What the new mortgage rules mean for you

New mortgage lending rules are going into effect Friday that aim to put an end to the worst mortgage lending abuses of the past.

The new rules are designed to take a "back to basics" approach to mortgage lending and lower the risk of defaults and foreclosures among borrowers, according to the Consumer Financial Protection Bureau, which issued the new rules.

"No debt traps. No surprises. No runarounds. These are bedrock concepts backed by our new common-sense rules, which take effect today," said CFPB director Richard Cordray in remarks prepared for a hearing Friday.

Related: Million-dollar housing markets

Mortgage lenders are being asked to comply with two new requirements: The Ability to Repay rule and Qualified Mortgages. Here's how they will impact borrowers:

Ability to Repay

• Lenders must determine that a borrower has the income and assets to afford to make payments throughout the life of the loan. To do so, the lender may look at your debt-to-income ratio, which is how much you owe divided by how much you earn per month, including the highest mortgage payments you would be required to make under the terms of the loan. To calculate your debt-to-income ratio, add up all your monthly obligations -- including student loan, credit card and car payments, housing costs, utilities and other recurring expenses -- and divide it by your monthly gross income.

Calculator: How much house can you afford?

• In an effort to put an end to no- or low-doc loans, where lenders issue risky mortgages without the necessary financial information, lenders will be required to document and verify an applicant's income, assets, credit history and debt. For borrowers, that means more paperwork and longer processing times.
• Underwriters must also approve mortgages based on the maximum monthly charges you face, not just low "teaser rates" that last only a matter of months, or a year or two, before resetting higher.

Qualified Mortgages

• To make sure you aren't taking on more house than you can afford, your debt-to-income ratio generally must be below 43%. This rule is not absolute. Banks can still make loans to people with debt-to-income ratios that are greater than that if other factors, such as a high level of assets, justify the risk.
• Qualified mortgages cannot include risky features, such as terms longer than 30 years, interest-only payments or minimum payments that don't keep up with interest so your mortgage balance grows.
• Upfront fees and charges cannot add up to more than 3% of the mortgage balance. That includes title insurance, origination fees and points paid to lower mortgage interest rates.

The rules also restrict "steering," or practices that give financial incentives to loan officers or mortgage brokers for pushing people into higher-interest loans that they can't afford -- a practice that was all too common leading up to the housing bust, Cordray said.

Related: American dream homes: What you'll pay in 10 cities

"We think the new rules are balanced and well-drawn. They will offer consumers protection without limiting credit to qualified borrowers," said Gary Kalman, the policy director for the Center for Responsible Lending.

Lenders don't seem to be too worried about the new rules, according to Keith Gumbinger of HSH.com, a mortgage information provider. "It's no surprise; everybody has been preparing for the change for months," he said. "Because there will be additional underwriting scrutiny, it could gum up the works initially and slow loan processing, but it's really just the codification of things that are already in place."

A significant factor is what's not in the rules. There's no minimum down payment or credit score requirement.

"[The qualifed mortgage] is not taking a one-size-fits-all approach. It ensures that first time homebuyers can still come to the table," said Kalman.

Related: 5 most and least affordable housing markets

If the rules required a minimum down payment of, say 10% or 20%, it would eliminate many first time buyers who would have a difficult time raising that much cash.

The lack of a credit score requirement will enable lenders to loosen currently tight underwriting standards in the future should conditions warrant, according to Gumbinger. For the moment, most loans will still have to be backed by Fannie Mae and Freddie Mac, and, with a few exceptions, they won't approve applicants with scores below 620.

Original CNN Article

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St. James could save third of cost with switch to LED streetlights

A switch to LED illumination to reduce the Town of St. James’s greatest expense may take a while to complete, but a planned January 7 presentation should shed light on the potential long-term cost savings.

 

The topic was part of town council’s broader discussion last Thursday on street-lighting in the town. An ad hoc committee will be formed to address the location of streetlights, and a single council member was designated to accept the increasing number of requests for specific lighting improvements.

 

Council member and finance officer Jim Donnelly noted that the town’s 2013-14 budget includes $254,000 for lighting, the single largest expenditure. He said if the switch to LED lighting were made, costs could be “cut by a minimum of a third.”

As one of its functions, the town assumes the cost of electricity for the approximately 700 streetlights installed for the developer. There is agreement on how much the town shall spend on each light, but nothing that limits the number of lights on the streets, which were built by the developer and are maintained by the St. James Property Owners Association.

Donnelly said the move to LED would require a major investment by the town.

“The units are not cheap,” he said, about $600 per light to change-out the fixture. He said Military Ocean Terminal Sunny Point has just spent $10-million on a similar project.

For St. James, Donnelly suggested a “demonstration area”—the Town Hall/Community Center complex—where LED lights would be installed and costs compared. There are 27 light fixtures on-site, and billing is separate from those within the gated St. James Plantation.

The lights, both at the Town Hall/Community Center and throughout the development, are owned by Brunswick Electric Membership Corporation. The member-owned cooperative has incentive to pursue cost-saving initiatives, Donnelly said; “I anticipate we will have some cooperation.”

Brunswick Electric has been invited to make a presentation at the town’s regular meeting the first Tuesday of the month. If that goes well, the Town Hall/Community Center test-lighting will be considered.

Article from State Port Pilot

Ken Keegan Real Estate Broker
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Foreclosures drop to lowest level in 7 years

The foreclosure crisis is showing signs that it's finally fading away.

The number of new foreclosure filings -- which includes default notices, auctions and bank repossessions -- dropped 15% to a total of 113,454 properties in November, according to RealtyTrac, an online marketer of foreclosed properties.

That was the biggest monthly decline since November 2010, and foreclosure filings are now at the lowest level since December 2006. From a year ago, filings are down 37%.

"[T]he depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis with the outcome all but guaranteed," Daren Blomquist, vice president at RealtyTrac, said in a statement.

Along with general economic improvements that have made it possible for homeowners to stay on top of mortgage payments, people are also trying harder to hold onto their homes as housing prices continue to rise.

"People have more to lose if they lose their home," said Jed Kolko, chief economist at Trulia.

While filings are much lower than the average of 300,000 filings per month during the height of the foreclosure crisis, they haven't quite recovered to the level of around 86,000 that was seen in 2005 and 2006, before the housing bubble burst. And certain markets, like Florida, Delaware, Maryland and South Carolina, are still struggling with high rates of foreclosures.

"While foreclosures will likely continue to stage a weak rally in certain markets next year as the last of the distress left over from the Great Recession is dealt with, it is highly unlikely that there will be a foreclosure comeback that poses any major threat to the solid housing recovery that has now taken hold," said Blomquist.

CNN Article

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October Pending Home Sales Down Again, but Expected to Level Out

WASHINGTON (November 25, 2013) – Although conditions were mixed across the country, pending home sales continued to move lower in October, marking the fifth consecutive monthly decline, according to theNational Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, slipped 0.6 percent to 102.1 in October from an upwardly revised 102.7 in September, and is 1.6 percent below October 2012 when it was 103.8. The index is at the lowest level since December 2012 when it was 101.3; the data reflect contracts but not closings.

Lawrence Yun, NAR chief economist, said weaker activity was expected. “The government shutdown in the first half of last month sidelined some potential buyers. In a survey, 17 percent of Realtors® reported delays in October, mostly from waiting for IRS income verification for mortgage approval,” he said.

“We could rebound a bit from this level, but still face the headwinds of limited inventory and falling affordability conditions. Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors,” Yun said.

Modest gains in the Northeast and Midwest were offset by declines in the South and West. Yun notes there was a greater impact in the high-cost region of the West, where tight inventory also is holding back contract offers. He expects generally flat home sales going into 2014, but continued growth in home prices from limited inventory conditions.

The PHSI in the Northeast rose 2.8 percent to 85.8 in October, and is 8.1 percent above a year ago. In the Midwest the index increased 1.2 percent to 104.1 in October, and is 3.2 percent higher than October 2012. Pending home sales in the South slipped 0.8 percent to an index of 114.5 in October, and are 1.5 percent below a year ago. The index in the West fell 4.1 percent in October to 93.3, and is 12.1 percent lower than October 2012.

Yun said there are concerns heading into 2014. “New mortgage rules in January could delay the approval process, and another government shutdown would harm both housing and the economy,” he said.

Annual existing-home sales should be nearly 10 percent higher this year than in 2012, totaling just above 5.1 million, with a comparable volume expected in 2014. The national median existing-home price for 2013 is projected to be 11 percent above last year, and then cool to a 5.0 to 5.5 percent increase in 2014.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries. For additional commentary and consumer information, visitwww.houselogic.com and http://retradio.com.

Ken Keegan Real Estate Broker
(910) 523-0903 mobileEmail Mewww.KenKeegan.com Click here for more information on Brunswick, County Real Estate St. James Plantation

Happy Thanksgiving

I'd like to wish everyone a very safe and Happy Thanksgiving!

Ken Keegan Real Estate Broker
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Home prices continue to climb

Home prices posted the largest annual gain since housing bubble days in August, although the month-over-month gain slowed for the fourth straight month.

The closely watched S&P/Case-Shiller home price index increased 12.8% from a year earlier, the biggest 12-month gain since February 2006.

But with mortgage rates significantly higher in recent months, the pace of increases is slowing. The 1.3% rise compared to July is only half the monthly increase posted in April when mortgage rates were near arecord low.

Still, the recovery in the housing market continues to be strong, helped by a drop in foreclosures that were weighing on overall prices. A drop in theunemployment rate is also helping to support the housing recovery.

Related: To get the house, get there first

Experts said the slowing of the monthly increase is not necessarily a bad thing, as it will reduce the chance of another bubble in home prices.

"It's good to see the pace of home value appreciation moderate, allowing the market to get back into a more sustainable balance and not topple over," said Stan Humphries, chief economist of home price tracker Zillow.com. "Home value appreciation is better when it's boring, and we expect to see continued moderation."

Related: Shiller, two other win economics Nobel for 'bubble' warning

Despite the rebound in prices, overall prices remain about 20% below the July 2006 peak. But prices in Dallas and Denver once again hit record highs. And markets, including Boston and Charlotte, are now less than 10% below their peak prices.

The markets that rose fastest during the bubble -- Las Vegas, Miami, Tampa and Phoenix -- remain more than 35% below their peak valuations. But those markets are also among those with the most rapid price increases compared to a year ago. The fastest growth has been in Las Vegas, where prices are up 29%.

Article from CNN

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New initiative sees folks flocking to Southport for eco-tourism sightseeing

From grackles to kingfishers, bluejays to vultures and cowbirds to herons, Southport is home to about as many species of birds as one can imagine. A special tour last week gave enthusiasts an opportunity to learn about feathered friends, with the hope of spotting some in a tree or over the river.

 

The Wednesday morning event was organized as a joint effort between the city’s parks and recreation and tourism and economic development departments, along with Coastal Water Watch, an area non-profit organization that specializes in protecting wildlife and promoting coastal environmental issues.

 

The tour visited optimal bird-watching areas in the city, including Old Smithville Burying Ground and Taylor Field, the city pier and Salt Marsh Boardwalk, and Kingsley, Waterfront and Keziah parks. 

Participants traveled the tour route by bicycle, on foot, or on one of two golf carts operated by Southport Tours and Southport Fun Tours.  

“We are trying to increase our eco-tourism offerings in Southport, so that visitors can have a chance to experience the natural beauty we have here,” city tourism and economic development director Cindy Brochure said.

The group of 30 was lead by Mike Campbell, a coastal outreach educator with the N.C. Wildlife Resources Commission.

The tour was also held to raise awareness of the in-progress Caswell Avenue Community Garden project. There, Carolyn Pryor of Coastal Water Watch gave the group tips on ecologically sound gardening.

Campbell, who is based in New Bern, teaches birding and bird-calling to groups across the state. In Southport in the fall, Campbell said he would be searching for and pointing out resident birds and winter visitors. 

But birds flying south for the winter were also spotted, with several flocks of double-crested cormorants spotted in “Flying V” formations, catching the eye of the tour.

“Live oaks and cedar trees are great habitats for birds, but many do not make a lot of sound this time of year,” Campbell said. “If you were to come out in the spring, you would hear all types of songs and tweets.”

At Taylor Field, at the end of East Nash Street, one of the early stops on the three-hour trek, a pair of bluejays flew overhead. 

“Bluejays are very intelligent, but a lot of people don’t like them because they are aggressive and because they are nest invaders,” Campbell told the gathering.

A member of the party also queried Campbell about the types of owls found in this part of the country. 

“The four most common are the Screech Owl, Barn Owl, Barred Owl and Great Horned Owl, also known as a “Hoot Owl,” Campbell said. “They each have their own distinct sound.”

From Waterfront Park and the Salt Marsh Boardwalk, the group viewed gulls, blackbirds and vultures hovering in the distance. 

“Identifying species of gulls can be very confusing, as some can take two or three years to reach plumage,” Campbell said. 

At Kingsley Park, others learned an interesting fact about protected Battery Island, located across the river.

“That island is home to the nests of the American white ibis, and it is the highest concentration of that species in one area in the state,” Campbell said.

Following the guided tour the group enjoyed a picnic lunch at Caviness Park, and learned more about bird and plant conservation from Pryor. 

“We hope to be able to offer more events like this in the future,” Brochure said. 

Original Article from State Port Pilot

Ken Keegan Real Estate Broker
(910) 523-0903 mobileEmail Mewww.KenKeegan.com Click here for more information on Brunswick, County Real Estate St. James Plantation