Housing News
Creative Bank of America program turns homeowners into renters
Creative pilot program allows homeowners with high balances that are at risk of foreclosure to stay in their homes and become renters for up to three years.
Bank of America pilot program
Bank of America has announced their “Mortgage to Lease” program in limited pilot for up to 1,000 homeowners in Arizona, New York, and Nevada, wherin homeowners in danger of foreclosure may stay in their homes as renters. Bank of America said in a statement that if the pilot is a success, they will expand the program to a more broad group of homeowners at risk of foreclosure.
Homeowners will not be able to apply for the pilot program, rather the bank will select the participants from at-risk homeowners in the three states that are over 60 days delinquent on their home loans, have income that qualifies for the rent amount, have no liens on the property, and have high loan balances compared to their current property value.
At first, the bank will maintain ownership of the properties but homes in the program will be transitioned to investor ownership, while the bank works with property management to oversee the properties. In exchange for having their outstanding mortgage debt forgiven, the homeowner will transfer the title to their property and may lease their home for up to 36 months at or below the current market rental rate.
“Our priority is designing a solution that helps our customer,” said Bank of America executive, Ron Sturzenegger. “If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community and curtail neighborhood blight by keeping a portion of distressed properties off the market.”
Bank of America is part of a recent $26 billion mortgage settlement between the major mortgage servicers and 49 attorneys general alongside federal agencies. Banks are attempting to seek out additional alternatives given the limited scope of the settlement. CoreLogic reports that 1.4 million homes are now in the foreclosure process, making creative measures to prop up housing left to either banks or law makers.
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Housing News
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
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Housing News
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.
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bficker
March 24, 2012 at 7:17 pm
Does this allow the owners a chance to buy it back after the 36 months?
Sheila Rasak
March 27, 2012 at 5:55 pm
I had someone in my office this morning talking about this news. A very slippery slope when you’re dealing with the ability to rent out the house at a lower value to a delinquent homeowner. Obviously this is the last place, other than taxes, where the average homeowner defaults when the bills start piling up from a legitimate hardship. Factor in the additional costs of carrying the owner such as HOA, Mello Roos, property taxes, and maintenance and I think you’ve got another Band Aid on a gaping wound.
Wade Lester
May 10, 2012 at 6:32 pm
Should have been implemented years ago do it now to stop the bleeding
Market Trends by Aldo
May 10, 2012 at 6:33 pm
Nothing creative about it. It’s a no brainer as long as those rental rates are in line with the market monthly rental rates it will work. But I guess it depends on how big long term loss is on the investor’s end.