Fannie Extends Closing Cost Incentive to Buyers

Due to strong buyer response, Fannie Mae has announced it will extend the deadline for an incentive program that allows home buyers to receive up to 3.5 percent in closing cost assistance on purchases of its HomePath foreclosed properties.

Home buyers now have until April 30 to submit offers on the REO homes, and transactions must close by June 30 to be eligible. Originally, the incentive applied for offers submitted by March 31 and transactions that closed before May 31.

The incentive offers qualified buyers up to 3.5 percent of the final sales price to pay closing costs. In some cases, buyers may opt to use the savings to buy down their interest rate through upfront points, Fannie Mae notes.

The incentive, offered in 27 states, is part of Fannie Mae HomePath’s FirstLook program, which offers potential owner-occupants or public entity buyers the first 20 days after a property is listed for sale to submit offers without facing competition from investors.

“We have received a strong response from the incentive since it went into effect on February 14, and we are happy to extend the offer to even more home buyers,” says Jay Ryan, vice president of REO sales. “With the unusually cold and extended winter season ending, we want to give people more opportunity to use the incentive to buy properties that they will call home.”

The states eligible for the homebuyer incentives are: Arizona, Maryland, New Mexico, California, Massachusetts, Ohio, Florida, Michigan, Oregon, Idaho, Minnesota, Puerto Rico, Illinois, Missouri, Tennessee, Indiana, Nebraska, Virginia, Iowa, Nevada, Washington, Kansas, New Hampshire, West Virginia, Maine, New Jersey, and Wisconsin.

DAILY REAL ESTATE NEWS | FRIDAY, MARCH 28, 2014

First-Time Buyers Show Interest; Face Tough Market

Source: DSNews Author: Colin Robins

More than 4 million first-time buyers want to enter the market, but they face some tough issues as market conditions aren’t exactly favorable to new buyers. This conclusion came from the Zillow Housing Confidence Index (ZHCI), a new calculation released by Zillow and Pulsenomics. The ZHCI is a measure of consumer sentiment; anything over 50 indicates a positive sentiment. The current national index is 63.7. Of the 20 metros surveyed, 11 had individual confidence levels above the national average.

In 19 of the 20 large metros surveyed, more than 5.0 percent indicated they wanted to buy a home in the next year. The report notes, "Among current renters, homeownership aspirations were particularly strong, with about 10 percent of all renters nationwide saying they would like to buy within the next 12 months." A vast majority of respondents said they were "confident or somewhat confident" they could afford a home in 2014. If every respondent who indicated they wanted to buy a home actually purchased one, first-time home sales would total more than 4.2 million for 2014, more than double the roughly 2.1 million first-time buyers in 2013.

 While this optimistic total from Zillow suggests interest is high, actually purchasing a home should prove to be a challenge in the upcoming year. Market conditions are mixed: inventory, up 11 percent from a year ago, is still well below optimal levels, and has fallen year-over-year in 8 of 20 metros measured by the ZHCI. Mortgage rates, once a record low 3.3 percent in 2013, have risen to 4.2 percent, according to the Zillow Mortgage Marketplace. A dearth of inventory coupled with rising mortgage rates could push homes out of a homebuyer's price range, particularly for first-time buyers. "For the housing market to continue its recovery, it is critical that homes are both available and remain affordable to meet the strong demand these survey results are predicting, particularly from first-time homebuyers," said Zillow Chief Economist, Dr. Stan Humphries. "Even after a wrenching housing recession, this data shows that the dream of homeownership remains very much alive and well, even in those areas that were hardest hit."

He added, "But these aspirations must also contend with the current reality, and in many areas, conditions remain difficult for buyers. The market is moving toward more balance between buyers and sellers, but it is a slow and uneven process." Areas indicated by the ZHCI with the highest interest in purchasing a new home come from metros that were hit hardest by the housing recession: Miami (67.5), Atlanta (62.9), and Las Vegas (64.1). Each were near or above the national index of 63.7 for "Overall Housing Confidence.

Why Education Will Keep Housing Crisis at Bay

Arming today’s youth with greater financial knowledge is the key to making sure there is no repeat of the housing and economic crisis, Richard Cordray, director of the Consumer Financial Protection Bureau, said at a meeting Monday of the President’s Advisory Council for Financial Capability for Young Americans. “Now more than ever, as we emerge from the deepest financial and economic crisis of our lifetimes, people need the know-how to manage the ways and means of their lives,” Cordray said. “The choices they face in the financial marketplace, with instruments like mortgages, credit cards, auto loans, student loans, credit reporting, and more, are increasingly complex.” Cordray said that childhood education is crucial to shaping housing’s future and should include: Financial education: Cordray said that financial education needs to begin at a young age, with the benefits of compound interest being taught in math classes; economic costs and risks in social studies classes; and overall curriculum involving how to use and protect money. Experimental learning: Cordray said that financial management should be practiced through experimental learning, whether that’s through simulating a banking experience or a computer game that teaches financial skills. Integration into standardized tests: Financial education concepts should be integrated into standardized tests, which would then make it more of an incentive for more teachers to teach such concepts, Cordray said. Parent involvement: “Parents help set expectations, and research has shown that if parents engage their children by establishing a savings account for them, these children are seven times more likely to attend college than those without a savings account,” Cordray said. Source: “5 Ways Children Hold the Key to Housing’s Future,” HousingWire (March 10, 2014

Net Worth of U.S. Households Sets Record:

Household net worth jumped nearly $3 trillion during last year's fourth quarter to $80.7 trillion. Stock and mutual fund portfolios gained nearly $1.7 trillion, or 9 percent, according to a Thursday report by the Federal Reserve. The value of Americans' homes rose just over $400 billion, a 2 percent gain. And checking account balances, pensions plan assets and retirement savings, such as 401(k)s, also increased. Strong wealth gains tend to trigger more consumer spending, a critical fuel for economic growth. Higher household net worth is one reason economists have forecast that the U.S. economy will accelerate later this year. Household wealth, or net worth, reflects the value of homes, stocks, bank accounts and other assets minus mortgages, credit cards and other debts. Rising home prices are helping people rebuild ownership stakes in their homes. The equity that Americans as a whole have in their homes has reached 51.7 percent, the highest point since before the recession began. That's up from a record low of 36.5 percent in the first three months of 2009.