Hi, Friends,
This blog has moved to www.extremerealestatecoach.com (a Wordpress site). Please click on this link where you can sign up to follow the new, improved blog.
Thanks for following!
Best.
Coach Cliff
Friday, June 22, 2012
Tuesday, May 22, 2012
DSNews - Default Servicing In Print and Online
Home Prices Show Strongest Gain in 6 Years: NAR
05/22/2012 By: Mark Lieberman, Five Star Institute Economist
Existing-home sales rose to 4.62 million (seasonally adjusted annualized rate) in April from a downwardly revised March rate of 4.47 million, the National Association of Realtors (NAR) reported Tuesday. Economists had forecast the April sales pace would be 4.66 million.
The median price of an existing home climbed 10.1 percent to $177,400 from $161,100 in April 2011, the strongest year-to-year gain since January 2006. The median price in April reached its highest level since July 2010 when it was $182,100.
The inventory of homes for sale in April rose to 2.54 million, the highest level since last November, bringing the months’ supply of homes on the market to 6.6.
The 10.0 percent yearly gain in the sales rate was the strongest since October when sales were up 14.0 percent year-over-year.
Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011, the NAR said. Foreclosures sold for an average discount of 21 percent below market value in April (compared with an average discount of 19 percent in March), while short sales were discounted 14 percent in April compared with 16 percent in March.
The months’ supply of existing homes for sale remains well below the July 2010 cyclical peak of 12.4 which had been the highest level since 1982. Inventories as tracked by the NAR are 20.3 percent below their year ago level. However, anecdotal evidence suggests there is still a large “shadow” inventory of homes available for sale, especially bank-owned properties.
Regionally, existing-home sales rose in April in every region of the country led by a 5.1 percent month-to-month increase in the Northeast where sales were up19.2 percent over April 2011. Sales rose 4.4 percent over March in the West (a 7.3 percent year-year gain), 3.5 percent in the South (6.5 percent year-year) and 1.0 percent in the Midwest (14.4 percent year over year).
The median price of an existing home rose month-to-month and year-to-year in all four regions. At $256,600, the median price of an existing home reached its highest level since August 2010. The median price of an existing home in the South rose to $153,400, the highest level since July 2010 and the median price of an existing home in the West rose to $221,700, also the highest since July 2010.
The year-to-year price gain in the West, 15.9 percent, was the strongest since November 2005. The year-to-year price increase in the Northeast was the first since last June.
From: http://ping.fm/Rj6gh
05/22/2012 By: Mark Lieberman, Five Star Institute Economist
Existing-home sales rose to 4.62 million (seasonally adjusted annualized rate) in April from a downwardly revised March rate of 4.47 million, the National Association of Realtors (NAR) reported Tuesday. Economists had forecast the April sales pace would be 4.66 million.
The median price of an existing home climbed 10.1 percent to $177,400 from $161,100 in April 2011, the strongest year-to-year gain since January 2006. The median price in April reached its highest level since July 2010 when it was $182,100.
The inventory of homes for sale in April rose to 2.54 million, the highest level since last November, bringing the months’ supply of homes on the market to 6.6.
The 10.0 percent yearly gain in the sales rate was the strongest since October when sales were up 14.0 percent year-over-year.
Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011, the NAR said. Foreclosures sold for an average discount of 21 percent below market value in April (compared with an average discount of 19 percent in March), while short sales were discounted 14 percent in April compared with 16 percent in March.
The months’ supply of existing homes for sale remains well below the July 2010 cyclical peak of 12.4 which had been the highest level since 1982. Inventories as tracked by the NAR are 20.3 percent below their year ago level. However, anecdotal evidence suggests there is still a large “shadow” inventory of homes available for sale, especially bank-owned properties.
Regionally, existing-home sales rose in April in every region of the country led by a 5.1 percent month-to-month increase in the Northeast where sales were up19.2 percent over April 2011. Sales rose 4.4 percent over March in the West (a 7.3 percent year-year gain), 3.5 percent in the South (6.5 percent year-year) and 1.0 percent in the Midwest (14.4 percent year over year).
The median price of an existing home rose month-to-month and year-to-year in all four regions. At $256,600, the median price of an existing home reached its highest level since August 2010. The median price of an existing home in the South rose to $153,400, the highest level since July 2010 and the median price of an existing home in the West rose to $221,700, also the highest since July 2010.
The year-to-year price gain in the West, 15.9 percent, was the strongest since November 2005. The year-to-year price increase in the Northeast was the first since last June.
From: http://ping.fm/Rj6gh
Wednesday, May 16, 2012
Judicial States Continue to Skew Foreclosure Statistics
by Jann Swanson
Judicial States Continue to Skew Foreclosure Statistics
May 16 2012, 12:39PM
There were substantial improvements in delinquency rates during the first quarter of 2012 according to the National Delinquency Survey for the period released this morning by the Mortgage Bankers Association. At a conference call for media accompanying the release, Jay Brinkmann, MBA's Chief Economist and Senior Vice President of Research and Education said that the combined percentage of loans in foreclosure or at least one payment past due was 11.33 percent, a 120 basis point (bp) decrease from last quarter and 98 from one year ago. This was the lowest that this measure has been since 2008.
This improvement was driven by a 62bp decrease in the rate of loans that were 30 days or more delinquent. Brinkmann said that the first quarter generally experiences a decline in 30-day delinquencies for seasonal reasons but this year the decrease was even larger and that rate, in fact, has returned to historical norms at 3.13 percent.
There was also a decrease in seriously delinquent loans, down 29bp, and this was not accompanied by an increase in foreclosure starts which, in fact, decreased 3bp on a non-seasonally adjusted basis. Brinkmann said, looking at the two figures together leads to the assumption that a lot of very delinquent loans are being resolved in a manner other than foreclosure.
The overall delinquency rate decreased to a seasonally adjusted rate of 7.40 percent, down from 7.58 percent in Q42012 and 8.32 percent in the first quarter of 2011. Loans 90+ days delinquent were at a rate of 3.06 percent versus 3.11 and 3.62 percent.
Nationally the percentage of loans in foreclosure rose slightly but Mike Fratantoni MBA's Vice President of Research and Economics said the top-line figure covers up a couple of trends. "First, the percentage of loans in foreclosure is up for prime and FHA loans. The percentage of subprime loans in foreclosure continues to fall as the subprime loans age and the problems loans are resolved one way or the other. However, the percentage of loans in foreclosure for both FHA loans and prime fixed-rate loans are climbing and are just below all -time records."
"The problem continues to be the slow-moving judicial foreclosure systems in some of the largest states," Franantoni said. While the rate of foreclosure starts is essentially the same in judicial and non-judicial foreclosure states, the percent of loans in the foreclosure process has reached another all-time high in the judicial states, 6.9 percent. In contrast that rate has fallen to 2.8 percent in non-judicial state, the lowest since early 2009."
The difference in the rates is even more disturbing in certain states. In Florida the percent of loans in foreclosure is now 14.31 percent. New Jersey and Illinois are trailing Florida substantially but still have rates of 8.37 percent and 7.46 percent and, Brinkmann said, their rates are increasing. Ten judicial states have rates above the national average of 4.39 percent. On the other hand, among the 29 states using a non-judicial process, only Nevada has a higher rate of loans in foreclosure (6.47 percent) than the national average.
Five state now account for over 52.4 percent of all foreclosures in the country while accounting for only 32.1 percent of the loans services They are Florida, California, Illinois, New York, and New Jersey.
This judicial/non-judicial dichotomy is beginning to play out with FHA loans as well. The foreclosure inventory for FHA loans is 3.83 percent, an increase of 29bp from the previous quarter. The rate in judicial states, however is 5.59 percent compared to 2.69 percent. Fratantoni indicated that this was somewhat the case for VA loans as well. "You have to ask yourself, " he said, "who is going to bear the costs of this differential foreclosure rate? They are being passed on to all FHA borrowers in the form of higher across-the-board increases in insurance premiums, and ultimately to the taxpayers if the FHA insurance fund develops a shortage.
Another problem FHA is encountering is the result of the sharp increase in loan volume they experienced in the 2008-2009 period when other credit dried up. Those loans are now entering the period in their life cycle most when delinquencies commonly occur. Right now, while that vintage of loan accounts for 15 percent of all delinquent loans but represents 47 percent of FHA delinquencies.
In answer to a question during the conference call, Brinkmann said that he had seen little impact from the recent settlement agreement with servicers from five major banks. He said the foreclosure inventory might have built a bit in anticipation of it, but "we know it didn't affect the 90 day bucket." Any impact now that the agreement has been signed might not be noticed as it would have to differentiate itself from everything else that is going on in the system and it would also be felt largely on a state by state basis rather than nationally.
Brinkmann summed up the NDS report saying, "Overall it has good news about where we are going but the bottom line is we are still dependent on the economy." As the job situation has improved so have delinquency figures and as long as this continues and there are no serious problems, such as a melt-down in Europe, we should see more of the same.
From: http://ping.fm/vpiav
Judicial States Continue to Skew Foreclosure Statistics
May 16 2012, 12:39PM
There were substantial improvements in delinquency rates during the first quarter of 2012 according to the National Delinquency Survey for the period released this morning by the Mortgage Bankers Association. At a conference call for media accompanying the release, Jay Brinkmann, MBA's Chief Economist and Senior Vice President of Research and Education said that the combined percentage of loans in foreclosure or at least one payment past due was 11.33 percent, a 120 basis point (bp) decrease from last quarter and 98 from one year ago. This was the lowest that this measure has been since 2008.
This improvement was driven by a 62bp decrease in the rate of loans that were 30 days or more delinquent. Brinkmann said that the first quarter generally experiences a decline in 30-day delinquencies for seasonal reasons but this year the decrease was even larger and that rate, in fact, has returned to historical norms at 3.13 percent.
There was also a decrease in seriously delinquent loans, down 29bp, and this was not accompanied by an increase in foreclosure starts which, in fact, decreased 3bp on a non-seasonally adjusted basis. Brinkmann said, looking at the two figures together leads to the assumption that a lot of very delinquent loans are being resolved in a manner other than foreclosure.
The overall delinquency rate decreased to a seasonally adjusted rate of 7.40 percent, down from 7.58 percent in Q42012 and 8.32 percent in the first quarter of 2011. Loans 90+ days delinquent were at a rate of 3.06 percent versus 3.11 and 3.62 percent.
Nationally the percentage of loans in foreclosure rose slightly but Mike Fratantoni MBA's Vice President of Research and Economics said the top-line figure covers up a couple of trends. "First, the percentage of loans in foreclosure is up for prime and FHA loans. The percentage of subprime loans in foreclosure continues to fall as the subprime loans age and the problems loans are resolved one way or the other. However, the percentage of loans in foreclosure for both FHA loans and prime fixed-rate loans are climbing and are just below all -time records."
"The problem continues to be the slow-moving judicial foreclosure systems in some of the largest states," Franantoni said. While the rate of foreclosure starts is essentially the same in judicial and non-judicial foreclosure states, the percent of loans in the foreclosure process has reached another all-time high in the judicial states, 6.9 percent. In contrast that rate has fallen to 2.8 percent in non-judicial state, the lowest since early 2009."
The difference in the rates is even more disturbing in certain states. In Florida the percent of loans in foreclosure is now 14.31 percent. New Jersey and Illinois are trailing Florida substantially but still have rates of 8.37 percent and 7.46 percent and, Brinkmann said, their rates are increasing. Ten judicial states have rates above the national average of 4.39 percent. On the other hand, among the 29 states using a non-judicial process, only Nevada has a higher rate of loans in foreclosure (6.47 percent) than the national average.
Five state now account for over 52.4 percent of all foreclosures in the country while accounting for only 32.1 percent of the loans services They are Florida, California, Illinois, New York, and New Jersey.
This judicial/non-judicial dichotomy is beginning to play out with FHA loans as well. The foreclosure inventory for FHA loans is 3.83 percent, an increase of 29bp from the previous quarter. The rate in judicial states, however is 5.59 percent compared to 2.69 percent. Fratantoni indicated that this was somewhat the case for VA loans as well. "You have to ask yourself, " he said, "who is going to bear the costs of this differential foreclosure rate? They are being passed on to all FHA borrowers in the form of higher across-the-board increases in insurance premiums, and ultimately to the taxpayers if the FHA insurance fund develops a shortage.
Another problem FHA is encountering is the result of the sharp increase in loan volume they experienced in the 2008-2009 period when other credit dried up. Those loans are now entering the period in their life cycle most when delinquencies commonly occur. Right now, while that vintage of loan accounts for 15 percent of all delinquent loans but represents 47 percent of FHA delinquencies.
In answer to a question during the conference call, Brinkmann said that he had seen little impact from the recent settlement agreement with servicers from five major banks. He said the foreclosure inventory might have built a bit in anticipation of it, but "we know it didn't affect the 90 day bucket." Any impact now that the agreement has been signed might not be noticed as it would have to differentiate itself from everything else that is going on in the system and it would also be felt largely on a state by state basis rather than nationally.
Brinkmann summed up the NDS report saying, "Overall it has good news about where we are going but the bottom line is we are still dependent on the economy." As the job situation has improved so have delinquency figures and as long as this continues and there are no serious problems, such as a melt-down in Europe, we should see more of the same.
From: http://ping.fm/vpiav
Monday, May 14, 2012
Shadow Inventory: 46 Months to Clear Distressed Housing Supply
Shadow Inventory: 46 Months to Clear Distressed Housing Supply
05/14/2012 By: Carrie Bay
It will take 46 months to clear the market’s supply of distressed homes, or the shadow inventory, according to estimates from Standard & Poor’s Rating Services based on first-quarter 2012 data.
The agency’s latest estimate came in one month shy of the liquidation timeline determined in the fourth quarter of 2011.
While national residential mortgage liquidation rates appeared stable over the first three months of this year, these rates varied widely between local markets, which prevented any significant reduction in S&P’s months-to-clear estimate, the agency explained in its report.
Regional variations in how quickly servicers can clear the backlog of nonperforming loans are primarily due to differences in foreclosure procedures, judicial vs. non-judicial.
As of first-quarter 2012, S&P says its months-to-clear estimate in judicial states was almost 2.5x as long as non-judicial states.
S&P includes in the shadow inventory all outstanding properties on which the mortgage payments are 90 or more days delinquent, properties in foreclosure, and properties that are REO. The agency also includes 70 percent of the loans that became current, or “cured,” from 90-day delinquency within the past 12 months because S&P says these loans are more likely to re-default.
S&P’s calculation of the months to clear the shadow inventory is the ratio of the total volume of distressed loans to the six-month moving average of liquidations. Although S&P’s analysis of the shadow inventory uses only non-agency loan data, the agency’s analysts believe the months-to-clear is similarly high for the market as a whole.
The volume of these distressed U.S. non-agency residential mortgages—which excludes loans from government sponsored entities, such as Fannie Mae and Freddie Mac—remained extremely high at $354 billion in the first quarter, according to S&P. The agency does note, however, that the industry’s distress volume has declined in each quarter since mid-2010.
To put the shadows into perspective, S&P says this latest number, which is based on the original balances of the loans, represents slightly less than one-third of the outstanding non-agency residential mortgage-backed securities (RMBS) market in the United States.
The New York City metropolitan statistical area (MSA) has the highest months-to-clear in the nation, at 202 months.
S&P also reported that the U.S. monthly first default rate fell to 0.67 percent in March 2012, the lowest level since May 2007. The first default rate is the percentage of loans that became 90-plus-days delinquent in that month for the first time, as a percent of all loans that have never before been at least 90 days or more past due.
This means that properties are entering the shadow inventory at a slower rate. S&P says with this improvement, the speed at which servicers can liquidate or cure nonperforming loans will determine the size of the shadow inventory going forward.
Default rates have been falling since first-quarter 2009 and the average national liquidation rate has stabilized, according to S&P—both factors that bode well for getting a handle on the magnitude of the industry’s shadow inventory and its inevitable impact.
From: http://ping.fm/Jk0C7
05/14/2012 By: Carrie Bay
It will take 46 months to clear the market’s supply of distressed homes, or the shadow inventory, according to estimates from Standard & Poor’s Rating Services based on first-quarter 2012 data.
The agency’s latest estimate came in one month shy of the liquidation timeline determined in the fourth quarter of 2011.
While national residential mortgage liquidation rates appeared stable over the first three months of this year, these rates varied widely between local markets, which prevented any significant reduction in S&P’s months-to-clear estimate, the agency explained in its report.
Regional variations in how quickly servicers can clear the backlog of nonperforming loans are primarily due to differences in foreclosure procedures, judicial vs. non-judicial.
As of first-quarter 2012, S&P says its months-to-clear estimate in judicial states was almost 2.5x as long as non-judicial states.
S&P includes in the shadow inventory all outstanding properties on which the mortgage payments are 90 or more days delinquent, properties in foreclosure, and properties that are REO. The agency also includes 70 percent of the loans that became current, or “cured,” from 90-day delinquency within the past 12 months because S&P says these loans are more likely to re-default.
S&P’s calculation of the months to clear the shadow inventory is the ratio of the total volume of distressed loans to the six-month moving average of liquidations. Although S&P’s analysis of the shadow inventory uses only non-agency loan data, the agency’s analysts believe the months-to-clear is similarly high for the market as a whole.
The volume of these distressed U.S. non-agency residential mortgages—which excludes loans from government sponsored entities, such as Fannie Mae and Freddie Mac—remained extremely high at $354 billion in the first quarter, according to S&P. The agency does note, however, that the industry’s distress volume has declined in each quarter since mid-2010.
To put the shadows into perspective, S&P says this latest number, which is based on the original balances of the loans, represents slightly less than one-third of the outstanding non-agency residential mortgage-backed securities (RMBS) market in the United States.
The New York City metropolitan statistical area (MSA) has the highest months-to-clear in the nation, at 202 months.
S&P also reported that the U.S. monthly first default rate fell to 0.67 percent in March 2012, the lowest level since May 2007. The first default rate is the percentage of loans that became 90-plus-days delinquent in that month for the first time, as a percent of all loans that have never before been at least 90 days or more past due.
This means that properties are entering the shadow inventory at a slower rate. S&P says with this improvement, the speed at which servicers can liquidate or cure nonperforming loans will determine the size of the shadow inventory going forward.
Default rates have been falling since first-quarter 2009 and the average national liquidation rate has stabilized, according to S&P—both factors that bode well for getting a handle on the magnitude of the industry’s shadow inventory and its inevitable impact.
From: http://ping.fm/Jk0C7
Thursday, May 10, 2012
Fiserv Expects Home Prices to Stabilize This Year Despite Price Declines
Fiserv Expects Home Prices to Stabilize This Year Despite Price Declines
05/09/2012 By: Esther Cho
Analyzing the housing market through the perspective of 384 markets, Fiserv Case-Shiller Indexes pointed to a slow, but steady pace toward recovery after dramatic prices declines.
According to the Fiserv indexes, in the fourth quarter of 2011, home prices in 18 percent, or 70, of the 384 metro areas tracked were either unchanged or had increased compared to a year ago during the same quarter. Also 32 percent of the metros, or 122, saw prices decline by less than 2 percent.
On the other hand, nearly one-half of the metro areas, or 191, saw prices decrease by more than 2 percent, including double-digit losses in Atlanta (-12.8 percent), Reno, Nevada (-10.8 percent), and Tucson, Arizona (-10 percent).
In the fourth quarter of 2011, the average price of a U.S. single-family home fell four percent from the year-ago period, and Fiserv Case-Shiller projects a further decline of 0.8 percent by the end of 2012.
“The year-over-year decline in average home prices does not tell the full story of stabilization and recovery,” said David Stiff, chief economist for Fiserv. “Nearly all non-price metrics – existing home sales, rising home order volumes, increased spending on home improvement, a jump in multi-family construction – indicate that the housing sector hit bottom last year and has started along a path of slow recovery.”
Stiff also added that they expect home prices, which tend to fall behind changes in sales activity, to stabilize by the end of summer, then rise at an annualized rate of 3.9 percent over the next five years.
Markets that showed improvement after large price declines include Detroit, Michigan (+9.8 percent), Cape Coral, Florida (+3.5 percent), and Port St. Lucie, Florida (+1.1 percent).
According Fiserv, some of the hardest-hit markets are expected to see the fastest growth during recovery, while home prices in markets that were not as adversely affected by the crises are expected to increase at a slower rate.
Twenty-two of the 25 markets that have seen the largest decline in home prices from peak to the end of 2011 are in California and Florida.
When distinguishing between the best-performing markets versus the worst, in the 2011 fourth quarter, 13 out of the 30 best had unemployment rates of seven percent or less and 14 had a median family income above the national average.
Seven of the 10 worst-performing markets in 2011 had unemployment rates higher than the national average and median family incomes below the national average.
When home prices do hit bottom, Fiserv said they will be 35 percent lower than their peak level in the first quarter of 2006.
With the prices declines and low mortgage rates, affordability is greater than ever. For a conventional mortgage, the payment for a median-priced home represents 12 percent of median-family income, the lowest percentage on record since 1971.
Fiserv Case Shiller anticipates the affordability will encourage more first-time and trade-up buyers into the market as apartment rents increase. The growth in demand will then put a floor under home prices.
Fiserv is a provider of financial services technology solutions. The indexes used data from the FHFA and include thousands of zip codes, counties, metro areas, and state markets. The Fiserv Case-Shiller home price forecasts are produced by Fiserv and Moody’s Analytics.
From: http://ping.fm/7FSu0
05/09/2012 By: Esther Cho
Analyzing the housing market through the perspective of 384 markets, Fiserv Case-Shiller Indexes pointed to a slow, but steady pace toward recovery after dramatic prices declines.
According to the Fiserv indexes, in the fourth quarter of 2011, home prices in 18 percent, or 70, of the 384 metro areas tracked were either unchanged or had increased compared to a year ago during the same quarter. Also 32 percent of the metros, or 122, saw prices decline by less than 2 percent.
On the other hand, nearly one-half of the metro areas, or 191, saw prices decrease by more than 2 percent, including double-digit losses in Atlanta (-12.8 percent), Reno, Nevada (-10.8 percent), and Tucson, Arizona (-10 percent).
In the fourth quarter of 2011, the average price of a U.S. single-family home fell four percent from the year-ago period, and Fiserv Case-Shiller projects a further decline of 0.8 percent by the end of 2012.
“The year-over-year decline in average home prices does not tell the full story of stabilization and recovery,” said David Stiff, chief economist for Fiserv. “Nearly all non-price metrics – existing home sales, rising home order volumes, increased spending on home improvement, a jump in multi-family construction – indicate that the housing sector hit bottom last year and has started along a path of slow recovery.”
Stiff also added that they expect home prices, which tend to fall behind changes in sales activity, to stabilize by the end of summer, then rise at an annualized rate of 3.9 percent over the next five years.
Markets that showed improvement after large price declines include Detroit, Michigan (+9.8 percent), Cape Coral, Florida (+3.5 percent), and Port St. Lucie, Florida (+1.1 percent).
According Fiserv, some of the hardest-hit markets are expected to see the fastest growth during recovery, while home prices in markets that were not as adversely affected by the crises are expected to increase at a slower rate.
Twenty-two of the 25 markets that have seen the largest decline in home prices from peak to the end of 2011 are in California and Florida.
When distinguishing between the best-performing markets versus the worst, in the 2011 fourth quarter, 13 out of the 30 best had unemployment rates of seven percent or less and 14 had a median family income above the national average.
Seven of the 10 worst-performing markets in 2011 had unemployment rates higher than the national average and median family incomes below the national average.
When home prices do hit bottom, Fiserv said they will be 35 percent lower than their peak level in the first quarter of 2006.
With the prices declines and low mortgage rates, affordability is greater than ever. For a conventional mortgage, the payment for a median-priced home represents 12 percent of median-family income, the lowest percentage on record since 1971.
Fiserv Case Shiller anticipates the affordability will encourage more first-time and trade-up buyers into the market as apartment rents increase. The growth in demand will then put a floor under home prices.
Fiserv is a provider of financial services technology solutions. The indexes used data from the FHFA and include thousands of zip codes, counties, metro areas, and state markets. The Fiserv Case-Shiller home price forecasts are produced by Fiserv and Moody’s Analytics.
From: http://ping.fm/7FSu0
Wednesday, May 9, 2012
BofA to Offer Principal Writedowns to 200K Delinquent Borrowers
BofA to Offer Principal Writedowns to 200K Delinquent Borrowers
05/08/2012 By: Carrie Bay
Bank of America began mailing out more than 200,000 letters this week targeting borrowers thought to be eligible for principal-reducing modifications under terms of the recent settlement the company and four other servicers reached with the federal government and 49 state attorneys general.
To be eligible, a homeowner must owe more on the mortgage than the property is worth today and must have been at least 60 days behind on payments on January 31, 2012.
In addition, the homeowner’s monthly housing costs must be more than 25 percent of gross household income, and the loan must be owned and serviced by Bank of America or serviced for another investor that has authorized the bank to grant principal writedowns.
Officials at Bank of America estimate average monthly savings of 30 percent for customers who qualify for the program.
The North Carolina-based lender said Tuesday that it has already extended about 5,000 trial modification offers involving principal reductions since March, with a potential total of more than $700 million in forgiven mortgage debt. Homeowners are required to make at least three timely trial payments before the modification can be made permanent.
“Building on home retention and payment assistance programs already in place, we are meeting our obligation to deliver this additional relief to our customers following the completion of the recent global mortgage settlement,” said Ron Sturzenegger, Bank of America’s executive over legacy asset servicing.
“To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors, and communities,” Sturzenegger added.
The first letters of Bank of America’s mail blitz should start landing in mailboxes this week with the majority of the 200,000-plus identified candidates receiving notice by the third quarter of this year.
Bank of America has committed to slashing $11 billion in mortgage debt for struggling homeowners as part of the settlement agreement reached. But with BofA expecting an average principal reduction of $150,000 for each borrower, crude estimates put the tab potentially as high as $28 billion to $30 billion if a large majority of those targeted respond to the company’s outreach efforts and satisfy the qualifying criteria.
From: http://ping.fm/8Qqc4
05/08/2012 By: Carrie Bay
Bank of America began mailing out more than 200,000 letters this week targeting borrowers thought to be eligible for principal-reducing modifications under terms of the recent settlement the company and four other servicers reached with the federal government and 49 state attorneys general.
To be eligible, a homeowner must owe more on the mortgage than the property is worth today and must have been at least 60 days behind on payments on January 31, 2012.
In addition, the homeowner’s monthly housing costs must be more than 25 percent of gross household income, and the loan must be owned and serviced by Bank of America or serviced for another investor that has authorized the bank to grant principal writedowns.
Officials at Bank of America estimate average monthly savings of 30 percent for customers who qualify for the program.
The North Carolina-based lender said Tuesday that it has already extended about 5,000 trial modification offers involving principal reductions since March, with a potential total of more than $700 million in forgiven mortgage debt. Homeowners are required to make at least three timely trial payments before the modification can be made permanent.
“Building on home retention and payment assistance programs already in place, we are meeting our obligation to deliver this additional relief to our customers following the completion of the recent global mortgage settlement,” said Ron Sturzenegger, Bank of America’s executive over legacy asset servicing.
“To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors, and communities,” Sturzenegger added.
The first letters of Bank of America’s mail blitz should start landing in mailboxes this week with the majority of the 200,000-plus identified candidates receiving notice by the third quarter of this year.
Bank of America has committed to slashing $11 billion in mortgage debt for struggling homeowners as part of the settlement agreement reached. But with BofA expecting an average principal reduction of $150,000 for each borrower, crude estimates put the tab potentially as high as $28 billion to $30 billion if a large majority of those targeted respond to the company’s outreach efforts and satisfy the qualifying criteria.
From: http://ping.fm/8Qqc4
Tuesday, May 8, 2012
Short Sales Will Increase Dramatically in 2012
Short Sales Will Increase Dramatically in 2012
by The KCM Crew on May 7, 2012
We believe that short sales will be a major part of the real estate market in 2012. That is why we have dedicated this entire week to posts exclusively on this subject. We hope that by the end of the week you have a better handle on the need for short sales and a better understanding of the process. – the KCM Crew
It seems that the banks have finally realized that a short sale is a better option than foreclosure for them, the homeowner and the neighborhood. It is for this reason we believe that 2012 will come to be known as the year of the short sale. CNN Money reported on this exact point:
“We believe 2012 could be a record year for short sales,” said Daren Blomquist, vice president at RealtyTrac.
Banks are showing signs of being more open and willing to approve the deals — even if it means accepting less money. The average sales price for a short sale was $174,120 in January, down 4% from December and 10% year-over-year.
Market Watch also addressed the short sale situation recently:
Fitch expects the increase in short sales to continue because of the potential benefits afforded to both lenders and borrowers. Some borrowers may prefer short sales because, though they cannot stay in the property, they often walk away with cash incentives from lenders and healthier credit reports unmarred by foreclosure. For lenders, short sales provide a more efficient and cheaper alternative to the increasingly lengthy and costly foreclosure process.
Why Are the Banks Now Leaning Towards Short Sales?
The simple answer is that the banks lose less money when doing a short sale. The CNN Money article mentioned above explains:
Typically, banks get about 20% less for a foreclosed home. Foreclosure can also take years to unload, during which expenses, like property taxes, insurance and other expenses, mount up.
The Market Watch report breaks it down further:
Short sales…are currently getting completed 20 months after the last payment made on the loan, approximately 10 months less than the average time to foreclose. Shorter timelines reduce lenders’ carrying costs (i.e. accrued loan interest and property taxes, insurance, and maintenance) and eliminate most of the legal expenses associated with foreclosure and liquidation. As a result, loss severities tend to be considerably lower. Historically, for loans with similar attributes, short sales have severities 10%-15% less than REO sales. As the proportion of short sales increases, we expect average loss severities to improve further.
How Many Short Sales Could Be Completed?
JPMorgan has projected that over 500,000 short sales will be done this year. Also, NECN.com recently reported:
RealtyTrac estimates that if the January numbers it found hold up, there would be about 105,000 “pre-foreclosure” sales of homes, most of them short sales, during the first quarter of this year, and at that rate something like 400,000 for the year.
How Long Will Short Sales Be a Major Part of the Market?
The NECN article shows us that short sales are here to stay for some time.
According to the Mortgage Bankers Association, there are nearly 3.5 million homeowners delinquent on their mortgages by at least one month, including 1.5 million who are 90 days or more behind on paying their mortgage. And there are 12.5 million homeowners still who are “underwater,” owing more on their mortgage than their home is worth. That suggests that at the current rates, barring some spectacular economic recovery, it would take years, even decades, for short sales alone to clean up the mortgage mess that remains.
Short sales are here to stay. We must accept this fact and work hard to learn the process and apply it where it makes sense.
From: http://www.kcmblog.com/2012/05/07/short-sales-will-increase-dramatically-in-2012/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28The+KCM+Blog%29
by The KCM Crew on May 7, 2012
We believe that short sales will be a major part of the real estate market in 2012. That is why we have dedicated this entire week to posts exclusively on this subject. We hope that by the end of the week you have a better handle on the need for short sales and a better understanding of the process. – the KCM Crew
It seems that the banks have finally realized that a short sale is a better option than foreclosure for them, the homeowner and the neighborhood. It is for this reason we believe that 2012 will come to be known as the year of the short sale. CNN Money reported on this exact point:
“We believe 2012 could be a record year for short sales,” said Daren Blomquist, vice president at RealtyTrac.
Banks are showing signs of being more open and willing to approve the deals — even if it means accepting less money. The average sales price for a short sale was $174,120 in January, down 4% from December and 10% year-over-year.
Market Watch also addressed the short sale situation recently:
Fitch expects the increase in short sales to continue because of the potential benefits afforded to both lenders and borrowers. Some borrowers may prefer short sales because, though they cannot stay in the property, they often walk away with cash incentives from lenders and healthier credit reports unmarred by foreclosure. For lenders, short sales provide a more efficient and cheaper alternative to the increasingly lengthy and costly foreclosure process.
Why Are the Banks Now Leaning Towards Short Sales?
The simple answer is that the banks lose less money when doing a short sale. The CNN Money article mentioned above explains:
Typically, banks get about 20% less for a foreclosed home. Foreclosure can also take years to unload, during which expenses, like property taxes, insurance and other expenses, mount up.
The Market Watch report breaks it down further:
Short sales…are currently getting completed 20 months after the last payment made on the loan, approximately 10 months less than the average time to foreclose. Shorter timelines reduce lenders’ carrying costs (i.e. accrued loan interest and property taxes, insurance, and maintenance) and eliminate most of the legal expenses associated with foreclosure and liquidation. As a result, loss severities tend to be considerably lower. Historically, for loans with similar attributes, short sales have severities 10%-15% less than REO sales. As the proportion of short sales increases, we expect average loss severities to improve further.
How Many Short Sales Could Be Completed?
JPMorgan has projected that over 500,000 short sales will be done this year. Also, NECN.com recently reported:
RealtyTrac estimates that if the January numbers it found hold up, there would be about 105,000 “pre-foreclosure” sales of homes, most of them short sales, during the first quarter of this year, and at that rate something like 400,000 for the year.
How Long Will Short Sales Be a Major Part of the Market?
The NECN article shows us that short sales are here to stay for some time.
According to the Mortgage Bankers Association, there are nearly 3.5 million homeowners delinquent on their mortgages by at least one month, including 1.5 million who are 90 days or more behind on paying their mortgage. And there are 12.5 million homeowners still who are “underwater,” owing more on their mortgage than their home is worth. That suggests that at the current rates, barring some spectacular economic recovery, it would take years, even decades, for short sales alone to clean up the mortgage mess that remains.
Short sales are here to stay. We must accept this fact and work hard to learn the process and apply it where it makes sense.
From: http://www.kcmblog.com/2012/05/07/short-sales-will-increase-dramatically-in-2012/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28The+KCM+Blog%29
Wednesday, April 25, 2012
Low-ball bidders in many markets learn they can no longer get a steal on a house - The Washington Post
Low-ball bidders in many markets learn they can no longer get a steal on a house
Charles Buchanan/AP - ERA Realtor JoAnn MacHamer places a sold sign at 1941 Brookstone Drive in the Greystone subdivision between Kinston and La Grange Friday, Jan. 27, 2012.
By Kenneth R. Harney, Published: April 19
It’s not something that economists routinely track, but it provides a rough sense of what’s happening in local real estate markets. Call it the low-ball index.
A year ago, according to researchers at the National Association of Realtors, one out of 10 members surveyed in a monthly poll complained about low-ball offers on houses listed for sale. In the latest survey — conducted in March among 4,500 agents and brokers across the country but not yet released — there were hardly any. Instead, the focus of volunteered comments has shifted to declining inventory levels — fewer houses available to sell — and multiple offers on well-priced listings.
A low-ball offer typically involves a contract submitted to a seller where the price proposed by the purchaser is 25 percent or more below list. Low-balls increase sharply when there’s a glut of properties available, asking prices are out of sync with local economic realities and values are depressed or uncertain. Buyers figure: Hey, why not? Maybe I’ll get lucky.
Based on the latest survey results, that sort of strategy is not a winning move in many communities this spring. In fact, in local markets where inventories are tight and competition for homes rising, realty agents say that buyers looking to steal houses by low-balling their offers are ending up at the back of the line, their contracts either rejected out of hand or countered close to the original asking price.
In high-demand, high-cost markets that have rebounded from recession slumps, sellers are now firmly in control; they pay scant attention to low-ballers.
Jayne Esposito, an agent with Coldwell Banker Residential Brokerage in Los Gatos, Calif., says that multiple offers are “the rule, not the exception,” in her area, and many transactions end up with final contract prices higher than the listing. “Sure, I’ve had a few buyers try to low-ball, and they wouldn’t listen,” she said in an interview, “but that didn’t work out well for them.”
Similar trends are underway in more moderately priced markets.
Wes Neal, an agent at Prudential Olympia in Olympia, Wash., said “low-ball offers are down a lot because we’re seeing more homes come on the market that are more realistically priced.” Sellers have absorbed the hard lessons of the recession years about what the market can bear.
Even when buyers submit shockingly low bids, sellers no longer are so insulted that they send the contract back without a counteroffer. Now they negotiate aggressively, and the final number ends up close to the original asking price. For example, Neal said, a buyer recently came in with a bottom-fishing offer of $150,000 on a house listed for $250,000. Though the seller was irritated, after a series of negotiations the low-ball buyer settled for a final price of $230,000.
In Northern Virginia, well-priced houses in good locations move fast, sometimes pulling in multiple offers within 48 hours of listing, says Chris Ann Cleland, an agent with Long & Foster Realtors. Sellers who encounter the occasional outrageous low-ball offer reminiscent tell listing agents not to even bother with them. After all, there’s an excellent chance there will be a realistic offer shortly, maybe more than one.
In the suburbs south of Chicago, Judy Orr, an agent with Classic Realty Group in Orland Park, Ill., says low-ball frequency and efficacy depend on the specific neighborhood or town. “We still see them, and we try to work with them” in communities where prices are soft and the impacts of tough economic times persist, she said. Elsewhere, though low-ball offers are down, she urges sellers to stick with it and negotiate. Recently a low-baller came in $40,000 below the asking price. Through negotiations with the buyer, Orr managed to close the gap to just $2,000 below asking.
Marnie Matarese, an agent with J Wood Realty in Sarasota, Fla., said that while low-ball offers are far fewer this spring, some out-of-town buyers still appear to be under the impression that all Florida real estate remains depressed. They insist on submitting offers that make no sense in today’s environment. Matarese has no problem with this — “you can’t blame a buyer for trying to get a good deal,” she says — but the fact remains: They usually risk losing the house.
The takeaway here: Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012’s environment — at least in rebounding markets — it could be counterproductive if you truly want to buy.
* * *
Update: Following a recent column on FHA’s controversial tightening of rules on collection accounts, the agency postponed the effective date of the policy change to July 1 from April 1.
Ken Harney’s e-mail address is kenharney@earthlink.net.
From: http://ping.fm/liyK6
Charles Buchanan/AP - ERA Realtor JoAnn MacHamer places a sold sign at 1941 Brookstone Drive in the Greystone subdivision between Kinston and La Grange Friday, Jan. 27, 2012.
By Kenneth R. Harney, Published: April 19
It’s not something that economists routinely track, but it provides a rough sense of what’s happening in local real estate markets. Call it the low-ball index.
A year ago, according to researchers at the National Association of Realtors, one out of 10 members surveyed in a monthly poll complained about low-ball offers on houses listed for sale. In the latest survey — conducted in March among 4,500 agents and brokers across the country but not yet released — there were hardly any. Instead, the focus of volunteered comments has shifted to declining inventory levels — fewer houses available to sell — and multiple offers on well-priced listings.
A low-ball offer typically involves a contract submitted to a seller where the price proposed by the purchaser is 25 percent or more below list. Low-balls increase sharply when there’s a glut of properties available, asking prices are out of sync with local economic realities and values are depressed or uncertain. Buyers figure: Hey, why not? Maybe I’ll get lucky.
Based on the latest survey results, that sort of strategy is not a winning move in many communities this spring. In fact, in local markets where inventories are tight and competition for homes rising, realty agents say that buyers looking to steal houses by low-balling their offers are ending up at the back of the line, their contracts either rejected out of hand or countered close to the original asking price.
In high-demand, high-cost markets that have rebounded from recession slumps, sellers are now firmly in control; they pay scant attention to low-ballers.
Jayne Esposito, an agent with Coldwell Banker Residential Brokerage in Los Gatos, Calif., says that multiple offers are “the rule, not the exception,” in her area, and many transactions end up with final contract prices higher than the listing. “Sure, I’ve had a few buyers try to low-ball, and they wouldn’t listen,” she said in an interview, “but that didn’t work out well for them.”
Similar trends are underway in more moderately priced markets.
Wes Neal, an agent at Prudential Olympia in Olympia, Wash., said “low-ball offers are down a lot because we’re seeing more homes come on the market that are more realistically priced.” Sellers have absorbed the hard lessons of the recession years about what the market can bear.
Even when buyers submit shockingly low bids, sellers no longer are so insulted that they send the contract back without a counteroffer. Now they negotiate aggressively, and the final number ends up close to the original asking price. For example, Neal said, a buyer recently came in with a bottom-fishing offer of $150,000 on a house listed for $250,000. Though the seller was irritated, after a series of negotiations the low-ball buyer settled for a final price of $230,000.
In Northern Virginia, well-priced houses in good locations move fast, sometimes pulling in multiple offers within 48 hours of listing, says Chris Ann Cleland, an agent with Long & Foster Realtors. Sellers who encounter the occasional outrageous low-ball offer reminiscent tell listing agents not to even bother with them. After all, there’s an excellent chance there will be a realistic offer shortly, maybe more than one.
In the suburbs south of Chicago, Judy Orr, an agent with Classic Realty Group in Orland Park, Ill., says low-ball frequency and efficacy depend on the specific neighborhood or town. “We still see them, and we try to work with them” in communities where prices are soft and the impacts of tough economic times persist, she said. Elsewhere, though low-ball offers are down, she urges sellers to stick with it and negotiate. Recently a low-baller came in $40,000 below the asking price. Through negotiations with the buyer, Orr managed to close the gap to just $2,000 below asking.
Marnie Matarese, an agent with J Wood Realty in Sarasota, Fla., said that while low-ball offers are far fewer this spring, some out-of-town buyers still appear to be under the impression that all Florida real estate remains depressed. They insist on submitting offers that make no sense in today’s environment. Matarese has no problem with this — “you can’t blame a buyer for trying to get a good deal,” she says — but the fact remains: They usually risk losing the house.
The takeaway here: Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012’s environment — at least in rebounding markets — it could be counterproductive if you truly want to buy.
* * *
Update: Following a recent column on FHA’s controversial tightening of rules on collection accounts, the agency postponed the effective date of the policy change to July 1 from April 1.
Ken Harney’s e-mail address is kenharney@earthlink.net.
From: http://ping.fm/liyK6
Friday, April 20, 2012
RealtyTrac: Short Sales Up 33% in January, Outpace REO Sales in 12 States
RealtyTrac: Short Sales Up 33% in January, Outpace REO Sales in 12 States
04/19/2012 By: Esther Cho
With the number of short sales increasing and even outnumbering REO sales in certain states, experts are speculating short sales might become key to preventing an even greater swelling of foreclosed properties on the market.
Compared to a year ago in January 2012, pre-foreclosure sales, which are typically short sales, increased 33 percent, according to a RealtyTrac report released Thursday.
Short sales even outpaced bank-owned REO sales in 12 states, including Utah, California, Arizona, Florida, Indiana, Colorado, New York and New Jersey.
Also, 32 states saw annual increases in pre-foreclosure sales, with the top five being Georgia (+113 percent), Michigan (+90 percent), Wisconsin (+77 percent), South Carolina (+76 percent) and Utah (+70 percent).
Despite the increase, Daren Blomquist, VP of RealtyTrac and author of the report, points out that short sales have declined on a long-term basis, but January’s report could signal a turning point.
“Short sales have long held great promise as a market-based solution to the nation’s foreclosure problem, but short sales transactions over the past three years have actually declined after peaking in the first quarter of 2009,” said Blomquist. “January foreclosure sales numbers, along with first quarter foreclosure activity, strongly indicate that downward trend is ending, and we believe 2012 could be a record year for short sales.”
Average pre-foreclosure prices saw a decline, according to the report, with the average sales price in January at $174,120, down 10 percent from January 2011. This, RealtyTrac stated, shows that lenders are more willing to approve more aggressively priced short sales.
In January, a home sold via short sale sold at a 21 percent discount on average compared to the average price of a home not in foreclosure, according to RealtyTrac.
The five states with the biggest discounts were Massachusetts (40.86 percent), Missouri (35.5 percent) California (29.93), Indiana (29.82), and Georgia (29.31).
The five metropolitan areas with the greatest discounts were Kansas City (56.53 percent), Louisville/Jefferson County (44.25 percent), Milwaukee-Waukesha-West Allis (43.64 percent), Boston-Cambridge-Quincy (41.57 percent), and Indianapolis-Carmel (37.26 percent).
The time it took to approve of a short sale was a bit lower for the 2012 first quarter, averaging 306 days, down from 308 days in the fourth quarter of 2011 and down from a peak of 318 days in the third quarter of 2011. The short sale timeline begins when a property starts the foreclosure process to when it’s sold as a pre-foreclosure.
However, the average time to sell a pre-foreclosure has actually tripled since the first quarter of 2007, when it took an average of 113 days.
There’s nothing short about short sales. If you can survive that process and make that happen it’s going to be a better outcome for everyone, said RealtyTrac VP Charlie Engel during a broadcast hosted by the Charfen Institute for Certified Distressed Property Experts.
Recently, Bank of America and GSEs Fannie Mae and Freddie Mac announced efforts to streamline the short sale process. BofA’s change requires a decision on a short sale in less than 3 weeks.
Starting in June, the GSEs are requiring servicers to make a decision on a short sale within 30 days of receiving an offer or an application package from a borrower; if more time is needed, a servicer must provide the borrower with a weekly update and come to a decision no later than 60 days.
With foreclosure starts – either default notices or scheduled foreclosure auctions – numbering more than 100,000 in March, this means more opportunities for short sales, according to the report.
Compared to the month before, March foreclosure starts increased 7 percent, but were down 11 percent from a year ago. When looking at individual states, 31 posted monthly gains in foreclosure starts in March.
Other properties with potential to become short sales are delinquent loans, which represented approximately 3.5 million properties, according to a fourth quarter 2011 survey from the Mortgage Bankers Association.
RealtyTrac is an online marketplace of foreclosure properties, with more than 1.3 million default, auction and bank-owned listings from over 2,200 U.S. counties, along with detailed property, loan and home sales data.
From: http://www.dsnews.com/articles/realytrac-reports-short-sales-up-33-in-january-and-outpaced-reo-12-states-2012-04-19
04/19/2012 By: Esther Cho
With the number of short sales increasing and even outnumbering REO sales in certain states, experts are speculating short sales might become key to preventing an even greater swelling of foreclosed properties on the market.
Compared to a year ago in January 2012, pre-foreclosure sales, which are typically short sales, increased 33 percent, according to a RealtyTrac report released Thursday.
Short sales even outpaced bank-owned REO sales in 12 states, including Utah, California, Arizona, Florida, Indiana, Colorado, New York and New Jersey.
Also, 32 states saw annual increases in pre-foreclosure sales, with the top five being Georgia (+113 percent), Michigan (+90 percent), Wisconsin (+77 percent), South Carolina (+76 percent) and Utah (+70 percent).
Despite the increase, Daren Blomquist, VP of RealtyTrac and author of the report, points out that short sales have declined on a long-term basis, but January’s report could signal a turning point.
“Short sales have long held great promise as a market-based solution to the nation’s foreclosure problem, but short sales transactions over the past three years have actually declined after peaking in the first quarter of 2009,” said Blomquist. “January foreclosure sales numbers, along with first quarter foreclosure activity, strongly indicate that downward trend is ending, and we believe 2012 could be a record year for short sales.”
Average pre-foreclosure prices saw a decline, according to the report, with the average sales price in January at $174,120, down 10 percent from January 2011. This, RealtyTrac stated, shows that lenders are more willing to approve more aggressively priced short sales.
In January, a home sold via short sale sold at a 21 percent discount on average compared to the average price of a home not in foreclosure, according to RealtyTrac.
The five states with the biggest discounts were Massachusetts (40.86 percent), Missouri (35.5 percent) California (29.93), Indiana (29.82), and Georgia (29.31).
The five metropolitan areas with the greatest discounts were Kansas City (56.53 percent), Louisville/Jefferson County (44.25 percent), Milwaukee-Waukesha-West Allis (43.64 percent), Boston-Cambridge-Quincy (41.57 percent), and Indianapolis-Carmel (37.26 percent).
The time it took to approve of a short sale was a bit lower for the 2012 first quarter, averaging 306 days, down from 308 days in the fourth quarter of 2011 and down from a peak of 318 days in the third quarter of 2011. The short sale timeline begins when a property starts the foreclosure process to when it’s sold as a pre-foreclosure.
However, the average time to sell a pre-foreclosure has actually tripled since the first quarter of 2007, when it took an average of 113 days.
There’s nothing short about short sales. If you can survive that process and make that happen it’s going to be a better outcome for everyone, said RealtyTrac VP Charlie Engel during a broadcast hosted by the Charfen Institute for Certified Distressed Property Experts.
Recently, Bank of America and GSEs Fannie Mae and Freddie Mac announced efforts to streamline the short sale process. BofA’s change requires a decision on a short sale in less than 3 weeks.
Starting in June, the GSEs are requiring servicers to make a decision on a short sale within 30 days of receiving an offer or an application package from a borrower; if more time is needed, a servicer must provide the borrower with a weekly update and come to a decision no later than 60 days.
With foreclosure starts – either default notices or scheduled foreclosure auctions – numbering more than 100,000 in March, this means more opportunities for short sales, according to the report.
Compared to the month before, March foreclosure starts increased 7 percent, but were down 11 percent from a year ago. When looking at individual states, 31 posted monthly gains in foreclosure starts in March.
Other properties with potential to become short sales are delinquent loans, which represented approximately 3.5 million properties, according to a fourth quarter 2011 survey from the Mortgage Bankers Association.
RealtyTrac is an online marketplace of foreclosure properties, with more than 1.3 million default, auction and bank-owned listings from over 2,200 U.S. counties, along with detailed property, loan and home sales data.
From: http://www.dsnews.com/articles/realytrac-reports-short-sales-up-33-in-january-and-outpaced-reo-12-states-2012-04-19
Wednesday, April 18, 2012
Fannie and Freddie Set Timeline Requirements for Short Sales
Fannie and Freddie Set Timeline Requirements for Short Sales
04/17/2012 By: Carrie Bay
Beginning June 15, real estate agents working with distressed homeowners whose loans are backed by Fannie Mae and Freddie Mac should expect to receive a decision on a short sale offer within 30-60 days.
The GSEs issued new guidelines Tuesday that fall under the Servicing Alignment Initiative rolled out last fall and aim to bring greater transparency to the short sale process and expedite decisions related to these pre-foreclosure sales.
Not only is a short sale an effective foreclosure alternative when home retention is no longer an option, but it keeps homes occupied and helps to maintain stable communities, according to the Federal Housing Finance Agency (FHFA).
Addressing real estate practitioners’ No. 1 complaint about short sales, FHFA directed Fannie Mae and Freddie Mac to establish a new uniform set of minimum response times that servicers must follow in order to facilitate more efficient short sale transactions.
The GSEs’ new short sale timelines require servicers to make a decision within 30 days of receiving either an offer on a property under the companies’ traditional short sale programs or a completed Borrower Response Package (BRP) requesting short sale consideration, whether it’s through the federal government’s Home Affordable Foreclosure Alternative (HAFA) program or a GSE program.
If more than 30 days are needed, servicers must provide the borrower with weekly status updates and come to a decision no later than 60 days from the date the BRP or offer was received.
According to the GSEs, this 30-day add-on will provide some leeway for servicers who may need more time to obtain a broker price opinion (BPO) or a private mortgage insurer’s approval for a short sale. All decisions must be made within 60 days.
In the event a servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower’s response.
The GSEs plan to use the new short sale timelines to evaluate servicer compliance with the Servicing Alignment Initiative.
Edward DeMarco, acting director of the FHFA, says the GSEs new borrower communication and timeline requirements for short sales “set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”
GSE servicers must comply with the new minimum communication time frames for all short sale evaluations conducted on or after June 15, 2012, although servicers are encouraged to begin implementing the new requirements sooner.
“I applaud Fannie and Freddie for finally coming out with real guidance with real world timelines for their servicers,” commented Anthony Lamacchia, broker/owner of McGeough Lamacchia Realty Inc., which specializes in short sales. “There is no question that this will help short sales and the market as a whole.”
Last year Freddie Mac completed 45,623 short sales, a 140 percent increase since 2009. Fannie Mae’s short sale completions shot up by 101 percent over the same period, totaling around 79,800 in 2011.
From: http://ping.fm/lTiX0
04/17/2012 By: Carrie Bay
Beginning June 15, real estate agents working with distressed homeowners whose loans are backed by Fannie Mae and Freddie Mac should expect to receive a decision on a short sale offer within 30-60 days.
The GSEs issued new guidelines Tuesday that fall under the Servicing Alignment Initiative rolled out last fall and aim to bring greater transparency to the short sale process and expedite decisions related to these pre-foreclosure sales.
Not only is a short sale an effective foreclosure alternative when home retention is no longer an option, but it keeps homes occupied and helps to maintain stable communities, according to the Federal Housing Finance Agency (FHFA).
Addressing real estate practitioners’ No. 1 complaint about short sales, FHFA directed Fannie Mae and Freddie Mac to establish a new uniform set of minimum response times that servicers must follow in order to facilitate more efficient short sale transactions.
The GSEs’ new short sale timelines require servicers to make a decision within 30 days of receiving either an offer on a property under the companies’ traditional short sale programs or a completed Borrower Response Package (BRP) requesting short sale consideration, whether it’s through the federal government’s Home Affordable Foreclosure Alternative (HAFA) program or a GSE program.
If more than 30 days are needed, servicers must provide the borrower with weekly status updates and come to a decision no later than 60 days from the date the BRP or offer was received.
According to the GSEs, this 30-day add-on will provide some leeway for servicers who may need more time to obtain a broker price opinion (BPO) or a private mortgage insurer’s approval for a short sale. All decisions must be made within 60 days.
In the event a servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower’s response.
The GSEs plan to use the new short sale timelines to evaluate servicer compliance with the Servicing Alignment Initiative.
Edward DeMarco, acting director of the FHFA, says the GSEs new borrower communication and timeline requirements for short sales “set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”
GSE servicers must comply with the new minimum communication time frames for all short sale evaluations conducted on or after June 15, 2012, although servicers are encouraged to begin implementing the new requirements sooner.
“I applaud Fannie and Freddie for finally coming out with real guidance with real world timelines for their servicers,” commented Anthony Lamacchia, broker/owner of McGeough Lamacchia Realty Inc., which specializes in short sales. “There is no question that this will help short sales and the market as a whole.”
Last year Freddie Mac completed 45,623 short sales, a 140 percent increase since 2009. Fannie Mae’s short sale completions shot up by 101 percent over the same period, totaling around 79,800 in 2011.
From: http://ping.fm/lTiX0
Tuesday, April 17, 2012
Report: Sellers' Asking Prices Rose in March - Developments - WSJ
Report: Sellers’ Asking Prices Rose in March.
By Nick Timiraos
Here’s a sign that sellers are feeling more optimistic about their prospects this spring: median asking prices in March jumped by 5.6% from a year ago, and were up 1% from February, according to a report released Tuesday.
The jump in median asking prices comes amid a sharp drop in the number of homes listed for sale from one year ago. While listing inventories in March rose by 1.5% from February, they were still 21.5% below last year’s levels.
Inventories of homes listed for sale tend to go up in the spring, and the 1.8 million listings in March represented the second straight increase for the year. Over the past 27 years, the average increase in for-sale listings in March has been 1.8% from February, according to research firm Zelman & Associates.
The Realtor.com figures include sale listings from more than 900 multiple-listing services across the country. They don’t cover all homes for sale, including those that are “for sale by owner” and newly constructed homes that aren’t always listed by the services.
Compared with February, inventories declined in roughly less than half of the top 30 metros tracked by Realtor.com during March, with the biggest declines in Phoenix (-6.4%), Seattle (-4.8%) and Orlando, Fla. (-4.2%).
Northeastern cities showed the largest inventory gains — a finding that shouldn’t surprise given that sellers are more likely to list their homes when the weather improves. Washington, D.C., saw a 9.5% gain, followed by Philadelphia (8.1%) and Boston (7.4%).
But compared with one year ago, inventories are still down sharply in almost all of the 145 markets tracked by Realtor.com. Just two, Philadelphia and Hartford, Conn., have seen any annual inventory increases. Listings are down by more than half in Oakland and Bakersfield, Calif.
Where are prices rising? Median asking prices were up from one year ago or unchanged in the vast majority of markets, with whopping increases of 23% in Phoenix, 22% in Miami, 17% in Washington, D.C.
The biggest monthly price gains were reported in San Francisco (6.1%), Seattle (5%) and Washington, D.C. (4.1%).
Where are prices falling? Chicago topped the list, with median asking prices down by 9.5% from last year’s levels. Orange County, Calif., saw a 5.4% decline and Los Angeles posted a 3% drop.
Compared with February, asking prices turned up in all but one of the cities, with Minneapolis posting a 2.2% drop in median listing prices from February.
From: http://blogs.wsj.com/developments/2012/04/17/report-sellers-asking-prices-rose-in-march/
By Nick Timiraos
Here’s a sign that sellers are feeling more optimistic about their prospects this spring: median asking prices in March jumped by 5.6% from a year ago, and were up 1% from February, according to a report released Tuesday.
The jump in median asking prices comes amid a sharp drop in the number of homes listed for sale from one year ago. While listing inventories in March rose by 1.5% from February, they were still 21.5% below last year’s levels.
Inventories of homes listed for sale tend to go up in the spring, and the 1.8 million listings in March represented the second straight increase for the year. Over the past 27 years, the average increase in for-sale listings in March has been 1.8% from February, according to research firm Zelman & Associates.
The Realtor.com figures include sale listings from more than 900 multiple-listing services across the country. They don’t cover all homes for sale, including those that are “for sale by owner” and newly constructed homes that aren’t always listed by the services.
Compared with February, inventories declined in roughly less than half of the top 30 metros tracked by Realtor.com during March, with the biggest declines in Phoenix (-6.4%), Seattle (-4.8%) and Orlando, Fla. (-4.2%).
Northeastern cities showed the largest inventory gains — a finding that shouldn’t surprise given that sellers are more likely to list their homes when the weather improves. Washington, D.C., saw a 9.5% gain, followed by Philadelphia (8.1%) and Boston (7.4%).
But compared with one year ago, inventories are still down sharply in almost all of the 145 markets tracked by Realtor.com. Just two, Philadelphia and Hartford, Conn., have seen any annual inventory increases. Listings are down by more than half in Oakland and Bakersfield, Calif.
Where are prices rising? Median asking prices were up from one year ago or unchanged in the vast majority of markets, with whopping increases of 23% in Phoenix, 22% in Miami, 17% in Washington, D.C.
The biggest monthly price gains were reported in San Francisco (6.1%), Seattle (5%) and Washington, D.C. (4.1%).
Where are prices falling? Chicago topped the list, with median asking prices down by 9.5% from last year’s levels. Orange County, Calif., saw a 5.4% decline and Los Angeles posted a 3% drop.
Compared with February, asking prices turned up in all but one of the cities, with Minneapolis posting a 2.2% drop in median listing prices from February.
From: http://blogs.wsj.com/developments/2012/04/17/report-sellers-asking-prices-rose-in-march/
FHA Delaying Disputed Debt Rule Until July
FHA Delaying Disputed Debt Rule Until July
04/09/2012 By: Esther Cho
The Federal Housing Administration (FHA) rule preventing potential borrowers with outstanding collections debt of $1,000 or more from getting an FHA-insured loan is on hold until July 1.
The rule, which many in the industry warn would prevent even more consumers from taking out a loan during a time when lending has tightened, took effect April 1, but will be delayed now until July 1, 2012, according to a notice issued by the FHA.
According to the FHA, the delay is to allow “[m]ortgagees additional time to adapt their procedures to implement portions of the new guidance.”
Before the effective date, FHA said it intends to seek additional input on the rule, which was created to lower default rates.
For lenders who assigned case numbers between April 1, 2012, and April 8, 2012, as long as the numbers were assigned according to either the old or new guidance, the actions will not be viewed as a violation of HUD requirements.
The new rule does include exceptions, such as debt disputed due to identity or credit card theft or if a hardship was faced such as death, divorce, or loss of employment.
FHA-insured loans accounted for 25 percent of the new market share in February, according to Ellie Mae’s Origination Insight Report. Overall, FHA currently has 4.8 million insured single family mortgages, the agency stated on its website.
From: http://ping.fm/iEwLi
04/09/2012 By: Esther Cho
The Federal Housing Administration (FHA) rule preventing potential borrowers with outstanding collections debt of $1,000 or more from getting an FHA-insured loan is on hold until July 1.
The rule, which many in the industry warn would prevent even more consumers from taking out a loan during a time when lending has tightened, took effect April 1, but will be delayed now until July 1, 2012, according to a notice issued by the FHA.
According to the FHA, the delay is to allow “[m]ortgagees additional time to adapt their procedures to implement portions of the new guidance.”
Before the effective date, FHA said it intends to seek additional input on the rule, which was created to lower default rates.
For lenders who assigned case numbers between April 1, 2012, and April 8, 2012, as long as the numbers were assigned according to either the old or new guidance, the actions will not be viewed as a violation of HUD requirements.
The new rule does include exceptions, such as debt disputed due to identity or credit card theft or if a hardship was faced such as death, divorce, or loss of employment.
FHA-insured loans accounted for 25 percent of the new market share in February, according to Ellie Mae’s Origination Insight Report. Overall, FHA currently has 4.8 million insured single family mortgages, the agency stated on its website.
From: http://ping.fm/iEwLi
Thursday, April 12, 2012
CoreLogic: Best Markets for Single-Family Rental Investments
CoreLogic: Best Markets for Single-Family Rental Investments
04/11/2012 By: Esther Cho
Single-family rental investing is a $3 trillion market, according to CoreLogic’s MarketPulse report, which further stated that the single-family rental market accounts for $21 million rental units, or 52 percent of the residential rental market.
The report, authored by Sam Khater, said that unlike multifamily rentals, single-family rents increased during the recession.
With reports showing rental prices have gone up and home prices have decreased, it’s no surprise that large investors have shown interest in buying up single-family homes at a discount to convert them to rental units.
Also, according to the report, during the last five years, foreclosures have turned 3 million former homeowners into potential renters.
Though, in terms of capitalization rates, which is a metric used to determine the profitability of an investment property, certain markets are much more attractive than others when it comes to profitability of an investment home.
Capitalization rates are found by taking the expense adjusted annual cash flow from renting a property relative to the acquisition price.
Based on the 26 major markets CoreLogic assessed, the markets that yield the highest single-family rental cap rates were generally in Florida or the Midwest. West Palm Beach had the highest rate at 12.4 percent, followed by Cleveland (12.3 percent), Fort Lauderdale (12 percent), Chicago (11.6 percent), and Las Vegas (11.4 percent).
The common denominator for areas with lower cap rates was lower than average prices. Honolulu at 5.4 percent had the lowest cap rate, followed by Raleigh (7.3 percent), and Austin (7.7 percent). Among the larger markets, Miami had the lowest cap rate at 7.7 percent, which is partly due to improved home prices.
As of January 2012, cap rates for the single-family market averaged 8.6 percent, according to CoreLogic.
From: http://ping.fm/f3Jmj
04/11/2012 By: Esther Cho
Single-family rental investing is a $3 trillion market, according to CoreLogic’s MarketPulse report, which further stated that the single-family rental market accounts for $21 million rental units, or 52 percent of the residential rental market.
The report, authored by Sam Khater, said that unlike multifamily rentals, single-family rents increased during the recession.
With reports showing rental prices have gone up and home prices have decreased, it’s no surprise that large investors have shown interest in buying up single-family homes at a discount to convert them to rental units.
Also, according to the report, during the last five years, foreclosures have turned 3 million former homeowners into potential renters.
Though, in terms of capitalization rates, which is a metric used to determine the profitability of an investment property, certain markets are much more attractive than others when it comes to profitability of an investment home.
Capitalization rates are found by taking the expense adjusted annual cash flow from renting a property relative to the acquisition price.
Based on the 26 major markets CoreLogic assessed, the markets that yield the highest single-family rental cap rates were generally in Florida or the Midwest. West Palm Beach had the highest rate at 12.4 percent, followed by Cleveland (12.3 percent), Fort Lauderdale (12 percent), Chicago (11.6 percent), and Las Vegas (11.4 percent).
The common denominator for areas with lower cap rates was lower than average prices. Honolulu at 5.4 percent had the lowest cap rate, followed by Raleigh (7.3 percent), and Austin (7.7 percent). Among the larger markets, Miami had the lowest cap rate at 7.7 percent, which is partly due to improved home prices.
As of January 2012, cap rates for the single-family market averaged 8.6 percent, according to CoreLogic.
From: http://ping.fm/f3Jmj
Monday, April 9, 2012
Credit Scores Rising, LTVs Dropping on New Mortgages: Report
Credit Scores Rising, LTVs Dropping on New Mortgages: Report
04/06/2012 By: Carrie Bay
Mortgage lenders remain cautious in terms of credit quality, down payments, and valuations, as evidenced by the findings outlined in the new Origination Insight Report generated by Ellie Mae.
The company found that the average credit score for loans approved by lenders and closed is steadily rising, while acceptable loan-to-value (LTV) ratios are declining.
Ellie Mae’s report series tracks the current lending environment for refinance and purchase mortgages and provides metrics on the kinds of loans getting done and on the challenges consumers and lenders are facing. The company intends to issue the report monthly.
Ellie Mae’s inaugural Origination Insight Report discusses changes in mortgage lending activity over the month of February 2012, as compared to the company’s historical data from the prior six months.
The average credit score on loans that closed was 750 in February, up from 740 six months before. Meanwhile, the average loan-to-value (LTV) ratio was 76 percent, a decrease of 3 percent from August 2011.
The average FICO score for borrowers who were denied a loan in February was 699, according to Ellie Mae’s analysis. The average LTV of denials was 83 percent.
“If you look at the full report on our website, you’ll see the impact of the higher underwriting requirements for refinance that were in place in February,” said Jonathan Corr, COO for Ellie Mae.
“Last month, if your FICO score was below 720 or you had a down payment or equity of less than 25 percent, there was a good chance that your refinance application for a conventional loan was denied or you were offered a significantly less attractive interest rate, Corr explained.
He also noted that borrowers denied a mortgage refinancing during the month had a front-end debt-to-income (DTI) ratio – which is calculated as total housing payment divided by total gross income – of 27 percent and a back-end DTI – measured as all monthly debt, including the mortgage, divided by gross income – of 43 percent.
Those borrowers that were approved for a loan and closed in February demonstrated a front-end/back-end DTI of 23/34.
Ellie Mae also offered up a snapshot of the types of mortgage loans closed in February. Sixty-seven percent were refinances and 33 percent were for the purchase of a home.
The Federal Housing Administration (FHA) garnered 25 percent of the new market share in February, while conventional loans made up 67 percent of the month’s closings.
The timeline from application to closing for the average loan was 44 days in February and 43 for a refinance, up 10 percent and 16 percent, respectively, over where the industry was six months ago. Corr says these timeframes track with the increases in demand seen at the end of 2011.
To get a meaningful view of lender “pull-through,” Ellie Mae reviewed loan applications initiated within the previous 90 days to calculate a closing rate and found that nearly 48 percent of all applications closed. There was a higher percentage of purchase mortgages closing (60%) than refinances (42%).
In 2011, the total volume of mortgages that ran through Ellie Mae’s Encompass360 mortgage management software was approximately two million loan applications, or 20 percent of all U.S. mortgage originations. The company’s Origination Insight Report mines its data from a sampling of approximately 33 percent of all applications initiated on the Encompass origination platform.
Given the size of this sample and Ellie Mae’s market share, the company believes the Origination Insight Report is “a strong proxy of the underwriting standards that are being employed by lenders across the country.”
From: http://www.dsnews.com/articles/credit-scores-rising-ltvs-dropping-on-new-mortgages-report-2012-04-06
04/06/2012 By: Carrie Bay
Mortgage lenders remain cautious in terms of credit quality, down payments, and valuations, as evidenced by the findings outlined in the new Origination Insight Report generated by Ellie Mae.
The company found that the average credit score for loans approved by lenders and closed is steadily rising, while acceptable loan-to-value (LTV) ratios are declining.
Ellie Mae’s report series tracks the current lending environment for refinance and purchase mortgages and provides metrics on the kinds of loans getting done and on the challenges consumers and lenders are facing. The company intends to issue the report monthly.
Ellie Mae’s inaugural Origination Insight Report discusses changes in mortgage lending activity over the month of February 2012, as compared to the company’s historical data from the prior six months.
The average credit score on loans that closed was 750 in February, up from 740 six months before. Meanwhile, the average loan-to-value (LTV) ratio was 76 percent, a decrease of 3 percent from August 2011.
The average FICO score for borrowers who were denied a loan in February was 699, according to Ellie Mae’s analysis. The average LTV of denials was 83 percent.
“If you look at the full report on our website, you’ll see the impact of the higher underwriting requirements for refinance that were in place in February,” said Jonathan Corr, COO for Ellie Mae.
“Last month, if your FICO score was below 720 or you had a down payment or equity of less than 25 percent, there was a good chance that your refinance application for a conventional loan was denied or you were offered a significantly less attractive interest rate, Corr explained.
He also noted that borrowers denied a mortgage refinancing during the month had a front-end debt-to-income (DTI) ratio – which is calculated as total housing payment divided by total gross income – of 27 percent and a back-end DTI – measured as all monthly debt, including the mortgage, divided by gross income – of 43 percent.
Those borrowers that were approved for a loan and closed in February demonstrated a front-end/back-end DTI of 23/34.
Ellie Mae also offered up a snapshot of the types of mortgage loans closed in February. Sixty-seven percent were refinances and 33 percent were for the purchase of a home.
The Federal Housing Administration (FHA) garnered 25 percent of the new market share in February, while conventional loans made up 67 percent of the month’s closings.
The timeline from application to closing for the average loan was 44 days in February and 43 for a refinance, up 10 percent and 16 percent, respectively, over where the industry was six months ago. Corr says these timeframes track with the increases in demand seen at the end of 2011.
To get a meaningful view of lender “pull-through,” Ellie Mae reviewed loan applications initiated within the previous 90 days to calculate a closing rate and found that nearly 48 percent of all applications closed. There was a higher percentage of purchase mortgages closing (60%) than refinances (42%).
In 2011, the total volume of mortgages that ran through Ellie Mae’s Encompass360 mortgage management software was approximately two million loan applications, or 20 percent of all U.S. mortgage originations. The company’s Origination Insight Report mines its data from a sampling of approximately 33 percent of all applications initiated on the Encompass origination platform.
Given the size of this sample and Ellie Mae’s market share, the company believes the Origination Insight Report is “a strong proxy of the underwriting standards that are being employed by lenders across the country.”
From: http://www.dsnews.com/articles/credit-scores-rising-ltvs-dropping-on-new-mortgages-report-2012-04-06
Tuesday, April 3, 2012
More realty agents report that their home sales are being canceled or postponed - The Washington Post
More realty agents report that their home sales are being canceled or postponed
By Kenneth R. Harney, Published: March 30
What’s behind the unusually high rate of contract cancellations and settlement delays in the real estate market? With signs of recovery emerging in many parts of the country, shouldn’t deals be zipping along with minimal complications?
Apparently not. Nearly one-third of realty agents in a new national survey reported experiencing contract cancellations — purchases crumbling before going to closing — in February. That’s up dramatically from a similar poll 12 months earlier, when just 9 percent of agents reported cancellations. Another 18 percent reported delays in scheduled closings in the latest study, which involved approximately 3,000 agents surveyed by the National Association of Realtors.
The high reported cancellation rate (31 percent) doesn’t mean that nearly one of every three of all signed contracts is falling apart, according to the association, but rather that more than triple the number of agents and their clients are running into deal-endangering problems compared with 2011. If you are a potential buyer or seller in an otherwise improving marketplace, you need to be aware of the issues that are hampering sales, and be prepared in advance to deal with some of the most prominent.
Tops on the list:
●Appraisals below contract. You may assume that the true market value of a house is what a seller and buyer agree to in a binding contract, but it’s not. The appraiser hired by the bank may come up with a different opinion of value — significantly below what was agreed between the parties — and this is occurring with far greater frequency today than in previous years. Part of the problem is the excessive use of price-depressed foreclosure sales chosen as “comparables” to value non-distressed houses under pending contracts.
In addition, some appraisers are inexperienced and unfamiliar with local pricing trends, and they go far beyond their normal duties.
For example, Risa Bell, an agent in Boston for national broker Redfin, recently represented purchasers of a bank-owned property being sold “as is.” An appraiser for the lender not only detailed a long list of needed repairs to the house but also said the deal could proceed only if the prospective buyers spent thousands of dollars fixing up the house before — not after — closing. Along the way, frozen pipes in the unheated house broke and a contractor hired to do repairs filed a mechanic’s lien requiring payment before the title could be transferred. All of this combined to kill the financing and torpedo the closing, but the buyers ultimately were approved by a second lender using a different appraiser, who made no such demands for repairs in advance.
●Ultraconservative underwriting and documentation requirements. It’s no longer just towering credit score minimums, hefty down payments and mind-bending paperwork submissions that get mortgage applicants turned down. “It’s a lot of other stuff, too,” said Melissa Zavala, broker and owner of Broadpoint Properties in Escondido, Calif. Increasingly she’s been running into regulatory snags and restrictive underwriting rules at FHA, Fannie Mae and Freddie Mac that knock signed contracts off the tracks or at least delay them for months.
For instance, FHA’s toughened rules on condominium sales — limits on the percentage of residents in the entire project who are delinquent on their condo dues, plus controversial requirements for “recertifications” of condominium developments that many condo boards find costly and burdensome in terms of legal liability — are making units in those communities difficult to get financed, no matter how well qualified the purchasers. Little-publicized recent changes in FHA rules on loan applicants who have outstanding collection accounts buried away in their credit files “can force you to take three to four months to clean up” through mandatory repayment plans, Zavala said in an interview. By that point the contract may well have gone bust.
●Poor service by lender staff. Agents in the survey identified “lack of customer service” and “generally bad attitudes” as contributing factors to delays and some contract failures. But Zavala said realty agents themselves need to be on the ball when loan processing deadlines begin to slip or communication breaks down with lenders. “Agents can be part of the problems” — and the solutions — in moving the financing along, she said.
Bottom line: If you seriously want to go to closing on a house you’re buying or selling, make sure you know all the key rules and requirements upfront, then stay on top of the lending, escrow, title and real estate professionals assigned to your transaction.
And don’t give up if your deal runs into complications. There are more of them out there than usual.
Ken Harney’s e-mail address is kenharney@earthlink.net.
From: http://ping.fm/OHE9X
By Kenneth R. Harney, Published: March 30
What’s behind the unusually high rate of contract cancellations and settlement delays in the real estate market? With signs of recovery emerging in many parts of the country, shouldn’t deals be zipping along with minimal complications?
Apparently not. Nearly one-third of realty agents in a new national survey reported experiencing contract cancellations — purchases crumbling before going to closing — in February. That’s up dramatically from a similar poll 12 months earlier, when just 9 percent of agents reported cancellations. Another 18 percent reported delays in scheduled closings in the latest study, which involved approximately 3,000 agents surveyed by the National Association of Realtors.
The high reported cancellation rate (31 percent) doesn’t mean that nearly one of every three of all signed contracts is falling apart, according to the association, but rather that more than triple the number of agents and their clients are running into deal-endangering problems compared with 2011. If you are a potential buyer or seller in an otherwise improving marketplace, you need to be aware of the issues that are hampering sales, and be prepared in advance to deal with some of the most prominent.
Tops on the list:
●Appraisals below contract. You may assume that the true market value of a house is what a seller and buyer agree to in a binding contract, but it’s not. The appraiser hired by the bank may come up with a different opinion of value — significantly below what was agreed between the parties — and this is occurring with far greater frequency today than in previous years. Part of the problem is the excessive use of price-depressed foreclosure sales chosen as “comparables” to value non-distressed houses under pending contracts.
In addition, some appraisers are inexperienced and unfamiliar with local pricing trends, and they go far beyond their normal duties.
For example, Risa Bell, an agent in Boston for national broker Redfin, recently represented purchasers of a bank-owned property being sold “as is.” An appraiser for the lender not only detailed a long list of needed repairs to the house but also said the deal could proceed only if the prospective buyers spent thousands of dollars fixing up the house before — not after — closing. Along the way, frozen pipes in the unheated house broke and a contractor hired to do repairs filed a mechanic’s lien requiring payment before the title could be transferred. All of this combined to kill the financing and torpedo the closing, but the buyers ultimately were approved by a second lender using a different appraiser, who made no such demands for repairs in advance.
●Ultraconservative underwriting and documentation requirements. It’s no longer just towering credit score minimums, hefty down payments and mind-bending paperwork submissions that get mortgage applicants turned down. “It’s a lot of other stuff, too,” said Melissa Zavala, broker and owner of Broadpoint Properties in Escondido, Calif. Increasingly she’s been running into regulatory snags and restrictive underwriting rules at FHA, Fannie Mae and Freddie Mac that knock signed contracts off the tracks or at least delay them for months.
For instance, FHA’s toughened rules on condominium sales — limits on the percentage of residents in the entire project who are delinquent on their condo dues, plus controversial requirements for “recertifications” of condominium developments that many condo boards find costly and burdensome in terms of legal liability — are making units in those communities difficult to get financed, no matter how well qualified the purchasers. Little-publicized recent changes in FHA rules on loan applicants who have outstanding collection accounts buried away in their credit files “can force you to take three to four months to clean up” through mandatory repayment plans, Zavala said in an interview. By that point the contract may well have gone bust.
●Poor service by lender staff. Agents in the survey identified “lack of customer service” and “generally bad attitudes” as contributing factors to delays and some contract failures. But Zavala said realty agents themselves need to be on the ball when loan processing deadlines begin to slip or communication breaks down with lenders. “Agents can be part of the problems” — and the solutions — in moving the financing along, she said.
Bottom line: If you seriously want to go to closing on a house you’re buying or selling, make sure you know all the key rules and requirements upfront, then stay on top of the lending, escrow, title and real estate professionals assigned to your transaction.
And don’t give up if your deal runs into complications. There are more of them out there than usual.
Ken Harney’s e-mail address is kenharney@earthlink.net.
From: http://ping.fm/OHE9X
Spring Outlook: Reports From the Field Suggest Better Days Ahead
Spring Outlook: Reports From the Field Suggest Better Days Ahead
04/02/2012 By: Carrie Bay
Despite the fact that key market indicators released in recent weeks have shown declines in home sales, anecdotal reports from real estate agents in the field suggest “better days are ahead for the industry,” according to commentary released Monday by the economic team at Wells Fargo Securities, LLC.
Even builders – who’ve endured possibly the steepest drop-off in business over this downturn – are optimistic heading into the spring, the economists note.
As a result, Wells’ economic team has nudged its forecast for home sales slightly higher, as the spring selling season appears to have gotten off to a strong start. They are now expecting sales of existing homes to top out at 4.50 million in 2012 and rise to 4.65 million in 2013. These annual projections compare to 4.26 million existing homes sold in 2011.
“While employment conditions have clearly improved and consumer confidence and spending have risen, we remain concerned about the lack of real after-tax income growth.
That said, the anecdotal evidence is hard to dismiss,” the economists write.
Most real estate agents are reporting “significant gains in buyer interest and sales,” and these gains are organic rather than incentive induced, according to the Wells Fargo economic team.
Unfortunately, they note that conservative appraisals and tight mortgage underwriting continue to undermine a large number of deals, however, they “suspect that the undertow from these two hindrances will subside over the course of this year, as the fog surrounding shadow inventories lightens up a bit and more lenders come back to the market.”
Unseasonably warm weather led to upticks in existing-home sales in December and January. Those gains were paid back with a 0.9 percent decline in February, but the economic group at Wells says the underlying trend remains positive and they expect to see further improvements as the spring homebuying season kicks off.
Distressed transactions still make up a considerable portion of overall sales activity and will continue to pressure prices through at least the first half of 2012, they note in the report. Real home prices are now back down to 1999 levels, as are price-to-rent ratios, according to the economists.
“We expect home prices to definitively bottom by the middle of this year, as the backlog of foreclosures finally begins [to] clear,” writes Wells Fargo’s economic team. “For properties not in foreclosure, prices have probably already bottomed, but should remain relatively low” given the competition from foreclosures.
From: http://ping.fm/P6CVq
04/02/2012 By: Carrie Bay
Despite the fact that key market indicators released in recent weeks have shown declines in home sales, anecdotal reports from real estate agents in the field suggest “better days are ahead for the industry,” according to commentary released Monday by the economic team at Wells Fargo Securities, LLC.
Even builders – who’ve endured possibly the steepest drop-off in business over this downturn – are optimistic heading into the spring, the economists note.
As a result, Wells’ economic team has nudged its forecast for home sales slightly higher, as the spring selling season appears to have gotten off to a strong start. They are now expecting sales of existing homes to top out at 4.50 million in 2012 and rise to 4.65 million in 2013. These annual projections compare to 4.26 million existing homes sold in 2011.
“While employment conditions have clearly improved and consumer confidence and spending have risen, we remain concerned about the lack of real after-tax income growth.
That said, the anecdotal evidence is hard to dismiss,” the economists write.
Most real estate agents are reporting “significant gains in buyer interest and sales,” and these gains are organic rather than incentive induced, according to the Wells Fargo economic team.
Unfortunately, they note that conservative appraisals and tight mortgage underwriting continue to undermine a large number of deals, however, they “suspect that the undertow from these two hindrances will subside over the course of this year, as the fog surrounding shadow inventories lightens up a bit and more lenders come back to the market.”
Unseasonably warm weather led to upticks in existing-home sales in December and January. Those gains were paid back with a 0.9 percent decline in February, but the economic group at Wells says the underlying trend remains positive and they expect to see further improvements as the spring homebuying season kicks off.
Distressed transactions still make up a considerable portion of overall sales activity and will continue to pressure prices through at least the first half of 2012, they note in the report. Real home prices are now back down to 1999 levels, as are price-to-rent ratios, according to the economists.
“We expect home prices to definitively bottom by the middle of this year, as the backlog of foreclosures finally begins [to] clear,” writes Wells Fargo’s economic team. “For properties not in foreclosure, prices have probably already bottomed, but should remain relatively low” given the competition from foreclosures.
From: http://ping.fm/P6CVq
Wednesday, March 28, 2012
NAR: 2012 home sales will be strongest in past 5 years - February pending sales up 9.2% from year ago
NAR: 2012 home sales will be strongest in past 5 years
February pending sales up 9.2% from year ago
By Inman News
Inman News®
The National Association of REALTORS® is predicting existing-home sales will jump 7 to 10 percent in 2012 to the highest level in five years, based on an "uneven but higher sales pattern" so far this year.
Pending home sales fell a seasonally adjusted 0.5 percent from January to February, which was up 9.2 percent from the same time a year ago, NAR said today in releasing its latest Pending Home Sales Index.
Last week, NAR reported a similar trend for existing-home sales, which were down 0.9 percent from January to February, but up 8.8 percent from a year ago.
The pending sales data released today provides a glimpse into more recent trends, because it tracks homes that were under contract in February -- deals that will in most cases be finalized within one or two months.
NAR said 31 percent of REALTORS® experienced contract failures in February, in some cases because buyers' mortgage applications were rejected or because appraisals came in below the negotiated price.
In the Northeast, NAR's index slipped a seasonally adjusted 0.6 percent from January but was up 18.4 percent from a year ago.
The Midwest saw a month-over-month gain of 6.5 percent and a 19 percent gain from a year ago.
Pending home sales fell 3 percent in the South from January to February, but were up 7.8 percent from a year ago.
In the West, the index declined 2.6 percent from January to February and was 1.8 percent below the index rating in February 2011.
In its latest economic forecast, NAR predicts existing-home sales will total 4.65 million in 2012, up 9.1 percent from last year. That forecast assumes that the U.S. economy will grow at a 2.3 percent annual rate and add 2.7 million jobs this year.
From: http://lowes.inman.com/newsletter/2012/03/28/news/183115
February pending sales up 9.2% from year ago
By Inman News
Inman News®
The National Association of REALTORS® is predicting existing-home sales will jump 7 to 10 percent in 2012 to the highest level in five years, based on an "uneven but higher sales pattern" so far this year.
Pending home sales fell a seasonally adjusted 0.5 percent from January to February, which was up 9.2 percent from the same time a year ago, NAR said today in releasing its latest Pending Home Sales Index.
Last week, NAR reported a similar trend for existing-home sales, which were down 0.9 percent from January to February, but up 8.8 percent from a year ago.
The pending sales data released today provides a glimpse into more recent trends, because it tracks homes that were under contract in February -- deals that will in most cases be finalized within one or two months.
NAR said 31 percent of REALTORS® experienced contract failures in February, in some cases because buyers' mortgage applications were rejected or because appraisals came in below the negotiated price.
In the Northeast, NAR's index slipped a seasonally adjusted 0.6 percent from January but was up 18.4 percent from a year ago.
The Midwest saw a month-over-month gain of 6.5 percent and a 19 percent gain from a year ago.
Pending home sales fell 3 percent in the South from January to February, but were up 7.8 percent from a year ago.
In the West, the index declined 2.6 percent from January to February and was 1.8 percent below the index rating in February 2011.
In its latest economic forecast, NAR predicts existing-home sales will total 4.65 million in 2012, up 9.1 percent from last year. That forecast assumes that the U.S. economy will grow at a 2.3 percent annual rate and add 2.7 million jobs this year.
From: http://lowes.inman.com/newsletter/2012/03/28/news/183115
Monday, March 19, 2012
Check the fine print on FHA refinancings - The Washington Post
Check the fine print on FHA refinancings
By Kenneth R. Harney, Published: March 16
The Obama administration’s new plan to stimulate refinancings of Federal Housing Administration mortgages is likely to help large numbers of homeowners cut their monthly costs — even those who are deeply underwater. But it’s also likely to be a disappointment to many borrowers who aren’t aware of the program’s fine print and end up missing an opportunity to switch into a loan with a rate below 4 percent.
To cut through the bureaucratic details, here’s a quick overview of the so-called “streamline refi” program and what it will take for you to qualify.
First, the baseline criteria: Your current home loan must be FHA-insured and must have been put on the agency’s books no later than May 31, 2009. If you have a mortgage owned or backed by Fannie Mae, Freddie Mac, the Department of Veterans Affairs or private investors, you’re out.
The May 31, 2009, date is crucial. Your lender can tell you precisely when the FHA “endorsed” your loan for insurance. This is different from the dates you applied for your loan or closed on your house. If it turns out to be anytime later than May 31, 2009, you miss the cut.
You also need to have an unblemished record of on-time mortgage payments for the past 12 months. Maybe you were late occasionally a couple of years back. That’s okay. But the 12 months immediately preceding the closing need to be pristine.
On top of that, if your refinancing does not provide you a net savings of at least 5 percent in your monthly principal, interest and mortgage insurance payments, you won’t be eligible.
Those are the main hurdles. But they are substantial enough to exclude hundreds of thousands of FHA borrowers who might like to refi. According to an FHA spokesman, Brian Sullivan, FHA has roughly 500,000 active loans in its portfolio that are eliminated from participation solely on the basis of the May 31, 2009, cutoff date. Of those, an estimated 145,000 have interest rates higher than 5 percent, which would make them prime candidates for a refi if it weren’t for the cutoff date.
Now for the good stuff: Under the Obama plan, if you meet the criteria above, you get to breeze through the paperwork maze and underwriting hassles that come with any refinancing. The FHA streamline refi requires:
●No new verifications of your income or employment status. If you’ve been paying on time for a year, the presumption is that you’ve got the needed income.
●No new credit evaluation, credit reports or FICO scores.
●No new physical appraisal. The program generally accepts the appraised value of your home at the time you closed on your current FHA loan as good enough, even if you’re now in serious negative equity territory.
Along with the stripped-down underwriting, the new program also comes with valuable financial concessions. To sweeten the deal, the FHA has slashed its regular insurance premium charges for streamline participants.
Take this hypothetical example provided by Paul Skeens, president of Colonial Mortgage Co. in Waldorf.
Say you now have a $180,000 FHA loan at 5.25 percent that dates to March 2009. Your current monthly principal and interest payment is $993.93. With the addition of FHA’s mortgage insurance premium costs of $82.50, your total monthly outlay is $1,076.43.
If you qualify for the new streamlined plan, you could lower your interest rate to 3.875 percent and your monthly principal, interest and mortgage insurance to $928.92, an immediate savings of $147.51 per month, or $1,770.12 a year. Over the next 60 months, you’ll save $8,850.60.
Not bad.
But why the May 31, 2009, cutoff? What about the thousands of responsible borrowers who happened to take out their FHA loans a little more recently, have paid on time and have rates higher than 5 percent? Why punish them? Sullivan said it’s all about the traditional three-year “seasoning” period for mortgages during which most insurance claims — prompted by delinquencies and foreclosures — normally occur. He denied industry rumors that the 2009 date had anything to do with the FHA’s policy of making partial refunds of upfront insurance premiums to borrowers who refinance during the first 36 months, which might cost the agency millions of dollars if more-recent borrowers could qualify for the new program.
“How cynical,” he said in response to an e-mail question on the refunds. “This is about easing the pressure on [borrowers] in a responsible way.” Saving money by cutting out more-recent FHA borrowers “was never a consideration.”
Ken Harney’s e-mail address is kenharney@earthlink.net.
From: http://ping.fm/tqwoL
By Kenneth R. Harney, Published: March 16
The Obama administration’s new plan to stimulate refinancings of Federal Housing Administration mortgages is likely to help large numbers of homeowners cut their monthly costs — even those who are deeply underwater. But it’s also likely to be a disappointment to many borrowers who aren’t aware of the program’s fine print and end up missing an opportunity to switch into a loan with a rate below 4 percent.
To cut through the bureaucratic details, here’s a quick overview of the so-called “streamline refi” program and what it will take for you to qualify.
First, the baseline criteria: Your current home loan must be FHA-insured and must have been put on the agency’s books no later than May 31, 2009. If you have a mortgage owned or backed by Fannie Mae, Freddie Mac, the Department of Veterans Affairs or private investors, you’re out.
The May 31, 2009, date is crucial. Your lender can tell you precisely when the FHA “endorsed” your loan for insurance. This is different from the dates you applied for your loan or closed on your house. If it turns out to be anytime later than May 31, 2009, you miss the cut.
You also need to have an unblemished record of on-time mortgage payments for the past 12 months. Maybe you were late occasionally a couple of years back. That’s okay. But the 12 months immediately preceding the closing need to be pristine.
On top of that, if your refinancing does not provide you a net savings of at least 5 percent in your monthly principal, interest and mortgage insurance payments, you won’t be eligible.
Those are the main hurdles. But they are substantial enough to exclude hundreds of thousands of FHA borrowers who might like to refi. According to an FHA spokesman, Brian Sullivan, FHA has roughly 500,000 active loans in its portfolio that are eliminated from participation solely on the basis of the May 31, 2009, cutoff date. Of those, an estimated 145,000 have interest rates higher than 5 percent, which would make them prime candidates for a refi if it weren’t for the cutoff date.
Now for the good stuff: Under the Obama plan, if you meet the criteria above, you get to breeze through the paperwork maze and underwriting hassles that come with any refinancing. The FHA streamline refi requires:
●No new verifications of your income or employment status. If you’ve been paying on time for a year, the presumption is that you’ve got the needed income.
●No new credit evaluation, credit reports or FICO scores.
●No new physical appraisal. The program generally accepts the appraised value of your home at the time you closed on your current FHA loan as good enough, even if you’re now in serious negative equity territory.
Along with the stripped-down underwriting, the new program also comes with valuable financial concessions. To sweeten the deal, the FHA has slashed its regular insurance premium charges for streamline participants.
Take this hypothetical example provided by Paul Skeens, president of Colonial Mortgage Co. in Waldorf.
Say you now have a $180,000 FHA loan at 5.25 percent that dates to March 2009. Your current monthly principal and interest payment is $993.93. With the addition of FHA’s mortgage insurance premium costs of $82.50, your total monthly outlay is $1,076.43.
If you qualify for the new streamlined plan, you could lower your interest rate to 3.875 percent and your monthly principal, interest and mortgage insurance to $928.92, an immediate savings of $147.51 per month, or $1,770.12 a year. Over the next 60 months, you’ll save $8,850.60.
Not bad.
But why the May 31, 2009, cutoff? What about the thousands of responsible borrowers who happened to take out their FHA loans a little more recently, have paid on time and have rates higher than 5 percent? Why punish them? Sullivan said it’s all about the traditional three-year “seasoning” period for mortgages during which most insurance claims — prompted by delinquencies and foreclosures — normally occur. He denied industry rumors that the 2009 date had anything to do with the FHA’s policy of making partial refunds of upfront insurance premiums to borrowers who refinance during the first 36 months, which might cost the agency millions of dollars if more-recent borrowers could qualify for the new program.
“How cynical,” he said in response to an e-mail question on the refunds. “This is about easing the pressure on [borrowers] in a responsible way.” Saving money by cutting out more-recent FHA borrowers “was never a consideration.”
Ken Harney’s e-mail address is kenharney@earthlink.net.
From: http://ping.fm/tqwoL
Check the fine print on FHA refinancings - The Washington Post
Check the fine print on FHA refinancings
By Kenneth R. Harney, Published: March 16
The Obama administration’s new plan to stimulate refinancings of Federal Housing Administration mortgages is likely to help large numbers of homeowners cut their monthly costs — even those who are deeply underwater. But it’s also likely to be a disappointment to many borrowers who aren’t aware of the program’s fine print and end up missing an opportunity to switch into a loan with a rate below 4 percent.
To cut through the bureaucratic details, here’s a quick overview of the so-called “streamline refi” program and what it will take for you to qualify.
First, the baseline criteria: Your current home loan must be FHA-insured and must have been put on the agency’s books no later than May 31, 2009. If you have a mortgage owned or backed by Fannie Mae, Freddie Mac, the Department of Veterans Affairs or private investors, you’re out.
The May 31, 2009, date is crucial. Your lender can tell you precisely when the FHA “endorsed” your loan for insurance. This is different from the dates you applied for your loan or closed on your house. If it turns out to be anytime later than May 31, 2009, you miss the cut.
You also need to have an unblemished record of on-time mortgage payments for the past 12 months. Maybe you were late occasionally a couple of years back. That’s okay. But the 12 months immediately preceding the closing need to be pristine.
On top of that, if your refinancing does not provide you a net savings of at least 5 percent in your monthly principal, interest and mortgage insurance payments, you won’t be eligible.
Those are the main hurdles. But they are substantial enough to exclude hundreds of thousands of FHA borrowers who might like to refi. According to an FHA spokesman, Brian Sullivan, FHA has roughly 500,000 active loans in its portfolio that are eliminated from participation solely on the basis of the May 31, 2009, cutoff date. Of those, an estimated 145,000 have interest rates higher than 5 percent, which would make them prime candidates for a refi if it weren’t for the cutoff date.
Now for the good stuff: Under the Obama plan, if you meet the criteria above, you get to breeze through the paperwork maze and underwriting hassles that come with any refinancing. The FHA streamline refi requires:
●No new verifications of your income or employment status. If you’ve been paying on time for a year, the presumption is that you’ve got the needed income.
●No new credit evaluation, credit reports or FICO scores.
●No new physical appraisal. The program generally accepts the appraised value of your home at the time you closed on your current FHA loan as good enough, even if you’re now in serious negative equity territory.
Along with the stripped-down underwriting, the new program also comes with valuable financial concessions. To sweeten the deal, the FHA has slashed its regular insurance premium charges for streamline participants.
Take this hypothetical example provided by Paul Skeens, president of Colonial Mortgage Co. in Waldorf.
Say you now have a $180,000 FHA loan at 5.25 percent that dates to March 2009. Your current monthly principal and interest payment is $993.93. With the addition of FHA’s mortgage insurance premium costs of $82.50, your total monthly outlay is $1,076.43.
If you qualify for the new streamlined plan, you could lower your interest rate to 3.875 percent and your monthly principal, interest and mortgage insurance to $928.92, an immediate savings of $147.51 per month, or $1,770.12 a year. Over the next 60 months, you’ll save $8,850.60.
Not bad.
But why the May 31, 2009, cutoff? What about the thousands of responsible borrowers who happened to take out their FHA loans a little more recently, have paid on time and have rates higher than 5 percent? Why punish them? Sullivan said it’s all about the traditional three-year “seasoning” period for mortgages during which most insurance claims — prompted by delinquencies and foreclosures — normally occur. He denied industry rumors that the 2009 date had anything to do with the FHA’s policy of making partial refunds of upfront insurance premiums to borrowers who refinance during the first 36 months, which might cost the agency millions of dollars if more-recent borrowers could qualify for the new program.
“How cynical,” he said in response to an e-mail question on the refunds. “This is about easing the pressure on [borrowers] in a responsible way.” Saving money by cutting out more-recent FHA borrowers “was never a consideration.”
Ken Harney’s e-mail address is kenharney@earthlink.net.
From: http://ping.fm/AOumY
By Kenneth R. Harney, Published: March 16
The Obama administration’s new plan to stimulate refinancings of Federal Housing Administration mortgages is likely to help large numbers of homeowners cut their monthly costs — even those who are deeply underwater. But it’s also likely to be a disappointment to many borrowers who aren’t aware of the program’s fine print and end up missing an opportunity to switch into a loan with a rate below 4 percent.
To cut through the bureaucratic details, here’s a quick overview of the so-called “streamline refi” program and what it will take for you to qualify.
First, the baseline criteria: Your current home loan must be FHA-insured and must have been put on the agency’s books no later than May 31, 2009. If you have a mortgage owned or backed by Fannie Mae, Freddie Mac, the Department of Veterans Affairs or private investors, you’re out.
The May 31, 2009, date is crucial. Your lender can tell you precisely when the FHA “endorsed” your loan for insurance. This is different from the dates you applied for your loan or closed on your house. If it turns out to be anytime later than May 31, 2009, you miss the cut.
You also need to have an unblemished record of on-time mortgage payments for the past 12 months. Maybe you were late occasionally a couple of years back. That’s okay. But the 12 months immediately preceding the closing need to be pristine.
On top of that, if your refinancing does not provide you a net savings of at least 5 percent in your monthly principal, interest and mortgage insurance payments, you won’t be eligible.
Those are the main hurdles. But they are substantial enough to exclude hundreds of thousands of FHA borrowers who might like to refi. According to an FHA spokesman, Brian Sullivan, FHA has roughly 500,000 active loans in its portfolio that are eliminated from participation solely on the basis of the May 31, 2009, cutoff date. Of those, an estimated 145,000 have interest rates higher than 5 percent, which would make them prime candidates for a refi if it weren’t for the cutoff date.
Now for the good stuff: Under the Obama plan, if you meet the criteria above, you get to breeze through the paperwork maze and underwriting hassles that come with any refinancing. The FHA streamline refi requires:
●No new verifications of your income or employment status. If you’ve been paying on time for a year, the presumption is that you’ve got the needed income.
●No new credit evaluation, credit reports or FICO scores.
●No new physical appraisal. The program generally accepts the appraised value of your home at the time you closed on your current FHA loan as good enough, even if you’re now in serious negative equity territory.
Along with the stripped-down underwriting, the new program also comes with valuable financial concessions. To sweeten the deal, the FHA has slashed its regular insurance premium charges for streamline participants.
Take this hypothetical example provided by Paul Skeens, president of Colonial Mortgage Co. in Waldorf.
Say you now have a $180,000 FHA loan at 5.25 percent that dates to March 2009. Your current monthly principal and interest payment is $993.93. With the addition of FHA’s mortgage insurance premium costs of $82.50, your total monthly outlay is $1,076.43.
If you qualify for the new streamlined plan, you could lower your interest rate to 3.875 percent and your monthly principal, interest and mortgage insurance to $928.92, an immediate savings of $147.51 per month, or $1,770.12 a year. Over the next 60 months, you’ll save $8,850.60.
Not bad.
But why the May 31, 2009, cutoff? What about the thousands of responsible borrowers who happened to take out their FHA loans a little more recently, have paid on time and have rates higher than 5 percent? Why punish them? Sullivan said it’s all about the traditional three-year “seasoning” period for mortgages during which most insurance claims — prompted by delinquencies and foreclosures — normally occur. He denied industry rumors that the 2009 date had anything to do with the FHA’s policy of making partial refunds of upfront insurance premiums to borrowers who refinance during the first 36 months, which might cost the agency millions of dollars if more-recent borrowers could qualify for the new program.
“How cynical,” he said in response to an e-mail question on the refunds. “This is about easing the pressure on [borrowers] in a responsible way.” Saving money by cutting out more-recent FHA borrowers “was never a consideration.”
Ken Harney’s e-mail address is kenharney@earthlink.net.
From: http://ping.fm/AOumY
Tuesday, March 13, 2012
FHA may soon further limit how much sellers can contribute at settlements - The Washington Post
FHA may soon further limit how much sellers can contribute at settlements
By Kenneth R. Harney, Published: March 8
If you’re considering buying a house with an FHA mortgage and expect the seller to help out with your closing costs, here’s a heads-up: The Federal Housing Administration plans to impose significant restrictions in the near future on the amount that sellers can contribute at settlements. On top of that, FHA also will be raising its mortgage insurance premiums during the coming weeks, increasing charges for new purchasers across the board.
You might ask: Why hit us with additional financial burdens right now, just as housing is showing modest signs of recovery in many areas and the spring buying season is getting underway?
One big reason: Over the past six years, FHA has been the turnaround champ of residential real estate, offering down payments as low as 3.5 percent despite the recession and housing bust, growing its market share from 3 percent to 25 percent-plus. The program is now financing 40 percent or more of all new-home purchases in some metropolitan areas and is a crucial resource for first-time buyers and moderate-income families, especially minorities. With a maximum loan limit of $729,750 in high-cost areas, it is also a force in some of the country’s most expensive markets: California, Washington, D.C., New York and parts of New England.
But during the same span of rapid growth, FHA’s insurance fund capital reserves have steadily deteriorated; they’re now far below congressionally mandated levels. Delinquencies have been increasing. According to the latest quarterly survey by the Mortgage Bankers Association, FHA delinquencies rose to 12.4 percent, compared with a 4.1 percent average for prime (Fannie Mae-Freddie Mac) conventional fixed-rate mortgages and 6.6 percent for VA loans.
As a result, FHA is under the gun — from Congress and from within the Obama administration — to get its house in order, cut insurance claims and rebuild its reserves. The coming squeeze on seller contributions and bumps in premiums are steps in this direction, but may not be the last.
The seller-contribution cutbacks could be painful, particularly in places where closing costs and home prices are relatively high.
Here’s what’s involved: Traditionally FHA has been uniquely generous in allowing home sellers — including builders marketing new construction — to sweeten the pot for purchasers by chipping in money to defray closing costs. FHA currently allows sellers to pay up to 6 percent of the price of the house toward their buyers’ settlement expenses. Fannie Mae and Freddie Mac, by comparison, cap contributions at 3 percent. VA’s ceiling is 4 percent.
Under newly proposed rules, the FHA cap would drop to the greater of 3 percent of the home price or $6,000. In sales involving houses priced at $100,000 or below, this wouldn’t change anything ($6,000 equals 6 percent of $100,000). But on all sales above this threshold, the squeeze would get progressively tighter. On a $200,000 home, a buyer could today ask the seller to pay for $12,000 of a long list of settlement charges, including all prepaid loan expenses, discount points on the loan, interest rate buy-downs and upfront FHA insurance premiums, among others. Under the proposed cutback, the maximum amount of closing-cost help for that $200,000 house would be slashed in half. On many transactions, the reduction would force sellers to lower their prices to enable cash-short buyers to get through the closing. In other cases, sales might simply be too much of a stretch for some purchasers.
The proposed cuts are open to public comment through the end of this month but are highly likely to be adopted in approximately their current form soon afterward.
FHA also is restricting the types of closing costs that sellers can pay. For example, advance payment of six months’ or a year’s worth of interest payments or homeowner association dues no longer will be permitted, a serious blow to many builders who use these as financial carrots.
Beyond these changes, FHA also plans significant increases in insurance premiums: from 1 percent to 1.75 percent on its upfront premiums, effective April 1, and 0.1 percentage-point increases in annual premiums on all loans under $625,000 and 0.35 percentage point on mortgage amounts above that, effective June 1.
William McCue, president of McCue Mortgage Co. in New Britain, Conn., which does a sizable percentage of its business with FHA, said the cumulative impact of all these increases “will not just crowd first-time buyers out of the FHA market. It will prevent them from owning a home that absent these new costs would be affordable.”
Bottom line: Nail down your FHA money and seller-contribution negotiations as soon as you can, because later looks as though it could be a lot more expensive.
From: http://ping.fm/Y4EXu
By Kenneth R. Harney, Published: March 8
If you’re considering buying a house with an FHA mortgage and expect the seller to help out with your closing costs, here’s a heads-up: The Federal Housing Administration plans to impose significant restrictions in the near future on the amount that sellers can contribute at settlements. On top of that, FHA also will be raising its mortgage insurance premiums during the coming weeks, increasing charges for new purchasers across the board.
You might ask: Why hit us with additional financial burdens right now, just as housing is showing modest signs of recovery in many areas and the spring buying season is getting underway?
One big reason: Over the past six years, FHA has been the turnaround champ of residential real estate, offering down payments as low as 3.5 percent despite the recession and housing bust, growing its market share from 3 percent to 25 percent-plus. The program is now financing 40 percent or more of all new-home purchases in some metropolitan areas and is a crucial resource for first-time buyers and moderate-income families, especially minorities. With a maximum loan limit of $729,750 in high-cost areas, it is also a force in some of the country’s most expensive markets: California, Washington, D.C., New York and parts of New England.
But during the same span of rapid growth, FHA’s insurance fund capital reserves have steadily deteriorated; they’re now far below congressionally mandated levels. Delinquencies have been increasing. According to the latest quarterly survey by the Mortgage Bankers Association, FHA delinquencies rose to 12.4 percent, compared with a 4.1 percent average for prime (Fannie Mae-Freddie Mac) conventional fixed-rate mortgages and 6.6 percent for VA loans.
As a result, FHA is under the gun — from Congress and from within the Obama administration — to get its house in order, cut insurance claims and rebuild its reserves. The coming squeeze on seller contributions and bumps in premiums are steps in this direction, but may not be the last.
The seller-contribution cutbacks could be painful, particularly in places where closing costs and home prices are relatively high.
Here’s what’s involved: Traditionally FHA has been uniquely generous in allowing home sellers — including builders marketing new construction — to sweeten the pot for purchasers by chipping in money to defray closing costs. FHA currently allows sellers to pay up to 6 percent of the price of the house toward their buyers’ settlement expenses. Fannie Mae and Freddie Mac, by comparison, cap contributions at 3 percent. VA’s ceiling is 4 percent.
Under newly proposed rules, the FHA cap would drop to the greater of 3 percent of the home price or $6,000. In sales involving houses priced at $100,000 or below, this wouldn’t change anything ($6,000 equals 6 percent of $100,000). But on all sales above this threshold, the squeeze would get progressively tighter. On a $200,000 home, a buyer could today ask the seller to pay for $12,000 of a long list of settlement charges, including all prepaid loan expenses, discount points on the loan, interest rate buy-downs and upfront FHA insurance premiums, among others. Under the proposed cutback, the maximum amount of closing-cost help for that $200,000 house would be slashed in half. On many transactions, the reduction would force sellers to lower their prices to enable cash-short buyers to get through the closing. In other cases, sales might simply be too much of a stretch for some purchasers.
The proposed cuts are open to public comment through the end of this month but are highly likely to be adopted in approximately their current form soon afterward.
FHA also is restricting the types of closing costs that sellers can pay. For example, advance payment of six months’ or a year’s worth of interest payments or homeowner association dues no longer will be permitted, a serious blow to many builders who use these as financial carrots.
Beyond these changes, FHA also plans significant increases in insurance premiums: from 1 percent to 1.75 percent on its upfront premiums, effective April 1, and 0.1 percentage-point increases in annual premiums on all loans under $625,000 and 0.35 percentage point on mortgage amounts above that, effective June 1.
William McCue, president of McCue Mortgage Co. in New Britain, Conn., which does a sizable percentage of its business with FHA, said the cumulative impact of all these increases “will not just crowd first-time buyers out of the FHA market. It will prevent them from owning a home that absent these new costs would be affordable.”
Bottom line: Nail down your FHA money and seller-contribution negotiations as soon as you can, because later looks as though it could be a lot more expensive.
From: http://ping.fm/Y4EXu
Wednesday, March 7, 2012
Micro News - Mortgage News Daily#249986
NAR: Housing Affordability Index Hits Record High
Housing affordability conditions have reached the highest level since recordkeeping began in 1970, according to the National Association of Realtors.
NAR’s Housing Affordability Index rose to a record high 206.1 in January, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power.
An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent downpayment and 25 percent of gross income devoted to mortgage principal and interest payments. For first-time buyers making small downpayments, the affordability levels are relatively lower.
From: http://ping.fm/wh3yP
Housing affordability conditions have reached the highest level since recordkeeping began in 1970, according to the National Association of Realtors.
NAR’s Housing Affordability Index rose to a record high 206.1 in January, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power.
An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent downpayment and 25 percent of gross income devoted to mortgage principal and interest payments. For first-time buyers making small downpayments, the affordability levels are relatively lower.
From: http://ping.fm/wh3yP
Thursday, March 1, 2012
Foreclosure-Related Sales in 2011 = 907,138. Banks becoming Short Sal "Friendly"
Foreclosure-Related Sales in 2011 = 907,138
02/29/2012 By: Carrie Bay
Pre-foreclosure short sales and sales of foreclosed REOs totaled 907,138 for the 2011 calendar year, RealtyTrac reported Thursday. These foreclosure-related transactions made up 23 percent of all residential sales in the U.S. last year, with short sales accounting for 9 percent and REOs accounting for 14 percent of 2011 home sales.
During the last three months of the year, third parties purchased a total of 88,303 pre-foreclosure homes that were in default or scheduled for auction, according to RealtyTrac. That tally represents a decrease of 5 percent from the previous quarter but is up 15 percent compared to the fourth quarter of 2010.
Pre-foreclosure sales increased more than 20 percent on a year-over-year basis in several states, including Michigan (103 percent), Georgia (59 percent), Arizona (48 percent), Washington (36 percent), Nevada (29 percent), Oregon (27 percent), Illinois (26 percent), Ohio (25 percent), California (23 percent), and Texas (22 percent).
RealtyTrac says pre-foreclosure short sales went for an average of $184,221 in the fourth quarter. The average sales price of a pre-foreclosure home in the fourth quarter was 21 percent below the average sales price of a non-foreclosure home, similar to the discount of 22 percent on pre-foreclosure purchases for the entire year.
Pre-foreclosure homes that sold in the fourth quarter of 2011 took an average of 308 days to sell after starting the foreclosure process.
Third parties purchased a total of 115,777 bank-owned REO homes in the fourth quarter, down 10 percent from the previous quarter and down 12 percent from the fourth quarter of 2010.
Despite the nationwide decrease, RealtyTrac says REO sales increased 20 percent or more on a year-over-year
basis in several states, including Minnesota (65 percent), Wisconsin (23 percent), Washington (21 percent), and Illinois (20 percent).
REOs sold for an average of $149,686 in the fourth quarter, 36 percent below the average sales price of a non-foreclosure home, while the average discount on bank-owned homes for the entire year was 40 percent.
REOs that sold in the fourth quarter took an average of 175 days to sell after completing the foreclosure process.
“Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures,” said Brandon Moore, RealtyTrac’s CEO. “Even so, foreclosures accounted for nearly one in every four sales during the quarter and for the entire year.”
Moore says his firm expects to see foreclosure-related sales increase in 2012, particularly pre-foreclosure short sales, as lenders start to more aggressively dispose of distressed assets.
“We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter,” Moore said. “Nationally, pre-foreclosure sales increased 15 percent from a year ago while REO sales decreased 12 percent.”
Moore says short sales outnumbered REO sales in several bellwether markets, including Los Angeles, Miami, and Phoenix – all metros where REO sales had outnumbered pre-foreclosure sales a year ago.
“That trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans,” according to Moore.
Among metro areas with at least 500 short sales during the fourth quarter and where short sales increased at least 5 percent from a year ago, the San Francisco-Oakland-Fremont metro in California posted the biggest short sale discount at 41 percent.
Among metro areas with at least 500 REO sales during Q4 and where REO sales rose by at least 5 percent from the year-ago period, Wisconsin’s Milwaukee-Waukesha-West Allis metro saw the biggest discount. There, bank-owned properties sold for 58 percent less than non-foreclosure homes.
Combined, short sales and REOs accounted for 56 percent of all residential sales in Nevada in the fourth quarter, the highest percentage of any state.
From: http://ping.fm/YGtSK
02/29/2012 By: Carrie Bay
Pre-foreclosure short sales and sales of foreclosed REOs totaled 907,138 for the 2011 calendar year, RealtyTrac reported Thursday. These foreclosure-related transactions made up 23 percent of all residential sales in the U.S. last year, with short sales accounting for 9 percent and REOs accounting for 14 percent of 2011 home sales.
During the last three months of the year, third parties purchased a total of 88,303 pre-foreclosure homes that were in default or scheduled for auction, according to RealtyTrac. That tally represents a decrease of 5 percent from the previous quarter but is up 15 percent compared to the fourth quarter of 2010.
Pre-foreclosure sales increased more than 20 percent on a year-over-year basis in several states, including Michigan (103 percent), Georgia (59 percent), Arizona (48 percent), Washington (36 percent), Nevada (29 percent), Oregon (27 percent), Illinois (26 percent), Ohio (25 percent), California (23 percent), and Texas (22 percent).
RealtyTrac says pre-foreclosure short sales went for an average of $184,221 in the fourth quarter. The average sales price of a pre-foreclosure home in the fourth quarter was 21 percent below the average sales price of a non-foreclosure home, similar to the discount of 22 percent on pre-foreclosure purchases for the entire year.
Pre-foreclosure homes that sold in the fourth quarter of 2011 took an average of 308 days to sell after starting the foreclosure process.
Third parties purchased a total of 115,777 bank-owned REO homes in the fourth quarter, down 10 percent from the previous quarter and down 12 percent from the fourth quarter of 2010.
Despite the nationwide decrease, RealtyTrac says REO sales increased 20 percent or more on a year-over-year
basis in several states, including Minnesota (65 percent), Wisconsin (23 percent), Washington (21 percent), and Illinois (20 percent).
REOs sold for an average of $149,686 in the fourth quarter, 36 percent below the average sales price of a non-foreclosure home, while the average discount on bank-owned homes for the entire year was 40 percent.
REOs that sold in the fourth quarter took an average of 175 days to sell after completing the foreclosure process.
“Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures,” said Brandon Moore, RealtyTrac’s CEO. “Even so, foreclosures accounted for nearly one in every four sales during the quarter and for the entire year.”
Moore says his firm expects to see foreclosure-related sales increase in 2012, particularly pre-foreclosure short sales, as lenders start to more aggressively dispose of distressed assets.
“We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter,” Moore said. “Nationally, pre-foreclosure sales increased 15 percent from a year ago while REO sales decreased 12 percent.”
Moore says short sales outnumbered REO sales in several bellwether markets, including Los Angeles, Miami, and Phoenix – all metros where REO sales had outnumbered pre-foreclosure sales a year ago.
“That trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans,” according to Moore.
Among metro areas with at least 500 short sales during the fourth quarter and where short sales increased at least 5 percent from a year ago, the San Francisco-Oakland-Fremont metro in California posted the biggest short sale discount at 41 percent.
Among metro areas with at least 500 REO sales during Q4 and where REO sales rose by at least 5 percent from the year-ago period, Wisconsin’s Milwaukee-Waukesha-West Allis metro saw the biggest discount. There, bank-owned properties sold for 58 percent less than non-foreclosure homes.
Combined, short sales and REOs accounted for 56 percent of all residential sales in Nevada in the fourth quarter, the highest percentage of any state.
From: http://ping.fm/YGtSK
Wednesday, February 29, 2012
FHA Raises Insurance Premiums
FHA Raises Insurance Premiums
02/28/2012 By: Carrie Bay
The Federal Housing Administration (FHA) has seen its capital reserves quickly dissipate over the past few years amid a growing number of mortgage defaults and payouts on insurance claims. In an effort to bolster its capital cushion, the federal agency has announced a new premium structure for FHA-insured single-family mortgage loans.
FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500, effective for new loans insured by FHA beginning in April. The agency is increasing the annual MIP by 0.35 percent for loans above that amount, effective in June. Upfront premiums (UFMIP) will also increase by 0.75 percent, beginning April 1. Existing borrowers who are already part of an FHA insurance program will not be impacted by the pricing changes.
Acting FHA Commissioner Carol Galante says the agency’s premium increases will help to encourage the return of
private capital to the housing market, as well as protect FHA’s capital reserves.
FHA’s Mutual Mortgage Insurance Fund slipped below the congressionally mandated threshold in 2009 for the first time in the agency’s history (going back to 1934), and it has fallen farther and farther ever since. The FHA insures lenders against defaults on home mortgages, and this fund pays for any losses the agency may have to cover.
“These modest [premium] increases are one of several measures we are taking towards meeting the congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers,” Galante said.
FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.
HUD Secretary Shaun Donovan stood before a Senate subcommittee on Tuesday and presented testimony on deficiencies in the foreclosure process and the recently announced settlement between state and federal officials and the nation’s largest mortgage servicers.
Inevitably, questioning from lawmakers turned to FHA’s financial state and Donovan was asked directly if the federal mortgage insurer would be the next big bailout shouldered by taxpayers.
Donovan assured the senators that the agency was taking steps to avert such action. He said the new premium changes for FHA insured mortgages would allow the agency to increase revenues and contribute more than $1 billion to the depleted Mutual Mortgage Insurance Fund through fiscal year 2013.
From: http://ping.fm/iT1fV
02/28/2012 By: Carrie Bay
The Federal Housing Administration (FHA) has seen its capital reserves quickly dissipate over the past few years amid a growing number of mortgage defaults and payouts on insurance claims. In an effort to bolster its capital cushion, the federal agency has announced a new premium structure for FHA-insured single-family mortgage loans.
FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500, effective for new loans insured by FHA beginning in April. The agency is increasing the annual MIP by 0.35 percent for loans above that amount, effective in June. Upfront premiums (UFMIP) will also increase by 0.75 percent, beginning April 1. Existing borrowers who are already part of an FHA insurance program will not be impacted by the pricing changes.
Acting FHA Commissioner Carol Galante says the agency’s premium increases will help to encourage the return of
private capital to the housing market, as well as protect FHA’s capital reserves.
FHA’s Mutual Mortgage Insurance Fund slipped below the congressionally mandated threshold in 2009 for the first time in the agency’s history (going back to 1934), and it has fallen farther and farther ever since. The FHA insures lenders against defaults on home mortgages, and this fund pays for any losses the agency may have to cover.
“These modest [premium] increases are one of several measures we are taking towards meeting the congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers,” Galante said.
FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.
HUD Secretary Shaun Donovan stood before a Senate subcommittee on Tuesday and presented testimony on deficiencies in the foreclosure process and the recently announced settlement between state and federal officials and the nation’s largest mortgage servicers.
Inevitably, questioning from lawmakers turned to FHA’s financial state and Donovan was asked directly if the federal mortgage insurer would be the next big bailout shouldered by taxpayers.
Donovan assured the senators that the agency was taking steps to avert such action. He said the new premium changes for FHA insured mortgages would allow the agency to increase revenues and contribute more than $1 billion to the depleted Mutual Mortgage Insurance Fund through fiscal year 2013.
From: http://ping.fm/iT1fV
Monday, February 27, 2012
Warren Buffett on CNBC: I'd Buy Up 'Millions' of Single-Family Homes If I Could - US Business News - CNBC
Warren Buffett on CNBC: I'd Buy Up 'Millions' of Single-Family Homes If I Could
Published: Monday, 27 Feb 2012 | 6:17 AM ET By: Alex Crippen
David Grogan/CNBC
--------------------------------------------------------------------------------
Warren Buffett says along with equities, single-family homes are a very attractive investment right now.
Appearing live on CNBC's Squawk Box, Buffett tells Becky Quick he'd buy up "millions" of single family homes if it were practical to do so.
If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks. He advises buyers to take out a 30-year mortgage and refinance if rates go down.
Here's the video!
http://ping.fm/unX0r
From: http://ping.fm/CyJe0
Published: Monday, 27 Feb 2012 | 6:17 AM ET By: Alex Crippen
David Grogan/CNBC
--------------------------------------------------------------------------------
Warren Buffett says along with equities, single-family homes are a very attractive investment right now.
Appearing live on CNBC's Squawk Box, Buffett tells Becky Quick he'd buy up "millions" of single family homes if it were practical to do so.
If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks. He advises buyers to take out a 30-year mortgage and refinance if rates go down.
Here's the video!
http://ping.fm/unX0r
From: http://ping.fm/CyJe0
Monday, February 13, 2012
National Mortgage Settlement: What You Need To Know
National Mortgage Settlement: What You Need To Know
by The KCM Crew on February 13, 2012
Last week, the Federal government and 49 state governments (Oklahoma being the exception) agreed to a $25 billion settlement regarding robo-signing and the challenges it created in the foreclosure process. We want to give a synopsis of the settlement and some perspective on what effect it will have on the housing market in 2012.
The Basics
The $25 billion in funds will be dispersed as follows:
$17 Billion National Commitment to Foreclosure Relief Efforts
The servicers collectively agree to commit a minimum of $17 billion directly to borrowers through foreclosure relief effort options, including principal reduction for qualifying borrowers, short sales, anti-blight measures, and enhanced homeowner transition programs.
$3 Billion National Commitment to Underwater Mortgage Refinancing Program
The servicers collectively agree to commit $3 billion to refinance “underwater” homes (when a homeowner owes more on a mortgage than a home’s current market value). To qualify, borrowers must be current on their mortgage payments on a mortgage owned by one of the five banks.
$5 Billion Payment to States and Federal Government
The servicers’ $4.25 billion payment to the states includes $1.5 billion for payments to borrowers who lost their home to foreclosure by one of the five servicers…$750 million of the state-federal payment will go to the federal government to resolve federal claims.
For further details on the settlement you can go to the official website.
Will the Settlement Have a Major Impact on a Housing Recovery?
Probably not. Though it is a step in the right direction, it may be too little too late. Here are some opinions on the settlement:
IHS Global Insights
“Like many previous plans to stem foreclosures, this agreement will help at the edges. The problem is too big for it to have a large impact, however…This agreement will help the housing market move ahead in 2012 in a small way. But it is hardly a game changer.”
HSH.com
“While there is no doubt some benefit to formalizing and organizing the process of foreclosure and better monitoring of the process, the fact is that the settlement changes little.”
Capital Economics
“While it is good that the settlement has been finalized and will offer principal reductions and refinancing schemes to borrowers, the bigger picture is that the settlement is not large enough to dramatically alter the outlook for the housing market or the wider economy.”
What about Foreclosures Moving Forward?
The settlement did bring clarity to one major issue – foreclosures. Banks have been holding off the foreclosure process on millions of homes over the last 18 months as they waited for the particulars of the settlement. They now know how they can move forward without penalty. The result will be an increase in foreclosures coming to the housing market.
Housing Wire
“It will speed up processing, and perhaps mean that foreclosures that have been waiting around since robo-signing came to light in 2010 will now gain legitimacy.”
Calculated Risk
“It does appear the number of completed foreclosures will increase following this settlement – especially in some judicial states with large backlogs – so there will probably be more REOs (lender Real Estate Owned) for sale.”
Bloomberg News
“The $25 billion settlement with banks over foreclosure abuses may result in a wave of home seizures…Lenders slowed the pace of foreclosures as they negotiated with attorneys general in all 50 states for more than a year over allegations of faulty and fraudulent paperwork used to repossess homes. With yesterday’s agreement, banks are likely to resume property seizures.”
Wells Fargo
“Mark Vitner, a senior economist at Wells Fargo Securities, said the settlement helps the housing market in the long run because it allows banks to proceed with millions of foreclosures that have been stalled. Many lenders have refrained from foreclosing on homes as they awaited the settlement.”
From: http://ping.fm/PNi7r
by The KCM Crew on February 13, 2012
Last week, the Federal government and 49 state governments (Oklahoma being the exception) agreed to a $25 billion settlement regarding robo-signing and the challenges it created in the foreclosure process. We want to give a synopsis of the settlement and some perspective on what effect it will have on the housing market in 2012.
The Basics
The $25 billion in funds will be dispersed as follows:
$17 Billion National Commitment to Foreclosure Relief Efforts
The servicers collectively agree to commit a minimum of $17 billion directly to borrowers through foreclosure relief effort options, including principal reduction for qualifying borrowers, short sales, anti-blight measures, and enhanced homeowner transition programs.
$3 Billion National Commitment to Underwater Mortgage Refinancing Program
The servicers collectively agree to commit $3 billion to refinance “underwater” homes (when a homeowner owes more on a mortgage than a home’s current market value). To qualify, borrowers must be current on their mortgage payments on a mortgage owned by one of the five banks.
$5 Billion Payment to States and Federal Government
The servicers’ $4.25 billion payment to the states includes $1.5 billion for payments to borrowers who lost their home to foreclosure by one of the five servicers…$750 million of the state-federal payment will go to the federal government to resolve federal claims.
For further details on the settlement you can go to the official website.
Will the Settlement Have a Major Impact on a Housing Recovery?
Probably not. Though it is a step in the right direction, it may be too little too late. Here are some opinions on the settlement:
IHS Global Insights
“Like many previous plans to stem foreclosures, this agreement will help at the edges. The problem is too big for it to have a large impact, however…This agreement will help the housing market move ahead in 2012 in a small way. But it is hardly a game changer.”
HSH.com
“While there is no doubt some benefit to formalizing and organizing the process of foreclosure and better monitoring of the process, the fact is that the settlement changes little.”
Capital Economics
“While it is good that the settlement has been finalized and will offer principal reductions and refinancing schemes to borrowers, the bigger picture is that the settlement is not large enough to dramatically alter the outlook for the housing market or the wider economy.”
What about Foreclosures Moving Forward?
The settlement did bring clarity to one major issue – foreclosures. Banks have been holding off the foreclosure process on millions of homes over the last 18 months as they waited for the particulars of the settlement. They now know how they can move forward without penalty. The result will be an increase in foreclosures coming to the housing market.
Housing Wire
“It will speed up processing, and perhaps mean that foreclosures that have been waiting around since robo-signing came to light in 2010 will now gain legitimacy.”
Calculated Risk
“It does appear the number of completed foreclosures will increase following this settlement – especially in some judicial states with large backlogs – so there will probably be more REOs (lender Real Estate Owned) for sale.”
Bloomberg News
“The $25 billion settlement with banks over foreclosure abuses may result in a wave of home seizures…Lenders slowed the pace of foreclosures as they negotiated with attorneys general in all 50 states for more than a year over allegations of faulty and fraudulent paperwork used to repossess homes. With yesterday’s agreement, banks are likely to resume property seizures.”
Wells Fargo
“Mark Vitner, a senior economist at Wells Fargo Securities, said the settlement helps the housing market in the long run because it allows banks to proceed with millions of foreclosures that have been stalled. Many lenders have refrained from foreclosing on homes as they awaited the settlement.”
From: http://ping.fm/PNi7r
Friday, February 3, 2012
Real Estate Professionals Feeling Brunt of Recession
Real Estate Professionals Feeling Brunt of Recession
02/02/2012 By: Krista Franks
The effects of the housing crisis are widespread, but nowhere do they hit home more than in the real estate community.
Eighty-eight percent of real estate professionals in a recent survey said they have lost money since 2008 or are living off significantly less income. Many are dipping into savings to make ends meet.
The survey of more than 800 real estate agents and brokers across the nation, 99 percent of whom claim real estate as their primary employment, was conducted in January by insurance company Entitle Direct.
More than half of real estate professionals – about 61 percent – said they feel the financial crisis has impacted them more than their friends and relatives who work in other industries.
“Our survey shows that both personally and professionally, they have had to make significant sacrifices to adapt to the new environment,” said Paula DeLaurentis, chief marketing officer of Entitle Direct.
With the majority of agents and brokers stating they have been “negatively impacted” by the crisis, 20 percent are working second jobs.
Nine percent have had to sell their homes, and another 9 percent lost their homes to foreclosure.
According to more than half of those surveyed, the difficult environment has made the real estate field a more competitive one; 60 percent of respondents said the field is “much more competitive.”
From: http://ping.fm/SPm9P
02/02/2012 By: Krista Franks
The effects of the housing crisis are widespread, but nowhere do they hit home more than in the real estate community.
Eighty-eight percent of real estate professionals in a recent survey said they have lost money since 2008 or are living off significantly less income. Many are dipping into savings to make ends meet.
The survey of more than 800 real estate agents and brokers across the nation, 99 percent of whom claim real estate as their primary employment, was conducted in January by insurance company Entitle Direct.
More than half of real estate professionals – about 61 percent – said they feel the financial crisis has impacted them more than their friends and relatives who work in other industries.
“Our survey shows that both personally and professionally, they have had to make significant sacrifices to adapt to the new environment,” said Paula DeLaurentis, chief marketing officer of Entitle Direct.
With the majority of agents and brokers stating they have been “negatively impacted” by the crisis, 20 percent are working second jobs.
Nine percent have had to sell their homes, and another 9 percent lost their homes to foreclosure.
According to more than half of those surveyed, the difficult environment has made the real estate field a more competitive one; 60 percent of respondents said the field is “much more competitive.”
From: http://ping.fm/SPm9P
Wednesday, January 25, 2012
Housing Crisis to End in 2012 as Banks Loosen Credit Standards
Housing Crisis to End in 2012 as Banks Loosen Credit Standards
01/24/2012 By: Krista Franks
Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
From: http://ping.fm/siTVM
01/24/2012 By: Krista Franks
Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
From: http://ping.fm/siTVM
Wednesday, January 4, 2012
FHA Waives Anti-Flipping Rule Through Year-End to Speed REO Sales
FHA Waives Anti-Flipping Rule Through Year-End to Speed REO Sales
01/03/2012 By: Carrie Bay
The Federal Housing Administration (FHA) is extending the temporary waiver of its property anti-flipping rule through the end of 2012.
FHA rules typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, the agency waived this regulation, and later extended the waiver through 2011.
The new extension announced late last week will permit buyers to continue to use FHA-insured financing to purchase HUD-owned and bank-owned properties, no matter how long the homeowner has held the title, through December 31, 2012.
FHA says the waiver will allow homes to resell as quickly as possible, helping to stabilize real estate prices and revitalize communities experiencing high foreclosure activity.
“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, FHA’s Acting Commissioner. “FHA remains a critical source of mortgage financing and
stability and we must make every effort that to promote recovery in every responsible way we can.”
According to FHA, the waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers.
Among these conditions, all transactions must be arms-length, with no link between the buying and selling parties.
In addition, in cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.
FHA’s property-flipping waiver is limited to forward mortgages, and does not apply to the agency’s Home Equity Conversion Mortgage (HECM) for purchase program.
Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.
The agency says its own research has found that in today’s market, acquiring, rehabilitating, and reselling foreclosed properties to prospective homeowners often takes less than 90 days.
As a result, FHA says prohibiting the use of its mortgage insurance for a subsequent resale within 90 days would adversely impact the willingness of sellers to consider offers from potential FHA buyers, namely because they would be required to cover holding costs and the risk of vandalism that comes with allowing a property to sit vacant over a 90-day period of time.
From: http://ping.fm/TwGBL
01/03/2012 By: Carrie Bay
The Federal Housing Administration (FHA) is extending the temporary waiver of its property anti-flipping rule through the end of 2012.
FHA rules typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, the agency waived this regulation, and later extended the waiver through 2011.
The new extension announced late last week will permit buyers to continue to use FHA-insured financing to purchase HUD-owned and bank-owned properties, no matter how long the homeowner has held the title, through December 31, 2012.
FHA says the waiver will allow homes to resell as quickly as possible, helping to stabilize real estate prices and revitalize communities experiencing high foreclosure activity.
“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, FHA’s Acting Commissioner. “FHA remains a critical source of mortgage financing and
stability and we must make every effort that to promote recovery in every responsible way we can.”
According to FHA, the waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers.
Among these conditions, all transactions must be arms-length, with no link between the buying and selling parties.
In addition, in cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.
FHA’s property-flipping waiver is limited to forward mortgages, and does not apply to the agency’s Home Equity Conversion Mortgage (HECM) for purchase program.
Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.
The agency says its own research has found that in today’s market, acquiring, rehabilitating, and reselling foreclosed properties to prospective homeowners often takes less than 90 days.
As a result, FHA says prohibiting the use of its mortgage insurance for a subsequent resale within 90 days would adversely impact the willingness of sellers to consider offers from potential FHA buyers, namely because they would be required to cover holding costs and the risk of vandalism that comes with allowing a property to sit vacant over a 90-day period of time.
From: http://ping.fm/TwGBL
Subscribe to:
Posts (Atom)
.JPG)