Housing and Economic Forecast Points to Rising Activity

WASHINGTON, May 12, 2011   
Home sales are expected to stay on an uptrend through 2012, although the performance will be uneven with mortgage constraints weighing on the market, according to experts at a residential real estate forum today at the Realtors® Midyear Legislative Meetings & Trade Expo here.
Lawrence Yun, NAR chief economist, said existing-home sales have been underperforming by historical standards and will rise gradually but unevenly. “If we just hold at the first-quarter sales pace of 5.1 million, sales this year would rise 4 percent, but the remainder of the year looks better,” Yun said. “We expect 5.3 million existing-home sales this year, up from 4.9 million in 2010, with additional gains in 2012 to about 5.6 million – that’s a sustainable level given the size of our population.”

FHA squeezed, but still in game

May 01, 2011 07:00AM

By Kenneth R. Harney

Is the Federal Housing Administration losing some of its post-boom, post-bust oomph? Is the Obama administration's plan to gradually throttle back FHA's home mortgage insurance volume already having effects -- and if so, what might this mean to buyers?

There are definitely signs that something's brewing:
• Total applications for FHA-insured single-family mortgages are down 30 percent year-to-year through March, according to the agency's data. Applications from prospective home purchasers are down 35 percent. FHA's popularity with buyers previously had sustained its high origination volumes.
• FHA put its second increase in premium charges in six months into effect on April 18. Higher premiums mean higher monthly payment requirements for buyers, and could have the effect of squeezing some consumers with tight budgets out of the market entirely.
• The private mortgage insurance industry, which competes with FHA for borrowers who make low down payments, is touting its newly resurgent conventional mortgage products, which may offer significant monthly savings when compared with FHA.

Private Party Financing "PPF" - When to use it vs. a FNMA/FHA Loan

Brokers, Agents, Investors, and Network Affiliates:
With over 5 million people having lost their homes in the past 3 years, and many millions more who have lost jobs and income and seen their credit ratings shot to heck, the question rises over and over, Is Private Party Financing “PPF” i.e. “Hard Money” an appropriate loan for real estate buyers?

The short answer is yes. More now than ever. While there are scenarios that lend themselves to PPF better than others. A growing portion of real estate sales will be financed with some version of PPF. There are of course various categories of PPF, that come up.

1. Seller Carry “WRAP” financing. - This is typically a case where the seller does not need the equity upon sale, or has no equity and is able to sell the home at a price that will eventually get the out of ownership without the buyer needing conventional financing at time of initial sale. The carry period for these can be anywhere from 2 years to 5 or more.

2. Lease w/ an Option to Buy. - This is in fact a type of private party financing of a sale yet to be determined. The structure can even be recognized in some cases as a “financing” for IRS tax purposes. Thus giving the Lease Option Buyer the rights to take a tax write off as an interest deduction. (Check with you CPA or Tax Advisor before trying this one.).