Lots of housing news today, so here's a quick wrap-up:
The Minnesota Multi Housing Association (MHA), the state’s largest association for rental property owners, has a new chairperson: Angelina French, a portfolio and manager with Mid Continent Management.
French has been a member of Minnesota Multi Housing Association for more than 18 years, has been active on several committees and has served on the organization’s board of directors. She also takes her experience in the industry into the classroom, where as a member of the MHA’s speakers bureau, she spreads the word about vocational opportunities within the industry. French got her start as an apartment caretaker in rural Minnesota but quickly rose through the management ranks at various companies. She’s been with Mid Continent since 2004 and succeeds Jon Segner, president and chief operating officer of Dominium as MHA chair. Also on the executive committee: Jon Hornig of Hornig Companies, Inc., Becky Yonts of Timberland Partners, Inc., Tom Backstrom of Pinnacle and Brad Kittleson of CSM Corporation.
French told Just Listed today that one of her top priorities in her new role will to reinforce that "renting is a (smart) (viable) (economical) (fulfilling) (satisfying) lifestyle choice.
"One of our goals," she said. "is to promote this reality to our current and potential residents with the tag line "Rent Your Home, Own Your Life.'"
As if homeowners don't already have enough to worry about, now comes news that homeowner's insurance premiums are on the rise, according to the Insurance Information Institute. You can read more about the issue in a story on the WSJ's Smart Money website.
Has your premium increased?
A recent ruling from the Bankruptcy Appellate Panel of the 8th Circuit Court of Appeals said that people who file for Chapter 13 protection can discharge their second or any junior mortgage (it’s called lien stripping) and still keep their house if the value of the house is less than the first, or primary mortgage.
The decision is being hailed a significant one because it means that people who have a paycheck and want to keep making the payments might be able to do so through the financial reorganization that comes with the bankruptcy process.
A significant challenge for many of those who are trying to recast their debt to make it more manageable is that they owe so much more than their house is worth and have a second mortgage. There’s more about the case that inspired the decision and details about what it means on Craig Andresen’s
Being a renter isn't getting any easier: A record number of renters now pay more than half their income for housing, according to a new report from the Harvard Joint Center for Housing Studies (JCHS).
Here's what's happening: Falling homeownership rates mean more people have to or choose to rent, and that's putting upward pressure on occupancy rates. That gives landlords an option they haven't had for years: raise rents. At the same time, renters are earning less money, putting more pressure on the working and middle class Americans. The report says that one in four renters, or 10.1 million households, spend more than half their income on rent and utilities. Another quarter of renters, 26.2 percent, spend 30 to 50 percent of their income on rent and utilities.
Are you a renter feeling the pressure? Finding any rent deals out there?
Welcome to Harney Friday!! Our real estate expert in Washington sheds light on a controversial issue that impacts people who have FHA mortgages.
By KENNETH R. HARNEY
WASHINGTON -- Could the federal government's booming FHA mortgage program be forcing homeowners to pay tens of millions of dollars of extra interest charges when they sell their houses or refinance their loans?
Critics say yes. The government says the critics aren't providing the full picture.
Those critics include Sen. Ben Cardin, D-Md., who is sponsoring new legislation that would prohibit FHA lenders from collecting a full month's worth of interest from sellers and refinancers who pay off their mortgages -- go to settlement -- before the final day of the month.
No other major source of financing -- not Fannie Mae, Freddie Mac or even the VA -- requires interest payments from borrowers beyond the date they pay off their loans. On an FHA loan, however, if you sell your house and go to closing early in the month, you are charged interest through the rest of the month.
To illustrate: Say you pay off a $200,000 FHA-insured mortgage on the fifth day of April. You'll be charged an extra $820 to cover interest for the remaining days of the month, according to estimates prepared by the National Association of Realtors, which supports Cardin's bill. If you pay off the same loan on April 15, the additional interest levy would total $492.
Where does the money go? Ted Tozer, president of the Government National Mortgage Association, which bundles FHA loans into bonds and sells them to investors, says it flows to the bondholders, who are guaranteed payment of interest for the full month even if the balance is paid off much earlier.
Tozer maintains that the direct payment approach has afforded FHA borrowers a slight discount on their initial interest rates -- probably in the range of 0.10 percent to 0.15 percent, compared with conventional loans.
But critics charge that the extra interest taken from FHA sellers and refinancers exerts a far greater personal economic impact -- often cutting their proceeds by hundreds of dollars -- than the barely perceptible rate break they received on the mortgage itself.
"This is an issue of fairness," says Cardin. "Homeowners should not have to pay interest on loans that they have fully repaid." His bill, the Reduce Excessive Payments Act, would prohibit the practice and require FHA lenders to compute payoffs on a per-diem basis rather than a full-month basis.
Real estate agents are especially critical of FHA's interest prepayment policy because they say it squeezes money out of sellers who have little or no control over the timing of their closing transaction. Many have no idea of the FHA's requirement, realty agents say, but even if they do, the buyers of their houses generally are in a better position to control the date of settlement since they are dealing directly with title and escrow companies.
The National Association of Realtors says the out-of-pocket costs to unwary consumers are huge. Citing the most recent statistics on early payoffs it claims it could obtain from FHA, the group says that during the year 2003 alone:
-- FHA borrowers paid $587.4 million in "excess interest fees" because of the full-month rule.
-- Only 16 percent of loans were prepaid during the final five days of the month.
-- The average "excess interest" payment from borrowers to lenders and investors was $528, but 425,000 homeowners paid an average $622 in extra fees.
Between January 2000 and January 2004, according to the Realtors' analysis of FHA data, borrowers paid more than $1.375 billion in excessive interest. The corresponding amounts today could be significantly higher since FHA has a much larger market share.
Asked for comment, Vicki Bott, who heads FHA's single-family mortgage office, acknowledged the controversy, and said that the agency is "examining this issue very closely" and actively considering a regulatory change.
In an interview, Tozer said the entire issue is up to FHA, and that his agency could readily sell its mortgage-backed bonds using the per-diem payoff approach that is standard in the conventional mortgage marketplace. But investors would still need to be compensated for the full month's worth of interest, he said, and that would probably require a slightly higher rate on the mortgage.
Where's this headed? With pressure coming from Congress -- notably from an influential Democrat who tends to be supportive of the Obama administration's policies -- FHA may move off its disputed practice.
In the meantime: If you have an FHA loan and plan to refinance or sell your house, try hard to schedule the closing at the end of the month. You could save a bundle.
Ken Harney's email address is kenharney(at)earthlink.net.
(c) 2011, Washington Post Writers Group