It’s Tuesday News Day and these are this weeks hot topics concerning the real estate market, the financial market, general market conditions, and interest rates.
The San Francisco Chronicle – Obama Lays Out Housing Policies; Mortgage Rates to Rise Under Reform Plans?
A bipartisan Senate bill – that would phase out mortgage giants Fannie Mae and Freddie Mac over five years while diminishing the government’s role in guaranteeing mortgage securities – was bolstered by a speech President Barack Obama gave on Tuesday in Phoenix, Ariz. The president outlined policies that were largely in line with the Senate bill by calling for mortgage financing risk to be shifted from the government to the private sector. Commenting on lenders, Obama stated, “No more leaving taxpayers on the hook for irresponsibility or bad decisions.” If Fannie and Freddie are ultimately shut down, borrowers could end up paying slightly higher mortgage rates.
The president affirmed a commitment to preserving the 30-year fixed-rate mortgage as part of any future housing system. Maintaining a government role in the housing market ensures homeownership is affordable and allows borrowers to obtain fixed-rate loans with longer repayment terms.
Obama called for allowing more Americans to refinance at current low mortgage rates, and widening the pool of borrowers eligible to receive loans from federally backed programs.
CALIFORNIA ASSOCIATION OF REALTORS® President Don Faught released the following statement: “While C.A.R. is encouraged to see private capital begin to return to the housing market and hopes that trend continues, we believe that the government must play a role in a healthy mortgage market to ensure the continued availability of safe and affordable mortgages in all market conditions.”
Obama’s speech also called for an “independent regulator” for a system in which private capital bears most of the risk for mortgage loans. Private capital would have to be “wiped out” before a government reinsurance guarantee kicks into effect.
To address the needs of low income people, the president pushed for a tax on securities. Financial institutions would have to pay a small assessment on mortgage-backed securities in order to support low-income housing.
In other news…
The San Diego Union-Tribune – What’s stalling homebuilding?
Recent employment reports indicate that construction industry jobs are lagging amidst the housing industry’s recovery. Market uncertainty has left some companies cautious about adding workers since they were forced to cut staff during the recession. High costs for raw materials as well as developers’ fees are also likely factors. There has been a particularly big drop in public construction.
LA Times – A second lien could affect refinancing of your primary mortgage
A second lien on a home could throw a wrench in the works if a consumer wants to refinance because the lien-holder of the secondary agreement must be willing to remain in a subordinate position to the newly refinanced primary mortgage. Borrowers are urged to be upfront about holding a second lien.
Chicago Agent Magazine – 7 Things That Worry Buyers Most about the Buying/Selling Process
Tight supplies, rising rates and bidding wars have characterized market conditions for many buyers looking to secure the property of their dreams. A new survey conducted by Trulia and Harris Interactive shows that 41 percent of respondents are concerned that mortgage interest rates will rise before they are ready to buy. Finding a suitable home and qualifying for a mortgage were other major concerns.
Wall Street Journal – When Home Buyers Ask Mom and Dad for Cash
Loans from family members could go the extra mile in making a down payment, but financial experts say parental help is most useful when it comes as a gift rather than a loan during the mortgage application process. A family loan may not be viewed favorably by a lender and could lead to disqualification for a mortgage since the loan is considered unsecured debt.
NPR – Freddie Mac Earns $5 Billion In 3 Months
The turnaround in the housing market has led to booming financial results for Freddie Mac. The mortgage giant had a net income of $5 billion in the second quarter of 2013, which is seven profitable quarters in a row. The U.S. government provided federal assistance during the 2008 mortgage crisis, so it will receive a dividend of $4.4 billion to the U.S. Treasury.
DSNews – Demand for Non-Traditional, Subprime Loans Up
A quarterly Senior Loan Officer Opinion Survey reveals that half (49.3 percent) of lenders surveyed said demand for loans from prime borrowers had increased, up from 39.1 percent in the second quarter survey. Also, a net 25 percent of respondents said demand for loans from subprime borrowers was higher than it was in May. For “traditional” mortgage loans, a net 7.5 percent of banks reported easing lending criteria.
The Los Angeles Times – Putting borrowers into higher-rate mortgages still occurs, U.S. says
A lawsuit filed recently by the Consumer Financial Protection Bureau indicates that “upselling” remains a pressing concern due to hidden, backroom ploys. “Upselling” leads mortgage applicants into higher-cost terms that increase the lender’s profits, and this abusive practice was banned by the Federal Reserve Board in 2011.
Talking Points…
Asking prices fell 0.3% in July, which is the first month-over-month decline since November of last year, according to Trulia. Overall, the year-over-year increase in quarterly asking prices increased at a slower pace during the second quarter than in the first.
The quarterly asking home price gain was lower than in the previous quarter in 64 out of 100 U.S. metros. On the West Coast, a slowdown was particularly apparent. Many metros in the South and Midwest are seeing price gains accelerate
Despite the fact that asking home prices slowed down, July was the first time that prices outpaced rents in the 25 largest rental markets since Trulia started tracking rent trends in March 2011.
If you have any questions about the current real estate market give me a call at (408) 840-3852 or shoot me an email at Thomas.Feng@gmail.com to discuss your situation and how to get the most out of the current real estate housing market.
Because of the many legal and tax situations that can arise through the sale and purchase of real estate ALWAYS consult with your ATTORNEY or ACCOUNTANT before making ANY decisions in ANY transaction
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* THIS ARTICLE WAS POSTED AT Thomas Feng’s Bay Area Connect *