Bernanke: More Needs to Be Done to Help Housing

Federal Reserve Chairman Ben Bernanke urged lawmakers to form “strong housing policies to help the housing market recovery” and advance the economy. Bernanke made the comments during a Q&A session following a speech in Cleveland on Tuesday about emerging market economies. His remarks come at a time when more than 6.3 million homes are 30 days or more behind on their mortgage payments or in foreclosure, according to Lender Processing Services. Get your own online store -- in minutes! GoDaddy.com Quick Shopping Cart® The Fed has taken steps that have been keeping mortgage rates hovering at or near record lows in recent weeks, but with unemployment still high, Bernanke said that record-low interest rates don’t seem to be helping the housing crisis. During the speech, Bernanke called long-term unemployment a “national crisis.” About 6.2 million Americans, or 45.1 percent of all unemployed, have been jobless for more than six months — a total that is at its highest point since the Great Depression, HousingWire reports in citing government stats. "Clearly getting more money into the hands of home owners who spend it could help to fuel GDP growth," Eric Rosengren, president of the Federal Reserve Bank of Boston, said in remarks on Wednesday. "This would reduce one of the impediments to a more significant effect from the monetary policy actions taken to date." Source: “Bernanke Calls for More Housing Help from Washington,” HousingWire (Sept. 28, 2011)

Pending Home Sales Dip in August

Pending home sales slipped in August with a mixed regional performance but are higher than a year ago, according to the National Association of REALTORS®. The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 1.2 percent to 88.6 in July from 89.7 in July but is 7.7 percent above August 2010 when it stood at 82.3. The data reflects contracts but not closings. Lawrence Yun, NAR chief economist, said the decline reflects an uneven market. “The biggest monthly decline was in the Northeast, which was significantly disrupted by Hurricane Irene in the closing weekend of August,” he said. “But broadly speaking, contract signing activity has been holding in a narrow range for many months.” The PHSI in the Northeast fell 5.8 percent to 63.6 in August but is 1.3 percent higher than August 2010. In the Midwest, the index declined 3.7 percent to 76.2 in August but is 8.2 percent above a year ago. Pending home sales in the South rose 2.6 percent to an index of 96.9 and are 7.6 percent higher than August 2010. In the West, the index dropped 2.4 percent to 108.1 in August but is 10.5 percent above a year ago.Sign up to receive the best daily deals! Yun said the market is underperforming given a pent-up demand in household formation. “We continue to experience a pattern in which financially qualified home buyers, willing to stay well within their means, are being denied credit – a factor in elevated levels of contract failures,” he said. “Based on the improving fundamentals of population growth, some job additions, rent increases and higher stock market wealth, we should be seeing existing-home sales closer to 5.5 million, but are expecting just over 4.9 million this year. The unnecessarily restrictive mortgage underwriting standards are attenuating the housing recovery and are a risk factor for the overall economy.” Although economic growth as measured by the gross domestic product is expected to remain positive, uncertainty is causing some consumer hesitation. “We need to remove the road blocks to the housing recovery for people who are trying to take advantage of excellent affordability conditions,” Yun added. “Unfortunately, some buyers also will face notably higher mortgage rates on jumbo loans because of a lack of competition in the banking industry.” Source: NAR

Moody's: U.S. CMBS Loan Delinquencies Decline to 9.01%

The delinquency rate on loans held in U.S. commercial mortgage-backed securities (CMBS) fell 23 basis points in August to 9.01 percent, according to Moody’s Investors Service. Based on the New York-based agencies market assessment, the rate of loans in special servicing also declined last month, falling 7 basis points to 12.23 percent. Even with a slip in the numbers, Moody’s notes that August was the eighth consecutive month that delinquencies in the U.S. have been above the 9 percent mark. The resolutions of delinquent loans continued to exceed new delinquencies in August. Last month, there were $4.1 billion in resolutions versus $2.6 billion in new delinquencies.Avoid Foreclosure. Modify your loan. Eliminate your back payments, and save your home The difference lowered the total amount of delinquent loans to $54.0 billion from $55.6 billion the month before. Moody’s reports two new deals totaling $3.1 billion joined the CMBS fray, but approximately $4.7 billion of CMBS exited. Total outstanding CMBS issuance now stands at $599.5 billion, the first time that the CMBS universe has been less than $600 billion since February 2007, according to Moody’s. By property type, the hotel sector saw the greatest improvement in its delinquency rate in August, as it fell by 44 basis points during the month to 14.56 percent. Industrial saw the biggest increase, as its delinquency rate rose by 43 basis points last month to hit 11.2 percent. The multifamily sector continues to have the highest delinquency rate, at 15.21 percent. That reflects an 8 basis point increase between July and August. The office and retail property sectors are holding on to the lowest delinquency rates at around 7 percent. During August, the office delinquency rate fell 23 basis points to 7.36 percent, while the retail delinquency rate dropped 29 basis points to 7.08 percent. By region, the South and West both saw improvements in their delinquency rates last month. The rate for the South declined by 67 basis points to 10.37 percent, while in the West it fell 54 basis points to 8.28 percent. The Midwest delinquency rate increased by 32 basis points to 9.67 percent. The delinquency rate in the East was nearly unchanged versus the prior month, declining by one basis point to 7.50 percent. Los Angeles and Washington D.C. rank as the strongest performers among major markets, with delinquency rates less than half the national average. Las Vegas and Riverside are the two weakest performers, both with delinquency rates more than twice the national average.

Proprietary Modifications Unchanged, Foreclosure Starts Rise

Servicers completed about 56,000 proprietary permanent loan modifications in the month of August – similar to their July efforts. Most of these modifications included reduced principal and interest payments and fixed interest rates for five years or more, according to HOPE NOW data released Wednesday. About 83 percent of proprietary modifications completed in August insured a fixed interest rate for at least five years, up from 76 percent in July. The same percentage of modifications included reductions in loan principal and interest in August. This is an increase of 3 percent from the previous month. About 68 percent offered homeowners a reduction of at least 10 percent on their principal and interest payments, up 8 percent from July. Are You Looking to Refinance? Don't wait! Lock in at record low rates. Start today and start saving. The total number of loan modifications completed since HOPE NOW began reporting data in 2007 has reached 4.86 million. Servicers completed more than 4.06 million of these modifications, while about 790,000 loans were modified under the government’s Home Affordable Modification Program (HAMP). HAMP’s August data has not yet been released. HOPE NOW reports about 690,000 loans have been modified this year. “HOPE NOW’s servicing partners continue to complete permanent loan modifications at a rate consistent with past months – in spite of tremendous negative impact of the continued housing and unemployment crisis,” Faith Schwartz, executive director of HOPE NOW, states. “And, in cases where modifications are not possible, the industry is working hard to educate at-risk homeowners about the options available to them,” Schwartz adds. While proprietary loan modifications remained level from July to August, foreclosure starts increased 18 percent, rising from 185,000 in July to 218,000 in August. Completed foreclosure sales also increased for the month, rising 5 percent from 65,000 to 68,000. The number of homeowners 60 or more days delinquent fell slightly from July to August, falling from 2.81 million to 2.80 million. HOPE NOW is an alliance of private sector mortgage industry professionals, including servicers, investors, mortgage insurers, and nonprofit counselors.

Case-Shiller: Home Prices Show Seasonal Strength, Down From Last Year

Even with a seasonal uptick in the month of July, home prices are falling short of their levels a year earlier, according to data released Tuesday morning by Standard & Poor’s. Both the 20-city and 10-city composite readings of the S&P/Case-Shiller index rose 0.9 percent between June and July, but were down 4.1 percent and 3.7 percent, respectively, when compared to July 2010. Washington, D.C. and Detroit were the only metropolitan areas to buck the annual trend. In the nation’s capital city, home prices are up 1.3 percent from July of last year. Motor City posted a positive annual rate of change of 0.3 percent. While most markets are struggling to return to their year-ago levels, there are some having trouble treading water even when comparing the short-term stats. Seventeen of the 20 metros covered by the Case-Shiller study saw positive monthly increases in July. However, Las Vegas and Phoenix were down for the month and Denver was unchanged. The S&P/Case-Shiller index has recorded month-over-month increases in home prices overall for four consecutive months (April-July), reflecting the typical movement that accompanies the spring and summer homebuying seasons. S&P’s David Blitzer sees positives in the data even beyond that. “With July’s data we are seeing not only anticipated monthly increases, but some fairly broad improvement in the annual rates of change in home prices,” said Blitzer, who is chairman of the index committee at S&P Indices. “This is still a seasonal period of stronger demand for houses, so monthly price increases are expected and were seen in 17 of the 20 cities….The better news is that 14 of 20 cities and both composites saw their annual rates of change improve in July,” Blitzer said. The latest Case-Shiller results were in line with market expectations. Galen Ward, CEO of the real estate brokerage web site Estately.com points out that last year’s summer buying season ended earlier than usual as buyers rushed to close before June 30 to take advantage of the federal government’s homebuyer tax credit incentive. “All that extra buying activity…right before the tax credit deadline drove up home prices, so it makes sense that we’re still seeing a year-over-year decline. Remember, the July Case-Shiller covers a rolling average of May, June, and July sales prices,” Ward said. He also noted that the slight monthly increase recorded in the composite readings is likely related to the number of foreclosure filings, which have been consistently declining month-over-month. RealtyTrac shows a 4 percent drop in foreclosure filings for July when compared to June. “Since foreclosures tend to sell for less than non-distressed properties, average home prices go up in concert with a drop in foreclosure listings,” Ward explained, adding that “a slight rise in home values for July is also in step with the Consumer Confidence Index, which rose slightly to 59.5 from June’s 57.6.” Dr. Stan Humphries, chief economist for the online mortgage marketplace Zillow, pegged the July Case-Shiller results very close to their actual readings. Humphries issued a forecast on Monday just before the Case-Shiller release. He projected a 1.2 percent gain month-over-month for the 20-city composite and a 4 percent decline year-over-year. Humphries notes that “the market is full of conflicting signals right now.” Still, he believes the numbers will show weaker housing performance in the back half of this year, dampened by concerns over global economic crises, weak employment growth here in the states, and low consumer confidence. “Looking ahead, expect fading monthly momentum in Case-Shiller,” Humphries said.

Short Sale Delays Drive First-Time Buyers From Market: Survey

Processing delays have taken their toll on first-time homebuyer interest in short sales, according to the latest HousingPulse Tracking Survey released by Campbell Surveys and Inside Mortgage Finance Monday. First-time homebuyers were a part of 39.7 percent of the short sale transactions completed in August, the HousingPulse survey found. That tally marks a three-month slide in the share of short sales that went to first-time buyers, and is the lowest percentage for this buyer segment ever recorded by the survey. The first-time homebuyer share of short sales hit a peak of 54.1 percent of all short sale transactions in November 2009, just before the originally-scheduled expiration of the federal homebuyer tax credit, according to Campbell Surveys. Short sale transactions have garnered a reputation for being problematic for buyers and sellers alike, with typical approval times of several months after a homebuyer first submits an offer. Campbell Surveys has found that factors slowing down short sale approvals include lost paperwork, coordination with multiple investors, slow appraisals, and mortgage servicer understaffing. With average time-on-market for short sales stalled at 16.6 weeks – with the majority of that time spent waiting for approval of the transaction – short sale transactions are becoming less popular with first-time homebuyers, according to the polling firm Still, for some first-time homebuyers, average short sale prices of 27 percent less than non-distressed properties compensated for the wait time, Campbell Surveys said. Short sales are just one type of distressed property, with foreclosed REO homes also a significant component of today’s housing market. In August, the HousingPulse survey found that short sales accounted for 17.1 percent of the home purchase market, with damaged REO and move-in ready REO accounting for 13.2 percent and 15.6 percent, respectively. Real estate agents responding to the August survey indicated that homebuyers frustrated with short sale delays are resorting to placing offers on multiple properties, with the intention of closing on only one. This practice can further bog down the short sale approval process. The state of California is a hotbed of short sale activity, with these sales accounting for 31 percent of home purchases in the month of August, according to the HousingPulse survey. “Short sales buyers/investors were generally looking at several properties and if one already had first and second approval, buyers would move towards the property that had a better chance of closing sooner. They would get tired of waiting on the short sale process,” commented one California agent. “I feel that selling agents are telling the buyers it’s okay to write multiple offers because they can walk away with no risk, especially on short sales,” reported another agent. The HousingPulse Tracking Survey from Campbell Surveys and Inside Mortgage Finance polls approximately 2,500 real estate agents nationwide each month to assess market trends surrounding homes sales and mortgage lending

OCC: Servicers to Spend One Year or More Reviewing Foreclosures

IIt will be a long road ahead for the 14 servicers who received consent orders from federal regulators earlier this year. Acting Comptroller of the Currency John Walsh says the servicers will spend the next year or more recompensing for past documentation errors related to foreclosure processing. “Unfortunately, such a complex process will take another year and more to complete,” Walsh stated before the Institute for International Finance Friday. “I wish it could be completed more quickly,” he added, “but it’s important that it be done correctly and in a way that assures fair treatment for homeowners who underwent foreclosure proceedings.” Walsh believes this is the only way to restore confidence to the market. Under the direction of the OCC, the 14 servicers must hire an independent consultant to review cases in which foreclosed borrowers believe they suffered monetary damages due to wrongful actions by their servicers. “This effort includes a massive campaign to get information out to affected borrowers,” Walsh stated. The campaign will include mailings, tracing techniques, and advertising. In addition, the servicers are to establish a single website and toll-free number through which borrowers can access necessary forms and information. Walsh notes that this is a massive project, and “[j]ust contacting all those eligible for review to provide necessary information will be a challenge.” In fact, about 4.5 million loans will be up for review. Walsh is confident the process will bring fair treatment for borrowers, ensuring “that at-risk borrowers get a fair chance to stay in their homes, while assuring that those who do find themselves in foreclosure receive appropriate protection and due process under the law,” he said. “The challenges before us are substantial, but so are the steps we have taken in our enforcement orders. I believe that we are on track to settle outstanding issues in a way that respects the needs of all who have truly suffered from flaws in the system and restores confidence in the system,” Walsh stated. “The sooner the better.”