Friday, February 10, 2012

Clarification Sought for Discrimination Protections

A new measure is seeking clarification to the National Association of REALTORS’® Code of Ethics that would specifically extend discrimination protections to include gender identity.

NAR’s Board of Directors passed an amendment to the Code of Ethics in November 2010 prohibiting members from discriminating on the basis of sexual orientation. Gender identification was not completely addressed in that Code change, says Eric Kodner, a NAR Diversity Committee member and REALTOR® with offices in the Twin Cities and Madeline Island, Wis.

HUD extended its discrimination protections to include gender identity and sexual orientation in a new rule announced Jan. 24. “We’re looking for the Professional Standards Committee to re-evaluate what we passed last year,” said Kodner. “When the Article 10 amendment was submitted, it was supposed to be all-encompassing. We’re really just bringing the NAR policy in line with the HUD policy. It’s more definitional clarification than a new addition to the Code of Ethics.”

Kodner, who is also currently serving as president of the National Association of Gay & Lesbian Real Estate Professionals (NAGLREP), is championing the clarification, which was proposed during the NAR Diversity Committee meeting on Nov. 11, 2011, in Anaheim, Calif.

The Wisconsin REALTORS® Association’s Cultural Diversity in Housing Committee officially endorsed the effort to bring the Code of Ethics in line with HUD policy, as has the Council of Residential Specialists.

“This is something CRS should do for the benefit of our members and the consumer,” says Toni Sherman, director of business relations at CRS. “Amending the NAR Code of Ethics to align with HUD’s new policy that includes protections based on gender identity as well as sexual orientation is only taking Article 10 to a crystal-clear completion.”

Kodner says he is encouraged by the supportive response he has received on the proposed revision. “It’s an issue we clearly had to get in front of because there should be no exclusions,” he says.

“He is tireless in going after a goal that will benefit the members of NAGLREP, but more importantly, this will have far-reaching positive affects across the nation,” Sherman says. “Eric is the kind of member we want at [CRS] — someone who is bright, aware of current issues affecting the consumer and NAR members, and enthusiastically following through until the job is done.”

The revision is expected to be discussed at the Diversity Committee at the Midyear Meetings in Washington, D.C., this spring.

- By Erica Christoffer, REALTOR® Magazine

Squatters Busted With Surprising Finds in Miami Home

When a home falls into foreclosure and is left abandoned, you can never be too sure what you may walk into.

Authorities entering a home in Florida certainly were surprised and unsure what they’d find after the out-of-state home owner alerted them that two people had taken up residence in the home illegally. Authorities called in the bomb squad to take a look. The found: Drugs, a handgun, 10 grenades, and a pig roaming around the house.

A man and woman who were squatting in the home face weapon and drug charges.

The number of squatting cases in abandoned homes has increased in recent years. When homes are left unattended for months, others may decide to move in. Other recent surprising finds in abandoned homes have included a man who was hiding 94 hamsters in an apartment and a home that caught fire from a marijuana growing operation inside, as well as cases of skeletons found in homes or swarms of bees and bats that took refuge.

Source: Source: “Alleged Squatters Found with Drugs, Handgun, Grenades, Pig,” AOL Real Estate News (Feb. 9, 2012) and “Police Find Squatters, Grenades in Homes,” Associated Press (Feb. 7, 2012)

30-Year Mortgage Rates Hold at Record Lows

The 30-year fixed-rate mortgage averaged 3.87 percent this week, matching last week’s all-time record low. As for other rates, they ticked up slightly this week, but still hovered around record lows compared to historical standards, Freddie Mac reports in its weekly mortgage market survey.

“A strong January employment report added upward pressure to most mortgage rates this week,” Frank Nothaft, Freddie Mac’s chief economist, said. The unemployment rate dropped to 8.3 percent as the economy gained 243,000 jobs last month, the largest gain since April 2011.

Here’s a closer look at rates for the week ending Feb. 9:

•30-year fixed-rate mortgages: averaged 3.87 percent, with an average 0.8 points. A year ago at this time, 30-year rates averaged 5.05 percent.
•15-year fixed-rate mortgages: averaged 3.16 percent, with an average 0.7 point, rising slightly from last week’s record low of 3.14 percent. But 15-year rates were still far below what they averaged a year ago at this time — 4.29 percent.
•5-year adjustable-rate mortgages: averaged 2.83 percent, with an average 0.7 point, rising from last week’s 2.80 percent average. Last year at this time, 5-year ARMs averaged 3.92 percent.
•1-year ARMs: averaged 2.78 percent, with an average 0.6 point, rising slightly from last week’s 2.76 percent average. A year ago, 1-year ARMs averaged 3.35 percent.
Source: Freddie Mac

Income, Job Gap Between Young and Old Widens

Young Americans are having it rough, according to a new study by the Pew Research Center. The generation of mostly 20- and 30-somethings have suffered from the biggest income losses than any other age group, the study found. What’s more, young professionals are less likely to have a job than any time since World War II.

The dire situation for young professionals has caused them in record numbers to shun moving long distances, delay marriage and kids, and move back with their parents in order to curb costs.

Forty-one percent of Americans say that young adults have been hit harder than any other age group, according to the Pew survey.

What’s more, nearly 70 percent of Americans say it’s more challenging for young adults than their parents’ generation to buy a home, find a job, pay for college, or even save for the future.

"Young workers are on the bottom of the ladder, and during a recession like we've had, it's often hard for them to hold on," Kim Parker, associate director of Pew's Social & Demographic Trends project, told "They have a long way to climb back, and a lot of displaced workers to compete with.”

The number of young adults aged 18-24 who are employed dropped to 54.3 percent, which is the lowest on record since data started being collected in 1948. Also, for young adults who do work full time, their median weekly earnings average $448 — about 6 percent less than what it was in 2007.

"The research points to long-term economic problems for young adults,” says Mark Mather, an associate vice president at the Population Reference Bureau. “But many of the trends we are seeing among young people — postponing marriage, living at home, staying in school longer — can be viewed more as short-term ways to cope until the economy picks up."

Source: “U.S. Jobs Gap Between Young, Old Is Widest Ever,” Associated Press (Feb. 9, 2012)

What You Need to Know About the Mortgage Settlement

A settlement announced this week among state and federal officials and the nation’s five largest banks is the largest joint state-federal settlement in history against an industry. The settlement, which amounts to somewhere between $25 billion and $26 billion, is aimed at fixing some of the mortgage abuses over the last few years that caused people to lose their home.

So what does the settlement mean for home owners?

Home owners underwater on their house or struggling to make payments may have something to gain from the deal. Home owners who are eligible for payments or principal write-downs on their mortgage from the settlement will be notified by mail within the next nine months.

Those who may be eligible for aid under the settlement include home owners who are currently struggling to make their payments and need a loan modification; borrowers who are current on their payments but owe more on their house than it’s currently worth; or borrowers who may have already lost their home to foreclosure.

In the settlement, banks have agreed to write off a sum of the mortgage principal in select cases where home owners are struggling to make payments. Home owners will then be able to refinance and lower their monthly payments. Underwater borrowers also may receive aid, such as being able to refinance so they also can lower their monthly payments.

Borrowers who have already lost their home to foreclosure may be eligible for payments. About $2,000 per person will be doled out to 750,000 borrowers found eligible.

Payments will be paid over a three-year period.

The banks participating in the settlement are Bank of America, JPMorgan Chase, Wells Fargo, Citi, and Ally/GMAC. Fannie Mae and Freddie Mac-backed loans are not eligible for the benefits.

You can learn more about the settlement at the just-launched “National Mortgage Settlement” Web site.

Source: “What the Mortgage Settlement Means to You,” (Feb. 9, 2012)

Bank of America Focuses on Customer Satisfaction During Refi Boom

Bank of America is experiencing a deluge of phone calls from homeowners wanting to refinance their mortgages. Consumer demand is so high, in fact, that without some sort of internal adjustment, it threatens to compromise the level of customer service delivered by the bank’s fulfillment personnel and interfere with closing timelines.

“We are not willing to sacrifice long-term customer satisfaction for short-term volume,” said Terry Francisco, spokesperson for the North Carolina-based bank.

He says BofA decided to implement a stopgap measure that will ensure each and every borrower receives the type of service and assistance they’ve come to expect from their Bank of America representatives. In late January, the company instituted a “reservation system” throughout its call center network for refinance requests, Francisco explained in an interview with DS News.

This system kicks in during periods of high volume and alerts customers that BofA is experiencing a temporary delay in processing refinance applications. Borrowers’ contact information is recorded and they receive a commitment from Bank of America to take up their refinance request within 60 days.

Francisco says relatively few of the bank’s customers seeking refinance assistance receive this “delay” response, and he says a BofA staff member typically reconnects with
these borrowers and takes their application within a matter of weeks as opposed to two months.

Ed Delgado, CEO of the Five Star Institute, says Bank of America’s strategy is akin to a concierge service. “It is a responsible way to handle consumer response during periods of excessive call volume in order to ensure they maintain the level of customer service that is expected,” Delgado said.

January was a particularly strong month for Bank of America in terms of refinancing. With the high volume of refi applications flooding the company’s offices, Francisco says BofA reasonably concluded, “Customers would be unable to get a predictable closing date.”

Refi activity jumped 25 percent between December and January for Bank of America. The company was one of the first to begin offering homeowners the chance to refinance through a new and improved government program, which took shape as the second rendition of the Home Affordable Refinance Program, or HARP 2.0.

Francisco says the sharp increase in refi activity had a lot to do with the pent-up demand that was unleashed when HARP guidelines were relaxed, as well as the added visibility President Obama has lent to the refinancing market in recent weeks coupled with the current rate environment.

While consumer demand for mortgage refinancing is expected to remain strong, Francisco says BofA’s reservation system is only temporary. “Eventually, we will eliminate the need for this measure,” he said.

The company is aggressively hiring fulfillment personnel to increase capacity and accept more refinance applications. Bank of America currently has more than 1,000 open requisitions for the refi side of its business.

“We are working hard to ensure that we can effectively respond to our customers’ needs,” Francisco said.

Editor’s Note: The Five Star Institute is the parent company of DS News and

Anticipation for Market Begins at Close of Settlement

While the $25 billion robo-signing settlement concludes 16 months of intense negotiations, questions still remain on how this will impact borrowers and the larger economy.

Capital Economics stated that while it is good that the settlement has been finalized and will offer principal reductions and refinancing schemes to borrowers, the bigger picture is that the settlement is not large enough to dramatically alter the outlook for the housing market or the wider economy.

Looking at the economy, $25 billion is worth 0.2 percent of gross domestic product (GDP), and if the deal expands to $40 billion, that would be 0.3 percent of GDP, according to the Capital Economics report.

When assessing the housing market, the report projects little impact. While $10 billion will be set aside for principal forgiveness, close to 11 million borrowers are underwater, totaling about 700 billion in negative equity.

The settlement also doesn’t include Fannie Mae or Freddie Mac mortgages, which represents roughly half of American homeowners.

“It’s a start, but it’s a drop in the bucket. There is still a long way for banks to go in repairing families, communities and the housing market,” said Mark Seifert, executive director of Empowering and Strengthening Ohio’s People (ESOP).

While the relief provided to homeowners is said to be immediate, ESOP questioned exactly how homeowners will be notified of the relief they can receive, especially those already in foreclosure.

“[The] devil is in the details. In our experience, the industry has never done anything voluntarily to repair the damage they wreaked over the last decade, and we have no reason to believe this settlement will be any different,” said Seifert.

In addition to the $25 billion, new servicing standards were set for the top five servicers – Bank of America,
JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial – to address robo-signing, lost paperwork, and problematic modifications.

Some of the standards include an end to robo-signing practices and improved communication between servicers and borrowers, such as notifying customers 14 days before referring loans to a foreclosure attorney. Again, while market participants acknowledge this a direction towards recovery, impact is still in question.

“A final agreement can play an important role stabilizing and providing certainty and confidence to the housing and mortgage markets,” said David H. Stevens, President and CEO of Mortgage Bankers Association (MBA). “With all the rumors and speculation surrounding these negotiations behind us, it is now imperative that policymakers, lenders, servicers, and other stakeholders work together on policies and initiatives that will allow us to get the housing market on the road to recovery. I would caution, though, that, while a positive step, this will not be a panacea for all that ails housing.”

Oklahoma, the only state that did not sign onto the agreement, reached an independent mortgage settlement agreement with the five banks. The servicers agreed to pay Oklahoma $18.6 million.

“This settlement will provide damages to those Oklahomans who did fall victim to unfair and unlawful misconduct of mortgage servicing companies, while not exceeding the appropriate role and authority of state attorneys general,” Pruitt said.

When Iowa Attorney General Tom Miller announced in March that the settlement expanded beyond investigating fraud and unlawful practices and into the restructuring of the mortgage industry, Pruitt sent a letter to Miller, voicing strong concerns, according to a release issued by the Oklahoma attorney general’s office.

“We had concerns that what started as an effort to correct specific practices harmful to consumers, morphed into an attempt by President Obama to establish an overarching regulatory scheme, which Congress had previously rejected, to fundamentally restructure the mortgage industry in the United States,” Pruitt said.

Another concern stated in the letter to Miller was that the terms might encourage more homeowners to default.

When addressing the settlement, President Obama argued it would help millions of people affected by the housing market crises.

“These practices were plainly irresponsible and we refused to let them go unanswered,” Obama said at the White House. “This settlement is a start. We’re going to make sure that the banks live up to their end of the bargain.”

Regulators Hit Servicers With Monetary Penalties for Robo-Signing

The Office of the Comptroller of the Currency (OCC) and the Federal Reserve issued statements Thursday detailing monetary penalties they have levied against the nation’s largest servicers for “unsafe and unsound mortgage servicing and foreclosure practices.”

The OCC is assessing a total of $394 million in penalties against Bank of America ($164M), Citibank ($34M), JPMorgan Chase ($113M), and Wells Fargo ($83M).

The Federal Reserve’s monetary sanctions total $766.5 million and target the same four institutions as well as Ally Financial. The breakdown of the Fed’s fines by servicer are: Ally ($207M), Bank of America ($175.5M), Citigroup ($22M), JPMorgan Chase ($275M), and Wells Fargo ($87M).

Both regulatory agencies said the penalties are based on “an agreement in principle” reached with the banking
organizations and stem from procedural deficiencies identified by examiners during reviews conducted from November 2010 to January 2011.

Corrective measures were required by formal enforcement actions issued by the OCC and Federal Reserve against the institutions on April 13, 2011. At that time, the regulators made it clear that they believed monetary sanctions were also warranted and they planned to pursue such actions separately.

The fines announced by the OCC and Fed came on the heels of Thursday’s long-awaited announcement that the robo-signing settlement between these same servicers, the Department of Justice, HUD, and state attorneys general is at last a done deal.

With the OCC and Fed finalizing the last piece of their punitive actions and the federal-state settlement in place, Thursday’s events are expected to bring some closure to the robo-signing problems that surfaced in September of 2010. Much of the work related to correcting servicing and foreclosure procedures, as well as independent reviews of past foreclosure cases, however, will continue through 2012.

“The actions announced [Thursday] mark important progress in addressing the problems associated with foreclosure processing and are a critical step toward restoring a functioning industry that protects the rights of the customers it serves,” acting Comptroller of the Currency John Walsh said in a statement.
4 Tips for Buying Smart With New Construction

Thursday, February 9, 2012

4 Tips for Buying Smart With New Construction

For buyers who want new construction, be sure to educate them about some differences in buying "old" versus "new." offers some of the following tips for smart strategies when buying new construction:

1. Choose to escrow if not all changes are completed by closing. If the builder isn’t going to be done with all of the changes by the time of closing, “it’s probably a really good idea to escrow some money,” Ron Phipps, immediate past president of the National Association of REALTORS®, told Then builders will have more incentive to complete the work.

2. Try to get custom features added. The builder may be willing to swap out a few things before you move in, says Stephen Melman, director of economic services for the National Association of Home Builders. This is easier to do in a new home because the building materials are already on site, unlike in a previously owned home where you have to negotiate any alterations with the seller.

3. Research additional financing options. Buyers of new homes may have more financing options available since many builders usually work with a bank. Buyers aren’t required to go with the builder’s lender, but they can use it as a point of comparison to what other lenders are offering in shopping around for a best rate.

4. You can still negotiate. While previously owned homes offer plenty of deals nowadays and most likely more square footage for less money, builders are also more willing to negotiate with buyers on new homes. "There is such price pressure on the builder," Melman says. "Prices haven't been this low in years” on new construction. And even though you may be able to get a better deal on a previously owned home, Phipps says some buyers still may be drawn to new construction, despite the higher price tag: “You're starting fresh, its economic life is longer, you get to personalize it, and you don't have to undo what that other person thought was important."

Source: “6 Tips for Buying a Newly Constructed Home,” (Feb. 8, 2012)

Is the Foreclosure Crisis Finally Fading?

Foreclosures decreased by 8.4 percent -- or 130,000 -- in 2011, according to research by CoreLogic.

"The pace at which properties are entering foreclosure is slowing," Mark Fleming, chief economist with CoreLogic, told CNNMoney. "And servicers nationwide stepped up the rate at which they were able to process distressed assets."

So why are foreclosures dropping?

For one, lenders are being more cautious. Homes are entering the foreclosure process more slowly as lenders more carefully scrutinize paperwork before processing a foreclosure, after getting into big trouble for the mishandling of some foreclosures in recent years.

Also, with stricter credit conditions nowadays, lenders are being more choosy in who they give loans too, reserving mortgages for mostly only low-risk borrowers who have less chance of default and foreclosure.

Banks also are doing more loan modifications to prevent foreclosures. And when a home does land in foreclosure, banks are trying to process them faster or trying to encourage a short sale.

Fleming also notes "this is the first time in a year that REO sales [those of bank-owned properties] have outpaced completed foreclosures." Case in point: There were 103 sales of bank-owned homes for every 100 homes in foreclosure inventory in December 2011. That’s compared to November 2010 when there were 94 REO sales for every 100 in the foreclosure process.

Source: “Homes in Foreclosure Decline by 130,000,” CNNMoney (Feb. 8, 2012)

$26 Billion Deal Could Offer Relief to Home Owners

After months of tense negotiations, the nation’s five largest banks and state and government officials have agreed to a $26 billion settlement aimed at holding banks accountable for the mishandling of some foreclosures.

The settlement is expected to help 1 million home owners, by having lenders reduce their mortgage debt or refinance into lower mortgage rates to reduce costs of their monthly payments. Also, about 750,000 people who lost their homes to foreclosure from September 2008 to the end of 2011 are expected to receive checks for about $2,000. The aid from the settlement will be distributed over the next three years, The New York Times reports.

“I wouldn’t say it’s a panacea for the housing industry but it is good for the banks to get this behind them,” Jason Goldberg, an analyst with Barclays, told The New York Times about the settlement.

Details of the settlement still need to be finalized, including how many states will participate. Also, federal officials say the final figure could move upwards to $39 billion. Mortgages owned by Fannie Mae and Freddie Mac will not be part of the deal.

The banks involved in the settlement are Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial.

Source: “States Negotiate $26 Billion Deal for Home Owners,” The New York Times (Feb. 8, 2012)

Fourth Quarter Metro Area Home Prices Boost Affordability, Sales Improving

Housing affordability conditions improved in most metropolitan areas from softer existing-home prices and record-low mortgage interest rates in the fourth quarter, with rising sales and lower inventory creating more balanced conditions, according to the latest quarterly report by the National Association of REALTORS®.

Introduced with this release is a new annual metro-level housing affordability index, with historically favorable conditions dominating across the country.

The median existing single-family home price rose in 29 out of 149 metropolitan statistical areas in the fourth quarter from a year earlier; two were unchanged and 118 areas had price declines.

Lawrence Yun, NAR chief economist, said the figures reflect greater home sales activity at lower price points. “Sales have risen strongly in lower price ranges from one year ago, while sales at the upper end remain sluggish,” he said. “More importantly, we’re seeing a consistent trend of declining inventory, which means supply and demand conditions are becoming more balanced in more areas, which will help stabilize home prices.”

The national median existing single-family home price was $163,500 in the fourth quarter, down 4.2 percent from $170,600 in the fourth quarter of 2010. The median is where half sold for more and half sold for less. Distressed homes -- foreclosures and short sales which sold at discounts averaging 15 to 20 percent -- accounted for 30 percent of fourth quarter sales; they were 34 percent a year earlier.

Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times because the level of distressed sales, which artificially depress median prices, can vary notably in given markets. Annual price measures, also reported today, generally smooth out any quarterly swings.

“Broadly speaking, the very middle of the country, from the Dakotas and Nebraska to Oklahoma and Texas, has experienced very stable home price trends because of stronger job creation in those areas,” Yun said.

Total existing-home sales, including single-family homes and condos, increased 5.9 percent to a seasonally adjusted annual rate of 4.42 million in the fourth quarter from 4.17 million in the third quarter, and were 9.2 percent above the 4.04 million pace during the fourth quarter of 2010. All regions rose from the third quarter and from a year ago.

At the end of the fourth quarter there were 2.38 million existing homes available for sale, which is 21.2 percent lower than the close of the fourth quarter of 2010, when there were 3.02 million homes on the market.

NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said market conditions vary widely around the country. “Even with record high housing affordability conditions, all real estate is local,” he said. Both buyers and sellers need to be aware of what works in their local market, and REALTORS® are the best resource because they have unparalleled knowledge of local market conditions and options.”

NAR’s national Housing Affordability Index rose to a record high 184.5 in 2011, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power; recordkeeping began in 1970.

An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent down payment and 25 percent of gross income devoted to mortgage principal and interest payments. For first-time buyers making small down payments, the affordability levels are relatively lower.

Metro areas with the greatest housing affordability conditions in 2011 include the Detroit-Warren-Livonia area of Michigan, with an index of 383.4; Toledo, Ohio, at 242.9; and Decatur, Ill., at 236.8. Only 24 out of 152 metros measured had an affordability index below 100 in 2011.

“Clearly, the Midwest has the greatest concentration of areas where home buyers have the strongest purchasing power, followed by the South,” Yun said. “Metros on the West Coast and along the Northeastern seaboard have generally higher-priced homes, which account for lower affordability.”

Between 2010 and 2011, in markets where comparisons are available, all but 2 out of 148 areas showed improvement in housing affordability, and 69 MSAs had double-digit increases in affordability conditions.

The share of all-cash home purchases in the fourth quarter was 29 percent, unchanged from the third quarter; they were 30 percent in the fourth quarter of 2010. Investors, who are drawn by bargain prices and who account for the bulk of cash purchases, accounted for 19 percent of transactions in the third quarter; they were 20 percent in the third quarter and 19 percent a year ago.

First-time buyers purchased 33 percent of homes in the fourth quarter; they were 32 percent in both the third quarter and the fourth quarter of 2010.

In the condo sector, metro area condominium and cooperative prices -- covering changes in 54 metro areas -- showed the national median existing-condo price was $160,800 in the fourth quarter, which is 1.7 percent below the fourth quarter of 2010. Ten metros showed increases in their median condo price from a year ago; one was unchanged and 43 areas had declines.

Regionally, existing-home sales in the Northeast rose 6.3 percent in the fourth quarter and are 3.7 percent above the fourth quarter of 2010. The median existing single-family home price in the Northeast fell 4.6 percent to $229,200 in the fourth quarter from a year ago.

In the Midwest, existing-home sales increased 7.0 percent in the fourth quarter and are 14.1 percent higher than a year ago. The median existing single-family home price in the Midwest declined 3.3 percent to $134,100 in the fourth quarter from the fourth quarter in 2010.

Existing-home sales in the South rose 3.8 percent in the fourth quarter and are 9.1 percent above the same quarter in 2010. The median existing single-family home price in the South was $146,500 in the fourth quarter, down 3.8 percent from a year earlier.

Existing-home sales in the West increased 8.1 percent in the fourth quarter and are 8.4 percent higher than a year ago. The median existing single-family home price in the West declined 4.2 percent to $205,200 in the fourth quarter from the fourth quarter of 2010.

Source: National Association of REALTORS®

Wednesday, February 8, 2012

Mortgage Modifications Down 40%

An estimated 1.05 million homeowners received permanent loan modifications from mortgage servicers in 2011, according to year-end data released Tuesday by HOPE NOW.

That tally represents a 40 percent decline from the 1.76 million mods granted in 2010.
Of the more than 1 million loan mods completed last year, approximately 695,000 were done through servicers’ own proprietary programs, while 353,677 were through the government’s Home Affordable Modification Program (HAMP).
For the month of December, HOPE NOW reports there were approximately 80,000 loan modifications completed, which included 56,000 proprietary and 23,374 completed under HAMP.
HOPE NOW’s industry data shows that loan modifications outpaced foreclosure sales for the fourth consecutive year. In 2011, there were approximately 843,000 foreclosure
sales completed for the year – a significant drop from the 1.07 million reported in 2010.
Faith Schwartz, executive director of HOPE NOW, says 2011 was yet another challenging year for the nation’s housing market and the economy in general, but she notes that great strides continue to be made on behalf of at-risk families across the country.
“Since 2007, more than five million permanent, sustainable solutions have been offered and in the past two years, almost three million have been done,” Schwartz said.
While HOPE NOW’s data shows that total loan mods for 2011 were less than the number completed last year, Schwartz says it is important to note that foreclosure sales dropped by more than 21 percent from 2010.
“That is very significant in that it reinforces the assertion that the industry, and its various partners, has worked hard to ensure that every homeowner in trouble is apprised of all available options before going to foreclosure sale,” Schwartz said.
HOPE NOW’s analysis of last year’s loan modifications found that approximately 80 percent, or 555,000, of all proprietary modifications reduced borrowers’ principal and interest payments.
In addition, fixed-rate modifications – which are structured with an initial fixed period of five years or more – accounted for 82 percent, or 572,000, of all proprietary modifications.
HOPE NOW’s report shows that as of December 2011, there were 2.79 million mortgages 60 or more days delinquent, compared to 2.87 million in December 2010.

Mortgage Applications Soar 7.5% on Low Rates

Record low mortgage rates are creating more demand for mortgage applications. The Mortgage Bankers Association reports in its most recent weekly mortgage market survey that loan application volume increased 7.5 percent on a seasonally adjusted basis compared to one week earlier.

Refinance activity was due to most of that increase last week. Applications for refinancings increased 9.4 percent compared to a week earlier, while applications for purchases only ticked up slightly at 0.1 percent.

The 30-year fixed-rate mortgage on conforming loans reached its lowest rate in the survey’s history last week -- falling from 4.09 percent to 4.05 percent. Freddie Mac was reporting even lower for the week ending Feb. 2, with 30-year rates averaging 3.87 percent nationwide.

Source: “Mortgage Applications Surge on Low Interest Rates,” HousingWire (Feb. 8, 2012)

Major Foreclosure Servicer Charged With Forgery

DocX, one of the largest companies in the nation to provide foreclosure services to lenders nationwide, has been indicted by a Missouri grand jury on forgery charges stemming from foreclosures against home owners in the state.

The indictment marks one of the “few criminal actions to follow reports of widespread improprieties against home owners” nationwide, The New York Times reports.

According to the indictment, DocX is accused of making “mass-produced fraudulent signatures on notarized real estate documents” and could face up to 136 counts of forgery in the preparation of documents used to evict defaulting home owners from their homes. DocX could face a fine of up to $10,000 for each forgery conviction.

DocX is a unit of Lender Processing Services of Jacksonville, Fla. The company is accused of executing and notarizing millions of mortgage documents for banks and lenders the last few years. Lender Procession closed in April 2010 after allegations surfaced of alleged forged documents.

Some of its employees were also indicted last week and could face several years in prison if found convicted.

An attorney for DocX says the company will enter a plea of “not guilty” and declined to comment further about the charges.

Source: “Company Faces Forgery Charges in Mo. Foreclosures,” The New York Times (Feb. 6, 2012)

Fannie Starts Accepting Online Offers for Properties

Fannie Mae has announced that it is rolling out a pilot program nationwide that will allow real estate agents to now submit and track their offers online for Fannie Mae-owned properties. Once an offer is submitted, you’ll receive confirmation and be able to track its status through Fannie’s HomePath web site.

Fannie first began piloting the program for online offers in 2010 in San Diego, Orlando, Fla., and Detroit. It now be accepting online offers for properties nationwide.

"Collecting offers online through will provide greater transparency for home buyers and their agents," Jay Ryan, vice president for REO at Fannie Mae, said in a statement. "Our online platform will make it easier to sell properties to owner-occupants, which is a major factor in helping to stabilize communities across the nation."

For more information on how the new program works, visit

Source: Fannie Mae

Tuesday, February 7, 2012

Obama’s Housing Scorecard Shows Mixed Results

Obama’s Housing Scorecard Shows Mixed Results

The Obama administration’s latest Housing Scorecard shows a mixed sign for the real estate market, which continues to face challenges.

The administration’s monthly scorecard reports on the health and overall conditions in the national housing market.

The latest report in January shows that inventories of existing homes for sale have continue to show improvement over the last two quarters. Inventories dropped from 3.2 million in the second quarter to 2.4 million in the fourth quarter. Another positive sign for housing: Foreclosure sales continued to fall in December. However, foreclosure completions are up. Also, new-home sales and home prices showed mixed signals.

“While we should be encouraged by the positive trends on inventories and foreclosure starts, the mixed overall outlook means that we must remain diligent to improve conditions in the nation’s housing market,” says Raphael Bostic, HUD assistant secretary.

You can view the full report of the January Housing Scorecard at

Source: U.S. Department of Housing and Urban Development

For Renters, Market Likely to Get Pricier

Rising demand and a tightening supply is force both commercial and residential rents upward, and signs point to an increase in prices continuing over the next few years.

For one, office construction starts have been at their lowest level in more than 50 years, and on record. The lower starts means that there will be fewer spaces for businesses to rent, which will likely give landlords the upper hand in pushing rents even higher.

Residential renters can also expect an increase. Nationwide, rents in December 2011 increased 2.5 percent compared to December 2010, the Consumer Price Index shows. Rising rents have led to rents to reach their highest levels in 2011 since 2007, Reis Inc. reports.

“The supply side is so constrained because nobody has been building for years” due to the economy and the struggle developers face in getting loans, Mark Stapp, professor of real estate practice at Arizona State University, told

While rents have risen, the cost of home ownership has dropped. In fact, in 74 percent of major U.S. cities, renting may be more expensive than owning a home, a study has found.

Source: “Office and Home Rent Will Keep Rising and Rising,” (Feb. 6, 2012)

More Deals Falling Through

Appraisals coming in lower than the agreed-upon sales price continue to cause more real estate deals to be cancelled, recent surveys show.

In December, a third of real estate professionals reported they had a real estate contract fall through, up from 9 percent a year earlier.

The National Association of REALTORS®, along with other housing industry groups, point to low appraisals and rejected mortgage applications from a stringent lending environment as the main forces behind the high number of transaction cancellations in recent months.

Too often, foreclosures sales — which tend to be sold at big discounts — are being weighted into valuations, experts argue.

The National Association of Home Builders’ chairman Bob Nielsen has called the use of distressed and foreclosure sales in comparables in appraisals “inappropriate” and “needlessly driving down home prices.”

Sixty percent of builders say they are seeing problems from appraisals coming in below their contract sales price.

"This is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more home owners underwater, harms local economic activity and acts as an obstacle to the recovery of the housing market," Nielsen said in a statement in December about appraisals.

But the lending environment also needs to change for the housing market to recover and for fewer deals to stop falling through, housing experts say.

"If we simply return to the normal credit standards, verifying income and looking at the creditworthiness of an individual to stay in a property long term, we think sales will be 15 percent to 20 percent above where they are," NAR spokesman Walt Molony told Investor’s Business Daily. "There are more people trying to buy homes than are succeeding today."

Source: “Real Estate: A Buy or Bust This Spring Selling Season?” Investor’s Business Daily (Feb. 2, 2012) and REALTOR® Magazine Daily News

List of Improving Housing Markets Grows

The list of housing markets showing signs of improvement in home prices and overall market conditions in February has grown to nearly 100 cities, according to the National Association of Home Builders/First American Improving Markets Index.

The index reveals metro areas that have shown improvement in home prices, housing permits, and employment for at least six straight months.

In the latest index, some markets that were particularly hard-hit during the housing market crash — such as Miami and Detroit — were added to this month’s list. Such cities are seeing a turnaround in their sluggish housing markets, possibly already hitting bottom.

“Despite the many challenges that continue to drag on the housing recovery — including the tight lending environment for builders and buyers — improving conditions are slowly but surely spreading from one housing market to the next,” Bob Nielsen, NAHB chairman, said in a statement.

The 29 metro areas added to the list this month are:

Napa, Calif.
Deltona, Fla.
Miami, Fla.
North Port, Fla.
Tampa, Fla.
Augusta, Ga.
Shreveport, La.
Springfield, Mass.
Cumberland, Md.
Lewiston, Maine
Boston, Mass.
Detroit, Mich.
Duluth, Minn.
Rochester, Minn.
Jefferson City, Mo.
Kansas City, Mo.
Hattiesburg, Miss.
Omaha, Neb.
Ocean City, N.J.
Syracuse, N.Y.
Springfield, Ohio
Youngstown, Ohio
Portland, Ore.
Longview, Texas
Memphis, Tenn.
Provo, Utah
Salt Lake City, Utah
Bellingham, Wash.
Kennewick, Wash.
See all 98 metro areas on the list at

Still, while there are signs of improvement, the metros on the list, for the most part, continue to have a long way to go to fully recover, said David Crowe, NAHB’s chief economist. But "this is a sign that a large cross section of the country is starting to turn the corner as local economic conditions stabilize,” Crowe said.

While nearly 30 markets were added to the February index, seven markets dropped off the list this month as home prices started to soften. The metro areas dropped from this month’s index are: San Jose, Calif.; Washington, D.C.; Kankakee, Ill.; New Orleans; Worcester, Mass.; Jackscon, Miss.; and Sherman, Texas.

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

New York Housing Counselor Charged with Defrauding Homeowners

A New York housing counselor was recently sentenced to 72 months in jail and three years supervision by a U.S. District Court judge after defrauding 136 homeowners who reached out for help as they attempted to avoid foreclosure on their homes.

The U.S. District Court Judge also ordered Lori J. Macakanja to pay $298,639 in restitution to the homeowners she affected.
Macakanja reportedly required upfront fees from homeowners and promised in return to help them achieve mortgage modifications and avoid foreclosure.
“Little did the homeowners know, the payments were being used by Macakanja to support her gambling habit and to pay her own mortgage,” said Christy Romero, deputy special inspector general for the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
“SIGTARP will aggressively investigate and pursue those who exploit the federal government’s aid to homeowners under TARP and, with the help of its partners in law enforcement, ensure that they are brought to justice,” Romero stated.
The U.S. attorney for the Western District of New York, William J. Hochul, Jr., also commented, “Many Americans are struggling to hold on to the American dream, ownership of a home.”
“Unfortunately, because of the defendant’s actions, some of the victims lost their homes,” Hochul stated.
“Our Office, along with our federal law enforcement partners, will work vigorously to protect federal funding targeted to help those who are struggling. We will also continue to prosecute those, like this defendant, who attempt to take advantage of those who are most vulnerable,” he continued.
In addition to defrauding individual homeowners of about $300,000, Macakanja also used $2,000 of federal grant money from the Buffalo Urban Renewal Agency to pay her own mortgage.
SIGTARP also reminds homeowners that advice from government-sanctioned housing counseling agencies is always free as are mortgage modifications through the government’s Home Affordable Modification Program (HAMP.)

HAMP Mods Approach 1M Mark

More than 930,000 homeowners have received a permanent modification through the government’s Home Affordable Modification Program (HAMP), saving an estimated $10.5 billion in monthly mortgage payments, according to Treasury.

While this tally – nearly three years after the program’s launch – falls well short of the results initially promised by President Obama of helping 3 to 4 million homeowners restructure their loans, federal officials continue to tout a key success of HAMP as improving standards and processes within the industry.
Treasury’s latest report card on HAMP points out that HOPE NOW lenders have offered more than 2.6 million proprietary mortgage modifications from April 2009 – when HAMP was launched – through December 2011.
Officials also contend that HAMP ensures borrowers are fitted with sustainable modifications. Quarterly redefault data shows that after six months in the program, more than 94 percent of homeowners remain in their permanent modification.
During the month of December, 23,374 permanent HAMP modifications were granted by participating servicers, according to the Treasury report released Monday. Another 20,079 trial plans were started under HAMP.
Treasury notes in its report that eligible borrowers entering HAMP now have a high likelihood of earning a
permanent modification. Eighty-four percent of homeowners entering HAMP in the past 18 months received a permanent modification, with an average trial period of 3.5 months.
On January 27, the Obama administration announced a slew of enhancements to HAMP aimed at broadening the pool of eligible homeowners, protecting tenants whose landlords face foreclosure, and reducing mortgage principals for underwater homeowners who participate in the program.
In addition, just last week, President Obama unveiled a plan to provide responsible borrowers with non-GSE loans an opportunity to refinance and lower their monthly payments or shorten their loan terms. Obama also announced his intention to implement a Homeowner’s Bill of Rights and begin to transition government-owned REOs into rental housing.
“Responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief,” said Raphael Bostic HUD assistant secretary. Bostic described the recent proposals put for the by the administration as “critical to promoting healing in the market.”
While Treasury’s report noted positive trends within several key housing indicators, Bostic says the overall outlook remains mixed, which means both officials and the industry “must remain diligent to improve conditions.”
Market data show inventories of existing homes for sale have continued to improve over the last two quarters, declining from 3.2 million in the second quarter to 2.4 million in the fourth quarter.
At the same time, housing units held off the market have also fallen, from 3.9 million in the first quarter to 3.6 million in the fourth quarter, according to Treasury.
Existing-home sales continue to increase, while foreclosure starts continue to fall and foreclosure completions tick upward.

Industry Waits with Bated Breath as States Consider Settlement

The deadline for the 50 state attorneys general to sign onto the settlement negotiated between the committee headed by Iowa Attorney General Tom Miller and five large servicers was extended from Friday to Monday. Late Monday evening, Miller’s office issued a statement saying more than 40 states have agreed to participate in the settlement.

“This enables us to move forward into the very final stages of remaining work,” Miller said. “Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement.”
Miller declined to provide any further details on Monday’s developments.
For the past few months, the number repeated from various sources is $25 billion. That’s $25 billion that Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial would pay for a clean slate regarding the robo-signing misdeeds of the past.
According to a Monday article on, the $25 billion would be distributed in three ways: $17 billion for principal reductions, $3 billion for homeowners whose homes have been foreclosed, and $5 billion for state and federal foreclosure programs.
The $17 billion in principal reductions is expected to provide aid for about 1 million homeowners, and about 750,000 homeowners who have lost their homes to foreclosure would receive about $2,000.
While $25 billion is the number most cited, the amount is contingent on how many and which states agree to the settlement.
California Attorney General Kamala Harris previously called the proposal “inadequate” for Californians, but it is possible she will sign on to the deal.
Likewise, New York Attorney General Eric Schneiderman says the settlement is now more favorable than in the past, according to an article Monday in the New York Times.
According to the New York Times article, the proposed settlement also states that if the banks fail to follow through on the full amount of principal reductions, they will pay the government the difference along with a fine of up to 40 percent.