Lending Changes Will Impact Buyers and Sellers
The rules of lending will be changed this year, specifically the expiration of the Mortgage Forgiveness Debt Relief Act, which could affect Houston’s housing market.
“While our inventory of short sales and foreclosures is low, we could see less homeowners willing to short sale with the expiration of the Mortgage Forgiveness Debt Relief Act,” Martin says. “This in turn could lead to those homeowners being more willing to let their homes go, resulting in a foreclosure.”
Borden agrees that this will impact sellers who go through these debt forgiveness transactions and count on this relief.
“They may not be able to re-enter the real estate market as a future buyer if they are saddled with this additional debt,” she says.
The Mortgage Insurance Premium Deduction will also be expiring this year. Borden is concerned about the expiration of this deduction, and says it is crucial that it stays in place.
“So many buyers appreciate this deduction and consider this a major factor when deciding to rent versus buy,” she says. “The health of our nation’s economy depends on the health of the real estate market and this will have a negative impact.”
However, some believe the expiration of this deduction will barely affect homeowners. Martin says that it will only affect homeowners who purchased between 2007 to 2013 and allowed them to write off their Private Mortgage Insurance (PMI) premiums (for those putting less than 20 percent down).
“There are so many different variables on if they’re actually able to write it off (from being required to itemize, their AGI, etc.) that if they were even able to claim the deduction, it usually didn’t result in a huge savings; therefore, I don’t think this will affect the market one way or the other,” Martin says.
Interesting article, but it would be prudent to at least mention the factors which are driving demand, particularly since some of them are neither organic or sustainable. It appears you don’t appreciate (or don’t understand) the real factors driving the current demand and asset inflation in our real estate markets. With the Fed’s balance sheet at $4 trillion and climbing, and TX oil production going parabolic, it’s pretty easy to see why demand is as robust as it is. The real problem is that neither of these two phenomena are sustainable. This particular statement caught my attention:
“With Houston’s strong economy and low unemployment rate, there are not many factors that would hinder buyer demand either.”
I would argue that we are witnessing unprecedented asset inflation to keep a corrupt banking sector afloat. At the same time, we’re making homes unaffordable for a large percentage of the population. If that’s your idea of progress, then by all means let the good times roll. Personally, I’m advising my clients to take a more cautious, realistic approach in our current real estate environment. While the 2008 housing collapse may be behind us, the next one is creeping up in the rear-view mirror. This time is not different. It’s just a different verse of the same song because none of the real problems in the economy have been solved; they’ve just been papered over.
“Debt that can’t be paid won’t be paid.”
http://aaronlayman.com/houston-tx-housing-bubble/
You cannot do a short sale until you’ve adelary missed payments. If you are up to date on your mortgage, the bank has no reason to worry and therefore will not accept a short sale. The bank knows you can still make the payments because you still are, and will expect you to continue to fulfill your end of the bargain. If you do fall behind on payments, you have to have a good reason why. Such reasons might be a death in the family, loss of job or an injury that has kept you from working. A short sale protects the owners credit when the borrower can no longer make the payments. In that event, the bank realizes it’ll take many more months to wait to evict you and sell it themselves than if they cooperate with you and allow you to retain possession of the house while they sell it. The bank takes the financial hit and pays all the fees in the sale of the property, but in turn, the owner is not entitled to any equity that has built up on the property.If you have absolutely no equity in the house and just want to get rid of it, you might want to do research or talk with a lawyer about a quitclaim deed. With that deed, you sign off all your rights to someone else and they take on all the responsibility you once had. If nobody you know wants the property, I’m sure there are investors who will be more than happy to take it off your hands, rent it out and wait a few years for the market to rise. Then, you can move on to a less expensive house free from the hassle of your overpriced property.I am not a lawyer and not qualified to give legal advice, so please speak with an attorney about your options. Some of them may give you some quick advice over the phone without charging you. Good luck