Open House by Jim Woodard

Today's housing news usually focuses on home buyers and sellers. But a large number of Americans live in rented homes and apartments, and those renters are experiencing problems as severe as their buyer-seller counterparts.

Problems in the capital markets have hindered construction of rental housing nationwide. As the supply of rentals dwindle and demand increases, it is becoming harder for families to find suitable rentals at affordable prices.

"Despite a demand for our product that far exceeds the supply, affordable apartment developers are finding it nearly impossible to assemble the necessary capital to move forward with their projects," said Robert Greer, president of a firm that has long specialized in producing rental developments. "Putting together deals that make sense is more difficult now than it has ever been, because the program's biggest investors of the past have been sidelined."

If credit markets remain frozen, or unemployment continues to skyrocket, building starts for multifamily rental housing will decline even more, says Bernard Markstein, vice president of the National Association of Home Builders.

Steve Lawson, president of a major multi-housing building firm, expressed a dim view of the future of rental housing. "These projects take longer to design and build than single-family homes, so it's important to have a development pipeline. In the next few years, the huge Generation Y age cohort — people now in their early 20s —- will begin entering the housing market and they won't be able to find apartments."

Making matters worse, renters are facing another new and intensifying problem. Because many landlords are losing their rental properties to foreclosure, renters are being evicted from homes and apartments despite having paid their rent on time.

There is good news, however, for some renters. Fannie Mae, a major government-sponsored buyer of mortgages, recently announced a new policy that will allow qualified renters in Fannie Mae-owned residences to stay in their homes for longer periods.

"Renters in foreclosed properties have often been a casualty of the foreclosure crisis," said Michael Williams, chief operating officer of Fannie Mae. "This policy will allow renters to remain in Fannie Mae-owned properties should they choose to do so, mitigate the disruption of personal lives, and help bring a measure of stability to communities impacted by high foreclosure rates."

The policy applies to renters occupying foreclosed properties at the time Fannie Mae acquires the property.

Eligible renters will be offered a month-to-month lease, or financial assistance to relocate should they decide to leave.

Q: Are home sales increasing?

A: Home sales are indeed increasing, substantially, in an increasing number of markets. Meanwhile, inventories of homes for sale are declining.

Existing home sales — including single-family homes, townhomes and condos — increased by 6.5 percent nationally in December, over the previous month, says a National Association of Realtors report. "It appears buyers are taking advantage of much lower home prices," said Lawrence Yun, NAR's chief economist. "The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal."

The extent of increasing home sales is regional. December home sales in California increased 85 percent as compared with December 2007. The state's median price of existing homes fell 41.5 percent over the past year.

"The decline in home prices has brought the cost of housing more in line with household incomes, improving affordability across the state. This should be especially helpful for first-time buyers who can qualify for a home loan," said a report from the California Association of Realtors.

Q: What's the best first step in solving a mortgage problem?

A: When a homeowner can no longer meet the payments on his or her mortgage, the best first step is to candidly discuss it with the lender. In many cases, a modification of the loan can be worked out, making the payments more affordable. This is better than letting the property slip into foreclosure.

However, most mortgages that are modified by lenders fall back into delinquency within six months, said John Dugan, head of the Treasury Department's Office of the Comptroller of Currency. Nearly 53 percent of modified loans re-default. But trying first to resolve the problem with the lender is always a good idea.

A word of caution: An increasing number of firms are hanging out the shingle that says, "expert mortgage modifier consultant." For an upfront fee of up to $3,000, they claim to help negotiate a modified payment schedule. In most cases, it's more productive for the homeowner to personally discuss and negotiate the modification directly with the lender. The last thing a struggling homeowner needs is to pay yet another unnecessary fee.

The same applies to firms that offer to negotiate with county assessors to reduce a homeowner's real estate tax. Assessors usually have a simple procedure set up for homeowners who want to appeal their tax amount. A third-party fee-consultant is not needed.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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