The latest study by the University Florida shows that the new housing market is actually stabalizing. This is a move in the right direction, as markets will tend to stabalize before they can move back up. The report indicated that the Florida market is different from most states in the nation. In spite of lots of press to the contrary and the increase in the number of people moving away, Florida continues to grow.
Archer does believes the owner-occupied single family homes are still good investments. While prices may continue to drop in some markets, he did not see widespread declines.
While this is excellent news that is supportive of our housing market, there is some concern regarding some legislative activity that is going on in Washington DC right now. Activity that could affect some us sitting in our Florida homes.
The government, in their quest to “appear” to be doing something about the Real Estate problems throughout the country, have decided that they must blame someone and punish them. They have chosen to blame and punish Mortgage Companies, and have proposed a bill (Mortgage Reform Act HR 3915) that, if enacted the way initially presented, would make Mortgage Lenders prove that someone has the ability to repay in order for them to be able to legally borrow money against their home.
At first glance this doesn’t seem too unreasonable, after all, one of the problems in the market today was that people were lent money that they were unable to repay, and those resulting foreclosures are putting a strain on the marketplace. But looking more closely this is very frightening.
Everyone knows that bad things happen to good people.
Imagine you have been trying to pay off your mortgage as fast as possible (not something we recommend, but that’s another story/another time) and have been for years making extra principal payments on your mortgage. Your payment history is great, credit is good, but the mistake you made was you put too much money into your house. One day, through no fault of your own, the company you work for goes bankrupt and you are out of a job. Your savings account was mostly located in your home, and before too long your bank account is next to nothing. You would try to take back the hard earned money you “deposited” into your home so that you can live until you get your income situation settled. Your Lender’s response to your loan request is:
I’m sorry – there are no legal options available….
since you have no proof of income.
As scary as this is, the bill has been presented. In fact, some States have already outlawed certain types of mortgages that cater to self employed people. We do not know one way of the other if the bill will go through in this format, a modified format, or any format at all, but that it got presented this way is concerning. This is because the people in charge of making laws are not necessarily experts in the fields that they can make laws regarding.
Take control of your money and your house while you can!
We all hope that cooler, informed heads will prevail and this will not come to pass, but we don't know. We don't know the different things that could be coming to pass in our market over the next 12 months. It would be very wise right now to do an equity and mortgage evaluation to determine if you have any opportunity to improve your financial house right now, before the market or the goverment tell you you can't.
BREAKING NEWS - Yesterday The House of Representatives Passed HR3915 Mortgage Reform and Anti-Predatory Lending Act of 2007. This Law, should it eventually be passed, would bring new rules for lending standards, predatory lending, and Mortgage Broker Licensing.
From a Licensing standpoint, there are items in the bill that would serve to protect the public, including a National Registry for all Mortgage Originators, so that bad apples that break the law can be tracked should they try to move from company to company or state to state. Background checks of all originators (except employees of federal-depository institutions) would become mandatory.
There will also be a much higher level that lenders will be held to in determining a borrower’s ability to repay a loan. We have said previously that this sounds like a smart thing to keep people who shouldn’t have gotten a loan over the past few years from getting a loan going forward, but there are serious concerns. People who have had a setback temporarily that affected their credit and cash flow may be unable to borrow money they put into their property if they cannot meet the ability to repay.
In fact, within the past several days we received word of lending changes already occurring in the state of Massachusetts:
The Massachusetts Attorney General has significantly revised existing mortgage regulations to require that lenders determine whether a borrower has the ability to repay a loan…. No Doc, No Income, No Asset (NINA), No Income, Full Assets (NIFA), Limited Doc and Stated Income documentation will no longer be permitted in Massachusetts.
While all of this definitely serves to keep people who should not be borrowing from doing so, it certainly will keep people who really should be allowed to borrow from doing so as well. People who could be possibly impacted by this law include:
· People with cash flow rich, but very tax-efficient businesses (real estate investors for one)
· People who have a lot of their savings in their house but lose their income for a time
· People who may have income they cannot “prove” from family or overseas
· Those with new businesses
· Certainly others, these just come top of mind
If I have a brand new business with no track record, but a ton of cash in the bank and I want to buy a home, I may no longer be able to purchase using a No-Doc loan in Massachusetts.
What this could do is keep people who really never did anything wrong, expect try to save on their tax bill, or be entrepreneurial, or unfortunately get very ill, or get laid off, etc..from now having the option of paying the lenders price to borrow money against the asset they currently own or want to own.
2 things you should do now!
1. Contact Your Senator and tell them you OPPOSE this bill if it has to be accepted in its entirety – the bill has to clear the Senate where changes may be made! http://www.senate.gov/general/contact_information/senators_cfm.cfm
2. Call us TODAY, to get the best rate, get cash out, or buy your next property. We have hard money available for investment deals or we can get you the best bank deal through one of institutional lenders. You have many options available to take advantage of this “Buyers Market”. Sieze opportunities today because with all the shake ups in the Banking and Legislative world you may not get a chance tomorrow. ….hope is not a strategy – call today 954-217-9518
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