I blogged on my Wall!

August 5, 2010

Wouldn't you just know it?  I have been saying this over and over, it's getting tighter, leaner, stricter, meaner, over the top, tip of the iceberg unfair housing unethical behavior to obtain a home loan these days!  And before I hear the glass hit the floor, I know so because I am living it with clientele who were turned down for reasons that were almost surreal and so borderline riding the fine line of unethical behavior that HUD's lines have to be ringing off the hook! So what happens when there isn't a sea of homeowners?  Foreclosures which equals RENTERS, read the article to follow below,,,

The banks gave out these bad notes, now Americans with money to put down on a home with the same decent score of the past is paying for the sins of the banks bad discretions. I thought then,, here comes a train wreck for those with zero on everything to buy a home, zero down, zero closing costs etc. just waiting to crash! And bang did it ever! Now the middle class is becoming extinct, non existent, disappearing fewer in numbers?

Why don't we give scores to the banks that are the cause and ruination of  scores of people who have no choice now but to have their credit compromised who were truly unfortunate victims of predatory lending or loss of income (number one) or etc. and you have to love it when you are told in order to participate in a short sale or deed in lieu some banks require you to be 3 months behind before they'll talk to you!  Now some dutiful folks don't and cannot afford to be placed in this position.  Now after that 3 months,,,your credit takes a hit, you go for a short sale not sure if it will be granted or denied ,,, well you get the drill.  NOW you want to go out and rent .,,,HELLOOOO your scores just dropped how much by taking a hit on your credit that the bank just granted that short sale that you possibly may have a problem renting mainstream now, right because now Sellers, Renters, Investers (some of which walked away from their underwater homes to buy homes so they can capitalize on this market to rent to people only with marginally good credit, yep that's right) are requesting your score be at least 600. Wasn't that a good score a few years back? We forgot 560 was ok with a lil work on your credit. Well amnesia has hit and assimilated us Americans like a virus again as we just become the shrinking middle class of folks who can't sell, move but drowning for while holding your breath for 5 years is a more likely reality.

 Don't we love this NEW American Dream of .....home ownership, renting, employment ?  Well I ran across this fascinating article and BINGO is all I can say,,,,this is not to say, I am against renters, hecks I  was one for years,,,however it was by choice,,,,so just saying I found it to be a very interesting read and just had to share...

How Wall Street Reform Benefits Foreclosure Buyers
By Peter G. Miller    

With the passage of Wall Street reform now a done deal in Washington there are probably few people who did better than real estate investors. Stricter mortgage standards plus less federal emphasis on homeownership means there will be a new and growing demand for rental housing.

“In previous eras, we haven’t seen people question whether homeownership was the right decision. It was just assumed that’s where you want to go,” Raphael Bostic, a senior official with the Department of Housing and Urban Development, told the Washington Post. “You’re not going to hear us say that. What we’ve seen in the last four years is that there really is an underside to homeownership.” 

The change in government policies impacts the demand for investment real estate because a growing population combined with a smaller percentage of owner-occupants means more demand for rental property.

Mortgages
The Wall Street reform legislation homogenizes the mortgage marketplace and assures that there will be no shortage of conventional, VA and FHA loans. Lenders are entirely free to offer more exotic financial products, but only if they’re willing to set aside reserves, eliminate prepayment penalties and face potent lawsuits from borrowers and mortgage investors enabled by the new standards.

For buyers and investors with proper paperwork and visible finances the new loan requirements will be a low hurdle, however, for many borrowers mortgage applications will suddenly become more difficult. Application reviews will stiffen and lender standards will rise, meaning that many loan applications will be declined. We’re already seeing this with the new devotion to higher credit scores.

The tougher financing standards will create two results. First, there will simply be fewer buyers than might otherwise be the case. Second, there will be fewer buyers who can “stretch” and afford a bigger mortgage for a given income. In the end these two factors will create less pressure to push up home prices.

Rentals & Foreclosures
Since the end of World War II we have had a steady need for additional rental units to accommodate a growing population. In 1950 we had a population of 153 million, a figure that will soon top 310 million. Now we have massive numbers of foreclosures adding to demand.

For 2010, says James J. Saccacio, chief executive officer of RealtyTrac, “the midyear numbers put us on pace to exceed thee million properties with foreclosure filings by the end of the year, and more than one million bank repossessions. The roller coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market.”

No doubt many of those who have lost their properties have moved in with friends and family. That said, there are only so many basements and accessory apartments. Armies of people who once owned now need rental units.

Marketplace Changes
Although there’s plenty of property demand that demand is not actionable. Individuals who might once have bought are effectively being shut out of the marketplace by such issues as tougher loan standards, unemployment, reduced wages, credit reports with major black marks and changing federal policies. And while such individuals may not have the financial muscle to buy a home, they often have sufficient income to afford a good rental.

Market data developed by Reis.Inc., a leading provider of commercial real estate information, shows two interesting trends.

According to its second quarter analysis of national apartment trends, Reis says occupancy improved in 67 out of 82 markets. “Vacancies fell for the first time in two years from 8.0 percent to 7.8 percent, as net absorption surged by over 46,000 units. This was the largest net positive addition to occupied stock on record in ten years. Approximately 70 percent of this addition to occupied stock came from existing buildings leasing up empty units.”

Fewer vacancies are good news for property owners, but what about rental rates?

Reis figures show that rental rates for apartments, the best barometer we have, increased steadily between 2005 and the third quarter of 2008. The last quarter of 2008 and all of 2009 saw rental rate declines. In 2010 we’re back to rising rental rates: Reis says rates were up .4 percent in the first quarter and .7 percent in the second quarter.

Time & Place
So is this the time to buy investment real estate, especially short sales and foreclosures?

In many markets there’s a fusion of discounted acquisition costs, historically-low interest levels, falling vacancy rates and rising rental rates. This doesn’t mean specific real estate investments are attractive everywhere or for all buyers, but in areas where such trends exist and seem likely to continue this may well be an unusually good time to consider short sales and foreclosures, two ways to acquire discounted real estate.

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Peter Miller is syndicated in more than 100 newspapers and operates the consumer real estate site, OurBroker.com.

 Thanks Peter Miller,,,confirmed what I have been saying while watching this tide turn for the last couple of years! On my resources page check out the 5 mortgage myths!  Well a wrap for today! Thanks for reading!