five ways the rules affect a home purchase:

1. New servicing standards: Existing homeowners will either get a monthly statement or a coupon book from their lender showing the current loan balance, payment amount and next due date. While some borrowers already receive monthly statements, all mortgage lenders are now required to provide them.

2. Underwriting criteria: Lenders will require more documentation of ability to repay from new homebuyers applying for a loan. At a minimum, creditors generally must consider eight underwriting factors:• current or reasonably expected income or assets• current employment status• the monthly payment on the covered transaction• the monthly payment on any simultaneous loan• the monthly payment for mortgage-related obligations• current debt obligations, alimony, and child support• the monthly debt-to-income ratio or residual income• credit history

3. Debt ratio: The Consumer Financial Protection Bureau set a number for determining if a buyer can afford their mortgage payments. The number – the debt ratio, or what percentage of monthly income is used to pay debt – is 43 percent. Debt includes payments on student and auto loans, credit cards, alimony and child support. A loan to a borrower with a higher than 43 percent debt ratio is considered high risk and might not get approved. Before, consideration of debt to income was at the discretion of the lender. Lenders can still make loans that don’t meet the 43 percent debt ratio standard, but might not be able to sell these loans, which creates more risk for the lender.

4. Struggling borrowers: Lenders now have certain obligations to meet with people having trouble paying their mortgages. For example, a foreclosure cannot be initiated before 120 days of default. During that time, lenders are to work with homeowners on loan modifications or refinances to keep them in their home.

5. Timeliness: Other rules require lenders to fix issues quickly and credit payments quickly. Mortgage servicers will now have to call or contact most borrowers by the time they are 36 days late on their mortgage. One thing that hasn’t changed: Past payment history is still a big deal, including your credit

I viewed this property in Xanadu at 704 Xanadu this morning and thought I might start bloging reviews

In short, Xanadu is a fantastic community and this place is typical of that.  Gated, quiet, right next to carlin park but the beach just across the street is virtually empty as the public parking is further down the road.  This is a very well maintained and indeed updated house.  It is frame as 90% of xanadu is but this allows for more architectural variations in the community.  Not much time to wright this so I’m off but this is a link to the property details…

And, to the community details…

Xanadu

I must admit that I did not think this would happen but it’s good news that even when the fed starts pulling out of Buying MBS that the market is still pricing them down…

Average rate on 30-year loan at 4.41%

Mortgage Rate Trend Index

Average U.S. rates for fixed mortgages declined this week, edging closer to historically low levels.

Mortgage buyer Freddie Mac said Thursday that the average for the 30-year loan fell to 4.41 percent from 4.51 percent last week. The average for the 15-year loan eased to 3.45 percent from 3.56 percent.

Mortgage rates have risen about a full percentage point since hitting record lows a year ago. The increase was driven by speculation that the Federal Reserve would reduce its bond purchases. The Fed determined last month that the economy was strong enough to start trimming those purchases, which have kept long-term interest rates low.

The rise in mortgage rates slowed home sales, which have fallen for three straight months. But overall, 2013 was the best year for housing since the financial crisis. Most economists expect home sales and prices to keep rising this year, but at a slower pace. They forecast sales and prices will likely rise around 5 percent, down from double-digit gains in 2013.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan rose to 0.7 point from 0.6 point.

The average rate on a one-year adjustable-rate mortgage remained at 2.56 percent. The fee was unchanged at 0.5 point.

The average rate on a five-year adjustable mortgage fell to 3.10 percent from 3.15 percent. The fee rose to 0.5 point from 0.4 point.

A tax break for distressed homeowners who mortgages were written down expired on Dec. 31.The 2007 measure exempted borrowers from federal taxes they normally would owe on assistance received from banks, primarily in the form of a seller’s forgiven home loan debt in a short sale.If a lender approves a short sale that’s $10,000 less than the seller owes on the home, for example, the lender absorbs the $10,000 loss. However, the IRS considers that $10,000 money that the seller made on the deal since he no longer owes as much to the bank. As a result, the IRS expects the seller to report that $10,000 as income – even if he never saw the money – unless Congress extends the tax break.Although the residential property market is in recovery, housing advocates contend that the market still needs this tax break that was put in place after the crash. More than 6 million homeowners in this country still owe more on their mortgages than the underlying properties are worth, they say, and failure to renew the tax break would only increase their financial burden. A report by the Congressional Research Service calculates that a middle-income homeowner who is granted a $20,000 reduction in mortgage debt could expect to owe $5,600 in federal taxes under the new reality.“It makes absolutely no sense,” says Sen. Debbie Stabenow D-Mich.. “This is not just about fairness for homeowners. This is about keeping the housing recovery alive.”Many of her colleagues agree, given the broad bipartisan support for an extension of the law. While Congress went on holiday break without taking action, it could revisit the issue as soon as next week, possibly passing a retroactive extension.However, an extension is not guaranteed. Owners considering a short sale currently should seek advice from a professional tax consultant or attorney

The US Federal Reserve took its first step away from its historic third round of asset purchases monthly buying from $85bn to $75bn.

Starting in January, the Fed will taper its Treasury purchases by $5bn to $40bn a month, and its mortgage-backed securities purchases by $5bn to $35bn a month.

A majority of 9-1 voted for the decision.  Eric Rosengren, president of the Boston Fed, dissented saying that the taper was premature until the data showed that stronger growth will be sustained.

“The Committee sees the improvement in economic activity and labour market conditions?.?.?.?as consistent with growing underlying strength in the broader economy,” says the Fed statement. If the data stays strong it will “likely reduce the pace of asset purchases in further measured steps at future meetings”.

The 10-year Treasury yield rose to 2.92 per cent, and the benchmark yield retreated to 2.87 per cent, up four basis points on the day. The dollar rose on a trade-weighted basis, while gold trimmed early gains.

The taper comes 15 months after the Fed began its unprecedented third round of asset purchases in September 2012. Unlike previous programes, there was no limit on its size, with the Fed pledging to buy until it achieved a “substantial improvement” in the outlook for the labor market.

Since then it has bought more than $1tn in Treasuries and MBS. Even with a taper, its total balance sheet will soon exceed $4tn.

The goal of the purchases is to drive down long-term interest rates and stimulate the economy now that short-term rates are already stuck at zero. The Fed regards QE3 as booster to increase the economy’s momentum and always intended to slow and stop the purchases once that was achieved.

Florida Supreme Court issues HOA ruling

A Florida Supreme Court ruling applies to developers of home communities. The core issue focused on the responsibility a developer has down the road if problems arise in “essential services,” such as roads or sewer systems.

The Lakeview Homeowners Association in Central Florida alleged construction defects in the development’s subdivision against Maronda Homes after the homeowners association (HOA) assumed control. It alleged a “breach of the implied warranties of fitness and merchantability in the residential construction context.” The specific complaint: bad stormwater drainage that flooded driveways along with other problems.

The HOA filed a lawsuit claiming the problems were latent and could not easily be discovered by homebuyers.

Maronda argued that “common law implied warranties of fitness and merchantability” don’t include a community’s infrastructure – items beyond the home itself. If so, the builder said, it wasn’t responsible for things like retention ponds, private roads, underground pipes, etc.

A trial court agreed with Maronda; an appeal court did not. That took the case to the Florida Supreme Court.

The key issue before the Supreme Court was whether it should extend buyer protections beyond a home itself via an implied warranty. In the end, the Florida Supreme Court upheld the appeal court decision that Maronda did have some responsibility for community infrastructure.

For homebuyers, this means an “implied warranty of fitness and merchantability” now extends beyond their new home in some cases to the surrounding roads, sewer systems, and other infrastructure built by the community developer.