Atlanta High Debt to Equity Ratio Third In The Nation

Atlanta High Debt to Equity Ratio Third In The Nation


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From By Michael E. Kanell at My AJC, “Despite several years of improvement in the housing market, metro Atlanta ranks third in the nation in the share of homeowners who still owe more on their mortgage than their homes are worth.

According to a study released today by Zillow, 17.6 percent of metro Atlanta homeowners still have negative equity, also described as being “underwater.”

That means that – at best – those owners would break even if they sold their homes. More likely, it would cost them money to sell the home. Nearly 37 percent of homeowners are effectively underwater, that is, “they don’t have enough equity to comfortably cover the costs of selling their home and buying a new one,” according to Zillow, a Seattle-based real estate data firm.

I was disturbed to read the recent story in the New York Post that said: “We learned nothing from the last financial crisis. The housing market is set to collapse, again, and a key culprit, again, is artificial demand created by government policies.

“For starters, mortgage-software firm Ellie Mae reports that the average FICO credit score of an approved home loan plunged to 719 in January (the latest month for which data is available) from 731 a year earlier, and well below 2011’s peak of 750.

“It’s a dangerous sign lenders are loosening underwriting standards. Lower FICO scores correlate with higher risk of loan default.

“The Federal Housing Administration is a big reason for falling credit scores. So are Fannie Mae and Freddie Mac. The government housing agencies have slashed credit requirements under pressure from the Obama administration — like the Clinton administration before it — to qualify more immigrants and minorities with low incomes and “less-than-perfect credit.”

“Meanwhile, home lenders are approving more debt-strapped borrowers. According to Ellie Mae, applicants approved for mortgages in January had an average household debt-to-income ratio of 39%, up from 2012’s annual average of 34%. Borrower debt loads have been creeping higher each year since 2012, when Ellie Mae first started tracking such data.”

Does this sound familiar? Last year, Fannie Mae launched a new subprime-mortgage product called HomeReady that caters to recent immigrants with weak credit and limited income.

The new loan program, which offers “income flexibility,” allows borrowers for the first time to bundle income from roommates and relatives to meet qualifications for income. They only have to put 3% down, and can use gifts from nonprofit groups to subsidize their down payments.

“There is no limit on the number of non-borrower household members who can be present on a single transaction,” Fannie advises originators. And even then there is “documentation flexibility,” a frightening echo of last decade’s “no-doc loans.”

If you are looking for the right time to sell your house, maybe the time has arrived. When you read how housing prices have gone up nationwide and median incomes have been flat for years, we have an affordability issue. That means fewer and fewer potential homeowners can meet lending standards without putting themselves in jeopardy. And from this New York Post article, there’s no new supply coming on the market until prices rise further and price more people out of the market.

Val Buys Houses LLC specializes in helping homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple honest truth about your home. We buy for cash, therefore we can help you sell it fast to resolve any situation, or give you as much time as you need.
We care about our community in Cobb county and Atlanta. At Val Buys Houses LLC we take a lot of pride in providing excellent customer service. We have come across all scenarios, we are not here to judge; only to help.

Give us a call today at 404-844-8845 and let us see if we can help YOU!

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