A report from the Wall Street Journal. “Mary Babinski, a senior loan officer with Motto Mortgage Champions in Trinity, Fla., recently wrote a 30-year loan for a retiree buying a home in New Port Richey. He had no problem qualifying, but he was surprised he could nonetheless. Why the amazement? Because he was 97 years old, Ms. Babinski said. Loan officers say older borrowers often don’t realize they can get loans with terms that will expire on their 110th, 120th or nearly 130th birthdays.”
“Borrowers over 65 account for roughly 10% of all mortgages originated annually, according to reports by the Federal Housing Finance Agency. Eager to serve this group, some lenders are working harder to find ways to qualify retirees, including rolling out lending programs that let borrowers use their investment portfolios to qualify, without even taking monthly distributions.”
“If income isn’t enough, the next step is to create a distribution from a retirement account, such as an IRA or 401(k). Matt Andre, branch manager in Orlando, Fla., for lender FBC Mortgage, said that in September a retired borrower needed to show $8,000 of monthly income to qualify for a 30-year home purchase loan. She set up a distribution for that amount from a $500,000 IRA and had her financial adviser draft a letter to the lender about the new income stream. This qualified her, even though at that rate, the entire account would likely be drained within five or six years. Fannie Mae rules—which many lenders use as guidelines even if they are not going to sell the loan—only require that distributions are guaranteed to continue for three years.”
“If qualifying is still a problem, lenders are increasingly willing to consider stocks, bonds and mutual funds. This differs from creating a distribution that will be counted as income because the borrower doesn’t have to take a monthly amount out of their portfolio. Instead, the lender uses a formula called ‘asset depreciation,’ (sometimes labeled asset annuitization, depletion or dissipation) to impute a monthly distribution from the portfolio.”
“Some jumbo lenders, particularly who cater to high-net-worth individuals, have implemented far more liberal asset depreciation programs, said Richard Barenblatt, a mortgage specialist with Guardhill Financial in New York. Last year, he got an 83-year-old retired Manhattan co-op owner a $1 million, 10-year, interest-only adjustable-rate mortgage, for a re-fi, at ‘a highly competitive rate’ through a ‘liquidity-based program,’ which is similar to asset depreciation.”
From KTAR in Arizona. “Finding a safe and affordable place to live can be difficult for anyone but with a prison record, it’s nearly impossible. That’s where buying a home comes into play. Over the past three years, Ron Kuhn, senior loan officer with Summit Funding in Tempe has helped about a dozen former inmates apply for home loans. He said that the time in prison gives these men and women a blank slate. Kuhn explained that their first step towards home ownership is establishing a credit score, which he said only takes about six months.”
“‘Now they qualify for the best of the interest rates, the down payment assistance and it’s just wonderful,’ Kuhn said. ‘As long as I can identify that you’ve had a solid two year work history in the past, not even with the same employer, just you’ve worked for two years in your adult life,’ Kuhn said. ‘When you’ve had a gap of employment six months or greater you just need to be back on the job for six months or more.’”
“As for the down payment, Kuhn said each of Arizona’s 15 counties offer first-time buyer programs that help to cover most — if not all — of the down payment in exchange for higher interest rates.”
The Palm Beach Post in Florida. “Jon Leiberman rarely plays the lottery but he felt like he won it this past June. That’s when he became aware of $1 condos for sale at Hunters Run Country Club in Boynton Beach. Without ever seeing it, he bought a two-bedroom, two-bath, 1,400 square-foot condo. His Realtor, Elaine Perlmutter of Lang Realty, face-timed him pictures. ‘I got the steal of the century,’ Leiberman said.”
“The phenomenon of giveaway condos in Palm Beach County at places like Hunters Run and Boca West caught the attention of the New York Post last year. The biggest impediment to country club sales of small condos is that buyers have to pay one-time buy-in fees that can be more than $80,000. Other reasons include: Golf is not as popular as it once was. Annual carrying costs can be as high as $30,000. More condos are on the market at the 30-year-old plus country clubs as owners have passed or moved into assisted-living facilities. Some condo owners upgraded into single-family homes, and do not want to carry two units. Some condos need major upgrades.”
“Sellers at Boca West and Hunters Run receive back 30% to 40% of their original buy-in fee when they sell. At Hunters Run, the refund is about $30,000. But savvy buyers often want some of that money as an enticement to buy. At Boca West, a seller is willing to do just that. A $100 listing tells buyers to get their apartment ‘for free’ with the seller offering to pay $10,000 toward the $70,000 buy-in. Five other condos at Boca West are listed for under $5,000; one is listed for $1.”
“Meanwhile, back at Hunters Run, Paul Ware of Brockton, Mass. agreed with his Realtor to list for $1. ‘It is sad that it has come to this,’ said Ware. ‘I have yet to receive an offer, and it has been nearly a year.’”
“Ware paid $64,000 for a second-floor unit in 2004. He said he stopped using the unit three years ago. He pays for a social membership but his annual carrying costs still total $27,000 a year. Those carrying costs include property taxes, homeowner association fees and a minimum that must be spent at restaurants. ‘It is like throwing money down the drain,’ he said. But Ware is not prepared to give back part of his buy-in fee to facilitate a sale. ‘If they do not want it for a buck, then so be it. I will just hold onto it.’”
“Carolyn Liss of Hunters Signature Real Estate said one of her clients recently had to give back money to sell her Hunters Run condo. She joked she ‘inherited her mother’s debt.’ Elaine Perlmutter of Lang Realty, said she often feels like ‘the bearer of bad news’ bringing lowball offers on giveaway condos.”
From Crain’s New York Business. “For a Manhattan condo developer in a slowing sales market, the request from an international travel website was irresistible: Let us furnish 20 of your unsold units and offer our users a two-night stay. In its search for empty apartments to decorate in New Year’s resolution themes, Booking.com found its canvas at 25 Broad St., a 308-unit rental building in the Financial District that developer LCOR is converting into for-sale condos. Starting today, the website’s users can book one of the Instagram-ready units and stay there this weekend for a $20.20 fee.”
“For the promotion, a budding stand-up comic can book the ‘Find your Funny’ suite, with a curtained stage, rubber chickens on a bedroom wall and the promise of a script-writing session with a comedy writer. A two-bedroom apartment—for sale at about $1.7 million—is reimagined as a fashionista’s closet and comes with money to spend at Nordstrom. And a unit listed for $2.085 million is equipped with exercise machines and a kitchen full of juicing ingredients, for those who resolve to get in shape.”
“It’s not a bad way to call attention to unsold condos in a borough that’s awash in them. An estimated 7,050 units are competing for buyers in Manhattan, according to a report this month by Halstead Development Marketing. The Financial District has about 1,000 of those units, most of which haven’t been formally listed.”
From Curbed Boston in Massachusetts. “Charlestown. This neighborhood might be worth exploring for possible condo deals. The median sales price was down in the fourth quarter 12.7 percent annually, to $690,000. In fact, every major price indicator, including the average per square foot, was down. Fenway. Here’s another enclave with possible deal potential, at least by downtown Boston standards. The median condo sales price was $604,500 in the fourth quarter, down 11.8 percent annually. What the Miller Samuel-Douglas Elliman report calls Midtown, and what we might better call Downtown Crossing, saw a pretty sizable median sales price drop—down 15.4 percent, to $1,275,000.”
“The West End. Here, finally, the median condo price was down sharply in the fourth quarter: 27.6 percent, to $555,000.”