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More Foreclosures on the Horizon

by Madeleine Tingen

It's more than mere speculation--there is yet another wave of foreclosures looming. According to both the U.S. Treasury Department and Fitch Ratings, the housing market faces the prospect of a new round of foreclosures. 

Last week, Fitch Ratings released a report indicating that as hundreds of thousands of risky home loans known as option adjustable-rate mortgages scheduled to reset to significantly higher payments, more borrowers may be forced to fall behind. Fitch Ratings Credit Market Research provides market participants with data and analysis on default and recovery rates and broad credit trends in the fixed income markets. The Fitch Report covers only those mortgages that were securitized, meaning packaged into securities and resold.

Approximately 70 percent of the $189 billion in outstanding option ARMs will reset by 2011--according to the Fitch report, which would be another setback to the wavering housing market still attempting to recover from the mortgage meltdown that precipitated the financial crisis.

The unraveling of the option ARMs could be felt for years--even though they make up only 1.3 percent of the outstanding mortgages and were used by a far smaller segment of the population than subprime mortgages. Fortunately the fallout from the resets should not be as devastating as the initial market setback.

Additionally, Fitch estimates that $134 billion in option ARMs will reset in the next two years. It expects monthly payments to jump 63 percent on average, or $1,053 a month, for loans adjusting this year and next--prompting a rise in defaults and foreclosures.

Clearly, foreclosures and distressed properties will continue to plague the housing market over the next few years.

If you are interested in more information regarding foreclosures--specifically those within the Greenville, NC and Pitt County area, please contact The Pistol Tingen Team at (252) 321-6161.

 

Act Fast to Receive $8,000 First-Time Home Buyer Tax Credit

by Madeleine Tingen

Time is quickly running out for first-time home buyers to receive a tax credit of up to $8,000.  There is tremendous urgency for first-time home buyers to choose a home, put it under contract and actually close or finalize the sale immediately.

 

Even though the tax credit doesn't expire until November 30, today's home purchases take approximately 45 to 60 days to close as the underwriting and appraisal process is taking longer because lenders are being more cautious.  For the serious first-time buyer that means their offer really needs to be made this month or at the very latest early in October.

 

Real estate groups are urging Congress to extend the credit beyond its current deadline and expand the tax credit to up to $15,000. 

 

Legislation exists in both the Senate and the House that would expand the tax credit.  A proposal by Sen. Johnny Isakson, R-Ga., would raise the credit amount to a maximum of $15,000 for any buyer of any home over the next year.  It would remove the caps that currently apply (those limits are now $75,000 for an individual and $150,000 on couples).

 

"I think we've got a realistic chance of doing this," Isakson says.  "Our problem is not with the first-time home buyer, it's with the move-up buyer."

 

Lawrence Yun, chief economist at the National Association of Realtorsīƒ’, says extending or raising the tax credit would spur the housing recovery, which in turn would help bolster the economy.

 

Under the existing legislation, as the deadline looms, Realtors say they are seeing a market upswing in interest by first-time home buyers. 

 

For more information regarding the $8,000 first-time buyer tax credit or assistance purchasing a home within the Greenville, NC or Pitt County area, please call The Pistol Tingen Team at (252) 321-6161.

Displaying blog entries 1-2 of 2

BERKSHIRE HATHAWAY HomeServices Prime Properties,   Greenville, NC, 2625 Charles Blvd.

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