Friday, December 10, 2010
Wednesday, December 8, 2010
Consumers Don't Expect Housing Recovery Until 2013, Experts Agree
Consumers Don't Expect Housing Recovery Until 2013, Experts Agree
12/07/2010 By: Carrie Bay
Americans continue to grapple with uncertainty about the housing market, with 58 percent of U.S. adults expecting recovery to be at least another two years away, according to the results of a new survey conducted by Trulia and RealtyTrac, which tracks homebuyers’ attitudes toward foreclosed homes. One in five consumers believe it will be 2015 or later before we see a housing recovery.
As a result of the recent robo-signing debacle, nearly half of U.S. adults surveyed said they now have less faith in mortgage lenders and banks. Thirty-five percent believe the robo-signing issue will delay the housing market’s recovery, and 24 percent of those surveyed say they have lost faith in the government because of the way the robo-signing mess has been handled.
Pete Flint, co-founder and CEO of Trulia, stressed in a conference call with reporters announcing the survey results that consumer confidence is key to a healthy housing market.
“Government incentives have come and gone and historic lows in interest rates have done little to spur recovery,” Flint said. “Then, as if prospective buyers and sellers needed more to be concerned about, the robo-signing issue caused a ‘what’s next?’ fear to surface in the minds of consumers who, frankly, have lost faith in banks and their government to make good decisions.”
Rick Sharga, RealtyTrac SVP, told reporters that the best thing the government can do right now to support housing is to create more jobs to ensure people can continue making mortgage payments and keep their homes and to get more buyers into the market.
Sharga says the most likely scenario that will play out as a result of the industry’s affidavit problems is that we’ll see massive fines levied against some of the servicers being investigated, with some possibly facing criminal prosecution.
But in terms of foreclosure sales themselves, Sharga says the impact will be “very minimal,” in both judicial and non-judicial states. He notes that there have been some temporary delays in sales timelines as REO homes were pulled from the market to allow for proper case reviews, but Sharga says there hasn’t been a single case so far
where a foreclosure has been completed and the property subsequently sold that has been overturned as a result of affidavit errors.
Sharga expects the robo-signing scandal to have a dampening effect on fourth-quarter sales in general in terms of artificially low numbers, but again he argues that the net effect will be “minimal.”
Flint says the robo-signing mess might rear its ugly head again in the new year, but he believes it will effect the market in a good way. Flint thinks it’s likely the investigation by state attorneys general will lead to more widespread utilization of foreclosure alternatives by servicers, such as short sales, which in turn would serve to deter strategic default and allow the market to more quickly absorb the most distressed properties.
Both Flint and Sharga are of the same mind as consumers in projecting the long-awaited housing upturn. They peg the recovery to begin taking shape between 2013 and 2014.
Flint notes that 68 percent of consumers surveyed by Trulia and RealtyTrac say it will be at least two years before they buy a home, closely in line with the time span most Americans anticipate for a recovery to take hold. He’s also forecasting long-term mortgage rates to continue to creep up to at least 5 percent by 2012, a hike that he says may push some buyers out of the market, further depressing demand.
With demand already weak, sales activity will continue to be volatile through next year, Flint says, but he notes that real estate is “hyper-local” and the recovery of individual markets will be too. Several markets have proven particularly resilient to home price declines, and Flint expects them to be exceptions to the slow-recovery rule, namely Oklahoma City, Oklahoma; Austin, Texas; Omaha, Nebraska; Salt Lake City, Utah; and the Raleigh-Durham region of North Carolina.
Sharga says he expects at least another 5 percent decline in national home prices, before residential values begin to recover in 2014, primarily because consumer appetite will be too weak over the next couple of years to absorb the already engorged supply of homes for sale.
Even though he says the industry might get back to a somewhat balanced level of foreclosure activity by 2013, Sharga maintains that with a large number of delinquencies still hanging over the market, compounded by economic hurdles such as high unemployment, there will be an extremely taxing inventory of distressed properties to work through for years to come.
Sharga says RealtyTrac’s data shows that 2010 will be another record year in terms of foreclosure activity and the number of homes taken back by lenders. He estimates more than 3 million homes will have received a foreclosure filing by the end of the year, eclipsing last year’s tally of 2.8 million foreclosure filings, and about 1.2 million homes will have been repossessed.
From: http://ping.fm/3uptH
12/07/2010 By: Carrie Bay
Americans continue to grapple with uncertainty about the housing market, with 58 percent of U.S. adults expecting recovery to be at least another two years away, according to the results of a new survey conducted by Trulia and RealtyTrac, which tracks homebuyers’ attitudes toward foreclosed homes. One in five consumers believe it will be 2015 or later before we see a housing recovery.
As a result of the recent robo-signing debacle, nearly half of U.S. adults surveyed said they now have less faith in mortgage lenders and banks. Thirty-five percent believe the robo-signing issue will delay the housing market’s recovery, and 24 percent of those surveyed say they have lost faith in the government because of the way the robo-signing mess has been handled.
Pete Flint, co-founder and CEO of Trulia, stressed in a conference call with reporters announcing the survey results that consumer confidence is key to a healthy housing market.
“Government incentives have come and gone and historic lows in interest rates have done little to spur recovery,” Flint said. “Then, as if prospective buyers and sellers needed more to be concerned about, the robo-signing issue caused a ‘what’s next?’ fear to surface in the minds of consumers who, frankly, have lost faith in banks and their government to make good decisions.”
Rick Sharga, RealtyTrac SVP, told reporters that the best thing the government can do right now to support housing is to create more jobs to ensure people can continue making mortgage payments and keep their homes and to get more buyers into the market.
Sharga says the most likely scenario that will play out as a result of the industry’s affidavit problems is that we’ll see massive fines levied against some of the servicers being investigated, with some possibly facing criminal prosecution.
But in terms of foreclosure sales themselves, Sharga says the impact will be “very minimal,” in both judicial and non-judicial states. He notes that there have been some temporary delays in sales timelines as REO homes were pulled from the market to allow for proper case reviews, but Sharga says there hasn’t been a single case so far
where a foreclosure has been completed and the property subsequently sold that has been overturned as a result of affidavit errors.
Sharga expects the robo-signing scandal to have a dampening effect on fourth-quarter sales in general in terms of artificially low numbers, but again he argues that the net effect will be “minimal.”
Flint says the robo-signing mess might rear its ugly head again in the new year, but he believes it will effect the market in a good way. Flint thinks it’s likely the investigation by state attorneys general will lead to more widespread utilization of foreclosure alternatives by servicers, such as short sales, which in turn would serve to deter strategic default and allow the market to more quickly absorb the most distressed properties.
Both Flint and Sharga are of the same mind as consumers in projecting the long-awaited housing upturn. They peg the recovery to begin taking shape between 2013 and 2014.
Flint notes that 68 percent of consumers surveyed by Trulia and RealtyTrac say it will be at least two years before they buy a home, closely in line with the time span most Americans anticipate for a recovery to take hold. He’s also forecasting long-term mortgage rates to continue to creep up to at least 5 percent by 2012, a hike that he says may push some buyers out of the market, further depressing demand.
With demand already weak, sales activity will continue to be volatile through next year, Flint says, but he notes that real estate is “hyper-local” and the recovery of individual markets will be too. Several markets have proven particularly resilient to home price declines, and Flint expects them to be exceptions to the slow-recovery rule, namely Oklahoma City, Oklahoma; Austin, Texas; Omaha, Nebraska; Salt Lake City, Utah; and the Raleigh-Durham region of North Carolina.
Sharga says he expects at least another 5 percent decline in national home prices, before residential values begin to recover in 2014, primarily because consumer appetite will be too weak over the next couple of years to absorb the already engorged supply of homes for sale.
Even though he says the industry might get back to a somewhat balanced level of foreclosure activity by 2013, Sharga maintains that with a large number of delinquencies still hanging over the market, compounded by economic hurdles such as high unemployment, there will be an extremely taxing inventory of distressed properties to work through for years to come.
Sharga says RealtyTrac’s data shows that 2010 will be another record year in terms of foreclosure activity and the number of homes taken back by lenders. He estimates more than 3 million homes will have received a foreclosure filing by the end of the year, eclipsing last year’s tally of 2.8 million foreclosure filings, and about 1.2 million homes will have been repossessed.
From: http://ping.fm/3uptH
Tuesday, December 7, 2010
House Price Declines Hitting Most States
House Price Declines Hitting Most States
by The KCM Crew on December 7, 2010 ·
This winter will see a softening of prices in most parts of the country. If you are considering selling your home in the near future, you should set an appointment with a real estate professional that has experience in your local market. That being said, we want to explain the magnitude of the challenge.
The FHFA just released their third quarter House Price Index. In the titled they claimed: U.S. House Prices Fall 1.6 Percent in the Third Quarter; Declines in Most Parts of the Country
What is the FHFA HPI?
Federal Housing Finance Agency (FHFA) explains their pricing index this way:
The HPI is a broad measure of the movement of single-family house prices. It serves as a timely, accurate indicator of house price trends at various geographic levels. It also provides housing economists with an analytical tool that is useful for estimating changes in the rates of mortgage defaults, prepayments and housing affordability in specific geographic areas. The HPI is a measure designed to capture changes in the value of single-family houses in the U.S. as a whole, in various regions and in smaller areas. The HPI is published by the Federal Housing Finance Agency (FHFA) using data provided by Fannie Mae and Freddie Mac.
How widespread are price declines in the report?
The easiest way to explain this is to show the pricing map contained in the report:
Bottom Line
The majority of states have experienced weakening in house values. Many experts predict this will continue throughout the next several quarters. If you are considering selling in the near future, speak with your agent soon to determine where prices are headed in your neighborhood.
From: http://ping.fm/6rO8C
by The KCM Crew on December 7, 2010 ·
This winter will see a softening of prices in most parts of the country. If you are considering selling your home in the near future, you should set an appointment with a real estate professional that has experience in your local market. That being said, we want to explain the magnitude of the challenge.
The FHFA just released their third quarter House Price Index. In the titled they claimed: U.S. House Prices Fall 1.6 Percent in the Third Quarter; Declines in Most Parts of the Country
What is the FHFA HPI?
Federal Housing Finance Agency (FHFA) explains their pricing index this way:
The HPI is a broad measure of the movement of single-family house prices. It serves as a timely, accurate indicator of house price trends at various geographic levels. It also provides housing economists with an analytical tool that is useful for estimating changes in the rates of mortgage defaults, prepayments and housing affordability in specific geographic areas. The HPI is a measure designed to capture changes in the value of single-family houses in the U.S. as a whole, in various regions and in smaller areas. The HPI is published by the Federal Housing Finance Agency (FHFA) using data provided by Fannie Mae and Freddie Mac.
How widespread are price declines in the report?
The easiest way to explain this is to show the pricing map contained in the report:
Bottom Line
The majority of states have experienced weakening in house values. Many experts predict this will continue throughout the next several quarters. If you are considering selling in the near future, speak with your agent soon to determine where prices are headed in your neighborhood.
From: http://ping.fm/6rO8C
Wednesday, November 24, 2010
Coach Cliff's Real Estate and Mortgage Blog: Why You MUST NOT WAIT to Sell Your House http://ping.fm/gliNC
Tuesday, November 23, 2010
Wednesday, November 17, 2010
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Tuesday, November 16, 2010
Myths: The Earth Is Flat and Newspapers Sell Houses
Myths: The Earth Is Flat and Newspapers Sell Houses
by The KCM Crew on November 16, 2010
It is amazing how masses of ppeople can believe something that is absolutely untrue. The greatest example of this is that at one time the vast majority of people believed the world to be flat. Today, we want to debunk another commonly held belief – that newspapers sell houses. Somehow this notion gained believability even though the facts consistently prove it to not be true.
We should know what methods perspective purchasers use to find the home of their dreams when we are selling our house. That would enable us to develop the best marketing strategy to attract a buyer. The National Association of Realtors (NAR) has just released the 2010 Profile of Home Buyers and Sellers*. This report is recognized by most as the best compilation of data on today’s buyers and sellers because of the enormous amount of data available at NAR’s fingertips.
Let’s look at the actual search habits of today’s buyers as reported by NAR:
It might interest everyone to know that less than 2% looked in newspapers, magazines or home buying guides when starting the search process. What do most buyers do?
by The KCM Crew on November 16, 2010
It is amazing how masses of ppeople can believe something that is absolutely untrue. The greatest example of this is that at one time the vast majority of people believed the world to be flat. Today, we want to debunk another commonly held belief – that newspapers sell houses. Somehow this notion gained believability even though the facts consistently prove it to not be true.
We should know what methods perspective purchasers use to find the home of their dreams when we are selling our house. That would enable us to develop the best marketing strategy to attract a buyer. The National Association of Realtors (NAR) has just released the 2010 Profile of Home Buyers and Sellers*. This report is recognized by most as the best compilation of data on today’s buyers and sellers because of the enormous amount of data available at NAR’s fingertips.
Let’s look at the actual search habits of today’s buyers as reported by NAR:
It might interest everyone to know that less than 2% looked in newspapers, magazines or home buying guides when starting the search process. What do most buyers do?
We can see that buyers today want to explore their options online (combined 47%) or check with industry professionals (combined 27%). You might be ready to argue that the use of the internet is a new phenomenon over the past year or so. However, the report looks back over the last nine years. Though it is true that the percentage of those using the internet has dramatically increased (from 8% to 37%), it might interest you to find out that even back in 2001 only 9% of buyers found their home through print media (again, that number is now 2%).
If you want to develop a great marketing strategy to give your house maximum exposure, forget newspapers and look toward the internet. Where on the internet? The NAR report breaks down the most searched web sites this way:
The buyer is attracted to the type of sites that have the greatest number of listings. These sites are normally generated by the real estate industry. You should make sure your home is on as many of these sites as possible. That will give you the best chance of attracting your buyer.
Bottom Line
Print media never was a great way to market a house for sale and its effectiveness is diminishing each year. Meet with a local real estate professional and put together an internet marketing strategy worthy of your home.
From: http://kcmblog.com/2010/11/16/myths-the-eart-is-flat-and-newpapers-dont-sell-houses/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
Analysts See 7% Drop in Home Prices over Next Year
Analysts See 7% Drop in Home Prices over Next Year
11/15/2010 By: Carrie Bay
Despite a bounce in home prices during the first half of 2010, Fiserv Inc. says it expects property values nationally to fall another 7.1 percent over the next 12 months before beginning to stabilize. The Wisconsin-based financial services technology company sees double-dip territory ahead for many major markets, particularly those that saw the strongest appreciation during the spring and summer months of this year.
Prices of single-family homes rose an average of 3.6 percent during the second quarter of 2010 compared to a year earlier, according to the Fiserv Case-Shiller Indexes. As of the end of June, the median U.S. home price was $177,000, as tracked by Fiserv.
Fiserv says the annual increase in the national reading was driven by strong price increases in relatively high-priced markets, such as San Diego, Washington, D.C., and the San Francisco Bay area.
But despite the gain in the national average, prices actually fell in 70 percent of the 384 metro areas, compared to the 2009 second quarter. Many markets experienced double-digit drops, including Detroit; Boise, Idaho; Reno, Nevada, and many smaller markets in Florida and Oregon.
Fiserv notes that much of the sustained activity in the first half of the year was due to the federal government’s homebuyer tax credit that expired in June. Since then, home sales activity has plummeted.
In addition to the aftereffects of the tax credit, factors weighing on the housing market include chronic high unemployment and the large number of distressed properties that remain in markets such as Florida, Arizona, and Nevada.
Taking these factors into consideration, Fiserv says it expects home prices will drop over the next four quarters in nearly all metro markets before they start to stabilize at the end of 2011, provided there are no downside surprises for the economy or the housing and mortgage markets.
“Some of the largest declines in prices will occur in markets that had strong spring and summer 2010 price increases,” said David Stiff, Fiserv’s chief economist. “This is because the home buyer tax credit delayed the correction in home prices that is necessary to return housing affordability to its pre-bubble levels.”
Stiff points to the Phoenix market as a prime example. There, prices increased by 5.5 percent from the 2009 second quarter to the 2010 second quarter, but Fiserv is forecasting a 16 percent decline in Phoenix home prices by the second quarter of 2011.
Steep drops in home prices are expected to continue in markets that have been hurt most by the housing crisis.
From the second quarter of 2010 through the second quarter of 2011, Fiserv predicts home price declines of 12.4 percent in Nevada; 11.5 percent in Arizona; 9.4 percent in Florida; and 12.7 percent in the District of Columbia.
The analysts at Standard & Poor’s also released their forecast for the path of home prices on Monday. They anticipate an additional 7 percent to 10 percent drop through 2011.
“Low mortgage rates will likely continue to encourage refinancing, but their influence on homebuying activities has been limited due to the weak housing market and a lack of demand,” said Erkan Erturk, a credit analyst for S&P.
The ratings agency says a range of other key factors are also hampering a recovery in the housing market, including an elevated, but declining level of short sales and distressed asset sales.
S&P also points to the large backlog of distressed properties that have yet to be re-marketed for sale, high unemployment, and the ongoing foreclosure paperwork crisis as impeding any meaningful recovery for housing.
From: http://www.dsnews.com/articles/fiserv-sees-7-drop-in-home-prices-over-next-year-2010-11-15
11/15/2010 By: Carrie Bay
Despite a bounce in home prices during the first half of 2010, Fiserv Inc. says it expects property values nationally to fall another 7.1 percent over the next 12 months before beginning to stabilize. The Wisconsin-based financial services technology company sees double-dip territory ahead for many major markets, particularly those that saw the strongest appreciation during the spring and summer months of this year.
Prices of single-family homes rose an average of 3.6 percent during the second quarter of 2010 compared to a year earlier, according to the Fiserv Case-Shiller Indexes. As of the end of June, the median U.S. home price was $177,000, as tracked by Fiserv.
Fiserv says the annual increase in the national reading was driven by strong price increases in relatively high-priced markets, such as San Diego, Washington, D.C., and the San Francisco Bay area.
But despite the gain in the national average, prices actually fell in 70 percent of the 384 metro areas, compared to the 2009 second quarter. Many markets experienced double-digit drops, including Detroit; Boise, Idaho; Reno, Nevada, and many smaller markets in Florida and Oregon.
Fiserv notes that much of the sustained activity in the first half of the year was due to the federal government’s homebuyer tax credit that expired in June. Since then, home sales activity has plummeted.
In addition to the aftereffects of the tax credit, factors weighing on the housing market include chronic high unemployment and the large number of distressed properties that remain in markets such as Florida, Arizona, and Nevada.
Taking these factors into consideration, Fiserv says it expects home prices will drop over the next four quarters in nearly all metro markets before they start to stabilize at the end of 2011, provided there are no downside surprises for the economy or the housing and mortgage markets.
“Some of the largest declines in prices will occur in markets that had strong spring and summer 2010 price increases,” said David Stiff, Fiserv’s chief economist. “This is because the home buyer tax credit delayed the correction in home prices that is necessary to return housing affordability to its pre-bubble levels.”
Stiff points to the Phoenix market as a prime example. There, prices increased by 5.5 percent from the 2009 second quarter to the 2010 second quarter, but Fiserv is forecasting a 16 percent decline in Phoenix home prices by the second quarter of 2011.
Steep drops in home prices are expected to continue in markets that have been hurt most by the housing crisis.
From the second quarter of 2010 through the second quarter of 2011, Fiserv predicts home price declines of 12.4 percent in Nevada; 11.5 percent in Arizona; 9.4 percent in Florida; and 12.7 percent in the District of Columbia.
The analysts at Standard & Poor’s also released their forecast for the path of home prices on Monday. They anticipate an additional 7 percent to 10 percent drop through 2011.
“Low mortgage rates will likely continue to encourage refinancing, but their influence on homebuying activities has been limited due to the weak housing market and a lack of demand,” said Erkan Erturk, a credit analyst for S&P.
The ratings agency says a range of other key factors are also hampering a recovery in the housing market, including an elevated, but declining level of short sales and distressed asset sales.
S&P also points to the large backlog of distressed properties that have yet to be re-marketed for sale, high unemployment, and the ongoing foreclosure paperwork crisis as impeding any meaningful recovery for housing.
From: http://www.dsnews.com/articles/fiserv-sees-7-drop-in-home-prices-over-next-year-2010-11-15
Wednesday, October 27, 2010
PIMCO | Investment Outlook - Run Turkey, Run
Investment Outlook William H. Gross November 2010
Run Turkey, Run
•The Fed’s announcement of a renewed commitment to Quantitative Easing has been well telegraphed and the market’s reaction is likely to be subdued.
•We are in a “liquidity trap,†where interest rates or trillions in asset purchases may not stimulate borrowing or lending because consumer demand is just not there.
•The Fed’s announcement will likely signify the end of a great 30-year bull market in bonds and the necessity for bond managers and, yes, equity managers to adjust to a new environment.
From: http://ping.fm/Z90TM
Run Turkey, Run
•The Fed’s announcement of a renewed commitment to Quantitative Easing has been well telegraphed and the market’s reaction is likely to be subdued.
•We are in a “liquidity trap,†where interest rates or trillions in asset purchases may not stimulate borrowing or lending because consumer demand is just not there.
•The Fed’s announcement will likely signify the end of a great 30-year bull market in bonds and the necessity for bond managers and, yes, equity managers to adjust to a new environment.
From: http://ping.fm/Z90TM
Wednesday, October 20, 2010
GMAC Mortgage to Move Forward with Foreclosures
GMAC Mortgage to Move Forward with Foreclosures
10/19/2010 By: Carrie Bay
GMAC Mortgage was the first company to halt foreclosures in 23 states where a judge’s approval is required because of concerns that the legal paperwork was not validated and processed correctly. After two months of reviewing individual case files, the company says it will restart foreclosure proceedings.
“Our review and remediation activities related to cases involving judicial affidavits in the 23 states continues,†said James Olecki, a spokesperson for GMAC Mortgage’s parent company Ally Financial. “As each of those files is reviewed, and remediated when needed, the foreclosure process resumes.â€
GMAC’s suspension of foreclosure actions and REO sales was prompted by the unearthing of a court deposition in which one of its servicing executives testified that he was signing off on thousands of foreclosures a month, without checking the paperwork for accuracy or signing the documents in the presence of a notary.
News of documentation deficiencies at GMAC and a number of other major servicers has raised questions about the legitimacy of foreclosure rulings and homeowner evictions, but Olecki says his company has found “no evidence of inappropriate foreclosures to date†and plans to move forward with taking possession of properties where borrowers have failed to make payments on the mortgage.
Bank of America announced Monday that it is also lifting its foreclosure suspension in 23 states.
The company says it has found no instances in which a homeowner was wrongly foreclosed upon and has begun the process of preparing 102,000 foreclosure affidavits that have been on hold for re-submission to the courts beginning next Monday. BofA plans to continue postponing foreclosure sales in the remaining 27 states until the company’s paperwork reviews are completed on a state-by-state basis.
Bank of America and GMAC may be intent on moving forward with foreclosure proceedings, but at least one county sheriff in the judicial state of Illinois says he’s not going to carry out their evictions.
Sheriff Thomas Dart of Cook County, which includes the city of Chicago, said Tuesday that he will not put defaulted borrowers out of their homes based on eviction orders from BofA, GMAC, or JPMorgan Chase until the companies “can provide complete assurance that the foreclosure was done properly and legally.â€
The three lenders have until Monday, October 25th to respond to Dart’s demand for affidavits affirming any foreclosures they file in Cook County have been properly processed in accordance with Illinois law. The sheriff says BofA, GMAC, and JPMorgan, along with their subsidiaries, make up a third of the approximately 3,700 foreclosure eviction orders filed with his office annually.
Dart says he will extend the county-wide moratorium on evictions to any other lending institutions which publicly admit to or which investigators find engaged in questionable foreclosure processing practices.
According to a statement from the Cook County sheriff’s office, even after filing, it typically takes about 10 months before a foreclosure eviction order is actually carried out there. Dart says one in every 30 homes in Cook County is at some stage of foreclosure.
From: http://ping.fm/LN9KF
10/19/2010 By: Carrie Bay
GMAC Mortgage was the first company to halt foreclosures in 23 states where a judge’s approval is required because of concerns that the legal paperwork was not validated and processed correctly. After two months of reviewing individual case files, the company says it will restart foreclosure proceedings.
“Our review and remediation activities related to cases involving judicial affidavits in the 23 states continues,†said James Olecki, a spokesperson for GMAC Mortgage’s parent company Ally Financial. “As each of those files is reviewed, and remediated when needed, the foreclosure process resumes.â€
GMAC’s suspension of foreclosure actions and REO sales was prompted by the unearthing of a court deposition in which one of its servicing executives testified that he was signing off on thousands of foreclosures a month, without checking the paperwork for accuracy or signing the documents in the presence of a notary.
News of documentation deficiencies at GMAC and a number of other major servicers has raised questions about the legitimacy of foreclosure rulings and homeowner evictions, but Olecki says his company has found “no evidence of inappropriate foreclosures to date†and plans to move forward with taking possession of properties where borrowers have failed to make payments on the mortgage.
Bank of America announced Monday that it is also lifting its foreclosure suspension in 23 states.
The company says it has found no instances in which a homeowner was wrongly foreclosed upon and has begun the process of preparing 102,000 foreclosure affidavits that have been on hold for re-submission to the courts beginning next Monday. BofA plans to continue postponing foreclosure sales in the remaining 27 states until the company’s paperwork reviews are completed on a state-by-state basis.
Bank of America and GMAC may be intent on moving forward with foreclosure proceedings, but at least one county sheriff in the judicial state of Illinois says he’s not going to carry out their evictions.
Sheriff Thomas Dart of Cook County, which includes the city of Chicago, said Tuesday that he will not put defaulted borrowers out of their homes based on eviction orders from BofA, GMAC, or JPMorgan Chase until the companies “can provide complete assurance that the foreclosure was done properly and legally.â€
The three lenders have until Monday, October 25th to respond to Dart’s demand for affidavits affirming any foreclosures they file in Cook County have been properly processed in accordance with Illinois law. The sheriff says BofA, GMAC, and JPMorgan, along with their subsidiaries, make up a third of the approximately 3,700 foreclosure eviction orders filed with his office annually.
Dart says he will extend the county-wide moratorium on evictions to any other lending institutions which publicly admit to or which investigators find engaged in questionable foreclosure processing practices.
According to a statement from the Cook County sheriff’s office, even after filing, it typically takes about 10 months before a foreclosure eviction order is actually carried out there. Dart says one in every 30 homes in Cook County is at some stage of foreclosure.
From: http://ping.fm/LN9KF
Tuesday, October 19, 2010
Bank of America and Fidelity National Reach Agreement for REOs
Bank of America and Fidelity National Reach Agreement for REOs
10/18/2010 By: Joy Leopold
Bank of America and Fidelity National Financial have come to an agreement regarding the foreclosure paperwork issues that have plagued several of the largest lenders in the past weeks.
Under the agreement, Jacksonville, Florida-based Fidelity agreed to continue to provide title insurance for Bank of America’s recently foreclosed homes. BofA agreed to cover all court related costs and settlements related to any lawsuits, and Fidelity agreed it would defend new homeowners in court.
Charlotte, North Carolina-based Bank of America is working on similar agreements with other title insurers, though at this time it has not lifted its ban on foreclosure proceedings.
Dan Frahm, spokesperson for Bank of America Home Loans, said the bank on Monday began the process of
preparing 102,000 foreclosure affidavits for submission in the 23 states in which judicial approval is required for foreclosure.
“We anticipate that by Monday, Oct. 25, the first foreclosure affidavits will be resubmitted to the courts,†he said.
He continued, “Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states.â€
Of the other states, Frahm said, “We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis.â€
This agreement comes on the heels of assertions by some title insurers that they would no longer insure foreclosed properties for lenders. Fears of title-ownership discrepancies have put REO sales on hold until banks can verify that documents signed by “robo-signers†are valid.
Agreements between lenders and title insurers can help the REO market gain some much-needed stability.
American Land Title Association (ALTA) released a statement in support of such agreements during this foreclosure furor.
The Federal Housing Finance Agency released a directive with guidelines for servicers to take to identify and correct potential mistakes in foreclosure paperwork.
“ALTA supports FHFA’s outline for an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, markets and other stakeholders,†said Kurt Pfotenhauer, CEO of ALTA.
From: http://ping.fm/8A70I
10/18/2010 By: Joy Leopold
Bank of America and Fidelity National Financial have come to an agreement regarding the foreclosure paperwork issues that have plagued several of the largest lenders in the past weeks.
Under the agreement, Jacksonville, Florida-based Fidelity agreed to continue to provide title insurance for Bank of America’s recently foreclosed homes. BofA agreed to cover all court related costs and settlements related to any lawsuits, and Fidelity agreed it would defend new homeowners in court.
Charlotte, North Carolina-based Bank of America is working on similar agreements with other title insurers, though at this time it has not lifted its ban on foreclosure proceedings.
Dan Frahm, spokesperson for Bank of America Home Loans, said the bank on Monday began the process of
preparing 102,000 foreclosure affidavits for submission in the 23 states in which judicial approval is required for foreclosure.
“We anticipate that by Monday, Oct. 25, the first foreclosure affidavits will be resubmitted to the courts,†he said.
He continued, “Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states.â€
Of the other states, Frahm said, “We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis.â€
This agreement comes on the heels of assertions by some title insurers that they would no longer insure foreclosed properties for lenders. Fears of title-ownership discrepancies have put REO sales on hold until banks can verify that documents signed by “robo-signers†are valid.
Agreements between lenders and title insurers can help the REO market gain some much-needed stability.
American Land Title Association (ALTA) released a statement in support of such agreements during this foreclosure furor.
The Federal Housing Finance Agency released a directive with guidelines for servicers to take to identify and correct potential mistakes in foreclosure paperwork.
“ALTA supports FHFA’s outline for an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, markets and other stakeholders,†said Kurt Pfotenhauer, CEO of ALTA.
From: http://ping.fm/8A70I
Bank of America and Fidelity National Reach Agreement for REOs
Bank of America and Fidelity National Reach Agreement for REOs
10/18/2010 By: Joy Leopold
Bank of America and Fidelity National Financial have come to an agreement regarding the foreclosure paperwork issues that have plagued several of the largest lenders in the past weeks.
Under the agreement, Jacksonville, Florida-based Fidelity agreed to continue to provide title insurance for Bank of America’s recently foreclosed homes. BofA agreed to cover all court related costs and settlements related to any lawsuits, and Fidelity agreed it would defend new homeowners in court.
Charlotte, North Carolina-based Bank of America is working on similar agreements with other title insurers, though at this time it has not lifted its ban on foreclosure proceedings.
Dan Frahm, spokesperson for Bank of America Home Loans, said the bank on Monday began the process of
preparing 102,000 foreclosure affidavits for submission in the 23 states in which judicial approval is required for foreclosure.
“We anticipate that by Monday, Oct. 25, the first foreclosure affidavits will be resubmitted to the courts,†he said.
He continued, “Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states.â€
Of the other states, Frahm said, “We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis.â€
This agreement comes on the heels of assertions by some title insurers that they would no longer insure foreclosed properties for lenders. Fears of title-ownership discrepancies have put REO sales on hold until banks can verify that documents signed by “robo-signers†are valid.
Agreements between lenders and title insurers can help the REO market gain some much-needed stability.
American Land Title Association (ALTA) released a statement in support of such agreements during this foreclosure furor.
The Federal Housing Finance Agency released a directive with guidelines for servicers to take to identify and correct potential mistakes in foreclosure paperwork.
“ALTA supports FHFA’s outline for an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, markets and other stakeholders,†said Kurt Pfotenhauer, CEO of ALTA.
From: http://ping.fm/LMAis
10/18/2010 By: Joy Leopold
Bank of America and Fidelity National Financial have come to an agreement regarding the foreclosure paperwork issues that have plagued several of the largest lenders in the past weeks.
Under the agreement, Jacksonville, Florida-based Fidelity agreed to continue to provide title insurance for Bank of America’s recently foreclosed homes. BofA agreed to cover all court related costs and settlements related to any lawsuits, and Fidelity agreed it would defend new homeowners in court.
Charlotte, North Carolina-based Bank of America is working on similar agreements with other title insurers, though at this time it has not lifted its ban on foreclosure proceedings.
Dan Frahm, spokesperson for Bank of America Home Loans, said the bank on Monday began the process of
preparing 102,000 foreclosure affidavits for submission in the 23 states in which judicial approval is required for foreclosure.
“We anticipate that by Monday, Oct. 25, the first foreclosure affidavits will be resubmitted to the courts,†he said.
He continued, “Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states.â€
Of the other states, Frahm said, “We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis.â€
This agreement comes on the heels of assertions by some title insurers that they would no longer insure foreclosed properties for lenders. Fears of title-ownership discrepancies have put REO sales on hold until banks can verify that documents signed by “robo-signers†are valid.
Agreements between lenders and title insurers can help the REO market gain some much-needed stability.
American Land Title Association (ALTA) released a statement in support of such agreements during this foreclosure furor.
The Federal Housing Finance Agency released a directive with guidelines for servicers to take to identify and correct potential mistakes in foreclosure paperwork.
“ALTA supports FHFA’s outline for an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, markets and other stakeholders,†said Kurt Pfotenhauer, CEO of ALTA.
From: http://ping.fm/LMAis
Tuesday, October 5, 2010
Amherst: One out of Five Borrowers Could Lose Their Home
Amherst: One out of Five Borrowers Could Lose Their Home
10/04/2010 By: Carrie Bay
If governmental policy on foreclosure prevention does not change, 11.5 million borrowers are in danger of losing their homes, according to the analysts at Amherst Securities Group LP.
The staggering figure put forth by the mortgage investment brokerage equates to one out of every five borrowers – an astronomical 20 percent default rate that Amherst says “politically cannot happen.â€
The dire forecast should be a wake-up call to regulators and government officials charged with plugging the nation’s foreclosure tsunami, and the analysts at the New York-based firm say they do believe “the government will attempt successive modification plans until something works.â€
But up to this point, the administration still hasn’t hit on a successful equation. Reports on the progress of the Home Affordable Modification Program (HAMP) seem to grow more disappointing with each month’s new dataset. Treasury’s August report showed that nearly half of all homeowners approved for trial HAMP mods have already fallen out of the program.
Amherst’s report warns that while recent industry data shows a drop in the number of delinquent loans, this information is skewed. According to the firm’s analysts, this so-called “improvement†simply reflects large-scale modification activity. The study explains that modifications are being flagged as “current†often with no cash flow from the borrower.
The firm’s analysts say, the bottom line is that 20 out of every 100 U.S. first lien residential mortgages are already impaired:
•Nine are seriously behind in their payments.
•Six have been behind and are classified as what Amherst calls “dirty current†because they have been modified. But the firm says these loans are re-defaulting at an eye-popping rate of 50 percent.
•Five are underwater by more than 20 percent of their current value and are defaulting at a 20 percent per-year-pace.
So how can the administration fix deficiencies in its loan modification program and keep the mortgage default rate from hitting the menacing 20 percent mark? Amherst analysts say the answer lies in cutting borrowers’ principal balances.
They argue that the success rate on mortgage modifications can be raised by making greater use of principal reductions. Amherst says this approach would help to address the phenomenon of strategic default, which is becoming increasingly acceptable among frustrated borrowers. Policymakers must first recognize that the inclination to walk-away from one’s mortgage has become an economic issue, not a moral one, according to Amherst. In addition, the costs of default must be made explicit, and the second lien issue must also be addressed.
Unfortunately, it is unlikely that these foreclosure-prevention policy changes will be sufficient to address the housing crisis, according to Amherst. The firm says additional government intervention is needed to boost housing demand.
Amherst recommends that the government provide leverage for investors to buy real estate, ideally through its federal housing agencies – the Federal Housing Administration (FHA), Fannie Mae, or Freddie Mac. Currently, Fannie and Freddie credit availability for investor properties is very limited, requiring large down payments and pristine credit, while FHA is for owner-occupied homes only.
Amherst says just when the market needs to increase demand for homes, demand is actually contracting due to credit availability issues. The firm’s analysts say new financing channels should be opened up to investors, noting that investors are currently purchasing a disproportionate share of foreclosed properties for cash.
In addition, Amherst recommends increasing credit availability on prudent terms to borrowers with less than pristine credit.
The large numbers of borrowers who have defaulted or will default on existing mortgages will, under present programs, be locked out of owning a home for years, but the company’s analysts say this setback can be addressed by re-qualifying borrowers who are in a home they can’t afford into one that better fits their financial situation.
From: http://ping.fm/dw5lh
10/04/2010 By: Carrie Bay
If governmental policy on foreclosure prevention does not change, 11.5 million borrowers are in danger of losing their homes, according to the analysts at Amherst Securities Group LP.
The staggering figure put forth by the mortgage investment brokerage equates to one out of every five borrowers – an astronomical 20 percent default rate that Amherst says “politically cannot happen.â€
The dire forecast should be a wake-up call to regulators and government officials charged with plugging the nation’s foreclosure tsunami, and the analysts at the New York-based firm say they do believe “the government will attempt successive modification plans until something works.â€
But up to this point, the administration still hasn’t hit on a successful equation. Reports on the progress of the Home Affordable Modification Program (HAMP) seem to grow more disappointing with each month’s new dataset. Treasury’s August report showed that nearly half of all homeowners approved for trial HAMP mods have already fallen out of the program.
Amherst’s report warns that while recent industry data shows a drop in the number of delinquent loans, this information is skewed. According to the firm’s analysts, this so-called “improvement†simply reflects large-scale modification activity. The study explains that modifications are being flagged as “current†often with no cash flow from the borrower.
The firm’s analysts say, the bottom line is that 20 out of every 100 U.S. first lien residential mortgages are already impaired:
•Nine are seriously behind in their payments.
•Six have been behind and are classified as what Amherst calls “dirty current†because they have been modified. But the firm says these loans are re-defaulting at an eye-popping rate of 50 percent.
•Five are underwater by more than 20 percent of their current value and are defaulting at a 20 percent per-year-pace.
So how can the administration fix deficiencies in its loan modification program and keep the mortgage default rate from hitting the menacing 20 percent mark? Amherst analysts say the answer lies in cutting borrowers’ principal balances.
They argue that the success rate on mortgage modifications can be raised by making greater use of principal reductions. Amherst says this approach would help to address the phenomenon of strategic default, which is becoming increasingly acceptable among frustrated borrowers. Policymakers must first recognize that the inclination to walk-away from one’s mortgage has become an economic issue, not a moral one, according to Amherst. In addition, the costs of default must be made explicit, and the second lien issue must also be addressed.
Unfortunately, it is unlikely that these foreclosure-prevention policy changes will be sufficient to address the housing crisis, according to Amherst. The firm says additional government intervention is needed to boost housing demand.
Amherst recommends that the government provide leverage for investors to buy real estate, ideally through its federal housing agencies – the Federal Housing Administration (FHA), Fannie Mae, or Freddie Mac. Currently, Fannie and Freddie credit availability for investor properties is very limited, requiring large down payments and pristine credit, while FHA is for owner-occupied homes only.
Amherst says just when the market needs to increase demand for homes, demand is actually contracting due to credit availability issues. The firm’s analysts say new financing channels should be opened up to investors, noting that investors are currently purchasing a disproportionate share of foreclosed properties for cash.
In addition, Amherst recommends increasing credit availability on prudent terms to borrowers with less than pristine credit.
The large numbers of borrowers who have defaulted or will default on existing mortgages will, under present programs, be locked out of owning a home for years, but the company’s analysts say this setback can be addressed by re-qualifying borrowers who are in a home they can’t afford into one that better fits their financial situation.
From: http://ping.fm/dw5lh
Tuesday, September 28, 2010
Veros Sees Strength in Texas Home Values, Declines for Florida, Nevada
Veros Sees Strength in Texas Home Values, Declines for Florida, Nevada
09/27/2010 By: Carrie Bay
The Texas metro areas of Houston and Dallas show the strongest home price appreciation over the next 12 months in the most recent update to the U.S. real estate market forecast from Veros Real Estate Solutions.
The California-based risk management and valuation service provider says its analysis shows Texas cities leading the nation, with home prices in these areas expected to post the biggest gains in the months ahead.
Meanwhile, Florida home markets continue to struggle as the state placed four metro areas in the rankings of the five projected weakest markets in Veros’ forecast. The Las Vegas and Reno metros also made the weakest-markets list. The company says key markets in Florida and Nevada will likely see home prices drop another 6-7 percent over the next year.
“Texas is looking strong, with four of the top ten markets in the appreciation forecast,†said Eric Fox, Veros’ VP of statistical and economic modeling.
Fox added that California markets are less robust than in previous quarterly updates, but remain steady, with the Riverside/San Bernardino market faring the best in the state due to affordability and seasonal trends. He also noted that Anchorage, Alaska is showing modest gains, as are the Central Plains areas of Illinois and Iowa.
Veros called its home price forecasts for certain states in the central Great Plains region “especially good.†These
hallmarks of appreciation include Texas, Louisiana, Missouri, Iowa, Arkansas, Oklahoma, Nebraska, and South Dakota.
Projected Five Strongest Markets
1.Houston/Sugar Land/Baytown, Texas +3.8%
2.Dallas/Fort Worth/Arlington, Texas +2.7%
3.Amarillo, Texas +2.7%
4.Anchorage, Alaska +2.7%
5.Davenport/Moline/Rock Island, Iowa-Illinois +2.7%
In marked contrast to the forecast for Texas, the outlook for Florida remains weak, but Fox says there is some improvement in negative growth markets in the Sunshine State.
“For example, the Daytona area was at -8.3 percent last quarter and this forecast shows an improved change to -6.0 percent,†Fox explained. “There are more Florida communities on the weakest market list this time, but they appear to be depreciating at a reduced rate.â€
Projected Five Weakest Markets
1.Port St. Lucie/Fort Pierce, Florida -7.2%
2.Reno/Sparks, Nevada -7.0%
3.Orlando/Kissimmee, Florida -6.3%
4.Las Vegas/Paradise, Nevada -6.1%
5.Deltona/Daytona/Ormond Beach, Florida -6.0%
“Approximately one-third of the markets forecast are expected to appreciate in the next 12 months, and two-thirds are expected to depreciate,†Fox said. “In the longer 12- to 24-month horizon, we anticipate this ratio to even out to 50-50, with half appreciating gently and half depreciating similarly.â€
According to Fox, “There are tangible indications that things are getting better as time moves on.â€
Veros’ utilizes more than 50 critical decisioning factors in its forecast analytics to develop market trend predictions covering more than 900 counties, more than 300 metro areas, and nearly 14,000 ZIP codes. Key factors range from interest, unemployment, and inflation rates, to housing inventory levels, as well as economic and geographic trends.
From: http://www.dsnews.com/articles/veros-sees-strength-in-texas-home-values-declines-for-florida-and-nevada-2010-09-27
09/27/2010 By: Carrie Bay
The Texas metro areas of Houston and Dallas show the strongest home price appreciation over the next 12 months in the most recent update to the U.S. real estate market forecast from Veros Real Estate Solutions.
The California-based risk management and valuation service provider says its analysis shows Texas cities leading the nation, with home prices in these areas expected to post the biggest gains in the months ahead.
Meanwhile, Florida home markets continue to struggle as the state placed four metro areas in the rankings of the five projected weakest markets in Veros’ forecast. The Las Vegas and Reno metros also made the weakest-markets list. The company says key markets in Florida and Nevada will likely see home prices drop another 6-7 percent over the next year.
“Texas is looking strong, with four of the top ten markets in the appreciation forecast,†said Eric Fox, Veros’ VP of statistical and economic modeling.
Fox added that California markets are less robust than in previous quarterly updates, but remain steady, with the Riverside/San Bernardino market faring the best in the state due to affordability and seasonal trends. He also noted that Anchorage, Alaska is showing modest gains, as are the Central Plains areas of Illinois and Iowa.
Veros called its home price forecasts for certain states in the central Great Plains region “especially good.†These
hallmarks of appreciation include Texas, Louisiana, Missouri, Iowa, Arkansas, Oklahoma, Nebraska, and South Dakota.
Projected Five Strongest Markets
1.Houston/Sugar Land/Baytown, Texas +3.8%
2.Dallas/Fort Worth/Arlington, Texas +2.7%
3.Amarillo, Texas +2.7%
4.Anchorage, Alaska +2.7%
5.Davenport/Moline/Rock Island, Iowa-Illinois +2.7%
In marked contrast to the forecast for Texas, the outlook for Florida remains weak, but Fox says there is some improvement in negative growth markets in the Sunshine State.
“For example, the Daytona area was at -8.3 percent last quarter and this forecast shows an improved change to -6.0 percent,†Fox explained. “There are more Florida communities on the weakest market list this time, but they appear to be depreciating at a reduced rate.â€
Projected Five Weakest Markets
1.Port St. Lucie/Fort Pierce, Florida -7.2%
2.Reno/Sparks, Nevada -7.0%
3.Orlando/Kissimmee, Florida -6.3%
4.Las Vegas/Paradise, Nevada -6.1%
5.Deltona/Daytona/Ormond Beach, Florida -6.0%
“Approximately one-third of the markets forecast are expected to appreciate in the next 12 months, and two-thirds are expected to depreciate,†Fox said. “In the longer 12- to 24-month horizon, we anticipate this ratio to even out to 50-50, with half appreciating gently and half depreciating similarly.â€
According to Fox, “There are tangible indications that things are getting better as time moves on.â€
Veros’ utilizes more than 50 critical decisioning factors in its forecast analytics to develop market trend predictions covering more than 900 counties, more than 300 metro areas, and nearly 14,000 ZIP codes. Key factors range from interest, unemployment, and inflation rates, to housing inventory levels, as well as economic and geographic trends.
From: http://www.dsnews.com/articles/veros-sees-strength-in-texas-home-values-declines-for-florida-and-nevada-2010-09-27
Wednesday, September 22, 2010
Moody's Forecast for Housing and the Economy: Dim
Moody's Forecast for Housing and the Economy: Dim
09/21/2010 By: Carrie Bay
The analysts at Moody’s Investors Service are downbeat in their outlook for both the U.S. economy and the housing market. In the agency’s ResiLandscape report issued last week, they warn that there’s a stronger chance the country will slide back into a recession, and they are forecasting a “longer and deeper housing correction.â€
Mark Zandi, chief economist for Moody’s Analytics, said in the report, “We have lowered the near-term economic outlook and raised the risk of a double-dip recession from one in four to one in three.â€
He says the U.S. recovery has lost significant momentum since the spring. Retailing, housing, business investment, and industrial activity have all weakened, and the job market is no longer improving. After ticking higher to 9.6 percent in August, Zandi is expecting the nation’s unemployment rate to drift back into double digits in the coming months.
“The recovery is sputtering,†according to Zandi, and the odds of a double-dip recession during the coming year have risen “uncomfortably high.â€
On the housing side, Celia Chen, senior director for Moody’s Analytics says the market’s nascent recovery is already back-sliding into a double-dip.
“We have downgraded the near-term housing outlook based on the lingering weakness in the demand for homes, the expectation that job creation will remain soft this year, and the slow speed at which the mortgage industry is working through distressed mortgages,†Chen said in the report.
Chen expects house prices to fall until the third quarter of next year, significantly longer than Moody’s previous projections of a first-quarter 2011 bottom in home prices.
According to Chen, the change to a longer correction is primarily fueled by the slow disposition of repossessed homes. She says the flood of 4 million homes either in late-stage delinquency or foreclosure is clogging the foreclosure pipeline from the servicers to the courtrooms, creating delays.
Distortions due to the homebuyer tax credits offered last year and this year are also partially to blame for the expected double-dip, Chen says.
Housing’s double-dip correction will hamper the broader economy’s already slow pace upward, but it will not drag the economy back into recession, according to the report. Moody’s says the nearly five-year correction has sharply diminished housing’s contribution to national output and job growth.
The upside of this trend is that the economy is less reliant on housing activity and thus housing’s double-dip will have less of a drag on the economy, the analysts explained. The double-dip housing correction, however, does raise the downside risks for the economy, they say.
There was one positive note in Moody’s report. The agency says the Federal Reserve’s directive aimed at protecting mortgage borrowers from aggressive lending practices, which was issued last month, will enhance transparency and alignment of interests between loan originators and borrowers and will likely lower rates and fees for borrowers.
These changes, which become effective April 1, 2011, will translate into lower defaults on mortgage loans in the future, Moody’s said. The directive puts restrictions on loan originators’ compensation, prevents dual compensation to mortgage brokers and loan officers from consumers and lenders, and prohibits “steering,†the practice by which loan originators direct borrowers to less-than-optimal mortgage products in return for higher compensation.
From: http://ping.fm/Pa0um
09/21/2010 By: Carrie Bay
The analysts at Moody’s Investors Service are downbeat in their outlook for both the U.S. economy and the housing market. In the agency’s ResiLandscape report issued last week, they warn that there’s a stronger chance the country will slide back into a recession, and they are forecasting a “longer and deeper housing correction.â€
Mark Zandi, chief economist for Moody’s Analytics, said in the report, “We have lowered the near-term economic outlook and raised the risk of a double-dip recession from one in four to one in three.â€
He says the U.S. recovery has lost significant momentum since the spring. Retailing, housing, business investment, and industrial activity have all weakened, and the job market is no longer improving. After ticking higher to 9.6 percent in August, Zandi is expecting the nation’s unemployment rate to drift back into double digits in the coming months.
“The recovery is sputtering,†according to Zandi, and the odds of a double-dip recession during the coming year have risen “uncomfortably high.â€
On the housing side, Celia Chen, senior director for Moody’s Analytics says the market’s nascent recovery is already back-sliding into a double-dip.
“We have downgraded the near-term housing outlook based on the lingering weakness in the demand for homes, the expectation that job creation will remain soft this year, and the slow speed at which the mortgage industry is working through distressed mortgages,†Chen said in the report.
Chen expects house prices to fall until the third quarter of next year, significantly longer than Moody’s previous projections of a first-quarter 2011 bottom in home prices.
According to Chen, the change to a longer correction is primarily fueled by the slow disposition of repossessed homes. She says the flood of 4 million homes either in late-stage delinquency or foreclosure is clogging the foreclosure pipeline from the servicers to the courtrooms, creating delays.
Distortions due to the homebuyer tax credits offered last year and this year are also partially to blame for the expected double-dip, Chen says.
Housing’s double-dip correction will hamper the broader economy’s already slow pace upward, but it will not drag the economy back into recession, according to the report. Moody’s says the nearly five-year correction has sharply diminished housing’s contribution to national output and job growth.
The upside of this trend is that the economy is less reliant on housing activity and thus housing’s double-dip will have less of a drag on the economy, the analysts explained. The double-dip housing correction, however, does raise the downside risks for the economy, they say.
There was one positive note in Moody’s report. The agency says the Federal Reserve’s directive aimed at protecting mortgage borrowers from aggressive lending practices, which was issued last month, will enhance transparency and alignment of interests between loan originators and borrowers and will likely lower rates and fees for borrowers.
These changes, which become effective April 1, 2011, will translate into lower defaults on mortgage loans in the future, Moody’s said. The directive puts restrictions on loan originators’ compensation, prevents dual compensation to mortgage brokers and loan officers from consumers and lenders, and prohibits “steering,†the practice by which loan originators direct borrowers to less-than-optimal mortgage products in return for higher compensation.
From: http://ping.fm/Pa0um
Tuesday, August 24, 2010
FHA LAUNCHES SHORT REFI OPPORTUNITY FOR UNDERWATER HOMEOWNERS
HUD No. 10-173
Brian Sullivan
(202) 708-0685 begin_of_the_skype_highlighting (202) 708-0685 end_of_the_skype_highlighting
FOR RELEASE
Friday
August 6, 2010
FHA LAUNCHES SHORT REFI OPPORTUNITY FOR UNDERWATER HOMEOWNERS
Effort designed to encourage principal write-downs for responsible borrowers
WASHINGTON - In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today provided details on the adjustment to its refinance program which was announced earlier this year that will enable lenders to provide additional refinancing options to homeowners who owe more than their home is worth. Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain 'underwater' non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.
The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth - or 'underwater' - because their local markets saw large declines in home values. Originally announced in March, these changes and other programs that have been put in place will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.
"We're throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined," said FHA Commissioner David H. Stevens. "This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product."
Today, FHA published a mortgagee letter to provide guidance to lenders on how to implement this new enhancement. Participation in FHA's refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal to or greater than 500. The property must be the homeowner's primary residence. And the borrower's existing first lien holder must agree to write off at least 10% of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115%.
In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.
To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.
For more information on FHA Short Refinance option, read FHA's mortgagee letter.
From: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-173
Brian Sullivan
(202) 708-0685 begin_of_the_skype_highlighting (202) 708-0685 end_of_the_skype_highlighting
FOR RELEASE
Friday
August 6, 2010
FHA LAUNCHES SHORT REFI OPPORTUNITY FOR UNDERWATER HOMEOWNERS
Effort designed to encourage principal write-downs for responsible borrowers
WASHINGTON - In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today provided details on the adjustment to its refinance program which was announced earlier this year that will enable lenders to provide additional refinancing options to homeowners who owe more than their home is worth. Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain 'underwater' non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.
The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth - or 'underwater' - because their local markets saw large declines in home values. Originally announced in March, these changes and other programs that have been put in place will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.
"We're throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined," said FHA Commissioner David H. Stevens. "This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product."
Today, FHA published a mortgagee letter to provide guidance to lenders on how to implement this new enhancement. Participation in FHA's refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal to or greater than 500. The property must be the homeowner's primary residence. And the borrower's existing first lien holder must agree to write off at least 10% of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115%.
In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.
To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.
For more information on FHA Short Refinance option, read FHA's mortgagee letter.
From: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-173
GSEs' Foreclosure Pipelines Will Grow Well into 2011: S&P
GSEs' Foreclosure Pipelines Will Grow Well into 2011: S&P
08/23/2010 By: Carrie Bay
Despite the continued efforts of mortgage giants Fannie Mae and Freddie Mac to find sustainable workouts for delinquent borrowers – and the fact that their loan
modification activity has indeed increased significantly this year – the analysts at Standard & Poor’s (S&P) expect the GSEs’ foreclosure inventories to continue to swell.
The two companies have each already completed about 40 percent more workout volume during the first half of 2010 than they did in all of 2009 by S&P’s estimates. Still, the ratings agency says annualized loan workout activity (as a percentage of existing delinquent loans) remains less than half at both institutions.
In addition, S&P reports that foreclosure alternatives, such as short sales and deeds-in-lieu, have declined to about 15 percent of the workouts, compared with the low 20-percentile range of 2009.
“We believe that the slow and arduous single loan-by-loan workout process, persistently weak national economic conditions, and high unemployment will likely lead to higher foreclosures, resulting in a foreclosure pipeline that we believe will continue to grow well into 2011,†S&P said in report issued last week.
S&P adds that timelines for delinquency and default are being lengthened by policies currently in place and the GSEs’ mandate to prevent avoidable foreclosures. The growing workout pipelines will “result in actual realization of embedded credit losses during the next three to five years,†the agency’s analysts said.
S&P is holding to its downbeat outlook when it comes to the GSEs’ foreclosure numbers even though the ratings agency says credit quality is stabilizing for Fannie and Freddie.
The firm’s analysts concede that better underwriting is likely to support stronger performance of the more recent 2009 and 2010 vintage mortgages, but both Fannie Mae and Freddie Mac are expected “to continue to record significant credit losses†from their 2005-2008 loans.
On a combined basis, the companies have a $4.7 trillion single-family guarantee portfolio, of which 23 percent is from the most problematic 2006 and 2007 vintages, S&P points out. These vintages have significantly higher delinquency rates, and also generated about two-thirds of the 2010 total credit losses (year to-date) at each company.
The GSEs have already recorded significant losses as they work out their large inventories of defaulted loans, and S&P says the deficiencies will likely keep on coming, as evidenced by the fact that both companies continue to carry “a sizable reserve for embedded losses in pre-2009 portfolio vintages.â€
According to S&P, Fannie Mae recorded $120 billion in credit-related expenses (loan-loss provisions plus foreclosure expenses) between the beginning of 2008 and the second quarter of 2010. Freddie Mac recorded $57.9 billion in credit-related expenses during the same period.
S&P did note, however, that each of Fannie and Freddie’s second-quarter losses narrowed and credit showed some signs of stabilization through slightly lower serious delinquency rates. Fannie Mae’s seriously delinquent rate was 4.99 percent in Q2. Freddie Mac’s came in at 3.96 percent.
But S&P says, “Despite one quarter of stabilization in the seriously delinquent rate, foreclosure pipelines are large and continue to grow, and modifications have not been very successful to date.â€
For every one foreclosed property Fannie disposed of in Q2, S&P says the GSE repossessed 1.39 homes. Freddie’s ratio was one disposition to 1.32 new REOs.
From: http://ping.fm/vLwnI
08/23/2010 By: Carrie Bay
Despite the continued efforts of mortgage giants Fannie Mae and Freddie Mac to find sustainable workouts for delinquent borrowers – and the fact that their loan
modification activity has indeed increased significantly this year – the analysts at Standard & Poor’s (S&P) expect the GSEs’ foreclosure inventories to continue to swell.
The two companies have each already completed about 40 percent more workout volume during the first half of 2010 than they did in all of 2009 by S&P’s estimates. Still, the ratings agency says annualized loan workout activity (as a percentage of existing delinquent loans) remains less than half at both institutions.
In addition, S&P reports that foreclosure alternatives, such as short sales and deeds-in-lieu, have declined to about 15 percent of the workouts, compared with the low 20-percentile range of 2009.
“We believe that the slow and arduous single loan-by-loan workout process, persistently weak national economic conditions, and high unemployment will likely lead to higher foreclosures, resulting in a foreclosure pipeline that we believe will continue to grow well into 2011,†S&P said in report issued last week.
S&P adds that timelines for delinquency and default are being lengthened by policies currently in place and the GSEs’ mandate to prevent avoidable foreclosures. The growing workout pipelines will “result in actual realization of embedded credit losses during the next three to five years,†the agency’s analysts said.
S&P is holding to its downbeat outlook when it comes to the GSEs’ foreclosure numbers even though the ratings agency says credit quality is stabilizing for Fannie and Freddie.
The firm’s analysts concede that better underwriting is likely to support stronger performance of the more recent 2009 and 2010 vintage mortgages, but both Fannie Mae and Freddie Mac are expected “to continue to record significant credit losses†from their 2005-2008 loans.
On a combined basis, the companies have a $4.7 trillion single-family guarantee portfolio, of which 23 percent is from the most problematic 2006 and 2007 vintages, S&P points out. These vintages have significantly higher delinquency rates, and also generated about two-thirds of the 2010 total credit losses (year to-date) at each company.
The GSEs have already recorded significant losses as they work out their large inventories of defaulted loans, and S&P says the deficiencies will likely keep on coming, as evidenced by the fact that both companies continue to carry “a sizable reserve for embedded losses in pre-2009 portfolio vintages.â€
According to S&P, Fannie Mae recorded $120 billion in credit-related expenses (loan-loss provisions plus foreclosure expenses) between the beginning of 2008 and the second quarter of 2010. Freddie Mac recorded $57.9 billion in credit-related expenses during the same period.
S&P did note, however, that each of Fannie and Freddie’s second-quarter losses narrowed and credit showed some signs of stabilization through slightly lower serious delinquency rates. Fannie Mae’s seriously delinquent rate was 4.99 percent in Q2. Freddie Mac’s came in at 3.96 percent.
But S&P says, “Despite one quarter of stabilization in the seriously delinquent rate, foreclosure pipelines are large and continue to grow, and modifications have not been very successful to date.â€
For every one foreclosed property Fannie disposed of in Q2, S&P says the GSE repossessed 1.39 homes. Freddie’s ratio was one disposition to 1.32 new REOs.
From: http://ping.fm/vLwnI
Housing Market Continues to See First-Time Buyer Exodus
Housing Market Continues to See First-Time Buyer Exodus
08/23/2010 By: Carrie Bay
First-time homebuyers continued to desert the housing market in July, according to a new industry study released Monday.
Data compiled by Campbell Surveys and Inside Mortgage Finance, shows that first-time homebuyers accounted for only 39.1 percent of the home purchase market last month. That’s down from a peak of 48.2 percent as recently as March and the lowest level seen in at least a year.
“The end of the tax credit has clearly had an effect,†said Thomas Popik, research director for Campbell Surveys. “First-time homebuyer participation is continuing to drop.â€
Popik’s research team says the share of first-time homebuyer activity could fall to as low as 30-35 percent of the market by the fall months.
With homeowners continuing to fall behind on their mortgages, and more distressed properties coming onto the
market, Popik says first-time homebuyers serve the function of soaking up this excess inventory.
In contrast, purchases by current homeowners have little positive effect on the housing inventory, because they usually sell a house at the same time they are buying another.
Short sales remain one of the few bright spots in the residential housing market. Time-on-market for short sales continued to decline, from an average of 20.5 weeks in February to 15.8 weeks in July, according to Campbell Surveys. First-time homebuyers made up a healthy 46.4 percent of short sale purchasers last month.
Campbell polls more than 3,000 real estate agents nationwide each month to evaluate trends in home sales and mortgage usage patterns.
The company says while fewer first-time homebuyers in the housing market will likely put downward pressure on home prices in the late summer and fall, in the near-term, real estate agents are reporting stable prices overall for the month of July and rising prices for non-distressed properties.
One real estate agent in Florida predicted, “Non-distressed property pricing is rising too quickly. Anticipated REOs coming on the market will impact this pricing by the end of September.â€
Another agent in Iowa commented, “Once the ‘free’ money [from the federal tax credit] was over, the market began to die. The sales that would have normally taken place over the summer took place in March and April to get the money. The residential market is dying-prices are gradually falling.â€
From: http://ping.fm/xg8rx
08/23/2010 By: Carrie Bay
First-time homebuyers continued to desert the housing market in July, according to a new industry study released Monday.
Data compiled by Campbell Surveys and Inside Mortgage Finance, shows that first-time homebuyers accounted for only 39.1 percent of the home purchase market last month. That’s down from a peak of 48.2 percent as recently as March and the lowest level seen in at least a year.
“The end of the tax credit has clearly had an effect,†said Thomas Popik, research director for Campbell Surveys. “First-time homebuyer participation is continuing to drop.â€
Popik’s research team says the share of first-time homebuyer activity could fall to as low as 30-35 percent of the market by the fall months.
With homeowners continuing to fall behind on their mortgages, and more distressed properties coming onto the
market, Popik says first-time homebuyers serve the function of soaking up this excess inventory.
In contrast, purchases by current homeowners have little positive effect on the housing inventory, because they usually sell a house at the same time they are buying another.
Short sales remain one of the few bright spots in the residential housing market. Time-on-market for short sales continued to decline, from an average of 20.5 weeks in February to 15.8 weeks in July, according to Campbell Surveys. First-time homebuyers made up a healthy 46.4 percent of short sale purchasers last month.
Campbell polls more than 3,000 real estate agents nationwide each month to evaluate trends in home sales and mortgage usage patterns.
The company says while fewer first-time homebuyers in the housing market will likely put downward pressure on home prices in the late summer and fall, in the near-term, real estate agents are reporting stable prices overall for the month of July and rising prices for non-distressed properties.
One real estate agent in Florida predicted, “Non-distressed property pricing is rising too quickly. Anticipated REOs coming on the market will impact this pricing by the end of September.â€
Another agent in Iowa commented, “Once the ‘free’ money [from the federal tax credit] was over, the market began to die. The sales that would have normally taken place over the summer took place in March and April to get the money. The residential market is dying-prices are gradually falling.â€
From: http://ping.fm/xg8rx
Thursday, August 12, 2010
HUDNo.10-173/U.S. Department of Housing and Urban Development (HUD)
FHA LAUNCHES SHORT REFI OPPORTUNITY FOR UNDERWATER HOMEOWNERS
Effort designed to encourage principal write-downs for responsible borrowers
WASHINGTON - In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today provided details on the adjustment to its refinance program which was announced earlier this year that will enable lenders to provide additional refinancing options to homeowners who owe more than their home is worth. Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain 'underwater' non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.
The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth - or 'underwater' - because their local markets saw large declines in home values. Originally announced in March, these changes and other programs that have been put in place will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.
"We're throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined," said FHA Commissioner David H. Stevens. "This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product."
Today, FHA published a mortgagee letter to provide guidance to lenders on how to implement this new enhancement. Participation in FHA's refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal to or greater than 500. The property must be the homeowner's primary residence. And the borrower's existing first lien holder must agree to write off at least 10% of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115%.
In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.
To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.
For more information on FHA Short Refinance option, read FHA's mortgagee letter.
From: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-173
Effort designed to encourage principal write-downs for responsible borrowers
WASHINGTON - In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today provided details on the adjustment to its refinance program which was announced earlier this year that will enable lenders to provide additional refinancing options to homeowners who owe more than their home is worth. Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain 'underwater' non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.
The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth - or 'underwater' - because their local markets saw large declines in home values. Originally announced in March, these changes and other programs that have been put in place will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.
"We're throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined," said FHA Commissioner David H. Stevens. "This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product."
Today, FHA published a mortgagee letter to provide guidance to lenders on how to implement this new enhancement. Participation in FHA's refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal to or greater than 500. The property must be the homeowner's primary residence. And the borrower's existing first lien holder must agree to write off at least 10% of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115%.
In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.
To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.
For more information on FHA Short Refinance option, read FHA's mortgagee letter.
From: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-173
Monday, August 2, 2010
U.S. Housing Market Is in Worse Shape than You Think: Altos Research
U.S. Housing Market Is in Worse Shape than You Think: Altos Research
07/30/2010
By: Carrie Bay
Real estate data provider Altos Research is taking a very bearish outlook on the housing market.
The California-based company says that ominous shadow inventory of distressed properties hanging over the
industry will lock home prices into a downward trajectory for the remainder of this year, with property values starting out 2011 even lower than they were in 2009.
Market trends charted by Altos show that inventory levels are indeed moving higher and the influx of shadow inventory is beginning to show in the market. The company’s VP of data analytics, Scott Sambucci, described a noticeable shift in housing supply dynamics in a Webinar earlier this week, in what he called “a sign of market weakness.â€
Data provided by Altos as recently as January pointed to a steady decline in housing inventories over the previous 16 months, at both the national and local market levels. But Sambucci says that quickly changed after the first month of this year.
Since January, and particularly post-tax credit stimulus, Altos has tracked a rapid divergence in inventory numbers vs. listings sold and absorbed. This, Sambucci explained, means more inventory is coming onto the market, with less inventory leaving.
As a result, he says, we’re going to see an extreme inventory overhang going into 2011. Add to that the fact that the pool of viable buyers out there is shrinking – thanks to tight credit, a declining homeownership rate, and more and more consumers being locked out of the market after a foreclosure – and you’ve got an equation that’s right in line with Altos’ bearish outlook.
Following the rudimentary rules of supply and demand, more inventory with fewer takers equals lower prices.
Altos Research provided its assessment of the most stable housing markets…and the markets that it considers to be on shaky ground.
The San Francisco metro area topped the stable list, along with Las Vegas and Washington, D.C.
Unstable metros included Minneapolis, Denver, Chicago, and Phoenix.
From: http://ping.fm/w3SqK
07/30/2010
By: Carrie Bay
Real estate data provider Altos Research is taking a very bearish outlook on the housing market.
The California-based company says that ominous shadow inventory of distressed properties hanging over the
industry will lock home prices into a downward trajectory for the remainder of this year, with property values starting out 2011 even lower than they were in 2009.
Market trends charted by Altos show that inventory levels are indeed moving higher and the influx of shadow inventory is beginning to show in the market. The company’s VP of data analytics, Scott Sambucci, described a noticeable shift in housing supply dynamics in a Webinar earlier this week, in what he called “a sign of market weakness.â€
Data provided by Altos as recently as January pointed to a steady decline in housing inventories over the previous 16 months, at both the national and local market levels. But Sambucci says that quickly changed after the first month of this year.
Since January, and particularly post-tax credit stimulus, Altos has tracked a rapid divergence in inventory numbers vs. listings sold and absorbed. This, Sambucci explained, means more inventory is coming onto the market, with less inventory leaving.
As a result, he says, we’re going to see an extreme inventory overhang going into 2011. Add to that the fact that the pool of viable buyers out there is shrinking – thanks to tight credit, a declining homeownership rate, and more and more consumers being locked out of the market after a foreclosure – and you’ve got an equation that’s right in line with Altos’ bearish outlook.
Following the rudimentary rules of supply and demand, more inventory with fewer takers equals lower prices.
Altos Research provided its assessment of the most stable housing markets…and the markets that it considers to be on shaky ground.
The San Francisco metro area topped the stable list, along with Las Vegas and Washington, D.C.
Unstable metros included Minneapolis, Denver, Chicago, and Phoenix.
From: http://ping.fm/w3SqK
Friday, July 30, 2010
Fiserv Predicts Home Prices to Drop Another 4.9% in Year Ahead
Fiserv Predicts Home Prices to Drop Another 4.9% in Year Ahead
07/29/2010 By: Carrie Bay
Despite recent increases in a number of the industry’s home price measurements, and even an uptick in the company’s own index of residential property prices, Fiserv Inc. says the gains will be short-lived. The Wisconsin-based information technology firm is forecasting home prices to fall by nearly 5 percent more over the next 12 months.
According to the Fiserv Case-Shiller Indexes, which covers trend data in 384 U.S. markets, single-family home prices in the United States rose 2 percent in the first quarter of 2010 compared to a year earlier, Fiserv reported Thursday.
It was the first year-over-year gain recorded by the company since 2006, but Fiserv says the national numbers mask the broad declines seen in most markets. Home prices were actually lower in 303 of the 384 metro areas included in the Q1 study.
Fiserv expects home prices nationally to fall by another 4.9 percent in the year ahead, as unemployment remains high, mortgage rates rise, and markets such as Florida,
Arizona, and Nevada add even more distressed properties to their inventories.
“The stabilization of residential real estate markets will take many years as buyers and sellers try to find price levels that clear large inventories of vacant homes from the market,†said David Stiff, Fiserv’s chief economist.
“Consequently, we expect to see prices bounce up and down around their lows for the next two to three years, especially in markets that experienced the largest home prices bubbles,†Stiff continued. “This will result in alternating bouts of optimism and pessimism regarding the housing market recovery… [and] will make it difficult to know exactly when the housing market has reached its bottom.â€
Steep home price declines are expected to continue in markets that have been hurt most by the housing crisis. From the first quarter of 2010 through the first quarter of 2011, Fiserv projects average home prices in Nevada to drop another 11.1 percent. In Arizona the company predicts a decline of 10.8 percent by March of next year, and Florida is likely to see prices fall another 8.8 percent.
According to the Fiserv Case-Shiller Indexes, at the end of the first quarter 2010, the median U.S. home price was $166,000. The median monthly mortgage payment fell slightly to 13 percent of median family income.
The S&P/Case-Shiller Home Price Indices released earlier this week showed that prices were up 1.2 percent in May compared to April, and were 4.6 higher than May 2009. But Standard & Poor’s put forth the same prognosis as Fiserv, that the gains were making only a temporary showing.
From: http://www.dsnews.com/articles/fiserv-predicts-home-prices-to-drop-another-49-in-year-ahead-2010-07-29
07/29/2010 By: Carrie Bay
Despite recent increases in a number of the industry’s home price measurements, and even an uptick in the company’s own index of residential property prices, Fiserv Inc. says the gains will be short-lived. The Wisconsin-based information technology firm is forecasting home prices to fall by nearly 5 percent more over the next 12 months.
According to the Fiserv Case-Shiller Indexes, which covers trend data in 384 U.S. markets, single-family home prices in the United States rose 2 percent in the first quarter of 2010 compared to a year earlier, Fiserv reported Thursday.
It was the first year-over-year gain recorded by the company since 2006, but Fiserv says the national numbers mask the broad declines seen in most markets. Home prices were actually lower in 303 of the 384 metro areas included in the Q1 study.
Fiserv expects home prices nationally to fall by another 4.9 percent in the year ahead, as unemployment remains high, mortgage rates rise, and markets such as Florida,
Arizona, and Nevada add even more distressed properties to their inventories.
“The stabilization of residential real estate markets will take many years as buyers and sellers try to find price levels that clear large inventories of vacant homes from the market,†said David Stiff, Fiserv’s chief economist.
“Consequently, we expect to see prices bounce up and down around their lows for the next two to three years, especially in markets that experienced the largest home prices bubbles,†Stiff continued. “This will result in alternating bouts of optimism and pessimism regarding the housing market recovery… [and] will make it difficult to know exactly when the housing market has reached its bottom.â€
Steep home price declines are expected to continue in markets that have been hurt most by the housing crisis. From the first quarter of 2010 through the first quarter of 2011, Fiserv projects average home prices in Nevada to drop another 11.1 percent. In Arizona the company predicts a decline of 10.8 percent by March of next year, and Florida is likely to see prices fall another 8.8 percent.
According to the Fiserv Case-Shiller Indexes, at the end of the first quarter 2010, the median U.S. home price was $166,000. The median monthly mortgage payment fell slightly to 13 percent of median family income.
The S&P/Case-Shiller Home Price Indices released earlier this week showed that prices were up 1.2 percent in May compared to April, and were 4.6 higher than May 2009. But Standard & Poor’s put forth the same prognosis as Fiserv, that the gains were making only a temporary showing.
From: http://www.dsnews.com/articles/fiserv-predicts-home-prices-to-drop-another-49-in-year-ahead-2010-07-29
Tuesday, July 27, 2010
Home Prices Tumble in Most Distressed Property Categories in June
Home Prices Tumble in Most Distressed Property Categories in June
07/26/2010 By: Carrie Bay
A drop in homebuyer activity following the contract deadline for the federal tax credit incentive helped trigger a noticeable decline in home prices between May and June, according to an industry study released Monday by the research firm Campbell Surveys.
The company’s latest market analysis found that home prices fell in three out of four property categories last month. Average prices tumbled by 6.8 percent for move-in ready foreclosed properties, 6.3 percent for short sales, and 4.6 percent for non-distressed properties. In contrast, prices for damaged foreclosed properties increased by 5.9 percent on average in June.
“These price declines are related to decreased homebuyer demand surrounding the end of the tax credit,†noted Thomas Popik, research director for Campbell Surveys. “Some housing market analysts had expected demand to remain strong through the end of June, but in retrospect it’s clear that the peak of first-time homebuyer activity occurred three months earlier, in March.â€
The first-time buyer share of home purchase transactions was 42 percent in June, according to the survey – well below the 48 percent level reported in March. This reflected the fact that first-time homebuyers were given a federal tax break of up to $8,000 for buying a primary residence, provided they were under contract by April 30.
One Florida-based real estate agent responding to the survey commented, “Prices are dropping…same house that had 2 showings a day in April with hopes of a closing by June at $139,000 now gets a showing of just one a week if we are lucky and at $129,000.â€
Another agent located in Ohio said, “Buyers just plan on deducting the $8,000 off what they are going to offer now. So, now prices are dropping to compensate for the credit not being available.â€
The survey results suggest that home prices are likely to continue their decline in the months of July and August.
Real estate agents were asked in the June survey, “With the end of the homebuyer tax credit, do you notice prices for contracts signed in June going up, down, or staying flat?†Agents responding “down†outnumbered those responding “up†by a ratio of 10 to 1.
“Contracts signed in June will be closing in July and August,†Popik explained. “That’s why we know prices for closed transactions will continue their decline. But this won’t be reflected in the publicly-released price indexes until October or November.â€
Campbell’s monthly real estate survey is conducted in conjunction with Inside Mortgage Finance and queries more than 3,000 real estate agents nationwide to provide a snapshot of home sales and mortgage usage patterns.
From: http://ping.fm/iPGtD
07/26/2010 By: Carrie Bay
A drop in homebuyer activity following the contract deadline for the federal tax credit incentive helped trigger a noticeable decline in home prices between May and June, according to an industry study released Monday by the research firm Campbell Surveys.
The company’s latest market analysis found that home prices fell in three out of four property categories last month. Average prices tumbled by 6.8 percent for move-in ready foreclosed properties, 6.3 percent for short sales, and 4.6 percent for non-distressed properties. In contrast, prices for damaged foreclosed properties increased by 5.9 percent on average in June.
“These price declines are related to decreased homebuyer demand surrounding the end of the tax credit,†noted Thomas Popik, research director for Campbell Surveys. “Some housing market analysts had expected demand to remain strong through the end of June, but in retrospect it’s clear that the peak of first-time homebuyer activity occurred three months earlier, in March.â€
The first-time buyer share of home purchase transactions was 42 percent in June, according to the survey – well below the 48 percent level reported in March. This reflected the fact that first-time homebuyers were given a federal tax break of up to $8,000 for buying a primary residence, provided they were under contract by April 30.
One Florida-based real estate agent responding to the survey commented, “Prices are dropping…same house that had 2 showings a day in April with hopes of a closing by June at $139,000 now gets a showing of just one a week if we are lucky and at $129,000.â€
Another agent located in Ohio said, “Buyers just plan on deducting the $8,000 off what they are going to offer now. So, now prices are dropping to compensate for the credit not being available.â€
The survey results suggest that home prices are likely to continue their decline in the months of July and August.
Real estate agents were asked in the June survey, “With the end of the homebuyer tax credit, do you notice prices for contracts signed in June going up, down, or staying flat?†Agents responding “down†outnumbered those responding “up†by a ratio of 10 to 1.
“Contracts signed in June will be closing in July and August,†Popik explained. “That’s why we know prices for closed transactions will continue their decline. But this won’t be reflected in the publicly-released price indexes until October or November.â€
Campbell’s monthly real estate survey is conducted in conjunction with Inside Mortgage Finance and queries more than 3,000 real estate agents nationwide to provide a snapshot of home sales and mortgage usage patterns.
From: http://ping.fm/iPGtD
Tuesday, July 13, 2010
HUD taking a closer look at added realty fees - washingtonpost.com
HUD taking a closer look at added realty fees
Kenneth R. Harney
Saturday, March 20, 2010
Does it matter whether a real estate agent charges you a flat commission rate -- say 6 percent -- or quotes you a flat rate but adds hundreds of dollars labeled an "admin" or administrative fee?
A top federal housing official says it might matter a lot, especially when minimal or no separate services are performed to justify charges beyond the regular commission.
Helen R. Kanovsky, general counsel at the Department of Housing and Urban Development, clarified the government's position on controversial add-on fees in a recent letter to industry lawyers. During the past several years, many brokerage companies began adding fees onto their commissions to generate higher revenue. The fees came with a variety of names -- "processing" and "ABC" among others -- and were charged to sellers and buyers, payable at closing.
But a U.S. District Court decision last year threw the industry into an uproar when a judge concluded that add-on fees violate federal law when there are no specific services performed to justify the extra cost. Though the decision directly affected only an estimated 30,000 transactions by one brokerage firm based in Alabama, the National Association of Realtors and other industry groups urged brokers and agents to reexamine their approach to pricing.
HUD, the agency that oversees federal consumer protections in real estate settlements across the country, never issued detailed guidance to the industry following the court decision on what's legal -- and what's not -- until Kanovsky's letter. Here's what she said, in essence: Federal law does not govern how much realty brokers can charge their customers. But it does govern how brokers and agents disclose their compensation to consumers.
Commissions may be quoted "using a flat fee, a percentage of the sales price, or a combination" of the two. The revised HUD-1 settlement sheet in use nationwide since Jan. 1 has lines where the commission charges and splits can be listed. However, Kanovsky warned that if the total charges "exceed the amount of the commission for listing and selling the home that are reflected in the real estate broker's or agent's listing agreement," then HUD has the legal power to review the extra charge "to determine whether additional services were provided" to justify the add-on.
If little or no services are performed, HUD would treat this as a violation of the Real Estate Settlement Procedures Act, subject to significant penalties. Kanovsky also warned about fees charged when there is no contract or agreement permitting the agent or broker to impose those charges. For example, if a listing broker charged the buyer an administrative fee of $250 but there was no contractual language sanctioning the charge, HUD might treat that add-on as an illegal fee.
What's the likely practical effect of HUD's clarifications? According to Steve Murray, a consultant to real estate brokers and editor of Real Trends, an industry journal, many of the largest firms tightened up their procedures on commission rates and fees in the wake of last year's district court decision.
But some smaller and midsize firms "probably haven't gotten the word yet," Murray says, and are still quoting fees in ways that could -- if consumers filed complaints with HUD -- put agents and brokers in legal jeopardy. Still other firms have agents who tack on and pocket their own extra fees on top of the broker's commission and administrative fees -- a practice that Murray considers vulnerable to legal challenge.
Brokers who quote admin fees on top of their commissions insist that they constitute an integral part of their compensation package and are fully justified by the work provided to clients. Chris Heller of Heller Real Estate Group in Encinitas, Calif., says his standard charge is 6 percent plus a $695 "transaction" or admin fee.
The fee pays for the work of the "administrative people" who assist on all transactions, according to Heller. Only two out of 10 clients even ask about the charge or its purpose, he said, "and maybe one out of 10 takes issue with it."
Northern Virginia broker Frank Borges Llosa, who runs Frankly Realty, is critical of add-on fees, calling them "sneaky" and "bogus." He says he welcomes HUD's clarification on the issue, and believes that when all compensation is quoted as "the commission, it's a lot clearer" to consumers, and "it's more open to negotiation" upfront.
Bottom line: Ask about all compensation and fees in any transaction. If you're asked to pay fees you've never heard of, or that come with vague justifications, don't roll over. Just say no.
From: http://ping.fm/GoPp1
Kenneth R. Harney
Saturday, March 20, 2010
Does it matter whether a real estate agent charges you a flat commission rate -- say 6 percent -- or quotes you a flat rate but adds hundreds of dollars labeled an "admin" or administrative fee?
A top federal housing official says it might matter a lot, especially when minimal or no separate services are performed to justify charges beyond the regular commission.
Helen R. Kanovsky, general counsel at the Department of Housing and Urban Development, clarified the government's position on controversial add-on fees in a recent letter to industry lawyers. During the past several years, many brokerage companies began adding fees onto their commissions to generate higher revenue. The fees came with a variety of names -- "processing" and "ABC" among others -- and were charged to sellers and buyers, payable at closing.
But a U.S. District Court decision last year threw the industry into an uproar when a judge concluded that add-on fees violate federal law when there are no specific services performed to justify the extra cost. Though the decision directly affected only an estimated 30,000 transactions by one brokerage firm based in Alabama, the National Association of Realtors and other industry groups urged brokers and agents to reexamine their approach to pricing.
HUD, the agency that oversees federal consumer protections in real estate settlements across the country, never issued detailed guidance to the industry following the court decision on what's legal -- and what's not -- until Kanovsky's letter. Here's what she said, in essence: Federal law does not govern how much realty brokers can charge their customers. But it does govern how brokers and agents disclose their compensation to consumers.
Commissions may be quoted "using a flat fee, a percentage of the sales price, or a combination" of the two. The revised HUD-1 settlement sheet in use nationwide since Jan. 1 has lines where the commission charges and splits can be listed. However, Kanovsky warned that if the total charges "exceed the amount of the commission for listing and selling the home that are reflected in the real estate broker's or agent's listing agreement," then HUD has the legal power to review the extra charge "to determine whether additional services were provided" to justify the add-on.
If little or no services are performed, HUD would treat this as a violation of the Real Estate Settlement Procedures Act, subject to significant penalties. Kanovsky also warned about fees charged when there is no contract or agreement permitting the agent or broker to impose those charges. For example, if a listing broker charged the buyer an administrative fee of $250 but there was no contractual language sanctioning the charge, HUD might treat that add-on as an illegal fee.
What's the likely practical effect of HUD's clarifications? According to Steve Murray, a consultant to real estate brokers and editor of Real Trends, an industry journal, many of the largest firms tightened up their procedures on commission rates and fees in the wake of last year's district court decision.
But some smaller and midsize firms "probably haven't gotten the word yet," Murray says, and are still quoting fees in ways that could -- if consumers filed complaints with HUD -- put agents and brokers in legal jeopardy. Still other firms have agents who tack on and pocket their own extra fees on top of the broker's commission and administrative fees -- a practice that Murray considers vulnerable to legal challenge.
Brokers who quote admin fees on top of their commissions insist that they constitute an integral part of their compensation package and are fully justified by the work provided to clients. Chris Heller of Heller Real Estate Group in Encinitas, Calif., says his standard charge is 6 percent plus a $695 "transaction" or admin fee.
The fee pays for the work of the "administrative people" who assist on all transactions, according to Heller. Only two out of 10 clients even ask about the charge or its purpose, he said, "and maybe one out of 10 takes issue with it."
Northern Virginia broker Frank Borges Llosa, who runs Frankly Realty, is critical of add-on fees, calling them "sneaky" and "bogus." He says he welcomes HUD's clarification on the issue, and believes that when all compensation is quoted as "the commission, it's a lot clearer" to consumers, and "it's more open to negotiation" upfront.
Bottom line: Ask about all compensation and fees in any transaction. If you're asked to pay fees you've never heard of, or that come with vague justifications, don't roll over. Just say no.
From: http://ping.fm/GoPp1
Tuesday, June 29, 2010
Foreclosure alternative gaining favor
Foreclosure alternative gaining favor
By Kenneth R. Harney
Saturday, June 26, 2010
Short sales have been the hot solution for financially stressed homeowners and their lenders for the past year, but here's another potent foreclosure alternative that's about to take center stage: deeds in lieu.
Some of the largest mortgage servicers and lenders in the country are gearing up campaigns to reach out to carefully targeted borrowers with cash incentives that sometimes range into five figures, plus a simple message: Let's bypass the time-consuming hassles of short sales and foreclosures. Just deed us the title to your underwater home, and we'll call it a deal. We won't come after you to collect any deficiency between what you owe us on the mortgage and what we obtain from the home sale. We might even be able to wrap up the whole transaction in as little as 30 to 45 days. How about it?
Mortgage companies say troubled borrowers are increasingly signing up. One of the largest servicers, Bank of America, has mailed 100,000 deed-in-lieu solicitations to customers in the past 60 days, and its volume of completed transactions is breaking company records, according to officials.
What are deeds in lieu? The full name is deeds in lieu of foreclosure. They are voluntary transfers of property ownership from borrowers to creditors that make court-directed foreclosures unnecessary.
The concept is one of the oldest in real estate, but it got a special boost this year when the Obama administration included it as an option in its Home Affordable Foreclosure Alternatives program, and mortgage giant Fannie Mae cut the penalty-box time for homeowners who use the technique from four years to two before they can qualify for another home mortgage.
Deeds in lieu also are surging because they provide a win-win for borrowers and mortgage investors that short sales often cannot match. Tops on the list: speed. Travis Hamel Olsen, chief operating officer of Loan Resolution, a Scottsdale, Ariz., firm that works with lenders to solve troubled borrowers' problems, said deeds in lieu represent "a very expeditious way to move on" for underwater borrowers who are facing potential foreclosure.
"A lot of owners just want to be finished with it now," he said. "They don't want to deal with [the house] anymore." They don't want to deal with real estate agents or signs on the front lawn that reveal their financial squeeze to neighbors. They don't want to haggle with potential buyers coming in with lowball offers. But they also don't want to simply walk away -- strategically default -- because that will crater their credit files and scores for as much as seven years.
Greg Hebner, president of the MOS Group of San Diego, which also works with banks and investors across the country to resolve defaulting borrowers' situations, said a key motivation is that lenders are stuck with massive backlogs of underwater homes that haven't yet gone through foreclosure and been put on the market -- the so-called shadow inventory.
Not only is it cheaper for them to do deeds in lieu to gain control of those properties, but with mortgage rates below 5 percent, they also will probably be able to resell them faster and on potentially more favorable terms in the summer and fall.
"If you can get a lot of inventory moving in the next couple of months" of prime home-buying season, Hebner said, "you are solving a lot of problems."
Matt Vernon, Bank of America's top short sale and deed-in-lieu executive, said the technique works so well for borrowers and mortgage owners that his company is running pilot programs in major housing markets to alert borrowers who might benefit but are not familiar with deeds in lieu.
To sweeten the pot, Bank of America is offering cash incentives that range from $3,000 to $15,000 -- and is getting a strong response, Vernon said.
What are the downsides or limitations of deeds in lieu for homeowners? Probably the most important, experts said, is that they don't work for every situation involving serious mortgage default. For example, if you have equity in the property, you'll probably want to pursue a loan modification first, then a short sale, rather than hand your equity stake over to the lender.
Deeds in lieu usually don't work when there are multiple mortgages from different creditors encumbering the property. Also, though deeds in lieu do less damage to borrowers' credit histories than foreclosures or bankruptcies, they definitely leave a mark.
Fair Isaac, developer of the widely used FICO credit score, said on its "MyFico" Web site that deeds in lieu and short sales are treated as "not paid as agreed" accounts and are treated the same by the FICO scoring model.
From: http://ping.fm/GtrDE
By Kenneth R. Harney
Saturday, June 26, 2010
Short sales have been the hot solution for financially stressed homeowners and their lenders for the past year, but here's another potent foreclosure alternative that's about to take center stage: deeds in lieu.
Some of the largest mortgage servicers and lenders in the country are gearing up campaigns to reach out to carefully targeted borrowers with cash incentives that sometimes range into five figures, plus a simple message: Let's bypass the time-consuming hassles of short sales and foreclosures. Just deed us the title to your underwater home, and we'll call it a deal. We won't come after you to collect any deficiency between what you owe us on the mortgage and what we obtain from the home sale. We might even be able to wrap up the whole transaction in as little as 30 to 45 days. How about it?
Mortgage companies say troubled borrowers are increasingly signing up. One of the largest servicers, Bank of America, has mailed 100,000 deed-in-lieu solicitations to customers in the past 60 days, and its volume of completed transactions is breaking company records, according to officials.
What are deeds in lieu? The full name is deeds in lieu of foreclosure. They are voluntary transfers of property ownership from borrowers to creditors that make court-directed foreclosures unnecessary.
The concept is one of the oldest in real estate, but it got a special boost this year when the Obama administration included it as an option in its Home Affordable Foreclosure Alternatives program, and mortgage giant Fannie Mae cut the penalty-box time for homeowners who use the technique from four years to two before they can qualify for another home mortgage.
Deeds in lieu also are surging because they provide a win-win for borrowers and mortgage investors that short sales often cannot match. Tops on the list: speed. Travis Hamel Olsen, chief operating officer of Loan Resolution, a Scottsdale, Ariz., firm that works with lenders to solve troubled borrowers' problems, said deeds in lieu represent "a very expeditious way to move on" for underwater borrowers who are facing potential foreclosure.
"A lot of owners just want to be finished with it now," he said. "They don't want to deal with [the house] anymore." They don't want to deal with real estate agents or signs on the front lawn that reveal their financial squeeze to neighbors. They don't want to haggle with potential buyers coming in with lowball offers. But they also don't want to simply walk away -- strategically default -- because that will crater their credit files and scores for as much as seven years.
Greg Hebner, president of the MOS Group of San Diego, which also works with banks and investors across the country to resolve defaulting borrowers' situations, said a key motivation is that lenders are stuck with massive backlogs of underwater homes that haven't yet gone through foreclosure and been put on the market -- the so-called shadow inventory.
Not only is it cheaper for them to do deeds in lieu to gain control of those properties, but with mortgage rates below 5 percent, they also will probably be able to resell them faster and on potentially more favorable terms in the summer and fall.
"If you can get a lot of inventory moving in the next couple of months" of prime home-buying season, Hebner said, "you are solving a lot of problems."
Matt Vernon, Bank of America's top short sale and deed-in-lieu executive, said the technique works so well for borrowers and mortgage owners that his company is running pilot programs in major housing markets to alert borrowers who might benefit but are not familiar with deeds in lieu.
To sweeten the pot, Bank of America is offering cash incentives that range from $3,000 to $15,000 -- and is getting a strong response, Vernon said.
What are the downsides or limitations of deeds in lieu for homeowners? Probably the most important, experts said, is that they don't work for every situation involving serious mortgage default. For example, if you have equity in the property, you'll probably want to pursue a loan modification first, then a short sale, rather than hand your equity stake over to the lender.
Deeds in lieu usually don't work when there are multiple mortgages from different creditors encumbering the property. Also, though deeds in lieu do less damage to borrowers' credit histories than foreclosures or bankruptcies, they definitely leave a mark.
Fair Isaac, developer of the widely used FICO credit score, said on its "MyFico" Web site that deeds in lieu and short sales are treated as "not paid as agreed" accounts and are treated the same by the FICO scoring model.
From: http://ping.fm/GtrDE
Monday, June 28, 2010
Bill Extending Tax Credit Closing Deadline Falls Through in Senate
Bill Extending Tax Credit Closing Deadline Falls Through in Senate
06/25/2010 By: Carrie Bay
An amendment that would have extended the closing deadline for the homebuyer tax credit by three months failed on the Senate floor this week.
Senate Majority Leader Harry Reid (D-Nevada) proposed the extension, and the amendment itself was approved by a large margin last week as an add-on to H.R. 4213, the American Jobs and Tax Loopholes Act.
Republican senators, though, defeated the full measure on Thursday, for the third time, when Democrats moved to end debate and push it to a chamber vote. Reid has indicated that after three unsuccessful attempts, he plans to drop the matter altogether.
The amendment would have extended the tax credit deadline for closing on a home purchase to September 30. The current deadline is June 30.
The National Association of Realtors (NAR) says some 180,000 homebuyers who signed contracts in time will not be able to make the June 30 closing deadline, simply because of the time it takes for lenders to complete transactions. The trade group estimates that 75,000 of those who will miss out on the tax break are buyers of distressed properties.
NAR says its members have reported that as many as one-third of qualified applicants have already been notified by lenders that their mortgages will not close before June 30, due to the sheer volume of applications in the pipeline.
The tax credit amendment was just one piece of the multi-faceted bill that was primarily intended to extend unemployment benefits for Americans out of work for more than six months.
Republicans rallied against the measure on the grounds that it would have added $30 billion to the “already staggering national deficit,†they said.
From: http://ping.fm/jbBvE
06/25/2010 By: Carrie Bay
An amendment that would have extended the closing deadline for the homebuyer tax credit by three months failed on the Senate floor this week.
Senate Majority Leader Harry Reid (D-Nevada) proposed the extension, and the amendment itself was approved by a large margin last week as an add-on to H.R. 4213, the American Jobs and Tax Loopholes Act.
Republican senators, though, defeated the full measure on Thursday, for the third time, when Democrats moved to end debate and push it to a chamber vote. Reid has indicated that after three unsuccessful attempts, he plans to drop the matter altogether.
The amendment would have extended the tax credit deadline for closing on a home purchase to September 30. The current deadline is June 30.
The National Association of Realtors (NAR) says some 180,000 homebuyers who signed contracts in time will not be able to make the June 30 closing deadline, simply because of the time it takes for lenders to complete transactions. The trade group estimates that 75,000 of those who will miss out on the tax break are buyers of distressed properties.
NAR says its members have reported that as many as one-third of qualified applicants have already been notified by lenders that their mortgages will not close before June 30, due to the sheer volume of applications in the pipeline.
The tax credit amendment was just one piece of the multi-faceted bill that was primarily intended to extend unemployment benefits for Americans out of work for more than six months.
Republicans rallied against the measure on the grounds that it would have added $30 billion to the “already staggering national deficit,†they said.
From: http://ping.fm/jbBvE
Thursday, June 24, 2010
Fannie Mae Increases Penalties for Borrowers Who Walk Away
News Release
June 23, 2010
Fannie Mae Increases Penalties for Borrowers Who Walk Away
Seven-Year Lockout Policy for Strategic Defaulters
WASHINGTON, DC — Fannie Mae (FNM/NYSE) announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.
"We're taking these steps to highlight the importance of working with your servicer," said Terence Edwards, executive vice president for credit portfolio management. "Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time."
Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.
Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances. These policy changes were announced in April, in Fannie Mae's Selling Guide Announcement SEL-2010-05.
From: http://ping.fm/CXHZp
June 23, 2010
Fannie Mae Increases Penalties for Borrowers Who Walk Away
Seven-Year Lockout Policy for Strategic Defaulters
WASHINGTON, DC — Fannie Mae (FNM/NYSE) announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.
"We're taking these steps to highlight the importance of working with your servicer," said Terence Edwards, executive vice president for credit portfolio management. "Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time."
Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.
Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances. These policy changes were announced in April, in Fannie Mae's Selling Guide Announcement SEL-2010-05.
From: http://ping.fm/CXHZp
Monday, June 21, 2010
Real Estate Relapse Has Arrived « Great Speculations - Forbes.com
Real Estate Relapse Has Arrived - click on the link to read what Forbes has to say...
From: http://ping.fm/x5nmM
From: http://ping.fm/x5nmM
Thursday, June 17, 2010
Senate Approves Extension of Tax Credit Closing Deadline
The U.S. Senate has passed an amendment that would extend the closing deadline of the homebuyer tax credit by three months.
Right now, qualifying homebuyers who were under contract by April 30 have until June 30 to close the deal. But because of the large volume of applications for lenders to process, concerns have begun to surface that some buyers may miss out on the tax break simply because of the backlogged pipeline.
The National Association of Realtors (NAR) says it has received reports that as many as a third of the buyers eligible for the credit have already been notified by their lender that they won’t make the June 30 closing deadline.
The Senate’s amendment, approved Wednesday by a vote of 60 to 37, would give homebuyers and their lenders until September 30 to complete their transactions.
The extension was proposed by Senate Majority Leader Harry Reid, whose home state of Nevada still holds the title of one of the most distressed housing markets in the country.
Reid says not only did the tax credit make it easier for thousands of Nevadans to purchase their first home, it helped reduce the state’s overblown inventory of residential properties.
But a statement on his Web site warns, “There is growing concern that because of the time it takes for banks to complete transactions such as short sales, many of these home purchases would not be complete before the deadline through no fault of the homebuyer.â€
The measure granting an extension is part of a larger $140 billion jobs and tax bill currently under consideration by the Senate. A Senate vote on the full legislation is expected to come later this week or next week, and then it will be sent to the House for review.
“If Congress fails to act promptly, then prospective homebuyers might not get the benefit of the homebuyer tax credit, even though they have completed contracts,†NAR stressed in a recent letter to lawmakers.
From: http://ping.fm/csDeH
Right now, qualifying homebuyers who were under contract by April 30 have until June 30 to close the deal. But because of the large volume of applications for lenders to process, concerns have begun to surface that some buyers may miss out on the tax break simply because of the backlogged pipeline.
The National Association of Realtors (NAR) says it has received reports that as many as a third of the buyers eligible for the credit have already been notified by their lender that they won’t make the June 30 closing deadline.
The Senate’s amendment, approved Wednesday by a vote of 60 to 37, would give homebuyers and their lenders until September 30 to complete their transactions.
The extension was proposed by Senate Majority Leader Harry Reid, whose home state of Nevada still holds the title of one of the most distressed housing markets in the country.
Reid says not only did the tax credit make it easier for thousands of Nevadans to purchase their first home, it helped reduce the state’s overblown inventory of residential properties.
But a statement on his Web site warns, “There is growing concern that because of the time it takes for banks to complete transactions such as short sales, many of these home purchases would not be complete before the deadline through no fault of the homebuyer.â€
The measure granting an extension is part of a larger $140 billion jobs and tax bill currently under consideration by the Senate. A Senate vote on the full legislation is expected to come later this week or next week, and then it will be sent to the House for review.
“If Congress fails to act promptly, then prospective homebuyers might not get the benefit of the homebuyer tax credit, even though they have completed contracts,†NAR stressed in a recent letter to lawmakers.
From: http://ping.fm/csDeH
Wednesday, June 2, 2010
#1 Threat to Housing Recovery: Shadow Inventory
#1 Threat to Housing Recovery: Shadow Inventory
by Steve Harney on June 2, 2010
The concept of supply and demand is relatively easy to understand. It applies to real estate as it applies to any other industry. We must look forward to determine the upcoming supply of housing inventory just like every other industry does. As an example, let’s assume I own a hardware store in town. I have done $1 million in retail sales each and every year for the last ten years. What should I budget to do in sales over the next twelve months? Approximately $1 million seems like the correct answer. However, if I found out a Loews or Home Depot was building a store in the vacant lot across from my store, should I change my planned budget? Of course I should.
What does this have to do with the current real estate market? There is a ‘Home Depot’ being built as we speak. It is called ‘shadow inventory’.
‘Shadow inventory’ consists of homes that are not yet on the market but fall into one of these categories:
Houses that have not come to market because the homeowners didn’t put their homes up for sale in the last few years hoping that by waiting they will get a higher price.
Homes that have already been reposed by the banks (REOs) but not yet on the market.
Homes that are in already in the foreclosure process but have not yet been reposed by the banks.
Homes that are 90+ days behind on their mortgage payments (less than one percent will ever catch up. 99% will become a distressed sale).
What number are we talking about?
Pent-up Selling Demand
Zillow just recently released a survey on the category of ‘pent-up selling demand’. They asked:
“If you saw signs of a real estate market turnaround in the next 12 months, how likely would you be to put your home up for sale?â€
The responses extrapolated to show actual numbers:
5.3 million home owners would be ‘very likely’ to put their home up for sale
6.1 million would be ‘likely’
10.6 would be ‘somewhat likely’
By comparison, 5.2 million existing homes were sold during 2009.
Assorted Distressed Properties
There have been several organizations that have attempted to quantify the other category (delinquencies, homes in the foreclosure process and REOs). Here are their findings:
The Mortgage Bankers’ Association believes that there are 4.3 million homes in this category.
Barclay’s Capital puts the number at 4.7 million.
Capital Economics says 5.5 million.
Morgan Stanley, in a very recent study, claims 8 million.
Total Shadow Inventory
If we take the lowest number in each category, there could be an additional 9.4 (5.3 + 4.1) million homes entering the market.
Again, by comparison, 5.2 million existing homes were sold during 2009.
What does this mean to you?
If the concept of supply and demand applies to real estate, there will be a tremendous downward pressure on prices.
From: http://kcmblog.com/2010/06/02/number-1-threat-to-housing-recovery-shadow-inventory/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
by Steve Harney on June 2, 2010
The concept of supply and demand is relatively easy to understand. It applies to real estate as it applies to any other industry. We must look forward to determine the upcoming supply of housing inventory just like every other industry does. As an example, let’s assume I own a hardware store in town. I have done $1 million in retail sales each and every year for the last ten years. What should I budget to do in sales over the next twelve months? Approximately $1 million seems like the correct answer. However, if I found out a Loews or Home Depot was building a store in the vacant lot across from my store, should I change my planned budget? Of course I should.
What does this have to do with the current real estate market? There is a ‘Home Depot’ being built as we speak. It is called ‘shadow inventory’.
‘Shadow inventory’ consists of homes that are not yet on the market but fall into one of these categories:
Houses that have not come to market because the homeowners didn’t put their homes up for sale in the last few years hoping that by waiting they will get a higher price.
Homes that have already been reposed by the banks (REOs) but not yet on the market.
Homes that are in already in the foreclosure process but have not yet been reposed by the banks.
Homes that are 90+ days behind on their mortgage payments (less than one percent will ever catch up. 99% will become a distressed sale).
What number are we talking about?
Pent-up Selling Demand
Zillow just recently released a survey on the category of ‘pent-up selling demand’. They asked:
“If you saw signs of a real estate market turnaround in the next 12 months, how likely would you be to put your home up for sale?â€
The responses extrapolated to show actual numbers:
5.3 million home owners would be ‘very likely’ to put their home up for sale
6.1 million would be ‘likely’
10.6 would be ‘somewhat likely’
By comparison, 5.2 million existing homes were sold during 2009.
Assorted Distressed Properties
There have been several organizations that have attempted to quantify the other category (delinquencies, homes in the foreclosure process and REOs). Here are their findings:
The Mortgage Bankers’ Association believes that there are 4.3 million homes in this category.
Barclay’s Capital puts the number at 4.7 million.
Capital Economics says 5.5 million.
Morgan Stanley, in a very recent study, claims 8 million.
Total Shadow Inventory
If we take the lowest number in each category, there could be an additional 9.4 (5.3 + 4.1) million homes entering the market.
Again, by comparison, 5.2 million existing homes were sold during 2009.
What does this mean to you?
If the concept of supply and demand applies to real estate, there will be a tremendous downward pressure on prices.
From: http://kcmblog.com/2010/06/02/number-1-threat-to-housing-recovery-shadow-inventory/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
Friday, May 7, 2010
Regional Economic Update, May 2010 - Economic Research - FRB Dallas
Regional Economic Update
May 3, 2010
Regional Economy Continues to Pick Up Steam
Economic conditions have firmed up in Texas over the past six weeks, and new data and anecdotal evidence suggest that a recovery is under way in the state. Texas payroll employment is growing at a modest pace, and the Texas Business-Cycle Index has increased for three consecutive months. Factory output is expanding, residential real estate is firming up, and retail sales and exports are rising. The Texas Leading Index continues to show gains, consistent with gradual improvement.
However, risks to the recovery remain. Improvement in the residential real estate market continues to be buoyed by the homebuyer tax credit, which expired on April 30. The commercial real estate sector remains weak and is unlikely to see a significant turnaround for some time.
From: http://ping.fm/HG0PJ
May 3, 2010
Regional Economy Continues to Pick Up Steam
Economic conditions have firmed up in Texas over the past six weeks, and new data and anecdotal evidence suggest that a recovery is under way in the state. Texas payroll employment is growing at a modest pace, and the Texas Business-Cycle Index has increased for three consecutive months. Factory output is expanding, residential real estate is firming up, and retail sales and exports are rising. The Texas Leading Index continues to show gains, consistent with gradual improvement.
However, risks to the recovery remain. Improvement in the residential real estate market continues to be buoyed by the homebuyer tax credit, which expired on April 30. The commercial real estate sector remains weak and is unlikely to see a significant turnaround for some time.
From: http://ping.fm/HG0PJ
Tuesday, April 20, 2010
Excess Inventory May Impede Housing Recovery: Fannie Mae
Excess Inventory May Impede Housing Recovery: Fannie Mae
04/19/2010 By: Brittany Dunn
Although housing is beginning to stabilize, excess inventory and shadow supply may hinder continued recovery, according to the April 2010 Economic Outlook released Monday by Fannie Mae’s Economics & Mortgage Market Analysis Group.
Fannie Mae said recent major housing indicators have been harsh. Housing starts fell in February, led by a large drop in multifamily starts. In addition, single-family starts fell slightly and have basically moved sideways during the past 6 months. Hovering near an annualized level of 500,000, single-family starts remained well above their record low reached in February 2009 but are significantly below their record high of more than 1.8 million annualized rate recorded in February 2006.
According to the outlook, lackluster homebuilding activity is one of the reasons for a relatively modest recovery. However, given soft demand for new homes, a much-below trend level of activity is necessary to restore balance to the housing market. The fourth consecutive drop in new home sales in February brought sales to another record low.
Existing home sales posted their third consecutive drop in February, but Fannie Mae said the near-term outlook is brightening, as augured by improving leading indicators of home sales. Pending home sales, which measure contract signings of existing homes, surged in February, and purchase applications have risen nearly 25 percent in the last six weeks. As a result of these positive indicators, existing home sales are projected to strengthen substantially in the second quarter.
The homebuyer tax credit, set to expire later this month, is expected to pull sales forward into the first half of this year. As a result, Fannie Mae said sales will likely fall back in the third quarter. And if the labor market improves substantially in the fourth quarter as anticipated, home sales should rebound and begin a self-sustaining recovery without the help of a tax subsidy.
Even with an expected gain in March total home sales, sales for the first quarter are likely to be much lower than originally projected, causing Fannie Mae to downwardly revise the trajectory of sales going forward. For all of 2010, Fannie Mae projects a 6 percent increase in sales, down from a 9 percent increase forecast in the March outlook and a 12 percent increase projected in the February outlook.
As for home prices, Fannie Mae expects to see more moderate declines this year. However, the shadow inventory of homes continues to pose risks. In the minutes from the March Federal Open Market Committee meeting, committee members expressed concerns that the foreclosure rate could remain elevated or even surge higher in coming quarters. Consequently, this could potentially add supply to the already large inventory of vacant homes, posing downside risks to home prices.
However, Fannie Mae said two recent initiatives by the administration to address rising delinquencies and stem foreclosures, if successful, will help reduce shadow inventory. These include Federal Housing Administration financing of underwater mortgages and an enhancement to the Home Affordable Modification Program to address principal write-downs and unemployed borrowers.
It will be some time to determine how effective the programs will be in reducing strategic defaults and the shadow supply of housing, but Fannie Mae believes these measures will reduce downside risks to the housing market.
From: http://ping.fm/16Km2
04/19/2010 By: Brittany Dunn
Although housing is beginning to stabilize, excess inventory and shadow supply may hinder continued recovery, according to the April 2010 Economic Outlook released Monday by Fannie Mae’s Economics & Mortgage Market Analysis Group.
Fannie Mae said recent major housing indicators have been harsh. Housing starts fell in February, led by a large drop in multifamily starts. In addition, single-family starts fell slightly and have basically moved sideways during the past 6 months. Hovering near an annualized level of 500,000, single-family starts remained well above their record low reached in February 2009 but are significantly below their record high of more than 1.8 million annualized rate recorded in February 2006.
According to the outlook, lackluster homebuilding activity is one of the reasons for a relatively modest recovery. However, given soft demand for new homes, a much-below trend level of activity is necessary to restore balance to the housing market. The fourth consecutive drop in new home sales in February brought sales to another record low.
Existing home sales posted their third consecutive drop in February, but Fannie Mae said the near-term outlook is brightening, as augured by improving leading indicators of home sales. Pending home sales, which measure contract signings of existing homes, surged in February, and purchase applications have risen nearly 25 percent in the last six weeks. As a result of these positive indicators, existing home sales are projected to strengthen substantially in the second quarter.
The homebuyer tax credit, set to expire later this month, is expected to pull sales forward into the first half of this year. As a result, Fannie Mae said sales will likely fall back in the third quarter. And if the labor market improves substantially in the fourth quarter as anticipated, home sales should rebound and begin a self-sustaining recovery without the help of a tax subsidy.
Even with an expected gain in March total home sales, sales for the first quarter are likely to be much lower than originally projected, causing Fannie Mae to downwardly revise the trajectory of sales going forward. For all of 2010, Fannie Mae projects a 6 percent increase in sales, down from a 9 percent increase forecast in the March outlook and a 12 percent increase projected in the February outlook.
As for home prices, Fannie Mae expects to see more moderate declines this year. However, the shadow inventory of homes continues to pose risks. In the minutes from the March Federal Open Market Committee meeting, committee members expressed concerns that the foreclosure rate could remain elevated or even surge higher in coming quarters. Consequently, this could potentially add supply to the already large inventory of vacant homes, posing downside risks to home prices.
However, Fannie Mae said two recent initiatives by the administration to address rising delinquencies and stem foreclosures, if successful, will help reduce shadow inventory. These include Federal Housing Administration financing of underwater mortgages and an enhancement to the Home Affordable Modification Program to address principal write-downs and unemployed borrowers.
It will be some time to determine how effective the programs will be in reducing strategic defaults and the shadow supply of housing, but Fannie Mae believes these measures will reduce downside risks to the housing market.
From: http://ping.fm/16Km2
Monday, April 19, 2010
Shadow Inventory about to See the Light
Shadow Inventory about to See the Light in Foreclosures
by Steve Harney on April 19, 2010
As Steve mentioned in a post earlier this month, 5 Keys to a Real Estate Recovery:
He believes both the increase of distressed properties and the timing of their release to the market will be the biggest real estate story of 2010 … Anytime the supply of an item increases and demand remains flat, pricing is adversely impacted. This supply will come at discounted prices. Its impact could be substantial.
There were four major news reports concerning foreclosures last week. None were good news to an anticipated housing recovery or to home values in 2010.
Let’s go over each news item:
RealtyTrac’s Foreclosure Market Report 1st Quarter 2010
RealtyTrac is one of the leading data resources for foreclosures in the country. Most main stream media see them as the major player when it comes to reporting on the foreclosure situation. In this quarter’s report, they stated:
Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.
“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” said James J. Saccacio, chief executive officer of RealtyTrac. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs increasing 9 percent on a quarterly basis in the first quarter of 2010 compared to a 13 percent quarterly decrease in REOs in the first quarter of 2009.
“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline.”
… REOs also hit a record high for the report in the first quarter, with a total of 257,944 properties repossessed by the lender during the quarter.
A property is classified as REO after a bank forecloses and repossesses it. The banks are beginning to foreclose at greater rates and are actually taking possession of the houses. This is a sign that the banks are preparing larger foreclosure inventories to release to the market.
As a matter of fact it seems Bank of America is already beginning the process of releasing these properties in certain regions. The North Country Times reported last week:
Bank of America, the nation’s largest mortgage lender, ramped up its foreclosure activity in March, sending hundreds of letters warning delinquent borrowers in the region that it could sell their homes at auction in as little as three weeks, according to North County Times analysis of data from ForeclosureRadar.
The bank said the increased activity was a natural consequence of borrowers running out of options … Richard Simon, a Bank of America spokesman, wrote in an e-mail that he couldn’t speak to the sharp increase of notices in San Diego and Riverside counties, but that the bank has expected more foreclosure activity.
“We have reported recently that we anticipate a rise in foreclosure activity through the coming months as homeowners are unable to qualify for loan modifications, fall out of modification programs or go into delinquency due to the ongoing stress in the economy,” he said.
Analysts and real estate agents said the moves by the Charlotte, N.C., banking giant, which controls a large share of the Southern California mortgage market, could signal a final reckoning for homeowners who have been protected by government programs for months or even years.
Fannie & Freddie’s Foreclosure Report
In an article in Housing Wire, it was reported:
The government-sponsored enterprises Fannie Mae and Freddie Mac, like the banking industry, are preparing for a surge in foreclosures to hit already overloaded REO portfolios in 2010.
Freddie holds 45,000 real estate owned (REO) properties in its portfolio as of the end of 2009, according to a filing with a quarterly filing with the Securities and Exchange Commission (SEC). And while Freddie expects the number of REO to continue to grow in 2010, exactly how much will depend on the pace of the economic recovery, according a spokesperson at Freddie.
Fannie currently holds 86,000 REO properties in its inventory as of the end of 2009, according to its report to the SEC. That number has more than doubled the 33,729 at the end of 2007 and grown another 35% from 63,538 in 2008.
“Although we have expanded our loan workout initiatives to keep borrowers in their homes, we expect our foreclosures to increase in 2010 as a result of the adverse impact that the weak economy and high unemployment have had and are expected to have on the financial condition of borrowers,” according to the SEC filing by Fannie.
First American Core Logic’s Distressed Sales Report
This report qualified the number of distressed sales already coming to market and talks to their impact on a recovery and on home prices:
The report indicates that distressed home sales – such as short sales and real estate owned (REO) sales – accounted for 29 percent of all sales in the U.S. in January: the highest level since April 2009.
Distressed sales are non‐arms length transactions such as REO or short sales. Market sales are arms‐length transactions between a willing buyer and willing seller and they exclude distressed sales. Distressed sales have a very strong influence on home price trends and are an indicator of a housing market’s health.
Lending Processing Services Mortgage Monitor
This report showed the percentage of loans 6 months or more delinquent which have not had foreclosure procedures even started yet. This represents future inventory of foreclosures that will come to market.
What does this mean to you?
We have told every seller for months that we believe the best chance you have to maximize the price you will receive for your house is to sell it before the ‘shadow inventory’ of distressed properties comes to market. It appears this is about to happen.
From: http://kcmblog.com/2010/04/19/is-the-shadow-inventory-beginning-to-see-light/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
by Steve Harney on April 19, 2010
As Steve mentioned in a post earlier this month, 5 Keys to a Real Estate Recovery:
He believes both the increase of distressed properties and the timing of their release to the market will be the biggest real estate story of 2010 … Anytime the supply of an item increases and demand remains flat, pricing is adversely impacted. This supply will come at discounted prices. Its impact could be substantial.
There were four major news reports concerning foreclosures last week. None were good news to an anticipated housing recovery or to home values in 2010.
Let’s go over each news item:
RealtyTrac’s Foreclosure Market Report 1st Quarter 2010
RealtyTrac is one of the leading data resources for foreclosures in the country. Most main stream media see them as the major player when it comes to reporting on the foreclosure situation. In this quarter’s report, they stated:
Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.
“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” said James J. Saccacio, chief executive officer of RealtyTrac. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs increasing 9 percent on a quarterly basis in the first quarter of 2010 compared to a 13 percent quarterly decrease in REOs in the first quarter of 2009.
“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline.”
… REOs also hit a record high for the report in the first quarter, with a total of 257,944 properties repossessed by the lender during the quarter.
A property is classified as REO after a bank forecloses and repossesses it. The banks are beginning to foreclose at greater rates and are actually taking possession of the houses. This is a sign that the banks are preparing larger foreclosure inventories to release to the market.
As a matter of fact it seems Bank of America is already beginning the process of releasing these properties in certain regions. The North Country Times reported last week:
Bank of America, the nation’s largest mortgage lender, ramped up its foreclosure activity in March, sending hundreds of letters warning delinquent borrowers in the region that it could sell their homes at auction in as little as three weeks, according to North County Times analysis of data from ForeclosureRadar.
The bank said the increased activity was a natural consequence of borrowers running out of options … Richard Simon, a Bank of America spokesman, wrote in an e-mail that he couldn’t speak to the sharp increase of notices in San Diego and Riverside counties, but that the bank has expected more foreclosure activity.
“We have reported recently that we anticipate a rise in foreclosure activity through the coming months as homeowners are unable to qualify for loan modifications, fall out of modification programs or go into delinquency due to the ongoing stress in the economy,” he said.
Analysts and real estate agents said the moves by the Charlotte, N.C., banking giant, which controls a large share of the Southern California mortgage market, could signal a final reckoning for homeowners who have been protected by government programs for months or even years.
Fannie & Freddie’s Foreclosure Report
In an article in Housing Wire, it was reported:
The government-sponsored enterprises Fannie Mae and Freddie Mac, like the banking industry, are preparing for a surge in foreclosures to hit already overloaded REO portfolios in 2010.
Freddie holds 45,000 real estate owned (REO) properties in its portfolio as of the end of 2009, according to a filing with a quarterly filing with the Securities and Exchange Commission (SEC). And while Freddie expects the number of REO to continue to grow in 2010, exactly how much will depend on the pace of the economic recovery, according a spokesperson at Freddie.
Fannie currently holds 86,000 REO properties in its inventory as of the end of 2009, according to its report to the SEC. That number has more than doubled the 33,729 at the end of 2007 and grown another 35% from 63,538 in 2008.
“Although we have expanded our loan workout initiatives to keep borrowers in their homes, we expect our foreclosures to increase in 2010 as a result of the adverse impact that the weak economy and high unemployment have had and are expected to have on the financial condition of borrowers,” according to the SEC filing by Fannie.
First American Core Logic’s Distressed Sales Report
This report qualified the number of distressed sales already coming to market and talks to their impact on a recovery and on home prices:
The report indicates that distressed home sales – such as short sales and real estate owned (REO) sales – accounted for 29 percent of all sales in the U.S. in January: the highest level since April 2009.
Distressed sales are non‐arms length transactions such as REO or short sales. Market sales are arms‐length transactions between a willing buyer and willing seller and they exclude distressed sales. Distressed sales have a very strong influence on home price trends and are an indicator of a housing market’s health.
Lending Processing Services Mortgage Monitor
This report showed the percentage of loans 6 months or more delinquent which have not had foreclosure procedures even started yet. This represents future inventory of foreclosures that will come to market.
What does this mean to you?
We have told every seller for months that we believe the best chance you have to maximize the price you will receive for your house is to sell it before the ‘shadow inventory’ of distressed properties comes to market. It appears this is about to happen.
From: http://kcmblog.com/2010/04/19/is-the-shadow-inventory-beginning-to-see-light/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
Fannie Updates Policies for Loan Eligibility After a Pre-Foreclosure Event
Fannie Updates Policies for Loan Eligibility After a Pre-Foreclosure Event
04/16/2010 By: Brittany Dunn
In an effort to support overall market stability and reinforce the importance of borrowers working with their servicers when they have difficulty repaying their
debt, Fannie Mae has updated several policies regarding borrowers’ future eligibility to obtain a new mortgage loan after experiencing a pre-foreclosure event, including a deed-in-lieu of foreclosure, pre-foreclosure sale, or short sale.
Under these new policies, Fannie Mae is changing the waiting period required for a borrower to be eligible for a mortgage loan after a pre-foreclosure event. The waiting period, which commences on the completion date of the pre-foreclosure event, may now vary on the loan-to-value (LTV) ratio for the transaction, occupancy of the property, and whether extenuating circumstances played a part in the borrower’s inability to pay his or her mortgage.
Current waiting-period requirements are four years for a deed-in-lieu of foreclosure, two years for a pre-foreclosure sale, and no policy currently exists specific to short sales. But under the new guidelines, waiting periods will be determined by LTV ratios, not the type of pre-foreclosure event.
Borrowers with 80 percent maximum LTV ratios will be required to wait two years to obtain a new mortgage, and
90 percent maximum LTV borrowers will have to wait four years. Borrowers with LTV ratios higher than 90 percent may have to wait seven years.
The new policies also include waiting-period exceptions for borrowers with extenuating circumstances. Borrowers with 90 percent maximum LTV ratios will only have to wait two years before becoming eligible to obtain a new mortgage if they can prove extenuating circumstances, such as loss of employment, contributed to their financial hardship.
In addition, Fannie Mae is updating the requirements for determining that borrowers have re-established their credit after a pre-foreclosure event. Borrowers must meet three specific requirements before their credit will be considered re-established:
The waiting period and the related requirements must be met.
The loan must receive a recommendation from Desktop Underwriter (DU) that is acceptable for delivery to Fannie Mae or, if manually underwritten, meets the minimum credit score requirements based on the parameters of the loan and the established eligibility requirements.
The borrower must have traditional credit as outlined in Fannie Mae’s Selling Guide. Nontraditional credit or “thin files” will not be considered acceptable.
These policies are effective immediately. Fannie Mae’s DU will be updated in June to reflect the deed-in-lieu of foreclosure policy changes, but the new policies for pre-foreclosure sales and short sales will not be included, as they cannot be identified by DU at this time.
However, effective for loan application dates on or after July 1, 2010, lenders will be required to determine during their review of the credit report if there is a pre-foreclosure sale or short sale and must manually apply the new policies to all loan case files underwritten through DU.
From: http://ping.fm/2MjAf
04/16/2010 By: Brittany Dunn
In an effort to support overall market stability and reinforce the importance of borrowers working with their servicers when they have difficulty repaying their
debt, Fannie Mae has updated several policies regarding borrowers’ future eligibility to obtain a new mortgage loan after experiencing a pre-foreclosure event, including a deed-in-lieu of foreclosure, pre-foreclosure sale, or short sale.
Under these new policies, Fannie Mae is changing the waiting period required for a borrower to be eligible for a mortgage loan after a pre-foreclosure event. The waiting period, which commences on the completion date of the pre-foreclosure event, may now vary on the loan-to-value (LTV) ratio for the transaction, occupancy of the property, and whether extenuating circumstances played a part in the borrower’s inability to pay his or her mortgage.
Current waiting-period requirements are four years for a deed-in-lieu of foreclosure, two years for a pre-foreclosure sale, and no policy currently exists specific to short sales. But under the new guidelines, waiting periods will be determined by LTV ratios, not the type of pre-foreclosure event.
Borrowers with 80 percent maximum LTV ratios will be required to wait two years to obtain a new mortgage, and
90 percent maximum LTV borrowers will have to wait four years. Borrowers with LTV ratios higher than 90 percent may have to wait seven years.
The new policies also include waiting-period exceptions for borrowers with extenuating circumstances. Borrowers with 90 percent maximum LTV ratios will only have to wait two years before becoming eligible to obtain a new mortgage if they can prove extenuating circumstances, such as loss of employment, contributed to their financial hardship.
In addition, Fannie Mae is updating the requirements for determining that borrowers have re-established their credit after a pre-foreclosure event. Borrowers must meet three specific requirements before their credit will be considered re-established:
The waiting period and the related requirements must be met.
The loan must receive a recommendation from Desktop Underwriter (DU) that is acceptable for delivery to Fannie Mae or, if manually underwritten, meets the minimum credit score requirements based on the parameters of the loan and the established eligibility requirements.
The borrower must have traditional credit as outlined in Fannie Mae’s Selling Guide. Nontraditional credit or “thin files” will not be considered acceptable.
These policies are effective immediately. Fannie Mae’s DU will be updated in June to reflect the deed-in-lieu of foreclosure policy changes, but the new policies for pre-foreclosure sales and short sales will not be included, as they cannot be identified by DU at this time.
However, effective for loan application dates on or after July 1, 2010, lenders will be required to determine during their review of the credit report if there is a pre-foreclosure sale or short sale and must manually apply the new policies to all loan case files underwritten through DU.
From: http://ping.fm/2MjAf
Saturday, April 17, 2010
Mortgage Fraud Blog - Forty Indicted in Major East Texas Mortgage Fraud Scheme
Hmmmmmmm....
Please click on the link to view the article and let me know if you on this list!
Forty Indicted in Major East Texas Mortgage Fraud Scheme
40 individuals have been arrested and charged in connection with a major mortgage fraud scheme in the Eastern District of Texas. The 16-count indictment was returned by a federal grand jury on March 10, 2010, and includes one count of conspiracy to commit mail and wire fraud, 12 counts of mail fraud, and three counts of money laundering.
From: http://ping.fm/oHFZw
Please click on the link to view the article and let me know if you on this list!
Forty Indicted in Major East Texas Mortgage Fraud Scheme
40 individuals have been arrested and charged in connection with a major mortgage fraud scheme in the Eastern District of Texas. The 16-count indictment was returned by a federal grand jury on March 10, 2010, and includes one count of conspiracy to commit mail and wire fraud, 12 counts of mail fraud, and three counts of money laundering.
From: http://ping.fm/oHFZw
Wednesday, April 14, 2010
REALTOR® Magazine-Daily News-HAMP Applicants Risk Credit Score Reduction
Borrowers who apply for the government’s Making Home Affordable program are likely to have their credit scores drop about 100 points.
This can be a nasty surprise if they try to get a car loan or even apply for a job. “It’s a feeling of being duped,” says Kathy Conley, a housing counselor with the nonprofit credit counseling service GreenPath Inc.
Credit rating agencies defend the reduction, saying that borrowers wouldn’t be applying to participate in the program if they weren’t having financial troubles.
From: http://ping.fm/aFajr
This can be a nasty surprise if they try to get a car loan or even apply for a job. “It’s a feeling of being duped,” says Kathy Conley, a housing counselor with the nonprofit credit counseling service GreenPath Inc.
Credit rating agencies defend the reduction, saying that borrowers wouldn’t be applying to participate in the program if they weren’t having financial troubles.
From: http://ping.fm/aFajr
Tuesday, April 13, 2010
Foreclosures: Their Impact on Real Estate 2010
Steve Harney firmly believes the foreclosure situation will be the main story line in real estate for the rest of 2010. He says there will be other key factors (unemployment, government involvement, interest rates, etc.). However, no issue will have the same impact as the tidal wave of distressed properties about to come to market.
For purposes of his blog he considers distressed properties as those that fit into one of three categories:
1. Real Estate Owned (REOs) by banks currently
2. Houses that are in the process of foreclosure
3. Houses that are 90+ days delinquent on their mortgage payment (the reason we include this category is that recent studies have shown that less than 1% of the borrowers who fall 90 days behind ever catch up. That means that 99% of these homes will turn into distressed properties).
Click on the link to see the amazing graphs to which Steve refers...
From: http://kcmblog.com/2010/04/13/foreclosures-their-impact-on-real-estate-values/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
For purposes of his blog he considers distressed properties as those that fit into one of three categories:
1. Real Estate Owned (REOs) by banks currently
2. Houses that are in the process of foreclosure
3. Houses that are 90+ days delinquent on their mortgage payment (the reason we include this category is that recent studies have shown that less than 1% of the borrowers who fall 90 days behind ever catch up. That means that 99% of these homes will turn into distressed properties).
Click on the link to see the amazing graphs to which Steve refers...
From: http://kcmblog.com/2010/04/13/foreclosures-their-impact-on-real-estate-values/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
Monday, April 12, 2010
Economic View - Don't Bet on a Long Housing Recovery - NYTimes.com
A must-read article by THE Dr. Robert Shiller (Case-Shiller) from the New York Times
Don’t Bet the Farm on the Housing Recovery
By ROBERT J. SHILLER
Published: April 9, 2010
MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained?
From: http://ping.fm/samGB
Don’t Bet the Farm on the Housing Recovery
By ROBERT J. SHILLER
Published: April 9, 2010
MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained?
From: http://ping.fm/samGB
Wednesday, April 7, 2010
Calculated Risk: Report: BofA to increase Foreclosures significantly in 2010
Irvine Renter at the Irvine Housing Blog writes: Bank of America to Increase Foreclosure Rate by 600% in 2010
[Irvine Renter] attended a local Building Industry Association conference on Friday 26 March 2010. The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010.
After his surprising statement, two questioners from the audience asked questions to verify the numbers.
Bank of America is projecting a 600% increase in its already large number of monthly foreclosures.
This isn't unsubstantiated rumor; this comes straight from one of the most powerful men in Bank of America's OREO department (yes, that really is what they call it). It appears they have too many properties already.
From: http://www.calculatedriskblog.com/2010/04/report-bofa-to-increase-foreclosures.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
[Irvine Renter] attended a local Building Industry Association conference on Friday 26 March 2010. The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010.
After his surprising statement, two questioners from the audience asked questions to verify the numbers.
Bank of America is projecting a 600% increase in its already large number of monthly foreclosures.
This isn't unsubstantiated rumor; this comes straight from one of the most powerful men in Bank of America's OREO department (yes, that really is what they call it). It appears they have too many properties already.
From: http://www.calculatedriskblog.com/2010/04/report-bofa-to-increase-foreclosures.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
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