March, 2009:
The Weather Channel Features Destin
If a home is offered as a “short sale”, is the listing agent required to set a price that the bank will accept?
Good Economic News?
Fresh look finds hope
By Jeff Harrington, Times Staff Writer
Published Friday, March 6, 2009
Ticking off reasons to be in a dour economic mood is picking low-hanging fruit: The stock market is near 12-year lows; about one-third of bay area homeowners hold a bigger mortgage than their house is worth; more small businesses are losing their credit lines while more Floridians are losing their jobs.
No wonder consumer confidence is kicking around at all-time lows.
Enough with the gloom already.
In the spirit of hope and our perpetually optimistic governor, we prefer to seize on a handful of positive economic snippets that set the stage for a turnaround. After all, Federal Reserve Chairman Ben Bernanke, who more often than not moves the market downward with a bluntness alien to his predecessors, is among those predicting the recession will end in the second half of this year.
So raise your half-full glass for a semitoast to the upside of our economic condition.
BUSINESS INVENTORIES have been dramatically pared down, leaving many small companies lean enough to weather a prolonged slump and flexible enough to adjust their products to a shifting marketplace.
THERE ARE GREAT DEALS to be had in buying a house (substitute: stock, car or marked-down consumer good of your choosing). Yes, there may be a further slump in real estate and stock prices, but history dictates they’ll eventually rise above current levels, and discounts and incentives abound.
THE FEDERAL STIMULUS PACKAGE may be assailed for lingering long-term effects on the deficit. But in the short term, Gov. Crist is counting on it to help Florida balance its budget and avoid government layoffs.
CONSUMER SPENDING rose in January after falling for a record six straight months. The better-than-expected numbers were pushed higher by purchases of food and other nondurable items.
INCOMES ALSO ROSE unexpectedly in January. The jump was helped by higher Social Security checks kicking in; nevertheless, take heart that the 0.4 percent increase was the biggest jump since May.
NEW JOBLESS CLAIMS and the total number of people receiving unemployment benefits both dropped more than expected a week ago.
A HUGE DROP IN HOUSING STARTS has helped shrink the inventory of homes on the market. When homes sales eventually stabilize, home prices should appreciate at a quicker pace because there are fewer houses out there.
© 2009 • All Rights Reserved • St. Petersburg Times
How will this new Fannie Mae home refinance program work?
Unfortunately, the program referred to as “Making Home Affordable” (MHA) will not benefit many homeowners in this market. Call me a cynic, but I believe that the scope of this program is so narrowly focused that very few homeowners will be able to qualify.
The reason is that area depreciation (like so many others) has been severe. This program will not allow you to refi more than 5% above the current value of your home. As an example – Say you had put 10% down on a home in 2005. If that home has now depreciated by 25%, you would be 15% “upside down”, or 10% above the qualification threshold.
Look at it another way:
$300,000 – Purchase price in 2005
$ 30,000 – Down Payment
$270,000 – Mortgage Balance
$225,000 – Current Value (25% less than original purchase price)
$236,250 – Maximum MHA refi loan amount (5% above current value)
As you can see, there is a difference (deficit) of $33,750 between the existing mortgage balance and the amount that could qualify for a MHA refi.
This program equates to typical government fuzzy math. It’s like putting lipstick on a pig – It sounds cute but it does not accomplish much 🙂