Mortgage Master, a large regional lender, opened shop in Williamsburg in December. The Massachusetts-based firm is among the largest, privately-owned mortgage lenders in the country with over $5 billion in loans a year and offices throughout the northeast and in California. Apparently the skyrocketing market in Williamsburg has caught its eye. The 1,600 square-foot office — a bit off the beaten path at 697 Lorimer between the BQE and McCarren Park — is staffed by Brooklyn locals. The landlord installed reclaimed timber, an old winch and other odds and ends found in a building he owns in Greenpoint. More pics after the jump. (more…)
The headline pretty much says it all: The percentage of mortgage holders in New York City and environs who have negative equity ticked up slightly from 20.1 in the fourth quarter of 2011 to 21.3 in the first quarter of 2012. As you can see from the map (from Zillow via The Real Deal), however, much of the pain was felt in New Jersey and Queens. Brooklyn, especially Brownstone Brooklyn, looks largely unscathed. And compared to the rest of the country, where almost one-third of homeowners are still underwater, New York isn’t doing too badly.
Real-estate website Zillow Inc. (Z) said Tuesday its real-time rate on 30-year fixed mortgages fell to a new record low in the last week. Zillow said the 30-year fixed mortgage rate on its Mortgage Marketplace is at 3.66%, down from 3.72% a week earlier. The rate is the lowest since Mortgage Marketplace launched in April 2008, Zillow said. The company said the 30-year fixed mortgage rate peaked at 3.7% on Friday and steadily declined through the weekend, dropping to its current rate Tuesday morning. Erin Lantz, director of Zillow Mortgage Marketplace, said despite strong employment figures on Friday, the rate has remained historically low and has been hovering between 3.65% and 3.7% for the past week. “Although European headlines may drive more volatility in the coming week, we expect rates will stay near this range,” Lantz said.
This isn’t the first mortgage fraud bust in Brooklyn and it won’t be the last, but it’s good to see some weight sentences getting thrown around. This case, reported by The Post today, involves all the usual suspects: a ring of lawyers, real estate brokers, mortgage brokers, title insurers and straw buyers got together to buy cheap properties in Brooklyn and Queens and then quickly flip them at inflated prices. The amount of fraud surpassed $10 million, with Lehman Brothers and a handful of lenders getting stuck with the bill. The ring leader, a 44-year-old lawyer named Anthony Onua, could face up to 30 years in prison. Photo by i_follow
The New York Times had a good primer this weekend on when it makes sense to send in money above and beyond your required monthly payment to reduce the principal amount of your mortgage. Back in corporate finance class in business school (if we recall correctlyâ€”it’s been twelve years!), you’re taught that a company should pay down its debt if can’t find any alternative use for its capital that it believes can return as much as it’s paying in interest on its debt. The same thing applies to an individual, and with rates as low as they are and the significant tax breaks factored in, the hurdle is pretty low right now. “Back when rates ran at 7 or 8 percent, making extra payments offered what amounted to a guaranteed return on your money,” says The Times. “When you’re ridding yourself of debt that costs you much less, however, it’s easier to imagine a future when you could more easily earn a higher return by investing those potential extra mortgage payments someplace else.” Of course, there are some other common-sense considerations to factor in, like the flexibility and safety that having some cash sitting in the bank can bring or the priority of paying off higher-interest debt like credit cards before attacking the balance of your mortgage. When Not to Pay Down a Mortgage [Brownstoner]
Appraisals, for all their importance in getting a mortgage and buying a home, seem to be rather nebulous. This past weekend, The New York Times ran an article pointing out several gray areas in the art of appraising. First of all, a change in the Home Valuation Code of Conduct that took effect back in May gave banks exclusive power over the appraisal process. The plus side, and intent of the change, is that brokers, builders, and buyers cannot influence the appraisal as much; the down side, according to some appraisers in New York, is that banks are using national appraisal firms that assign appraisers who charge lower feesâ€”i.e., less experienced appraisers who are likely unfamiliar with the local market, something which is essential in New York City’s market of microscopic subclimates. It is common, of course, in a down market for appraisals to come in low, but the combination of inexperienced appraisers and fewer data points due to lower volume might result in inaccurately low valuations. Buffalo News made a similar report about the appraisal industry upstate, and CNN Money reported that the housing industry met with New York Attorney General Andrew Cuomo last week to protest the current Code of Conduct, and the attorney general’s office agreed to consider the matter further. The primary sources for these articles are brokers and local appraisers. We’d like to hear from other players in the game, as well. Any bankers, buyers, or national appraisers out there who want to throw their hat into the ring? New York Appraisals Get Shortchanged [NY Times] Tougher Appraisals Make Home Sales Harder [Buffalo News] Housing Industry to Cuomo: Let’s Work Together [CNN Money] Photo by Richard Wanderman
Common wisdom for home-buyers has been to front at least 20 percent as a down payment, but this practice may no longer be rewarded by the financial markets, reports The New York Times. Because of rules implemented by Fannie Mae and Freddie Mac in 2008, “for most people, it turns out, smaller down payments result in lower interest rates,” according to the Times. For example, The Times found that a buyer with a 720 credit score buying a $400,000 home would typically be able to obtain a 30-year fixed-rate mortgage of 4.875 percent if he were putting down $80,000. Perversely, he could have gotten the same rate by only putting down 5 percent as well. Why’s that? In the case of the 5 percent down payment he would have been required to pay mortgage insurance of around a hundred bucks a month. Even stranger, if he’d been even more conservative and opted to put down 25 percent, his interest rate would have shot up to 5.375 percent. Apparently, lenders like the idea of a borrower having a cushion in his checking account better than having a smaller loan principal. Strange days indeed. A Down Payment Anomaly [NY Times] Photo by Corey Thomas
Bankrate.com has created a simple, handy quiz to determine whether you qualify for the federal government’s new Home Affordable Refinance program, which helps home-owners struggling with their mortgages. Bankrate.com also adds that you might qualify even if your first mortgage slightly exceeds the market value of the property. Go to the quiz via the link above, or click here.
In addition to the federal tax cut for first-time home-buyers, New York State is sweetening the deal by offering its own mortgage aid, reported the New York Times this weekend. The State of New York Mortgage Agency’s Mortgage Credit Certificate program will grant federal income-tax credits to first-time buyers equal to 20 percent of the annual mortgage interest. To apply in New York City, the Times explains, “the combined annual income for households with three or more people cannot exceed $107,520, and the house price cannot exceed $637,640.” Participating banks such as M&T Bank and Wells Fargo will begin accepting applications in early September, and the program will run through the end of the year. And unlike the federal aid program, the Mortgage Credit Certificate will renew its tax credit every year. More Help for New Yorkers [NY Times] Photo by David Lot
This weekend the Times had word about a new version of the federal Home Affordable Refinance Program, which is expected to start issuing loans by October and is aimed at helping borrowers who owe more than their homes are worth. So-called “underwater” borrowers who have not missed a mortgage paymentâ€”but are nevertheless in danger of becoming the next wave of foreclosuresâ€”will be able to avail themselves of the program if their mortgage is up to 25 percent more than their home’s current value. The loans will only be given to borrowers who have Fannie or Freddie loans, and they probably won’t have the very most competitive rates. Nevertheless, they’re expected to help out a lot of New York-region borrowers: “Michael Moskowitz, the president of Equity Now, a lender based in Manhattan, says he believes that New York borrowers will benefit from the recent changes. The area, he said, is among the last in the nation to experience significant drops in real estate values. ‘But because of the unemployment on Wall Street, that will continue,’ Mr. Moskowitz said. ‘So this program will have a very meaningful effect here.'” Lifelines for Those â€˜Underwater’ [NY Times] Photo by zert.sonstige_2008