What in the world is a QRM and why does it matter to the typical home buyer?

With the 2010 Dodd – Frank bill the U.S. Congress attempted to establish a vehicle to require mortgage generating banks to retain a portion of the securitized loans (loans that are bundled together and sold to investors) that they generate. Simplistically speaking the theory is that if you require the banks to retain say 5% of the loans that they securitize they will be more diligent in assuring that they originate quality loans to quality borrowers thus reducing the likelihood of default. By Congress’s definition exempt from this 5% “skin in the game” rule are FHA loans and Qualified Residential Mortgages or QRMs the definition of which was left up to the country’s six banking regulators.

Discussion to date suggests that a QRM would be defined as a loan based on 80% loan to value, or 20% down-payment, made to a borrower with a minimum FICO score of 690 whose ratio of income to mortgage payment and overall debt is no more than 28% and 36% respectively. While on the surface one might accept that that does in fact describe a qualified borrower and loan the concern is what such a definition does to the mortgage market as a whole.

Banks that are forced to assume additional risk and maintain additional reserves will do what banks always do and that is they will pass the cost of the risk on to the borrower in the form of higher rates and expenses or will raise the bar for qualifying to the point where the only real options are as a QRM or a FHA borrower. Playing out this scenario one can easily project that FHA down payment and qualification requirements would necessarily be raised to manage an already larger than ever intended market share.

With available statistics suggesting that 80+% of first time home buyers put down less than 20% this scenario does not bode well for maintaining the affordability factor so important in that market segment and as we well know, as goes the first time buyers so goes the market. The National Association of Realtors has and is following these developments very carefully and is advising both the regulatory agencies and Congress itself as to what it is sees as the impact of such actions. We will keep you posted…

 Posted by Susan and Paul Vaccaro

Woods Bros Realty in Beatrice was voted favorite Real Estate company in Gage County, through a community vote hosted by the Beatrice Daily Sun.

 Posted by Woods Bros Realty

Here are the April numbers from all Woods Bros offices, including Lincoln, Seward, York, Beatrice and Grand Island:

• $36,136,601 Total Volume Closed (Down 14% from Mar. 2011)
• 235.55 Total Sides Closed (Down 1% from Mar. 2011)
• 328 Sides Placed Under Contract (Up 2% from Mar. 2011)
• 514,038 Page Views on WoodsBros.com
• 55,908 User Sessions on WoodsBros.com
• 54 New Saved Searches on WoodsBros.com
• 1,130 New Saved Properties on WoodsBros.com
• 116 New Customers on WoodsBros.com
• 820 Daily Active Users on Facebook.com/WoodsBros
• 166 Text Inquiries to WOODS at 59559
• 3,276 Guided Tour Views at WoodsBros.com
• 126 Views at MyWoodsBrosTV.com (launched end of month)

View our monthly Market Snapshot here.

 Posted by Woods Bros Realty

John Morgan

John Morgan joins the Grand Island office. He grew up in Hastings, Nebraska. He attended Kearney State College. He was in the transportation industry for 20 years and owned his own restaurant (Little Mexico). John and his wife live in Hastings. John can be reached at 402-469-7467 or John.Morgan@woodsbros.com.

 Posted by Woods Bros Realty

According to the city Building & Safety office, permits were pulled in 78 Lincoln subdivisions. Twenty-five percent of these subdivisions accounted for 77% of all permits pulled last year. Our mystery area had nearly three times more construction than the second most active area, accounting for 42 of the 370 total permits pulled for new construction. The next most active development had just 15.

This mystery area encompasses more than 500 Acres of residential and 130 acres of commercial properties with plans for parks, trails, premier shopping and more. The development is now moving forward with opening its fourth addition, offering 110 premium home sites. This area touts “Distinctive Living Where Dreams Come Alive.”

If you guessed an area in South Lincoln, you would be right! The Wilderness Hills development is one of Lincoln’s newest and finest additions, nestled in a prime location in South Lincoln, located one-half mile south of S. 27th Street and Yankee Hill Road, close to SouthPointe.

Make plans to see this new development at this year’s Spring Parade of Homes. There are seven featured homes in the Wilderness Hills area, with an opening Celebration for everyone on Sunday, May 8th. The Celebration includes roses for the first 250 moms in attendance along with inflatable games for the kids, a Grand Prize Drawing, LIVE Radio Remote from 2-4pm, prize drawings at the featured homes, and food & beverages.

If you have been considering building a new home in Lincoln, take a look a Wilderness Hills.

Woods Bros Realtor Vladimir Oulianov represents several builders who have constructed the majority of homes built at Wilderness Hills. Each of these builders is Energy Star Certified, meaning they build healthy and efficient homes to reduce impact on the environment as well as save the home owner money on utilities.

To learn more about Wilderness Hills and new energy efficient homes, visit www.NewEfficientHomes.com.

 Posted by Vladimir Oulianov

Laura Green

Laura Green joins the Country Club office.  She grew up in Lincoln, Nebraska.  She attended Lincoln Southwest High School and the University of Nebraska where she majored in Business Administration.  Her hobbies include cooking, traveling and spending time with family.  She is looking forward to her wedding in July. Laura can be reached at 402-440-8575 or Laura.Green@woodsbros.com.

 Posted by Woods Bros Realty

Nick Wood

Nick Wood joins the Lincolnshire office.  He is a lifelong Lincoln resident. He attended Lincoln High School and the University of Nebraska where he majored in Psychology. His hobbies include golfing and going to the horse races.  Nick can be reached at 402-525-5076 or Nick.Wood@woodsbros.com.

 Posted by Woods Bros Realty