Enactment of Foreclosure Prevention Act doubtful

The Foreclosure Prevention Act of 2008 (S. 2636) may not be signed into law. The White House indicates it's headed for a veto. The bill would change bankruptcy laws by giving judges the latitude to reduce interest rates and the amount that is owed on mortgages of at-risk homeowners.

“We appreciate the Senators' efforts to try to help stabilize the mortgage market and help those who are at risk of facing foreclosure,” said David Kittle, chairman-elect of the Mortgage Bankers Association. “However, by including language to reform bankruptcy and allow judges to modify mortgage contracts the bill threatens to hurt those it is designed to help. Bankruptcy reform will increase the cost of mortgage credit for all borrowers at a time when we ought to be making it easier, not harder, to get credit.”

Number of senior homebuyers growing

The number of households headed by persons over age 55 is growing, and will continue to grow. They now make up 20.9 percent of all new home buyers and 24.3 percent of new custom home buyers, according to a study by the National Association of Home Builders.

The good news for home builders is that many of these buyers have accumulated wealth over the years and can pay for new homes by selling their existing homes, the study report noted. However, the vast majority of people age 55 and above tend to be content with their current homes, so the challenge for builders is to develop products that will be attractive enough to lure them away from their established home and into a new one.

Condo sales on rise

Sales of condominiums and townhome's are picking up. These units are just too popular with a large segment of buyers to be held down long by a general sales slump. “We are definitely emerging from a difficult time and seeing some light in the condo market,” said Bill Donges, CEO of Lane Company, a major condominium development firm. “The condo lifestyle, especially in urban areas, is very attractive and with mortgage interest rates low and selection good, we are seeing buyers come back into the market.”

The steady and growing sale of condo units in certain markets is also helping the rental apartment market, it was noted by Steve Patterson, an officer with the National Association of Home Builders. “We've had fairly strong rental demand for quite some time, but the unsold condos and single-family homes coming back into the market as rentals were hampering the rental apartment sector. With many of those units now selling, the so-called `shadow market' is starting to dissipate and the multifamily market overall is getting healthier,” Patterson said.

At the height of the housing boom, condo construction starts accounted for an unprecedented 45 percent of all multifamily starts annually. When the market rebounds, NAHB expects that percentage to hover between 20 to 30 percent of all annual multifamily starts. “The real difference we're seeing now is that all our buyers want to live in the condos,” said developer Donges. “The speculators are gone, which is a good thing. We're optimistic that, except for the most overbuilt markets, the worst is behind us.”

Consumers feel positive about their home

People are feeling very positive about their homes these days, despite a generally sluggish housing market. A recent survey conducted by Harris Interactive revealed an interesting insight into consumer sentiments. It indicated that about 77 percent of homeowners believe the value of their home has increased or remained the same during the past year. Also, many homeowners say they are planning to do things this year that you might not expect during a housing and credit slump.

For example, 82 percent will spend the same or more on minor home improvements, such as installing a new garbage disposal, repair or wall paper a room. And 67 percent say they will spend the same or more on major home improvements this year. Those projects might include replacing the roof or remodeling a kitchen. About a third of respondents to the survey say they plan to take out a home equity loan this year, or refinance their mortgage, or take out a second mortgage, or sell their home.

`Mortgage Help Now' launched

A new company, named Mortgage Help Now, has been formed to provide assistance to homeowners facing foreclosure due to problems in the mortgage industry. The company, affiliated with The Liput Group, is comprised of mortgage industry executives and lawyers. Many of the participants are professional mortgage consultants who were formerly mortgage industry executives and lawyers who normally provide advice to lenders and Wall Street on banking/lending issues, such as loss mitigation, investor relations and regulatory matters.

“Our staff has decided to take our expertise, and our relationships with mortgage banks, and use them to help consumers faced with foreclosure,” said Andrew Liput, the group's president. “Rather than pay lawyers high hourly fees to learn about the mortgage business and try to stop a foreclosure, we feel using mortgage insiders will be less expensive and get faster, better results for homeowners.

“Lawyers are not trained in the highly specialized mortgage industry, so they charge a lot of money to review documents to get up to speed. We know the industry, the market, the lenders and the methods to fight foreclosure. Whenever possible, we save a consumer's home. When that is not possible, we know the language and techniques to minimize the financial consequences,” Liput said.

Inspectors implement new tactics

Home inspectors are rolling out new programs to help them survive the slow market. Some are now offering energy audits, maintenance inspections, phased-in inspections and other related services. And, of course, they are urging homeowners to hire an inspector before placing their property on the market.

“Maintenance should be at the top of every seller's list this year,” said Brion Grant, president of the American Society of Home Inspectors. “In this market, homebuyers have more properties to choose from and will look closely at how well a home has been kept up.”

Agenda set by NAMB

An activity agenda for the year has been announced by the National Association of Mortgage Brokers. It's a plan that strongly targets abusive lending practices, addresses the need for mortgage reform and continues their commitment to financial literacy for consumers.

The group's key policy positions for the year include (1) a call for an independent, government sponsored study or investigation of consumer disclosures that may be contributing to or enabling deceptive sales and marketing practices in the mortgage industry. Also (2), it will promote efforts that ensure direct or indirect compensation received by any originator, regardless of distribution channel, to be treated equally and in similar fashion to avoid competitive inequities and consumer confusion. And (3) NAMB will support the establishment of a nationwide registry that mandates the inclusion of all loan originators. It would provide tracking control and strengthen the industry and consumer protection. It supports the establishment of professional standards for all mortgage originators that will mandate minimum pre-employment and continuing education, testing and complete criminal background checks.

Jim Woodard writes a nationally syndicated newspaper column on real estate news and trends, carried in about 230 U.S. newspapers – along with freelance features.  Reproduction of this report, in part or entirety, is prohibited without the express permission of the author. E-mail: storyjim@aol.com.