The Anna Maria Island Sun Newspaper

Vol. 11 No. 23 - March 9, 2011


The future of the home mortgage

We've heard a lot about change over the past couple of years, and we've sure had a lot of it. Some of the biggest changes have been in the real estate markets, most of it not good, and most of it not done.

On Feb. 11 a report to congress was published by the Treasury and Department of Housing and Urban Development (HUD) regarding the country's mortgage system. The report, entitled "Reforming America's Housing Finance Market," discusses the nation's mortgage complex during the years leading up to the crash of 2008.

The major recommendation of the report is the winding down of Fannie Mae and Freddie Mac over a period of five years or more to be replaced by private mortgage markets. The recommendation was made in an effort to prevent taxpayers from having to bail out institutions such as Fannie and Freddie in the future.

Although Fannie Mae and Freddie Mac were initially supposed to support liquidity in the mortgage market so mortgage funds were more widely available, they went far afield of their charters. Since both companies were looking at lush profits, they kept pouring more and more liquidity into the system with less and less restrictions.

The larger issue is what if anything will replace Fannie Mae and Freddie Mac. Some of the suggestions involve no government role except for existing agencies like the Federal Housing Administration, or a plan that would be a government guarantee of private mortgage markets solely as a lender of last resort.

Either one of these would probably make home loans more expensive and even put in question traditional 30-year fixed rate mortgages, or at least make them much more expensive, in favor of adjustable-rate mortgages. Whatever happens, it will take a long time to iron out, continuing to keep the real estate market edgy at least for those who need financing.

However, when the mortgage markets are finally modified it should make for a much healthier industry. Buyers will be required to put more money down, have verifiable income and assets and properties would have to appraise at acceptable margins. If this can be accomplished, the end result could actually bring down the risk associated with providing mortgages resulting in mortgage costs declining. Less risk and costs to lenders would inevitably translate into savings and better rates to consumers.

For the short term, the Treasury Department and HUD have made several suggestions. One that could have an effect in our real estate market, is reducing the maximum size of mortgages purchased by Fannie and Freddie by more than $100,000 to $625,000 before the end of the year. They will also now require a 10 percent down payment for all loans, ending previous programs accepting minimal down payments, and the fees for government guarantee mortgages would increase.

There are already plenty of other ideas out there from the brainy bean counters with MBAs, and there will be plenty more before we see the final products. But the way it looks now is there will be a lot less government intervention in the mortgage markets, keeping taxpayer risk to a minimum.

When it comes to the financial situation of the country and particularly the real estate industry, the more things change the more they continue to change. Sometimes I wish it was 1955 again.

Real Estate Transactions
Real Estate Transfers from Jan. 1 to 31, 2011
Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

01/21/2011 329,000 310,000 612 North Bay Blvd None SF Res
01/25/2011 1,474,000 1,050,000 103 SeaGrape Ln None SF Res

Bradenton Beach

01/31/2011 179,900 152,500 611 Gulf N Dr # D23 None Condo Res
01/14/2011 299,000 280,000 244 17th St N # 25 None Condo Res


01/27/2011 169,000 150,000 4227 126th W St None SF Res
01/24/2011 749,000 722,000 12519 Safe Harbor Dr None SF Res
01/21/2011 736,800 728,800 12310 BayPointe Ter Reo/Bank Own SF Res

Holmes Beach

01/18/2011 244,700 222,000 3402 Sixth Ave # 3 None Condo Res
01/21/2011 275,000 250,000 6400 Flotilla Dr # 11 Short Sale Condo Res
01/28/2011 349,000 310,000 6200 Flotilla Dr # 293 None Condo Res
01/20/2011 334,900 304,000 6313 Gulf Dr None Condo/TH Res
01/12/2011 699,900 500,000 5808 Gulf Dr # 109 N None Condo Res
01/05/2011 475,000 425,000 526 70th St None SF Res
01/21/2011 498,900 475,000 213 70th St None SF Res
01/14/2011 575,000 570,000 206 55th St None SF Res
01/28/2011 619,000 580,000 309 68th St None SF Res
01/14/2011 1,999,000 1,775,000 717 Key Royale Dr None SF Res
01/31/2011 359,000 345,000 307 63rd St None Duplex Inc
01/21/2011 1,000,050 1,000,050 534 70th St Cash Vacant Land


Source: Manatee County Property Appraiser’s Office

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