Archive for May, 2012

What Does It Take to Get a Loan Today? A Lot!

Saturday, May 26th, 2012

As Alex reported 5/26/2012 on Property Source Radio. – Daily Real Estate News | Tues May 22, 2012
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One of the biggest obstacles home buyers are facing is qualifying for financing, and a new report by the Federal Reserve shows exactly how big of struggle potential borrowers face.

According to a new Federal Reserve report surveying banks, the report found that most banks say they are a lot less likely to issue a mortgage to borrowers with a FICO credit of 620 and a 10 percent down payment than they were in 2006 during the housing boom.

“A moderate net fraction of banks were less likely to originate loans to borrowers with a FICO score of 680, regardless of down payment size,” the report also said. “A modest net fraction of banks were less likely to originate loans to borrowers with a FICO score of 720 and a 10 percent down payment, although survey respondents indicated that they were about as likely to originate loans now as they were in 2006 if such borrowers had a down payment of 20 percent.”

So while mortgage rates continue to sink to new record lows, many home buyers are finding they can’t always qualify for the low rates.

As a recent New York Times article about the Federal Reserve’s report illustrates: “A borrower with a credit score of 720 can expect a rate of 3.70 percent on a 30-year, $300,000 fixed-rate mortgage … while someone with a score of 620 to 639 can expect a 5.07 percent rate — or an extra $242 per monthly payment.”

Source: “How to Pump Up Your Credit Score,” The New York Times (May 17, 2012)

Gaps Persist in Americans’ Credit Knowledge

Saturday, May 19th, 2012

As Alex reported 5/19/2012 on Property Source Radio. – Daily Real Estate News | Tues May 15, 2012
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The majority of Americans don’t fully understand how credit scores are formulated, according to a survey released by the Consumer Federation of America. That gap in knowledge can cost them when applying for a mortgage too.

While the survey showed a big improvement in the last year in the number of Americans knowledgeable about credit and how companies collect credit information on them, Americans overall still don’t fully understand how credit scores are calculated or used.

For example, the survey found that respondents were not fully aware of just how a low credit score could hamper them. “Only 29 percent are aware that, on a $20,000, 60-month auto loan, a borrower with a low credit score is likely to pay at least $5,000 more than a borrower with a high credit score,” according to the Consumer Federation of America survey.

The survey found that 56 percent of respondents mistakenly believe a person’s age and 54 percent say a person’s marital status are used to calculate a credit score. Twenty-one percent surveyed also mistakenly said that a person’s ethnic origin was a factor in calculating credit scores too.

The survey also found that less than half of respondents — 44 percent — understood that a credit score is for measuring the risk of repaying loans. Twenty-two percent mistakenly thought credit scores measured a person’s amount of debt and 21 percent said credit scores were “financial resources.”

Still, the survey found that more people are becoming aware of what can hurt or help your credit score in comparing this year’s results to last year’s. The survey found that more people in the most recent survey knew that a missed payment, bankruptcy, or carrying high credit card balances could lower their credit score. Most respondents also knew that making payments on time can raise their credit score, while missing a payment can lower it.

Source: Consumer Federation of America and “Consumer Knowledge of Credit Leaves a lot to be Desired,” HousingWire (May 14, 2012)

More Foreclosures Turned into Indoor Pot Farms

Saturday, May 12th, 2012

As Alex reported 5/12/2012 on Property Source Radio. – Daily Real Estate News | Tues May 8, 2012
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Foreclosed homes are increasingly being purchased or rented by those who are turning the homes into sites of illegal activity: Indoor marijuana farms.

According to law enforcement officials, many of these illegal marijuana farm foreclosures are blending right into suburbia. New owners or renters move into foreclosed properties in middle to upper-class neighborhoods, mowing the lawn, taking out the trash, and appearing like any other good neighbor, The New York Times reports.

“Houses that sold for $1 million before the crisis have been turned into grow houses, equipped with the high-intensity lights, water, and air-filtering systems necessary to produce potent, high-quality marijuana,” The New York Times reports. “Many grow houses go unnoticed, even by next-door neighbors, until there is a fire, typically caused by unsafe electrical wiring.”

Rusty Payne, a spokesman for the Drug Enforcement Administration, says areas in Northern California are seeing some of the highest incidences of foreclosures turned into indoor marijuana farms.

Indeed, according to DEA statistics from 2010 — the latest year available — California accounted for more than 70 percent of all marijuana plants confiscated nationwide.

Source: “Foreclosed Houses Become Homes for Indoor Marijuana Farms,” The New York Times (May 6, 2012)

Attacks Against Real Estate Professionals Surge

Saturday, May 5th, 2012

As Alex reported 5/5/2012 on Property Source Radio. – Daily Real Estate News | Tues May 1, 2012
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The number of assaults against real estate professionals is on the rise, with the nature of attacks becoming more violent and sometimes deadly.

Fatal injuries among real estate professionals while working on the job reached in 2010 their highest level since 2003, according to the Bureau of Labor Statistics. Figures from 2010 are the latest year available.

Sixty-three workplace fatalities occurred in the real estate industry category in 2010, which is a 19 percent rise over the previous year. Of the 63 fatalities, 23 were homicides, according to BLS. That overall total also includes 14 deaths from falls, nine from transportation incidents, and eight from being exposed to harmful substances or environments, Inman News reports on the BLS findings.

That marks the highest level of fatalities since at least 2003 when BLS began collecting such data. The real estate industry category, as defined by BLS, includes landlords, real estate agents and brokers, and those who perform work related to real estate, such as appraisers and property managers.

Landlords appear to be the most vulnerable to attacks. Of the 23 homicides in 2010, 52 percent of the victims were landlords.

In 2010, 940 real estate and rental leasing professionals were victims of nonfatal assaults. That number has steadily risen over the last few years, up from 620 in 2009 and 170 in 2008.

Inman News, in its analysis of the findings, discovered that workplace fatalities among real estate professionals were at their lowest point during 2005, the height of the housing boom. In 2005, 39 fatalities were recorded. The number has been on the rise ever since, particularly in the categories of “assaults and violent acts” caused by others, self-inflicted injury, and animal attacks.

Source: “Assaults, Murders of Real Estate Professionals on the Rise,” Inman News (April 30, 2012) [Log-in required.]