- Amidst the Walking Dead: Judicial and Nonjudicial Approaches for Eradicating Zombie Mortgages, by Andrea Clark, Emory Law Journal, Vol. 65, No. 3, Forthcoming.
- The Paradox of Judicial Foreclosure: Collateral Value Uncertainty and Mortgage Rates, by David Harrison & Michael Seiler, Journal of Real Estate Finance and Economics, Vol. 50, No. 3, 2015.
- Debt, Default and Crises: A Historical Perspective, by Antonie Kotze, Financial Chaos Theory; Department of Finance and Investment Management.
- Demographic and Financial Determinants of Housing Choice in Retirement and the Rise of Senior Living, by Calvin Schnure & Shruthi Venkatesh, March 31, 2015.
- The Impact of State Foreclosure and Bankruptcy Laws on Higher-Risk Lending: Evidence from FHA and Subprime Mortgage Originations, by Qianqian Cao & Shimeng Liu, February 19, 2015.
- Zoning and Land Use Planning: How Real is Gentrification, by Michael Lewyn, 43 Real Est. L.J. 344 (Winter 2014).
- Maximizing Inclusionary Zoning’s Contributions to Both Affordable Housing and Residential Integration, by Tim Iglesias, Washburn Law Journal, Vol. 54, No. 4, 2015.
Tag Archives: retirement
Reiss on Prepaying Your Mortgage
Newsday quoted me in Prepaying Your Mortgage. It reads,
You’ve heard that it’s good to be early — whether for work, a job interview, or going to bed. But what about prepaying your mortgage? When does it make sense?
THE PROS
Fewer payments and a faster payoff are appealing. “For many people it’s a no-brainer to prepay . . . Essentially you’re getting a guaranteed return in the form of the interest you aren’t paying,” says David Reiss, who teaches residential real estate finance at Brooklyn Law School. “It’s hard to find an investment in today’s market that gives you an equivalent risk-adjusted return.”
Money you no longer put toward the mortgage can go elsewhere. Being mortgage-free in retirement helps cash flow on a fixed income, points out Leslie Tayne, a Melville attorney specializing in financial issues.
Take your monthly payment, divide it in half and make that payment every two weeks. On a typical mortgage, this could shave off almost four years, says Jason Auerbach of First Choice Lending Services in Manhattan.
THE CONS
Paying extra on your loan “means you can’t use that money for other more important things such as contributing to a retirement account,” Tayne says. If your assets are earning a higher rate of return than the interest rate on your mortgage, it doesn’t make sense to pay early. Run the numbers.
Also, once the loan is paid, will you miss the tax deduction? Does your loan carry a prepayment penalty? Can you really afford to pay extra? Better know the answers to such questions, advises Jeff Tanenbaum, a broker with Halstead Property in Manhattan.
NYC’s Housing Affordability Challenge
NYC’s Comptroller Stringer has issued The Growing Gap: New York City’s Housing Affordability Challenge. The report tells
a sobering story—of stagnant incomes, rising rents, and a deepening affordability crunch, especially for the working poor and others at the lower end of the income spectrum. This financial squeeze comes despite significant housing investments during the 12 years of the Bloomberg mayoralty. From 2000 to 2012, this report found:
• Median apartment rents in New York City rose by 75 percent, compared to 44 percent in the rest of the U.S. Over the same period, real incomes of New Yorkers declined as the nation struggled to emerge from two recessions.
• Housing affordability—as defined by rent-to-income ratios—decreased for renters in every income group during this period, with the harshest consequences for poor and working class New Yorkers earning less than $40,000 a year.
• There was a dramatic shift in the distribution of affordable apartments, with a loss of approximately 400,000 apartments renting for $1,000 or less. This shift helped to drive the inflation-adjusted median rent from $839 in 2000 to $1,100 in 2012, a 31.1% increase. In some neighborhoods – among them Williamsburg, Greenpoint, Ft. Greene and Bushwick in Brooklyn, average real rents increased 50 percent or more over the 12-year period.
• The elderly and working poor are making up a growing portion of low-income households with 40 percent of the increase tied to households in which the head is 60 years or older.
• In 2000, renters earning between $20,000 and $40,000 in inflation-adjusted dollars were dedicating an average of 33 percent of their income to rental costs. Twelve years later that average jumped to 41 percent. Their housing circumstances became more precarious even though their labor force participation rates soared.
It is clear that affordable housing remains one of New York City’s most pressing needs. Mayor de Blasio has laid out a goal of creating or preserving 200,000 units of affordable housing over a 10-year period, an ambitious increase over the 165,000 units pledged under Mayor Bloomberg’s 12-year New Housing Marketplace Plan.
Now, with the winding down of one major housing initiative and the launching of another, it is appropriate to take stock of the City’s housing circumstances, to evaluate the changes that have taken place in the city’s housing ecology, and to outline strategies for future housing investment that are informed by the city’s evolving housing landscape. (1)
While the report diagnoses many of the problems in the housing market, it does much less in terms of proposing solutions to them. It also fundamentally misunderstands the role that new housing plays in the housing market (see page 24). The report only focuses on the high rents for the new units without taking into account the fact that those new units reduce the pressure on rents for older units of housing, a process that housing economists refer to as “filtering.” There is no question that the CIty needs to increase the supply of housing if it wants to reduce the cost of housing overall. The de Blasio Administration understands this. We will have to wait and see how the Mayor’s housing plan, to be released in May, will tackle the under-supply problem head on.
