By Robert Freedman, Senior Editor, REALTOR® Magazine
The Wall Street Journal in an attention-grabbing half-page article and graphic (“Sellers Brace for New Mortgage Caps”) in its July 6 issue showed just how hard expensive markets in the U.S. would be hit if Congress allows Fannie Mae, Freddie Mac, and FHA loan limits to expire on September 30, the end of the federal fiscal year. Currently, limits are set at $417,000, although for expensive areas they can go up to $729,750. Should the limits be allowed to expire, the limits would drop to $271,050 for FHA and remain at $417,000 for Fannie and Freddie, but for expensive areas, the high-cost limit of $729,750 would drop to $625,500 for Fannie and Freddie as well as for FHA.
The Journal’s graphic is particularly illuminating because it illustrates the problem of expiring mortgage caps as largely a coastal matter, with 80 percent of markets facing the biggest hit in two states: California and Massachusetts. The other 20 percent are scattered largely along the rest of the eastern and western seaboard, the Mountain West, and parts of the Midwest. Virtually no areas would be affected in the country’s heartland.
As far as high-cost loan limits are concerned, that portrayal is surely accurate, and it shows a lot of pain for borrowers in expensive areas like Boston, where federally backed financing (now 90 percent of all loans made) would only be available for loans up to $625,500. That means any house that households want to buy above that price will require more than 3.5 percent down, because FHA won’t be available to them, and will come with a higher interest rate, because Fannie Mae and Freddie Mac won’t be available to them. Especially for first-time buyers, coming up with as much as 20 percent down or paying another 100 basis points or so for financing will be extremely hard. Many buyers simply won’t be able to do it.
The problem with the Journal’s take on the issue is that it doesn’t address what real estate practitioners around the country say is the far bigger problem with expiring loan limits. And that’s a related change in the loan formula to 115 percent of area median home price from 125 percent. According to a chart put together by Fannie, Freddie, and FHA, this change would mean a decrease in loan limits in 669 counties in 42 states. Only eight states (Ark., Iowa, Kans., , Miss., Neb., N.D., S.D., and Okla.) will see no decline because they are already at the FHA floor of $271,050. Continue reading »
By Robert Freedman, senior editor, REALTOR® Magazine
You might have read in your newspaper that bed bugs are back. Yes, they returned a few years ago. Thanks to increased global travel and increased mobility in general as well as changes in pesticide use the bugs of “don’t let the bed bugs bite” fame have returned to the spotlight. The difference now is that they don’t just migrate to beds; they migrate to any place where they can be close to human contact so they can feed. Remember, the definition of bed bug is “blood-feeding parasite.”
Earlier this year NAR and the Institute for Real Estate Management (IREM) hosted a bed bug specialist at the NAR Midyear Legislative Meetings & Trade Expo in Washington for a primer on how to detect bed bugs, what to do to get rid of them, and how to prevent them in the first place.
To help as many NAR members as possible get the benefit of that session, we’re hosting the speaker, Lyn Garling of the Integrated Pest Management Program at Penn State University, in an hour-long webinar that will cover the same material as her conference presentation. The webinar is free and will include links to brochures and other resources that can be printed out as reference material.
For property managers, particularly those handling multifamily properties, the importance of knowing about bed bugs is clear. But sales associates could benefit as well, because bed-bug migrations aren’t limited to apartment buildings; they can be a problem in for-sale single-family houses. If one of your listings has them, you’ll want to know what to do. The fact is, a bed bug infestation won’t necessarily leave when the bed leaves; infestations can be found in carpets, cracks in walls, and crevices in floors. When the bugs move in, they move in for the long-term.
Register for the webinar today.
When: Thursday, July 28, 3 p.m., Eastern Time
Where: Your desktop
Length: one hour
Who: Lyn Garling, Penn State University Integrated Pest Management Program