Published: December 10, 1998

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"Residential Lending Fueled by Lower Rates, Fed Reports"
American Banker (12/10/98) P. 2; Barancik, Scott

Atlanta was among the markets in which banks reported strong demand for home mortgages and refinancings in November, the Federal Reserve Board said in its Beige Book, a periodic review of the health of the U.S. economy. "Stronger consumer confidence and lower interest rates spurred home building, refinancing, and a rebound in commercial construction in some areas," the Fed said in its report on Wednesday. Banks in New York, Philadelphia, Cleveland, Richmond, Chicago, St. Louis, and Kansas City also saw a strong demand for residential lending last month.

"Home Buyers Share Outlook That Future for Economy Will Be Rosy"
Wall Street Journal (12/10/98) P. A9; Wysocki Jr., Bernard

Homes priced $300,000 and upwards are selling at a brisk pace throughout New Jersey, as that state's residents have exhibited an unusually high level of confidence in the nation's economy and the local job market. Most will commit most of their life's savings to buying a home, producing a down payment between $40,000 and $80,000. In addition, they will typically commit to at least $1,500 per month in mortgage payments over a 30-year term. Builders are looking to take advantage of this trend by constructing more houses in this price range. Matzel & Mumford President Roger Mumford, though, has been fretting over the high end of the residential real estate market now for over a year. As a result, he has shifted his company's focus away from building $600,000-plus residences in the affluent New Jersey suburbs west of New York City to more affordable homes in areas such as South River. In doing so, the builder has targeted Generation-X buyers who are just coming on to the market for the first time.

"Warehouse Retailer Costco Offering Home Loans"
American Banker (12/10/98) P. 11; Hochstein, Marc

Costco, the Washington state-based warehouse retailer, has started offering home mortgages to a segment of its customers through the real estate services firm, Amerinet Financial Systems, Inc. Consumers who pay more for their membership and are among Costco's Executive members are invited to work with Amerinet, the company that ultimately handles the entire transaction. Amerinet negotiates for the lowest fees, rates and commissions for participating customers and selects the best offer from among 56 lenders and 500 real estate offices. Although Amerinet received a reported 41,000 telephone calls in 1997, according to Amerinet Chairman and CEO John Pembroke, it is yet unknown if Costco will profit from the new program. After all, Costco is not the first retailer to try marketing home loans. Both Sears Roebuck & Co. and Sam's Club, a unit of the Wal-Mart chain, attempted to sell mortgage services with little success, only a few years ago. The program has also drawn opposition from large real estate agents, who are unwilling to give back 35 percent of their commission fees.

"Open Homes, Warm Hearts, Bright Future"
Washington Post (12/09/98) P. B1; Milloy, Courtland

This year's "Winter Revelry" Capitol Hill Arts Workshop, a celebration of local homes and neighborhoods, will be held on Sunday at the new Townhomes on Capitol Hill development, a community of co-op units and private single-family homes. Eight of the homes will be open for people to visit and enjoy music, food, and old stories, and the homes will be decorated in different themes. This year's Winter Revelry, in its 13th year, comes at a strong time for the District of Columbia, which is experiencing a turnaround in its image. Just four years ago, many people were moving out of Capitol Hill and the District amid fears of crime and budget cuts. But today, homes are selling quickly, and demand is outpacing supply. This new trend is due to both a change of image in the District and to the quality of the homes available, many of which were built in classic styles. This Sunday's event allows the community to open its doors and encourage other people to become involved in their communities. Funds from the workshop will benefit the Capitol Hill Arts Workshop, which provides arts education and exhibits.

"Bank of N.Y. Tests Fannie Automation of Co-op Loans"
American Banker (12/09/98) P. 9; Habal, Hala

As part of a Nov. 16 pilot testing program, Bank of New York is making use of the co-op option that is available on the updated version of the underwriting software of Fannie Mae. The company no longer has to rely as much on paperwork during the underwriting process. "This has speeded up the process significantly," said Patrick McEnerney, president of Bank of New York Mortgage. "Co-ops are a very small volume in the national market, which shows how advanced the agencies have gotten with automated underwriting if they've gotten to the point where co-ops are part of their model." Co-op lending represents 28 percent of the mortgage market in New York City.

"The Housing Boom Gives the Economy a Boost"
Washington Post (12/09/98) P. C11; Smart, Tim

Increased homeownership has the ability to greatly affect the American economy in positive ways. For example, most sociologists agree that areas with high homeownership rates have less crime and are generally more stable. Economist Sung Won Sohn adds, "One out of every six jobs in America is housing or related industries. The largest user of copper in the world, or at least in America, is housing. The demand for lumber, aluminum, carpets, all these things are affected by housing." Recent Fannie Mae studies show that new immigrants generally become homeowners for the first time 10 to 15 years after first arriving in America. Due to the high levels of immigration to the United States throughout the '80s and early '90s, the housing market is now seeing the benefits. Also helping to propel the market is the fact that the Federal Housing Administration (FHA) today approves mortgages as great as 97 percent of the value of certain homes. Gopal Ahluwalia, director of research at the National Association of Home Builders, adds, "The interest rates are low, the economy is doing pretty good. There are a lot of people who were sitting on the edge and when the interest rates dropped, they came into the market."

"Washington Mutual Donates $250,000"
Business Wire (12/08/98)

Washington Mutual has awarded a $250,000 grant to NeighborWorks that will be used to help put more low- to moderate-income consumers in California in homes. Inglewood, Pasadena, Sacramento, San Diego, Orange County, and the Inland Empire will be among the 12 markets that will benefit from the grant, which is part of Washington Mutual's $120 billion pledge of financial support to low- to moderate-income consumers over a 10-year period. NeighborWorks is a collaboration of Neighborhood Housing Services that are committed to building and revitalizing communities.

"No-Closing-Cost Loan Can be Good"
Miami Herald (12/06/98) P. 2H; Garton-Good, Julie

Buyers of new or existing homes have the option of applying for no-closing cost mortgages, in which the lender pays all nonrecurring closing costs in exchange for a potentially higher interest rate. These costs don't include insurance or property taxes, which are included in monthly payments. Borrowers should base their decision of whether to apply for a no-closing cost mortgage on how long they will live in the home, how much money they have for closing costs, their monthly payments, and their ability to qualify. This type of mortgage may be best when the borrower is short of cash, plans to live in the home for a long time, or is trying to lock in a low interest rate right away. No-closing cost loans can also be beneficial when refinancing, because there will be a low interest rate and no upfront costs. Borrowers should consult with their lender to decide which loan would be best for them.

"What Exclusions Mean in Contract"
Miami Herald (12/06/98) P. 2H; Hymer, Dian

California real estate agent and author Dian Hymer writes in a column carried by the Miami Herald that before writing an offer to purchase a home, prospective home buyers should find out whether the seller has any exclusions. "This way you won't be caught by surprise when you find out that the sellers are removing the dining room chandelier that you have admired," writes Hymer. And "it behooves sellers to notify buyers in advance of exclusions in order to avoid disappointing the buyers during the home purchase negotiation." The seller would have to exclude items from the listing agreement and from the purchase contract that they wish to keep, such as a dining room chandelier that belonged to his or her grandmother, for example. Real property and permanently attached items are usually included in the sale.

"Home, Sweet Home Page"
Crain's Cleveland Business (11/16/98) Vol. 19, No. 46; P. 26; Tramer, Harriet

Many of the leading real estate companies in Cleveland are attempting to take advantage of the Internet as a marketing tool for attracting potential home buyers. Although the actual number of home buyers who use the Internet is still small, their numbers should grow as more people become comfortable dealing with the technology, according to Harry Marro, broker for Smythe, Cramer Co. Aside from allowing home buyers to search their site, Smythe, Cramer also provides a link to its Home Mortgage Assistance Corp., where buyers can apply for a mortgage online. This online process allows borrowers to find the best rates and apply for a loan at any time. Other local companies also say that, although actual sales haven't increased significantly, the Internet has become another resource for home buyers. Buyers who visit the site of Realty One (www.realtyone.com) tend to be more prepared when actually buying the home. The site appeals to buyers with a number of questions because it allows them to learn more about homes of varying price ranges and locations, according to Realty One chief information officer Stephen Verba. Progressive Urban Real Estate uses its Web site to allow home buyers to view different rooms in a home. Vice president David Sharkey says that the best sites combine technological aspects with strong selling techniques. Using the Internet also allows buyers to conduct a home search rapidly, eliminating homes they don't want. But all home buyers will still want to visit the home personally, according to Robert Levitt, executive vice president of NextHome Inc.

"Install Sturdy Access to Attic Storage"
Chicago Tribune (12/05/98) P. 4-3; Carter, Tim

In his latest Ask the Builder column, Tim Carter writes that homeowners should consider purchasing a high-quality fold set of steps or a strong, one-piece, disappearing stairway if they want more reliable access to their attics. Step ladders are not all that safe. For example, when looking for a folding attic ladder, Carter writes that homeowners should make sure that the stringer (side members of the ladder) and the treads (steps) are at least three-fourth of an inch thick, and at least three and one-half inches wide. What's more, each tread should have a thin metal rod underneath for added strength. The minimum weight-bearing capacity of folding ladders should be 250 pounds.

"MBA Launches Housing Think Tank"
Real Estate Finance Today (11/23/98) Vol. 15, No. 27; P. 1; Campbell, Niles Steven

The Mortgage Bankers Association and other industry leaders recently announced the beginning of the Research Institute for Housing America, a research organization that will work on expanding the markets for housing and mortgages. One of the main goals of the institute will be to expand access to these markets by reaching underserved communities. The institute will also attempt to remove housing barriers and expand knowledge of the industry. It will act as a catalyst for members of the industry to work together, according to MBA president Donald Lange. A number of representatives from the housing industry, including HUD Secretary Andrew Cuomo and Attorney General Janet Reno, announced their support for the institute, which they say will help to educate homebuyers by providing answers to their questions. Steven Hornburg, former senior director of policy for the Fannie Mae Foundation, will serve as the institute's executive director. Some of the issues the institute hopes to address in its research include fair housing and lending, housing and mortgage markets, and the costs and benefits of homeownership.

"New Guides for Insulation"
Washington Post--Home (11/26/98) P. 25; McClintock, Mike

The U.S. Department of Energy recently established new insulation recommendations for homes and as a result, most local codes are falling short of these new regulations. The recommendations were based on the views of insulation experts, who tried to develop a cost-effective approach for consumers. Local codes have yet to be updated, and some builders are resisting the change because they say it will add to the cost of construction. But until local codes are updated, homeowners can take their own steps to meet regulations. Adding insulation to the attic, where the R-value of insulation effectiveness was increased to R-49, can be done by simply adding about 3 inches of insulation between and over joists. But adding insulation to walls is more difficult because not all wall cavities have enough room to accommodate additional insulation. Homeowners have the choice of four types of insulation: bats, rolls, loose fill, and rigid foam boards. Each of these types work best in different situations. For walls, liquid, site-mixed foam is an option, but this must be done professionally. Longer studs can increase the wall cavity, but using this approach means that other parts of a wall must be adjusted as well. For rules and recommendations on insulation installation, homeowners can contact the Department of Energy.

"To Aid Fair Lending, Feds Tightening Laws"
Crain's Cleveland Business (11/16/98) Vol. 19, No. 46; P. 25; Jurek, Ken

In an effort to allow more minorities to become homeowners, the Office of Thrift Supervision is improving its efforts to enforce fair lending laws. The trend of possible lending discrimination has taken place in a number of areas across the country, including Cuyahoga County, Ohio. OTS research shows that in 1997, only 9.7 percent of whites were turned down for home loans, while the denial for minorities was 18.5 percent. One of the OTS's main efforts will be improving methods of determining areas of possible "redlining," where minorities may be unfairly denied loans. This includes reviewing data from the Home Mortgage Disclosure Act. Enforcement against redlining is also being strengthened, according to Charles Bromley, executive director of the Metro Strategy Group of Cleveland. Bromley says that possible cases of redlining will be automatically turned over to the Justice Department, a significant change from past policies. But there are some positive statistics, such as large increases in mortgage originations for minorities. Jack Male, president of Parkview Federal Savings Bank, said lenders in Cleveland take redlining very seriously, but he says there has been no evidence of the practice. "No matter what the data might say, if someone qualifies for a loan, it doesn't matter if they're green or blue," said Male, who said lenders are very willing to lend to those who qualify.

"Same House--$711,875 Difference in Price"
Today's Buyer Rep (11/98) Vol. 7, No. 11; P. 7

Home buyers looking for a typical single-family home will encounter major price differences depending on where they are looking. The typical four-bedroom, two-and-a-half bath home can cost as little as $100,350 in Killeen, Texas, but as much as $812,225 in Beverly Hills. In fact, there is over a 700 percent difference between the highest and lowest price of a typical home, according to the 1998 Coldwell Banker Home Price Comparison Index. These homes have the highest average price in the West ($255,157), and the lowest average price in the Southeast ($160,099).

"Fireproofing Furniture"
Consumer Reports (12/98) Vol. 63, No. 12; P. 6

A high number of fires in the home are caused by the padding in upholstered furniture, which catches fire easily when lit by cigarettes or lighters, according to the National Association of State Fire Marshals. These fires have declined somewhat because of voluntary industry changes, but no federal standards currently exist concerning upholstered furniture. The House and Senate voted in October to continue working on standards, but the cost of developing them would be high, and furniture manufacturers say mandatory standards would increase furniture costs. Consumer Reports supports a standard of some sort; and it, along with state fire marshals, recommend that homeowners buy upholstered furniture from dealers in California, the only state with a flammability standard.