Lack of Affordability – Accessible Housing a Problem for Persons with Disabilities

A huge problem for people with disabilities is that they are not able to access affordable housing. Roughly 54 million Americans have at least one disability, comprising the biggest minority group in the state.

According to Federal guidelines, affordable housing means total costs (i.e. rent/mortgage, utilities, insurance and taxes) do not go beyond 30 percent of a renter’s or homeowner’s household income.

At present, persons who are qualified for Supplemental Security Income (SSI) in California receive $854.40 every month and $1,444.20 for couples. Based on the Federal guidelines, persons living alone on SSI must not pay over $256.32 every month and couples must not pay over $433.26. Taking this into consideration, it seems impossible for persons with disabilities to access affordable housing and a lot of them will be on waiting lists.

In addition to problems with affordability, another problem is accessibility. Many California communities are attempting to solve the problem of accessibility by, for instance, implementing the Universal Design Model Ordinance. This ordinance provides more opportunities for persons with disabilities, whether temporary, developing or permanent, to age in place.

Experts in the industry say that education will make a significant difference. People must be made informed about the programs and agencies that are working together with lenders, housing authorities and service providers in making new housing alternatives, like smart-home technology. Moreover, experts advise that persons with disabilities talk to elected leaders regarding their real-life experiences and the need for laws that enhance affordability and accessibility.

Elsa Quesada, chair of the California State Independent Living Council, said that they are committed to support persons with disabilities and providing information, training and education to help them. In partnership with the California State Department of Rehabilitation, the California State Independent Living Council prepares and oversees the State Plan for Independent Living. They are continuously asking for public feedback in order to guarantee that services reached persons with disabilities.

Fannie Mae, Freddie Mac, and FHA is Profitable Again

These past few years, politicians, economists and Wall Street became concerned for Fannie Mae, Freddie Mac, and the Federal Housing Administration. They were anxious about the agencies’ respective ability to stay solvent. The three agencies have been getting high default rates for almost five years, which resulted to large quarterly losses.

Recently, those concerns have improved, as Fannie Mae reported $5.1 billion profits for the second quarter and Freddie Mae reported $3 billion profits for the second quarter as well.

Towards the end of the year 2008, the two agencies got $188 billion in taxpayer funds as a form of assistance. As of now, they have paid back a quarter of that, and if profitable quarters continue, they will be able to repay the loan in full.

One of the things that helped the agencies return to profitability is the improving housing market. Another reason can be better risk management of the two agencies.

In addition to Fannie Mae and Freddie Mac, FHA is also rebuilding their reserves and recapitalizing.

Ever since the first months of 2009, FHA has increased its mortgage insurance premiums on four separate instances. New FHA homeowners located in high-cost areas (e.g. Orange County, California and Loudoun County, Virginia) currently pay as high as 1.5 percent every year to the FHA’s capital reserves.

A few things that helped FHA to keep a positive capital ratio and move toward its target 2 percent reserve ratio include bigger premiums and fewer FHA defaults.  At present, the capital ratio of FHA is around 0.50 percent. Moreover, $1 billion of the $25 billion mortgage services settlement went to FHA’s bottom line.

One huge factor that contributed to Fannie Mae, Freddie Mac, and FHA’s return to profitability is the increase in U.S. homeowners staying current on their respective home loans. In other words, decrease in defaults indicates fewer losses and more profit.

Rate Cut Expected by Borrowers

According to national loan approval data from Mortgage Choice, which is the largest mortgage broker in Australia, demand for variable rate home loans achieved an eleventh month high in July due to the rumors of another rate cut in the upcoming months.

Variable rate demand increased to 85 percent of all new home loan approvals for the month of July. This was the highest ever since August of the previous year, when it was 86 percent of all new home loan approvals.

The only state that reported a decrease in the variable rate demand was Western Australia, from 86 percent in June to 81 percent in July. In the meantime, the average increase of variable rate across the rest of the states was 3.75 percentage points.

According to company spokesperson Belinda Williamson, most of the borrowers feel positive about variable interest rate like they did in August 2011, when borrowers had encountered nine successive months of constant interest rates, which was followed by decrease in the rates.

In addition, Williamson said that the borrowers’ expectations of another rate cut in the approaching months may be strengthened by the low inflation figures in the previous month. Apparently, borrowers are focused on obtaining the lowest interest rate possible. In fact, the top two variable rate loan options in July are common for having low interest rates.

Demand for discount rate loans increased to 44 percent, while demand for basic variable rate loans increased to 20 percent. Moreover, demand for standard variable rate loans decreased in the previous month, from 19 percent to 18 percent. Similarly, demand for fixed rate loans significantly decreased from 18 percent to 15 percent.

In contrast, the only state that reported an increase in the fixed rate loan demand was Western Australia. This may be due to the effect of the mining boom on living costs and borrowers searching for ways to limit their expenses.

Attempt to Resolve Home Loan Rates Begin

According to the most recent figures from the Reserve Bank, the floating rate mortgages is 61.7 percent of the overall mortgage lending by banks for the month of May, which is a decrease from the 63.1 percent during the month of April.

Consequently, it is the first monthly decrease ever since August of the previous year, in which floating rate mortgages was 56.3 percent of the overall mortgage lending. However, the figures during August a year ago was obviously an irregularity given that the floating rate mortgages percentage had been increasing ever since August of the year 2009, where it was 22.8 percent of the whole.

The size of the shift is happening into the one to two-year fixed rates which make up 13.3 percent of the whole during the month of May, an increase from the 11.8 percent during April and 9.6 percent during February. The most popular were pre-GFC, two-year fixed-rate mortgages.

Based on figures from other central banks, the price war has caused mortgage approvals to extensively increase but credit growth has hardly increased.

There was an increase in the household credit growth of 0.2 percent during May for a third consecutive month and a progress of the zero to 0.1 percent growth observed during the last seven months. On the other hand, the growth during May 2007 was 1 percent and 1.1 percent during May 2006.

According to Nick Tuffley, the chief economist of ASB Bank, the credit growth figures are already the net and are being restrained considerably by insurance payouts in Christchurch but the rebuilding is just starting.

The net mortgage lending increased by only 1.5 percent from that of May in the previous year but the $558 million growth during May was significantly higher than the $343 million growth during April.

In addition, Tuffley said that the growth for the month of May is the highest since October 2009. It is estimated that lending will be even stronger for June.

FHA Recoils on New Policy

A policy demanding borrowers to settle their disputed bills in their credit reports before they are qualified to have another loan has been canceled by the Federal Housing Administration.

The FHA has ordered to make the annulment of the policy effective on July 1. This policy would have had a big impact on people with undisputed bill accounts listed on their files where the amounts range from $1000 or more. According to some experts if ever the policy was pushed through, one out of three FHA applicants for loan would find it difficult to get qualified.

The withdrawn policy would have required borrowers who had collections of unpaid bills to settle the amounts before they could apply for a new loan. They could do this either by paying the amounts in full or by applying a repayment schedule. If you fail to do so then you would not be allowed to have FHA loans.

Disputed bills are very common to the files of every borrower in the United States; however it does not pose a very serious risk to credit. These bills would however, result to many altercations and disputes among the overpricing of dealers and consumers. The same is through with open collection accounts, however they are considered more threatening by the lenders because they often get unpaid during the extension period.

Those who opposed the policy said that the terms were more in favor of the lenders and it was very heavy on FHA borrowers, which composed of low income households, first-time buyers and other minority groups. They also said that the policy would not be very helpful in seeking out the credit risks in private lending for the agency. This is because these private persons are already imposing overlays in the mortgages of borrowers.

So to sum it all up, borrowers are no longer required to pay off their undisputed debts, however they must be wary of overlay prices from private lenders for they might be the reason you could not get a loan despite the fact that the FHA is more giving.