Women Better Than Men at Paying Mortgages

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 09, 2016

Women are less likely than men to miss a mortgage payment, according to a new study from the Urban Institute. Yet, they tend to pay higher interest rates.

Read more: The Easiest Cities to Get a Mortgage

A single male borrower had a 6 percent probability of default while a comparable female-only borrower had an expected default rate of 5.8 percent, the study showed.

“This is the first step in saying the barometer is consistently not accurately predicting whether women are able to pay their mortgages,” says Sheryl Pardo, a spokesperson for the Housing Finance Policy Center at the Urban Institute.

Even though women show a higher tendency to pay their mortgages on time, they tend to pay higher interest rates. Why? The study posits that women tend to get higher interest rates because they comprise a higher percentage of subprime loan borrowers and their credit profiles don’t tend to be as good as men’s.

But the study’s authors argue that lenders need to reassess predictors in determining how likely a person is to default on the loan. 

Women’s predictors are lower, which suggests she’s not going to do as well, but lenders aren’t “predicting accurately,” Pardo told Credit.com. “Women do better than their characteristics say they should do. And, in fact, they perform better than men.”

Women tend to pay higher interest rates than men – 5.48 percent versus 5.41 percent, the study found. Women borrowers tend to have more debt to income, which lowers credit scores, and they tend to have less income than men ($68,000 versus $95,000 for men).

“Given that more than one-third of female-only borrowers are minorities and almost half of them live in low-income communities, we need to develop more robust and accurate measures of risk to ensure that we aren’t denying mortgages to women who are fully able to make good on their payments,” Pardo says.

Source: “Women Are Better Than Men at Paying Their Mortgages,” Credit.com (Sept. 8, 2016)

Lenders Go After the ‘Zombie’ Homes

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 09, 2016

Banks want to get rid of “zombie” foreclosures and prevent them from haunting housing markets. At the end of the third quarter, 18,304 residential properties in the foreclosure process were vacant (dubbed “zombie foreclosures), a 9 percent drop from a year ago.

Read more: Metros Plagued With Surging Vacancies

That represents about 4.7 percent of all residential properties in foreclosures in the third quarter, according to ATTOM Data Solutions’ Q3 2016 U.S. Residential Property Vacancy and Zombie Foreclosure Report.

“A strong seller’s market along with political pressure has likely motivated lenders to complete the foreclosure process over the past year on many vacant properties that were lingering in foreclosure limbo for years,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “While that has reduced the number of vacant properties in the foreclosure process — so-called zombie foreclosures — it has also resulted in a corresponding rise in the number of vacant bank-owned homes. Assuming that the foreclosing lenders are maintaining these properties and paying the property taxes, they pose less of a threat to neighborhood quality than zombie foreclosures, but they still represent latent inventory in an inventory-starved housing market.”

Overall, nearly 1.4 million residential properties were vacant by the end of the third quarter.

The following markets had the highest number of vacant REOs:

• Florida: 5,880
• Michigan: 4,661
• Ohio: 3,585
• Illinois: 2,652
• Georgia: 2,626

At a metro level, the areas with the most vacant REOs were: Detroit, Chicago, Miami, Philadelphia, and New York, according to the report.

Meanwhile, the states with the highest number of vacant foreclosures – or zombies – were in New Jersey (3,698), New York (3,556), Florida (2,528), Illinois (1,018) and Ohio (999). At a metro level, zombie foreclosures were highest in New York (3,590), Philadelphia (1,525), Chicago (783), Miami (694), and Tampa (603).

Source: RealtyTrac

Court Agrees Rent Hike Was Too Much in LA

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 09, 2016

A jury recently sided with a family in East Los Angeles who refused to pay rent when their landlord issued a 63 percent rent hike. The court says the family can stay put in their two-bedroom apartment, at least for a while longer.

Read more: The Delicate Art of Rent Increases

The court found the rent increase was excessive. The landlord wanted the family to pay $2,000 per month for the apartment. However, the court deemed $1,050 as more reasonable, which is actually $200 less than what the tenants were charged prior to the rent increase.

The court said that until the building’s owner Winstar Properties Inc. makes necessary repairs to the apartment the family wouldn’t have to pay any rental increases and only the $1,050. The jury said the landlord’s rent hike seemed unjustified since the jury found the unit’s condition “uninhabitable.”

Winstar has not commented on the case.  

"We have a lot of roaches. Some of our doors are practically falling down ... it was 1,2,3,4,5, like 8 outlets were messed up, my cabinets in my kitchen were falling apart, the rug is old, my walls were peeling. They never did any maintenance," one of the tenants, Carolina Rodriguez, told Curbed.com. "The floor in the restroom is soft, it feels like one of these days you’re going to sink in."

But the tenants won’t be totally immune from rental increases. Once the landlords do fix the unit, the court said they then will be allowed to increase the rent.

The family’s attorney said his latest focus will be to challenge the rent increase to eliminate it permanently. He says he is attempting to do that in federal court with a lawsuit that accuses Winstar of violating the Federal Fair Housing Act, alleging the company only served rent increase notices to tenants who were born outside of the U.S.

Source: “Jury Sides With East Los Angeles Family Who Refused to Pay Excessive Rent Increase,” Curbed.com (Sept. 8, 2016)

Home Owners Rush to Lock in Lower Rates

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 09, 2016

The latest drop in fixed-rate mortgages this week is spurring a boom in refinancing activity among home owners.

"The 30-year fixed-rate mortgage fell 2 basis points to 3.44 percent this week,” says Sean Becketti, Freddie Mac’s chief economist. “As mortgage rates continue to range between 3.41 and 3.48 percent, many are taking advantage of the historically low rates by refinancing. Since the Brexit vote, the refinance share of mortgage activity has remained above 60 percent."

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 8:

• 30-year fixed-rate mortgages: averaged 3.44 percent, with an average 0.6 point, falling from last week’s 3.46 percent average. A year ago, 30-year rates averaged 3.90 percent.
• 15-year fixed-rate mortgages: averaged 2.76 percent, with an average 0.5 point, dropping from last week’s 2.77 percent average. Last year at this time, 15-year rates averaged 3.10 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.81 percent, with an average 0.4 point, falling from last week’s 2.83 percent average. A year ago, 5-year ARMs averaged 2.91 percent.

Source: Freddie Mac

Where Millennials Won't Leave the Nest

DAILY REAL ESTATE NEWS | THURSDAY, SEPTEMBER 01, 2016

Nearly a third of all U.S. millennials still live with their parents. But in some states, the trend is particularly paramount. 

New research from Stateline, using 2014 Census Bureau data, offers a close look at which states have the greatest percentage of millennials still living at home.

According to their research, young adults in New Jersey may be having the toughest time moving out of their parents’ home. The state has the highest percentage of millennials who still live with their parents at 44 percent of its millennial population.

Here are the states that have the highest percentage of millennials still living at home:

• New Jersey: 43.9%
• Connecticut: 38.8%
• New York: 37.4%
• Florida: 37.2%
• California: 36.7%

These results aren't too surprising, since these states have some of the highest priced rental markets and have a general shortage of housing, particularly around their urban centers.

On the other hand, researchers found the following states had the lowest concentration of millennials living at home: North Dakota (15.6%); Wyoming (18.7%); South Dakota (19.7%); and Nebraska and Iowa (both 20.7%).

5 Home Buying Myths: Set Your Clients Straight

DAILY REAL ESTATE NEWS | TUESDAY, SEPTEMBER 06, 2016

Home buyers get a lot of advice from friends and family – some good, some bad. A lot of myths can pop up and negatively guide their home purchasing experience. Make sure your clients don’t fall for one of these common buying falsehoods.

1. The only upfront cost is the down payment.

Buyers need to be prepared for several expenses – everything from fees, taxes, costs for inspections, credit reports, insurance, and others. Closing costs can be anywhere from 3 percent to 6 percent of the purchase price. Those costs can fluctuate greatly depending on the state you live in too.

Read more: Home Buyer Advantage Starts Now

2. Just looking for a house casually is not a big deal.

Some people may want to just start looking at homes to get a feel for the area, before they even sit down with a REALTOR®. But they could be setting themselves up for major heartbreak. “A buyer might be viewing homes that are in a higher or lower price range than what they are qualified for,” Connie Antoniou, a broker associate in Barrington, Ill., told realtor.com®. Home shoppers – even at the earliest stages – should get pre-approved for a mortgage so they know their budget from the get-go and don’t waste time looking at homes that are out of their price range.

3. You must have a 20 percent down payment.

A 20 percent down payment will help a buyer avoid paying private mortgage insurance. But 20 percent down isn’t required. Many lenders will still qualify a buyer for home loans with 10 percent or 5 percent down. Some buyers can even qualify for only 3.5 percent down with a Federal Housing Administration loan. There are many options for down payment assistance that lenders can explore with a buyer who has a limited amount to put down.

4. Schools shouldn’t matter if you don’t have kids.

“The neighborhood you choose matters – both now and later when you might consider selling,” notes the realtor.com® article. “Even if you don’t have children, good schools are a sign of a good neighborhood.” Buyers should explore all factors with their REALTOR® on items that could influence their homes appreciation and desirability so they don’t run into trouble later on one day when they try to sell.

5. You don’t need a home inspection.

When the housing market is extremely competitive, some home shoppers may be willing to waive the home inspection in order to get the home they want. “But beware: sellers are banking on your skipping this crucial step,” the realtor.com® article notes. “It means you’ll get the home as is, including any and all problems that come with it. And sometimes those problems aren’t exactly visible.”

Source: “9 Home-Buying Myths You Need to Stop Believing Immediately,” realtor.com® (Sept. 6, 2016)

Loan Demand Mostly Flat, But…

DAILY REAL ESTATE NEWS | WEDNESDAY, SEPTEMBER 07, 2016

Mortgage application volume barely budged last week, rising just 0.9 percent, as mortgage rates mostly held steady. But a different story emerges when looking at mortgage activity—both for refinancings and home purchases—compared to a year ago. On that scale, loan applications are up nearly 28 percent over the past 12 months.

Most of the increases from this year have been due to an uptick in refinancing applications, the Mortgage Bankers Association reports. These rose 1 percent last week, but are 43 percent higher than a year ago. Meanwhile, applications for home purchases – viewed as a gauge for the housing sector – increased 1 percent last week and are 7 percent higher compared to a year ago, MBA reports.

“Although the pace of job growth slowed in August, purchase volume continues to run strong,” says Mike Fratantoni, MBA’s chief economist. “This strength is broad based, with growth at both the high and low ends of the market.”

MBA reports the average 30-year fixed-rate mortgage averaged 3.68 percent last week, up slightly from 3.67 percent the week prior.

Overall, closed mortgage volume in the second quarter posted a strong finish. Lenders originated $518 billion in first-lien mortgage originations during the second quarter, which marks the highest volume since the second quarter of 2013, according to new data released by Black Knight Financial Services.

“While purchase originations jumped more than 50 percent from Q1, refinances saw only an eight percent increase over that period, and were actually down from the same time last year, despite the number of potential refinance candidates outpacing 2015 by over 1 million in every month since March,” says Ben Graboske, vice president at Black Knight Data & Analytics. “That said, refinance lending has risen for three consecutive quarters, and accounted for $221 billion in originations in Q2.”

Source: “Mortgage Applications Up Just 0.9% as Interest Rates Stall,” CNBC (Sept. 7, 2016)