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
Tuesday, August 24, 2010
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
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