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Negative equity is disproportionately concentrated in the Chicago region’s communities of color, Woodstock Institute report shows
Tom Feltner | Vice President
Woodstock Institute
Homeowners with mortgages in African American communities more than twice as likely to be underwater as homeowners in white communities
CHICAGO–Negative equity is disproportionately concentrated in the Chicago region’s African American, Latino, and majority minority neighborhoods, a new report from Woodstock Institute found. The report also found that borrowers in communities of color have much less equity on average than do borrowers in predominantly white communities.
View the full report here: http://bit.ly/strugglingtostayafloat
Join us for a telephone briefing Tuesday March 27 at 10am CT: http://stayingafloat.eventbrite.com/
The report, “Struggling to Stay Afloat: Negative Equity in Communities of Color in the Chicago Six County Region,” used data from a major provider of mortgage and home value data to examine patterns of underwater homes in communities of various racial and ethnic compositions in the Chicago six county region in 2011. It found that:
- Nearly one in four residential properties in the Chicago six county region is underwater, with just under $25 billion of negative equity. The average underwater property has 31.8 percent more outstanding mortgage debt than the property is worth.
- Borrowers in communities of color are much more likely to be underwater than are borrowers in white communities.
- Borrowers in communities of color are more than twice as likely as are borrowers in white communities to have little to no equity in their homes. In highly African American communities in the Chicago six county region, 40.5 percent of borrowers are underwater, while another 5.4 percent are nearly underwater. Similarly, 40.3 percent of properties are underwater in predominantly Latino communities and 5.3 percent are nearly underwater. In contrast, only 16.7 percent of properties in predominantly white communities are underwater, with another 4.4 percent nearly underwater.
- Almost three times as many properties in communities of color are severely underwater compared to properties in white communities. In predominantly African American communities, 30.1 percent of properties have loan-to-value (LTV) ratios—a comparison of outstanding mortgage debt to home value—exceeding 110 percent, while that figure is 30 percent in predominantly Latino communities. In contrast, just 10.1 percent of the properties in predominantly white communities have LTVs exceeding 110 percent.
- Borrowers in communities of color have much less equity in their homes than do borrowers in white communities, resulting in a significant wealth gap.
- Only about one-third of homeowners in communities of color have significant equity in their homes. In predominantly African American communities, 34.5 percent of borrowers have more than 25 percent equity in their homes, while 33.1 percent of borrowers in Latino communities have more than 25 percent equity in their homes. Fifty-five percent of borrowers in predominantly white communities have more than 25 percent equity.
- Borrowers in communities of color have much higher average loan-to-value ratios than do borrowers in predominantly white communities. The average LTV ratio is 92.1 in predominantly African American communities and 87.4 in Latino communities, compared with an average LTV ratio of 67.7 in predominantly white communities.
Negative equity contributes to community decline by potentially leading to increased foreclosure activity, threatening the success of foreclosure prevention programs, and draining neighborhood wealth. In addition, the destruction of assets caused by negative home equity may disproportionately threaten the economic security of people of color because home equity is a larger proportion of their net worth than it is for white people.
View the full report here: http://bit.ly/strugglingtostayafloat
The report concluded with a number of policy recommendations to reduce the negative impacts of concentrated negative equity, including:
- Servicers should use principal reduction as a foreclosure prevention tool more broadly.
- The Federal Housing Finance Authority should permit loans backed by Fannie Mae and Freddie Mac to be eligible for principal reductions.
- Servicers should streamline processes for short sales.
—
Tom Feltner | Vice President
Woodstock Institute
29 E Madison Suite 1710 | Chicago, Illinois 60602
T 312/368-0310 x2028 | F 312/368-0316 | M 312/927-0391
www.woodstockinst.org | tfeltner@woodstockinst.org | @tfeltner
Related articles
- A good credit score did not protect Latino and black borrowers (scoppcanton.wordpress.com)
- Negative Equity Increasing Around US; but Not Oro Valley (finehomesdigest.wordpress.com)
- Housing Still Drowning in Underwater Mortgages (blogs.wsj.com)
EPI News: Today’s labor market – Mixed signals
The latest assortment of government data tells different stories about the strength of the economy, providing no guarantee that we are yet experiencing a self-sustaining, robust jobs recovery.
The good news: State-level data show signs of recovery
State-level data released this week by the Bureau of Labor Statistics show that most states have been experiencing the steady progress towards economic recovery seen nationally. Over the four-month period from October 2011 to January 2012, every state except New York experienced a reduction in its unemployment rate. Over the course of a year (from January 2011 to January 2012), seven states experienced job growth exceeding 2.0 percent, while North Dakota experienced growth of 5.7 percent. Notably, five states (Alaska, Mississippi, Missouri, Rhode Island, and Wisconsin) lost jobs over this period, led by Wisconsin’s loss of 12,500 jobs. (Click here for interactive state maps.)
Despite these generally positive trends, four states and the District of Columbia have unemployment rates at or above 10.0 percent (led by Nevada at 12.7 percent), while 11 states plus the District of Columbia have unemployment rates of 9.0 percent or higher.
“States looking to further spur economic growth should invest more significantly in infrastructure, such as transportation networks, schools, and broadband, while avoiding budget cuts that would impede economic recovery today and could compromise future economic prosperity,” wrote EPI’s Douglas Hall, director of the Economic Analysis and Research Network.
The not-so-good news: Low level of voluntary quits should temper recent optimism about the labor market
Through examining voluntary quits, this week’s Economic Snapshot provides further evidence that the country’s labor market is not yet out of the woods. Voluntary quits, defined as workers who voluntarily leave their jobs, are high when job opportunities are plentiful and employed workers have the flexibility to look for jobs that pay better and more closely match their skills and experience. During downturns, on the other hand, the number of voluntary quits drops as job opportunities become scarce. The Snapshot shows that the number of voluntary quits is still more than 30 percent below the pre-recession level—and has seen no improvement since last summer.
More of the same: Job-seekers ratio remains unchanged
Finally, Tuesday’s release of the latest Job Openings and Labor Turnover Survey by the Bureau of Labor Statistics showed decreases in both job openings and hires in January. However, the job-seekers ratio—the ratio of unemployed workers to job openings—was 3.7-to-1 in January, unchanged from the revised December ratio.
“The softness in January’s job openings is inconsistent with the strength of January’s employment and unemployment report,” explained EPI labor economist Heidi Shierholz. “These inconsistencies underscore that it is too soon to declare that we have entered a self-sustained period of robust job growth.”
Brad Plumer of the Washington Post cited Shierholz’s analysis for his Wonkblog piece “Why are wages still stagnant? Blame the labor market”:
“There are still 3.7 job seekers for every available employment opportunity. That’s down considerably from the brutal 6.7-to-1 ratio seen in July, 2009. But as Heidi Shierholz of the Economic Policy Institute points out, the current ratio is also higher than at any point during the 2001 downturn. Across just about every industry, competition remains intense for a limited number of jobs, which means that employers are under less pressure to offer higher pay in order to entice prospective workers.”
EPI in the news
Shierholz’s analysis of last Friday’s release of the Employment Situation Summary by the Bureau of Labor Statistics was also picked up by multiple national media outlets, including the Washington Post, NPR, McClatchy, Huffington Post, and CNBC.
- Speaking to NPR’s Scott Neuman, Shierholz explained why the labor market still needs to gain many more jobs to return to its pre-recession health, and why it’s difficult to predict when this will occur. “We don’t have some historical perspective to compare this to and go, ‘OK, we know from experience that when the unemployment rate gets to X, or the number of jobs gets to whatever, that’s when people will start coming back,’” she said.
- And Shierholz told the Huffington Post’s Lila Shapiro that although we are seeing job growth, “it’s still a hellish job search out there” for job seekers.
EPI President Lawrence Mishel’s latest research on young workers’ declining wages continues to inform the national economic conversation. Mishel’s findings were most recently cited by the New York Times,CBS News, Huffington Post, and Think Progress.
- From the New York Times editorial “Better Numbers on Jobs”:
“Years into a weak labor market, and with years to go before full recovery, the scars are becoming all too apparent. Recent data from the Economic Policy Institute shows that the inflation-adjusted hourly wage of college-educated men aged 23 to 29 dropped 5.2 percent from 2007 to 2011, and for female college graduates of the same age, 4.4 percent. Joblessness and wage declines are also pronounced for those with only a high school education. For those men aged 19 to 25, wages fell 8 percent from 2007 to 2011. For those young women, the decline was 3.1 percent.” - CBS News’ MoneyWatch: “Recent college graduates have had a hard time landing jobs and those that have jobs, are earning less. The Economic Policy Institute found that the average inflation-adjusted hourly wage for male college graduates aged 23 to 29 dropped 11 percent over the past decade. For female college graduates of the same age, the average wage is down 7.6 percent.”
- Huffington Post: “A new analysis from the Economic Policy Institute shows what a lot of younger Americans have probably noticed for themselves: even if you’re lucky enough to have a job, it’s still tough to get ahead. Over the last decade, wages for younger male college grads have plummeted by 11 percent, while women college grads saw their paychecks drop by 7.6 percent.”
- And Think Progress: “Not only has the Great Recession been bad for workers entering the workforce, but as the Economic Policy Institute noted, the entire last decade has essentially been lost in terms of entry-level wages.”
How I Remember Patty Rouse
March 15, 2012
By Bart Harvey, Former Enterprise Chairman and CEO
When I heard about Patty’s condition, I went in to see her two Saturdays ago, expecting the worst.
When I got to Vantage House, she was alone, sitting in a chair in her room with perfect posture, perfectly coiffed, primly dressed and totally alert. I was quite surprised, and said, “Hi there Patty,” and in that sweet Norfolk drawl she answered back, “Well, hi there.”
I couldn’t tell whether she knew who I was, but she covered it perfectly. Then, suddenly, a Catholic priest entered, saying he was covering for the Episcopal minister who was out of town, and with great solemnity asked how she was doing. She answered back that she was doing just fine – but how was the priest doing? Was he feeling okay?
I nearly burst out laughing, shaking my head and saying to myself, “They just don’t make them like Patty anymore.” And I heard in the background her saying to the priest, “It was nice of you to stop by, and if I can help you at all, let me know.”
Patty sitting there in her nicely patterned wool suit and her lovely Southern manner and pattern of conversation brought a flood of memories back to me – of her and Jim, of many trips together, of the start of Enterprise 30 years ago, of all the wonderful people at Enterprise who cared so well for her and her appreciation of her Enterprise family, of her own family and all the Rouses, of the remarkable journey she took and the people she helped as part of a duo and in her own right.
I marveled at the journey Patty Rouse had taken. An independent Southern girl who won a sailing contest as a teenager, the first woman Commissioner of the Norfolk Public Housing Authority, a divorcee who struck out on her own and let a tennis match and Jim Rouse bring her north and into the maelstrom of real estate development and Enterprise and poor neighborhoods.
She adapted to her new life and became deeply involved at Enterprise as vice president and secretary and served on its various boards. She was always looking out for her Enterprise family, attending functions, giving Jim the high sign when his speeches went on too long, tending to the details, lending her support.
She never took credit herself, always saying “Jim did that,” but he couldn’t have and wouldn’t have done it without her support, help, encouragement and devotion. People at Enterprise understood that, I understood that, her family understood that.
Outside of Enterprise, she sat on a number of commissions, tasks forces and boards, but her heart was always with Jim Rouse, Enterprise and much of the mission work of Church of the Saviour in Washington, D.C.
She took quite a journey and quite a risk, and after Jim died, she continued on and I was grateful that she was carrying on a legacy and living it every day, until she couldn’t anymore.
Enterprise has lost its other co-founder, but I believe, and I know Patty does too, what Patty and Jim Rouse did deserves to not only continue but to be multiplied many times. They weren’t casual about the importance of what they were doing and they gave up a lot to carry out their beliefs. They believed that those at Enterprise would be up to the task and do even more than they could imagine.
States with highest foreclosure rates shift
Posted 02/17/2012
December, 2011 unemployment: 9.9% (6th highest)
Home price change (2006Q3-2011Q3): -49% (3rd largest decline)
Processing period: 135 days
2. New Jersey—
2011 foreclosure rate: 6.4%
December, 2011 unemployment: 9% (13th highest)
Home price change (2006Q3-2011Q3): -22.6% (14th largest decline)
Processing period: 270 days
3. Illinois—
2011 foreclosure rate: 5.4%
December, 2011 unemployment: 9.8% (7th highest)
Home price change (2006Q3-2011Q3): -29% (7th largest decline)
Processing period: 300 days
4. Nevada—
2011 foreclosure rate: 5.3%
December, 2011 unemployment: 12.6% (the highest)
Home price change (2006Q3-2011Q3): -59.3% (the largest decline)
Processing period: 116 days
5. New York—
2011 foreclosure rate: 4.6%
December, 2011 unemployment: 8% (23rd highest)
Home price change (2006Q3-2011Q3): -13.6% (23rd largest decline)
Processing period: 445 days
Related articles
- Foreclosure activity edges higher in January (usatoday.com)
- Foreclosures and a Small Sign of Housing Recovery (247wallst.com)
- Foreclosures climbed in January (money.cnn.com)
- Chicago Foreclosure Activity in 2011 Indicates Hot Foreclosure Market in 2012 (prweb.com)
Is There a Wikipedia to Go Dark for Homeowners?
David M. Abromowitz
Senior Fellow at the Center for American Progress
Posted: 02/ 6/2012 5:44 pm
When Congress was on the brink of pushing through legislation that Internet advocates opposed, over four million online signatures were gathered quickly. Congress relented.
Today, millions of American households are poised to benefit directly from the opportunity to reduce mortgage payments, avoid foreclosure, build up some savings, or have a few thousand dollars to spend a little more freely. Yet while even conservative economists believe that easier refinancings will boost the economy and help millions more families — a major part of Congress is ready to say a big, “No, let’s not even try.”
Not a day elapsed after President Obama outlined a more ambitious set of proposals to let average families take advantage of the same low interest rates that have benefited upper income households and large corporations before Speaker Boehner among others declared the idea dead on arrival.
“All [the refinancing plan] does is delay the clearing of the market,” Speaker Boehner told reporters. “As soon as the market clears and we understand where the prices really are — [that] will be the most important thing we can do in order to improve home values around the country.”
Saying millions of families should wait until the “market clears” is the modern equivalent of “let them eat cake.” Clearing the market is an economist’s term for letting the tidal wave of foreclosures continue. But unchecked foreclosures drag down everyone’s home values, let vacant homes pile up in neighborhoods, and force families to choose between struggling to make needlessly high mortgage payments or become another default statistic with ruined credit.
It is time to ask lenders and investors to shoulder some of the burden, and Congress should be taking the lead on this, not finding objections. As my colleagues at the Center for American Progress and I explain in detail, the principles of accountability to avoid more foreclosures — especially for families who haven’t missed payments — is at the core of the administration’s expanded proposal for making refinancing easier.
Families with mortgages, however, are not an easily organized constituency. Unlike the protesters most engaged in social media who were the bulwark of those moved to criticize SOPA and PIPA, borrowers are not necessarily the internet generation nor an easily reached interest group.
But given the politics of “embrace the opposite of what Obama proposes,” homeowners struggling to keep making payments could use a Wiki dark day of their own. And so could the tens of millions of others who live next door, as no neighborhood really wants another foreclosure.
Related articles
- From Bad To Worse: Nevada Foreclosures Only Half Way Done (scoppcanton.wordpress.com)
- Should the Government Help Homeowners With Underwater Mortgages? (usnews.com)
Innovative Projects Integrate Affordable Housing into Asset-Building Strategies
CFED Newsletter: February 2012
There is growing interest across the country from innovative affordable housing providers in integrating asset building and other financial services into their affordable housing programs. As a pioneer and leader in asset building, CFED is being tapped to help structure financial programs and services in affordable housing programs that encourage low-income families to increase their level of financial literacy, improve their access to financial services and build assets.
CFED has long been engaged in one particular niche in the affordable housing marketplace – helping owners of manufactured housing take advantage of factory-built housing’s affordability, while also accessing the opportunity to build wealth in a way that more closely resembles the experience of owners of site-built housing. CFED began broadening its engagement in the housing field in 2011 through outreach and discussion with a number of housing organizations, including several innovative public housing authorities, a HUD Choice Neighborhoods Implementation Grant Awardee and the largest community development intermediary in the U.S.:
- The Cambridge Housing Authority in Massachusetts and the Tacoma Housing Authority in Washington State are both Moving to Work (MTW) participants and national leaders in affordable housing innovation. MTW gives unprecedented flexibility to public housing authorities to innovate. In 2012, CFED will be assisting both organizations with their efforts to integrate financial security programs within their housing programs. Exciting new ideas include efforts to get public housing residents banked, as well as the creation of a student Individual Development Account (IDA) – a special savings account that allows young residents to earn deposits by achieving personal and/or academic goals.
- The Boston-based organization – Preservation of Affordable Housing (POAH) – recently was granted a HUD Choice Neighborhoods Implementation grant for their work in the Woodlawn public housing development in Chicago. CFED is currently exploring numerous ways to assist POAH as they seek to fulfill the promise of the Choice Neighborhoods Initiative. Building on HOPE VI, Choice Neighborhoods seeks to provide support for the preservation and rehabilitation of public and HUD-assisted housing within the context of a broader approach to concentrated poverty that addresses basic services, schools, public assets, transportation and access to jobs.
- CFED continues our engagement with Enterprise Community Partners and is exploring new areas of partnership. Through a recent contract with HUD, Enterprise is working with a wide range of housing authorities on troubled projects, institutions and initiatives. CFED looks forward to working with Enterprise on embedding asset building as part of proposed turnaround strategies.
CFED believes that using housing as a platform for delivering financial security programs and systems has the power to change the trajectory of the lives of low-income families and children. We’re excited about working with such innovative partners in 2012 and are encouraged by the growing acceptance of a more holistic and integrated approach that has implications for a variety of platforms beyond housing.
To learn more about CFED’s affordable housing initiatives, click here.
Related articles
- Assets and the Poor: Twenty Years Later (scoppcanton.wordpress.com)
Low Mortgage Rates — Finally Having Impact on Housing Market?
CIN Alert for January 24, 2012
Vicky and Joe had always dreamed of buying a nice neat home in a Northern city suburb. That dream came true in 1972 when they purchased a Cape Cod style three bedroom home for $45,000 with a 30-year fixed-rate mortgage of 7.5%.
Joe remembers telling Vicky at the time that they would never see rates that low again, and over most of the next 40 years he was right.
However, something quite unusual has happened during the past several years: mortgage rates have plummeted to new record low levels, most recently 3.88 %. Of course, Joe and Vicky, now retired, don’t need the low rates anymore, but for many others – including their kids and grandkids — those rates seem very inviting.
Inviting they may be, but the low rates have not thus far been able to trigger a strong stimulation of the US housing market as (sad to say) relatively few people qualified for the lower rates. High unemployment and small wage gains have made it harder for many people to qualify. Other would-be borrowers didn’t want to sink money into a home that they fear could lose value over the next few years.
However, new statistics just released would seem to indicate that things are beginning to change. Perhaps there is good news coming over the horizon.
“Existing home sales rose for the third consecutive month in December, according to data released Friday by the National Association of Realtors, which touts the upswing as a sign of recovery in the national housing market.
“Sales of existing homes rose to a seasonally adjusted rate of 4.42 million during the final month of the year, marking a 5% increase over the downwardly revised 4.39 million homes sold in November and a 4 percent increase over the 4.25 million homes sold in October.
“The number of homes sold in December 2011 also marked a 3.6 percent increase over the 4.45 million homes sold during the same month one year ago. “The pattern of home sales in recent months demonstrates a market in recovery,” NAR chief economist Lawrence Yun said in a statement. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.” (Source: The Washington Post)
Builders are hopeful that the low rates will boost sales even more as the year progresses. In fact, low mortgage rates were cited as a key reason the National Association of Home Builders survey of builder sentiment rose in December to its highest level in more than a year.
Mortgage rates are one of the major issues your CIN editors monitor and report on regularly in our Housing Section, which is designed to provide information to prospective homebuyers, their counselors and advisors, lenders, developers, and others focused on the critical issues surrounding housing.
These include aspects of arranging financing and other details of the purchasing process, such as obtaining a fair appraisal of the value of the intended home. We also present information on various bank mortgage lending programs and mortgage banking programs to help borrowers understand the process they are entering as they select a home for purchase. Here’s a sample of some articles recently included in CIN’s Housing Section:
One million homeowners may get mortgage writedowns: U.S.
(Source: Reuters) About one million American homeowners would get write downs in the size of their mortgages under a proposed deal with banks over shady foreclosure practices. The deal, which could be struck within weeks, would mark the largest cut in the mortgage load since the start of the credit crisis.
Do FHA Mortgage Borrowers Still Face Credit Score Layering?
(Source: Our Broker.com) More than a year has passed since HUD announced that it would investigate 22 lenders on possible ‘Layering’, the addition of requirements on top of FHA standards. The investigations are in response to 22 complaints the National Community Reinvestment Coalition (NCRC) filed with HUD alleging that the loan activities of the mortgage originators showed that their home lending practices deny FHA- insured loans to African-Americans and Latinos with credit scores as high as 640.
WSJ: Home Equity Squeeze Sparks Reverse Mortgage Revival
(Source: Reverse Mortgage Daily) The real-estate crunch left most home values with much to be desired, prompting a revival in reverse mortgages. Although the number of reverse mortgage endorsements has decreased compared to its peak a few years ago, lending has been picking up, with MetLife Bank’s 2011 reverse originations increasing by 171% compared to the previous year.
Confidence Among U.S. Homebuilders Climbs to Highest Since 2007
(Source: Bloomberg) Confidence among U.S. homebuilders rose in January to the highest level in more than four years as sales and buyer traffic improved. The National Association of Home Builders/Wells Fargo sentiment gauge increased to 25 this month, exceeding the median forecast of economists surveyed by Bloomberg News and reaching the highest level since June 2007.
Feds investigating possible fraud at GE’s former subprime unit
(Source: i watch news) Federal authorities are investigating possible fraud at General Electric Co.’s former subprime mortgage arm amid increased public pressure to hold Wall Street accountable for its role in the financial crisis.
Mortgage, foreclosure issues top AG’s complaint list for the first time
(Source: Boston.com) Complaints about mortgage, loan modification and foreclosure issues soared in 2011 and were the biggest source of problems for consumers who asked the Massachusetts State Attorney General’s office for help.
COMMENTARY:
Why Falling Home Ownership Is a Good Thing
(Source: The Motley Fool) Commentator Dan Caplinger opines that falling levels of home ownership may not be such a bad thing, since for many, owning a home never made financial sense and avoiding the burden of having so much debt on one’s biggest asset can make financial life a lot easier.
Related articles
There Is Some Good News Out There This Thanksgiving Week
CIN Alert for November 22, 2011
As we prepare to enter the holiday season, your CIN editors thought it would be a good time to take a tiny step back from the daily dosage of negative news served up to us all by the major media and recognize that there have been some significantly positive developments recently regarding the US economy. This is by no means meant to minimize the negative impact that this Great Recession has had on the lives of so millions of individuals and businesses. We all know it, we feel it and we see it every day.
However, between media inclination to highlight the negative news of the day, along with the outrageous sound bites offered by some of politicians, we fear that some positive and noteworthy developments get lost in the balance. For example, how many of us recall seeing or hearing about this development last month:
“Permits for housing construction climbed in October, signaling an uptick in optimism among homebuilders. The number of permits for future housing construction jumped to a seasonally adjusted annual rate of 653,000 last month, up 10.9% from the revised rate of 589,000 in September, the Commerce Department said. That was much higher than expected, with economists surveyed by Briefing.com looking for a 603,000 permit rate.
If the glut of foreclosures starts thinning and demand picks up, the jump in permits could translate into a rise in new construction in coming months. As it is, permits and construction have both increased significantly from a year ago. Housing starts are up 16.5% from the same month a year ago, and building permits are up 17.7%.”
(Source: CNN)
Small development, perhaps, but a welcome (positive) news report among the many negative reports on the state of the economy.
We would guess that many people never knew of, or heard about these positive figures. Of course, time will tell if there is a positive trend development. The editors will be watching and reporting to you. CIN editors make a concerted effort to present a balanced collection of news and commentary on each subject that we cover.
CIN is specifically designed to be a reliable information resource for individuals and organizations interested in creating, rejuvenating and maintaining healthy communities in the United States and other countries. We have made this 24/7 resource easy to access and to use for you. For example, if you click on the link for Community Development, you would see this collection of recent news articles:
The Next Mega-Trend in Housing
(Source: Stock Market Review) One pocket of absolute strength in the current housing market is apartment-based REITs. According to Oliver Chang, a housing and securitized products analyst at Morgan Stanley, this trend toward rentals is just getting started.
KC architects work to create affordable green housing
(Kansas City Star) A Kansas City architectural firm is partnering with a local Habitat for Humanity organization to create a new energy-efficient model for the affordable-housing program. Heartland Habitat for Humanity, which works in three Kansas counties and two in Missouri, hopes to break ground next spring on a prototype being developed by El Dorado Inc.
Building permits climb 11%
(Source: CNN) Permits for housing construction climbed in October, signaling an uptick in optimism among homebuilders. The number of permits for future housing construction jumped to a seasonally adjusted annual rate of 653,000 last month, up 10.9% from the revised rate of 589,000 in September, according to the Commerce Department.
TD Bank to Create More Than 1,600 Jobs in South Carolina
(Source: TD Bank) TD Bank has announced that it will expand its corporate operations at the bank’s campus on Interstate 85 in Greenville, SC, creating more than 1,400 new jobs in the next three to five years. TD Bank will also add more than 200 new positions in Lexington, SC.
Farmland prices surge to record; investors grow wary
Source: (Reuters) U.S. farmland prices in the third quarter surged to the highest levels in more than three decades amid an accelerating agricultural boom that has so far defied fears of a bubble about to burst. Prices hit record highs in the plains, where wheat and cattle dominate production, and jumped 25 percent in the Midwest Corn Belt.
Chase Expands Military Banking Benefits to all US Veterans
(Source: JP Morgan Chase) Chase has announced the expansion of its Military Banking checking program to include all U.S. military veterans. Specifically, the premium checking account benefits typically reserved for high-balance are now available to everyone who has served in the U.S. military.
For sure, we are still bombarded every day with negative news of the U.S. and global economies, the prolonged effects of the Great Recession, and news and commentary about jobs, employment and the economy. Still, this Thanksgiving week, there are glimmers of hope in some of the media reports we bring you, however tiny they may be in today’s challenged environment for American families.
CIN is the place where the news — good and not so good, and the bad — will be found. We work hard to present programs and developments which will benefit the single community and all communities in need, as well as numerous “communities of interest” that share the goal of creating or maintaining vibrant hometowns. We urge you to make CIN a daily reference source.
And to all in the land – a Most Happy Thanksgiving. We do have much to be grateful for, even in tough economic times.
Related articles
- Jerry Jasinowski: Good News For Thanksgiving (huffingtonpost.com)
Making Those Mortgage Payments May Pay Off – After All
CIN Alert for November 1, 2011
The last 18 months have been rough for Dana. Sad to say, in the midst of the continuing Great Recession, she and her husband of three years have parted company. He’s not willing to help her at all, so she now has full responsibility for raising two toddlers and maintaining her job as a restaurant manager, while also paying the mortgage on their modest two-story home each month. There have been months when money has been so tight she’s had to ask her Mom to help out. Still, through all the adversity, Dana has managed to make her monthly mortgage payments on time. She’s never missed a payment, nor even been late.
Unfortunately, the value of her home has plunged from what it was when she purchased it in 2007, so she now finds herself in the same position as many other homeowners do today: upside down with a mortgage rate much higher than today’s going rates. Until now, there has been no way she could refinance or modify her mortgage loan to relieve some of the fiscal pressure she faces every month. However, there are signs that maybe — finally – there could be light at the end of the tunnel for Dana and millions of other Americans in the same boat underwater:
“The Obama Administration is launching yet another high-profile campaign to shore up the housing market — and with it, the economy — by making it easier for some struggling homeowners to refinance underwater mortgage loans at today’s ultra-low interest rates.
The federal government’s new rules will encourage borrowers to secure new loans no matter how much value their homes have lost during the nation’s housing crisis, with the hitch that they can’t have missed any mortgage payments for the last six months.
The plan could help 1 million to 2 million people get significantly lower monthly payments in hopes of stabilizing the real estate market. On top of that, it would boost the economy by putting about $2,500 more in a typical homeowner’s pocket each year, administration officials said. The plan amounts to a sweeping overhaul of the 2½-year-old Home Affordable Refinance Program, easing rules and reducing fees to allow many more homeowners potentially to take advantage of historically low mortgage rates.
The revisions include lifting a ceiling that barred participation by borrowers who owed more than 125% of the value of their homes, and using a controversial modeling method to replace costly appraisals that are among the fees that have kept some homeowners from refinancing. About 14.6 million mortgages nationwide were underwater at the end of the first quarter, about 29% of the nearly 51 million residential mortgages nationwide, according to Moody’s Analytics and Equifax.” (Source: Los Angeles Times)
Will these steps help? Stay tuned. Buying and maintaining a home can be a very emotional process for families. This is the largest purchase most individuals will make — and one with long-lasting effects. The home purchase process can also be confusing, and the terms of the loans offered are not always understandable for most of us (remember all the pages at closing!). It’s especially crucial in today’s economy that homeowners be aware of all the options available to them, and to avoid those deals that “sound too good to be true.” The results of the Obama Executive Orders will be seen in the weeks ahead.
Meantime, there are millions of homeowners today in desperate need of assistance with their housing issues. The CIN editors are watching many developments for you.
CIN’s Housing Section is a dependable reference tool for current and prospective homeowners. Information is updated on a daily basis. We offer details on various bank mortgage lending programs and mortgage banking programs to help borrowers understand the process they are entering as they select a home for purchase, or ways to maintain/refinance their home after purchase. It seems hardly a day goes by without another dramatic development. Consider these recent examples:
Mortgage refinancing to get easier under revised U.S. program
(Source: Los Angeles Times) New rules being implemented by the federal government will encourage borrowers to secure new loans no matter how much value their homes have lost during the nation’s housing crisis.
Obama looks to bypass Congress with help for homeowners, students
(Christian Science Monitor) President Obama is bypassing Congress and using executive powers to enact change. Strapped homeowners and indebted students are first in line under his relief plan.
SHRA to expand program to buy, rehab and resell foreclosed properties
(Source: Sacramento Press) The Sacramento Housing and Redevelopment Agency can now grant developers a first look at foreclosed properties for rehab and resale in Sacramento’s low- and moderate-income neighborhoods – before the properties are put on the open market. Through the new program developers can purchase vacant, foreclosed properties at discounted prices and then rehabilitate and resell those properties.
Cost of Fannie & Freddie bailouts trimmed
(Source: CNN Money) The cost to taxpayers for bailing out mortgage finance giants Fannie Mae and Freddie Mac won’t be quite as bad as previous estimates.
The FHA now estimates that the net cost of the bailouts through 2014 will be about $124 billion, down about 19% from an estimate of $154 billion a year ago.
Reverse Mortgages to be Scrutinized
(Source: Mortgage Loan.com) Older borrowers are getting a new resource to assist them with reverse mortgages and other financial matters, courtesy of the new Consumer Financial Protection Bureau (CFPB). The Office of Financial Protection for Older Americans is one of several entities being established under the new bureau, with the goal of promoting financial literacy among Americans age 62 and over, and protecting them from unfair and abusive practices regarding financial decisions.
Senate Adopts Measure to Increase Fannie, Freddie Loan Limits
(Source: Bloomberg) The U.S. Senate has adopted a measure that would raise the maximum size of a home loan backed by mortgage companies Fannie Mae, Freddie Mac and the Federal Housing Administration to $729,750. The measure was approved less than a month after the limit on so-called conforming loans was automatically reduced to $625,500.
Related articles
- The Pros & Cons of Reverse Mortgages (orangecountymortgage.co)
- National Mortgage Complaint Center Warns Homeowners About Mortgage Refinance Scams & Explains How Homeowners About To Refinance Can Save Money (prweb.com)
- Freddie Mac seeks $6 billion more in aid (bottomline.msnbc.msn.com)
Thirty Percent: Good Or Bad?
CIN Alert for October
Community Investment Network
October 14, 2011
Thirty percent: It’s a terrible score on a school exam, but a rather nice figure for the relative humidity outside in this balmy fall weather. It’s also the amount of household income devoted to housing costs which the federal government uses as the“affordability threshold.” In other words, anyone devoting 30 % or more of their income to housing is considered to be living in “unaffordable housing.” This figure applies not only to those who own their homes but also to those who rent.
Recent reports would indicate that the number of both owners and renters living in unaffordable housing has increased. Consider this report: “The share of renters paying 30% or more of their household income on housing costs — the government threshold to determine if housing is unaffordable — rose to 53% last year from 51.5% in 2009 and about 50% in 2008, according to 2010 Census data released today.
While median rents remained stable last year at $855 a month, median national household incomes, adjusted for inflation, fell 2.2% — putting the squeeze on renter budgets. Last year, 38% of homeowners with a mortgage paid 30% or more for housing, up from 37.6% in 2009.
Yet, the fact that percentage rose at all shows that many homeowners haven’t been able to refinance mortgages, despite near record low interest rates. The US Census Bureau’s definition of housing costs includes mortgage payments, insurance, taxes and utilities. (Source: USA Today)
Living in a home remains the ultimate American Dream. For all of our country’s history the dream of land and homeownership has been an important motivating force for individuals and families. That desire drove the early pioneers from east coast to west coast and south; drove homesteading, especially in the west; and today continues to motivate individuals and families who want a home of their own. But there are obstacles to the dream.
In a perfect world, everyone who earns a salary should be able to buy a home of his or her own. However, the impact of the economic recession has clearly taken its toll on the ability of many people to purchase a home of their own. The rental market is very hot, as would be expected in times such as these with a slow residential real estate market, but there too we find obstacles for many individuals.
Mortgage lenders generally are not lending money today to many creditworthy individuals, but interest rates are rock bottom right now. Also, various municipal, state and federal government programs have been designed to expand homeownership. Some help is still there for home purchase – as long as you can make the numbers work.
Clearly it’s a challenge for everyone. CIN’s editors recognize the importance of homeownership, and we maintain a special section on affordable housing designed to provide information to prospective homebuyers, their counselors and advisors, lenders, developers, and others focused on the critical issues surrounding affordable housing.
Related articles
- Rising rents lessen the affordability of housing (usatoday.com)
- You: Private rents unaffordable for families in most English boroughs (guardian.co.uk)
- Truth and Nonsense About Mortgage Lending, the Housing Collapse and Homeownership (scoppcanton.wordpress.com)
- Census: Housing bust worst since Great Depression (seattletimes.nwsource.com)
- National Survey of Homeowners and Renters Reports Increased Interest in Homebuying (prweb.com)
Building Community, One Household at a Time 