Solution sought for reverse mortgage problem
A potential problem facing homeowners who have signed up for a reverse mortgage has still not been corrected. Congressional leaders are now trying to solve the problem.
A group of 17 members of Congress sent a letter to Department of Housing and Urban Development Secretary Julian Castro calling for more foreclosure protections for spouses of Home Equity Conversion Mortgage borrowers, it was reported by Mortgage Servicing News.
Led by Rep. John Lewis, the group wants Castro to direct HUD and the Federal Housing Administration to extend to all HECM-borrower spouses the protections that were recently offered to surviving spouses of HECM borrowers whose loans were originated after Aug. 4.
"HUD has not taken action to protect surviving spouses subject to existing reverse mortgage loans from losing their homes. The same protections must be offered to every surviving spouse regardless of when their reverse mortgage was created," the letter reads.
A group of surviving spouses, whose names were not on the titles when their partners got loans under the government reverse mortgage program, sued HUD after finding themselves threatened with possible foreclosure after their spouses died.
The litigation led to the Aug. 4 policy change.
The FHA-backed HECM program allows borrowers age 62 and older to take out reverse mortgages and withdraw equity from their homes while still living in them, so long as they can meet certain conditions. In return, borrowers must generally agree to sell the property back to the lender when they leave the home or die, it was reported.
Q. Is it still possible to buy distressed homes at discounted prices?
A. Those bargains are still available but are vanishing in certain markets. RealtyTrac, a source for housing data, released its November 2014 Residential and Foreclosure Sales Report, which shows that the median sales price of U.S. single-family homes and condos in November was $190,000 - flat compared to the previous month but up 15 percent from a year ago.
The median sales price of distressed homes - those in the foreclosure process or bank-owned - reached a high of $128,625, the highest since December 2009, 35 percent below the median sales price of non-distressed properties, $199,000. Distressed home prices increased at a faster pace, up 18 percent from a year ago, while non-distressed home prices were up 14 percent during the same time period.
"As the price of distressed properties reaches a new high, the pool of investor activity that has been fueling the housing recovery may dry up," said Daren Blomquist, vice president at RealtyTrac.
"However, 20 states still saw annual decreases in distressed property prices, so we will continue to see a fragmented recovery as investors move from once hot markets such as Phoenix, Atlanta and many California markets and into markets such as Charlotte; Columbus, Ohio; Dallas and Oklahoma City."
Q. Is renting a home becoming more expensive?
A. Yes, rents have been rising for some time. Americans shelled out $20.6 billion more in rent in 2014 compared to 2013.
Cumulatively, U.S. renters paid $441 billion in rent in 2014 compared to $420 billion the previous year, an increase of nearly 5 percent (4.9 percent), as both the number of renting households and the average rent rose nationally, according to a Zillow rentals analysis.
Q. What factors are considered by analysts when making predictions for growth this year?
A. Analysts usually consider a wide variety of factors. For example, improvements in economic fundamentals, notably employment growth among millennials, will fuel significant increases in home sales and housing starts and a modest rise in home prices in 2015, according to CoreLogic's 2015 Housing Outlook.
Q. Are mortgage delinquencies still declining?
A. Yes, delinquency rates continue to drop. The total balance of seriously delinquent first mortgages is down to the lowest level in more than five years, Equifax reports. Its latest National Consumer Credit Trends Report indicates that the total balance on first mortgages at least 90 days past due or in foreclosure was $198.8 billion in November, down more than 29.8 percent from a year ago.
Delinquent first mortgages, or home loans late 30 days or more, represented 4.54 percent of outstanding balances last month and are down from 5.87 percent in November 2013.
• Email Jim Woodard at storyjim@aol.com.
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