By AUSTIN KILGORE
The launch of the Making Home Affordable Modification Program (HAMP) lacked drive, and despite changes to the program to help additional distressed borrowers, the Treasury Department’s response continues to lag well behind the pace of the crisis, according to the latest Congressional Oversight Panel (COP) monthly report. It’s an opinion that seems validated when considering similar initiatives spear-headed by the nation’s largest servicers.
“It now seems clear that Treasury’s programs, even when they are fully operational, will not reach the overwhelming majority of homeowners in trouble,” the COP wrote in the April Oversight Report, adding that Treasury’s stated goal of offering 3m to 4m modifications will result in only a fraction resulting in temporary modifications, and only some of those modifications will convert to final, five-year status.
“In the final reckoning, the goal itself seems small in comparison to the magnitude of the problem,” the report continued.
The private sector has found less success in modifying mortgages through HAMP than through other in-house strategies. According to testimony by Bank of America (BAC: 17.66 -3.50%) Home Loans president Barbara Desoer to the House Financial Services Committee this week, of BofA’s 14m mortgages, 1.4m are 60 or more days delinquent. All told, BofA completed 560,000 of its own modifications to those borrowers. Similar success escapes government-led initiatives as even though 391,000 borrowers at BofA were offered a HAMP mod, only 33,000 are now permanent through HAMP.
In response, Treasury said it agrees with COP’s assessment that foreclosures are at an unacceptable high rate, but defended its efforts at stemming the tide of foreclosures through HAMP and the recently launched Home Affordable Foreclosure Alternatives (HAFA) program.
“It’s critical to point out that many of the foreclosure starts that are referenced in this report will in fact never become foreclosure sales thanks to HAMP and HAFA,” Treasury said in a statement.
“As we have said before, these programs are not intended to help every homeowner in trouble. The Administration’s programs were designed to help responsible, eligible families keep their homes, not for investors or speculators, and not to save million dollar houses or vacation homes,” the statement continued. “We also must recognize that we cannot help those who simply bought a home that they could not afford.”
According to the COP report, as of February 2010, only 168,708 homeowners have received final, five-year loan modifications — a small fraction of the 6 million borrowers who are presently 60+ days delinquent on their loans. For every borrower who avoided foreclosure through HAMP last year, another 10 families lost their homes, COP said.
But according to the Treasury, the March HAMP report, expected to be released Thursday, will show more than 1.4m homeowners received offers for trial modifications more than 230,000 homeowners received permanent modifications and an additional 108,000 permanent modifications have been approved by servicers and are pending only borrower acceptance. More than 1.1m borrowers are receiving a median savings of $500 each month.
URL to Original Article:
http://www.housingwire.com/2010/04/14/one-year-down-the-road-success-still-escapes-hamp/
Friday, April 30, 2010
Fannie Extends REO Discount Deadline
By JON PRIOR
Fannie Mae (FNM: 1.22 -3.17%) extended its seller assistance incentive on all of its HomePath properties this week.
In February, Fannie began providing a 3.5% discount to buyers of its REO properties listed as part of its HomePath division. The discount can be used for closing cost assistance or the buyer’s choice of appliances.
The original offer was set to expire on May 1, 2010. Now, Fannie pushed the deadline for any owner-occupant who closes on the purchase of a property listed on HomePath by June 30, 2010.
“We are happy with the results of the program, which has helped us to sell properties quickly, thereby stabilizing neighborhoods and property values,” said Terry Edwards, executive vice president of credit portfolio management at Fannie.
The HomePath properties may also be eligible for special financing, which could allow buyers to purchase REO with 3% down.
URL to Original Article:
http://www.housingwire.com/2010/04/27/fannie-extends-reo-discount-deadline/
Fannie Mae (FNM: 1.22 -3.17%) extended its seller assistance incentive on all of its HomePath properties this week.
In February, Fannie began providing a 3.5% discount to buyers of its REO properties listed as part of its HomePath division. The discount can be used for closing cost assistance or the buyer’s choice of appliances.
The original offer was set to expire on May 1, 2010. Now, Fannie pushed the deadline for any owner-occupant who closes on the purchase of a property listed on HomePath by June 30, 2010.
“We are happy with the results of the program, which has helped us to sell properties quickly, thereby stabilizing neighborhoods and property values,” said Terry Edwards, executive vice president of credit portfolio management at Fannie.
The HomePath properties may also be eligible for special financing, which could allow buyers to purchase REO with 3% down.
URL to Original Article:
http://www.housingwire.com/2010/04/27/fannie-extends-reo-discount-deadline/
Tuesday, April 27, 2010
Monday, April 26, 2010
Trulia Sees 26% Decline in Number of Listings with Price Reductions
By AUSTIN KILGORE
The rate of house listings where the seller made at least one reduction in asking price declined 26% at the beginning of April 2010 compared to the same time one year ago, according to research by Trulia.com.
Trulia said 20% of asking prices for current home listings were reduced at least once, compared to 27% of asking prices in April 2009. Las Vegas experienced a 54% decrease in listings with at least one price reduction, from 28% in April 2009 to 13% in April 2010. San Diego experienced a similar decrease at 52%. San Francisco and New York both experienced a 45% year-over-year decline and Los Angeles experienced a 40% drop.
The decline in the number of properties with price reductions is not necessarily a sign of home price stabilization, but could rather be attributed to sellers properly pricing homes when the properties are originally put on the market. In Seattle, the rate of listings with price reductions increased 15% from last year, and Denver had a similar increase of 5%. Atlanta, Chicago, Philadelphia and Phoenix were even from the previous year.
In addition to the number of homes with price reductions going down, the rate of the asking price cut also decreased in many markets. San Francisco topped the list of the biggest decline of reduction, down to 8% from 13%, a decline of 37%. The discount amount decreased 32% in New York, followed by declines in Boston (23%), Los Angeles (12%) and Las Vegas (8%). Houston saw the biggest increase in the rate of price reduction, up to 8% in 2010 compared to 6% in 2009, a change of 38%. Reductions were up 19% in Denver and Seattle, and up 10% in Phoenix.
“As the federal stimulus comes to an end this month, coupled with expected increases in interest rates and foreclosures, the next few months will be very telling for whether the U.S. housing market can be self-sustaining over the longer-term,” said Trulia co-founder and CEO Pete Flint.
Of the 50 major markets Trulia tracks, Milwaukee has the greatest percentage of homes with reduced asking prices at 34%, followed by Phoenix (32%), Minneapolis (32%), Mesa (31%) and Dallas (30%).
Trulia generates its reports using live listings from its online real estate listings website from listings by brokers, agents, third party aggregators and multiple listing services (MLS). The data does not include recently foreclosed properties on the market.
URL to Original Article:
http://www.housingwire.com/2010/04/21/trulia-sees-26-decline-in-number-of-listings-with-price-reductions/
The rate of house listings where the seller made at least one reduction in asking price declined 26% at the beginning of April 2010 compared to the same time one year ago, according to research by Trulia.com.
Trulia said 20% of asking prices for current home listings were reduced at least once, compared to 27% of asking prices in April 2009. Las Vegas experienced a 54% decrease in listings with at least one price reduction, from 28% in April 2009 to 13% in April 2010. San Diego experienced a similar decrease at 52%. San Francisco and New York both experienced a 45% year-over-year decline and Los Angeles experienced a 40% drop.
The decline in the number of properties with price reductions is not necessarily a sign of home price stabilization, but could rather be attributed to sellers properly pricing homes when the properties are originally put on the market. In Seattle, the rate of listings with price reductions increased 15% from last year, and Denver had a similar increase of 5%. Atlanta, Chicago, Philadelphia and Phoenix were even from the previous year.
In addition to the number of homes with price reductions going down, the rate of the asking price cut also decreased in many markets. San Francisco topped the list of the biggest decline of reduction, down to 8% from 13%, a decline of 37%. The discount amount decreased 32% in New York, followed by declines in Boston (23%), Los Angeles (12%) and Las Vegas (8%). Houston saw the biggest increase in the rate of price reduction, up to 8% in 2010 compared to 6% in 2009, a change of 38%. Reductions were up 19% in Denver and Seattle, and up 10% in Phoenix.
“As the federal stimulus comes to an end this month, coupled with expected increases in interest rates and foreclosures, the next few months will be very telling for whether the U.S. housing market can be self-sustaining over the longer-term,” said Trulia co-founder and CEO Pete Flint.
Of the 50 major markets Trulia tracks, Milwaukee has the greatest percentage of homes with reduced asking prices at 34%, followed by Phoenix (32%), Minneapolis (32%), Mesa (31%) and Dallas (30%).
Trulia generates its reports using live listings from its online real estate listings website from listings by brokers, agents, third party aggregators and multiple listing services (MLS). The data does not include recently foreclosed properties on the market.
URL to Original Article:
http://www.housingwire.com/2010/04/21/trulia-sees-26-decline-in-number-of-listings-with-price-reductions/
Time ripe to buy homes before prices rise: poll
By Housing Market
(Reuters) - Most consumers think U.S. homes are affordable and the time is ripe to buy as many expect prices to rise in the next year, a new survey showed on Wednesday.
U.S. home buyers remain worried about the economy. But with average home prices down about 30 percent nationally from 2006, mortgage rates low and federal tax credits still in play, more than 80 percent of buyers see this as a good time to purchase, a Century 21 Real Estate LLC poll found.
The First-Time Home Buyers and Sellers survey by the Realogy Corp. unit polled consumers who bought or sold their first home within the past year or planned to do so within the next year.
"Today's market presents a generational opportunity for home buyers and current home owners looking to leverage their market position," Rick Davidson, president and CEO of Parsippany, New Jersey-based Century 21, said in a statement.
The housing market is showing signs of stabilizing after its deepest plunge since the Great Depression, though a rapid recovery is highly unlikely with unemployment hovering just below 10 percent.
Recovery will be sporadic and slow, most analysts agree, constrained by restrictive lending standards and a stockpile of foreclosed properties that must also be sold.
Almost half of first-time home buyers and sellers expect home prices to increase over the next year, the survey found.
Such indications of improved sentiment have been in short supply and eagerly sought in the midst of the important spring home sales season. Spring sales are especially important this year as some major government backstops are yanked.
The Federal Reserve on March 31 ended its purchases of more than $1.4 trillion in mortgage-related securities aimed to hold down mortgage rates, rejuvenate housing and the economy.
Meantime, buyers eligible for an $8,000 first-time home purchase tax credit or a $6,500 repeat-buyer credit need to sign contracts by the end of this month and close on loans by the end of June.
Eighty-four percent of first-time buyers surveyed by Century 21 are aware of the credit and 64 percent of those who are in the market for their first home said they qualify.
The same percentage of sellers were aware of the move-up buyer credit, though just 33 percent said they qualified.
Home prices, the tax credit and low interest rates were the top three reasons first-time buyers decided to enter the market.
Personal/family reasons and home prices were the main factors leading owners to sell their house for the first time.
Home prices also drove about half of the sellers surveyed to move up to bigger homes, and about 37 percent to change neighborhoods.
Losing money and getting offers near their asking price were the main concerns for sellers.
About 40 percent of those polled were more worried about the economy than a year ago, Century 21 said, and market conditions generally favor buyers. However, about half of first-time buyers see prices rising by next spring, helping reestablish a balance between buyers and sellers.
Almost 80 percent of those polled said mortgage rates are either somewhat or very affordable.
Low rates influenced 46 percent of owners to sell for move-up reasons and another 43 percent to change neighborhoods.
Thirty-year mortgage rates have averaged around 5 percent through the first three months of this year, rising slightly in April, according to home funding company Freddie Mac.
But as many banks have tightened lending practices, the vast majority also said that getting a home loan is either somewhat or very difficult.
Century 21 said that most of those who moved or plan to move are staying between 10 and 50 miles of their current homes, suggesting market conditions may be spurring the transactions rather than demand for big geographic changes or job relocations.
The on-line survey was conducted with 708 respondents from March 12-16 by MarketTools, Inc.
URL to Original Article:
http://www.reuters.com/article/idUSTRE63K29820100421
(Reuters) - Most consumers think U.S. homes are affordable and the time is ripe to buy as many expect prices to rise in the next year, a new survey showed on Wednesday.
U.S. home buyers remain worried about the economy. But with average home prices down about 30 percent nationally from 2006, mortgage rates low and federal tax credits still in play, more than 80 percent of buyers see this as a good time to purchase, a Century 21 Real Estate LLC poll found.
The First-Time Home Buyers and Sellers survey by the Realogy Corp. unit polled consumers who bought or sold their first home within the past year or planned to do so within the next year.
"Today's market presents a generational opportunity for home buyers and current home owners looking to leverage their market position," Rick Davidson, president and CEO of Parsippany, New Jersey-based Century 21, said in a statement.
The housing market is showing signs of stabilizing after its deepest plunge since the Great Depression, though a rapid recovery is highly unlikely with unemployment hovering just below 10 percent.
Recovery will be sporadic and slow, most analysts agree, constrained by restrictive lending standards and a stockpile of foreclosed properties that must also be sold.
Almost half of first-time home buyers and sellers expect home prices to increase over the next year, the survey found.
Such indications of improved sentiment have been in short supply and eagerly sought in the midst of the important spring home sales season. Spring sales are especially important this year as some major government backstops are yanked.
The Federal Reserve on March 31 ended its purchases of more than $1.4 trillion in mortgage-related securities aimed to hold down mortgage rates, rejuvenate housing and the economy.
Meantime, buyers eligible for an $8,000 first-time home purchase tax credit or a $6,500 repeat-buyer credit need to sign contracts by the end of this month and close on loans by the end of June.
Eighty-four percent of first-time buyers surveyed by Century 21 are aware of the credit and 64 percent of those who are in the market for their first home said they qualify.
The same percentage of sellers were aware of the move-up buyer credit, though just 33 percent said they qualified.
Home prices, the tax credit and low interest rates were the top three reasons first-time buyers decided to enter the market.
Personal/family reasons and home prices were the main factors leading owners to sell their house for the first time.
Home prices also drove about half of the sellers surveyed to move up to bigger homes, and about 37 percent to change neighborhoods.
Losing money and getting offers near their asking price were the main concerns for sellers.
About 40 percent of those polled were more worried about the economy than a year ago, Century 21 said, and market conditions generally favor buyers. However, about half of first-time buyers see prices rising by next spring, helping reestablish a balance between buyers and sellers.
Almost 80 percent of those polled said mortgage rates are either somewhat or very affordable.
Low rates influenced 46 percent of owners to sell for move-up reasons and another 43 percent to change neighborhoods.
Thirty-year mortgage rates have averaged around 5 percent through the first three months of this year, rising slightly in April, according to home funding company Freddie Mac.
But as many banks have tightened lending practices, the vast majority also said that getting a home loan is either somewhat or very difficult.
Century 21 said that most of those who moved or plan to move are staying between 10 and 50 miles of their current homes, suggesting market conditions may be spurring the transactions rather than demand for big geographic changes or job relocations.
The on-line survey was conducted with 708 respondents from March 12-16 by MarketTools, Inc.
URL to Original Article:
http://www.reuters.com/article/idUSTRE63K29820100421
Friday, April 23, 2010
Thursday, April 22, 2010
Wednesday, April 21, 2010
Don't know if you read the email sent to you yesterday by Joanna at Keller Williams. Seems they're very proud of some Big producer somewhere in Texas. It occurred to me they sure have to go a long way to find a top producer in the Keller Williams Family. Our top team also did over 100 million in 2009 but we did it Right Here In Fresno. I think that's better.
We're not the number 1 selling Real Estate office in Texas but we are in Central California. Any questions?
Barbara Martin
436-4080
PS we also have ownership opportunities available. Interested? Give me a call. I won't tell anyone we talked. Promise.
We're not the number 1 selling Real Estate office in Texas but we are in Central California. Any questions?
Barbara Martin
436-4080
PS we also have ownership opportunities available. Interested? Give me a call. I won't tell anyone we talked. Promise.
Tuesday, April 20, 2010
Homes lost, but some second-mortgage debts remain
By: Carolyn Said, Chronicle Staff Writer
Eleven days after losing his home to foreclosure, Jorge, a Napa construction worker, received an ominous letter in the mail. It said he still owed $78,000 on his home's second loan.
"I was afraid and felt pressured," said Jorge, who asked that his last name be withheld because he is embarrassed about his situation. "I called them to say I had already lost the house in a foreclosure," he said, speaking in Spanish through a translator. "They told me it doesn't matter, you have to pay the money anyway."
Jorge's experience is being mirrored elsewhere. Debt collectors are starting to hound people who lost their homes to foreclosures or short sales over their second mortgages.
In California, a foreclosure generally wipes out the borrowers' obligation on the main mortgage but not necessarily on other home loans.
"We've seen a lot of folks coming to us, saying, 'I was foreclosed on, now these people say I owe $150,000 for my second loan; I thought everything was going to go away, what do I do now?' " said Noah Zinner, an attorney with Housing & Economic Rights Advocates in Oakland.
Some experts think the trend will accelerate, causing foreclosure pain to linger.
"I think the other shoe is going to drop soon," said Shannon Jones, a real estate attorney in Danville who gets several calls a day from people concerned about their liabilities post-foreclosure. "In the next two years we will see a huge volume of (debt collection on) second loans. We're seeing a number of lenders start filing suit or turn them over to collection companies."
California is a nonrecourse state, meaning lenders cannot pursue borrowers for unpaid balances on home-purchase loans. However, home loans not used for the purchase - home equity lines of credit and second loans taken out after purchase - are recourse loans, which means lenders are legally entitled to collect the unpaid balance. Depending on the type of loan, they have four to six years to pursue borrowers, Jones said.
Pursuing borrower
Refinanced mortgages do become recourse loans, but in California a nonjudicial foreclosure - the most common kind - eliminates the borrower's liability to the lender that carried out the foreclosure, which is generally the main lender. A second lender for a nonpurchase loan, however, still has "recourse," or the right to pursue the borrower.
In Jorge's case, he took out the second loan to buy his house, so it is nonrecourse debt, and he cannot be sued for the unpaid balance. A debt collector can, however, ask him to pay "voluntarily."
Class action planned
For several months, Jorge continued to receive letters and phone calls from both his bank and a debt collector asking him to pay.
"The servicer says there is nothing that prohibits the borrower from voluntarily paying us," Zinner said. "There is no question it's sneaky, but it's not illegal for them to do that. If they were to threaten to sue, that would clearly be illegal."
"I suspect they're just dealing with volume," said Maeve Elise Brown, executive director of the Oakland group. "(Debt collectors) buy the debt for 10 cents on the dollar and figure they'll browbeat a certain percentage of homeowners into paying them, whether the money is lawfully due or not."
Housing & Economic Rights Advocates has partnered with attorney Will Kennedy of Santa Clara to represent Jorge and plans to pursue a class-action case on behalf of other borrowers with nonrecourse loans whose lenders dunned them for that debt.
"Many people are in Jorge's situation and don't realize they're under no obligation to make any more payments after a foreclosure," Kennedy said.
Loans after purchase
But millions of borrowers do have recourse loans that they took out after purchase, which means lenders have a legal right to pursue them for unpaid balances.
In California during the boom real estate years - 2005 to 2007 - homeowners took out 2.88 million home equity lines of credit and 1.18 million nonpurchase second loans, according to First American CoreLogic, which tracks loan data. The total was 4 million such recourse loans totaling $485.3 billion.
Some experts think lenders may pick whom to pursue by probing defaulted borrowers' net worth.
Rick Harper, director of housing at Consumer Credit Counseling Services of San Francisco, which staffs the federal HOPE for Homeowners hot line, said his workers tell borrowers who are considering default that their second loans could make them liable to debt collection.
"Depending on what the holder of that note wants to do, it can make their (the borrowers') life miserable," he said. "Most of the (lenders) do an asset test to see if there's anything there. They can run credit reports, use investigative services, get their hands on the applications they used when they applied for a loan." Applications for loan modifications and short sales also require disclosure of assets.
Banks check assets
At Wells Fargo, Mary Berg, a spokeswoman for the Home Equity Group, said in an e-mail: "On a case-by-case basis, after a review of the borrower's situation, we do sometimes pursue deficiency balances in states that allow this type of activity. We only pursue deficiency judgments if we determine that the borrower has the ability to repay the entire or a portion of the balance."
Wells, Bank of America and JPMorgan Chase hold the lion's share of U.S. second liens, according to Inside Mortgage Finance. BofA has $147 billion, Wells $124 billion and Chase $118 billion, it says.
Chase wrote off about $4.6 billion in home equity loans in 2009, and has said it expects to write off up to $5.6 billion of the loans this year.
Chase declined to comment. BofA did not return requests for comment.
Jones, the Danville real estate attorney, said she's turned down some second-loan clients.
For instance, one Bay Area man had borrowed $52,000 on a home equity line of credit for a home that ended up in foreclosure.
"The lender filed suit against him and he asked me to defend him," she said. "I said, 'You don't have a defense. You borrowed the money, you spent the money. You signed a promissory note and said you would pay it back.' "
Often, such borrowers end up settling with the lender for pennies on the dollar, Jones said. "You can't get blood from a turnip," she said.
Bankruptcy option
Margot Saunders, an attorney with the National Consumer Law Center, said bankruptcy may be the best option for some people to wipe out liability for their second loans.
"People with a second mortgage who are facing foreclosure should go to bankruptcy to get rid of the unsecured second-mortgage note," she said. "They should do it as soon as they're foreclosed upon, because that's when they're at rock-bottom, not when they've started to rebuild (their finances)."
Other attorneys said borrowers should try to discharge their second liens before a foreclosure or short sale by offering the lender a percentage of the amount due.
Home Affordable Modification Program, the government's foreclosure-prevention plan, recently added provisions encouraging lenders to settle or modify second loans. If adopted by lenders, that could help people who lose their homes in the future avoid pursuit by debt collectors, but it won't do anything for the millions who already lost their homes in recent years.
"It will be hard for people in our state to start over again, if they sometimes lawfully and sometimes unlawfully end up getting pursued for pretty significant-sized debt," Brown said.
URL to Original Article:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/04/19/MN3C1CQGOC.DTL
Eleven days after losing his home to foreclosure, Jorge, a Napa construction worker, received an ominous letter in the mail. It said he still owed $78,000 on his home's second loan.
"I was afraid and felt pressured," said Jorge, who asked that his last name be withheld because he is embarrassed about his situation. "I called them to say I had already lost the house in a foreclosure," he said, speaking in Spanish through a translator. "They told me it doesn't matter, you have to pay the money anyway."
Jorge's experience is being mirrored elsewhere. Debt collectors are starting to hound people who lost their homes to foreclosures or short sales over their second mortgages.
In California, a foreclosure generally wipes out the borrowers' obligation on the main mortgage but not necessarily on other home loans.
"We've seen a lot of folks coming to us, saying, 'I was foreclosed on, now these people say I owe $150,000 for my second loan; I thought everything was going to go away, what do I do now?' " said Noah Zinner, an attorney with Housing & Economic Rights Advocates in Oakland.
Some experts think the trend will accelerate, causing foreclosure pain to linger.
"I think the other shoe is going to drop soon," said Shannon Jones, a real estate attorney in Danville who gets several calls a day from people concerned about their liabilities post-foreclosure. "In the next two years we will see a huge volume of (debt collection on) second loans. We're seeing a number of lenders start filing suit or turn them over to collection companies."
California is a nonrecourse state, meaning lenders cannot pursue borrowers for unpaid balances on home-purchase loans. However, home loans not used for the purchase - home equity lines of credit and second loans taken out after purchase - are recourse loans, which means lenders are legally entitled to collect the unpaid balance. Depending on the type of loan, they have four to six years to pursue borrowers, Jones said.
Pursuing borrower
Refinanced mortgages do become recourse loans, but in California a nonjudicial foreclosure - the most common kind - eliminates the borrower's liability to the lender that carried out the foreclosure, which is generally the main lender. A second lender for a nonpurchase loan, however, still has "recourse," or the right to pursue the borrower.
In Jorge's case, he took out the second loan to buy his house, so it is nonrecourse debt, and he cannot be sued for the unpaid balance. A debt collector can, however, ask him to pay "voluntarily."
Class action planned
For several months, Jorge continued to receive letters and phone calls from both his bank and a debt collector asking him to pay.
"The servicer says there is nothing that prohibits the borrower from voluntarily paying us," Zinner said. "There is no question it's sneaky, but it's not illegal for them to do that. If they were to threaten to sue, that would clearly be illegal."
"I suspect they're just dealing with volume," said Maeve Elise Brown, executive director of the Oakland group. "(Debt collectors) buy the debt for 10 cents on the dollar and figure they'll browbeat a certain percentage of homeowners into paying them, whether the money is lawfully due or not."
Housing & Economic Rights Advocates has partnered with attorney Will Kennedy of Santa Clara to represent Jorge and plans to pursue a class-action case on behalf of other borrowers with nonrecourse loans whose lenders dunned them for that debt.
"Many people are in Jorge's situation and don't realize they're under no obligation to make any more payments after a foreclosure," Kennedy said.
Loans after purchase
But millions of borrowers do have recourse loans that they took out after purchase, which means lenders have a legal right to pursue them for unpaid balances.
In California during the boom real estate years - 2005 to 2007 - homeowners took out 2.88 million home equity lines of credit and 1.18 million nonpurchase second loans, according to First American CoreLogic, which tracks loan data. The total was 4 million such recourse loans totaling $485.3 billion.
Some experts think lenders may pick whom to pursue by probing defaulted borrowers' net worth.
Rick Harper, director of housing at Consumer Credit Counseling Services of San Francisco, which staffs the federal HOPE for Homeowners hot line, said his workers tell borrowers who are considering default that their second loans could make them liable to debt collection.
"Depending on what the holder of that note wants to do, it can make their (the borrowers') life miserable," he said. "Most of the (lenders) do an asset test to see if there's anything there. They can run credit reports, use investigative services, get their hands on the applications they used when they applied for a loan." Applications for loan modifications and short sales also require disclosure of assets.
Banks check assets
At Wells Fargo, Mary Berg, a spokeswoman for the Home Equity Group, said in an e-mail: "On a case-by-case basis, after a review of the borrower's situation, we do sometimes pursue deficiency balances in states that allow this type of activity. We only pursue deficiency judgments if we determine that the borrower has the ability to repay the entire or a portion of the balance."
Wells, Bank of America and JPMorgan Chase hold the lion's share of U.S. second liens, according to Inside Mortgage Finance. BofA has $147 billion, Wells $124 billion and Chase $118 billion, it says.
Chase wrote off about $4.6 billion in home equity loans in 2009, and has said it expects to write off up to $5.6 billion of the loans this year.
Chase declined to comment. BofA did not return requests for comment.
Jones, the Danville real estate attorney, said she's turned down some second-loan clients.
For instance, one Bay Area man had borrowed $52,000 on a home equity line of credit for a home that ended up in foreclosure.
"The lender filed suit against him and he asked me to defend him," she said. "I said, 'You don't have a defense. You borrowed the money, you spent the money. You signed a promissory note and said you would pay it back.' "
Often, such borrowers end up settling with the lender for pennies on the dollar, Jones said. "You can't get blood from a turnip," she said.
Bankruptcy option
Margot Saunders, an attorney with the National Consumer Law Center, said bankruptcy may be the best option for some people to wipe out liability for their second loans.
"People with a second mortgage who are facing foreclosure should go to bankruptcy to get rid of the unsecured second-mortgage note," she said. "They should do it as soon as they're foreclosed upon, because that's when they're at rock-bottom, not when they've started to rebuild (their finances)."
Other attorneys said borrowers should try to discharge their second liens before a foreclosure or short sale by offering the lender a percentage of the amount due.
Home Affordable Modification Program, the government's foreclosure-prevention plan, recently added provisions encouraging lenders to settle or modify second loans. If adopted by lenders, that could help people who lose their homes in the future avoid pursuit by debt collectors, but it won't do anything for the millions who already lost their homes in recent years.
"It will be hard for people in our state to start over again, if they sometimes lawfully and sometimes unlawfully end up getting pursued for pretty significant-sized debt," Brown said.
URL to Original Article:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/04/19/MN3C1CQGOC.DTL
Monday, April 19, 2010
Altos Sees House Price Decline Decelerate in March
By DIANA GOLOBAY
The median house listing price declined 0.5% in the Altos Research 10-city composite in March, improved from February’s 1.3% decline in an indication the pace of decline may be decelerating.
March, the eighth consecutive month of decline, brings the Q110 price decline to 1.8%. But weekly price changes have shown a modest upward trend in the past seven weeks, which means an uptick in house prices could arrive in the coming months, Altos said.
Houses listed at an average $477,596 in March, marking a 6.2% decline from the $509,030 peak in July 2009.
Listing prices fell in 22 of 26 major metropolitan markets since February, Altos said. San Diego, Phoenix and Denver had the sharpest monthly declines at a respective -2.9%, -2.5% and -2.2% over the previous month.
Altos found that prices remained flat in Chicago and rose 0.1%, 0.3% and 1.5% in Cleveland, Boston and Washington DC, respectively. Of these markets, only Washington DC posted a quarterly increase — 0.4% — in Q110.
Although overall listed property inventory rose by 4.2% in March, inventory is down 10% from the same time last year. Listed properties in most metropolitan areas remained on the market 100 days or more before sale.
Inventory increased at the fastest rate in Houston and Boston, up 18.8% and 15.8% respectively this month. A sharp drop in the Washington DC metro, where inventory is down 17.3%, “bodes well” for house price stability in that area as the spring selling season begins, Altos said.
URL to Original Article:
http://www.housingwire.com/2010/04/12/altos-sees-house-price-decline-decelerate-in-march/
The median house listing price declined 0.5% in the Altos Research 10-city composite in March, improved from February’s 1.3% decline in an indication the pace of decline may be decelerating.
March, the eighth consecutive month of decline, brings the Q110 price decline to 1.8%. But weekly price changes have shown a modest upward trend in the past seven weeks, which means an uptick in house prices could arrive in the coming months, Altos said.
Houses listed at an average $477,596 in March, marking a 6.2% decline from the $509,030 peak in July 2009.
Listing prices fell in 22 of 26 major metropolitan markets since February, Altos said. San Diego, Phoenix and Denver had the sharpest monthly declines at a respective -2.9%, -2.5% and -2.2% over the previous month.
Altos found that prices remained flat in Chicago and rose 0.1%, 0.3% and 1.5% in Cleveland, Boston and Washington DC, respectively. Of these markets, only Washington DC posted a quarterly increase — 0.4% — in Q110.
Although overall listed property inventory rose by 4.2% in March, inventory is down 10% from the same time last year. Listed properties in most metropolitan areas remained on the market 100 days or more before sale.
Inventory increased at the fastest rate in Houston and Boston, up 18.8% and 15.8% respectively this month. A sharp drop in the Washington DC metro, where inventory is down 17.3%, “bodes well” for house price stability in that area as the spring selling season begins, Altos said.
URL to Original Article:
http://www.housingwire.com/2010/04/12/altos-sees-house-price-decline-decelerate-in-march/
Fannie Shortens Wait for Some Distressed Borrowers to Get New Loans
By AUSTIN KILGORE
Fannie Mae (FNM: 1.21 -2.42%) announced it is reducing the wait time for some borrowers between when they complete a short sale or deed-in-lieu of foreclosure transaction and when they can obtain a new mortgage.
Previously, a borrower was required to wait four years before getting a new mortgage, or two years if their home sold in a short sale. Under the new guidelines, a borrower that previously completed a deed-in-lieu of foreclosure transaction can get a new mortgage in two years, provided the borrower has a 20% down payment.
If the borrower has a 10% down payment, the wait period is still four years. In some extenuating circumstances, the wait period can be reduced to two years with a 10% down payment for deed-in-lieu of foreclosure, but not for short sales.
Fannie Mae’s Desktop Underwriter (DU) origination software will be updated in June to reflect the new deed-in-lieu of foreclosure policy, but not short sales, as the software cannot at this time determine whether a borrower participated in a short sale.
Originators are required to manually underwrite mortgages after the waiting period if the borrower previously completed a short sale. This new policy is effective for manually underwritten mortgage loans with application dates beginning July 1, 2010.
The policy changes come as Fannie Mae develops its deed for lease (D4L) plan. At Thursday’s Texas Mortgage Bankers Association (TMBA) servicing conference, Miguel Gutierrez, program’s director, outlined the initiative, where in exchange for a deed-in-lieu of foreclosure, the homeowner-turned-renter pays fair market rent to stay in their home for up to 12 months.
Fannie expects the program to get a boost from the Home Affordable Foreclosure Alternative (HAFA) program, which offers incentives to servicers and second lien holders to consummate deed-in-lieu transactions. Gutierrez said Fannie hopes its program will benefit from increased workouts incentivized by HAFA.
URL to Original Article:
http://www.housingwire.com/2010/04/16/fannie-shortens-wait-for-some-distressed-borrowers-to-get-new-loans/
Fannie Mae (FNM: 1.21 -2.42%) announced it is reducing the wait time for some borrowers between when they complete a short sale or deed-in-lieu of foreclosure transaction and when they can obtain a new mortgage.
Previously, a borrower was required to wait four years before getting a new mortgage, or two years if their home sold in a short sale. Under the new guidelines, a borrower that previously completed a deed-in-lieu of foreclosure transaction can get a new mortgage in two years, provided the borrower has a 20% down payment.
If the borrower has a 10% down payment, the wait period is still four years. In some extenuating circumstances, the wait period can be reduced to two years with a 10% down payment for deed-in-lieu of foreclosure, but not for short sales.
Fannie Mae’s Desktop Underwriter (DU) origination software will be updated in June to reflect the new deed-in-lieu of foreclosure policy, but not short sales, as the software cannot at this time determine whether a borrower participated in a short sale.
Originators are required to manually underwrite mortgages after the waiting period if the borrower previously completed a short sale. This new policy is effective for manually underwritten mortgage loans with application dates beginning July 1, 2010.
The policy changes come as Fannie Mae develops its deed for lease (D4L) plan. At Thursday’s Texas Mortgage Bankers Association (TMBA) servicing conference, Miguel Gutierrez, program’s director, outlined the initiative, where in exchange for a deed-in-lieu of foreclosure, the homeowner-turned-renter pays fair market rent to stay in their home for up to 12 months.
Fannie expects the program to get a boost from the Home Affordable Foreclosure Alternative (HAFA) program, which offers incentives to servicers and second lien holders to consummate deed-in-lieu transactions. Gutierrez said Fannie hopes its program will benefit from increased workouts incentivized by HAFA.
URL to Original Article:
http://www.housingwire.com/2010/04/16/fannie-shortens-wait-for-some-distressed-borrowers-to-get-new-loans/
Thursday, April 15, 2010
So, Where Will Housing Double Dip?
by PAUL JACKSON
I’m going to spend today’s column presenting the results of some ad-hoc research I’ve recently been doing, looking at where we can expect a double-dip in housing to hit the hardest — and whether it’s enough to matter in the context of the national mortgage market.
But before I do, this past weekend, famed economist Robert J. Shiller came out and suggested U.S. housing faces an increasing likelihood of a double-dip — something regular readers know I tend to view as more of a foregone conclusion at this point.
As HousingWire reported last week, fresh data from First American Corp. (FAF: 36.24 +1.80%) business unit CoreLogic clearly shows why: distressed sales are on the rise again, reaching 29 percent of resale activity in January.
With that in mind, let’s take a look at where housing’s pending double dip is likely to have the most impact. To do this, I used data from Lender Processing Services (LPS: 37.01 +0.22%), who this morning released updated delinquency data.
Among other ways of viewing the data, LPS’ data stratifies non-current loans by state as a percentage of all loans. Not surprisingly, perhaps, Florida leads the nation in non-current loans with 23.8% of all loans in the state delinquent or in foreclosure status.
But I wanted to see the data slightly differently, comparing each state along its delinquency and foreclosure inventory percentages. I ranked each state by its delinquency and foreclosure inventory percentages — and then looked at the difference between the two. In other words: By assessing the volume of properties in delinquency status (but not yet in foreclosure), and comparing that to the volume of loans already in foreclosure, one can calculate a relative measure of the amount of pain that can be expected in each state as delinquent loans move through the pipeline.
Put in more plain terms, a state with a 1% foreclosure rate and an 11% delinquency rate should be expected to feel the impact of distressed properties moving through the pipeline far more than a state with a 5% foreclosure rate and a 5% delinquency rate, for example. The reasoning is simple: distressed property sales (short sales or REOs) are a drag on retail home prices. In markets that have seen comparatively less foreclosures relative to the volume of delinquencies stuck in the pipeline, the impact of those delinquencies will be felt proportionately more strongly as they are finally dealt with.
Drum roll, please: the results
The result of ranking states in this way lead to some very interesting findings. For one thing, some very large states appear to yet have some significant shocks to their system ahead — while other states that may have done comparatively better thus far appear set to find themselves in some pain on this next downward leg in housing.
In particular, as the table below shows, Southern U.S. states appear to have some surprises ahead, with both Mississippi and Georgia boasting the largest discrepancies between foreclosure inventory and delinquencies.
These are the top 15 states, in terms of the difference between foreclosures and delinquencies. I then matched these states against HMDA origination data for 2007 — as a proxy for loan origination trending — and found that the top 15 states listed above represented just under 43% of all loans originated that year.
Why’d I do this? Because if states like West Virginia (0.45% of 2007 originations) had comprised the entire top 15, I’d suggest that while the impact of distressed sales within the state would be comparatively stronger, it would matter less to the overall housing market in general. But that’s not what I found. Instead, what I’m seeing is some large states that seem to have escaped the first round of housing shocks, now staring at being pulled directly into round two — and I’m also seeing already-battered states, like California, that surprisingly have more pressure yet to come.
In fact, the fact that California and Arizona made this list should be frightening. So, too, should the fact that Texas is here as well.
You might be surprised, too, to find out which state ranked dead last in this sort of exercise: Florida, one of the nation’s hardest hit states thus far, which came in with a meager 1.0 percent difference between foreclosures and delinquencies.
That said, this is still only one way of looking at the data and shouldn’t be seen as gospel by anyone — it’s an attempt to make sense out of where we’re headed next.
Florida, for example, despite an 11.4 percent foreclosure rate, still has 12.4 percent in delinquencies (and in terms of delinquency percentage, FL is ranked 5th in the nation). So expecting Florida’s woes to be behind it is probably an exercise in lunacy. But the point here was to try to find those states that will feel the impact of outstanding delinquencies comparatively harder, and looking at the differences between foreclosures and delinquencies strikes me as good a path to get there as anything else I’ve seen.
So, if this exercise has any merit, it’s time to buck up, readers in Southern states: your turn to feel housing’s bite might be just around the corner.
Paul Jackson is publisher at HousingWire.com and HousingWire Magazine. Follow him on Twitter: @pjackson
URL to original article: http://www.housingwire.com/2010/04/12/so-where-will-housing-double-dip/
I’m going to spend today’s column presenting the results of some ad-hoc research I’ve recently been doing, looking at where we can expect a double-dip in housing to hit the hardest — and whether it’s enough to matter in the context of the national mortgage market.
But before I do, this past weekend, famed economist Robert J. Shiller came out and suggested U.S. housing faces an increasing likelihood of a double-dip — something regular readers know I tend to view as more of a foregone conclusion at this point.
As HousingWire reported last week, fresh data from First American Corp. (FAF: 36.24 +1.80%) business unit CoreLogic clearly shows why: distressed sales are on the rise again, reaching 29 percent of resale activity in January.
With that in mind, let’s take a look at where housing’s pending double dip is likely to have the most impact. To do this, I used data from Lender Processing Services (LPS: 37.01 +0.22%), who this morning released updated delinquency data.
Among other ways of viewing the data, LPS’ data stratifies non-current loans by state as a percentage of all loans. Not surprisingly, perhaps, Florida leads the nation in non-current loans with 23.8% of all loans in the state delinquent or in foreclosure status.
But I wanted to see the data slightly differently, comparing each state along its delinquency and foreclosure inventory percentages. I ranked each state by its delinquency and foreclosure inventory percentages — and then looked at the difference between the two. In other words: By assessing the volume of properties in delinquency status (but not yet in foreclosure), and comparing that to the volume of loans already in foreclosure, one can calculate a relative measure of the amount of pain that can be expected in each state as delinquent loans move through the pipeline.
Put in more plain terms, a state with a 1% foreclosure rate and an 11% delinquency rate should be expected to feel the impact of distressed properties moving through the pipeline far more than a state with a 5% foreclosure rate and a 5% delinquency rate, for example. The reasoning is simple: distressed property sales (short sales or REOs) are a drag on retail home prices. In markets that have seen comparatively less foreclosures relative to the volume of delinquencies stuck in the pipeline, the impact of those delinquencies will be felt proportionately more strongly as they are finally dealt with.
Drum roll, please: the results
The result of ranking states in this way lead to some very interesting findings. For one thing, some very large states appear to yet have some significant shocks to their system ahead — while other states that may have done comparatively better thus far appear set to find themselves in some pain on this next downward leg in housing.
In particular, as the table below shows, Southern U.S. states appear to have some surprises ahead, with both Mississippi and Georgia boasting the largest discrepancies between foreclosure inventory and delinquencies.
These are the top 15 states, in terms of the difference between foreclosures and delinquencies. I then matched these states against HMDA origination data for 2007 — as a proxy for loan origination trending — and found that the top 15 states listed above represented just under 43% of all loans originated that year.
Why’d I do this? Because if states like West Virginia (0.45% of 2007 originations) had comprised the entire top 15, I’d suggest that while the impact of distressed sales within the state would be comparatively stronger, it would matter less to the overall housing market in general. But that’s not what I found. Instead, what I’m seeing is some large states that seem to have escaped the first round of housing shocks, now staring at being pulled directly into round two — and I’m also seeing already-battered states, like California, that surprisingly have more pressure yet to come.
In fact, the fact that California and Arizona made this list should be frightening. So, too, should the fact that Texas is here as well.
You might be surprised, too, to find out which state ranked dead last in this sort of exercise: Florida, one of the nation’s hardest hit states thus far, which came in with a meager 1.0 percent difference between foreclosures and delinquencies.
That said, this is still only one way of looking at the data and shouldn’t be seen as gospel by anyone — it’s an attempt to make sense out of where we’re headed next.
Florida, for example, despite an 11.4 percent foreclosure rate, still has 12.4 percent in delinquencies (and in terms of delinquency percentage, FL is ranked 5th in the nation). So expecting Florida’s woes to be behind it is probably an exercise in lunacy. But the point here was to try to find those states that will feel the impact of outstanding delinquencies comparatively harder, and looking at the differences between foreclosures and delinquencies strikes me as good a path to get there as anything else I’ve seen.
So, if this exercise has any merit, it’s time to buck up, readers in Southern states: your turn to feel housing’s bite might be just around the corner.
Paul Jackson is publisher at HousingWire.com and HousingWire Magazine. Follow him on Twitter: @pjackson
URL to original article: http://www.housingwire.com/2010/04/12/so-where-will-housing-double-dip/
Wednesday, April 14, 2010
Using HAMP Borrowers Flaws HAFA Success: Servicing Panel
By AUSTIN KILGORE
There is a fundamental flaw to the Making Home Affordable Foreclosure Alternatives (HAFA) program that will keep the program from reaching its full potential, panelists told the audience today in Dallas at the Source Media Mortgage Servicing Conference.
That flaw is that the program requires the borrower exhaust the Making Home Affordable Modification Program (HAMP) before proceeding to a HAFA short sale. That strategy takes borrowers who are committed to staying in their homes and transfers the loss mitigation strategies from a workout plan to vacancy, said Robert Hunter, a vice president of Amherst Securities.
“I think HAFA is a lot of press about nothing at the end of the day,” he said.
Average borrowers trying to save their homes aren’t going to call a real estate agent the day after they’re told no. They’re going to try to wait it out, especially if they’re unemployed and trying to get a new job, said Bryan Bolton, senior vice president of loss mitigation at the mortgage division of Citigroup (C: 4.875 +5.52%).
HAMP is seeing some success in helping borrowers, Bolton told the audience, adding it’s made the public more aware of alternatives to foreclosure.
“HAMP gets a bad rap,” Bolton said, adding at a high level, the program works because it puts some standardization on modifications for the industry.
The panel session, titled “How to Stop the Bleeding — Or What to do About Defaults” also covered the topic of principle forgiveness. Barbara Peterson, assistant vice president and assistant manager of default servicing at M&I Corp. (MI: 9.06 +2.26%), is vehemently opposed to principle forgiveness, especially for borrowers who are underwater on their mortgages, but can still afford their monthly payments.
“Loss of equity is not a hardship. It’s unfortunate, but it’s not a hardship,” Peterson said. “You’re just going to have to ride it out. You can afford the payment.”
M&I does not participate in HAMP, and as such, will not participate in HAFA. The bank instead uses its own in-house modification program for borrowers with true, documented hardships. So far, the program’s resulted in a recidivism rate that’s less than 20%. That rate includes not just owner-occupied properties, but also rental homes and pieces of undeveloped land, as long as the borrower has a hardship the bank can verify.
For those looking for a modification with the threat of strategic default, Peterson has no sympathy.
“If you want to default and ruin your credit, there’s nothing I can do to stop you, but if you don’t have a hardship, I can’t help you,” she said.
A change in the modification environment is the source of borrower hardship. Previously, borrowers with exotic mortgage products were the first wave to default, now lenders are seeing more borrowers that are unemployed looking for mortgage assistance.
That said, the panel’s moderator, Diane Pendley, a Fitch Ratings managing director, presented data that showed prime mortgage defaults seem to have capped at 10%. In addition, the most recent data shows that subprime defaults are also down 0.5%.
It could be simply the modifications are starting to happening, or income tax returns showing up and being used for payments, she said. “It’s definitely a good sign and we’ll take it.”
URL to original article:
http://www.housingwire.com/2010/04/09/using-hamp-borrowers-flaw-to-hafa-success-servicing-panel/
There is a fundamental flaw to the Making Home Affordable Foreclosure Alternatives (HAFA) program that will keep the program from reaching its full potential, panelists told the audience today in Dallas at the Source Media Mortgage Servicing Conference.
That flaw is that the program requires the borrower exhaust the Making Home Affordable Modification Program (HAMP) before proceeding to a HAFA short sale. That strategy takes borrowers who are committed to staying in their homes and transfers the loss mitigation strategies from a workout plan to vacancy, said Robert Hunter, a vice president of Amherst Securities.
“I think HAFA is a lot of press about nothing at the end of the day,” he said.
Average borrowers trying to save their homes aren’t going to call a real estate agent the day after they’re told no. They’re going to try to wait it out, especially if they’re unemployed and trying to get a new job, said Bryan Bolton, senior vice president of loss mitigation at the mortgage division of Citigroup (C: 4.875 +5.52%).
HAMP is seeing some success in helping borrowers, Bolton told the audience, adding it’s made the public more aware of alternatives to foreclosure.
“HAMP gets a bad rap,” Bolton said, adding at a high level, the program works because it puts some standardization on modifications for the industry.
The panel session, titled “How to Stop the Bleeding — Or What to do About Defaults” also covered the topic of principle forgiveness. Barbara Peterson, assistant vice president and assistant manager of default servicing at M&I Corp. (MI: 9.06 +2.26%), is vehemently opposed to principle forgiveness, especially for borrowers who are underwater on their mortgages, but can still afford their monthly payments.
“Loss of equity is not a hardship. It’s unfortunate, but it’s not a hardship,” Peterson said. “You’re just going to have to ride it out. You can afford the payment.”
M&I does not participate in HAMP, and as such, will not participate in HAFA. The bank instead uses its own in-house modification program for borrowers with true, documented hardships. So far, the program’s resulted in a recidivism rate that’s less than 20%. That rate includes not just owner-occupied properties, but also rental homes and pieces of undeveloped land, as long as the borrower has a hardship the bank can verify.
For those looking for a modification with the threat of strategic default, Peterson has no sympathy.
“If you want to default and ruin your credit, there’s nothing I can do to stop you, but if you don’t have a hardship, I can’t help you,” she said.
A change in the modification environment is the source of borrower hardship. Previously, borrowers with exotic mortgage products were the first wave to default, now lenders are seeing more borrowers that are unemployed looking for mortgage assistance.
That said, the panel’s moderator, Diane Pendley, a Fitch Ratings managing director, presented data that showed prime mortgage defaults seem to have capped at 10%. In addition, the most recent data shows that subprime defaults are also down 0.5%.
It could be simply the modifications are starting to happening, or income tax returns showing up and being used for payments, she said. “It’s definitely a good sign and we’ll take it.”
URL to original article:
http://www.housingwire.com/2010/04/09/using-hamp-borrowers-flaw-to-hafa-success-servicing-panel/
Monday, April 12, 2010
Sales contracts for previously owned homes rise 8.2% in February
By Alejandro Lazo
The number of previously owned homes placed under sales contract surged 8.2% in February, according to data released Monday, the first sign that the government's extended tax credit for buyers may bolster sales this spring.
The National Assn. of Realtors said Monday that its pending home sales index, a forward-looking measure based on contracts signed, rose to 97.6 in February from a downwardly revised 90.2 in January. That was 17.3% above February 2009, when the index was at 83.2.
A reading of 100 is equivalent to the amount of activity hit during 2001, when home prices began their record climb and when the data were first measured."
I don't expect a vigorous market resurgence or a sharp, new rise in home prices," said Michael D. Larson, a housing and interest rate analyst with Weiss Research."
Foreclosure inventory will continue to be doled out into the market over the next year or two, taking some vigor out of this recovery," Larson said. "But it will be a recovery nonetheless, one warmly welcomed by battered home sellers, banks and home builders."
The Midwest notched the biggest increase, rising 21.8%. Pending sales climbed 9.2% in the South and 9% in the Northeast, but fell nearly 4.8% in the West.
Sales nationally have plummeted for three consecutive months beginning in December after surging last fall as buyers rushed to take advantage of the government's credit for first-time purchases before its initial November expiration.
Congress extended that incentive of as much as $8,000 for first-time borrowers through the end of April and expanded it to include as much as $6,500 for some current homeowners.
Contracts signed typically lead to closings in one or two months, although distressed sales such as foreclosure sales and short sales often can take longer.
URL to original article:
http://www.latimes.com/business/la-fi-home-sales6-2010apr06,0,5038223.story
The number of previously owned homes placed under sales contract surged 8.2% in February, according to data released Monday, the first sign that the government's extended tax credit for buyers may bolster sales this spring.
The National Assn. of Realtors said Monday that its pending home sales index, a forward-looking measure based on contracts signed, rose to 97.6 in February from a downwardly revised 90.2 in January. That was 17.3% above February 2009, when the index was at 83.2.
A reading of 100 is equivalent to the amount of activity hit during 2001, when home prices began their record climb and when the data were first measured."
I don't expect a vigorous market resurgence or a sharp, new rise in home prices," said Michael D. Larson, a housing and interest rate analyst with Weiss Research."
Foreclosure inventory will continue to be doled out into the market over the next year or two, taking some vigor out of this recovery," Larson said. "But it will be a recovery nonetheless, one warmly welcomed by battered home sellers, banks and home builders."
The Midwest notched the biggest increase, rising 21.8%. Pending sales climbed 9.2% in the South and 9% in the Northeast, but fell nearly 4.8% in the West.
Sales nationally have plummeted for three consecutive months beginning in December after surging last fall as buyers rushed to take advantage of the government's credit for first-time purchases before its initial November expiration.
Congress extended that incentive of as much as $8,000 for first-time borrowers through the end of April and expanded it to include as much as $6,500 for some current homeowners.
Contracts signed typically lead to closings in one or two months, although distressed sales such as foreclosure sales and short sales often can take longer.
URL to original article:
http://www.latimes.com/business/la-fi-home-sales6-2010apr06,0,5038223.story
Big Banks Prepare for Major Rise in Foreclosures Ending 2010
By JON PRIOR
Two major banks are expecting major increases in foreclosures, by the end of 2010.
According to the Irvine Housing blog, Bank of America (BAC: 18.66 +0.38%), which currently forecloses on 7,500 homes every month will see that number rise to 45,000 by December 2010 as one senior executive pointed out at a recent trade show. However, a spokesman for BofA told HousingWire, he could not confirm the numbers and they do not reflect a public position of the bank.
JPMorgan Chase (JPM: 46.14 +0.35%) is forecasting bigger foreclosure numbers in the coming months. According to a presentation at the end of February, JPMorgan expects the amount of real estate owned (REO) properties in its portfolio to reach between 33,000 to 45,000 in Q410. By comparison, in Q409, REO inventories were at 23,100.
A property becomes REO after it forecloses and is repossessed by the bank. While those without access to the big bank REO vaults are left to speculate the exact count, many in the industry believe that an expertise in how to liquidate these properties will prove vital to a recovery.
BofA does anticipate a rise in foreclosure activity through the coming months as homeowners slip into delinquency, fail to qualify for or fall out of loan modification programs. The spokesperson said while BofA is preparing for contingencies, they will not go public with any projections as the focus remains to prevent as many foreclosures as possible through both its private modification program and the Home Affordable Modification Program (HAMP).
According to the latest figures from the US Treasury Department, BofA placed 24% of the more than 1m HAMP-eligible loans into active trial or permanent modifications.
Wells Fargo (WFC: 32.42 +0.37%) declined to forecast future foreclosure levels. Citigroup (C: 4.64 +1.98%) did not respond immediately to inquiries.
URL to original article:
http://www.housingwire.com/2010/04/08/big-banks-prepare-for-major-rise-in-foreclosures-ending-2010/
Two major banks are expecting major increases in foreclosures, by the end of 2010.
According to the Irvine Housing blog, Bank of America (BAC: 18.66 +0.38%), which currently forecloses on 7,500 homes every month will see that number rise to 45,000 by December 2010 as one senior executive pointed out at a recent trade show. However, a spokesman for BofA told HousingWire, he could not confirm the numbers and they do not reflect a public position of the bank.
JPMorgan Chase (JPM: 46.14 +0.35%) is forecasting bigger foreclosure numbers in the coming months. According to a presentation at the end of February, JPMorgan expects the amount of real estate owned (REO) properties in its portfolio to reach between 33,000 to 45,000 in Q410. By comparison, in Q409, REO inventories were at 23,100.
A property becomes REO after it forecloses and is repossessed by the bank. While those without access to the big bank REO vaults are left to speculate the exact count, many in the industry believe that an expertise in how to liquidate these properties will prove vital to a recovery.
BofA does anticipate a rise in foreclosure activity through the coming months as homeowners slip into delinquency, fail to qualify for or fall out of loan modification programs. The spokesperson said while BofA is preparing for contingencies, they will not go public with any projections as the focus remains to prevent as many foreclosures as possible through both its private modification program and the Home Affordable Modification Program (HAMP).
According to the latest figures from the US Treasury Department, BofA placed 24% of the more than 1m HAMP-eligible loans into active trial or permanent modifications.
Wells Fargo (WFC: 32.42 +0.37%) declined to forecast future foreclosure levels. Citigroup (C: 4.64 +1.98%) did not respond immediately to inquiries.
URL to original article:
http://www.housingwire.com/2010/04/08/big-banks-prepare-for-major-rise-in-foreclosures-ending-2010/
Dugan: Public Policy Fed the Wave of Subprime Demand
By DIANA GOLOBAY
Comptroller of the currency John Dugan, before the Financial Crisis Inquiry Commission (FCIC) today, said public policy favoring the American dream of homeownership, combined with lax underwriting, fed the market for subprime mortgages and related investment products.
“[F]or many years, home ownership has been a policy priority,” he said in prepared remarks (download here). “As a result, when times are good, we as a nation have an unfortunate tendency to tolerate looser loan underwriting practices – sometimes even turning a blind eye to them – if they make it easier for more people to buy their own homes.”
Dugan noted that the rapid increase in market share by unregulated brokers and originators put pressure on regulated banks to lower their underwriting standards. Then, low interest rates and excess liquidity spurred investors to chase yields, he said.
The contagion of risk from unsustainable and unaffordable mortgages could be averted in the future through higher down payment requirements, he said.
“We had a crisis in which credit was too easy and too many people
got loans because of lending standards,” Dugan told the FCIC. “If you strengthen those standards, fewer people will get loans. That is the trade-off.”
He recommended that the government establish minimum, common sense underwriting standards for mortgages that can be effectively applied and enforced for all mortgage lenders, whether they are regulated banks or unregulated mortgage companies.
“If we had had such basic, across the board rules in place ten years ago on income verification, down payments, and teaser rate mortgages, I believe the financial crisis would have been much less severe than it was,” he said.
Former comptroller of the currency John Hawke Jr. — also testifying to the FCIC — said prior to 2000, the Office of the Comptroller of the Currency (OCC) warned banks on holding subprime loans for their portfolios. He said they needed stronger underwriting and and internal controls, better monitoring and administration and appropriate pricing in their subprime programs.
Additionally, demand in the market for higher yield investments at a time of low market rates encouraged “an erosion” of underwriting standards, he said. As a result, many thousands of subprime loans eventually were put back to the originating banks.
“I think it is fair to say that supervisors did not anticipate this risk, which arose from wholesale defaults on securitized loans, and if they had, the need to require banks to maintain capital commensurate with this risk would have been compelling, even if the loans had been taken off the banks’ balance sheets,” Hawke said in prepared testimony (download here).
His remarks supported earlier testimony to the FCIC from former executives at Citigroup (C: 4.64 +1.98%) who said the banks could not anticipate the coming wave of financial fallout linked to subprime mortgages.
URL to original article:
http://www.housingwire.com/2010/04/08/dugan-public-policy-fed-the-wave-of-subprime-demand/
Comptroller of the currency John Dugan, before the Financial Crisis Inquiry Commission (FCIC) today, said public policy favoring the American dream of homeownership, combined with lax underwriting, fed the market for subprime mortgages and related investment products.
“[F]or many years, home ownership has been a policy priority,” he said in prepared remarks (download here). “As a result, when times are good, we as a nation have an unfortunate tendency to tolerate looser loan underwriting practices – sometimes even turning a blind eye to them – if they make it easier for more people to buy their own homes.”
Dugan noted that the rapid increase in market share by unregulated brokers and originators put pressure on regulated banks to lower their underwriting standards. Then, low interest rates and excess liquidity spurred investors to chase yields, he said.
The contagion of risk from unsustainable and unaffordable mortgages could be averted in the future through higher down payment requirements, he said.
“We had a crisis in which credit was too easy and too many people
got loans because of lending standards,” Dugan told the FCIC. “If you strengthen those standards, fewer people will get loans. That is the trade-off.”
He recommended that the government establish minimum, common sense underwriting standards for mortgages that can be effectively applied and enforced for all mortgage lenders, whether they are regulated banks or unregulated mortgage companies.
“If we had had such basic, across the board rules in place ten years ago on income verification, down payments, and teaser rate mortgages, I believe the financial crisis would have been much less severe than it was,” he said.
Former comptroller of the currency John Hawke Jr. — also testifying to the FCIC — said prior to 2000, the Office of the Comptroller of the Currency (OCC) warned banks on holding subprime loans for their portfolios. He said they needed stronger underwriting and and internal controls, better monitoring and administration and appropriate pricing in their subprime programs.
Additionally, demand in the market for higher yield investments at a time of low market rates encouraged “an erosion” of underwriting standards, he said. As a result, many thousands of subprime loans eventually were put back to the originating banks.
“I think it is fair to say that supervisors did not anticipate this risk, which arose from wholesale defaults on securitized loans, and if they had, the need to require banks to maintain capital commensurate with this risk would have been compelling, even if the loans had been taken off the banks’ balance sheets,” Hawke said in prepared testimony (download here).
His remarks supported earlier testimony to the FCIC from former executives at Citigroup (C: 4.64 +1.98%) who said the banks could not anticipate the coming wave of financial fallout linked to subprime mortgages.
URL to original article:
http://www.housingwire.com/2010/04/08/dugan-public-policy-fed-the-wave-of-subprime-demand/
What do buyers want in a home? Survey offers clues
By Lew Sichelman
Reporting from WashingtonHome buyers tend to want it all, especially in this age of affordability, when prices and mortgage rates are low.
But this also is the age of frugality, a time of economic uncertainty when many people are not as concerned about their next pay raise as they are about the next round of layoffs. So today's buyers are far more willing to do without "extras."
The question is what to give up: Do you really need a formal living room? A fifth bedroom would be nice, but is it a necessity? And what about that view of a golf course?
Many builders rely on surveys that quiz would-be buyers about their preferences to help answer these and numerous other questions so they know how to outfit their latest designs. But buyer wannabes have yet to make any of the hard decisions.
A recent study of more than 22,000 owners who bought their homes within the last nine years sheds light on where buyers were willing to put their money and may provide important clues for builders, architects and current buyers. After all, if your predecessors didn't opt for an outsize backyard patio equipped with a five-burner grill, maybe it's not as necessary as you think.
The survey by Avid Ratings of Madison, Wis., found that current homeowners planned to be "more practical" the next time around.
For example, a community clubhouse is "not a big deal anymore," Avid Chief Executive Paul Cardis said at the recent International Builders' Show in Las Vegas, where he detailed his findings on a panel with design experts. Health clubs that people end up using "maybe five times a year" can be eliminated, as can dog parks and golf courses -- even 24-hour security."
No one said a swimming pool is a must, either," said Cardis, who has worked with more than 400 builders in the U.S. and Canada.
A children's playground, however, is essential, as are walking paths.
Inside, large kitchens are still a must-have, but formal dining rooms are not. Upstairs laundry rooms and home theaters aren't necessities either.
Heather McCune, director of marketing for Bassenian Lagoni Architects in Park Ridge, Ill., said a major take-away from Avid's findings was that builders and buyers should "focus more on spaces, not rooms."
For builders, McCune said, the key is construction efficiency, with simpler rooflines and simpler foundations. For buyers, the key is to "rethink space." For example, buyers should look for kitchen cabinets that go all the way to the ceiling for added space and efficiency. And they should pass on expensive "focal point" stairways, opting instead for steps that are tucked away and out of sight.
Along those same lines, Carol Lavender, president of Lavender Design Group in San Antonio, said builders and buyers should be on the lookout for dead space. And she suggested that if the dining room or media room is eliminated, at least some of that square footage should be put into secondary bedrooms."
People are willing to live in less square footage, but it has to be livable," Lavender said. "They won't accept a 10-by-10 bedroom anymore."
Avid's survey also found that there has been a "huge transition" toward such "green" features as high-efficiency appliances, insulation and windows that are not large expanses of glass. "Homeowners are getting it," Cardis said. "If they want efficient windows, they need less glass."
Recycled materials, though, have not made it onto many people's radar screens. They just don't pay attention yet to the recycled content of the building products that go into their homes.
Large kitchens are still essential, according to the Avid research. But if you are thinking about nixing the kitchen island, think again, Cardis said. "Islands remain super-strong."
Home offices or studies are a must among first-time buyers, vacation-home buyers, custom-home buyers and even empty nesters, the survey found.
Main-floor master bedrooms are a big deal to practically every segment of the market. Even first-timers find them desirable.
Two-car garages are still a must "across the board," and three-car garages are desirable.
In the master bath, whirlpool tubs are giving way to soaker tubs. But both are secondary to oversize showers with overhead shower heads and seating. Master bedrooms can be shrunk, McCune observed.
URL to original article:
http://www.latimes.com/classified/realestate/news/la-fi-lew4-2010apr04,0,2602030.story
Reporting from WashingtonHome buyers tend to want it all, especially in this age of affordability, when prices and mortgage rates are low.
But this also is the age of frugality, a time of economic uncertainty when many people are not as concerned about their next pay raise as they are about the next round of layoffs. So today's buyers are far more willing to do without "extras."
The question is what to give up: Do you really need a formal living room? A fifth bedroom would be nice, but is it a necessity? And what about that view of a golf course?
Many builders rely on surveys that quiz would-be buyers about their preferences to help answer these and numerous other questions so they know how to outfit their latest designs. But buyer wannabes have yet to make any of the hard decisions.
A recent study of more than 22,000 owners who bought their homes within the last nine years sheds light on where buyers were willing to put their money and may provide important clues for builders, architects and current buyers. After all, if your predecessors didn't opt for an outsize backyard patio equipped with a five-burner grill, maybe it's not as necessary as you think.
The survey by Avid Ratings of Madison, Wis., found that current homeowners planned to be "more practical" the next time around.
For example, a community clubhouse is "not a big deal anymore," Avid Chief Executive Paul Cardis said at the recent International Builders' Show in Las Vegas, where he detailed his findings on a panel with design experts. Health clubs that people end up using "maybe five times a year" can be eliminated, as can dog parks and golf courses -- even 24-hour security."
No one said a swimming pool is a must, either," said Cardis, who has worked with more than 400 builders in the U.S. and Canada.
A children's playground, however, is essential, as are walking paths.
Inside, large kitchens are still a must-have, but formal dining rooms are not. Upstairs laundry rooms and home theaters aren't necessities either.
Heather McCune, director of marketing for Bassenian Lagoni Architects in Park Ridge, Ill., said a major take-away from Avid's findings was that builders and buyers should "focus more on spaces, not rooms."
For builders, McCune said, the key is construction efficiency, with simpler rooflines and simpler foundations. For buyers, the key is to "rethink space." For example, buyers should look for kitchen cabinets that go all the way to the ceiling for added space and efficiency. And they should pass on expensive "focal point" stairways, opting instead for steps that are tucked away and out of sight.
Along those same lines, Carol Lavender, president of Lavender Design Group in San Antonio, said builders and buyers should be on the lookout for dead space. And she suggested that if the dining room or media room is eliminated, at least some of that square footage should be put into secondary bedrooms."
People are willing to live in less square footage, but it has to be livable," Lavender said. "They won't accept a 10-by-10 bedroom anymore."
Avid's survey also found that there has been a "huge transition" toward such "green" features as high-efficiency appliances, insulation and windows that are not large expanses of glass. "Homeowners are getting it," Cardis said. "If they want efficient windows, they need less glass."
Recycled materials, though, have not made it onto many people's radar screens. They just don't pay attention yet to the recycled content of the building products that go into their homes.
Large kitchens are still essential, according to the Avid research. But if you are thinking about nixing the kitchen island, think again, Cardis said. "Islands remain super-strong."
Home offices or studies are a must among first-time buyers, vacation-home buyers, custom-home buyers and even empty nesters, the survey found.
Main-floor master bedrooms are a big deal to practically every segment of the market. Even first-timers find them desirable.
Two-car garages are still a must "across the board," and three-car garages are desirable.
In the master bath, whirlpool tubs are giving way to soaker tubs. But both are secondary to oversize showers with overhead shower heads and seating. Master bedrooms can be shrunk, McCune observed.
URL to original article:
http://www.latimes.com/classified/realestate/news/la-fi-lew4-2010apr04,0,2602030.story
Friday, April 9, 2010
And So it Begins: Weekly Mortgage Rates Jump
by AUSTIN KILGORE
One day after the Federal Reserve’s $1.25trn mortgage-backed securities (MBS) purchase program came to a close, mortgage rates were up in two weekly surveys.
Freddie Mac’s (FRE: 1.37 +2.24%) weekly survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 5.08% with an average 0.7 origination point for the week ending April 1, up from last week’s average of 4.99%. At this time last year, the average rate was 4.78%.
Bankrate.com’s survey of large banks and thrifts put the 30-year FRM at 5.23% with an average 0.4 origination point, up from last week’s average of 5.11%.
“Interest rates for fixed mortgages rose this week following a run up in long-term bond yields, while ARM rates eased slightly,” said Freddie Mac vice president and chief economist Frank Nothaft. “Rates on 30-year fixed loans were the highest since the starting week of this year.
The 15-year FRM averaged 4.39% with an average 0.6 point, up from last week’s average of 4.34%. Last year, the average rate for a 15-year FRM was 4.52%. Bankrate.com put the 15-year FRM at 4.53% with an average 0.4 origination point, up from 4.47%.
Freddie put the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.1% with an average 0.6 origination point, down from last week when it averaged 4.14%. Last year, the five-year ARM averaged 4.92%. Bankrate.com said the five-year ARM averaged 4.51% with an average 0.4 origination point. Freddie said the one-year Treasury-indexed ARM averaged 4.05% with an average 0.6 point, down from last week when it averaged 4.2% and last year when it averaged 4.75%.
URL to original article:
http://www.housingwire.com/2010/04/01/and-so-it-begins-weekly-mortgage-rates-jump/
One day after the Federal Reserve’s $1.25trn mortgage-backed securities (MBS) purchase program came to a close, mortgage rates were up in two weekly surveys.
Freddie Mac’s (FRE: 1.37 +2.24%) weekly survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 5.08% with an average 0.7 origination point for the week ending April 1, up from last week’s average of 4.99%. At this time last year, the average rate was 4.78%.
Bankrate.com’s survey of large banks and thrifts put the 30-year FRM at 5.23% with an average 0.4 origination point, up from last week’s average of 5.11%.
“Interest rates for fixed mortgages rose this week following a run up in long-term bond yields, while ARM rates eased slightly,” said Freddie Mac vice president and chief economist Frank Nothaft. “Rates on 30-year fixed loans were the highest since the starting week of this year.
The 15-year FRM averaged 4.39% with an average 0.6 point, up from last week’s average of 4.34%. Last year, the average rate for a 15-year FRM was 4.52%. Bankrate.com put the 15-year FRM at 4.53% with an average 0.4 origination point, up from 4.47%.
Freddie put the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.1% with an average 0.6 origination point, down from last week when it averaged 4.14%. Last year, the five-year ARM averaged 4.92%. Bankrate.com said the five-year ARM averaged 4.51% with an average 0.4 origination point. Freddie said the one-year Treasury-indexed ARM averaged 4.05% with an average 0.6 point, down from last week when it averaged 4.2% and last year when it averaged 4.75%.
URL to original article:
http://www.housingwire.com/2010/04/01/and-so-it-begins-weekly-mortgage-rates-jump/
Parallel Paths
by PAM MCKISSICK
A recent New York Times headline read: “Program Will Pay Homeowners to Sell at a Loss.” The article goes on to describe how the program will pay you to move out of your home so the bank can sell it.
In contrast, the Detroit Free Press described a program that will pay you to stay— move in, not out. You agree to occupy a foreclosed home, pay a monthly fee, no taxes or insurance, just mow the lawn and pay your utilities, and the program may refund half of what you’ve paid when the property is sold.
The equity write-down program may allow you to “re-up” your existing mortgage at a more affordable sum.
The tax-incentive program gives you an $8K tax break if you’re a first-time buyer, or a $6.5K tax break if you’ve owned and resided in the same home for five consecutive years of the eight-year period ending on the date of the purchase of a new home.
And then there’s the program that allows you to choose 3.5% off the closing costs or receive free name-brand appliances.
Mortgage servicers are staggering under the weight of well-meaning programs as Washington tries to solve our nation’s real-estate woes. While these programs are designed to help troubled homeowners, they also thwart an underlying fear—that too many foreclosures attract equity players, investors, and those who want to bulk-buy, rent, or resell, rather than live in the houses. As a nation, we’re hurting and don’t want anyone to profit from our pain.
Government, designed to serve the will of the people, is merely responding to our cries and creating programs to help. The problem, as David Ogilvy opined, is that “In all the parks in all the cities there are no statues to committees.” Committees, legislative or otherwise, are collaborative, not inventive. They discuss trouble and gather data on it, but they rarely get people out of it. (Getting out of trouble through our own initiatives has always been one of the great attributes of the American people.)
The much-feared “shadow inventory” will soon result in the US having north of seven million foreclosed homes for which we must find new stewards. A lot of private real-estate investment money is available to purchase those homes. (Supply meeting demand.) But investors have been side-lined due to lack of anything to buy at a reasonable price as the holders of assets try to outwait or outthink the market.
Special Inspector General Neil Barofsky, in managing TARP, reported that government “has done more than simply support the mortgage market, in many ways it has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor.”
Despite those warnings, we Americans don’t want investors, suspect of their motives. No one wants “greedy capitalists” in the midst of this crisis. These assets have to be worth much more.A mortgage servicer who recently rejected an offer of 89% of last list, for a home that had been on the market six months, said he was holding out for a minimum of 90%. That single point brings up another: over our shoulder is a burgeoning foreclosure inventory, unsold because we can’t take the write-down, will lose money off the UPB, over saturate the market, or jump too soon when the next program might make us whole. The plan, then, is to manage the market…release the assets slowly.
If seven million foreclosures are at our back door as forecasted in a recent analysis by Amherst Securities Group and we’re releasing slowly at the rate of 20% per year, the average American can assume that in only five years we’ll be out of this mess….unless the other forty-eight million mortgage holders, who are watching what we do for the first seven, start thinking maybe they’d like to take part in a few real estate programs.
The housing foreclosure issue is coupled with the looming commercial foreclosure problem. If people have lost their homes, it could be because they’ve lost their jobs, which means their companies are tightening their belt or, worse, losing their shorts, and therefore the buildings from which they do business will soon be up for sale.
In light of the scope of the crisis, can we persist in delaying mass disposition and competitive price discovery and continue trying to put seven million foreclosed, or about to be foreclosed, homes through specified programs first…a task not unlike pushing a camel through a keyhole. Shouldn’t we consider other solutions, working parallel paths, perhaps shortening the timeline and broadening the disposition pipeline?
Our company has sold tens of thousands of homes in all fifty states year round, and 87% of the time even small homes under seventy-five thousand dollars are sold to owner occupants. Despite that good news, when we arrive onsite, often entire blocks have signs in the yards indicating that the vast majority of the neighborhood is for sale. In worse areas, houses are boarded up, grass higher than last lists—realtor signs displaced by signs of reality.
The average vacant home deteriorates at a rate of 2-3% a month, even if no one has ripped out the plumbing, kicked in the doors, or stolen all the appliances and whatever else they could find. What’s the program for that? It’s called a free market, with competitive bidders and quick disposition. When encouraged, versus incented, left alone versus managed, traders trade, buyers buy. In the midst of this nation’s worst blizzards, we continued to experience record-breaking crowds, individuals, and small investors bidding and buying alongside one another in two feet of snow.
People have money and they are buying. But, whether it’s due to the process or the plan, all of nation’s programs combined simply aren’t selling assets across America as quickly as they need to be sold. (Sixteen thousand boarded-up homes in Baltimore’s inner city attest to the need for speed.)
Investors, those with capital in the billions, could immediately purchase thousands of homes that sit vacant and unearning, blighting neighborhoods and providing no tax dollars to the municipalities they haunt. To weed out “vulture investors,” (those buying homes merely to flip them to other investors,) the government could require proof of the investor’s ability to effectively market and sell the majority of homes to owner occupants within a thirty- to sixty-day window along with a thorough plan for orderly disposition. Through partnerships, investors could leverage analytic capabilities and marketing expertise, selling strategically, mindful of DMA absorption rates, ending neighborhood blight and affording new home owners the opportunity to rebuild the American Dream. Investor dollars not only broaden the pipeline that delivers assets to owner occupants but can fund the target marketing to attract them. Currently, thousands of houses stay on the market for an average of 300 days…buyers unknown. How could an additional disposition strategy be more harmful than the deteriorating homes that are vacant across our land?
The purchase of these homes from the government by partner investors puts money immediately back into government coffers and could easily include splitting the subsequent sale proceeds with the government…money coming back to the American people.
So investor partners make bulk real estate purchases, provide instant capital to the government, embark on an immediate thirty-day marketing and disposition program to owner occupants, and share the proceeds from the subsequent time-definite sale with the government, which gets immediate relief from managing REO, preserving our neighborhoods and winding down this real-estate crisis. (Remind me again why we hate capitalists.)
The train has left the station: flying past BPOs, EMVs, loan-mods, next-stop write-downs, and short sales; arriving at jingle mail, strategic foreclosures, and now, please stay seated and hold on tight, because we’re approaching the end of the line. The government is running out of money…everybody off the train. Government should not be expected to invest forever in programs that manage what we should be doing freely for ourselves. At the very least, we should allow the investor program to operate alongside all the other programs—working parallel paths.
Individual owner occupants and small investors can’t, by themselves, absorb and disseminate this enormous inventory problem. Large investors can help through rapid, intelligent disposition strategies that will put money back into government coffers and help take the US government out of the housing-management business. The faster we put these homes into the hands of new stewards, the quicker our nation becomes healthy and productive again.
Pamela L. McKissick is president and Chief Operating Officer at Williams & Williams Worldwide Real Estate Auction. She is also founder and CEO at Auction Network™, a live interactive auction entertainment platform.
URL to original article:
http://www.housingwire.com/2010/04/02/parallel-paths-2/
A recent New York Times headline read: “Program Will Pay Homeowners to Sell at a Loss.” The article goes on to describe how the program will pay you to move out of your home so the bank can sell it.
In contrast, the Detroit Free Press described a program that will pay you to stay— move in, not out. You agree to occupy a foreclosed home, pay a monthly fee, no taxes or insurance, just mow the lawn and pay your utilities, and the program may refund half of what you’ve paid when the property is sold.
The equity write-down program may allow you to “re-up” your existing mortgage at a more affordable sum.
The tax-incentive program gives you an $8K tax break if you’re a first-time buyer, or a $6.5K tax break if you’ve owned and resided in the same home for five consecutive years of the eight-year period ending on the date of the purchase of a new home.
And then there’s the program that allows you to choose 3.5% off the closing costs or receive free name-brand appliances.
Mortgage servicers are staggering under the weight of well-meaning programs as Washington tries to solve our nation’s real-estate woes. While these programs are designed to help troubled homeowners, they also thwart an underlying fear—that too many foreclosures attract equity players, investors, and those who want to bulk-buy, rent, or resell, rather than live in the houses. As a nation, we’re hurting and don’t want anyone to profit from our pain.
Government, designed to serve the will of the people, is merely responding to our cries and creating programs to help. The problem, as David Ogilvy opined, is that “In all the parks in all the cities there are no statues to committees.” Committees, legislative or otherwise, are collaborative, not inventive. They discuss trouble and gather data on it, but they rarely get people out of it. (Getting out of trouble through our own initiatives has always been one of the great attributes of the American people.)
The much-feared “shadow inventory” will soon result in the US having north of seven million foreclosed homes for which we must find new stewards. A lot of private real-estate investment money is available to purchase those homes. (Supply meeting demand.) But investors have been side-lined due to lack of anything to buy at a reasonable price as the holders of assets try to outwait or outthink the market.
Special Inspector General Neil Barofsky, in managing TARP, reported that government “has done more than simply support the mortgage market, in many ways it has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor.”
Despite those warnings, we Americans don’t want investors, suspect of their motives. No one wants “greedy capitalists” in the midst of this crisis. These assets have to be worth much more.A mortgage servicer who recently rejected an offer of 89% of last list, for a home that had been on the market six months, said he was holding out for a minimum of 90%. That single point brings up another: over our shoulder is a burgeoning foreclosure inventory, unsold because we can’t take the write-down, will lose money off the UPB, over saturate the market, or jump too soon when the next program might make us whole. The plan, then, is to manage the market…release the assets slowly.
If seven million foreclosures are at our back door as forecasted in a recent analysis by Amherst Securities Group and we’re releasing slowly at the rate of 20% per year, the average American can assume that in only five years we’ll be out of this mess….unless the other forty-eight million mortgage holders, who are watching what we do for the first seven, start thinking maybe they’d like to take part in a few real estate programs.
The housing foreclosure issue is coupled with the looming commercial foreclosure problem. If people have lost their homes, it could be because they’ve lost their jobs, which means their companies are tightening their belt or, worse, losing their shorts, and therefore the buildings from which they do business will soon be up for sale.
In light of the scope of the crisis, can we persist in delaying mass disposition and competitive price discovery and continue trying to put seven million foreclosed, or about to be foreclosed, homes through specified programs first…a task not unlike pushing a camel through a keyhole. Shouldn’t we consider other solutions, working parallel paths, perhaps shortening the timeline and broadening the disposition pipeline?
Our company has sold tens of thousands of homes in all fifty states year round, and 87% of the time even small homes under seventy-five thousand dollars are sold to owner occupants. Despite that good news, when we arrive onsite, often entire blocks have signs in the yards indicating that the vast majority of the neighborhood is for sale. In worse areas, houses are boarded up, grass higher than last lists—realtor signs displaced by signs of reality.
The average vacant home deteriorates at a rate of 2-3% a month, even if no one has ripped out the plumbing, kicked in the doors, or stolen all the appliances and whatever else they could find. What’s the program for that? It’s called a free market, with competitive bidders and quick disposition. When encouraged, versus incented, left alone versus managed, traders trade, buyers buy. In the midst of this nation’s worst blizzards, we continued to experience record-breaking crowds, individuals, and small investors bidding and buying alongside one another in two feet of snow.
People have money and they are buying. But, whether it’s due to the process or the plan, all of nation’s programs combined simply aren’t selling assets across America as quickly as they need to be sold. (Sixteen thousand boarded-up homes in Baltimore’s inner city attest to the need for speed.)
Investors, those with capital in the billions, could immediately purchase thousands of homes that sit vacant and unearning, blighting neighborhoods and providing no tax dollars to the municipalities they haunt. To weed out “vulture investors,” (those buying homes merely to flip them to other investors,) the government could require proof of the investor’s ability to effectively market and sell the majority of homes to owner occupants within a thirty- to sixty-day window along with a thorough plan for orderly disposition. Through partnerships, investors could leverage analytic capabilities and marketing expertise, selling strategically, mindful of DMA absorption rates, ending neighborhood blight and affording new home owners the opportunity to rebuild the American Dream. Investor dollars not only broaden the pipeline that delivers assets to owner occupants but can fund the target marketing to attract them. Currently, thousands of houses stay on the market for an average of 300 days…buyers unknown. How could an additional disposition strategy be more harmful than the deteriorating homes that are vacant across our land?
The purchase of these homes from the government by partner investors puts money immediately back into government coffers and could easily include splitting the subsequent sale proceeds with the government…money coming back to the American people.
So investor partners make bulk real estate purchases, provide instant capital to the government, embark on an immediate thirty-day marketing and disposition program to owner occupants, and share the proceeds from the subsequent time-definite sale with the government, which gets immediate relief from managing REO, preserving our neighborhoods and winding down this real-estate crisis. (Remind me again why we hate capitalists.)
The train has left the station: flying past BPOs, EMVs, loan-mods, next-stop write-downs, and short sales; arriving at jingle mail, strategic foreclosures, and now, please stay seated and hold on tight, because we’re approaching the end of the line. The government is running out of money…everybody off the train. Government should not be expected to invest forever in programs that manage what we should be doing freely for ourselves. At the very least, we should allow the investor program to operate alongside all the other programs—working parallel paths.
Individual owner occupants and small investors can’t, by themselves, absorb and disseminate this enormous inventory problem. Large investors can help through rapid, intelligent disposition strategies that will put money back into government coffers and help take the US government out of the housing-management business. The faster we put these homes into the hands of new stewards, the quicker our nation becomes healthy and productive again.
Pamela L. McKissick is president and Chief Operating Officer at Williams & Williams Worldwide Real Estate Auction. She is also founder and CEO at Auction Network™, a live interactive auction entertainment platform.
URL to original article:
http://www.housingwire.com/2010/04/02/parallel-paths-2/
How Texas Escaped the Housing Crisis
By ALYSSA KATZ
It’s one of the great mysteries of the mortgage crisis: Why did Texas—Texas, of all places!—escape the real estate bust? Only a dozen states have lower mortgage foreclosure and default rates, and all of them are rural places like Montana and South Dakota, where they couldn’t have a real estate boom if they tried.
No, Texas’ 3.1 million mortgage borrowers are a breed of their own among big states with big cities. Just less than 6 percent of them are in or near foreclosure, according to the Mortgage Bankers Association; the national average is nearly 10 percent. Texas might look to outsiders an awful lot like Sunbelt sisters Arizona (13 percent) or Nevada (19)—flat and generous in letting real estate developers sprawl where they will. Texas was even the home base of two of the nation’s biggest bubble-era homebuilders, Centex and DR Horton (DHI).
Texas subprime borrowers do especially well compared with counterparts elsewhere. The foreclosure rate among subprime borrowers there, at less than 19 percent, is the lowest of any state except Alaska. Part of the state’s performance is due to the fact that Texas saw nothing like the stratospheric home-price run-ups other states experienced. On average, the 20 metro areas in the Case-Shiller Home Price Indexsaw their home-resale prices peak in 2006 after more than doubling since 2000. In Dallas, one of the 20, they went up just 25 percent, gradually, and have barely declined.
But there is a broader secret to Texas’s success, and Washington reformers ought to be paying very close attention. If there’s one single thing that Congress can do now to help protect borrowers from the worst lending excesses that fueled the mortgage and financial crises, it’s to follow the Lone Star State’s lead and put the brakes on “cash-out” refinancing and home-equity lending.
A cash-out refinance is a mortgage taken out for a higher balance than the one on an existing loan, net of fees. Across the nation, cash-outs became ubiquitous during the mortgage boom, as skyrocketing house prices made it possible for homeowners, even those with bad credit, to use their home equity like an ATM. But not in Texas. There, cash-outs and home-equity loans can’t total more than 80 percent of a home’s appraised value. There’s a 12-day cooling-off period after an application, during which the borrower can pull out. And when a borrower refinances a mortgage, it’s illegal to get even $1 back. Texas really means it: All these protections, and more, are in the state constitution. The Texas restrictions on mortgage borrowing date back to the first days of statehood in 1845, when the constitution banned home loans entirely.
URL to original article:
http://www.housingwire.com/2010/04/05/how-texas-escaped-the-housing-crisis/
It’s one of the great mysteries of the mortgage crisis: Why did Texas—Texas, of all places!—escape the real estate bust? Only a dozen states have lower mortgage foreclosure and default rates, and all of them are rural places like Montana and South Dakota, where they couldn’t have a real estate boom if they tried.
No, Texas’ 3.1 million mortgage borrowers are a breed of their own among big states with big cities. Just less than 6 percent of them are in or near foreclosure, according to the Mortgage Bankers Association; the national average is nearly 10 percent. Texas might look to outsiders an awful lot like Sunbelt sisters Arizona (13 percent) or Nevada (19)—flat and generous in letting real estate developers sprawl where they will. Texas was even the home base of two of the nation’s biggest bubble-era homebuilders, Centex and DR Horton (DHI).
Texas subprime borrowers do especially well compared with counterparts elsewhere. The foreclosure rate among subprime borrowers there, at less than 19 percent, is the lowest of any state except Alaska. Part of the state’s performance is due to the fact that Texas saw nothing like the stratospheric home-price run-ups other states experienced. On average, the 20 metro areas in the Case-Shiller Home Price Indexsaw their home-resale prices peak in 2006 after more than doubling since 2000. In Dallas, one of the 20, they went up just 25 percent, gradually, and have barely declined.
But there is a broader secret to Texas’s success, and Washington reformers ought to be paying very close attention. If there’s one single thing that Congress can do now to help protect borrowers from the worst lending excesses that fueled the mortgage and financial crises, it’s to follow the Lone Star State’s lead and put the brakes on “cash-out” refinancing and home-equity lending.
A cash-out refinance is a mortgage taken out for a higher balance than the one on an existing loan, net of fees. Across the nation, cash-outs became ubiquitous during the mortgage boom, as skyrocketing house prices made it possible for homeowners, even those with bad credit, to use their home equity like an ATM. But not in Texas. There, cash-outs and home-equity loans can’t total more than 80 percent of a home’s appraised value. There’s a 12-day cooling-off period after an application, during which the borrower can pull out. And when a borrower refinances a mortgage, it’s illegal to get even $1 back. Texas really means it: All these protections, and more, are in the state constitution. The Texas restrictions on mortgage borrowing date back to the first days of statehood in 1845, when the constitution banned home loans entirely.
URL to original article:
http://www.housingwire.com/2010/04/05/how-texas-escaped-the-housing-crisis/
Tuesday, April 6, 2010
Fannie Delinquencies Reach All-Time High at 5.52%
By JON PRIOR
While serious delinquencies in the Fannie Mae (FNM: 1.07 +0.94%) portfolio continue to reach new heights in January, mortgage-backed securitization (MBS) issuance dropped for the second month in a row in February, according to its monthly report.
The serious delinquency rate at Fannie climbed to 5.52% in January – the most recent month of data – up 14 bps from December and doubling the 2.77% rate in January 2009.
The single-family delinquency rate remains below the 4.03% rate in the portfolio of its brother Freddie Mac (FRE: 1.30 0.00%).
Multi-family loans in the Fannie portfolio slipped into serious delinquency at a 0.69% rate in January, up from 0.63% in December.
Fannie issued $43.9bn in mortgage-backed securities (MBS) in February, a 7% drop from the $47.6bn mark in January and a 2.8% decrease from the $45.2bn issued in February 2009. MBS issuances reached its peak in the last year in June 2009, when Fannie issued more than $130bn in MBS.
Fannie’s book of business declined at an annualized rate of 1% in February. The gross mortgage portfolio also fell at an annualized rate of 14.2%.
The new numbers came in a week after Timothy Geithner, secretary of the US Treasury Department, stressed the need of a process that would reform the GSE’s and remove “the umbrella of public protection” before Congress.
URL to original article:
http://www.housingwire.com/2010/03/31/fannie-delinquencies-reach-all-time-high-at-5-52/
While serious delinquencies in the Fannie Mae (FNM: 1.07 +0.94%) portfolio continue to reach new heights in January, mortgage-backed securitization (MBS) issuance dropped for the second month in a row in February, according to its monthly report.
The serious delinquency rate at Fannie climbed to 5.52% in January – the most recent month of data – up 14 bps from December and doubling the 2.77% rate in January 2009.
The single-family delinquency rate remains below the 4.03% rate in the portfolio of its brother Freddie Mac (FRE: 1.30 0.00%).
Multi-family loans in the Fannie portfolio slipped into serious delinquency at a 0.69% rate in January, up from 0.63% in December.
Fannie issued $43.9bn in mortgage-backed securities (MBS) in February, a 7% drop from the $47.6bn mark in January and a 2.8% decrease from the $45.2bn issued in February 2009. MBS issuances reached its peak in the last year in June 2009, when Fannie issued more than $130bn in MBS.
Fannie’s book of business declined at an annualized rate of 1% in February. The gross mortgage portfolio also fell at an annualized rate of 14.2%.
The new numbers came in a week after Timothy Geithner, secretary of the US Treasury Department, stressed the need of a process that would reform the GSE’s and remove “the umbrella of public protection” before Congress.
URL to original article:
http://www.housingwire.com/2010/03/31/fannie-delinquencies-reach-all-time-high-at-5-52/
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