The latest on saving homes from foreclosure, resetting ARMs, interest rates and more
According to Interest.com's latest national survey of home equity rates, the average cost for a $30,000:
- Home equity loan held steady at 7.92%, but it has edged down seven of the past 10 weeks. It is up almost four-tenths of a percentage point from 7.55% one year ago, but well off its recent high of 8.2%, which was reached in May 2004.
- Home equity line of credit rose to 8.16% from 8.13% where it had held for eight straight weeks. The HELOC rate is up almost half a point from the 7.68% of last March. Two years ago it was at 5.91%.
A number of states are trying to figure out how they can help homeowners facing foreclosure because they can no longer afford their adjustable rate mortgages.
Many of these borrowers want to refinance but can't because they have too much debt, too little income or not enough equity in their homes to refinance.
The most common solution being discussed is for the states to borrow money and then reloan it to homeowners who can't get refinancing any other way.
The Ohio Housing Finance Agency will be one of the first to put such a program into action on Monday.
Homeowners will be able to refinance into 30-year fixed-rate loans at an interest rate of about 6.75%. To assist with closing costs the program also will offer a 20-year fixed-rate second mortgage of up to 4% of the home's appraised value.
The loans will be available through participating lenders that will be announced Monday.
A Massachusetts couple facing foreclosure because of an adjustable rate mortgage has won at least a small legal victory.
A judge has told Ameriquest Mortgage Co. that it can't impose a $715 monthly increase or foreclose until the lawsuit is resolved.
Thomas Hilchey, a self-employed homebuilder, and his fiance, Robin Crevier, claim Ameriquest's salesman never provided the documents and disclosures that state and federal law require.
As a result they had an adjustable rate mortgage but didn't understand that rates could rise so much it would make their payments unaffordable.
The couple's loan started with two-year "teaser rate" of 5.75% and monthly payments of $1,692. In 2005 the rate rose to 7.75% and the payments grew to $2,035. On March 1, the rate increased another 2 percentage points to 9.75%, resulting in payments of $2,750 -- if the judge has allowed Ameriquest to collect.
The "New American Home 2007" unveiled at a big homebuilders show in Orlando last month was an ultramodern three-level home with a wheelchair ramp and elevator.
There were two bedrooms on the ground floor, each providing a full bath -- one with a shower, the other a tub -- equipped with a sliding door.
Those features were intended to reflect one of the most powerful trends in the housing industry: Americans ages 55 and older will buy one in every five new homes this year -- $103 billion worth -- according to research by the National Association of Home Builders.
Architects and builders say the major reason we choose one home over another is the room layout and design, and most new homes are featuring a more open floor plan, with the kitchen often a focal point.
"It's indicative of where we're going -- an open lifestyle, not enclosing it into a formal dining room or living room. Just fun," Ron Nowfel, an architect at Robb & Stucky Interiors, told USA Today.
More than a dozen lawsuits filed in Rhode Island and Massachusetts charge that lenders are violating the federal Fair Credit Reporting Act by obtaining consumers' personal credit data to flood them with ads for home equity loans.
Enacted by Congress in 1996, the Fair Credit Reporting Act is supposed to protect consumers' privacy by restricting how credit bureaus can disseminate personal credit information.
Credit bureaus are permitted to sell lists of consumers based on their credit scores if -- and only if -- the information is used to extend to the consumer a "firm offer of credit."
The lawsuits say the letters they've received provide none of the details -- such as interest rates, repayment periods and loan terms -- required to be considered such an offer.
A Canadian company wants to photograph and appraise most American homes for a database it will sell to real estate agents, banks and insurance companies.
Zaio Corp. -- taken from "zone appraisal and imaging operations" -- claims the information will also help consumes by reducing the time it takes to get a loan approved.
Some homeowners are understandably nervous about photographers walking down the street, taking photos of every house on the block. But that's not illegal.
Zaio has completed photographing and appraising homes in Spokane, Wash., and Mesa, Ariz., and plans to move on to 170 more cities this month.
A report by the Federal Deposit Insurance Corp. says the number of homeowners behind on their mortgages rose 15.6% in the fourth quarter after rising 5.2% in the third quarter.
The FDIC, which insures deposits at more than 8,600 banks and savings & loans, considers homeowners to be delinquent if payments are more than 90 days late.
"While the degree of credit distress in these portfolios is still well below the peaks that we saw during and after the 2001 recession," says Richard Brown, the FDIC's chief economist, "it seems likely that their performance will get worse before it gets better."
The Harvard University Joint Center for Housing projects that the money spent on home remodeling will increase 3.7% a year, or 44% from 2005 to 2015.
Because of the slowdown in home sales, homeowners are staying in their homes longer and battling neglected projects.
"Homeowners are nervous about prices and what new prices will do," Nicolas Retsinas, director of the Joint Center, told the Oakland Tribune. "So if they can't get the price they want, they're putting in a new kitchen. ... It's an alternative to moving up."
Another big reason we're remodeling is that our homes are getting older, according to Gopal Ahluwalia, vice president for research at the National Association of Home Builders.
In 2005, the median age of a home was 32, up from 23 years in 1985.
"People are trying to bring their 1960s and 1970s homes into the 2000s," Ahluwalia says.
We continue to take lots of equity from our homes with cash-out refinancing.
Freddie Mac, a government chartered company that buys, packages and resells mortgages to investors, says that 84% of all of its loans that were refinanced the last three months of 2006, and 87% of all the loans refinanced in the third quarter, were cash-out refinancing.
That means borrowers took out new mortgages with loan amounts that were at least 5% higher than the balance of the home loan they're paying off.
Properties refinanced during the fourth quarter enjoyed a median price appreciation of 28% since the original loan was made, with the median age of the loans being 3.4 years.
While that's down from a revised 33% percent appreciation in the third quarter, it's still a healthy average appreciation of 8.2% a year.
If many of the houses or condos for sale in your neighborhood are vacant, they could be driving down your property values.
Today's Wall Street Journal notes that an often-overlooked measure of how many homes for sale are empty has climbed to the highest level since the Census Bureau began tracking it four decades ago.
During the last three months of 2006 about 2.1 million vacant homes were for sale. That brought the home-owner vacancy rate to 2.7%, up from 2.0% a year ago. Until last year the vacancy rate had never risen above 2.0%
"Economists fear that many vacant homes are owned by speculators who are stuck with investment properties that they can't sell and may be under increasing pressure to drop their prices," the Journal reported.
It went on to give an example of two investment homes in Virginia that sat empty for several months before being sold at substantial discounts, including one that went for $35,000 less than the investor had paid for it.