This is not just a Los Angeles issue, it’s developing into a problem in other cities.
The Burden of Transportation Costs on Housing Affordability: Report
10/19/2012 By: Esther Cho
Oftentimes, when the idea of home affordability is calculated, the focus is on the monthly mortgage payment, and how to bring that particular number down through a modification or refinancing.
One report, Losing Ground: The Struggle of Moderate-Income Households to Afford the Rising Costs of Housing and Transportation, assessed the burden of housing expenses combined with transportation costs to offer a more comprehensive view of what defines housing affordability.
The report was the result of a partnership between the Center for Housing Policy and Center for Neighborhood Technology and measured housing and transportation costs of moderate income households living in the 25 largest metro areas.
Overall, research results found moderate-income households, or households earning 50 to 100 percent of the median income of their metropolitan area, spent 59 percent of their income on housing and transportation costs in 2010. Housing costs generally included mortgage payments, property taxes, home insurance, utilities, while transportation encompassed car payments, insurance, maintenance, and gas. The overall figure also consisted of renters, homeowners with a mortgage, and mortgage-free homeowners.
When assessing moderate-income homeowners who still have a mortgage, housing and transportation costs accounted for nearly 72 percent of income on average. A typical moderate-income renter had a lesser burden of 55 percent.
The study also revealed that places with cheaper housing aren’t necessarily the most affordable.
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Proprietary OC Housing News home purchase analysis
10214 VIREO Cir Fountain Valley, CA 92708
$645,999 …….. Asking Price
$645,999 ………. Purchase Price
10/13/2012 ………. Purchase Date
$0 ………. Gross Gain (Loss)
($51,680) ………… Commissions and Costs at 8%
============================================
($51,680) ………. Net Gain (Loss)
============================================
0.0% ………. Gross Percent Change
-8.0% ………. Net Percent Change
0.0% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$645,999 …….. Asking Price
$129,200 ………… 20% Down Conventional
3.50% …………. Mortgage Interest Rate
30 ……………… Number of Years
$516,799 …….. Mortgage
$117,756 ………. Income Requirement
$2,321 ………… Monthly Mortgage Payment
$560 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$161 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$3,042 ………. Monthly Cash Outlays
($362) ………. Tax Savings
($813) ………. Equity Hidden in Payment
$144 ………….. Lost Income to Down Payment
$181 ………….. Maintenance and Replacement Reserves
============================================
$2,192 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$7,960 ………… Furnishing and Move In at 1% + $1,500
$7,960 ………… Closing Costs at 1% + $1,500
$5,168 ………… Interest Points
$129,200 ………… Down Payment
============================================
$150,288 ………. Total Cash Costs
$33,600 ………. Emergency Cash Reserves
============================================
$183,888 ………. Total Savings Needed
The property above is available for sale on the MLS.
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Cost of Ownership Analysis
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Are you ready to make an offer, but you are worried you will either (1) underbid and miss the property or (2) overbid and pay too much? Don't make a mistake and miss your dream home, or worse yet, overpay for it! Get the advice of a seasoned professional. Contact us at info@ochousingnews.com today!
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Justice Department Sues BofA for Over $1B, Alleging Mortgage Fraud
The U.S. Department of Justice sued Bank of America for over $1 billion for alleged mortgage fraud related to the sale of loans to Fannie Mae and Freddie Mac, Manhattan U.S. Attorney Preet Bharara announced in a release Wednesday.
According to the release, the civil fraud suit is a first for the Justice Department for mortgage loans sold to the GSEs.
The lawsuit stems from origination practices from Countrywide, which BofA acquired in 2008.
According to the complaint, from 2007 to 2009, Countrywide implemented a loan process called the “Hustle,” which pushed loans through the origination process by eliminating quality checkpoints and by compensating employees based on the volume of loans originated.
For example, the complaint stated Countrywide eliminated the use of an underwriter for many high risk loans and instead used loan processors who previously weren’t even qualified to answer borrower questions.
The complaint further alleges Countrywide informed Fannie Mae and Freddie Mac that it had actually tightened its underwriting guidelines during this time. As a result, the complaint stated thousands of defective loans were sold to Fannie Mae and Freddie Mac, resulting in over $1 billion in losses and loans that went into default.
“For the sixth time in less than 18 months, this Office has been compelled to sue a major U.S. bank for reckless mortgage practices in the lead-up to the financial crisis,” said Manhattan U.S. Attorney Preet Bharara.
The civil mortgage fraud lawsuit was also filed by the Federal Housing Finance Agency and the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
Bank of America spokesperson, Lawrence Grayson, said the bank “has stepped up and acted responsibly to resolve legacy mortgage matters,” further adding “the claim that we have failed to repurchase loans from Fannie Mae is simply false.”
“At some point, Bank of America can’t be expected to compensate every entity that claims losses that actually were caused by the economic downturn,” Grayson said.