Daily Archives: May 20, 2014

Government’s moves to ease mortgage credit are mostly for show | Katonah Real Estate


  • The regulator of Fannie Mae and Freddie Mac, Mel Watt, said he would not reduce home loan limits, as planned by his predecessor as director of the Federal Housing Finance Agency, Ed De Marco. Plus, in the most widely quoted promise in his speech at the Brookings Institution, Watt said he doesn’t believe his role is to “contract the footprint” of Fannie and Freddie. In other words, gradually shrink their roles or significance in the housing marketplace in preparation for their eventual total phase out by Congress.
  • Watt also announced that his agency will permit Fannie and Freddie to use “compensating factors” to accommodate loans from borrowers whose back-end debt-to income ratios exceed 43 percent. Compensating factors allow lenders to approve loans when applicants may have elevated DTIs but also have counter-balancing strengths, such as substantial financial reserves, high credit scores, among others.
  • FHA Commissioner Carol Galante announced a “blueprint for access” designed to lower the costs of obtaining an FHA mortgage for underserved borrowers. HUD Secretary Shaun Donovan called Galante’s plan, which would extend reductions in mortgage insurance fees to buyers who complete a counseling course, “a win for the market, FHA, lenders and borrowers.”


All that sounded upbeat and was heartily welcomed by groups such as NAR, the Mortgage Bankers Association and the home builders. It sounded like good news in a week that saw prospects for long-term reforms of Fannie Mae and Freddie Mac dim in a split vote by the Senate Banking Committee.

But how significant were these promises by Washington politicians and what will the changes really mean on the ground for real estate professionals and their clients? Much less than it all appeared to audiences eager to hear that credit standards finally are going to start loosening up for mortgage applicants.



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One Night In The Biltmore Hotel’s Famous Al Capone Suite | Bedford Hills Real Estate



1:30 PM: I arrive at the Biltmore Hotel, ready for a night in the huge Al Capone Suite, a few very good meals, a swim in a giant pool, and maybe some ghosts. There were no ghosts, but there would be a door that opened itself later in the evening. I check in, and head upstairs to have a quick look around before afternoon tea in the lobby.

In the elevator I discover the suite is on the 13th floor. Yep, unlike many buildings that superstitiously omit the 13th floor, the Biltmore doesn’t. There’s a small elevator lobby with double doors, leading to the suite’s foyer that enters into a small kitchen and the grand double-height living room. This is a really mind-blowing suite. A massive stone fireplace is in front of you, there is a dining table on the right, a sitting area in the middle, and a large desk to the left. A piano is also to the left. Windows on the far ends look out onto balconies which are accessed through small side-doors that also lead to the suite’s other spaces. A balconied mezzanine encircles the room, with a vaulted, chandelier-mounted, frescoed ceiling above. The suite occupies two entire floors of the hotel’s tower.


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Luxury market’s ticking time bomb: If this were a virus, you would call it a full-blown epidemic | Bedford Real Estate


There is a ticking time bomb hidden in the top end of the housing market that I don’t see the mainstream media addressing. And this is no hidden bomb — it is glaringly obvious and sitting right out in the open.

McMansions image via Shutterstock.
McMansions image via Shutterstock.

The question is not, “Will it blow up?” The simple question is, “What will the fallout be when it does explode?”

Do we still love our McMansions?

This is not a Tallahassee problem — this is a U.S. housing market issue that will be felt in most areas. Only the highest-growth, strongest economic areas of our country will be shielded from the blast when it occurs.

We have built too many McMansions; too many homes for an upper 10 percent of the market that is going to change dramatically when the trigger point is reached. As with any time bomb, you have to wonder just what is needed to make it explode.



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Here’s why there aren’t any houses to buy | Pound Ridge Homes



The supply of existing homes on the market remains low, at 5.2 months in March, according to a report from Freddie Mac.

The total number of homes offered for sale relative to the number of households in the U.S. has been running at the lowest level in more than 30 years.

“The housing recovery is struggling to shift into a higher gear, and obviously there are various imbalances holding this back from happening, but at the heart of the matter it comes down to jobs,” said Frank Nothaft, Freddie Mac vice president and chief economist.

But these low inventory challenges are the direct offspring of several features of today’s market.

1. Underwater homeowners

Since the Mortgage Forgiveness Debt Relief Act expired on Dec. 31, 2013, many underwater homeowners are reluctant to short-sell.

CoreLogic reported that 6.5 million homeowners remained underwater as of year-end 2013.

Meanwhile, there was also a sharp decline in short sales at the beginning of 2014, from 5.2% of sales in December to 2.2% of sales in February.

2. Low rates

Many borrowers were able to refinance into record low rates in the past several years.

According to the Bureau of Economic Analysis, the average interest rate on single-family mortgages outstanding was 3.9% during the first quarter of 2014, drastically down from the average 30-year fixed-rate average rate of 4.4% for new loans during the quarter.

As a result, homeowners are reluctant to sell their current home and forego the low rate mortgage loan they currently have.

3. REO sales slow

Despite real-estate owned sales remaining strong in some markets, in aggregate REO sales have slowed considerably over the past couple of years.



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