HOME OWNERSHIP AND LONG ISLAND LOW INCOME RESIDENTS

From Newsday (and Empire Justice Center) Saturday September 19:

http://www.newsday.com/business/counseling-new-rules-could-widen-home-ownership-empire-justice-center-study-says-1.10857130

MORE ON HOME AFFORDABILITY AND FORECLOSURE

So why do people default on their mortgage - whether due to divorce, illness, unexpected expenses, loss of employment, etc. - the answer is the same: the house is unaffordable.

Yesterday, MSN had the following post:

"What you must earn to buy a home in 25 cities in 2014
By Tim Manni of HSH.com

How much salary do you need to earn to afford the principal and interest
payments on a median-price home in your metro area?

To find out, HSH.com took the National Association of Realtors'
fourth-quarter data for median home prices and HSH.com's fourth-quarter
average interest rate for 30-year, fixed-rate mortgages to determine how
much of your salary it would take to afford the base cost of owning a
home -- the principal and interest -- in 25 metro areas.

We used standard 28 percent "front-end" debt ratios and a 20 percent down
payment subtracted from the NAR's median-home-price data to arrive at our
figures. There is no doubt that your income will need to be much higher to
cover taxes, insurances and other expenses to live in the home, plus any
other debts you might have.

While the NAR continues to report strong year-over-year price growth, home
prices and mortgage rates retreated from the third to fourth quarter in
2013. While homeowners continue to praise home-price growth as it adds to
their equity positions, some homebuyers have actually been stymied by the
rapid growth as home prices have been rising faster than incomes."

And this was the result for New York - these figures do not cover taxes and other expenses to live in the home which are quite high in Nassau and can add that monthly figure to almost another $1000 a month and the required income figure to almost $90,000 a year.:

"What you must earn to buy a home in 25 cities in 2014
New York: $66,167.27
Mortgage rate: 4.38 percent

Quarterly change: -0.22 percent
Home price: $386,300

Quarterly change: -4.71 percent
YOY change: +2.8 percent
Monthly payment: $1,543.90

Salary: $66,167.27

Quarterly change: -$5,088
If you're on the cusp of affordability in the Big Apple, you must "buy on
the dips." The fourth quarter of 2013 would have been your time to pounce.
Lower mortgage rates and a $19,000 drop in home prices improved salary
conditions by $5,000."

FOR HOME OWNERS ON LONG ISLAND

As I was a volunteer lawyer yesterday at the Nassau County Bar Association's Foreclosure/Sandy clinic, the truth for almost all in foreclosure is that the reason a homeowner does not make mortgage payments is that the homeowner cannot afford to make mortgage payments - for a myriad of reasons.

Basically, the issue is home affordability and to emphasize this issue, a link to another article that is front page in today's Newsday:

NEWSDAY - Report: 44% of LI homeowners pay more for housing than they can afford

REVERSE MORTGAGES

Yesterday I attended a CLE on reverse mortgages sponsored by Tradition Title Agency.

A reverse mortgage is actually called a Home Equity Conversion Mortgage (HECM). It is a FHA program and, in my opinion, may not be completely explained in the commercials I see on television. Some basic information about them, the costs, eligibility, etc. can be found at these links which I found to be helpful:

HUD - Frequently Asked Questions about HUD's Reverse Mortgages

WIKI - Reverse mortgages in the United States

Another interesting fact I learned is that not all banks are offering reverse mortgages.

NEW YORK HOME SALES - SELLER'S CONCESSION

There was a discussion recently regarding language for the use of a "Seller's Concession" - which is a method utilized to assist Buyers by a financing of the Closing costs.

There are ethical questions on this practice which has been addressed by the NYSBA as basically what these concessions are is a“grossing up” the sales price of a residential property in an amount matched by a “seller’s concession”. The ethical opinions require full disclosure to all parties.

I personally do not agree with this process. If housing is unaffordable, then do not buy it. I recently found a blog post which had additional concerns too:

NY State Bar Ethics Opinion Doesn’t Go Far Enough by Robert J. Smith

HOME SALES NEW YORK - MORTGAGE FINANCING

As I have a new matter with a home sale contingent on Buyer financing, I am submitting this link to an online MSN article I recently read:

What makes you unmortgageable?

NASSAU COUNTY BAR ASSOCIATION MORTGAGE FORECLOSURE CLINIC

Yesterday, I was a Volunteer Lawyer at the Nassau County Mortgage Foreclosure Clinic and was faced with the following general categories of clients seeking advice:

1) Clients in default of mortgage foreclosure action.

2) Clients just served with mortgage foreclosure actions.

3) Clients not in default of mortgage but seeking advice on loan modification.

All of them had this in common: none of them first sought the assistance of a certified housing counselor for a loan modification. HUD-approved housing counseling agencies are available to provide you with the information and assistance you need to avoid foreclosure. As part of President Obama's comprehensive Homeowner Affordability and Stability Plan (HASP), you may be eligible for a special Making Home Affordable loan modification or refinance, to reduce your monthly payments and help you keep your home. If you need help understanding the Making Home Affordable programs, find a counseling agency in your area that will provide you with free foreclosure prevention services. If you are eligible for the loan modification or refinance program, the counselor will work with you to compile an intake package for your servicer. Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the Federal Government. These agencies are funded, in part, by HUD and NeighborWorks® America. There is no need to pay a private company for these services.

MORTGAGE FORCLOSURE

I have consulted with many people who are unhappy with the Making Home Affordable program. The Making Home Affordable Program is supposed to work this way: in return for billions of dollars in taxpayer bailout money, banks would offer loans that would reduce troubled borrowers' monthly mortgage payments to 31 percent of their income. To qualify, a homeowner must have an income and must live in the house, and that house can't be worth more than $730,000. But there are lots of problems:
1. The program is not mandatory.
2. Bank staff and servicing staff is low.
3. The homeowners who most need the program are the riskiest bets.
4. Banks don't always have the final say. Many of these mortgages are held by private investors, and the bank simply acts as a middleman. If investors think they can make more money by foreclosing than modifying the loan, experts say the bank is powerless to override that decision.
5. Banks who do participate and break the program's rules have not been penalized.
If you are seeking this type of relief, don't attempt it on your own. Contact the Homeowner’s HOPE™ Hotline: (888) 995-HOPE. In earlier blogs, I've also pointed out where Nassau County residents can also get assistance.

SONYMA

From the SONYMA website (link above on title):"The State of New York Mortgage Agency, or SONYMA, provides affordable homeownership opportunities to low- and moderate-income first-time homebuyers in New York State. SONYMA's primary homeownership program is the Low Interest Rate Program. It features below-market,fixed interest rates for first-time homebuyers. Up to 97% financing is available. To be eligible, a prospective homebuyer's income must be within the program's household income limits and the sales price of the property
cannot exceed the program's purchase price limits. SONYMA also offers several specialized homeownership programs:
1. The Achieving the Dream Program offers a very low interest rate mortgage to
low-income first-time homebuyers.
2. The Construction Incentive Program provides up to 100% financing to
qualified first-time homebuyers who purchase newly constructed or rehabilitated homes.
3. The Remodel New York Program allows borrowers to finance the cost of
acquisition and renovation in one low-rate loan.
4. The Keep the Dream Program helps owners with adjustable, interest-only or
other unconventional mortgages avoid foreclosure by refinancing with a fix-rate
mortgage.
5. The Homes for Veterans Program allows military veterans to obtain any SONYMA
mortgage on more favorable terms.
Closing Cost Assistance Loans are available along with every SONYMA loan. Qualified borrowers may receive closing cost assistance of $5,000 or 5% of the mortgage loan amount-whichever is greater. The interest rate for applicants taking advantage of our CCAL program is 0.50% higher than the standard SONYMA rate offered for each program. SONYMA also offers special incentives to prospective homebuyers interested in purchasing a newly constructed,energy efficient home under the ENERGY STAR® Labeled Homes Program or a home in a Federally designated Target Area, which are areas considered economically distressed.For more information please visit our website at www.nyhomes.org or call us at (800) 382-HOME (4663)"