IRS clerks allowed to work during shutdown

After an intense lobbying effort my the mortgage industry 400 furloughed IRS clerks will be allowed to work – and get paid – during the current partial federal government shutdown. These clerks help potential home buyers verify their incomes. Without their work, the $1.3 trillion mortgage industry would be at a standstill.

Many questioned the government’s decision to allow the clerks to work, arguing that while their jobs are important, they are not essential as outlined by the law. It was seen as a favor to a powerful industry.

Government officials responded by saying it was done as a service to consumers trying to buy a home and not as a favor to the mortgage industry.

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Poorly designed buildings contributing to obesity

A New study from the nonprofit Trust of America’s Health states that architectural design of buildings – including homes – are contributing to the obesity crisis. While current trends are placing an increased emphasis on outdoor spaces such as parks, bike lines, and sidewalks, building interiors are seriously lagging behind.

Some cities, such as New York, are adopting “active design guidelines” that are putting greater emphasis on the prominent placement – and use – of stairs and ramps and downplaying the use of elevators and escalators.

It is estimated that the average person spends 90 percent of their time indoors. With obesity at nearly 40 percent of Americans, including 18 percent of children under the age of 18, physical activity must be increased.

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Trade tariffs may drive up home prices

The national Association of Home Builders is warning that the next round of trade tariffs aimed at China could target close to $10 billion of goods used in home construction. This includes approximately 6,000 imports used in the construction of new home and apartments.

The construction industry is already dealing with a 20 percent tariff on softwood lumber imports from Canada which add thousands of dollars to the cost of a single-family home.

These increases in costs is just another burden on the housing industry which is already dealing with a labor shortage causing many builders to delay or cancel projects.

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Fixing Bay Area Housing

A recent summit of housing developers, city leaders and resident advocates – Urban Land Institute’s “Housing the Bay” – in San Francisco discussed ways to fix, or at least improve, the current housing shortage in the Bay Area. All agreed that the siutation is so critical that no reasonable idea should be dismissed. Some of the possible solutions included:

  • More duplexes or fourplexes as the demand for single-family homes continues to severely limit supply
  • Boost production by changing – i.e. lowering – city fees
  • Create a middle-income financing structure
  • Remove Prop. 13 from commercial properties
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Apartment Development Slowing?

One of the nation’s and Bay Area’s largest apartment developers, Equity Residential, said recently that building new housing in major U.S. cities is becoming more difficult and predicts there will be fewer projects in the future.

According to Equity Residential, higher construction costs, the price of land, and less available financing are all responsible for the slowdown.

While prices in San Francisco remain high, softening rents and the city’s higher affordable requirements have slowed development. Oakland has actually seen more proposals in the last two years as costs are lower and approvals generally faster.

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Freddie Mac Looking to Automate Appraisal Process

Mortgage servicer Freddie Mac will soon be featuring a new program called Automated Collateral Evaluation (ACE) that will allow some buyers to skip the traditional appraisal process in an effort to speed up the closing process and lessen fees for home buyers.

ACE is a computer algorithm that uses data from multiple listing services, public records and historical home values to determined a property’s collateral risk. Not all home purchases will be eligible however as the system will assess if a property needs to be appraised by a human.

According to Freddie Mac those that do qualify should see closing times improved by 10 days and may save up to $500. The new program for home purchases is scheduled to begin on September 1.

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FHA’s planned mortgage insurance premium cut “suspended indefinitely”

The U.S. Department of Housing and Urban Development announced that it has “suspended indefinitely” a planned cut in the annual mortgage insurance premium on home loans insured by the Federal Housing Administration. The FHA loans accounted for 12.1 percent of loans in the San Francisco metro area in the 12 months ending in September. This is considerably lower than the 24.4 precent in California, primarily because the maximum loan $636,150 in all Bay Area counties (except Solano and Sonoma, which are lower) and the median home price in the region was $695,000.

First-time home buyers often use FHA loans as they require lower down payments (as little as 3.5 percent) and lower credit scores (580 and above) as compared with Fannie Mae and Freddie Mac.

Analysts say home buyers in California would have saved an average of $860.00 a year.

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Foreclosures at Lowest Level in 10 Years

According to a recent report by RealtyTrac, foreclosure starts in the United States dropped one percent in August to 45,072, a decrease 19 percent year-on-year decrease. This means that nationwide foreclosures are currently at their lowest level since November 2005.

On the other hand, while bank repossessions were down 22 percent in August when compared with July to 36,792, overall this still represented a 40 percent increase over a comparable period in 2014 and a huge increase over the pre-crisis average in 2005 of 23,119.

According to RealtyTrac the best explanation is that banks are making a concerted effort to clear out current foreclosure inventories.

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Truth-in-Lending/Real Estate Protection Act Integrated Disclosure Rule Takes Effect

Huh?

Simply put, the TRID (Truth-in-Lending/Real Estate Protection Act Integrated Disclosure Rule) states that as of October 3, 2015, the final closing costs on a home loan must be made available to a consumer purchasing or refinancing a home three business days before closing.

This means that all parties have to take special care in planning a purchase or refinance transaction as last minute changes are now more likely to cause delays.

The good news for would-be buyers is that if your application is fully pre-approved by your lender this could ultimately make your offer more enticing to a seller.

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91% of Homes Have Equity

A recent report by CoreLogic states that the total of residential mortgages that are currently lower than their property’s value is approximately 45.9 million or about 91 percent of all mortgaged properties. CoreLogic is predicting that home prices will rise an additional 4.7 percent over the next year will mean another 800,000 home owners will regain positive equity by July 2016.

Analysts agree that sharply rising prices over the past three years, coupled with low housing stock, is primarily responsible for the improved equity percentages.

While 91 percent is an impressive percentage it does mean that the number of homes with negative equity is still high at 4.4 million. According to the report, 95 percent of homes valued at more than $200,000 have equity, compared with 87 percent of homes with a value less than $200,000.

Texas, Alaska, Hawaii, Montana and Colorado are the states with the highest percentage of mortgaged properties in positive equity.

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