HGTV’s FrontDoor.com Identifies Top 10 Real Estate Predictions for 2010

(BUSINESS WIRE)--With some subtle signs of recovery in the housing market, the real estate industry is due to bounce back – but more challenges could lie ahead for buyers and sellers alike. HGTV’s FrontDoor.com identifies the top 10 must-know real estate trends for the coming year: (http://www.frontdoor.com/top10)

#10: Cash is king. All-cash offers will become even more popular for foreclosures and short sales, as banks would rather get less money than deal with the hassles of loan transactions.

#9: Smoother short sales. As lenders and real estate professionals become more accustomed to short sales (sales in which the proceeds are less than the outstanding debt), the process will become more streamlined and successful for all parties involved.

#8: Tricky appraisal rules. Due to the government’s Home Valuation Code of Conduct passed in May, property appraisals will be more expensive and take longer, sometimes hindering (or breaking) real estate deals.

#7: A conflicted construction market. Though lenders are still reluctant to finance new housing projects for builders, there’s a chance of double-digit increases in new construction next year (according to the McGraw-Hill Construction Outlook Report).

#6: Rising mortgage rates. The Fed’s effort to keep mortgage rates at historic lows is scheduled to end in March. Homebuyers should act now to capitalize on the lowest interest rates in years.

#5: Lending standards still tight. With the subprime mortgage debacle in recent memory, lenders will continue to require stellar credit and thorough documentation from borrowers.

#4: Some stabilizing home values. Nationally, the outlook for home values is good, with a rise in home prices during the last two quarters of 2009. Locally, however, many markets are a long way from full recovery.

#3: More foreclosures to come. Though more homes will go into foreclosure in 2010, some homeowners will be able to lease back their property at market rental rates for a year’s time, allowing more people to stay in their homes longer.

#2: More buyers entering the market. The government’s first-time homebuyer tax credit was extended to April 30 and to a broader range of buyers, which should bring even more buying activity to bear.

#1: Still a buyer’s market. As 2010 looks to be another year of low home prices and a robust inventory of homes for sale, it will still be the best opportunity for buyers to cash in on some great real estate deals.

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Two-Thirds of Struggling Homeowners Meet Key Criteria for Housing Bill Relief, According to Survey by CCCS of Greater Atlanta

PRNewswire/ -- Almost two-thirds of homeowners who called Consumer Credit Counseling Service (CCCS) of Greater Atlanta for foreclosure prevention counseling in recent months appear to meet the threshold requirements for relief under the new federal housing bill that took effect Oct. 1, according to a recent survey of those homeowners.

Of 591 people surveyed in late September, 381 of them, or 64.6 percent, said they met five key eligibility criteria for the mortgage refinancing program.

On July 30, President Bush signed the Housing and Economic Recovery Act of 2008. The law created a new program called Hope for Homeowners intended to help families save their homes from foreclosure. Mortgage lenders participating in the program can allow "at risk" borrowers to refinance their current mortgage into a new fixed-rate loan insured by the FHA. Lenders' participation in the program is voluntary.

"Our survey results indicate this new FHA program holds the potential to help a large number of Americans struggling to pay their mortgage," said Suzanne Boas, president of CCCS of Greater Atlanta. "Not everyone will be able to meet the terms. But if someone meets the basic criteria laid out in the housing bill, it would be worth a phone call to their lender to ask about the FHA program."

Homeowners must meet several requirements to be considered for the program. People who called CCCS of Greater Atlanta in July and August trying to avoid foreclosure were surveyed about these requirements by email from Sept. 19-23.

To be counted among the 64.6 percent of survey takers who appear to meet the threshold criteria, people needed to indicate that they live in the home with the problem mortgage; their mortgage was originated before January 2008; they didn't have an existing home equity line or other second mortgage; they did not own another home and they spend at least 31 percent of their gross monthly income on mortgage debt.

From those surveyed, the top challenge to participation in the FHA program is paying off a home equity loan or second mortgage. Thirty-five percent of respondents reported that their home secures more than one loan.

A second mortgage or home equity loan must be paid before a homeowner can qualify for the refinance program. It is possible to pay off the second mortgage through proceeds from the new FHA loan. That could be difficult if the first and second mortgage are held by different lenders because only the primary loan qualifies for the FHA program.

Also, nearly 20 percent of respondents say they don't spend at least 31 percent of their gross monthly income on their mortgage -- a threshold required by the FHA refinance program.

Borrowers who qualify for the FHA program are responsible for paying loan origination fees, as well as an insurance premium to FHA equal to 1.5 percent of the principal annually.

There are several other conditions:

-- The borrower must certify there was no misrepresentation in their application for the existing loan.

-- The borrower must agree to share both initial equity and future appreciation with The U.S. Housing and Urban Development Department (HUD).

-- The equity sharing agreement provides that if the house is sold within the first year, 100 percent of the initial equity (generally 10 percent of the value of the property at origination) will go to FHA. After 1 year, FHA is entitled to 90 percent of the initial equity. The percentage keeps dropping in 10 percent increments to 50 percent after the fifth year, where it stays.

-- In addition to the initial equity which is a fixed amount, 50 percent of any future appreciation of the property must be paid to HUD when the property is sold.

-- The FHA loan will be a 30-year fixed rate mortgage and may not exceed 90 percent of the current appraised value of the property. An additional 3 percent mortgage insurance premium will be financed in the mortgage making the initial loan to value 87 percent.

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