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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.
11/07/2008 9:01 AM
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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.
10/28/2008 9:02 AM
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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]
10/15/2008 10:32 AM
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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.
10/10/2008 9:01 AM
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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
07/25/2008 10:00 AM
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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
07/23/2008 9:00 AM
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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.
05/19/2008 9:00 AM
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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.
04/23/2008 9:29 AM
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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]
03/19/2008 4:00 PM
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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.
03/10/2008 10:30 AM
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Study: Subprime More Prevalent in Minority Nabes
A new study from NYU’s Furman Center for Real Estate and Urban Policy shows that subprime lending in the city last year was much more common in minority-heavy neighborhoods than in mostly white neighborhoods, irrespective of median income levels. For example, 44 percent of loans in East Flatbush, a predominantly black and Hispanic neighborhood, were subprime; in Sheepshead Bay and Gravesend, which are majority white, 10.8 percent of mortgages were from subprime lenders. All three neighborhoods have median incomes in the $40,000 to $50,000 range. Though the study didn’t take into account things like borrowers’ credit histories, it definitely raises questions about whether subprime lenders have engaged in discriminatory practices by offering white borrowers loans with better rates. There certainly is a disgraceful element here, but how big it is, we don’t know, said Julia Vitullo-Martin, a senior fellow at the Manhattan Institute. Is it a few rogue lenders, or is it an extensive problem that requires a regulatory response? We don’t know yet.
Study Finds Disparities in Mortgages by Race [NY Times]
Tilden Avenue photo by polychrome
10/15/2007 10:05 AM
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Renegotiating a Mortgage: One Man’s Quest
A reader emailed us the letter he was planning to send to his lender in an effort to renegotiate the terms of his loan. We thought it would be interesting to get readers’ input, both in terms of changes/improvements to the letter as well as predictions about the likelihood of his success.
Dear Madam or Sir:
I am writing to be considered for a loan modification. I am currently in year three of a 5yr fixed mortgage at a rate of 5.75%. As I weigh my options, I am asking that MORTGAGECO extend me a lower, fixed rate for a term of 30 or 20 years. I have every intention of exploring my mortgage options with other lenders but first I wanted to contact you. I would be happy to remain a customer of MORTGAGECO under the proper terms.
In no way should this be considered a plea… (more…)
10/10/2007 9:33 AM
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Man on the Street: Mortgage Crisis Hitting Close to Home?
We buttonholed a few folks this week on the streets of Park Slope and asked whether they knew anyone who’d been affected by the mortgage crisis. While no one reported trouble close to home, plenty thought it might be looming just ’round the corner…
I don’t know anybody who’s been affected, but I’ll probably see some in the coming months. Houses around here are so expensive that I don’t know how you can buy without a heavy mortgage.
Kyle; lives in Park Slope.
Not really, but I know mostly young people who’ve recently bought and people who’ve owned their houses for many years. I assume I’ll start seeing more people affected by it. Part of it might be, though, that it’s not something that people readily talk about.
Julia; lives in Fort Greene.
No. I certainly can’t imagine anyone I know having trouble with a mortgage, because I don’t know anyone in New York who can afford a mortgage–let alone be in trouble for it.
Steve; lives in Williamsburg.
No. I don’t really know anything about it.
Tiffany; lives in Park Slope.
Abby; lives in Park Slope.
09/28/2007 10:58 AM
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As Mortgage Rates Rise, More Deals Sink
The suffocating embrace of the subprime crisis is definitely starting to take the wind out of the city’s residential deals. Mortgage brokers say they’re seeing a pronounced uptick in the number of buyers who are backing out of deals because they can’t get mortgages at competitive interest rates. Hardest hit are borrowers who don’t have excellent credit histories, or who expected to take out large mortgages and then pay them down with bonuses. A number of brokers say they’re seeing plenty of prospective buyers who didn’t lock in rates and who can’t close on the units because they can’t afford higher-than-expected monthly payments. And these are borrowers who aren’t necessarily on financially shaky ground—a sobering article in today’s Times documents some of the effects of too-lenient lending practices geared towards lower-income earners. Large swaths of working-class enclaves in the boroughs, like parts of central Brooklyn, have turned into new-development ghost towns because of predatory lending practices and concomitant rising foreclosure rates. So it’s becoming clear that the mortgage industry crisis is now affecting the city’s haves and have-nots. Anyone had a deal scuttled recently?
Frustrated New Yorkers Grapple With Loan Rates [NY Times]
Risky Loans Help Build Ghost Town of New Homes [NY Times]
Photo by D.B. Blas
09/24/2007 9:00 AM
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Bargaining With The Bank
The Times ran an interesting piece yesterday reminding those facing a mortgage payment crunch to be proactive with their lenders. The logic makes sense: Your bank does not want to foreclose on you; it’s not in the real estate speculation business and the process of disposing of a repossessed property costs it $40,000 or so. As a result, if you can come up with a proposal that will cost your bank less than $40,000, a compromise is likely. The article recomends starting the conversation three to four months before a rate reset. Have any Brownstoner readers been through a negotiation like this or know anyone who has?
Homeowners, Call Your Bankers Before They Call You [NY Times]
Photo by Mark Lennox
04/02/2007 8:58 AM
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panyl
May 21, 2012 | 02:16 PM