Rising Home Prices In The U.S.
http://thedianerehmshow.org/shows/2012-08-09/rising-home-prices-us
For the first time in seven years, home prices are going up. What fewer foreclosures, record low mortgage rates and renewed investor enthusiasm mean for the U.S housing market and the overall economy.
Guests
Mark Zandi
chief economist at Moody's Analytics and author of "Paying the Price: Ending the Great Recessions and Beginning a New American Century."
Dean Baker
co-director of the Center for Economic and Policy Research, blogger at "Beat the Press" and author of "The End of Loser Liberalism: Making Markets Progressive."
Doug Duncan
chief economist at Fannie Mae.
Comments
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Hooray, lets reinflate the housing bubble and mortgage our way to wealth.
Q. There is one segment of homeowners that is being left out of the response to the housing collapse and the money they could save from refinancing at lower rates even though they have been dutifully making their payments: the people who's are 'under-water' (they owe more than the current value of their home) but their mortgages notes were kept by the banks rather than sold to Fannie or Freddie. They are not eligible under HARP Should there not be a mandate for banks to offer refinancing on these loans based on terms similar to HARP? Otherwise, the banks have no incentive to offer refinancing because they are making money on the original higher mortgage rates.
25 yrs ago I have a house in Oklahoma with a 12.5 interest rate. We had an oil bust and my house was underwater WITH 12.5% rate. No one was yelling to help us here. I was getting married and was looking at losing half on the house, I rented the house out and gritted my teeth until times came back. People need to stop whining and full fill the contract they signed.
Jean OKC
I have represented older homeowners facing foreclosing for over 20 years. Fannie Mae was very much a part of the problem. Its guidelines permitted it to purchase "no income, no asset" (where the borrower's income was not even stated on the loan application) and interest only mortgages originated by other lenders. I do not think the statement that Fannie was not a player in the subprime/Alt A problems is founded in fact.
If reduction of principal is on the table, I only wish I had purchased a bigger house...
I have yet to meet anyone who has received an apology letter from the Republican/T-Party for their deregulation that caused the bubble and the bubble bursting. 10`s of million of American families lost much of their wealth when their home values crashed. So much for taking RESPONSIBILITY.....
The Bush 2005 changes to the bankruptcy laws are biting homeowners hard today.
This is hardly anything to rejoice about. In 1955, the year I began school, my parents had built a new home. The total cost was about $4000. The monthly payments were $80 per month. That house was paid for in about 10 years; before I had finished high school. In fact, in their lifetimes, they owned and paid for in full at least 4 different homes. I'm fairly certain they owned at least one home in another part of the state before I was born.
They were lower-middle class textile workers; hourly paid. Their total life savings was about $30,000. But this story wasn't unique; only unique to that generation.
Most of the current generation will be lucky to pay off one mortgage in their lifetime.
My house is in foreclosure because the mortgage company made an error in my account. I went to court - an euphanism - but my case was not even considered, and it was found in favor of the mortgage company. I am now in appeal.
I owe no money, have paid for my house for 15 years without missing a payment, and requested a modification because of downsizing in my work. I now have a good job and wished I never participated in "Save the Dream Ohio" program. I have fought this since December of 2010, and can't get anywhere.
My mortgage company is not listed in the independent foreclosure review. Any suggestions from your experts about where to turn next?
This time, though lets try a novel little concept of not buying more than you can afford, and not being dishonest with your loan officer.
I totally agree with the bankruptcy attorney!!!!
The banks don't want to lend or refinance. It took us 5 applications and over 14 months to refinance our home. We have perfect credit in 780 range, 6 years perfect payment history @ 13% interest!!, 40% equity, more than adequate income and strong DTI ratios at new 4% interest rate.
The main issue was underwriting guidelines have changed to become so illogical and ridiculously strict that it nearly impossible to qualify unless one fits inside a tiny perfect box.
Once we navigated the qualification process, the appraiser came out and valued our home at nearly HALF of the value using bad comparables such as foreclosures and unqualified sales. We disputed the appraisal and finally were able to refi after second appraisal came in just under value needed. So we kicked in extra $$ to close.
I read that rejection rates for mortgage applications are around 40% in Florida and personally know why.
I have a question I don't remember ever hearing asked or answered. It amazes me that lending institutions will not let a person refinance their home if they are upside down. You are the same person, it is the same house, and they already own the mortgage.
If refinancing the home keeps a person in the house and paying the mortgage, I would think it is a win/win.
Wouldn't this be better than the lending institution foreclosing on the home, displacing the owner, and having a home they now have to sell at a lower price?
The caller told about her problem- having 20% to put down but not being able to buy a house to live in because other buyers are paying 100% cash. Her question was clear- how does she buy a home? She does not want to continue to be a renter. The gentleman answering the question did not even listen to her question- as he got it totally wrong. Then when it was explained to him, he did not answer. He did not even have the courtesy to say he did not know the answer and tell her where to go for help. Instead he rudely told about a friend who had the opposite problem. I found that rude. Please don't have him as a guest again. It reminded me of child in school who raises his/her hand and instead of answering the teacher's question says he's going for ice cream after school.
I often hear people reference healthcare as being a right - a basic requirement associated with citizenship in a modern culture. It would seem to me that shelter would hold the same priority. Hence, shouldn't housing be free and available to all as simply a benefit of being able to fog a mirror? And, as we are among the most advanced of nations, shouldn't our citizenry be able to expect only the very best in housing, free to all - not as a benefit or charity, but as a right?
@marisadanielle Agreed. I thought the panel was very cowardly overall in refusing to address the very real concerns of ordinary homeowners. What is the point of having experts pontificate on the radio if they won't talk about the elephant in the room?
We had the same problem that one of the callers had. "Investors" were buying up the better houses for cash and sending in hired teams to rehab, when necessary. They then rented or sold outright---flipped.
We were pre-approved for a mortgage, but lawyers for banks chose to sell to investors for cash because it is easier and faster. Sometimes the bid (best offer by a certain date) was the same. They are not required to sell to the highest bidder and can sell to anyone of their choosing. It may be "good lawyering" and good "free marketing", but it demonstrates that "money talks" and the middle class suffers.
I think that your guest is wrong about LIBOR, as that initial adjustable rate reset is what started people who had been affording their homes to suddenly find their payments doubled and tripled, sending them to try refinance, as they had been told they would be able do when the adjustable rates went up, or after two years; but they were then denied, could not make the exorbitant payments, and this started the foreclosure avalanche.
I do believe that the banks intend to hold onto as many underwater loans as possible because if their books say they have an asset worth 100,000 rather than 50,000, they then have a larger amount of money to "bet" with.
I constantly hear that the banks don't want to own homes, but i think that is exactly what they do want. They will rent peoples own homes to them, managed by the likes of Remax and Century 21; the bank retains the asset and then can resell it in the future if prices will ever recover, but meanwhile they have both an income stream equal to the mortgage payments they were getting as well as the inflated price of the asset on their books, which they use as a basis claim of their "capital" which the government has required them to increase. Many families will take this option in the interest of keeping their children in The Good School District which they had hunted so long to find.
I have been trying for over a year to buy a home. I prequalified for $40,000 which is not much but there were a lot available last summer. I made half a dozen bids but none were accepted because cash trumped a FHA loan. There is nothing left in Phoenix now. Investors have snapped up everything and they will be rented out at 2-3 times what my mortgage would have been.
Now Fannie Mae has batched out a large block of foreclosures to an unknown investor, reducing the available homes even more. It seems to me that this whole economic thing has resulted in more movement of the country's resources to the upper 2%. Individual citizens of modest means haven't got a chance.
"Paying the Price: Ending the Great Recession and Beginning a New American Century" [Hardcover]
Mark Zandi (Author)
"Publication Date: September 24, 2012
Only a few years ago, the U.S. financial system and economy were near collapse. Global financial institutions teetered and fell, while at once-mighty U.S. companies, panicked CEOs slashed jobs. The financial chaos inflicted catastrophic damage: double-digit unemployment; crashing house and stock prices; federal budget deficits in the trillions, and a wider gap between the country’s haves and have-nots. Today many Americans still feel shell-shocked. But while there remains much to be nervous and frustrated about, it is impressive how much progress has been made in righting the wrongs that got us into this mess. The economy is growing and steadily creating jobs; house prices are stable and stock prices are up; debt burdens have eased for most households and the financial system has shored up its foundations to an impressive degree. American companies are as competitive globally as they have been in a half century. This dramatic turn in the economy’s fortunes occurred because of what government did to stem the financial panic and combat the effects of Great Recession. Policymakers’ unprecedented actions – from Congress’ auto and bank bailouts and fiscal stimulus, to the Federal Reserve’s zero interest rates and quantitative easing – remain intensely controversial, but ultimately they will be judged a success. Serious problems remain, including the government’s mounting debt load and a burgeoning number of disenfranchised workers, but we are on our way to addressing them. Our economic future has arguably never been brighter."
As I read this review, tears were rolling down my tired old cheeks.
Morning in America!!!
Thank G_d and thank the Producers of the DRShow for their selection of timely, wise and generous Panelists!!!
Monte Haun mchaun@hotmail.com
While it's better than nothing, the HARP 2.0 program continues to disappoint underwater homeowners, many of whom are desperate for fix their financial situation through mortgage re-financing. Many lending institutions (many whom are very large in size) participating in the program are retaining lending guidelines that are far, far too conservative to help many underwater borrowers who really need it. For example, the lenders we checked with all had lending caps of 95% to 105% Loan-to-Value (LTV). Rather modest ratios I'd say, given that the HARP program is supposed to enable re-financing loans of up to 120% LTV.
Hi, The topic of home and home foreclosures touches me deeply after all these years. I lost my Atlanta condo in November 2005 due to mortgage fraud and predatory lending. I have never forgotten the horrible feeling of not having a home anymore. Now something similar is happening. I am being evicted after having lived with a so called friend. I am reliving the emotional turmoil of the early part of this century through this second experience. Homelessness and eviction and foreclosures must stop. When I owned my condo I was trapped in a situation with 2 very high interest rates in spite of my excellent credit score. I am trapped now. Eugenia Renskoff