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…)
Over 20 Percent of NYC Metro Area Mortgage Holders Underwater, But Brownstone Brooklyn Largely Spared
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.
One-fifth of NYC-area Borrowers Are Underwater [The Real Deal]
From The Wall Street Journal:
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.
“The mortgage loan delinquency rate in Brooklyn, the Bronx and Queens in the final quarter of 2010 was up from year-earlier levels, according to a recent quarterly analysis. The uptick could well lead to a rise in foreclosure activity in coming months. Brooklyn recorded the greatest increase in the percentage of borrowers 60 or more days past due with their mortgage payments with a 1.05 percentage point increase last year, according to data compiled by TransUnion, a Chicago-based credit and information management company….Despite last year’s rise in mortgage delinquencies in New York, foreclosures dropped drastically in the city as a whole, as well as in each borough. According to PropertyShark.com, new foreclosures were down 59% last month from a year ago citywide. But experts warn that the decline may not accurately represent the market conditions because banks implemented a temporary freeze in filings to examine their foreclosure processes.” -Crains
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
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
A Down Payment Anomaly [NY Times]
Photo by Corey Thomas
More Help for New Yorkers [NY Times]
Photo by David Lot
Lifelines for Those â€˜Underwater’ [NY Times]
Photo by zert.sonstige_2008
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]
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]
Penetrating the Maze of Mortgage Relief [NY Times]
Photo by Nick Blake.
Photo by Rev Dan Catt
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.
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?
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]
Why Credit Lines Are Drying Up [NY Times]
Photo by lactardjosh