Archive for October, 2011

2011 Real Show photos are online

If you attended and would like to browse photos from this year’s REal Show (or didn’t attend and want to see what you missed), check out VAR’s Smug Mug page to see lots of great candids.

If you took a minute in the expo to sit and have a new headshot taken, you can check out J. Ford Photography’s website (password is var2011) and order prints or digital copies.

Ah, memories!

FHFA: Refinancing, yes; principal reduction, no

The director of the Federal Housing Finance Agency (it oversees Fannie and Freddie) has made it clear that the agency is not considering reducing the balances of borrowers — only their interest rates.

Congress has been pushing the agency to look at principal reduction, but FHFA director Edward DeMarco said that, “Some of those things that are being advocated for us to do really go beyond what Congress has given us the authority to do.”

Read all about it.

Halloween fun: What’s in YOUR new house?

From Cracked, which does the best job of mixing humor with darned good research: “The 6 Creepiest Things Discovered by New Homeowners.”

OK, based on what you have seen in horror movies/novels/TV shows, what is the one single thing that ensures your home will be infested with ghosts and/or poltergeists? Without question, it’s building your house on top of a burial ground. You’re angering not just one restless spirit, but dozens, who are sure to take vengeance on whoever has disturbed their sacred resting place.

So of all the possible things in the world you can find in your new home, none can be quite as unsettling as plunging a shovel into the floor of your basement only to have a child’s skull come rolling out.

And that’s from number six. Enjoy. (Note: Cracked’s language tends towards the R-rated. So if you’re easily offended by four-letter words (and I don’t mean “cake”), you may want to skip it.)

New HARP may have hit the sweet spot

You know about “HARP 2.0” — the new version of the Home Affordable Refinance Program announced by the Obama Administration last week.

Much was said and predicted about it — it’s good, it’s bad, it’s too little, it’s too much, it’s a good step, it’s a bad idea, and on and on.

Well, now the folks at The Mortgage Reports have some data, and at first blush it seems that A) people are applying for HARP, and B) they’re exactly the people it targeted. “The new HARP Refinance is the loan program for which they’ve been waiting since 2007,” says TMR.

The new HARP allows refinancers to avoid the whole loan-to-value issue. It’s not about what the home is worth, it’s simply about whether you are making payments. If you are, HARP 2.0 lets you get a better rate. That will free up capital and (hopefully) help boost the economy while helping those underwater homeowners.

About 60 percent of HARP refinance applicants have owe between 105% and 150% of their home’s value — in other words, these are mostly people who didn’t go crazy with overbuying, but have seen their home value plummet.

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And their current rates are, for the most part, between about 5.5% and 6.75% — low at the time, but way high compared to today’s (4.21% for a 30-yr fixed in Virginia, as I write this).

Of course, it’s only been a few days since the new HARP too effect, but this first glance seems to offer some positive news.

Mortgage insurers’ troubles — and why they might ripple

Interesting column from Reuters’s Agnes Crane, “U.S. housing has added problem: mortgage insurance.” Why interesting? Because the trouble she describes hits right in the issue of down payments — specifically, the idea of a 20 percent-down requirement for the best rates.

Here’s the gist: Mortgage insurers such as PMI made their billions by selling policies to lenders. If a borrower couldn’t put 20 percent down, he’d have to buy mortgage insurance in case he defaulted. Thus, lenders were protected.

Well, a lot of people didn’t put 20 percent — or, frankly, anything — down during the housing boom/bubble. They paid a bit for mortgage insurance and all was well. But insurers make money because the odds are way in their favor. That’s what actuaries do: figure the odds and make sure the house — i.e., the insurer — always wins in the big picture.

Then came the crash, and suddenly lenders realized that they had given loans to people who really couldn’t afford them. Borrowers defaulted. Lenders turned to their mortgage insurance companies by the truckload.

Suddenly the odds were against the house, big time. Mortgage insurers had to pay out, and pay out, and pay out.

imageAnd now they’re in trouble. PMI Group had its mortgage insurance unit seized by the state of Arizona last week. And the other major policy writers are in trouble.

As Crane writes,

Only one of the six major home loan insurers has an investment-grade credit rating. A few are dangerously close to breaching their risk-to-capital limit of 25 to 1 – the minimum required to ensure they have enough firepower to pay claims.

So what might happen if mortgage insurance becomes harder to get, or prohibitively expensive? Might down-payment requirements go up? Might 20 percent become the norm? And what would that do for sales?

In other words, it’s an issue worth watching. Which is what we’ll be doing.

Realtor.com adds apartment listings

NAR’s Realtor.com website has added multifamily homes to its searchable listings. Move, Inc., owns both Realtor.com and Move.com, and those listings are coming from the latter.

That is all.

34 senators: Sell those REOs in bulk

A group of 34 senators wrote to key members of the Obama Administration asking that it decide — quickly, please — what it’s going to do with all the foreclosed properties now owned by Fannie, Freddie, and the FHA.

One plan that has been gaining momentum would sell those properties in bulk and at a discount to investors. They would then fix ‘em up and rent them at reasonable prices.

That would get the properties off the government’s books and (in theory) put the homes in good hands — thus improving property values in those neighborhoods.

Here’s a snippet:

REO represents a significant financial risk to the [Fannie and Freddie] since they incur taxes and fees on the properties in their inventories, these costs increase the longer it takes to resell the REO, and all the while the value of the properties may be declining.

Click here to read the whole letter. (Not really that exciting, but certainly detailed.)

Smart homebuilders are adapting

You can’t blame homebuilders for feeling a bit depressed. The housing slump/crisis/burst bubble is hitting them hard, too. And it’s probably not going to get better anytime soon, what with all the shadow inventory waiting in the wings (in addition to what’s already out there).

But the industry isn’t sitting around feeling sorry for itself. In this interesting Housing Wire piece, we see how smart homebuilders are adapting to the changed market, rather than simply hoping to power through.

They’ve discovered new ways to get homes built during the downturn, like turning to private equity firms to provide project funding.

And they are innovating in other ways: adding technology, rethinking design, going green and investing more in market research to build a home that consumers will buy.

Click here to read the full piece — it may get you thinking about the whole ‘reinvention’ thing.

HUD study: Better neighborhood = better health

A 16-year study by the Department of Housing and Urban Development of families in poverty found that simply moving to a better neighborhood reduces the incidence of obesity and diabetes.

The study involved 4,498 volunteers living in public housing; some were given vouchers so they could afford to live in middle-class neighborhoods, some had vouchers to live in the same neighborhood but got help with rent, and some got neither.

In other words, the only significant change to the living situation was neighborhood, not income. And the study found that

The health of people who received rent subsidies but did not move showed no significant improvement. But the people who moved to middle-class neighborhoods were about 5% less likely to be obese and show signs of diabetes than were people in the control group, the team reports today in The New England Journal of Medicine.

Nature vs. nurture? Another thing to ponder.

Click here to read the story in Wired.

According to the Census Bureau and HUD, sales of new single-family houses in September were down almost a percent from September 2010. Bad news? Yes, if that number meant anything. The press release also says that the figure is ±16.3%. So new-home sales could have been anywhere from down 17.2% to up 15.4%.Welcome to the world of sampling error.