The bill instructs lenders with loans backed by Fannie Mae, Freddie Mac and the Federal Housing Administration, (which is about 90 percent of the market) to account for expected energy cost savings.

Those savings must then be factored into how much the borrower can afford in a monthly mortgage payment, so the energy savings are essentially subtracted from a borrowers expenses.

“You would be amazed at how a few dollars can make a difference in a transaction, $50 in a monthly payment, because people calculate their purchase and what to borrow based upon what it’s going to cost them per month,” argued Isakson.

The bill also tells lenders to add the value of expected energy savings to the value of the home in the appraisal. Since mortgage amounts are based on a percentage of the value of the home, this would allow borrowers to get a bigger mortgage.

(Read more: Housing starts stall, optimism doesn’t)

That’s where homeowners, like Tamara Lyons in Darnestown, Md., who already have green technology in their homes, will be able to make more money when they sell. The value of green will be in the appraisal.

“A lot of my neighbors feel that it’s too much of an initial investment, and they don’t want to put that money down,” explained Lyons, “But, if they see that it’s going to add to the value of their home for resale purposes I think it would definitely make the idea more sexy and more appealing.”

The legislation could also benefit companies that are investing heavily in green product development.

“Certainly companies like Dow or Home Depot who have been working on selling and highlighting their energy-efficient products. Insulation manufacturers … the whole host of manufacturers who make the products that go into the homes that make them more energy efficient,” said Stephen Cowell, CEO of Conservation Services Group.

“So we have a host of technologies and this would give manufacturers, builders, retailers and retrofit companies all an opportunity to begin reaching consumers to say ‘if you take advantage, if you put these products in, you can increase your home’s value’ because it’s now available to a broader range of homebuyers in the marketplace.”

Article source: http://www.cnbc.com/id/100899584

Now, facing a $16 billion shortfall, the FHA has raised premiums and will raise them yet again next month. FHA loans are becoming increasingly expensive.

(Read More: Housing Jobs Jump, Where Are the Workers?)

Meanwhile, as the housing market improves, private mortgage insurers are starting to remove overlays on higher loan-to-value loans, meaning the percentage of the home value that is mortgaged. Low LTV’s and high credit scores were the rule recently for the private insurers, but that may now be loosening, making these loans cheaper than FHA.

“FHA is certainly becoming more expensive,” noted Craig Strent, CEO of Apex Home Loans in Bethesda, Maryland. “The increase in low down payments is reflective of first time buyers coming off the sidelines and entering the market. We’re going to see more of this trend in the next couple of years as the economy improves and renters start to once again see the benefit of buying over renting. FHA has become more expensive and the mortgage insurance companies are the beneficiary of that, which is really not a bad thing as it means the private market is insuring the lower down payments rather than the government.”

(Read More: Home Buyers Are Back, but Where Are the Houses?)

The stocks of mortgage insurers like MGIC and Radian spiked in the first months of this year, as home prices improved and FHA policy changes designed to shrink its share of the market were announced. There is currently a bipartisan effort in the U.S. Senate to reduce the FHA’s role, and in the House of Representatives a hearing is being held Wednesday looking at, “the competitive advantages the Federal Housing Administration has relative to private mortgage insurers and how those advantages contribute to the crowding out of private capital in housing finance,” according to the House Financial Services Committee release.

Despite the advantages, FHA’s share is already shrinking, as Fannie Mae’s is rising. In the first quarter of 2012, loans with between 3 and 10 percent down payment made up 15 percent of Fannie Mae’s business for home purchase loans (not refinances). In the second quarter it rose to 17 percent and in the third to 18 percent. Fannie Mae has not reported its fourth quarter yet, but that share is expected to rise again. While a credit thaw is part of it, as mortgage interest rates rise and fewer borrowers apply to refinance, lenders are simply looking for more business.

Article source: http://www.cnbc.com/id/100548913

Coming back to home ownership may not be as difficult as some think. Consumers who only defaulted on their mortgage during the recent recession were far better risks than those who went delinquent on multiple credit accounts, like credit cards and auto loans, according to a 2011 study by TransUnion.

“There appears to be a pocket of opportunity among mortgage-only defaulters that is not the result of excess liquidity, but rather the unique circumstances of the recent recession,” said Steve Chaouki, group vice president in TransUnion’s financial services business unit in the study release. “This new market segment that the recession created is an important one for lenders to understand. They have the potential, today, to be stronger and more reliable customers.”

Not surprisingly, given this potential, YouWalkAway.com is launching the “AfterForeclosure.com Pass/Fail App,” which claims to tell potential borrowers in just one minute, “if they have a shot at home ownership.”

“We want people to know that it’s possible and, in a lot of cases, it’s advantageous,” says Jon Maddux, former CEO and co-founder of YouWalkAway.com.

(Read More: US Homeowners RiseAbove Water on Mortgages)

It is possible, but mortgage underwriting is far more strict today than during the housing boom, and there are varying waiting periods before former homeowners who went through foreclosure can qualify for a new loan. The Federal Housing Administration, the government insurer of home loans which now backs just over 20 percent of new loan originations, requires a three-year wait. Fannie Mae and Freddie Mac, which own or guarantee the bulk of the remaining new loan originations, require up to seven years for a strategic defaulter to qualify again for a mortgage.

d More: Americans Are Using Their Houses as ATMs Again)

Article source: http://www.cnbc.com/id/100485159

Photo by Justin Sullivan/Getty Images

“We did have a brief window of opportunity—or now it seems brief, it actually lasted quite awhile—during the housing downturn where we had, for the first time in years something approaching reasonable affordability in the Bay Area,” said Carolyn Said, economics and real estate reporter for the San Francisco Chronicle, on KQED Public Radio’s Forum show. “First-time home buyers could find a home in the $300,000 price range. [That home wasn't] necessarily in San Francisco, but in Alameda and Contra Costa counties, and without even going way out to the outer edges of the counties.”

And homes prices in San Francisco dipped as well.

Affordability was “the highest we have seen in 25 years in 2010, early 2011,” said Rick Turley, president of Coldwell Banker for the San Francisco Bay Area.

This Golden Age of Affordability may have come to an end, at least for now. But here’s the good news: If you didn’t buy a home in the past few years, you only sort of missed the boat.

Low Interest Rates

An advantageous part of the affordability equation is still applicable in the form of historically low interest rates, according to Said. “[Rates] are still right around 3.5 percent, which is just amazing when you think of it,” she said.

“That’s a positive for people looking to buy a house. Their buying power is really more because their effective monthly payment is still going to be less, even if they’re paying a little more [for the property].”

In addition to low interest rates, there’s some other good news for would-be home buyers. The Federal Housing Administration still offers loans requiring relatively small down payments.

FHA Loans

“In order to have home ownership, you need to have a down payment, which people starting out in their careers often don’t have,” said Said. She said FHA loan are available with a “3.5 percent down payment if you have decent enough credit, and of course it helps to have a stable income.” A down payment of less than 20 percent requires the purchase of mortgage insurance, but even with that added cost, the low percentage required up front should make the initial plunge more affordable.

Micro-Markets

It’s also important to remember that the Bay Area is a diverse region, and with that diversity comes price range.

“We tend to roll things up as the ‘Bay Area’ in general, but we’re probably 30 micro-markets,” said Turley.

You may have missed your window of opportunity to own a house in San Francisco and Palo Alto proper, but there are still relatively affordable places in the Bay Area.

“More affordable neighborhoods are in Oakland, eastern Contra Costa County, and other parts of the East Bay, as well as in some San Jose neighborhoods,” said Jed Kolko, chief economist for Trulia, an online real estate company.

These places might not have the cachet of the Marina district, but they still offer many of the benefits of living in the Bay Area: good weather,  a decent job market and proximity to outdoor recreation.

And even if you have to pay a bit more to enter the market, chances are you still will get a decent return on your investment.

Still Time to Make a Good Investment

“Historically, since World War II, housing has appreciated … maybe half a percent or a percent ahead of inflation,” said Said. “And that is normal for our country. If you look at [the value of your house] going up 3.5 percent a year over the next 20 years that’s still a substantial appreciation.”

True, that’s not a doubling in value that earlier California generations enjoyed. But Said said that “given what’s been happening in Silicon Valley, with the tremendous demand for housing and the tremendous amount of money that is out there for people working at high-tech companies, the housing in Silicon Valley is not following normal economic paths. It is fueled by all this tech money and from that perspective, it’s perfectly possible that your house will run way up there.”

Finding a Place in the Bay Area Was Never Easy

If you should find yourself put on the spot about why you didn’t jump while prices were lower, you can always blame a lack of credit.

“One of the reasons why people haven’t been able to take advantage of the relatively lower prices and low mortgage rates during the past couple of years is that mortgage credit has been very tight,” said Kolko. “Banks have been reluctant to lend to people who don’t have high credit scores.” The new mortgage rules announced Thursday might encourage banks to be more willing to lend to borrowers who meet income and credit guidelines, he said, so that credit could become easier for some people to obtain.

And remember, San Francisco is a world-class city. Affordability here is a relative term.

“It’s as if God wanted the Bay Area to be expensive,” said Kolko. Not only does the region’s relatively mild weather attract people, but because the region is “hemmed in by the ocean on one side, the bay and the mountains on the other, there’s very little available land to build. The Bay Area’s not like places in Texas or other parts of the South where you can spread out in all directions.”

And there are other limits on building…

“Regulations on building are particularly strict in the Bay Area,” said Kolko. “That makes it even more difficult to build new housing, both in the Bay Area and in much of California, and that adds to the high cost.”

So if you didn’t get around to buying a house when prices were low — take solace in the fact that prices weren’t ever that low.

Article source: http://blogs.kqed.org/newsfix/2013/01/10/if-youre-in-the-market-for-a-home-in-the-bay-area-yes-you-missed-the-boat-sort-of/

(Read More: FHA May Show Negative Reserves For Mortgage Losses)

The FHA, which requires just 3.5 percent down payment on a loan and which had lower relative credit score requirements, went from just 2 percent of the market during the height of the housing boom to nearly 40 percent at the height of the crash, insuring $330 billion worth of mortgages in 2009 alone. It has recently shrunk its share to around 15 percent of the market, by raising premiums and credit requirements.

“While there is no doubt that the housing finance system needs to be reformed, the contributions that the FHA has made during this economic downturn underscore the need for a government backstop for both the primary and secondary mortgage markets,” noted Barry Rutenberg, chairman of the National Association of Home Builders in response to news of the FHA’s shortfall. “Without government support for home purchasing and refinancing, the nation’s mortgage markets will grind to a halt, throwing the economy back into recession.”

In contrast to the loans insured from 2007-2009, the FHA’s recent book of business has been quite healthy, providing billions in net revenues to offset earlier losses, though clearly not enough. According to the annual review, the 2013 book of loans should add $11 billion in value to the fund.

(Read More: Why Home Refinancing Boom Is Different This Time.)

There are, however, concerns that impending new rules in the mortgage market, dictated by Dodd-Frank financial reform, will make the overall loan market more expensive and drive more borrowers to the FHA. Most agree FHA’s share of the market should shrink.

(Read More: Ready for the Land Mines Embedded in Dodd-Frank?)

“The best medicine for FHA is a steadily growing housing market with stable home price appreciation, a less likely outcome if the rules cause lenders to increase cost or tighten qualification requirements for borrowers,” said Debra Still, chairman of the Mortgage Bankers Association.

Sector Watch: US Home Builders

—Toll Brothers
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—DR Horton
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—Hovnanian Enterprises
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—PulteGroup
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—Ryland Group
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—Lennar Corp
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—Beazer Homes USA
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—Meritage Homes
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—KB Home
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Questions?  Comments?