by JON PRIOR
Fannie Mae (FNM: 0.3462 -1.09%) is sifting through borrower data to determine who is strategically defaulting and who is not after announcing more efforts this week to crack down on those who walk away from their homes. And if the GSE determines someone strategically defaulted, then they say they will hold the borrower accountable for all associated costs of getting the house back on the market, in areas that lawfully allow deficiency judgments.
Often when a home forecloses, Fannie Mae brokers and contractors discover vandalism and missing appliances and fixtures when they ready the home for resale, the GSE said. The cost of making those repairs and replacements will be included in the determination of the deficiency amount, a Fannie Mae spokesperson said, in addition to the difference in the mortgage balance and the proceeds from the foreclosure sale.
Those who Fannie Mae and its servicers deem strategically defaulted will not be able to secure a Fannie Mae-backed mortgage for seven years after the foreclosure and could face legal action in order for the company to recoup mortgage debt.
Fannie will base its assessment of who is and who isn’t walking away from their home on income verification, information on the borrower’s credit report, and borrower documentation related to the disposition of prior mortgage loans, the spokesperson for Fannie said.
When a borrower applies again for a Fannie Mae-backed mortgage, he or she would have to produce evidence of hardship or extenuating circumstances to get the loan.
“Borrowers who worked with their servicers to address delinquency and/or avoid foreclosure, will be viewed more favorably than those who do not,” the spokesperson said.
According to the announcement this week, Fannie is instructing its servicers to monitor delinquent loans on the verge of foreclosure and recommend cases where the company can pursue deficiency judgments.
URL to original article: http://www.housingwire.com/2010/06/25/fannie-mae-to-charge-strategic-defaulters-for-everything
Wednesday, June 30, 2010
Friday, June 25, 2010
Thursday, June 24, 2010
Fannie Mae Cracks Down on Strategic Defaulters
"If you owe more than your home is worth, this is an important article"
URL to Origianl Article:
http://www.housingwire.com/2010/06/23/fannie-mae-cracks-down-on-strategic-defaulters
by JON PRIOR
Borrowers who are determined to have the ability to make their monthly payments but walk away from their homes will not be able to secure a Fannie Mae (FNM: 0.388 -5.37%)-backed mortgage for seven years after the foreclosure, according to a new policy announced by the mortgage giant this week.
Fannie Mae will also take legal action against borrowers who strategically default in order to recoup mortgage debt. These would be limited to locations that allow deficiency judgments.
According to the University of Chicago Booth School of Business, one-third of all defaults are strategic.
Fannie will instruct its servicers in an announcement next month to monitor delinquent loans on the verge of foreclosure. They will recommend cases for Fannie to pursue deficiency judgments.
Terence Edwards, executive vice president for credit portfolio management at Fannie, said these steps are meant to urge borrowers to work with the servicers.
“Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting,” Edwards said. “On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”
"Also, to avoid a foreclosure, you should do a Short Sale. For complete information, go to http://www.londonproperties.com/page/index/4215"
URL to Origianl Article:
http://www.housingwire.com/2010/06/23/fannie-mae-cracks-down-on-strategic-defaulters
by JON PRIOR
Borrowers who are determined to have the ability to make their monthly payments but walk away from their homes will not be able to secure a Fannie Mae (FNM: 0.388 -5.37%)-backed mortgage for seven years after the foreclosure, according to a new policy announced by the mortgage giant this week.
Fannie Mae will also take legal action against borrowers who strategically default in order to recoup mortgage debt. These would be limited to locations that allow deficiency judgments.
According to the University of Chicago Booth School of Business, one-third of all defaults are strategic.
Fannie will instruct its servicers in an announcement next month to monitor delinquent loans on the verge of foreclosure. They will recommend cases for Fannie to pursue deficiency judgments.
Terence Edwards, executive vice president for credit portfolio management at Fannie, said these steps are meant to urge borrowers to work with the servicers.
“Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting,” Edwards said. “On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”
"Also, to avoid a foreclosure, you should do a Short Sale. For complete information, go to http://www.londonproperties.com/page/index/4215"
Monday, June 21, 2010
California home prices jump 20.9% in May
Now's the time to buy that "Move-Up" home........
By Alejandro Lazo, Los Angeles Times
Tax incentives spur sales. The median home price rises to $278,000, reflecting less a rise in housing values than a shift in sales toward more expensive coastal markets.
Fueled by tax incentives, California home sales rose in May, helping lift the Golden State's median home price by 20.9% from its year-earlier mark.
The median was $278,000 last month, MDA DataQuick of San Diego said, a 9% increase from April. But that reflects less a rise in the actual valuation of homes than a continued shift in sales away from cheaper, inland areas of the state toward more coastal markets.
That shift is being driven partly by an increasing willingness of owners in pricier neighborhoods to sell at a lower price, DataQuick has said. And much of the jump in sales has been driven by a surge of buyers rushing to close deals to take advantage of state and federal tax incentives.
"In the second half of the year, there's obviously going to be less wind in the market's sails, given the fading tax credits," MDA DataQuick President John Walsh said. "A healthier job market and low mortgage rates will be key to driving demand.
"A total of 40,965 new and previously owned houses, condominiums and town homes sold last month, a 9.3% increase from April and a 4.9% jump from May 2009. Experts fear that once the effects of the credits wane, sales and prices could slump again.
"Of course, you are going to see a slowdown; these programs basically steal sales from the future," said Christopher Thornberg, principal of Beacon Economics. "Now that may be a good policy option, but understand when you get to the future you are going to feel the effects of that. It's just the nature of the beast.
"The federal credits of up to $8,000 for first-time buyers and $6,500 for some current homeowners required that deals be reached by April 30 and close by June 30, though Senate Democrats have moved to extend the closing deadline to Sept. 30.
The California credits, which kicked in May 1, are for first-time buyers and purchasers of new homes, with $100 million set aside for each credit. The state credit for first-time buyers is quickly running out. The state's Franchise Tax Board said Thursday that it had received applications claiming an estimated 80% of the first-time credit. It expects to run out of money for the first-time credit much faster than the one for new homes as those sales often lag because of the time it takes to construct a home and because the resale market is much bigger. The state did not say Thursday how many applications had been received for the new-home credit.
In the San Francisco Bay Area, sales took off in some of the region's costlier neighborhoods last month, DataQuick reported, helping push the median home price above $400,000 for the first time since the U.S. was gripped by the financial crisis 21 months ago. The decline in bank-owned inventory there helped the median sale price for all property types reach $410,000, up 10.8% from April and 20.1% from May 2009. Sales jumped 18% in May over April and 11% over May 2009.
The Southland's median price rose 22.5% from its year-earlier level to $305,000, DataQuick said Tuesday, and sales jumped 7.2% from May 2009.
URL to Original Article:
http://www.latimes.com/business/realestate/la-fi-home-sales-20100618,0,4144904.story
By Alejandro Lazo, Los Angeles Times
Tax incentives spur sales. The median home price rises to $278,000, reflecting less a rise in housing values than a shift in sales toward more expensive coastal markets.
Fueled by tax incentives, California home sales rose in May, helping lift the Golden State's median home price by 20.9% from its year-earlier mark.
The median was $278,000 last month, MDA DataQuick of San Diego said, a 9% increase from April. But that reflects less a rise in the actual valuation of homes than a continued shift in sales away from cheaper, inland areas of the state toward more coastal markets.
That shift is being driven partly by an increasing willingness of owners in pricier neighborhoods to sell at a lower price, DataQuick has said. And much of the jump in sales has been driven by a surge of buyers rushing to close deals to take advantage of state and federal tax incentives.
"In the second half of the year, there's obviously going to be less wind in the market's sails, given the fading tax credits," MDA DataQuick President John Walsh said. "A healthier job market and low mortgage rates will be key to driving demand.
"A total of 40,965 new and previously owned houses, condominiums and town homes sold last month, a 9.3% increase from April and a 4.9% jump from May 2009. Experts fear that once the effects of the credits wane, sales and prices could slump again.
"Of course, you are going to see a slowdown; these programs basically steal sales from the future," said Christopher Thornberg, principal of Beacon Economics. "Now that may be a good policy option, but understand when you get to the future you are going to feel the effects of that. It's just the nature of the beast.
"The federal credits of up to $8,000 for first-time buyers and $6,500 for some current homeowners required that deals be reached by April 30 and close by June 30, though Senate Democrats have moved to extend the closing deadline to Sept. 30.
The California credits, which kicked in May 1, are for first-time buyers and purchasers of new homes, with $100 million set aside for each credit. The state credit for first-time buyers is quickly running out. The state's Franchise Tax Board said Thursday that it had received applications claiming an estimated 80% of the first-time credit. It expects to run out of money for the first-time credit much faster than the one for new homes as those sales often lag because of the time it takes to construct a home and because the resale market is much bigger. The state did not say Thursday how many applications had been received for the new-home credit.
In the San Francisco Bay Area, sales took off in some of the region's costlier neighborhoods last month, DataQuick reported, helping push the median home price above $400,000 for the first time since the U.S. was gripped by the financial crisis 21 months ago. The decline in bank-owned inventory there helped the median sale price for all property types reach $410,000, up 10.8% from April and 20.1% from May 2009. Sales jumped 18% in May over April and 11% over May 2009.
The Southland's median price rose 22.5% from its year-earlier level to $305,000, DataQuick said Tuesday, and sales jumped 7.2% from May 2009.
URL to Original Article:
http://www.latimes.com/business/realestate/la-fi-home-sales-20100618,0,4144904.story
Thursday, June 17, 2010
More Sales, Higher Prices May Indicate Shift in California Housing Market
"The average sales price for homes in the Central Valley is up between 10-12% from May 2009. Prices are ticking up around the state, just read................"
by DIANA GOLOBAY
The housing market in California showed rising sales and prices in May, indicating a possible shift in local areas.
Home sales in Southern California rose in higher-priced areas, while sales are accelerating in San Francisco. The monthly rate of mortgage defaults and subsequent level of foreclosures also drew back last month.
As discounted bargains dried up in SoCal's lower-cost inland areas, sales migrated to higher-priced coastal neighborhoods over the past year, according to San Diego-based real estate information provider MDA DataQuick.
A total 22,270 new and resale houses and condos closed escrow in May in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. It marked a 9.7% increase from the month before and a 7.2% increase from the same time a year earlier.
Tax incentives and low mortgage rates fed sales in mid- to high-end areas, where sellers have become more motivated over the last year, MDA said. The median sales price in SoCal jumped $20,000, or 7%, from April to $305,000. The median sales price, which topped $300,000 for the first time in 20 months, is now 22.5% higher than the same time last year.
"Last month's jump in the regional median sale price is the flipside of what we saw a year ago, when low-cost inland foreclosures dominated and sales in the costlier coastal towns struggled for a pulse," said MDA DataQuick president John Walsh. "Today the bargains on foreclosures are fewer and farther between, and the high-end is approaching a normal sales rate."
Walsh added: "The important thing to remember, though, is that what we saw in May was partly driven by government stimulus. In the second half of the year the market will have to stand on its own again, barring new forms of government involvement. Prices will be tested if there's any sudden move by lenders to release a flood of distressed properties."
North along the Californian coast, the San Francisco housing market is seeing a bit of its own revival. Home sales activity is accelerating, working inventory down from historic highs, according to the San Francisco Association of Realtors.
"As closed sales activity has rebounded, sellers have regained some leverage in negotiations," says Association president John Lee, in a statement. "Prices at the low-end of the market are stable while pricing volatility in higher-priced segments remains."
The median single-family home price rose slightly on a yearly basis to $752,500 in May. Despite the relatively flat appreciation, pricing conditions appear stable, according to the Rosen Consulting Group, a California-based real estate and regional economics research consulting firm.
"Rising housing affordability, driven by attractive pricing and low mortgage rates combined with a more optimistic view of the economy assisted by government incentives have brought buyers back to the market," the Rosen Consulting Group said in a statement.
"Recognizing the shifting market conditions, sellers who have been waiting for more favorable market conditions to place their homes on the market should begin to do so in coming months."
URL to Original Article:
http://www.housingwire.com/2010/06/16/more-sales-higher-prices-may-indicate-shift-in-california-housing-market
by DIANA GOLOBAY
The housing market in California showed rising sales and prices in May, indicating a possible shift in local areas.
Home sales in Southern California rose in higher-priced areas, while sales are accelerating in San Francisco. The monthly rate of mortgage defaults and subsequent level of foreclosures also drew back last month.
As discounted bargains dried up in SoCal's lower-cost inland areas, sales migrated to higher-priced coastal neighborhoods over the past year, according to San Diego-based real estate information provider MDA DataQuick.
A total 22,270 new and resale houses and condos closed escrow in May in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. It marked a 9.7% increase from the month before and a 7.2% increase from the same time a year earlier.
Tax incentives and low mortgage rates fed sales in mid- to high-end areas, where sellers have become more motivated over the last year, MDA said. The median sales price in SoCal jumped $20,000, or 7%, from April to $305,000. The median sales price, which topped $300,000 for the first time in 20 months, is now 22.5% higher than the same time last year.
"Last month's jump in the regional median sale price is the flipside of what we saw a year ago, when low-cost inland foreclosures dominated and sales in the costlier coastal towns struggled for a pulse," said MDA DataQuick president John Walsh. "Today the bargains on foreclosures are fewer and farther between, and the high-end is approaching a normal sales rate."
Walsh added: "The important thing to remember, though, is that what we saw in May was partly driven by government stimulus. In the second half of the year the market will have to stand on its own again, barring new forms of government involvement. Prices will be tested if there's any sudden move by lenders to release a flood of distressed properties."
North along the Californian coast, the San Francisco housing market is seeing a bit of its own revival. Home sales activity is accelerating, working inventory down from historic highs, according to the San Francisco Association of Realtors.
"As closed sales activity has rebounded, sellers have regained some leverage in negotiations," says Association president John Lee, in a statement. "Prices at the low-end of the market are stable while pricing volatility in higher-priced segments remains."
The median single-family home price rose slightly on a yearly basis to $752,500 in May. Despite the relatively flat appreciation, pricing conditions appear stable, according to the Rosen Consulting Group, a California-based real estate and regional economics research consulting firm.
"Rising housing affordability, driven by attractive pricing and low mortgage rates combined with a more optimistic view of the economy assisted by government incentives have brought buyers back to the market," the Rosen Consulting Group said in a statement.
"Recognizing the shifting market conditions, sellers who have been waiting for more favorable market conditions to place their homes on the market should begin to do so in coming months."
URL to Original Article:
http://www.housingwire.com/2010/06/16/more-sales-higher-prices-may-indicate-shift-in-california-housing-market
Wednesday, June 16, 2010
Low Mortgage Rates Help Block Double-Dip Threat: Morgan Stanley
"Somethings are too good to be true, but low interest rates are not among them. Buyers should take advantage, check this out......."
by JACOB GAFFNEY
The US economics team at financial firm Morgan Stanley (MS: 25.76 -0.73%) says in their latest research report that recent gains in the nation's economy point to a remote chance of a so-called double dip — where recent upticks in economic activity are only temporary — citing low mortgage rates as a key driver in drawing this conclusion.
"The dip in conventional 30-year mortgage rates to about 4.8% has triggered a minor refinancing boom; reduced debt service will further add to discretionary spending power for many mortgage borrowers," according to the report. "Taking these offsets into account, we expect net financial conditions to be roughly unchanged."
In their latest report, titled "Defying the Double Dip," authors Richard Berner and David Greenlaw look at several macroeconomic factors in coming to this result. Lower fuel costs and greater infrastructure spending, for example, are providing relief to the American economy at-large, something they don't see changing anytime soon.
"To be sure, the recent surge probably overstates the new upswing, but there remains ample unspent Federal funding," the economists write, "and officials are unlikely to turn off the spigot in an election year when incumbents are threatened."
The report cites "powerful offsets" like the strong dollar, along with low mortgage rates, as potential hedges against the risk of a double dip. Indeed, they concede there are large market worries over growing sovereign debt levels, especially in Europe, where higher borrowing is expected to be favored over austerity measures in the short term.
Paul Ashworth, a senior economist for Capital Economics, did not agree totally with the Morgan Stanley assessment in a note on US manufacturing levels today.
"It is possible we will see a more marked decline in the coming months, as Europe's woes start to affect global trade and domestic inventory rebuilding begins to slow," he wrote.
Ashworth adds that the recent appreciation in the dollar, particularly against the euro, and lower commodity prices mean that over the next 12 months the rise in import prices over the past year will be largely reversed.
"This is another reason to suspect that both headline and core consumer price inflation is going to fall to 0.5% by year-end."
The Morgan Stanley economists recognize the concern that a stronger dollar in concert with the sovereign crisis may promote deflation, but aren't on-board with the theory.
"In contrast, we think the fundamentals for pricing power are gradually improving," they conclude, again with the view of stability in the short term. "Climbing rents, accelerating prices at the early stages of the processing pipeline, and rising import prices all are starting to signal that inflation is bottoming."
URL to Original Article:
http://www.housingwire.com/2010/06/15/low-mortgage-rates-help-block-double-dip-threat-morgan-stanley
by JACOB GAFFNEY
The US economics team at financial firm Morgan Stanley (MS: 25.76 -0.73%) says in their latest research report that recent gains in the nation's economy point to a remote chance of a so-called double dip — where recent upticks in economic activity are only temporary — citing low mortgage rates as a key driver in drawing this conclusion.
"The dip in conventional 30-year mortgage rates to about 4.8% has triggered a minor refinancing boom; reduced debt service will further add to discretionary spending power for many mortgage borrowers," according to the report. "Taking these offsets into account, we expect net financial conditions to be roughly unchanged."
In their latest report, titled "Defying the Double Dip," authors Richard Berner and David Greenlaw look at several macroeconomic factors in coming to this result. Lower fuel costs and greater infrastructure spending, for example, are providing relief to the American economy at-large, something they don't see changing anytime soon.
"To be sure, the recent surge probably overstates the new upswing, but there remains ample unspent Federal funding," the economists write, "and officials are unlikely to turn off the spigot in an election year when incumbents are threatened."
The report cites "powerful offsets" like the strong dollar, along with low mortgage rates, as potential hedges against the risk of a double dip. Indeed, they concede there are large market worries over growing sovereign debt levels, especially in Europe, where higher borrowing is expected to be favored over austerity measures in the short term.
Paul Ashworth, a senior economist for Capital Economics, did not agree totally with the Morgan Stanley assessment in a note on US manufacturing levels today.
"It is possible we will see a more marked decline in the coming months, as Europe's woes start to affect global trade and domestic inventory rebuilding begins to slow," he wrote.
Ashworth adds that the recent appreciation in the dollar, particularly against the euro, and lower commodity prices mean that over the next 12 months the rise in import prices over the past year will be largely reversed.
"This is another reason to suspect that both headline and core consumer price inflation is going to fall to 0.5% by year-end."
The Morgan Stanley economists recognize the concern that a stronger dollar in concert with the sovereign crisis may promote deflation, but aren't on-board with the theory.
"In contrast, we think the fundamentals for pricing power are gradually improving," they conclude, again with the view of stability in the short term. "Climbing rents, accelerating prices at the early stages of the processing pipeline, and rising import prices all are starting to signal that inflation is bottoming."
URL to Original Article:
http://www.housingwire.com/2010/06/15/low-mortgage-rates-help-block-double-dip-threat-morgan-stanley
Survey Finds Nearly Half of Americans Can't Afford Large Down Payments on Mortgages
by JON PRIOR
Of more than 2,000 respondents to a survey conducted by the National Foundation for Credit Counseling (NFCC), nearly half — 49% — believe they will never afford a 20% down payment to purchase a home.
The NFCC said the discouraging news implies that buying a home will always be out of reach for these people. In the past, finding the money for a down payment was only a problem for first-time homebuyers, the NFCC said. After making the first purchase, borrowers could use the proceeds of selling it as a down payment on the next one. That was in an appreciating market, however.
"Due to today's turbulent housing market, the problem has now spread to those who currently own a home. Many mortgages are underwater. Thus, even if the homeowner is able to sell their current house, there may be no profit available to satisfy the down-payment on the next home," according to the NFCC survey report.
Gail Cunningham, a spokesperson for the NFCC, said with home prices averaging at just below $200,000, a 20% down payment – $40,000 – is "a nice chunk of change by any standard."
"Some may still be able to obtain an FHA loan with a low down-payment requirement, but those with poor credit will likely have to put a larger amount down. Even with the economy improving, considering the staggering number of people who are out of work and those whose retirement plans have been decimated, buying a home may no longer be a part of the American dream, at least not in the near future," Cunningham said.
While 12% of the respondents said they would have no trouble coming up with a 20% down payment, 20% said they would need a loan with a much lower down payment, and 18% said they would have to borrow the down-payment money regardless of how much is required.
URL to Original Article:
http://www.housingwire.com/2010/06/01/survey-finds-nearly-half-of-americans-cant-afford-large-down-payments-on-mortgages
Of more than 2,000 respondents to a survey conducted by the National Foundation for Credit Counseling (NFCC), nearly half — 49% — believe they will never afford a 20% down payment to purchase a home.
The NFCC said the discouraging news implies that buying a home will always be out of reach for these people. In the past, finding the money for a down payment was only a problem for first-time homebuyers, the NFCC said. After making the first purchase, borrowers could use the proceeds of selling it as a down payment on the next one. That was in an appreciating market, however.
"Due to today's turbulent housing market, the problem has now spread to those who currently own a home. Many mortgages are underwater. Thus, even if the homeowner is able to sell their current house, there may be no profit available to satisfy the down-payment on the next home," according to the NFCC survey report.
Gail Cunningham, a spokesperson for the NFCC, said with home prices averaging at just below $200,000, a 20% down payment – $40,000 – is "a nice chunk of change by any standard."
"Some may still be able to obtain an FHA loan with a low down-payment requirement, but those with poor credit will likely have to put a larger amount down. Even with the economy improving, considering the staggering number of people who are out of work and those whose retirement plans have been decimated, buying a home may no longer be a part of the American dream, at least not in the near future," Cunningham said.
While 12% of the respondents said they would have no trouble coming up with a 20% down payment, 20% said they would need a loan with a much lower down payment, and 18% said they would have to borrow the down-payment money regardless of how much is required.
URL to Original Article:
http://www.housingwire.com/2010/06/01/survey-finds-nearly-half-of-americans-cant-afford-large-down-payments-on-mortgages
Tuesday, June 15, 2010
Strike Strategic Default: Survey Finds Mortgage Payments Remain Borrower Priority
by DIANA GOLOBAY
Less than one-quarter, or 23%, of consumers recently polled indicated that opting for foreclosure is justifiable when a borrower is underwater, owing more on a home than its worth, according to the National Foundation for Credit Counseling (NFCC).
This idea of strategic default, when a borrower with the ability to pay chooses not to remain current on payments, was unacceptable to another 15% of survey respondents who said no circumstances justify walking away from the financial obligation.
"Taken together, the NFCC survey data brings us some encouraging news: consumers still place a priority on making their mortgage payment, less than one-fourth think that defaulting on a mortgage is justifiable simply because the property is underwater, and a significant number take mortgage obligations so seriously that they find no acceptable reason to default on a home loan," said NFCC spokesperson Gail Cunningham, in an e-mail.
NFCC noted that "the overwhelming majority" consider mortgage payments a priority, based on a survey of more than 2,000 adults conducted in March by Harris Interactive. When asked to choose between mortgages and credit cards, 91% of respondents indicated they would pay their mortgage first.
The survey is supported by recent findings from credit-rating agency Standard & Poor's and national credit bureau Experian, who saw monthly default rates fall for first and second mortgages and rise for bank card loans in April.
"Americans continue to prioritize their obligation to service their mortgage loan, and this is indeed good news for homeowners, mortgage lenders and the housing market overall," said NFCC's Cunningham.
URL to Original Article:
http://www.housingwire.com/2010/06/08/strike-strategic-default-mortgage-payments-remain-priority-in-borrower-mentality-nfcc-finds
Less than one-quarter, or 23%, of consumers recently polled indicated that opting for foreclosure is justifiable when a borrower is underwater, owing more on a home than its worth, according to the National Foundation for Credit Counseling (NFCC).
This idea of strategic default, when a borrower with the ability to pay chooses not to remain current on payments, was unacceptable to another 15% of survey respondents who said no circumstances justify walking away from the financial obligation.
"Taken together, the NFCC survey data brings us some encouraging news: consumers still place a priority on making their mortgage payment, less than one-fourth think that defaulting on a mortgage is justifiable simply because the property is underwater, and a significant number take mortgage obligations so seriously that they find no acceptable reason to default on a home loan," said NFCC spokesperson Gail Cunningham, in an e-mail.
NFCC noted that "the overwhelming majority" consider mortgage payments a priority, based on a survey of more than 2,000 adults conducted in March by Harris Interactive. When asked to choose between mortgages and credit cards, 91% of respondents indicated they would pay their mortgage first.
The survey is supported by recent findings from credit-rating agency Standard & Poor's and national credit bureau Experian, who saw monthly default rates fall for first and second mortgages and rise for bank card loans in April.
"Americans continue to prioritize their obligation to service their mortgage loan, and this is indeed good news for homeowners, mortgage lenders and the housing market overall," said NFCC's Cunningham.
URL to Original Article:
http://www.housingwire.com/2010/06/08/strike-strategic-default-mortgage-payments-remain-priority-in-borrower-mentality-nfcc-finds
A Look at Both Sides of the Argument over US Housing
What are you waiting for? Don't you think now is the perfect time to buy Real Estate? Experts say............
by QUINN EDDINS
The principal argument of those who expect home prices to improve steadily is that home prices have already fallen significantly from their peaks and homes are now affordable to a large group of prospective buyers. The decline in home prices over the last 3-4 years has released "pent-up demand" for housing that is more than sufficient to absorb the homes brought to market while keeping housing prices at current levels.
Richard DeKaser, a contributing economist to the Kiplinger Letter, supports the assertion that homes are now extraordinarily affordable by arguing that it now takes 18% of the typical household income to meet principal and interest payments on a single-family home, which compares favorably with the long-term averages of 26%.
Housing bulls also argue that housing credit will become more accessible in coming months and years. They point to the Federal Reserve's April survey of senior loan officers, which shows the majority of banks have reported no change in their lending standards for prime and nontraditional mortgages over the last three months. This is the first extended period in four years in which the majority of respondents have not reported tightening their lending standards.
Bulls also cite improving consumer confidence to bolster their arguments, referring to recent surveys by the University of Michigan that show nearly three-quarters of Americans believe this is a "good time to buy" a home.
What Housing Bears Say
Those who take a bearish view on housing prices point to the large supply of unsold homes, which is augmented by foreclosed homes owned by banks and other financial institutions, and argue that this supply will outstrip demand from potential buyers. They bolster their argument with references to millions of homes whose owners are delinquent in paying their mortgages, many (if not most) of which could produce new inventory in the form of real estate owned (REO) by financial institutions.
Housing bears also point out that much of the demand that helped to keep home prices stable in 2009 was a product of interventions into the housing market by the Federal Government which have now expired, or are set to do so soon.
Finally, some bears claim that nationwide price-to-rent and price-to-income ratios remain above their long-term averages. The above-average price-to-rent ratio suggests that renting a home is a better deal than purchasing a home. If home prices do not come back into alignment with rents, so the argument goes, people will choose to rent rather than buy a home, thereby reducing the demand for home ownership and contributing to a decline in home prices. Bears argue that the above-average price-to-income ratios indicate housing is still not as affordable as it has been in the past. They say that home prices will eventually have to come back into their long-term alignment with incomes.
The View from Radar Logic
For now, we are taking our place among the bears. Here are a few predictions:
1) The benefits of the housing tax credit will be temporary.
Last autumn, the $8,000 housing tax credit helped to delay much of the expected seasonal declines in the RPX Composite price until after the credit’s original November 30 expiration date. It appears that the credit motivated people who were likely to purchase a home to do so prior to December 2009. Even though the credit was extended in early November, many prospective buyers had already decided to make their move by then, so the pool of prospective buyers was depleted by December. As a result, the RPX Composite price and transaction count dropped sharply during December and January.
The same scenario is likely to play out this summer, when the deadline for completing home purchases eligible for the tax credit passes on June 30, 2010. We expect the RPX Composite prices and transaction counts to increase in May and June, as seasonal strength is augmented by a rush of activity ahead of the closing deadline for the tax credit. Then the Composite price and transaction count will drop quickly in July and August.
2) In the second half of the year, a faltering economic recovery will send the RPX Composite price to new lows.
A number of factors will weigh on the U.S. economy in the second half of 2010, including a decrease in Federal stimulus spending, an increase in household savings at the expense of consumption growth, the economic slowdown in China and Europe and cutbacks by state and local governments. In turn, the downturn in the national economy will weaken demand for housing and further increase the supply of real estate owned by financial institutions, as more homeowners fall behind on their mortgage payments and lose their homes to foreclosure.
3) Motivated sales and sales at the lower end of the price spectrum will make up a larger share of home sales, putting more downward pressure on the RPX Composite price.
Sales at the high-end of the home price spectrum will decline relative to sales at the low end of the spectrum, including motivated sales. High rates of negative equity will limit the number of homeowners who can sell their homes, and those who are able will be more likely to move into the rental market or purchase a less expensive home than to trade up into a more expensive home. The activity at the high end of the spectrum will be further limited by tightness in the jumbo mortgage market.
Notwithstanding reports from the Federal Housing Administration, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) that mortgage delinquencies have slowed in recent months, estimates by the MBA and Zillow indicate that there are still almost 5m loans more than 90 days past due or in foreclosure. As delinquent mortgages move through the foreclosure process — slowly, for now, but perhaps more rapidly in the near future — the inventory of bank-owned homes is going to increase barring a significant increase in the rate at which banks liquidate their REO inventory via motivated sales. Therefore we expect motivated transaction counts to either remain at their current levels or increase.
URL to Original Article:
http://www.housingwire.com/2010/06/11/a-look-at-both-sides-of-the-argument-over-us-housing
by QUINN EDDINS
The principal argument of those who expect home prices to improve steadily is that home prices have already fallen significantly from their peaks and homes are now affordable to a large group of prospective buyers. The decline in home prices over the last 3-4 years has released "pent-up demand" for housing that is more than sufficient to absorb the homes brought to market while keeping housing prices at current levels.
Richard DeKaser, a contributing economist to the Kiplinger Letter, supports the assertion that homes are now extraordinarily affordable by arguing that it now takes 18% of the typical household income to meet principal and interest payments on a single-family home, which compares favorably with the long-term averages of 26%.
Housing bulls also argue that housing credit will become more accessible in coming months and years. They point to the Federal Reserve's April survey of senior loan officers, which shows the majority of banks have reported no change in their lending standards for prime and nontraditional mortgages over the last three months. This is the first extended period in four years in which the majority of respondents have not reported tightening their lending standards.
Bulls also cite improving consumer confidence to bolster their arguments, referring to recent surveys by the University of Michigan that show nearly three-quarters of Americans believe this is a "good time to buy" a home.
What Housing Bears Say
Those who take a bearish view on housing prices point to the large supply of unsold homes, which is augmented by foreclosed homes owned by banks and other financial institutions, and argue that this supply will outstrip demand from potential buyers. They bolster their argument with references to millions of homes whose owners are delinquent in paying their mortgages, many (if not most) of which could produce new inventory in the form of real estate owned (REO) by financial institutions.
Housing bears also point out that much of the demand that helped to keep home prices stable in 2009 was a product of interventions into the housing market by the Federal Government which have now expired, or are set to do so soon.
Finally, some bears claim that nationwide price-to-rent and price-to-income ratios remain above their long-term averages. The above-average price-to-rent ratio suggests that renting a home is a better deal than purchasing a home. If home prices do not come back into alignment with rents, so the argument goes, people will choose to rent rather than buy a home, thereby reducing the demand for home ownership and contributing to a decline in home prices. Bears argue that the above-average price-to-income ratios indicate housing is still not as affordable as it has been in the past. They say that home prices will eventually have to come back into their long-term alignment with incomes.
The View from Radar Logic
For now, we are taking our place among the bears. Here are a few predictions:
1) The benefits of the housing tax credit will be temporary.
Last autumn, the $8,000 housing tax credit helped to delay much of the expected seasonal declines in the RPX Composite price until after the credit’s original November 30 expiration date. It appears that the credit motivated people who were likely to purchase a home to do so prior to December 2009. Even though the credit was extended in early November, many prospective buyers had already decided to make their move by then, so the pool of prospective buyers was depleted by December. As a result, the RPX Composite price and transaction count dropped sharply during December and January.
The same scenario is likely to play out this summer, when the deadline for completing home purchases eligible for the tax credit passes on June 30, 2010. We expect the RPX Composite prices and transaction counts to increase in May and June, as seasonal strength is augmented by a rush of activity ahead of the closing deadline for the tax credit. Then the Composite price and transaction count will drop quickly in July and August.
2) In the second half of the year, a faltering economic recovery will send the RPX Composite price to new lows.
A number of factors will weigh on the U.S. economy in the second half of 2010, including a decrease in Federal stimulus spending, an increase in household savings at the expense of consumption growth, the economic slowdown in China and Europe and cutbacks by state and local governments. In turn, the downturn in the national economy will weaken demand for housing and further increase the supply of real estate owned by financial institutions, as more homeowners fall behind on their mortgage payments and lose their homes to foreclosure.
3) Motivated sales and sales at the lower end of the price spectrum will make up a larger share of home sales, putting more downward pressure on the RPX Composite price.
Sales at the high-end of the home price spectrum will decline relative to sales at the low end of the spectrum, including motivated sales. High rates of negative equity will limit the number of homeowners who can sell their homes, and those who are able will be more likely to move into the rental market or purchase a less expensive home than to trade up into a more expensive home. The activity at the high end of the spectrum will be further limited by tightness in the jumbo mortgage market.
Notwithstanding reports from the Federal Housing Administration, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) that mortgage delinquencies have slowed in recent months, estimates by the MBA and Zillow indicate that there are still almost 5m loans more than 90 days past due or in foreclosure. As delinquent mortgages move through the foreclosure process — slowly, for now, but perhaps more rapidly in the near future — the inventory of bank-owned homes is going to increase barring a significant increase in the rate at which banks liquidate their REO inventory via motivated sales. Therefore we expect motivated transaction counts to either remain at their current levels or increase.
URL to Original Article:
http://www.housingwire.com/2010/06/11/a-look-at-both-sides-of-the-argument-over-us-housing
Friday, June 11, 2010
Mortgage Interest Rates Resume Weekly Slide
"It's a great time to buy Real Estate"
by DIANA GOLOBAY
Average 30-year fixed mortgage rates were down again in two weekly surveys after a slight uptick last week.
The Freddie Mac (FRE: 1.21 +0.83%) weekly survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 4.72% with an average 0.7 origination point for the week ending June 10, down from last week's 4.79% average, which interrupted a seven-week-long run of falling rates.
Meanwhile, the Bankrate survey of large banks and thrifts put the average rate for 30-year FRMs at a new low of 4.88% with a 0.5 origination point, down from 4.95% last week.
"Following a relatively weak employment report, bond yields fell this week and mortgage rates followed," said Freddie vice president and chief economist Frank Nothaft in a statement. "Private payrolls rose by 41,000 jobs in May, less than a quarter of the market forecast consensus of an 180,000 gain."
Bankrate, in its survey, added: "Nervous investors again piled into the safe haven of US Treasury notes, which helped bring mortgage rates to previously unseen levels. Weak hiring will further postpone the timeframe when the Federal Reserve begins boosting short-term interest rates, which is also helping keep mortgage rates low."
Freddie said the average rate for 15-year FRMs slipped down to 4.17% with an average 0.7 point, from last week's 4.2% average. Similarly, Bankrate's average for 15-year FRMs slid to 4.33% from 4.36% last week.
Freddie put the 5-year adjustable-rate mortgage (ARM) at an average 3.92% with an average 0.7 point, down from last week's 3.94%. It also put the 1-year FRM down to an average 3.91% with an average 0.6 point, from last week's 3.95%. The Bankrate average for 5/1 ARMs slipped to 4.16%, from last week's 4.21%.
URL to Original Article:
http://www.housingwire.com/2010/06/10/mortgage-interest-rates-resume-weekly-slide
by DIANA GOLOBAY
Average 30-year fixed mortgage rates were down again in two weekly surveys after a slight uptick last week.
The Freddie Mac (FRE: 1.21 +0.83%) weekly survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 4.72% with an average 0.7 origination point for the week ending June 10, down from last week's 4.79% average, which interrupted a seven-week-long run of falling rates.
Meanwhile, the Bankrate survey of large banks and thrifts put the average rate for 30-year FRMs at a new low of 4.88% with a 0.5 origination point, down from 4.95% last week.
"Following a relatively weak employment report, bond yields fell this week and mortgage rates followed," said Freddie vice president and chief economist Frank Nothaft in a statement. "Private payrolls rose by 41,000 jobs in May, less than a quarter of the market forecast consensus of an 180,000 gain."
Bankrate, in its survey, added: "Nervous investors again piled into the safe haven of US Treasury notes, which helped bring mortgage rates to previously unseen levels. Weak hiring will further postpone the timeframe when the Federal Reserve begins boosting short-term interest rates, which is also helping keep mortgage rates low."
Freddie said the average rate for 15-year FRMs slipped down to 4.17% with an average 0.7 point, from last week's 4.2% average. Similarly, Bankrate's average for 15-year FRMs slid to 4.33% from 4.36% last week.
Freddie put the 5-year adjustable-rate mortgage (ARM) at an average 3.92% with an average 0.7 point, down from last week's 3.94%. It also put the 1-year FRM down to an average 3.91% with an average 0.6 point, from last week's 3.95%. The Bankrate average for 5/1 ARMs slipped to 4.16%, from last week's 4.21%.
URL to Original Article:
http://www.housingwire.com/2010/06/10/mortgage-interest-rates-resume-weekly-slide
Wednesday, June 9, 2010
California Senate Passes Foreclosure Legislation
by JON PRIOR
The California State Senate passed legislation this week in an effort to prevent avoidable foreclosures.
Senate Bill (SB) 1275 requires mortgage servicers to notify borrowers of a right to seek options that would avoid foreclosure and attach an application for a loan modification or other alternatives before issuing a notice of default (NOD). Also before filing an NOD, servicers must evaluate a borrower who submits a written request for a loan modification. For those denied one, a separate letter must be mailed to the borrower informing them of the denial and reasons why.
The bill was authored by Sen. Mark Leno (D-San Francisco) and Senate President Pro Tem Darrell Steinberg (D-Sacramento). The bill will now move to the California State Assembly for consideration by the Assembly Banking Committee.
Eligible mortgages must have been originated before Jan. 1, 2009 and must be a single-family, owner-occupied residential property.
Under the bill, servicers must file a new declaration of compliance before recording the NOD. It is a checklist of all of the requirements completed before the NOD is filed. If this new document is not filed, damages could be awarded to the borrower, and the foreclosure could be voided.
Also, if the home is sold at auction out of servicer error, recourse is provided in the form of a private right of action. It allows eligible homeowners to seek limited damages and could even reverse the foreclosure sale. Before the bill passed, there was no recourse for erroneous foreclosure sales.
According to the Center for Responsible Lending, servicers are initiating the foreclosure process while handling borrower’s requests for resolutions.
“Simple fairness dictates that no one should lose their home while they are in the middle of trying to save it,” said Paul Leonard, director of the California office of the Center for Responsible Lending.
According to RealtyTrac, an online foreclosure marketplace, one in 192 homes received a foreclosure filing in April 2010. It’s the fourth highest foreclosure rate in the country.
Another California bill requiring servicers and borrowers to attend foreclosure mediations passed the Assembly Appropriations Committee last week and should reach the floor in early June.
URL to Original Article:
http://www.housingwire.com/2010/06/04/california-senate-passes-foreclosure-legislation
The California State Senate passed legislation this week in an effort to prevent avoidable foreclosures.
Senate Bill (SB) 1275 requires mortgage servicers to notify borrowers of a right to seek options that would avoid foreclosure and attach an application for a loan modification or other alternatives before issuing a notice of default (NOD). Also before filing an NOD, servicers must evaluate a borrower who submits a written request for a loan modification. For those denied one, a separate letter must be mailed to the borrower informing them of the denial and reasons why.
The bill was authored by Sen. Mark Leno (D-San Francisco) and Senate President Pro Tem Darrell Steinberg (D-Sacramento). The bill will now move to the California State Assembly for consideration by the Assembly Banking Committee.
Eligible mortgages must have been originated before Jan. 1, 2009 and must be a single-family, owner-occupied residential property.
Under the bill, servicers must file a new declaration of compliance before recording the NOD. It is a checklist of all of the requirements completed before the NOD is filed. If this new document is not filed, damages could be awarded to the borrower, and the foreclosure could be voided.
Also, if the home is sold at auction out of servicer error, recourse is provided in the form of a private right of action. It allows eligible homeowners to seek limited damages and could even reverse the foreclosure sale. Before the bill passed, there was no recourse for erroneous foreclosure sales.
According to the Center for Responsible Lending, servicers are initiating the foreclosure process while handling borrower’s requests for resolutions.
“Simple fairness dictates that no one should lose their home while they are in the middle of trying to save it,” said Paul Leonard, director of the California office of the Center for Responsible Lending.
According to RealtyTrac, an online foreclosure marketplace, one in 192 homes received a foreclosure filing in April 2010. It’s the fourth highest foreclosure rate in the country.
Another California bill requiring servicers and borrowers to attend foreclosure mediations passed the Assembly Appropriations Committee last week and should reach the floor in early June.
URL to Original Article:
http://www.housingwire.com/2010/06/04/california-senate-passes-foreclosure-legislation
Foreclosed Properties Held by Banks Up 12.4% in Q110: SNL Financial
by JON PRIOR
Foreclosed properties held by US banks reached $41.5bn in Q110, a 12.4% increase from the previous quarter, according to data analysis firm SNL Financial.
The amount of foreclosed properties jumped from $36.9bn at the end of 2009. At the end of the first quarter in 2008, that number was $11.7bn. Andrew Schukman, an analyst at SNL Financial said that the amount of one-to-four family properties in some stage of the foreclosure process (and not yet an REO) reached $78.6bn in Q110, up 9.1% from the end of last year.
The amount of REO property held by the banks is also known as the “shadow inventory” of foreclosures. According to Morgan Stanley, it would take 47 months for the market to clear the roughly 7.5m first-lien mortgages in danger or already in foreclosure.
REO assets took up 0.3% of commercial and savings bank balance sheets in Q110, up from 0.1% in Q108. While the volume of REO continues to grow, the type of real estate being taken back has changed. According to SNL Financial data, 40% of the total amount of REO in the US is construction and land development properties, up from 24.3% in Q108. One-to-four family REO fell to 28.45, compared to 44.5% in Q108.
Commercial REO made up 18%, while multifamily properties accounted for 6.1% of all REO.
URL to Original Article:
http://www.housingwire.com/2010/06/04/foreclosed-properties-held-by-banks-up-12-4-in-q110-snl-financial
Foreclosed properties held by US banks reached $41.5bn in Q110, a 12.4% increase from the previous quarter, according to data analysis firm SNL Financial.
The amount of foreclosed properties jumped from $36.9bn at the end of 2009. At the end of the first quarter in 2008, that number was $11.7bn. Andrew Schukman, an analyst at SNL Financial said that the amount of one-to-four family properties in some stage of the foreclosure process (and not yet an REO) reached $78.6bn in Q110, up 9.1% from the end of last year.
The amount of REO property held by the banks is also known as the “shadow inventory” of foreclosures. According to Morgan Stanley, it would take 47 months for the market to clear the roughly 7.5m first-lien mortgages in danger or already in foreclosure.
REO assets took up 0.3% of commercial and savings bank balance sheets in Q110, up from 0.1% in Q108. While the volume of REO continues to grow, the type of real estate being taken back has changed. According to SNL Financial data, 40% of the total amount of REO in the US is construction and land development properties, up from 24.3% in Q108. One-to-four family REO fell to 28.45, compared to 44.5% in Q108.
Commercial REO made up 18%, while multifamily properties accounted for 6.1% of all REO.
URL to Original Article:
http://www.housingwire.com/2010/06/04/foreclosed-properties-held-by-banks-up-12-4-in-q110-snl-financial
Tuesday, June 1, 2010
Welcome Aboard New Agents
I just wanted to announce 12 new sales associates that have joined our family in the month of May. I don't know if anyone caught the Fresno Bee article on the front page on Saturdays paper, but it talked about all time low home prices mix with low interest rates make this an awesome buyers market. And a great time for a person to get their real estate license and jump into selling.
Please welcome the following agents into our Fresno main office; Shiela Contrestano, Randy Ingram, Patrick McZenzie & Kimberly Bloem. These agents are new to the real estate industry and will be selling real estate full time.
Please welcome Steven Weagel, Steven is a new sales assocaite and will be working out of Merced office.
The following agents are seasoned agents and will also be working out of Fresno main office. Welcome aboard Tomasa Bonilla formerly of The Housing Connection, Christie Majors formerly of Guarantee Real Estate, Linda Bishop formerly of Mike Briggs Realty, Chaypet Phasouvor formerly of Pulti Home Corp. & Wade Hanson formerly of First Bankers.
We also have brought on board two seasoned agents for our Clovis office which are; Nick Guerrero formally of Guarantee & Sera Baber formerly of Realty Concepts.
We are so happy to have these wonderful sales associates on board with us and we look forward to working with them for years to come.
Please welcome the following agents into our Fresno main office; Shiela Contrestano, Randy Ingram, Patrick McZenzie & Kimberly Bloem. These agents are new to the real estate industry and will be selling real estate full time.
Please welcome Steven Weagel, Steven is a new sales assocaite and will be working out of Merced office.
The following agents are seasoned agents and will also be working out of Fresno main office. Welcome aboard Tomasa Bonilla formerly of The Housing Connection, Christie Majors formerly of Guarantee Real Estate, Linda Bishop formerly of Mike Briggs Realty, Chaypet Phasouvor formerly of Pulti Home Corp. & Wade Hanson formerly of First Bankers.
We also have brought on board two seasoned agents for our Clovis office which are; Nick Guerrero formally of Guarantee & Sera Baber formerly of Realty Concepts.
We are so happy to have these wonderful sales associates on board with us and we look forward to working with them for years to come.
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