New York Times on Housing: Federal Retreat from backing Jumbo Loans

New York Times
Federal Retreat on Bigger Loans Rattles Housing
By DAVID STREITFELD

MONTEREY, Calif. — By summer’s end, buyers and sellers in some of the country’s most upscale housing markets are slated to lose one their biggest benefactors: the deep pockets of the federal government. In this seaside community of pricey homes, the dread of yet another housing shock is already spreading.

“We’re looking at more price drops, more foreclosures,” said Rick Del Pozzo, a loan broker. “This snowball that’s been rolling downhill is going to pick up some speed.”

For the last three years, federal agencies have backed new mortgages as large as $729,750 in desirable neighborhoods in high-cost states like California, New York, New Jersey, Connecticut and Massachusetts. Without the government covering the risk of default, many lenders would have refused to make the loans. With the economy in free fall, Congress broadened its traditionally generous support of housing to a substantial degree.

But now Democrats and Republicans agree that the taxpayer should no longer be responsible for homes valued well above the national average, and are about to turn a top slice of the housing market into a testing ground for whether the private mortgage market can once again go it alone. The result, analysts say, will be higher-cost loans and fewer potential buyers for more expensive homes.

Michael S. Barr, a former assistant Treasury secretary, said the federal government’s retrenchment would be painful for many communities. “There’s always going to be a line, and for the person just over it it’s always going to be an arbitrary line,” said Mr. Barr, who teaches at the University of Michigan Law School. “But there is no entitlement to living in a home that costs $750,000.”

As the housing market braces for more trouble, homeowners everywhere have been reduced to hoping things will someday stop getting worse. In some areas, foreclosures are the only thing selling. New home construction is nearly nonexistent. And CoreLogic, a data company, said Tuesday that house prices fell 7.5 percent over the last year.

The federal government last year backed nine out of 10 new mortgages nationwide, and losses from soured loans are still mounting. Fannie Mae, which buys mortgages from lenders and packages them for investors, said last week it needed an additional $6.2 billion in aid, bringing the cost of its rescue to nearly $100 billion.

Getting the government out of the mortgage business, however, is proving much more difficult than doling out new benefits. As regulators prepare to drop the level at which they will guarantee loans — here in Monterey County, the level will drop by a third to $483,000 — buyers and sellers are wondering why they should be punished simply for living in an expensive region.

Sellers worry that the pool of potential buyers will shrink. “I’m glad to see they’re trying to rein in Fannie Mae, but I think I’m being disproportionately penalized,” said Rayn Random, who is trying to sell her house in the hills for $849,000 so she can move to Florida.

Buyers might face less competition in the fall but are likely to see more demands from lenders, including higher credit scores and larger down payments. Steve McNally, a hotel manager from Vancouver, said he had only about 20 percent to put down on a new home in Monterey County.

If a bigger deposit were required, Mr. McNally said, “I’d wait and rent.”

Even those who bought ahead of the changes, scheduled to take effect Sept. 30, worry about the effect on values. Greg Peterson recently purchased a house in Monterey for $700,000. “That doesn’t get you a palace,” said Mr. Peterson, a flight attendant.

He qualified for government insurance, which meant he needed only a small down payment. If that option is not available in the future, he said, “home prices all around me will plummet.”

The National Association of Realtors, 8,000 of whom have gathered in Washington this week for their midyear legislative meeting, is making an extension of the loan guarantees a top lobbying priority.

“Reducing the limits will put more downward pressure on prices,” said the N.A.R. president, Ron Phipps. “I just don’t think it makes a lot of sense.” But he said that in contrast to last year, when a one-year extension of the higher limits sailed through Congress, “there’s more resistance.”

Federal regulators acknowledge that mortgages will get more expensive in upscale neighborhoods but say the effect of the smaller guarantees on the overall housing market will be muted.

A Federal Housing Administration spokeswoman declined to comment but pointed to the Obama administration’s position paper on reforming the housing market. “Larger loans for more expensive homes will once again be funded only through the private market,” it declares.

Brokers and agents here in Monterey said terms were much tougher for nonguaranteed loans since lenders were so wary. Borrowers are required to come up with down payments of 30 percent or more while showing greater assets, higher credit ratings and lower debt-to-income ratios.

In the Federal Reserve’s quarterly survey of lenders, released last week, only two of the 53 banks said their credit standards for prime residential mortgages had eased. Another two said they had tightened. The other 49 said their standards were the same — tough.

The Mortgage Bankers Association has opposed letting the limits drop, although a spokesman said its members were studying the issue.

“I don’t want to sugarcoat this,” said Mr. Barr, the former Treasury official. “The housing finance system of the future will be one in which borrowers pay more.”

The loan limits were $417,000 everywhere in the country before the economy swooned in 2008. The new limits will be determined by various formulas, including the median price in the county, but will not fall back to their precrisis levels. In many affected counties, the loan limit will fall about 15 percent, to $625,500.

Monterey County, however, will see a much greater drop. The county is really two housing markets: the farming city of Salinas and the more affluent Monterey and Carmel.

Real estate records show that 462 loans were made in Monterey County between the current limit and the new ceiling since the beginning of 2009, according to the research firm DataQuick. That was only about 1 percent of the loans made in the county. But it was a much higher percentage for Monterey and Carmel — about a quarter of their sales.

Heidi Daunt, with Treehouse Mortgage, said loans too large for a government guarantee currently carried interest rates of at least 6 percent, more than a point higher than government-backed loans.

“That can definitely blow a lot of people out of the water,” Ms. Daunt said.

Zeder Team Is Tops In Sales

From Miami Today, December 9, 2010

For a year's worth of sales, Judy Zeder has earned the spot as Miami-Dade's top dollar volume Realtor, completing $76 million in sales this year. In the luxury residential category alone, Ms. Zeder, an agent at Esslinger-Wooten-Maxwell, has been involved in the sale of 32 residential properties priced at $1 million or more from October 2009 to this October, according to data from the Southeast Florida Regional Multiple Listing Service. "Miami continues to be a destination for domestic and international buyers" she said. "This year alone, we have worked with individuals from New York City; Chicago; Washington, DC; Brazil; Mexico; China; Germany; Venezuela, and more." The Zeder Team, led by Ms. Zeder, focuses on luxury homes and condos throughout the county.

REO/Foreclosure Homes for Sale with the Zeder Team

The Zeder Team at EWM has a growing foreclosure/REO division. With many of these properties selling soon after going on the market, both our closed sales and pipeline of homes waiting to go on the market has grown rapidly!

In Miami-Dade county, of all current residential sales, 22% are short sales and 35% are foreclosures!

Contact the Zeder Team at EWM for an extensive list of REO properties we have for sale!

The Zeder Team in the News!

In a Miami Herald August 25th article, "South Florida Condo Sales Up On Sagging Prices", Judy Zeder was quoted," ... buyers are out there, but the rules of the market now require more patience. She recently sold two homes on the same block in High Pines area of Miami-Dade County, for more than a year after the initial listing. The properties were rented during some of the interim, Zeder said. 'The best advice that we give all of our clients is to be paitent in this market, she said. "You need to be very patient in both selling and buying. Pricing is everything.'"

The article was written by Herald writer Toluse Olorunnipa

ZEDER TEAM SELLS MORE CONDOS IN THE EXCLUSIVE GABLES CLUB

The Zeder Team at EWM is pleased to announce that between January 1 and August 15, 2010, Judy Zeder, founder of The Zeder Team at EWM, has sold more units than any other realtor at the prestigious Coral Gables condominium, The Gables Club. With just 9 sales in the two building condo complex during that time, the Zeder Team was responsible for sales in 5 of those units (more than half), representing 7 clients.

“The Gables Club is Coral Gables’ finest condominium complex. Many of our clients are seeking the luxury amenities and services that the Gables Club offers, including 24-hour concierge, security, tennis courts, fitness center, and a restaurant on-site. Matching the right property to the right client is magical. It’s what I love doing”, says Judy Zeder.

About the Zeder Team
The Zeder Team at EWM is one of South Florida’s most successful luxury real estate practices. With five realtors, including a full-time licensed broker, on staff, and in-house marketing services, the team provides the best possible sales, marketing and investment services to its clients. Each team member delivers a specific skill set that enhances overall client service and performance. Judy Zeder, founder and principal is one of the most successful realtors in the country, is consistently one of the top ten residential realtors in Florida, and is in the top one-half of one percent of realtors nationally.

Zeder Team Open House Gazpacho Shots

At our recent Broker's Open at 3590 Crystal View Ct., we served gazpacho shots. We had so many requests for the recipe, we thought it would be easier to share on our website!

Zeder Team Open House Gazpacho Shots
1 quart V-8 juice
1 quart tomato juice
1 each red, yellow and green bell peppers, diced fine
1 red onion diced fine
1 cucumber diced fine
1 cup chopped fresh cilantro
2 tablespoons sherry vinegar
2 tablespoons Tabasco
2 tablespooons olive oil
kosher salt and fresh ground pepper to taste
1 ripe avocado, cut into small cubes

Combine all ingredients except avocado. Chill for at least 4 hours. Serve with fresh avocado as garnish.

London Calling

The Zeder Team at EWM's home for sale at 4725 SW 80th St. in Miami, FL, was featured in London's Telegraph Newspaper under: Homes with A Tennis Court for sale to tie into the 2010 Wimbledon Tennis Championship.

MIAMI, FLORIDA Five-bedroom “tennis estate”, £2.4m

LOOKS If you’re looking for sunnier climes to practise your serve, this glamorous tennis lover’s home would hit the mark. Owned by Butch Buchholz, a Boys’ Singles Champion at Wimbledon in 1958, and a member of the International Tennis Hall of Fame. It has manicured grounds with mature oaks and a large patio.
CHARM As well as a state-of-the-art tennis court, the property has a swimming pool and putting green.
VITAL STATISTICS There’s a one-bedroom, walled, gated guesthouse on the grounds.
The Zeder Team at EWM, 020 7467 5330

Click here to see the online version of the article.


http://www.telegraph.co.uk/property/propertypicturegalleries/7843478