"30-Year Rate Stays Sub-7 Percent, a Strong Sign for Housing"
American Banker (12/14/98) P. 12; Fields-White, Monee

Last week's decline in mortgage rates prompted Freddie Mac's chief economist to say that the drop was a sign that the housing market will remain strong. Robert Van Order observed that "Mortgage rates remain low, inflation is almost non-existent, and housing values continue to grow at a pace slightly more than inflation." By the end of last week, mortgage rates fell to 6.69 percent from 6.71 percent during the previous week, according to Freddie Mac. The decline was the fourth consecutive week in which a drop in mortgage rates has taken place. The last time mortgage rates were this low was two months ago, Oct. 9, when the average rate on a 30-year, fixed mortgage was 6.49 percent.

"Paying Off Mortgage Quickly Isn't Always Smartest Move"
Investor's Business Daily (12/11/98) P. B1; Sweeney, Katie

At a time when 24 percent of consumers with 30-year mortgages refinanced their mortgages for loans that have terms of 15 years, financial planners are saying that the move to pay off home loans quickly may not be for everyone. "If you're really going to be pushing yourself and taking away from other things, then I don't know if (a 15-year loan) is the right thing to do, especially since you always have the opportunity to prepay (a 30-year loan)," said Dean Caso, president of Newton, Mass.-based HomeVest Mortgage Co. Switching to a 15-year mortgage may spread the finances of homeowners so thin that they do not have money for anything else. Some financial planners say the extra money that homeowners have in their pockets each month could be used for other investments, such as a stock fund for the house. Brian Carey, an economist with the Mortgage Bankers Association of America favors a switch to 15-year mortgages for homeowners who are getting close to retirement so that they can have their homes paid off by the time they stop working.

"Sounds Like Lower Rate, But You Might Pay More"
Baltimore Sun (12/13/98) P. 1M; Harney, Kenneth R.

Homeowners must already deal with an increasing number of advertisements for home loans with low rates, and now some mortgage companies are emphasizing refinancing loans that promise low rates but may actually cost more. Columnist Kenneth R. Harney reports that some of these companies advertise mortgages with "equivalent rates" that are lower than the homeowner's current interest rate. But a closer look shows that the low rate is actually a buydown from the lender, which offers a lower rate, even though origination and closing fees are high enough to offset the interest rate. Because of this, monthly mortgage payments will actually be higher than they were before. But the most important thing that homeowners must be careful of is disclosing too much information to the company advertising the low rate. According to Harney, these companies will target consumers who don't need to refinance, and they often use confusing language to make the homeowner think that refinancing would be a good option.

"Homeownership Brochure for Persons With Disabilities..."
PRNewswire (12/10/98)

The Pennsylvania Housing Finance Agency (PHFA) recently began distributing a new brochure that describes six different programs designed to assist people with disabilities in purchasing a home. "Homeownership Opportunities for Persons With Disabilities" is free to consumers and describes different mortgage financing options for persons with disabilities, including: closing cost assistance, low income opportunities, Homestead programs, and home improvement loans. Some of these programs also offer down payment assistance. PHFA also introduced a similar program in October for apartment renters with disabilities.

"Wall Street Living: Still Quiet After the Bulls Go Home"
New York Times (12/10/98) P. D1; Rozhon, Tracie

Two years ago, the New York City housing market was buzzing with the prospect of its financial district becoming the next hot place to live. Politicians and developers were saying that they wanted to transform the Wall Street canyons into a 24-hour, seven-day-a-week neighborhood, and transform its vacant office space into rental and condominium apartments. These days, however, the enthusiasm for a new financial district has dwindled. Of the 7,000 new apartments that were supposed to be added to the area, only 2,500 units have been converted, most of them rentals. The financial district "was billed as either the Promised Land or the new Wild West," explains Barbara Corcoran, chairman of the Corcoran Group. "But Wall Street still has a commercial image: when it comes to actually living there, customers think of dark canyons at night, and that seems foreboding." However, some prospective homebuyers complain that a lack of commitment on the part of politicians and developers to services such as schools, supermarkets, and night life gave them no reason to move to the financial district. The slowing of the transformation of Wall Street is also believed to be the result a rebounding office market. Some developers have changed their minds because they can make more money building office space.

"Tricks to Trim Taxes: Mail a Mortgage Check"
U.S. News & World Report (12/07/98) Vol. 125, No. 22; P. 77; Wiener, Leonard

Homeowners making a mortgage payment that is due on Jan. 1 should make sure their payment arrives before the end of the year so they can add the current month's payment to their 1998 mortgage deductions. The Jan. 1 payment will cover the interest for December. Families making their first payments will qualify for 13 months of deduction. The check should be mailed by the middle of the month so the lender can process the payment and include it on the IRS form for this year's interest.

"Natural-Gas Customers Begin Choosing Providers"
Crain's Detroit Business (11/23/98) Vol. 14, No. 47; P. 18; Bridgeforth Jr., Arthur

A decree issued by Michigan's Public Service Commission (PSC) may enable a select group of natural gas customers to begin shopping around for suppliers as early as next year. Issued in April and December 1997, the order opened the door for Consumers Energy Co. and Michigan Consolidated Gas Co. to offer customer choice programs statewide. While the power industry in Michigan has not yet had a deregulation bill authorized, PSC Chairman John Strand says customer-choice programs may be ready as soon as the first quarter of 1999. The objective is to get the measure approved before the new state legislature comes into office next year. There is, however, some concern that the new legislature will tamper with the existing plan even if the phase-in plan is not approved. Regardless, Consumers Energy plans to launch the second leg of its customer-choice program in 1999.

"Burbs Short-Circuit ComEd"
Crain's Chicago Business (11/23/98) Vol. 21, No. 47; P. 4; Knapp, Kevin

In a move aimed to outmaneuver Commonwealth Edison Co., 125 Chicago suburbs are pooling their resources to negotiate more competitive electricity rates. Although still in the beginning stages, the strategy would give the municipalities the leverage needed to win deals that would allow them to reduce electric costs for commercial and residential customers. The plan may require partnerships to be formed to pool the power purchases of the city, suburban governments and park, school, and sanitary districts. It may also include setting up suburban-owned generation plants or forming independent municipal power agencies. From a theoretical standpoint, the municipalities' plan looks like a viable option. According to observers like William Abolt, acting commissioner of Chicago's Department of Environment, there is a growing consensus that intergovernmental cooperation on energy purchases is a sound idea. The city of Chicago and surrounding suburbs tend to agree, which is why they are moving forward with a multi-pronged approach that could begin the savings process as early as next October, when municipalities are given the go-ahead to begin shopping for power. The plan is advancing despite a current state law that prohibits potential savings during the deregulation phase-in period. However, the blatant defiance does not appear to worry ComEd's parent company--Unicom Corp., which believes it still has a good chance of supplying these customers.

"Regulatory Hurdles, Attitudes Seen Hindering Online Mortgage"
Real Estate Finance Today (11/23/98) Vol. 15, No. 27; P. 11; Conger, Barry

The increased potential of the Internet in the mortgage application process has been slow, mainly because there are a number of barriers that prevent extensive online origination growth, according to panelists at the American Conference Institute's Web Based Mortgage Origination Conference. One of the biggest obstacles is regulatory issues. Most of today's regulatory policies are designed to cover paper mortgages, whereas the rules for online origination aren't as well-known, according to John Kromer of Negroni and Winston. There are important rules governing online transactions, and violators of these rules may face stiff penalties. Another barrier to online origination is security. Many Internet users are uncertain about the strength of security. Most of this problem simply involves perception, because Internet users may not yet feel that their private information is safe, said Jerry Bohall of Crestar Mortgage. Mortgage companies that operate on the Internet can improve their security through security providers, restrictive methods, and security protocol. Despite these barriers, online mortgage experts still say there is a great deal of opportunity on the Internet, although the human factor will remain important.

Published: December 14, 1998

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