Thursday’s Advocacy & Think Tank Round-Up
- Enterprise Community Partners and the National Low Income Housing Coalition and 45 other affordable housing advocates signed a letter to the appropriations committees of the house and senate urging them to pride at least $1.2 billion for the HOME Investment Partnerships Program (HOME). a block grant that provides states and localities critical resources to help them respond to affordable housing challenges.
- A recent study by the National Association of Realtors finds that formerly distressed homeowners with restored credit are re-entering the housing market, nearly a million of these former owners have likely already purchased a home again, and an additional 1.5 million are likely to become eligible and purchase over the next five years, representing an additional source of buyer demand for the housing market.
- National Association of Realtors also released it’s March Realtor Confidence Index which finds gains in home sales and prices but noted concern over lender delays and tight inventory, especially for affordable units.
April 23, 2015 | Permalink | No Comments
April 22, 2015
Reiss on Anatomy of a Mortgage
MainStreet quoted me in The Anatomy of a Mortgage – Determining Which Fees You Need to Pay. It reads in part,
All mortgages are not created equal, so reading the fine print before you agree to a long-term commitment is crucial.
Mortgage lenders now have become “very risk averse” since the financial crisis and are doing everything “pretty much by the book,” said Greg McBride, the chief financial analyst for Bankrate.com, a New York-based personal finance content company. “The rules on the ability of a homeowner to be able to repay are stricter than ten years ago,” he said. “Niche products have gone back to niche borrowers.”
While lenders are offering fewer risky products such as interest only mortgages to run-of-the-mill consumers, there are still hidden fees and other deceptive practices to be wary of, said Jason van den Brand, CEO of Lenda, the San Francisco-based online mortgage company.
In 2013, the Consumer Finance Protection Bureau issued guidelines to protect consumers from the types of mortgages that contributed to the financial crash. In the past, lenders were approving mortgages that allowed consumers to borrow large sums of money without any documentation such as pay stubs and offered extremely low interest rates to lure people into buying homes.
“It also doesn’t mean that the potential to get bad mortgage advice has been eliminated,” van den Brand said. “There aren’t bad mortgage products, just bad advice and decisions.”
Here are the top seven things consumers should consider carefully.
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Avoid choosing an adjustable rate mortgage or ARM when it makes more sense to select a fixed rate mortgage. Those low initial rates offered by ARMs are enticing, but they only make sense for homeowners who know that in less than ten years, they plan to upgrade to a large home, move to another neighborhood or relocate for work. Many ARMs are called a 5/1 or 7/1, which means that they are fixed at the introductory interest rate for five or seven years and then readjust every year after that, which increases your monthly mortgage payment said David Reiss, a law professor at Brooklyn Law School.
While many homeowners gravitate toward a 30-year mortgage, younger owners “should seriously consider getting an ARM if they think that they might move sooner rather than later,” he said. If you are single and buying a one-bedroom condo, it is likely you could sell that condo and buy a house in the future. “That person might not want to pay for the long-term safety of a 30-year fixed rate mortgage and instead save money with a 7/1 ARM,” Reiss said.
April 22, 2015 | Permalink | No Comments
Wednesday’s Academic Roundup
- Keepings, by Donald J. Kochan, NYU Environmental Law Journal (2015) Forthcoming.
- Low-Income Housing Policy, by Robert A. Collinson, Ingrid Gould Ellen, & Jens Ludwig, NBER Working Paper No. w.21071.
- Housing Discrimination Among Available Housing Units in 2012: Do Paired Testing Studies Understate Housing Discrimination, by Rob Pitingolo & Stephen L. Ross, April 5, 2015.
April 22, 2015 | Permalink | No Comments
April 21, 2015
How Can Tech Support Housing Rights?
Here is Linda Raftree’s write up of the Technology Salon Brooklyn event on How Can Tech Support Housing Rights in Brooklyn? The salon co-hosted the event with the Brooklyn Community Foundation (BCF) and AfroLatin@ Project. The salon attendees explored the issue of tenant rights within the wider context of structural discrimination:
We aimed to think about how new technology and social media might be a tool for helping community organizations to support Brooklyn residents to know their rights and report violations. We were also curious about how better use of data (and ‘big data’) might help housing rights activists and community organizations to more successfully engage residents and advocate for change.
Our lead discussant was David Reiss from Brooklyn Law School, who provided an overview of the wider housing market and challenges in New York City as well as information on some applications that are helping landlords do a better job of keeping properties up to standard. We also heard from Tynesha McHarris (BCF) and Amilcar Priestly (AfroLatin@ Project).
Clearly, tech offers no magic bullets for the gap between the supply and demand of housing in NYC, but there were some intriguing ideas about how to protect rent-regulated tenants from harassment. There were also some interesting ideas about how public housing tenants could use technology to track and organize around bad housing conditions. The write up of the salon is here and is worth a read.
April 21, 2015 | Permalink | No Comments
Tuesday’s Regulatory & Legislative Round-Up
- Enterprise Community Partners made comments to the Senate Finance Committee’s Community Development and Infrastructure Tax Reform Working Group, as part of a New Market Tax Credit Coalition, which is calling for preservation of the credit as it has been critical to the development of affordable housing.
- Federal Housing Finance Agency finds, after studying the matter, “no compelling economic reason” to change the guarantee fees charged by Fannie May and Freddie Mac. FHFA’s review focused on reaching an appropriate balance between FHFA’s statutory obligations to: 1) ensure the safety and soundness of the Enterprises, and 2) foster a liquid national housing finance market.
April 21, 2015 | Permalink | No Comments
April 20, 2015
Reiss on Low Interest Rates & Down Payments
MainStreet quoted me in How to Get the Lowest Mortgage Rates Without a Large Down Payment. It reads in part,
Low mortgage rates can play a large factor whether homeowners are able to save tens of thousands of dollars in interest.
Even a 1% difference in the mortgage rate can save a homeowner $40,000 over 30 years for a mortgage valued at $200,000. Having a top-notch credit score plays a critical factor in determining what interest rate lenders will offer consumers, but other issues such as the amount of your down payment also impact it.
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Opt For an FHA or ARM
Both an adjustable rate mortgage (ARM) and a Federal Housing Administration (FHA) mortgage are good options if homeowners are concerned about receiving a lower interest rate and have not been able to accumulate the 20% standard down payment.
The biggest benefit of an ARM is that they have lower interest rates than the more common 30-year fixed rate mortgage. Many ARMs are called a 5/1 or 7/1, which means that they are fixed at the introductory interest rate for five or seven years and then readjust every year after that, said David Reiss, a law professor at Brooklyn Law School in N.Y. The new rate is based on an index, perhaps LIBOR, as well as a margin on top of that index.
While many homeowners gravitate toward a 30-year mortgage, younger owners “should seriously consider getting an ARM if they think that they might move sooner rather than later,” he said.
FHA loans can be a good option for consumers purchasing their first home because they require much smaller down payment of 3.5%.
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Given that young households tend not to have the savings for a substantial down payment, they can be an attractive option, Reiss said.
April 20, 2015 | Permalink | No Comments
