Don Haws Real Estate

Fast Facts

2011-06-13T12:39:00.000-07:00

Calif. median home price: April 2011: $293,570 (Source: C.A.R.)

Calif. highest median home price by region/county April 2011: Marin $726,060 (Source: C.A.R.)

Calif. lowest median home price by region/county April 2011: Merced $103,890 (Source: C.A.R.)

Calif. Pending Home Sales Index: March 2011: 128.7 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index: First quarter 2011: 53 percent (Source: C.A.R.)

Mortgage rates: Week ending 5/26/2011 30-yr. fixed: 4.60 fees/points: 0.7% 15-yr. fixed: 3.78 fees/points: 0.7% 1-yr. adjustable: 3.11% Fees/points: 0.5% (Source: Freddie Mac)

Weekly Fraud Alert: Federal Audits Accuse Lenders of Defrauding Taxpayers

2011-06-13T12:36:00.000-07:00

A set of confidential federal audits accuse the nation’s five largest mortgage companies – Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial – of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans, according to a story in the Huffington Post.

The audits accuse the lenders of violating the False Claims Act. The audits were completed between February and March, according to four officials briefed on the situation. The internal watchdog office at HUD referred its findings to the Department of Justice, which now must decide whether to file charges.

Source: Huffington Post

Real Estate Investors Set to Become More Active

2011-06-09T12:33:00.000-07:00

Real estate investors are expected to be more active in their local markets by a three-to-one margin compared with typical home buyers over the next 24 months, according to a survey released by Move, Inc.

The survey also suggests local markets may be heating up with renewed investor interest and activity, as nearly 70 percent of investors expect it will be easier to find properties in the near future. Real-estate investors (62%) told Move they’re paying more attention to home values in their local markets, and only 43.5 percent say it will be harder to find bargains. Those who are already in the market are starting to feel optimistic, as well as two out of five investors expecting it’ll be easier to sell their properties in the next six months.

An uptick may be in the offing; some investors (22%) are bullish and expect prices to rise in the next six to 12 months, while almost half expect prices to remain relatively the same. Nearly a quarter of real estate investors expect prices will fall in the next six to 12 months

It is set to get heated out there. The Move Investor survey also suggests investors may be positioned to compete vigorously with traditional first-time homebuyers for hot deals:

65.5 percent said they expect the problems first-time buyers are having in getting mortgages will make it easier for them to compete for properties.

18.5 percent say they’ll be cash-only buyers, a strategy that’s out of reach for most first-time buyers.

80.5 percent expect cash discounts from sellers.

Source: Move, Inc.

Home Prices Nationwide Increase in April Compared With March

2011-06-09T12:29:00.000-07:00

CoreLogic’s April Home Price Index increased on a month-to-month basis by 0.7 percent between March and April, marking the first such increase since the conclusion of the federal home buyer tax credit.

However, home prices nationwide, including distressed sales, declined by 7.5 percent in April 2011 compared with a year earlier. Excluding distressed sales, year-over-year prices declined 0.5 percent in April 2011 compared with April 2010 and by 1.6 percent in March 2011 compared with March 2010. Distressed sales include short sales and real estate owned (REO) transactions.

Source: CoreLogic

California Housing Starts Rise 2 Percent in April

2011-06-08T12:25:00.000-07:00

Total housing starts in California, as measured by the number of building permits issued, rose 2 percent in April, according to the California Building Industry Association.

According to statistics compiled by the Construction Industry Research Board (CIRB), builders pulled permits for 3,474 total housing units in April, an increase of 2 percent compared with the same month a year ago, but down 23 percent from March. Permits for single-family homes totaled 1,978, down 16 percent from April 2010, but up 10 percent from the previous month, while multifamily permits totaled 1,496, up 43 percent from a year ago, but down 45 percent from March.

Source: California Building Industry Association

Short Sale Soundoff: 2011 Short Sale Research Study

2011-06-07T12:22:00.000-07:00

CoreLogic recently announced the release of its 2011 Short Sale Research Study, “CoreLogic Analysis on Short Sale Trends, Risks, and Opportunities.” The study was designed to take a rigorously scientific, data-driven look at current trends in short sales and to identify inherent risks and opportunities associated with these transactions.

“Suspicious” short-sale transactions are those where a lender may have incurred unnecessary losses due to the short sale transaction quickly followed by a resale transaction for a substantially higher price where that higher price is not supported by an underlying increase in property value. The focus of the study was to quantify the potential losses associated with these suspicious short-sale transactions.

“This study reveals that short sales that show another sale transaction closing on the same day account for 16 percent of all suspicious short sales in the industry. These same-day resales are on average $50,000 greater than the lender agreed upon short sale price,” said Tim Grace, senior vice president of Product Management and Analytics at CoreLogic. “The study also validates an industry perception related to Limited Liability Company buyers in short-sale transactions: while they comprise only two percent of all buyers, they comprise more than 25 percent of buyers in suspicious short-sale transactions.”

Key findings from the study include:

It is estimated that lenders, servicers, and investors may incur potential losses in excess of $375 million in 2011 due to suspicious short sale transactions. This is up more than 20 percent from $310 million in estimated losses for 2010.

Rates of suspicious transactions are on the rise. In the first half of 2010, approximately one in every 52 (1.9 percent) short sale transactions appears to be suspicious, wherein the lender may have incurred unnecessary loss.

Some of the states with the largest short sale volume (California, Arizona, Colorado, and Florida) are now the same states with the highest rates of suspicious short-sale transactions. This convergence results in maximum negative impact on the industry.

Source: CoreLogic

Home Prices Decline 4.2 Percent in First Quarter

2011-06-07T12:18:00.000-07:00

The latest S&P/Case-Shiller Home Price Indices show that the U.S. National Home Price Index declined by 4.2 percent in the first quarter compared with the fourth quarter. Nationally, home prices are back to their mid-2002 levels.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.1 percent decline in the first quarter of 2011 compared with the first quarter of 2010. In March, the 10- and 20-City Composites posted annual rates of decline of 2.9 percent and 3.6 percent, respectively.

Source: S&P/Case-Shiller

Foreclosure Homes Account for 28 Percent of First Quarter 2011 Sales

2011-06-06T12:34:00.000-07:00

RealtyTrac® the leading online marketplace for foreclosure properties, released its Q1 2011 U.S. Foreclosure Sales Report™, which shows that sales of bank-owned homes and those in some stage of foreclosure accounted for 28 percent of all U.S. residential sales in the first quarter of 2011, up slightly from 27 percent of all sales in the fourth quarter of 2010 and the highest percentage of sales since the first quarter of 2010, when 29 percent of all sales were foreclosure sales.

The average sales price of properties in some stage of foreclosure — default, scheduled for auction or bank-owned (REO) — was $168,321, down 1.89 percent from the fourth quarter of 2010 and down 1.46 percent from the first quarter of 2010.

The average sales price of foreclosure properties was nearly 27 percent below the average sales price of properties not in foreclosure, unchanged from the 27 percent foreclosure discount in the fourth quarter and up slightly from the 26 percent foreclosure discount in the first quarter of 2010.

Third parties purchased a total of 158,434 U.S. bank-owned homes and those in some stage of foreclosure during the first quarter, a decrease of 16 percent from a revised fourth quarter total and down 36 percent from a revised Q1 2010 total. Bank-owned properties that sold in the first quarter had been repossessed by the bank an average of 176 days prior to the sale, while properties that sold in the earlier stages of foreclosure in the first quarter were in foreclosure an average of 228 days before selling.

“While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties sold to third parties,” said James J. Saccacio, chief executive officer of RealtyTrac. “While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery. At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks’ books, or in foreclosure.”

Foreclosure sales by type

A total of 107,143 bank-owned (REO) residential properties sold to third parties in the first quarter, down 11 percent from the previous quarter and down nearly 30 percent from the first quarter of 2010. REO sales accounted for nearly 19 percent of all sales in the first quarter, up from 17 percent of all sales in the previous quarter and up from 18 percent of all sales in the first quarter of 2010. REOs sold for an average discount of 35 percent, the same discount as in the previous quarter and up from an average discount of 33 percent in the first quarter of 2010.

A total of 51,291 pre-foreclosure properties — in default or scheduled for auction — sold to third parties in the first quarter, down nearly 26 percent from the previous quarter and down 45 percent from the first quarter of 2010. Pre-foreclosure sales accounted for nearly 9 percent of all sales, down from 10 percent of all sales in the fourth quarter of 2010 and down from 11 percent of all sales in the first quarter of 2010. Pre-foreclosure sales, which are often short sales, sold for an average discount of 9 percent, down from an average discount of 13 percent in the fourth quarter and an average discount of 14 percent in the first quarter of 2010.

Nevada, California, Arizona post highest percentage of foreclosure sales

Foreclosure sales accounted for 53 percent of all residential sales in Nevada during the first quarter, the highest percentage of any state but down from nearly 54 percent of all sales in the previous quarter and down from 59 percent of all sales in the first quarter of 2010. The average foreclosure sales price in Nevada during the first quarter was nearly 18 percent below the average sales price of homes not in foreclosure. Bank-owned properties that sold in the first quarter had been repossessed by the bank an average of 130 days prior to sale, while properties that sold in the earlier stages of foreclosure were in foreclosure an average of 135 days before selling.

California foreclosure sales accounted for 45 percent of all residential sales in the state during the first quarter, up from 43 percent of all sales in the fourth quarter but down from nearly 48 percent of all sales in the first quarter of 2010. The average foreclosure sales price in California was nearly 34 percent below the average sales price of homes not in foreclosure. California bank-owned properties that sold in the first quarter had been repossessed by the bank an average of 164 days prior to sale, while properties that sold in the earlier stages of foreclosure were in foreclosure an average of 156 days before selling.

Foreclosure sales also accounted for 45 percent of all residential sales in Arizona during the first quarter, down from 50 percent of all sales in the previous quarter and down from nearly 47 percent of all sales in the first quarter of 2010. Arizona bank-owned properties that sold in the first quarter had been repossessed by the bank an average of 129 days prior to the sale, while properties that sold in the earlier stages of foreclosure were in foreclosure an average of 176 days before selling.

Other states where foreclosure sales accounted for at least one-quarter of all sales were Idaho (33 percent), Florida (32 percent), Michigan (32 percent), Oregon (32 percent), Virginia (30 percent), Colorado (30 percent), Illinois (29 percent), Georgia (27 percent) and Ohio (25 percent).

Source: Realty Trac

More Than Half of U.S. Adults Believe Housing Recovery Unlikely Until 2014 or Later

2011-06-06T12:30:00.000-07:00

An ongoing survey conducted by Harris Interactive on behalf of Trulia and RealtyTrac finds that 54 percent of U.S. adults believe recovery in the housing market will not happen until 2014 or later. In a previous survey conducted six months ago, 42 percent of American adults said they thought the market would turn around by 2012 or had already turned around. Now, only 23 percent continue to think this will happen.

According to the survey, 45 percent of American adults say the government is not doing enough to prevent foreclosures, and only 17 percent say too much is being done. Sixteen percent say the government is doing the right amount to prevent foreclosures, and 22 percent are unsure.

More than half of U.S. renters (56 percent) and 47 percent of current homeowners are at least somewhat likely to purchase a foreclosed home, according to the survey. Along with having some concerns about hidden costs, a risky buying process and loss in home value, the majority of American adults expect to pay 38 percent less for a foreclosed home than a similar home that was not in foreclosure – not too far above the average discount of 36 percent on sales of bank-owned homes (REO) compared to sales of homes not in foreclosure reported in the RealtyTrac 2010 Foreclosure Sales Report.

Source: Trulia

California’s Median Home Price Increases, Home Sales Decrease in April

2011-06-03T12:26:00.000-07:00

California’s median home price for existing, single-family homes rose 2.5 percent in April to $293,570, while home sales declined 2.9 percent, compared with March, according to C.A.R.’s latest sales and price report.

In year-to-year comparisons, sales of existing, single-family detached homes rose 5 percent and the median price fell 4.4 percent.

C.A.R.’s Unsold Inventory Index stood at 5.4 months in April, up from 5.3 months in March, and up compared with April 2010’s 4.9-month supply. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

The median number of days it took to sell a single-family home in California was 53 days in April 2011, compared with 37.4 days for the same period a year ago.

Source: California Association of Realtors

Mortgage Loan Delinquency Rate Increases in First Quarter

2011-06-03T12:22:00.000-07:00

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 8.32 percent of all loans outstanding as of the end of the first quarter of 2011, an increase of seven basis points from the fourth quarter of 2010, and a decrease of 174 basis points from one year ago, according to the Mortgage Bankers Association’s National Delinquency Survey.

The percentage of loans on which foreclosure actions were started during the first quarter declined 1.08 percent, down 19 basis points from last quarter and 15 basis points from one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.

The percentage of loans in the foreclosure process at the end of the first quarter was 4.52 percent, down 12 basis points from the fourth quarter of 2010 and 11 basis points lower than one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 8.10 percent, a decrease of 50 basis points from last quarter, and a decrease of 144 basis points from the first quarter of last year.

The combined percentage of loans in foreclosure or at least one payment past due was 12.31 percent on a non-seasonally adjusted basis, a 129 basis point decline from 13.60 percent last quarter.

Source: Mortgage Bankers Association

April Pending Home Sales Drop After Two Monthly Gains

2011-06-02T09:22:00.000-07:00

Pending home sales fell in April with regional variations following increases in February and March, with unusual weather and economic softness adding to ongoing problems that are hobbling a recovery, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, dropped 11.6 percent to 81.9 in April from a downwardly revised 92.6 in March. The index is 26.5 percent below a cyclical peak of 111.5 in April 2010 when buyers were rushing to beat the contract deadline for the homebuyer tax credit.

The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said the dip in contracts may be due to temporary factors. “The pullback in contract signings is disappointing and implies a slower than expected market recovery in upcoming months,” he said. “The economy hit a soft patch in April from sharply rising oil prices, widespread severe weather with the heaviest precipitation in 20 years, and a sudden rise in unemployment claims.”

Yun notes the growth in retail sales slowed measurably in April, while sales at furniture and home furnishing stores declined sharply. “Nonetheless, the magnitude of the fall in pending home sales is larger than can be implied by broad economic factors, so we need to see if it’s just a one-month aberration.”

Yun said tight credit is the primary long-term factor holding back the market. “No doubt the continuing excessively tight mortgage underwriting process is making the housing market recovery unnecessarily slow,” he said. “Lenders and bank regulators need to be mindful of the historically low default rates among mortgage borrowers of the past two years. A robust economic and housing market recovery cannot occur as long as banks continue to hold onto huge cash reserves.”

“We simply have to get back to sound, common-sense lending standards to provide mortgages to creditworthy borrowers who are buying homes well within their means. Bank balance sheets show rising cash reserves and declining loan balances – it’s time to loosen the purse strings,” Yun added.

The PHSI in the Northeast rose 1.7 percent to 64.5 in April but is 33.4 percent below a year ago. In the Midwest the index fell 10.4 percent to 74.1 and is 30.2 percent below April 2010. Pending home sales in the South dropped 17.2 percent to an index of 91.3 in April and are 27.0 percent below a year ago. In the West the index declined 8.9 percent to 89.1 and is 16.9 percent below April 2010.

“Even with very favorable affordability conditions, job growth and a pent-up demand from abnormally low household formation during the past three years, the recovery will continue to be uneven and sluggish given the ongoing credit constraints,” Yun said.

Source: NAR

Fast Facts

2011-06-02T09:20:00.000-07:00

Calif. median home price: April 2011: $293,570 (Source: C.A.R.)

Calif. highest median home price by region/county April 2011: Marin $726,060 (Source: C.A.R.)

Calif. lowest median home price by region/county April 2011: Merced $103,890 (Source: C.A.R.)

Calif. Pending Home Sales Index: March 2011: 128.7, up 15.2 percent compared with February (Source: C.A.R.)

Calif. First-time Buyer Affordability Index: First quarter 2011: 53 percent (Source: C.A.R.)

Mortgage rates: Week ending 5/19/2011 30-yr. fixed: 4.61 fees/points: 0.7% 15-yr. fixed: 3.80 fees/points: 0.7% 1-yr. adjustable: 3.15% Fees/points: 0.6% (Source: Freddie Mac)

Winners of the Rental Economy

2011-06-01T11:00:00.000-07:00

Members of the Rent is Too Damn High Party beware! Residential rental prices are on the rise. Here's who wins in the new non-ownership society.

There are still many factors discouraging even the most savvy homebuyers from purchasing a home, but a new class of renters is expected to bring a bright spot to the troubled U.S. real estate market. Prices for rental apartments are expected to rise nationally – by approximately 4.5% in 2011 and up to another 3% in 2012, according to Rent.com.

During the housing boom between 2001 and 2005, prices for rentals fell by nearly 10% as easy credit offered by banks lured many newcomers to homeownership. Since the bust of the housing market, rents have more than made up those declines as more people now question the financial merits of homeownership or simply can't get approved for a mortgage. From 2006 to 2009, rental prices on average increased by more than 15%, according to Moody's Analytics economist Andreas Carbacho-Burgos. Nationwide, the average rent today is $1,360 a month.

Experts predict rents will continue rising.

Christina Aragon, director of strategy and consumer insight of Rent.com, says this is being driven by demographic changes coupled with an improving economy and ongoing foreclosure problems hampering the market for single-family homes. Much of the demand for rentals will likely come from younger people who tend to rent rather than buy. The economic recession pushed many jobless twenty- and early thirty-somethings to crash with friends and parents, but Aragon expects that the improving job market will get them to find their own place. What's more, the number of people aged 25 to 34 is forecast to grow 1.4% per year through 2013, helping drive demand further.

Paying more to the landlord might be bad news for renters, but it could signal that better days are ahead for the overall housing market. Here are a few winners of our burgeoning rental economy.

Builders and developers

Since the bust of the housing market, residential construction has dropped to record lows. But that is poised to change as builders and developers have already begun trying to cash in on higher demand for rental apartments.

Charles Brindell, chairman of the National Association of Home Builders' Multifamily Leadership Board, says he expects apartment construction to pick up to at least 160,000 units this year, mostly in urban areas along the East Coast. This would be significantly higher, given that construction since 2009 has totaled less than 90,000 a year – the lowest in 50 years.

Brindell, also CEO of a Texas-based firm that invests and develops apartment communities, says he's bullish because of the improving job prospects for younger workers. More than 60% of jobs created in 2010 went to workers between 20 to 24-years old – the prime age group for renters. Brindell's Mill Creek Residential Trust is planning to build 3,000 apartment units this year, mostly in the Northeast including the Boston area, Long Island, New York, and Virginia.

However, while a burst of activity in multi-family homes is certainly good news for the construction sector, it is by no means enough to return the homebuilders to their previous level of activity. The NAHB index that tracks builder confidence remains low at 16 -- it was as high as 72 in 2005.

Real estate investment trusts (REITs)

It's not that homeownership is dead, but people are certainly renting more and investors have picked up on the higher demand.

REITs, which invest in commercial properties from office buildings to rental apartments – have outperformed the S&P500 since the financial crisis. In 2010, investments in apartment complexes led gains in the overall REITs market with total returns at 47%. Returns for the overall REITs market was 28%, markedly higher than the S&P500 that saw returns of 15%.

Last month, real estate investment trusts Equity Residential, headed by real estate mogul Sam Zell, and AvalonBay Communities -- both among the nation's biggest apartment owners -- posted higher year-over-year revenue as the companies raised rents.

For Equity Residential, average rent rose 3.6% to $1,400 and occupancy rose to 95% from 94.6% the previous year on properties the company operated for a year or more. Revenue rose by 4%. And AvalonBay reported that revenues jumped 3.7% and average monthly rental rates ticked up slightly quarter over quarter from $1,873 to $1,879.

As of Monday, total returns for REITs were 8.73% (with about seven months to go), outperforming the Russell 2000, NASDAQ and S&P 500. Investments in apartment complexes continued contributing much of the gains.

Overall U.S. housing market

Given that many homeowners are still trying to clean up their messy finances, it might be hard to see how higher rents could benefit the overall U.S. housing market. In theory, at least, renting could become so expensive that it costs less to buy a house and make monthly mortgage payments.

In fact, that's happening already, even if it hasn't yet translated to a return to homeownership. In Moody Analytics' latest list of rent ratios for 54 U.S. metropolitan areas, 29 cities fell into the "better to buy" category. With many experts predicting that home prices have further to fall this year and with higher expectations for rentals, more cities could end up on the buy side of the buy-versus-rent calculator.

But much of that will likely depend on huge hurdles weighing on the housing market – namely, record foreclosure rates, high unemployment and tighter lending standards for new mortgages. Areas that continue to experience high foreclosure rates and widespread unemployment, such as Florida and Arizona, might find it more affordable to buy than rent. Yet renting will likely be king in more urban areas with more employment opportunities, such as New York and Seattle.

Source: Fortune Magazine

Fixed-Rate Mortgages Hit a New Year-To-Date Low

2011-05-31T12:15:00.000-07:00

Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®), which shows slower economic activity pushing fixed-rate mortgages slightly lower for the sixth consecutive week. The 30-year averaged 4.60 percent; the 15-year averaged 3.78 percent, marking new lows for 2011.

News Facts

30-year fixed-rate mortgage (FRM) averaged 4.60 percent with an average 0.7 point for the week ending May 26, 2011, down from last week when it averaged 4.61 percent. Last year at this time, the 30-year FRM averaged 4.84 percent.

15-year FRM this week averaged 3.78 percent with an average 0.7 point, down from last week when it averaged 3.80 percent. A year ago at this time, the 15-year FRM averaged 4.21 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.41 percent this week, with an average 0.5 point, down from last week when it averaged 3.48 percent. A year ago, the 5-year ARM averaged 3.97 percent.

1-year Treasury-indexed ARM averaged 3.11 percent this week with an average 0.5 point, down from last week when it averaged 3.15 percent. At this time last year, the 1-year ARM averaged 3.95 percent.

Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

"Fixed mortgage rates eased slightly for the sixth consecutive week amid reports of slower economic activity. The index of leading indicators fell 0.3 percent in April and represented the first monthly decline since June 2010. In addition, the Federal Reserve banks reported less business and manufacturing activity in Philadelphia, Chicago and Richmond.

"U.S. house prices indexes may be nearing a bottom soon. On a national basis, prices fell 0.3 percent between February and March, which was the smallest decline since November 2009, according to the Federal Housing Finance Agency. In addition, four of the nine Census Regions exhibited positive growth, compared to none in February. Separately, the Mortgage Bankers Association reported a further reduction in the serious delinquency rate (90 or more days plus foreclosures) in the first quarter, which stood at the lowest reading since the second quarter of 2009."

Source: FreddieMac

Construction of New Homes Plummeted in April

2011-05-30T11:50:00.000-07:00

Fixed mortgage rates fell this week to the lowest point of the year, offering incentive for homeowners to save money by refinancing their loans.

Freddie Mac said Thursday that the average rate on the 30-year loan fell to 4.61 percent. That's down from 4.63 percent and the lowest level since mid-December.

The average rate on the 15-year fixed mortgage, a popular refinance option, slipped to 3.80 percent from 3.82 percent. That marked the lowest point since late November.

Rates track the yield on the 10-year Treasury note, which fell to the lowest level of the year this week.

Low rates haven't been enough to jumpstart the weak housing market. Fewer people bought previously occupied homes in April, the National Association of Realtors said Thursday. Sales fell to a seasonally adjusted annual rate of 5.05 million units, far below the 6 million homes a year that economists consider a healthy market.

However, the number of borrowers looking to refinance is now at the highest level since the second week of December, according to the Mortgage Bankers Association. Refinance activity has increased 33 percent over the last five weeks, mirroring the steady decline in rates.

Despite the gains, refinancing is only at half the level it reached in the fall of last year when mortgage rates fell to record lows. The rate on the 30-year home loan hit a four-decade low of 4.17 percent in November. The 15-year mortgage rate reached 3.57 percent that same month, the lowest level on records dating back to 1991.

"We're not seeing a (refinancing) boom by any means," said Pava Leyrer, president of Heritage National Mortgage in Michigan.

She said many borrowers refinanced when rates were lower last year. Others don't have enough equity in their homes because values have fallen too much or their credit isn't polished enough for them to qualify.

And those who may shave off a percentage point or more from their mortgage rate face higher closing costs this year because of a recent fee increases for appraisals, title insurance and other costs. That could offset any savings from an interest rate reduction.

"If it's purely a rate decision, the difference needs to be one and a half percentage points," said Ritch Workman, co-owner of Workman Mortgage in Melbourne, Fla.

Workman has notice an uptick in applications for purchase mortgages. Would-be buyers are taking advantage of the combination of low rates and declining home prices.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage rose to 3.48 percent from 3.41 percent. The five-year adjustable-rate loan hit 3.25 percent last month, the lowest rate on records dating back to January 2005.

The average rate on a one-year adjustable-rate loan also increased to 3.15 percent from 3.11 percent, the lowest level for the rate in the last year.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year fixed loan and 15-year fixed loan in Freddie Mac's survey was 0.7 point. The average fee for the five-year ARM and the 1-year ARM was 0.6 point.

Source: MercuryNews.com

Foreclosures Taking Longer

2011-05-30T11:45:00.000-07:00

Big banks are taking longer to push borrowers into foreclosure and through each stage of the process amid increased scrutiny.

Increased scrutiny of how lenders foreclose on Americans has dragged the repossession process out to unprecedented lengths, driving down the pace at which banks are taking back homes.

Big banks are taking longer not only to push borrowers into foreclosure, but also to move homeowners through each stage of the process than in previous years, according to a report by Irvine-based RealtyTrac.

The extended timelines have meant a reprieve for troubled borrowers. But economists said the delays could hold back a national housing rebound if foreclosures remain a significant part of the market for years to come.

In April, U.S. foreclosure activity fell for the seventh month in a row on a year-over-year basis to the lowest point in more than three years, RealtyTrac said. The sharp April drop was the result of the foreclosure-processing slowdown and not an indication of a housing rebound lifting people out of default, experts said.

"The banks have had to slow down and get more lawyers involved because of all of the fuss over the robo-signing scandal," said Christopher Thornberg, principal of Beacon Economics, referring to the revelations last year that banks foreclosed on properties using faulty paperwork.

Foreclosure filings— notices of default, scheduled auctions and bank repossessions — dropped 9% in April from March and plunged 34% from April 2010 as 219,258 U.S. properties received new filings in April. The number of bank repossessions fell 5% from the prior month and 25% from April 2010, with lenders taking back 69,532 U.S. properties. In all, 239,795 foreclosure filings were made, with some properties receiving multiple filings.

In California, 55,899 properties received new foreclosure filings, down 7% from the previous month and off 20% from a year earlier. But a 22% jump in home seizures compared with March contributed to keeping the state's foreclosure rate the third highest in the nation, with 13,741 homes seized. That was still down 19% from April 2010.

One in every 240 California homes received a foreclosure filing in April, RealtyTrac said.

Houston Smith, a Hermosa Beach real estate agent who markets foreclosures for big banks, said that as a result of the paperwork fiasco, he has seen the pace of bank-owned properties released into the market slow significantly.
"[Lenders] are under increased pressure and encouragement to make every effort to do a loan modification, or a short sale, and that has been a dramatic change," Smith said. "It does not mean that there are fewer properties in trouble."

New laws have helped drag out the process in many states. Consumer advocates and attorneys also are increasingly challenging bank actions in courts and are ramping up their lobbying efforts to push for more mortgage workouts for borrowers in trouble.

"In the end it is really a sideshow," said Alys Cohen, a staff attorney for the National Consumer Law Center. "The paperwork needs to be proper, but the real question is whether homeowners will get loan modifications when they qualify for them."

Nationally, foreclosures completed in the first quarter of 2011 took an average of 400 days from start to finish, according to RealtyTrac, an increase from 340 days during the same period in 2010 and more than double the average of 151 days it took to foreclose during the same period in 2007.

The process has even slowed in California, where foreclosures remain largely outside of the court system. In California, the average foreclosure took 330 days in the first quarter, up from 262 days during the same period last year and more than double the average of 134 days during the period in 2007.
In states where a court order is needed to repossess a home, foreclosures are taking even longer.

The average timeframe from start to finish in New Jersey and New York was more than 900 days in the first quarter, more than three times the average in the first quarter of 2007 for both states, according to RealtyTrac.

In Florida, the average foreclosure took 619 days in the first quarter, up from 470 a year earlier and nearly four times the average of 169 during the same period in 2007.

Federal regulators last month ordered the nation's biggest banks to overhaul their procedures and compensate borrowers injured financially by wrongdoing or negligence. A wider-ranging investigation conducted by a coalition of state attorneys general and other federal agencies is ongoing.

Several states have sought to put their own limitations on how quickly banks can take back homes. Homeowners also appear to be increasingly challenging foreclosures, particularly in states where a court order is required.

States with a judicial foreclosure process registered a 3% decrease in overall foreclosure activity from March, but a 47% plunge from April 2010. States with a non-judicial foreclosure process posted an 11% month-over-month decrease and a 26% year-over-year decrease.

Some economists are concerned that a slower foreclosure process will mean that the housing recovery will take longer to get going. Foreclosures tend to sell at a discount, and, when making up the bulk of sales in a market, give the perception that prices are falling. In addition, residential builders are struggling to compete with foreclosed homes. Home building has typically been an important boost to an economy exiting recession.

"Clearing this stuff out and getting this stuff over with is just essential, and so in the long run the faster these things can be resolved now, the better," said Richard Green, director of USC's Lusk Center for Real Estate. "That is the only point at which the market can resume normalcy."

But Kurt Eggert, a professor at Chapman University School of Law, said that much of the slowdown in California and other states has been intentional by banks that do not want to see another steep drop in prices. Fewer foreclosures and more mortgage modifications would be a good thing, he said.
"If servicers foreclosed as quickly as they could, and they dumped all the properties on the market, you could get a downward spiral," Eggert said. "As that happens, more and more borrowers go underwater and you could have a vicious cycle — just like the housing boom was fed by the perception that prices always go up, you could have a housing slump that is fed by the perception that prices always go down."

Source: Los Angeles Times

Talking Points

2011-05-27T15:46:00.000-07:00

Occasionally, homeowners hoping to close a deal agree to purchase home warranties to give the home buyer peace of mind. However, prospective homeowners should do their homework to make sure the policies will actually help.

Typical home warranties cover the major mechanicals and appliances in a home for one year after the sale. Warranties range in price from $350 to $800. If purchased from reputable companies, home warranties can help homeowners deal with broken appliances, malfunctioning air conditioning, and other problems.

The policies usually require homeowners to contact the service company when something breaks. The company then sends out a repair person who provides an evaluation for a set fee, usually about $65. Once a professional has determined what the problem is, the warranty company pays for the broken items to be repaired or replaced.

Source: California Association of Realtors

Why are Short Sales So Long and Drawn Out?

2011-05-27T15:43:00.000-07:00

It's understandable that lenders would want to squeeze as much money as possible from a deal in which a home is being sold for less than what is owed on it, but turning short sales into an ordeal is discouraging potential buyers.

The housing market may be on the ropes, but Curt Beck was ready to come out swinging. He offered $385,000 for a three-bedroom house in Acton. The seller was happy with the terms. But it was unclear if the mortgage holders would allow the deal to go through.

Beck, 56, is typical of many would-be home buyers trying to navigate what's known as a short sale — when a property is sold for less than the outstanding mortgage (or mortgages).

Real estate experts say this can be a particularly challenging process, complicated by lenders trying to squeeze as much money as possible from a transaction, even though a failed deal often results in the property being foreclosed on.

The situation has grown so problematic that the California Assn. of Realtors recently ran ads in newspapers statewide saying more needs to be done to assist homeowners on the verge of foreclosure by expediting the short-sale process.

"Horror stories abound from potential home buyers and Realtors forced to wait 90 or more days for a response to a purchase offer or being required to fax short-sale applications or other paperwork as many as 50 times," said Beth Peerce, president of the organization.

"These delays discourage potential home buyers from considering a short-sale purchase and undermine the process for those who short sales are intended to benefit — the hundreds of thousands of families facing foreclosure," she said.
April home sales in Southern California fell 9.2% from a year earlier, according to market researcher DataQuick. The figure was 25.4% below the month's average since record-keeping began in 1988. The median price paid for a home in the region fell 1.8% from a year earlier to $280,000.

Meanwhile, 21% of homes in the Los Angeles metropolitan area are now underwater, according to the real-estate website Zillow.com. That's another way of saying their mortgages are greater than what the homes are currently worth.

Lenders aren't acting nefariously in most short sales. They're going to take a bath no matter what by allowing a home to be sold for less than is owed for the property. It's understandable they'd want to minimize their loss as much as possible.

But Beck's experience illustrates how a home buyer may feel he's getting the runaround when entering into a short sale.

Beck, of Santa Clarita, had been eyeing the Acton house for months. According to real-estate listings, the house had been offered for $479,000 in October and then pulled from the market a few weeks later.

It was listed again in February for $399,000. In March, the asking price was cut to $374,000.

Wendy Ann Moore, the agent representing the property owner, said no offers were received at the higher prices. But when the house was listed for $374,000, a motivated buyer came forward.

The three lenders holding about $500,000 in loans on the property — GMAC Mortgage, Bank of America and Specialized Loan Servicing — each agreed to the terms of the short sale.

But Moore said the deal fell apart during the escrow process after the buyer lost his job. It was at this point that Beck stepped in.

He told me that as soon as the house returned to the market, he offered to pay the full list price with no contingencies. In other words, he was ready to buy the house as-is.

"My wife and I liked everything about it," Beck said. "We liked the house. We liked the land. We liked the neighborhood."

A few days after making his offer, though, the primary mortgage lender, GMAC, countered that now it wanted $400,000 for the house.

Beck wasn't pleased.

"If they wanted $400,000, they should have told the owner to list it at $400,000," he said. "But it was still listed at $374,000."After much consternation, Beck reluctantly raised his offer to $385,000. But he felt as if he was being taken advantage of.

"It just seems like they're trying to get more money out of us because they've looked at our credit file and think they can get it," Beck said.

Moore, the real estate agent, said she's been down this road more times than she can count.

"It's very, very frustrating," she said. "It just doesn't seem like banks want to work with buyers and sellers."

Like I say, I get that lenders want to cut their losses in a short sale. But considering that banks filed 68,239 notices of default on California residents during the first quarter, according to DataQuick, you'd think lenders would be eager to avoid repossessing additional properties.

In Beck's case, there's a happy ending. He said GMAC told him the other day that it's willing to accept the $385,000. The other mortgage holders will probably follow GMAC's lead.

But thousands of other home buyers are still struggling to get short sales approved.

Colleen Badagliacco, who heads the California Assn. of Realtors' distressed properties task force, said many lenders don't get serious about short sales until a property owner starts missing mortgage payments. By that time, however, foreclosure proceedings can be imminent.

"This is crazy," Badagliacco said. "You would think they'd work to sell the property before people start missing payments."

The housing crunch won't last forever. We shouldn't be going out of our way to prolong the pain.

Source: Los Angeles Times

Home Sellers are Financing Buyers with Poor Credit

2011-05-26T15:17:00.000-07:00

Sue and Douglas Reed knew no bank would give them a mortgage - not with a bankruptcy and two foreclosures fresh in their credit history.

They turned to Hilarie Walters, whose childhood home on 15 acres in Marshall, Mich., had been on the market since 2009. The unemployed single mother of twins agreed in December to sell the property to the Reeds for $105,000. She also consented to a risky payment plan that in effect makes her the couple's mortgage lender.

Financing provided by home sellers, popular in the 1980s when mortgage rates reached 18 percent, is making a comeback in markets such as Michigan that have been hit hard by foreclosures and where tightening lending standards and years of economic distress have drained the pool of creditworthy buyers. For a small but growing number of people, it's the only way to get a deal done.

"This is the American dream, and we're going for it no matter what," said Sue Reed, 56, who sells snacks from a trailer at estate auctions and going-out-of-business sales. "We'll either make it or it will break us."

Michigan, where unemployment is 10.3 percent, leads the nation with about 1,600 home listings advertising seller financing, according to Trulia Inc., a San Francisco real estate information company. It is followed by Florida, Ohio, California, Wisconsin, Minnesota and Texas.

Last year, 52,991 U.S. homes were purchased with various forms of owner financing, up 56 percent from 2008, said Realtors Property Resource LLC, a subsidiary of the National Association of Realtors, citing data collected from county record offices. Such deals accounted for 1.5 percent of all transactions in 2010.

"Anytime the market is in this much trouble, people have to find ways to get it to function," said Dennis Capozza, a professor of finance at the University of Michigan in Ann Arbor. Capozza has direct experience with seller financing: He purchased a friend's foreclosed home a couple years ago and allowed him to buy it back in installments.

Home sales, weighed down by a 9 percent national jobless rate and tight credit, have languished even as 30-year mortgage rates remain below 5 percent. Loans insured by the Federal Housing Administration carried an average FICO score of 703 in March, compared with 629 two years earlier, highlighting that lenders are requiring stronger credit histories. FICO scores range from 300, the least creditworthy, to 850 for the best borrowers.

"The market is locked up because there's no financing," said Gordon Albrecht, executive vice president of FCI Lender Services Inc., an Anaheim Hills firm that oversees mortgages for private investors. "This is moving houses."

Source: San Francisco Chronicle

Many Homeowners are Refinancing Their Mortgages to Shorter Terms

2011-05-25T22:36:00.000-07:00

Borrowers who can afford the higher payments, and who meet lenders' tougher requirements, often opt to replace their 30-year mortgages with shorter-term loans at near-record low rates.

Want to refinance into a seven-year fixed-rate mortgage at 2.99%? Or how about 10 or 15 years fixed in the mid-3% range?

These may sound suspiciously like teaser quotes with tricks in the fine print, but they are in fact signs of an important shift underway among American homeowners: Not only have they been refinancing at a robust pace in recent weeks, but they're dialing down on the remaining number of years they plan to pay on their mortgages.

Freddie Mac chief economist Frank Nothaft calls the shift to shorter terms "a very strong trend." In his company's latest quarterly survey of refinancers, more than 1 in 3 borrowers who ditched their 30-year fixed-rate loans opted to replace them with 15-year or 20-year mortgages at near-record low rates.

Among community banks and lending institutions that originate mortgages to retain for their own portfolios, the trend is toward even shorter maturities. Jeff Lipes, president of the Connecticut Mortgage Bankers Assn. and senior vice president of Family Choice Mortgage near Hartford, Conn., says some institutions are dangling fixed rates just under 3% to refinancers who want to compress their terms to as little as seven years and are willing to set up automatic payment withdrawal accounts.

"It can make a lot of sense if you can do it," he said — especially for baby boomers in their 50s who want to be mortgage-free by the time they hit retirement.

Obviously you'd need to have the income or financial reserves sufficient to pay the extra money each month. Plus you'd need to be able to qualify for a refi in the first place under today's toughened underwriting standards.

Paul Skeens, chief executive of Colonial Mortgage in Waldorf, Md., said shifting to shorter-term debt "is a great move" — he's refinancing his own home to a 10-year term right now — "but do you have the appraisal to support it? Do you have the credit scores you need?"

With short sales and bank foreclosures still a heavy drag on market values, getting an appraisal high enough for a refi "can be almost impossible in some areas," Skeens said.

For some low-cost refi programs, lenders want to see at least 25% equity in the house. Higher FICO credit score requirements by Fannie Mae and Freddie Mac are another big impediment; both companies reserve their best rates for borrowers with FICO scores of 740 and higher.

The shift to shorter-term loans is part of an even broader trend among consumers emerging from the scary moments of the recession and global financial crisis: de-leveraging, reducing long-term household debt burdens and getting out of adjustable-rate loans. According to Freddie Mac data, "cash-out" refinancings, where homeowners increase their mortgage debt by more than 5%, accounted for just 25% of refinancings in the latest quarter, compared with 80% and higher during the boom years.

In the first quarter of 2011, 84% of homeowners who refinanced hybrid adjustable-rate mortgages switched to fixed-rate replacement loans ranging from 15-year to 30-year terms, Nothaft says. Part of the reason, he believes, is that today's rock-bottom fixed rates — with conventional 15-year rates in the upper 3% range and 30-year loans averaging just above 4.6% — are exceptionally attractive.

Plus, Nothaft said, "there's a lot of chatter about the [Federal Reserve] pushing rates up" in the coming months, so many homeowners are checking out their options on locking in rates that may well be the best they will ever see. Freddie Mac's own forecasts put 30-year fixed rates at 5.25% by the final quarter of this year.

The takeaway here: Even if you've already got a low mortgage rate, consider going shorter term, lowering your rate even further and owning your home debt-free sooner.

Source: LA Times

Financing Foreclosed Homes

2011-05-24T20:39:00.000-07:00

Foreclosure properties, especially those with the water and power turned off, may not qualify for standard financing, but would-be owner-occupants may qualify for a federally insured 203(k) loan.

Making sense of the story

Would-be owner-occupants who do not have enough money to purchase a foreclosure home using cash, may qualify for the federally insured 203(k) loan, which allows borrowers to roll projected rehab costs into the loan.

According to one real estate expert, most foreclosure properties are sold as is, and, oftentimes, heat, plumbing, and electric are turned off, making it unlikely a lender will lend money on the home.

To qualify for a 203(k) loan, buyers generally hire an independent consultant hired by the Federal Housing Administration to review contractor cost estimates and architectural plans for things like whether the work will bring the property up to minimum standards, while not going overboard on improvements.

Buyers should be aware that not all foreclosure properties are eligible. For instance, a partially built house that has never had a certificate of occupancy requires a construction loan of the kind that a commercial developer would use.

The interest rate on a 203(k) loan is approximately a quarter of a percentage point higher than on a standard FHA-insured loan, and a buyer also can expect to pay 1 or 2 points.

Also, as with other FHA-backed loans, down payments may be as low as 3.5 percent, and loan limits apply. Currently, most FHA loans are capped at $729,750.

Source: New York Times

Fixed-Rate Mortgages Hit a New Year-To-Date Low

2011-05-23T14:46:00.000-07:00

Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®), which shows fixed-rate mortgages declining for the fifth consecutive week amid mixed economic and housing data. The 30-year fixed averaged 4.61 percent and the 15-year, 3.80 percent.

News Facts

30-year fixed-rate mortgage (FRM) averaged 4.61 percent with an average 0.7 point for the week ending May 19, 2011, down from last week when it averaged 4.63 percent. Last year at this time, the 30-year FRM averaged 4.84 percent.

15-year FRM this week averaged 3.80 percent with an average 0.7 point, down from last week when it averaged 3.82 percent. A year ago at this time, the 15-year FRM averaged 4.24 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.48 percent this week, with an average 0.6 point, up from last week when it averaged 3.41 percent. A year ago, the 5-year ARM averaged 3.91 percent.

1-year Treasury-indexed ARM averaged 3.15 percent this week with an average 0.6 point, up from last week when it averaged 3.11 percent. At this time last year, the 1-year ARM averaged 4.00 percent.

Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

"Fixed mortgage rates inched down for the fifth consecutive week as financial markets try to ascertain the current strength of the economy. Industrial production was unchanged in April owing to disruptions in automobile parts supplies due to the earthquake and tsunami in Japan. Netting out automobiles and gasoline, retail sales rose 0.2 percent in April, which was less than a third of the increase in March and the weakest growth since December 2010. However, consumer confidence, as measured by the University of Michigan, rose above the market consensus in May to the highest reading since February.

"Data on the housing market was also mixed. New construction on single-family homes fell 5.1 percent in April, with the largest declines occurring in the Midwest and South regions where tornados hit the hardest. Homebuilder confidence remained unchanged in May and near its January 2009 historical low, according to the NAHB/Wells Fargo Housing Market Index. However, conventional mortgages applications rose for the past five straight weeks ending May 13th, buoyed by lower mortgage rates and stronger refinancing activity."

Source: FreddieMac

Existing Home Sales Rise in Most States in First Quarter

2011-05-20T15:12:00.001-07:00

Existing-home sales rose 8.3 percent to a seasonally adjusted annual rate of 5.14 million units in the first quarter, an increase from 4.75 million in the fourth quarter, but are 0.8 percent below the 5.18 million recorded during the same period in 2010, NAR reported.

The national median existing single-family home price was $158,700 in the first quarter, down 4.6 percent from $166,400 in the first quarter of 2010. Distressed homes, typically sold at a discount of about 20 percent, accounted for 39 percent of first quarter sales, up from 36 percent a year earlier.

Investors accounted for 21 percent of first-quarter transactions, up from 18 percent a year ago, while first-time buyers purchased 32 percent of homes, down from 42 percent in the first quarter of 2010 when a tax credit was in place. Repeat buyers accounted for a 47 percent market share in the first quarter, up from 40 percent a year earlier.

Regionally, existing-home sales in the West, which includes California, rose 13.5 percent in the first quarter to a level of 1.29 million and are 2.1 percent above a year ago. The median existing single-family home price in the West declined 4.7 percent to $197,400 in the first quarter compared with the first quarter of 2010.

Source: National Association of Realtors

Fast Facts

2011-05-20T15:12:00.000-07:00

Calif. median home price: March 2011: $286,010 (Source: C.A.R.)

Calif. highest median home price by region/county March 2011: Marin $826,700 (Source: C.A.R.)

Calif. lowest median home price by region/county March 2011: Lake County $94,170 (Source: C.A.R.)

Calif. Pending Home Sales Index: March 2011: 128.7 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index: Fourth quarter 2010: 69 percent (Source: C.A.R.)

Mortgage rates: Week ending 5/5/2011 30-yr. fixed: 4.71 fees/points: 0.7% 15-yr. fixed: 3.89 fees/points: 0.7% 1-yr. adjustable: 3.14% Fees/points: 0.5% (Source: Freddie Mac)

April Existing-Home Sales Ease

2011-05-19T20:59:00.000-07:00

Existing-home sales slipped in April, although the market has managed six gains in the past nine months, according to the National Association of Realtors®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, eased 0.8 percent to a seasonally adjusted annual rate of 5.05 million in April from a downwardly revised 5.09 million in March, and are 12.9 percent below a 5.80 million pace in April 2010; sales surged in April and May of 2010 in response to the home buyer tax credit.

Lawrence Yun, NAR chief economist, said the market is underperforming. “Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger,” he said. “Although existing-home sales are expected to trend up unevenly through next year, unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations.”

A parallel NAR practitioner survey shows 11 percent of Realtors® report a contract was cancelled in April from an appraisal coming in below the price negotiated between a buyer and seller, 10 percent had a contract delayed, and 14 percent said a contract was renegotiated to a lower sales price as a result of a low appraisal.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84 percent in April, unchanged from March; the rate was 5.10 percent in April 2010.

“Although sales are clearly up from the cyclical lows of last summer, home sales are being held back 15 to 20 percent due to the very restrictive loan underwriting standards,” Yun said.

All-cash transactions stood at 31 percent in April, down from a record level of 35 percent in March; they were 26 percent in March 2010; investors account for the bulk of cash purchases.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the lending community needs to return to sensible standards. “We want to ensure that qualified buyers will be able to own their property on a sustained basis from a sound credit evaluation, but banks needn’t be so stingy as to only lend to those with the highest credit scores,” he said.

“Very high shares of cash purchases, and high credit score requirements, have led to historically low default rates among home buyers over the past two years. This trend implies a gulf is opening between those who can and cannot have access to the American dream of home ownership,” Phipps said. “At the same time, existing guidelines from Freddie Mac and Fannie Mae must be fully implemented so all appraisals are done by valuators with local expertise.”

The national median existing-home price for all housing types was $163,700 in April, which is 5.0 percent below April 2010. Distressed homes – typically sold at a discount of about 20 percent – accounted for 37 percent of sales in April, down from 40 percent in March; they were 33 percent in April 2010.

“Home values, despite month-to-month volatility, have been remarkably stable in the range of $160,000 to $170,000 for the past three years,” Yun said. “Stable home prices in turn will steadily lower loan default rates, including strategic defaults.”

Total housing inventory at the end of April increased 9.9 percent to 3.87 million existing homes available for sale, which represents a 9.2-month supply at the current sales pace, up from an 8.3-month supply in March.

First-time buyers purchased 36 percent of homes in April, up from 33 percent in March; they were 49 percent in April 2010 when the tax credit was in place. Investors slipped to 20 percent in April from 22 percent of purchase activity in March; they were 15 percent in April 2010. The balance of sales was to repeat buyers, which were 44 percent in April.

Phipps added that proposals and regulations are being considered in Washington that could further constrain the housing market. “One of the most damaging proposals would effectively raise downpayment requirements to 20 percent, which would slam the brakes on the housing market,” he said. “What we need to do is simply return to the sound standards that were in place before the introduction of risky mortgage products.”

“Our data shows only one out of five first-time buyers needing a mortgage could afford a 20 percent downpayment, and without first-time buyers the trade-up market would stall with very negative consequences for housing and the overall economy,” Phipps said. “Ironically, low downpayment FHA and VA loans, which are so critical to this segment, have performed well and never needed a taxpayer bailout because those borrowers stayed well within their budgets.” NAR consumer survey data shows 56 percent of entry-level buyers in the past year financed with an FHA loan.

Single-family home sales slipped 0.5 percent to a seasonally adjusted annual rate of 4.42 million in April from 4.44 million in March, and are 12.6 percent below the 5.06 million pace in April 2010. The median existing single-family home price was $163,200 in April, which is 5.4 percent below a year ago.

Existing condominium and co-op sales fell 3.1 percent to a seasonally adjusted annual rate of 630,000 in April from 650,000 in March, and are 15.0 percent below the 741,000-unit level one year ago. The median existing condominium price was $167,300 in April, down 2.3 percent from April 2010.

Existing-home sales in the West slipped 1.6 percent to an annual level of 1.24 million in April and are 0.8 percent below April 2010. The median price in the West was $203,400, down 6.1 percent from a year ago.

Source: NAR

Home Values Decline at Fastest Pace in Q1 Since 2008

2011-05-18T21:41:00.000-07:00

Home values nationwide declined at a faster pace in the first quarter of 2011 than in any quarter since 2008, when the housing market experienced its worst performance, according to Zillow's first quarter Home Value Index. The Index decreased 3 percent in the first quarter compared with the fourth quarter of 2010, and declined 8.2 percent year-over-year to $169,600. Home values have declined 29.5 percent since they peaked in June 2006.

Negative equity reached a new high mark with 28.4 percent of single-family homeowners with mortgages underwater at the end of the first quarter, up from 27 percent in the fourth quarter of 2010.

Foreclosures also increased in the first quarter, as banks unfroze moratoriums and allowed foreclosures to resume. Foreclosures had fallen in late 2010 due to the slew of moratoriums brought about by the "robo-signing" controversy. In March, one out of every 1,000 homes in the country was lost to foreclosure.

Source: Zillow

Reported Incidents of Mortgage Fraud Decrease in 2010

2011-05-17T22:10:00.000-07:00

Reported incidents of subscriber-verified mortgage fraud and misrepresentation by professionals in the mortgage industry decreased 41 percent in 2010 compared with 2009, according to a new report by the LexisNexis Mortgage Asset Research Institute. This is the first time in several years there was a reported decrease in mortgage fraud. California ranked number three for reported mortgage fraud and misrepresentation based on the Mortgage Asset Research Institute Fraud Index.

“The data suggests that in 2010 there was a decrease in the number of verified incidents of fraud reported to the LexisNexis Mortgage Asset Research Institute. While this is a noticeable decrease, we believe it can be attributed to a variety of factors, including the post-economic crisis mortgage fraud landscape,” said Jennifer Butts, LexisNexis Mortgage Asset Research Institute manager of Data Processing and co-author of the report. “We are seeing the convergence of several factors, including decreasing loan origination volumes and fewer resources available to investigate and report incidents of fraud as discovered.”

Source: LexisNexis Mortgage Asset Research Institute

30-Year Fixed-Rate Mortgage Drops to 4.63 Percent

2011-05-16T14:40:00.000-07:00

Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®), which shows mortgage rates at their lowest level for 2011 after declining for the fourth consecutive week. The 30-year fixed-rate averaged 4.63 percent, and the 15-year fixed averaged 3.82 percent.

News Facts

30-year fixed-rate mortgage (FRM) averaged 4.63 percent with an average 0.7 point for the week ending May 12, 2011, down from last week when it averaged 4.71 percent. Last year at this time, the 30-year FRM averaged 4.93 percent.

15-year FRM this week averaged 3.82 percent with an average 0.7 point, down from last week when it averaged 3.89 percent. A year ago at this time, the 15-year FRM averaged 4.30 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.41 percent this week, with an average 0.6 point, down from last week when it averaged 3.47 percent. A year ago, the 5-year ARM averaged 3.95 percent.

1-year Treasury-indexed ARM averaged 3.11 percent this week with an average 0.5 point, down from last week when it averaged 3.14 percent. At this time last year, the 1-year ARM averaged 4.02 percent.

Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

"Mortgage rates continued to decline this week following a mixed employment report. The economy added a healthy number of 244,000 workers in April, the most in 11 months, and the figures for March and February were revised up by 56,000 more jobs. However, the unemployment rate rose to 9.0 percent from 8.8 percent in March and was the highest reading since January. In addition, wages grew by only 0.1 percent, which was below the market consensus forecast.

"Distressed homes are suppressing house prices in many local areas. The National Association of Realtors® reported these homes sold at a 20 percent discount in the first quarter of this year and accounted for 39 percent of all existing home sales, up from 36 percent in the first quarter of 2010. As a result, only 22 percent of metropolitan areas exhibited higher median sales prices from a year ago, compared to 51 percent in the fourth quarter of 2010.

"However, households have been strengthening their balance sheets over the past year. The New York Federal Reserve Bank reported that the serious delinquency rate (90 or more days delinquent plus foreclosures) on first mortgages and closed-end home equity loans balances fell to 7.46 percent in the first quarter from a peak of 8.89 percent the same period last year. This suggests there may be fewer distressed sales later this year."

Source: Freddie Mac

Obama Administration Releases April Housing Scorecard

2011-05-13T20:02:00.000-07:00

HUD and the U.S. Dept. of the Treasury have released the April edition of the Obama Administration's Housing Scorecard - a comprehensive report on the nation's housing market.

Highlights of the Housing Scorecard include:

More than 4.5 million mortgage-modification arrangements were started between April 2009 and the end of March 2011 - including more than 1.5 million trial modification starts through HAMP, more than 808,000 FHA loss mitigation and early delinquency interventions, and nearly 2.2 million proprietary modifications under HOPE Now.

Servicers reported more than 36,000 trial HAMP modifications and more than 36,000 permanent modifications with a median payment reduction of 37 percent - or more than $500 every month.

Home prices remain weak under continued strain from foreclosures and distressed homes. However, mortgage delinquencies continued a downward trend compared with early 2010 and foreclosure starts and completions remain below peak.

Source: HUD

Foreclosures Down for 7th Straight Month

2011-05-12T12:51:00.000-07:00

The number of foreclosure filings issued in April plunged 34% from a year ago -- the seventh straight month of declines.

And there were just 69,532 homes repossessed last month, a 32% fall from the peak last September just before the eruption of the "robo-signing" scandal, in which banks were found to be mishandling the foreclosure process.

Will the seeming good news continue? No way, said Rick Sharga of RealtyTrac, which issued the latest monthly figures on Thursday.

Even with the drop, there were nearly 220,000 foreclosure filings during the month, including notices of default, scheduled auctions and bank repossessions.

And there are 3.7 million borrowers at least 90 days late on payments. Normally a large percentage of them would already be in foreclosure. They are not -- for two reasons.

One is that ongoing regulatory issues. Banks want to make sure their procedures are all in place.

Second, the banks have already saturated many markets with repossessions they've put back on the market.

"Banks can't move inventory fast enough, at prices high enough, that they're excited about foreclosing on any more homes," said Sharga.

On the other hand, there are a couple of reasons to believe the conditions may be improving. Hiring has picked up, enabling some borrowers to resume paying their bills.

Banks are also doing more to keep borrowers in their homes. In March, banks completed 77,000 mortgage modifications without government assistance, according to Hope Now, a coalition of mortgage servicers, investors and private counselors. That was 26% more than in February.

"What's important," said Faith Schwartz, the head of Hope Now, "is that these modifications are much more affordable. They should perform much better."

Home prices, however, continue to erode. That's a problem because it pushes more borrowers "underwater," with home loans worth more than the value of their homes.

That removes an important financial cushion should the borrower run into financial problems. And it given incentive to "strategically default," or walk away from their homes and mortgage payments.

The percentage of underwater owners of single-family homes has now reached 28.4%, according to real estate web site Zillow. That will worsen if home prices fall further.

"Home value declines are currently equal to those we experienced during the darkest days of the housing recession," said Zillow Chief Economist Stan Humphries. "That's going to put more homeowners in default."

Home prices have fallen so fast lately that Humphries changed his 2011 outlook, forecasting a 7% to 9% price drop for the year, up from 5% to 7%.

Just as falling home prices result in more foreclosures, rising foreclosures hurt home prices by swamping housing markets with repossessed homes.

Bottom line is that the crisis could last for years, according to Sharga. It could be 2014 before the housing market returns to a more normal condition.

Source: CNN

Real Estate Outlook: Sales Across the Nation

2011-05-12T12:46:00.000-07:00

According to the National Association of Realtors® (NAR), existing-home sales rose in March, up 3.7 percent. The NAR expects existing-home sale to rise around 5 to 10 percent this year, thanks to high levels of affordability, rising rent costs, and job growth.

In new homes, a segment of the market that took a big hit during the recession, sales were up a healthy 11.1 percent in March.

National Association of Home Builders' Chief Economist, David Crowe, reports, "The March pace of new-home sales more accurately reflects current market conditions than the extremely low pace we saw in the first two months of this year, when unusually poor weather likely kept buyers away. That said, the average sales pace for the first quarter of 2011 held at about the same level seen for the last half of 2010. A limiting factor is the extremely thin inventory of new homes for sale, which is now at its second-lowest level in history. Builders continue to confront major challenges in obtaining financing to build new homes, and the shortage of new product makes it that much tougher for them to compete with existing homes on the market. At the same time, tighter lending conditions are making it more difficult for qualified buyers to obtain a mortgage."

Regionally, all areas except the South saw a rise in sales of newly built homes. The Northeast led the way with a 66.7 percent gain. The West posted a distant second at a 25.9 percent gain, and the Midwest saw a still impressive rise of 12.9 percent.

The inventory of new homes for sale fell to 183,000 units in March, which is the second-lowest level on record. This represents a 7.3-month supply at the current sales pace.

Pending home sales were also on the rise. After an uneven recovery the past nine months, the NAR's Pending Home Sales Index saw contract signings rise 5.1 percent. This is still down over 11 percent from March 2010.

Lawrence Yun, NAR chief economist, said home sales activity has shown an uneven but notable improvement. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own,” he said. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”

Regionally, all regions except the Northeast saw rises, though every region is still below last year's levels. Most are between 10 and 20 percent below March 2010 levels.

The largest increase month over month was seen in the South, rising 10.3 percent.

Continued strides in the job market and economy will help to foster more growth in the housing sector. If recession recovery continues, the housing market should continue to post gains in the months ahead.

Source: Realty Times

75 Percent of Refinancing Homeowners Maintain or Reduce Debt in First Quarter

2011-05-11T21:44:00.000-07:00

Real Cash-Out Volume Reaches 15-Year Low

Freddie Mac released the results of its first quarter refinance analysis showing homeowners who refinance continue to strengthen their fiscal house.

News Facts

In the first quarter of 2011, 3-out-of-4 homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table. Fifty-four percent maintained about the same loan amount, the highest share since 1985, when Freddie Mac began keeping records on refinancing patterns. In addition, 21 percent of refinancing homeowners reduced their principal balance.

"Cash-out" borrowers, those that increased their loan balance by at least five percent, represented 25 percent of all refinance loans; the average cash-out share over the past 25 years was 62 percent.

The net dollars of home equity converted to cash as part of a refinance, adjusted for inflation, was at the lowest level in 15 years (third quarter of 1996). In the first quarter, an estimated $6.0 billion in net home equity was cashed out during the refinance of conventional prime-credit home mortgages, down from $9.1 billion in the fourth quarter and substantially less than during the peak cash-out refinance volume of $83.7 billion during the second quarter of 2006.

Among the refinanced loans in Freddie Mac's analysis, the median appreciation of the collateral property was a negative six percent over the median prior loan life of five years. In comparison, the Freddie Mac House Price Index shows a 21 percent decline in its U.S. series between the end of 2005 and end of 2010. Thus, borrowers who refinanced in the first quarter owned homes that had held their value better than the average home, or may reflect value-enhancing improvements that owners had made to their homes during the intervening years.

The median interest rate reduction for a 30-year fixed-rate mortgage was about 1.2 percentage points, or a savings of about 20 percent in interest costs. Over the first year of the refinance loan life, these borrowers will save over $1,800 in interest payments on a $200,000 loan.

Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

"The average interest rate on single-family mortgages outstanding at the end of 2010 was about six percent, so there are still plenty of homeowners that can benefit from refinancing. We found the typical borrower reduced their interest rate about 1.2 percentage points by refinancing during the first quarter. For a 30-year fixed-rate mortgage with a $200,000 loan balance, that's a monthly payment savings of about $150.

"Consumers continue to reduce their debt, either by paying down or paying off their mortgage loan, or reducing the interest cost. Homeowners' aggregate financial-obligation ratio, which peaked during the third quarter of 2007, had dropped by the end of 2010 to a level last seen more than a decade ago."

Source: Freddie Mac

Talking Points

2011-05-10T17:14:00.000-07:00

Some home buyers may opt for a condo over a single-family home for a number of reasons. A condominium can provide a less-expensive entry into the housing market, and is a low-maintenance downsizing option for seniors. However, misconceptions about condominium ownership abound, which can often keep potential buyers from considering them as an option.

Many home buyers view condo fees as an additional expense, compared with owning a single-family residence. However, it’s important to look at what’s included in that figure. Typical condo fees generally include a contribution toward the building’s upkeep and maintenance, but also may include heating costs, water, sewer, garbage-collection fees, and even electricity and cable TV, in some cases.

Even well-managed condo associations may have what is called a “special assessment,” which is an additional fee that condo owners must pay when the regular condominium fees are insufficient to pay for a major repair. Not unlike living in a single-family home, even homeowners who routinely save money for repairs may encounter major unforeseen expenses, such as foundation or roof repair.

Source: California Association of Realtors

Fallout From a Poor Credit Score

2011-05-09T17:36:00.000-07:00

IF you want to see how quickly you can ruin a great credit score, just skip a mortgage payment.

More Mortgages ColumnsLenders use credit scores to measure how you handle debt. The number you’ll see most often is your FICO score. It runs from 300 to 850. The major credit reporting bureaus developed a rival, VantageScore, with scores from 501 to 990.

Missed mortgage payments, serious loan delinquencies, loan modifications, short sales, foreclosures and bankruptcies all drag down credit scores. Because a mortgage is such a big slice of anyone’s credit profile, it carries more weight than other loans. Both FICO and VantageScore have studied and quantified those impacts.

They reached similar conclusions: for people with near-perfect records, a single mortgage payment that’s 30 days late reduces a credit score enough to hurt. For anyone, a short sale — selling a home for less than the amount owed — can be almost as destructive as a foreclosure.

In contrast, a loan modification — when the lender approves new loan terms — can have a “very, very minimal” effect, said Sarah Davies, the senior vice president for analytics at VantageScore. In some cases, the borrower’s score might drop 10 or 15 points.

With a loan modification, said Joanne Gaskin, the director of global scoring solutions at FICO, “the consumer does not have to go delinquent to get assistance.”

Modification horror stories abound; some borrowers have been told they can’t be helped unless they’ve already missed payments. That doesn’t have to be the case, said Josh Zinner, the co-director of the Neighborhood Economic Development Advocacy Project, a New York City nonprofit company active in foreclosure prevention.

The government-backed Home Affordable Modification Program, known as HAMP, specifically permits modifications for borrowers who can document hardship like a job loss, Mr. Zinner said. “What we advise people in New York to do” he said, “is reach out to a nonprofit loan counselor or to Legal Services in order to get a modification with a servicer.”

It’s not a perfect solution — HAMP has been criticized for not helping enough borrowers. There are plenty of paperwork hassles, and points in the process where credit scores are in peril.

Still, because of “some really profound consequences” to bad credit, modification is worth pursuing, he said. Employers increasingly check credit. Housing options may be limited. “Virtually all landlords look at credit,” he said, adding that getting a mortgage can be difficult. Car loan and credit card costs jump.

In a study last month, FICO looked at how choices would affect three hypothetical mortgage holders: One with a spotless 780 score; another with a good 720, who may have missed a couple of credit card payments three years ago; a third with a not-great, not-toxic 680, who has sometimes fallen seriously behind on credit cards or a car loan. (Most lenders consider poor credit about 650 and below, Ms. Gaskin said.)

¶30 days late: The gold-plated 780 drops to 670-690, the middling 720 becomes 630-650, and 680 is now 600-620. Effects are most significant for the strongest borrower. “A continued progression is going to have less and less impact on a score,” Ms. Gaskin said.

¶90 days late: This is seriously delinquent, and brings the onetime best borrower down to 650-670, the midlevel one to 610-630, and the weakest to 600-620.

¶Short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The result is just a bit less serious. The 780 score deteriorates to 655-675; 720 to 605-625; 680 to 610-630.

¶Foreclosure, or short sale with a deficiency balance owed: For either, 780 is 620-640; 720 is 570-590; and 680 is 575-595.

At a certain point it might seem as if there was not much difference between bad and worse, but remember that the lower the score, the longer it takes to climb back.

Source: New York Times

FHA Mortgages May Still Beat Loans Available from Private-Sector Rivals

2011-05-05T15:12:00.000-07:00

Although it has raised fees, the FHA continues to offer much higher and more flexible maximum debt-to-income ratios, far more generous underwriting and lower down payments than conventional lenders.

Is the Federal Housing Administration losing some of its post-boom, post-bust oomph? Is the Obama administration's plan to gradually throttle back the FHA's home mortgage insurance volume already having effects — and if so, what might this mean to you as a buyer? There are definitely signs that something is brewing:

•Total applications for FHA-insured single-family mortgages are down 30% year over year through March, according to the agency's data. Applications from prospective home purchasers are down 35%. The FHA's popularity with buyers previously had sustained its high origination volumes.

•The FHA put its second increase in premium charges in six months into effect April 18. Higher premiums mean higher monthly payment requirements for buyers and could have the effect of squeezing some consumers with tight budgets out of the market entirely.

•The private mortgage insurance industry, which competes with the FHA for borrowers who make small down payments, is touting its newly resurgent conventional mortgage products, which may offer significant monthly savings compared with the FHA.

•Some of the agency's long-standing advocates are wondering aloud whether the administration's policy tilt toward more private-sector involvement in the mortgage arena may be hurting first-time buyers who can't bring large cash resources or high credit scores to the table.

"Here you have our last refuge for ordinary people to buy a home, and the government is making it tougher to qualify" by raising insurance premiums, said Mario Yeaman, senior loan officer for Milestone Mortgage in Manhattan Beach.

Brian Chappelle, a principal of Potomac Partners, a mortgage banking industry consulting firm in Washington, D.C., said he worried about the direction the FHA had begun pursuing. "FHA's role was designed to be the first rung on the homeownership ladder. If you raise fees, increase down payments and lower mortgage limits, it would be a serious impediment for future buyers and the economy."

Chappelle's concern about higher down payments stems from the Obama administration's February "white paper" on housing reform in which policymakers called for higher down payments across the board — including at the FHA. To date, no increases have been proposed by the agency, but some analysts believe that a move to a 5% minimum down payment — up from the current 3.5% — would not be surprising in the months ahead. The FHA's maximum loan amounts might also drop significantly in October if Congress does not renew the economic recovery law ceilings, which now top out in high-cost areas at $729,750.

Given these developments, how does FHA financing stack up against rivals in the low-down-payment space? Private mortgage insurers have a quick response: They say their lower monthly costs already are winning back some of the business they lost to the FHA during the recession.

For instance, Radian Guaranty Inc., a major home loan insurer, claims that in the wake of the FHA's premium increases, a low-down-payment conventional mortgage carrying its insurance coverage requires monthly payments 15% lower than FHA-insured mortgages for borrowers with FICO credit scores above 720.

Radian provided this cost-comparison example to illustrate: Say you've got a FICO score above 720, and you need a $285,000, 30-year loan with 5% down at a 5% interest rate. The FHA mortgage would cost $1,806 in principal and interest a month. The same loan insured by Radian would cost from $1,530 to $1,753 a month, depending on the type of premium payment plan you chose.

Brien McMahon, chief franchise officer of Radian, said that as a general rule, private insurance on low-down-payment loans would beat the FHA whenever the buyer put down 5% and had a 720 or higher FICO score or put down 10% and had at least a 680 FICO.

So does this mean that all buyers with low down payments should abandon the FHA and switch to conventional loans? Hardly. David Van Waldick of Western Realty Finance in Carlsbad, Calif., said the majority of FHA users couldn't fit into the private insurers' high-FICO, strict-underwriting model, so those vaunted savings may be illusory.

The FHA, by contrast, continues to offer much higher and more flexible maximum debt-to-income ratios, far more generous underwriting and lower down payments, and will accept FICO scores that conventional lenders and private insurers won't touch.

Bottom line: If you're purchasing a home with a small down payment, check out both the FHA and the private alternative with your loan officer. It's true that the FHA has just gotten a little more expensive. But it may still have the total package you need to do the deal.

Source: Los Angeles Times

Don’t Become a Crime Victim When You Show Your Home to Potential Buyers

2011-05-04T22:26:00.000-07:00

Safety should always be a top concern for both real estate agents and home sellers. While holding an open house and allowing potential home buyers to tour the property is an effective means of selling a home, home sellers should be aware of the risks.

MAKING SENSE OF THE STORY

While most criminals will seek small items and anything they can fit into their pockets, sometimes these “buyers” are actually scoping the home for a future burglary.

According to a safety expert who has worked with the NATIONAL ASSOCIATION OF REALTORS® and other groups, first and foremost, people should trust their instincts, so if someone or something is making one uncomfortable, be extra alert and extremely careful.

If a potential buyer or unknown agent arrives at the house unexpectedly, the homeowner should tell him to call their agent to schedule an appointment.

Before allowing anyone to enter the house, all lights should be turned on and all blinds, shades, and curtains opened. Homes are safer for showing when someone outside can see inside.

In advance of an open house, homeowners should remove all valuables, including jewelry, artwork, and electronic equipment.

Additionally, money, mail, bank statements, credit cards and keys should never be kept lying around, or even in a drawer with easy access.

Prescription drugs should be kept in locked cabinets, to prevent anyone from stealing them or using the information on the label.

Professional burglars often linger in rooms, looking for items they can dispose of quickly. They also search for ways to get in and out, scouting possible escape routes and checking for security devices. Couples up to no good often split up so one can check out the house and its belongings, while the other keeps the agent and/or seller occupied.

Source: L.A. Times

Pending Home Sales Rise Again in March

2011-05-03T21:48:00.000-07:00

March saw another increase in pending home sales, with contract activity rising unevenly in six of the past nine months, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 5.1 percent to 94.1 in March from a downwardly revised 89.5 in February. The index is 11.4 percent below 106.2 in March 2010; however, activity was at elevated levels in March and April of 2010 to meet the contract deadline for the homebuyer tax credit.

The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

The PHSI in the Northeast fell 3.2 percent to 63.4 in March and is 18.4 percent below March 2010. In the Midwest the index rose 3.0 percent in March to 83.5 but is 16.6 percent below a year ago. Pending home sales in the South jumped 10.3 percent to an index of 110.2 but are 10.5 percent below March 2010. In the West the index increased 3.1 percent to 103.7 but is 4.1 percent below a year ago.

“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year with sales growth of lower priced homes likely to outperform high-end homes. That means the price trend will reflect more homes sold in the lower price ranges,” Yun said.

“The good news is that recent home buyers are staying well within budget, leading to exceptionally low loan default rates among home buyers over the past two years,” Yun added.

Source: NAR

Low Mortgage Rates a Plus for Improving Housing Market

2011-05-02T20:53:00.000-07:00

This past week's released economic data reports came from several housing market areas, all of which showed some improvement over the past month. At the same time, Freerateupdate.com's daily survey of wholesale and direct lenders show that mortgage rates have continued to remain stable and at low levels for the past week.

Conforming 30 year fixed mortgage rates are at 4.750%, 15 year fixed mortgage rates are at 4.000% and 5/1 adjustable mortgage rates are at 3.125%. Conforming mortgage loans require good credit in order to obtain lender approval and the lowest mortgage rates with 0.7 to 1% origination fee. Conforming 30 year and 15 year fixed rate mortgages are the most popular of this group because they offer security with a consistent mortgage payment over the life of the loan.

The trend with borrowers for several years continues to be FHA mortgage loans. FHA 30 year fixed mortgage rates are at 4.500%, FHA 15 year fixed mortgage rates are at 4.250% and FHA 5/1 adjustable mortgage rates are at 3.750%. For borrowers who have a limited amount of available funds, FHA mortgage loans offer a low down payment option, as well as easier credit qualifying. FHA also accepts gifts from several sources that can be used for the down payment. These benefits often override any FHA downsides, such as higher FHA closing costs (APR) due to the upfront mortgage insurance premium and other various FHA fees.

Jumbo mortgage interest rates continue to be consistently low and beneficial for the high end borrower. Jumbo 30 year fixed mortgage rates are at 5.375%, jumbo 15 year mortgage rates are at 5.000% and jumbo 5/1 adjustable mortgage rates are at 3.875%. Borrowers need jumbo mortgage loans for mortgage financing above the conforming loan limit which is $417,000 to $729,000 depending on location. In order to obtain these low jumbo mortgage rates with 0.7 to 1% origination fee, borrowers must have outstanding credit and the ability to meet approval guidelines set by lenders.

MBS prices (also known as mortgage backed securities) are dependent upon market conditions and investor sentiment. Mortgage rates move in the opposite direction of MBS prices. Recent data released showed a very necessary improvement in the sluggish housing market. For the month of March, housing starts saw a jump, existing home sales increased and home mortgages rose. Yesterday, the Census Bureau and Department of Housing and Urban Development reported that new home sales were stronger than expected. Through all of this, MBS prices fluctuated a little in both directions, but never enough to make a change in mortgage.

Source: Realty Times

Fast Facts

2011-04-28T22:24:00.000-07:00

Calif. median home price: March 2011: $286,010 (Source: C.A.R.)

Calif. highest median home price by region/county March 2011: Marin $826,700 (Source: C.A.R.)

Calif. lowest median home price by region/county March 2011: Lake County $94,170 (Source: C.A.R.)

Calif. Pending Home Sales Index: March 2011: 128.7 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index: Fourth quarter 2010: 69 percent (Source: C.A.R.)

Mortgage rates: Week ending 4/14/2011 30-yr. fixed: 4.91 Fees/points: 0.6% 15-yr. fixed: 4.13% Fees/points: 0.7% 1-yr. adjustable: 3.25% Fees/points: 0.6% (Source: Freddie Mac)

Weekly Fraud Alert: HUD Campaign Promotes Homeowner Scam Awareness

2011-04-28T22:19:00.000-07:00

HUD has launched a new campaign in Miami, Chicago, and Los Angeles called “Know It. Avoid It. Report It.,” a campaign that aims to direct homeowners facing foreclosure to trusted resources and housing counselors, and to solicit the support of homeowners in shutting down scammers who regularly target the elderly, Hispanics, and African Americans. Both objectives will be pursued through education and outreach, anti-scam reporting tools, and close cooperation with federal, state, local, and non-profit partners.

Highlights of the Know It. Avoid It. Report It. campaign include:

Information on how to avoid becoming a victim

Scam artist red flags and fraud warning signs

Complaint form and hotline to report fraud or suspicious activity

Resources for finding HUD-approved counselors and free housing workshops in every state

Names of individuals and companies identified by law enforcement agencies who have allegedly committed loan modification fraud or foreclosure relief scams

Education, outreach, and grassroots efforts in hardest hit communities include:

Multilingual brochures, posters, flyers, and other outreach materials

Television, radio, print, mass transit, and out-of-home advertising

Social media activity

Source: HUD

Builder Confidence Declines in April

2011-04-26T21:56:00.000-07:00

Builder confidence for newly built, single-family homes declined to 16 in April after rising to 17 in March, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

Two of the three HMI component indexes registered declines in April, with the components gauging current sales conditions and home sales expectations for the next six months declining one point to 16 and three points to 23, respectively. The component gauging traffic of prospective buyers, however, rose one point to 13, marking its highest level since June 2010, according to the report.

Regionally, the South declined four points to 15; the Northeast and Midwest each registered two-point gains to 20 and 14, respectively; and the West, which includes California, remained flat at 17.

Source: National Association of Home Builders

Fed Requests Public Comment on Proposed Rule

2011-04-22T12:31:00.000-07:00

The Federal Reserve Board on Tuesday requested public comment on a proposed rule under Regulation Z that would require creditors to determine a consumer's ability to repay a mortgage before making the loan and would establish minimum mortgage underwriting standards.

The proposal would apply to all consumer mortgages, except home equity lines of credit, timeshare plans, reverse mortgages, or temporary loans.

Consistent with the act, the proposal would provide the following four options for complying with the ability-to-repay requirement:

A creditor must meet the general ability-to-repay standard by considering and verifying specified underwriting factors, such as the consumer's income or assets.

A creditor must make a "qualified mortgage," which provides the creditor with special protection from liability provided the loan does not have certain features, such as negative amortization; the fees are within specified limits; and the creditor underwrites the mortgage payment using the maximum interest rate in the first five years. The Board is soliciting comments on two alternative approaches for defining a "qualified mortgage."

A creditor operating predominantly in rural or underserved areas can make a balloon-payment qualified mortgage.

A creditor can refinance a "non-standard mortgage" with risky features into a more stable "standard mortgage" with a lower monthly payment.

The Board is soliciting comment on the proposed rule until July 22, 2011.

Source: The Board of Governors Federal Reserve

Fast Facts

2011-04-18T14:55:00.000-07:00

Calif. median home price: February 2011: $271,320 (Source: C.A.R.)

Calif. highest median home price by region/county February 2011: Marin $632,580 (Source: C.A.R.)

Calif. lowest median home price by region/county February 2011: Merced $117,270 (Source: C.A.R.)

Calif. Pending Home Sales Index: February 2011: 112.1 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index: Fourth quarter 2010: 69 percent (Source: C.A.R.)

Mortgage rates: Week ending 4/7/2011 30-yr. fixed: 4.87 Fees/points: 0.7% 15-yr. fixed: 4.10% Fees/points: 0.7% 1-yr. adjustable: 3.22% Fees/points: 0.7% (Source: Freddie Mac)

30-Year Fixed-Rate Mortgage Moves Up to 4.91 Percent

2011-04-15T13:12:00.000-07:00

Freddie Mac has released the results of its Primary Mortgage Market Survey® (PMMS®), which shows mortgage rates slowly increasing for the fourth consecutive week, yet remaining below 5 percent moving into the traditional home buying season.

News Facts

30-year fixed-rate mortgage (FRM) averaged 4.91 percent with an average 0.6 point for the week ending April 14, 2011, up from last week when it averaged 4.87 percent. Last year at this time, the 30-year FRM averaged 5.07 percent.

15-year FRM this week averaged 4.13 percent with an average 0.7 point, up from last week when it averaged 4.10 percent. A year ago at this time, the 15-year FRM averaged 4.40 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.78 percent this week, with an average 0.6 point, up from last week when it averaged 3.72 percent. A year ago, the 5-year ARM averaged 4.08 percent.

1-year Treasury-indexed ARM averaged 3.25 percent this week with an average 0.6 point, up from last week when it averaged 3.22 percent. At this time last year, the 1-year ARM averaged 4.13 percent.

Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

"Mortgage rates edged up following a light week of economic data releases. Although rates on 30-year fixed mortgages have risen four weeks in a row, they have remained below 5 percent for eight straight weeks now, helping to maintain affordability in the housing market. Meanwhile, consumer purchases of retail goods rose for the ninth consecutive month in March, suggesting families have an increasing capacity to spend, which bodes well for the economic recovery.

"Reinforcing this notion, the Federal Reserve reported in its April 13th regional economic review that consumer spending picked up modestly in February and March across most Districts. In addition, it noted that economic activity generally continued to improve and that reports focusing on the near-term outlook were most often upbeat."

Source: Freddie Mac

Confidence in Value of Homeownership Persists Through Bust, Survey Shows

2011-04-14T14:41:00.000-07:00

An unexpected 81% of U.S. adults surveyed by the Pew Research Center say buying a home is the best long-term investment.

The real estate bust appears to have done little to alter Americans' confidence in the investment value of homeownership.

A robust 81% of adults said buying a home is the best long-term investment a person can make, according to a national survey by the Pew Research Center in Washington.

"Owning a home is really a part of the American dream, and that is just part of the American psyche and something that people aspire to," said Kim Parker, associate director for the center and one of the study's authors.

The study's results were unexpected, given the deep plunge in home prices and the fallout from the mortgage crisis, she said. Homeownership topped the list of long-term financial goals for Americans, according to the study; respondents rated homeownership, as well as living comfortably in retirement, more important than sending children to college or leaving offspring an inheritance.

The public's faith in real estate has been bruised since the last time a comparable survey asked people about the wisdom of investing in real estate. A total of 37% of respondents said they "strongly agree" that homeownership is the best investment a person can make while 44% said they "somewhat agree." The same question was asked by a CBS News/New York Times survey in 1991, and at that time 49% "strongly agreed" and 35% "somewhat agreed."

"The study results are surprising in that so many households still believe that homeownership is a good investment, even after the plunge in home values that has occurred over the past couple of years," said Celia Chen, a housing economist for Moody's Economy.com. "The preference for homeownership has deep roots in the history of this nation, and apparently even a severe correction in house prices can shake American's belief in homeownership only slightly."

The telephone survey was comprised of a nationally representative sample of 2,142 adults conducted from March 15 to March 29 by Princeton Survey Research Associates International. Interviews were done in English and Spanish. The margin of sampling error for the data is plus or minus 2.7%.

While home prices have entered a renewed decline after showing some improvements last year, many economists believe that the worst of the housing crisis is probably over. That sentiment could help to explain the resiliency in Americans' optimism.

"People may have the feeling that the worst is behind us," Parker said.

Though other investments such as stocks tend to produce a better return, the housing market has generally avoided the wild swings that the stock market has over time, potentially helping to explain real estate's lasting allure, Parker added.

Homeowners in the survey were more positive about the financial wisdom of owning a home than were renters. But even among renters, the desire for homeownership remains strong, according to the survey's findings. Just 24% of renters surveyed said they rent out of choice and 81% said they would like to buy.

The decline in values has struck a wide swath of Americans. About half, or 47%, of homeowners said their property is now worth less than when the recession began, and 31% said the value of their home has not improved. Just 17% said their home is worth more than before the recession.

Of those who said their properties have lost value, 86% said they expect it to take at least three years for values to recover, 42% said at least six years and 10% said they expect a recovery in 10 years or more.

Despite those sentiments, 82% of homeowners who indicated their home is worth less than before the recession said homeownership is the best long-term investment a person can make.

Source: LA Times