Mortgage loan

Getting a home loan can be a challenge for self-employed people: A typical mortgage lender wants to see one job with steady month-over-month income.

But an independent contractor might have time off between jobs, varying amounts of income each pay period, and business income that looks low because of capital investments, which are common tax write-offs for the self-employed. This often means they can’t qualify for a traditional home loan, even though they’re earning enough to afford it.

In fact, about one in four borrowers see their traditional purchase loan applications rejected in areas like Dallas and Travis counties, where self-employment is roughly 30 percent, according to Zillow. Around the rest of Texas, the chances of being rejected can be even higher for well-qualified borrowers, including small business owners, freelancers, entrepreneurs, and self-employed borrowers.

“It’s not that they aren’t financially capable of buying a home—it’s that they’re up against a traditional lending system that hasn’t adapted to a changing workforce,” said Michael Slavin, CEO of online mortgage lender Privlo, which rolled out its services in Texas Friday, one of nine states in which it is currently doing business.

“We underwrite each borrower and are able to tailor the loans,” Slavin said. “We’re using technology to be a lot more flexible because we deal with the exceptions to all the lending rules.”

Because of those exceptions, Privlo considers many more data points beyond the typical W2 used by traditional banks and institutions to assess a borrower’s creditworthiness, like tax returns and bank statements.

(more…)

I’m just going to say it: is this administration trying to KILL OFF the U.S. housing market?

By now, if you are in the real estate business, you are thinking about serious drinking. Save the calories if you live in Dallas: we did OK. Not great, but OK. The S&P/Case-Shiller report says overall, the nation’s home prices spiraled downward at the end of 2010, even as the rest of the economy gained steam.

National home prices fell 4.1% during the last three months of 2010, compared with 12 months earlier. They were down 1.9% compared with three months earlier.

“Despite improvements in the overall economy, housing continues to drift lower and weaker,” said David Blitzer, spokesman for S&P.

And things may get a lot worse, said Robert Shiller, a Yale economist and half of the Case-Shiller team, in a telephone/web conference after the report’s release.

“There’s a substantial risk of home prices falling another 15%, 20% or 25% more,” he said.

Good Lord, did he say 25% more?

Shiller is referring to talk out of Washington about the government limiting and reducing its presence in Fannie Mae and Freddie Mac, the GSEs that guarantee about three-fourths of the loaning going on right now. Add in that talk of saying goodbye to the mortgage interest deduction — all this threatens home values. Private mortgage money will have to cover most home loans and banks don’t lend money to be nice, they do it to make money. Lending costs will increase which will further hurt home prices.

I know we need to ease out of the GSEs, but baby steps!

So should you buy or wait? I honestly think it’s six to one-half dozen: prices may fall further, but borrowing costs and interest rates could more than make up the difference. If you’re a cash buyer, this is your year.

But Dallas, God bless Dallas. Dallas was listed as one  of six cities that showed an improvement in annual growth rates in December as opposed to November, 2010. And we stayed above our price lows from February 2009. How can we ever forget that was the month when everything cratered!

Problem is, even our treading water here, which is great, is going to be splashed over by all the negative national news.¬† Just keep thinking those positive thoughts, pray that the Middle East calms down and the price of oil doesn’t sky-rocket.

Like the builder I was with today said, this spring market has got to be good! Of course, high oil prices sometimes benefit Texas.

I’m off to church!

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Good morning.

At 9am EST today, S&P Indices released the year-end results of the S&P/Case-Shiller Home Price Indices. Data through December 2010 reveals the following:

  • The U.S. National Home Price Index declined by 3.9% during the fourth quarter of 2010.
  • The National Index is down 4.1% versus the fourth quarter of 2009, the lowest annual growth rate since the third quarter of 2009 when prices were falling at an 8.6% annual rate.
  • 18 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down compared to December 2009.
  • San Diego and Washington DC as the only two cities where home prices are increasing on a year-over-year basis
  • The 10-City and 20-City Composites were down 0.9% and 1.0%, respectively, from their November levels. They are now only 3.9% and 2.3% above their April 2009 trough. Back in July 2010, they were +7.9% and +6.9% above the troughs, respectively.

The complete press release, as well as the historical data files, is attached to this email. Also attached are the details to today’s 10am teleconference on U.S. home prices featuring presentations by Professor Robert Shiller and Doctor David Blitzer. A Q&A session follows the call.

Declining home prices

Percentage change in home prices in December 2010 compared to year earlier in each market.

Atlanta …………… -8.0%

Boston …………… -0.8%

Charlotte ………… -4.4%

Chicago …………. -7.4%

Cleveland ..……… -4.0%

Dallas ……………. -3.6%

Denver …………… -2.4%

Detroit ……………. -9.1%

Las Vegas ……….. -4.7%

Los Angeles ‚Ķ‚Ķ… 0.2%

Miami …………….. -3.7%

Minneapolis ……… -5.3%

New York ………… -2.3%

Phoenix ‚Ķ‚Ķ‚Ķ‚Ķ… -8.3%

Portland …………… -7.8%

San Diego …………. 1.7%

San Francisco …….. -0.4%

Seattle ……………… -6.0%

Tampa ……………… -6.2%

Washington ………… 4.1%

Composite-20 city …. -2.4%

Source: Standard & Poor’s and Fiserv