Mortgage
November 16, 2009
Extension of Higher Conforming Loan Limits a Boost?
September 28, 2009
Appraising the Appraisers
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 fees—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
September 8, 2009
Lower Down Payments, Lower Interest Rates
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
August 21, 2009
Do You Qualify for Federal Mortgage Relief?
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.
August 11, 2009
New York State's Mortgage Aid
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
July 27, 2009
Federal Life-Preserver Loans Target Sinking Borrowers
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 payment—but are nevertheless in danger of becoming the next wave of foreclosures—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 ‘Underwater’ [NY Times]
Photo by zert.sonstige_2008
July 6, 2009
Tough Slog for Buyers Seeking Jumbo Mortgages
From this weekend's Times, a story about the difficulties of obtaining a nonconforming jumbo loan in the post-meltdown market: "'Two years ago these loans could be accommodated very easily, but today the requirements to get those loans are much more stringent,' said David Adamo, the chief executive of Luxury Mortgage in Stamford, Conn. Mr. Adamo likened the current mortgage market to a barbell, with pockets of availability for borrowers at both ends of the income spectrum but less for those in between. Those with annual incomes up to about $250,000 have access to mortgages insured by the Federal Housing Administration, while the very affluent can obtain loans from private banking institutions. For borrowers with household incomes between $250,000 and $500,000, however, mortgages are not as easy to get, Mr. Adamo said. 'These people are living in places where starter homes might be $1 million,' he said, 'and it’s really affecting them.' Fannie Mae and Freddie Mac will accept only loans below $729,500 in the highest-cost markets like New York City and northern New Jersey. For mortgages larger than that, mortgage brokers and bankers must find other investors who want to take the loans." The story talks about how borrowers have to go to community banks like Astoria Federal and Hudson City Savings Bank to get jumbos, and that qualifying for the loans at these institutions has become much more difficult.
Securing a Jumbo: No Small Task [NY Times]
June 29, 2009
F.H.A. Loans Skyrocket in Popularity
From this weekend's Times real estate section: "Loans insured by the F.H.A., an arm of HUD, protect lenders from losses, thereby encouraging them to provide financing to those who might otherwise be refused a mortgage. These loans are typically 30-year fixed-rate products, but they require only a small down payment, as low as 3.5 percent — significantly less than the 20 percent standard of recent months. Often, the loans are made to people who don’t have perfect credit scores." The article says the loans now account for a quarter of all mortgages, up from 2 percent only 3 years ago. Although they often serve borrowers with less-than-stellar credit, they're considered solid because people receiving them must have verifiable income and jobs. The loans cap out at $729,750 here in New York, and condo developers who want to offer them have to "meet a variety of financial, structural and environmental standards and restrictions." As we covered a couple weeks ago, an East Williamsburg condo that offers F.H.A. loans is seeing brisk sales.
F.H.A. Loans Help Sales [NY Times]
Nondescript East W'burg Condos Defying the Market [Brownstoner]
On the Other Hand: Chase Pushing FHA Loans [Brownstoner]
June 15, 2009
Mortgage Mod Program Off to a Slow Start
The cover story in the real estate section of this weekend's Times is about how Obama's mortgage relief program, unveiled in March, has been slow to deliver much-needed help in New York: “'The promise of this program is enormous,' said Rafael Cestero, the commissioner of the city’s Department of Housing Preservation and Development. 'It’s a brand-new program and it’s a very complicated issue, but we all share the feeling that it’s been moving too slowly.' The federal program offsets some costs for banks that agree to modify mortgages. Mr. Cestero estimated that in addition to the 400 applications handled by the center, other agencies have probably processed 400 applications. 'When you think that almost all of those are in southeast Queens and some in eastern Brooklyn,' he said, 'that’s a lot of people in need in a not particularly big area.” Housing counselors say that while 15 lenders — including major ones like Bank of America, CitiMortgage, Chase and Wells Fargo & Co. are participating, many have yet to fully train people to process the applications. As a result, housing counselors say they often receive mixed signals, with different lenders offering different interpretations of the guidelines, including whether foreclosure actions can proceed while a loan modification is being considered and whether you have to be current on your payments to be eligible for a modification."
Penetrating the Maze of Mortgage Relief [NY Times]
Photo by Nick Blake.
May 26, 2009
15-Year Mortgages Grow in Popularity
In this weekend's Real Estate section, the Times had an article on the increasing popularity of 15-year, fixed-rate mortgages: "Brokers and mortgage industry executives say that these loans are becoming especially popular among people who want to shed debt more quickly, and in light of the current economic atmosphere, that goal is perhaps more widely applicable than ever. Of course, debt shedding comes at a price. Those borrowing $400,000 on a 15-year loan, with a 4.375 percent interest rate, the average rate earlier this month, can expect to pay about $3,034 a month, compared with about $2,056 a month for a 30-year fixed-rate loan with a 4.625 percent average rate. (The payment excludes costs like property taxes and insurance.) Because a 15-year loan also has 180 fewer interest payments than a 30-year loan, the borrower with that 15-year loan would pay $194,000 less in interest over the life of the mortgage." Any readers considering them over 30-year loans?
Photo by Rev Dan Catt
May 22, 2009
Chase Turns Off Our Spigot—For Now at Least
Here's an interesting twist in our refinancing story. We received in the mail earlier this week the following notice from Chase, which is the provider of both our current mortgage and our Home Equity Line of Credit:
With home values falling in many parts of the country, we've used a proven valuation method to estimate your home's value at $1,000,000. Unfortunately, that valuation no longer supports the full amount of your Line of Credit, so we are suspending future draws again your account as of May 15, 2009.
Say what? Leaving aside for a moment our suspicion that their "proven valuation method" did not take into account the fact that ours is a five-story house, the most interesting part of this is the perverse incentive it creates: After we finished our renovation in late 2005, our HELOC was pretty close to maxed out at $62,500. Since then, we've chipped away a few hundred dollars a month at the principal, so that the balance is now around $47,000. (Our credit score, as of last week, was the equivalent of an "A+", according to our Chase refinancing so that can't have anything to do with it.) So now, instead of continuing to reduce our balance, we're going to just pay off the interest, since we know we can't tap the line in the future if we needed to. The appraiser came for our mortgage refi yesterday morning; if that goes okay, we should have a decent case to make for unfreezing the line of credit. Regardless, the "proven valuation method" sounds like some very unnuanced generalizing at best and suspiciously like the beginnings of some old-school red-lining at worst. If, for example, the computer is using zip codes to group areas by risk, then it has no way of differentiating between a house on Classon and a house on Clinton. Or if it's merely using physical proximity, our house could be impacted by comps a half-mile away on a less valuable block of Bed Stuy. Scary.
May 14, 2009
Refinancing: How Sweet It Is
We've had a 6 percent 30-Year fixed mortgage since we bought our house in 2005. With rates at historic lows, we, like many people, started looking into refinancing earlier in the year, but had to put it on hold until we got tax extensions, and then returns, filed. When we spoke with the mortgage specialist at Chase in February the conforming loan limit for a two-family house in Brooklyn was just south of $800,000. When we got on the phone yesterday morning we were pleased to learn that the conforming limit had recently been raised to $934,200; the single-family limit is $729,750. We were able to do a 90-day lock for a 1/4 point at 5 percent. Here's where you have to start to question how low prices can really go: With rates where they are right now, you could, say, buy a $1.2 million house and lock in mortgage payments of $5,000 a month; assume you make $1,500 on your rental and you're down to $3,500; throw in the tax breaks and you're down to $2,500; add back in $1,000 a month for taxes and insurance and you're back up to $3,500. $3,500 a month to own your own house in New York City and have, say, 2,400 square feet of living space for yourself (three out of four floors). The trickier part comes when you need to finance more than that $934,200. Have any readers gotten financing for significantly more than that recently? How did you structure it? We heard from Chase that HELOCs are quite hard to get right now?
May 4, 2009
Despite Low Interest Rates, Few Refinancings in New York
With long-term interest rates bouncing around near record lows for the last several months, it's been a great time for home owners to refinance--unless they live in New York, that is. According to stats from Inside Mortgage Finance, while there were 92 percent more mortgage refinancings nationwide in the first quarter of 2009 versus the same period a year earlier, the increase in New York State was only a modest 6 percent. The reasons? First of all, New York has a lot of high-priced real estate, and the best rates are only available on conforming loans ($417,000 and under); if there's enough equity in your house and your credit score is high enough, competitive rates are available for so-called agency-jumbo loans ($417,001 to $729,750). Secondly, New York State has a painfully high mortgage tax of 2.05 percent, and it's become harder and harder to avoid in the case of refinancings. Has anyone refinanced a jumbo or agency-jumbo loan in the last few months? What kind of rates and fees did you encounter? What are the best banks to go to in this category?
New Yorkers Miss Refinancing Spree [NY Times]
April 20, 2009
Tough Times for Getting a Home Equity Loan
Home equity lines of credit (or HELOCs in industry parlance) have gotten harder to get and more expensive when you can get them, according to an article in yesterday's New York Times. The reason is pretty straightforward: "As the economy and housing market declined, it made little sense for banks to lend money on an asset that was becoming less valuable by the week, and in an environment where borrowers had a diminishing ability to repay." At this point, you'll need to have a credit score of 720 or better and be able to prove that you've still got 20 percent equity left in your house or apartment; and if the debt service on the HELOC you're seeking combined with your existing mortgage payments would consume more than 38 percent of your income, you're likely to strike out. The Times also says that HELOC rates in New York are now around 5.4 percent. Have any readers tried to get a loan like this recently?
Why Credit Lines Are Drying Up [NY Times]
Photo by lactardjosh
January 13, 2009
Conforming Loan Limits May Rise
While it's tempting to refinance right now given the fall in mortgage rates in recent months, it may make sense to wait: According to The Times, the government may raise the conforming loan limit in New York to $729,750 from $625,500 as part of the stimulus package. That could mean paying 5.25% for a 30-year-fixed rate instead of 6%. Of course, inaction may work against you too: rates could rise while you wait.
November 7, 2008
Fewer Mortgages for Minority Communities
Brooklyn mortgages dropped 18 percent in 2007, reports the Daily News, in line with the city's statistics. But it turns out the number of mortgages was chopped in half, or more, in poorer, minority neighborhoods, which are bearing the brunt of the foreclosure crisis — they call it the "tale of two Brooklyns." "The number of mortgages issued fell by 60% in Brownsville, 58% in Bushwick, 57% in East New York and 45% in East Flatbush," they write. "Experts say the declines are due to a combination of the drying up of the subprime market and lending discrimination by banks reluctant to make loans — even to qualified buyers — in those neighborhoods." Now for the other Brooklyn: the number of mortgages rose 48 percent in Brooklyn Heights and Fort Greene; 11 percent in Williamsburg and Greenpoint; and stayed the same in the Slope.
Mortgages Plunge by 50% in Some Minority Neighborhoods [NY Daily News]
Photo by Jimmy Legs.
October 28, 2008
Mortgages More Elusive for Some Minorities
A new study by the Furman Center for Real Estate & Urban Policy finds that mortgages fell 14 percent last year, but impacted communities very differently. For black and Hispanic home buyers, the number of mortgages dipped 44% and 34% respectively, while mortgages for white buyers barely fell at all. Asian buyers, on the other hand, had six percent more loans. "As a result, the racial breakdown of home buyers in New York City changed significantly during the period studied, which predated the financial turmoil in the markets this year," writes the NY Times. The shift isn't entirely because of the sub-prime mortgage meltdown, says the NY Daily News (the Times says the opposite); prime loans have fallen for minority groups as well. The Times says one primary reason for the decline is fewer applications, but that's not city-wide: mortgages fell in every borough but Manhattan, where they increased 12%. Even so, we're doing better than the rest of the country, where mortgages dropped 25 percent on average.
Fewer Mortgages for Blacks and Hispanics [NY Times]
Minorities Hard Hit in Mortgage Crunch [NY Daily News]
Photo by wmliu.
October 15, 2008
Jumbo Mortgages: How You Lookin'?
According to an article in today's Wall Street Journal, the average rate for a fixed rate jumbo mortgage (over $729,500) is currently 7.91%, versus 6.6% for smaller "conforming" loans that are backed by the government; the federal legislation that raised the conforming ceiling to $729,500 back in March is scheduled to expire at the end of the year, and a Real Deal article last week noted that both Chase and Wells Fargo were moving up that date to December 1. What are readers that have been in the market for a mortgage hearing from their mortgage brokers? Any mortgage brokers out there care to chime in directly?
No Quick Fix for Housing Prices [WSJ]
October 10, 2008
Banks Putting the Squeeze on Jumbo Loan Borrowers
A discussion on the Forum got started yesterday on this piece from the Real Deal. "JPMorgan Chase and Wells Fargo have moved up by four weeks to December 1 the deadline for borrowers to close on jumbo conforming loans, thereby limiting lending options available to already pinched home buyers, in high-priced areas such as New York City," they write. "The move affects buyers of homes and apartments between about $1 million and $3 million seeking a loan in the jumbo category, which is between $417,000 and $729,750." After December 31, the loan limit will drop to $625,000, but JP Morgan and Chase, who covered 71 such mortgages in the city last week, made the cutoff date December 1. The bottom line, as reader Sunny Hong wrote: "Those that are looking for jumbo conforming loans above 417k and up to $729,750 will not be able to obtain a mortgage from Chase or Wells after December 1... This affects people that have loan amounts between 417k and $729,750 from getting a pretty competitive 30 year fixed rate. They would have to get a regular jumbo loan. Other banks may follow suit as well." Anybody out there affected by this?
Chase, Wells Set Early Date for Jumbo Loan Closings [Real Deal]
Photo by Rev Dan Catt.
July 25, 2008
Fed Bailout Bill: Any Piece of That Pie for New Yorkers?
The Times has a piece today entitled "Housing Bill Has Something for Nearly Everyone" that talks about how the multi-billion (how much exactly? no one knows) housing bailout bill isn't just pitched at people with mortgage woes and troubled lenders. Aspects of the bill will probably have modest benefits for New York-area borrowers who don't have mortgage trouble. The bill, for example, is supposed to help first-time buyers, who'll be eligible for a federal tax credit of $7,500 or 10 percent of the home purchase price (whichever's smaller). The catches: single people earning $95,000 or more, or married couples earning $170,000 or more aren't eligible for the credit. Another break comes for people who take standard deductions on their taxes: They'll be eligible for an additional tax deduction of $500, or $1,000 for married couples. The aspect of the bill that might have the most impact on pricey New York is the one that allows Fannie Mae or Freddie Mac to buy bigger loans (none over $625,500, however) in areas with higher housing costs, a measure that's aimed at lowering interest rates for people who take big loans.
Housing Bill Has Something for Nearly Everyone [NY Times]
Photo by Rikx
July 23, 2008
Mortgage Rates on the Rise
Mortgage rates are rising, according to the Times, in the wake of the troubles surrounding Fannie Mae and Freddie Mac. While rates continue to be low by historical standards, they're high compared to the levels they've been at in the past several years: The average yesterday was 6.71 percent for 30-year, fixed-rate mortgages, up from 6.44 percent on Friday, and 7.8 percent for jumbo loans. Rising rates primarily threaten to affect borrowers who have had loans with an interest-only teaser period, which could deepen the national housing morass. “When we get to rate levels like this, the market just shuts down,” said a mortgage broker based in Colorado. Some analysts argue that the rising rates are a temporary blip. Do any readers have first-hand experiences to report from the last few days?
Woes Afflicting Mortgage Giants Raise Loan Rates [NY Times]
Photo by woodleywonderworks
May 19, 2008
No Shirt, No Shoes, No Mortgage
It's getting more and more difficult for would-be borrowers in the New York region to get a mortgage, according to an article in yesterday's Times. Mortgage brokers say many lenders are refusing loans to applicants with credit scores that are below the 680-700 range. Stated-income loans, meanwhile, are basically history, and people with lower credit scores have to pay much bigger down payments. To add insult to injury, loans are coming with more fees nowadays, especially for those with less-than-pristine credit. One financial analyst says loan applicants with credit scores below 720 and down payments of less than 40 percent face fees between .5 and .75 percent of the loan amount. Is all this a necessary correction, or has the pendulum swung too far in the other direction, making home ownership unattainable for a huge segment of the population?
Lenders Raise the Bar [NY Times]
Chart from The New York Times.
April 23, 2008
Cash for Condos Grows Scarcer; Equity Lines Vanish
Syndicated real estate columnist Kenneth Harney reports that would-be condo buyers across the country are about to find financing harder to come by. Fannie Mae and Freddie Mac have both recently issued guidelines that require loan officers to perform due-diligence research on characteristics like a condo's legal documentation and the percentage of units owned by investors, and for lenders to assume legal and financial responsibility for the accuracy of their assessments. "Even if you had an 800 FICO score and 50 percent equity," says one mortgage broker, "you still might not be able to get a condo loan." As Harney writes, "It depends on whether the underlying project can pass the underwriting tests, is in a declining market, and has a lender 'concentration' limit on it. Some lenders refuse to finance more than a set percentage of units in a single condo project to limit their risk." At the same time, many home owners are starting to see big reductions, or freezes, on their home equity lines of credit. A poster on the Forum recently wrote the following: "Logged into my bank account today to find that my line of credit had been cut down by more than half. When I called the bank they told me it was due to a "reduction in property value". I know things ain't peachy, but I haven't noticed prices going down that much! Has anyone else had experience with challenging this type of decision? I put 40% down on my home, fer chrissakes, got a great lease on my rental unit and my credit is well above 750. What gives?!" As the Times has reported, banks are freezing equity lines "even in areas where property prices are rising." Ouch.
Condo-Loan Restrictions Tightening [Baltimore Sun]
Incredible Shrinking HELOC?? [Forum]
Photo by Evaonne Hendricks.
March 19, 2008
Closing Bell: Architect of Subprime Crisis Dies
Roland E. Arnall, the founder of the Ameriquest Mortgage Company, died earlier this week. Arnall, whose personal fortune was pegged at $1.5 billion by Forbes last year, was a top donor to the Republican party and was named the U.S. Ambassador to the Netherlands in '06. Ameriquest, which went out of business last August, was one of the largest subprime lenders in the country and was the target of dozens of lawsuits over its allegedly deceptive lending practices. Arnall was 68.
Roland Arnall, Mortgage Innovator, Dies at 68 [NY Times]
March 10, 2008
Fannie Mae Supersizes You
Last week Fannie Mae and Freddie Mac made it easier for buyers in high-priced areas like New York to get big loans or re-fi their existing ones. Limits for federally backed loans in 70 counties across the U.S. have now been raised to $729,750, according to an article in the Wall Street Journal. The move is supposed to encourage lenders to to drop rates on jumbo loans (those over $417,000), which have soared above smaller loan amounts in the wake of the credit crunch. The loan-limit increase, however, will be short-lived: It's set to expire at the end of this year. Still, this should do more to prop up the economy than tax rebate checks.
Fannie, Freddie Loan Limits Raised [WSJ]
Photo by *andrew.
Latest Restaurant Additions
-
Le Barricou
added November 20, 2009 12:00 PM in Williamsburg -
Der Schwarze Kölner
added November 19, 2009 12:00 PM in Fort Greene -
Oak Wine Bar & Café
added November 18, 2009 12:00 PM in Williamsburg -
Mr. Wonton
added November 17, 2009 12:00 PM in Park Slope -
Casa Rosa
added November 16, 2009 12:00 PM in Carroll Gardens -
Cousin John's Café & Bakery
added November 13, 2009 12:00 PM in Park Slope -
Elote
added November 12, 2009 12:00 PM in Williamsburg -
Miracle Grill
added November 11, 2009 12:00 PM in Park Slope -
Phoebe's Cafe
added November 10, 2009 12:00 PM in Williamsburg -
Ruthie's
added November 9, 2009 12:00 PM in Clinton Hill, Downtown Brooklyn