More Americans may be growing reluctant to buy homes in some of the nation’s priciest areas because of the high cost.
“Even though people often say they want to live in urban neighborhoods where they can walk more and drive less, they get more for their buck where the car is king,” says Jed Kolko, Trulia’s chief economist. “Most long-distance searches are toward smaller, suburban, more sprawling areas, not toward the older, dense cities of the northeast.”
According to a new study by Trulia and 24/7 Wall St., Americans may be avoiding relocation to the following metro areas due to the high costs of real estate:
1. Newark-Union, N.J.-Penn.
Median home price: $400,000
2. San Jose-Sunnyvale-Santa Clara, Calif.
Median home price: $546,000
3. Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.V.
Median home price: $390,000
4. Philadelphia, Penn.
Median home price: $265,000
5. Bethesda-Rockville-Frederick, Md.
Median home price: $700,000
“Most of the cities attracting lots of search activity from outsiders had huge price declines during the housing bust,” says Kolko. “They’re now much more affordable than they were during the boom — especially to people in cities where prices are still high.”
Source: “Newark, San Jose, Washington and More Major Cities Where No One Wants to Move,” 24/7 Wall St. (Feb. 10, 2012)
Showing posts with label Syosset Split NY. Show all posts
Showing posts with label Syosset Split NY. Show all posts
Monday, February 13, 2012
Banks Offer More Cash Incentives for Short Sales
More banks are offering home owners incentives to sell their houses in a short sale to prevent a costly foreclosure to the bank. In fact, some banks are offering struggling home owners as much as $35,000 to do a short sale, according to an article at CNNMoney.
Many home owners have been surprised at banks’ recent willingness to approve short sales.
"Initially, the home owners are skeptical," says Elizabeth Weintraub, a real estate professional in Sacramento, Calif. "The bank may have already turned down their request for a modification. Then, one day, they call and say, 'Let us give you some cash.'"
For banks, the incentives have proven to be a smarter move than letting a property fall into foreclosure.
"The first choice is a modification, but if that's impossible then a short sale is a faster, more efficient solution," Tom Kelly, a spokesman for Chase Mortgage, said.
With a foreclosure, home owners stop making their mortgage payments and usually property taxes as well. They also often put off maintenance issues, which can cause the home to lose value even more. Foreclosed homes sold, on average, for 22 percent less than homes not in foreclosure in December, according to National Association of REALTORS®’ data. For comparison, discounts for short sales were about 14 percent.
"I've seen a lot of foreclosures for sale where it would cost a lot more than $20,000 to get them into condition to sell again," says John Hayton, a short sale specialist in Orlando, Fla.
Source: “Banks Pay Delinquent Borrowers $35,000 to Sell Their Homes,” CNNMoney (Feb. 10, 2012)
Many home owners have been surprised at banks’ recent willingness to approve short sales.
"Initially, the home owners are skeptical," says Elizabeth Weintraub, a real estate professional in Sacramento, Calif. "The bank may have already turned down their request for a modification. Then, one day, they call and say, 'Let us give you some cash.'"
For banks, the incentives have proven to be a smarter move than letting a property fall into foreclosure.
"The first choice is a modification, but if that's impossible then a short sale is a faster, more efficient solution," Tom Kelly, a spokesman for Chase Mortgage, said.
With a foreclosure, home owners stop making their mortgage payments and usually property taxes as well. They also often put off maintenance issues, which can cause the home to lose value even more. Foreclosed homes sold, on average, for 22 percent less than homes not in foreclosure in December, according to National Association of REALTORS®’ data. For comparison, discounts for short sales were about 14 percent.
"I've seen a lot of foreclosures for sale where it would cost a lot more than $20,000 to get them into condition to sell again," says John Hayton, a short sale specialist in Orlando, Fla.
Source: “Banks Pay Delinquent Borrowers $35,000 to Sell Their Homes,” CNNMoney (Feb. 10, 2012)
Could the Mortgage Deal Lead to a Jump in Foreclosures?
A $25 billion mortgage settlement announced between major banks and state and government officials is supposed to bring aid to troubled home owners, but it could also bring a wave of new foreclosures, CNNMoney reports.
During the yearlong negotiations, some banks slowed down repossessing homes, and now they may have a backlog of troubled loans on the books — loans that can’t be saved by the deal’s aid on refinancing or mortgage principal reduction.
"The bottom line is that 2012 will see a lot of foreclosures that should have taken place in 2011 and didn't," Rick Sharga, executive vice president for Carrington Holdings, told CNNMoney.
Last year, foreclosure filings dropped 34 percent. This year, Daren Blomquist, vice president of RealtyTrac, estimates that new foreclosure filings will increase to between 2.2 million and 2.5 million compared to last year’s 1.9 million filings in 2011.
The mortgage deal is aimed at helping home owners avoid foreclosure. One million struggling home owners may see their mortgage principal reduced as part of the deal. But the home owners must be able to afford new, lower payments. The banks will have no choice but to foreclose on home owners who stop making payments altogether or cannot afford a new payment structure on their loan.
But the spike in the backlog of foreclosures may not be all bad for the housing market, experts say.
"The market needs to clear out a lot of the distressed inventory before prices start to come back," Sharga said. There are more than 3 million home owners seriously delinquent on their mortgage or in foreclosure currently.
The five banks part of the settlement are Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and Ally Financial.
Source: “Mortgage Deal Means More Foreclosures,” CNNMoney (Feb. 10, 2012)
During the yearlong negotiations, some banks slowed down repossessing homes, and now they may have a backlog of troubled loans on the books — loans that can’t be saved by the deal’s aid on refinancing or mortgage principal reduction.
"The bottom line is that 2012 will see a lot of foreclosures that should have taken place in 2011 and didn't," Rick Sharga, executive vice president for Carrington Holdings, told CNNMoney.
Last year, foreclosure filings dropped 34 percent. This year, Daren Blomquist, vice president of RealtyTrac, estimates that new foreclosure filings will increase to between 2.2 million and 2.5 million compared to last year’s 1.9 million filings in 2011.
The mortgage deal is aimed at helping home owners avoid foreclosure. One million struggling home owners may see their mortgage principal reduced as part of the deal. But the home owners must be able to afford new, lower payments. The banks will have no choice but to foreclose on home owners who stop making payments altogether or cannot afford a new payment structure on their loan.
But the spike in the backlog of foreclosures may not be all bad for the housing market, experts say.
"The market needs to clear out a lot of the distressed inventory before prices start to come back," Sharga said. There are more than 3 million home owners seriously delinquent on their mortgage or in foreclosure currently.
The five banks part of the settlement are Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and Ally Financial.
Source: “Mortgage Deal Means More Foreclosures,” CNNMoney (Feb. 10, 2012)
6 ‘Turnaround Towns’ in Real Estate
Florida cities are expected to see some of the biggest recoveries in housing prices in the coming months, according to a new report by Realtor.com that reveals the top turnaround towns. In fact, the signs are already there with drops in inventories and distressed homes, as well as higher listing prices and increases in sales.
The following are the top six housing markets expected to see the biggest turnaround, according to Realtor.com.
1. Miami, Fla.
Median home price: $185,000
Growth: Sales volume of existing single-family homes has jumped 51 percent in the third quarter compared to 12 months prior.
A factor in the recovery: International clients are snagging up Miami homes: In May, they purchased 60 percent of existing houses and condos and 90 percent of newly built homes.
2. Phoenix
Median home price: $129,000
Growth: Homes sold 27 percent faster in the fourth quarter compared tot he same period in 2010.
A factor in the recovery: An improving job market: Unemployment dropped to 7.7 percent in November, which beats the national average and is a 1.1 percentage point improvement over 2010‘s rate in the city.
3. Orlando
Median home price: $145,000
Growth: Inventory of for-sale homes dropped 44 percent in the fourth quarter and homes that were on the market sold 37 percent faster than they did a year earlier.
A factor in the recovery: A strong tourist destination, Orlando is attracting international buyers, such as from South America, Canada, and Europe. Also, the job market is improving there, particularly aided by the development of a major medical complex.
4. Fort Myers, Fla.
Median home price: $115,000
Growth: Median listing prices here had the biggest increase in the nation last year, soaring 31 percent year-over-year.
A factor in the recovery: This retirement hot-spot is getting more attention from Canadians, who are taking advantage of a strong Canadian dollar and the fallen home values here.
5. Sarasota, Fla.
Median home price: $181,000
Growth: Sales volume here increased 17 percent during the three months ended Dec. 31 compared to year-over-year. Plus, home prices rose 2 percent in that time period.
A factor in the recovery: A drop in bank-owned homes and distressed sales is helping the housing market to recover, as well as an improving job market.
6. Boise, Idaho
Median home price: $120,000
Growth: A big drop in inventory: The number of homes for sale during the fourth quarter dropped by 40 percent compared to a year earlier.
A factor in the recovery: The metro area is seeing a growth in the diversity of its employers and the number of jobs its attracting, particularly in the tech industry and a growth in agricultural-based companies.
Source: “Top 10 Turnaround Towns,” CNNMoney (February 2012)
The following are the top six housing markets expected to see the biggest turnaround, according to Realtor.com.
1. Miami, Fla.
Median home price: $185,000
Growth: Sales volume of existing single-family homes has jumped 51 percent in the third quarter compared to 12 months prior.
A factor in the recovery: International clients are snagging up Miami homes: In May, they purchased 60 percent of existing houses and condos and 90 percent of newly built homes.
2. Phoenix
Median home price: $129,000
Growth: Homes sold 27 percent faster in the fourth quarter compared tot he same period in 2010.
A factor in the recovery: An improving job market: Unemployment dropped to 7.7 percent in November, which beats the national average and is a 1.1 percentage point improvement over 2010‘s rate in the city.
3. Orlando
Median home price: $145,000
Growth: Inventory of for-sale homes dropped 44 percent in the fourth quarter and homes that were on the market sold 37 percent faster than they did a year earlier.
A factor in the recovery: A strong tourist destination, Orlando is attracting international buyers, such as from South America, Canada, and Europe. Also, the job market is improving there, particularly aided by the development of a major medical complex.
4. Fort Myers, Fla.
Median home price: $115,000
Growth: Median listing prices here had the biggest increase in the nation last year, soaring 31 percent year-over-year.
A factor in the recovery: This retirement hot-spot is getting more attention from Canadians, who are taking advantage of a strong Canadian dollar and the fallen home values here.
5. Sarasota, Fla.
Median home price: $181,000
Growth: Sales volume here increased 17 percent during the three months ended Dec. 31 compared to year-over-year. Plus, home prices rose 2 percent in that time period.
A factor in the recovery: A drop in bank-owned homes and distressed sales is helping the housing market to recover, as well as an improving job market.
6. Boise, Idaho
Median home price: $120,000
Growth: A big drop in inventory: The number of homes for sale during the fourth quarter dropped by 40 percent compared to a year earlier.
A factor in the recovery: The metro area is seeing a growth in the diversity of its employers and the number of jobs its attracting, particularly in the tech industry and a growth in agricultural-based companies.
Source: “Top 10 Turnaround Towns,” CNNMoney (February 2012)
Fed Chair Says 'Normal Lending' Key to Recovery
The Federal Reserve’s monetary policy and efforts to keep interest rates low have contributed to increased housing affordability. However, those strategies have not yet had the desired effect of stimulating the economy into a full recovery as banks have stuck to their guns on strict lending standards.
“We want [banks] to take a balanced approach. We want to make prudent loans, but we don’t want them to turn away creditworthy borrowers,” said Federal Reserve Chairman Ben Bernanke during his speech Friday to home builders at the 2012 International Builders’ Show in Orlando.
Echoing recommendations outlined in the a Federal Reserve white paper released Jan. 5, Bernanke called for increased lending to creditworthy home buyers and more loan modifications and mortgage refinancings to help revitalize the housing industry and economy.
“Normal lending is a big part of getting the economy back on its feet,” said Bernanke, who also called for greater access to loans for investors to purchase homes in bulk.
Relaxed credit standards contributed to the housing crisis, thus tightened borrowing was necessary to protect banks, investors, and borrowers, Bernanke said. However, the lending pendulum may have swung too far the other direction.
REALTORS® are feeling the credit crunch affecting their clients, with 34 percent of reporting that mortgage accessibility is the biggest factor prohibiting their clients from purchasing a home, according to the 2011 NAR Member Profile.
The Fed has been working to improve lending conditions, helping banks become strong again through regulation and administering “stress tests” to ensure lenders have enough capital. And some progress has been made. According to a recent Fed survey of loan officers, there were reports of a slight uptick in lending nationwide.
Bernanke addressed other issues still hindering the housing market recovery, including the fact that 12 million home owners – or more than one in five borrowers with a mortgage – are underwater. Additionally, the drop in home equity by more than 50 percent since the peak of the housing boom has resulted in the loss of more than $7 trillion in household wealth nationally.
Federal Reserve staff estimate that distressed sales, which include both short sales and REOs, now account for 30 percent of home sales. And about one-fourth of vacant homes for sale in the second quarter of 2011 were bank-owned.
“With home prices falling and rents rising, it could make sense in some markets to turn some of the foreclosed homes into rental properties,” said Bernanke, advocating for REO-to-rental programs.
As of early November 2011, about 60 metropolitan areas each had at least 250 REO properties for sale by the GSEs and the FHA. However, NAR has asked policymakers “to proceed cautiously with the REO-to-rental program since housing markets are complex and varied.” NAR has also advised that any REO-to-rental program be administered by local entities, market experts, and licensed real estate professionals.
By Erica Christoffer, REALTOR® Magazine
“We want [banks] to take a balanced approach. We want to make prudent loans, but we don’t want them to turn away creditworthy borrowers,” said Federal Reserve Chairman Ben Bernanke during his speech Friday to home builders at the 2012 International Builders’ Show in Orlando.
Echoing recommendations outlined in the a Federal Reserve white paper released Jan. 5, Bernanke called for increased lending to creditworthy home buyers and more loan modifications and mortgage refinancings to help revitalize the housing industry and economy.
“Normal lending is a big part of getting the economy back on its feet,” said Bernanke, who also called for greater access to loans for investors to purchase homes in bulk.
Relaxed credit standards contributed to the housing crisis, thus tightened borrowing was necessary to protect banks, investors, and borrowers, Bernanke said. However, the lending pendulum may have swung too far the other direction.
REALTORS® are feeling the credit crunch affecting their clients, with 34 percent of reporting that mortgage accessibility is the biggest factor prohibiting their clients from purchasing a home, according to the 2011 NAR Member Profile.
The Fed has been working to improve lending conditions, helping banks become strong again through regulation and administering “stress tests” to ensure lenders have enough capital. And some progress has been made. According to a recent Fed survey of loan officers, there were reports of a slight uptick in lending nationwide.
Bernanke addressed other issues still hindering the housing market recovery, including the fact that 12 million home owners – or more than one in five borrowers with a mortgage – are underwater. Additionally, the drop in home equity by more than 50 percent since the peak of the housing boom has resulted in the loss of more than $7 trillion in household wealth nationally.
Federal Reserve staff estimate that distressed sales, which include both short sales and REOs, now account for 30 percent of home sales. And about one-fourth of vacant homes for sale in the second quarter of 2011 were bank-owned.
“With home prices falling and rents rising, it could make sense in some markets to turn some of the foreclosed homes into rental properties,” said Bernanke, advocating for REO-to-rental programs.
As of early November 2011, about 60 metropolitan areas each had at least 250 REO properties for sale by the GSEs and the FHA. However, NAR has asked policymakers “to proceed cautiously with the REO-to-rental program since housing markets are complex and varied.” NAR has also advised that any REO-to-rental program be administered by local entities, market experts, and licensed real estate professionals.
By Erica Christoffer, REALTOR® Magazine
Friday, February 10, 2012
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)
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
“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 MSNBC.com. "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)
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 MSNBC.com. "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,” MSNBC.com (Feb. 9, 2012)
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,” MSNBC.com (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 DSNews.com.
“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 DSNews.com.
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.”
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.
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.
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."
Bankrate.com 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 Bankrate.com. 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,” Bankrate.com (Feb. 8, 2012)
Bankrate.com 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 Bankrate.com. 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,” Bankrate.com (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)
"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)
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®
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.
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)
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)
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 HomePath.com 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 HomePath.com.
Source: Fannie Mae
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 HomePath.com 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 HomePath.com.
Source: Fannie Mae
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