As the result of tighter standards from Fannie Mae and Freddie Mac, getting a mortgage has gotten tougher and many home buyers are getting rejected for loans they could easily afford. A quarter of all mortgage loan applications get denied for loans, according to the Federal Reserve. Many other potential home buyers never even try to get loans, said Jerry Howard, CEO of NAHB. “The pendulum has swung too far in the other direction,” Howard said. “This overreaction is retarding the housing market recovery.” Among the tougher requirements, for Fannie/Freddie lenders to approve a mortgage on a condo, 70% of the units in the building have to be already sold or under contract to individuals. Before 2009, the threshold was 51%. Today, if someone’s total debt exceeds 45% of income, the mortgage will be denied. In 2009, the limit was 55%. Fannie and Freddie also have gotten stricter in how they factor in missed payments on credit cards, auto loans and other debts in which the balances do not have to be paid off every month. They used to be OK with a missed payment or two. Now, one missed payment will hit the debt-to-income ratio, because banks will add 5% of the outstanding loan balance to the debt part of the calculation. (www.money.cnn.com)
CNN Money (4/19/11); Les Christie

Forthcoming regulations could make conventional mortgages more expensive to the wide swath of home buyers and owners who can’t put 20% down, depressing originations and potentially undermining the housing recovery. If 20% down becomes the standard for “qualifying residential mortgages,” nearly half of all current home owners with a mortgage and 70% of first-time home buyers would not make the cut, according to data from CoreLogic. Under the Dodd-Frank act, lenders will have to retain 5% of the credit risk of any non-QRM home loan they securitize. Therefore, whether or not lenders held such loans in their portfolios, they’d have to hold capital against them — a cost that’s apt to be passed on, in the form of higher mortgage rates, to borrowers without 20% equity. “The economics just don’t work,” said Cameron Findlay, chief economist at LendingTree. He estimates that rates for low-downpayment loans could rise as much as three percentage points. “We think the housing market would be hurt through the endorsement of a mandatory downpayment.” (www.americanbanker.com)
American Banker (3/22/11) Kate Berry

Both the Federal Housing Administration and Fannie Mae recently launched start-ups to provide the cash households need to pay for energy improvements to their homes. The FHA’s new Powe Saver program allows eligible owners to borrow up to $25,000 at fixed rates between 5% and 7% for as long as 20 years to finance high-efficiency windows and doors, heating and ventilating systems, solar panels, geothermal systems, insulation and duct sealing, among other retrofits. An estimated 30,000 loans will be closed in the next two years and PowerSaver could become a major national program for energy upgrades, according to Housing and Urban Development Secretary Shaun Donovan. Fannie Mae’s “energy improvement” mortgage add-on program is significantly different from the FHA’s. Rather than a separate loan to finance energy retrofits, Fannie folds the cost of the improvements — capped at up to 10% of the estimated market value of the home following the energy efficiency enhancements — into the mortgage amount itself. (www.washingtonpost.com)
Washington Post (4/29/11); Kenneth R. Harney

The supply of new condos in Washington’s Puget Sound area is steadily shrinking. Marking the end of the last development cycle, only 32 new condo units are expected to deliver in downtown Seattle in 2011, according to Realogics Sotheby’s International Realty principal Dean Jones. Those are part of the Volta condos, which were built in 2008, but were later foreclosed on. And, according to Jones, it is likely they will be purchased out of foreclosure and converted into apartments. Future demand will be in part satisfied by remaining inventory from the previous development cycle. Jones estimates that 351 new construction condos remain available in downtown Seattle for sale by developers, down from more than 570 a year ago. And those units are going somewhat fast, because so many projects have lowered prices to avoid foreclosure. (www.bizjournals.com/seattle)
Puget Sound Business Journal (4/2/11); Kelly Gilblom

With more than 7,000 Americans a day turning 65 for the next 19 years, there’s a huge market out there for anything that can help them stay in their homes. Builders, companies that retrofit existing housing, AARP and agencies that work with the aging population are all seeking plans, devices and adjustments to existing housing and home services that will keep people from having to go into assisted living facilities and nursing homes if they don’t want to. Already 211,864 residents of Hillsborough County, Fla., are more than 60 years of age. That’s 17.6%. 21,000 of those are below the poverty level; 20,000 are medically underserved; and 12,000 are raising grandchildren. According to statistics kept by the U.S. Bureau of Labor, 76 million baby boomers (which make up 43% of the current U.S. workforce) will be eligible to retire in the next 10 years, but an AARP poll conducted by Woelfel Research Inc. in 2010 says many of them say they don’t plan to retire. But whether they work or not, how and where they will live will be a major concern and should be planned for early; not when the time comes that changes must be made. (www.observernews.net)
Observer News (4/21/11); Penny Fletcher

Several new developments in Manhattan have incorporated maid's rooms into their larger apartments, and while the rooms are separate from family sleeping areas, they are generously sized and have standard en-suite bathrooms. The Laureate, a new 20-story building at the corner of Broadway and 76th Street, has four such apartments — each has four or more bedrooms and is priced at about $11 million. The maid’s room is listed simply as another bedroom, but it is away from the others, closer to the front door and living areas. Two of the building’s penthouse units even have separate entrances that lead directly to the servant’s rooms. Demand for family-sized apartments with separate quarters for live-in help has been so marked at the Laureate that the Stahl Organization, the developer, has decided to combine some smaller apartments to create more units that fit the bill. Even in the current economy, there is still strong demand for live-in help, said Brian Taylor, the owner of New York Domestics, which places hundreds of nannies and housekeepers annually in the New York area. From the suburbs, the majority of requests fielded by his agency are for live-in help, but in Manhattan, where space is more of an issue, only about 40% to 50% of clients want someone to live in. (www.nytimes.com)
New York Times (4/28/11); Vivian S. Toy