Feb. 23, 2003
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INDUSTRY NEWS |
TAXES,
INSURANCE TAKE SHOTS AT AFFORDABILITY. RISING COSTS COULD CANCEL THE BENEFITS OF
ULTRA-LOW INTEREST RATES IN TEXAS
Inman News Features reprinted from ALTA Web
site
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BREAKING
NEWS |
PROPOSED
REBATE RULE PUBLISHED
The
Texas Department of Insurance published a proposed new procedural rule
in the Texas Register on Friday, February 21, 2003 regarding payment and
receiving/acceptance of rebates in the title insurance industry. To be
considered, written comments on the proposal must be submitted no later than
HOUSING SUBCOMMITTEE TO REVIEW REFORM OF THE
HOME BUYING PROCESS (RESPA Reform Proposal)
The House
Financial Services Housing Subcommittee, chaired by Rep. Bob Ney (OH), will hold
a hearing to examine a Department of Housing and Urban Development RESPA
reform proposal. The
hearing is scheduled for
As home mortgage rates have hit historic
rock-bottom levels, it seems reasonable to assume homes are more affordable now
than in the past.
This is not the case though in many states and especially in Texas, where the skyrocketing cost of homeowners insurance coupled with increasing property taxes has largely offset any positive effects of low interest rates on housing affordability, according to Jack C. Harris, research economist with the Real Estate Center at Texas A&M University.
Harris has compiled the Texas housing affordability index for several years and recently revised the index to account for the state's unprecedented increases in insurance and taxes by using property tax rate averages and benchmark insurance rates for each Texas market rather than national data.
The third quarter index stands at 1.07, almost unchanged from the same quarter last year. Harris even points out that Texas homes now are less affordable than they were in 1999 when the index was 1.24.
The Real Estate Center at Texas A&M reported that insurance companies with the largest shares of the state’s market have either stopped or restricted writing new homeowners policies and raised rates for renewals.
In addition, Harris said that property tax assessors are raising valuations based on higher sales prices, so property taxes are taking a bigger bite of homeowners’ incomes.
Overall, Harris’ research indicates that Texas homes remain affordable, with an estimated 54 percent of households able to afford the median priced home last quarter. Affordability in today’s market largely matches that of the early 1990s.
The Real Estate Center at Texas A&M was created by the state legislature and is primarily funded by Texas real estate licensee fees.
Copyright: Inman News Service
MORTGAGE DEFAULTS RISING IN AREA Foreclosures nearing 1992 levels in Travis, Williamson counties. Friday, February 21, 2003 By Shonda Novak and R. Michelle Breyer, AUSTIN AMERICAN-STATESMAN STAFF
Property foreclosures in Travis and Williamson counties are on track to hit their highest levels since 1992, as the aftershocks of the economic downturn continue.
In Williamson County, foreclosure postings are up 85 percent this year over the same period in 2002. Travis postings are up 54 percent.
Last year, 2,400 residential and commercial properties were posted for foreclosure in Travis County. Already, 855 have been posted through the next auction, set for March 4.
In Williamson County, 520 properties have been posted through the March auction, compared with 1,327 for all of 2002.
Economists consider foreclosures a lagging indicator, not an omen of a worsening economy. People might lose their job but manage for months before falling behind on their mortgage.
"It takes a while to get to the level where you can no longer make your house payment," said Jon Hockenyos, an Austin economist. "And the foreclosure process typically takes a number of months."
Williamson County is feeling the impact of the high-tech downturn more acutely because its economy is less diversified, Hockenyos said.
"That's a significant contributor, there's no doubt," Hockenyos said. And unlike Travis County, Williamson County lacks the relatively stable government and university job base to help buffer the effects of events like the Dell Computer Corp. layoffs, Hockenyos said.
Foreclosures are rising in other Texas cities and across the country as people run out of financial rope. Experts cite factors such as employees losing their jobs and consumers overextending themselves.
"I think that when times were good, a lot of folks stretched themselves to buy the nicest possible home," Hockenyos said. "Obviously when times turned tough, that home just may no longer be affordable for them."
Over the past two years, the number of high-end foreclosures has risen dramatically, said Gregg Stanley, president of Real Estate Foreclosures, a San Antonio company that conducts seminars on buying foreclosed property. Stanley said 80 houses worth $300,000 or more were posted for foreclosure in the first three months of 2003 in the area, up from 26 for the same period of 2002.
Sallie Boren, education coordinator for the nonprofit Consumer Credit Counseling Service of Austin, said more people are coming in for help in avoiding foreclosures from a wide range of occupations and income levels.
But she said many people wait until the last minute.
"A lot of times, people don't end up coming until they get notice that they're going to be foreclosed on in the next day or week," she said. "Generally, they're under a lot of stress anyway. They don't want to deal with it. They're in denial. We'd like to see them earlier."
In Central Texas, a new trend has emerged -- people losing their homes because they defaulted on home equity loans, which were not permitted in Texas until 1998.
While the number is small, it has been rising over the last six months, said Amalia Rodriguez-Mendoza, Travis County District Court clerk. She said there had been 90 such foreclosures filed from Aug. 1 through Jan. 30. Amounts owed on the estimated two dozen cases filed so far this year range from $40,000 to $218,000.
"When the economy is good, you don't see that type of activity," she said. "This is a very new type of case for us."
In Williamson County, 19 home equity foreclosures were filed in the past two months. Unlike standard foreclosures, home equity lenders must go to court to foreclose if the borrower has missed payments.
Ann Graham, general counsel of the Texas Credit Union League, a trade association, said there's no information to indicate that home equity foreclosures are out of proportion to first mortgage foreclosures, although no one tracks the numbers.
The lending industry is asking the Legislature to expand home equity financing by allowing home equity lines of credit, a process that would require approval by Texas voters as well. Lines of credit allow people to borrow only as much as they need, unlike home equity loans, which are like a second mortgage.
Graham said most borrowers use the loans responsibly for everything from financing their children's college educations to paying medical bills or other expenses.
"I think the people of Texas are responsible enough to manage their credit appropriately," Graham said.
Central Texas is nowhere near the crisis it experienced during the bust of the late 1980s, when foreclosures in Travis and Williamson counties topped 13,000. And while this year's numbers might equal or top 1992, the area's population has grown by more than 40 percent since then.
Foreclosures are rising in other counties. January postings for Dallas County were up 43 percent from a year ago. In Tarrant County, they were at their highest level since 1995.
Nationally, mortgage foreclosures set a record in the third quarter, according to a recent survey by the Mortgage Bankers Association of America. Some experts think mortgage delinquencies and foreclosures are at or nearing peaks, but others predict the trend will continue if unemployment continues to rise.
Tips on avoiding foreclosure
* Lenders would rather work with homeowners who are behind on their mortgage payments than take back the house.
* The first step in heading off foreclosure is to let your lender know quickly if you are at risk of missing a payment. Be prepared to provide details of your financial situation.
* Lenders may agree to renegotiate your payment plan or the loan itself. They may allow you to make up the missed payment over a few months.
* Consider refinancing your mortgage. With record low rates, you may reduce your payment enough to make it manageable. Or your lender may agree to modify the loan to reduce the payments. You'll still owe the full amount on the mortgage, but over a longer time or at a lower interest rate.
* If you really can't make the payments, see if the lender will allow you to sell the house yourself, although there will be a time limit. Some companies specialize in helping arrange such sales. Or you can turn over the deed to the lender. You lose the house but protect your credit rating.
* For more information and help, contact the Consumer Credit Counseling Service at 447-0711.
* The Real Estate Center at Texas A&M
University also has a report, "A Homeowner's Rights Under
Foreclosure," available on the Web site: http://recenter.tamu.edu
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CALENDAR OF EVENTS |
MEETINGS AND SEMINARS
The TLTA Board of
Directors will meet
at
Managing
to Stay Ahead of the Curve
- Management Essentials for Title Industry Professionals
Land Title School of Texas, to be held
Rediscover the Nature of Your Business - Business meets pleasure at TLTA's Annual Conference
at The Woodlands Resort and Conference Center. Put yourself in the
re-charge zone and have a great time doing it! Block the dates –
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BYLAWS AMENDMENT
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Inter-Continental
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2003-2004 BOARD NOMINATIONS
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Nominations for the 2003-2004 TLTA Board of Directors are currently
being accepted. Active TLTA members are eligible to serve on the Board and all
submissions will be considered by the Nominating Committee. The deadline for
nominations is