Can’t get a Mortgage? Try a Bigger Lender

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Demand for mortgages rose during the second quarter, but a strong divergence between larger and smaller lenders in underwriting credit standards is appearing, according to Fannie Mae’s Mortgage Lender Sentiment Survey, which tracks current lending activities and market expectations among senior mortgage executives.

Mortgage executives say it’s difficult for consumers to get a mortgage today, but some lenders are tightening their standards more than others. The Fannie Mae survey found that smaller and mid-size lenders are more likely than larger lenders to say their credit standards tightened over the prior three months. These lenders also report that they’re more likely to tighten them even more during the next three months. On the other hand, larger lenders were more likely to report that they have eased their credit standards over the prior three months and that they expect to ease standards more during the next three months.

The most common reason cited for tightening credit standards among all the lenders surveyed was the “changing regulatory requirements,” according to the survey. “Lenders have been trying to find ways to manage their operational costs and meet new regulatory rules,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “They appear to feel cost constrained and, thus, may be applying more conservative standards in their lending practices.” Still, overall, lenders reported positive expectations for mortgage demand throughout the remainder of the year, although they expect growth to remain modest. “These results are broadly in line with other major indicators released recently, including the pickup in home sales in May, and also support our expectations of a steady but unspectacular rebound for housing during the second half of this year,” says Duncan.

New Home Sales Plummet by 8.1 Percent

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Sales of newly built, single-family homes dropped 8.1 percent in June, the largest decline since July 2013, the Commerce Department reported Thursday. New-home sales were at a seasonally adjusted annual rate of 406,000 units in June. May’s sales pace was also revised from a previously reported 504,000 units to 442,000 units.

“The numbers are a little disappointing, but May was unusually high and some pull back isn’t completely unexpected,” says Kevin Kelly, chairman of the National Association of Home Builders. “Our surveys show that builders are confident about the future and we are still seeing a gradual upward trajectory in housing demand.” Across the country, new-home sales were down, falling by the largest amount – 20 percent – in the Northeast. New-home sales were also down by 9.5 percent in the South; by 8.2 percent in the Midwest; and by 1.9 percent in the West. Inventories of new homes for-sale rose 3.1 percent in June to the highest number since October 2010, reaching a 5.8-month supply at the current pace.

Builders are still optimistic that the new-home sector will see improvement later this year. “With continued job creation and economic growth, we are cautiously optimistic about the home building industry in the second half of 2014,” says David Crowe, NAHB chief economist. “The increase in existing home sales also bodes well for builders, as it is a signal that trade-up buyers can move up to new construction.”

Missing Mortgage Payments Could Cost You Dear

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People can miss a mortgage payment for a variety of different reasons, and circumstances do change. Job losses or relocation can all put pressure on household finances and homeowners may end up owing more than their properties value. Figures from the Mortgage Bankers Association show approximately 6% of mortgage loans were at least one payment behind at the end of March this year. The article in aol.com points out that missing a mortgage payment isn’t a trivial decision, especially as foreclosure can seriously damage credit ratings. In addition it makes obtaining another mortgage much harder or almost impossible in the shorter term.

If you do have to miss one or two mortgage payments it doesn’t necessarily mean you are at risk of foreclosure, but it could set processes in motion that carry long-lasting consequences for your finances. Earlier this year new foreclosure avoidance procedures took effect and are designed to get rid of the mismanagement and deceptive practices that plagued the housing crisis. The procedures now mean mortgage lenders have to send written notices to homeowners before they are 45 days in delinquency. The notice has to include all the available options to avoid foreclosure such as loan modifications or short sales.

If the loan is modified then the provider will add on the delinquent payments plus the penalties to the balance of the loan, creating a brand-new payment plan. A short sale enables a homeowner to sell the property for less than they owe on their mortgage. The foreclosure procedure does differ depending on where you live is there are two different types which are judicial and non-judicial. A judicial foreclosure involves formal court proceedings and is generally more drawn-out. If the proceedings are non-judicial then a foreclosure sale can be initiated without the approval of a judge. Neither of these systems is particularly fast, and data from RealtyTrac for the first quarter of this year shows banks took an average of 572 days to complete the process.

If you live in a state where judicial foreclosure is more likely, then the wait can be considerably longer. It took an average of 840 days for this type of foreclosure to go through in Hawaii, while the figures for Florida and New York were 935 days and 986 days respectively. If you’re in New Jersey and the process could take a lengthy 1,103 days. In addition lenders cannot formally file for the foreclosure until you are at least 120 days delinquent on your mortgage, and they cannot start the process if you have already applied for assistance. The article goes on to detail ways of avoiding foreclosure and the possible effect on credit ratings.

Communicating with clients: What Real Estate Pros Must Know

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Real estate agents need to understand the differences in how men and women communicate. While men like to handle one idea at a time, women often launch into a stream of multiple ideas all at once, reports Inman News.

To ensure more effective communications, agents should ask probing questions and aim for male clients to talk about 80 percent of the time. They should be direct and avoid rambling, interrupting, or finishing a man’s sentence, as well as provide additional data until they are ready to consider the next topic. When it comes to time, agents should keep in mind that men tend to allot a specific amount of time to each task, whereas women focus more on completing tasks, no matter how much time it takes.

This means agents should start showings on time and end early, as well as tell clients a particular task will take longer than they anticipate, which ensures the agent always appears efficient and organized. Men are more direct in their communication, whereas women tend to be indirect; so it is important to always tell a man exactly what should be done instead of to imply it. Culturally, people from the United States, Australia, Canada, the Middle East, and Southern Europe prefer getting right to the point, while those from China, Japan, and India prefer that messages are implied. However, even if direct communication is preferred, agents should keep in mind that American Millennials are unnerved by direct eye contact; and staring is considered rude in the United Kingdom. Agents should watch how clients communicate with them and with others, then adjust their communication style to match.

More appetite for condo units, poll indicates

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Condo investors worried about the future pool of buyers may take heart from a new poll suggesting that Ontarians are willing to take the plunge…and soon.

While most home-buyers would prefer to get their hands on a detached home, rising prices and limited supply are pushing their dreams out of reach.

However, that is good news for some investors as a majority of potential buyers say they would turn to the condo market for their future residential needs.

According to a recent survey on behalf of the Ontario Real Estate Association and The Ontario Home Ownership Index, almost 30 per cent of Ontarian buyers say they would consider condos. This push is naturally being led by potential buyers in the GTA region.

Almost 60 per cent of the 1,080 surveyed who are likely to purchase a home in the next two years say they would look for a detached house.

And despite all of the doom and gloom in the market, a majority of the survey respondents believe conditions are currently favourable to buy property, while most believe the overall state of the province’s economy is good.

However, not everyone is as positive. One in five believe the province’s real estate market is weaker compared to one year ago.

Interestingly, more Ontarians rank long-term investment value as they motivation for buying, followed by affordability/availability with 26 per cent driven by the desire to own their own home.

Affordable homes becoming scarce in the Lone Star State

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The energy sector has been supercharged in the last few years, which has fueled growth in housing demand in the Lone Star State, according to Metrostudy’s first quarter 2014 survey focusing on the Texas housing market. Texas is home to some of the strongest performing housing markets in the nation, but recent reports show the market for homes $150,000 of less is quickly drying up.

“As strong as the Texas markets are, there is one thing missing: a strong first-time home buyer segment,” says Metrostudy’s chief economist Brad Hunter. Builders reportedly are shifting away from affordable and “entry-level” products and focusing on the higher priced “move-up” buyer housing. “The costs of nearly every input including land, materials, and labor have seen sharp increases during the housing recovery,” Metrostudy notes. “In order to mitigate these increased costs, builders have chosen to construct more homes at higher price points [and fewer at lower price points] in an effort to maintain their profit margins.

In addition, the scarcity of housing product in many Texas markets has increased prices that builders are able to charge home buyers for the same product. As a result, the quantity [and proportion] of homes built priced less than $150,000 has dropped dramatically during the last three years.” For example, in the first quarter of 2012, 13.3 percent of all new housing starts in Austin were priced less than $150,000. By the first quarter of 2014, that percentage fell to 4.3 percent for that price bracket. In Dallas-Fort Worth, in the first quarter of 2012, 12.1 percent of annual starts were priced below $150,000, compared to 6 percent in the first quarter of this year.

Meanwhile, starts of homes priced greater than $300,000 grew from 28.6 percent to 42 percent in that time period. In Houston, in the first quarter of 2012, 19.1 percent of annual starts were priced below $150,000 compared to only 9.8 percent in the first quarter of 2014. Housing starts of $300,000 and above grew from 27.7 percent to 39.4 percent.

“Housing production is still struggling to catch up to burgeoning new-home demand, so more expansion is on the way,” says Hunter. “The pace of job relocation into Houston will be slower this year than the breakneck pace of 2013, but the influx of companies and workers will continue to support demand growth.”