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October 20, 2008

Time out

As some of you already know, I've spent most of this year pregnant. Now comes the time for maternity leave, and parents assure me I'll be far, far too busy and exhausted to blog.

My plan is eight months on leave. Perhaps I will have some energy to blog occasionally between now and then -- we'll just have to see.

But whatever happens, thank you all for these 12-months-and-change together. You've offered food for thought, story suggestions and a window into the minds of buyers, sellers and others with an interest in housing. I hope you've found my posts worth your time.

Posted by Jamie Smith Hopkins at 2:00 AM | | Comments (15)
        

How-to Monday: Investing in affordable housing

In these days of financial instability, housing development seems like the last place you’d want to invest your money.

Calvert Foundation begs to differ.

The Bethesda nonprofit has investment vehicles for affordable housing, a niche of the market it says is holding up well despite all the turmoil. And you don’t have to be a Rockefeller to get involved.

Its Community Investment Note, which investors can purchase for $1,000, lends money in part to nonprofit housing developers working on affordable for-sale and rental projects. A thousand dollars will also get you into its new Habitat for Humanity Investment Program, which lends to the global affordable-housing charity through that Community Investment Note. (The minimums for both drop to $100 if purchased through an online company called MicroPlace.)

The foundation describes the notes as fixed-income investments that are a bit like bonds and a bit like certificates of deposit.

You might wonder why the risk should be any different than it was for big banks toppled by "subprime" loans gone bad. Shari Berenbach, president and chief executive of Calvert Foundation, says it’s simple: "We’ve never used all these exotic instruments. We’re not having all these problems."

Habitat homeowners, for instance, don’t buy with no-documentation, adjustable-rate, negative-amortization loans. Instead, they get an interest-free mortgage from Habitat. They’re also expected to help build their house to put some sweat equity into the deal.

"It’s easy for people to want to blame the people with lower household incomes as being the source of the problem," Berenbach says. "We’re able to show those people can be very good credit risks if they’re given appropriate products and treated fairly."

Unlike a CD, these notes are not federally insured. But Berenbach says they’re conservative investments because Calvert Foundation isn’t highly leveraged. It has total losses of about $300,000 but a loan-loss reserve of $4 million, she says. Corporations and foundations stand behind the foundation with $30 million more to give investors confidence that they’ll get their money back.

So what’s the catch? Don’t count on big returns. The interest rate for the Habitat notes is a maximum of 2 percent. (A note-purchaser can choose 2 percent or opt for a lesser amount — this is "socially responsible" investing, after all.) The Community Investment Note allows you to choose an interest rate of up to 3 percent. The maturities range from 1 to 10 years, depending on your preference.

Another big, local affordable-housing player, Enterprise Community Partners, takes small donations rather than small investments. But the Columbia nonprofit says it is considering a pilot program based loosely on the Calvert Foundation model.

Calvert Foundation hopes small investors will jump on board because the credit crunch, which is drying up capital nationwide, has narrowed options for affordable-housing developers and lower-income families alike.

"Now more than ever, there’s really a need for average people to be helping average people," Berenbach says.

Posted by Jamie Smith Hopkins at 1:00 AM | | Comments (0)
Categories: How-to Mondays
        

October 19, 2008

Rents: More expensive or less, depending

Apartment rents are higher than a year ago in some parts of the Baltimore metro area but lower in others, a sign that difficulties in the for-sale market are having an uneven effect on the rental market.

A new report from Delta Associates shows average effective rents for Class A apartments rose 2.2 percent in the metro area to about $1,380 this summer, "due in large part to the northern suburbs (up 3.9% from third quarter 2007)." Rents were flat downtown and decreased 4.6 percent in the Fells Point/Inner Harbor neighborhoods, Delta says.

Apartment industry analysts have blamed sluggish or falling rents on the "shadow market" -- condos and other homes for rent because the owners are having a hard time selling.

Posted by Jamie Smith Hopkins at 1:00 AM | | Comments (1)
        

October 18, 2008

Have an opinion about growth?

Inquiring minds want to know what you think about growth and development in Maryland.

A state task force on land use is offering a survey at the Maryland Department of Planning site -- when you're there, click on the icon for Smart Growth Listening Sessions Online. Questions range from "what would be your preference to improve your shopping district" to "how would you describe this picture" for a photo of big homes on one-acre lots near farmland. (Your options for that one are "preserving agricultural land," "threatening family farms" and "meeting demand for housing.") 

"We must know how those affected by development feel, and consider their recommended solutions," attorney Jon M. Laria, chairman of the task force, said in a statement yesterday.

The 21-member Task Force on the Future for Growth and Development in Maryland heard from residents in person last month in "listening sessions" across the state.

Posted by Jamie Smith Hopkins at 1:00 AM | | Comments (0)
        

October 17, 2008

Mortgage rates: Are you dizzy yet?

Rates for 30-year fixed mortgages jumped half a percentage point this week thanks to the ongoing upheaval on Wall Street. For anyone trying to time a refinancing or new mortgage, it's been a wild ride.

The average interest rate is 6.46 percent, according to the latest survey by Freddie Mac, up from 5.94 percent last week. So far this year, rates have swung between a low of about 5.5 percent and a high of more than 6.6 percent, its survey shows.

Bankrate.com, which does its own survey, saw a similar increase this week -- the largest in more than 21 years, according to its records. (The last time rates rose by more than half a percentage point, they were hovering around 10 percent.) Bankrate.com offers several explanations for the volatility, including this one:

Cameron Findlay, chief economist for LendingTree.com, says the roots (sorry) of the increase in mortgage rates lie in technical matters. The money in a mortgage-backed security goes in three directions: the investor, Fannie Mae or Freddie Mac, and the servicer who handles billing and collections. Lately, as prices for mortgage-backed securities have plummeted, investors and servicers have been squeezed -- so they demand higher coupon yields and therefore higher mortgage rates.
Posted by Jamie Smith Hopkins at 9:05 AM | | Comments (0)
        

October 16, 2008

Q: What sort of homes sold here last month?

A: Less expensive ones.

Sales of homes priced below $250,000 increased by 9 percent last month vs. a year earlier in the Baltimore metro area, according to my analysis of Metropolitan Regional Information Systems data. Homes sales in the $250,000 to $499,000 range fell by 9 percent, while the $500,000-plus sales dropped 19 percent.

A lot more homeowners are trying to tap into that sweeter spot of the market: The number of properties listed for under $250,000 rose nearly 20 percent from a year earlier. Listings in the pricier categories dropped.

But there's still less competition for sellers in that lowest range, relatively speaking. Nine homeowners were trying to sell a home priced under $250,000 for every one that sold last month, vs. 10 in the middle price range and 20 in the high range.

Posted by Jamie Smith Hopkins at 1:00 AM | | Comments (5)
Categories: Number-crunching
        

October 15, 2008

More commentary on home prices

As home prices are a topic of considerable interest here (at least among those of you who comment), I thought you'd like to see economist Dean Baker's price-related thoughts in his newest Housing Market Monitor:
Proposals by politicians and economists to try to prevent further price declines will inevitably prove counterproductive. They are likely to encourage more oversupply through more building (unless we also restrict building, in the same way that farm price support programs often restrict agricultural production) and will simply lead more people to buy homes at bubble-inflated prices.

The best course for the economy and the housing market would be if house prices fell back to their trend levels as quickly as possible. At the recent pace of price decline, house prices should reach their trend levels by the middle of next year. Of course, tight credit and the further weakening of the economy could bring this date forward. It would be reasonable to try to prevent prices from overshooting on the downside, but this would mean focusing on the markets where this could occur (e.g. Detroit and Cleveland), not a blanket effort to prevent price declines nationwide.

Baker is co-director of the Center for Economic and Policy Research. 

Opinions? Arguments?

Posted by Jamie Smith Hopkins at 12:28 PM | | Comments (0)
        

You knew it was only a matter of time

The Homeownership Preservation Foundation sent out a warning today that people are trying to profit off borrowers in danger of foreclosure by mimicking the "HOPE hotline" with similar names and telephone numbers. (I've received one of those emails, as it happens. Is this the new "in" thing in spam?)

The foundation, part of the HOPE NOW Alliance formed months ago, said the actual number is 888-995-HOPE.

In a press release, the group offers these recommendations:

Avoid any websites, phone numbers, or companies and individuals requesting up-front payment of fees or claiming to be affiliated with the 888-995-HOPE™ or the Homeownership Preservation Foundation. Services provided by the Homeowner’s HOPE™ Hotline and our affiliates are absolutely free to consumers and accessible only by calling 888-995-HOPE.

Never grant access to bank accounts, provide Social Security numbers, write a check, wire money, or otherwise pay for counseling sessions.

Never turn over the deed to a home to people claiming to be “counselors” or sign legal agreements that you do not understand.

Never pay money to a third party promising to bring a mortgage current or begin a repayment program. Such payments should only be made directly to a mortgage servicer.

You can see HUD's list of approved Maryland housing counseling agencies HERE.

Posted by Jamie Smith Hopkins at 10:29 AM | | Comments (0)
        

October 14, 2008

The borrower or the loan?

The University of North Carolina at Chapel Hill is offering its opinion on the housing market's quasi chicken-or-egg question -- what's to blame for the stunning number of mortgages gone bad, the borrowers or the loan products?

In a new study, the university's Center for Community Capital says it looked at default rates among two types of borrowers with similar credit histories -- ones who got subprime loans and ones who got more traditional, fixed-rate mortgages designed for lower-income people (for instance, loans made by banks to fulfil Community Reinvestment Act requirements). The subprime borrowers were "three to five times as likely to go into default," the center's press release says.

According to the study:

The broker origination channel, the adjustable-rate terms, and the prepayment penalty — all more common in the subprime market — seem to contribute substantially to the elevated default risk among subprime loans.
Posted by Jamie Smith Hopkins at 9:08 AM | | Comments (7)
        

October 13, 2008

How-to Monday: Escrow

Homeowners are accustomed to mortgage payments that include taxes and insurance. Every month you pay 1/12th of the annual tab (give or take), and the lender socks it away into an escrow account for when the bills come due.

But a lot of the subprime loans made during the pre-credit-crunch frenzy didn’t come with escrow accounts. There’s nothing like being hit with an unexpected tax bill to ruin your day — or wreck your budget.

Many of the people streaming into St. Ambrose Housing Aid Center in Baltimore for help avoiding foreclosure don’t have escrow accounts and didn’t realize it when they got the loan. The truth comes as an especial shock to homeowners who refinanced, thinking they were getting a better deal.

“That’s something we’re seeing more often: ‘What do you mean my taxes and insurance aren’t included? I always had taxes and insurance included with my payment,’” says Anne Balcer Norton, director of foreclosure prevention at St. Ambrose.

If you’re shopping for a mortgage now, you’re probably not in danger of ending up without an escrow account. Much has changed since subprime lending collapsed last year. (Keep in mind that reverse mortgages are a different animal: Seniors getting them to tap into their equity should be aware that these products typically do not cover taxes and insurance, Norton says.)

But what if you already have a mortgage? Unless you’re absolutely certain your lender is escrowing for you, it wouldn’t hurt to double-check.

Your monthly mortgage statement should say how much you’re paying in taxes and insurance if you are indeed paying for taxes and insurance, Norton says. You could also call your loan servicer or look through the stack of documents you got at the settlement table.

All isn’t lost if it turns out that you’re escrow-less. First, try calling your servicer to request an account be set up, Norton suggests. In most cases she’s aware of, the servicers followed through.

If you get a “sorry, but no” response, there’s the do-it-yourself method. Figure out the annual cost of your insurance and taxes. Then every month put 1/12th of that amount into a bank account or other special fund for the purpose. (As a bonus, you get interest on that money while it sits there.)

“Really be disciplined about putting that money aside,” Norton says. “Life happens. Particularly in this economy, there are no certainties.”

There is a flip side to the no-escrow problem: Some borrowers with mandatory escrow accounts wish they didn't have them because their servicers are taking too much, taking too little, not paying on time, etc. Jack M. Guttentag discusses the issue on his Mortgage Professor site.

Posted by Jamie Smith Hopkins at 1:00 AM | | Comments (0)
Categories: How-to Mondays
        

October 12, 2008

Property taxes: Baltimore vs. D.C.

A Wonk reader asked for a Baltimore vs. Washington comparison of residential property taxes. I aim to please.

The city's rate is $2.268 per $100 in assessed value. Washington's is 85 cents.

Baltimore homes are a lot less expensive than D.C.'s, though, so it's useful to know what you'd be paying if you recently bought the average house in each city (assuming your assessment matches up with the average sales price in August):

Baltimore, with its $195,000 sales price: $4,423.

Washington, with its $557,000 sales price: $4,191.

Wait, you math wonks are saying: Isn't $557,000 divided by 100 times 0.85 actually more than $4,700? Yes indeed -- but one of D.C.'s owner-occupancy benefits is that you don't have to pay taxes on the first $64,000.

One advantage Baltimore has over D.C. is that its cap on the amount your tax bill can increase if you're an owner-occupier is 4 percent a year, while Washington's is 10 percent.

Property taxes are a topic of continual debate and frustration in Baltimore. Both real estate agents and economists say the city's rate gets in the way of more people moving here -- whether from Washington or elsewhere.

I chatted with Joseph Himali, incoming president of the Greater Capital Area Association of Realtors, to double-check my grasp of D.C. tax rules. He shared a tale of a couple he's working with who decided to move to Baltimore from overseas because the home prices were much lower than in D.C. Then they got here and realized what their taxes would be, he said. They weren't thrilled about their commute to the D.C. 'burbs, either.

They're in the process of selling here and buying in Washington instead.

"I think people on the first blush will seriously consider Baltimore; then they'll look at taxes," said Himali, principal broker of Best Address Real Estate in Georgetown. You'll eventually pay off a mortgage, "but in Baltimore, you can't ever get rid of the tax."

Comments? Arguments? Chime in.

Or you can compare and contrast other Maryland jurisdictions by looking up sales prices at Metropolitan Regional Information Systems and tax rates at the state Department of Assessments and Taxation.

Posted by Jamie Smith Hopkins at 1:00 AM | | Comments (8)
        

October 11, 2008

Home prices last month

If your weekend just isn't complete without a housing story, feel free to check out mine about September home sales in the Baltimore metro area. A few stats:
Average sale prices fell in all parts of the metro area last month except Howard County, which recorded a 3.3 percent increase. The drop was largest in Carroll County, down 17 percent to about $300,000. That's below the average of four years earlier and is $75,000 less than Carroll sellers got in September 2005.

Average prices in the rest of the metro area were at or below 2005 levels, with the exception of Baltimore. The city's $170,000 price last month was $8,600 less than sellers got two years earlier but $7,200 more than the average in 2005.

There's also an interesting -- if depressing for homeowners -- discussion by economists about the "true" drop in prices and the number of people underwater on their mortgages.

Posted by Jamie Smith Hopkins at 7:28 AM | | Comments (0)
        

October 10, 2008

September home sales

Here's something completely different: The drop in home prices in the Baltimore metro area last month was larger than the drop in sales.

New numbers from Metropolitan Regional Information Systems show home sales falling about 2 percent from a year ago, a sharp change after months of losses in the neighborhood of 30 percent. Those big declines started in September 2007 as lenders clamped down on borrowing rules, which means we're no longer comparing sales to pre-crunch days.

Average prices dropped 5.9 percent in the metro area, sliding below September 2005 values. The average price last month was about $296,000 vs. nearly $304,000 three years earlier.

The biggest decline in average price came in Carroll County, which was down 17 percent. Howard County recorded the lone increase -- 3.3 percent -- but its median price dropped, so you might take that with a grain of salt.

Both Howard and Carroll saw sales jump -- particularly Howard, up 26 percent. And sales were almost even in Baltimore City and Baltimore County.

Posted by Jamie Smith Hopkins at 10:44 AM | | Comments (2)
        

October 9, 2008

Bragging rights for Charles Village, Annapolis

And now for something completely different from the ever-more-frequent comparisons of nowadays to the Great Depression: The American Planning Association is calling Charles Village in Baltimore one of the top 10 "great neighborhoods" in America and Main Street in Annapolis one of the top 10 "great streets."

Its piece on Charles Village includes this commentary on the neighborhood's taxing structure:

Recognizing the limits of their authority to address safety concerns, residents, citizen groups, and alliances from Baltimore's Charles Village neighborhood turned to the Maryland State Assembly for help. They proposed establishing a benefits district so they could collect a small levy from property owners for additional security and sanitation services. At the time such districts had been established for U.S. downtowns and commercial zones only and not for residential areas.

The neighborhood's proposal was approved, enabling the Charles Village Community Benefits District to be formed in 1994. Funded by a minimal levy on property values, the district has successfully managed to cut crime in half since its inception while serving as a model for three additional service districts in Baltimore.

Other neighborhoods on the list include Society Hill in Philadelphia, Old Town in Wichita, Kansas and Greater Park Hill in Denver.

The APA, meanwhile, praised Annapolis' Main Street for its "three centuries of history and well-preserved 18th- and 19th-century buildings."

We now return you to your regularly scheduled depressing economic news. Did you see the big ad in the paper today by a bank that just wanted to note for the record that it's a safe place to put your money?

Posted by Jamie Smith Hopkins at 9:23 AM | | Comments (5)
        

October 8, 2008

Interest rates and their impact

The spotlight's on interest rates today -- the Federal Reserve, trying to stem more economic pain, announced early this morning that it is cutting its benchmark rate by half a percentage point -- so what better time to check in on the rates that matter most to homebuyers?

Zillow.com, which has a "mortgage marketplace" where borrowers can get quotes from lenders, says the average rate quoted for Marylanders last week was 6.02 percent for a 30-year fixed mortgage. That's down slightly from the week before but is tied for third-highest among the 20 states with the highest volume of quotes, Zillow says. (Lowest was Georgia, at 5.88 percent.)

Americans planning to buy in the next two years told Zillow in a survey that their top concern was interest rates (two-thirds called that a worry), followed by local property taxes, the purchase price and closing costs.

Rates are actually lower on average than they were last year or in 2006, according to Freddie Mac's data. But they've been bouncing around so much in recent months that buyers probably don't know what to expect. 

Posted by Jamie Smith Hopkins at 8:18 AM | | Comments (6)
        

October 7, 2008

Sellers lowering their prices for a 10-day event

Homebuilders have been holding "10 percent off" events for a while. Now -- with sales continuing to slump and financial turmoil on Wall Street worsening -- a real estate brokerage is giving it a try.

Coldwell Banker said yesterday that home sellers across the country will lower their asking prices by as much as 10 percent during a sales event running Oct. 10 through 19. In Baltimore and its five surrounding suburbs, more than 300 sellers have agreed to lower prices “significantly,” Coldwell Banker Residential Brokerage Greater Baltimore told me.

"This is a really neat, interesting, good opportunity if you've been waiting, watching prices," said Melissa Brever, marketing manager with the Greater Baltimore company.

The local breakdown, in case you're interested: 102 participating sellers in Anne Arundel, 79 in Baltimore City, 71 in Baltimore County, 14 in Carroll, 34 in Harford and 16 in Howard.

Once the event kicks off, buyers can see which properties are participating and how the prices have changed at cbmove.com. There's also supposed to be event information at coldwellbank.com/event.

Tip of the hat to Wonk reader John for giving me a heads-up about the announcement.

Coldwell Banker said three-quarters of its U.S. agents surveyed recently believe most sellers have “unrealistic expectations” about price, but an equal amount think a reduction of 10 percent or less would be enough to interest buyers. (Almost 80 percent "agreed that homes in their market that are priced appropriately are attracting more buyers and moving more quickly," the company says.)

So, potential buyers, here's an unscientific survey: What sort of reduction would it take for you to do a deal? Is it price or something else keeping you from signing on the dotted line?

Posted by Jamie Smith Hopkins at 1:00 AM | | Comments (6)
        

October 6, 2008

How-to Monday: Researching loans and foreclosures

ForeclosureSignAPphoto.jpg

Associated Press photo

 

Foreclosure can affect you and your neighborhood, never mind if you personally have never been late paying your mortgage. When lenders repossess homes, economists say, values go down nearby.

The good news is that the riskiest mortgages — subprime — made up 10 percent of all loans in the Baltimore metro area as of May, down from 13 percent a year earlier. That’s according to an estimate by First American CoreLogic.

The bad news? About 8 percent of metro-area homes with subprime loans were either in the foreclosure process or had been foreclosed on, almost four times what it was a year earlier.

A homeowner or buyer could be excused for wanting to know how good or bad, exactly, the mortgage picture looks close by. With a bit of time, you can find some answers.

Put in your address or ZIP code at First American CoreLogic’s RealQuest site and it will tell you how many homes in your area are facing foreclosure, have an auction date scheduled or are owned by lenders. You’ll get street names, too, so you can see if you’re surrounded. Similar information is at RealtyTrac and ForeclosureS.com.

If you’d just like a sense of how Maryland compares with the rest of the country, try the Federal Reserve Bank of New York’s maps. You can see the state-by-state share of subprime or “Alt-A” loans — the latter are in the gray area between subprime and prime. You can also get stats about those loans, such as the percentage in foreclosure. (If you're looking for a site that combines loan information with demographic stats, try The Reinvestment Fund's PolicyMap.)

Though Maryland has seen a significant increase in problem mortgages, the Federal Reserve maps offer some could-be-worse perspective. California and Florida in particular have been pummeled by loans going sour.

The bigger price drops in those states hasn’t helped. Neither have the loans. In California, according to First American CoreLogic, 17 percent of mortgages taken out in 2006 were “option ARMs” — adjustable-rate loans with an option to make a monthly payment so low that the amount owed would grow rather than shrink. Option ARMs accounted for not quite 5 percent of new mortgages in Maryland that year. (In the first six months of this year, they were down to two-tenths of a percent of new loans here.)

The Baltimore area is doing better than the nation overall, according to First American CoreLogic’s figures. Remember the 8 percent of subprime loans about to be or already foreclosed on in the metro area? It’s 13 percent nationwide.

Here’s hoping that things are better than average near you, too. Misery loves company, but it’s human nature to prefer the worst misery be elsewhere.

“You can look at other areas and say, ‘I’m glad I’m not there,’” says Bob Visini, a vice president with First American CoreLogic.

Posted by Jamie Smith Hopkins at 1:00 AM | | Comments (13)
Categories: How-to Mondays
        

October 5, 2008

Poll: Home sales

A lot has happened in the last few weeks. Seems high time for another poll about the housing market:

Better yet -- chime in below about why you think things will turn around soon, not so soon or really not soon.

UPDATE at 8:30 p.m. 10/7: About 40 percent of you say 2010. Just over a quarter predict things will turn around next year, 12 percent think it'll be years from now, 8 percent say 2012 and 6 percent each opted for "soon" and 2011.

Posted by Jamie Smith Hopkins at 1:16 PM | | Comments (0)
Categories: Polls
        

October 4, 2008

Affordability ups and downs

There's been a lot of chatter about how the run-up in prices during the housing boom made it unreasonably difficult for a first-timer to buy a home in Maryland, and that things haven't improved much since. Naturally I was curious to see what some number-crunching would show.

But rather than do my own crunching this time, I've graphed the Maryland Association of Realtors' first-time homebuyer affordability index, which tries to measure whether a typical first-timer could afford the typical "starter" home. (The group, relying on survey data, assumes a first-timer's median household income is 57 percent of all buyers and a starter home is 85 percent of the median home price.)

If the affordability index hits 100, it means that first-time buyer has enough income for the starter home. If the index is, say, 50, the buyer has only half the income needed. Here's how the index has changed in recent years:

MdAffordabilityYears.jpg

 

And here's a look at the last several quarters:

MdAffordabilityQrters.jpg

Naturally, your experience may vary. Feel free to chime in.

Interested in the Realtors' methodology? See it here.

Posted by Jamie Smith Hopkins at 1:30 PM | | Comments (0)
        

October 3, 2008

Housing grants and housing vacancies

HUD said today that it's giving $50 million in grants to housing counseling groups, including about $3.9 million to Maryland organizations. Housing counselors are trained to help people buy and stay in homes, though it's the latter part that's taken a lot of their time in recent months as foreclosures rise.

Curious about which groups got what? You can find the grant list HERE. A big piece of the local pie went to the National Foundation for Credit Counseling in Silver Spring.

Meanwhile, the National Multi Housing Council says in a new research note that there are "approximately 825,000 excess vacant single-family houses and 125,000 excess vacant condos beyond normal vacancy levels" in the country. That doesn't count what it says are the "2 million excess existing houses and condos still occupied but on the market." It concludes:

Our view: we’re unlikely to be out of the woods until 2010 at the earliest.
Posted by Jamie Smith Hopkins at 4:23 PM | | Comments (2)
        

October 2, 2008

Changes this week, courtesy of the housing law

Elements of the housing rescue bill passed this summer went into effect this week. Two you might want to know more about:

* No more seller-funded down payment assistance on FHA-insured mortgages. Buyers could effectively turn FHA into a no-money-down loan by getting the money from nonprofits that in turn got their money from sellers. The law bans this practice. HUD has complained that it leads to more foreclosures, but supporters (including Gaithersburg-based AmeriDream) say it promotes homeownership. They're trying to get the ban overturned.

* A new avenue for borrowers in trouble. To stem foreclosures, the law allows certain homeowners to refinance with FHA if their lender agrees to eat any principal owed beyond 90 percent of the current market value of the house. It's voluntary, which means there's been a lot of debate about how many people this change will end up affecting. HUD, which oversees FHA, has a Q&A here about the HOPE for Homeowners program.

Posted by Jamie Smith Hopkins at 12:00 PM | | Comments (3)
        

October 1, 2008

A measure of housing risk

PMI, which puts out a "market risk" index that predicts the chance of home prices falling in two years, says the Baltimore metro area's risk ranking has risen a notch from "minimal" to "low." (Above those categories are "moderate," "elevated" and "high.")

The newest index is for the second quarter of the year and puts the metro area's likelihood of price decline at 10 percent, up from about 5 percent in the first quarter. The Washington metro area, at "moderate" risk, has a 26 percent chance, according to the index. (The index uses the Office of Federal Housing Enterprise Oversight measurement of home prices, in case you were wondering.)

You can find wildly divergent opinions from economists on most any issue, and this is no exception. Some think significant price declines in the Baltimore metro area are very likely. But I doubt there would be much disagreement about the areas PMI believes are most at risk: The top five are all in Florida or California.

Posted by Jamie Smith Hopkins at 10:33 AM | | Comments (0)
        
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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
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