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Less Than Half of All Home-Sale Attempts Successful in ‘09

A survey of seven major housing markets found that less than half of all attempts to sell a home in 2009 had, as of last Wednesday, resulted in a sale.

The analysis, conducted by Redfin Corp., a Seattle-based brokerage that operates in nine states, shows just how tough the housing market has become–and just how many sellers are unwilling to lower their prices.

The survey looked at how ..... to read click on, "Less Than Half of All Home-Sale Attempts Successful in '09

Exerpts:

Many sellers aren’t willing to reduce their prices because they don’t want to sell their homes for less than the amount they owe. Those “short sales” typically take much longer to complete because a bank must sign off on the deal.  Banks are less likely to approve short sales for borrowers who can’t demonstrate hardship or imminent default.

Others simply think that they shouldn’t have to reduce their prices, often because .... The buyers may be happy to pull their homes off and wait for the market to come back.

Already, there are some signs that this year could be worse than 2009

No More Overly Easy Loans

Fannie Mae CEO Michael Williams said Wednesday that Fannie’s current book of business is its strongest in 10 years.

In a speech to the group Women in Housing and Finance, Williams said Fannie is emphasizing long-term, fixed-rate loans based on more accurate appraisals to borrowers with higher credit ratings who can thoroughly document their income.

Williams called the tougher standards “the new realism” in the housing market that will make owning a home more challenging.

"Step-by-step, we are putting in place a new foundation for our industry," he said. "It's a foundation based on the right lending standards and on a broad re-examination of what constitutes sensible risk."

Source: The Wall Street Journal, Jessica Holzer (07/28/2010)

New hurdles for home financing

Waiting for home prices to fall even more?  Well, there's other considerations; waiting for less may cost you more.

Underwriting standards have tightened, meaning that borrowers need higher credit scores, more income and higher down payments. And that's not all. There are many challenges to financing a home, but the following six are especially problematic in today's market.

1. Higher credit score requirements: Although loans can be had in most cases for credit scores down to 620, they often come with a higher rate and/or fees."
2. Greater scrutiny of income and assets. Buyers are now put through the wringer
3. Ever-changing borrower requirements. Unfortunately, a buyer can have all of these items fall into the current guidelines, only to have the guidelines change.

To read the complete list please go to 6 new hurdles for home financing in MSN Real Estate

It's Great Time for Housing Deals

If you are trading up, what better time than when interest rates are at record lows and the cost of the trade-up is much less than it used to be?" says Christopher J. Mayer, a Columbia Business School economist.

With 15-year fixed-rate mortgages at about 4.5 percent, it also makes sense to pay off the mortgage and keep the house. "At this point," says Jay Brinkmann, chief economist of the Mortgage Bankers Association in Washington, D.C., "if they don't have anything else that is bringing a tremendous return, then they are buying themselves an annuity by paying their house off sooner than they needed to."

What kind of home should you look for?

The nation's housing inventory is cluttered with foreclosures, short sales and homebuilders willing to make a deal. If you're in the market to buy a home today, you're likely weighing the benefits of each type of property available for purchase.

Don't be fooled. Not all bank-owned foreclosures are sold at deep discounts. Not all builders are slashing prices. Short sales can be a crapshoot, with some buyers enduring months of waiting and still not getting the property.

All things considered, it's possible that your best deal is purchasing a traditionally sold existing home, so don't count those out of the running.

To get the most for your money, it's important to . . . read the full article published in MSN Real Estate

HUD announcement: FHA Seller concession to be cut in half

For the next 30 days, HUD is seeking public comment on the following policy changes, each of which are designed to mitigate risk to the Mutual Mortgage Insurance Fund while promoting sustainable homeownership for FHA borrowers:

1. Update the combination of credit and down payment requirements for new borrowers. New borrowers seeking FHA-insured financing will be required to have a minimum FICO score of 580 to qualify for FHA’s flagship 3.5 percent down payment program. New borrowers with credit scores of less than a 580 will be required to make a cash investment of at least 10 percent. Borrowers with credit scores of less than 500 will no longer qualify for an FHA-insured mortgage.

2. Reduce allowable seller concoessions from six to three percent. Allowing sellers to contribute up to six percent of the home’s sales price to offset a buyer’s costs exposes the FHA to excess risk by potentially driving up the cost of the home beyond its appraised value. Reducing seller concessions to three percent will bring FHA into conformity with industry standards.

3. Tighten underwriting standards for manually underwritten loans. When using compensating factors in the underwriting process, lenders will be required to consider those factors which are the best predictive indicators of loan performance, such as the borrower’s credit history, loan-to-value (LTV) percentage, debt-to income ratio, and cash reserves.

for more information go to CalculatedRisk.com and for the public notice go here

This will become effective after the 30 day comment period - so around August 15th.

Similar article found at HousingWire

FHA May Require 10% Down from Low Credit-Score Borrowers

by DIANA GOLOBAY

Specifically, the FHA is proposing to update the combination of credit and downpayment requirements for new borrowers, reduce seller concessions from 6% to 3% and tighten underwriting standards for manually-underwritten loans.

The proposed FHA policy updates also require lenders, during the underwriting process, to consider compensating factors that are "the best predictive indicators of loan performance" — credit history, loan-to-value ratio, debt-to-income ratio and cash reserves.

Tight Credit Standards Halt Some Buyers

Lenders continue to reject borrowers with otherwise good credit when they diverge from the standard approval checklist.

Would-be borrowers facing the most problems include the self-employed.

One reason bankers are so nervous are the standards held out by Fannie Mae and Freddie Mac. Not only are Fannie and Freddie demanding credit scores above 720, they are refusing to buy back defaults when the original mortgage application had small discrepancies from the norm. To avoid losses, lenders are being extra careful.

The result is that some borrowers are being rejected for problems that seem completely inconsequential.

Source: The Wall Street Journal, James R. Hagerty and Nick Timiraos

Senate Passes Homebuyer Tax Credit Extension

Yesterday, the House pushed through a three month closing extension of the homebuyer tax credit.

Tonight, the Senate unanimously approved the bill — leaving the President to ratify the provision by signing it into law, as early as tomorrow morning.

House votes to give homebuyers 3 extra months

Homebuyers would get an extra three months to complete their purchases and qualify for a generous tax credit under a bill overwhelmingly passed by the House on Tuesday. The bill passed 409-5. It now goes to the Senate.

Read the full story by Stephen Ohlemacher, Associated Press and published in StarTribune

 

Senate Extends Tax Credit Closing Deadline

The U.S. Senate voted Wednesday to extend the home buyer tax credit closing deadline to Sept. 30, giving an estimated 180,000 buyers who met the contract deadline of April 30 extra time to close the transaction.

The extension was added to a bill to pay for jobless benefits.

The NATIONAL ASSOCIATION OF REALTORS® estimates that one-third of qualified applicants have been notified that they will be unable to close by the deadline. The Mortgage Bankers Association says delays are caused largely by the volume of transactions.

The measure still must be approved by the House.

Source: Associated Press, Andrew Taylor