mortgage

Slow starts, shrugging lenders

Tuesday, May 19
Written 11:15 a.m. EDT

HOUSING STARTS: April saw a further decline in housing starts. Most of the news coverage will compare April to March, but I think it's more informative to compare April 2009 to April 2008.

Total housing starts this April were at a seasonally adjusted annual rate of 458,000. That's a 54 percent decline from the previous April's annual rate of 991,000.

The decline isn't as bad for single-family houses. Construction of one-unit dwellings was at a seasonally adjusted annual rate of 373,000 in April, a 42 percent decrease from the 647,000 annual rate in April 2008.

Multifamily structures (apartments and condos with five or more living units) fell 66 percent in one year. Multifamily units were started at an annual rate of 103,000 this April, compared to an annual rate of 305,000 in April 2008.

Mike Larson, real estate and interest rate analyst for Weiss Research, writes: "The weakness in April was concentrated in the multifamily sector of the market -- condos, apartments, and so on. That likely stems from the ongoing condo glut and the tighter financing conditions we've seen in the commercial real estate arena."

Indeed, the National Multi Housing Council has been saying repeatedly that it's difficult to get financing to build apartments and condos. "Certainly, finance is scarce at best right now," says Mark Obrinsky, chief economist for the NMHC. "If the financing were more available, we would see more multifamily starts than we're seeing."

The decline in housing construction has a constellation of causes. Decreased demand and unemployment are the most important ones, but not the only ones.

STUCK: I've received two e-mails recently from readers who can't get lenders to fix mistakes. The lenders shrug helplessly and say, "Whaddya gonna do?"

One homeowner got a mortgage modification from SunTrust. But there was a problem in calculating the homeowner's income. He gets paid 26 times a year, which means that there are 10 months in which he gets two paychecks, and two months in which he gets three paychecks. He got a modification based upon his income during a month when he collected three checks. Now, he says, his new, modified payment is hundreds of dollars a month more than it should be.

"They refuse to accept any other documents or look at my pay stub actual gross amount," he says. "What actions can I take?"

I wish I had a suggestion. If SunTrust won't take a second look, I don't know how to persuade them to do so. I have a call in to SunTrust about other issues (based on e-mails from other readers), and I'll ask.

Here's another situation: Just now another homeowner e-mailed to say that an appraiser mismeasured the house by 250 square feet and based all of his work off of that number, with numerous errors resulting. "The bank who ordered the appraisal is saying that there is nothing they can do," the reader says.

The new Home Valuation Code of Conduct forbids originators from talking directly to appraisers. Originators are forbidden from asking appraisers to bump up their appraisal a little so the loan can go through. But I doubt the code of conduct expressly forbids borrowers and lenders from seeking a correction of a mistake.

A lot of politicians believe they're infallible. Maybe the politicians who negotiated the home valuation code of conduct believe appraisers are infallible, too.

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