First Rate Financial Group, Author at First Rate Financial Group

31

Jul

Real Estate

What Is Eminent Domain?

What Is Eminent Domain Eminent domain is a law that gives the federal, state, county, and municipal governments in the United States the legal right to “condemn” property and then seize it to allow its use for development. Eminent domain is supposed to be used by the government at the various levels to do things for the public benefit, such as to build new roads or construct new public schools.

Compensation Under Eminent Domain Seizure

The government cannot take property without compensating the owner for its market value. Disputes that lead to lawsuits arise when the property owner and the government have a serious disagreement about the value of the property.

Imagine an acre of desert land in Nevada with no water, nothing built on it, and no utilities. The owner would be lucky to get $10,000 for it. Now, imagine it is less than a few miles away and that same amount of land is on the world-famous Las Vegas Strip. Now, it can sell for up to $10 million per acre.

What if the vacant land becomes a part of a new extension of Las Vegas? Is it worth $10,000 or $10 million? This is the type of thing that causes major legal disputes over the property valuations.

Abuse Of Eminent Domain

Eminent domain is supposed to be only used sparingly for the public benefit. Unfortunately, that is not always the case. Developers sometimes use eminent domain laws with the complicit help of government officials to seize all kinds of property that the owners have no intention of ever selling at any price. People may lose their family homes where they lived for generations so that the city can allow a developer to build a parking lot.

To make matters worse, in 2005, the U.S. Supreme Court ruled in a case called Keto v. City of London that the city could seize property on the mere expectation of increased tax revenues for the city or jobs.

This landmark case basically removed any restrictions and expanded the ability of the government to seize property on a mere pretense of having an expectation of revenues. In response to the U.S. Supreme Court ruling, 44 states enacted laws restricting eminent domain seizures in those states.

Summary

When a property owner gets hit with an eminent domain action, it is usually a surprise. The owner should immediately seek out competent legal counsel to help protect their rights and not necessarily let the abusers get away with using eminent domain laws inappropriately. There are non-profit organizations that are legal action groups, such as the Institute for Justice working on these issues that can help as well.

If you are in the market for a new home or interested in refinancing your current property, please contact your trusted home mortgage professional.

30

Jul

By First Rate Financial Group

Real Estate

The Community Reinvestment Act Explained In Simple Terms

The federal government adopted the Housing and Community Development Act in 1977, and the Community Reinvestment Act (CRA) portion was designed to prompt lending institutions to provide mortgages for low- and moderate-income Americans. The underlying reasoning for the CRA was to discourage discriminatory lending practices that inhibited low-income communities and neighborhoods.

Over the years, its regulations have been revised to improve effectiveness. During the early 1990s, upwards of five changes were made and more following the 2007 financial crisis. With the country currently in the midst of an economic comeback, the Office of the Comptroller of the Currency announced that it favored making changes to the rules that govern lending under the CRA. These changes could have a significant impact on the real estate market.

Modernization of the Community Reinvestment Act

Critics of the CRA say that it has failed to keep pace with the emerging technologies readily available in the low- to moderate-income communities it was designed to serve. Falling behind in this capacity reportedly inhibited the worthy goal of the policy.

Organizations such as the American Bankers Association are said to be in favor of modernizing the CRA. This group continues to press regulators to bring resources into the technology era. Improved technological resources appear to be critical elements to meeting community borrowing needs and improving banking transparency.

Another aspect of the CRA some feel has trailed behind the times is that not all lending institutions are subject to CRA guidelines. If the goal of the CRA is to give low- and moderate-income families a fair shot at the American dream of homeownership, other financial organizations may need to come under the CRA umbrella. A greater CRA borrowing pool is likely to increase residential and commercial buying.

How The CRA Helps Communities Build Wealth

The current administration has made some hay about pushing policies that centralize ownership in community members’ hands. Several of the potential rule changes to the CRA point to improved home and business ownership within low- and moderate-income communities. In essence, the changes are a kind of throwback to the days when the person who owned the local bakery, breakfast restaurant and hardware store lived within the community.

If successful, the discussed policy shift would encourage residents to buy residential and commercial real estate where they live. In some sense, the administration appears to be shielding living, breathing communities from the widespread corporate takeovers that occurred in the 1990s and early 21^st Century.

Critics seem to worry that tinkering with guidelines may lead to quantity over quality lending. However, proponents see a long-term plan to revitalize communities by restoring and increasing localized property ownership.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional.

29

Jul

By First Rate Financial Group

Financial Reports

What’s Ahead For Mortgage Rates This Week – July 29th, 2019

What’s Ahead For Mortgage Rates This Week – July 29th, 2019 Last week’s economic reports included readings on sales of new and pre-owned homes and weekly reports on mortgage rates and first-time jobless claims.

Realtors® Report Sales of Pre-Owned Homes Fall in June

Sales of previously-owned homes fell last month according to real estate pros. 5.27 million homes would be sold in 2019 if the current pace of sales was unchanged for all of 2019. Analysts expected a reading of 5.33 million sales based on May’s reading of 5.38 million sales. Analysts said that sales of pre-owned homes fell despite lower mortgage rates and the seasonal peak home-buying season.

Sales of pre-owned homes rose 1.60 percent in the Northeast and were 1.60 percent higher in the Midwest. Sales fell 3.40 percent in the South and were 3.50 percent lower in the West. Factors contributing to lagging home sales included low inventories of available homes and steadily rising home prices.

Home prices have risen every month for more than seven years. Fewer homes for sale and higher home prices limit buyers’ choices and their ability to qualify for financing needed to buy higher-priced homes.

New Home Sales Rise in June after Two-Month Lull

The sales pace for new single-family homes rose to a seasonally-adjusted annual rate of 646,000 sales as compared to an expected sales pace of 657,000 for new homes. May’s reading was downwardly revised from a sales pace of 626,000 sales to 604,000 sales. New homes sold fastest in the South and West and were slower in the Northeast and Midwest regions according to the Commerce Department.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported average mortgage rates approaching three year lows last week. Rates for 30-year fixed rate mortgages averaged 3.75 percent and were six basis points lower. The average rate for 15-year fixed rate mortgages dropped five basis points to 3.18 percent; rates for 5/1 adjustable rate mortgages averaged 3.47 percent and were one basis point lower.

First-time jobless claims fell last week to 206,000 new claims filed as compared to the expected reading of 218,000 new claims filed and the prior week’s reading of 216,000 first-time unemployment claims filed.

What‘s Ahead

This week’s economic reports include readings on housing markets, pending home sales and the post meeting statement of the Fed’s Federal Open Market Committee.

Fed Chair Jerome Powell is scheduled to give a press conference and the Labor Department will release monthly updates for public and private-sector jobs created and the national unemployment rate. Weekly reports on average mortgage rates and new jobless claims will also be released.