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Affordable dream: Housing crisis policies could bring changes to your community

The American dream isn’t dead, but it is evolving.

For decades, the dream has meant owning a home, having a successful career, or having a better quality of life than your parents. Now, it’s more about freedom and family.

A pair of studies released earlier this year showed how the American dream is changing and whether people believe they’re on the path to living it.

When RealClear Opinion Research asked more than 2,000 U.S. registered voters across all age groups and political affiliations in February about the American dream, 37% said the dream was “alive, but under threat.” Another 28% said it is “under serious threat, but there is still hope.” Nearly seven in 10 respondents believe that the American dream “can be achieved by anyone in the U.S. if they work hard.”

The American Enterprise Institute also released a report in February after collecting more than 2,400 responses across demographic groups to a survey on social capital, civic health, and quality of life in the U.S. The public policy think tank discovered that 40% of respondents believe their family is living the American dream. Another 40% believe their family is on the way to achieving it.

The most essential factors of the American dream are having the freedom of choice in how to live one’s life (85%), having a good family life (83%), and retiring comfortably (71%), according to the research. While owning a home might not be as important as it once was, it is still a critical part of the picture; 59% called it essential.

Unfortunately, owning or renting a suitable home is increasingly out of reach for many in the U.S. Lawmakers, housing officials, and advocates are scrambling to find solutions.

Some states and municipalities are considering accessory dwelling units—also known as mother-in-law suites or granny flats. Some are interested in developing smaller homes on smaller lots in communities occasionally referred to as pocket neighborhoods. Zoning changes and new Federal Housing Administration lending guidelines for condominiums are expected to make a difference in the affordable housing crisis too.

Your community association could be impacted by one or more of these efforts.

Whatever the problem and solution, the American dream is more complex and individualistic than ever. It’s also sure to be a discussion point leading up to the presidential election—now less than one year away.

What does the American dream mean to you?

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Welcome home? New FHA process could make condos available to more buyers

Millions of homebuyers could benefit from new guidelines issued by the U.S. Department of Housing and Urban Development that streamline the Federal Housing Administration’s condominium project approval process. The guidelines, which went into effect yesterday, now allow single-unit approvals, extend the lifetime of approvals, simplify recertification, and more.

In a statement, HUD Secretary Ben Carson says one goal of the new process is “to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age in place.” HUD data shows condominium unit mortgages currently account for fewer than 2% of all FHA-insured mortgages. 

One important element in the agency’s updated approval guidelines includes single-unit approvals on up to 10% of mortgages in condominiums without FHA approval provided that they are financially stable. The other changes include increasing the concentration rate so that FHA can insure up to 75% of unit mortgages in a condo project and lowering owner occupancy rates from 50% to 35% based on financial and operational stability. 

In addition, the new procedures extend FHA approvals for condominiums from two years to three, simplify recertification to only requiring updates to information instead of resubmitting all information, and ease restrictions on mixed-use condominiums with up to 45% commercial space. 

HUD estimates that between 20,000–60,000 condominium units may now be eligible for FHA-insured financing annually, and that around 7,000 new condominium projects could be built thanks to wider availability of mortgages.

The new guidelines “take some of the pressure off boards” to spend association time and money to certify a condominium project for FHA financing, says Jeffrey A. Beaumont, vice chair of CAI’s California Legislative Action Committee and an attorney with Beaumont Tashjian in Woodland Hills.  

The changes should allow greater access to FHA financing and ultimately result in a greater pool of homes for prospective purchasers to choose from, says Beaumont, a fellow in CAI’s College of Community Association Lawyers. 

CAI supports the actions and has made a balanced, data-driven approval process a public policy priority. “Following the housing crisis in 2008, the FHA condominium approval process severely impacted access to FHA-insured mortgages, which hurt homeowners and household formation,” says Dawn M. Bauman, CAE, CAI’s senior vice president of government and public affairs. “The changes mark a return for FHA as a key long-term partner for condominium associations.” 

Credit-worthy first-time homebuyers who have been prevented from achieving condominium homeownership could now benefit from the new guidelines. About 40% of the nation’s 27 million community association households call a condominium home, accounting for approximately 10% of the nation’s housing stock, according to the Foundation for Community Association Research.  

>>Read more about the updated process at www.caionline.org/FHA.  

Pamela Babcock, a writer and editor in the New York City area, contributed to this article. 

The post Welcome home? New FHA process could make condos available to more buyers appeared first on Ungated: Community Associations Institute Blog.

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Fannie Mae and Freddie Mac to Align Guidelines for Servicing Delinquent Mortgages

“Federal Housing Finance Agency Acting Director Edward J. DeMarco hasdirected Fannie Mae and Freddie Mac (the Enterprises) to align their guidelines for servicing delinquent mortgages they own or guarantee. The updated framework will establish uniform servicing requirements as well as monetary incentives for servicers that perform well and penalties for those that do not.”

Click here for full article - FHFA NEWS RELEASE

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Banks drag feet on short sales, survey finds

Associated Press
March 7, 2011, 10:09 p.m.

Banks are dragging their feet when considering so-called short sales, an increasingly prevalent type of real estate transaction in which lenders allow homes to be sold for less than what is owed on them, according to a survey of California real estate agents.

Nearly two-thirds of the 2,150 respondents to the California Assn. of Realtors’ survey of member agents said banks took longer than 60 days to respond to short sale offers and that fewer than three out of every five offers ultimately resulted in a sale.

The response times are much longer than those specified in government guidelines for banks who agreed to participate in programs that help troubled borrowers when they accepted a share of the $700-billion Wall Street rescue.

“The survey results show that the short sale system is clearly flawed,” CAR president Beth L. Peerce said. “Increasing the number of successful short sale transactions is one important way we can help California families and move our economy closer to recovery.”

Although the survey only covered agents in California, National Assn. of Realtors spokesman Walter Molony said similar complaints had come from across the country, especially from states with hard-hit housing markets such as Nevada, Florida and Arizona.

“Banks just have not been equipped or willing to make quick decisions on this,” Molony said. “It’s unfair to all parties concerned.”

Short sales have played an increasingly large role in California’s real estate market, with declines in property values leaving many borrowers with crushing payments on mortgages that are greater than their homes’ worth.

The transactions allow troubled borrowers to dodge the hit to their credit scores that would come from a foreclosure, while banks are able to keep distressed properties off their books without going through the costly foreclosure process.

The estimated percentage of resales in the state that were short sales went from about 10% in 2008 to 18% in 2010, according to tracking firm DataQuick Information Systems.

But foreclosures are still much more common, accounting for nearly 38% of all resales in 2010, DataQuick said.

Richard Green, who directs the USC Lusk Center for Real Estate, said the market would benefit from avoiding foreclosures, which can lead to homes languishing on the market, by encouraging more short sales.

“Forcing banks to clear the market through short sales would almost certainly get us through this faster than we’re getting through it,” he said.

Green said he suspected banks were slow to approve short sales because the transactions force them to immediately report the difference between the sale price and what they’re owed as a loss, rather than carrying the loan balance as a purported asset. He said some banks may also fear inadvertently letting property go for less than it’s worth.

Mortgage Bankers Assn. spokesman John T. Mechem did not return a phone message.

CAR had previously written to federal government agencies that oversee short sales to ask them to mandate faster responses by banks and to take other steps to foster more of the transactions.

The association said in the December letter to the Treasury and the Federal Housing Finance Agency, which oversees government-supported lenders Fannie Mae and Freddie Mac, that banks were not living up to the terms of the Home Affordable Foreclosure Alternatives’ short sale program.

Since most lenders have repaid their bailout funds to the government, participation in HAFA is now primarily voluntary, but CAR said the banks should still be bound by the agreement.

The association noted that banks were taking much longer to approve short sales than the time allotted by HAFA: Ten days in cases where the lender has already decided on a selling price; 30 days if the selling price is being proposed by a listing agent.

CAR asked for the government agencies to force banks to complete all short sales following HAFA guidelines and to comply with the program’s time frames. It also recommended increasing monetary incentives to banks for completing short sales.

Treasury spokeswoman Andrea Risotto said that her agency was still working on its response to CAR’s letter, but that some of the requests — such as punishing banks for not meeting HAFA’s time frames — would require legislative action.

A message left with the Federal Housing Finance Agency was not returned.

Original article at http://www.latimes.com/business/la-fi-short-sales-20110307,0,6800709.story