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Real Estate Tips Real Estate News Tight Lending, Green Building, the Foreclosure Effect
Real Estate Tips Real Estate News Tight Lending, Green Building, the Foreclosure Effect 
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Just like investors don't know how many subprime loans are in the mortgage-backed securities they buy, borrowers don't know which banks are tightening lending standards. According to the Federal Reserve, most banks are tighter about handing out mortgage money than they used to be. And that doesn't improve the guidance for the real estate industry in the short term. As columnist and economy observer Peter Miller points out, we're having a credit crisis while "looking at rates last seen in the 1960s." Imagine what a world of hurt the real estate industry would be, he points out, if interest rates were at 7, 8 or 9 percent - all of which are much closer to historical norms. It's yet another reason why borrowers should apply for mortgage loans and homeowners should refinance adjusting or higher rate loans, as the situation isn't likely to get better for some time to come. The Fed conducted a survey in early October of banks that supply approximately 75 percent of all residential mortgage loans and found that 41 percent of banks had tightened their loan requirements for prime loans offered to borrowers with very good credit scores and histories. Energy Saving is Consumer Key Interest in Green Building Why are consumers interested in green building? A survey conducted for the National Association of Home Builders (NAHB) confirms that a desire for greater energy efficiency drives consumers to choose a green-built home. The survey involved asking 800 registered voters nationwide about how important certain items would be in their decision to either purchase a new green home or remodel their current home to be more "green." Nearly two-thirds of the voters polled said that reduced energy costs would be the most important. The second-highest scoring reason, at 55 percent, was because it would be healthier. Forty-nine percent of those surveyed say that using sustainable materials and procedures to build a home was "the right thing to do for the environment." The NAHB is banking on its voluntary National Green Building Program to pave the way for authentic yet cost-effective green building. The program's guidelines incorporate new technologies, advances in building science and materials for insulation, windows and other components mean that homes are significantly more energy efficient than they used to be. Foreclosure Fallout Landing on Neighboring Homes Foreclosures in your neighborhood don't just cost homeowners their homes - they also depress nearby home values and rob the tax base for as long as two years. The Center For Responsible Lending (CRL), which reported in "Losing Ground" that more than 2 million households will face foreclosure due to risky loans, now says the story doesn't stop there. CRL's latest report, "Subprime Spillover" says for each of the millions of foreclosures on home loans originated in 2005 and 2006, the home values of more than 22 homes will suffer. The study comes on the heels of a RealtyTimes.com report "Foreclosures Undercutting Social Benefits of Homeownership" which reveals an increase in social turmoil due to foreclosures. Studies have long associated homeownership with reduced crime, better educated kids, higher incomes, less reliance upon welfare, more politically active residents and even reduced teen pregnancy, among other benefits. |
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