Greetings!
We are living in a challenging and changing time, which is creating havoc in our financial markets, real estate and more importantly, our psychology as a nation.
I'm not an economist, and I won't try to predict where we go from here. But I have been taking the time to become as educated as possible by listening to top economists who have track national real estate trends via their economic models. They try to predict the future based on statistics ( psychology is taking over right now), and who are considered the top economists in the United States: Carl Case and John Tuccillo. So my comments are based on facts, rather than here say from the media, and one has to be reminded that we are always trying to relate national data to the micro economy of Boston and its metro suburbs.
The government has introduced three bill's so far aimed at helping distressed home owners, raising loan limits, and to restore confidence in Fannie Mae.
· The Housing Stimulus Bill ( HR 3221)
· Housing & Economic Recovery Act of 2008 HERA- Fannie Mae and Freddie Mac
· Troubled Assets Relief Program (HR1424)
In Massachusetts, so far, the downturn has not been as severe, due to the strength of the state's technology, higher education, and healthcare sectors, which have helped insulate the broader economy from the housing downturn.
Boston is fairing better than most cities due to this. This is not to say that we are not immune to the current national situation, but we aren't following the national trends of foreclosures and distressed selling yet in the prime Boston neighborhoods where I sell real estate.
According to Carl Case, we don't know when the market will go up again, but it will. And John Tuccillo predicts that 2010, 2011 & 2012 will be great years for Boston real estate due to the current soft price declines acting as a mechanism of healing.
For more information on what Carl and John had to share, email me and I'll send you their detailed comments.
The index to watch is The S&P Case Schiller Home Price Index which is published on the last Tuesday of each month at 9am ET.
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Mortgage Market:
In This Week's "Good News"
RESPA Releases Mandatory Standardized 'Good Faith Estimate'
It has been in the works for sometime, and is finally here. RESPA reveals a new standardized Good Faith Estimate that may save borrowers up to $700 in fees, according to the U.S. Department of Housing and Urban Development (HUD).
This represents the first revision to the Real Estate Settlement Procedures Act in 30 years.
The new form makes disclosure of yield spread premiums paid to mortgage brokers necessary. This fact, of course, has been the major contention brought forward by mortgage brokers/originators across the nation.
Yield-spread premiums (YSP's) are fees paid by wholesale lenders to mortgage brokers/originators who place their loans with the particular investor funding the loan. The fee is paid, typically, in correlation to a higher than par interest rate being charged to the borrower(s).
Also, "For the first time ever, HUD will require mortgage lenders and brokers to provide borrowers with an easy-to-read standard Good Faith Estimate that will clearly answer the key questions they have when applying for a mortgage," HUD stated.
The new GFE is predicted to clarify the loan term, how the interest rate will change and what the closing costs will be, as well as explaining prepayment penalties and balloon payments.
HUD Secretary Steve Preston gave a statement indicating that the mortgage crisis was empowered, partially, by borrower's uncertainty about the amounts of their mortgage payments.
He further stated some borrowers were clueless regarding the fact that their payments would go up so drastically after only two or three years.
The revisions help line up the GFE better with the HUD-1 closing statement so borrowers can without difficulty compare HUD-1 charges to the original GFE issued by the mortgage broker/originator.
The closing statement will also now distinctively refer to corresponding lines of relevance from the GFE.
According to HUD, the new disclosure will allow prospective borrowers to more easily compare loan proposals from competing originators.
In research done by HUD, potential borrowers were able to choose the lowest cost loan 99 percent of the time.
However, a very large mortgage brokers deem the YSP disclosure requirement to be unjust to them due to the fact that their mortgage banking competitors are not made to divulge servicing released premiums earned after the loan is completed.
Having been in the lending industry for 17+ years, I have heard this argument over and over - I have worked for both mortgage bankers and brokers, and it comes down to this: If you are offering your client the best terms, regardless of yield spread disclosure or not, you will have a client for life. Smart shoppers shop.
Obviously, I am in support of the new rules, clarifying all terms to borrowers on three simple pages, not 30 pages that the borrower(s) are pressured to read, sign and initial at closing. This, I feel, is one of the reasons that we are in this mess.
The new standardized Good Faith Estimates will be required on mortgage loans originated on or after January 1st, 2009.
Sincerely,
Lexi
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Lexi Crivon
Coldwell Banker
1375 Beacon St
617-796-2447
www.lexirealestate.com
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