Friday, February 24, 2012

New NAR Partnership Aims to Assist You With Short Sales

The National Association of REALTORS® is teaming up with the U.S. Department of Treasury for a series of workshops to help real estate professionals better assist home owners who are struggling to sell their homes in a short sale.

At upcoming Making Home Affordable “Help for Homeowners” outreach events, real estate professionals will be able to gain greater insight into navigating short sales and also have the chance to meet directly with loan officers on their clients’ behalf for any assistance with challenging transactions.

Those who attend the events will hear directly from lender and loan servicers about the short sale process as well as learn tips to effectively negotiate short sale offers and how to speed up these transactions. Treasury officials will also be present to speak about foreclosure prevention programs, such as the Home Affordable Foreclosure Alternatives (HAFA) short sales program.

By REALTORS® and the Treasury Department working together, “we can improve the success rate for short sale transactions, which will reduce the overall number of foreclosures and benefit sellers, lenders, buyers, and the entire community,” said NAR President Moe Veissi.

The outreach events will be held throughout this year. The next session is slated for Feb. 24 in Tampa, Fla. Additional events are planned for Chicago, Indianapolis, Los Angeles, and Sacramento, Calif. Live webinars will also be available for those who can’t attend in person.

For more information about the “Help for Homeowners” events, visit or register to attend at

Source: National Association of REALTORS®

Deadline Extended for Foreclosure Reviews

Home owners who’ve undergone a foreclosure and want a review of their case now have a longer time to submit their request. The Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve announced the deadline has been extended to July 31, which provides an extra three more months to spread the word about the review program.

Home owners who faced foreclosure in 2009 and 2010 may be eligible to request a review from their lender of their case through the Independent Foreclosure Review to see if any errors were made in their paperwork and if they were wrongly foreclosed upon. If errors are found, the home owner may receive compensation or another agreed upon settlement.

Announced in April 2011, government agencies mandated that the country’s 14 largest mortgage servicers hire independent consultants to conduct reviews of foreclosure activity in 2009 and 2010 and to ensure that no errors were made in the processing of the foreclosure.

You can view a list here of the lenders involved in the Independent Foreclosure Reviews.

Source: “Deadline to Request Mortgage Review Extended to July 31,” RISMedia (Feb. 22, 2012)

Critics Push the Fed for More Public Rulemaking Meetings

Since July 2010, when the Dodd-Frank Act became law, the U.S. Federal Reserve has held 47 votes on financial regulations. Of the 47 votes, the Fed only held two public meetings. The other votes were submitted electronically, and the votes were just recently disclosed.

Bipartisan critics say that the closed off rulemaking has made it harder for Congress to hold the Fed accountable and has broken with a long-held tradition of providing the public with insight into how rules are being written and implemented.

"People have a right to know and hear the discussion and hear the presentations and the reasoning for these rules," Former Federal Deposit Insurance Corp. Chair Sheila Bair says. " All of the other agencies which are governed by boards or commissions propose and approve these rules in public meetings. I think it would be in the Fed's interest to do so as well."

There are more votes on the way as the central bank works to reshape the regulatory environment and direct how much capital banks must hold, what kind of trading they can do, and what fees they can charge retailers on debit-card transactions.

The Fed indicates that open meetings are held more often and that growing demands on the governors' time makes it difficult to coordinate schedules. But the recent dissension of Fed Governor Sarah Bloom Raskin to the draft Volcker Rule was not disclosed until Feb. 14, though she has recently said that she was concerned the rule was too unwieldy for banks to comply with and for regulators to enforce.

Fed officials say that many open meetings are formulary and will provide little insight into the rulemaking process, and with 250 separate rule writing projects under way, coordinating schedules for meetings would be difficult. Moreover, each rule is open to public comment for between 60 and 90 days, and Fed officials are called before Congress and grilled on the status of controversial regulations.

Source: "Fed Writes Sweeping Rules From Behind Closed Doors," Wall Street Journal (02/21/12)

Former Home Owners Wait for Second Chance

More than 4 million homes have been lost to foreclosure in the last six years, and many of those former home owners are now starting to ask: When can we buy again?

Many banks have guidelines that prevent them from issuing loans to people with a foreclosure or short sale in their credit history in some cases for as much as seven years. That also doesn’t factor in the damage foreclosures and short sales can do to a person’s credit score, and the work former home owners' will need to do to repair it so they’ll have a better chance at qualifying for financing again in the future.

Still, some former home owners, particularly those who foreclosed or did a short sale due to extenuating circumstances like a job loss or illness, are finding the wait may not be as long as they were once told.

"They're probably going to pay a little higher interest rate, but with rates so low, a higher interest rate of 4 percent is not a big deal," Rosa Herwick, a broker and owner of Century 21 JR Realty in Henderson, Nev., told the Associated Press.

The wait-time varies among lenders and government entities. For example, the Federal Housing Administration says former home owners with a foreclosure must wait three years before they can qualify, while Fannie Mae and Freddie Mac require a seven-year wait following a foreclosure.

As for short sales, sometimes these waits can be waived or drastically cut, depending on the borrower’s situation. FHA requires a three-year wait following a short sale, but it may waive that wait if the short sale was due to a job loss.

Also, for borrowers who can come up with a higher down payment on their next home purchase, they may also not have as long to wait. For example, Fannie Mae will reduce the wait from seven years to two years for borrowers who come with a down payment of 20 percent or more.

Source: “Lost Home to Foreclosure but Ready to Buy Again? Prepare to Wait in Lender ‘Penalty Box,’” Associated Press (Feb. 22, 2012)

Home Sales on the Rise: Ready for Spring Buying Season?

Existing-home sales rose 4.3 percent in January to a seasonally adjusted annual rate of 4.57 million, marking the third gain for home sales in the last four months, the National Association of REALTORS® reports.

“The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” NAR’s Chief Economist Lawrence Yun says.

While sales ticked up, inventories of for-sale homes also continued to show improvement, NAR reported. At the end of January, total housing inventory fell 0.4 percent to 2.31 million existing homes for sale, which represents a 6.1-month supply at the current sales pace.

“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” Yun says. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.”

Unsold listed inventory has steadily dropped since reaching a peak of 4.04 million in July 2007. It now is 20.6 percent below where it was a year ago, NAR reports.

Housing Affordability Improves
As home prices have fallen and mortgage rates at all-time record lows, housing affordability is at some of its highest levels on record.

“Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago,” says NAR President Moe Veissi. “With other favorable market factors, these are hopeful indicators leading into the spring home-buying season. We’re cautiously optimistic that an uptrend will continue this year.”

The national median existing-home price for all housing types in January was $154,700, which is down 2 percent year-over-year.

Distressed sales, which tend to sell at steep discounts, continue to hamper home prices nationwide. Foreclosures and short sales accounted for 35 percent of all January home sales, which is up slightly from 32 percent in December.

Still, “home buyers over the past three years have had some of the lowest default rates in history,” Yun said. “Entering the market at a low point and buying at discounted prices have greatly helped in that success.”

Breakdown by Housing Type
Here’s a closer look at how home sales fared by housing type in January:

Single-family home sales: increased 3.8 percent to a seasonally adjusted annual rate of 4.05 million in January from 3.90 million in December. They are 2.3 percent above the 3.96 million-unit pace a year ago. Median price: $154,400 in January, down 2.6 percent from January 2011.

Existing condominium and co-op sales: rose 8.3 percent to a seasonally adjusted annual rate of 520,000 in January from 480,000 in December. They are 10.3 percent lower than the 580,000-unit level in January 2011. Median price: $156,600 in January, up 2 percent from a year ago.

Home Sales by Region
The following is a breakdown of existing-home sales in January by region:

Northeast: increased3.4 percent to an annual pace of 600,000 in January and are 7.1 percent above a year ago. Median price: $225,700, which is 4.2 percent below January 2011.
Midwest: increased 1 percent in December to a level of 980,000 and are 3.2 percent higher than January 2011. Median price: $122,000, down 3.9 percent from a year ago.
South: rose 3.5 percent to an annual level of 1.76 million in January but are unchanged from a year ago. Median price: $134,800, which is 0.3 percent below January 2011.
West: increased 8.8 percent to an annual pace of 1.23 million in January but are 3.1 percent below a spike in January 2011. Median price: $187,100, down 1.8 percent from a year ago.
Contract Delays, Cancellations Remain High
Twenty-one percent of NAR members in January reported delays in contracts, and 33 percent said contracts fell through, according to NAR. The number of contract cancellations remains mostly unchanged from December.

The increase in the past year of contract cancellations or delays has been blamed on more lenders declining mortgage applications from stricter underwriting standards and low appraisals coming in under the agreed upon contract price.

Source: National Association of REALTORS®

Mortgage Rates Inch Up After Record Lows

For the first time in three weeks, fixed mortgages rate moved up from their all-time lows, Freddie Mac reports in its weekly mortgage market survey.

One of the factors leading to higher fixed mortgage rates this week was signs of a gradually improving housing market, Freddie Mac Chief Economist Frank Nothaft says. For example, the Mortgage Bankers Association reported this week that seriously delinquent loans — those 90 days or more past due — and the inventory of foreclosures dropped 5.3 percent by the end of 2011, marking the lowest quarterly share since the beginning of 2009. Also, the National Association of REALTORS® reported this week that existing-home sales in January were at their strongest pace since May 2010.

Here’s a closer look at how rates fared for the week ending Feb. 23:

30-year fixed-rate mortgages: averaged 3.95 percent, with an average 0.8 point, up slightly from last week’s all-time low of 3.87 percent. A year ago, 30-year rates averaged 4.95 percent.
15-year fixed-rate mortgages: averaged 3.19 percent, with an average 0.8 point, inching up from last week’s 3.16 percent average. Last year, 15-year rates averaged 4.22 percent at this time.
5-year adjustable-rate mortgages: averaged 2.80 percent this week, with an average 0.7 point, dropping from last week’s 2.82 percent average. Last year, 5-year ARMs averaged 3.80 percent at this time.
1-year ARMs: averaged 2.73 percent, with an average 0.6 point, also dropping from last week’s 2.84 percent average. A year ago at this time, 1-year ARMs averaged 3.40 percent.
Source: Freddie Mac

Commercial Real Estate Vacancy Rates Improve

According to the National Association of REALTORS®’ quarterly commercial real estate forecast, all of the major commercial real estate sectors are seeing improved fundamentals, but multifamily housing is becoming a landlord’s market, commanding bigger rent increases. These trends also are confirmed in NAR’s recent quarterly Commercial Real Estate Market Survey.

Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. “Sustained job creation is benefiting commercial real estate sectors by increasing demand for space,” he said. “Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest.”

NAR forecasts commercial vacancy rates over the next year to decline 0.4 percentage point in the office sector, 0.8 point in industrial real estate, 0.9 point in the retail sector and 0.2 percentage point in the multifamily rental market.

“Household formation appears to be rising from pent-up demand,” Yun said. “The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term.”

The Society of Industrial and Office REALTORS® shows a notable gain in its SIOR Commercial Real Estate Index, an attitudinal survey of 297 local market experts.

The SIOR index, measuring the impact of 10 variables, jumped 8.3 percentage points to 63.8 in the fourth quarter, following a gain of 0.6 percentage point in the third quarter. The index remains well below the level of 100 that represents a balanced marketplace, which was last seen in the third quarter of 2007.

Most market indicators posted advances in the fourth quarter, but 71 percent of respondents said leasing activity is below historic levels in their market — an improvement from 83 percent in the third quarter. Only 29 percent report there is ample sublease space available.

Office and industrial space remains a tenant’s market — 87 percent of participants feel that tenants are getting a range of benefits ranging from moderate concessions to deep rent discounts.

Construction activity is still low, with 95 percent of experts reporting it is below normal, and 83 percent said it is a buyers’ market for development acquisitions; prices are below construction costs in 78 percent of markets.

Participants are broadly expecting stronger conditions for the current quarter, with two out of three expecting market improvement.

NAR’s latest Commercial Real Estate Outlookoffers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS Inc., a source of commercial real estate performance information.

Office Markets
Vacancy rates in the office sector are projected to fall from 16.4 percent in the current quarter to 16.0 percent in the first quarter of 2013.

The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.5 percent; New York City, at 10.0 percent; and New Orleans, 12.4 percent.

After rising 1.6 percent in 2011, office rents should increase another 1.9 percent this year and 2.4 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 20.1 million square feet in 2012 and 28.1 million next year.

Industrial Markets
Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013.

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.8 percent; Los Angeles, 4.9 percent; and Miami at 7.6 percent.

Annual industrial rent is expected to rise 1.8 percent in 2012 and 2.3 percent next year. Net absorption of industrial space nationally is seen at 40.6 million square feet this year and 57.7 million in 2013.

Retail Markets
Retail vacancy rates are forecast to decline from 11.9 percent in the current quarter to 11.0 percent in the first quarter of 2013.

Presently, markets with the lowest retail vacancy rates include San Francisco, 3.6 percent; Fairfield County, Conn., at 5.1 percent; and Long Island, N.Y., at 5.4 percent.

Average retail rent should rise 0.7 percent this year and 1.2 percent in 2013. Net absorption of retail space is projected at 9.9 million square feet this year and 23.9 million in 2013.

Could Rising Rents Bump Up Home Sales?

Home sales may get a boost from the rising prices occurring in the rental market, which is making it cheaper to own rather than rent in a growing number of cities.

“We might see a spring season better than the numbers are predicting," Jay Brinkmann, the Mortgage Bankers Association's chief economist, said during the an MBA conference in Florida this week.

The number of renters in the country increased during the housing crisis, while home ownership dropped to a 14-year low. But with rental costs rising nationwide, more renters may be lured to buying a home, particularly with home prices falling and mortgage rates hovering at record lows.

Mike Fratantoni, MBA’s vice president of economics and research, is forecasting home sales to increase 10 percent in 2013. An improving employment picture also is expected to have a positive impact on housing, MBA economists noted.

Still, "everything is going to be based overall where the economy goes," Brinkmann said. "This is going to be a slow year. There are a number of headwinds we're facing in terms of economic growth."

Source: “MBA: Rising Rental Costs May Drive Home Sales Up,” HousingWire (Feb. 23, 2012)

Thursday, February 23, 2012

Once You Walk Into This Beautiful One Bedroom Co-Op In The Heart Of Bayside You Will Notice The Impeccable Condition This Unit Is In. This Unit Is Semi Attached Corner Unit With Windows All Around And The Exterior Has Been Updated Recently. Featuring One Bedroom And One Bath This Unit With A Open Flow Has Been Renovated By A Professional Licensed General Contractor.

Study Calls Today’s Market Good Time to Buy

Researchers from several universities have just completed a paper that looks at what they call the hurdle rate. This is the point at which it’s equally smart to rent or buy if your only criterion is to build wealth. Based on today’s hurdle rate, it’s a better time to buy than to rent, because you can build more wealth owning than renting.

The study looks at what they call an indifferent renter. This is someone who is just as happy renting as buying depending on which choice is better at building wealth over a holding period, in this case eight years. The study assumes the renter puts the savings from renting into an investment to earn a return.

The hurdle rate is the point of equilibrium between renting and buying where it’s a wash in terms of wealth building. If today’s hurdle rate rate is lower than the average past property appreciation rate for a particular market, then it makes sense to buy, because future property appreciation should be such that an individual will, on average, create more wealth through owning rather than renting. On the other hand, if today’s hurdle rate is higher than the average past property appreciation for a particular market, then this is a sign that ownership can be a drag on wealth creation.

“It’s not a perfect reason to buy, it’s just a test,” says Ken. H. Johnson of Florida International University in Miami, one of the authors of the study, called “The Rent vs. Buy Decision,” released about two weeks ago. “But it’s a good sign that the market’s turning.”

The paper is part of a series Johnson and some other researchers have been doing on the rent vs. buy decision. This paper just looks at the narrow topic of the hurdle rate; other papers look more broadly at whether it makes sense to rent or buy based on financial considerations. In one earlier paper, renting can make more sense in some instances, at least in the short run, if renters invest all of their savings over a period of time in an instrument that generates a yield comparable to what they would earn in appreciation on a house in their market. But since few renters could realistically invest all of their savings from renting, it’s more appropriate to assume renters don’t invest all of their savings. And in these cases, owning is the overwhelmingly better investment over the holding period.

You can learn more about the paper that looks at the hurdle rate in the two-minute video above. The paper was sponsored by the REALTOR® University Research Center, which is part of REALTOR® University.


Wednesday, February 22, 2012

Bank and Non-Profit Unite to Provide Homes to Service Members

Operation Homefront, a non-profit which assists families of service members, partnered with Chase to place at least 100 Wounded Warriors, military, and veteran families into permanent residences this year through the Homes on the Homefront program.

Chase is providing the homes, and Operation Homefront will provide ongoing transitional services to the families until properties are deeded to the recipients.
“These individuals have made tremendous sacrifices for our nation, and as they move back into civilian life in a tough economic environment, we hope that a mortgage-free home will make that transition a little easier,” said JPMorgan Chase CEO of mortgage banking Frank Bisignano in a release.
Operation Homefront and Chase will match families served by the non-profit with homes in the bank’s inventory. In order to be an eligible applicant, one must be on active duty, the Guard or Reserve, or have been honorably discharged; one must not own a home; and one must be financially capable of sustaining a home.
Special priority will also be given to families who already live at an Operation Homefront Village, Wounded Warriors, surviving single spouses of those killed in action, and post 9/11 disabled veterans.
“Chase’s imaginative, nation-wide approach to providing quality homes to deserving service members and their families will make a huge difference in how these heroes can make that difficult transition and adjustment into productive civilian lives,” said CEO of Operation Homefront Jim Knotts.
Military families can apply for the program online. A veteran of any era can apply.

Moderate Growth Projected for 2012

Overall, growth is expected to continue for the year, but at a modest rate, according to the Fannie Mae February 2012 Economic Outlook report.

Economic growth is projected to be at 2.3 percent for 2012, an increase compared to 1.6 percent last year, according to the report.
For the first time in seven years, the housing market is projected to contribute to gross domestic product (GDP), the report also stated, but by a very modest amount.
“Risks to the forecast are more balanced between the upside and downside since our January forecast,” said Fannie Mae chief economist Doug Duncan. “The economy appears to be more resilient than in previous months, and should be less vulnerable to shocks, including any spillover from the European sovereign debt crisis.”
Duncan added that economic growth will remain constrained by various headwinds, including a potential spike in oil prices; an expected decline in net exports; and an expected increase in fiscal drag, including the fading of federal spending from the stimulus and a decline in defense spending for operations in Iraq and Afghanistan.
For 2011, the unemployment rate ended at 8.9 percent, and is projected to average at 8.4 percent in 2012, according to an economic forecast report released by the Mortgage Bankers Association (MBA).
The unemployment rate dropped to 8.3 percent in January, down 0.2 points from the previous month.
Mike Fratantoni, VP of research and economics for the MBA, said the organization has increased its estimate of economic growth, and nudged down expectations for the unemployment rate in 2012 considering the stronger job reports from the last two months.
The MBA report projects the 30-year fixed rate mortgage to average at about 4.3 percent for 2012. According to the February 16 Primary Mortgage Market Survey from Freddic Mac, the 30-year rate stayed at an all-time low of 3.87 percent since the first week of February.
Fratantoni also said purchase applications have come in weaker than anticipated, while refinance applications have come in considerably stronger.
According to an MBA report released February 15, the Market Composite Index, a measure of mortgage loan application volume, decreased 1 percent compared to the previous week. The Refinance Index increased 0.8 percent from the previous week, reaching its highest level since August 8, 2011. The refinance share of mortgage activity inched up to 81.1 percent of total applications, a slight increase from 80.5 percent for the previous week.
Foreclosures activity in 2012 is predicted to increase due to artificially low numbers in 2011 from foreclosure processing delays, according to the 2012 foreclosure market outlook report released by RealtyTrac. Foreclosure activity is not expected to return to the 2009 peak and is projected to decrease in 2013, according to the report.

Overdue Mortgages Number 6,082,000

New data from Lender Processing Services (LPS) shows that as of the end of January, there were 6,082,000 mortgages in the U.S. going unpaid. That tally includes loans that are 30 or more days delinquent and loans in foreclosure.

LPS’ mortgage performance statistics are derived from its loan-level database of nearly 40 million mortgage loans.
The national mortgage delinquency rate as of January month-end was 7.97 percent. LPS determines the delinquency rate as a measurement of all loans behind by at least one payment, excluding those already in the process of foreclosure.
The delinquency rate registered a decline, both for the month and the year, with January’s rate down 2.2 percent from December 2011 and down 10.5 percent from January 2011.
The total foreclosure inventory rate hit 4.15 percent last month – up 1.1 percent compared to December 2011, but down a slight 0.1 percent when comparing year-over-year numbers.
According to LPS’ report, there were 2,084,000 properties that were counted as part of the foreclosure inventory last month.
The number of properties with mortgages 30 or more days past due but not yet referred to a foreclosure attorney tallied 3,998,000. Of these, 1,772,000 had been delinquent for 90 days or longer.
LPS says Florida had the highest percentage of non-current mortgages last month, followed by Mississippi, Nevada, New Jersey, and Illinois.
Non-current totals combine foreclosures and delinquencies as a percent of all active loans in that state.
States with the lowest percentage of non-current loans in January included Montana, Alaska, Wyoming, South Dakota, and North Dakota.

Overdue Mortgages Number 6,082,000

New data from Lender Processing Services (LPS) shows that as of the end of January, there were 6,082,000 mortgages in the U.S. going unpaid. That tally includes loans that are 30 or more days delinquent and loans in foreclosure.

LPS’ mortgage performance statistics are derived from its loan-level database of nearly 40 million mortgage loans.
The national mortgage delinquency rate as of January month-end was 7.97 percent. LPS determines the delinquency rate as a measurement of all loans behind by at least one payment, excluding those already in the process of foreclosure.
The delinquency rate registered a decline, both for the month and the year, with January’s rate down 2.2 percent from December 2011 and down 10.5 percent from January 2011.
The total foreclosure inventory rate hit 4.15 percent last month – up 1.1 percent compared to December 2011, but down a slight 0.1 percent when comparing year-over-year numbers.
According to LPS’ report, there were 2,084,000 properties that were counted as part of the foreclosure inventory last month.
The number of properties with mortgages 30 or more days past due but not yet referred to a foreclosure attorney tallied 3,998,000. Of these, 1,772,000 had been delinquent for 90 days or longer.
LPS says Florida had the highest percentage of non-current mortgages last month, followed by Mississippi, Nevada, New Jersey, and Illinois.
Non-current totals combine foreclosures and delinquencies as a percent of all active loans in that state.
States with the lowest percentage of non-current loans in January included Montana, Alaska, Wyoming, South Dakota, and North Dakota.

Plans to Involve Private Investors Lessen Role of Fannie and Freddie

The Federal Housing Finance Agency (FHFA) released a three-part goal Tuesday to phase out the dominant role of Fannie Mae and Freddie Mac and allow for more private investors into the mortgage industry.

The first part of the goal involves building a new infrastructure to allow the private sector to participate in the secondary market. The goal includes national standards for the mortgage securitization process that Congress and participants can use to develop the mortgage market, according to a letter from the FHFA explaining the strategic plan. The letter also states that the GSEs securitize $100 billion per month in new mortgages, and today, no private sector infrastructure exists that is capable of doing this.
The second goal would be to contract the GSEs’ operations to the private sector, gradually moving mortgage credit risk from the GSEs to private investors, according to the letter.
The last goal is to continue with programs and initiatives to prevent foreclosures and ensure mortgage credit is available.
In September of 2008, the GSEs were placed into a conservatorship by the U.S Treasury amidst the housing market crises to keep the two mortgage giants in operation. The conservatorship for the GSEs meant the government would oversee their operations temporarily.
Since that time, the GSEs have received more than $180 billion in taxpayer support, according to the letter.
“With the conservatorships operating for more than three years and no near-term resolution in sight, it is time to update and extend the goals and directions of the conservatorships,” said Edward J. DeMarco, acting director of the FHFA.
Since entering the conservatorship, the GSEs have bought or guaranteed about three out of every four mortgages originated in the U.S., according to the letter.
In order to shift mortgage credit risk from the GSEs to private investors, several plans are being considered or are already implemented, according to the letter.
One includes a gradual increase in guarantee fee pricing so that the price may become closer to the level expected if mortgage credit risk was based on private capital. In September 2011, the FHFA announced plans to continue towards gradual price increases based on risk and the cost of capital, and in December of that year, Congress required the FHFA to increase guarantee fees by at least an average of 10 basis points, according to the letter.
Currently, most GSE mortgage securities are fully guaranteed, but one idea proposes to establish loss-sharing arrangements and have private investors bear some or all of the credit risk.
Another plan under consideration is to expand mortgage insurance coverage on loans.

Proposal Gives Lenders Short Sale Response Deadline

A Senate proposal would expedite short sales by giving mortgage lenders or servicers 75 days to respond after receiving a home owner's written request.

Borrowers must submit a copy of a contract with a prospective buyer to the lender/servicer — which can accept it, reject it, or seek an additional three weeks to consider it.

For each instance where the lender/servicer fails to respond, borrowers would receive $1,000, along with other "appropriate relief," according to the bill sponsored by Sens. Lisa Murkowski (R-Alaska), Sherrod Brown (D-Ohio), and Scott Brown (R-Mass).

National Association of REALTORS®' 2012 President Moe Veissi said NAR supports "any effort to improve the process for approving short sales."

Source: "Senate Bill Requires Response to Short Sale Requests Within 75 Days," Housing Wire (02/20/12)

Is the Downsizing Trend Fading?

Homes are getting bigger again. Census Bureau data shows that 2011 home starts were bigger with more features and amenities than those built in 2010.

According to the data, the average new-home size grew from 2,381 square feet in 2010 to 2,522 square feet in 2011. Forty-two percent of the new homes had four or more bedrooms, and 28 percent of the new homes had three or more full bathrooms.

However, housing experts are quick to point out that home construction last year saw its worst year on record, so the characteristics of new homes from last year is being pulled from a much smaller pool of homes than previous years.

Also, the average sales price for a new home also increased last year, going from $264,900 in 2010 to $274,400 in 2011.

Source: “Size Matters: Newly Constructed Home Trends in 2011,” RISMedia (Feb. 16, 2012)

Fewer Home Owners Behind on Payments

The number of home owners behind on their mortgage payments dropped to the lowest level in three years, according to a report of data from the fourth quarter of 2011 released by the Mortgage Bankers Association.

"Mortgage performance is also improving faster than the overall economy," says Jay Brinkmann, MBA's chief economist.

According to MBA, 7.6 percent of residential mortgages were at least 30 days past due on their payments in the fourth quarter of 2011. Last year, the percentage was 8.3, and the peak of 10 percent was reached in early 2010. Mortgage delinquencies usually hover around 5 percent in more stable markets.

Still, while the lower delinquencies serve as an important sign needed for a healing housing market, MBA still caution that the number of loans in foreclosure remains high. About 4.4 percent of all loans were in foreclosure in the fourth quarter. The peak reached one year earlier was 4.6 percent.

Source: “Mortgage Delinquencies Hit Three-Year Low,” The Wall Street Journal (Feb. 16, 2012)

The 10 Most Popular Housing Markets

Chicago continues to hold on to the top-spot in January as the most widely searched housing market at The following are the top searched housing markets from last month, according to data of 146 metro areas.

1. Chicago
Median list price: $186,000

2. Detroit
Median list price: $81,700

3. Los Angeles-Long Beach, Calif.
Median list price: $320,444

4. Philadelphia, Pa.-N.J.
Median list price: $221,995

5. Phoenix-Mesa, Ariz.
Median list price: $169,500

6. Atlanta
Median list price: $150,000

7. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $142,500

8. Dallas
Median list price: $189,900

9. Orlando, Fla.
Median list price: $155,000

10. Las Vegas, Nev.-Ariz.
Median list price: $121,500

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

| -A A +A Housing Inventories Drop, List Prices Rise

n a growing number of housing markets, sellers are facing less competition now compared to a year ago.

Inventory of for-sale homes has dropped by about 23 percent compared to this time last year, and fell by 6 percent alone from December 2011 to January 2012, according to data.

The age of the inventory is also declining, and is nearly 5 percent below levels last January.

The median age of for-sale housing inventory is lowest — 69 days or less — in Oakland, Calif.; Bakersfield, Calif.; Denver; Fresno, Calif.; Stockton-Lodi, Calif. and Phoexnis-Mesa, Ariz., according to January data from

Meanwhile, as inventory is falling, the median list price has been on the rise: up nationally more than 3 percent year-over-year.

“Over the past year, an increasing number of markets have registered year-over-year increases in median list prices while fewer markets have experienced year-over-year list price declines,” a statement by notes.

The metro areas with the highest increases to median list prices year-over-year, from January 2011 to January 2012 are:

1. Miami, Fla.: 32.75%
Median list price (in January 2012): $265,500

2. Fort Myers-Cape Coral, Fla.: 21%
Median list price: $229,900

3. Punta Gorda, Fla.: 19%
Median list price: $179,000

4. West Palm Beach-Boca Raton, Fla: 18.6%
Median list price: $224,150

5. Boise City, Idaho: 18.15%
Median list price: $151,228

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

January Home Sales Up Again

Existing-home sales rose in January for the third time in the last four months, according to the National Association of Realtors (NAR).

January sales – completed transactions – were up 4.3 percent from December to a seasonally adjusted annual rate of 4.57 million. December’s total was revised downward to 4.38 million from 4.61 million. The January 2012 sales pace was up 0.7 percent from January 2011.

The median price of an existing-home was $154,700 in January, down 2 percent from January 2011, falling to its lowest level since November 2001. After appearing to stabilize at low levels in the first half of 2011, prices are dipping again.

According to the NAR, distressed homes – foreclosures and short sales, which sell at deep discounts – accounted for 35 percent of January sales (22 percent were foreclosures and 13 percent were short sales), up from 32 percent in December; they were 37 percent in January 2011.

Price recovery depends on a reduction in the number of distressed properties on the market. All cash transactions, NAR

reported, accounted for 31 percent of sales.

Total housing inventory at the end of January fell 0.4 percent to 2.31 million existing homes available for sale, a 6.1-month supply at the current sales pace, down from a 6.4-month supply in December.

The month-month increase – 190,000 —was the largest in both numbers and percentage since last August when sales increased 360,000, a jump of 8.9 percent. Despite the month-month increase in sales, the January pace was well below the pre-recession sales of 5.06 million existing homes sold and the cyclical peak of 6.49 million in November 2009 when the homebuyer tax credit boosted sales.

Total unsold listed inventory has trended down from a record 4.04 million in July 2007, and is 20.6 percent below a year ago.

Regionally, existing-home sales in the Northeast rose 3.4 percent to an annual pace of 600,000 in January and are 7.1 percent above a year ago. The median price in the Northeast was $225,700, 4.2 percent below January 2011.

Existing-home sales in the Midwest increased 1.0 percent in December to 980,000, 3.2 percent higher than January 2011. The median price in the Midwest was $122,000, down 3.9 percent from a year ago.

In the South, existing-home sales rose 3.5 percent to 1.76 million in January, unchanged from a year ago. The median price in the South was $134,800, 0.3 percent below January 2011.

Existing-home sales in the West jumped 8.8 percent to an annual pace of 1.23 million in January but are 3.1 percent below a spike in January 2011. The median price in the West was $187,100, down 1.8 percent from a year ago.

By: Mark Lieberman, Five Star Institute Economist

Tuesday, February 21, 2012

Proposed Bill to Speed Up Short Sale Process and Prevent Foreclosure

Ex-Bank President and Developer Both Charged With Mortgage Fraud

A former bank president and real estate developer were charged in a one count bill of information for conspiracy to commit mortgage bank fraud.

The case, which is being investigated by agents from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the FBI, involves Reginald Harper, 58, former president and CEO of First Community Bank in Hammond, Louisiana, and Troy A. Fouquet, 43, developer based in Covington, Louisiana.

Both men were charged February 16 for their roles in a scheme involving the cover up of delinquent loans in place of “sham” loans.

“Rather than recognize losses on bad loans, Harper and Fouquet concocted a scheme to create and use sham loans to hide delinquent, non-performing loans,” said Christy

Romero, deputy special inspector general for SIGTARP. “Instead of living up to his fiduciary duties as president and CEO of the bank, Harper concealed the true status of the loans from the bank, regulators, and the U.S. Department of Treasury in the bank’s TARP application.”

In about 2004, Harper loaned Fouquet more than $2 million to purchase parcels of land, develop them into subdivisions, and then build homes on them to be bought by home buyers, according to court documents.

In 2005, it became difficult for Harper and Fouquet to find qualified buyers. To avoid reporting delinquency on loans made by Harper, the two developed various cover-up methods instead, according to the bill of information.

According to the bill of information, one scheme involved Harper making it appear to mortgage lenders that the prospective home buyers had more money than they did and another involved the use of “nominee” loans or “straw” borrowers to take out loans from First Community Bank, according to court documents. Nominee loans and straw buyers refers to a form of fraud involving the concealing of a borrower’s identity in place of a nominee’s name and credit history to take out a loan. Harper also accepted insufficient checks from Fouquet, crediting the loan payment in First Community Banks’s books and records, according to a release.

If Harper and Fouquet are convicted, the maximum penalty they face is up to five years in prison, a $250,000 fine, and a $100 special assessment, according to a release

By: Esther Cho

Treasury Hosts Servicer Workshops for Florida Agents and Homeowners

The U.S. Treasury Department is heading to the coastal cities of Miami and Tampa, Florida, this week and setting up shop for a single day in each city in order to offer assistance to homeowners who are struggling to make their mortgage payments.

Treasury will host a “Help for Homeowners” community outreach event in each of the hard-hit Florida cities, giving homeowners there a chance to meet one-on-one with their loan servicers and with housing counselors to work toward resolving their mortgage problems and averting foreclosure.

Realizing that staying in the home is not always an option, Treasury has included several opportunities within each event’s agenda for real estate professionals and housing counselors to discuss short sales as a foreclosure prevention strategy.

The Miami event is Wednesday, February 22. “Help for Homeowners” moves to Tampa on Friday, February 24. Each event is opened up to homeowners from 1:00 – 8:00 p.m. Tim Massad, assistant Treasury secretary for financial stability is scheduled to speak at the Tampa event at 1:00 p.m.

Before those doors open, though, Treasury has set aside two-and-a-half hours for agents and other real estate professionals to participate in short sale workshops that Treasury says will “explore just about everything you need to know about executing short sales in today’s market.”

They’ll have the opportunity to hear directly from Bank of America, CitiMortgage, GMAC, JPMorgan Chase, and Wells Fargo about the most effective ways to get a short sale offer approved. The lenders will also share tips for navigating through the short sale process, provide assistance for working through difficult cases, and discuss ways agents can close the deal faster.

Treasury officials will also be on hand to talk about the Home Affordable Foreclosure Alternatives (HAFA) program. For real estate professionals unable to attend one of the Florida events in person, live footage of the short sale workshops will be streamed via a webinar which can be accessed through Treasury’s HAMP admin site.

The short sale workshops and live webinar are being offered to real estate professionals free of charge. “Get all of your questions answered,” Treasury prompts in the marketing material for the event posted to its admin site. The morning short sale workshop sessions are not open to homeowners.

Treasury is also giving real estate professionals a unique opportunity to meet on their clients’ behalf with one of the participating servicers: Bank of America, CitiMortgage, GMAC, JPMorgan Chase, and Wells Fargo, as well as OneWest/IndyMac and Seterus.

Registration for these servicer meetings has been closed according to the scheduling information available online. Additional details on each of the Florida “Help for Homeowners” events can be found on the website.

By: Carrie Bay

Treasury Increases Incentives for Principal Reductions

recently released Supplemental Directive from Treasury increases incentives for second lien investors when loans receive principal reductions.

The increased incentives apply to permanent HAMP modifications with principal reductions through the government’s Principal Reduction Alternative (PRA) that have trial period plans starting March 1 or later.

The incentives are also available when second liens are completely or partially eliminated through the Second Lien Modification Program (2MP) on loans modified starting June 1.

For loans no more than six months delinquent over the previous 12 months, investors may receive $0.63 per

dollar of written down principal between 105 percent and 115 percent market-to-market loan-to-value ratios (MTMLTVs), or $0.45 per dollar of written down principal between 115 percent and 140 percent MTMLTV.

For loans that have been more than six months delinquent sometime in the previous 12 months, investors may receive $0.18 per dollar of written down principal, irrespective of MTMLTV ratio.

Regarding second liens modified through 2MP that have not been more than six months delinquent in the previous year, investors may receive $0.12 per dollar of unpaid principal balance eliminated on second liens.

While servicers may reduce principal below 105 percent MTMLTV, they will not receive incentives on the portion of principal reduction that brings the MTMLTV below 105 percent, according to Treasury.

Investors may also receive $0.12 per dollar of eliminated unpaid principal balance on second mortgage liens more than six months delinquent in the year prior to the “date of extinguishment,” Treasury stated in the directive.

“This guidance does not apply to mortgage loans that are owned or guaranteed by Fannie Mae or Freddie Mac, insured or guaranteed by the Veterans Administration or the Department of Agriculture’s Rural Housing Service or insured by the Federal Housing Administration,” the directive states.

By: Krista Franks Brock

Proposed Bill to Speed Up Short Sale Process and Prevent Foreclosure

To avoid losing homes to foreclosure due to long response times for short sale transactions, three senators introduced legislation to speed up the short sale process.

Senators Lisa Murkowski (R-Arkansas), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the bill addressing the issue of short sales timelines on February 17. A short sale is a real estate transaction where the homeowner sells the property for less than the unpaid balance with the lender’s approval.

“There are neighborhoods across the country full of empty homes and underwater owners that have legitimate offers, but unresponsive banks,” said Murkowski. “What we have here is a failure to communicate. Why don’t we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is ‘yes,’ ‘no’ or ‘maybe?’”

The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.

The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer

will be limited to one extension of no more than 21 days.

The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.

According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.

“The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure,” said Moe Veissi, president of the National Association of Realtors. “As the leading advocate for homeownership, realtors are supportive of any effort to improve the process for approving short sales.”

Equi-Trax released a survey last year on the issues real estate agents face when completing short sales. Guy Taylor, CEO at Equi-Trax, said 71.9 percent of respondents reported that a short sale can take four to nine months to complete, and they think that is simply too long.”

The survey also found that 18.2 percent of deals require less than three months to complete, with 10 percent requiring more than 10 months.

When agents in the survey were asked to how the short sale process can be improved, 57.6 percent said lenders should take less time to close transactions, 14 percent said borrowers should be better educated about short sales, and 40.4 percent said both of these changes are necessary to improve the process.

In April 2011, a similar bill was introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), but this version requested a response deadline of 45 days instead of 75 from lenders. The legislation never came up for debate before a House committee.

Monday, February 20, 2012

Where Two Is Better Than One

NEARLY as soon as Daniel Zarabi, a builder in Port Washington, completed a pair of two-family homes on Manhasset Isle in Manorhaven, he rented out each duplex for $3,500 a month. He is eager to build more such housing nearby.

“There is always a demand for it,” Mr. Zarabi said. “It’s a nice size, and you get to use what the community has to offer,” including parks, a pool, golf and fine schools.

Despite calls across the Island for more multifamily housing, Manorhaven is one of only a handful of communities with zoning that allows for two-family construction. Most permit such housing only if it’s grandfathered in. Among buyers, the benefits include living in one half while renting out the other to cover property taxes, if not the mortgage. For renters who cannot or are not yet ready to buy, two-family homes often provide more space — for instance, the three bedrooms that are hard to come by in apartment buildings.

In fact, to hear Mr. Zarabi and others tell it, two-families are the answer to a number of the Island’s housing problems — a way to draw younger residents while avoiding the blight that can sometimes gain a foothold if a community has too many rentals.

The “young professionals” drawn to his housing, Mr. Zarabi said, often replace more “transient” tenants. And the popularity of two-families is only being bolstered by the strength of the rental market, with prices ranging from $2,800 to $3,800 a month for new construction depending on size, location and views.

Jonathan P. Fielding, the Manorhaven village clerk, says that code permits two-family houses on lots with a minimum of 4,000 square feet, and that single-family homes are eligible for conversion if they meet that standard. There are 1,550 properties in Manorhaven, he said, and the “lion’s share” are two-families.

In quite a few, “the owner lives in one unit and rents out the other unit,” Mr. Fielding said. “We have a lot of residents who rely on the income from renting out the other unit in their house to make ends meet.” With owner-occupied units, he pointed out, people have “that same pride in ownership. That doesn’t create a problem for a community the way you could have if you have all rentals.”
Mr. Zarabi, given the green light by the village board of trustees late last year on a pair of slightly larger two-families, recently knocked down a single-family on a corner lot in preparation. Replacing it will be a pair of Hamptons-style shingle postmodern two-family homes, each with 1,600 square feet over two stories, and two and a half baths, a basement and a porch to call its own. One will have three bedrooms; the other will be laid out for two bedrooms and an office. One tenant’s front door will be on Sintsink Avenue West and the other will face Mohegan Avenue, making the dual residences look more like single-family homes.

“We don’t like to put the two doors next to each other because it is not very private,” Mr. Zarabi said.

Ed Mayourian, a builder and a partner in Putnam Development, says his two-family homes in Manorhaven sell for $650,000 to $900,000. “The demand is there,” he said. “We have plenty of customers. We sell them; we rent them.” When first-time buyers eventually move up to a single-family residence, Mr. Mayourian said, they often keep the two-story home as an investment property.

On the South Shore in Long Beach, the Island’s other two-family-home stronghold, there has been a moratorium on two-family home construction since 1999, to stem overcrowding, except for properties grandfathered in. The Multiple Listing Service of Long Island has 55 two-families on the market there

According to Alex Rubin, an associate broker with Prudential Douglas Elliman, Long Beach’s multifamilies command a premium. Mr. Rubin’s recent listing for an owner-occupied contemporary two-story two-family home “in perfect shape” on a beach side street for $699,000, a short sale, received an accepted offer “fairly quickly,” he said. Rent for the lower level runs $2,000 a month; the upstairs, including a roof deck, commands $3,000.

He said two-family homes made sense for downsizers who sometimes have difficulty shedding enough belongings to move to a two-bedroom apartment from a five- or six-bedroom home. Many empty nesters are also concerned about common charges and assessments in co-ops or condominiums. In a two-family home, Mr. Rubin said, they feel “more in control.”

At the high end in Long Beach, Gosia Malgorzata Onufrik, a sales agent with Paul Gold Realty, has a $2.65 million listing for a new two-story two-family contemporary oceanfront home that replaced an older two-family home. Each unit has three bedrooms, two and a half baths, a deck, a tandem two-car garage and an elevator. Rent runs about $5,000 a month for the lower level and $6,500 for the upper.

In Brookhaven, meanwhile, a town code amended last year is opening up a new possibility for builders. In a new 10-lot subdivision in Port Jefferson Station called Sweet Woods by Island Estates, Len Axinn, a developer, just started framing a model home with an accessory apartment that can legally be rented.

“It is a two-family house,” Mr. Axinn said, “but it cannot be owned by an investor who seeks to rent out both parts.” The basic three-bedroom one-and-a-half-bath model runs $499,900, with the apartment on a walkout lower level with its own entrance.

“It is a house to grow into,” Mr. Axinn said, envisioning first-time buyers needing the rental income. During child-rearing years, the space can be converted for family use as an extra bedroom or a media room. Later, grown children returning to their parents’ nest can relish the privacy of a separate apartment. And downsizers have yet another option: “The homeowner could live in the apartment and rent out the main house,” Mr. Axinn said.


A Fixed-Rate Alternative

WITH interest rates at historically low levels, the vast majority of borrowers are finding value with a reliable fixed-rate mortgage. But borrowers who think they could be relocating in the near future, or need to shore up savings, might want to consider what some regard as the next best thing: an adjustable-rate mortgage that offers several years at a fixed interest rate.

These hybrid adjustable-rate mortgages, or ARMs, originated in the jumbo-loan marketplace at the end of the 1980s. But they fell out of favor — along with the riskier ARMs with ultralow teaser rates and interest-only components — after the subprime mortgage crisis.

There were certain types of ARMs that didn’t work out that well,” said Keith T. Gumbinger, a vice president of HSH Associates, a financial publisher in Pompton Plains, N.J., “but hybrids predated those products by at least a decade or more. If you’re buying a home, and you’re good about saving money for the future, there are ways to take these hybrid products and save some cash or pay down the loans.”

Some adjustable-rate mortgages have an interest rate that changes every year, but a hybrid — also known as a delayed first-adjustment ARM — has a fixed interest rate for a period of time. In fact, most loan officers refer to a hybrid by the period during which the rate is fixed. A 5/1 loan, for example, has a fixed rate for five years, then adjusts annually for the remainder of the term; a 7/1 adjusts after seven years.
ARMs make up only a small segment of the overall mortgage market these days, financing just over 10 percent of home purchases, but market share is expected to increase to 14 percent this year, according to an annual survey released last month by Freddie Mac, a government buyer of home loans. The 5/1 hybrid was the most popular adjustable-rate loan product in the market, the survey found, followed by the 3/1 and 7/1. (The least popular: a 3/3 ARM, which adjusts once every three years.)

A common reason for choosing a hybrid ARM is projected length of homeownership: it’s a nice option for buyers who don’t expect to stay in their home for longer than, say, three to five years, perhaps because they anticipate transferring to a new city or starting a family.

And, “you might be an empty nester, a retiree,” said Lou-Ann Smith, a loan officer at Hamilton Home Loans in Ridgefield, Conn., “or somebody who knows they’re getting a big inheritance and won’t have a mortgage.”

Rates on hybrid ARMs are also attractive. As of Thursday, for example, the average rate on a 5/1 loan was 2.81 percent in the Northeast, compared with 3.88 percent for a 30-year fixed-rate loan, according to Freddie Mac.

The interest rate is often tied to rates on Treasuries or to an index, like the London Interbank Offered Rate, or Libor.

“We continuously have interest in hybrid ARMs, especially in the jumbo marketplace, where there’s a huge rate differential,” said Melissa Cohn, the president of the Manhattan Mortgage Company. The rate on a 5/1 ARM could be as low as 2.5 percent, according to Ms. Cohn, while a 30-year fixed-rate loan costs 3.75 percent. So if you took out a $300,000 loan, you could save almost $4,000 a year with the hybrid ARM, she said.

She noted that the difference was even larger with nonconforming jumbo loans.

“Those are real numbers that make it worth the risk,” Ms. Cohn said. “We’re in an unusual financial period where interest rates are very low, and the indices by which the rates are set are also very low.”

A word of caution to borrowers, however: With rates starting at rock-bottom levels, there’s generally only one direction for them to go. And even though there are caps on the rate change amount, the jump could be as much as six percentage points.


Tracking the euro-zone economy in real time

THE short-term outlook for the world economy seems to hinge on whether a resolution to Europe's debt crisis can be found. A resolution, in turn, will be difficult to come by if the euro zone falls back into recession. If output is shrinking and unemployment rising, then austerity measures are likely to make economic conditions worse while raising very little new revenue. The euro zone may fall ever deeper into a hole.

That's an unnerving possibility given the outlook for the euro-zone economy. The euro-zone economy probably contracted in the fourth quarter, according to an analysis of recent data points by Now-Casting, which publishes "real-time" economic forecasts. You can see the information that goes into their forecast in the interactive chart below. A negative fourth quarter has been a real possibility since July. Recent data do suggest that the fourth-quarter decline may not have been as bad as once seemed possible, and output in the first quarter is close to returning to positive territory. Early signs indicate that expansion may be back in the cards as of the second quarter. Moderation in industrial output figures that not long ago were showing big declines helps explain some of the rebound. Improvement in the euro zone's trade balance also helped. Imports were flat in November, thanks to weak domestic conditions. But exports rose, pushing the euro area's November surplus to €6.9 billion, up from just €1 billion in October.

Source: The Lists Top 10 Turnaround Towns released its list of the top 10 turnaround towns for the 2011 fourth quarter. While the 10 towns listed – eight of which are in Florida – suffered from high foreclosure rates, they are now rebounding.

The current list was developed based on market rankings on year-over-year median price appreciation, reduction in year-over-year median age of inventory, and inventory reduction levels from, as well as unemployment rates on a year-over-year basis, according to a release from
Miami, Florida, at number one, had sales of existing single-family homes shoot up 51 percent in the third quarter compared to a year ago, according to the Miami Association of Realtors. The median age of inventory is down 30 percent from a year ago.
Phoenix, Arizona is returning to stability, with median list prices up 15.38 percent compared to a year ago.
Orlando, Florida saw its median age of inventory go down to 73 days, a 36 percent drop from a year ago and inventory also declined 44 percent compared to a year ago.
Fort Myers-Cape Coral, Florida saw its sale price increase 20 percent over the past year, more than any other Florida market, though sales are down 13 percent.
Sarasota-Bradenton, Florida saw an increase in sales by 17 percent over last year. Median list prices were also up 2 percent.
Boise City, Idaho experienced a reduction in foreclosures, helping the town also see a 40 percent year-over-year decline in inventory. This reduction in inventory also led to drop a 23.42 drop in the median age of inventory.
Naples, Florida had a13.38 percent year-over-year increase in median list prices, and a 35.94 percent reduction in for sale inventory.
Fort Lauderdale, Florida reduced its inventory by 41.63 percent since last year, and sales were up up 18 percent year-over-year.
Lakeland-Winter Haven, Florida increased by 9.09 percent increase in median list prices compared to a year ago. Inventory declined 35.28 percent since last year.
Punta Gorda, Florida made the 10th spot with median price appreciation up 17.79 percentcompared to a year ago.

Property Valuation Fraud Rises Following Decline

The risk for property valuation fraud rose nearly 8 percent for this fourth quarter following a period of decline, according to the Mortgage Fraud Risk Report released by Interthinx.

This rise is the primary cause for areas within the New York Tri-State region to move into the high risk category, according to report. The New York Tri-State area includes the New York City metro along with the Connecticut metros of Bridgeport and New Haven and the New Jersey metros of Atlantic City and Ocean City.
The national mortgage fraud risk index also increased by 1.4 percent compared to the last quarter and 3.6 percent since a year ago.
With an index value of 247, Arizona overtook Nevada as the riskiest state. Nevada, now at number two, ranked first in this category since the first quarter of 2010. Florida is the third riskiest state for mortgage fraud and has the riskiest ZIP code in the nation, which is 33993 located in Cape Coral. California ranked
number four, and Connecticut was number five for mortgage fraud.
The states ranked as the least risky were Kansas, West Virginia, Maine, South Dakota, and Iowa.
The top five metropolitan statistics areas (MSA) at risk for mortgage fraud were Stockton, CA; Modesto, CA; Phoenix-Mesa-Scottsdale, AZ; Bakersfield, CA and Cape Coral-Fort Myers, FL.
Interthinx tracks four types of specific fraud risks: property valuation, identity, occupancy, and employment/income.
The top three MSAs for property valuation fraud were Stockton, CA; Modesta, CA and Phoenix, AZ. Property valuation fraud occurs when a property’s value is manipulated to create false equity.
MSAs at most risk for identity fraud are Miami, FL; San Jose-Sunnyvale-Santa Clara, CA and Detroit-Warren-Livonia, MI.
Risky MSAs for occupancy fraud are Palm Bay-Melbourne-Titusville, FL; Miami-Fort Lauderdale, FL and Cape Cora-Fort Myers, FL. On a national level, occupancy fraud dropped 14 percent from the last quarter.
Employment/income fraud are on higher alert in Burlington-South Burlington, VT; Ocean City, NJ and Naples-Marco Island, FL. Nationally, income/employment fraud risk shot up nearly 14 percent since a year ago and 46 percent over the past two years.
Interthinkx fraud risk indices can indicate a higher potential for default and foreclosure activity, according to the report, which points that overall, areas to watch include the New York Tri-State, Arizona, Nevada, and Florida.

San Francisco's Foreclosure Audit Turns Up Irregularities, Illegal Activity

An audit of San Francisco foreclosures conducted by county officials revealed documentation errors were evident in nearly all of the cases examined.

Auditors reviewed 382 case files that resulted in a foreclosure sale between January 2009 and October 2011. They identified one or more irregularities in 99 percent of the loans and one or more clear violations of state law in 84 percent.
San Francisco’s Office of the Assessor‐Recorder says its analysis “presents an accurate picture of the nature and frequency of the mortgage industry’s performance respecting compliance with important aspects of California’s nonjudicial foreclosure laws” and by releasing the results, it hopes to open a dialogue on the importance of ensuring compliance so that corrective action can be taken.
The county recorder says this means working productively with the mortgage industry to improve compliance and effecting legislative change so that the laws more accurately reflect the current state of California’s mortgage market.
California’s foreclosure laws generally are concerned with imposing procedural obligations on foreclosing parties and providing due process rights to homeowners in order to ensure that the streamlined non‐judicial foreclosure process is not abused, the country recorder explained in the report.
“It is worth noting that the process was created long before things such as the secondary market and mortgage brokers existed. When the laws were first enacted, lenders ‘originated‐to‐hold’ loans for their portfolio and rarely sold mortgage loans,” the report points out.
The securitization-spurred boom in originations prior to the downturn ultimately made it infeasible to carry out large‐scale foreclosures once the market turned, according to the country recorder.
San Francisco officials contend that given the well‐documented and widespread origination and servicing issues related to mortgage transfers in securitization, as well as the foreclosure documentation errors uncovered with the robo-signing debacle of 2010, “it is not implausible that there are homeowners who are alleged to have defaulted on loans to which they never fully agreed to and, further, are being foreclosed upon by lenders that might not even own such loans.”
They maintain that just because these homeowners entered into a contractual lending-borrowing agreement, that should not be enough to rob them of their due process right.
The county officials, however, are quick to follow those claims with a reproof for blaming mortgage lenders and the mortgage industry as a whole.
“We are not asserting that every distressed borrower is a victim and that the mortgage industry is collectively guilty of defrauding homeowners,” the report said. “Certainly many borrowers knowingly and recklessly overextended themselves. The U.S. housing market’s … future stabilization depends heavily upon the responsible actions of many of the industry’s leading participants.”
The San Francisco County recorder’s report was published within a week of the announcement that 49 state attorneys general and the federal government finally agreed to a settlement with the country’s five largest mortgage servicers over allegations of robo-signing.
“[I]f nothing else, this report provides a fuller context for understanding the general nature and extent of the problems precipitating California’s participation in the settlement,” county officials said.

New York, Delaware Pursue Mortgage Securitization Investigation

Reluctant attorneys general for New York and Delaware both signed on to the multi-state $25 billion settlement last week with the nation’s largest servicers, securing $740 million and $45 million for their states, respectively. These amounts are divided into homeowner assistance and cash payments to the states.

The two attorneys general were lured back to the settlement in its final days when they were assured the settlement would not impede further investigation into additional civil and criminal claims at the five mortgage servicers – Bank of America, Citi, JPMorgan Chase, Wells Fargo, and GMAC.
“On multiple fronts, we will continue to investigate the mortgage crisis, and ensure that justice and accountability prevail,” Schneiderman said.
He and Biden are actively pursuing a joint investigation – initiated prior to the settlement agreement – into the packaging of mortgage backed securities.
“The settlement is not perfect,” Biden stated in a press release, “But I signed on to its terms because we can continue our investigations while providing some real relief to Delawareans and important new protections to the men and women who serve in our nation’s armed forces,” Biden said.
Biden will also continue his efforts to challenge an $8.5 billion settlement proposal between Bank of American and Bank of New York Mellon regarding mortgage securitizations and his lawsuit against MERS, a system, which through its “deceptive trade practices” has “left our time-tested public land recording system in shambles,” Biden said at a press conference.
“We cannot allow the housing crisis to go down in history as a manmade disaster for which no person or entity was held accountable,” Biden said.