Thursday, December 8, 2011

What Will Be Hot in Home Interiors in 2012?

The design forecasts are rolling in for the new year and the predictions of what’s going to be popular in interior decorating in 2012.

According to Beasley & Henley Interior Design in Winter Park, Fla., here are some interior design trends to be on the lookout for in the upcoming year:

Hickory chair featuring hot 2012 trend of yellow and gray; Photo Credit: Beasley & Henley Interior Design

Homes go gray: All shades of gray will be making up more households, from warm grey to charcoal gray, through furnishings, window treatments, and artwork.

Yellow pops: Yellow can lift practically any room, according to Beasley & Henley Interior Design. Pairing yellow with gray can bring a trendy look to a home in 2012.

Photo Credit: Beasley & Henley Interior Design

Rustic: Furnishings from natural, reclaimed, and rustic wood are expected to catch on. “Finishes on these rustic pieces will range from wire-brushed to bleached oak to gray washes,” according to Beasley & Henley Interior Design.

Photo Credit: Beasley & Henley Interior Design

Repurposed lighting: Reclaimed pieces that are turned into lamps and lighting pieces is expected to continue its wave of popularity in 2012.

The industrial look: The industrial look is also gaining traction, such as repurposed, industrial occasional tables or side carts.

Lower seating: Chairs and sofas are sitting lower to the ground. More home furniture manufacturing companies are debuting lounge chair seating lower than the standard 20’’ off the floor. They’re introducing more products at 17-18’’ off the floor–possibly to fit in smaller homes.

Oversized photography, such as in Sepia or computer-enhanced, will dominate the look of artwork in the coming year. Photo Credit: Beasley & Henley Interior Design

Supersized artwork: Artwork continues to get bigger with oversized photography dressing up interiors with black and white, Sepia, or standard pictures.

By Melissa Dittmann Tracey, REALTOR® Magazine

Report Predicts Drop in Delinquencies Next Year

The number of borrowers behind on their mortgage payments is expected to drop sharply by the end of next year, according to a new report released by TransUnion.

Mortgage delinquency rates reflect the ratio of borrowers 60 or more days behind on their loan payments. Rates are expected to rise to about 6 percent during the first three months of 2012 before dropping to 5 percent by the end of the year, TransUnion forecasts. At its peak in the fourth quarter of 2009, mortgage delinquencies stood at a 6.89 percent rate.

An improving jobs picture, along with a stabilizing housing market, are expected to be the main contributors in curtailing mortgage delinquencies in 2012, TransUnion says.

But there’s still a long way to go. Even at a 5 percent rate forecasted for 2012, mortgage delinquencies will still be well above the pre-recession average of 1.5 to 2 percent, according to TransUnion.

"We have a long way to go to get back," Steven Chaouki, a TransUnion vice president, told the Associated Press.

Source: “Mortgage Delinquency to Drop Sharply in 2012, Report Says,” Associated Press (Dec. 7, 2011)

NAR Urges Reform of Mortgage Finance System

Reforming the secondary mortgage market is essential to ensuring a reliable source of mortgage lending for consumers in all types of markets and is integral to the nation’s economic and housing recovery, a representative of the National Association of REALTORS® said in testimony yesterday.

NAR’s 2012 Director of REALTOR® Party Activities Tom Salomone spoke before the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises regarding proposed legislation by Rep. Scott Garrett (R-N.J.) to bring private capital back into the secondary mortgage market.

NAR believes that the concepts outlined in the draft legislation, the “Private Mortgage Market Investment Act,” could help create standards and uniformity, provide investors with greater transparency and ensure legal certainty regarding investors’ rights, which could help restore confidence and reignite the private label securities market. However, the long-term viability of the secondary mortgage market requires comprehensive reform.

“As the leading advocate for homeownership, NAR agrees with Rep. Garrett that greater transparency is needed in the trading of mortgage backed securities; however, to restore confidence in the market and ensure that the housing finance system works more efficiently and effectively in the future, this proposed legislation must be coupled with a comprehensive strategy for reforming the secondary mortgage market,” Salomone said.

NAR supports efforts to increase private capital in the housing finance market and reduce the size of the government’s involvement. Nonetheless, NAR believes that full privatization is not a viable option and that the federal government must have a continued role in the conventional conforming portion of the secondary mortgage market, beyond the Federal Housing Administration, to ensure a consistent flow of mortgage credit in all markets and all economic conditions.

Salomone testified that it’s critical that middle-class consumers have access to a steady flow of mortgage funding, especially during extreme economic conditions when private lenders have retreated from the marketplace. He said the housing market requires the participation of an entity that will remain active in the marketplace regardless of economic conditions.

“REALTORS® agree that a properly functioning housing finance market requires reducing the government’s participation and increasing private capital, but full privatization is not an effective option. Without some continued involvement by the federal government we risk losing affordable long-term, fixed-rate mortgage products. This would be devastating to middle-class home buyers and the housing market,” Salomone explained.

Source: NAR

Bill Seeks 1-Year Cap on Foreclosure Deficiencies

A bill introduced in the U.S. House of Representatives Tuesday aims to limit and standardize the timeframe that a mortgage company can go after a home owner following a foreclosure for a deficiency judgment.

Known as the Fairness in Foreclosures Act of 2011, H.R. 3566, the bill seeks a one-year cap on any deficiency judgment, except in states that already have shorter time limits already in place. The bill also proposes that mortgage lenders not be allowed to go after “low-income” borrowers for a deficiency judgment.

Deficiency judgments vary greatly by states. In some states, when a bank does not recover the money owed on the mortgage after a foreclosure or short sale, the bank may pursue the former home owners and require them to make up the loss. In some states, lenders can pursue borrowers for deficiency judgments up to six years after a foreclosure sale, HousingWire reports. Other states, such as California and Nevada, have banned deficiency judgments in some circumstances.

"A deficiency judgment after foreclosure seems to be one of the greatest injustices that occur to home owners after they have gone through the arduous foreclosure process," Rep. Edolphus “Ed” Towns, D-N.Y., who introduced the bill, said in a release. "Not only are they behind by thousands of dollars on their mortgage payments and facing public auction of their houses, the ordeal may continue indefinitely."

Source: “House Bill Proposes 1-Year Limit on Foreclosure Deficiencies,” HousingWire (Dec. 7, 2011) and “Rep. Town Introduces the Fairness in Foreclosure Act,” Congressman Ed Towns (Dec. 6, 2011)

Wednesday, December 7, 2011

Sellers Overvalue Their Home’s Worth, Study Finds

About 76 percent of home owners believe their home is worth more than their agent’s recommended listing price -- that’s up from 73 percent last year, according to a new survey conducted by HomeGain of real estate professionals and home owners.

On the other hand, 68 percent of home buyers say homes are overpriced, with 32 percent saying homes are overpriced by more than 10 percent.
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“Home buyers and sellers continue to remain apart as to home valuations with the vast majority of home owners thinking their homes are worth more than their agents and the market are telling them,” Louis Cammarosano, general manager of HomeGain said in a statement.

Source: “Three Quarters of Owners Continue to Overvalue,” RISMedia (Dec. 6, 2011)

Calm Before the Storm: CMBS Delinquency Rate Retreats

The delinquency rate for loans held in U.S. commercial mortgage-backed securities (CMBS) fell 26 basis points to 9.51 percent in November, according to Trepp, LLC.

That’s the second biggest decline recorded by the New York-based research firm in 2011, surpassed only by August’s 36 point drop. The rate has now fallen in four of the 11 months of 2011.
The value of delinquent CMBS loans is now $58.5 billion by Trepp’s calculations.
Recent declines in CMBS delinquencies, however, likely aren’t the makings of a trend, according to Trepp’s analysts.
The delinquency rate is expected to rise in coming months as the 2007 vintage loans that were originated under the
weakest underwriting standards start to reach their five-year balloon maturity dates. This will add to the stress that is being put on the delinquency rate by the slow-down in CMBS issuance, Trepp explained.
“It is quite possible that this will represent the best reading for a while,” said Manus Clancy, senior managing director of Trepp. “With the first of the dreaded 2007 vintage loans starting to mature, severe upward pressure will be put on the rate over the next few months.”
Clancy went on to explain, “Even if the 2007 vintage is only ‘as bad’ as the 2006 vintage has been, the rate could easily go up 75 basis points. So for now, further improvements in the delinquency rate could be elusive.”
By property type, the hotel delinquency rate dropped 184 basis points to 12.28 percent during the month of November.
The industrial delinquency rate jumped 61 basis points to 12.20 percent, threatening to pass lodging as the second worst performing property type.
The office delinquency rate was down 19 basis points, to 8.76 percent, while the multifamily delinquency rate dipped 55 basis points to remain the worst performing major property type with a rate of 16.18 percent.
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The retail delinquency rate tightened 9 basis points to 7.52 percent, remaining the best major property type.

Market Analysis Must Be Granular to Be Relevan

Home price predictions have traditionally been fairly straightforward, relying heavily on employment and income levels, according to Michael Sklarz, president of Collateral Analytics. However, the last cycle has posed challenges for analysts, Sklarz said during a panel at the Five Star MPact Mortgage Conference and Expo in Dallas, Texas Tuesday.

For example, one of the leading market indicators throughout the housing crisis has been foreclosure sales, which rise and fall at the inverse of home prices.
Another indicator throughout the past few years has been the ratio of sales price to listing price.
However, despite the best indicators and the best analytic data, national predictors – even if accurate – may not be relevant on a local basis.
During the discussion, Alex Villacorta, director of research and analytics at Clear Capital, used Phoenix as an example to show how much variation exists from market to market, and ZIP code to ZIP code.
Currently, Clear Capital predicts prices in Phoenix will remain relatively flat, falling just 3 percent. However, the analytics company predicts one Phoenix ZIP code will see a 17 percent decline, while a neighboring ZIP code will see a 34 percent rise in prices.
Another indicator, according to Thomas J. Healy, president and CEO of Level 1 Loans, Inc., is the ratio of median real estate value to median income.
Prior to the crisis, some ZIP codes were at 8.9, while others were at 1.5, according to Healy, reiterating the importance of granular data as opposed to national or regional data.
A ratio of about 3 or 3.5 is sustainable, according to Healy, and most markets that experienced a sharp rise during the bubble are now falling back to these levels.
At his keynote presentation at MPact Tuesday morning, Doug Duncan, chief economist at Fannie Mae, said we are now at the “new normal.”
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Healy agrees. “There will be no rebound,” he said during the panel discussion. “We’re pretty much where we should have been at the entire time,” had the crisis not occurred, he said.
(Note: The Five Star Institute is the parent company of and DS News magazine.)

California and Nevada AGs Announce Mortgage Investigation Alliance

Attorneys General Kamala Harris of California and Catherine Cortez Masto of Nevada have entered into a joint investigation alliance targeting both mortgage servicers and perpetrators of mortgage-related fraud.

The AGs say the initiative is designed to assist homeowners who have been harmed by misconduct and fraud in the mortgage industry.
The alliance will link the California and Nevada attorney general offices’ civil and criminal enforcement teams in order to speed up investigations of wrongdoing in the two states, which have experienced similar foreclosure and mortgage fraud crises.
“The mortgage crisis is a man-made disaster that has taken a heavy toll on the country, but it saved its worst for California and Nevada,” Harris said. She described the mortgage crisis as “a law enforcement matter,” adding
that she and Masto will pursue prosecution to hold those responsible accountable.
The partnership forged between Harris and Masto illustrates the deep rifts that have developed within the attorney general camp in recent months over robo-signing settlement negotiations.
What started out as a united front of lead counsels from all 50 states has splintered as talks between the AGs and servicers has dragged on for over a year.
Massachusetts Attorney General Martha Coakley filed her own individual lawsuit against the five servicers taking part in the negotiations last week.
The California-Nevada mortgage investigation alliance is the product of weeks of discussion between Attorneys General Harris and Masto to ascertain “the most effective and efficient means of achieving justice” for their respective states, the two said in a joint statement. Tuesday’s announcement formalizes an agreement reached between the two officials last week.
By most measures, California and Nevada have been the states hardest hit by the nation’s foreclosure crisis. The attorneys general note that the crisis in their states are similar because both employ a non-judicial foreclosure system in which a bank can foreclose on a borrower’s home without court oversight.
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“The collective result has created a rich opportunity for predators, leading both states to make mortgage-related law enforcement action a top priority,” according to Harris and Masto.

Tuesday, December 6, 2011

Is That Rental in Foreclosure?

More “accidental” landlords are surfacing as home owners turn their underwater homes into rentals to try to come up with some extra cash. But some of these accidental landlords are still unable to keep up with their mortgage payments and may become delinquent on their mortgage. So what’s this mean for the person renting their property?

Some renters may suddenly be served with an eviction notice when they discover the property they are renting is being foreclosed upon, and only having days to vacate.

One new Web site,, allows renters to check rental properties in the U.S. to see if there are any notices of default filed against the property.

Renters, or real estate professionals who represent them, can also stop at the county recorder’s office to check the status of a property.

Source: “Renters Can Search Their Home for Foreclosure Notices for Free at,” Marketwire (Nov. 30, 2011)

Prices Mostly Stabilize: Why Aren't More Talking About It?

An improving job picture and prices stabilizing for non-distressed homes are all signs that point to a housing recovery taking shape, Barclays Capital analyst Stephen Kim told HousingWire.

"In the absence of a government home buyer incentives, prices for non-distressed home sales have stabilized for almost a year," Kim said. "This is the most important trend in the housing industry right now, and we are amazed at how little attention it has been getting from the media and the street. This stability on the part of nondistressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices."

The key to when the housing recovery will largely take off “depends primarily on when these first-time buyers decide it is safe to buy a house," Kim told HousingWire.

Source: “Barclays Analyst Sees Housing Rebound Coming in 2012,” HousingWire (Dec. 5, 2011)

Where the Work is Heading: 6 Top Job States

One factor reportedly holding many Americans back from purchasing a home is job stability. But several states’ future looks bright when it comes to adding jobs.

Texas is expected to add the most jobs over the next five years on a percentage basis, according to Forbes (it edges out Nevada if you do not round up the growth rate). Employment in Texas is expected to increase by 2.9 percent annually through 20150— or add 1.6 million new net jobs in that period, according to research from Moody’s Analytics.

Here are the states expected to grow the most with jobs in the next five years, according to Forbes:

1. Texas
Projected 5-year annual job growth: 2.9%

2. Nevada
Projected 5-year annual job growth: 2.9%

3. Arizona
Projected 5-year annual job growth: 2.8%

4. New Mexico
Projected 5-year annual job growth: 2.6%

5. North Dakota
Projected 5-year annual job growth: 2.6%

6. Utah
Projected 5-year annual job growth: 2.4%

Find out where else the jobs are heading.

Source: “Texas Tops the List of the Best States for Jobs,” Forbes (Dec. 5, 2011)
"Life's most persistent and urgent question is, 'What are you doing for others?'"

Martin Luther King, Jr.

Monday, December 5, 2011

Federal Agencies Fight Modification Scams

Three government agencies are combining efforts to address mortgage modification scams through a joint task force.

With the announcement of the task force, the participating agencies – the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Consumer Financial Protection Bureau (CFPB), and the Treasury Department — released a consumer fraud alert to warn homeowners of modification scams.
“The goal of our consumer fraud alert is to empower homeowners with the knowledge of how to recognize and
avoid these scams,” said Christy Romero, deputy special inspector general for SIGTARP.
The agencies warn homeowners to beware of any company that requires advance charges to pursue loan modifications, offers money-back guarantees, or advises them to discontinue mortgage payments and/or contact with their servicer.
“Only your mortgage servicer has discretion to grant a loan modification,” the fraud alert emphasized.
The agencies stressed that applying for a modification through HAMP is free, and homeowners interested in pursuing a modification can call the Homeowner’s HOPE Hotline at 1.888.995.HOPE for more information and to make sure they receive help from a legitimate source.
“This new initiative builds on the work we have done with SIGTARP to date and other collaborative efforts throughout the federal government to educate homeowners about scams so they can protect themselves and their homes,” stated Tim Massad, Treasury assistant secretary for financial stability.
“Mortgage scams harm not only homeowners but legitimate businesses and the market as a whole,” said Richard Cordray, chief of enforcement for the CFPB.

OCC Investigates Foreclosures of 5,000 Military Members

The Office of the Comptroller of the Currency (OCC) launched an investigation into the possible wrongful foreclosures of about 5,000 military members by 10 of the nation’s largest banks.

The Servicemembers Civil Relief Act (SCRA), signed into law in 2003, protects military members from foreclosure while on active duty. The banks may have violated this act by foreclosing on military members who were deployed in Iraq and Afghanistan.
The OCC data is based on estimates by the lenders themselves and includes 2,400 foreclosures by Bank of America, 870 by Wells Fargo, 700 by Citigroup, and 575 by OneWest, according to OCC data obtained by the Financial Times.
Earlier this year, BofA agreed to a $20 million settlement regarding wrongful military foreclosures.
New York Attorney General Eric Schneiderman is taking initiative in investigating the newly discovered possible wrongful foreclosures, according to another Financial Times article.
Additionally, Rep. Brad Miller (D-North Carolina) issued a statement regarding the foreclosures.
“It is hard to see this as anything except a flagrant disregard for a law that has been on the books continuously since the First World War,” Miller said. The Servicemembers Civil Relief Act is an update of the Soldiers and Sailors Civil Relief Act of 1940.
“The flagrant failure to pursue criminal charges in the face of flagrant violations of the criminal law is destroying American’s faith in their government and democracy,” Miller stated. “In a democracy, no one is too big to prosecute.”
Miller and the North Carolina National Guard are hosting a roundtable Monday to discuss financial protections and hardships for military members.
Holly Petraeus, assistant director of the Office of Servicemembers Affairs at the Consumer Financial Protection Bureau will be present at the event.

Study Uncovers Declines Among Owner-Occupant REO Buyers

Looking for an REO buyer? It’s becoming harder to find owner-occupants to fit that bill.

New Vista Asset Management has published the results of a three-year study on buyers of foreclosed homes, covering 18 counties hit hardest by the mortgage crisis.
The company says the percentage of REO homes sold to owner-occupant buyers has decreased in almost every market.
In Los Angeles County, California, for example, owner-occupant REO buyers have dropped from 80 percent in 2009 to 60 percent by the third quarter of 2011.
New Vista’s study uses data extracted from local recorder, courthouse, and tax assessment records – looking at foreclosed homes sold by banks, HUD, Fannie Mae, and Freddie Mac – to determine whether the purchasers were owner-occupants or absentee owners using single-family homes as rental or vacation properties.
The company began tracking real estate sales transactions closed in the first quarter of 2009 and includes consecutive quarterly data through the third quarter of 2011.
“Although, quarter-by-quarter, we have observed some market-specific increases, over the entire period, owner occupancy rates for REO sales have broadly weakened,” said Brian Hurley, New Vista’s president and COO.
Hurley notes that with eleven consecutive quarters of data, the company can look beyond both seasonality and the temporary impact of demand stimuli such as the homebuyer tax credit, and observe “a clear pattern of decline.”
Wayne County, Michigan is the only market of the 18 analyzed that has seen the percentage of owner-occupant REO buyers increase over the last three years, albeit from extremely low levels.
In 2009, owner-occupants accounted for nearly 33 percent of REO purchases in Wayne County. By the third quarter of this year, their share had risen to just over 37 percent.
Wayne County was the only market that had an owner occupancy rate for single-family REO sales below 50 percent in 2009.
By the third quarter of 2011, owner occupancy rates for REO sales in an additional four of the studied counties had fallen below 50 percent, including Maricopa County, Arizona; Osceola County, Florida; Miami-Dade County, Florida; and Clark County, Nevada.
Most markets included in the study saw their share of owner-occupant REO buyers drop by double-digits over the three-year period.
Kevin Stein is with the California Reinvestment Coalition, a nonprofit organization that advocates for increased access to credit on behalf of California’s low-income communities.
Commenting on New Vista’s results, Stein said, “We are troubled by the significant drop in owner occupant purchases of REO properties in these hard hit markets, which is no doubt compounded by decreased access to credit and a failure to repair foreclosed properties to move-in condition.”
Stein says the increased investor acquisition of REOs is reversing the years of community development progress that nonprofits have facilitated.
“We need to ensure that lenders, nonprofits and government agencies are working together to give qualified homebuyers a fair chance to purchase REO properties and help stabilize residential neighborhoods,” Stein added.
While New Vista has been tracking the study’s findings since the first quarter of 2009, company management elected to formally publish the index in response to a growing focus on investor-driven solutions to the nation’s residential real estate crisis.
“Several initiatives now under consideration promise to channel more houses to investors rather than to owner-occupant purchasers,” Hurley noted.
“We timed the first release of our study to raise awareness of the community impacts that current REO disposition practices are already having,” he explained.
Hurley says bulk sales, drop-bid foreclosure auctions, and proposals under review by the Federal Housing Finance Agency (FHFA) to facilitate the sale of government-owned REOs for rental purposes all promise to move more REOs out of local real estate markets.
“Before the market adopts new strategies to address an expected surge in foreclosure volumes, we wanted the owner-occupancy impact of current approaches to be well understood,” Hurley said.
New Vista’s “Index of the Percentage of Single Family REO Properties Sold to Owner-Occupant Buyers” will now be published quarterly.
The company plans to increase coverage to include additional markets in 2012.

First-time Home Buyers Scared Off?

Home prices have fallen to 2002 levels and mortgage rates are at record lows — so why are the number of first-time home buyers decreasing instead of increasing?

First-time home buyers used to account for about half of all housing sales, but over the past year, they’ve made up only about a third of buyers, according to a recent New York Times article.

"The obstacles facing first-time buyers are big, and it's changing the way they look at home ownership," Dan McCue, research manager at Harvard University's Joint Center for Housing Studies, told The New York Times.

Higher downpayment requirements, job insecurity, and tougher credit standards may all be holding back first-time home buyers — which tend to be dominated by young professionals. The median down payment for a single-family home in 2002 was 4 percent in nine major metro areas, but now stands at 22 percent, according to

What’s more, while mortgage rates are hovering at record lows, fewer buyers are able to qualify. About one-third of households have credit scores that aren’t good enough to qualify for a mortgage. The median required credit score from FICO Inc. has increased from 720 in 2007 to 760 currently, according to The New York Times article.

Source: “Home Market Being Held Back by Wary First-Timers,” The New York Times (Nov. 30, 2011)

Study: Women Get Worse Mortgage Rates Than Men

Women aren’t getting the best mortgage rate when getting a loan compared to men, but it’s not because of gender discrimination. It’s because women aren’t doing enough shopping when it comes to mortgage rates, a new study published in the Journal of Real Estate Finance and Economics finds.

Women tend to rely on recommendations from their friends when it comes to mortgage rates, while men are more likely to shop around and talk to several lenders in finding the best rate, the researchers note.

Researchers aimed to shed light on why a 2006 study found that 32 percent of women are more likely to get a subprime mortgage than men.

Researchers suggest that “gender disparity in mortgage rates may be addressed by policies aimed at improving women’s financial literacy and search skills.”

Source: “When it Comes to Mortgages, Women Don’t Shop Enough,” AOL Real Estate (Nov. 18, 2011)

Are the Holidays a Good Time to Sell?

Sixty percent of real estate professionals advise their sellers to list a home during the holidays because it’s a good time to sell, according to a new survey conducted by

Why are the holidays such a good time to sell? Seventy-nine percent of the agents surveyed said that more serious buyers come out during the holidays, and 61 percent say less competition from other properties make it a great time to sell. Plus, 17 percent of agents say the cold weather is actually a benefit, making homes feel more cozy.

But online listing photos become even more crucial during the holiday season, according to the survey. Slightly more than half of agents say that the photos are more important because sellers tend to offer less open houses around the holidays, and so the online photos help buyers decide the properties to see and which ones to possibly bypass.

The biggest hurdles sellers face during the holidays, however, are keeping a home ready to show (clean and staged) as well as winter weather conditions and buyers’ vacation schedules, the survey found.

Source: “Survey Data Reveals Majority of Real Estate Professionals Recommend Clients List Their Homes During the Holidays,” (Dec. 2, 2011)