Saturday, December 31, 2011

Lenders Gain More Acceptance Over Short Sales

Lenders are increasingly becoming more accepting over short sales as they seek more solutions to help struggling home owners avoid foreclosure, according to a recent article at

"Foreclosure sales are pretty devastating," Faith Schwartz, executive director of Hope Now, a resource for cash-strapped home owners, told "We'd much prefer a [loan] modification, but if [home owners] don't quality, then the next best alternative is deed-in-lieu or short sales."

Short sales and foreclosures increased in 2010, but in 2011, short sales continued to climb even more (increasing 26,000 nationwide) while foreclosures dropped by 255,000, according to Hope Now data.

Banks are realizing that a short sale is far more preferable than a foreclosure in most cases. For one, banks tend to make more money off of a short sale vs. foreclosure: The average price of a foreclosed home in the second quarter of 2011 was $164,217 compared to $192,129 for a short sale. Also, foreclosures tend to be more costlier to a lender in legal and administrative resources too.

Neighborhoods also tend to benefit more from a short sale than a foreclosure because short sales tend to sell for less of a discount and, unlike a foreclosure, they don’t often sit vacant, which can make them prime targets for vandalism and depressing nearby property values, housing experts say.

Source: “Increase in Short Sales Give Market a Little Breathing Room,” (Dec. 29. 2011)

Positive Market Report Sends Housing Stocks Soaring

Good news spread Thursday for home builders, home improvement companies, and mortgage lenders, as stocks ticked up after the National Association of REALTORS® released a new report showing that pending home sales in November reached their highest level in a year-and-a-half.

Pending home sales — a gauge for the future of the market — increased 7.3 percent in November to a reading of 100.1, NAR reported in its index. (A reading of 100 is considered healthy for the real estate market.)

Analysts are predicting that 2012 will mark a turnaround for the real estate market, after years of a drastic slowdown in activity.

Stocks inched up on Thursday for several home builders. For example, Hovnanian Enterprises Inc., saw the biggest rise in shares following Thursday’s report, with shares increasing 9 cents, or nearly 7 percent, to trade at $1.39. Also, homebuilders D.R. Horton Inc. saw shares rise 45 cents, or 3.7 percent, to $12.65; Lennar Corp. added 77 cents, or 4.1 percent, to $19.75; and PulteGroup Inc. gained 28 cents, or 4.8 percent, to $6.24, the Associated Press reported.

Also, mortgage companies also saw an increase to their stocks. For example, Bank of America shares increased 11 cents, or 2.1 percent, to $5.40 on Thursday while Huntington increased 16 cents, or 2.8 percent, to $5.63; and Wells Fargo shares jumped 55 cents, or 2 percent, to $27.66.

Source: “Housing Stocks Up on Pending Sales Report,” Associated Press (Dec. 29, 2011)

Buyer vs. Seller on Home Prices

Housing analysts are expecting home prices to stabilize in 2012, but that doesn’t mean that buyers and sellers won’t continue to be at odds over home prices in the new year.

While buyers are feeling good about the housing market and saying its a great time to buy, seller sentiment is falling to record low, a new report by the Mortgage Bankers Association shows. Sellers say they are unhappy because they’re unable to snag the prices for the home that they want.

According to the MBA report, a large gap is occurring between home buying and home selling that isn’t expected to narrow for at least the next five quarters.

From 1992 to 2005, seller sentiment remained high — between 40 percent and 60 percent, according to the report. However, since 2005, seller sentiment has decreased to 7.6 percent. Meanwhile, home buyer sentiment has remained high despite unemployment and economic conditions. Nearly 80 percent of American households say now is a good time to purchase a home.

As home values have dropped over the last few years, many sellers are refusing to budge on their prices to reflect current market traditions. One reason why: Some sellers are underwater on their homes. About 20 percent of home owners nationwide are considered “underwater,” owing more on their mortgage than their home is currently worth. Also, some sellers are realizing there may be a benefit in waiting to sell or to keep the home on the market holding out for a higher price, notes the author of the report, Gary Engelhardt, a Syracuse economics professor. “This could hold prices high enough to drive a substantial wedge between the existing buyer and seller. And a poor jobs market with limited mobility, a key driver of housing-market transactions, may exacerbate this,” an article at HousingWire notes about the report.

Source: “Buyers, Sellers Continue to Butt Heads on Home Prices,” HousingWire (Dec. 29, 2011)

Mortgage Rates End the Year Near Record Lows

Home buyer affordability continues to be pushed higher due to mortgage rates remaining at record lows, Freddie Mac reports in its weekly mortgage market survey.

"Mortgage rates ended the year hovering near historic lows in an already affordable housing market,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement. With affordability so high, Nothaft notes “it's not surprising then that over 5 percent of households in December plan to purchase a home over the next six months, the highest share since May,” according to The Conference Board.

For the ninth consecutive week, 30-year fixed-rate mortgages, the most popular choice among home buyers, have been at or below 4 percent. In fact, only twice this year did 30-year rates average above 5 percent, Freddie Mac reports.

Here’s a closer look at rates for the week ending Dec. 29.

30-year fixed-rate mortgages: averaged3.95 percent, with an average 0.7 point, inching up from last week’s all-time record--a 3.91 percent average. A year ago at this time, 30-year rates averaged 4.86 percent.
15-year fixed-rate mortgages: averaged 3.24 percent, with an average 0.8 point, also up slightly compared to last week’s record 3.21 percent average. Last year at this time, 15-year rates averaged 4.20 percent.
5-year adjustable-rate mortgages: averaged 2.88 percent, with an average 0.6 point, increasing from last week’s 2.85 percent average. Last year at this time, the 5-year ARM averaged 3.77 percent.
1-year ARMs: averaged 2.78 percent, with an average 0.6 point, slightly up from last week’s 2.77 percent average. A year ago, 1-year ARMs averaged 3.26 percent.
Source: Freddie Mac

What Had the Biggest Impact on Housing in 2011?

The “government, the mortgage industry, and forces of nature all shook the housing market in 2011,” according to a recent Time magazine article, which highlights the key issues that had the greatest impact on the real estate market this year--and what’s expected to have a major impact in the new year as well.

Here are a few of the issues that the Time magazine article by Jed Kolko, Trulia’s chief economist, notes as having some of the greatest impact:

1. The robo-signing scandal

The issue: Banks were accused of approving numerous foreclosures without proper reviews when a robo-signing scandal first broke in October 2010, continuing well-into 2011.

The fallout: Banks slowed their processing of foreclosures greatly in 2011, making sure to take extra precautions. Regulators and states are working on a settlement with banks over the scandal — one that could include reducing loan balances of current home owners, if approved. Once a settlement is in place, housing experts predict the pace of foreclosures to pick up in 2012.

2. Natural disasters

The issue: A series of natural disasters wreaked havoc on real estate in 2011, from tornados, floods, and hurricanes. The National Flood Insurance Program was pushed into the spotlight, a program still financially strapped after Hurricane Katrina. The program’s insurance premiums were not fully covering insurance claims in disasters this year, according to the Time magazine article.

The fallout: For home owners living in flood-prone areas, “you can’t get a mortgage if you don’t have flood insurance,” the Time magazine article notes. “Without NFIP, housing markets in these areas would skid to a stop.” NFIP recently received an extension until May 2012 but experts say the future of the program still remains uncertain.

3. The conforming loan limit

The issue: In October, the government lowered the conforming loan limit for loans backed by Fannie Mae and Freddie Mac as well as those insured by the Federal Housing Administration from $729,750 to $625,500 in most areas. The real estate industry urged the government to keep the conforming loan limits higher. In November, the government raised the loan limits back up for FHA loans, but they left out Fannie and Freddie loans.

The fallout: “Mortgage lenders are willing to charge lower rates for loans that are backed by Fannie or Freddie; with a lower conforming loan limit, a small number of loans that used to qualify for federal backing no longer do,” the Time magazine article notes.

Read more about the key issues for the real estate industry in 2011.

Source: “5 Events That Really Mattered for Housing in 2011 -- and Beyond,” Time Magazine (Dec. 29, 2011)

Thursday, December 29, 2011

Obama Pledges to Refinance Millions of Mortgages at Today's Rates

Housing got only a brief mention in President Obama’s highly anticipated jobs speech Thursday night. But it was a pledge that some pundits say is finally a step in the right direction. Others say it’s likely to have little impact.

Obama told Congress that his administration is going to work with federal agencies to refinance millions of homeowners’ mortgages at today’s record-low rates.
With those rates now near 4 percent, the president says the move could “put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices.”
While the specifics have not been released, it’s expected that the program will make homeowners with government-backed mortgages eligible for new, lower-rate, lower-payment loans even if they are underwater or have bad marks on their credit as a result of financial hardship.
The Congressional Budget Office (CBO) released a paper just one day before Obama’s speech outlining the impact of such an extensive refinance program.
The agency analyzed a “stylized large-scale mortgage refinancing program” that would relax current income and loan-to-value restrictions for borrowers who wish to refinance and whose mortgages are backed by Fannie Mae, Freddie Mac, or the Federal Housing Administration.
CBO concluded that the specific program analyzed is estimated to lead to an additional 2.9 million mortgage refinancings, resulting in 111,000 fewer defaults on those loans and estimated savings for the GSEs and FHA of $3.9 billion on their credit guarantee exposure.
Offsetting those savings, however, CBO says federal investors in the mortgage-backed securities holding those loans – including the Federal Reserve, Treasury, and GSEs – would experience an estimated fair-value loss of $4.5 billion.
Based on these figures, CBO says the estimated cost to the federal government for a refi program of this magnitude would be $600 million.
For private investors, the costs run significantly higher. CBO says they would experience an estimated fair-value loss of $13 to $15 billion. Most of that wealth would be transferred to borrowers, the report notes.
CBO concludes that the benefits of a 4-percent-rate, government-led refi boom would be “small” relative to the size of the housing market, the mortgage market, and the overall economy.

Fannie and Freddie Detail New HARP Guidelines

Fannie Mae and Freddie Mac have released highly anticipated guidelines for the revised Home Affordable Refinance Program (HARP).

Both GSEs have posted details of the program modifications and procedural changes on their respective business sites for mortgage servicers to follow (Fannie’s, Freddie’s).
Among the key program revisions, the GSEs have eliminated or raised the loan-to-value (LTV) cap, and relaxed representation and warranty stipulations – changes that officials expect to at least double the number of homeowners with a HARP-refinanced mortgage. Since the program was launched in 2009, just under 900,000 borrowers have participated.
Negative equity typically excludes a homeowner from refinancing through traditional channels. Removing previous LTV ceilings will allow homeowners who are severely underwater due to plummeting property values to take out new loans at today’s lower interest rates. There are, however, some LTV conditions depending on loan type.
There are no LTV restrictions for fixed-rate mortgages with terms up to 30 years, including those with terms of 15 years.
For fixed-rate loans with terms between 30 and 40 years, LTV is limited to 105 percent. Likewise, a 105 percent LTV cap has been placed on adjustable-rate mortgages (ARMs) with initial fixed periods of five years or more and terms up to 40 years.
Any borrower with an LTV ratio below 80 percent is not eligible for a HARP refinance. However, both GSEs do offer assistance to these borrowers through their traditional refinance programs.
As previously announced, across the board, the original mortgage must have been sold to Fannie or Freddie prior to April 1, 2009 to qualify for a HARP refi.
In the October notice announcing their intent to modify HARP to increase participation, the GSEs said they would “waive certain representations and warranties” on loans
refinanced through the program. Analysts said at the time that depending on what exceptions would be made, such a move could spark increased competition among lenders to refinance borrowers through HARP.
In Tuesday’s guidance, the GSEs provided specifics on which liabilities would be lifted and noted that the rep and warranty adjustment is one of the most important components of the new program.
The lender will not be responsible for any of the representations and warranties associated with the original loan.
The lender is also relieved of the standard underwriting representations and warranties with respect to the new mortgage loan as long as the data in the case file is complete and program instructions are followed for collecting information on income, employment, assets, and fieldwork.
The lender is not required to make any representation or warranty as to value, marketability, or condition of the subject property unless they obtain a new appraisal.
Lenders will, however, be held accountable for any fraudulent activities.
Administration officials are hoping that eliminating the risk associated with reps and warranties – whether transferred from the original loan or on the new loan – will spark healthy competition among lenders to help homeowners get into the program. And Fannie and Freddie are making it easier for the competition to flourish.
The GSEs are modifying their policies to allow lenders to solicit borrowers with Fannie- and Freddie-owned mortgages for a refinance. The only condition is that the lender “simultaneously applies the same advertising and solicitation activities” to borrowers of both GSEs, and for loans both owned or securitized by the GSEs.
In the new guidelines, the GSEs detail specific language that must be included in any borrower solicitation material.
Regarding program eligibility as it relates to delinquencies, the borrower must not have been behind on their payments at all within the most recent six-month period, and had no more than one 30-day delinquency within the last year.
The GSEs are also removing the requirement that the borrower (on the new loan) meet the standard waiting period following a bankruptcy or foreclosure. The requirement that the original loan must have met the bankruptcy and foreclosure policies in effect at the time the loan was originated is also being removed.
The new HARP program has been extended through December 31, 2013.

Distressed Commercial Properties Level Off

Are better days ahead for commercial real estate? A new report by Real Capital Analytics shows the number of distressed commercial properties is plateauing and expected to continue to do so in the new year. Distressed properties — which include commercial properties that are in default, foreclosure, or repossessed by lenders — had totaled $171.6 billion in October 2011, a decrease from topping off at $191.5 billion in March 2010, according to Real Capital Analytics.

“The real test of the distress plateau is likely to be seen in 2012 and 2013, when about $300 billion in loans comes due each year,” according to a recent article in the Washington Post.

At $41.9 billion, the office sector continues to have the largest number of distressed commercial properties. But that number has been steadily declining — about 11.8 percent less than its peak reached in October 2010.

The apartment sector has the second-highest level of distressed commercial properties with $35.6 billion in troubled loans, according to the Washington Post article. Land and other property types have about $29.8 billion in distressed assets.

The metro areas with the largest number of commercial properties in distress is Manhattan, in which the total volume of distress properties stands at $11.8 billion, followed by L.A.-Orange County with $10 billion. Meanwhile, Houston has the lowest at $111 per capita.

Source: “Amount of Distressed Real Estate Could be on Way Down,” Washington Post (Dec. 26, 2011)

Gov’t Reviews Proposals for Foreclosure-Rental Program

The Federal Housing Finance Agency (FHFA) received more than 400 proposals on how it should handle the high number of foreclosures that are plaguing many markets across the country. The proposals suggest various ideas on how the FHFA can go about turning thousands of repossessed homes that Fannie Mae and Freddie Mac own into rentals, in trying to curb losses, stabilize neighborhoods, and prevent further drops to housing values.

Fannie and Freddie service more than half of all U.S. home mortgages so any foreclosure-to-rental program could have a significant impact on the housing market, real estate experts say. The FHFA received more than 4,000 submissions during its call for proposals — however, only about 10 percent were deemed valid, the agency said.

“FHFA is proceeding prudently but with a sense of urgency to lay the groundwork for the development of good initial transactions in early 2012,” Corinne Russell, an FHFA spokeswoman, told Bloomberg. FHFA has declined to discuss specific submissions or a timeline for the program.

But proposals for the foreclosure-rental program reportedly documented joint-venture partnerships, sales, and auctions.

As of Sept. 30, Fannie Mae has 122,616 foreclosures with a carrying value of $11 billion — costing Fannie $733 million to maintain in the third quarter alone, according to a Securities and Exchange Commission filing. Meanwhile, Freddie Mac owns 59,6161 foreclosures, costing it $221 million to operate and manage in the third quarter.

Source: “Deutsche Bank Offers U.S. Plans for Renting Foreclosed Homes,” Bloomberg (Dec. 27, 2011)

3 Cities Where Prices Appreciated the Most in 2011

Some cities saw big increases in home prices this year. The ones that saw the largest levels of appreciation often had the lowest foreclosure rates in the country, or did not peak midway through the past decade.

For example, in Charleston, W. Va., home values soared nearly 18 percent over the first 10 months of the year, the largest rise among the 384 metro areas tracked by CoreLogic.

AOL Real Estate recently profiled cities that saw the largest price appreciation this year. The top three are:

1. Charleston, W. Va.

Home value change January to October: +17.95 percent

2. Holland-Grand Haven, Mich.

Home value change January to October: +11.89 percent

3. Bloomington, Ind.

Home value change January to October: +11.82 percent

See which other cities made the list.

Source: “Biggest Home Price Increases of 2011,” AOL Real Estate (December 2011)

Read More

10 Cities Where List Prices Soared Last Month

Pending Home Sales Rise Again

Pending home sales continued to gain in November and reached the highest level in 19 months, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 7.3 percent to 100.1 in November from an upwardly revised 93.3 in October and is 5.9 percent above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4 percent monthly gain.

The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” he said. “Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.

“November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.

Pending home sales are not affected by the recently published rebenchmarking of existing-home sales because the index uses a different methodology based directly on contract signings, and is adjusted for seasonality.

The PHSI in the Northeast rose 8.1 percent to 77.1 in November but is 0.3 percent below November 2010. In the Midwest the index increased 3.3 percent to 91.6 in November and is 9.5 percent above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7 percent above November 2010. In the West the index surged 14.9 percent to 121.2 in November and is 2.9 percent higher than a year ago.

Source: NAR

Monday, December 26, 2011

Real Estate Outlook: Existing-Home Sales Rise

Mortgage debt is up. Defaults, which had been on the decline, were also on the rise in November. This latest report comes from Standard & Poor’s/Experian indices.

The default rate had dropped to 2.08 percent this October from 3.06 at the same time last year. Second mortgage defaults were also down, dropping to 1.29 percent from 1.8 percent a year earlier.

Yet, defaults were up for the month of November for five major metro markets that are tracked.

Los Angeles led the pack at a November increase to 2.53 percent from 2.15 the month earlier.

The Miami market saw a default rise to 4.47 from 4.16 percent in October.

"These are two markets where we have seen some recent weakness in other housing statistics," said David Blitzer, managing director and chairman of the index committee for S&P Indices. "Again, while there may be some cause for concern if this upward trend continues. Other recent housing statistics point to the same relative weakness, so these statistics align with the overall current picture of the economy." The year over year decline in mortgage defaults currently stands at around 34%.

"Nationally, consumers continue to gradually improve their financial condition," said Blitzer. "Debt-service ratios, the proportion of disposable income that goes to paying debt, continues to decline."

With these improved financial conditions, consumers are returning to the market. Existing-home sales rose in November according to the National Association of Realtors. These sales rose 4.0 percent from October. Lawrence Yun, NAR chief economist, said more people are taking advantage of the buyer’s market. "Sales reached the highest mark in 10 months and are 34 percent above the cyclical low point in mid-2010 - a genuine sustained sales recovery appears to be developing," he said. "We’ve seen healthy gains in contract activity, so it looks like more people are realizing the great opportunity that exists in today’s market for buyers with long-term plans."

Sales could be higher if not for contract cancellations that still plague the market. Cancellations are the result of changes in employment status, failed home inspections, decline mortgage applications, and appraisals coming in below contract prices.

Regionally, the largest rise was seen in the Northeast, where existing sales rose 9.8 percent. This is 7.7 percent above year ago levels.

The Midwest saw a 4.3 percent rise, gaining double-digits of 15.7 percent over last year.

The West rose 3.6 percent in November and the South was up 2.4 percent.

Keeping pace with the good news of existing-home sale rises, the latest U.S. Commerce Department reports that the production of new single-family homes was up 9.3 percent in November.

"While we still have a long way to go back to normal, the latest numbers are one more indication that housing is slowly turning the corner," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "In scattered markets across the country, buyers who have long sat on the sidelines are starting to take advantage of today’s very attractive prices and interest rates, while others are making the move to a new apartment. This nascent trend would be stronger if not for the very restrictive lending environment that continues for both building and buying new homes."

Published: December 26, 2011

Source: Carla Hill Realty Times

Gardening: It’s bloomin’ early

FOR some years now, we have had reports of a wide variety of springtime plants coming into flower in the autumn and early winter.

And this year has probably been amongst the most exceptional, with November having been one of the mildest on record.

The study of the timing of natural phenomenon such as when certain plants flower or come into leaf is called phenology and it has become more important in recent years, as the concerns about global warming/climate change have been increasing.

The studies are based on the fact that the various activities of plants are controlled by light intensity, day-length or temperature, with some plants being influenced by more than one of these factors.

Well, nature seems to have given us an early Christmas this year because I have had reports that the snowdrops are out in Beaumont Park, there is a forsythia in flower in Shelley and I have recently seen a winter aconite in flower in North Yorkshire, one month before it should.

I have a Narcissus ‘White Cheerfulness’ in flower in my garden that does not normally flower until late February and there are signs of tulip and bluebell foliage that you would not expect until March.

So, despite the ravages of last winter and the poor late summer this year, nature, as always, is throwing up some surprises that we can have little control over and we should just enjoy the fleeting moments of pleasure and hope that the plants will not suffer for getting out of bed too early!


Bedroom sets and bedroom furniture sets

In planning of buying a bedroom sets, you have to shop around for the best brand which offers durability, fashion and has a wide array of designs. A furniture set for the bedroom can include wooden bedroom furniture complete with a bed, a dresser or chest drawers, and one or two night stands or bedside tables. In buying bedroom furniture, one need not worry about buying mismatched pieces. These bedroom sets can either have the antique, the modern and eclectic designs which you can use depends on the theme you have in mind for your bedroom and for your whole house as well. Do not forget to include the bed sets too in buying since it will affect the overall impact of the design you have.

Does It Work?: Furniture Fix, EZ Moves, Half Time Drill Driver, Clean Step Mat, Swivel Store

Promises, promises.We all want to believe products' claims that they'll make our home lives easier. But as the Does It Work? testers have learned, promises and reality don't always match.
For this story, Akron Beacon Journal food writer Lisa Abraham, consumer reporter Betty Lin-Fisher and home writer Mary Beth Breckenridge put five home products to the test. Here's what we found:
Furniture Fix
Maybe you've tried the trick of putting plywood under the cushion of a sagging seat to firm it up. Furniture Fix works on the same principle, except it's plastic and provides a little more give than rigid plywood.
Furniture Fix is a set of interlocking plastic panels that slide under a seat cushion in an upholstered chair or couch. Each box contains six panels, or enough to support one seat. For a regular-size couch with three seats, you'd need three sets.
We tried out one set on a co-worker's aging sectional sofa, where one particularly well-worn seating area sagged and tended to cause the sitter to lean to one side.
The Furniture Fix made the seat noticeably firmer -- maybe even a bit uncomfortably firm, although not as hard as the board we also tried. And we still found ourselves leaning.
"I think it's an improvement," Betty said, "but I wouldn't spend $15 on it."
Considering we'd need at least two and perhaps three to shore up the sagging portion of this particular couch,

we'd be looking at an investment of $30 to $45.
That's still considerably cheaper than new furniture, but we thought it was a little pricey for a solution that's less than ideal.
Betty: It depends.
Lisa: It depends.
Mary Beth: It depends.
EZ Moves
Somehow I missed the physics lesson that explained why certain materials reduce friction and make heavy things easier to move across a surface, but apparently the makers of EZ Moves paid closer attention.
EZ Moves are plastic pads that are placed under furniture legs to make the furniture easier to slide. Each pad has a foam insert with a felt backing that can be used on hard-surface floors to prevent scratching.
We tried the pads on Betty's heavy sleeper sofa. Without the EZ Moves, it took all three of us working together to move it across her carpeted floor.
With the EZ Moves, each of us could move it alone. Even Betty's 11-year-old daughter managed to move the couch by herself with the help of the EZ Moves, albeit with considerable effort.
I thought the plastic was a little flimsier than the furniture-moving glides I already had at home, but the pads still seemed sturdy enough to hold up to repeated use.
We all liked the lifting tool that comes with the glides, which uses leverage (see, I did remember something from physics) to help you lift a corner of a heavy piece of furniture so you can slide the pads underneath
It might even come in handy for cleaning under furniture, Betty noted.
Where we disagreed a bit was on the value
"It's a little pricey at $19.99, but it does what it says," Betty says.
Lisa and I disagreed. "I don't think $19.99 is unreasonable for that package," Lisa says, especially considering that it included the lifter and eight pads.
Betty: Snap it up.
Lisa: Snap it up.
Mary Beth: Snap it up.
Half Time Drill Driver
This device works with a power drill to let you switch bits quickly.
It's a hinged gadget that fits into the drill's chuck, allowing you to drill a hole with one bit, flip the device and drive a screw with another bit.
We barely had it out of the packaging when our male colleagues started offering opinions.
When we tried it out, the whine of the drill drew guys to it like moths to a flame.
Note to single women: Looking for a man? Ditch the perfume. Go for the power tools.
It didn't take us long to recognize a problem: The Half Time Drill Driver puts the base of the bit a good 5½ inches away from the drill. Add on the length of the bit, and you have a real challenge trying to drill a perpendicular hole or keep a screw from wobbling as you're driving it.
Beacon Journal maintenance guru Ed Grohosky took one look at the construction of the Half Time Drill Driver and voiced his doubts that it would hold up to hard use.
Both he and photographer Mike Cardew noted that a quick-change chuck would let you change bits just as quickly.
Betty: Skip it.
Lisa: Skip it.
Mary Beth: Skip it.
Clean Step Mat
This doormat's highly absorbent fibers are supposed to trap water and dirt instantly, so you can just walk across the mat and not even have to stop to wipe your feet.
It didn't quite work that way, at least in our test.
Each of us muddied our shoes, walked across the mat and then walked onto plain newsprint we'd spread on the floor.
All three of us left dirty prints on the paper, indicating the mat hadn't done its job.
One thing I'll say for the mat is that its mix of dark brown, tan and white fibers did a good job of hiding the mud once it had dried. But as Lisa pointed out, that color scheme made the mat look dirty in the first place.
What's more, as Betty discovered, drying it in a clothes dryer takes quite a long time.
Lisa's comment pretty much summed up how we felt: "I see no benefit to it beyond a regular doormat."
Betty: Skip it.
Lisa: Skip it.
Mary Beth: Skip it.
Swivel Store
Organizing freak that I am, I had great hopes for this swiveling spice rack the first time I saw it advertised. It promises to hold spices -- or pill bottles, craft supplies or whatever else fits in it -- in just a 4-inch-wide space.
The unit has two racks that you pull forward from the base and then swivel to access.
But you need 4 inches of clearance on either side of the unit so you can turn the racks. Devoting that much cupboard space to storing 20 spice bottles didn't strike any of us as a good use of space.
The plastic used to make the Swivel Store seemed flimsy to us, and the pull-out racks were a little wobbly.
"That, to me, feels like it's rockin' 'n rollin'," Lisa said.
I liked the side rails that kept the bottles from tumbling off the racks, but we discovered the racks were too narrow for some larger spice bottles.
The unit was also just a smidgen deep to fit within the frame of Betty's cabinet, although we were still able to close the cabinet door completely.
Betty: Skip it.
Lisa: Skip it.
Mary Beth: Skip it.

By Mary Beth Breckenridge
Akron Beacon Journal

In battle to save Bonny Doon vineyards, scientists try tricking bacteria

Every grapevine in the 28-acre Bonny Doon Vineyard had to be ripped from the earth and torched in 1994. New vines might have faced the same fate the following year. Instead, owner Randall Grahm, numb from years of battling an incurable plague, sold his whole vineyard of dead and dying Syrah, Viognier and Marsanne grapes.
But that was just the beginning of a statewide killing spree by a new duo behind Pierce's disease: the sap-sucking insect known as the glassy-winged sharpshooter and the vine-choking bacteria Xylella fastidiosa. Together, they drained more than $30 million out of Northern California's $3 billion-a-year grape industry in the late '90s. The wine industry retaliated with millions of dollars of pest-management and protection measures -- in a battle it's still fighting.
Now, scientists have come up with a new and cheaper tactic: Confuse the germs as soon as the sharpshooter delivers them into a healthy vine. And it couldn't come at a better time for Grahm, who just bought land for a new vineyard in Bonny Doon.
Though Xylella and other sharpshooters have been in California since the 19th century, glassy-winged sharpshooters sneaked in during the 1980s, hopelessly infesting 12 southern counties warm enough to host them.
The strong fliers and heavy swarmers have shot up the state ever since, siphoning sap from plants along the way. Their crosshairs are on almonds, stone fruits and citrus. But grapes are where they

cause the most damage.
Sapping the vines
They carry their partner in crime, Xylella, in their mouthparts and deliver it as they tap into a new vine. Once inside, the bacterium spreads through the plant's veins, and within a year clogs its plumbing so it can't get enough water.
"The unique thing about Pierce's disease is that it kills plants," said Larry Bettiga, a viticulture adviser at UC Davis. "You can't deal with that."
Grahm, speaking from experience, agreed: "Once the vines are infected, there's nothing you can do."
Every winery in Bonny Doon was affected in the mid-90s. Some wine growers thought their time in California was up, Grahm said.
But by the late '90s, the California Department of Agriculture had launched full-scale pest-management programs that included spraying insecticides, monitoring sharpshooter activity, reaching vintners and farmers through outreach campaigns and inspecting all nursery plants shipped around the state -- the likely route glassy-winged sharpshooters used to get into California in the first place. Seventy percent of the state's nurseries are in areas infested with glassy-winged sharpshooters.
"Prevention is really critical," Bettiga said. "It's very difficult to eradicate an insect once it becomes established."
But the intensive pest-management program caused costs to soar.
Tricking the bacteria
So, scientists are now investigating less costly methods of managing the sharpshooters and the spread of Pierce's disease. Steve Lindow, a plant pathologist from UC Berkeley, is using something similar to a Jedi mind trick: Convince the bacteria they've already caused disease.
But to stop these microscopic killers, scientists had to do some criminal profiling.
When Xylella get into a grape vine, they're released in the vascular tissue -- the plumbing of the plant that pumps water up from the roots. From there, the bacteria use the tissue as "hallways" to invade the whole vine. They then start exploring and munching on the plant.
"We think that the exploratory phase involves rather promiscuous movement of bacteria," Lindow said. But as they spread from place to place, there are only a few bacteria in each area, he said.
This is key, he said, because when Xylella populations start to get big, they run into each other and switch tactics.
Each bacterium sends out a molecular beacon constantly, similar to the ping of a submarine's sonar. When many cells are stuck in part of the hallway at once, they're aware of each other because they can pick up the pings.
Then they mob up.
"It's kind of a switch -- a lifestyle switch," Lindow said. In a mob, they make themselves sticky -- to each other and to a spot -- so they can be sucked into a sharpshooter, their getaway car.
Restoring Bonny Doon
Lindow and his team of researchers realized that this beacon is the bacteria's glaring weakness -- without it, they wouldn't make it into their next sharpshooter or kill the vine.
So, the researchers engineered transgenic grape vines to make the same beacon.
If the vines constantly produce the signal for clumping, the arriving bacteria will get confused and act as though they've already infected the plant. They won't explore. They'll stay right where they landed and wait for their getaway insect -- even though they didn't pull off a heist.
Lindow thinks they'll start seeing results in fields in the next few years, but in the meantime, he'll also explore additional methods of treating Pierce's disease.
For Grahm, it's all good news for his effort to restore the essence of Bonny Doon wine.
"You can capture the distinctiveness of a site in the wine itself," he said. "Bonny Doon wines need to come from Bonny Doon."

Living Room With Bali Blinds

Simple living room in basic color tones. Asian style interior design, rich with natural light from wide windows and have balance from the green plants and the wall-picture. Sometime rich of natural light brought some problem for the furnishing, so bali blinds can solved that problem, because it can reduce the massive light that come to your living room. Bali blinds are made from wood strips, it is about 1 to 2 inches wide that held among one to another with cotton chords, it is look like wood curtain.

Small Office Furniture:- An Excellent Office Furnishing Option.

The requirement for telecommuting is rising now, therefore the necessity for a small office. The office should reflect a person’s personality and style. It should additionally be absolutely functional. The home office furniture should be organised having the office decor under consideration. It’s got a different feel and a different sound than a cheap economy vehicle. Just like shutting the vehicle door of a luxury auto.

Tip two : The drawers in wood small office desks and filing drawers should slide smoothly. You’ll be ready to tell quality handiwork if the drawers slide out and in smoothly without binding. Some corporations may not offer guaranties at all, thus getting shot of them as a shopping option. Keep under consideration, that many times the maker may offer their own guaranty whether or not the retailer doesn’t. Will you need furniture installation? Furniture installation could be a long and complex process, particularly when handling commercial office furniture. In addition, once your furniture is set up in your office you could have specific requirements like a hole drilled in your corner PC desk for your PC cords to go thru.

The reality is, of all of the retail industries furniture is among the most marked up. With web sales, for both armed forces and products, at a new high, many entrepreneurs or self employed employees are spotting a rise in purchasers. While this is nice, it can make keeping correct records hard. As someone that is in command of managing a business out of your house, this means you can professionally manage your business, while not having to have a massive quantity of space. Here is where some pieces of modern office fittings can offer help.

The key rule in planning an office cubicle is that form follows function. So long as the cubicle fits into the general function of the office generally, the inside design should be one that most nearly fits the individual that will occupy it. Once the action of each cubicle is determined, there are lots of designs that fit it and used office furniture that may be installed for the function. There are 3 points to consider at that point : the wall configuration, the storage, filing and work-surface design, and the colours and material for the walls and used office furniture.

Master Bedroom, A Hotel Suite Like Retreat

The concept of hotel suite room is a multi purpose space interior design, it is like home within home. Not only for sleep but you can do any activities of you without leaving the bedroom. Masculine, yet elegant looks in walnut and dark brown tones which applying at wall, furnishing, and fabrics. Designer is Trish Beaudet.

Study Finds 38% of Homes Purchased in 2011 Bought with Cash

Despite record low mortgage rates, 2011 has seen a surprisingly high level of cash home purchases, according to the real estate research firm Hanley Wood Market Intelligence.

Jonathan Dienhart and Ken Lee, two analysts with the company, say between tight lending standards and a desperate search for yield by investors, cash purchases of homes – particularly for distressed properties – became even more common in 2011 than last year.
Dienhart and Lee analyzed data collected through Hanley Wood’s Housing IntelligencePro, and shared their findings in a blog post.
The two discovered that 38 percent of homes purchased in 2011 were bought with all cash. That’s up from 34 percent in 2010, and double the 19 percent rate in 2006.
According to Dienhart and Lee, this trend is likely to continue in the near term. They note that cash-paying investors are responsible for an increasing share of home purchases nowadays as prior homeowners abandon the ownership market and head back to rentals.

Economists Don't Foresee Home Price Appreciation Until After 2013

Home prices in the U.S. are expected to post a decline of 1.57 percent for the fourth quarter of 2011, after falling 0.4 percent through September, according to more than 100 economists and housing experts surveyed by Zillow.

Prices are forecast to decline until the market’s bottom is reached in late 2012 or early 2013. After 2013, the panelists expect a relatively steady annual appreciation rate of roughly 3 percent through 2016, which is slightly below appreciation rates experienced during the pre-bubble years.
“There is a consensus among the nation’s top housing experts that we have not yet reached a bottom and are instead working through a prolonged bottoming process,” commented Dr. Stan Humphries, Zillow’s chief economist.
According to Humphries, negative equity, unemployment, and low consumer confidence remain the key factors delaying a true recovery in the housing market.
Terry Loebs, founder of Pulsenomics LLC, the firm that conducts the survey for Zillow, says the latest results
suggest expectations for recovery are no longer eroding, as has been evident in past studies.
“This is encouraging,” Loebs said, “but the average survey data are still consistent with a sluggish recovery scenario where eventual price increases will be less than those thought of as normal during the years preceding the national housing bubble.”
Looking at the expected housing market performance through the five year period ending in 2016, there continues to be significant variation among the panelists regarding their individual home price forecasts.
The most optimistic quartile of panelists projects nearly 18.3 percent price growth over the next five years, while the most pessimistic quartile projects a 1.4 percent decline.
“Given the current economic climate and uncertainty around the government’s future role in housing, it’s not surprising to see such a wide dispersion in long-term forecasts,” Humphries said. “As the market starts to stabilize, we should see individual forecasts start to converge.”
In the December survey, the panelists also offered their views on last month’s increase to loan limits for Federal Housing Administration (FHA) mortgages, as well as their assessments of the likelihood that the FHA would require a federal government bailout within the next two years.
The panelists were almost equally split on the loan limit increase, with 51 percent opposed and 49 percent in favor of it. Twenty-eight percent of the 91 panelists who expressed a view indicated the likelihood of a bailout of the FHA by the federal government within the coming two years as “high” or “very high.”

Lawmaker Presses for Criminal Investigation of GSEs

Sen. Scott Brown (R-Massachusetts) says the civil lawsuit filed by the Securities and Exchange Commission (SEC) last week against six former executives of Fannie Mae and Freddie Mac “does not go nearly far enough to achieve justice and accountability for the American people.”

Brown is pressing the Department of Justice and the SEC to immediately open criminal investigations into Fannie and Freddie. The senator says authorities need to take a closer look at the GSEs’ business dealings prior to the housing collapse and their disclosure of subprime mortgage holdings.
“If the investigation uncovers illegal actions, criminal prosecution should be pursued and people should go to jail,” Brown wrote in a letter to Attorney General Eric Holder and SEC Chairman Mary Shapiro.
Brown says he’s convinced that Fannie and Freddie’s former executives took steps to pad their own pockets while hiding the extent of their mortgage risks from Congress, creditors, and investors.
Because of their “reckless disregard,” Brown says, taxpayers are now left holding the bag and on the hook for $150 billion in losses – a tab that he expects will continue to grow and will never be repaid.
Brown says the latest civil case against the GSEs’ former executives “follows a troubling pattern” for the Justice Department and the SEC. He says authorities have been “far too timid” in pursuing criminal charges against the GSEs and cites the 2003 accounting scandals at Fannie Mae that resulted in only civil penalties.
The SEC filed a lawsuit on December 16, alleging securities fraud against Fannie Mae’s former CEO Daniel Mudd, former chief risk officer Enrico Dallavecchia, and former EVP of single family mortgage Thomas Lund, as well as Freddie Mac’s former CEO Richard Syron, former EVP and chief business officer Patricia Cook, and former EVP for single-family guarantee business Donald J. Bisenius.
The SEC’s complaint says these six executives made material misstatements to the public, investors, and the media about the companies’ exposure to subprime mortgage loans in 2007 and 2008.
Both Fannie and Freddie entered into non-prosecution agreements with the SEC and agreed to cooperate in the litigation against their former executives.

Housing Market Strengthening But Long Road to Recovery Lies Ahead

The year 2011 is ending on a high note as economists anticipate some signs of recovery ahead. Prices appear to be reaching their trough, visible supply is on the decline, and banks are beginning – just slightly – to loosen lending standards, according to a fourth-quarter report from Capital Economics.

However, Capital Economics warns these positive signs do not point to an immediate recovery.
Taking into account the historic ratio between disposable income and housing prices, homes were undervalued by 23 percent in the third quarter. Homes have not been this undervalued since at least 1975.
Since 2006, prices have declined 33 percent, countering the sharp increases of the boom years. Therefore, “[i]t is
clear that prices don’t need to fall further,” Capital Economics says.
Nondistressed home prices in particular seem to have bottomed out. While home prices declined 4 percent this year, prices of nondistressed homes fell only 0.5 percent.
Having reached the bottom, however, prices will not jump far in the new year. Capital Economics predicts national home prices will remain unchanged over the next two years before seeing positive movement – a 2.5 percent increase – in 2014.
This past year has seen some positive movement in housing inventory with a 20 percent decrease in the number of homes listed for sale over the year. However, supply will remain an obstacle moving forward as the current shadow inventory is estimated at 4 million.
Demand will also continue to be an issue. However, the report notes the market has seen a slight increase in home sales, which it attributes to first-time buyers.
Banks are contributing to rising demand and supply absorption by allowing loans with loan to value ratios of 80 percent or even slightly higher, something that has not occurred since mid-2008, according to Capital Economics.
The overall economy will not help boost the housing market in the coming year as the U.S. will continue to be affected by the euro-zone crisis.
The rental market will continue to be the best-performing segment of the market

Friday, December 23, 2011

FHFA: Home Prices Decline 0.2% in October

Home prices in the U.S. decreased 0.2 percent on a seasonally adjusted basis in October, according to the Federal Housing Finance Agency’s (FHFA) House Price Index released Thursday. On a yearly basis, prices declined 2.8 percent in October.

This slight decrease brings prices to levels seen in February 2004.
Current prices are about 19.2 percent below their peak in April 2007.
FHFA also revised the previous month’s index, lowering the 0.9 percent increase reported for September to a 0.4 percent increase.
FHFA calculates monthly purchase prices of homes backed by Fannie Mae and Freddie Mac mortgages.
On a regional basis, two of nine regions saw increases from October 2010 to October 2011 – the West South Central region (0.7 percent) and the East South Central region (0.1 percent).

Mortgage Rates...How Low Can They Go?

Mortgage interest rates continue to head south. Freddie Mac reported Thursday that the 30-year fixed-mortgage rate as well as adjustable rate products all sank to new all-time record lows this week, while the 15-year fixed rate settled in to match its historic low.

The 30-year fixed-rate mortgage averaged 3.91 percent (0.7 point) for the week ending December 22, dropping below last week’s previous record low mark of 3.94 percent. The average 30-year rate is now nearly a full percentage point below its level this time last year of 4.81 percent.
“Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year,” noted Frank Nothaft, Freddie Mac’s chief economist.
Nothaft says all those percentage basis points translate into $1,200 less a year on a $200,000 loan when you compare current rates versus borrowing costs 12 months ago.
The 15-year fixed rate matched last week’s all-time record low at 3.21 percent (0.8 point). A year ago at this time, the 15-year rate was averaging 4.15 percent.
Adjustable-rate mortgages (ARMs) also hit new all-time lows in Freddie Mac’s survey this week.
The GSE puts the average rate for a 5-year ARM at 2.85 percent (0.6 point) That’s down from 2.86 percent last week and 3.75 percent a year ago.
The 1-year ARM came in at 2.77 percent (0.6 point) this week, down from last week when it averaged 2.81 percent. At this time last year, the 1-year ARM was averaging 3.40 percent.
Nothaft says the greater homebuyer affordability afforded by today’s rock-bottom interest rates helped push existing home sales higher for the second consecutive month in November to an annualized pace of 4.42 million, the most since January.
Freddie’s chief economist also points to positive indicators in the new home sector, with construction of single-family showing a back-to-back monthly gain in November, with the largest increase since June, and homebuilder confidence in December rising to its highest reading since May 2010.

Fannie Mae Removes 'Ability to Repay' from HARP 2.0 Guidelines

Fannie Mae has updated its Selling Guide to reflect the recently announced changes to the Home Affordable Refinance Program (HARP).

Most of the revisions had been previously announced in November, but there’s one nuance that stands out, and until this week, had been absent the HARP 2.0 discussion.
Fannie Mae has removed the “reasonable ability to repay” clause from the criteria for vetting borrowers for a new HARP 2.0 refinance.
The D.C.-based GSE says the terminology was scratched because the underwriting requirements specific to its refinance channels – Refi Plus and DU Refi Plus – are already clearly outlined within the Selling Guide.
Fannie states in its latest update, “For Refi Plus, the lender is no longer required to determine the borrower has a reasonable ability to repay the mortgage based on a review of the information provided on the new loan application.”
The previous guidelines for HARP loans processed through the manual underwriting channel (Refi Plus) put the onus on lenders to determine that the borrower had a reasonable ability to repay the mortgage based on information provided by the borrower and payment history. It also required that lenders verify and ensure the borrower had a source of income.
Barclays Capital explains that ability to pay has traditionally been measured using DTI (debt-to-income
ratio) but pursuant to HARP guidelines, no DTI calculation or evaluation is required if the borrower’s payment does not increase by more than 20 percent. A 45 DTI cap applies otherwise.
Under the revised guidelines, the ‘borrower ability to pay’ clause is no longer an underwriting requirement. Barclays says it appears Fannie Mae has taken subsequent feedback from lenders into account since the November 15th announcement of the HARP 2.0 framework and incorporated this change into its guidelines.
The analysts at Barclays say the removal of the ability to pay clause is a “significant and unanticipated change that could have ramifications for the HARP program.”
The GSEs promised to relax representation and warranty requirements under the new HARP program and in doing so, have reduced or waived most of the underwriting requirements on traditional loans.
The ability to pay guideline, however, has continued to burden lenders with a subjective underwriting evaluation process that contains rep and warranty risk, according to Barclays.
“In our conversation with lenders, this has been often highlighted as one of the significant hurdles to HARP refinancing,” the investment banking firm said. “Lenders argue that lack of clarity on what ‘reasonable ability’ precisely means could expose lenders to indemnification liability in the event that the loan defaults.”
Barclays went on to explain, “Though the GSEs have indicated that this clause exists to ensure prudent underwriting judgment and efficient choice between HARP and HAMP, lenders view this as a significant risk.”
Removal of the clause alleviates many of the remaining concerns about rep and warranty indemnification with respect to HARP refis, according to Barclays.
The firm says lenders can now underwrite HARP loans assessing borrower credit based on a straightforward metric – number of payments made – which reduces a significant layer of complexity with respect to rep and warranties liabilities for HARP loans.

Yearly Home Values Decline Nearly $700B, But Rate of Decline Slows

As 2011 comes to a close, Zillow anticipates home value declines for the year will total more than $681 billion. The rate of depreciation, however, is slowing.

The $681 billion decline this year is 35 percent less than last year’s $1.1 trillion drop in value.
Additionally, much of this year’s decline occurred during the first half of the year. Values declined $454 billion in the first six months of 2011, and by the end of the second half of the year, values are expected to wan another $227 billion.
“While homeowners suffered through another year of steep losses, the good news is that homes are losing value at a substantially slower pace as the market works its way towards the bottom,” said Zillow Chief Economist Stan Humphries.
“Compared to last year when we saw sharp declines following the expiration of the homebuyer tax credits, this year we saw some organic improvement in home values, in terms of a slowed depreciation rate which resulted in a smaller total value loss for the year,” Humphries said.
Nine of the 128 markets Zillow tracked experienced increasing home values over the year.
The largest gain was seen in the New Orleans area, where home values rose $3.5 billion. The Pittsburgh metropolitan statistical area (MSA) followed with a $2.7 billion upsurge.
In terms of dollar value, the greatest decline was seen in the Los Angeles MSA, where home values declined $75.5 billion.
New York ranked second with a $44.8 billion drop in value, and Chicago followed with a $41.7 billion decrease.

Calif. AG Wants Answers, Sues Fannie, Freddie

California Attorney General Kamala Harris filed a lawsuit against mortgage giants Fannie Mae and Freddie Mac this week, pressuring the government-sponsored enterprises to respond to some 51 questions regarding foreclosures and other actions taken by Fannie and Freddie in the state.

Fannie and Freddie own about 60 percent of California mortgages. Harris is investigating the GSE’s involvement in 12,000 foreclosed properties in the state where they served as landlords, as well as the GSEs' role in selling or marketing mortgage-backed securities, HousingWire reports.

The state is seeking a variety of information from Fannie and Freddie, including a list of which homes in the state that they foreclosed on, whether they have complied with civil rights laws protecting minorities and military members against unlawful convictions and foreclosures, and whether they complied with California's securities and tax laws.

Fannie Mae and Freddie Mac have not commented on the lawsuit. An attorney representing the Federal Housing Finance Agency, however, said the lawsuits’ 51 subpoenas were "frequently vague and ambiguous," HousingWire reports. Also, the FHFA attorney said Harris does not have the authority to issue subpoenas against the GSEs since they’re under federal control.

Source: “State AG Sues Fannie and Freddie for Answers,” Associated Press (Dec. 21, 2011)

Banks Lay Groundwork for Commercial Comeback

Some community bankers are gearing up for increased activity on the commercial real estate (CRE) front in 2012. A recent Federal Reserve Board survey of senior loan officers found that more than 13 percent of respondents noticed stronger CRE demand in the fourth quarter, up from 1.8 percent a year earlier.

"Barring Europe imploding, we do generally expect the economy to continue to improve and the real estate market to continue to improve," says Ryan Severino, senior economist at Reis Inc., a commercial real estate research firm in New York. "If someone is thinking about ramping up their [CRE] lending process, now would not be a bad time to do it."

Umpqua Holdings recently reported that it is enhancing its CRE divisions in certain cities. Many of those cities have lost many local competitors when the real estate market collapsed, and survivors want to take advantage on a recovery.

"We think the markets are starting to, and will continue to, come back," says John Swanson, who is leading Umpqua's new commercial real estate division. "Now is the time to bring in some experienced CRE people. With the downturn and reduction in many CRE groups over the last two-to three-plus years, I've had an impressive list of candidates to choose from."

Source: "More Banks Laying Groundwork for CRE Comeback," American Banker (Dec. 22, 2011)

Mortgage Rates Reach New Record Lows

Just in time for the holidays: Mortgage rates reached new all-time lows this week, pushing home buyer affordability even higher, Freddie Mac reports in its weekly mortgage market survey.

"Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year, which means that today's home buyers are paying over $1,200 less per year on a $200,000 loan,” Frank Nothaft, chief economist at Freddie Mac, said in a statement. “This greater affordability helped push existing home sales higher for the second consecutive month in November to an annualized pace of 4.42 million, the most since January.”

Here’s a closer look at mortgage rates for the week ending Dec. 22:

30-year fixed-rate mortgages: averaged 3.91 percent this week, with an average 0.7 point, beating last week’s 3.94 percent record. A year ago at this time, 30-year rates averaged 4.81 percent.
15-year fixed-rate mortgages: averaged 3.21 percent, with an average 0.8 point, matching last week’s all-time low. Last year at this time, the 15-year mortgage averaged 4.15 percent.
5-year adjustable-rate mortgages: averaged 2.85 percent this week, with an average 0.6 point, a new record after dropping from last week’s 2.86 percent average. Last year at this time, 5-year ARMs averaged 3.75 percent.
1-year ARMs: averaged 2.77 percent this week, with an average 0.6 point, also a new record after falling from last week’s 2.81 percent average. A year ago at this time, the 1-year ARMs averaged 3.40 percent.
Source: Freddie Mac

Wednesday, December 14, 2011

Fed Leaves Rate Alone, More Upbeat About Recovery

At its Tuesday meeting, the Federal Reserve reaffirmed its pledge to keep interest rates low and opted to not take any new measures to bolster the economy, saying the economy has already been showing signs of “expanding moderately.” The economy has shown some improvement in employment and consumer spending in recent weeks. However, the Fed cautioned at Tuesday’s meeting that the "housing sector remains depressed."

In reaffirming a pledge it first issued in August, the Fed said the federal funds rate -- which serves as a benchmark rate for many types of loans, including mortgages -- will remain near zero until mid-2013. The Fed said it will continue with plans to move $400 billion of its bond portfolio into longer-term securities, which ultimately could send long-term interest rates even lower.

Overall, the Fed said the economy has steadily been showing signs of improvement and is on track to post its strongest gains of the year in the final months of 2011. But the Fed said that the European debt crisis will continue to pose a major threat to recovery with “strains in global financial markets continue to pose significant downside risks."

Source: “U.S. Fed Leaves Rate Unchanged, Says Economy Expanding Moderately,” Bloomberg News (Dec. 13, 2011)

Fed Chair Takes Advantage of Low Rates Too

Fed Chair Ben Bernanke knows a good interest rate when he sees it. The Fed chair has refinanced the mortgage on his three-bedroom, attached town home in Washington, D.C. twice since 2009.

Most recently Bernanke refinanced on his home in September shortly after the Fed announced “Operation Twist,” which was a rare move by the Fed to publicly vow to keep long-term interest rates low for the next two years.

Bernanke lives in a town house near the Capitol in Washington, D.C., which he paid $839,000 for it in 2004, according to an article in The Wall Street Journal. The home’s appraised value is about $850,000. Bernanke owes $672,000 on his 30-year mortgage, according to the article.

Meanwhile, mortgage rates continue to hover around record lows. The 30-year fixed-rate mortgage fell under 4 percent once again this past week--30-year rates below 4 percent were unheard of until this year. The 30-year fixed-rate mortgage averaged 3.99 percent for the week ending Dec. 8, according to Freddie Mac’s national mortgage market survey. Low rates, mixed with low home prices, are pushing housing affordability to record highs this year, Freddie Mac reports.

Source: “Bernanke Joins Bargain Hunters Who Refinance,” The Wall Street Journal (Dec. 12, 2011)

Principal Reductions Outpace Short Sales?

Some lenders may be more willing to reduce the mortgage principal than grant a short sale for borrowers under the Home Affordable Modification Program (HAMP). The principal reduction can mean big savings for home owners too — the average amount reduced on a principal reduction is more than $65,000, or 31 percent of the unpaid balance on the mortgage, according to new Treasury Department data.

Principal reductions under HAMP began in October 2010, serving as an alternative to a short sale or deed-in-lieu of foreclosure for cash-strapped home owners. Only loans not guaranteed by Fannie Mae and Freddie Mac are eligible for a principal reduction.

“The median loan-to-value ratio on modifications that went through principal reduction was 158 percent,” HousingWire reports in a recent article. “After the workout was complete, the borrower held an LTV of 115 percent, meaning he or she owed 15 percent more on the mortgage than the home was worth rather than being 58 percent underwater.”

Banks may find a principal reduction is better for them financially too. Banks report an average loss rate of 60 percent whenever borrowers complete a short sale, and an average 70 percent loss for homes in the foreclosure or REO process, according to Moody’s Investors Service.

Source: “Principal Reduction Outpaces Short Sales Under HAMP,” HousingWire (Dec. 12, 2011)

4 Tips to Help Your Buyers Refine Their Home Search

Are your buyers having a tough time wading through the inventories of homes to find the right home? Kelly O’Ryan, an office manager with Coldwell Banker in Lexington, Mass., offered some of the following tips in a recent article at RISMedia to help your home buyers narrow their search when looking for properties:

1. Have your home buyers make a list of all the must-haves for their future home, such as the number of bedrooms and school district they must have.

2. Make sure your buyers get pre-approved for a mortgage by a lender. This will help ensure they don’t look for homes that are only within their budget.

3. Encourage your buyers to research available homes on the Internet so they get a feel for what’s available. You can help them sort for properties within their price range and locate homes that fit their criteria. But have them review photos and videos of multiple homes on the Internet to help them narrow their search before you take them to view homes in-person.

4. Remind your home buyers to not get sidetracked when viewing homes at aesthetics that can be changed out easily, such as paint colors and light fixtures. Help them to see past any bad decor and focus in on items in the home that can’t easily be changed, such as the home’s location and lot size.

Source: “How to Lead a Refined Real Estate Search,” RISMedia (Dec. 12, 2011)

FHFA Sues Chicago Over Vacant Home Upkeep Law

In Chicago, lenders are required to maintain vacant homes in foreclosure, such as by keeping lawns mowed and tidy and attending to maintenance issues inside. Lenders found in violation can face daily fines up to $1,000. But the Federal Housing Finance Agency (FHFA) is suing the city of Chicago for its new ordinance, saying the city is overstepping its authority with the mandate.

FHFA, which oversees Fannie Mae and Freddie Mac, says the ordinance is unfair because it “imposes all the costs of home ownership without any of the benefits, such as the right to sell or lease the property,” according to an article in The Wall Street Journal.

The Chicago ordinance has been controversial from the beginning. Lenders have argued that it’s not fair for them to be held liable for upkeeping a property in the middle of the foreclosure process--property, which they say, they haven’t even officially taken ownership of yet.

One research firm estimates that about 1,900 homes are vacant in Chicago, residing in foreclosure limbo, and cost an estimated $36 million in maintenance costs.

"In many cases, by ignoring these properties you're doing a disservice to the community and a disservice to the investor," Tom Feltner, vice president of the Woodstock Institute, told The Wall Street Journal.

Last week, Las Vegas passed a similar ordinance that requires banks to register any homes with a defaulted mortgage and pay a $200 registration fee. Lenders who do not properly maintain the properties then may even face jail time.

Source: “Chicago Sued Over Vacant-Properties Upkeep Fee,” The Wall Street Journal (Dec. 13, 2011)

House Flippers to Blame for Housing Downturn?

House flippers — made up of investors who bought up homes during the housing boom, possibly made a few upgrades to the home, and quickly resold the homes for high-dollar profit — played a larger role in causing the housing bubble than previously thought, according to a new federal report out by the Federal Reserve Bank of New York. The impact that speculative real estate investors played in driving the housing downturn has mostly been overlooked until now, the researchers note.

The speculative investors used low downpayments and subprime credit in buying up multiple homes at once, the report says. Their actions attributed to home prices in some areas being inflated, researchers say.

"This may have allowed the bubble to inflate further, which caused millions of owner-occupants to pay more if they wanted to buy a home for their family," researchers note in the report.

House flippers made up a big piece of the real estate market during the housing boom. According to the report, more than one-third of all home mortgages from 2006 were to people who already owned at least one home. What’s more, “in Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble,” the Associated Press reports. “Buyers owning three or more properties represented the fastest-growing segment of home owners during that time.”

When home values began to fall in 2006, investors defaulted on their loans in large numbers, accounting for more than 25 percent of seriously delinquent mortgage balances, according to the report. In investor hot-spots like Arizona, California, Florida, and Nevada, investors accounted for more than a third of seriously delinquent mortgage balances from 2007 to 2009.

The report urges lenders and regulators to take action to limit speculative borrowing in order to avoid a future housing downturn.

Source: “Flippers’ Housing Bust Role Larger than Thought,” The Associated Press (Dec. 12, 2011

Fed Offers Nothing New

Those keeping tabs on the Federal Reserve’s movements were looking for a change in the central bank’s communication strategy when officials emerged from their final policy meeting of the year on Tuesday. Some analysts were even anticipating the Fed to launch a third round of ‘Quantitative Easing’ measures.

All expectations went unfulfilled, as the nation’s central bankers announced no new policies or economic stimulus programs, and stuck to their traditional messaging surrounding forecasts for short-term interest rates.

In its policy statement issued following the meeting, the Fed reiterated that it will keep the federal funds rate – the rate at which banks lend to one another – in the range of 0 to 0.25 percent at least through the middle of 2013. The benchmark rate has not budged in over three years.

Analysts were hoping for more definitive guidance that tied expectations for the rate increase to specific targets for indicators such as inflation and unemployment.
Fed officials said they are prepared to employ the tools in the central bank’s arsenal to promote a stronger economic recovery should it be determined that additional stimulus is needed, but at this time, no new policy actions were enacted.

The Federal Reserve’s policy committee said information received since it last met in November suggests “the economy has been expanding moderately, notwithstanding some apparent slowing in global growth.”

The Fed’s statement cited “some improvement in overall labor market conditions” but stressed that the unemployment rate “remains elevated.” The committee said it continues to expect a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually.

According to the committee, household spending has continued to advance, and longer-term inflation expectations have remained stable. The housing sector, however was described still “depressed.”

Dan Green, whose daily blog covers mortgage rates and market trends, notes that Wall Street wasn’t expecting no policy change and no QE3, and in response, mortgage rates dipped to new lows following the Fed’s (non) announcement.

The Fed said it will continue to extend the average maturity of its securities holdings as announced in September, and will maintain its existing policy of reinvesting principal payments from its holdings of GSE debt and agency mortgage-backed securities into new mortgage bonds

Foreclosure Sales Slow on West Coast

With the holiday season approaching, the research and tracking firm ForeclosureRadar is seeing declines in the number of completed foreclosures in four of the five states it monitors along the country’s West Coast.

ForeclosureRadar’s coverage area includes Arizona, California, Nevada, Oregon, and Washington. Only Arizona saw foreclosure sales rise in November, up 25 percent from October. The company notes, however, that Arizona’s increase last month simply offset the 20 percent drop seen in October and is still well below the state’s average monthly sales for the year.

“It’s great to see the banks slow down foreclosures and evictions for the holidays,” said Sean O’Toole, CEO and founder of ForeclosureRadar. “We expect that the numbers will drop even further in December.”
ForeclosureRadar says it’s not unusual to see foreclosures slow for the holidays. Come January though, O’Toole says it will be back to business as usual with at least a small surge as banks play catch up after the delays.

Foreclosure starts were up slightly in Nevada (+6.4 percent) and Washington (+5.0 percent), but ForeclosureRadar described the increases as “insignificant” given the recent declines in those states due to legislative changes and legal challenges.

Notice of trustee sale filings rose 34.7 percent from October to November in California. ForeclosureRadar’s data show the increase came primarily from filings by Bank of America, up 52 percent, and Wells Fargo, up 23 percent.

The company points out that it is not unusual to see an increase in foreclosure sales each January. These rise in trustee sale filings would be necessary in preparation for that, ForeclosureRadar explained.

Sales to third parties, typically investors, have increased significantly year-over-year across most of ForeclosureRadar’s coverage area.

The largest increases in third-party foreclosure sales were seen in Arizona and Nevada at 101.6 percent and 79.9 percent, respectively. Other states saw higher numbers as well – California, up 29.4 percent, and Washington, with a 6.7 percent annual increase.

Prices Decline Slightly But Show Signs of Stabilizing

While home values are continuing to decline, they are beginning to stabilize as the market nears the bottom, according to the Zillow Real Estate Market Report released Tuesday.

Since their peak in May 2007, prices have fallen 23.7 percent, according to Zillow’s data.

On a yearly basis, prices fell 5.1 percent in October, arriving at $147,000.

However, on a monthly basis, prices fell just 0.3 percent, demonstrating a deceleration in decline.

“As expected, home values continue to fall in the back half of this year due to an abundance of housing supply relative to demand,” said Dr. Stan Humphries, Zillow’s chief economist. “Potential buyers remain on the sidelines or doubled up in other households, despite record high housing affordability and historically low mortgage rates.”
Zillow, based in Washington, measures 156 metropolitan statistical areas (MSAs) each month. In October, prices declined in 95 MSAs and rose in 39.

Prices in the remaining 22 MSAs remained relatively unchanged over the month.

Some of the harder hit areas are starting to see a reprieve from their sharp declines in home values.

Miami’s prices remained essentially unchanged for the month, and hard-hit areas of Phoenix and Detroit saw slight gains – 0.2 percent in Phoenix and 1 percent in Detroit.

On a yearly basis, 10 of the 156 MSAs experienced rising prices.

In addition to stabilizing prices, Zillow reported another positive sign for the market in its most recent report. The foreclosure liquidation rate fell for in October to 8.1 out of every 10,000 homes.

This contrasts the record high reached one year ago – 10.7 of every 10,000 homes.

While Zillow reports some slight positive signs for the market, Humphries says the “crisis of consumer confidence along with high rates of negative equity, are the biggest factors hindering a housing recover.”

“However, I’m encouraged by the positive, albeit slow, progress in working down the unemployment rate, which should help to improve consumers’ appetites for buying homes,” he continues.

Attorneys General Expect to Reach Settlement Before Christmas

The state attorneys general and the nation’s five largest mortgage servicers have been supposedly close to a settlement for quite some time. The latest estimate, according to the Des Moines Register is that they are likely to reach a settlement before Christmas.

The Des Moines Register attributes this information to Iowa Attorney General Tom Miller, head of the committee negotiating a settlement with the banks, who said the
settlement would release the banks from legal claims on past servicing and foreclosure practices but would not provide any release on claims regarding securitizations.

Miller reportedly said the deal would be complete by Christmas regardless of whether or not California participates.

California Attorney General Kamala Harris withdrew from settlement negotiations in October but can still rejoin.

Though the exact amount of the settlement is unknown, Bloomberg reported it will likely be in the range of $25 billion.

In addition, Miller told the Des Moines Register the settlement requires “substantial principal reductions” for underwater homeowners as well as a new set of servicing standards.

In other developments, Bloomberg reported Monday that former chairman of the FDIC, Sheila Bair, is being considered as a monitor for the settlement. As such, she would be charged with making sure banks comply with all aspects of the agreed upon settlement.

Monday, December 12, 2011

More Owners Opt for 'Strategic Default'

Strategic defaults are on the rise due mainly to two factors: the growing number of mortgages where the outstanding balance is greater than the home's current market value, and continued high unemployment.

A study by the Mortgage Bankers Association warns that the trend could have a significant harmful impact in certain markets.

"While the merits of such a choice can and will continue to be debated, what is indisputable is that the possibility to strategically default has certainly been brought to the attention of current homeowners like never before, with potentially negative consequences for housing markets," said Michael Seiler, who headed the study.

Source: "More Homeowners Opt for 'Strategic Default'," Sioux City (Iowa) Journal (Dec. 10, 2011)

BofA Considers Renting REOs Back to Former Owners

In facing large inventories of foreclosures, Bank of America is considering a program that would allow investors to buy a foreclosed home and then rent it back to the former home owner, HousingWire reports.

Bank of America is looking for ideas on how to handle the large inventories of foreclosures in some areas where demand hasn’t picked up.

"We are looking at programs where you can capture somebody before the REO process and offer a deed-for-lease," Ron Sturzenegger, who leads the bank's legacy asset servicing division, explained to HousingWire. "We would go to the customer and say, 'We'll do a short sale. Will you be interested in leasing your property back? We're still going to sell the property. You will no longer be the owner. But you can be a tenant now in that same property and save you from moving on.'"

The program is still in very early stages and more details need to be worked out, Sturzenegger noted.

Source: “BofA Developing Foreclosure Rental Programs to Deal With Distressed Properties,” HousingWire (Dec. 9, 2011)

Banks, GSEs Spend More Money to Spruce Up REOs

Foreclosed homes continue to hamper nearby property values. In some cities, foreclosures were found to decrease nearby property values up to $17,000, according to a new report from the Government Accountability Office (GAO).

More programs are being aimed at rehabbing foreclosed homes so the harm to property values won’t be as great.

According to the GAO report, Fannie Mae and Freddie Mac doled out $953 million last year to maintain and fix up vacant homes.

"We are committed to stabilizing communities and helping the housing market recover," a Fannie Mae spokesperson told HousingWire. "Our goal is to sell REO properties at a competitive market rate, and maintaining our properties is an important part of achieving that goal."

Since 2008, investors and nonprofits received $6 billion in grant money from HUD’s Neighborhood Stabilization Program to maintain and fix up vacant homes. In Detroit, the city spent $20 million last year demolishing vacant homes or rehabbing ones that could still be saved after neglect.

Wells Fargo & Co. said recently it will donate $5.53 million to 52 nonprofit groups through its Leading the Way Home Program Priority Markets Initiative so that the groups can purchase and redevelop foreclosed and abandoned homes.

"These grants will help stabilize and rebuild local communities," Kimberly Jackson, executive director of Wells Fargo's Housing Foundation. "We want to do what we can to make resources available to support efforts led by nonprofits to revitalize neighborhoods in cities that have felt the effects of financial difficulties and a challenging economy."

Source: “GSEs Spend Nearly $1 Billion on Property Preservation,” HousingWire (Dec. 9, 2011) and Wells Fargo

More Contracts Come With a Contingency

More offers are coming with a contingency: The buyer wants the house but the seller has to give them more time — 30 to 60 days, possibly — to try to sell their own home before they’ll make the deal final, more real estate professionals are reporting.

"In a strong real estate market, it's harder to get away with (a sell contingency)," Eric Tyson, co-author of "Home Buying for Dummies" told the Chicago Tribune. "It adds another element of uncertainty to the deal."

Many sellers will continue to show homes to potential buyers during the contingency period, but since it’s listed in the multiple listing service, some buyers might be less apt to take a look.

“Most contingency agreements contain a kick-out clause: If your dream home's seller receives a noncontingent offer during the set time period, you typically have a day or two to rescind the contingency or risk losing the home,” according to the Tribune article.

Oftentimes, seller's agents will want to visit the buyer’s home before agreeing to a contingent sale offer to check the home’s condition and location and see whether it’ll likely sell in the time period, the article notes. “The seller's agent may even have a hand in setting the price or determining how long the home should be on the market before a price drop,” according to the article.

Source: “Contingency Sale Offers Becoming More Acceptable,” Chicago Tribune (Dec. 9, 2011)

Housing Market Sees Signs of Stability: Clear Capital

The housing market may be stabilizing as house prices and REO saturation rates show little change on a quarterly and yearly basis, according to Clear Capital’s most recent Home Data Index.

Nationally, prices rose just 0.3 percent while REO saturation rate was relatively unchanged at 24.6 percent over the most recent quarter, according to Clear Capital data ending in November. Clear Capital measures housing data on a rolling quarter, which compares the most recent four months with the previous three.

“With only a one percent drop in national home prices since January and virtually no change in prices over the last six months, strong evidence suggests the big swings that many market participants are accustomed to could become a thing of the past,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital.

Villacorta also reiterated a point he and other analysts made at a panel discussion a few days ago at the Five Star MPact Conference and Expo: Market data must be granular to be effective.

“Although many of the nation’s major markets are experiencing no significant movement in prices, there are still several micro markets that are underperforming the overall market due to high levels of REO saturation,” Villacorta said in the Home Data Index.

He continued: “As lien holders continue to process their foreclosures and the flow of REOs continue to come to market, it will be critical for industry participants to ensure they understand the micro economic nature of specific markets.”
Over the recent quarter, prices changed by less than one percentage point in three of four U.S. regions, while the Midwest demonstrated a price increase of 1.2 percent.

The West was the only region to post a decline, falling 0.8 percent over the quarter. This decline is slightly lower than the quarterly price decline reported last month in the region – 1 percent.

“As this improvement comes at the beginning of the winter slow down, it suggests the stubborn quarter-over-quarter and year-over-year declines seen consistently in the hard hit region may be easing,” stated Clear Capital’s report.

The Northeast posted a 0.5 percent increase for the quarter, and the South posted a 0.2 percent increase.

While price changes did not vary drastically from region to region, they also did not vary widely from market to market.

The difference between the No. 1 highest performing market – Washington D.C. – and the 15th highest performing market – Cleveland, Ohio (1.7 percent) was just 3.1 percent.

However, the difference between the top and bottom ranked markets on the list of 15 lowest performing markets was much greater. In the No. 1 spot, Atlanta posted a 9.7 percent decline, while Dallas, at No. 15, posted a 0.4 percent decline.

Atlanta’s decline is likely the result of a decrease in transactions and an increase in distressed properties.

In keeping with Villacorta’s assertion that some markets are underperforming due to high REO saturation rates, Atlanta’s REO saturation rate is 42.8 percent, significantly higher than the national rate of 24.6 percent.

Also notable, Florida, which has seen a 59.1 percent decline in prices since their 2006 peak, has seen a 12 percent decline in REO saturation over the past year.

Additionally, four Florida metro markets – all of which experienced high foreclosure rates and sharp price declines over the past two years – held positions on the list of 15 highest performing markets for the second month in a row. Orlando, Tampa, Jacksonville, and Miami are now seeing rising prices.

GSE Execs Say Defined Foreclosure Timelines Are Necessary

Representatives from both Fannie Mae and Freddie Mac upheld the companies’ practice of assessing penalties against servicers who fail to meet defined timelines for processing foreclosures.

Speaking to mortgage professionals at the Five Star MPact Conference in Dallas, Steve Clinton, Freddie Mac’s SVP of single-family operations, said “clearly the better outcome for both Fannie and Freddie is to keep the borrower in the home” with a loan modification offered early in the default process.

But as Edward Seiler, a director in Fannie Mae’s National Servicing Organization, acknowledged, sometimes servicers are faced with a difficult decision – sometimes “a borrower just shouldn’t be in that home,” Seiler said.

In such a situation, it’s critical that servicers complete the foreclosure process in a timely manner to clear bad loans from the pipeline and limit losses for the GSEs and taxpayers, according to the companies’ execs.

Rep. Elijah Cummings (D-Maryland) recently began inquiring about policies in place at Fannie and Freddie that fine servicers when they don’t complete a foreclosure action within the window of time established by the GSEs’ servicing guidelines.

Cummings says internal records show the GSEs assessed $150 million in fines against servicers last year for not processing foreclosures fast enough.
“I am concerned that these penalties, at least some of which were ordered by the Federal Housing Finance Agency (FHFA), may have contributed to widespread abuses by mortgage servicing companies and law firms attempting to meet arbitrary deadlines to expedite foreclosures,” Cummings said in a letter sent last month to Edward DeMarco, acting director of FHFA.

Cummings cites a June 2010 report from FHFA’s Office of Conservatorship Operations which concluded that “servicers, attorneys, and other supporting personnel were overloaded with the volume of foreclosures … documentation problems were evident, and law firms … were not devoting the time necessary to their cases.”

Clinton and Seiler stress that the foreclosure timeline mandates come into play only after all loss mitigation options are exhausted.

“Our biggest problem was loans from a year and two years ago were just sitting there,” stagnant in the foreclosure pipeline, Clinton said.

Fannie Mae and Freddie Mac have synchronized their individual foreclosure timeline requirements with the coordinated Servicing Alignment Initiative that went into effect October 1.

Clinton notes that the timelines and penalties have been in place for some time, but with the newly enacted guidelines, the GSE have aligned their parameters in order to help simplify and standardize procedures for their servicers.

“We don’t want the money” from penalties, Clinton said, “we want the behavior,” in terms of servicer compliance with both foreclosure prevention and foreclosure processing procedures.

In today’s environment of mass default, Clinton says the industry needs mass loss mitigation – effective procedures, standardized evaluations, and timely resolutions.

Sunday, December 11, 2011

Housing Still Great Investment, Americans Say

Sixty-two percent of Americans say that purchasing a home is a good investment over the next 10 years, according to the Mortgage Index Study conducted on behalf of Bank of America.

Affordability ranks high among the 1,104 consumers surveyed nationwide. For those considering a home purchase within the next year, 62 percent reported contacting a lender or using online tools to determine affordable monthly mortgage payments, according to the survey. Seventy-four percent also said they plan to use their personal savings for a down payment on a home.

According to the survey, consumers most popular piece of advice for others looking to buy a home soon: Don’t “buy more house than you can afford.”

Source: “Bank of America Survey: Consumers Cautious About Home Affordability,” Inman News (Dec. 8, 2011)

Industry Approaches 1M Loan Modifications This Year

About 885,000 borrowers have received permanent loan modifications this year, according to October data from HOPE NOW. The voluntary alliance of mortgage industry participants announced last month that the industry had completed 5 million modifications since 2007.

“With almost a million loan mods completed this year, it is clear that the industry and its partners continue to invest a tremendous amount of resources into assisting homeowners across the country,” said HOPE NOW executive director Faith Schwartz Wednesday with the release of the October data.
The industry completed almost 80,000 modifications in October after completing a little more than 90,000 in September.
Of the 80,000 modifications completed in October, more than 53,000 were proprietary modifications, while 26,102 were completed through HAMP.
Of the year-to-date modification total of 885,000, about 582,000 are proprietary, while 303,426 were completed through HAMP.
About 79 percent of all proprietary loan modifications completed in October included principal and interest payment reductions. On about 74 percent of the loans, the reductions in principal and interest were at least 10 percent.
Additionally, about 86 percent of proprietary modifications completed in October were fixed-rate modifications.
HOPE NOW also reported that foreclosure starts rose during the month of October, while foreclosure sales fell.
Foreclosure starts increased 7 percent, rising from 196,000 in September to 209,000 in October.
Foreclosure sales fell 5 percent over the month from 68,000 to 64,000.
Delinquencies of 60 days or more fell along with foreclosure sales, dropping 6 percent from 2.81 million in September to 2.65 million in October.
While Schwartz credited the industry for its efforts in accomplishing more than 5 million loan modifications since 2007 and its evolving efforts in borrower outreach, she stated, “The work is not done.”
However, HOPE NOW continues to conduct borrower outreach events throughout the nation to assist struggling homeowners.
“HOPE NOW recently wrapped up its 2011 homeowner outreach schedule – including 15 separate events with close to 12,000 attendees. Events are being planned for the first quarter of 2012 in Charlotte, Miami and Tampa, plus several cities to be determined,” Schwartz said.

Gloves Come Off as Lehman, Equity Residential Fight Over Control of Archstone

After a federal judge on Tuesday cleared the way for Lehman Brothers Holdings Inc. to exit the largest bankruptcy in history, the battle is officially on for control of Archstone, Lehman’s largest real estate asset. The card includes Lehman in one corner, possibly teaming with investors that may or may not include Blackstone and Brookfield Asset Management, squaring off against industry heavyweight Equity Residential and Lehman's partners in Archstone, Barclays Capital and Bank of America Corp.

U.S. Bankruptcy Judge James Peck approved Lehman's plan to exit Chapter 11 reorganization by Jan. 31, more than three years after the world's fourth-largest investment bank collapsed, and plunged the global financial markets further into crisis.

Under the agreement, Lehman Brothers, which had $639 billion in assets at the time it filed for bankruptcy protection in September 2008, will pay out $65 billion to creditors over the next three years versus $450 billion in claims.

Included in Lehman's vastly scaled-down portfolio is a minority 47% stake in Englewood, CO-based Archstone. Barclays Capital and Bank of America Corp. own a combined 53% of the apartment company. Formerly Archstone Smith Trust, the firm was one of the nation's largest REITs at the time Lehman and Tishman Speyer Properties acquired it in a $22 billion leveraged buyout during the peak of the real estate market in 2007.

Chicago-based Equity Residential (NYSE: EQR), an apartment REIT headed by real estate tycoon Sam Zell, emerged as the top bidder to buy out the banks’ majority interest in Archstone. On Dec. 2, an EQR subsidiary entered into a purchase agreement with BofA and Barclays to acquire 50% of their interests in Archstone for a total consideration of $1.33 billion in cash, implying a total equity value of $5 billion.

The acquisition would give Equity Residential a 26.5% interest in Archstone, which has ownership interests in 77,000 apartment units in the U.S. and Germany. However, EQR's end game appears to be full ownership. Zell told the Wall Street Journal that EQR would "like to own the whole company."

Lehman Brother called the offer for Archstone "inadequate," noting in a securities filing that if Archstone were to be broken up and sold in pieces, its net value "would suggest at least an additional $1 billion of value" over the value implied in Equity Residential's offer.

"Lehman believes that the EQR purchase price does not take into consideration the value of Archstone’s platform, including its management, which Lehman believes is the best in the industry, nor does it take into account Archstone’s valuable strategic position within the apartment industry," Lehman stated in the filing.

Lehman said that Bank of America and Barclays failed to provide sufficient information to trigger a 10-day period under its agreements with the banks allowing Lehman to exercise its rights to make a counteroffer. Lehman further alleged it appears that the banks and EQR timed the delivery of the offer for just prior to Lehman’s hearing to confirm its Chapter 11 hearing this week, and the election of its new board of directors, "to optimize the chance that Lehman will not exercise its rights."

Meanwhile, Bloomberg reported this week that Lehman is in talks with investors seeking to raise $2.6 billion, including Brookfield Asset Management Inc. and Blackstone Group LP, to exercise its right to counter EQR's offer and buy a controlling stake in Archstone.

If EQR is successful, it expects to fund the acquisition through a combination of cash on-hand, available borrowings under its $1.25 billion revolving credit facility, which could increase to a total of $1.75 billion; proceeds from the disposition of non-core apartment assets, bank debt and secured and unsecured debt, and equity offerings. Equity Residential and its subsidiary also obtained a commitment from Morgan Stanley Senior Funding, Inc. to provide a $1 billion bridge loan facility.

The sitution has captured Wall Street's attention. Among the scenarios being discussed is Lehman exercising its right of first offer and teaming with a large investor to cut a deal with EQR for a portion of Archstone's assets, retaining the remainder of the portfolio for an potential IPO to raise additional proceeds from real estate sales.

In any case, Lehman "came out swinging" against the EQR cash offer, a move likely to buy it more time in order to raise capital or execute a plan to maximize Archstone's value, Citi REIT analyst Michael Bilerman said in a research note.

"This response by Lehman clearly shows that EQR will have to put up a fight to acquire any interest in Archstone, and while shareholders were expecting such a fight, it nonetheless highlights the potentially long and uncertain road ahead," Bilerman said.

Sandler O’Neill REIT analysts Alexander Goldfarb and James Milam believe that Archstone CEO Scot Sellers and Lehman want to keep the company as an independent entity, and thus "will do everything they can to source the capital necessary to match EQR's offer.", Printer Ink for Less, Save Up to 7

The attraction of Archstone for EQR is clear as it would boost the REIT's penetration in core markets with one of the highest quality portfolios in the multifamily industry, rivaling that of its former office counterpart. Archstone's U.S. portfolio is concentrated in high-value markets such as Washington, D.C., Manhattan, Northern and Southern California, and Seattle.

"We have no doubt in EQR's ability to fund the announced transaction or a potential deal for the whole company, as EQR has ample capital options between secured and unsecured debt, bridge financing, term loans, equity issuance and dispositions," the Sandler O’Neill analysts said.