20-percent rule for mortgage down payments unlikely in near future
By Kenneth R. Harney, Published: September 23
Remember the proposed requirement from six federal agencies that home buyers make down payments of at least 20 percent if they want the lowest interest rates?
Remember the controversy that erupted over the plan last spring, when labor unions joined with bankers, civil rights groups, mortgage companies, real estate agents and consumer advocates to try to make sure it didn’t take effect? A bipartisan group of 39 senators and more than 250 Democrats and Republicans in the House even signed letters demanding that the agencies ditch the proposal on grounds that it would greatly harm a housing market in deep trouble.
Half a year has passed since then, so here’s an update: The 20-percent proposal is still alive, but it’s temporarily bogged down in agency reviews of the roughly 12,000 comments filed by interest groups and individuals. It almost certainly would not be ready for adoption until the first quarter of 2012. Even then, there would be a mandatory one-year lag before the requirement could take effect, pushing the issue into 2013 — well after the presidential and congressional elections.
But can it survive that long in its current form, given the rip currents of the political year that’s getting underway? The agencies themselves — the Federal Deposit Insurance Corp., the Treasury’s Office of the Comptroller of the Currency, the Department of Housing and Urban Development, the Federal Reserve, the Securities and Exchange Commission, and the Federal Housing Finance Agency — are officially remaining mum on the proposal during the comment review.
The group includes strong proponents of the 20-percent rule who argue that the “qualified residential mortgage” language Congress adopted in its 2010 Wall Street financial reform package requires them to devise a national standard for safe, low-risk home mortgages based on historical data on default and foreclosure risk. One of the statistical indicators of risk, based on studies of Fannie Mae and Freddie Mac mortgages, they say, is the amount of equity a borrower has in the property: The higher the initial equity, the lower the probability of foreclosure. Any standard that does not include down payments, proponents insist, will be deficient.
But the three co-sponsors of the provision say Congress expressly omitted any reference to down payments and never intended for the agencies to set an equity minimum that would prevent up to 40 percent of buyers from qualifying for a low-interest mortgage.
In testimony Sept. 8 before a House Financial Services subcommittee, Sen. Johnny Isakson (R-Ga.), one of the co-sponsors, said: “If this rule goes into effect as proposed, it will be the last nail in the coffin for the already crippled U.S. housing market. . . . Poor underwriting led us into the housing crisis, not down payments.”
Isakson, along with Sens. Mary Landrieu (D-La.) and Kay Hagan (D-N.C.), told the six agencies before they published the proposal that down payments were rejected in congressional discussions as an underwriting standard. The legislation intentionally left the door open for private mortgage insurance to cover the financial risks of down payments below 20 percent, just as the government-supervised mortgage investors Fannie Mae and Freddie Mac have permitted for decades.
A spokeswoman for Isakson declined to speculate whether, as rumored on Capitol Hill, he would introduce legislation to kill the 20-percent plan if it were adopted, but she did say in an e-mail that the senator has “faith that the regulators will make the right decision” and that “all his focus now is on stopping [the 20-percent plan] from happening.”
The controversy comes at a politically sensitive time for President Obama. Housing continues to be a lead weight holding back the economic recovery. His polling numbers are plunging, plus key segments of his political base — unions, community and economic development groups, and consumer activists — oppose any move to force working families to come up with more cash to buy a home. The six agencies’ rule — even in proposal form — is likely to be an attractive target for the president’s opponents next year.
The White House does not have the legal authority to dictate regulatory policy to independent bodies such as the Federal Reserve and the Federal Housing Finance Agency. But with Treasury and HUD playing important roles in formulating the final rule on mortgages, Obama has a direct pipeline to the policymaking process.
Bottom line: Don’t expect to see a 20-percent rule in the near future. Even independent regulators don’t operate in political vacuums. They’ve either gotten the message already or they will soon.
From: http://ping.fm/Bq5qe
Thursday, September 29, 2011
Monday, September 26, 2011
Rate Drop Spurs Home Refinancings - WSJ.com
Rate Drop Spurs Home Refinancing .
By NICK TIMIRAOS
The 30-year fixed-rate mortgage dipped below 4%, possibly triggering a refinancing boom for many of the same borrowers who already have taken advantage of rock-bottom interest rates.
According to a survey by Credit Suisse on Thursday, lenders were offering an average rate of 3.91% on 30-year fixed-rate mortgages to borrowers who paid "points," or fees, worth 1% of the loan balance.
Wells Fargo & Co. advertised on its website Friday afternoon a 3.875% rate on a 30-year fixed-rate mortgage, with fees of 1% on the loan.
Lou Barnes, a mortgage banker in Boulder, Colo., refinanced four borrowers on Thursday into 30-year fixed-rate mortgages at 3.875%. "At this point, the only people being helped are those who need it the least," he said.
For the home-sales market, low rates will help make homes more affordable, but may not boost home buying if consumers are worried about the economy.
"Today, the buyers' concern is the falling value of homes," said Mr. Barnes. "I've had potential buyers say: 'I don't care if rates are zero if prices are going to fall again.' "
Mortgages rates fell this past week after the Federal Reserve announced Wednesday that it would begin plowing payments from its portfolio of $885 billion in government-backed mortgage bonds back into mortgages. That caused a rally in the mortgage market because the Fed's move eliminates the risk that the central bank would be forced to sell its mortgage holdings as refinancing increases.
Mortgages rarely have been this cheap. A 1961 study by the National Bureau of Economic Research shows that loans made to World War II veterans in the late 1940s were available with 4% rates.
More than 60% of borrowers with a 30-year fixed-rate mortgage could reduce their mortgage rate by one percentage point, up from 42% at the beginning of August, according to Credit Suisse.
But some borrowers haven't been able to refinance rates because they can't qualify under loan standards that are much tighter than at the time of their first loan. Other borrowers don't have enough equity in their home to refinance.
Before the housing crisis, refinancing tended to jump when borrowers were able to lower their rate by 0.5 percentage point. Since 2009, mortgage applications have taken longer to process, while riskier borrowers have faced higher refinancing costs. As a result, borrowers typically now refinance when rates are 1.5 percentage points below their current rate, according to Bank of America mortgage analysts.
Donald Fraser, a 56-year old pathology assistant who shaved a full percentage point off the 4.875% mortgage he got last year, said he plans to stash most of the $2,700 a year in savings into retirement. "I don't think we'll ever see these rates in my lifetime or yours," he said.
It isn't clear how much these lower rates will help the economy, in part because a weakening economy is fueling the decline.
"We felt lucky. At the same time, we're lucky at the expense of a suffering market," said Richard Klompus, who refinanced his Glastonbury, Conn., home with a 4%, 30-year fixed-rate mortgage.
Mr. Klompus, 49, had a hybrid adjustable-rate mortgage that carries a 4.5% rate for the first five years before moving to a variable rate. He paid tens of thousands of dollars to pay down his loan balance to $417,000, the maximum size for loans eligible for purchase by mortgage companies Fannie Mae and Freddie Mac.
To encourage refinancing, Obama administration officials and U.S. regulators are in talks with lenders about ways to revamp an existing White House refinancing initiative designed to help borrowers with little or no equity. The program is open to borrowers whose loans are backed by Fannie and Freddie, which guarantee about half of all outstanding home loans.
The Federal Housing Finance Agency, which oversees Fannie and Freddie, is weighing a series of changes to the program, which has been snarled by a series of technical hurdles. Just 838,000 borrowers have refinanced, short of the hoped-for four million to five million. Just 63,000 of those borrowers have loans worth more than 105% of their home value.
"It hasn't worked, to be honest," said James Parrott, a top White House housing adviser, in a speech to industry executives this week. He said the housing market is at a "critical juncture" and policy decisions over the next six months could determine whether the economic headwinds are "going to be a blip or a broader struggle."
A separate question is whether banks will be able to handle the volume of mortgage applications.
Banks recently have laid off mortgage employees in anticipation of lower loan volumes, while shifting others to the backlog of delinquent loans. The reduced ability to handle loan volumes means that banks have charged higher rates relative to their borrowing costs, muting the decline in rates.
From: http://online.wsj.com/article/SB10001424053111904563904576589182943679612.html
By NICK TIMIRAOS
The 30-year fixed-rate mortgage dipped below 4%, possibly triggering a refinancing boom for many of the same borrowers who already have taken advantage of rock-bottom interest rates.
According to a survey by Credit Suisse on Thursday, lenders were offering an average rate of 3.91% on 30-year fixed-rate mortgages to borrowers who paid "points," or fees, worth 1% of the loan balance.
Wells Fargo & Co. advertised on its website Friday afternoon a 3.875% rate on a 30-year fixed-rate mortgage, with fees of 1% on the loan.
Lou Barnes, a mortgage banker in Boulder, Colo., refinanced four borrowers on Thursday into 30-year fixed-rate mortgages at 3.875%. "At this point, the only people being helped are those who need it the least," he said.
For the home-sales market, low rates will help make homes more affordable, but may not boost home buying if consumers are worried about the economy.
"Today, the buyers' concern is the falling value of homes," said Mr. Barnes. "I've had potential buyers say: 'I don't care if rates are zero if prices are going to fall again.' "
Mortgages rates fell this past week after the Federal Reserve announced Wednesday that it would begin plowing payments from its portfolio of $885 billion in government-backed mortgage bonds back into mortgages. That caused a rally in the mortgage market because the Fed's move eliminates the risk that the central bank would be forced to sell its mortgage holdings as refinancing increases.
Mortgages rarely have been this cheap. A 1961 study by the National Bureau of Economic Research shows that loans made to World War II veterans in the late 1940s were available with 4% rates.
More than 60% of borrowers with a 30-year fixed-rate mortgage could reduce their mortgage rate by one percentage point, up from 42% at the beginning of August, according to Credit Suisse.
But some borrowers haven't been able to refinance rates because they can't qualify under loan standards that are much tighter than at the time of their first loan. Other borrowers don't have enough equity in their home to refinance.
Before the housing crisis, refinancing tended to jump when borrowers were able to lower their rate by 0.5 percentage point. Since 2009, mortgage applications have taken longer to process, while riskier borrowers have faced higher refinancing costs. As a result, borrowers typically now refinance when rates are 1.5 percentage points below their current rate, according to Bank of America mortgage analysts.
Donald Fraser, a 56-year old pathology assistant who shaved a full percentage point off the 4.875% mortgage he got last year, said he plans to stash most of the $2,700 a year in savings into retirement. "I don't think we'll ever see these rates in my lifetime or yours," he said.
It isn't clear how much these lower rates will help the economy, in part because a weakening economy is fueling the decline.
"We felt lucky. At the same time, we're lucky at the expense of a suffering market," said Richard Klompus, who refinanced his Glastonbury, Conn., home with a 4%, 30-year fixed-rate mortgage.
Mr. Klompus, 49, had a hybrid adjustable-rate mortgage that carries a 4.5% rate for the first five years before moving to a variable rate. He paid tens of thousands of dollars to pay down his loan balance to $417,000, the maximum size for loans eligible for purchase by mortgage companies Fannie Mae and Freddie Mac.
To encourage refinancing, Obama administration officials and U.S. regulators are in talks with lenders about ways to revamp an existing White House refinancing initiative designed to help borrowers with little or no equity. The program is open to borrowers whose loans are backed by Fannie and Freddie, which guarantee about half of all outstanding home loans.
The Federal Housing Finance Agency, which oversees Fannie and Freddie, is weighing a series of changes to the program, which has been snarled by a series of technical hurdles. Just 838,000 borrowers have refinanced, short of the hoped-for four million to five million. Just 63,000 of those borrowers have loans worth more than 105% of their home value.
"It hasn't worked, to be honest," said James Parrott, a top White House housing adviser, in a speech to industry executives this week. He said the housing market is at a "critical juncture" and policy decisions over the next six months could determine whether the economic headwinds are "going to be a blip or a broader struggle."
A separate question is whether banks will be able to handle the volume of mortgage applications.
Banks recently have laid off mortgage employees in anticipation of lower loan volumes, while shifting others to the backlog of delinquent loans. The reduced ability to handle loan volumes means that banks have charged higher rates relative to their borrowing costs, muting the decline in rates.
From: http://online.wsj.com/article/SB10001424053111904563904576589182943679612.html
Readers question whether telemarketers who violate ?Do Not Call? lists are punished | Katie Fairbank Columns - Problem Solver - News for Dallas, Texas - The Dallas Morning News
Readers question whether telemarketers who violate “Do Not Call” lists are punished
Katie Fairbank
Problem Solver
problemsolver@dallasnews.com
Published: 24 September 2011 11:10 PM
THE PROBLEM: Dozens of readers contacted Problem Solver to say they had signed up for the state and national “Do Not Call” lists in hopes of avoiding telemarketing calls. But their phones keep ringing anyway. “Are telemarketers who violate the list punished in any way?” asked one reader. “I don’t see any consequences, so I’d appreciate a follow-up article on this problem.”
The penalty for ignoring the state “No Call” list is $25,000 per day, per violation. Breaking the rules that include the national “Do Not Call” list can result in civil penalties of up to $16,000 per violation.
Those are hefty fines. But while complaints about telemarketers are plentiful, enforcement actions are not.
Michael Lanham of Dallas found that out after a credit card marketing firm in Idaho kept calling his cellphone, even though he is registered on both the state and national lists.
Lanham first sacrificed some of his cell plan minutes to try to stop the calls. He went through the all-too-familiar routine of pressing “1” and waiting on hold for a human to come on the line.
“I explained that I was on all the ‘No Call’ lists, and I wanted them to honor that and take me off. His immediate response was to hang up on me,” said Lanham, who then logged onto the national “Do Not Call” list website to file a complaint. He was dismayed to realize it wouldn’t make much difference.
“The website clearly says that they really cannot enforce anything and that they cannot do anything but register the complaint,” he said. “I am sure that legitimate companies will try to abide by the rules, but the ‘No Call’ list is really a bit of a paper tiger. If someone chooses to violate the list, the consequences are minor, if any at all.”
In Texas, that’s mostly true. Consumers filed 6,185 complaints about calls to numbers registered on the “No Call” list between Sept. 1, 2008, and Aug. 31, 2010, according to a report from the Public Utility Commission.
Those 6,185 complaints initiated 13 investigations by the PUC, which oversees the lists. “Of these 13, five were referred to other agencies, six resulted in warning letters and two were found to be in full compliance,” the PUC reported to the Texas Legislature in December.
“The commission believes its approach to telemarketing (including No-Call List) investigations and enforcement strikes the appropriate balance between the use of the resources available to prosecute these types of violations and the seriousness of the violations,” the PUC’s report states.
The Texas attorney general’s office reported 154 complaints during the same two-year period. In response, the office opened 18 investigations, filed five lawsuits and reached an agreement with three companies believed to have violated the “Do Not Call” lists.
One of the lawsuits, filed in U.S. District Court in Dallas, was against Pleasant Valley Air Conditioning, an air conditioning and heating repair company that had generated over 1,000 telemarketing complaints with the Federal Trade Commission. Pleasant Valley agreed to a judgment of $100,000 and promised to stop making the calls.
Nationally, the FTC and the Federal Communications Commission jointly manage the “Do Not Call” list and caution consumers about “limitations” in jurisdiction. The agencies point out that calls from charities, surveyors or companies with which a consumer already has an existing business relationship are all allowed.
Also allowed are calls from political organizations seeking money and support. Politicians decided to leave those calls off the telemarketing list.
AT A GLANCE: REPORTING CALLS
Consumers may file complaints for violations of the Texas No-Call List with the Customer Protection Division of the Public Utility Commission.
Consumers may file complaints by phone at 1-888-782-8477; by mail at P.O. Box 13326, Austin, Texas 78711; or through a complaint form online at www.puc.state.tx.us/consumer/complaint/NoCallForm.aspx.
Consumers also can file complaints with the Office of the Attorney General of the State of Texas at http://ping.fm/rM7iC
SOURCES: Texas Public Utility Commission, Texas attorney general
From: http://ping.fm/6LqTC
Katie Fairbank
Problem Solver
problemsolver@dallasnews.com
Published: 24 September 2011 11:10 PM
THE PROBLEM: Dozens of readers contacted Problem Solver to say they had signed up for the state and national “Do Not Call” lists in hopes of avoiding telemarketing calls. But their phones keep ringing anyway. “Are telemarketers who violate the list punished in any way?” asked one reader. “I don’t see any consequences, so I’d appreciate a follow-up article on this problem.”
The penalty for ignoring the state “No Call” list is $25,000 per day, per violation. Breaking the rules that include the national “Do Not Call” list can result in civil penalties of up to $16,000 per violation.
Those are hefty fines. But while complaints about telemarketers are plentiful, enforcement actions are not.
Michael Lanham of Dallas found that out after a credit card marketing firm in Idaho kept calling his cellphone, even though he is registered on both the state and national lists.
Lanham first sacrificed some of his cell plan minutes to try to stop the calls. He went through the all-too-familiar routine of pressing “1” and waiting on hold for a human to come on the line.
“I explained that I was on all the ‘No Call’ lists, and I wanted them to honor that and take me off. His immediate response was to hang up on me,” said Lanham, who then logged onto the national “Do Not Call” list website to file a complaint. He was dismayed to realize it wouldn’t make much difference.
“The website clearly says that they really cannot enforce anything and that they cannot do anything but register the complaint,” he said. “I am sure that legitimate companies will try to abide by the rules, but the ‘No Call’ list is really a bit of a paper tiger. If someone chooses to violate the list, the consequences are minor, if any at all.”
In Texas, that’s mostly true. Consumers filed 6,185 complaints about calls to numbers registered on the “No Call” list between Sept. 1, 2008, and Aug. 31, 2010, according to a report from the Public Utility Commission.
Those 6,185 complaints initiated 13 investigations by the PUC, which oversees the lists. “Of these 13, five were referred to other agencies, six resulted in warning letters and two were found to be in full compliance,” the PUC reported to the Texas Legislature in December.
“The commission believes its approach to telemarketing (including No-Call List) investigations and enforcement strikes the appropriate balance between the use of the resources available to prosecute these types of violations and the seriousness of the violations,” the PUC’s report states.
The Texas attorney general’s office reported 154 complaints during the same two-year period. In response, the office opened 18 investigations, filed five lawsuits and reached an agreement with three companies believed to have violated the “Do Not Call” lists.
One of the lawsuits, filed in U.S. District Court in Dallas, was against Pleasant Valley Air Conditioning, an air conditioning and heating repair company that had generated over 1,000 telemarketing complaints with the Federal Trade Commission. Pleasant Valley agreed to a judgment of $100,000 and promised to stop making the calls.
Nationally, the FTC and the Federal Communications Commission jointly manage the “Do Not Call” list and caution consumers about “limitations” in jurisdiction. The agencies point out that calls from charities, surveyors or companies with which a consumer already has an existing business relationship are all allowed.
Also allowed are calls from political organizations seeking money and support. Politicians decided to leave those calls off the telemarketing list.
AT A GLANCE: REPORTING CALLS
Consumers may file complaints for violations of the Texas No-Call List with the Customer Protection Division of the Public Utility Commission.
Consumers may file complaints by phone at 1-888-782-8477; by mail at P.O. Box 13326, Austin, Texas 78711; or through a complaint form online at www.puc.state.tx.us/consumer/complaint/NoCallForm.aspx.
Consumers also can file complaints with the Office of the Attorney General of the State of Texas at http://ping.fm/rM7iC
SOURCES: Texas Public Utility Commission, Texas attorney general
From: http://ping.fm/6LqTC
Thursday, September 15, 2011
Surge in Defaults Breaks Six-Month Run of Declining Foreclosure Stats
Surge in Defaults Breaks Six-Month Run of Declining Foreclosure Stats
09/14/2011 By: Carrie Bay
The lingering effects of the foreclosure moratoriums enacted after evidence of improper foreclosure processing came to light appear to be fading. Data released by RealtyTrac Thursday shows the first rise in foreclosure filings since January, with all of the increase coming from new default notices.
The tracking company says filings – including default notices, scheduled auctions, and bank-repossessed REOs – rose 7 percent between July and August on the national stage. But with the steep declines seen over previous months, filings remain 33 percent below the level recorded in August 2010.
Default notices posted their biggest month-to-month increase since August of 2007, up 33 percent. The 78,880 new default notices filed last month represents a nine-month high, but is down 18 percent from a year earlier.
Default notices increased more than 40 percent on a month-over-month basis in several states, including New Jersey (42 percent), Indiana (46 percent), and California (55 percent).
James Saccacio, RealtyTrac’s CEO, says the big increase in new foreclosure actions is a sign lenders are pushing
foreclosures through and foreshadows more bank repossessions in the coming months.
Foreclosure auctions (NTS, NFS) were scheduled for 84,405 U.S. properties in August, a decrease of 1 percent from the previous month and a decrease of 43 percent from August 2010.
Despite the nationwide decrease, scheduled auctions were up substantially from the previous month in several states where the auction notice is the first public notice in the process, such as Oregon (19 percent), Arizona (20 percent), Georgia (22 percent), and Colorado (51 percent).
Lenders repossessed a total of 64,813 homes (REOs) in August, a 4 percent decrease from the previous month and a 32 percent decrease from a year earlier. The REO total in August marked a six-month low.
Five states accounted for more than half of the foreclosure activity in August. Leading the pack was California, where 59,383 properties had foreclosure filings during the month.
Florida posted the second highest state total with 23,569 filings, followed by Michigan (13,016), Illinois (12,493), and Georgia (11,743 properties).
RealtyTrac’s report shows that defaults surged in August in some of the hardest-hit local markets.
A 30 percent month-over-month increase in default notices helped Las Vegas maintain the nation’s highest foreclosure rate among large metropolitan areas.
Eight of the metros with top-10 foreclosure rates can be found in California. All but Stockton posted a double-digit monthly increase in default notices. The biggest jump was found in Visalia-Porterville, where new defaults climbed 97 percent from the previous month.
Closing out the metro top-10 list is Reno, Nevada. There, new defaults rose 23 percent in August.
From: http://ping.fm/py0Oc
09/14/2011 By: Carrie Bay
The lingering effects of the foreclosure moratoriums enacted after evidence of improper foreclosure processing came to light appear to be fading. Data released by RealtyTrac Thursday shows the first rise in foreclosure filings since January, with all of the increase coming from new default notices.
The tracking company says filings – including default notices, scheduled auctions, and bank-repossessed REOs – rose 7 percent between July and August on the national stage. But with the steep declines seen over previous months, filings remain 33 percent below the level recorded in August 2010.
Default notices posted their biggest month-to-month increase since August of 2007, up 33 percent. The 78,880 new default notices filed last month represents a nine-month high, but is down 18 percent from a year earlier.
Default notices increased more than 40 percent on a month-over-month basis in several states, including New Jersey (42 percent), Indiana (46 percent), and California (55 percent).
James Saccacio, RealtyTrac’s CEO, says the big increase in new foreclosure actions is a sign lenders are pushing
foreclosures through and foreshadows more bank repossessions in the coming months.
Foreclosure auctions (NTS, NFS) were scheduled for 84,405 U.S. properties in August, a decrease of 1 percent from the previous month and a decrease of 43 percent from August 2010.
Despite the nationwide decrease, scheduled auctions were up substantially from the previous month in several states where the auction notice is the first public notice in the process, such as Oregon (19 percent), Arizona (20 percent), Georgia (22 percent), and Colorado (51 percent).
Lenders repossessed a total of 64,813 homes (REOs) in August, a 4 percent decrease from the previous month and a 32 percent decrease from a year earlier. The REO total in August marked a six-month low.
Five states accounted for more than half of the foreclosure activity in August. Leading the pack was California, where 59,383 properties had foreclosure filings during the month.
Florida posted the second highest state total with 23,569 filings, followed by Michigan (13,016), Illinois (12,493), and Georgia (11,743 properties).
RealtyTrac’s report shows that defaults surged in August in some of the hardest-hit local markets.
A 30 percent month-over-month increase in default notices helped Las Vegas maintain the nation’s highest foreclosure rate among large metropolitan areas.
Eight of the metros with top-10 foreclosure rates can be found in California. All but Stockton posted a double-digit monthly increase in default notices. The biggest jump was found in Visalia-Porterville, where new defaults climbed 97 percent from the previous month.
Closing out the metro top-10 list is Reno, Nevada. There, new defaults rose 23 percent in August.
From: http://ping.fm/py0Oc
Friday, September 9, 2011
Shadow inventory Armageddon ? Foreclosure timeline up to an average of 599 days with 798,000 mortgages having no payment made in over 1 year and no foreclosure process initiated. Shadow inventory grows to over 6,540,000 properties. � Dr. Housing Bubble Blog
Shadow inventory Armageddon – Foreclosure timeline up to an average of 599 days with 798,000 mortgages having no payment made in over 1 year and no foreclosure process initiated. Shadow inventory grows to over 6,540,000 properties.
The biggest problem facing the housing market is still the large amount of stubborn shadow inventory. The fact that this figure remains elevated is a sign that the banking system after all these years and trillions of dollars in bailouts has yet to figure out a streamlined way to unload properties. The Federal Reserve is trying to grease the wheels with historically low mortgage rates but that has done very little since this does not address the weak economy. At the latest count there are 6.54 million loans that are either delinquent or in the foreclosure process. This figure hasn’t really moved much for the entire year. Properties have been sold from the REO (bank owned) pile but this is the tiny chunk of properties that is covered by the mainstream news and also that appear in public listing services. As we will show in charts later in this article, only examining this piece of the real estate pool is like seeing the tip of an iceberg and thinking there is nothing underneath it submerged in the water.
From: http://ping.fm/wWz0x
The biggest problem facing the housing market is still the large amount of stubborn shadow inventory. The fact that this figure remains elevated is a sign that the banking system after all these years and trillions of dollars in bailouts has yet to figure out a streamlined way to unload properties. The Federal Reserve is trying to grease the wheels with historically low mortgage rates but that has done very little since this does not address the weak economy. At the latest count there are 6.54 million loans that are either delinquent or in the foreclosure process. This figure hasn’t really moved much for the entire year. Properties have been sold from the REO (bank owned) pile but this is the tiny chunk of properties that is covered by the mainstream news and also that appear in public listing services. As we will show in charts later in this article, only examining this piece of the real estate pool is like seeing the tip of an iceberg and thinking there is nothing underneath it submerged in the water.
From: http://ping.fm/wWz0x
Thursday, September 8, 2011
Home Price Gains Expected to Wane: Clear Capital
Home Price Gains Expected to Wane: Clear Capital
09/07/2011 By: Carrie Bay
The warm weather homebuying season has kept prices moving up, but Clear Capital says the rate of appreciation is already slowing and weak consumer confidence points to a stormy rest of the year.
The “company’s latest report shows that home prices rose 4.0 percent over the four-month period ending in August when compared to the previous three months – an assessment Clear Capital refers to as a rolling quarter.
The company notes, however, that the recent gains over the summer months have not been enough to recoup longer-term declines, with national home prices still 6.2 percent below last year’s levels.
Dr. Alex Villacorta, director of research and analytics at Clear Capital, points out that the short-term gains reported in recent months are coming off of the record lows of winter.
“With summer coming to a close and the price gains clearly starting to level off, the market is at a critical juncture as to whether it can avoid another significant downturn into the slower buying seasons of fall and winter,” Villacorta said.
According to Clear Capital, low consumer confidence and a continued high unemployment rate support the company’s projection of downward home price movement for the remainder of 2011.
“The latest readings on consumer confidence paint an ominous picture that at present, consumers are still not ready to risk jumping into the market despite very low mortgage rates and very affordable home prices,” Villacorta added.
Based on Clear Capital’s latest report, the Midwest region leads the nation with a seasonal quarterly home price gain of 7.3 percent, buoyed by solid improvement in Chicago and the Ohio markets in particular.
In the Northeast home prices rose 4.9 percent, and in the South quarterly appreciation came in at 3.5 percent.
Home prices in the Western region of the U.S. were up just 0.7 percent. Clear Capital says with economic uncertainty and significant distressed sales activity affecting the West, this small gain may potentially represent peak price growth in the region for the rest of 2011.
Home prices in all four regions came in well below their readings at this time last year, with the smallest annual dip in the Northeast at 2.0 percent.
Jacksonville, Florida replaced Detroit as the “lowest performing” major market, posting a -2.7 percent quarterly price change. Eleven of the 15 markets on the low end of the price performance spectrum reside in the western part of the country.
Cleveland’s rolling quarter price gains jumped to 19.2 percent based on data through August, pushing the market to the top of Clear Capital’s “highest performing” list. The company says Cleveland’s large gains reflect vast differences in its REO composition between the winter and the spring-summer homebuying seasons.
From: http://ping.fm/QOCAR
09/07/2011 By: Carrie Bay
The warm weather homebuying season has kept prices moving up, but Clear Capital says the rate of appreciation is already slowing and weak consumer confidence points to a stormy rest of the year.
The “company’s latest report shows that home prices rose 4.0 percent over the four-month period ending in August when compared to the previous three months – an assessment Clear Capital refers to as a rolling quarter.
The company notes, however, that the recent gains over the summer months have not been enough to recoup longer-term declines, with national home prices still 6.2 percent below last year’s levels.
Dr. Alex Villacorta, director of research and analytics at Clear Capital, points out that the short-term gains reported in recent months are coming off of the record lows of winter.
“With summer coming to a close and the price gains clearly starting to level off, the market is at a critical juncture as to whether it can avoid another significant downturn into the slower buying seasons of fall and winter,” Villacorta said.
According to Clear Capital, low consumer confidence and a continued high unemployment rate support the company’s projection of downward home price movement for the remainder of 2011.
“The latest readings on consumer confidence paint an ominous picture that at present, consumers are still not ready to risk jumping into the market despite very low mortgage rates and very affordable home prices,” Villacorta added.
Based on Clear Capital’s latest report, the Midwest region leads the nation with a seasonal quarterly home price gain of 7.3 percent, buoyed by solid improvement in Chicago and the Ohio markets in particular.
In the Northeast home prices rose 4.9 percent, and in the South quarterly appreciation came in at 3.5 percent.
Home prices in the Western region of the U.S. were up just 0.7 percent. Clear Capital says with economic uncertainty and significant distressed sales activity affecting the West, this small gain may potentially represent peak price growth in the region for the rest of 2011.
Home prices in all four regions came in well below their readings at this time last year, with the smallest annual dip in the Northeast at 2.0 percent.
Jacksonville, Florida replaced Detroit as the “lowest performing” major market, posting a -2.7 percent quarterly price change. Eleven of the 15 markets on the low end of the price performance spectrum reside in the western part of the country.
Cleveland’s rolling quarter price gains jumped to 19.2 percent based on data through August, pushing the market to the top of Clear Capital’s “highest performing” list. The company says Cleveland’s large gains reflect vast differences in its REO composition between the winter and the spring-summer homebuying seasons.
From: http://ping.fm/QOCAR
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