FHA LOAN LIMITS RETURN!!!

SOURCE: National Association of Realtors

November 17, 2011 20:38 ET

Realtors® Applaud Congress for Reinstating FHA Loan Limits

WASHINGTON, DC--(Marketwire - Nov 17, 2011) - The National Association of Realtors® commends Congress for reinstating the loan limit formula and maximum cap for Federal Housing Administration-insured loans for two years.
"As the nation's leading advocate for homeownership, we applaud members of Congress for restoring FHA's previous loan limits, which will help reduce consumer cost burdens, stabilize local housing markets and allow qualified, creditworthy borrowers to access affordable mortgage financing," said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. "The reinstated loan limits will help provide much needed liquidity and stability to communities nationwide as tight credit restrictions continue to prevent some qualified buyers from becoming home owners and the housing market recovery remains fragile."
The provision reinstates the FHA loan limits through 2013 at 125 percent of local area median home prices, up to a maximum of $729,750 in the highest cost markets. The floor will remain at $271,050. The loan limits for Fannie Mae- and Freddie Mac-backed mortgages will remain at 115 percent of local area median home prices, up to $625,500.
NAR believes the reinstated loan limit formula and cap change will help make mortgages more affordable and accessible for hard-working, middle-class families throughout the country, not just wealthy individuals or those in costly markets. Nearly two-thirds of buyers who will be helped by the loan limits provision have incomes below $100,000.
"It's a misconception that only wealthy borrowers benefit from the maximum cost loan limits; middle-class home buyers living in all areas of the country deserve the same access to affordable mortgage financing and the same opportunity to achieve homeownership that home buyers enjoy in the most affordable regions of the country," said Veissi. The legislative action will have an impact even in communities with loan limits well below the maximum cap; the reset last month impacted 669 counties in 42 states and territories, with an average loan limit reduction of more than $68,000.
The bill also provides for a short-term extension of the National Flood Insurance Program through December 16, 2011. NAR strongly urges Congress to use the additional time to complete work on a five-year reauthorization of the program, which ensures access to affordable flood insurance for millions of home and business owners across the country.
The National Association of Realtors^®, "The Voice for Real Estate," is America's largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

GETTING CLOSER!

Why We Need the Housing Market to Hit Bottom

Written by: Brian O'Connell 11/11/11 - 12:01 PM EST

NEW YORK (MainStreet) -- With home values in decline, down about 29% since 2006 according to Zillow.com, you might think that affordability alone would make the housing market a good bet. But it isn't. And that is weird.

When the price of most commodities goes down, such as gasoline or oranges, the tendency is that consumers buy up more of those commodities. But that hasn't happened in the U.S. housing sector.

A bottom in the housing market has been a long time coming, and new numbers may make the picture clearer.

Even though housing prices, on average, have fallen almost by one-third in the past five years, housing purchases just haven't budged.

Pending home sales were down by 4.6% in September, according to Realtor.org, while existing homes sales fell by 3% (although sales for the year in both categories are up moderately). That's been the case for most years during the Great Recession, as sellers outnumber buyers.

But as any homebuyer could tell you, it's not easy getting credit for a $500,000 home -- or even a $300,000 home. In addition, high unemployment has made buyers nervous. Few consumers want to take on a massive source of debt when they're uncertain about their job prospects. In addition, consumers don't want to buy a home that may not appreciate in value all that much during the next 10 years.

But affordability may finally help get some homes off the market, albeit at a slower pace than homeowners and real estate professionals might like. Numbers from Fiserv Case-Shiller show that lower home prices may finally be triggering "price stability" in the U.S. housing market.

The Fiserv home price insights index shows three fairly major developments in the housing sector, one for the long haul and two happening right now:

Home prices in the U.S. are expected to decline 3.6% into mid-2012, and then rebound 2.4% in the second half of 2012 through the first half of 2013.

Price declines and low mortgage rates have resulted in dramatic improvements in housing affordability.

Fiserv estimates that the ratio between mortgage payments and housing income has fallen 40% from its peak in 2006.

"Housing affordability has improved dramatically because of declines in both prices and mortgage interest rates," explained David Stiff, chief economist at Fiserv, in a statement. "The monthly mortgage payment for a median-priced single-family home is now $700, compared to $1,140 in 2006 -- a decline of nearly 40%. Nationally, purchase mortgage payments now account for only 13% of monthly median family income, the lowest percentage on record (since 1971), and compared to 23% in the first quarter of 2006."

Both pricing declines and low mortgage rates may finally be gelling enough to where people should start to feel more comfortable buying a home, although the data show that lower-priced homes are more attractive than median-priced ones these days.

Of course, any pickup in "affordable" home purchases depends on the health of the U.S. economy -- an uncertain proposition as the U.S. and global economies struggle to emerge from recession. Stiff, for one, thinks the odds of that happening are pretty good.

"If economic growth picks up in the second half of 2011, then home prices should stabilize early next year," he says. "New housing construction is at an all-time low and inventories of foreclosed properties are starting to shrink. Lower levels of housing supply and more steady demand next year will reduce downward pressure on prices. As homebuyers become more confident, many who are sitting on the sidelines will begin to enter the market and prices will start to increase."

That would be a welcome prospect indeed for homeowners, and for buyers itching to get into a home of their own. We'll know a lot more by next spring, but for now, the outlook for housing is as good as it's been in a long while.

PRE-LISTING INSPECTION...NOT A BAD IDEA

3 must-knows about prelisting inspections

REThink Real Estate
By Tara-Nicholle Nelson
Inman News™

Q: Recently, I read an article of yours in which you told a seller to have her home inspected before putting it on the market. I will be putting my mom's house on the market, and in watching many of the real estate TV shows, I had never heard or seen this idea before.
Can I really obtain the home inspection in advance? The process always seems to have problems after the prospective buyer gets the mortgage and then pays for his or her own inspection. It would seem like a good selling point if the property already had a clean inspection or the indicated repair were already taken care of. --Albert W.
A: You absolutely can -- and possibly should -- obtain an inspection on your mother's home before you put it on the market. Given the way mortgage lending guidelines have tightened up and the fact that appraisal and condition issues are killing a larger number of transactions than at any time in memory, obtaining prelisting inspections differentiate your home from the overwhelming competition and boost your home's chances of selling by helping satisfy prospective buyers that the property will:

• pass the lender's and appraiser's condition guidelines;
• not have surprise condition issues arise midtransaction; and
• be in a condition that maps to the price they've agreed to pay for it.

Here are some things you should think about as you decide whether to move forward with obtaining prelisting inspections and figure out a plan around how to leverage the reports.
1. Prelisting inspections won't make the deal, but they can help optimize your chances of closing the deal. Buyers are not going to buy a house they wouldn't consider otherwise because it has reports, but if they are debating between your mother's home and another property, a clean bill of house health, documentation that needed repairs have been completed, or even reports showing what needs doing and a corresponding discount can help push buyers off the fence.
As you noted, many homes fall out of escrow because of condition issues not discovered until the transaction is partially underway. Sometimes, advance inspection reports can surface issues, allow you to get repairs completed and thus avoid that issue.
However, at other times, prelisting inspections show issues too big for you to have repaired that will be deal-killers for almost any mortgage lender. In this case, you do yourself the favor of forgoing even bothering trying to get it past a mortgage lender and empower yourself to list it as a cash-only sale for a fixer-upper price.
2. Having prelisting inspections may change your disclosure requirements. You don't mention whether your mother has passed away, but if so, and you are selling her home on behalf of her estate, you could very well be exempt from many disclosure requirements, depending on your state's law. (Consult with a local real estate agent to find out.)
However, once you obtain prelisting inspections, you will have a legal duty to provide information about any defects turned up to prospective buyers. That still might make sense, especially if the home is in great shape or you do elect to invest in necessary repairs. Just be aware that by obtaining the inspections you might heighten your own legal duties vis-à-vis making disclosures about the condition of the home.
3. Your prelisting inspection won't replace the buyer's inspections. To be clear, whatever inspection(s) you obtain won't be the inspection -- it will just be an inspection. You'll want to expressly advise the buyer that the prelisting inspections -- and I would encourage you to consider a pest inspection, property inspection and a roof inspection -- are for his information only.
You don't want the buyer to rely totally on it and forgo his own due diligence for liability reasons; your aim is to either verify the place is in good shape, clear the place of major repairs or brief them on why the property is being priced in that way and what they'll need to do (or won't need to do) later, assuming you can negotiate an as-is offer.
But you also want the buyer to still obtain his own inspections, so he can attend, ask questions, select the inspector and not fault you for anything that is missed. And you should work with your listing agent to require that the buyer sign your written advice to get his own inspections, as well as to make the property available to the buyer for just that purpose.

NEW FHA LOAN LIMITS

 As the housing market and the overall U.S. economy continue to falter, a group of real estate industry executives recently took the time to draft a letter to John Boehner, Speaker of the House; Nancy Pelosi, Office of the Democratic Leader; Majority Leader Harry Reid and Minority Leader Mitch McConnell