Could mortgage rates go even lower now that the Federal Reserve has announced it will start buying $600 billion in government bonds to stimulate the economy over the coming months? Some think the effects of the Fed’s action were already priced into rates, at least somewhat. “In advance of the announcement, we had a big rate drop, but since the announcement, the market has given back a bit,” said John Walsh, president of Total Mortgage Services, a Milford, Conn.-based mortgage lender. “I don’t see rates really going much lower.” Others think rates have more room to drop, at least a bit, including John Tuccillo, of John Tuccillo and Associates. Exactly how much they’ll drop is less certain. “It depends on how well this experiment works,” he said. “It’s uncharted territory.” Keith Springer, president of Springer Financial Advisors in Sacramento, Calif., expects to see more small-but-steady drops in rates in the next three to six months. The Fed’s bond buying program lasts until the end of June. “There’s a depression in housing,” Springer said. “[Low] demand is keeping rates low and the Fed is going to force rates down even more.” If rates do drop in the near future, it won’t be by much, said A.W. Pickel, president and chief executive of LeaderOne Financial Corp. And an eighth of a point drop, when rates are already in the 4% range, probably won’t make a lot of difference to many borrowers, he said. (www.marketwatch.com)
MarketWatch (11/11/10); Amy Hoak

In the second quarter of 2010, jumbo-mortgage lenders originated $18 billion in loans — a 20% increase from the first quarter, but lending still remains far below 2007 levels, according to Inside Mortgage Finance Publications. J.P. Morgan Chase’s home lending unit increased its jumbo-mortgage volume by 146.2% in the first six months of this year over the same period a year earlier, and Wells Fargo by 47.5%, according to Inside Mortgage Finance. “Overall lending for mortgages is up, and jumbos are up more,” says Thomas A. Kelly, a Chase spokesman. “Part of it is that we have the capacity and we are making it available to our customers.” But, he adds, “We are using very disciplined underwriting and we want to make sure that you have an ability to repay the loan.” Many jumbo borrowers are still finding it frustrating to get a loan. Some of them, encountering backlogs and processing delays at larger banks, are turning to smaller ones, such as Investors Bancorp in Short Hills, N.J. Peter Elsby, a senior loan officer at Investors Bancorp’s mortgage unit, which operates in 16 states, says many national banks are taking two to four months to process a mortgage, while his bank can turn one around in 30 to 60 days. “The turnaround time is just way too slow,” he says of the big banks. The total volume of jumbo loans is way down from a few years ago. Jumbo mortgages constituted 5% of total mortgage originations in 2009 and 2010, versus 20% from about 2004 to 2007. Historically, they comprise about 18% of mortgages issued, says Guy Cecala, CEO of Inside Mortgage Finance. Underwriting continues to be strict. Borrowers still need excellent credit profiles and must provide complete documentation and verification of income, unlike several years ago. Downpayments of 20% to 40% typically are required. Tim McLaughlin, senior vice president of capital markets for Weichert Financial Services in Morris Plains, N.J., says he doesn’t expect the traditional jumbo-mortgage market to return to normal until institutions can get back to developing and selling bonds based on the mortgages in the financial markets, instead of simply holding the mortgages in their portfolios. That could take another year or more, McLaughlin says. “We need investors to be confident in the assets they are purchasing,” he says. (www.marketwatch.com)
MarketWatch (11/8/10); M.P. McQueen, The Wall Street Journal

A history professor and Washington attorney voice their disappointment over their attempts to purchase a “stunning three-bedroom, two-bath contemporary on six acres of wooded land with a stream running through it, a huge deck and a swimming pool. A wall of windows brings the surrounding woods into the house. Strongly built and energy-efficient, it sailed through inspection.” The buyers were pre-qualified for a loan, with two professional incomes, good credit and enough cash for a 20% downpayment. Yet two mortgage companies rejected their application because the home — “a customized modular house of internationally acclaimed design, built in 1989” — is round. “Being ‘unusual’ or ‘unique,’ it was deemed ‘not marketable.’ Despite its evident worth and multiple independent appraisals, the lenders said they could not assign a value to the house because there were no comparable properties. And, with no ‘value,’ there was insufficient collateral for a loan.” In their Washington Post op-ed piece, Ngai and New write: “This is how far the pendulum has swung. Two years ago, banks were approving balloon mortgages for people who made little or no downpayment and whose ability to pay was questionable. Now they have gone beyond being cautious about borrowers’ income and assets to being skittish about even the shape of a house….Lenders are making overly conservative decisions based on fuzzy logic and blinkered, formulaic reasoning. In so doing, they discourage the market from recovery. And the house sits unsold, our dreams denied.” (www.washingtonpost.com)
Washington Post (11/6/10); Mae M. Ngai and John G. New

New York City was home to nearly 1.28 million people in their 20s last year, up from 1.21 million in 1980. Earlier generations had their share of hard-luck housing stories, but statistical evidence suggests that today’s new arrivals have a tougher struggle to live well, or even adequately, compared with their counterparts of just a decade ago. Battered by the one-two punch of persistent unemployment and the city’s housing costs, they are squeezing into even smaller spaces and living in neighborhoods once considered dicey and remote. They are doubling, tripling, quadrupling and even quintupling up. According to the New York City Planning Department, 46% of New Yorkers in their 20s who moved to the city from out of state between 2006 and 2008 lived with people to whom they were not related, up from 36% in 2000. Moving back in with parents is fast becoming the new normal. Those who do fly the family nest are paying an ever larger percentage of their often meager income for rent. Between 2006 and 2008, according to the Planning Department, the portion of New Yorkers in their 20s who moved to the city from other states and who paid at least 35% of their income for rent was 42%, up from 39% in 2000. Even young people in high-paying fields like finance have to make sacrifices. There’s the investment banker who can afford only a 450-square-foot studio, and the financial analyst who lives in a third-floor walk-up illegally divided into two rooms. (www.nytimes.com)
New York Times (11/12/10); Constance Rosenblum

Every year at about this time the manufacturers announce the newest paint trends for the year. Benjamin Moore recently announced that from deep smoky wine to wildly pumped-up fuchsia, purple promised to be a prominent color in home décor in 2011. Paint company CIL declared that 2010’s Color of the Year is blue, an airy and opportunistic blue that symbolizes igniting horizons, creating new beginnings, renewed energy and a positive dynamic. It evokes an image of vast skies, breezy ozone freshness and the energy and essentiality of water. A receding color, it will always create a sense of space. Home improvement retailer Rona said this year, given the economic instability spreading across the world, a greater need for calm, comfort and well-being has emerged, which is reflected in our choice of décor and, more particularly, colors. Nevertheless, in trying to remain positive about the future, we continue to pair stylish, vibrant and decisively modern colors with neutral tones. Budget-conscious decorating will combine with individual style to drive 2011 paint color trends, says the Paint Quality Institute, which is owned by The Dow Chemical Company. Its color expert, Debbie Zimmer, says, “There’s no escaping the state of the economy, even for home owners who want to beautify their homes. Rather than diving into large-scale renovation projects, in the coming year consumers will search for inexpensive ways to freshen and update their homes. Many will conclude that painting is the perfect solution.” She says that neutral paint colors “provide versatility and allow home owners to quickly change the look of a room just by adding a few new accessories, without spending time and money to remodel or repaint again. This is the ultimate in practical remodeling, and the time is ripe for it.” The institute suggests that higher paint sheens and metallic finishes are on the radar of consumers to bring a little sparkle to some rooms. “Gloss can subtly create a brighter, more upbeat mood in a home, but at the same time, it adds style and pizzazz,” says Zimmer. (www.realtytimes.com)
Realty Times (11/26/10); Jim Adair

To help average people ease into a greener future, San Francisco’s One Block Off the Grid (1BOG) brings together groups of home owners interested in solar panels. Once it hits a critical mass within a certain city, it negotiates a discounted bulk rate with contractors. “We want people to know that there are pockets of the United States where solar isn’t just for rich environmentalists,” says Dave Llorens, chief executive officer and founder of 1BOG. “We want to create a rocket booster for communities” that can help people pool together and satisfy their conscience while also saving money. So far, 1BOG has overseen 1,000 installations in eight states, and 40,000 people have signed up for information on the group’s website, 1bog.org. The arrangement allows everyone within a community to get a better deal on the systems — usually 15% to 20% off — and the peace of mind that comes with a team of solar experts scrutinizing local options. “There are giant trust issues with home contracting,” says Llorens. Because it’s still an emerging technology, “solar can be much more complex and confusing than other home improvements.” For one thing, it’s hard to pin down what’s an appropriate price. Costs vary dramatically from area to area, driven by utility rates, regional penetration and state rebates. This makes some cities, such as Seattle, a tough sell, he says. The problem is not that Seattle endures gray skies for more than half of the year. Solar panels can soak up sunlight even when the sky is overcast. Germany produces about seven times more megawatts of solar electricity than the U.S., despite being notoriously cloudy and considerably smaller. Instead, energy economics gets in the way. Seattle enjoys cheap power, in part because of hydroelectricity, another clean option. Expensive solar panels don’t make much sense for the average home owner when utility bills remain low. On the other hand, Llorens says, solar installations are good investments in New Jersey, California and other states with relatively expensive energy costs — especially factoring in government incentives. (www.csmonitor.com)
Christian Science Monitor (11/1/10); Chris Gaylord