Hard Money Loans

The Housing Finance Reform Act of 2011 has been introduced into Congress. The bill seeks to ensure liquidity in the conventional mortgage market during all economic cycles while limiting the government’s exposure. “The bipartisan legislation introduced by Congressmen Campbell and Peters to reform our secondary markets closely mirrors the proposal of MBA’s Council on Ensuring Mortgage Liquidity, the Mortgage Bankers Association’s chairman said in a statement.

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Washington, DC, United States (AHN) – The U.S. Supreme Court ruled Monday in favor of Bloomberg in a lawsuit that sought the publication of details of loans made by the Federal Reserve to American banks during the 2008 financial crisis.

Bloomberg, the parent company of Bloomberg News, sought details of the discount window data under the Freedom of Information Act, but the Fed thumbed down the request, prompting Bloomberg to file the lawsuit. A trial court favored Bloomberg in 2009, but the Fed appealed. A federal appeals court confirmed the lower court ruling.

While the Fed bowed to the court decision, the Clearing House Association – which represents 10 of the largest U.S. banks – filed an appeal with the Supreme Court. The association wanted to continue enjoying the confidentiality of such information that the Fed provided banks for almost 100 years.

Following the Supreme Court’s decision, the Fed said it would soon release details of the discount window loan. Last year Congress mandated the Fed to publish similar information on its other lending programs.

The banks tried to block the publication because it would bring back public attention to the financial institutions’ weaknesses while the banks are trying to project a renewed profitability image.

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Washington, D.C., United States (AHN) – Over the next two decades, the cost of treating heart disease in the United States will triple, according to a new study.

Dr. Paul Heidenreich, chairman of the American Heart Association panel that made the calculation, said enormous strides have been made over the past 50 years in treating and reducing heart disease, but he said even maintaining current trends will come at a high cost.

The panel made its estimation based on current rate of disease and Census data adjusted for anticipated shifts in age and race.

Heidenreich said the estimates do not assume the medical community would continue to make new discoveries to reduce heart disease.

Almost 37 percent of Americans have some type of heart disease, including high blood pressure, coronary heart disease, heart failure, stroke or other conditions. By 2030, the panel expects that rate to increase to more than 40 percent, or 116 million Americans.

The largest increases are expected in stroke and heart failure, both up about 25 percent.

Heart disease costs the national healthcare system about $172 billion a year. The American Heart Association panel estimates that number will jump to $276 billion by 2030.

A policy statement on the estimates is published in Circulation: Journal of the American Heart Association.

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NY, NY, United States (AHN) – According to a report Tuesday by the New York Times, baseball agent Scott Boras’ company allegedly handed out thousands of dollars in loans to the families of prospects from the Dominican Republic.

The Times report said the loans could mean that Boras or his company may have broke Major League Baseball Players Association rules.

The Times said that Boras issued a statement that acknowledged his company had “aided” players and families in the past, but he did not address whether loans were made.A

According to the report, loans of more than $500 per year made by agents to players and their families are forbidden unless the reason for the loan is revealed to the union.

A spokesman for the players’ association declined to comment in the report.

“This is a serious issue that raises concerns about the business practices of agents who have played a prominent role in the game,” a spokesman for Major League Baseball said in a written statement to The Times.

Domingo Ramos told The Times that the company typically represented a few top Dominican prospects each year and made loans to a majority of them. The money was usually used for food, housing and other needs, he said.

Ramos is a former big league player who works for Boras’ company.

“Sometimes we get it back, sometimes we don’t,” Ramos told The Times. “Sometimes, it’s tough to get it back. It’s as simple as that.”

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Third-quarter residential production by U.S. lenders fell 3 percent from the second quarter, the Mortgage Bankers Association projected. The trade group has fourth-quarter production falling another 34 percent. But MBA’s forecast conflicts with third-quarter reports from major lenders as well as forecasts from Fannie Mae and Freddie Mac — all which indicated that third- and fourth-quarter volume will end up higher.

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The price of housing is a major challenge in the United States. Some estimates note that more than 50% of the population cannot afford a median priced home. According to National Association of Home Builders (NAHB), of the total number of new and existing homes sold nationwide during the third quarter, only 40.4 percent were affordable for families earning the median U.S. income of $59,600.

But it is good news that housing affordability on the national level has not changed much in the third quarter in spite of a rise in the mortgage interest rates during the last quarter. This was because many markets saw a slight decrease in their home prices, which helped offset the rise in mortgage rates.

Indianapolis (Indiana) is the most affordable city for homes in America, based on the 2006 third quarter report of the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). The city achieved this status for the fifth consecutive quarter.

Of the total number of housing units sold in Indianapolis during the third quarter, 86 percent of homes were priced at or below the U.S. median household income of $65,100. Homes in this metro area had a median sales price of $122,000, which is slightly higher from $120,000 of the previous quarter.

It is interesting to note that the most affordable U.S. cities for homes, condos and other real estate are largely from the northern industrial metro areas. The other larger cities that top the list for affordable homes in the third quarter after Indianapolis are Youngstown-Warren-Boardman (Ohio-Pennsylvania); Detroit-Livonia-Dearborn (Michigan); Buffalo-Niagara Falls (New York); and Grand Rapids and Wyoming (Michigan).

The report also lists the top seven smaller cities in America that have the most affordable housing markets. These are: Bay City in Michigan, Springfield in Ohio, Mansfield in Ohio, Lansing-East Lansing in Michigan, Lima in Ohio, Battle Creek in Michigan and Canton-Massillon in Ohio.

For both major metros and small metros, many of the least affordable cities are located in California. The least affordable major metro areas are Santa Ana-Anaheim-Irvine, Modesto, Stockton, and San Diego-Carlsbad-San Marcos, in that order. The least affordable smaller metros (less than 500,000 people) include: Salinas, Merced, Madera, Napa, and Santa Barbara-Santa Maria.

The good news for homebuyers is that there are many affordable cities in the United States. Moreover, even for cities that rated poorly for affordability, there may be some communities within the larger city that have affordable housing. For example, although the San Diego metro in California rated poorly overall for affordability, there are some communities in San Diego priced to meet the needs of lower-income home buyers. A good real estate agent can help you choose a community where you want to live based on your housing budget and needs.

Modest median price gains in new and existing homes, a stable interest rate on the 30-year fixed mortgage, decreased housing starts and a stable unemployment rate are some of the features of the 2007 housing forecast provided by major trade group economists as reported by The Inman News.

NAR chief economist David Lereah expects new-home sales to fall from 1.07 million units sold in 2006 to 975,000 units in 2007, which is an 8.7% decline. He cites decreased new home construction as a large contributing factor to this change. The median new home price of $238,400 in 2006 is expected to increase by 1.3 percent to $241,400 in 2007.

NAR also predicts that existing home sales figures for 2006 to end around 6.47 million units, which is an 8.6% decline from 2005. The 2007 forecast for existing home sales is 6.43 million units. The median price of existing homes in 2006 was $223,700 and is expected to increase 1.7% to $227,500 in 2007.

Doug Duncan, chief economist for the Mortgage Bankers Association predicts the interest rates on 30-year fixed mortgages to stay around 6.5 percent, but mortgage originations to fall 14% to $2.1 trillion.

While Lereah predicts that the unemployment rate to stay at 4.7 percent, Duncan takes it higher and believes it may reach 5.2 percent by midyear 2007. However, he concurs with Lereah in predicting modest home price gains in new and existing homes for the coming year.

The housing forecast of The National Association of Home Builders (NAHB) is in line with NAR and the Mortgage Bankers Association. According to David Seiders, Chief Economist at NAHB, the year 2007 will see the housing market re-adjust itself once the housing demand stabilizes, leading to a healthy balance between supply and demand.

Looking at the state level, the California Association of Realtors (CAR) projects that the median price of California homes will end 2006 around $560,700, and will decline in 2007 to $550,000 — a 1.7% drop. The number of units sold in California will end 2006 around 481,200, and is projected to decrease 447,500 in 2007. CAR predicts that the unemployment rate will stay around 5.1 percent, although interest rates on the 30-year fixed mortgage may hover around 6.7 percent in 2007.

The overall housing forecast for 2007 made by these four major real estate trade groups is not at all bad. Home buyers and investors planning to go ahead with their real estate activities can fare better with the help of a good real estate agent.

Multiple Bills
As I mentioned before, there are already nearly half a dozen bills being considered by Congress. The most popular bill simply extends the current credit’s deadline from November 30th, 2009 to May 30th, 2010. However, there are other variations that would expand the credit even further. One seeks to raise the value of the credit from $8,000 to $15,000 while others would change the credit so that all homebuyers, as opposed to just those who have not purchased a house within the past three years, can take advantage of it.

Economy Still in Trouble
The main reason that supporters want to extend the bill is simple: the economy is still in trouble. Without a tax incentive, U.S. home sales will drop in 2010. Specifically, many are worried that sales during the winter months (when real estate activity is typically low) will plummet and put our economy back into trouble. Senator Isakson from Georgia, who actually worked in real estate before running for office claims “December through February is historically the worst time for home sales anyway because of the winter months, so with the credit ending November 30, you have a double whammy.”

Popular Credit
In all honestly, one of the largest reasons Congress is considering extending the credit is because of its mass popularity. Politicians are always thinking about their next reelection, and supporting legislation that is popular among your constituents is a great way to get reelected. Average taxpayers are always claiming that Congress does not do enough for “main street Americans” extending or expanding the current credit would be a great way to please them.

Opposition
There is quite a bit of opposition to extending the credit. First and foremost, there is concern over its costs. The first credit was passed in a state of economic emergency. Americans were frightened that the banking system would collapse, and that the housing marketing would crash entirely. Therefore, Congress was able to get the credit created without much debate about the costs. However, when you look at the math, this credit has already been very expensive. If 1.4 million families have already taken advantage of the credit, and 400,000 more will before it expires, then we are looking at a total cost of nearly $15 billion. Additionally, experts are worried that excessive credits will be the first step in creating the next real estate bubble.

Industry Pressure
Another thing to consider when examining the housing credit is the amount of pressure real estate and construction lobbyists have put on Congress. The National Association of Home Builders, The National Association of Realtors, and even the Business Roundtable (an association of chief executives) have all published statements promoting an extension of the credit. They are also pushing for lower interest rates, and an extension of the limits on loans eligible for government backing or purchase

Likelihood of Extension
With all of this debate about whether the credit has worked or not, what exactly are the odds that the credit will be extending? Lisa Poole of Time Magazine says there is a 2 to 1 chance that it will be either extended or expanding, but I would say that the odds are probably better than that. I doubt that it will be increased to $15,000, but I am pretty confident we will see some type of extension on the $8,000 credit for first time homebuyers.

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