The Department of Housing and Urban Development has issued new guidance on its policies for approving and recertifying condominium projects that are eligible for Federal Housing Administration financing.

HUD also consolidated all of its condo guidelines into a new 95-page booklet for easy reference.

“This guidance formalizes and expands the policies we put in place in 2009 and lays the groundwork for a more formal rulemaking process going forward,” said FHA acting commissioner Robert Ryan.

The new guidance gives the FHA Homeownership Centers more flexibility in making exceptions to owner-occupancy requirements and other rules.

But FHA has not made the guidelines more flexible, according to one source.

He noted that FHA tightened its rules on delinquent homeowners’ assessments to include all units — even foreclosed properties owned by banks.  Some banks don’t pay homeowners’ assessments on REO.

If 15% of units are 30-days or more behind on the assessments, the condo won’t qualify for FHA-insured financing.

Ron Howard Seattle Mortgage 206-852-7023

HUD consolidated all of FHA’s condo guidelines into a new 95-page booklet for easy reference.

Home prices around the country have fallen into a double dip. After declining around 30 percent from their peak, they started to rise a bit last summer with the help of a federal tax credit.

But with that stimulus gone, prices are now sliding again to new lows. And while some pundits say a lease makes more sense than a mortgage, other economists insist it’s a great time to buy.

‘American Dream’ Under Fire

Since the housing bubble burst, there’s been some dramatic questioning of homeownership. A Time magazine cover declared that owning a home may no longer make economic sense. And politicians are under fire for over-promoting homeownership.

It’s enough to make any prospective homeowner hide under their bed in their rented apartment. But many economists, like Mark Zandi with Moody’s Analytics, say these concerns are overblown.

“Everyone’s re-evaluating more carefully whether they should own a home or not,” Zandi says. “But for the vast majority of Americans homeownership is still the right thing.”

Zandi says the same fundamentals are still true: If you can afford it, there are a lot of advantages to homeownership. With a fixed interest rate, your home payment never goes up. But your rent will climb in most places. And even if prices don’t rise that much — if you pay down the mortgage every month, and you don’t take out a big home-equity loan — there’s an automatic savings for the future built into owning.

“This is why homeownership has been such an important part of the American Dream, because people have used it as a way to save. And it’s been a relatively safe way to save,” Zandi says. “Now of course, as we know as we have seen, there are ups and downs. But in general it’s been a pretty good investment.”

Buy Now To ‘Benefit In The Long Run’

Zandi says the housing crash hasn’t changed the nature of homeownership.

“The other thing to consider is that like any asset — after a crash, after prices have fallen very quickly — everybody is very nervous and reticent to dive back in, but it’s the people who do that who benefit in the long run,” he says.

Zandi has been tracking home prices as they’ve fallen in cities and neighborhoods across the country. And he’s asking this question: Does it make sense for people to buy a home right now?

“I think the arithmetic is such that if you plan to live in your home five or more years, then you should really consider buying a single-family home in most parts of the country at this point in time,” he says. “Prices have fallen so far, that single-family housing now is very, very attractive; very affordable [...] and it’s now even attractive relative to renting.”

Cost Of Owning Has Sunk

While it’s been getting cheaper to own a home, it’s actually been getting more expensive to rent a place to live.

Gleb Nechayev is a housing economist with CBRE Econometric Advisors, a real estate research firm in Boston. Nechayev has a chart that shows the cost of owning a house compared to renting. Back in 2006, the cost-of-owning line on the chart was reaching its peak, but now the line has plunged down — like the cliff of a mountain.

“We are at the very bottom of that mountain right now and we have never seen that ratio so low,” Nechayev says.

Nechayev’s data goes back to 1986. And he says since then, it’s never been this cheap to own a house as compared to the cost of renting. Of course, these are national averages and there are some big differences depending on the city and neighborhood and type of home.

But overall, it’s gotten so cheap that Nechayev is puzzled why more people aren’t buying.

“The fact that we haven’t seen people jumping at this opportunity does suggest that we might be witnessing some kind of changing perception of homeownership,” he says.

Nechayev says younger would-be homebuyers may be deciding to live in cities, where it can still be harder to find and afford a nice home or condo in a good neighborhood.

And he says job mobility is a big issue for many people in the still shaky economy. If they have to move to take a new job, it’s a lot easier to do as a renter.

Buy vs. Rent Ratio

Ron Howard Seattle Mortgage 206-852-7023

Reverse mortgages will help millions of people stay in their homes and pay for a variety of retirement expenses in the coming decades

Big banks want nothing to do with reverse mortgages.

In one of the stranger developments on the personal finance landscape in recent years, both of these statements turn out to be true. But you’d certainly be forgiven for looking at the headlines from the first half of 2011 and wondering whether reverse mortgages have a future.

First, Bank of America got out of the business of offering new reverse mortgages, which allow people 62 and older to access some of their home equity without having to make any mortgage payments as long as they live in the home full time.

Then, this month, Wells Fargo exited, taking subtle but pointed potshots at its regulator, the Department of Housing and Urban Development, as it said its goodbyes.

HUD does, in fact, intend to continue standing behind reverse mortgages, which might not exist were it not for the government insurance that backs most of these “home equity conversion” loans.

“People certainly shouldn’t be worried,” said Vicki Bott, who was HUD’s deputy assistant secretary for single-family housing until Friday, when she left for personal reasons.

This is a good thing. Reverse mortgages got a bad rap over the years, and deservedly so, for high fees and aggressive salesmen who persuaded elderly borrowers to extract equity and then drop the money in inappropriate annuities and other insurance products.

But let’s get real here. In the coming decades, millions of people in their 70s and 80s will run out of money. Social Security will be inadequate, they will have no private pensions and they’ll have spent all of their 401(k) savings, if they had any to begin with.

Making a mortgage payment is one of the best forms of forced savings we have. So for people who don’t want to sell their homes and downsize to free up money for living expenses (or can’t, for practical reasons), a reverse mortgage may be their best hope for continued solvency.

Then last week, American Banker, a trade publication, got hold of an e-mail from another senior Wells Fargo executive, Phil Bracken, who discussed concerns that HUD’s rules would effectively force the bank to foreclose on senior citizens. This, he said in the e-mail, created a situation where the reverse mortgage product “creates more reputation risk than value.”

Ron Howard 206-852-7023

Home prices in the U.S. rose 0.5% in the month of April, according to the FNC Residential Price Index.

The index increased for the first time since the withdrawal of the homebuyer tax credit in April 2010, despite nation’s economic malaise. Prices in April shrugged off downward pressure from a continued high number of foreclosures.

The FNC 10-MSA composite showed a 0.4% increase from March. The 30-MSA increased 0.6% in April. Home prices nationwide remained 6.4% lower than one year ago.

These results are contrary to what others may believe are continued price deteriorations, FNC analysts said. Listing activities increased more than 65% with the arrival of the summer home-buying season. The difference between the initial listing price and the final sales price dropped 4% in the first quarter of 2011 from a 6.7% difference at the end of 2010.

The amount of time these distressed properties spent on the market dropped to 2.5 months in April from four months in October 2010.

Home prices in 17 markets went up at an average rate of 2.5%.

“Despite downward price pressure from high volumes of foreclosure sales, home prices continue to gain traction in April after remaining relatively unchanged in March,” FNC said.

Remember to contact Ron Howard Seattle Mortgage for all your mortgage needs. (206) 852. 7023

Follow Seattle Real Estate News on www.seattlerealestateronhoward.blogspot.com/

Back in June 2006, when the housing market peaked, the prospect of a five-year national housing bust seemed unimaginable to most people. And yet here we are, with the latest Standard & Poor’s Case-Shiller index showing that prices hit new bear-market lows, falling back to 2002 levels nationally and to 1990s levels in some battered regions.

Despite all the gloom, however, there are growing indications that it is a good time to buy. Mortgage rates, which fell to 4.55% for the week ending June 2, according to Freddie Mac, are near 50-year lows. Homes have become more affordable than they have been in years: According to Moody’s Analytics, the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average. A historic glut of homes, meanwhile, has created a buyer’s market: There were about 15 million vacant homes in the U.S. last year, according to John Burns Real Estate ConsultingInc.—some 3.1 million more than normal.

Such conditions might not last long. Moody’s Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn’t likely to get much worse. Meanwhile, demographic indicators such as “household formation”—the number of new households each year—are on the rise, and promise to take a bite out of the glut in coming years.

The upshot: “While we might not see rapid growth in the next couple of years, there are a tremendous number of positive signs that could lead to a rebound,” says Anthony Sanders, a real-estate finance professor at George Mason University.

The short-term outlook isn’t encouraging. Job growth remains weak, foreclosure sales are making up more of the market, and economists are predicting that home prices will fall more in the coming months.

But the long-term benefits of homeownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.

So what might the next five years look like? Once the foreclosure mess begins to clear up, say housing economists, the traditional drivers of the housing market—demographics, affordability, loan availability, employment and psychology—should take over.

Here is a glimmer of what the future may hold: While overall home prices fell by 7.5% in April over the same period a year earlier, according to CoreLogic, a Santa Ana, Calif., provider of real-estate data and analytics, if you exclude distressed sales, prices were off just 0.5%. So if you are in a market that isn’t battered by foreclosures, you may be close to a bottom already.

“The regular marketplace is hanging tough,” says CoreLogic chief economist Mark Fleming.

Here is a look at five key factors that will govern local markets over the next several years:

Remember to contact Ron Howard Seattle Mortgage for all your mortgage needs. (206) 852. 7023

Please visit our Cobalt website by clicking the logo above.

We are currently updating Seattle Mortgage, please excuse our construction efforts.