Even with a whirlwind of news this week – from General McChrystal’s departure to the longest tennis match in the history of Wimbledon – real estate remained a major focus. Sales of new single-family homes were down 32.7 percent to a record low. Sales of previously owned homes, although up 19.2 year over year, fell 2.2 percent. Rounding it out, mortgage applications dropped to their lowest level since 1997.
All of these drastic numbers and record lows have some arguing about the dependence of the housing market on government support. That argument may heat up, as the Senate voted down the bill which would have extended the closing deadline for the home buyer credit to September 30 from June 30. It probably didn’t help that an audit found prisoners fraudulently receiving the tax credit.
In good news, pricing of homes rose for a second straight month. In California, prices rose 23 percent in May. Speaking of California, state legislators are considering a bill that would redefine the obligations of many defaulting homeowners. Do you think other states will consider similar bills? What about on a national level?
Take a page out of Mortgage Bankers Association President Jim Pair’s book and counsel borrowers to not charge large purchases or change jobs as their applying for mortgages — if at all possible, they should wait until after closing. This will prove especially important as Fannie Mae’s introduced new requirements to recheck a borrower’s finances shortly before closing. In other advice for your consumers, Fannie Mae’s “unusual hardships” policy provides relief for homeowners with problem drywall. Pass it along!
Fannie Mae also announced this week that in an effort to deter the trend toward strategic defaulting, it will temporarily deny new loans to borrowers who deliberately default and walk away from their homes. Who would have thought a measure like this would have been necessary?
Live and work in one of America’s dirtiest cities? Perhaps you can help think of ways to get involved to clean it up!