Category: Real Estate News

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Quarterly Housing Statistics

A common question that people ask Realtors is: “How’s the market these days?” The Wisconsin Realtors Association makes available housing statistics on a quarterly basis that are very interesting to follow. You can look at stats for Dane county by clicking here (and other counties in Wisconsin once you are at the site), and you will note that the number of homes sold this year is higher than last year. There is still improvement to be made in our local market as well as real estate markets across the country, however the numbers are promising considering buyers are now buying without the incentive of the federal buyer credit that was previously available.

If you have market questions, please be sure to send me an email at heidi@glassslipperhomes.com.

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Tax Credits For Some Home Improvements – Don’t Miss Out!

There are many, many different reasons for buying (and occupying) real estate. Some common reasons are that a mortgage payment is often less than a rent payment, mortgage interest is tax deductible, real estate tends to be an appreciating asset, and the list goes on and on. The common theme often relates to money and how we can get the most out of our investment. With that in mind, make sure you’re aware of the tax credits that are currently available for certain home improvements. Examples are some window and door replacements, some roof replacements, and some furnace and central air conditioning replacements. The list is long and you can should familiarize yourself with the factors needed to qualify for a particular tax credit before committing yourself to anything. But for those that make the qualifying home improvements, enjoy yet another monetary perk of home ownership!

If you have questions about the tax credits available for certain home improvements, visit the government website that outlines the program and email heidi@glassslipperhomes.com.

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Fannie Mae’s New Enforcement On Strategic Defaults

With more than 5 million home owners unable to make their monthly mortgage or currently in default, lending giant Fannie Mae has started to get tough on strategic default.

At the end of June, Fannie Mae announced that it would no longer look the other way from borrowers who walk on their mortgage. They also announced that the penalty would be a seven year ban from the GSE (Government Sponsored Enterprise) program. Additionally, Fannie plans to take legal action against borrowers who strategically default on their loans.

While Fannie Mae is standing tough on their decision, the reality is that with unemployment still at 9.5% or higher in some regions and a sluggish economy is having many home owners feel that they have no choice but to walk away from mortgages that they have no hope of catching up on.

 “We’re taking these steps to highlight the importance of working with your servicer,” said Terence Edwards, Fannie’s executive vice president for credit portfolio management. “Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”

Here’s how Fannie breaks it out:

  • Deed-in-Lieu of Foreclosure> — reduced from four years to two years with 20% down; four years with 10%.
  • Pre Foreclosure Sale — two years with 20% down; four years with 10%.
  • Short Sale— will be the same as pre-foreclosure sale
  • Strategic Default (Walk Away) — seven years.

Many experts are fearful that this move will contribute to the already dismally depressed home market by cutting out the government backed borrowers. Fannie Mae and Freddie Mac, fund more than 90% of new mortgages and so far, Freddie has not followed suit.

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New Energy Loan Programs Help Wisconsin

Recent trends for financing to encourage renewable energy and conservation are becoming more popular in Wisconsin, as city officials and utilities are pushing residents to be more energy efficient. Milwaukee has developed a new solar loan program that will provide revolving loans that homeowners can repay on their property tax. The city will provide $135,000 for the initial loans to Milwaukee Shines, the city’s solar project. Qualified residents will receive loans between $5,000 and $20,000, and they will contain an interest rate of 5.25 percent, which is two percentage points higher than the prime rate. “The big barrier to entry for people has been the significant upfront cost, and that’s the strongest part of this package,” says Alderman Tony Zielinski. “For as little as $300, they can have a solar system installed on their homes and they have 15 years to pay back the city. The money they save on reduced costs for energy, those dollars can be used to pay back the city.”

Other initiatives also are being announced, including River Falls Municipal Utilities, which is allowing residents in Pierce County, Wis., to extend payments for renewable energy upgrades. The residents would see a decrease in their electric bill similar to the loan payment. Racine, WI, will allow residents to fund energy-efficient retrofits in the Retrofit Racine program. The idea behind focusing on older buildings, such as the ones in Racine, will allow residents to see that older buildings are so inefficient that they pay too much on their utility bills. Studies have shown in Wisconsin and elsewhere that energy efficiency is the cheapest way to lower emissions of carbon dioxide.

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Federal Reserve Stops Mortgage Purchases

A recent article  from the NPR indicated that The Federal Reserve will stop buying mortgage-backed securities on Wednesday March 31. This marks the end to a massive program that’s been helping the housing market recover.

When the economy showed signs of decline over a  year and a half ago, the government wanted to drive down interest rates for homeowners to stimulate the economy by making it cheaper to buy or refinance a house. The problem was that lenders were not issuing loans, even to homeowners with good credit. As a result, interest rates rose. 

The Federal Reserve aimed to solve this problem by buying up a lot of mortgages. Because of this, they became the largest mortgage-backed security investor in the world. In fact the total amount of mortgage-backed securities now totals more than $1.2 trillion worth in all.

The Fed was buying 90 percent of new mortgage-backed securities and now is only buying about 30 percent or less. As of April 1, 2010 they will stop buying altogether. So the question is what happens then? Barry Habib, chairman of the board of Mortgage Success Source, which tracks rates and trends for mortgage brokers, says that when the Fed stops purchasing these securities, it will leave a vacuum in the market that will push up interest rates.

What many people don’t know or understand is that the government actually has been making quite a bit of money on this program. The U.S. Treasury earns about $50 billion a year from interest that homeowners pay on loans the government owns. However, there is the risk that some of the more than $1 trillion worth of home loans that might go bad.