Daily Real Estate News | December 20, 2007

Fed's New Loan Laws Don't Please Much of Anybody

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)

Daily Real Estate News | December 19, 2007

House Passes 3 Key Housing-Related Bills

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)

Daily Real Estate News | December 18, 2007

Fed to Unveil Mortgage Protection Plan

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)

Daily Real Estate News | December 17, 2007

Groups Warn Seniors to Beware of Reverse Mortgages

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)

Daily Real Estate News | December 17, 2007

Senate Passes FHA Reform Bill

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

!!!SOLD!!! Affordable Housing in Brookings, SD

1736 Torrey Pines Drive, Brookings, SD
Listing # 07-635

!!! SOLD!!!

Brookings, SD Real Estate for Sale!

List Price: $152,400

Why pay rent when you could afford to own a brand new home! Torrey Pines Drive is currently under construction and will feature quality homes starting at a base price of $149,900. Each home features a split foyer floor plan with 2 bedrooms and 1 bath on the main level. The lower level features a finished family room and space for the future finish of 2 more bedrooms and a bathroom. Not Actual Home Picture!

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

Descriptive Information
Area: Residential
Style: Split Foyer
Year Built: 2007
SqFt ML: 980
SqFt. LL: 980
SqFt LL Finish: 250
Total Finished SqFt: 1230
Taxes: 0
Tax Year: 2007
Garage Type: Attached, 2 Stall
Garage Remarks: Opener Included
Total Bedrooms: 2
Total Bathrooms: 1
Total Full Baths: 1

Directions
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

This property is listed by David Kneip of Best Choice Real Estate, Brookings, SD.

Brookings housing market still booming, say Realtors

'Market's really, really good in Brookings' ; home sales doing well, few foreclosures



BY JOHN KUBAL
Published in The Brookings Register on Friday, September 28, 2007

The news about real estate nationwide has of late been less than good. The market is headed south and will soon be in the tank or is there already. But not so in Brookings, say a pair of Realtors and members of the East Central Board of Realtors, past-president Scott Hodges and President Ryan Krogman.

Hodges, who has been in real estate for more than 30 years, said, "Our situation is entirely different; and yet I have customers and clients that are making comments to me all the time about their perception that the market is bad."

"And it's really, really not in Brookings; our market's really, really good in Brookings. It's just not mirroring what we're seeing in the national media."

He added that prices are not down and inventories and foreclosures are not up.

Smiling, Hodges said, "For the first time ever, being 48th in the nation is a good thing; because we're 48th in the nation in foreclosures, in South Dakota." The only states with lower foreclosure rates are North Dakota and Vermont.

Only about 50 houses are for sale in the city of Brookings. That's not a lot for a city like Brookings with a population of about 20,000.

Nationwide the real estate market might be considered a "buyer's market ," but not so in South Dakota. Hodges said, "In Brookings, it hasn't been (a buyer's market). It's not unusual for us still to get multiple offers on properties when they come on the market; it's not unusual for properties in Brookings to still sell over their list price."

Turning to some numbers, Krogman noted that locally property appreciated about 6 percent.

Also noting that the real estate market does not mirror the national scene, he added that homeowners who want to upgrade or people wanting to build a new home will not have to take a loss on their investment.

And, on average, homeowners who sell are realizing 98.9 percent of the list price of their property. Krogman added, "If we were seeing a big drop in values, we'd see that lower like 80 percent, or 75 percent.

"But we're still staying real strong; on some properties, we're getting over (the) asking price." Krogman said it would be good to have more houses on the market : such as 80 in Brookings and 120 to 130 in the area.

Assessment, appraisal factors in home's sale price

Joyce Dragseth, Brookings County Director of Equalization, explained, "The equalization office of each county is charged by state statute to value all property in the county at market value."

She added, "If the market goes up, we would have to follow it up; or if the market goes down, we would also have to follow it down.

"So if this recession that the rest of the country is talking about ever hits Brookings, we will have to follow that with our assessments. It's a yearly job to study each neighborhood and what we need to do with it. One neighborhood might need a 2 percent adjustment; another neighborhood might need a 5 percent adjustment."

The statute does allow some leeway: "We have to be at 85 percent of market (value)," Dragseth said.

However, she pointed out that the Department of Revenue, which oversees her office, "really stresses that we be at 90 to 95 percent."

That magic number is arrived at by taking all sales and dividing the assessed value by the sale price to come up with a ratio. The city of Brookings has "probably 300 house sales a year." To date in 2007 there have been 230 sales.

Dragseth also pointed out that South Dakota is an "ad valorem" state, meaning that "property is taxed by value for government purposes to pay for services."

While Dragseth's county-run office works on a "mass appraisal" basis, private appraisers work on a more individual for-hire basis.

Location, location, location still key

Patrice Gabel, a certified general appraiser and president of Hansen & Gabel Appraisers, on Sixth Street in Brookings, explained, "We're hired by banks, private individuals , attorneys. That's pretty well our client base, but mostly the banks, mortgage lenders.

"And it's either for a refinance situation or a sale, potential sale, divorce, estate purposes for the IRS and things like that." An appraisal of property is in some ways like a military inspection: It includes measuring the interior and exterior, noting (literally, writing down a lot of information) the condition of the interior and exterior, improvements and the age of the improvements.

Also to be factored in is "location , location, location," with a focus on comparable listings and sales of like properties in the "immediate neighborhood." Three to five properties are likely to put an appraiser in an appropriate "range of values."

Viewed with an appraiser's eye, what is Gabel seeing in Brookings?

"We're not seeing any depreciation in the marketplace," Gabel said. "We're not seeing appreciation as high as it had been in the past years, but properties are still appreciating as long as they're being maintained."

Show me the money

In the end, all real estate transactions come down to the dollars. What got a lot of home owners nationwide in over their heads were such fanciful financing initiatives that include ARMs adjustable-rate mortgages where over time a buyer's monthly house payment can become a moving target and "sub-prime lending" to "people with questionable credit." Included, too, are "interest-only " options, where the principle is not being paid down. Bottom line across the nation: Too many buyers have too much house and too little money. That's not often the case in Brookings, where mortgage dollars tend to be obtained in more convential fashion.

Connie Bridges, a mortgage loan officer at First Bank & Trust, said, "We want to make sure that our borrowers can afford the payments . Typically, around here they can.

"They've got two income earners in the household. And we look at ratios; we want to make sure that we're not getting them overextended. We look at a 28 percent debt-to-income ratio on the house and then 36 percent for total debt with everything. We look at insurance and taxes as well."

She added, "First of all. we want to be sure they're comfortable with the payments."

In Brookings, foreclosures are "pretty rare."

Reporter John Kubal may be reached at jkubal@brookingsregister.com