Good news about real-estate financing tends to get buried by headlines on Billygate, convention jockeying and the latest Gallup poll.
But if you're a home buyer, seller, broker or builder, you might be cheered to know that some positive things have been happening here that should help you directly in the coming months.
Take mortgage financing, for example. One of the problems facing the nation's biggest sources of home-loan credit -- federally chartered savings and loan associations -- has been congressionally mandated regulatory red tape. a
S&Ls throughout the country have been tied for years with restrictions on where or how much they can lend, and have been prohibited from making many of the types of loans that homeowners really need, such as second mortgages and deeds of trust.
Last week, the federal agency in charge of S&Ls began peeling away a lot of this red tape. The Federal Home Loan Bank Board proposed a series of deregulatory steps that will mean lower down payments for buyers who need them, second mortgages for owners of existing homes, energy-conservation and home improvement loans without limits, and a number of other changes of practical value to consumers.
When the proposals are finally ratified sometime early in the fall, you'll be able to:
Walk into an S&L, put down 10 percent on a house and not be required to pay extra costs for mortgage insurance premiums. The "standard" S&L loan for years has meant a 20 percent down payment. The new standard is going to be 10 percent down. On an $80,000 house, you'll need $8,000 in your pocket, not $16,000, when you go in for a conventional, prime-rate loan.
That's a big break for first-time buyers and for working couples with steady incomes but small savings accounts. To cut monthly payments further, you'll even be able to ask for a 40-year loan, rather than the 30-year current federal maximum.
Get a second mortgage or deed of trust -- at competitive rates and payback terms -- from an S&L. Second loans, which are the fastest-growing form of real estate financing in the United States, are simply a method of borrowing against the money you've already got tied up in the home you own.
The extra money you borrow can go for anything you want: a college education for a child, a business venture or a down payment on vacation real estate. Look for long-term seconds -- carrying paybacks of 15 years or more. The new regulations set no limits on terms for seconds, so S&Ls could offer you more attractive repayment schedules than just about anybody in the second-mortgage business.
Get a home-improvement loan from an S&L that's as big as you really need and can afford. Up until now, S&Ls have been restricted to home improvement loans of no more than $15,000 -- hardly enough to handle an addition or remodeling of any real size in today's inflationary market.
Get a loan from your regular, neighborhood S&L on a piece of property -- vacation or investment -- located hundreds of miles away.
Your local S&L generally has been restricted to loans on properties that are in-state or within 100 miles of its main office. Now you'll be able to comparison shop on rates, points, terms and closing fees, rather than being forced to finance with geographic blinders on.
The new S&L rule changes aren't the only positive developments for real estate this summer. Consider these others:
The Senate has effectively blocked a move by the House to ban most local government programs aimed at providing low-interest home mortgages to consumers through tax-exempt bond issues.
Nearly $5 billion has been raised and provided to home buyers in the past 18 months -- at bargain rates ranging from 7 1/2 percent to 9 1/4 percent -- via local bond issues. With the Treasury Department's backing, House Ways and Means Chairman Al Ullman (D-Ore.) choked off many new 1980 mortgage bond issues with a tough legislative campaign. But the Senate, led by Louisiana's Russell Long, has refused to accept any ban that would take effect this year.
That's good news for consumers in the District, Maryland, Illinois, Colorado, Louisiana, New York, New Jersey, Florida, California, Washington and Pennsylvania -- all of which have either had local mortgage-bond issues or may float new ones.
Two other pro-consumer real estate actions taken here in the past two weeks include:
The Department of Housing and Urban Development's announcement that federal law prohibits so-called "controlled business" tie-ins among lenders, lawyers and real estate brokers on settlement and title insurance costs for home purchase transactions. If your settlement fees were paid to a company owned or controlled by your lender, broker or lawyer, you may have grounds for a suit under the Real Estate Settlement Procedures Act (RESPA).
The House and Senate are rushing legislation to allow veterans who bought homes earlier this year with 13 percent and 14 percent VA mortgages to refinance immediately at lower rates, to the full amount of the first loan.