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WASHINGTON — The House voted overwhelmingly Tuesday to approve bipartisan legislation that would block dramatic increases in premiums paid by some property owners covered under the federal flood insurance program.
The 306-91 vote follows a Senate vote on Jan. 30 approving similar legislation. The Senate could vote on the House version by the end of the week.
"Relief is on the way,'' Rep. Maxine Waters, D-Calif., said before the vote.
Under the House bill, called the Homeowner Flood Insurance Affordability Act, premiums under the National Flood Insurance Program (NFIP) could increase no more than 18% per property annually.
The legislation was crafted by Republican Rep. Michael Grimm of New York in response to premiums that in some cases had increased tenfold.
Rep. Bill Cassidy, R-La., who worked on the compromise, said the House measure strikes "the right balance'' between fiscal solvency for the flood insurance program and consumer affordability.
Supporters of the measure, including Gulf Coast lawmakers, said the increases were making it impossible for many people to keep their homes or sell them.
Critics, however, say taxpayers will be left to foot the bill for the financially troubled insurance program.
The premium increases were required under a 2012 law known as Biggert-Waters that was designed to designed to make the government's flood insurance program financially solvent by bringing rates in line with true flooding risks.
Premiums under the program have been heavily subsidized by taxpayers, and the program is $24 billion in debt.
The House measure also would repeal a provision in the Biggert-Waters law that increases premiums — up to the full-risk rate over five years — when the Federal Emergency Management Agency adopts new flood maps.
Waters, a co-author of the 2012 Biggert-Waters law, worked with Republicans on the recent compromise.
Under the compromise, homes that met code when they were built would be protected from rate spikes due to new flood mapping.
Biggert-Waters imposes 25% rate hikes on some but not all properties that have received premium subsidies through the NFIP. The program, run by FEMA, has traditionally charged premiums at about 40% to 45% of their full cost, with taxpayers subsidizing the rest.
The Senate-passed bill, by Democratic Sen. Robert Menendez of New Jersey and Republican Sen. Johnny Isakson of Georgia, would delay some of the premium increases for four years. The Federal Emergency Management Agency would use the time to complete a study of how to make the higher rates affordable.
"I'm encouraged by this progress and hope we can bring the bill over the finish line very, very soon," Menendez said Tuesday.
The successful effort to win passage of the bill reflected a rare moment of bipartisanship in a highly partisan Congress.
But conservative lawmakers and government watchdog groups oppose the effort to roll back the increased premiums, saying taxpayers should not have to subsidize flood insurance coverage for homeowners who build or buy in high-risk areas.
"It's not going to be very affordable for taxpayers,'' said Steve Ellis, vice president of Taxpayers for Common Sense. "This program, that's $24 billion in debt to the Treasury, is going to be saddled with these changes.''
Critics of the legislation complain it didn't go through the regular committee process.
"Everybody we talked to, virtually without fail, recognize that these delay and repeal efforts are damaging and counterproductive,'' said Andrew Moylan, a senior fellow at the R Street Institute. "Rushing a vote the way that they are is an indication that in their heart of hearts, they know it's the wrong thing to do.''
Rep. Randy Neugebauer, R-Texas, chairman of the House Financial Services Subcommittee on Housing and Insurance, opposed the measure, saying the federal flood insurance program is in "deep debt and it's putting taxpayers at risk for another government bailout.''
"Maintaining these subsidies hurts everyone in the long run,'' Neugebauer said.
In addition to capping annual premium increases at 18%, the House bill also would allow people buying homes covered under the federal flood insurance program to pay the subsidized premium rate at first, rather than the higher rate reflecting true flooding risk.
The House bill would be financed through small assessments on all NFIP policyholders that would go into a reserve fund for FEMA to pay future claims.
Written by Blanche Evans
According to a new survey from Fannie Mae, credit availability is improving. For the first time in over three years, the majority of consumers believe it's easier to get a mortgage.
Doug Duncan, Fannie Mae's chief economist said, "The gradual upward trend in this indicator during the last few months bodes well for the housing recovery and may be contributing to this month's increase in consumers' intention to buy rather than rent their next home."
The Mortgage Bankers Association (MBA) says consumers are correct – credit availability has increased, particularly in the jumbo and refinance loan markets.
Explained Mike Fratatoni, chief economist for the MBA, "The market continues to adapt to the new QM [Qualified Mortgage] regulation by eliminating products that do not fit inside of the QM box. This tightening is being offset, both in the market for higher balance loans, where lenders continue to loosen terms for jumbo loans, and in the refi market, where more lenders are offering streamline refinance programs."
But there could be other reasons that credit is more available. Credit reporting agency Transunion announced that the mortgage delinquency rate for the fourth quarter of 2013 was 3.85 percent, down from 5.08 percent.
Delinquencies have been steadily declining over the past two years, while improved home sales and rising prices have allowed many homeowners on the edge of delinquency to sell their homes and get into something more affordable.
Credit has been extraordinarily tight since 2008, as lenders struggled with federal claims of mortgage fraud. For years, lenders raised credit standards beyond what was required to qualify for federally guaranteed loans and loans destined for purchase by the securities industry.
As the government leveled fines and made repayment settlements with many of the big banks, lenders are more willing to make mortgage loans. With the most toxic loans before 2008 foreclosed and disposed, lenders have more confidence in loans generated since them.
In fact, Transunion also reported that more loans were generated to borrowers with less-than-perfect credit in Q4 2013.
"We are on the downward slope of the mortgage delinquency curve, so we expect to continue seeing delinquency rates that have not been seen for several years," said Steve Chaouki, head of financial services for TransUnion.
With job gains growing, relatively low interest rates available and a tight supply of homes insuring equity gains, mortgage delinquencies should continue declining, and buyers should feel more confident in their decision to buy a home in 2014.
Feb 12, 2014
/ By Leonard Baron
Zillow real estate investment writer and long-term investor Leonard Baron, MBA, is answering questions from MintLife readers.
If you have a question about investment properties, cash flows, insurance, mortgage financing, homeowners associations, renting versus owning, foreclosures and more, drop Leonard an email.
Neri of Yuma, AZ asks:
I wanted to know if assuming a loan is a wise idea.
I have great credit and money saved. Would this be a good option for me?
The house I’m interested in is for sale by owner. The owner wants $284,000, and Zillow estimates the house value at $235,000.
Would taking over payments and giving cash for equity be a good idea? How about taxes?
Answer: I see you have a couple of questions here.
The first question seems to be whether assuming a loan is a wise idea. I’ll answer that second.
One of the most important principles in making smart real estate purchase decisions is to buy properties you will own for a long time.
In order to do this, you should buy properties that fit well with your reason for purchasing property in the first place, and that are smart financial decisions.
A very small percentage of homes for sale in a given area are available with assumable loans (roughly 5 to 10 percent).
My first question to you is whether this assumable loan-type property is the right property for you for all the reasons you want to buy real estate?
If not, hold out for one that suits you, especially since you could probably get traditional financing.
Most people who buy homes with assumable loans are doing so because they can’t get traditional financing.
And, the sellers often ask too much for these properties.
This is likely the case for the property you’re considering based on the home value estimates you provided.
You should also consider the interest rate on the assumable loan.
If it’s a high interest rate, it doesn’t make much financial sense to assume it, especially since you could likely get traditional financing at a low rate.
Mark of Fredericksburg, VA asks:
I’m buying a home, and the seller is purchasing title insurance for me. Why do I need to also pay for a separate policy – it’s on my estimated settlement sheet?
Answer: Who pays for the title insurance can vary by local custom in different areas and/or by what the parties agree to in the contract.
It’s typical in California that the seller pays for a policy for the buyer, and the buyer pays for a policy for the lender.
It seems like you are paying for a policy for your lender. Assuming you are financing the property, the lender will require a policy so they are protected in case of a title issue.
While the seller’s policy is typically for the full amount of the purchase price, you normally buy a policy for the lender that is only for the mortgage amount.
It seems redundant to buy two separate policies that essentially cover the same thing. But as of now, lenders require their own policy to protect them.
As far as I’m aware, title insurance companies do not sell a combined policy that covers both the buyer and lender.
The housing recovery hit high gear in 2013 with bigger than expected price gains and solid home sales. This year isn't likely to be as exciting. Rising mortgage interest rates will price out some potential buyers. Instead of double-digit price gains, look for single-digit ones, economists say, while existing home sales remain at last year's level.
Sound boring? "You want boring in the housing market," says Svenja Gudell, Zillow director of economic research.
Here's what's ahead for:
• Home prices. They were the highlight of the 2013 housing market, up 12.5% in October year over year, CoreLogic says. Prices are now 20% off their 2006 peaks after falling more than 30%, shows the Standard & Poor's Case-Shiller index.
Economist John Burns looks for a 6% gain in 2014. Many others see smaller increases ahead. Zillow forecasts just a 3% rise.
Prices will likely rise more slowly as more homes come on the market, fewer investors bid for homes and higher ownership costs — including interest rates and home prices — take a bite out of housing affordability, housing experts say.
Still, U.S. housing remains 4% undervalued when compared with other economic fundamentals, such as consumer incomes and the cost to rent, says Jed Kolko, Trulia economist. At their 2006 peak, home prices were 39% overvalued based on the same metrics, Kolko says.
•Existing home sales. They've started to slow. In November, they were down year over year for the first time in 29 months, National Association of Realtor data show.
The dip was driven by higher interest rates and a tight supply of homes for sale. It doesn't mean the housing recovery has come off the rails, because home prices and housing starts continue to improve, says Capital Economics economist Paul Ashworth.
Existing home sales, which came in at a 4.9 million seasonally adjusted pace in November, are expected to be about 10% higher in 2013 than 2012 and stay about the same at 5.1 million in 2014, NAR forecasts. That's roughly back to 2007 levels but below the inflated levels preceding the housing crash.
New-home sales, which make up a smaller part of the market, have more room to grow. They hit an annual pace of 464,000 in November, up almost 17% from a year ago but still below the 700,000-a-year pace generally considered healthy.
The new year will be different for home buyers, though.
Look for fewer bidding wars and a less frantic market, says Glenn Kelman, CEO of brokerage Redfin. Its data show bidding wars recently falling to one of two offers handled by Redfin agents, down from three of four at the peak in March.
Homes are taking longer to sell, and more sellers are also reducing prices to win sales, Kelman says. At the same time, the supply of existing homes for sale edged up to 5.1 months from 4.9 months in October, NAR says. That's still below the six-month supply that Realtors generally consider to be a balanced market for buyers and sellers.
Supply should get closer to that level in 2014, Kelman says.
Donaee and Jeff Reeve hope he's right. The couple sold their Seattle-area home in just 10 days amid a hot June market. They've been renting as they search for a new home with a few acres. Meanwhile, prices have risen. The lack of suitable homes for sale is "discouraging," says Donaee Reeve, 36, a dental hygienist.
• Housing construction. This part of the housing recovery has been a laggard.
November's data showed an improvement, with housing starts topping 1 million on an annual basis, the Commerce Department says. That was up almost 30% from a year earlier, but it's still far below the norm. Starts averaged 1.5 million a year before the mid-2000s housing boom.
Construction won't return to normal this year, but it will strengthen enough to be the main driver of the housing recovery as home price gains shrink, says investment manager Goldman Sachs Asset Management.
It sees housing starts increasing 20% a year for the next several years as household formation picks up with the strengthening economy.
More home construction means more jobs for construction workers, plumbers, civil engineers and others in the building trades, as well as related industries such as furniture manufacturing, it says.
Construction alone will add 300,000 to 500,000 jobs a year to the nation's job base for the next three years, GSAM predicts. That's up from about 100,000 in 2013.
"The construction revival is primarily a matter of when, not if," says Tom Teles, GSAM head of securitized and government investments.
• Mortgage rates. Sarah and Andrew Katz know home prices are going up, and mortgage interest rates, too. But they're still convinced it's a good time to buy a first home. They've set their sights on spring.
"We're banking on interest rates staying under 5%, but they are what they are," says Sarah, 29, who works in public relations in Manhattan.
The couple better not wait too long, economists warn.
Average rates for a fixed 30-year mortgage will rise to 5.5% by the end of 2014, says Lawrence Yun, NAR chief economist. Rates have already risen about 1 percentage point in the past year as the economy has strengthened. They'll be pushed up further as the Federal Reserve winds down its $85 billion monthly bond-buying program.
Each percentage point increase in mortgage rates makes homes about 10% more expensive in terms of higher housing payments.
Another factor could weigh on borrowers. Starting in January, lenders must make home loans that meet new federal qualified mortgage standards or face greater liability from borrower lawsuits, should the loans go sour.
At least 5% of mortgages extended in 2013 wouldn't meet the new standard, Yun says. More than that will likely face additional scrutiny from lenders as they implement all parts of the new rule, says Brian Koss, executive vice president of lender Mortgage Network.
He says the higher rates and tighter rules will likely drive some home buyers out of the market or into lower-priced homes than they could have afforded last year.
"People have gotten spoiled," Koss says. Higher rates and home prices will test the strength of the housing recovery in 2014, he says.
Fall is officially here! I love seasonal decor, and fall is one of the best seasons to perk up your garden, doorway, or walkway to give your home some instant curb appeal. Some simple home improvements don’t have to mean splurging – there are lots of budget friendly projects that don’t make a hole in your wallet or take weeks to complete.
Take a look at these small subtle changes that can make a huge difference to the exterior of your home:
Plants Make an Instant Impact!
Bring fall color to your yard with large shrubs and small, fall colored trees like a golden Japanese maple or an Austrian pine. Grouping together shrubs and trees in various sizes will block views of your garden, adding depth and mystery to your landscape. You can also add hanging baskets filled with autumn colored fall blooms to brighten up your porch and lawn.
Dress up your Doorway
Start this process by replacing outdated door handles, rusty locks and giving your front door a fresh lick of paint. Try contrasting colors or a bright red door to welcome the soon-to-be holiday season. If your home features an old or a faded house sign, look for a modern alternative such as slate or acrylic. Frame your doorway with plant pots either side of it, or a creeping plant such as ivy surrounding the door frame.
Pamper your Driveway and Walkway
If the path leading to your door, or your driveway, has any cracks in it then there is no doubt these will get worse over time, possibly causing an costly entire replacement. Once these cracks appear seal them right away with a tube of sealant.
You should also improve the safety of your pathways at night- invest in some lighting to run alongside the path or solar lights for a perfectly illuminated front garden.
Cleaning Gutters and Composting
Placing fine mesh or netting over your gutters will stop them from getting clogged with leaves in the autumn months, and eliminate blocked gutters and water damage.
Start composting! Fallen leaves, cut grass and even your fruit and vegetable peelings make great compost for your plants next year.
Hope your enjoying fall so far.
Best Regards Chris Mesunas.
This is a great article that I have shared with others!
The newlywed year is full of milestones including, of course, your first married home together.
It is often a natural step many couples take after tying the knot, but choosing whether to rent or buy is an important decision that needs to be made together. There are some major lifestyle factors that impact that choice.
When you are ready to have a serious conversation about your future home, set up a date with each other either at home or in a place where you can talk quietly and at length. Turn off your phones and other distractions so that you can truly focus. The six questions below are conversation starters to help you evaluate whether or not now is the right time for you to look at buying a home.
1) Where do we see ourselves in the next five years? If you are planning to move to another state…
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