State Senate Passes Foreclosure Prevention Measure
The Massachusetts State Senate unanimously passed a measure last month to prevent foreclosures in the Bay State. The legislation would make mortgage fraud a crime and require the licensing of all mortgage loan originators. The bill also proposes a network of counseling and education resources be set up to keep borrowers out of trouble.
Additionally, the proposed legislation would require lenders to provide accurate information on the amount homeowners owe on their home and in-person counseling for those who want an adjustable rate loan (ARM). Homeowners who are late in paying or missed a mortgage payment would have a 90-day grace period to do so without attorney’s fees being imposed during that timeframe. A database would be created under the Division of Banks to track the number of foreclosures and rate mortgage lenders’ business and advertising practices as well.
Another component of the bill calls for state funds to be provided to employers who offer housing assistance to their low- and moderate-income employees. The measure also seeks the establishment of a fund to be administered by the state Department of Housing and Community Development that would provide a 50 percent state match to employers offering housing assistance to employees. Individual employers would be able to receive up to $100,000 a year while the fund would provide a maximum of $5 million annually. The bill will now be sent to the House of Representatives for consideration.
Source: GBAR 8/07

New-home sales shrink
Sales of new single-family homes slipped 6.6 percent in June to a seasonally adjusted annual rate of 834,000 units as homebuyer demand continued to weaken, according to figures released by the U.S. Commerce Department.
The June sales pace was 22.3 percent below a year earlier, and down 40 percent from the housing market peak in mid-2005.
“ A significant increase in prime mortgage interest rates, along with the tightening of mortgage standards in subprime and other components of housing finance, clearly weighed on home buying in June,” said NAHB Chief Economist David Seiders. “Home builders continue to trim prices and offer large nonprice sales incentives, but many prospective home buyers obviously are reluctant to sign on the bottom line.
“ We still expect to see signs of stabilization later this year, although downside risks appear to be mounting.”
The inventory of new homes for sale was 537,000 in June, equaling the May inventory figures, although the equivalent months’ supply at the June sales pace edged up to 7.8 months — up from 7.4 months in May.
Completed homes for sale were 33 percent of the inventory, while units still under construction represented almost 51 percent of the inventory and units for-sale that were permitted but not yet started represented 16 percent of the inventory level — no change from the month before. The median length of time that completed homes were on the market was 6.0 months in June, up from 5.7 months in May.
Regionally, new-home sales in June were up 7.6 percent in the South. However, sales were down by 27.1 percent in the Northeast, 17.1 percent in the Midwest and 22.5 percent in the West.
Source: Valuation Review: Daily News 8/07

Rent Control Rejected Again In Boston
Today, the Boston City Council voted to reject the restoration of a system of Rent Control in Boston. The bill, authored by Councilor Yoon, and supported by Councilors Arroyo, Ross, Turner, and Yancey would have given tenant activists the right to collectively organize and negotiate rents and other related matters including lawful and existing terms of a lease. The Bill would have also required owners to open their buildings, providing access to tenant activists who would have been able to leaflet, solicit and organize tenants in their own homes.

The following Councilors who voted no:
Councilor Rob Consalvo Hyde Park, Roslindale, Mattapan
Maureen Feeney Dorchester, Harbor Islands
Michael Flaherty At Large (elected by voters throughout the city)
William Linehan South Boston, South End, Roxbury/South Bay, Dorchester
Jerry McDermott Allston, Brighton
Steve Murphy At Large (elected by voters throughout the city)
John Tobin Jamaica Plain, West Roxbury
Sal Lamattina East Boston, North End/Waterfront, City Hall/Beacon Hill
Source: GBREB 8/07

U.S. mortgages enter foreclosure at record rate
The number of Americans in danger of losing their homes because of late mortgage payments rose to a record in the first quarter, led by subprime borrowers pinched in an economy that grew at the slowest pace in four years.
The share of all mortgages entering foreclosure rose to 0.58 percent from 0.54 percent in the fourth quarter, the Mortgage Bankers Association said in a report Friday. Subprime loans entering foreclosure rose to a five-year high of 2.43 percent, up from 2 percent, and prime loans rose to a record 0.25 percent.
The median U.S. home price will probably fall this year for the first time since the Great Depression in the 1930s, according to Lawrence Yun, a National Association of Realtors economist.
Tumbling prices make it difficult for people who fall behind in loan payments to escape foreclosure by selling, according to Doug Duncan, chief economist for the Washington-based bankers' group.
Duncan told Bloomberg News housing is in a recession, and that is being reflected in prices.
The economy expanded at a 1.9 percent pace in the first quarter, compared with a year earlier, the smallest gain since the 1.8 percent rate in the second quarter of 2003.
Measured annually, the housing slump will contribute to cooling 2007's economic growth to the slowest pace in five years, Frank Nothaft, chief economist of Freddie Mac, the world's No. 2 mortgage buyer, told Bloomberg News.
Ohio had the biggest share of all loans entering foreclosure, at 1.07 percent, followed by Indiana and Michigan, according to the report.
Sales of new houses will probably tumble 18 percent this year, on top of an 18 percent drop in 2006, the Chicago-based National Association of Realtors said in a June 6 forecast. Sales of previously owned homes will drop 4.6 percent,
following an 8.5 percent decline last year, the trade group said.
The median U.S. price for a previously owned home will likely fall 1.3 percent in 2007 to $219,100, the first national decline on record, and the new-home median will likely drop 2.3 percent to $240,800, the first decrease in 16 years, according to the real estate trade group.
Source: NAR 6/2007

House Approves Tax Reporting Change for Sellers
The U.S. House of Representatives has passed the Taxpayer Protection Act of 2007, H.R. 1677, which includes a long-sought after provision by NAR that could change how sellers’ identities are reported at closing. Under the current law, sellers must provide a buyer with an affidavit that they are a U.S. citizen and disclose their Social Security number. But with identity theft growing, sellers have become reluctant to provide Social Security numbers to buyers. If approved, the legislation would continue to require verification that the seller is a U.S. citizen, but the tax laws would no longer require sellers to provide their Social Security number to buyers. The bill now heads to the U.S. Senate for deliberation.
Source: GBREB 5/07

Governor Proposes Criminalization of Mortgage Fraud in Bay State
With a record 19,487 foreclosures filed last year in Massachusetts, Governor Deval Patrick has proposed legislation aimed at criminalizing mortgage fraud and banning abusive foreclosure “rescue” schemes in the Bay State.
The proposal is based on recommendations from last month’s Mortgage Summit Group report, which was presented at the Massachusetts Association of Community Development Corporations’ (MACDC) Legislative Action Day on April 25.
If approved, the legislation would require a mandatory “pre-foreclosure” notice be filed with the state before any foreclosures can pass. A central repository of foreclosure notices would then be created at the Division of Banks to track foreclosure trends.
Other highlights of his proposal include:
• Tightening the licensing and education requirements for mortgage lenders and brokers;
• Raising licensing and examination fees for licensed mortgage lenders and brokers to increase enforcement capabilities;
• Reviewing sales practices of real estate brokers and salespersons who refer clients to mortgage lenders and brokers;
• Implementing a hotline for people facing foreclosures to receive referrals to reputable foreclosure counselors and lenders; and
• Creating a public education campaign targeting future and current homeowners.
On a similar note, lenders Fannie Mae and Freddie Mac announced they are creating new types of loans to help distraught borrowers.
Fannie Mae will launch consumer-friendly subprime products this summer designed to include 30-year and possibly 40-year fixed rate mortgages, as well as adjustable rate mortgages with longer fixed-rate periods.
Freddie Mac will launch HomeStay – a new program that offers options for subprime mortgage holders to refinance out of high interest adjustable rate mortgages and other difficult loans. Its subprime loan terms will also be increased to 40 years as opposed to the current maximum of 30 years, which could reduce monthly payments up to 5 percent for some borrowers.
Source: GBREB 5/07

Homeowners would face further regulation under proposed changes to state’s lead law
Bay State property owners of homes built before 1978 could be subject to increased costs and regulation under new legislation filed on Beacon Hill that seeks to amend the Commonwealth’s lead paint law. Specifically, a measure introduced by state Senator Patricia Jehlen (D-Somerville) seeks to require all persons selling properties constructed on or before January 1, 1978 “to conduct an inspection for dangerous levels of lead at their expense prior to the signing of a purchase and sale agreement.” In addition, the bill seeks to require all landlords to perform inspections of all rental units built prior to January 1, 1978 before any change in tenancy or once in a two-year period, whichever is less.
Currently, Massachusetts law requires that prospective purchasers and tenants of residential property built prior to 1978 be provided with a notification form regarding the presence of lead-based paint in the housing. Furthermore, the law allows prospective buyers 10 days in which to have a lead inspection performed and if lead is discovered, the buyer may withdraw from the sales transaction.
Draft language in the bill also would revise existing law to stipulate that de-lead certificates only be good for two years, whereas today a Letter of Compliance is considered to be valid indefinitely (and a Letter of Interim Control is valid for one year with the ability to renew for a second year), provided the property owner makes reasonable efforts to ensure the home is in good repair, principally by making sure there is no chipping or peeling lead paint. Finally, if passed, the bill would require soil and tap water to be tested as part of any lead inspection.
The proposed legislation will create additional hardship and expense for local property owners who already face some of the toughest public health statutes in the U.S. regarding lead paint law enforcement.
Source: GBAR 3/07

Governor’s tax plan could tap real estate to help close budget gap
Although Governor Deval Patrick’s plan to close a projected $1.3 billion budget gap in FY ’08 primarily targets multi-state corporations, business trusts, and the insurance industry to generate nearly $800 million in future tax payments, some companies and individual taxpayers with real estate interests could face an increased tax burden as well. Specifically, as part of legislation (H.B. 3756) he filed last month, Gov. Patrick hopes to raise $12 million during the next two years by imposing a deeds excise tax on taxpayers when they sell an ownership interest in an entity that owns buildings or land, as opposed to just selling the real estate outright.
Of all the tax changes being sought by the Governor, by far the most revenue – as much as $200 million – would be raised by requiring large companies to adhere to “combined reporting” rules that obligate firms which operate subsidiary corporations in multiple states to pay corporate excise taxes based on a share of overall company profits, rather than just the income earned by its Massachusetts unit(s). If successful in closing this tax loophole and others, as well as securing an estimated $515 million in proposed budget cuts, Patrick says he’ll be able to increase local aid by 5.5 percent and provide property tax breaks in the form of state income tax credits to lower-income homeowners, as presently called for his proposed FY ’08 budget.
Source: GBAR 3/07

Federal, state officials look to limit consumers’ risk to subprime loans
This past week, federal banking regulators and housing officials within the Patrick administration each announced plans to increase regulation and restrictions on subprime mortgage lenders in an effort to protect homeowners from risky loans and foreclosure. Concern over subprime mortgages – higher interest rate loans that are made available to low-income borrowers and those with blemished credit records or large debts – has been increasing in recent months as the delinquency rate on home loans, especially adjustable rate, subprime mortgages, continues to climb both nationally and in Massachusetts.
In response, the Federal Reserve Board and four other agencies that regulate the nation’s banks, thrifts and credit unions have issued proposed new guidelines that would require lending institutions to provide consumers with “clean and balanced information about the relative benefits and risks” of subprime mortgages. If adopted, the new rules could result in fewer consumers qualifying for these high-risk loans, including some deserving minority and first-time home buyers.
Meanwhile, Daniel O’Connell, the commonwealth’s new Secretary of Housing & Economic Development, said earlier this week that the Patrick administration would like to more strictly regulate subprime lenders and supports legislation that would require all loan officers working for a mortgage broker to be licensed in Massachusetts. With an estimated 30,000 mortgage originators currently operating in the state and a licensing fee of $250 in place, up to $7 million could be generated through new licensure requirements, according to O’Connell, enough to establish a $5 million fund the administration would like to create to assist homeowners facing foreclosure as well as hire more state examiners to monitor and investigate mortgage lenders.
Also, this past week, Freddie Mac announced that it will no longer buy certain subprime, adjustable rate mortgages that it deems most vulnerable to default or expose borrowers to undue risk. Among the loans its targeting are ARMs with low "teaser" rates that adjust upwards significantly after two or three years.
Significantly, a new study just released by the Federal Reserve Bank of Boston found that adjustable rate, subprime loans accounted for more than half of all foreclosure filings in the Massachusetts Land Court this past year, and, nationwide, the percentage of subprime mortgages originated in the U.S. has grown from just 2.6 percent of all loans in 2000 to 13.5 percent in 2006.
Source: GBAR 3/07

High housing costs top concern of Bay State residents
A new poll of over 500 Massachusetts residents found that high housing costs is the most pressing concern facing the local population today, with two-thirds of respondents (66%) citing the cost of housing as a “significant” concern that not only effects them personally, but also hurts the state’s economy and the ability of young professionals and families from residing in their hometowns. Concerns about public education and access to health care also were noted by a majority of poll participants (52% and 50% respectively) as important issues, while concern about jobs (44%) and traffic congestion (42%) rounded out the top five most troublesome worries of residents, according to the study which was conducted by the Donahue Institute at the University of Massachusetts and Citizens Housing & Planning Association.

One in four (42%) respondents to the survey indicated that their monthly housing payment makes it “hard to make ends meet,” an increase from 2005 when only 29.5 percent stated likewise. Furthermore, more than one-third of all respondents (36%) said that they or an immediate family member has seriously considered moving out of Massachusetts due to the cost of housing – that’s up from less than a quarter (24%) of state residents who responded similarly during last year’s poll.

To address the state’s housing crisis, roughly two-thirds of those surveyed believe the state should work to develop new housing near shops and public transit, including 64.8 percent who said they would support the construction of affordable housing in their neighborhood. Nearly one in six residents (58.4%) also favor the creation of state incentives for employers to assist their workers in purchasing affordably-priced homes, while a majority offered support for a doubling of state funding for housing programs, and 80 percent of respondents to the poll believe that state government should require local communities to plan regionally for growth and residential development.
Source: GBRAR 2/07

Greater Boston condo market seen stabilizing
The worst may be over for the condominium market in greater Boston, as newly released data show that sales of condo units rebounded in the City of Boston during the fourth quarter of 2006, climbing 0.9 percent over the same three-month period the previous year, while condo sales in the 54 cities and towns served by the Greater Boston Real Estate Board fell by just 100 units, or a modest 4.7 percent, in the final quarter of last year compared to the same quarter in 2005. The relatively stable sales pace follows sales declines of 12 percent and 15 percent in Boston during the second and third quarters of 2006 respectively, and decreases of 8 percent and 20 percent throughout the GBREB jurisdictional area in last year’s second and third quarters, an indication that demand is improving and a recovery in prices may not be far off.

Notably, in greater Boston, the median selling price for condominiums slipped 2.7 percent in the fourth quarter to $327,000, but was down just 1.4 percent on an annual basis last year, declining from an all-time high median price of $345,000 in 2005 to $340,000 in 2006. Meanwhile, in Boston proper the median selling price for condos sold in the final three months of the year fell 7.1 percent from the same period a year earlier to $325,000, however the annual median selling price was flat in 2006, at $349,000.

On an annual basis, sales of condominiums declined 7.6 percent in the City of Boston during 2006 from one year earlier, while sales activity dropped 9.5 percent across the larger 54 community GBREB jurisdiction. Nonetheless, the 9.529 condos sold in greater Boston in 2006 is the second highest yearly sales volume on record, topped only the 10,526 units sold in 2005. Statewide, last year, condo sales fell 12.1 percent, from a record 23,536 in 2005 to 20,698.
Source: GBRAR 2/07

Funding available for abatement of asbestos and lead paint
Applications are now being accepted for grants to be awarded for eligible asbestos and lead paint abatement projects. In 2006 the legislature mandated that Mass Development create a pilot program of up to $1 million dollars for grants to be used for asbestos and lead paint abatement in existing buildings. Selected projects will be eligible for grants in amounts ranging in size from $50,000 to $350,000 per project. The Notice of Funding Availability to Assist with Abatement of Asbestos and Lead Paint in Existing Buildings and the Application Form are now posted on the Mass Development website. The deadline for applications is March 30, 2007.
Source: NAR 2/07

FHA loan limits remain unchanged in eastern Mass.
The U.S. Department of Housing & Urban Development (HUD) has set new mortgage limits for loans insured by the Federal Housing Administration (FHA), but in most of eastern and central Massachusetts loan limits will remain unchanged in 2007.The announcement comes following a year of modest price declines in home values in Massachusetts during 2006.

In Barnstable, Essex, Middlesex, Norfolk, Plymouth and Suffolk counties, the FHA will continue to insure single-family home mortgages up to $362,790, a limit that first became effective on January 1, 2006, while in Bristol County the FHA single-family mortgage limit remains at $316,350 and in Worcester County a limit of $292,600 remains in place for a second consecutive year.

FHA loan limits for 2-3 family properties also are to remain stable in 2007.For two-family dwellings the limits are set at $461,113 in Barnstable, Essex, Middlesex, Norfolk, Plymouth and Suffolk counties; $359,397 in Bristol County; and $371,621 in Worcester County. On three-family properties, the FHA will continue to insure mortgages up to $560,231 in Barnstable, Essex, Middlesex, Norfolk and Suffolk counties; $434,391 in Bristol County; and $449,181 in Worcester County.
Source: GBREB 1/2007

Land use restrictions in metro Boston among the most stringent in U.S.
A new study examining land use regulations in more than 2,600 communities across the U.S. found that Boston and its immediate suburbs impose some of the most restrictive rules on residential construction in the nation. The study, conducted by the University of Pennsylvania’s Wharton School of Business, ranked Boston and 40 nearby cities and towns as second only to the Providence, R.I. area among 47 metropolitan markets in terms of severity of regulation placed on housing development.

This heavy regulation is contributing to the region’s high housing prices and helping to limit the local housing supply, which in turn is prompting young professionals and working-class families to leave the state in increasingly larger numbers, according to the study’s authors.

The Boston area’s high ranking is attributable in part to minimum lot size requirements that are much larger here than in communities in the South and Midwest, as well as the prominent role local elected officials, neighbors and community groups are often given in reviewing residential projects and zoning proposals. In many Bay State communities, it’s not uncommon for municipal zoning departments, boards of health and other elected officials to impose excessive regulatory controls on residential development to limit growth, reduce housing density, or preserve open space, the report found.
Source: GBREB 1/2007

Real Estate provisions part of newly signed federal tax bill
President Bush has signed a federal tax bill (H.R. 6111) that provides a temporary mortgage insurance deduction for home buyers and other tax benefits for commercial property owners. Specifically, tIn addition, the measure authorizes new rules that would permit the 15-year cost recovery period for leasehold tenant improvements made to commercial buildings to be made retroactive to January 1, 2006.

It was just two years ago that federal legislation was passed to allow a reduction in the recovery period for leasehold improvements from 39 years to 15 years for any qualified improvements (such as redesigned restrooms and upgrades to electrical wiring, cable and technology infrastructure) made to non-residential real estate.

With enactment of this legislation, the new rule retroactively applies the 15-year leasehold improvement provision to the beginning of last year and extends it through December 31, 2007.he legislation contains a special one-year only tax provision that allow certain home buyers to deduct the cost of mortgage insurance premiums issued in 2007. This new deduction will only be available to households with less than $100,000 income on a joint tax return and phases out for incomes above $110,000. Furthermore, it only applies for homes purchased in 2007, but can be taken on either private or FHA, VA or Rural Housing Service premiums.
Source GBREB 1/2007

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