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February 2011 Archives

Home Sales and Prices In Boston For January 2011

Single family home sales fell 32.4 percent from those sold in December but rose 13.1 percent more than the level seen in January 2010, according to the recent Existing Home Sales Report released by the Massachusetts Association of Realtors. The report also showed that the median price for single family homes declined 5.2 percent compared to last year.

However, condo sales in the Bay State fell on both a monthly and yearly basis, revealing a 35 percent drop from December and 5.2 percent decline since January. According to FavStocks, the median selling price for condos also plummeted below the prices recorded from 2010.

Boston Homeowners Will Likely Face Higher Mortgage Rates Soon

With the Obama administration's new housing report, Boston homeowners may no longer have access to favorable mortgage rates and terms such as minimum down payments below 5 percent, fixed 30-year mortgage rates within the 5 percent range, and jumbo home loans with regular interest rates.

Currently, Fannie Mae and Freddie Mac have cost taxpayers a total of $150 billion in bailout money and account for almost 60 percent of the country's mortgage market. So it may be no surprise that according to the Boston Herald, Congress welcomed the idea that the two giant federal lenders will no longer exist to provide mortgage loans.

Should Boston Homeowners Pay Off Their Homes Now?

In a previous post, we talked about the potential disadvantages homeowners may face when owning a house in full. But many Boston residents who are coming close to retirement, or generally have a few years of mortgage payments, might still be wondering if they should just pay off the balance on their home now, according to CNN Money.

While most are aware that mortgage interest is tax-deductible, there are a couple of other important factors Boston homeowners can consider when deciding whether they should pay off their balance sooner than later. These include the following:

Federal Government Might Have Less Role In Mortgage System

The Associated Press reported that the Obama administration seeks to reduce the government’s role in the mortgage system, which could potentially make home loans more expensive later on than they now are. The Treasury Department started to develop a plan this week that will slowly remove government-sponsored programs Fannie Mae and Freddie Mac from the mortgage system.

Many Boston real estate lawyers realize that eliminating Fannie Mae and Freddie Mac from the current mortgage system would alter how homes are purchased and redefine who can afford those properties. It would also change almost 70 years of federal housing regulations, dating from Fannie’s establishment under the New Deal and including the emphasis on an “ownership society” in the early 2000’s.

More High-End Homes Sold In Massachusetts In 2010

Sales for million-dollar homes jumped 28 percent in Massachusetts during the last year, reported the Boston Herald. The Warren Group, a real estate tracker, performed an analysis of properties sold throughout the state and revealed that nearly 2,210 houses and condos were bought for $1 million or more in 2010 compared to the 1,728 sold in 2009.

Nantucket real estate broker David Callahan said several factors may have contributed to the increase in million-dollar home sales, such as low-mortgage rates, reduced asking prices, and the sense among the wealthy that their finances are now stable enough for buying a home. "The economic downturn didn't seem to make (rich people) any poorer," said Callahan.

JPMorgan Returns Previously Foreclosed Homes To Military Families

Boston locals may have heard about the ten homes JPMorgan Chase & Co. returned to military families after they were improperly foreclosed on. According to The Boston Globe, those properties should have been protected by the Servicemembers Civil Relief Act (SCRA), which was designed to protect members of the military from financial stress.

Stephanie Mudick, who is the bank’s head of consumer practices, said the houses were among the 18 properties that were found to have been wrongly seized by JPMorgan after the bank was accused of violating the SCRA. Under that law, lenders are restricted from foreclosing on homes owned by service members who remained on active duty or were recently returned from service.

More MA Homeowners Skip Paying Their Mortgages

Thousands of homeowners in Massachusetts are living in their homes without paying their mortgages, according to the Boston Globe. Most of these property owners may be negotiating loan modifications or taking advantage of free housing as they wait for lenders to seize their homes.

Recent data from Lender Processing Services Inc. revealed that almost 36,000 borrowers throughout the state have not issued a mortgage check in at least three months, while a third of those homeowners have been behind their mortgage payments for a year or more.

Less Mortgage Loan Modifications May Lead To More Foreclosures

Low levels of mortgage loan modifications could potentially lead to even more foreclosures this year, according to The Huffington Post. The results from a loan analysis conducted by Fitch Ratings showed that only 36,500 mortgage modifications were completed last December, which is 58 percent lower than the high point reached in April of 2009.

Fitch predicted that between 60 to 70 percent of modified subprime and risky loans could possibly default a second time around within the next 12 months. As for the loans that were modified even before all the foreclosures started, 50 to 60 percent of those loans are also expected to default and add to the rising number of foreclosures already occurring nationwide.

How Debt Can Affect Your Mortgage Loan Application

Boston homeowners applying for a mortgage may need to prepare themselves for the potential effects new debt could have on a loan application. According to the Boston Herald, a new credit transparency standard has recently been imposed among lenders like Freddie Mac and Fannie Mae, and has led to stricter credit screenings that can make or break a potential mortgage deal.

Loan officer Matt Jolivette from Associated Mortgage Group Inc. described the new standard as a "financial colonoscopy" on a homeowner's credit. With lenders now seeking full disclosure on a borrower's credit accounts, any new loans or credit card purchases made before and following a mortgage application will be closely monitored up until the scheduled closing for a loan.

Boston Housing Market Update: Home Prices and Foreclosures

According to CNN Money, home prices in Boston have more than doubled during the last six years prior, reaching the high point in the middle of 2005. Since then, the median price for homes has fallen 20 percent to an estimated average price of $307,000.

But because the harbor and other surrounding smaller cities border Boston, many residents interested in finding a new home often find housing prices in the city to be expensive. With less land to build on, buying a home in Beantown can become a costly endeavor as the housing market remains competitive for existing properties.

Wachovia Settles Lawsuit For "Pick-a-Payment" Mortgage Loans

A class action lawsuit was brought against Wachovia, accusing the bank of deceiving customers with its “Pick-a-Payment” mortgage loans, which allowed borrowers to make payments that were less than the interest owed.

According to The Consumerist, the suit claimed Wachovia failed to inform customers that they could be subject to negative amortization if they chose to make a minimum payment during a limited time period and under specific conditions. If a borrower’s payment was less than the interest due on the loan, then the unpaid interest was added to the principle balance. This led to an increase in the borrower’s outstanding loan balance.

Why Are Loan Borrowers Choosing Adjustable-Rate Mortgages?

Federal mortgage lender Freddie Mac conducted new survey of 112 loan companies and found that adjustable-rate mortgages (ARM) are beginning to attract many homeowner applicants. The Boston Herald reported ARMs had accounted for only 3 percent of new home loans in 2009, but they might be the leading choice in home loans for one out of 10 borrowers this year.

With fixed 30-year rates at an all-time low of just below 5 percent, many Boston homeowners may be wondering how other borrowers could even consider getting an adjustable-rate mortgage. Many believe that locking in a low fixed rate loan is often the smarter move to make than gambling on a home loan whose rate could possibly increase in the next few years.