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Kenneth R. Harney
The Nation’s Housing

By Kenneth R. Harney, Nation’s Housing blog

WASHINGTON — The name itself conjures up images of ATMs: cash-outs.

You may associate the term “cash-out refinancing” with the frothy and dangerous days of the real-estate boom, when some owners turned their hyperinflating houses into money mills, leveraging their equities to the hilt.

That didn’t end up too well for many of them. read more »

 

WASHINGTON — The verdict was nearly unanimous at a recent hearing on Capitol Hill: The new federal “ability to repay” and “qualified mortgage” regulations that took effect Jan. 10 will make obtaining credit tougher, not easier, this year, and potentially force large numbers of creditworthy homebuyers to defer or cancel their plans.

What nobody addressed at the hearing, though, was the elephant in the room: OK we’ve got a problem.

But what, if anything, can buyers who find it difficult to meet the new standards do about it?

The testimony came from mortgage, banking and credit union leaders — even the head of a nonprofit Habitat for Humanity chapter. read more »

 

WASHINGTON — Higher mortgage rates for 2014? Count on it. Could this be the year to check out hybrid mortgages, which haven’t been popular lately? Maybe.

You can count on interest rates going higher because:

  • The Federal Reserve intends to continue reducing its monthly purchases of mortgage bonds and Treasury securities, which will have the side effect of raising rates.
  • The economy finally appears to be picking up steam, based on the latest quarterly data. Higher growth rates in turn will increase demand for available credit and likely nudge rates higher.
  • New federal regulations for mortgage lenders, aimed at avoiding another bust, take effect Jan. 10. Not only will loan officers and underwriters scrutinize applicants’ income, debt ratios and credit extra carefully, they’ll likely charge more for borrowers whom they see as a higher risk. Some mortgage economists predict conventional 30-year fixed-rate loans could go to 5.5 percent before year-end.

So what does this mean if you’re thinking about buying a house or refinancing and you want to nail down the most favorable interest rate and terms? read more »

 

WASHINGTON — The biggest story in American real estate in 2013 hasn’t gotten the attention it deserves, so let’s shout this out: Homeowners’ net-equity holdings soared by $2.2 trillion between the third quarter of 2012 and the third quarter of this year, according to new data collected by the Federal Reserve.

This is a record rebound for a 12-month period.

And it’s crucially important in personal-financial terms for hundreds of thousands of owners who’ve been underwater on their mortgages for years.

They now have options they didn’t have before: They can sell their homes and not have to bring money to the closing. read more »

 

WASHINGTON — For the growing numbers of home purchasers who care about energy efficiency, it’s the ultimate “green” goal: Lenders should recognize the net savings that energy improvements provide to property owners and take them into account when they underwrite and set the fees for mortgages.

Appraisers should also recognize the added value.

The rationale: Owners of homes that reduce energy use pay lower utility bills than owners of energy guzzlers, so why not factor these out-of-pocket savings into household debt-to-income ratios and appraised valuations?

This might permit larger mortgage amounts for energy-efficient homes and help qualify more first-time buyers for loans. read more »

 

WASHINGTON — Haven’t we seen this movie before? On Capitol Hill for the second year in a row, key federal tax assistance for homeowners is heading for expiration within weeks. And there’s no sign that Congress plans — or has the minimal political will — to do anything about it.

In fact, the prospects for extension of popular mortgage-forgiveness debt relief and deductions for mortgage insurance payments and home energy-efficiency improvements appear to be more dire than they were last year at this time, when at least there was a bill pending to extend them.

This year there is none, at the moment. The House and Senate are spending their time trying to figure out a budget, but are also considering overhauling the entire tax system, which could mean that a long list of special-interest tax preferences — including for housing — might be sucked into the tax-reform vortex and never revived if they expire as scheduled Dec. 31. read more »

 

WASHINGTON — Should you be concerned that the maximum loan amount you’ll be able to obtain through the biggest players in the mortgage industry — Fannie Mae and Freddie Mac — might be cut sometime next spring? You just might.

That’s because mortgage applicants who no longer qualify under the revised limits will be forced to shop in the jumbo arena, where minimum credit scores and financial-reserve requirements tend to be tougher and down payments heftier than in the conventional space dominated by Fannie and Freddie.

You might also have to settle for an adjustable-rate mortgage rather than a fixed-rate. Or you might end up where you need a higher-rate “piggyback” second mortgage to afford the down payment on the first mortgage deal you’re offered. read more »

 

WASHINGTON — Federal agencies haven’t been functioning much this month, but six of them are looking at a proposal that could squeeze huge numbers of buyers out of the mortgage market: a mandatory 30 percent down payment for borrowers who seek the best rates and terms.

The regulatory agencies have set an Oct. 30 deadline for public comments on a 505-page proposal that creates new rules for bond financings of loans for homes, autos and other assets.

Among the housing proposals is something known as “QRM-Plus.” It would require 30 percent down or more for purchasers, tough credit standards and a ban against second liens on properties at closing. read more »

 

WASHINGTON — For homeowners looking to the federal government’s reverse-mortgage program to supply lots of cash for their retirement years, here’s a heads-up: The pipeline just got narrower.

Pressed by Congress to slash losses, the Federal Housing Administration (FHA) recently outlined steps designed to limit the maximum amounts that seniors can draw down on their homes and to make it tougher to qualify for a reverse mortgage.

Starting in January, applicants for FHA-backed reverse mortgages will for the first time have to qualify under comprehensive new “financial assessments” — covering credit history, household cash flow and debt levels — to make sure they have the “capacity and willingness” to meet their financial obligations under the terms of the loan. read more »

 
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