The San Diego Real Estate Specialists Blog

2010-12-28T21:26:00.001-08:00

Smart Money Year in Review: The Value of a Home http://bit.ly/foLpHp

2010-09-27T21:06:00.001-07:00

Bank Mortgage Modifications More Likely to Fail http://ping.fm/JLFdE

2010-08-30T13:46:00.001-07:00

5 Reasons Homeownership Trumps Renting http://ping.fm/vvhJZ

2010-07-13T13:22:00.001-07:00

Rents Rise as Apartment Vacancies Fall http://ping.fm/YhjhK

2010-06-25T11:43:00.001-07:00

Forecasters Split on 2010 Housing Market http://ping.fm/UCW8O

2010-06-17T15:17:00.001-07:00

Fannie and Freddie Stock Delisted from NYSE http://ping.fm/hukbP

2010-06-09T09:57:00.001-07:00

Bernanke Forecasts a Fitful Recovery http://bit.ly/aR9WSv

2010-06-04T12:47:00.001-07:00

How to Help a Family Member Buy a Home http://ping.fm/rrBgp

2010-06-03T15:22:00.001-07:00

BofA Rolls Out Plan to Forgive Principal http://ping.fm/ChMHj

2010-05-07T18:01:00.001-07:00

Mortgage Rates Hit 6-Week Low http://bit.ly/aopqF1

2010-04-19T23:08:00.001-07:00

Lenders Unload Mortgages to Collection Agencies
http://bit.ly/d8s9YZ

2010-04-17T10:55:00.001-07:00

Entrepreneurs Can't Count on Equity for Loans
http://bit.ly/bz7wTM

2010-04-16T07:36:00.001-07:00

"Winning the mortgage modification lottery"
http://bit.ly/dyuDQ6

2010-04-14T11:38:00.001-07:00

San Diego Home Sales Up 6.9 Percent In March
http://bit.ly/c4TAAQ

2010-04-12T15:01:00.001-07:00

Phony Landlords Scam Would-Be Renters http://bit.ly/bAHwnm

2010-03-24T11:51:00.001-07:00

New Fannie Mae, Freddie Mac Structures Should Ensure Availability of Mortgage Capital and Protect Taxpayer Dollars, Says NAR. http://bit.ly/9ejvSH

2010-03-17T15:45:00.001-07:00

NY Times: Program Will Pay Homeowners to Sell at a Loss - http://ping.fm/KHKjd

Increasing numbers of Californians are suing lenders to avoid foreclosures - San Jose Mercury News

2010-03-09T14:50:00.000-08:00

Increasing numbers of Californians are suing lenders to avoid foreclosures - San Jose Mercury News

6 Surprising Facts About the Buyer Tax Credit

2010-01-22T15:26:00.000-08:00

6 Surprising Facts About the Buyer Tax Credit

What You Should Know About the Market

2010-01-14T15:43:00.001-08:00

The government is expected to unveil a new program in the next couple of months that, if approved, may reimburse homeowners for up to half the cost of making their homes more efficient. Through the program, homeowners will receive the largest return from simple upgrades like caulking windows, adding insulation, and changing incandescent light bulbs to those that are more energy-efficient.

To determine which energy-efficiency upgrades are best for their house, homeowners should obtain a home energy audit. Homeowners are advised to hire a contractor licensed by the Building Performance Institute or the Residential Energy Services Network. These contractors have been trained to first test a home to determine the amount of energy it is losing, and then make suggestions on renovations.

Fewer Sellers Cut Home Prices, for Now

2010-01-12T11:04:00.001-08:00

Trulia reports a decline in the number of home sellers lowering their asking prices at least once to 21 percent as of Jan. 1 from 22 percent in December and 25.6 percent in November, marking the lowest level since April. The average discount held steady at 11 percent.
Trulia reports a 50 percent drop in cities with price reductions of 30 percent or more on average, with only seven major cities reporting such cuts at the beginning of the month. Regionally, 20 percent of listings in the South and 22 percent of listings in the West, Midwest, and Northeast experienced price cuts.
Trulia CEO Pete Flint says, "I expect reductions to rise again as the tax credit extension deadline approaches but I also expect mortgage rates to rise, so they may cancel out the savings [from list price reductions].

Source: Reuters, Lynn Adler, (01/12/10)

Should the Fed Keep Buying Mortgage Backs?

2010-01-10T10:39:00.000-08:00

The Federal Reserve should continue to buy mortgage-backed securities past its self-set deadline of April 1, James Bullard, president of Fed Bank of St. Louis, told an audience in Shanghai on Monday.
Bullard argued that the Fed should continue the purchases “at a low level initially” and monitor the result to determine whether it needs to increase the purchases to add more liquidity – and stability – to the market.
Bullard also said the Fed Open Market Committee will discuss the issue at its meeting later this month.

Source: The Wall Street Journal (01/10/2010)

10 Hard-Hit Housing Markets That Are Ready to Rebound - US News and World Report

2009-10-01T11:04:00.001-07:00

10 Hard-Hit Housing Markets That Are Ready to Rebound - US News and World Report

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Housing-price rebound persists; experts split

2009-10-01T11:02:00.000-07:00

Housing-price rebound persists; experts split

By Roger Showley
Union-Tribune Staff Writer
2:00 a.m. September 30, 2009

"House prices look to have bottomed, which is the much-needed ingredient required to bake this housing-market recovery," an economist said. - Charlie Neuman / Union-Tribune

Housing prices in San Diego and other major markets rose for a third straight month in July, prompting economists locally and around the country to debate whether stability has arrived and recovery comes next.

The Standard & Poor's/Case-Shiller Home Price Index rose 2.5 percent from June to July for San Diego, the biggest one-month boost in four years. If that rate continued for a year, it would yield a 30 percent rise in prices and return them close to their all-time highs in late 2005.

There was a similar, though less dramatic, upsurge among the 20 metro markets covered in the index, with Minneapolis up the most by 4.6 percent, followed by San Francisco, up 3.3 percent; Chicago, up 2.7 percent; and San Diego.

Ever since housing began its descent from record highs at the end of 2005, economists have been looking for signs of a bottoming out — a trend that they say starts with at least three months of consistent data.

David Blitzer, chairman of the S&P Index Committee, said the July figures confirm that the price decline continues to slow, “and we now seem to be witnessing some sustained monthly increases across many markets.”

But he stopped short of declaring the gloom gone.

“These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months,” Blitzer said, citing three factors to watch: the impact of the Nov. 30 end to the $8,000 federal tax credit for first-time-buyers, anticipated higher unemployment rates and an expected increase in foreclosures.

Maureen Maintland, vice president of S&P Index Services, downplayed the significance of the Case-Shiller trend line.

“There are too many unknowns at this point,” Maintland said. “Yes, we've seen an improvement for three months, but three months is just three months. You need to see really sustained improvement.”

Regardless, Jennifer Lee, an economist at BMO Capital Markets, said several months of Case-Shiller trends are irrefutable: “No matter how you measure it, house prices look to have bottomed, which is the much-needed ingredient required to bake this housing-market recovery.”

San Diego's index stood at 150.99, just more than 50 percent above the starting point set for all areas in January 2000 and 5 points above the April 2009 low. But it was still 42.3 percent off the peak 250.34 set in November 2005.

Despite the rise since the spring, University of San Diego real estate professor Norm Miller said he believes turmoil will continue to roil the housing waters.

“I do think the positive numbers in Case-Shiller are a blip that will be reversed when we get to the October-November release,” Miller said, citing an expected wave of foreclosed properties put up for sale.

Erik Weichelt, president of the San Diego Association of Realtors, said the end of the tax credit would be a “tragedy” because it would “diminish the rate of purchase” among first-timers.

But he also said those buyers might benefit from the expected upsurge in foreclosures, which lately have been relatively few and led to widespread overbidding and multiple offers from investors competing against first-timers.

Michael Carney, director of the Real Estate Research Council of Southern California, based at Cal Poly Pomona, said he does not believe the latest numbers point to an overall rise in prices, because of unemployment levels, foreclosure prospects and general economic weakness.

“The recent news of prices edging up is not bogus, but I don't think it's any kind of a turnaround,” Carney said.

His advice to consumers: “I'd wait, or if you are really interested in buying a house now, go in there and bargain very, very, very severely. The future is uncertain. If you know the prices are going up, then it's a good time to buy. But how do you know for sure?”

Union-Tribune
Roger Showley: (619) 293-1286;

Find this article at:
http://www3.signonsandiego.com/stories/2009/sep/30/housing-price-rebound-persists-experts-split/?business&zIndex=174444

Survey Shows Huge Gap in Markets

2009-09-28T08:33:00.001-07:00

Survey Shows Huge Gap in Markets

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Housing prices in county rise, but sales down

2009-09-16T09:19:00.000-07:00

Analysts caution that values are slow to rebound

By Roger Showley
Union-Tribune Staff Writer
2:00 a.m. September 15, 2009

San Diego County housing prices rose for the fifth consecutive month in August to reach a median price of $325,000, the highest since last September and $45,000 above the low reached in January, MDA DataQuick reported yesterday.

Analysts called the numbers another sign that the market is stabilizing after three years of steep losses. But that doesn't mean all homes are regaining their lost value, they said.

It's just that fewer low-cost, distressed properties closed escrow last month and consumers remained concerned enough about the economy to hold off buying or listing their homes for sale.

“There were fewer screaming deals to choose from among foreclosures, and there was lack of consumer confidence,” DataQuick analyst Andrew LePage said.

There were 3,306 sales in the county last month, down 13.2 percent from July. LePage attributed much of the decline to a reduction in foreclosure properties that sold — roughly 980 in August compared with 1,320 in July.

In percentage terms, 32.2 percent of August resales involved foreclosures completed over the past 12 months, down from 37.4 percent in July and 43.1 percent a year ago.

“Foreclosures are still high by historic standards, but they're off their peaks,” LePage said.

Erik Weichelt, president of the San Diego Association of Realtors, said his agents at Weichert Realtors Elite are representing fewer bank-owned properties acquired through foreclosure. He said many other real estate offices report the same dearth of dirt-cheap homes.

“We'd get a couple a day when there was heavy foreclosure in 2008 — 10 a day sometimes,” Weichelt said. “Now, it's fairly slow. There are some months where we haven't gotten any and have sold off the remaining inventory we had.”

His association said yesterday's inventory of active listings stood at 8,462 — about a two-month supply at current selling rates.

That tightness normally signals a seller's market in which buyers submit multiple offers above the listed price. That's been the case for many bank-owned properties, agents report.

But above the $400,000 price level, sales are proceeding fairly slowly and few homes are available.

Kirk Lesh, senior economist at California Lutheran University's Center for Economic Research and Forecasting, said the relative scarcity of low-cost homes skews the median price upward.

“I don't think true price appreciation has taken place yet,” Lesh said. “There's just too much weakness in the market.”

Lesh said his analysis of defaults and foreclosures points to a continued high level of foreclosures for the foreseeable future, but not at the record levels registered late last year and early this year.

Lesh has helped develop a model to help banks predict defaults and the strength or weakness of real estate markets.

Another possible factor contributing to less sales activity is the waning of federal and state home buyer tax credits, said Peter Dennehy, senior vice president for Sullivan Group Real Estate Advisors.

The $10,000 state tax credits for new-home buyers were largely spoken for by the end of June, he said, and the $8,000 federal first-time buyer credit expires Nov. 30.

Would-be buyers might not have been able to find an affordable home in June and July that they would have closed escrow on in August. Now, it's getting almost too late to find a home, secure financing and close escrow by the deadline.

“I do think if the tax credits are not extended, we'll probably start to see sales fall again,” Dennehy said.

The National Association of Home Builders and other industry groups are lobbying Congress to extend the tax credit. As the builders' chief economist, David Crowe, said in a statement yesterday, “Housing has not made the leap forward that everyone had hoped for by now.”
Kelly Cunningham, chief economist at the National University System Institute for Policy Research, said even if the recession eases, local unemployment will likely continue to rise or remain high and cause distress for homeowners who lose their jobs.
“In normal times, that's when you start to see real problems in the housing market,” Cunningham said. “We're just now getting into that now. . . . All that doesn't speak well for us to see a rebound in the housing market.”
Union-Tribune
Roger Showley: (619) 293-1286;

2009-09-14T11:13:00.001-07:00

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Solar Panel Prices Drop Dramatically

2009-09-09T19:24:00.001-07:00

Solar Panel Prices Drop Dramatically

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Some Believe the Worst Isn't Over Yet

2009-09-01T11:55:00.000-07:00

A combination of low interest rates, tax incentives, and declining numbers of foreclosures on the market have driven up home prices in many previously hard-hit areas, but some skeptics insist that this is just the calm before another storm.

"We're entering the phase where the homeowner has to earn his way out of this mess," says Mark Hanson, a highly regarded independent real estate and finance sector analyst. "This summer is shaping up as the gateway into the next move down."

Hanson believes there will be a “wall of foreclosures” once mortgage servicers are no longer preoccupied by new mortgage-modification guidelines. He blames unemployment for continuing defaults.

"It took 10 years to create this problem," says Hanson. "Do people really believe we can correct it all in 36 months?"

Source: Fortune, Colin Barrr (09/01/2009)

What to do if your mortgage is sold to another lender

2009-08-27T13:54:00.000-07:00

Approximately half of all mortgage loans are sold from one lender to another, often because the original lender is not equipped to collect payments, manage escrow accounts, pay taxes and insurance, respond to questions, and prepare payoff statements when the home is sold or refinanced. Some borrowers may receive letters in the mail alerting them of the sale of their loan a few days after closing, while others may not receive a notice for years.

In the mortgage-industry, this is called a “transfer of servicing,” and is a common practice. Borrowers should not be concerned about these changes, as the majority of lenders transfer their servicing rights to loans. Generally, the selling of a mortgage loan from one lender to another is a smooth transition and does not impact the borrower. Every so often though, there is a misstep by either the loan buyer or the loan seller.

Under the National Affordable Housing Act, when a mortgage loan is sold, the borrower is required to receive a “goodbye” letter from their current servicers at least 15 days before their next payment is due. The letter must state the name, address, and telephone number of the new servicer; the date the old company will stop collecting payments; and the date the new company will start accepting them. Under the Helping Families Save Their Homes Act, signed by President Obama on May 20, the new owner of the loan—which may or may not be the servicer—also must notify the borrower of the transfer within 30 days, known as the “hello” letter.

The “hello” letter should outline the same information as the “goodbye” letter sent from the former loan servicing company. Borrowers should be cautious if they receive a “hello” letter without receiving a “goodbye” letter, as they may be the intended victim of a scam by someone who is hoping to unlawfully receive the monthly mortgage payments. Concerned borrowers should contact their current loan servicer to verify if their loan has been transferred. If it hasn’t, authorities should be notified immediately.

In most cases, a mortgage payment sent to the old servicer automatically will be forwarded to the new servicer for a brief amount of time, typically 60 days. However, if payments are not sent to the correct servicer, they could become lost, and the homeowner may incur late fees.

C.A.R. reports July sales up 12 percent, prices declined 19.6 percent

2009-08-26T19:42:00.000-07:00

Home sales increased 12 percent in July in California compared with the same period a year ago, while the median price of an existing home declined 19.6 percent, C.A.R. reported yesterday. “The federal tax credit for first-time buyers played a critical role in the purchase decision of many buyers,” said C.A.R. President James Liptak. “Nearly 40 percent of first-time buyers said they would not have purchased a home if the tax credit was not offered. Because the tax credit has helped so many first-time buyers become homeowners, it is critical that Congress extends the credit beyond the Dec. 1 deadline, and includes all buyers, not just first-timers.”

Closed escrow sales of existing, single-family detached homes in California totaled 553,910 in July at a seasonally adjusted annualized rate. Statewide home resale activity increased 12 percent from the revised 494,390 sales pace recorded in July 2008. Sales in July 2009 increased 8.1 percent compared with the previous month. The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the July pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during July 2009 was $285,480, a 19.6 percent decrease from the revised $355,000 median for July 2008, C.A.R. reported. The July 2009 median price rose 3.9 percent compared with June’s $274,740 median price.

“July marked the fifth consecutive month of month-to-month increases in the median price,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “This was the largest increase on record for the month of July based on statistics dating back to 1979. The yearly decline in July also was the smallest in the past 19 months.”

Option ARMs Put Recovery at Risk

2009-08-26T13:52:00.000-07:00

Option ARMs, which accounted for $750 billion in mortgages issued between 2004 and 2007, according to Inside Mortgage Finance, are at serious risk with at least 50 percent already in default.

Resets on option ARMS have doubled the payments for many holders.

“Everyone’s been focused on subprime, but we’re more concerned about this,” says Todd Jadlos, managing director of LPS Applied Analytics, which analyzes data for the financial industry. “By the time subprime defaults had increased 200 percent, in June and July of 2007, option ARMs had gone up 400 percent. People just didn’t notice because the overall numbers weren’t as high.”

Lenders have stopped offering option ARMS, but there are about 600,000 held by borrowers, three-quarters of whom are paying interest only. When the cap is reached – for most after they have held the loan for five years – they’ll face drastic increases.

Barclays Capital estimates that banks will lose $112 billion on option ARMs. Some banks are aggressively refinancing these loans, Barclays says.

Source: The New York Times, John Leland (08/26/2009)

Economists' optimism for end of slump not catching

2009-08-24T09:35:00.001-07:00

Economists' optimism for end of slump not catching

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Strong Gain in Existing-Home Sales

2009-08-23T12:17:00.001-07:00

Strong Gain in Existing-Home Sales

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Why Rent When Buying is Cheaper?

2009-08-20T12:13:00.000-07:00

The foreclosure crisis has knocked down prices so much in some parts of the country that it’s cheaper or only slightly more expensive to own than it is to rent.

BusinessWeek, with help from research firm Reis, calculated ownership costs assuming a fixed-rate, 30-year mortgage for 100 percent of the purchase price with no down payment. The magazine said that had they factored in a 20 percent down payment – what most people must make these days – owning would have been cheaper than renting in most metros.

"It's a great time to buy," says Mollie Carmichael, senior vice-president of John Burns Real Estate Consulting in Irvine, Calif. "If you can own a home for less than the cost to rent, then it's a logical financial proposition."

Here are the top-10 cities where buying is a bargain and the own vs. rent cost ratio for each:

Detroit, 94 percent
Pittsburgh, 97 percent
Rochester, NY, 113 percent
Memphis, 114 percent
Tampa, 115 percent
Cleveland, Tenn., 119 percent
Dayton, Ohio, 119 percent
Columbia, S.C., 123 percent
Orlando, 124 percent
Dallas-Fort Worth, 124 percent

Source: Business Week, Prashant Gopal (08/20/2009)

Study: Americans Still Want to Be Home Owners

2009-08-18T14:20:00.000-07:00

Despite all of the bad news in the media about homeownership and mortgages, most Americans still believe buying a home is a great investment, according to a new study commissioned by Bankrate.com.

Among the findings from the study:

92 percent say that a home is a good investment for the future.
48 percent worry about losing or being unable to afford their homes.

"These results provide an interesting illustration of the public's mindset in a difficult economy," says Julie Bandy, editor in chief at Bankrate. "While nine out of 10 still believe in the American dream of homeownership, nearly half worry about losing their homes.”

Source: Bankrate.com (08/18/2009)

Greenspan Unsure About Recovery

2009-08-17T14:24:00.000-07:00

Former Federal Reserve Chair Alan Greenspan said the economy seems to be improving in some areas, but he was dubious that improvement is sustainable.

“I think we’re going to be OK for the next six months,” he says. "We are getting a recovery in (housing) starts and motor vehicles, but the process doesn't have legs to it."

Greenspan adds that while the decline in construction is reducing inventory, it is unlikely that the percentage of home owners will ever be as high as it was at the peak, and that will result in a reduction of the overall size of the market.

Source: Reuters News, Emily Kaiser (08/17/2009

Banks Plan to Keep Lending Tight

2009-08-17T12:23:00.000-07:00

Banks tightened standards for all types of loans in the second quarter, the Federal Reserve reported Monday.

About 35 percent of senior loan officials said they tightened standards somewhat and none of the 51 responding banks said they loosened standards for prime mortgages. The rest said their standards for mortgages remained the same or were substantially stronger.

Banks also told the Fed that they expected to maintain strict lending standards until at least the second half of 2010.

“Most banks have woken up to the fact that there is a lot more risk in their loan books than they ever thought possible,” says Joel Conn, president of Lakeshore Capital LLC in Birmingham, Ala. That has caused many banks to reconsider their requirements for future lending, Conn says.

Source: Bloomberg, Craig Torres (08/17/2009)

Why the Foreclosure Plan Isn't Working

2009-08-11T19:29:00.000-07:00

Why can’t mortgage servicers process more than 9 percent of the applications of borrowers eligible for a government retooling of their loans?

Here are five reasons spelled out by CNNMoney.com:

1. Fax machines. Most loan servicers require that applications be faxed. "It's archaic. Given all the problems we've had with lost faxes, it seems unreasonable to use a fax system,” says Michael van Zalingen, director of homeownership services for Neighborhood Housing Services of Chicago.

2. Too many forms. Each servicer has its own form, as does Freddie Mac and Fannie Mae.

3. Outdated info. By the time the multiple forms get through the fax machine, the information is outdated and applicants have to start all over.

4. Green personnel. Servicers are hiring and training staff by the thousands and most of them haven’t been on the job long enough to understand the process.

5. Too complicated to comprehend. Some eligible borrowers are receiving loan modification offers without even applying, but the paperwork is such gobbledygook that they mistake it for trash and throw the offers away.

Source: CNNMoney.com, Tami Lubby (08/11/2009)

Buyers Rush to Beat Tax Credit Deadline

2009-08-11T12:26:00.000-07:00

Real estate professionals report that first-time home buyers are flooding the sale market, pressed to finalize a deal before the federal government's $8,000 tax credit offer expires on Nov. 30.

Because mortgage approvals, residential inspections, and other steps in the buying process typically take about two months, buyers hoping to take advantage of the incentive will need to have a contract by the end of September.

The new flurry of activity now as house-hunters try to meet the deadline is triggering bidding wars and energizing the property market, which historically is slow at the end of summer. As a result, more homes are getting their full asking price.

Source: Chicago Tribune, Kathleen Lynn (08/14/09)

Mortgage Giant Freddie Mac Rebounds

2009-08-10T14:31:00.000-07:00

Rebounding from a net loss of $9.9 billion in the first three months of the year, Freddie Mac posted $768 million in net income for the 2009 second quarter.

Boasting a net worth of $8.2 billion at the close of the reporting period, the mortgage company will not need a cash infusion from the U.S. Treasury.

Meanwhile, Freddie Mac said its smaller provision for credit losses was "driven by a reduced rate of growth in the company's loan loss reserve due to the recent modest national home price improvements, which the company believes to be largely seasonal."

Source: Housing Wire, Jon Prior (08/10/09)

FHA Drops Lender on Suspicion of Fraud

2009-08-05T18:39:00.000-07:00

The FHA's third-biggest lender, Taylor, Bean and Whitaker Mortgage Corp., has been dropped from the agency's loan program due to possible fraud.

An independent auditor found "irregular transactions that raised concerns of fraud," but FHA said the Florida-based firm failed to file a mandatory annual financial report and indicated that there were no outstanding issues related to the audit.

Experts say it could fold as a result; and with less competition in the industry, mortgage rates could rise.

"It's just a question of demand and supply," stated Equity Now Inc. President Michael Moskowitz. "If Taylor Bean goes down, it's a pretty big deal."

Source: Bloomberg David Mildenberg and Jody Shenn (08/05/09)

Banks Express Hope for Fed Short-Sale Effort

2009-08-05T17:34:00.000-07:00

The federal government is launching a program to simplify and speed up the short-sale process by providing standardized documentation, cash incentives to lenders, and a $1,500 moving allowance to borrowers. Holders of second liens will get up to $1,000 to relinquish their claims.

Banks say the short-sale process has been taking so long because both their employees and real estate practitioners are learning as they go.

David Sunlin, vice president in charge of short sales at Bank of America, says he hopes the new government plan will help. "About half of short sales never close. We see it as a big lost opportunity, and we need to improve the rate we close them," he says.

Wells Fargo says it has cut its short sale average turnaround time from 90 days to 30 days by preparing a guide from real estate practitioners and putting in place procedures to handle short-sale requests.

[Editor's note: The federal government announced its short sales initiative in May at the annual Washington meetings of the NATIONAL ASSOCIATION OF REALTORS® and the association maintains short-sale resources for practioners.

Source: USA Today, Stephanie Armour (08/05/2009)

More Home Owners Underwater as Prices Fall

2009-08-05T14:40:00.000-07:00

A report from Equifax and Moody's Economy.com shows that falling prices have left 24 percent of owner-occupied, single-family home owners with mortgage debt greater than the values of the residences.

At the end of this year's second quarter, more than 16 million Americans were in this predicament, an increase from 10 million a year earlier.

Almost 5 percent of owner-occupied dwellings are saddled with mortgage debt worth 150 percent of the property value. Nevada, where 40 percent of owner-occupied homes are "upside-down," is the hardest-hit state, followed by Arizona and California.

Source: Wall Street Journal, Nick Timiraos (08/05/09)

Feds Scold BoA, Wells Fargo on Loan Modifications

2009-08-04T14:37:00.000-07:00

The Treasury Department on Tuesday announced that only 9 percent of eligible home owners had been helped by the federal program to modify home loans and prevent foreclosure.

It scolded banking giants Bank of America and Wells Fargo, both of which received federal bailout money, pointing out that these banks have been among the least willing to assist troubled borrowers.

Bank of American modified 4 percent of eligible loans, and Wells Fargo modified 6 percent.

Big banks that did better included JPMorgan Chase & Co., which modified 20 percent of eligible loans, and Citigroup Inc., which modified 15 percent.

The bank with the best results was Saxon Mortgage Services Inc., which helped about 25 percent of its eligible borrowers.

Source: The Associated Press, Alan Zibel (08/04/2009)

Experts Say Now is the Time to Buy

2009-08-03T14:57:00.000-07:00

Many investment experts advise it's time to buy. With prices falling, it is a once-in-a-generation chance to load up on property, they say.

How much of an investment portfolio should be devoted to real estate? David Swensen, who manages Yale University's endowment, says 20 percent is a smart number.

One possibility is real estate investment trusts (REITs), which, despite the fact that they are slashing dividends to conserve cash, are still paying average yields of 7.3 percent. That’s double the yield on Treasurys.

Should a home be part of the equation? Michael Kirby, founder of Green Street Advisors, says no.

"You should own a house to provide shelter," says Kirby. "In a way, it's not an investment, and it's not part of your investment portfolio. It's really just a living expense. By owning a house you are prepaying rent."

Source: Forbes (08/03/2009)

FHA Program to Help Struggling Home Owners

2009-07-31T14:43:00.000-07:00

The newly enhanced FHA Making Home Affordable Loan Modification Program will help struggling home owners—who qualify—to significantly reduce their monthly mortgage payments and stay in their homes, said NAR President Charles McMillan in a public statement.

The changes expand the Obama administration's Making Home Affordable Loan Modification Program to include FHA borrowers. NAR is optimistic that this will have positive implications for thousands of home owners, McMillan said.

“Until foreclosures have been significantly reduced and housing inventory reaches a more normal level, there can be no true housing recovery," McMillan said. "The FHA–HAMP program will go a long way in achieving these important goals by helping FHA servicers bring mortgages current, buy down loans by up to 30 percent of the unpaid principal balance, and defer these amounts until the first mortgage is paid off."

NAR will continue to call on Congress and the Obama administration to expand the first-time home buyer tax credit to all home buyers and continue efforts to streamline the short-sale process.

"Along with the expanded loan modification program, addressing these issues will help reduce foreclosures and housing inventory, and stabilize home values," McMillan said.

Source: NAR

Unemployment Batters Housing Market

2009-07-30T14:46:00.000-07:00

Foreclosure activity continued to hit Florida, California, Nevada, and other parts of the Sun Belt region in the first six months of this year. However, RealtyTrac noted in its latest report that rising unemployment is escalating the trend elsewhere in the nation as well.

RealtyTrac CEO James J. Saccacio confirmed that "some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates, while new markets like Provo, Utah, and Boise, Idaho, have seen large increases."

Established foreclosure hubs, including Las Vegas and Orlando, may actually be experiencing some improvement as deep price discounts and first-time home buyer tax credits draw more people into the market.

The shift from a foreclosure crisis driven by risky loan underwriting to one based on job losses and salary cuts, meanwhile, has increased activity in states like Oregon, Arkansas, Illinois, and South Carolina that previously were relatively insulated. "

As unemployment rates increase in different parts of the country, it's very likely that we'll see similar patterns develop elsewhere," says Saccacio.

Source: Reuters, Lynn Adler (07/30/09)

IRS Cracking Down on False Tax Credit Claims

2009-07-29T14:35:00.000-07:00

The IRS is cracking down on people who don’t qualify for the first-time homebuyer tax credit but try to claim it anyway.

The IRS says it is investigating 24 cases of people who falsely claimed the first-time homebuyer credit on their federal income tax returns. Getting caught making a false claim carries a penalty of up to three years in jail and a fine of as much as $250,000.

The First-Time Homebuyer Credit, enacted in 2008 and modified in 2009, provides up to $8,000 for first-time homebuyers. The purchaser must be someone who has not owned a primary residence in the previous three years. If the taxpayer is married, this requirement also applies to the taxpayer’s spouse.

The home purchase must close before Dec. 1, and the credit may not be claimed on the purchaser’s tax return until after the taxpayer closes and has purchased the home.

Source: The Internal Revenue Service (07/29/2009) and The Boston Globe, Chris Reidy (08/03/2009)

Virtual Staging: Brilliant but Maybe Dangerous?

2009-07-27T16:48:00.000-07:00

An emerging trend in real estate is the concept of "virtual staging," in which a sales associate e-mails photos of an empty house to a professional stager, who then digitally enhances the photos with artwork, furnishings, and other finishing touches to make the space seem more inviting.

There are several benefits to using this marketing tactic, including the money it saves sellers because they do not have to foot the bill for physical staging services that are both costly and time-consuming.

Additionally, virtual staging demonstrates that rooms are bigger than they often appear. Not only can the technique show prospective buyers how furniture will fit into a space, it also helps house-hunters who have trouble visualizing themselves and their belongings in an empty home.

However, there are some potential pitfalls to virtual staging, including liability issues. There is the chance, for example, that a buyer will challenge whether the digitally altered photos provided an accurate rendering of the space. After moving in, the new owner could make a case for misrepresentation of the property against the real estate practitioner.

Another problem is the lack of control that sellers and practitioners experience in terms of color schemes and accessories. Virtually staged properties tend toward neutral tones and commonplace art and window treatments that could turn off some prospective buyers.

Source: Examiner.com, Cece Blase (07/27/09)

Buyers Shouldn't Wait on Falling Prices

2009-07-27T14:51:00.000-07:00

Fear of overpaying for property is common these days, especially in places like New York where prices continue to be unstable.

If you encounter potential buyers who are frozen because they are concerned that they will pay too much, here are some factors to point out:

Waiting for the right time can be expensive. Some buyers would have more equity today, despite falling prices, if they had bought when they were first considering it, instead of continuing to pay rent.
Financing is fickle. Some people who were highly qualified last year can’t find financing this year because the credit market has tightened or their personal financial situation now makes them an undesirable borrower.
Interest rates are headed up. If prices decline by another 10 percent, but interest rates increase by 1 percentage point, the monthly payment will be the same.

Source: The Wall Street Journal, Douglas Heddings (07/27/2009)

Countrywide Offers Help to Former Customers

2009-07-23T12:53:00.000-07:00

Bank of America, which acquired Countrywide Financial Corp., one of the most active of the subprime lenders, has begun issuing checks to its borrowers who are eligible for foreclosure assistance under an agreement with attorneys general in 40 states.

Borrowers most likely to be eligible for assistance must have experienced a foreclosure, short sale, or deed-in-lieu of foreclosure after taking out a Countrywide mortgage.

Rust Consulting, a third-party administrator, is managing the program, and notifying and paying eligible customers.

Source: Reuters News, Steve Eder (07/23/2009)

Don't Abandon Underwater Mortgages

2009-07-23T12:49:00.000-07:00

David Bach, author of The Automatic Millionaire Homeowner: A Lifetime Plan to Finish Rich in Real Estate, pooh-poohs the notion that it makes any sense at all to walk away from a property that is underwater.

In an interview with the AOL.com personal finance Web site, Walletpop.com, Bach said about 50 percent of homes in foreclosure are there because their owners walked away from underwater real estate. He calls that “stupid, short-term thinking” and recalls a condo he bought in New York City in 2003. He put down $600,000, then property values dropped and he lost all his equity. “I was bummed,” he said.

But the loss wasn’t permanent. Four years later he sold the condo for $3.65 million – and made a $1.5 million profit, after commissions and taxes.

Some people might have thought it was “logical” to walk away, he said. “But it would have cost me $1.5 million.”

Source: WalletPop, Zac Bissonnette (07/23/2009)

Bake Sale Helps Mom Save Her Home

2009-07-22T14:54:00.000-07:00

A Teaneck, N.J., mother of three advertised her plight and sold 500 home-baked apple cakes at $40 each to make the overdue mortgage payments that would make her eligible for a loan modification, saving her home from foreclosure.

Angela Logan’s story appeared first in The Record newspaper and then was widely promoted online and on television. Sympathetic readers and listeners sent in their orders.

Initially, disgruntled neighbors complained to health officials, who said that state law prohibited Logan from baking the cakes in her own kitchen, so the Hilton Hasbrouck Heights lent her their commercial kitchen. She filled the orders by baking for 10 hours straight.

Source: The Wall Street Journal, Nick Timiraos (07/22)

Best Place to Age Is at Home

2009-07-18T12:56:00.000-07:00

It is much cheaper for older people to live out their lives in a home of their own than it is to move to a residential center, but it takes work to make a home safer, according to the Home Safety Council.

The council advises anyone contemplating home safety for an older resident to consider hiring an occupational therapist who specializes in home modifications. If a physician writes a prescription for the changes, some insurance companies will cover at least some of the costs. Long-term care insurance may also pay for the upgrades, the council says.

Other possibilities for funding the improvements include Rebuilding Together, a national program created to help keep older people living safely in private homes.

Source: The New York Times, Lesley Alderman (07/18/2009)

FTC Cracks Down on Mortgage Relief Scams

2009-07-15T14:59:00.000-07:00

The Federal Trade Commission and prosecutors in 19 states filed 189 legal actions on Wednesday against loan modification consultants, accusing them of cheating desperate home owners.

All but one of the lawsuits were filed in the U.S. district Court for the Central District of California. At a press conference in Los Angeles, California Attorney General Jerry Brown and the FTC alleged that U.S. Foreclosure Relief, Lucas Law Center, Loss Mitigation Services, and Apply2Save did practically nothing to help home owners and charged them one month’s mortgage payment or more in advance.

Brown said, “they ripped off thousands of home owners desperately seeking mortgage relief.”

Source: The Associated Press, Jacob Adelman, and Inman News (07/15/2009)

Unemployed Might Get Anti-Foreclosure Help

2009-07-13T16:01:00.000-07:00

The Obama administration is reportedly considering a program that would give loan forbearance to the unemployed. The aim of the program is to provide help without distorting the housing market.

The program would augment the federal loan modification program, giving unemployed workers more time and financial leeway to qualify for a new loan.

So far the loan modification program hasn’t been very successful for a variety of reasons, including the declining equity many troubled borrowers have in their homes and rising unemployment figures that make lenders unwilling to participate.

Last week, the U.S. Treasury Department asked the 25 largest mortgage service companies to appoint a liaison officer to work with the government to slow defaults. On July 28, Treasury will host a meeting with these servicers to examine whether qualified applicants are being ignored.

Source: Reuters News, Patrick Rucker and David Lawder (07/13/2009)

Falling prices, low rates prod California homebuyers - Sacramento News - Local and Breaking Sacramento News | Sacramento Bee

2009-07-09T16:34:00.001-07:00

Falling prices, low rates prod California homebuyers - Sacramento News - Local and Breaking Sacramento News | Sacramento Bee

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In California, mortgage scammers find easy pickings

2009-07-09T16:21:00.000-07:00

http://www.latimes.com/business/la-me-mortgage-fraud6-2009jul06,0,1643135.story

From the Los Angeles Times

As foreclosures climb, so does fraud by schemers preying on desperate homeowners hoping to modify their loans. State investigators have 750 open cases -- up from just 10 a year ago.

By Jessica Garrison

July 5, 2009

Maricela Castellanos sat at her desk, the telephone pressed to her ear, a chill running through her body.

A representative from her mortgage company was on the line with troubling information about the loan on Castellanos' Hesperia home.

No one at the company had previously been in contact with her, Castellanos recalled the man saying. The bank had no record of a new loan agreement with her, he said, nor had it received cashier's checks for $2,260 and $1,408.23 she said she had sent.

Castellanos had been a victim of an alleged loan modification swindle -- a financial crime in which scammers pretend to help distressed borrowers renegotiate their mortgages with their banks but instead pocket the money and leave the homeowners in worse straits than before.

Law enforcement officials say the scams are becoming increasingly prevalent, especially in California, where the Department of Real Estate has reported an explosion from 10 open cases a year ago to more than 750 this spring. Nationally, U.S. Atty. Gen. Eric Holder has said that the FBI's "rescue scam" caseload is up 400% from five years ago.

Some schemes advertise with hand-drawn signs on freeway ramps, while others target homeowners by name with carefully forged documents that appear to come from their lender.

The alleged scam artists to whom Castellanos paid more than $5,000 last fall were among the most sophisticated operating in California, authorities said, stymieing investigators with a thicket of bank accounts, 1-800 numbers and wire transfers to Mexico.

"Trying to piece it together . . . was an incredibly difficult thing to do," said Deputy Atty. Gen. Angela Rosenau.

Hours after Castellanos' conversation with her lender, an unfamiliar car paused in front of her house.

Sandy Birch, an investigator with the California Department of Justice, had arrived with a cashier's check Castellanos had sent to a post office box in the San Fernando Valley.

"I want to know why you were sending money there," Castellanos recalled Birch asking her.

Castellanos told the investigator that she and her husband had bought their three-bedroom home on Manzanita Street in 2005. Their $280,000 loan had a monthly payment of about $1,700 -- manageable on her salary as an office manager and her husband's work at a golf course. Then her husband got laid off.

In July 2008, the mortgage fell into default. In August, Castellanos received a letter that appeared to be from her lender, telling her she could enroll in a free program to save her home. It even included a warning to beware of foreclosure rescue scams.

"I really fell for it," she said, adding that she responded immediately.

Days later, a man phoned Castellanos to say she and her husband had been approved for a more affordable loan, with delinquency fees tacked onto the end.

This sounded reasonable, Castellanos recalled, so she didn't question it when told to send her payments via money order or cashier's check to the "Payment Processing Department" at a postal box in North Hills.

But her bank had nothing to do with the purported new loan or the mail drop.

The California attorney general's office had been fielding complaints for months from homeowners who had fallen victim to what one prosecutor termed a "brilliant scheme."

Representatives of this operation allegedly induced homeowners to send them as many as three consecutive mortgage payments. More than $1 million flowed through a series of bank accounts, much of it eventually crossing the border to banks in Mexico, according to the attorney general's office.

In some cases, people lost their homes because they did nothing to head off foreclosure, believing they had made a deal with their bank.

Despite there being hundreds of victims, investigators found the trail confusing. The operation did not register its phone lines in its own name. Instead, investigators said, its 800-numbers ran through Internet phone companies. It was the same with the bank accounts.

Birch, Rosenau and a forensic auditor began working backward from the accounts where checks were deposited and postal boxes where victims sent their money.

They determined that much of the money seemed to go to Juan Jose Perez and Isuara Hernandez, a married couple with three children who had recently lived in San Bernardino County.

On Oct. 27, the attorney general's office filed a 39-count complaint charging Hernandez, Perez and several associates with grand theft, money-laundering and conspiracy. Five of Hernandez and Perez's associates pleaded guilty; but Hernandez and Perez, who authorities say are the ringleaders, have eluded capture.

Investigators suspect they went to Mexico.

On Oct. 29, the trail led to Anna Santos, 22, of North Hills.

Santos, who has three children, told investigators she had no idea she was involved in anything illegal. She had answered a help-wanted ad to be the "U.S. financial representative" for a firm selling time-shares in Mexico, according to court papers and Santos' husband.

Santos told investigators that her employer, a woman she knew only as Laura, told her to open post office boxes and bank accounts in her own name. Every few days, Laura would call Santos and tell her there was mail waiting for her. Santos would retrieve it, deposit it, keep $100 for herself and wire the rest of the money to Laura in Mexico. (Investigators believe Laura is Isuara Hernandez.)

Birch told Santos she had been involved in defrauding people. She also warned her that other people who had worked for Hernandez in a similar capacity had recently been arrested. Finally, Birch told Santos not to pick up any more checks from the post office box.

But two weeks later, Birch got a call from the manager of the North Hills Post Office. Santos had signed for two packages, he said. She then deposited checks at a bank and withdrew $5,963 in cash, according to court records.

Santos was arrested March 11. She pleaded guilty and on May 20 was sentenced to two years in prison.

Her husband, Dimas Santos, said his wife "was only trying to feed her children." He said it is not fair that his wife, who was told she was working for a time-share company, is in jail while Hernandez and Perez remain at large.

Castellanos, meanwhile, was able to work out a loan modification with her real bank, allowing her family to stay in their Hesperia home.

But authorities say that for every happy ending, there are plenty more people likely to fall victim, especially as the economy continues to sputter. Officials at the Department of Real Estate said there were 230,000 foreclosures in California last year, with as many or more expected this year.

That makes a lot of potential victims, noted Atty. Gen. Jerry Brown. "People are desperate," he added. "Desperate people do desperate things."

jessica.garrison@latimes.com

REALTOR® Magazine-Daily News-No-Doc Loans Could Return

2009-07-09T16:20:00.001-07:00

REALTOR® Magazine-Daily News-No-Doc Loans Could Return

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REALTOR® Magazine-Daily News-Foreclosures Continue to Flood Market

2009-07-09T16:18:00.001-07:00

REALTOR® Magazine-Daily News-Foreclosures Continue to Flood Market

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NAR Gives to Foreclosure Prevention Programs

2009-07-02T11:57:00.000-07:00

The National Association of REALTORS® has awarded more than $682,000 to 25 local and state REALTOR® associations through its Foreclosure Prevention and Response grant program. The grants help REALTOR® boards develop and fund local foreclosure-prevention programs.

More than $3 million is available to state and local associations through the program to help REALTORS®, their clients, and communities nationwide resolve the growing foreclosure problem. Funds can be used to:

Give consumers foreclosure prevention information and financial counseling.
Educate and train REALTORS® about foreclosure prevention, short sales, and auctions.
Help Realtors® and their associations form partnerships and get more involved in their communities to address foreclosures and support local neighborhood stabilization efforts.

“REALTORS® build communities, and as the leading advocate for homeownership and housing issues, we believe that any family that loses its home to foreclosure is one family too many,” NAR President Charles McMillan says. “Foreclosures affect each community differently, which is why NAR is providing the Foreclosure Prevention and Response grants directly to local and state REALTOR® associations – so that they can develop unique, coordinated action plans to prevent foreclosures and minimize their adverse effects on the community.”

NAR has also developed a Foreclosure Prevention and Response Toolkit for local and state associations. This free online toolkit helps associations develop a local foreclosure response program and support the work of REALTORS® in the community. Toolkit resources include a list of training programs, government and other grant programs, and opportunities for community involvement and best practices, including developing community-wide strategies.

Additional information on the approved grants is available at www.realtor.org/foreclosure.

— NAR

HAF: Mortgage Protection Program

2009-07-01T20:31:00.000-07:00

To help provide first-time home buyers with peace of mind when purchasing a home, the CALIFORNIA ASSOCIATION OF REALTORS® Housing Affordability Fund (C.A.R.H.A.F.) is offering a FREE supplemental insurance product for qualified first time homebuyers. Through the C.A.R. Housing Affordability Fund’s Mortgage Protection Program (C.A.R.H.A.F. MPP), first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month, for six months, to help make their mortgage payments, qualified co-buyers can receive $750. Home buyers must request an application for the H.A.F. Mortgage Protection Program from their REALTOR®.

Real Estate Improves in California

2009-06-26T21:07:00.000-07:00

Median prices for single-family homes in California have risen for the third straight month, reaching $267,570, up 4 percent from April, according to a report from the California Association of REALTORS®.

The inventory of homes continues to drop, falling a 4.2-month supply in May, compared to 8.7 month supply in May 2008.

California’s real estate market always has been seen as a leading indicator for the rest of the country. What is happening in California bodes well for the rest of the nation, observers say.

Source: The Wall Street Journal, Stu Woo (06/26/2009)

Fed to Keep Short-Term Rates Low

2009-06-25T21:10:00.000-07:00

The Federal Reserve announced Wednesday that it expects to keep short-term interest rates “exceptionally low” for the next few months. It also underscored its commitment to make $1.25 trillion in total purchases of mortgage-backed securities by the end of year.

Both actions are likely to keep mortgage rates low through the end of 2009.

The Fed failed to raise a cap of $300 billion in purchases of Treasury securities, which could lead indirectly to higher mortgage rates because mortgage rates tend to rise in conjunction with Treasurys.

In response to the possibility of rising mortgage rates, the Mortgage Bankers Association this week cut its forecast for total 2009 mortgage originations by 27 percent.

Source: Inman News (06/25/2009)

Tips for Parents Buying Homes for Children

2009-06-25T15:11:00.000-07:00

With home prices low, now could be a good time for parents to give their children a home or even an investment property.

Here are some suggestions for managing the tax consequences from Mark Luscombe, tax analyst with Wolters Kluwer.

Give a cash gift. Individuals are allowed to gift up to $13,000 per person in a given year without incurring gift tax. That means a couple could give their offspring and spouse $52,000 in a single year to go toward a down payment.
Lend money. The government requires that family members meet or exceed minimum loan rates to avoid having the loan be considered a gift. The rates are currently low. One way to handle this is for parent to use the $52,000 gift exclusion to forgive both interest and principal.
Use a trust. Set up a qualified personal residence trust, or QPRT. You’ll need an attorney to handle this transaction, but in a nutshell, parents put the home they want to give their children into a trust. At the end of a pre-set term, the home passes to the children with no taxes due.

Source: The Wall Street Journal, Shelly Banjo (06/25/2009)

Many modified mortgages will default again, Fitch Ratings projects

2009-05-27T20:32:00.000-07:00

Most nontraditional home loans -- especially subprime mortgages -- may become delinquent within a year anyway, study says.

By E. Scott Reckard

May 27, 2009

Modifying nontraditional mortgages will succeed for many people, but most such modifications will end up in default within a year, a major ratings company predicts.

The Fitch Ratings study examined subprime mortgages, jumbo loans and little-documented home loans that Wall Street bundled up to back mortgage bonds from 2005 through 2007. Those were the last years of the housing frenzy before delinquencies skyrocketed, home prices plummeted and investors' appetite for such "private-label" securities evaporated.

In the study released Tuesday, Fitch projected that 55% to 65% of these loans that are being reworked to avoid foreclosures may end up at least 60 days delinquent anyway within 12 months. For the subprime loans -- the mortgages for the riskiest borrowers, with credit dings, bankruptcies and outsized debt loads -- the projected 60-day delinquent rate was 65% to 75%.

Fitch based its projection partly on "shrinking disposable income, escalating job losses and possibly some deceptive practices on the part of the borrowers themselves," the New York company said.

The estimate comes as lenders and regulators, along with the Obama administration's $75-billion Making Home Affordable program, step up efforts to get mortgage terms modified to stem soaring foreclosures.

"Loan modifications hold clear value for many homeowners provided the modified payments are sustainable, but more often than not, reducing the home payments to an affordable level may not be enough to rescue borrowers who are overextended on other credit and expenses," said Diane Pendley, a managing director at Fitch.

The study said borrowers who are current on their loans are angry that others who took on too much debt and missed payments are benefiting from lowered interest rates, extended repayment terms and other modifications. There is also evidence that some able borrowers are choosing not to honor their obligations, the study said.

About 7% of U.S. home loans packaged into securities without government support were modified through April, including 18% of subprime loans, Fitch said. It expects the pace of modifications to increase.

The study excluded loans guaranteed or owned by Freddie Mac and Fannie Mae, the giant government-controlled mortgage firms, and home loans held on the books of lenders.

About 22% of the nearly $10 trillion in U.S. mortgages currently outstanding are held in the private-label mortgage pools that Fitch studied.

scott.reckard@latimes.com

Mortgage Modifications Fail to Halt Defaults

2009-05-26T18:39:00.000-07:00

Fitch Ratings is slated to release a report this week showing that 65 to 75 percent of modified subprime loans will fall behind by 60 days or more within one year of the loan change.

Although some experts believe that reducing the principal amount owed is the best way to keep distressed borrowers in their homes, Fitch found that 30 to 40 percent of loans that had lowered principal amounts were still redefaulting after 12 months.

Borrowers are redefaulting at a high rate because home prices continue to fall, unemployment is rising, and because of public pressure to help home owners, even those who are still likely to default even after receiving assistance.

Source: Wall Street Journal (05/26/09) Copyright Information Inc.

Web Sites Help Owners Fight Foreclosure

2009-05-25T18:42:00.000-07:00

Some home owners facing foreclosure are fighting for their rights to loan modifications and other help.

They are turning to Web sites like Consumer Warning Network and Living Lies , a foreclosure defense blog, for advice. Living Lies founder Brad Keiser also offers daylong seminars for $149.

The message at both Web sites and in person is the same: People who received loans they couldn’t afford are victims of investor greed.

Living Lies advises home owners on representing themselves in court, and walks them through the steps, including how to get on the judge’s calendar and how to notify all parties. If this seems too onerous, the site also includes a list of attorneys who do this kind of work.

Source: St. Petersburg Times, Susan Taylor Martin (05/25/2009)

Bill Offers Renewed HOPE for Troubled Owners

2009-05-21T20:45:00.000-07:00

The Obama Administration on Wednesday signed a bill that attempts to inject some hope into the housing rescue program--called Hope for Homeowners.

The original program asked banks to reduce mortgage balances voluntarily to 90 percent of a home’s current market value. The loan would then be refinanced into an FHA mortgage.

The program didn’t work because it forced lenders to sell short with no chance of an upside, says Tom Kelly, a spokesman for JP Morgan Chase.

The new version of Hope sweetens the pot by paying lenders $1,000 for every Hope-refinanced loan and easing the amount they have to write off by allowing loans of up to 93 percent of the market value.

But the most important change is that it allows the U.S. Department of Housing and Urban Development, FHA’s parent agency, to share home-price appreciation with investors, up to the appraised value of the property when the existing loan was first issued.

This bill originally included cramdown legislation that would have allowed bankruptcy judges to modify the first mortgage, but that portion of the legislation was defeated in the Senate.

Source: CNNMoney, Les Christie (05/20/2009)

A Battle Plan for Refinancing Your Mortgage

2009-05-20T20:19:00.000-07:00

By KAREN BLUMENTHAL With mortgage rates holding below 5%, there has rarely been a better time to refinance your home. But with a one-two punch of tighter credit and falling prices roiling homeowners, the process has never been more difficult.

In the Sacramento, Calif., area, Michael McGee of Winchester McGee Financial estimates that one in four of his customers can't get a loan approved. In Plano, Texas, Rodney Anderson, a mortgage lender, says the rate sheet of mortgage programs he can offer customers has shrunk to two pages from 42 during the housing boom.

That doesn't mean you shouldn't investigate your options. Lowering your mortgage payment -- or at least locking in a long-term low rate -- can free up cash for other needs, such as repaying other debt or replenishing your retirement accounts, while reducing your financial stress. In addition, if you're older than 40, shortening your mortgage term now could help leave you mortgage-free in retirement, reducing the income you'll need to generate from your battered 401(k).

But before you jump in, you should know that most single-family home loans today need to fall within Fannie Mae and Freddie Mac limits -- up to $417,000 in most places, and up to $729,750 in certain high-cost cities such as San Francisco and New York. "Jumbo" mortgages, or those larger than those limits, are still very hard to find.

Then you'll need two crucial and tough-to-acquire bits of information: your credit score and your home's current value. Those will determine whether you can refinance at all and how close you can get to the lowest rates available. Even then, you may find the process unusually long and unpleasant; some banks are taking up to 90 days to complete a refinancing.

If you got your current mortgage in the past few years, when less documentation was needed, you may be surprised by the financial colonoscopy that awaits you. You will need pay stubs, bank statements, brokerage statements and maybe tax returns to convince the lender that you can and will repay the loan. If you're self-employed, you may be asked for a profit-and-loss statement for this year; if you rely on bonus income, expect the lender to assume this year's bonus will be a lot less than last year's.

Here's what you need to know before you start the application process:

What's your equity? Having some equity in your house is key to getting a new loan. If your current mortgage is less than 80% of the value of your home or less than 75% of your condominium or co-op, you should have refinancing options.

If your mortgage is between 80% and 105% of your home value, you're current on your payments and your loan was bought by Fannie Mae or Freddie Mac, you may be able to refinance under a two-month-old government program called "Making Home Affordable." Some kinks are still being worked out, and Fannie and Freddie have different requirements, so go to the program's Web site (http://www.makinghomeaffordable.gov/) or contact your mortgage servicer to see if you qualify.

Sometimes under this program, Fannie and Freddie will waive appraisals and other underwriting steps. And if you're refinancing a Veterans Administration or Federal Housing Administration loan, a new appraisal isn't needed.

Securing an appraisal. The trickier question: With home values sinking in some parts of the country, what's your home worth? Appraisers may use foreclosure sales or other distressed sales in your area to assess your home's value, not just conventional sales. And since the appraisal is for the benefit of the lender, not the consumer, you have little, if any, say in the process.

On May 1, a new Home Valuation Code of Conduct took effect, which is intended to keep mortgage brokers and others from influencing appraisal values. As a result, only lenders, not mortgage salesmen, may hire and pay appraisers, often using middlemen known as appraisal management companies.

The process is too new to know what the impact will be, but some mortgage lenders and brokers fret that national appraisal management companies may not know much about their areas. "We're getting calls from Indiana about a co-op on 17th Street," says Melissa Cohn, president of Manhattan Mortgage Co. in New York, one of the nation's largest mortgage originators.

If you're worried about what your home will be valued at, see if a friendly real-estate agent will provide you with recent similar sales in your neighborhood. Otherwise, you may have to fork over an appraisal fee -- $350 to $500, depending on where you live -- to find out if you have enough equity, even if you don't qualify for the loan.

Your credit score. Whether you get today's lowest rates will depend next on your credit score, a measure of how big a credit risk you may be. Borrowers who want the best rates generally need a FICO score -- based on a formula developed by Fair Isaac Corp. -- of 740 or above out of a possible 850. Those with FICO scores between 620 and 740 will pay either higher interest rates or more upfront "points" or fees, and those with scores below 620 may not be able to land a loan at all.

That seems simple enough until you realize that the nation's three main credit bureaus -- TransUnion, Experian and Equifax -- all calculate their FICO scores differently. So lenders typically pull all three scores and take the middle one, or a couple's lowest middle score.

Getting your number. Finding your actual scores is a bit like trying to read tarot cards. The Web site Credit Karma (http://www.creditkarma.com/) offers a free credit score, but it's the TransUnion TransRisk score, not your FICO score. Experian (http://www.experian.com/) sells consumers its Experian Plus scores but doesn't make its FICO score available directly to the public.

You can buy TransUnion and Equifax FICO scores from MyFico.com, but they may not be the same scores your lender sees. That's because you actually have multiple FICO scores, with different equations for auto loans, credit cards and mortgages.

All those scores, however, should be fairly consistent, giving you a good idea of whether your credit is good or great. If your scores are lower than you'd expect or if they vary widely, check your credit reports for errors. You can retrieve all three credit reports free of charge once a year at AnnualCreditReport.com.

If you don't meet the cutoffs, both Credit Karma and MyFico offer suggestions on how to improve your scores.

Refinancing may still make sense even if a weak score or other issues mean you have to pay extra points or a somewhat higher rate. Total up the points and other costs of your new loan, including closing costs, and divide it by your monthly mortgage savings. If you can recover your costs in two or three years -- and you plan to stay in your home longer than that -- you can save a lot of money over time.

Before you second that. If you have a second mortgage on the property or a home-equity credit line, you'll have one more hurdle. Some second lenders are refusing to stay in second place when you try to refinance your first mortgage. In that case, your options are to roll the two loans together, if you have enough equity; pay off your second loan; or find a new second lender who will allow you to refinance the first loan.

The condo hurdle. If you live in a condo or co-op, your building will also have to meet more-rigorous guidelines. Ms. Cohn of Manhattan Mortgage says lenders are tightening up on how much insurance a building must have, its occupancy rate and how much space in the building can be used for commercial purposes. She says she now makes sure buildings will be approved before moving forward with an application.

Shortening your loan. If your current loan is less than three or four years old, it may make sense to start over with a new 30-year mortgage. But otherwise, try to avoid going backward. If you last refinanced in the 2003 boom, for example, go for a 15-year or 20-year mortgage to cut your future interest payments and pay off your home quicker.

Whether to refinance an adjustable-rate loan that is currently fairly cheap depends almost entirely on how long you plan to own the home. If you think you will still be there in three to five years, when interest rates may be substantially higher, it may make a lot of sense to lock in at low rates now. Many brokers and lenders expect rates to stay low at least until the fall, but they also expect rates to jump quickly once they move up.

Finally, you should be able to lock in a current rate without an additional charge. But since the loan process may last longer than your 60-day rate guarantee, you may want to wait until closing is in sight to lock in.

Email: familymoney@wsj.com

Printed in The Wall Street Journal, page D1

Housing Starts Hit Record Low in April

2009-05-19T20:49:00.000-07:00

Housing starts hit a record low in April, the U.S. Commerce Department reported, but the news wasn't all bad as single-family construction rose 2.8 percent, the second straight month of gains in that sector.

Overall, housing starts fell 13 percent to an annual rate of 458,000, driven by the decline in construction of apartment buildings and condominiums. Building permits, an indicator of future construction, fell 3.3 percent to a record low of 494,000.

Here's a look at housing starts at the regional level:
● Northeast: fell 31 percent
● Midwest: dropped 21 percent
● South: declined 21 percent
● West: rose 43 percent

Analysts believe that while joblessness will keep some people from starting new households, increased demand for more housing is inevitable.

“Now that fewer homes are hitting the market for sale, the growing U.S. population will have fewer homes to choose from,” Tony Crescenzi, chief bond-market strategist at Miller Tabak & Co. in New York, wrote in a note to clients. “This will undoubtedly be a game changer for inventories and prices.”

Source: Bloomberg, Bob Willis (05/19/2009)

Worst Still Not Over for Fannie and Freddie

2009-05-18T20:53:00.000-07:00

Fannie Mae and Freddie Mac are facing critical financial, operational, and compliance issues, federal regulators said Monday.

"With new senior management teams, each enterprise has made strides in remediating problems," the Federal Housing Finance Agency said in a report. "But they still face numerous significant challenges including building and retaining staff and correcting operational and credit management weaknesses that led to conservatorship."

Together, Fannie and Freddie accounted for 73 percent of mortgage originations in the first six months of 2008, and they are slated to play key roles in the government’s foreclosure prevention plan."

The problems of the last two years in the financial markets are slowly abating, but the challenges in the housing markets continue," says James Lockhart, director of the FHFA.

Source: CNNMoney.com, Tami Lubby (05/18/2009)

Bank of America Revises Short Sale Policy

2009-05-15T12:49:00.000-07:00

Bank of America, one of the country’s largest mortgage lenders, says it is loosening its policies on short sales in response to the U.S. Treasury Department’s announcement last week that it would increase incentives for lenders to work out short sale deals.

The government’s plan is a boon to banks, says David Sunline, BofA’s real estate management executive, because it provides guidance when there are multiple liens, a potentially litigious issue for lenders.

In the past, the bank followed Fannie Mae’s policy of giving second lien holders about 10 percent of the second mortgage balance in a short sale. Now when it holds the second lien, BofA will accept 5 percent of the net proceeds of the short sale, Sunline says. When it is the first lien holder, it will offer 5 percent to the holder of the second lien.

Sunline says home owners considering short sales should contact the bank within five days of getting an offer on the home and expect its cooperation as long as the offer is within the range of other sales in the area and the borrower can demonstrate financial hardship.

Source: The New York Times, Bob Tedeschi (05/15/2009)

Price Stabilization Is First Step to Recovery

2009-05-13T12:44:00.000-07:00

Home prices must stabilize before the broader economy can turn around, a panel of housing and economic experts said yesterday at a real estate summit hosted by the NATIONAL ASSOCIATION OF REALTORS® as part of its Midyear Legislative Meetings in Washington, D.C., this week.

Although there are encouraging signs in the housing market—including a pick-up of home sales in previously hard-hit markets, record affordability, and continuing low interest rates—prices have not yet hit bottom.

That’s keeping many households on the fence and making it hard for those who do jump in to get financing in the conventional market. What’s more, it’s making it harder for troubled homeowners to refinance, leading to more distressed sales, and thus further erosion in prices.

Tax Credit Bridge Loans on the Way

To put a floor under the market, the federal government must continue to intervene, panelists said, and expanding the first-time homebuyer tax credit is a good place to start. The credit should be expanded to all households, including those with higher incomes, increased significantly in value, perhaps to $15,000 to $16,000 instead of the current $8,000.

“Then it would start move real estate,” said Robert Sibcy, president of Sibcy Cline, REALTORS®, based in Ohio.

In a positive move, the U.S. Department of Housing and Urban Development is set to roll out guidelines permitting HUD-approved lenders, public housing finance agencies, and some nonprofit organizations to make bridge loans to home buyers. The loans would be collateralized by the $8,000 tax credit, giving buyers the upfront funds for a down payment.

The inability to use the credit for the down payment has been a major stumbling block for the tax credit. NAR has been calling for HUD to use its authority to allow the bridge loans.

During the summit, HUD Secretary Shaun Donovan announced that HUD has decided to allow bridge loans, sparking a loud cheer of appreciation from more than 1,000 REALTORS® attending the session.

“We want FHA consumers to access the credit to use as a down payment,” Donovan said. “I want to thank NAR for its partnership with FHA.” More details on the guidelines will be released in a few days, he said.

Donovan said the credit is expected to stimulate 100,000 first-time homebuyer purchases and 60,000 move-up purchases this year before it expires Dec. 1.

Further Government Actions Could Help

The credit alone isn’t enough to spur sales, many panelists said. Barry Bluestone, a professor of political economy at Northwestern University, called for the federal government to step in for a defined period of time, such as 18 months, to insure buyers’ home equity.

Providing protection against price drops would remove buyers’ reluctance to get into the market now, and since the program would be of limited duration, it could lead to a critical mass of households buying in the short-term and thereby shore up prices. Bluestone said he envisions the federal government insuring up to 85 percent of an owner’s home equity.

“This could stabilize prices over the next 18 months and cost the government practically nothing,” he said. “A small, temporary program can have a huge impact. It’s an idea whose time has come.”

Foreclosure Actions

The other way to stabilize prices is to finally get a handle on foreclosures, which exert heavy downward pressure on prices. Donovan said the administration is making gains in this effort with the voluntary cooperation of 14 of the country’s largest mortgage servicers, representing 75 percent of the market.

But several panelists said the voluntary effort hasn’t proven to be effective yet, and that a new wave of foreclosures is expected this summer.

“If modifications don’t work, we need to stop waiting for voluntary compliance,” said John Taylor, CEO of the National Community Reinvestment Coalition. “The government should buy [the loans] at fair market value, take them out of the market, modify them, and end the foreclosure crisis.”

The big worry about federal intervention among several panelists is the apparent lack of an exit strategy. It tends to be far easier for the government to get involved in the market, through interventions like the giant federal bank rescue plan, than it is to get back out.

“Right now the Federal Reserve is the mortgage-backed securities market,” said Jay Brinkmann, chief economist for the Mortgage Bankers Association. “I don’t know the exit strategy and how long this can continue. It’s scaring off other investors. If the Fed stops buying, [what happens?] How do we get out of it?”

Don't Skimp on Mortgage Modifications

Martin Feldstein, the noted deficit hawk who chaired the Council of Economic Advisors for President Ronald Reagan, said mortgage modifications are one area where the administration shouldn’t skimp, even at the cost of growing the federal deficit, so he was disappointed that the administration is balking at the cost of that.

Referring to comments made by HUD Secretary Donovan, he said, “I’m disappointed the HUD secretary said it’s too expensive for the government to deal with negative equity mortgages…. We still have not dealt with the overhang of underwater mortgages.”

Even without further federal intervention the housing market will turn around, the panelists agreed.

The unknowns are how long recovery will take, how much damage will be done to the economy, and how strong the recovery will be.

The Shape of Things to Come

When the recovery does take hold, the housing market will be very different from what it was before, panelists said. The boom years of 2002–2007 were fueled not by income growth but by debt. After what’s been learned from that debacle, any future growth will have to be based on income growth, said Sarah Rosen Wartell, executive vice president of the Center for American Progress. Such growth will likely be far more moderate, but also more sustainable.

Wartell said the Obama administration was right to focus both on short-term stimulus and investment in clean energy, education, and healthcare reform, because those are the kinds of investments that can lead to the long-term income growth.

—Robert Freedman, REALTOR® Magazine

For-Sale Housing Inventory Getting Smaller

2009-05-12T14:05:00.000-07:00

The supply of properties on the market at the end of April declined 3.6 percent from the previous month, according to an analysis compiled by ZipRealty Inc.

ZipRealty looked at information from multiple listing services in 29 major markets.

Typically, the housing inventory rises in April an average of 4.8 percent, according to Zelman & Associates research firm.

The unknown factor that keeps this from being unquestionably good news is the number of foreclosures held by banks that aren’t listing them. For instance, Fannie Mae and Freddie Mac list only about 35 percent to 50 percent of the homes they hold.

Noted housing economist Thomas Lawler discounts the foreclosure concerns, saying that the decline in listings means "the bottom in home prices is much closer than many pundits believe."

Source: The Wall Street Journal, James R. Hagerty (05/12/2009)

Tax Credit Can Be Used for Down Payment

2009-05-12T13:58:00.000-07:00

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Other Solutions for Today's Market

During his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”

The morning session included a panel discussion that was moderated by CNBC’s Ron Insana. Panelists examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.

“Right now the Federal Reserve is the market,” said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.

“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” said NAR President Charles McMillan. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.”

The real estate summit is part of the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo. During the week ending May 16, more than 8,500 REALTORS® will attend meetings, visit lawmakers and inspire action on Capitol Hill.

Source: NAR

House Passes Bill to Protect Borrowers

2009-05-08T14:15:00.000-07:00

A bill passed by the U.S. House of Representatives on May 7 requires mortgage lenders to take borrowers' repayment ability into account. It also makes it possible for borrowers to take legal action against entities that pool mortgages and sell them as securities on the secondary market.

The bill also will force lenders to retain a 5 percent interest in mortgages other than standard 30-year fixed and adjustable-rate loans. However, adjustable-rate mortgages that carry prepayment penalties or fees greater than 2 percent do not qualify for the exemption.

Source: Washington Post, Dina ElBoghdady (05/08/09)

Putting Mortgages into 'Plain Language'

2009-05-08T14:07:00.000-07:00

Bank of America has debuted www.BankOfAmerica.com/HomeLoans, a new Web site for borrowers that includes a calculator that determines not just what size loan people can qualify for, but how much they can spend without being stretched too thin.

“We wanted to change the conversation to ‘How much house can I comfortably afford?’ rather than ‘What’s the maximum I can buy?’ ” said Aditya Bhasin, the product, pricing and strategy executive for Bank of America Home Loans.

The site was designed to be easy to read, spelling out a variety of contingencies, including the maximum payment that an adjustable rate mortgage could potentially cost.

The new site also offers what BofA calls Flat Fee Mortgage Plus, which has no application fee and a single closing fee that includes processing costs and fees for third-party services like appraisals.

It doesn’t include other standard costs like property taxes, homeowners’ insurance and prepaid interest.

Craig Focardi, a senior research director at the Tower Group, a financial consulting firm, said the idea for the plan is nothing new – it’s been tried by others. But the prominence of the programs could persuade competitors to adopt the features.

Source: The New York Times, Bob Tedeschi (05/08/2009)

Buyers Shouldn't Dismiss All ARMs

2009-05-03T14:12:00.000-07:00

Potential home buyers in search of a mortgage are wary of all kinds of adjustable rate loans these days, but hybrid ARMs can be really good deals even in these times of historically low interest rates, some lending experts insist.

Hybrids are "a great product at a great rate," says Christopher Cruise, a mortgage broker in Silver Spring, Md.

Currently, starting rates are under 4 percent, generally a full percentage point lower than traditional, 30-year, fixed-rate mortgages. Hybrids are locked in at that starting rate for five, seven, or sometimes even 10 years, then they adjust—usually a maximum of 2 points a year with an overall cap of 6 or 8 points.

In the meantime, the savings on a hybrid ARM can be thousands of dollars and make sense for a buyer who doesn’t expect to be in a home for more than five or six years.

Even if they stay in the same house, it’s likely they’ll have an opportunity to refinance. "Seven years for a mortgage is an eternity these days," Cruise says.

He recommends that buyers do the math, considering the worst-case scenario. In many cases, particularly with jumbo loans, the savings will still be substantial even if the loan adjusts to the maximum for a couple of years.

Source: United Features Syndicate, Lew Sichelman (05/03/09)

Good Time to Buy Vacation Property

2009-04-29T14:19:00.000-07:00

For buyers who can afford it, right now is a great time to pick up a second home in a vacation paradise at a bargain price.

Since there are fewer people with money to spend on this kind of a luxury item, sales as well as prices are down in many prime areas. Buyers with the desire and the wherewithal can get a really good deal.

BusinessWeek and Zillow.com took a look at the second-home markets where prices dropped between the fourth quarter of 2007 and fourth quarter of 2008.

Here is a sampling of places where vacation homes are on sale:
● Scottsdale, Ariz.: 27 percent
● Mystic, Conn.: 17.2 percent
● Napa, Calif.: 21 percent
● Marco Island, Fla.: 27 percent
● Las Vegas: 26.8 percent
● Point Pleasant Beach, N.J.: 15.6 percent
● Sunriver, Ore.: 15.7 percent
● Chesapeake Beach, Md.: 2.9 percent
● Lake George, N.Y.: 4.2 percent
● Newport, R.I.: 2 percent

Source: BusinessWeek.com, Prashant Gopal (04/29/2009)

Where to Get Foreclosure Help

2009-04-21T14:31:00.000-07:00

With all the dubious assistance programs and out-right scams preying on home owners facing foreclosure, it can be difficult to find legitimate help.

Here’s a list of programs that are either operated by the U.S. government or have its seal of approval:

To find a counselor, contact the U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287 or (877) 483-1515, or go to www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

Call (888) 995-HOPE, the Homeowner’s HOPE Hotline to reach a nonprofit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners.

Visit NeighborWorks America’s Web site at www.nw.org/network/home.asp

Go to this Web site for information on federal mortgage modification and refinancing programs: www.makinghomeaffordable.gov

The Controller of the Currency’s consumer information site for banking-related questions is www.helpwithmybank.gov

OCC Customer Assistance Group and consumer assistance site: www.occ.gov/customer.htm

Federal Trade Commission: www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm

Federal Reserve Board: www.federalreserve.gov/pubs/foreclosurescamtips/default.htm

NeighborWorks America: http://www.nw.org

HOPE NOW: www.hopenow.com

Source: Controller of the Currency (04/21/2009)

FICO launches mortgage relief site

2009-04-17T14:24:00.000-07:00

Borrowers can explore refi, loan mod, counseling options

By Inman News, Friday, April 17, 2009.

A new Web site that's a partnership between FICO and two nonprofits promises to help distressed homeowners determine if they're eligible for loan modifications or loan refinancings under the Obama administration's Making Home Affordable program.

The site, Mortgage Relief Online, also promises to help borrowers who aren't eligible for the Making Home Affordable program by referring them to a consumer credit counseling agency employing HUD-certified counselors.

Mortgage Relief Online is a partnership between myFICO, the Homeownership Preservation Foundation, and Money Management International. In a press release, FICO -- formerly known as Fair Isaac Corp. -- said the Web site will leverage consumer traffic to myFICO.com, the Web site of FICO's consumer division, myFICO.

The Web site is part of FICO's larger "Mortgage Recovery Initiative," which also includes tools for lenders and loan servicers. FICO's Mortgage Risk Analyzer, for example, identifies mortgage loan holders who are likely to default or need assistance before they become delinquent. Integration with the new Mortagage Relief Online Web site is an efficient way to handle large volumes of loan remediation requests, FICO said.

FICO also offers a Mortgage Response Analyzer, which helps servicers design outreach campaigns to attain the highest borrower response and conversion rates, and a Mortgage Portfolio Optimization application, which uses sophisticated rules to help lenders determine the most appropriate loan product to offer at-risk customers while preserving loan portfolio value, the company said.

The Obama administration hopes the Making Home Affordable program will help 7 million to 9 million homeowners negotiate loan modifications with lenders or refinance loans. A government-sponsored, dedicated Web site for the Making Home Affordable program also offers online tools to help borrowers determine eligibility for the program.

The HOPE NOW coalition of loan servicers offers online tools at HopeNow.com, and a toll-free hotline, (888) 995-4673, that provides referrals to housing counselors.

Fannie Mae and Freddie Mac offer online tools to help borrowers determine if the companies own their loan, a prerequisite for Making Home Affordable refinancings.

California Home Prices Looking Steady

2009-04-16T17:07:00.000-07:00

Median home prices in California slipped less than a half percent in March compared to February, a sign that the state’s troubled housing market is stabilizing, according to MDA Data Quick, which tracks housing prices.

The firm said the market was similarly stable in January and February.

"History suggests that these are the kinds of signs you see when a market is approaching stabilization in terms of pricing," Data Quick spokesman Andrew Lesage says. "Are we at the bottom? That's not clear."

Source: The Associated Press, Jacob Edelman (04/16/2009)

Obama Urges Americans to Refinance

2009-04-09T17:04:00.000-07:00

President Obama urged Americans to take advance of the administration’s new program, which allows homeowners whose loans are underwater to refinance.

Obama, who spoke Thursday at a White House event, pointed to historically low interest rates and estimated that if 7 million to 9 million homeowners refinance, they will save $1,600 to $2,000 a year.

"That is money in their pocket," Obama said. "We are at a time where people can really take advantage of this, and what we want to do is to send a message that if you are having problems with your mortgage – and even if you're not, and you just want to save some money – you can go to makinghomeaffordable.gov."

Source: The Wall Street Journal, John D. McKinnon (04/09/2009)

California Association Offers Mortgage Protection

2009-04-07T17:03:00.000-07:00

To make home buyers less skittish about purchasing a home amid concerns about job security, the California Association of REALTORS® has created a Housing Affordability Fund to provide mortgage protection.

The fund will pay buyers' mortgages for six months, up to $1,500 per month, if they become unemployed.

Eligible buyers are salaried employees who have not owned a home during the last three years, are buying properties in California between April 2 and the end of the year, and are working with a real estate pro on their transaction.

Funded by donations from REALTORS® and REALTOR® associations statewide, the program also offers $750 per month for six months to eligible co-buyers, along with a $10,000 death benefit and accidental disability coverage.

Source: American Banker, Kate Berry (04/06/09)

Officials Crack Down on Loan Modification Scams

2009-04-06T17:01:00.000-07:00

The government is cracking down on scammers who take advantage of desperate homeowners facing foreclosure.

Federal and state officials are trying to put an end to fraudulent companies that charge borrowers up-front fees of $1,000 to $3,000 to modify their loans. For the most part, the modifications never happen.

"These are predatory schemes designed to rob Americans of their savings and potentially their homes," says Treasury Secretary Timothy Geithner. "We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.

"The Federal Trade Commission says 71 companies ran suspicious advertisements and complaints should filed at the Federal Loan Modification Law Center and Bailout.hud-gov.us, both based in California, and Clearwater, Fla.-based Home Assure LLC.

Not every loan modification business is a fraud, but "swimming around in those waters are a lot of sharks," says Jim Carr, chief operating officer at the National Community Reinvestment Coalition.

Source: The Associated Press, Alan Zibel and Christopher S. Rugaber (04/06/2009)

Mortgage Defaults Soar in 2008

2009-04-03T16:57:00.000-07:00

The share of home owners with mortgages who are paying them on time fell below 90 percent to 89.95 percent at the end of 2008, according to a study released Friday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

The report reflects the performance of about two-thirds of all U.S. mortgages.

Delinquent subprime loans reached 16.4 percent, while delinquent Alt-A loans reached 9.10 percent. About 2.4 percent of all prime loans were seriously delinquent.

The report concluded that cutting mortgage payments by at least 10 percent helps. Re-default rates were at 26 percent after nine months when payments were cut by at least 10 percent, compared with 50 percent or more when the payment stayed the same or were trimmed by less than 10 percent.

"The continuing decline in credit quality underscores the need for mortgage servicers to increase their efforts to modify home mortgages," says OTS Acting Director John E. Bowman.

Source: The Wall Street Journal, Jessica Holzer and Ruth Simon (04/03/2009)

How to really help troubled homeowners

2009-04-03T07:00:00.000-07:00

Tying mortgage modification to affordability lowers redefault rate, federal study finds. Regulators press banks to keep in mind borrowers' ability to pay.

By Tami Luhby, CNNMoney.com senior writer
Last Updated: April 3, 2009: 1:10 PM ET

NEW YORK (CNNMoney.com) -- It may seem obvious: Increasing how much troubled borrowers pay on their mortgage leads to redefaults. But that didn't stop America's banks.

Until the end of last year, the majority of loan modifications either increased homeowners' monthly payments or left them unchanged. Not surprisingly, more than half of those borrowers fell behind again within six months.

Loan servicers, the companies that collect mortgage payments and work with borrowers in default, have gotten the message.

A government report released Friday found that about half of modifications made in the fourth quarter decreased payments.

And reducing payments leads to fewer redefaults. Only 23% of borrowers whose monthly tabs were lowered by more than 10% in the third quarter had fallen behind in their payments within six months, according to the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

This compares with 46% of borrowers whose payments rose by more than 10% and 51% whose payments were unchanged.

"In stressful economic times, modifications that increase monthly payments or keep them the same are likely to run the risk of unacceptably high redefault rates," said Comptroller of the Currency John Dugan.

There are two main reasons for the disconnect between what seems like common sense and servicers' early response.

When the mortgage meltdown first started in 2007, servicers approached loan modifications in the typical way -- tacking on missed payments and penalties to the principal, which increased the monthly tab.

Also, servicers were constrained by contracts with investors who bought mortgage-backed securities, said Joseph Evers, deputy comptroller for large banks.

As foreclosures soared, however, servicers and investors grew more open to lowering payments, as long as it was more cost effective than foreclosing on the home.

"This crisis is more severe," Evers said. "The traditional approach of loss mitigation may not be the right approach in this environment."

Focusing on redefaults

The regulators created a stir in December when they reported that more than 50% of modified mortgages were delinquent six months later. Modification advocates -- including Federal Deposit Insurance Corp. Chair Sheila Bair -- blasted the study for not detailing the how the mortgages were modified.

The Obama administration, financial institutions and housing counselors are counting on loan modifications to pull the nation out of the mortgage crisis. They are at the center of the president's housing plan, which he announced in February.

The program subsidizes interest rate reductions so that borrowers' payments are no more than 31% of their gross monthly income. Many large servicers -- as well as mortgage financiers Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) -- have implemented initiatives in recent months that tie modifications to affordability.

But modifications' effectiveness in reducing foreclosures in the long run remains to be seen. That's why redefault rates are being so closely monitored.

In reviewing banks' fourth-quarter modification efforts, the regulators asked about the types of modifications being done. They found that by year's end institutions were doing many more modifications that lowered payments, rather than leaving them unchanged or raising them.

Some 50.7% of modifications in the fourth quarter decreased payments, compared to 35.7% in the first quarter.

Overall, however, redefault rates are rising. Some 43% of loans modified in the third quarter were at least 60 days delinquent after five months, compared with 37.6% of second-quarter adjustments and 31.4% of first-quarter efforts.

Regulators to banks: remember affordability

The report has spurred regulators to push financial institutions to take affordability into account when doing modifications.

"We have gone back to each of the servicers and directed them to review their modification polices to ensure they are designed to produce sustainable mortgages," Dugan said.

Some servicers, however, are still complaining about the constraints placed on them by investors' contracts.

"That's something they'll have to work through with their investors," Evers said.

The study also raised new concerns about how soon the housing market would recover. The percentage of seriously delinquent prime loans -- held by borrowers with the strongest credit backgrounds -- grew to a record 2.4% at the end of the fourth quarter. This is up from 1.11% at the end of the first quarter.

Regulators are monitoring these figures, since the prime mortgages are considered the lowest risk and account for two-thirds of all loans in the study.

"We watch that very carefully because to the extent we see problems there, it affects a much wider swath of mortgages outstanding in the United States," Dugan said of prime mortgages. "Historically, that's the highest we've ever seen prime mortgages."

First Published: April 3, 2009: 7:00 AM ET

Lowering Mortgage Rates May Have Risks

2009-04-02T16:56:00.000-07:00

The Federal Reserve has so far spent about $250 billion on low-interest mortgages acquired from lenders by Fannie Mae and Freddie Mac.

The purchases, which could eventually top $1 trillion, are one part of the financial buyout many people understand and support. This spending has driven mortgage rates to record lows, encouraged people to buy houses, and helped many people refinance out of lousy mortgages.

It all looks good on paper, but some economists are warning others about some risks. Here are a few of their concerns:

The Fed is creating new money to pay for this, which will eventually encourage inflation.
When the Fed stops buying, rates will increase quickly and substantially.
Not too many investors are interested in the low-yielding mortgages, so it is likely taxpayers will have to foot the bill.

Source: The Wall Street Journal, Peter Eavis (04/02/2009)

Appraisers Say BPOs Hurt Property Value

2009-03-28T16:49:00.000-07:00

An increasing number of appraisers and consumer experts say unrealistically low price estimates caused by short sales and bank-owned foreclosures are artificially depressing property values.

They are particularly critical of broker price opinions (BPOs), which they say are used because they cost less than property valuations by licensed appraisers.

David Berenbaum, executive vice president of the National Community Reinvestment Coalition, has asked Congress to outlaw using BPOs as a substitute for appraisals in distressed property transactions.

Defenders of BPOs say that real estate professionals know the local area and can do a realistic appraisal accurately.

The National Association REALTORS® said it intends to issue a policy statement in May, but it currently takes no position.

Source: Washington Post Writers Group, Kenneth R. Harney (03/28/2009)

Banks Spend Billions to Help Troubled Borrowers

2009-03-27T16:51:00.000-07:00

JP Morgan Chase & Co. is opening 24 offices nationwide to help home owners facing foreclosure.

"The idea is to reach people who are in trouble--many who may have gone into avoidance mode," spokeswoman Nancy Norris says. "We hope this personal, face-to-face service will enable us to help more of our customers."

JPMorgan Chase and Wells Fargo received $25 billion in federal bailout funds. Bank of America and Citigroup each got $45 billion.

Norris says Chase expects to use this money to help about 700,000 mortgage customers – a total of $110 billion in home loans – by the middle of 2010. In total, Chase has 10.4 mortgage customers.

Some observers are dubious that even this well-funded plan will work.

"Unfortunately, we tend to be a little cynical about these efforts," says Daren Blomquist, a spokesman for RealtyTrac, a research company that tracks foreclosures. "It seems that everything thrown at the problem so far has not been too successful."

Source: Orlando Sentinel, Richard Burnett (03/27/2009)

NAR Warns of Rental Property Scam

2009-03-27T16:48:00.000-07:00

The National Association of REALTORS®’ name is being used as part of a property rental scam in which rental property is offered to consumers, who are led to believe that NAR is functioning as an intermediary to receive rental deposits from prospective tenants.

“NAR is not involved in this business and has contacted law enforcement officials to request that the matter be investigated. We encourage any consumers who may be affected to file a complaint,” says NAR President Charles McMillan.

The scam claims that on receipt of a deposit, NAR will deliver the keys to the property to the tenant. Prospective tenants are instructed to send money via Western Union to NAR’s purported agent in the United Kingdom.

Some of the listings have been posted on Craigslist, which reportedly has had difficulty in tracing the original listings. NAR does not have an escrow service, or function as an intermediary to receive rental deposits.

Consumers who have encountered this scam may file a complaint with the Internet Crime Complaint Center, sponsored by the Federal Bureau of Investigation and the National White Collar Crime Center.

“Our mission is not only to protect consumers in the real estate transaction, but also guard them against fraud,” McMillan says.

Source: NAR

Picking Real Estate Pros Is for the Dogs

2009-03-27T16:45:00.000-07:00

When Candy Spelling, the widow of legendary Hollywood producer Aaron Spelling, decided to sell her home, she let her dog pick out the real estate professional for the job.

Spelling asked her security service to bring her beloved Wheaten Terrier Madison in each time she met a candidate and watched how the dog reacted. If Madison did not respond pleasantly, she took the individual off the list.

Sally Forster Jones, an associate with Coldwell Banker Previews International in Beverly Hills, was the winner. She will co-list the 56,500-square-foot mansion, known as “The Manor” in the exclusive Holmby Hills neighborhood of Los Angeles, for $150 million, making it the most expensive house on the market in the U.S.

Both Spelling and Jones told the Associated Press that they are unsure how many rooms the 56,500 square feet, three-story mansion has.

Source: The Associated Press, Alex Veiga (03/27/2009)

Tenants Losing Out From Foreclosures

2009-03-23T16:41:00.000-07:00

Foreclosures are turning inner-city tenants into homeless and shelter residents.The problem is particularly acute in Los Angeles, where the city council recently halted evictions to buy time to solve the problem.

In Chicago, the Cook County Sheriff’s Department has now required banks to give a four-month notice of eviction since the number of foreclosure-related evictions has tripled in two years to 4,500 in 2008.

Boston has battled the problem by aggressively supporting tenants’ rights, including allowing tenants in buildings with no heat to order heating oil and bill the buildings’ owners.

Most of the problems stem from banks that don’t want to be landlords or hire property managers, says Dustin Hobbs, spokesman for the California Mortgage Bankers Association.

Source: The Associated Press, Christina Hoag (03/23/2009)

Cramdown Bill Stalled in Senate

2009-03-20T16:38:00.000-07:00

The plan to allow judges to write down mortgage debt for people in bankruptcy court, a practice known as “cramdowns,” is stalled in the U.S. Senate.

The measure has passed the House already, but will need 60 votes to gain Senate approval. Senate Democrats have been unable to get a handful of moderates from both parties to agree to vote their way. Some lawmakers say the rule would penalize borrowers who have kept current with their mortgage payments.

President Obama included the cramdown idea as part of his broader housing plan.

Banks and other financial institution oppose court-ordered mortgage workouts because they say they it increases the risk for lenders and ultimately will raise mortgage rates.

Source: The Wall Street Journal, Elizabeth Williamson (03/20/2009)

Mortgage-Help Site, Call-in Number Go Live

2009-03-19T16:34:00.000-07:00

The U.S. Treasury Department went live on March 19 with its Making Home Affordable program, which aims to help home owners refinance or modify their mortgages.

The campaign includes a Web site at makinghomeaffordable.gov as well as a telephone hotline number at (888) 995-4673.

The federal government is targeting 9 million home owners whose loans are held by Fannie Mae or Freddie Mac.

Source: Indianapolis Star (03/19/09)© Copyright 2009 Information Inc.

Fannie Eases Its Investor Loan Rules

2009-02-10T17:21:00.001-08:00

To speed recovery of the housing market, Fannie Mae in March will begin purchasing and guaranteeing mortgages for borrowers carrying loans on as many as nine other properties, up from the current limit of three. However, the number of months of reserve payments that must be held by investors will rise to six in June from two currently. "One of the things that leads the economy out of a housing crisis is when prices get cheap enough that investors start moving in and buying things," says Joe Garrett of the Berkeley, Calif.-based consulting firm Garret, Watts & Co.

Source: American Banker, Harry Terris (02/10/09)
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When Will Prices Bottom Out?

2009-02-06T17:24:00.000-08:00

Housing prices will hit bottom in the fourth quarter of 2009, predicts Moody’s Economy.com in a new report.

"Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view," the report says.

On average, home prices will decline 36 percent from the peak in the first quarter of 2006, the report says.

By the end of the housing downturn, nearly 62 percent of the nation's 381 metropolitan areas will have experienced double-digit-percent declines in house prices, peak-to-trough, says the report.

The declines will exceed 20 percent in about 100 metro areas, according to the report, scheduled to be discussed in a Webcast on Thursday.

The recovery will be “lackluster,” the report continues.

"A number of uncertainties in both the housing and economic outlooks remain, and the risks tilt to the downside," says Moody’s Economy.com Chief Economist, Mark Zandi.

Source: The Wall Street Journal, James R. Hagerty (02/06/2009)

Experian Blocks Access to Scores at MyFICO.com

2009-02-04T17:19:00.000-08:00

Experian will no longer offer credit scores via MyFICO.com, but FICO scores based on data from Equifax and TransUnion will still be available through the Web site.

The change doesn’t affect lenders, but it makes it more difficult for potential borrowers to examine their score before they apply for a loan.

Experian said in a e-mailed statement: "Consumers will continue to have many choices for obtaining credit scores based on Experian data, including from Experian Web sites and our many resellers. Consumers can also assess their creditworthiness by purchasing credit scores developed by other credit reporting agencies or third parties, or FICO scores based on other bureaus’ credit data."

Source: The Wall Street Journal, Jane J. Kim (02/04/2009)