Green Building to Balloon to $173.5 Billion
The most recent issue of EL Insights reports that the U.S. green building market value will jump from $71.1 billion now to $173 billion by 2015. Commercial green building is expected to grow by 18.1 percent annually during the same time period, from $35.6 billion to $81.8 billion.
In the report, green building is defined as development with resource use and employee productivity in mind. The high project growth is attributed to a growing recognition of green building's potential cost savings and incentives from the government, like the multi-million dollar Sustainable Communities Challenge Planning Grant program and the Sustainable Communities Regional Planning Grant program.
Green renovation is also expected to be a major part of future green building, largely due to government projects like the Recovery through Retrofit initiative, which offers $80 billion in energy and environmental retrofits for federal buildings.
Green building growth will create many changes in the greater building market. For example, construction workers will increasingly pursue green training programs, companies will spend more money on green building technology, and homes with green features will do better on the real estate market. These changes will lead to cost savings for building and home owners, who will benefit from lower energy and heating bills.
In the report, green building is defined as development with resource use and employee productivity in mind. The high project growth is attributed to a growing recognition of green building's potential cost savings and incentives from the government, like the multi-million dollar Sustainable Communities Challenge Planning Grant program and the Sustainable Communities Regional Planning Grant program.
Green renovation is also expected to be a major part of future green building, largely due to government projects like the Recovery through Retrofit initiative, which offers $80 billion in energy and environmental retrofits for federal buildings.
Green building growth will create many changes in the greater building market. For example, construction workers will increasingly pursue green training programs, companies will spend more money on green building technology, and homes with green features will do better on the real estate market. These changes will lead to cost savings for building and home owners, who will benefit from lower energy and heating bills.
Mortgage Applications Up, Purchase Demand Jumps
U.S. mortgage applications jumped last week as demand for loans to purchase homes rose for the first time in five weeks, the Mortgage Bankers Association said on Wednesday.
The Mortgage Bankers Associations said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 7.6 percent for the week ended July 16.
In addition, demand for home refinancing loans hit the highest level in 14 months as interest rates reached their lowest in at least 20 years.
The data provided a glimmer of hope for a housing market that has been struggling since the expiration of popular homebuyer tax credits.
The Mortgage Bankers Associations said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 7.6 percent for the week ended July 16.
In addition, demand for home refinancing loans hit the highest level in 14 months as interest rates reached their lowest in at least 20 years.
The data provided a glimmer of hope for a housing market that has been struggling since the expiration of popular homebuyer tax credits.
FHA raising FICO floor, Reducing Seller Concessions
FHA borrowers will soon need a 580 FICO score in order purchase a home with the minimum 3.5 percent downpayment, and won't qualify for the program at all if they have a score below 500.
Federal housing officials are moving closer to implementing several policy changes announced in January that will also reduce the maximum allowable seller concession on FHA-backed loans from 6 percent to 3 percent and tighten underwriting standards for manually underwritten loans.
FHA will soon require 10 percent downpayments for borrowers with FICO scores between 500-579, instead of the 3.5 percent minimum. Borrowers with credit scores under 500 would be excluded from the program altogether.
HUD is currently reviewing public comments on this issue. These changes are aimed at curbing losses to FHA's capital ratio that fell below the Congressionally mandated minimum levels and to maintain FHA lending as a viable resource for existing and future homeowners.
Federal housing officials are moving closer to implementing several policy changes announced in January that will also reduce the maximum allowable seller concession on FHA-backed loans from 6 percent to 3 percent and tighten underwriting standards for manually underwritten loans.
FHA will soon require 10 percent downpayments for borrowers with FICO scores between 500-579, instead of the 3.5 percent minimum. Borrowers with credit scores under 500 would be excluded from the program altogether.
HUD is currently reviewing public comments on this issue. These changes are aimed at curbing losses to FHA's capital ratio that fell below the Congressionally mandated minimum levels and to maintain FHA lending as a viable resource for existing and future homeowners.
Reform Bill Retools Lending Industry
The Senate passed the Financial Reform Bill, which will impact home buyers and mortgage lenders. One of the biggest changes is the creation of a consumer bureau at the Federal Reserve and the requirement that the lenders ensure that a borrower is able to repay a home loan by verifying income, employment, and credit history.
Under the financial regulation bill, at least two categories of mortgages likely will see a dramatic decrease in their availability: interest-only loans and stated-income loans. Both loan types likely would fall short of the government’s definition of “qualified” mortgages and therefore be avoided by many in the lending community.
Many real estate analysts credit interest-only loans and stated-income loans as contributing factors to the decline of the housing market. With interest-only loans, borrowers pay none of the loan principal for a fixed period, typically 10 years, after which time they must make higher payments for the remaining 20 years of the loan. Unlike other loan products, stated-income loans do not require borrowers to verify their actual income. Only a few lenders continue to offer these loans, and typically only to borrowers with deep cash reserves and large down payments.
The bill also severely limits the industry practice known as “yield spread premiums,” which in many cases incentivized mortgage brokers and loan officers to sell higher-interest loans to borrowers. The reform bill will no longer allow commissions earned by mortgage brokers and loan officers to be linked to the interest rate, but rather the loan amount. Once the bill takes effect, the total commission and additional fees charged by lenders and others in the mortgage process will be limited to a maximum of 3 percent of the loan amount, not including the real estate commission.
Under the financial regulation bill, at least two categories of mortgages likely will see a dramatic decrease in their availability: interest-only loans and stated-income loans. Both loan types likely would fall short of the government’s definition of “qualified” mortgages and therefore be avoided by many in the lending community.
Many real estate analysts credit interest-only loans and stated-income loans as contributing factors to the decline of the housing market. With interest-only loans, borrowers pay none of the loan principal for a fixed period, typically 10 years, after which time they must make higher payments for the remaining 20 years of the loan. Unlike other loan products, stated-income loans do not require borrowers to verify their actual income. Only a few lenders continue to offer these loans, and typically only to borrowers with deep cash reserves and large down payments.
The bill also severely limits the industry practice known as “yield spread premiums,” which in many cases incentivized mortgage brokers and loan officers to sell higher-interest loans to borrowers. The reform bill will no longer allow commissions earned by mortgage brokers and loan officers to be linked to the interest rate, but rather the loan amount. Once the bill takes effect, the total commission and additional fees charged by lenders and others in the mortgage process will be limited to a maximum of 3 percent of the loan amount, not including the real estate commission.
Mortgage applications to buy home fall to 13-year low
Mortgage applications to buy a home plunged last week - to the lowest level in more than 13 years - as the housing recovery continued to struggle following the expiration of the homebuyer tax credit, an industry group said Wednesday.
The Mortgage Bankers Association said application for mortgages to purchase a home sank a seasonally adjusted 3.1% for the week ended July 9 on a week-over-week basis, driving the volume to its lowest level since December 1996. On an annual basis, applications for the week were down 43%.
Much of the slowdown has come since the April 30 expiration of homebuyer tax credit. Homebuyers had until that deadline to sign contracts. Congress extended the deadline to close deals to Sept. 30.
The government's latest reading on new home sales plummeted to a record low in May, thanks largely to the expiration of the tax credit.
The Mortgage Bankers Association said application for mortgages to purchase a home sank a seasonally adjusted 3.1% for the week ended July 9 on a week-over-week basis, driving the volume to its lowest level since December 1996. On an annual basis, applications for the week were down 43%.
Much of the slowdown has come since the April 30 expiration of homebuyer tax credit. Homebuyers had until that deadline to sign contracts. Congress extended the deadline to close deals to Sept. 30.
The government's latest reading on new home sales plummeted to a record low in May, thanks largely to the expiration of the tax credit.
New guidelines for appraisers
Fannie Mae has put lenders on official notice that they can only use appraisers who are knowledgeable about the area in which they are being asked to value property, and who have the ability to access records on recent sales in those markets.
In a June 30 notice updating several policies related to appraisals, Fannie Mae also fleshed out previous guidance to lenders on the selection and use of comparable sales, saying appraisers must consider a property's condition when choosing to use foreclosure sales or short sales as comps.
Fannie Mae is also barring lenders from making unilateral changes to appraisal reports, including the appraised value, saying only the appraiser who completed the original report is authorized to change it.
In a June 30 notice updating several policies related to appraisals, Fannie Mae also fleshed out previous guidance to lenders on the selection and use of comparable sales, saying appraisers must consider a property's condition when choosing to use foreclosure sales or short sales as comps.
Fannie Mae is also barring lenders from making unilateral changes to appraisal reports, including the appraised value, saying only the appraiser who completed the original report is authorized to change it.
Anti-deficiency bill passes California Assembly Judiciary Committee
The Assembly Judiciary Committee passed SB 1178 yesterday with a bipartisan vote of 7-1. The bill, which will extend anti-deficiency protections to homeowners who have refinanced “purchase money” loans and now are facing foreclosure, now must pass the Assembly before going to the governor for his signature. SB 1178 passed the Senate earlier this month.
This bill will close a loophole in the law that allows California homeowners, already facing the possibility of foreclosure, to be sued by their lender for the difference between the value of the foreclosed property and the outstanding balance on the mortgage loan.
This bill will close a loophole in the law that allows California homeowners, already facing the possibility of foreclosure, to be sued by their lender for the difference between the value of the foreclosed property and the outstanding balance on the mortgage loan.
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