Thursday, December 20, 2007
Critics of the lending industry say the regulations released Tuesday by the Federal Reserve aren’t tough enough.
For one, they don’t help the millions of homeowners who currently have subprime mortgages and can’t afford to pay them.
The sweeping changes, to take effect early next year after a 90-day public comment period, will impose new restrictions on all of the country's mortgage lenders, brokers, and loan servicers.
"On the core provisions, the rules are weak and very burdensome to consumers," said Alys Cohen, staff attorney at the National Consumer Law Center.
The rules aren't tough enough on the lending industry for Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.
"We now have confirmation of two facts we have known for some time," Frank said. "One, the Federal Reserve system is not a strong advocate for consumers, and two, there is no Santa Claus. People who are surprised by the one are presumably surprised by the other."
Source: USA Today, Noelle Knox (12/19/2007)
Wednesday, December 19, 2007
The U.S. House on Tuesday passed three bills that will have a big impact on the real estate industry. All three have passed the Senate and President George W. Bush is expected to sign them.
The bills are:
- The Mortgage Forgiveness Debt Relief Act of 2007. This legislation waives taxes by creating a three-year exception for borrowers whose mortgages are modified, with a portion of their debt forgiven, to avoid foreclosure or other financial distress.
"In sending this bill to the president, Congress made a good decision today that will affect many Americans who find themselves in a truly bad situation,” NAR President Richard (Dick) Gaylord said in an NAR public statement on the issue. “As the leading advocate for housing issues, NAR believes that changing the IRS code is an issue of fundamental fairness. It will relieve a tax burden at a time when an individual or family has experienced a true economic loss arising from the sale or loss of their home."
- Mortgage Insurance Tax Deductibility. This bill makes mortgage insurance premiums tax deductible for all mortgages originated for the next three years. Mortgage insurer Genworth Financial estimates that this tax break is worth $350 to the average taxpayer who has purchased a home with less than 20 percent down.
- Terrorism Risk Insurance Act. Federal backstops for terrorism insurance, passed initially after the Sept. 11 attacks, have been extended for another seven years. The bill also expands the program's protection by including domestic terrorism. The insurance and real estate industries have pushed for an extension, saying federal guarantees to help cover catastrophic losses are crucial to stimulating the investment needed to spur economic growth.
Source: The Associated Press, Jim Abrams, and Dow Jones International News and REALTOR® Magazine Online (12/18/2007)
Tuesday, December 18, 2007
The Federal Reserve is introducing its new mortgage protection plan today to help bailout struggling borrowers.
The rules it’s proposing are particularly aimed at protecting those who might find subprime loans their only alternative because of low income or poor credit.
The Fed proposes these regulations:
- Barring or restricting lenders from penalizing subprime borrowers who pay their loans off early.
- Forcing lenders to make sure that borrowers, especially subprime ones, set aside money to pay for taxes and insurance.
- Barring or limiting loans that do not require proof of a borrower's income.
- Setting new standards for how lenders determine a borrower's ability to repay a home loan.
The plan, if ultimately adopted, offers Federal Reserve Chairman Ben Bernanke, who took over the helm in February 2006, an important opportunity to put his imprint on the Fed's regulatory powers.
Source: The Associated Press, Jeannine Aversa (12/18/07)
The U.S. senior community is warming up to reverse mortgages, but the product's increasing popularity also is breeding a new crop of unscrupulous brokers, lenders, and loan agents who are taking advantage of the nation's elderly.
In general, reverse mortgages allow home owners who are 62 and older to borrow against their home equity without having to repay the money until the home is sold or the borrower dies or permanently moves out.
But the mortgages have some groups concerned. Speaking at a recent hearing before the Senate Special Committee on Aging, legislators and consumer advocates warned that, without better loan counseling and tougher government oversight, a flood of older home owners could be pressured into taking out inappropriate loans — just as millions of mortgage borrowers were persuaded to accept subprime loans that are now going into default at a rapid clip.
"We have gone through a savings and loan collapse, a stock market bubble and are currently in the middle of a lending mess," noted Sen. Claire McCaskill (D-Mo.) at the hearing. "Our goal is to make sure that the reverse mortgages don't become the scandal of the next decade."
National Reverse Mortgage Loan Association President Peter Bell says the perceived problem may be somewhat overblown. But he concedes that some sales agents who are finding themselves unemployed due to the housing downturn could be picking up jobs in the reverse mortgage sector but may have "a different type of mentality about moving transactions through quickly."
Source: Buffalo News, Tony Pugh (12/17/07)
The FHA Modernization Act of 2007, passed Friday by the U.S. Senate, would give borrowers a safer alternative to riskier mortgage products while also helping many home owners who may be facing foreclosure, according to the NATIONAL ASSOCIATION OF REALTORS®.
“A reformed FHA is positioned to help home owners who face unaffordable mortgage payments as a result of resetting adjustable subprime loans and help bring stability to local markets and economies,” says NAR President Richard (Dick) Gaylord.
NAR has long supported FHA modernization legislation that would increase loan limits, reduce or eliminate the statutory 3 percent minimum cash down payment, and give FHA increased flexibility and the ability to streamline certain programs, in addition to strengthening the loss mitigation program.
In addition, the increase in FHA mortgage loan limits would help first-time home buyers, minority buyers, and people who do not qualify for conventional mortgages, according to NAR. Increased loan limits would also help people living in high-cost areas; current FHA limits make the program unusable in these areas, Gaylord says.
Gaylord says that FHA has made mortgage insurance widely available to individuals regardless of race, ethnicity or social status during periods of prosperity and economic depression. The FHA program makes it possible for higher risk yet creditworthy borrowers to obtain prime financing.
The House had passed its own FHA bill Sept. 18. House leaders now will have to decide whether to clear the more limited Senate legislation or insist on a conference to reconcile the competing versions.
Source — REALTOR® Magazine Online
Monday, December 17, 2007
Brookings, SD Real Estate for Sale!
List Price: $152,400
Possession Date: TBD
Legal: Lot 7D, Block 9, Moriarty Fourth Addition, City of Brookings, County of Brookings, South Dakota
Realtor.COM Type: Residential Single Family
Style: Split Foyer
Year Built: 2007
SqFt ML: 980
SqFt. LL: 980
SqFt LL Finish: 250
Total Finished SqFt: 1230
Tax Year: 2007
Garage Type: Attached, 2 Stall
Garage Remarks: Opener Included
Total Bedrooms: 2
Total Bathrooms: 1
Total Full Baths: 1
Travel south on 17th Avenue S. Go past the 17th Ave S. & 12th St. S. intersection. Torrey Pines Dr. will be the first street on the East (left hand side) of the road.
For more information or to schedule a viewing of this property please call me, Justin Fjeldos, at (605) 691-1240 or email Justin@BrookingsHomes.com
BEST CHOICE REAL ESTATE - (800) 788-8323