual mortgage insurance premium (MIP) added onto most new mortgages by 10 basis points (0.10 percent). Premiums on FHA jumbo mortgages ($625,500 or larger) will go up by 5 basis points (0.05 percent). There are a few exceptions, such as some streamline refinance transactions.

In addition, most new FHA borrowers will pay the MIP for the life of their loan.

Previously, FHA automatically cancelled MIP on loans when the current principal balance reached 78 percent of the original principal balance. FHA’s Office of Risk Management and Regulatory Affairs says that cancellation has cost the MMI Fund billions of dollars in premium revenue on mortgages endorsed from 2010 through 2012.

Manual underwriting on higher-risk loans
If a buyer has a credit score below 620 and a total debt-to-income (DTI) ratio greater than 43 percent, FHA won’t allow lenders to automatically approve a loan request. Lenders must now manually underwrite these loans, document compensating factors that support their approval based on FHA guidelines.

Higher downpayment on loans above $625,500
FHA says it will raise the mandatory downpayment on jumbo loans from 3.5 to 5 percent. It will officially announce it soon in the Federal Register. FHA says the change will encourage more private lenders to participate in the housing finance market.

Home equity conversion mortgage consolidation
FHA will consolidate its Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options. This change will be effective for FHA case numbers assigned on or after April 1, 2013.

FHA loans after a foreclosure
FHA has a minimum waiting period of three years for a borrower who went through a foreclosure. However, the administration says it’s not that simple – a buyer must also reestablish good credit and qualify under other FHA loan guidelines.

“It has come to FHA’s attention that a few lenders are inappropriately advertising and soliciting borrowers with the false pretense that they can somehow ‘automatically’ qualify for an FHA-insured mortgage three years after their foreclosure,” FHA says in a release. “This is simply not true and such misleading advertising will not be tolerated.”

FHA says non-FHA lenders have also started advertising FHA mortgages. “FHA will work with other federal agencies to address such false advertising by non-FHA-approved entities,” according to the release.

© 2013 Florida Realtors®

February 9, 2013 Posted by | News related to Financing | Leave a comment

Homes for sale are in short supply

NEW YORK – Jan. 31, 2013 – The supply of homes for sale has been shrinking for six months and shows no improvement this month – a bad sign for buyers.

Listings of existing homes for sale were down 14 percent year-over-year in the first two weeks of January, according to Realtor.com, which tracks 146 markets nationwide.

In Phoenix, where prices were up 24 percent in November from a year earlier, new listings through the first three weeks of January were the lowest in 13 years, says Mike Orr, real estate expert at the W.P. Carey School of Business at Arizona State University.

That means “prices need to go up more” to bring more sellers to market, Orr says.

Nationwide, the supply of existing homes for sale fell to 4.4 months in December, based on the current monthly sales pace, the National Association of Realtors® (NAR) says. That’s the lowest in more than seven years. A six-month supply is considered balanced between buyers and sellers.

Home prices in November were 7.4 percent higher on average than a year earlier, according to CoreLogic. Real estate experts had expected that rising prices would spur more sellers trapped by years of falling prices.

Instead, January’s listing data “is the same sad story,” says Glenn Kelman, CEO of online brokerage Redfin. If sellers don’t have to sell, “They’re holding on, thinking they’ll wait for prices to go up even more.”

Redfin’s data, covering 19 major markets, mostly in the West, show new listings down 29 percent the first two weeks of January vs. a year earlier.

Scarce sellers aren’t the only reason for shrinking supplies. There are fewer distressed properties for sale. Foreclosure sales were down 7 percent through the first nine months of last year from the same period in 2011, RealtyTrac says.

Meanwhile, demand is up. Existing home sales were up 9.2 percent last year, NAR’s preliminary data show. New home sales rose almost 20 percent in 2012, the government reported Friday, while supply fell to 4.9 months in December from 5.4 months a year before. New home construction is still weak. In each of the past three years, builders completed fewer than 500,000 single-family homes. That’s less than half the number built annually from 1993 to 2007, according to the Census Bureau.

Homebuilders would need to double production this year to alleviate the tight supply, estimates Lawrence Yun, NAR’s chief economist. That’s not likely.

Home supplies nationally will stay at about the five-month level much of the year, Yun predicts.

Some markets are far below that.

California’s supply of existing single-family homes for sale stood at 2.6 months in December, the California Association of Realtors says.

Whether the supply of homes for sale will expand to meet demand is a “big question for the market” in 2013, says Jed Kolko, economist for real estate website Trulia.

This year is also the first since the housing bust began that falling inventories are not necessarily a good thing, he says.

Listings may still swell in time for the busy spring selling season, says Stan Humphries, Zillow economist.

He says listing activity next month will be key. If it doesn’t pick up by then, the spring season is likely to bring a lot of price increases, he says.

© Copyright 2013 USA TODAY, a division of Gannett Co. Inc., Julie Schmit.

February 9, 2013 Posted by | News related to the Market | Leave a comment

What’s behind falling housing inventories?

NEW YORK – Jan. 29, 2013 – Home prices are increasing across the country as the number of homes for-sale continues to fall. But at a time when buyer demand is picking up, why is inventory still so low?

Inventories fell to 1.82 million at the end of last year, a 21.6 percent drop from one year earlier, the National Association of Realtors® reports.

The Wall Street Journal recently highlighted several reasons behind the dropping inventories, including:

Sellers hesitant to sell: About 22 percent of homeowners with a mortgage remain underwater, owing more than their home is currently worth. These homeowners don’t tend to sell unless a life-changing event occurs because they don’t want to take a loss on the sale. CoreLogic data finds constrained inventories in areas with the highest number of underwater borrowers.

Not enough equity to trade up: Homeowners often rely on equity from their current home to make a downpayment on the next home. With fewer homeowners seeing equity, they may not have enough money to move into a pricier home – a constraint on the would-be “trade up” buyer.

Investors continue to snatch up properties: Investors still snap up properties, but they’ve changed their strategy, which also constrains inventories. Now they’re holding onto properties and turning them into rentals instead of rehabbing and flipping them for profit. The result: fewer homes on the market.

Banks slowing down foreclosures: Banks have new rules to meet with the foreclosure process, and it’s causing them to move at a slower pace. Banks also are showing a preference for short sales and loan modifications, which curbs the number of foreclosed homes on the market.

Builders doing less building: Housing starts were at record lows from 2009 through 2011, so there’s less inventory added to the market. A rebound in the new-home market has only recently started to occur.

Source: “Six Reasons Housing Inventory Keeps Declining,” The Wall Street Journal (Jan. 22, 2013)

February 9, 2013 Posted by | News related to Buyers, News related to Investors, News related to Sellers, News related to the Market | Leave a comment

Rental investors pant for next hot home market

PHOENIX, Ariz. – Jan. 22, 2013 – Major real estate investors are buying fewer homes in some hot markets while expanding in others as they race against rising prices to turn more distressed homes into rentals.

Phoenix, which has led the nation with rapid home-price gains, is among the first markets to see investors’ interest cool.

The percentage of Phoenix homes bought by investors fell to 28 percent in November after cresting at almost 36 percent in August and is now on a “clear downward” trend, says Mike Orr, real estate expert at the W.P. Carey School of Business at Arizona State University.

Investor interest also may be close to “peaking” in some California markets where prices have risen rapidly, because higher acquisition prices cut financial returns, says John Burns, CEO of Burns Real Estate Consulting.

Meanwhile, major investors are stepping up purchases elsewhere, especially in Southeastern cities such as Atlanta and Tampa. Home shoppers there are now seeing the multiple offers, bidding wars and shrinking supplies of homes for sale that occurred in Phoenix as investors swooped in.

“The Phoenix-like phenomenon has migrated to other markets,” says Sam Khater, economist for CoreLogic. It says Phoenix home prices were up 24 percent in November year-over-year, vs. 7.4 percent for the nation.

Major institutional investors are amassing a $10 billion war chest to pursue the single-family rental market, JPMorgan Chase estimated in a recent research report.

They’re betting that they can get distressed homes on the cheap, fix them up and rent them out, often to families who lost homes to foreclosure, and make money on home price appreciation in a few years.

The companies generally seek three-bedroom, two-bath homes in the $100,000 to $125,000 range that can rent for more than $1,000 a month, analysts say.

With $10 billion to spend, that would roughly equate to 80,000 homes, although the investment funds continue to raise money, says JPMorgan analyst Anthony Paolone. Nationwide, there are currently 12 million single-family rentals, most owned by mom-and-pop investors, Paolone says.

Big buying

The Blackstone Group, for one, has spent $2.5 billion since early last year buying 16,000 homes. It’s now adding 2,500 homes a month, it says. It’s believed to be the biggest player in the group, but most are private, so information is limited.

Colony Capital expects to invest up to $150 million a month this year to acquire single-family rentals. It bought 5,000 homes last year, it says.

Waypoint Homes, one of the market’s pioneers, expects to own 10,000 homes by year’s end. It started four years ago in the San Francisco Bay Area and owns 3,300 homes, says managing director Doug Brien.

Like many of the big investors, Blackstone started investing in Phoenix.

It next moved into California, then Atlanta, Tampa, Orlando, Chicago, Las Vegas and Charlotte.

Blackstone has accelerated its buying because home prices have risen faster than it expected, says Jonathan Gray, Blackstone’s head of real estate. In some markets, the window to buy before prices rise too much “is closing faster” than in others, he says.

Colony, for instance, has slowed purchases in Phoenix. Consultant Burns says Atlanta may be the hottest investor market now. Local real estate experts are seeing the impact.

Investors “are a significant force in the market right now,” says Mike Prewett, president of Southern REO Associates in Atlanta.

Prewett estimates that investors are buying 40 percent of foreclosed homes in the Atlanta area, triple the level of a year ago. Almost all foreclosures for sale draw multiple offers, often 10 or more, Prewett says.

Tampa, too, has seen an uptick, Realtors say.

A year ago, $125,000 homes in foreclosure could have been purchased “all day long,” says Brad Monroe, managing broker for Prudential Tropical Realty in Tampa. “Now, there’s 16 offers on each one of them within two days,” many from cash-paying investors.

Tampa’s inventory of homes for sale in December stood at 3.3 months, based on the pace of sales. That was about half its level of a year earlier, data from the Greater Tampa Association of Realtors show. Generally, a six-month supply is considered a balanced market between buyers and sellers.

Atlanta’s November home prices were up almost 5 percent from a year ago. Tampa posted a similar gain, CoreLogic says.

Lure of deep slumps

Institutional investors have largely circled cities that were hardest hit by the real estate downturn that started in 2006.

In Phoenix, home prices fell almost 60 percent from their pre-bust peak before they started to recover. Las Vegas posted a similar drop. Tampa dropped almost 50 percent.

The markets have more going for them than just cheap home prices. Phoenix, Tampa, Atlanta and Las Vegas – all markets where investor buyers are busy – have seen positive year-over-year job growth since July 2011. That will help drive housing demand, JPMorgan says.

The first task for investors is to buy at the right price. In many hard-hit markets, prices have bounced faster than anyone anticipated even a year ago. That’s made good buys harder to find, says Rick Sharga, executive vice president at Carrington Mortgage Holdings.

In recent months, Carrington has slowed its buying in single-family rentals, Sharga says. “As prices go up, it gets harder for investors to get the returns they’re looking for.”

In his report, analyst Paolone also warned that too many investors shopping in the same areas will drive prices up and eat into rental returns.

Burns says that’s already happening in some places. Single-family rentals that returned 10 percent annually three years ago may now be running closer to 6 percent. That’s too low for some investors, he says.

Nationwide, investors purchased 19 percent of homes in November, the National Association of Realtors says, down from 23 percent of sales in January and February of last year.

NAR economist Lawrence Yun says the percentage of homes being purchased by investors might decline more this year as regular home buyers make up more of the market, assuming a continued economic recovery.

Burns’ data show investors accounting for much higher levels of total home sales in some cities. It also shows a leveling off or decline in recent months in the share of homes bought by investors in a variety of markets, including Tucson; Oakland; Tacoma, Wash.; Minneapolis; Washington, D.C.; and Durham, N.C.

Burns also says a peak may be near for Sacramento and Riverside. Both California cities have seen home prices rise faster than the national average, CoreLogic data show.

In November, Sacramento prices were up almost 13 percent year-over-year. Riverside’s were up 10 percent.

Tight inventories will also slow investors, Burns says.

In Sacramento, the inventory of homes for sale fell to 1.6 months in December, based on the pace of sales, the California Association of Realtors says.

“These guys (investors) have bought up everything that’s worth buying in many of the hardest-hit markets,” Burns says.

The value of good timing

Even if investors slow purchases in a city, they may circle back around, says Waypoint’s Brien.

Waypoint was late to get to Phoenix, starting purchases there only last year. But as competitors have slowed buying there, Waypoint has seen “a little bit better buying opportunity,” Brien says.

He expects the same thing to happen elsewhere. Investors will pull back when prices rise too fast, then return when price gains slow, as more people list homes for sale.

“There’s a lot to buy and a lot to buy attractively,” says Justin Chang, Colony Capital principal.

While investor buyers have helped prop up prices, they’re making it tougher for regular home shoppers to compete.

Tom and Cyndi Vander Ven have been shopping for a home in Atlanta since September. The retired couple, both teachers, want to downsize.

They’ve lost out on three bids so far, even though they offered more than the asking price. Their Realtor told them investors had outbid them, Tom Vander Ven says.

They would have made more offers by now, but other homes they see listed are sold “before we can even move on them,” he says.

Copyright © 2012 USA TODAY, a division of Gannett Co. Inc., Julie Schmit

February 9, 2013 Posted by | News related to Buyers, News related to Investors, News related to the Market | Leave a comment

4 ways buyers can mess up a loan approval

WASHINGTON – Jan. 22, 2013 – A homebuyer has been approved for a mortgage loan, and both buyer and Realtor expect to be at the closing table soon. However, buyers sometimes do things that jeopardize the loan, and lenders sometimes rescind a loan offer shortly before a scheduled closing.

Common mistakes

• Making a big purchase. Big purchases, such as a new car or furniture, can change the buyer’s debt-to-income ratio that the lender used to initially approve the buyer’s home loan.
• Opening new credit. Buyers should avoid new credit card applications between approval and closing.
• Missing payments. Even bills in dispute should be paid on time between loan approval and closing.
• Cashing out. Avoid transferring large sums of money between bank accounts or making undocumented deposits – both could send up “red flags” to a lender.

Source: “How to Keep Your Mortgage Approval Approved,” Realty Times (Jan. 14, 2013)

February 9, 2013 Posted by | News related to Buyers, News related to Financing | Leave a comment

Fla.’s housing market continues positive track in Dec. 2012

ORLANDO, Fla. – Jan. 22, 2013 – Florida’s housing market had more closed sales, higher pending sales, higher median prices and a reduced inventory of homes for sale in December, according to the latest housing data released by Florida Realtors®.

“Florida is an international destination: Owning a home here appeals to people of all ages from all over the world,” said 2013 Florida Realtors President Dean Asher, broker-owner with Don Asher & Associates Inc. in Orlando. “Realtors from across the state are reporting increases in home sales and median prices. As a result of rising demand from investors and other buyers, there’s a shortage of inventory in many markets, and it’s putting pressure on prices.”

Statewide closed sales of existing single-family homes totaled 18,031 in December, up 15.8 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. Closed sales typically occur 30 to 90 days after sales contracts are written.

Meanwhile, pending sales – contracts that are signed but not yet completed or closed – for existing single-family homes last month rose 39.7 percent over the previous December. The statewide median sales price for single-family existing homes last month was $154,000, up 14.1 percent from the previous year.

According to the National Association of Realtors® (NAR), the national median sales price for existing single-family homes in November 2012 was $180,600, up 10.1 percent from the previous year. In California, the statewide median sales price for single-family existing homes in November was $349,300; in Massachusetts, it was $295,000; in Maryland, it was $246,294; and in New York, it was $215,000.

The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Looking at Florida’s year-to-year comparison for sales of townhouse-condos, a total of 8,470 units sold statewide last month, up 8.6 percent compared to December 2011. Meanwhile, pending sales for townhouse-condos in December increased 31.8 percent compared to the year-ago figure. The statewide median for townhouse-condo properties was $117,500, up 26.3 percent over the previous year. NAR reported that the national median existing condo price in November 2012 was $181,000.

December marks the 12th consecutive month of higher statewide median sales prices for both single-family homes and for townhouse-condo units year-to-year, according to Florida Realtors’ data.

The inventory for single-family homes stood at a 5.5-months’ supply in December; inventory for townhouse-condos was at a 6-months’ supply, according to Florida Realtors.

“The market continues to improve, and it’s doing so in all parts of the state,” said Florida Realtors Chief Economist Dr. John Tuccillo. “Of note is the fact that inventory levels are now clearly consistent with a sellers’ market. When the final year-end statistics are compiled, expect that sales in 2012 will be more than 10 percent higher than they were in 2011. Once again, all the positive indicators are up significantly. The Florida real estate market is rapidly improving.”

The interest rate for a 30-year fixed-rate mortgage averaged 3.35 percent in December 2012, down from the 3.96 percent averaged during the same month a year earlier, according to Freddie Mac.

To see the full statewide housing activity report, go to Florida Realtors website and click on the Research page; then look under Latest Housing Data, Statewide Residential Activity and get the December reports. Or go to Florida Realtors Media Center and download the December 2012 data report PDFs under Market Data.

© 2013 Florida Realtors®

February 9, 2013 Posted by | News related to Buyers, News related to Sellers, News related to the Market | Leave a comment

NAR: Bring back sensible lending standards

WASHINGTON – Sept. 17, 2012 – According to the National Association of Realtors® (NAR), new survey findings, combined with an analysis of historic credit scores and loan performance, show home sales could be notably higher by returning to reasonably safe and sound lending standards. The change would also create new jobs.

“Sensible lending standards would permit 500,000 to 700,000 additional home sales in the coming year,” says Lawrence Yun, NAR chief economist. “The economic activity created through these additional home sales would add 250,000 to 350,000 jobs in related trades and services almost immediately, and without a cost impact.”

A monthly survey of Realtors shows widespread concern over unreasonably tight credit conditions for residential mortgages. Respondents say lenders take too long in approving applications, and that they require excessive information from borrowers. Some respondents expressed frustration that lenders appear to be focusing only on loans to individuals with the highest credit scores.

Even though profits in the financial industry have climbed back to pre-recession levels, lending standards still remain unreasonably tight.

All it takes is a willingness to recognize that market conditions have turned in the wake of an over-correction in home prices, with all of the price measures now showing sustained gains, says Yun. “There is an unnecessarily high level of risk aversion among mortgage lenders and regulators, although many are sitting on large volumes of cash which could go a long way toward speeding our economic recovery. A loosening of the overly restrictive lending standards is very much in order,” he says.

According to the NAR survey, 53 percent of August loans went to borrowers with credit scores above 740. In comparison, only 41 percent of loans backed by Fannie Mae had FICO scores above 740 during the 2001 to 2004 time period, while 43 percent of Freddie Mac-backed loans were above 740.

In 2011, about 75 percent of total loans purchased by Fannie Mae and Freddie Mac, which is now a smaller market share, had credit scores of 740 or above.

There is a similar pattern for FHA loans. The Office of the Comptroller of the Currency has defined a prime loan as having a FICO score of 660 and above. However, the average FICO score for denied applications on FHA loans was 669 in May of this year, well above the 656 average for loans actually originated in 2001.

Loan performance over the past decade shows the 12-month default rate averaged just under 0.4 percent of mortgages in 2002 and 2003, which is considered normal. Twelve-month default rates peaked in 2007 at 3.0 percent for Fannie Mae loans and 2.5 percent for Freddie Mac loans, clearly showing the devastating impact of risky mortgages.

Yun says, however, the 12-month default rates have been abnormally low since 2009. Fannie Mae default rates have averaged 0.2 percent while Freddie Mac’s averaged 0.1 percent, which are notable given higher unemployment in the timeframe.

“Sales this year are projected to rise 8 to 10 percent. Although welcoming, this still represents a sub-par performance of about 4.6 million sales,” Yun says. “These findings show we need to return to the sound underwriting standards that existed before the aberrations of the housing boom and bust cycle, and thoroughly re-examine current and impending regulatory rules that may cause excessively tight standards.”

© 2012 Florida Realtors®

October 23, 2012 Posted by | News related to Buyers, News related to Financing | Leave a comment

20% downpayment not a QM requirement

WASHINGTON – Sept. 17, 2012 – Realtors and other housing groups worry that new rules now under development will make it more difficult for homebuyers, particularly first-time buyers, to obtain a mortgage. However, at least one fear seems to be unwarranted for the moment.

The Consumer Financial Protection Bureau (CFPB), created to oversee credit companies in the U.S., is developing a QM (qualified mortgage) code. An industry fear voiced by the National Association of Realtors® (NAR) and others was that the rules, once announced, would require a mandatory 20 percent downpayment, which would bump many homebuyers from the market and force others to wait years to qualify for a home.

In testimony before the Senate Banking Committee on Sept 13, however, CFPB Director Richard Corday said a 20 percent downpayment was not under consideration.

The issue is not yet finalized. Two federal groups are working independently on separate mortgage qualification rules. The Federal Reserve plans to issue its own qualified residential (QRM) code that, while similar, is unrelated to the QM code. In the past, Fed regulators have suggested a 20 percent downpayment rule.

© 2012 Florida Realtors®

October 23, 2012 Posted by | News related to Buyers, News related to Financing | Leave a comment