From Realtor Magazine Online, Daily Real Estate News April 30, 2009
Getting financing to buy a condo can be tough these days.
Lenders are examining everything about condo complexes – including the financial situations of all its owners – before they agree to lend money to people who want to buy in or current owners who want to refinance.
Some condos have been hit hard by the foreclosure crisis and that has affected condo association budgets and put downward pressure on the value of individual units.
"There's a recognition that a lot of condos are in weak hands," said Mike Larson, an analyst at Weiss Research in Florida. "There's a lingering fear that there will be more fallout and that's why more conditions are being attached to condo loans."
The market is likely to stabilize at the end of this year or in 2010, say some analysts, including William Rich, vice president at the research firm Delta Associates. But even the 2010 date isn't certain, according to Rich, because "There's always a lag time between when conditions change and when the banks respond.”
Source: The Washington Post, Dina Elboghdady (04/28/2009)
Thursday, April 30, 2009
First-Time Buyers Boosting House Sales
From Realtor Magazine Online, Daily Real Estate News April 30, 2009
The NATIONAL ASSOCIATION OF REALTORS® says more than 50 percent of March's home sales were tied to first-time buyers, many of whom snapped up foreclosed homes and other distressed properties.
Experts believe getting first-time buyers off the sidelines to take advantage of historically low interest rates and federal tax credits will reduce the glut of homes on the market and spark a recovery. Some point out that first-time buyers are helping to revitalize communities in Florida, California, and other states hit hard by foreclosures.
However, distressed properties often sell for 20 percent less than traditional properties, and the increase in lower-end sales is driving down the national median home price.
Source: USA Today, Stephanie Armour (04/30/09)
The NATIONAL ASSOCIATION OF REALTORS® says more than 50 percent of March's home sales were tied to first-time buyers, many of whom snapped up foreclosed homes and other distressed properties.
Experts believe getting first-time buyers off the sidelines to take advantage of historically low interest rates and federal tax credits will reduce the glut of homes on the market and spark a recovery. Some point out that first-time buyers are helping to revitalize communities in Florida, California, and other states hit hard by foreclosures.
However, distressed properties often sell for 20 percent less than traditional properties, and the increase in lower-end sales is driving down the national median home price.
Source: USA Today, Stephanie Armour (04/30/09)
HUD Sees Signs of Stabilization
From Realtor Magazine Online, Daily Real Estate News April 30, 2009
The housing market is looking healthier, but U.S. Housing and Urban Development Secretary Shaun Donovan said Wednesday that it is too early to tell if the recovery has taken hold."
We do have some early signs, I think, that the market is stabilizing. Since January, what we've seen is both prices and sales volumes moving up and down around a relatively stable number," Donovan said.
Donovan said he was optimistic that President Obama’s policies are bolstering the market.
"I think in particular when you get below the national level what you see is that in markets like California that were the hardest hit, that is where the signs (of recovery) are the strongest," he said.
[Editor's note: Remarks last week by NAR Chief Economist Lawrence Yun at a press conference on existing-home sales are consistent with Secretary Donovan's analysis. Video highlights of Yun's press conference are available online.]
Source: Reuters News (04/29/2009)
The housing market is looking healthier, but U.S. Housing and Urban Development Secretary Shaun Donovan said Wednesday that it is too early to tell if the recovery has taken hold."
We do have some early signs, I think, that the market is stabilizing. Since January, what we've seen is both prices and sales volumes moving up and down around a relatively stable number," Donovan said.
Donovan said he was optimistic that President Obama’s policies are bolstering the market.
"I think in particular when you get below the national level what you see is that in markets like California that were the hardest hit, that is where the signs (of recovery) are the strongest," he said.
[Editor's note: Remarks last week by NAR Chief Economist Lawrence Yun at a press conference on existing-home sales are consistent with Secretary Donovan's analysis. Video highlights of Yun's press conference are available online.]
Source: Reuters News (04/29/2009)
Wednesday, April 29, 2009
How to Size Up an Investment Property
From Realtor.org/realtormag May 2009
When you're evaluating a potential property investment, it's important to consider the cash flow and ROI. Here's how.
By Chris Lombardi
If you're thinking about buying your first real estate investment, there's good news. There are lots of good deals out there. But even if a deal looks to good to resist, you need to be sure you have a firm understanding of the two significant elements that determine profitability: cash flow and return on investment (ROI). Otherwise, it's very easy to misjudge just how profitable the property will be.
Expenses vs. Revenues
Cash flow is extremely important because it dictates whether the investment will cost you out-of-pocket money or put money back in your pocket on a monthly basis. To determine monthly cash flow, you must consider all expenses related to the property and then subtract this from the revenue being generated.
Finding the obvious expenses is pretty easy, but you may have to do some digging to uncover the not-so-obvious expenses. These line items are real and can significantly impact your monthly cash flow, so don’t leave anything out. They can include:
Vacancy-rate impact
Replacement equipment
Maintenance
Advertising
Tenant repairs
Payment delinquencies
After you subtract all expenses from the revenue, you’ll know whether you’ll be making money or paying money. You may ask yourself: Why would I involve myself in an investment that is going to cost me out-of-pocket money? This brings us to the next important variable when evaluating your real estate investment decision: return on investment (ROI).
What Is ROI, Anyway?
First, the technical definition: the rate of return based on an initial investment that generates a cash annuity for a specified time period. Now, in plain English: ROI is basically the money going out (including your initial investment) banked against the cash flow that the property will generate in a given amount of time. This creates a net cash flow stream, and your return percent is calculated off of this figure.
Keep in mind that when compiling these cash flows, you must include all expenses related to the property, and the revenue stream must include all monetary benefits derived from it as well. ROI is heavily determined by the initial investment, because that is most likely the largest cash outlay related to the investment. All other variables held constant within the same scenario dictate that the bigger the down payment, the less return you will have on the investment.
So a new question emerges: If my return is less, why would I put a larger amount down? You must consider the trade-off between the amount of the down payment and the monthly cash flow. The more you put down, the more likely you are to have a positive cash flow — the investment paying you dividends. There is a fine balance between cash flow and ROI. Depending on your current and future financial goals, you can determine the best scenario that suits your needs. In order to attain this balance, you must have the knowledge and skills to determine the best scenario.
Whether your goal is to generate an annuity stream, prepare for retirement or create a college fund, real estate investments can be an excellent place for your money, if you do it right. With interest rates at record lows, profitable inventory and opportunities throughout the nation, it may be time for you to invest in property.
When you're evaluating a potential property investment, it's important to consider the cash flow and ROI. Here's how.
By Chris Lombardi
If you're thinking about buying your first real estate investment, there's good news. There are lots of good deals out there. But even if a deal looks to good to resist, you need to be sure you have a firm understanding of the two significant elements that determine profitability: cash flow and return on investment (ROI). Otherwise, it's very easy to misjudge just how profitable the property will be.
Expenses vs. Revenues
Cash flow is extremely important because it dictates whether the investment will cost you out-of-pocket money or put money back in your pocket on a monthly basis. To determine monthly cash flow, you must consider all expenses related to the property and then subtract this from the revenue being generated.
Finding the obvious expenses is pretty easy, but you may have to do some digging to uncover the not-so-obvious expenses. These line items are real and can significantly impact your monthly cash flow, so don’t leave anything out. They can include:
Vacancy-rate impact
Replacement equipment
Maintenance
Advertising
Tenant repairs
Payment delinquencies
After you subtract all expenses from the revenue, you’ll know whether you’ll be making money or paying money. You may ask yourself: Why would I involve myself in an investment that is going to cost me out-of-pocket money? This brings us to the next important variable when evaluating your real estate investment decision: return on investment (ROI).
What Is ROI, Anyway?
First, the technical definition: the rate of return based on an initial investment that generates a cash annuity for a specified time period. Now, in plain English: ROI is basically the money going out (including your initial investment) banked against the cash flow that the property will generate in a given amount of time. This creates a net cash flow stream, and your return percent is calculated off of this figure.
Keep in mind that when compiling these cash flows, you must include all expenses related to the property, and the revenue stream must include all monetary benefits derived from it as well. ROI is heavily determined by the initial investment, because that is most likely the largest cash outlay related to the investment. All other variables held constant within the same scenario dictate that the bigger the down payment, the less return you will have on the investment.
So a new question emerges: If my return is less, why would I put a larger amount down? You must consider the trade-off between the amount of the down payment and the monthly cash flow. The more you put down, the more likely you are to have a positive cash flow — the investment paying you dividends. There is a fine balance between cash flow and ROI. Depending on your current and future financial goals, you can determine the best scenario that suits your needs. In order to attain this balance, you must have the knowledge and skills to determine the best scenario.
Whether your goal is to generate an annuity stream, prepare for retirement or create a college fund, real estate investments can be an excellent place for your money, if you do it right. With interest rates at record lows, profitable inventory and opportunities throughout the nation, it may be time for you to invest in property.
Short Sales: When Is an Offer 'Accepted'?
From Realtor.org/realtormag May 2009
When should you disclose a seller's acceptance of short sale offer?
By Bruce Aydt
Q. I recently sold a property that was heading into foreclosure and the buyer’s agent wanted the listing changed to "pending" in the MLS as soon as the seller accepted the offer. But shouldn’t the status be changed only after the offer is approved by the lender?
A. With distressed properties, there can be confusion about when the offer is "accepted." The seller is still the legal owner of the property in most cases, and must be the first to accept an offer. Yet the lender also must approve or agree to the transaction, since it’s being asked to take less than what’s owed on the mortgage. When the seller accepts an offer under these conditions and a contract is formed, the offer is "accepted," though it has at least one unresolved contingency: the lender’s approval of the short sale.
Many MLS systems require listing brokers to change a listing out of "active" status upon the acceptance of any offer—including offers subject to lender approval, as in a short sale. Whether, and when, the listing status must be changed is a matter of MLS rules.
Regardless of what the MLS requires, though, the Code of Ethics Standard of Practice 3-6 requires that accepted offers be disclosed: "REALTORS® shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation."
Even if your MLS doesn’t require the listing to be reclassified as "pending" or "under contract" upon acceptance of an offer in a short sale, if a cooperating broker contacts you about showing that listing to a prospect, you’re required to disclose the accepted offer.
You should consult with your seller client about what else to disclose about the accepted offer. It may be in the seller’s interest to disclose that the offer is contingent on lender approval as a short sale. This may encourage the cooperating broker to show the property, perhaps leading to another offer. If another offer is submitted, Standard of Practice 1-7 requires that you advise the seller to seek legal advice unless the offer is contingent on the termination of the accepted offer.
When should you disclose a seller's acceptance of short sale offer?
By Bruce Aydt
Q. I recently sold a property that was heading into foreclosure and the buyer’s agent wanted the listing changed to "pending" in the MLS as soon as the seller accepted the offer. But shouldn’t the status be changed only after the offer is approved by the lender?
A. With distressed properties, there can be confusion about when the offer is "accepted." The seller is still the legal owner of the property in most cases, and must be the first to accept an offer. Yet the lender also must approve or agree to the transaction, since it’s being asked to take less than what’s owed on the mortgage. When the seller accepts an offer under these conditions and a contract is formed, the offer is "accepted," though it has at least one unresolved contingency: the lender’s approval of the short sale.
Many MLS systems require listing brokers to change a listing out of "active" status upon the acceptance of any offer—including offers subject to lender approval, as in a short sale. Whether, and when, the listing status must be changed is a matter of MLS rules.
Regardless of what the MLS requires, though, the Code of Ethics Standard of Practice 3-6 requires that accepted offers be disclosed: "REALTORS® shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation."
Even if your MLS doesn’t require the listing to be reclassified as "pending" or "under contract" upon acceptance of an offer in a short sale, if a cooperating broker contacts you about showing that listing to a prospect, you’re required to disclose the accepted offer.
You should consult with your seller client about what else to disclose about the accepted offer. It may be in the seller’s interest to disclose that the offer is contingent on lender approval as a short sale. This may encourage the cooperating broker to show the property, perhaps leading to another offer. If another offer is submitted, Standard of Practice 1-7 requires that you advise the seller to seek legal advice unless the offer is contingent on the termination of the accepted offer.
Refinancing Activity Declines Sharply
From Realtor Magazine Online, Daily Real Estate News April 29, 2009
Mortgage applications decreased significantly last week compared to the previous week, declining 18.1 percent to 960.6 on a seasonally adjusted basis from 1,172.2, according to the Mortgage Bankers Association weekly index.
On an unadjusted basis, the index decreased 17.4 percent compared with the previous week, while increasing 62.7 percent compared with the same week a year ago.
Most of the decline was in the refinance share of mortgage activity with the refinance index decreasing 21.9 percent, while the purchase index went down only 0.6 percent.
Mortgage rates were down compared to the previous week:
* 30-year fixed-rate mortgages decreased to 4.62 percent from 4.73 percent;
* 15-year fixed-rate mortgages decreased to 4.45 percent from 4.46 percent;
* 1-year ARMs increased to 6.23 percent from 6.19 percent.
Source: Mortgage Bankers Association (04/29/2009)
Mortgage applications decreased significantly last week compared to the previous week, declining 18.1 percent to 960.6 on a seasonally adjusted basis from 1,172.2, according to the Mortgage Bankers Association weekly index.
On an unadjusted basis, the index decreased 17.4 percent compared with the previous week, while increasing 62.7 percent compared with the same week a year ago.
Most of the decline was in the refinance share of mortgage activity with the refinance index decreasing 21.9 percent, while the purchase index went down only 0.6 percent.
Mortgage rates were down compared to the previous week:
* 30-year fixed-rate mortgages decreased to 4.62 percent from 4.73 percent;
* 15-year fixed-rate mortgages decreased to 4.45 percent from 4.46 percent;
* 1-year ARMs increased to 6.23 percent from 6.19 percent.
Source: Mortgage Bankers Association (04/29/2009)
Tuesday, April 28, 2009
Advantages, Disadvantages and Pitfalls of REOs (Foreclosures)
Not all bank-owned properties are in terrible shape. Sure, some are uninhabitable without a lot of work. Some need lots of cosmetics - painting, new carpeting, etc. Others, however, are in move-in condition.
Commission fixed. The commission paid to your agent is set and agreed to in advance. For Short Sales, a bank might refuse to pay the full commission; this MIGHT mean you make up a shortfall if you have an Exclusive Buyer Representative contract with your agent. For REOs (Foreclosures) the listing agent has a direct contact at the bank, and the bank has already agreed to pay their listing agent a set commission based on a %-age of the sales price. The bank has also agreed that their listing agent can offer the selling agent - the agent who brings the buyer - a given %-age commission. Such %-ages are established well before the property ever comes on the market, so realize that Realtor commissions are not something a prospective buyer can circumvent, or negotiate.
REOs do present some challenges that may or may not occur in other types of real estate sales. Here are a few examples:
Unknown conditions. The bank has no history on the property and, in fact, is legally exempt from having to disclose anything about the property to the buyer. It does not know if there is an old oil tank buried, or the age or condition of the roof - or whether or not it leaks. Most banks have not even had one of their employees visit the property, or conducted any inspection of significance. The BPO and photos are normally the basis and extent of the bank's knowledge. I've never had a bank hire a home inspector to do a more thorough job. So, yes, there is more risk for a buyer.
Speed. Bank's love contracts that call for a closing in 30 days or less. They don't like to hear 60 or 90 days. In fact, most banks specify that if the buyer fails to close within the contracted time period, the buyer must pay $100 per day for each day the closing is delayed. And that includes ANY reason other than some delay caused by the bank.
Shifting costs. In a given market area, certain costs are traditionally borne by the seller and certain other costs are borne by the buyer. With REOs, the cost and responsibility is often shifted to the buyer. But in the big picture, that sum usually amounts to under $1000.
"As-Is". Means exactly that! What you see is what you get. What you don't see is also what you get. The bank will not do any repairs, nor discount the price toward repairs. They consider that all of those have already been taken into account with the list price.
Disclosures. Again, there will not be a Seller's Transfer Disclosure (the bank is exempt) because the bank has no historic knowledge. It bears repeating: What you see is what you get.
Home Inspection Timing. Some banks insist any home inspections be done prior to submitting an offer. Many buyers refuse to pay for a home inspection before knowing if the seller (the bank) will accept their offer. Look, the cost for a condo inspection is under $300 and for a home the cost is a bit more depending on the size, etc. Just consider the expense of your inspections an unavoidable cost, like "insurance." Besides, the bank still grants plenty of time to get inspections done leaving the buyer sufficient time to consider whether or not he/she wants to proceed with the purchase. Even though the bank will not do any repairs based on the inspector's findings, we still highly recommend that all buyers do a full home inspection on an REO property. Regardless of its timing, this is a sound investment that might uncover some otherwise non-visible problems. Again, all buyers should have an expert opinion on the condition of the property they are considering, just to know fully what they are getting, and to decide if they really wish to proceed with the purchase based on all facts.
Fully Executed Contract - the Deal is done. Banks very rarely change any terms once that contract is ratified. Do not expect concessions after it is signed - even if something really surprising pops up.
Repairs. I repeat, As-Is really means as-is. If the property had no toilet when it was listed and when you saw it, the bank will not be buying a new toilet.
Negotiations. When presenting an offer to a bank, there are no face-to-face chats. Usually, when we represent the buyers making an offer, we ask the listing agent to arrange a meeting with the seller so that we can not only present the offer, but so that we have an opportunity to "sell" our buyers and to appreciate a full visual impression of the seller's response to the numbers and terms our client is offering. But with REOs, no such in-person opportunity will arise. The bank does't give a hoot that Mary & Bill look forward to raising their growing family in this home. The bank doesn't care of the local chapter of the Hell's Angels is purchasing the REO. The bank only cares about the bottom line and the speed of the closing. The listing agent prepares a "net sheet," (a HUD-1 or similar form) to show how much money the bank will net based on the offer.
These are just some of the reasons why it is so important for buyers to appreciate the value of employing agents experienced in dealing with banks. Short sales, trustee sales, foreclosures and REOs are quite different from the typical "normal" deals.
Commission fixed. The commission paid to your agent is set and agreed to in advance. For Short Sales, a bank might refuse to pay the full commission; this MIGHT mean you make up a shortfall if you have an Exclusive Buyer Representative contract with your agent. For REOs (Foreclosures) the listing agent has a direct contact at the bank, and the bank has already agreed to pay their listing agent a set commission based on a %-age of the sales price. The bank has also agreed that their listing agent can offer the selling agent - the agent who brings the buyer - a given %-age commission. Such %-ages are established well before the property ever comes on the market, so realize that Realtor commissions are not something a prospective buyer can circumvent, or negotiate.
REOs do present some challenges that may or may not occur in other types of real estate sales. Here are a few examples:
Unknown conditions. The bank has no history on the property and, in fact, is legally exempt from having to disclose anything about the property to the buyer. It does not know if there is an old oil tank buried, or the age or condition of the roof - or whether or not it leaks. Most banks have not even had one of their employees visit the property, or conducted any inspection of significance. The BPO and photos are normally the basis and extent of the bank's knowledge. I've never had a bank hire a home inspector to do a more thorough job. So, yes, there is more risk for a buyer.
Speed. Bank's love contracts that call for a closing in 30 days or less. They don't like to hear 60 or 90 days. In fact, most banks specify that if the buyer fails to close within the contracted time period, the buyer must pay $100 per day for each day the closing is delayed. And that includes ANY reason other than some delay caused by the bank.
Shifting costs. In a given market area, certain costs are traditionally borne by the seller and certain other costs are borne by the buyer. With REOs, the cost and responsibility is often shifted to the buyer. But in the big picture, that sum usually amounts to under $1000.
"As-Is". Means exactly that! What you see is what you get. What you don't see is also what you get. The bank will not do any repairs, nor discount the price toward repairs. They consider that all of those have already been taken into account with the list price.
Disclosures. Again, there will not be a Seller's Transfer Disclosure (the bank is exempt) because the bank has no historic knowledge. It bears repeating: What you see is what you get.
Home Inspection Timing. Some banks insist any home inspections be done prior to submitting an offer. Many buyers refuse to pay for a home inspection before knowing if the seller (the bank) will accept their offer. Look, the cost for a condo inspection is under $300 and for a home the cost is a bit more depending on the size, etc. Just consider the expense of your inspections an unavoidable cost, like "insurance." Besides, the bank still grants plenty of time to get inspections done leaving the buyer sufficient time to consider whether or not he/she wants to proceed with the purchase. Even though the bank will not do any repairs based on the inspector's findings, we still highly recommend that all buyers do a full home inspection on an REO property. Regardless of its timing, this is a sound investment that might uncover some otherwise non-visible problems. Again, all buyers should have an expert opinion on the condition of the property they are considering, just to know fully what they are getting, and to decide if they really wish to proceed with the purchase based on all facts.
Fully Executed Contract - the Deal is done. Banks very rarely change any terms once that contract is ratified. Do not expect concessions after it is signed - even if something really surprising pops up.
Repairs. I repeat, As-Is really means as-is. If the property had no toilet when it was listed and when you saw it, the bank will not be buying a new toilet.
Negotiations. When presenting an offer to a bank, there are no face-to-face chats. Usually, when we represent the buyers making an offer, we ask the listing agent to arrange a meeting with the seller so that we can not only present the offer, but so that we have an opportunity to "sell" our buyers and to appreciate a full visual impression of the seller's response to the numbers and terms our client is offering. But with REOs, no such in-person opportunity will arise. The bank does't give a hoot that Mary & Bill look forward to raising their growing family in this home. The bank doesn't care of the local chapter of the Hell's Angels is purchasing the REO. The bank only cares about the bottom line and the speed of the closing. The listing agent prepares a "net sheet," (a HUD-1 or similar form) to show how much money the bank will net based on the offer.
These are just some of the reasons why it is so important for buyers to appreciate the value of employing agents experienced in dealing with banks. Short sales, trustee sales, foreclosures and REOs are quite different from the typical "normal" deals.
What is "REO", and How do They Work?
In today's economic condition, we hear a lot about short sales, foreclosures and REOs. So, just what is an "REO"?
"REO" stands for "real estate owned" and it refers to a property that is now owned by the bank. This usually results from the conclusion of a foreclosure.
Some REO properties are in good condition, while others have been trashed (even to the extent of cupboards and appliances having been removed) - usually by the disgruntled previous owner, the one who lost the property. It's a shame...and a crime...but it happens.
By the time a bank actually regains clear ownership of the property, it (the bank) has already hired one or more professionals to inspect the premises, do a comparison value study, and to provide a written broker professional opinion ("BPO") of the current market value of that property. This valuation could also be a formal appraisal done by an appraiser, but more often, it is a BPO done by an experienced real estate agent. Sometimes banks have multiple BPOs done to get a multiple opinions.
Some BPOs are "drive-by" external-only inspections, where the agent never sees the inside. In such cases, they cannot provide a valuation for repairing or replacing missing items. That is something a prospective buyer must consider.
Most BPO forms ask the agent to indicate what a property will sell for within 30 days and within 90 - 120 days. In setting a price, the bank considers:
* current, local market conditions including active inventory, average days on market, etc.
shape of the property;
* how much of a loss it has already taken on the original mortgage and the foreclosure process;
* amounts paid for trash-out and any work required to make the home safe and secure;
* carrying costs (insurance, taxes, bare-bones maintenance, utilities, etc.) during the time the REO is listed;
* the commission it will pay both agents - usually a fixed percentage.
Based on these factors, the bank also looks at its internal situation. How many REOs are they carrying? How quickly does the bank need to "unload" the property? Remember, most banks are "for profit" organizations; many report to shareholders. Nevertheless, an REO list price (Asking Price in the MLS) is usually a good deal.
The list price is typically a huge bargain, and the bank really DOES know the fair market value based on hard data for local market conditions. The list price already takes the shape of the property into account, so don't expect another discount based on bad condition or missing appliances. The bank will not take lowball offers seriously and may not even counter one.
The bank already knows that most homes in a given area sell for X% of the list price, so don't assume that you are going to negotiate another significant discount. It simply won't happen. For the most part, the price is what the price is...and the bank will only accept an offer close to (usually within 95%) the published asking price.
Your offering price is just one factor that the bank will consider. In addition, they will look at:
* Closing Date. If you want to purchase an REO, offer to close in 30 days. Yes, I realize this is quick but it has a dollar value! Banks want the REO off their books, especially if the closing will be prior to the end of a financial quarter.
* Paperwork. Complete and submit every piece of paper the bank has requested. Most banks have their own forms and want them used. Banks will reject offers that are missing the required paperwork.
* Down payment. Some banks specify a percentage of the price as minimim earnest money. In every case, I suggest the "good faith deposit" be at least 1.5% of your proposed purchase price, but if you want to make a good impression, make it the full 3%. Show the bank you are a serious buyer. A strong second deposit (post-contract, before closing) will also sway the bank in your favor.
* Mortgage. A few banks want a shot at your loan and insist they do your pre-approval, even if you have no intention of using them for the loan. (Remember, it is their property and they can make whatever rules they want.) Even without any imposed requirements, a letter of pre-approval from a "brand name" lender such as HomeServices Lending, Wells Fargo or Bank of America will strengthen your offer. Sure, you can actually then get your loan from "My Cousin Vinnie's Finance Center in Podunk" if you want, but a brand-name lender might just be that little added extra that gets your offer accepted by the bank.
Banks tend to have a very aggressive price-reduction strategy. They want to sell the REO quickly even if they will not consider offers far below the list price. Many banks drop the price almost monthly, assuming no offers are being negotiated. Waiting until the price drops where you want it to be could mean someone comes in ahead of you - DON'T RISK LOSING A PROPERTY YOU REALLY WANT OVER A SMALL DOLLAR AMOUNT.
But in determining what you will offer, you should know WHEN the last price reduction took place, the frequency between all price changes and the percentage of each. If it is a new REO listing, I can often determine a particular bank's reduction pattern by examining another local REO listing owned by the same bank. So, if a bank habitually reduces its list price 5% every 32 days and the current price came about 27 days ago - well, let's just say that bit of information often gives us a useful advantage.
"REO" stands for "real estate owned" and it refers to a property that is now owned by the bank. This usually results from the conclusion of a foreclosure.
Some REO properties are in good condition, while others have been trashed (even to the extent of cupboards and appliances having been removed) - usually by the disgruntled previous owner, the one who lost the property. It's a shame...and a crime...but it happens.
By the time a bank actually regains clear ownership of the property, it (the bank) has already hired one or more professionals to inspect the premises, do a comparison value study, and to provide a written broker professional opinion ("BPO") of the current market value of that property. This valuation could also be a formal appraisal done by an appraiser, but more often, it is a BPO done by an experienced real estate agent. Sometimes banks have multiple BPOs done to get a multiple opinions.
Some BPOs are "drive-by" external-only inspections, where the agent never sees the inside. In such cases, they cannot provide a valuation for repairing or replacing missing items. That is something a prospective buyer must consider.
Most BPO forms ask the agent to indicate what a property will sell for within 30 days and within 90 - 120 days. In setting a price, the bank considers:
* current, local market conditions including active inventory, average days on market, etc.
shape of the property;
* how much of a loss it has already taken on the original mortgage and the foreclosure process;
* amounts paid for trash-out and any work required to make the home safe and secure;
* carrying costs (insurance, taxes, bare-bones maintenance, utilities, etc.) during the time the REO is listed;
* the commission it will pay both agents - usually a fixed percentage.
Based on these factors, the bank also looks at its internal situation. How many REOs are they carrying? How quickly does the bank need to "unload" the property? Remember, most banks are "for profit" organizations; many report to shareholders. Nevertheless, an REO list price (Asking Price in the MLS) is usually a good deal.
The list price is typically a huge bargain, and the bank really DOES know the fair market value based on hard data for local market conditions. The list price already takes the shape of the property into account, so don't expect another discount based on bad condition or missing appliances. The bank will not take lowball offers seriously and may not even counter one.
The bank already knows that most homes in a given area sell for X% of the list price, so don't assume that you are going to negotiate another significant discount. It simply won't happen. For the most part, the price is what the price is...and the bank will only accept an offer close to (usually within 95%) the published asking price.
Your offering price is just one factor that the bank will consider. In addition, they will look at:
* Closing Date. If you want to purchase an REO, offer to close in 30 days. Yes, I realize this is quick but it has a dollar value! Banks want the REO off their books, especially if the closing will be prior to the end of a financial quarter.
* Paperwork. Complete and submit every piece of paper the bank has requested. Most banks have their own forms and want them used. Banks will reject offers that are missing the required paperwork.
* Down payment. Some banks specify a percentage of the price as minimim earnest money. In every case, I suggest the "good faith deposit" be at least 1.5% of your proposed purchase price, but if you want to make a good impression, make it the full 3%. Show the bank you are a serious buyer. A strong second deposit (post-contract, before closing) will also sway the bank in your favor.
* Mortgage. A few banks want a shot at your loan and insist they do your pre-approval, even if you have no intention of using them for the loan. (Remember, it is their property and they can make whatever rules they want.) Even without any imposed requirements, a letter of pre-approval from a "brand name" lender such as HomeServices Lending, Wells Fargo or Bank of America will strengthen your offer. Sure, you can actually then get your loan from "My Cousin Vinnie's Finance Center in Podunk" if you want, but a brand-name lender might just be that little added extra that gets your offer accepted by the bank.
Banks tend to have a very aggressive price-reduction strategy. They want to sell the REO quickly even if they will not consider offers far below the list price. Many banks drop the price almost monthly, assuming no offers are being negotiated. Waiting until the price drops where you want it to be could mean someone comes in ahead of you - DON'T RISK LOSING A PROPERTY YOU REALLY WANT OVER A SMALL DOLLAR AMOUNT.
But in determining what you will offer, you should know WHEN the last price reduction took place, the frequency between all price changes and the percentage of each. If it is a new REO listing, I can often determine a particular bank's reduction pattern by examining another local REO listing owned by the same bank. So, if a bank habitually reduces its list price 5% every 32 days and the current price came about 27 days ago - well, let's just say that bit of information often gives us a useful advantage.
Cramdown Bill Faces Senate Opposition
From Realtor Magazine Online, Daily Real Estate News April 28, 2009
The bill that would let judges modify the mortgages of home owners in bankruptcy, known as cramdown, is facing still more troubles as it moves to the U.S. Senate.
"I hope we can muster the courage and find the votes, although I know it will be hard," says Senate Majority Whip Richard J. Durbin, an Illinois Democrat. "It's hard to imagine that today the mortgage bankers would have clout in this chamber, but they do."
The bill Senators are being asked to vote on a measure that would require home owners be at least two months delinquent and have an outstanding balance of less than $729,750 to qualify. If a bankruptcy judge lowers the amount they owe, borrowers would have to split any ultimate profit with the lender if they sell while in bankruptcy proceedings.
Scott E. Talbott, senior vice president of government affairs for the Financial Services Roundtable, predicted that passage is unlikely. "The uphill battle that the bill has faced for years has continued. It will be very difficult to garner the votes," he says.
Source: Washington Post, Renae Merle (04/28/2009)
The bill that would let judges modify the mortgages of home owners in bankruptcy, known as cramdown, is facing still more troubles as it moves to the U.S. Senate.
"I hope we can muster the courage and find the votes, although I know it will be hard," says Senate Majority Whip Richard J. Durbin, an Illinois Democrat. "It's hard to imagine that today the mortgage bankers would have clout in this chamber, but they do."
The bill Senators are being asked to vote on a measure that would require home owners be at least two months delinquent and have an outstanding balance of less than $729,750 to qualify. If a bankruptcy judge lowers the amount they owe, borrowers would have to split any ultimate profit with the lender if they sell while in bankruptcy proceedings.
Scott E. Talbott, senior vice president of government affairs for the Financial Services Roundtable, predicted that passage is unlikely. "The uphill battle that the bill has faced for years has continued. It will be very difficult to garner the votes," he says.
Source: Washington Post, Renae Merle (04/28/2009)
Housing Analysts Predict the Bottom Is Near
From Realtor Magazine Online, Daily Real Estate News April 28, 2009
The bottom of the housing decline is near, predicted analysts and home builders attending the National Association of Home Builders’ semiannual Construction Forecast Conference last week.
Mark Zandi, chief economist of Moody’s Economy.com, facetiously picked a date when home prices would stop falling: Dec. 15, 2009. Other observers weren’t so precise, but they did generally agree that the federal government’s efforts to shore up the market would take effect by the end of 2009 or early in 2010.
Analysts also predicted that consumers will spend less on remodeling. Eric Belsky, executive director at Harvard University’s Joint Center for Housing Studies, predicted that spending on remodeling would fall 12.3 percent by the end of this year compared to last.
Analysts project that the credit crisis will loosen, although people with blemished credit records may continue to have trouble getting mortgage loans.
Source: The Wall Street Journal, June Fletcher (04/24/2009)
The bottom of the housing decline is near, predicted analysts and home builders attending the National Association of Home Builders’ semiannual Construction Forecast Conference last week.
Mark Zandi, chief economist of Moody’s Economy.com, facetiously picked a date when home prices would stop falling: Dec. 15, 2009. Other observers weren’t so precise, but they did generally agree that the federal government’s efforts to shore up the market would take effect by the end of 2009 or early in 2010.
Analysts also predicted that consumers will spend less on remodeling. Eric Belsky, executive director at Harvard University’s Joint Center for Housing Studies, predicted that spending on remodeling would fall 12.3 percent by the end of this year compared to last.
Analysts project that the credit crisis will loosen, although people with blemished credit records may continue to have trouble getting mortgage loans.
Source: The Wall Street Journal, June Fletcher (04/24/2009)
Consumer Confidence Surges to 39.2 In April
From FoxBusiness, Tuesday, April 28, 2009
Consumer confidence in April soared to its highest level of the year, indicating that U.S. consumers may feel the worst of the economic downturn is behind us.
A report issued by private research group the Conference Board showed that confidence levels in April rose to a higher-than-expected 39.2, easily beating economist estimates of 29.0.
Consumer confidence this month well exceeded March’s revised rate of 26.9, and April’s numbers were the highest recorded since last November.
The headline number was buoyed mostly by gains in the expectations index. Expectations rose to 49.5 this month, from 30.2 in March. The present situation index increased by a much narrower margin, to 23.7 from 21.9 recorded in March.
Consumer confidence in April soared to its highest level of the year, indicating that U.S. consumers may feel the worst of the economic downturn is behind us.
A report issued by private research group the Conference Board showed that confidence levels in April rose to a higher-than-expected 39.2, easily beating economist estimates of 29.0.
Consumer confidence this month well exceeded March’s revised rate of 26.9, and April’s numbers were the highest recorded since last November.
The headline number was buoyed mostly by gains in the expectations index. Expectations rose to 49.5 this month, from 30.2 in March. The present situation index increased by a much narrower margin, to 23.7 from 21.9 recorded in March.
Monday, April 27, 2009
Fight Inflation: Buy a Home
From Realtor Magazine Online, Daily Real Estate News April 27, 2009
Some economic analysts say that the possibility that the economy will go into overdrive and inflation will skyrocket is a much more frightening possibility than the current recession.
One inflation hedge nearly all of them point to is real estate. Owning it outright is the best scenario, but if that’s not possible, a low-rate, 30-year fixed mortgage is the next best thing. As inflation drives up salaries, mortgage payments will stay the same, analysts point out.
Source: USA Today, John Waggoner (04/24/2009)
Some economic analysts say that the possibility that the economy will go into overdrive and inflation will skyrocket is a much more frightening possibility than the current recession.
One inflation hedge nearly all of them point to is real estate. Owning it outright is the best scenario, but if that’s not possible, a low-rate, 30-year fixed mortgage is the next best thing. As inflation drives up salaries, mortgage payments will stay the same, analysts point out.
Source: USA Today, John Waggoner (04/24/2009)
Have New-Home Sales Found the Floor?
From Realtor Magazine Online, Daily Real Estate News April 27, 2009
It looks like sales of new homes have finally bottomed out.
The Commerce Department reported Friday that after hitting a record low in January — 74 percent lower than they were in July 2005 — new home sales rose in February and were flat in March.
"We believe that the bottom is at hand and that sales will begin turning in the second half of this year," writes IHS Global Insight economist Patrick Newport. "As previous recessions show, demand for new homes does not evaporate altogether, even in the hardest of times."
Median sales prices are still falling, down 12 percent in March compared to the same month the previous year. Analysts say they are likely to remain low until inventory is sold off.
Source: The Associated Press, Alan Zibel (04/24/2009)
It looks like sales of new homes have finally bottomed out.
The Commerce Department reported Friday that after hitting a record low in January — 74 percent lower than they were in July 2005 — new home sales rose in February and were flat in March.
"We believe that the bottom is at hand and that sales will begin turning in the second half of this year," writes IHS Global Insight economist Patrick Newport. "As previous recessions show, demand for new homes does not evaporate altogether, even in the hardest of times."
Median sales prices are still falling, down 12 percent in March compared to the same month the previous year. Analysts say they are likely to remain low until inventory is sold off.
Source: The Associated Press, Alan Zibel (04/24/2009)
Friday, April 24, 2009
Home Price Outlook Clouded by Disagreement
From Realtor Magazine Online, Daily Real Estate News April 24, 2009
Independent housing economist Thomas Lawler's criticism of Yale University economist Robert Shiller's chart outlining the direction of home prices since 1890 is drawing attention, as it could impact the perception of the nation's position in the current housing cycle and how to handle it.
Lawler insists Shiller's data is inconsistent and unreliable, and his own version of the chart shows that residential property prices are close to bottoming out in many markets. To date, no house-value gauge has found to be completely accurate, since no two residences are exactly alike.
Source: The Wall Street Journal
Independent housing economist Thomas Lawler's criticism of Yale University economist Robert Shiller's chart outlining the direction of home prices since 1890 is drawing attention, as it could impact the perception of the nation's position in the current housing cycle and how to handle it.
Lawler insists Shiller's data is inconsistent and unreliable, and his own version of the chart shows that residential property prices are close to bottoming out in many markets. To date, no house-value gauge has found to be completely accurate, since no two residences are exactly alike.
Source: The Wall Street Journal
New Home Sales Beat Expectations
From FoxNews.com, April 23, 2009
The Commerce Department said Friday that sales fell 0.6 percent in March to a seasonally adjusted annual rate of 356,000 from an upwardly revised February rate of 358,000.
The government says new U.S. home sales dipped slightly last month, but still beat expectations as builders start to see long-awaited encouraging signs about the housing market.
The Commerce Department said Friday that sales fell 0.6 percent in March to a seasonally adjusted annual rate of 356,000 from an upwardly revised February rate of 358,000. February's results were adjusted upward by more than 6 percent.
March's results exceeded the expectations of economists surveyed by Thomson Reuters who expected a sales pace of 340,000 units. Sales were still down nearly 31 percent from March 2008.
The Commerce Department said Friday that sales fell 0.6 percent in March to a seasonally adjusted annual rate of 356,000 from an upwardly revised February rate of 358,000.
The government says new U.S. home sales dipped slightly last month, but still beat expectations as builders start to see long-awaited encouraging signs about the housing market.
The Commerce Department said Friday that sales fell 0.6 percent in March to a seasonally adjusted annual rate of 356,000 from an upwardly revised February rate of 358,000. February's results were adjusted upward by more than 6 percent.
March's results exceeded the expectations of economists surveyed by Thomson Reuters who expected a sales pace of 340,000 units. Sales were still down nearly 31 percent from March 2008.
Thursday, April 23, 2009
Bidding Wars Seen More Frequently in Some Areas
From Realtor Magazine Online, Daily Real Estate News April 23, 2009
Bidding wars are back – at least in some parts of the country where falling prices are pitting investors against homebuyers looking for a good deal.
The parts of the country most likely to see warring bids are parts of California and Arizona, Washington D.C., and Minneapolis-St. Paul, according to real estate practitioners and other observers.
Having cash in hand can be persuasive in a bidding situation. Sellers are inclined to choose offers that aren’t likely to fall through, says Frank Borges Borges LLosa, owner of FranklyRealty.com, a real-estate brokerage in Arlington, Va.
Connie Vaughn, an associate with ZipRealty in the Los Angeles area, says one of her clients won the bidding when he offered $20,000 above the $66,000 asking price for a four-bedroom home in Adelanto, Calif., that sold for $200,000 in 2004.
Vaughn says she believes that mortgage companies are deliberately setting prices low on REO homes just to stimulate bidding situations.
Source: The Wall Street Journal, James R. Hagerty (04/23/2009)
Bidding wars are back – at least in some parts of the country where falling prices are pitting investors against homebuyers looking for a good deal.
The parts of the country most likely to see warring bids are parts of California and Arizona, Washington D.C., and Minneapolis-St. Paul, according to real estate practitioners and other observers.
Having cash in hand can be persuasive in a bidding situation. Sellers are inclined to choose offers that aren’t likely to fall through, says Frank Borges Borges LLosa, owner of FranklyRealty.com, a real-estate brokerage in Arlington, Va.
Connie Vaughn, an associate with ZipRealty in the Los Angeles area, says one of her clients won the bidding when he offered $20,000 above the $66,000 asking price for a four-bedroom home in Adelanto, Calif., that sold for $200,000 in 2004.
Vaughn says she believes that mortgage companies are deliberately setting prices low on REO homes just to stimulate bidding situations.
Source: The Wall Street Journal, James R. Hagerty (04/23/2009)
Rates on Bigger Mortgages Poised to Come Down
From Realtor Magazine Online, Daily Real Estate News April 23, 2009
Mortgage lenders will begin making loans between $625,500 and $729,750 in high-cost housing markets now that Fannie Mae and Freddie Mac have issued their underwriting standards.
Fannie Mae and Freddie Mac have said they will begin buying loans up to the new conforming-loan limit of $729,750 from mortgage lenders on May 4.
As more lenders originate loans in this range, the rates on them -- still at higher, jumbo pricing for the moment -- should begin to fall. It remains to be seen, however, how much the cost of bigger home loans actually comes down.
Source: San Francisco Chronicle, Kathleen Pender (04/23/09)
Mortgage lenders will begin making loans between $625,500 and $729,750 in high-cost housing markets now that Fannie Mae and Freddie Mac have issued their underwriting standards.
Fannie Mae and Freddie Mac have said they will begin buying loans up to the new conforming-loan limit of $729,750 from mortgage lenders on May 4.
As more lenders originate loans in this range, the rates on them -- still at higher, jumbo pricing for the moment -- should begin to fall. It remains to be seen, however, how much the cost of bigger home loans actually comes down.
Source: San Francisco Chronicle, Kathleen Pender (04/23/09)
Existing-Home Sales Slip but First-Time Buyers Rise
From Realtor Magazine Online, Daily Real Estate News April 23, 2009
Existing-home sales eased in March but first-time buyers are responding to low mortgage interest rates and tax credits, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 3.0 percent to a seasonally adjusted annual rate of 4.57 million units in March from a downwardly revised level of 4.71 million in February, and were 7.1 percent lower than the 4.92 million-unit pace in March 2008.
Lawrence Yun, NAR chief economist, said the market appears to be stabilizing with modest monthly ups and downs, and that first-time buyers are driving the market. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers, which we also see in a parallel member survey,” he said. “Sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans.”
Although prices rose from February to March, the national median existing-home price for all housing types was $175,200, down 12.4 percent from March 2008. The price increase from February to March was 4.2 percent, which is much higher than the typical 1.8 percent seasonal increase between those two months. Distressed properties, which accounted for just over half of all transactions in March, typically are selling for 20 percent less than traditional homes.
An NAR practitioner survey in March showed first-time buyers accounted for 53 percent of transactions, based largely on contracts offered before the $8,000 first-time home buyer tax credit became available. “Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit,” Yun said. “By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.”
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said first-time buyers are crucial at this stage of a housing recovery. “The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down, according to their needs,” he said. “Although homeownership builds wealth over the long term, buyers need to evaluate their options. In this market, buyers and sellers who use a REALTOR® to represent them are making a smart move,” McMillan said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 5.00 percent in March from 5.13 percent in February; the rate was 5.97 percent in March 2008; data collection began in 1971.
“Record-high housing affordability conditions are helping markets recover, with home sales higher than a year ago in Minneapolis, Northern Virginia, Las Vegas, Phoenix and most areas of California and Florida.”
Total housing inventory at the end of March fell 1.6 percent to 3.74 million existing homes available for sale, which represents a 9.8-month supply at the current sales pace, compared with a 9.7-month supply in February.
Single-family home sales slipped 2.8 percent to a seasonally adjusted annual rate of 4.10 million in March from a pace of 4.22 million in February, and are 5.7 percent below the 4.35 million-unit pace in March 2008. The median existing single-family home price was $174,900 in March, which is 11.5 percent lower than a year ago.
Existing condominium and co-op sales fell 4.1 percent to a seasonally adjusted annual rate of 470,000 units in March from 490,000 in February, and are 17.8 percent below the 572,000-unit pace a year ago. The median existing condo price was $177,600 in March, down 18.7 percent from March 2008.Regionally, existing-home sales in the Northeast fell 8.0 percent to an annual pace of 690,000 in March, and are 22.5 percent below a year ago. The median price in the Northeast was $231,700, down 18.4 percent from March 2008.
Existing-home sales in the Midwest were unchanged in March at a pace of 1.04 million but are 11.1 percent lower than March 2008.
The median price in the Midwest was $141,300, which is 6.1 percent below a year ago. In the South, existing-home sales slipped 1.7 percent to an annual pace of 1.71 million in March and are 10.9 percent below a year ago.
The median price in the South was $146,900, down 12.2 percent from March 2008. Existing-home sales in the West declined 4.2 percent to an annual rate of 1.13 million in March but are 18.9 percent higher than a year earlier. The median price in the West was $252,400, which is 11.1 percent below March 2008.
Source: NAR
Existing-home sales eased in March but first-time buyers are responding to low mortgage interest rates and tax credits, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 3.0 percent to a seasonally adjusted annual rate of 4.57 million units in March from a downwardly revised level of 4.71 million in February, and were 7.1 percent lower than the 4.92 million-unit pace in March 2008.
Lawrence Yun, NAR chief economist, said the market appears to be stabilizing with modest monthly ups and downs, and that first-time buyers are driving the market. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers, which we also see in a parallel member survey,” he said. “Sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans.”
Although prices rose from February to March, the national median existing-home price for all housing types was $175,200, down 12.4 percent from March 2008. The price increase from February to March was 4.2 percent, which is much higher than the typical 1.8 percent seasonal increase between those two months. Distressed properties, which accounted for just over half of all transactions in March, typically are selling for 20 percent less than traditional homes.
An NAR practitioner survey in March showed first-time buyers accounted for 53 percent of transactions, based largely on contracts offered before the $8,000 first-time home buyer tax credit became available. “Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit,” Yun said. “By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.”
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said first-time buyers are crucial at this stage of a housing recovery. “The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down, according to their needs,” he said. “Although homeownership builds wealth over the long term, buyers need to evaluate their options. In this market, buyers and sellers who use a REALTOR® to represent them are making a smart move,” McMillan said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 5.00 percent in March from 5.13 percent in February; the rate was 5.97 percent in March 2008; data collection began in 1971.
“Record-high housing affordability conditions are helping markets recover, with home sales higher than a year ago in Minneapolis, Northern Virginia, Las Vegas, Phoenix and most areas of California and Florida.”
Total housing inventory at the end of March fell 1.6 percent to 3.74 million existing homes available for sale, which represents a 9.8-month supply at the current sales pace, compared with a 9.7-month supply in February.
Single-family home sales slipped 2.8 percent to a seasonally adjusted annual rate of 4.10 million in March from a pace of 4.22 million in February, and are 5.7 percent below the 4.35 million-unit pace in March 2008. The median existing single-family home price was $174,900 in March, which is 11.5 percent lower than a year ago.
Existing condominium and co-op sales fell 4.1 percent to a seasonally adjusted annual rate of 470,000 units in March from 490,000 in February, and are 17.8 percent below the 572,000-unit pace a year ago. The median existing condo price was $177,600 in March, down 18.7 percent from March 2008.Regionally, existing-home sales in the Northeast fell 8.0 percent to an annual pace of 690,000 in March, and are 22.5 percent below a year ago. The median price in the Northeast was $231,700, down 18.4 percent from March 2008.
Existing-home sales in the Midwest were unchanged in March at a pace of 1.04 million but are 11.1 percent lower than March 2008.
The median price in the Midwest was $141,300, which is 6.1 percent below a year ago. In the South, existing-home sales slipped 1.7 percent to an annual pace of 1.71 million in March and are 10.9 percent below a year ago.
The median price in the South was $146,900, down 12.2 percent from March 2008. Existing-home sales in the West declined 4.2 percent to an annual rate of 1.13 million in March but are 18.9 percent higher than a year earlier. The median price in the West was $252,400, which is 11.1 percent below March 2008.
Source: NAR
Wednesday, April 22, 2009
Low Interest Rates Delay Option ARM Resets
From Realtor Magazine Online, Daily Real Estate News April 22, 2009
Option adjustable-rate mortgages aren’t imploding as quickly as predicted because interest rates remain at historic lows, but resets are likely to pick up next spring, according to Credit Suisse.
Option ARMs give borrowers the option of making low payments that don't even cover the interest due which is then added to the outstanding loan balance. A total of $500 billion of option ARM loans are outstanding, says the bank.
About 37.5 percent of those originated in 2005 are outstanding; 63 percent originated in 2006 are outstanding, and 82 percent of the 2007 loans remain, according to Barclays Capital.
The Mortgage Bankers Association says the impact of an increasing tide of resets will be diminished because lenders are helping borrowers refinance the option ARMs before they reset.
"I don't think this is going to be the tsunami that was forecasted a few years ago," says Keith Gumbinger, vice-president of HSH.com, a publisher of loan information. "But it's probably bigger than a ripple in a pond."
Source: BusinessWeek.com, Prashant Gopal (04/17/2009)
Option adjustable-rate mortgages aren’t imploding as quickly as predicted because interest rates remain at historic lows, but resets are likely to pick up next spring, according to Credit Suisse.
Option ARMs give borrowers the option of making low payments that don't even cover the interest due which is then added to the outstanding loan balance. A total of $500 billion of option ARM loans are outstanding, says the bank.
About 37.5 percent of those originated in 2005 are outstanding; 63 percent originated in 2006 are outstanding, and 82 percent of the 2007 loans remain, according to Barclays Capital.
The Mortgage Bankers Association says the impact of an increasing tide of resets will be diminished because lenders are helping borrowers refinance the option ARMs before they reset.
"I don't think this is going to be the tsunami that was forecasted a few years ago," says Keith Gumbinger, vice-president of HSH.com, a publisher of loan information. "But it's probably bigger than a ripple in a pond."
Source: BusinessWeek.com, Prashant Gopal (04/17/2009)
Foreclosures Highest in Ex-Boom Cities
From Realtor Magazine Online, Daily Real Estate News April 22, 2009
Cities with the highest foreclosure rates are all located in the four states where the housing bubble was biggest, according to a report released Wednesday from RealtyTrac, an online foreclosure marketing company.
The four states with the biggest levels are California, Florida, Nevada, and Arizona.
"The metro areas with the highest levels of foreclosure activity in the first quarter of 2009 paint a picture of concentrated problems in a relatively small number of hard-hit areas," said James J. Saccacio, CEO of RealtyTrac.
The top-10 cities with the highest foreclosure rates are:
1. Las Vegas
2. Merced, Calif.
3. Cape Coral-Fort Myers, Fla.
4. Stockton, Calif.
5. Riverside, Calif.
6. Modesto, Calif.
7. Bakersfield, Calif.
8. Vallejo-Fairfield, Calif.
9. Phoenix
10. Port St. Lucie, Fla.
Source: The Associated Press (04/21/2009)
Cities with the highest foreclosure rates are all located in the four states where the housing bubble was biggest, according to a report released Wednesday from RealtyTrac, an online foreclosure marketing company.
The four states with the biggest levels are California, Florida, Nevada, and Arizona.
"The metro areas with the highest levels of foreclosure activity in the first quarter of 2009 paint a picture of concentrated problems in a relatively small number of hard-hit areas," said James J. Saccacio, CEO of RealtyTrac.
The top-10 cities with the highest foreclosure rates are:
1. Las Vegas
2. Merced, Calif.
3. Cape Coral-Fort Myers, Fla.
4. Stockton, Calif.
5. Riverside, Calif.
6. Modesto, Calif.
7. Bakersfield, Calif.
8. Vallejo-Fairfield, Calif.
9. Phoenix
10. Port St. Lucie, Fla.
Source: The Associated Press (04/21/2009)
Mortgage Volume Is on the Rise
From Realtor Magazine Online, Daily Real Estate News April 22, 2009
Mortgage applications rose last week after being down slightly the previous week, probably because of the Easter and Passover holidays. The increase was driven by refinances, though purchases were down.
Mortgage application volume reached 1,172.2, an increase of 5.3 percent on a seasonally adjusted basis from 1,113.2 a week earlier.
On an unadjusted basis, the index rose 5.3 percent compared to the previous week and was up 76.9 percent compared with the same week a year ago.
The refinance index was up 7.7 percent, while the purchase index declined 4.2 percent. The refinance share of total applications was 79.7 percent.
Mortgage interest rates were up slightly:
* 30-year fixed-rate mortgages increased to 4.73 percent from 4.70 percent
* 15-year fixed-rate mortgages remained unchanged at 4.46 percent
* 1-year ARMs decreased to 6.19 percent from 6.21 percent
Source: Mortgage Bankers Association (04/22/2009)
Mortgage applications rose last week after being down slightly the previous week, probably because of the Easter and Passover holidays. The increase was driven by refinances, though purchases were down.
Mortgage application volume reached 1,172.2, an increase of 5.3 percent on a seasonally adjusted basis from 1,113.2 a week earlier.
On an unadjusted basis, the index rose 5.3 percent compared to the previous week and was up 76.9 percent compared with the same week a year ago.
The refinance index was up 7.7 percent, while the purchase index declined 4.2 percent. The refinance share of total applications was 79.7 percent.
Mortgage interest rates were up slightly:
* 30-year fixed-rate mortgages increased to 4.73 percent from 4.70 percent
* 15-year fixed-rate mortgages remained unchanged at 4.46 percent
* 1-year ARMs decreased to 6.19 percent from 6.21 percent
Source: Mortgage Bankers Association (04/22/2009)
Where to Get Foreclosure Help
From Realtor Magazine Online, Daily Real Estate News April 22, 2009
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: http://www.makinghomeaffordable.gov/
* The Controller of the Currency’s consumer information site for banking-related questions is http://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: http://www.hopenow.com/
Source: Controller of the Currency (04/21/2009)
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: http://www.makinghomeaffordable.gov/
* The Controller of the Currency’s consumer information site for banking-related questions is http://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: http://www.hopenow.com/
Source: Controller of the Currency (04/21/2009)
Tuesday, April 21, 2009
Fed Vice Chair Predicts Slow Recovery in 2009
From Realtor Magazine Online, Daily Real Estate News April 21, 2009
Federal Reserve Vice Chair Donald Kohn says home sales and other consumer spending combined with big earnings at some banks indicate that the U.S. economy is on the road to a gradual recovery this year.
Kohn, speaking Monday night at the University of Delaware, said declines in sales and construction of single-family homes have abated, but tight credit in the commercial real estate market is slowing recovery.
"My best guess is that we are in for a relatively gradual recovery [this year]," he said.
Source: The Associated Press, Jennifer Malloy Zonnas (04/21/2009)
Federal Reserve Vice Chair Donald Kohn says home sales and other consumer spending combined with big earnings at some banks indicate that the U.S. economy is on the road to a gradual recovery this year.
Kohn, speaking Monday night at the University of Delaware, said declines in sales and construction of single-family homes have abated, but tight credit in the commercial real estate market is slowing recovery.
"My best guess is that we are in for a relatively gradual recovery [this year]," he said.
Source: The Associated Press, Jennifer Malloy Zonnas (04/21/2009)
Cities Where Home Prices Could Fall More
From Realtor Magazine Online, Daily Real Estate News April 21, 2009
With incomes falling and loans remaining hard to get, the best bargains are probably yet to come in some of the nation’s largest housing markets, predicts Forbesmagazine.
To figure out which housing markets still haven’t hit bottom, Forbes calculated the spending power, unemployment, credit availability and housing stock over the last 27 years in the country’s 50 largest metropolitan statistical areas.
The projections determined how much each area’s home prices would have to change to bring that housing market into historical balance. Analysts said the employment rate is the great unknown. The more employment falls, the more likely home prices will follow.
Here are the 10 cities where Forbes believes prices are likely to continue to fall the most:
1. Orlando
2. Miami
3. Jacksonville, Fla.
4. Tampa
5. Los Angeles
6. Phoenix
7. Las Vegas
8. Oakland, Calif.
9. San Diego
10. New York
Source: Forbes, Matt Woolsey (04/17/2009)
With incomes falling and loans remaining hard to get, the best bargains are probably yet to come in some of the nation’s largest housing markets, predicts Forbesmagazine.
To figure out which housing markets still haven’t hit bottom, Forbes calculated the spending power, unemployment, credit availability and housing stock over the last 27 years in the country’s 50 largest metropolitan statistical areas.
The projections determined how much each area’s home prices would have to change to bring that housing market into historical balance. Analysts said the employment rate is the great unknown. The more employment falls, the more likely home prices will follow.
Here are the 10 cities where Forbes believes prices are likely to continue to fall the most:
1. Orlando
2. Miami
3. Jacksonville, Fla.
4. Tampa
5. Los Angeles
6. Phoenix
7. Las Vegas
8. Oakland, Calif.
9. San Diego
10. New York
Source: Forbes, Matt Woolsey (04/17/2009)
Experts Optimistic Despite Tight Credit Conditions
From Realtor Magazine Online, Daily Real Estate News April 21, 2009
Senior real estate executives believe market conditions are getting better, despite constricted credit conditions in the commercial market, according to the Real Estate Roundtable Sentiment Survey for the second quarter.
Nearly 60 percent of the 120 survey respondents say that they expect conditions in the real estate market will get better within a year. This view is reflected by a slight uptick in the Overall Q2 2009 Sentiment Index, which is at 41, up from last quarter's score of 38 and its low point of 33 six months ago.
Most executives are troubled by the lack of access to capital. Eighty-eight percent of respondents think it’s harder to get a loan compared to a year ago, yet 69 percent of respondents believe the situation will turn around in the next year. Likewise, 86 percent of respondents think equity financing has deteriorated from a year ago, yet 68 percent of respondents predict it will improve in the next year.
One survey respondent observed, "There is access to both equity and debt, but they're expensive. Banks are being very selective and are trying to pick survivors."
Roundtable members' portfolios contain over 5 billion square feet of office, retail and industrial properties; over 1.5 million apartment units; and in excess of 1.3 million hotel rooms.
Participating trade associations represent more than 1.5 million people involved in virtually every aspect of the real estate business.
Source: Real Estate Roundtable (04/20/2009)
Senior real estate executives believe market conditions are getting better, despite constricted credit conditions in the commercial market, according to the Real Estate Roundtable Sentiment Survey for the second quarter.
Nearly 60 percent of the 120 survey respondents say that they expect conditions in the real estate market will get better within a year. This view is reflected by a slight uptick in the Overall Q2 2009 Sentiment Index, which is at 41, up from last quarter's score of 38 and its low point of 33 six months ago.
Most executives are troubled by the lack of access to capital. Eighty-eight percent of respondents think it’s harder to get a loan compared to a year ago, yet 69 percent of respondents believe the situation will turn around in the next year. Likewise, 86 percent of respondents think equity financing has deteriorated from a year ago, yet 68 percent of respondents predict it will improve in the next year.
One survey respondent observed, "There is access to both equity and debt, but they're expensive. Banks are being very selective and are trying to pick survivors."
Roundtable members' portfolios contain over 5 billion square feet of office, retail and industrial properties; over 1.5 million apartment units; and in excess of 1.3 million hotel rooms.
Participating trade associations represent more than 1.5 million people involved in virtually every aspect of the real estate business.
Source: Real Estate Roundtable (04/20/2009)
Monday, April 20, 2009
Housing Market Faces New Rules for Appraisals
From Realtor Magazine Online, Daily Real Estate News April 20, 2009
housing industry is facing new national rules for real estate appraisals, which will ban mortgage brokers from ordering valuations and divert more business to third-party appraisal management companies.
Lenders seeking to sell their loans to Fannie Mae and Freddie Mac will have to adopt the home valuation code of conduct; but they have expressed some concern about the new standard, which takes effect on May 1.
Lenders can still focus on FHA financing, considering the agency has its own appraisal rules and does not plan to adopt the code of Fannie Mae or Freddie Mac.
Source: Realty Times, Kenneth R. Harney (04/20/09)
housing industry is facing new national rules for real estate appraisals, which will ban mortgage brokers from ordering valuations and divert more business to third-party appraisal management companies.
Lenders seeking to sell their loans to Fannie Mae and Freddie Mac will have to adopt the home valuation code of conduct; but they have expressed some concern about the new standard, which takes effect on May 1.
Lenders can still focus on FHA financing, considering the agency has its own appraisal rules and does not plan to adopt the code of Fannie Mae or Freddie Mac.
Source: Realty Times, Kenneth R. Harney (04/20/09)
Fed Officials: The Worst is Over
From Realtor Magazine Online, Daily Real Estate News April 20, 2009
The worst of the economic crisis is over, according to U.S. officials speaking at a financial conference Friday at Vanderbilt University.
Frank Nothaft, the chief economist for Freddie Mac, said housing sales have just about hit bottom and a third of home sales are now foreclosed properties.
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, warned that the declining commercial real estate market still poses a risk to the economy.
New York Fed chief William Dudley complained that the programs the government has put in place are being undermined by public perception that they are unfair to average taxpayers and that has made some potential investors fearful that they would be the focus of public outrage if they profit from the programs.
"It is worth emphasizing (that) actions that lead investors to shun taking risk, especially in this environment, are ultimately detrimental to the ability of households and businesses to secure credit at reasonable borrowing rates," Dudley said.
Source: Reuters News, Ros Krasny and Kristina Cooke (04/18/2009)
The worst of the economic crisis is over, according to U.S. officials speaking at a financial conference Friday at Vanderbilt University.
Frank Nothaft, the chief economist for Freddie Mac, said housing sales have just about hit bottom and a third of home sales are now foreclosed properties.
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, warned that the declining commercial real estate market still poses a risk to the economy.
New York Fed chief William Dudley complained that the programs the government has put in place are being undermined by public perception that they are unfair to average taxpayers and that has made some potential investors fearful that they would be the focus of public outrage if they profit from the programs.
"It is worth emphasizing (that) actions that lead investors to shun taking risk, especially in this environment, are ultimately detrimental to the ability of households and businesses to secure credit at reasonable borrowing rates," Dudley said.
Source: Reuters News, Ros Krasny and Kristina Cooke (04/18/2009)
Saturday, April 18, 2009
About Fannie Mae (FNME) Homes
About Fannie Mae Homes
1. Why does Fannie Mae have properties for sale?
2. What kinds of properties are available in the HomePath database?
3. How is buying a home owned or managed by Fannie Mae different from other home purchases?
4. Has Fannie Mae fixed everything in the house?
5. What can you tell me about this house?
6. What type of sales contract does Fannie Mae use?
7. Do I have to use Fannie Mae's selected title, settlement, or escrow companies?
8. Will Fannie Mae accept an offer contingent on the sale of my house?
9. Why does Fannie Mae require a lender's prequalification statement before negotiating a home purchase offer?
10. Does Fannie Mae provide special financing?
11. Can I buy a house directly from Fannie Mae without going through a real estate sales professional?
12. What happens if Fannie Mae gets more than one offer?
Why does Fannie Mae have properties for sale?
Fannie Mae works with all of its partners to help homeowners prevent and avoid foreclosure; however, sometimes it is unavoidable. When foreclosures occur on mortgages in which Fannie Mae is the investor, our goal is to sell properties in a timely manner in order to minimize the impact on the community.
What kinds of properties are available in the Fannie Mae HomePath database?
Fannie Mae's HomePath database includes only properties that are owned by Fannie Mae. There is a wide selection of homes, including single-family homes, condominiums, and town houses -- located in a variety of neighborhoods. The number, types and the sales prices of the homes that are offered for sale may vary substantially. Many of these homes are relatively new; however, older homes are offered in some areas. Some homes may require repairs.
How is buying a home owned or managed by Fannie Mae different from other home purchases?
Usually, when you buy a home, you deal with a seller who lives in the home. Fannie Mae has acquired these properties through foreclosure, deed in lieu of foreclosure, or forfeiture.
When buying a Fannie Mae-owned home, you should know the condition of the property, as explained in more detail below, the cost of any needed repairs, and the steps in the loan qualification and closing process before you enter into a purchase and sales agreement.
Has Fannie Mae fixed everything in the house?
Fannie Mae may make some repairs to properties to increase their marketability; however, the buyer should be aware that other repairs may be needed. Fannie Mae sells each property "as is," which means that the buyer accepts the property "as is." Fannie Mae is not responsible for fixing any problems after settlement.
Even if the house has fresh paint, brand new carpet, new appliances, perhaps even a new roof or siding, it doesn't mean everything in the house is new, or even works.
Fannie Mae does not warrant or guarantee any work that may have been done on the property, whether as part of its efforts to sell the home or pursuant to conditions in the purchase contract. Where a home warranty is available, you may wish to buy it at your own expense.
You should also consider hiring a qualified professional to inspect the property, whether it has been repaired or not. Hiring a home inspector is a recommended practice, no matter what type of home you buy.
What can you tell me about this house?
If Fannie Mae knows of any hazards on properties we own or market, we disclose this information through our real estate listing agents. However, we may not have been informed by the previous owner of all hazards. We encourage you to have the property inspected by a professional before you buy.
What type of sales contract does Fannie Mae use?
Fannie Mae uses a state-specific real estate purchase contract and a real estate purchase addendum for our properties. If there is anything in the document you don't understand or aren't comfortable with, you may want to contact a real estate attorney, the real estate sales professional who has listed the property, or any real estate professional of your choice to review these documents with you.
Do I have to use Fannie Mae's selected title, settlement, or escrow companies?
No. You may designate the title, settlement, or escrow company of your choice, subject to the terms of the contract.
Will Fannie Mae accept an offer contingent on the sale of my house?
No, Fannie Mae will not accept offers contingent on the sale of your current home. Other types of contingencies will be considered on a case-by-case basis.
Why does Fannie Mae require a lender's prequalification statement before negotiating a home purchase offer?
Fannie Mae wants to be sure that prospective buyers will be able to complete the sales transaction, including obtaining financing when needed. Prequalification allows you to see how much house you can afford and the mortgage amount you may be able to qualify for before you make an offer on a home. It also helps you focus on homes in an affordable price range.
A loan prequalification doesn't mean your loan is approved. You must apply for a loan separately, after you are prequalified and your purchase offer is accepted.
Does Fannie Mae provide special financing?
Special financing is available on many properties through HomePath® Mortgage and HomePath® Renovation Mortgage. Click here for more information.
Can I buy a house directly from Fannie Mae without going through a real estate sales professional?
No. Fannie Mae depends on the expertise of local real estate sales professionals and accepts offers only through our real estate listing agents. You may work with any real estate sales professional to submit an offer to the real estate agent who has listed the property.
What happens if Fannie Mae gets more than one offer?
All interested parties may be asked to submit their best offer in writing though the listing agent no later than a specified date and time. Fannie Mae may accept or provide a counteroffer that we determine to be in our best interest. Fannie Mae is not obligated to accept any offer submitted.
1. Why does Fannie Mae have properties for sale?
2. What kinds of properties are available in the HomePath database?
3. How is buying a home owned or managed by Fannie Mae different from other home purchases?
4. Has Fannie Mae fixed everything in the house?
5. What can you tell me about this house?
6. What type of sales contract does Fannie Mae use?
7. Do I have to use Fannie Mae's selected title, settlement, or escrow companies?
8. Will Fannie Mae accept an offer contingent on the sale of my house?
9. Why does Fannie Mae require a lender's prequalification statement before negotiating a home purchase offer?
10. Does Fannie Mae provide special financing?
11. Can I buy a house directly from Fannie Mae without going through a real estate sales professional?
12. What happens if Fannie Mae gets more than one offer?
Why does Fannie Mae have properties for sale?
Fannie Mae works with all of its partners to help homeowners prevent and avoid foreclosure; however, sometimes it is unavoidable. When foreclosures occur on mortgages in which Fannie Mae is the investor, our goal is to sell properties in a timely manner in order to minimize the impact on the community.
What kinds of properties are available in the Fannie Mae HomePath database?
Fannie Mae's HomePath database includes only properties that are owned by Fannie Mae. There is a wide selection of homes, including single-family homes, condominiums, and town houses -- located in a variety of neighborhoods. The number, types and the sales prices of the homes that are offered for sale may vary substantially. Many of these homes are relatively new; however, older homes are offered in some areas. Some homes may require repairs.
How is buying a home owned or managed by Fannie Mae different from other home purchases?
Usually, when you buy a home, you deal with a seller who lives in the home. Fannie Mae has acquired these properties through foreclosure, deed in lieu of foreclosure, or forfeiture.
When buying a Fannie Mae-owned home, you should know the condition of the property, as explained in more detail below, the cost of any needed repairs, and the steps in the loan qualification and closing process before you enter into a purchase and sales agreement.
Has Fannie Mae fixed everything in the house?
Fannie Mae may make some repairs to properties to increase their marketability; however, the buyer should be aware that other repairs may be needed. Fannie Mae sells each property "as is," which means that the buyer accepts the property "as is." Fannie Mae is not responsible for fixing any problems after settlement.
Even if the house has fresh paint, brand new carpet, new appliances, perhaps even a new roof or siding, it doesn't mean everything in the house is new, or even works.
Fannie Mae does not warrant or guarantee any work that may have been done on the property, whether as part of its efforts to sell the home or pursuant to conditions in the purchase contract. Where a home warranty is available, you may wish to buy it at your own expense.
You should also consider hiring a qualified professional to inspect the property, whether it has been repaired or not. Hiring a home inspector is a recommended practice, no matter what type of home you buy.
What can you tell me about this house?
If Fannie Mae knows of any hazards on properties we own or market, we disclose this information through our real estate listing agents. However, we may not have been informed by the previous owner of all hazards. We encourage you to have the property inspected by a professional before you buy.
What type of sales contract does Fannie Mae use?
Fannie Mae uses a state-specific real estate purchase contract and a real estate purchase addendum for our properties. If there is anything in the document you don't understand or aren't comfortable with, you may want to contact a real estate attorney, the real estate sales professional who has listed the property, or any real estate professional of your choice to review these documents with you.
Do I have to use Fannie Mae's selected title, settlement, or escrow companies?
No. You may designate the title, settlement, or escrow company of your choice, subject to the terms of the contract.
Will Fannie Mae accept an offer contingent on the sale of my house?
No, Fannie Mae will not accept offers contingent on the sale of your current home. Other types of contingencies will be considered on a case-by-case basis.
Why does Fannie Mae require a lender's prequalification statement before negotiating a home purchase offer?
Fannie Mae wants to be sure that prospective buyers will be able to complete the sales transaction, including obtaining financing when needed. Prequalification allows you to see how much house you can afford and the mortgage amount you may be able to qualify for before you make an offer on a home. It also helps you focus on homes in an affordable price range.
A loan prequalification doesn't mean your loan is approved. You must apply for a loan separately, after you are prequalified and your purchase offer is accepted.
Does Fannie Mae provide special financing?
Special financing is available on many properties through HomePath® Mortgage and HomePath® Renovation Mortgage. Click here for more information.
Can I buy a house directly from Fannie Mae without going through a real estate sales professional?
No. Fannie Mae depends on the expertise of local real estate sales professionals and accepts offers only through our real estate listing agents. You may work with any real estate sales professional to submit an offer to the real estate agent who has listed the property.
What happens if Fannie Mae gets more than one offer?
All interested parties may be asked to submit their best offer in writing though the listing agent no later than a specified date and time. Fannie Mae may accept or provide a counteroffer that we determine to be in our best interest. Fannie Mae is not obligated to accept any offer submitted.
Friday, April 17, 2009
California Home Prices Looking Steady
From Realtor Magazine Online, Daily Real Estate News April 17, 2009
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)
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)
Signs Point to Improving Economy
From Realtor Magazine Online, Daily Real Estate News April 17, 2009
Economic observers point to several factors that indicate the economy in general and the housing market in particular may be on the mend.
Positive signs include:
● Sales of single-family homes in March remained flat compared to January and February at $358,000, the U.S. Commerce Department reported.
● The Labor Department reported claims were down in the week ending April 11. While some argued this could just reflect the shortened Easter/Passover holiday, others took the optimistic view that some segments of the economy are stabilizing.
● New-home construction remains low because there is so much inventory—but the situation doesn’t appear to be worsening.
"The economy is still very weak, but there are some encouraging signs that support cautious optimism," Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said in a speech Thursday.
Source: The Wall Street Journal, Sudeep Reddy (04/17/2009)
Economic observers point to several factors that indicate the economy in general and the housing market in particular may be on the mend.
Positive signs include:
● Sales of single-family homes in March remained flat compared to January and February at $358,000, the U.S. Commerce Department reported.
● The Labor Department reported claims were down in the week ending April 11. While some argued this could just reflect the shortened Easter/Passover holiday, others took the optimistic view that some segments of the economy are stabilizing.
● New-home construction remains low because there is so much inventory—but the situation doesn’t appear to be worsening.
"The economy is still very weak, but there are some encouraging signs that support cautious optimism," Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said in a speech Thursday.
Source: The Wall Street Journal, Sudeep Reddy (04/17/2009)
Federal Housing Rescue Plan Launches
From Realtor Magazine Online, Daily Real Estate News April 17, 2009
The Obama Administration’s program to rescue distressed home owners got off the ground this week. The program was announced on Feb. 18, but it took several weeks to put the bureaucracy in place.
Six of the nation’s largest banks signed up to participate, the Treasury Department announced Wednesday. They are JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing.
Treasury says it is allocating $50 billion to the program. The Department of Housing and Urban Development will provide the rest.
The plan calls for loan servicers to reduce interest rates so a family’s monthly mortgage obligation is no more than 38 percent of its pre-tax income. Loan servicers also can reduce loan balances. After the loans are modified, the government then provides enough money to reduce payments to 31 percent of income.
Participating servicers get $1,000 a year for each modification and another $1,000 a year for three years if the borrower remains current. Servicers get an extra $500 if they do the modifications before the borrower falls behind in his payments—and the borrower gets $1,500.
Also, homeowners get $1,000 a year for five years if they remain current on their payments. The money must be used to reduce their principal balances.
Source: CNN, Tami Luhby (04/16/2009)
The Obama Administration’s program to rescue distressed home owners got off the ground this week. The program was announced on Feb. 18, but it took several weeks to put the bureaucracy in place.
Six of the nation’s largest banks signed up to participate, the Treasury Department announced Wednesday. They are JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing.
Treasury says it is allocating $50 billion to the program. The Department of Housing and Urban Development will provide the rest.
The plan calls for loan servicers to reduce interest rates so a family’s monthly mortgage obligation is no more than 38 percent of its pre-tax income. Loan servicers also can reduce loan balances. After the loans are modified, the government then provides enough money to reduce payments to 31 percent of income.
Participating servicers get $1,000 a year for each modification and another $1,000 a year for three years if the borrower remains current. Servicers get an extra $500 if they do the modifications before the borrower falls behind in his payments—and the borrower gets $1,500.
Also, homeowners get $1,000 a year for five years if they remain current on their payments. The money must be used to reduce their principal balances.
Source: CNN, Tami Luhby (04/16/2009)
Thursday, April 16, 2009
Builders' Confidence Brightens on Outlook
From Realtor Magazine Online, Daily Real Estate News April 16, 2009
Home builder confidence was in the double digits in April for the first time in six months.
The index rose to 14 from nine last month. That was the largest single-month increase since May 2003. An index number below 50 means most respondents view conditions as poor.
"After a very long period of extreme distress, it's given the builders some sense of reaching a bottom," says David Crowe, chief economist for the National Association of Home Builders, which compiles the index along with Wells Fargo.
The confidence index was up all over the country, with the largest increases in the Northeast at 16 and the West at 9.
Source: CNNMoney (04/15/2009)
Home builder confidence was in the double digits in April for the first time in six months.
The index rose to 14 from nine last month. That was the largest single-month increase since May 2003. An index number below 50 means most respondents view conditions as poor.
"After a very long period of extreme distress, it's given the builders some sense of reaching a bottom," says David Crowe, chief economist for the National Association of Home Builders, which compiles the index along with Wells Fargo.
The confidence index was up all over the country, with the largest increases in the Northeast at 16 and the West at 9.
Source: CNNMoney (04/15/2009)
Fed Report: Real Estate Stabilizing in Key Cities
From Realtor Magazine Online, Daily Real Estate News April 16, 2009
While real estate and other industries remained weak in all 12 of the Federal Reserve districts, there is reason for optimism in several areas, according to the Federal Reserve, which released its periodic “Beige Book” report of economic activity on Wednesday.
In Boston, Fed contacts reported “early signs of improvement” in the residential real estate sector, and the news was equally good in New York where the book said banks are reporting “the most widespread rise in demand for residential mortgages in more than seven years.”
In Richmond, Va., commercial real estate is reporting moderate increases in activity and residential lending is rising because of strong demand for refinancing, the report said. Demand for refinancing is "hard to keep up with," one of the Fed's contacts said.
Meanwhile, commercial real estate weakened in Kansas City while residential real estate is holding steady, the report concluded.
Source: The Wall Street Journal, Meena Thiruvengadam (04/15/2009)
While real estate and other industries remained weak in all 12 of the Federal Reserve districts, there is reason for optimism in several areas, according to the Federal Reserve, which released its periodic “Beige Book” report of economic activity on Wednesday.
In Boston, Fed contacts reported “early signs of improvement” in the residential real estate sector, and the news was equally good in New York where the book said banks are reporting “the most widespread rise in demand for residential mortgages in more than seven years.”
In Richmond, Va., commercial real estate is reporting moderate increases in activity and residential lending is rising because of strong demand for refinancing, the report said. Demand for refinancing is "hard to keep up with," one of the Fed's contacts said.
Meanwhile, commercial real estate weakened in Kansas City while residential real estate is holding steady, the report concluded.
Source: The Wall Street Journal, Meena Thiruvengadam (04/15/2009)
San Diego Home Prices Remain Level 3 Straight Months
From The San Diego Union Tribune, April 15, 2009
San Diego County home prices remained relatively level in March for the third straight month as sales rocketed upward, a possible sign of a stabilizing market, MDA DataQuick reported Wednesday.
The overall median remained unchanged from February at $285,000, which was $5,000 higher than January, making the opening quarter of the year the first to show no decline from the previous quarter since 2006.
Sales totaled 3,020, up 22.3 percent from February, the highest February-March increase in three years. It was up 43.3 percent from March 2008.
Single-family-resale home prices were down $1,000 from February to $319,000, and off 44.4 percent from the all-time peak of $574,000 in May 2006. Sales totaled 1,928, up 22.3 percent from February and 61.1 percent from a year earlier.
The median price for resale condos was $180,000, down from $195,000 in February and 37.9 percent below year-ago levels. The all-time peak of $400,000 was set in four different months in 2005 and 2006. Sales last month totaled 888, up from 725 in February and 592 in March 2008.
Newly built homes and condo conversions stood at a median $436,000, down from $452,000 in February and $450,000 a year earlier. Sales totaled 204, up from 168 in February but down from 319 in March 2008.
For the fifth straight month, a majority of sales involved properties that had been foreclosed on in the previous 12 months. But the 51.1 percentage was down for the third straight month from the peak of 55 percent in December. However, some market watchers expect an uptick in foreclosures and foreclosure sales in the next few months as lenders end moratoriums that forestalled foreclosures.
DataQuick President John Walsh said in a statement that the figures do not represent the overall state of the housing market because so few upper-end properties are selling amid the continuing credit crunch.
“Those neighborhoods are dormant right now,” he said, “but when so-called jumbo financing becomes available (for loans exceeding $417,000), possibly before summer, we expect enough sales to close escrow and generate more meaningful price statistics.”
By Robert Showley
San Diego County home prices remained relatively level in March for the third straight month as sales rocketed upward, a possible sign of a stabilizing market, MDA DataQuick reported Wednesday.
The overall median remained unchanged from February at $285,000, which was $5,000 higher than January, making the opening quarter of the year the first to show no decline from the previous quarter since 2006.
Sales totaled 3,020, up 22.3 percent from February, the highest February-March increase in three years. It was up 43.3 percent from March 2008.
Single-family-resale home prices were down $1,000 from February to $319,000, and off 44.4 percent from the all-time peak of $574,000 in May 2006. Sales totaled 1,928, up 22.3 percent from February and 61.1 percent from a year earlier.
The median price for resale condos was $180,000, down from $195,000 in February and 37.9 percent below year-ago levels. The all-time peak of $400,000 was set in four different months in 2005 and 2006. Sales last month totaled 888, up from 725 in February and 592 in March 2008.
Newly built homes and condo conversions stood at a median $436,000, down from $452,000 in February and $450,000 a year earlier. Sales totaled 204, up from 168 in February but down from 319 in March 2008.
For the fifth straight month, a majority of sales involved properties that had been foreclosed on in the previous 12 months. But the 51.1 percentage was down for the third straight month from the peak of 55 percent in December. However, some market watchers expect an uptick in foreclosures and foreclosure sales in the next few months as lenders end moratoriums that forestalled foreclosures.
DataQuick President John Walsh said in a statement that the figures do not represent the overall state of the housing market because so few upper-end properties are selling amid the continuing credit crunch.
“Those neighborhoods are dormant right now,” he said, “but when so-called jumbo financing becomes available (for loans exceeding $417,000), possibly before summer, we expect enough sales to close escrow and generate more meaningful price statistics.”
By Robert Showley
Wednesday, April 15, 2009
EB-5, L-1 and E-2 visas
EB-5, L-1 and E-2 visas allow foreign nationals to gain residency in the United States.
Banks Likely to Ramp Up Foreclosures
From Realtor Magazine Online, Daily Real Estate News April 15, 2009
More borrowers are expected to lose their homes to foreclosure as the nation's largest mortgage companies lift their internal moratoriums on home repossessions and start to determine which troubled borrowers cannot be helped.
The mortgage companies say the Obama administration's housing plan has given them a better idea of which borrowers they should assist, but their actions could be politically sensitive because some lenders received funds from the federal government's financial stimulus program.
An increase in foreclosures could lead to a further decline in residential prices and put more pressure on the earnings of banks as they write off troubled loans.
Source: Wall Street Journal, Ruth Simon (4/15/2009)
More borrowers are expected to lose their homes to foreclosure as the nation's largest mortgage companies lift their internal moratoriums on home repossessions and start to determine which troubled borrowers cannot be helped.
The mortgage companies say the Obama administration's housing plan has given them a better idea of which borrowers they should assist, but their actions could be politically sensitive because some lenders received funds from the federal government's financial stimulus program.
An increase in foreclosures could lead to a further decline in residential prices and put more pressure on the earnings of banks as they write off troubled loans.
Source: Wall Street Journal, Ruth Simon (4/15/2009)
Mortgage Applications Fell During Holiday Week
From Realtor Magazine Online, Daily Real Estate News April 15, 2009
Mortgage applications volume fell 11 percent last week to 1,113.2 from 1,250.6 the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the index decreased 10.9 percent compared with the previous week. It increased 45.6 percent compared with the same week a year ago.
The refinance share of activity decreased 1/10th of a percent while the purchase index declined 11.3 percent.
This was the first drop in mortgage applications in five weeks. While there was no adjustment in the calculations for the Easter and Passover holidays, it may have contributed to the decline in volume, the mortgage bankers suggested.
Mortgage rates continued to fall:
* 30-year fixed-rate mortgages decreased to 4.70 percent from 4.73 percent
* 15-year fixed-rate mortgages decreased to 4.46 percent from 4.49 percent
* 1-year ARMs decreased to 6.21 percent from 6.23 percent
Source: Mortgage Bankers Association (04/15/2009)
Mortgage applications volume fell 11 percent last week to 1,113.2 from 1,250.6 the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the index decreased 10.9 percent compared with the previous week. It increased 45.6 percent compared with the same week a year ago.
The refinance share of activity decreased 1/10th of a percent while the purchase index declined 11.3 percent.
This was the first drop in mortgage applications in five weeks. While there was no adjustment in the calculations for the Easter and Passover holidays, it may have contributed to the decline in volume, the mortgage bankers suggested.
Mortgage rates continued to fall:
* 30-year fixed-rate mortgages decreased to 4.70 percent from 4.73 percent
* 15-year fixed-rate mortgages decreased to 4.46 percent from 4.49 percent
* 1-year ARMs decreased to 6.21 percent from 6.23 percent
Source: Mortgage Bankers Association (04/15/2009)
Monday, April 13, 2009
Is FHA Key to Housing Turnaround?
From Realtor Magazine Online, Daily Real Estate News April 13, 2009
Federal Housing Administration loans can be a very good deal for home buyers, especially those who don’t have a lot of cash or whose credit rating isn’t stellar, experts say.
FHA loans now account for 20 percent of new mortgages, up from 3 percent in 2006. What's more, the number of authorized FHA lenders has increased 500 percent in two years.
Other benefits of FHA loans include easy loan modifications for borrowers who fall behind, easy refinancing plans if rates decline, and low rates overall, which don’t rise if the borrower has a low credit score. There are no income restrictions on FHA loans, so even borrowers with good incomes may find them attractive.
FHA loans still require a pre-settlement inspection of the home, but the process isn’t nearly as arduous as it once was, says George Hanzimanolis, past president of the National Association of Mortgage Brokers.
Source: CNNMoney.com (04/01/2009)
Federal Housing Administration loans can be a very good deal for home buyers, especially those who don’t have a lot of cash or whose credit rating isn’t stellar, experts say.
FHA loans now account for 20 percent of new mortgages, up from 3 percent in 2006. What's more, the number of authorized FHA lenders has increased 500 percent in two years.
Other benefits of FHA loans include easy loan modifications for borrowers who fall behind, easy refinancing plans if rates decline, and low rates overall, which don’t rise if the borrower has a low credit score. There are no income restrictions on FHA loans, so even borrowers with good incomes may find them attractive.
FHA loans still require a pre-settlement inspection of the home, but the process isn’t nearly as arduous as it once was, says George Hanzimanolis, past president of the National Association of Mortgage Brokers.
Source: CNNMoney.com (04/01/2009)
Buyers Say Foreclosure Deals Taking Too Long
From Realtor Magazine Online, Daily Real Estate News April 13, 2009
Banks are quickly accepting bids and writing contracts for foreclosed homes, but buyers are complaining that settlements are taking too long.
Real estate pros say purchasing a bank-owned property is different than dealing with a regular home owner, considering that banks have to check claims on the property and problems can arise at closing. Plus, in some states, banks also need court approval of the foreclosure.
Although banks are swamped by the record number of foreclosures, the bank-owned homes will have to be sold to help stabilize residential prices and boost the housing market.
Source: Washington Post, Dina ElBoghdady (04/13/09)
Banks are quickly accepting bids and writing contracts for foreclosed homes, but buyers are complaining that settlements are taking too long.
Real estate pros say purchasing a bank-owned property is different than dealing with a regular home owner, considering that banks have to check claims on the property and problems can arise at closing. Plus, in some states, banks also need court approval of the foreclosure.
Although banks are swamped by the record number of foreclosures, the bank-owned homes will have to be sold to help stabilize residential prices and boost the housing market.
Source: Washington Post, Dina ElBoghdady (04/13/09)
Friday, April 10, 2009
Obama Urges Americans to Refinance
From Realtor Magazine Online, Daily Real Estate News April 10, 2009
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)
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)
Mortgage Rates Rise After Record Lows
From Realtor Magazine Online, Daily Real Estate News April 10, 2009
Freddie Mac reports a jump in the 30-year fixed mortgage rate to 4.87 percent during the week ended April 9 from record lows posted during the last couple of weeks. The 15-year fixed mortgage rate climbed to 4.54 percent from 4.52 percent.
Meanwhile, the five-year hybrid adjustable rate bumped up to 4.93 percent from 4.92 percent, and the one-year ARM rose to 4.83 percent from 4.75 percent.
Source: San Diego Union-Tribune (04/10/09)
Freddie Mac reports a jump in the 30-year fixed mortgage rate to 4.87 percent during the week ended April 9 from record lows posted during the last couple of weeks. The 15-year fixed mortgage rate climbed to 4.54 percent from 4.52 percent.
Meanwhile, the five-year hybrid adjustable rate bumped up to 4.93 percent from 4.92 percent, and the one-year ARM rose to 4.83 percent from 4.75 percent.
Source: San Diego Union-Tribune (04/10/09)
Thursday, April 9, 2009
Home Sales: Some Welcomed Signs of Life
From Realtor Magazine Online, Daily Real Estate News April 9, 2009
The hardest-hit housing markets -- Florida's Gulf Coast, California's Inland Empire, and Las Vegas, among others -- experienced a more than 80 percent jump in home sales during the year-over-year period ended in February.
In Cape Coral, Fla., which had the highest foreclosure rate in the nation in 2008, there are even bidding wars. Experts say bargain foreclosures, low interest rates, and the $8,000 federal tax credit are helping first-time buyers and investors.
These buyers also have an advantage because they do not have to sell a current home to close the deal. However, experts note that the housing market will not recover until banks loosen their lending standards; and these markets could experience another downturn if interest rates rise and the tax credits disappear.
Source: Business Week, Christopher Palmeri, Maria Der Hovanesian, and Gopal Prashant (04/09)
The hardest-hit housing markets -- Florida's Gulf Coast, California's Inland Empire, and Las Vegas, among others -- experienced a more than 80 percent jump in home sales during the year-over-year period ended in February.
In Cape Coral, Fla., which had the highest foreclosure rate in the nation in 2008, there are even bidding wars. Experts say bargain foreclosures, low interest rates, and the $8,000 federal tax credit are helping first-time buyers and investors.
These buyers also have an advantage because they do not have to sell a current home to close the deal. However, experts note that the housing market will not recover until banks loosen their lending standards; and these markets could experience another downturn if interest rates rise and the tax credits disappear.
Source: Business Week, Christopher Palmeri, Maria Der Hovanesian, and Gopal Prashant (04/09)
Tuesday, April 7, 2009
California Association Offers Mortgage Protection
From Realtor Magazine Online, Daily Real Estate News April 7, 2009
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)
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)
Top Economists Say Recovery Has Begun
From Realtor Magazine Online, Daily Real Estate News April 7, 2009
Economic recovery is about making people feel more confident, says Mark Zandi, chief economist of Moody’s Economy.com.
Zandi evidenced increasing home sales and gains in the stock market are some promising signs that the worst is over and people will start spending again.
“We’re starting to see some pent-up demand for goods,” he says.
But Zandi warns that the situation is still fragile. "Confidence is a very fickle thing. It can go from abject pessimism that pervades now to a more balanced view of the world rather quickly.”
Robert Brusca of FAO Economics is predicting strong growth in the last half of the year and a quick recovery for the labor market. "You've lost 5 million jobs. It shouldn't be hard to put 2.5 million jobs back on rather quickly after you hit bottom," he said.
Joseph Carson, chief economist at AllianceBernstein, calls improving home sales, a rising stock market, and better-than-expected retail sales in February and March good signs of a turnaround. By the time President Obama’s stimulus package takes effect, the economy will be ready, he says.
"The stimulus has a much better chance of working if trends are already turning up than if it needs to halt a decline," he said.
Source: CNNMoney, Chris Isidore (04/06/2009)
Economic recovery is about making people feel more confident, says Mark Zandi, chief economist of Moody’s Economy.com.
Zandi evidenced increasing home sales and gains in the stock market are some promising signs that the worst is over and people will start spending again.
“We’re starting to see some pent-up demand for goods,” he says.
But Zandi warns that the situation is still fragile. "Confidence is a very fickle thing. It can go from abject pessimism that pervades now to a more balanced view of the world rather quickly.”
Robert Brusca of FAO Economics is predicting strong growth in the last half of the year and a quick recovery for the labor market. "You've lost 5 million jobs. It shouldn't be hard to put 2.5 million jobs back on rather quickly after you hit bottom," he said.
Joseph Carson, chief economist at AllianceBernstein, calls improving home sales, a rising stock market, and better-than-expected retail sales in February and March good signs of a turnaround. By the time President Obama’s stimulus package takes effect, the economy will be ready, he says.
"The stimulus has a much better chance of working if trends are already turning up than if it needs to halt a decline," he said.
Source: CNNMoney, Chris Isidore (04/06/2009)
Jumbo Loans Getting Easier to Find
From Realtor Magazine Online, Daily Real Estate News April 7, 2009
For nearly a year, it has been almost impossible for buyers of homes selling for more than $417,00 in most parts of the country and up to $729,750 in pricier areas to find jumbo mortgages to pay for them.
Now that appears to be changing. Bank of America recently began offering a 30-year fixed rate jumbo at less than 6 percent. "We decided it was time to really go after that market," says Vijay Lala, a product management executive for the bank.
Other banks, including Wells Fargo, J.P. Morgan Chase, GMAC, ING Direct and Citibank are following suit, said Guy Cecala, publisher of Inside Mortgage Finance.
Borrowers for jumbos should be prepared for a complex process and should shop aggressively for the best rate, Cecala says.
Source: The Wall Street Journal, Amy Hoak (04/04/2009)
For nearly a year, it has been almost impossible for buyers of homes selling for more than $417,00 in most parts of the country and up to $729,750 in pricier areas to find jumbo mortgages to pay for them.
Now that appears to be changing. Bank of America recently began offering a 30-year fixed rate jumbo at less than 6 percent. "We decided it was time to really go after that market," says Vijay Lala, a product management executive for the bank.
Other banks, including Wells Fargo, J.P. Morgan Chase, GMAC, ING Direct and Citibank are following suit, said Guy Cecala, publisher of Inside Mortgage Finance.
Borrowers for jumbos should be prepared for a complex process and should shop aggressively for the best rate, Cecala says.
Source: The Wall Street Journal, Amy Hoak (04/04/2009)
Friday, April 3, 2009
Lenders Cut Credit for Reliable Borrowers
From Realtor Magazine Online, Daily Real Estate News April 3, 2009
Lenders are cutting credit lines and pushing down credit limits on their best-paying customers, which ultimately can reduce these frugal customers’ abilities to get mortgages.
A new study by Fair Isaac says 11 percent of U.S. consumers had their access to credit trimmed during the six months ending last October, even though they pay their bills on time and have good credit scores. That’s more than double the 5 percent of consumers with poor credit whose access to credit was reduced in the same time frame.
People who pay on time aren’t very profitable for lenders, says John Ulzheimer, president of consumer education for Credit.com, because they don’t carry balances or pay late fees.
The affect of these cutbacks is cumulative, credit experts say. When lenders close accounts or cut limits, it can hurt consumers’ credit scores and make it harder for these good payers to get other loans, including mortgages.
Source: USA Today, Kathy Chu (04/03/2009)
Lenders are cutting credit lines and pushing down credit limits on their best-paying customers, which ultimately can reduce these frugal customers’ abilities to get mortgages.
A new study by Fair Isaac says 11 percent of U.S. consumers had their access to credit trimmed during the six months ending last October, even though they pay their bills on time and have good credit scores. That’s more than double the 5 percent of consumers with poor credit whose access to credit was reduced in the same time frame.
People who pay on time aren’t very profitable for lenders, says John Ulzheimer, president of consumer education for Credit.com, because they don’t carry balances or pay late fees.
The affect of these cutbacks is cumulative, credit experts say. When lenders close accounts or cut limits, it can hurt consumers’ credit scores and make it harder for these good payers to get other loans, including mortgages.
Source: USA Today, Kathy Chu (04/03/2009)
A Record Low for Mortgage Rates, Again
From Realtor Magazine Online, Daily Real Estate News April 3, 2009
Just one week after 30-year mortgage rates fell to a record low of 4.85 percent, the average dropped even further to 4.78 percent this week, Freddie Mac reported.
Refinancing activity has picked up because of the low rates, and the Mortgage Bankers Association says approximately 80 percent of mortgage applications came from borrowers seeking to refinance.
Source: Boston Globe (04/03/09)
Just one week after 30-year mortgage rates fell to a record low of 4.85 percent, the average dropped even further to 4.78 percent this week, Freddie Mac reported.
Refinancing activity has picked up because of the low rates, and the Mortgage Bankers Association says approximately 80 percent of mortgage applications came from borrowers seeking to refinance.
Source: Boston Globe (04/03/09)
Thursday, April 2, 2009
Hill Testimony: FHA Key to Housing Rebound
From Realtor Magazine Online, Daily Real Estate News April 2, 2009
The Federal Housing Administration is a primary source of mortgage financing for millions of America’s families and plays a key role in helping bring stability to the housing market. This is the message that the NATIONAL ASSOCIATION OF REALTORS® delivered to the Senate Appropriations Subcommittee today.
“Without FHA financing, families would be unable to purchase homes and communities would suffer from continued foreclosures and blight,” said Lennox Scott, a member of NAR’s Real Estate Services Advisory Board and chairman and CEO of John L. Scott Real Estate in Bellevue, Wash. In his testimony, Scott shared NAR’s belief in the importance of FHA and concern for the safety and soundness of its programs due to its dramatic growth over a short period of time.
“We believe that FHA has done a good job stepping up to today’s market challenges. However, along with the dramatic growth in market share, comes greater responsibility and the need for increased infrastructure and staff,” Scott said. Over the past 18 months, FHA has handled an increase in volume four times greater than 2007 levels, increasing its market share to over 30 percent.
NAR suggests a number of FHA improvements that will help maintain safe and affordable FHA loan products. These improvements include investment in staff and technology improvements; increased oversight and risk management; technical correction to help implement FHA programs; and monetizing the $8,000 first-time home buyer tax credit to allow buyers to apply it toward downpayment requirements.
“The U.S. Department of Housing and Urban Development has made a number of important and valuable changes to FHA over the years that has enabled it to stand up to the challenges of today’s mortgage market,” Scott said. “FHA is now a principal source of financing for millions of America’s families, and without it, the economic crisis would be significantly prolonged. This is why it is so important to invest in FHA improvements and advancements.”
NAR pledged to continue to work for FHA reforms that will ensure the continued success, availability and safety of FHA mortgage insurance programs.
Source: NAR
The Federal Housing Administration is a primary source of mortgage financing for millions of America’s families and plays a key role in helping bring stability to the housing market. This is the message that the NATIONAL ASSOCIATION OF REALTORS® delivered to the Senate Appropriations Subcommittee today.
“Without FHA financing, families would be unable to purchase homes and communities would suffer from continued foreclosures and blight,” said Lennox Scott, a member of NAR’s Real Estate Services Advisory Board and chairman and CEO of John L. Scott Real Estate in Bellevue, Wash. In his testimony, Scott shared NAR’s belief in the importance of FHA and concern for the safety and soundness of its programs due to its dramatic growth over a short period of time.
“We believe that FHA has done a good job stepping up to today’s market challenges. However, along with the dramatic growth in market share, comes greater responsibility and the need for increased infrastructure and staff,” Scott said. Over the past 18 months, FHA has handled an increase in volume four times greater than 2007 levels, increasing its market share to over 30 percent.
NAR suggests a number of FHA improvements that will help maintain safe and affordable FHA loan products. These improvements include investment in staff and technology improvements; increased oversight and risk management; technical correction to help implement FHA programs; and monetizing the $8,000 first-time home buyer tax credit to allow buyers to apply it toward downpayment requirements.
“The U.S. Department of Housing and Urban Development has made a number of important and valuable changes to FHA over the years that has enabled it to stand up to the challenges of today’s mortgage market,” Scott said. “FHA is now a principal source of financing for millions of America’s families, and without it, the economic crisis would be significantly prolonged. This is why it is so important to invest in FHA improvements and advancements.”
NAR pledged to continue to work for FHA reforms that will ensure the continued success, availability and safety of FHA mortgage insurance programs.
Source: NAR
Wednesday, April 1, 2009
Top 10 Most Heavily Taxed States
From Realtor Magazine Online, Daily Real Estate News April 1, 2009
It’s April, so people’s thoughts are turning to taxes, and where they live makes a big difference in how much they pay.
Here are the 10 states with the highest taxes, including property, individual income, sales, alcoholic beverages, tobacco, motor vehicles, hunting and fishing, motor fuels, death and gift taxes, as well as insurance premiums. The per capita tax was derived by adding up all the taxes and dividing the total by the number of citizens.
1. Vermont, $3,861
2. Hawaii, $3,856
3. Connecticut, $3,596
4. Minnesota, $3,203
5. New Jersey, $3,024
6. New York, $3,019
7. Massachusetts, $2,953
8. Washington, $2,553
9. Wyoming, $2,357
10. Pennsylvania, $2,223
Source: Forbes, Matt Woolsey (03/30/2009)
It’s April, so people’s thoughts are turning to taxes, and where they live makes a big difference in how much they pay.
Here are the 10 states with the highest taxes, including property, individual income, sales, alcoholic beverages, tobacco, motor vehicles, hunting and fishing, motor fuels, death and gift taxes, as well as insurance premiums. The per capita tax was derived by adding up all the taxes and dividing the total by the number of citizens.
1. Vermont, $3,861
2. Hawaii, $3,856
3. Connecticut, $3,596
4. Minnesota, $3,203
5. New Jersey, $3,024
6. New York, $3,019
7. Massachusetts, $2,953
8. Washington, $2,553
9. Wyoming, $2,357
10. Pennsylvania, $2,223
Source: Forbes, Matt Woolsey (03/30/2009)
Falling Rates Boost Mortgage Applications
From Realtor Magazine Online, Daily Real Estate News April 1, 2009
Mortgage applications continue to rise as rates slide. The weekly mortgage application index compiled by the Mortgage Bankers Association rose 3 percent last week to 1,194.4 from 1,159.4 on a seasonally adjusted basis.
On an unadjusted basis, the index increased 2.9 percent compared to the previous week and was up 68.8 compared to the same week last year.
The refinance share of mortgage activity is driving the increase, rising to 79.1 percent of total applications, up from 78.5 the previous week.
Fixed rates are at or near record lows:
● 30-year fixed-rate mortgages decreased to 4.61 percent from 4.63 percent.
● 15-year fixed-rate mortgages decreased to 4.45 percent from 4.48 percent.
● 1-year ARMs decreased to 6.20 percent from 6.22 percent.
Source: Mortgage Bankers Association (04/01/2009)
Mortgage applications continue to rise as rates slide. The weekly mortgage application index compiled by the Mortgage Bankers Association rose 3 percent last week to 1,194.4 from 1,159.4 on a seasonally adjusted basis.
On an unadjusted basis, the index increased 2.9 percent compared to the previous week and was up 68.8 compared to the same week last year.
The refinance share of mortgage activity is driving the increase, rising to 79.1 percent of total applications, up from 78.5 the previous week.
Fixed rates are at or near record lows:
● 30-year fixed-rate mortgages decreased to 4.61 percent from 4.63 percent.
● 15-year fixed-rate mortgages decreased to 4.45 percent from 4.48 percent.
● 1-year ARMs decreased to 6.20 percent from 6.22 percent.
Source: Mortgage Bankers Association (04/01/2009)
Big Gains in Pending Home Sales, Affordability
From Realtor Magazine Online, Daily Real Estate News April 1, 2009
Increases in pending home sales suggest a possible upswing in sales activity in coming months, according to the National Association of REALTORS.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 2.1 percent to 82.1 from a reading of 80.4 in January, but is 1.4 percent below February 2008, when it was 83.3.
Lawrence Yun, NAR chief economist, said the market is continuing to underperform.
“Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we’ll see additional sales gains,” he says. “More buyers are getting into the market to take advantage of stimulus incentives and much improved housing affordability conditions, but it will take a few months before we could see this turn up in measurable sales contract activity.”
Additionally, NAR’s Housing Affordability Index rose to a new high in February.
The Regional Breakdown
The PHSI picture varied across U.S. regions, with increases everywhere except the West:
1. Northeast: rose 10.6 percent to 63.9 in February but is 11.2 percent below a year ago.
2. Midwest: jumped 14.5 percent to 83.1 and is 3.4 percent higher than February 2008.
3. South: rose 4.4 percent to 85.8 in February but is 0.1 percent below a year ago.
4. West: fell 13.5 percent to 89.6 and is 1.7 percent below February 2008.
NAR President Charles McMillan says home buyers are in an excellent position.
“The drop in mortgage interest rates and home prices mean the buying power of a typical family has never been better,” he explains. “If you have a good job and long-term plans, it’s unlikely that you’ll find a much better time to buy a home. This is especially true for first-time buyers who can qualify for an $8,000 tax credit this year, have a great selection of homes to choose from, and are in a favorable negotiating position.”
Affordability Improves
NAR’s Housing Affordability Index rose 0.9 percentage points to a record high of 173.5 in February from an upwardly revised index of 172.6 in January, and is 36.3 percentage points higher than a year ago. The HAI shows the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.
A median-income family, earning $59,700, could afford a home costing $285,600 in February with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of that amount. The affordable price is considerably higher the median existing single-family home price in February, which was only $164,600.
“Obviously, potential home buyers need to be managing their existing debt effectively,” McMillan says. “A REALTOR can counsel you on what you may be able to afford given your personal financial situation. In some cases, buyers who want to build their future through homeownership may need to start reducing their debt and improving their credit score before entering the housing market.”
Last year at this time, the typical family could afford a home costing $265,600, which is $20,000 less than the current affordable price.
“Homes in many areas are now selling for less than replacement construction costs — clearly, this is an abnormal situation that will change once inventory is drawn down and supply and demand come closer into balance,” McMillan says.
Yun expects housing inventories to rise through early summer from a normal seasonal pattern of more sellers appearing in the spring.
“But with the positive housing stimulus incentives now in place, we expect home sales to gain momentum in the second half of the year with first-time buyers absorbing a lot of the excess inventory,” he says. “Under these conditions, we should see price stabilization in most markets by the end of the year.”
Source: NAR (04/01/2009)
Increases in pending home sales suggest a possible upswing in sales activity in coming months, according to the National Association of REALTORS.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 2.1 percent to 82.1 from a reading of 80.4 in January, but is 1.4 percent below February 2008, when it was 83.3.
Lawrence Yun, NAR chief economist, said the market is continuing to underperform.
“Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we’ll see additional sales gains,” he says. “More buyers are getting into the market to take advantage of stimulus incentives and much improved housing affordability conditions, but it will take a few months before we could see this turn up in measurable sales contract activity.”
Additionally, NAR’s Housing Affordability Index rose to a new high in February.
The Regional Breakdown
The PHSI picture varied across U.S. regions, with increases everywhere except the West:
1. Northeast: rose 10.6 percent to 63.9 in February but is 11.2 percent below a year ago.
2. Midwest: jumped 14.5 percent to 83.1 and is 3.4 percent higher than February 2008.
3. South: rose 4.4 percent to 85.8 in February but is 0.1 percent below a year ago.
4. West: fell 13.5 percent to 89.6 and is 1.7 percent below February 2008.
NAR President Charles McMillan says home buyers are in an excellent position.
“The drop in mortgage interest rates and home prices mean the buying power of a typical family has never been better,” he explains. “If you have a good job and long-term plans, it’s unlikely that you’ll find a much better time to buy a home. This is especially true for first-time buyers who can qualify for an $8,000 tax credit this year, have a great selection of homes to choose from, and are in a favorable negotiating position.”
Affordability Improves
NAR’s Housing Affordability Index rose 0.9 percentage points to a record high of 173.5 in February from an upwardly revised index of 172.6 in January, and is 36.3 percentage points higher than a year ago. The HAI shows the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.
A median-income family, earning $59,700, could afford a home costing $285,600 in February with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of that amount. The affordable price is considerably higher the median existing single-family home price in February, which was only $164,600.
“Obviously, potential home buyers need to be managing their existing debt effectively,” McMillan says. “A REALTOR can counsel you on what you may be able to afford given your personal financial situation. In some cases, buyers who want to build their future through homeownership may need to start reducing their debt and improving their credit score before entering the housing market.”
Last year at this time, the typical family could afford a home costing $265,600, which is $20,000 less than the current affordable price.
“Homes in many areas are now selling for less than replacement construction costs — clearly, this is an abnormal situation that will change once inventory is drawn down and supply and demand come closer into balance,” McMillan says.
Yun expects housing inventories to rise through early summer from a normal seasonal pattern of more sellers appearing in the spring.
“But with the positive housing stimulus incentives now in place, we expect home sales to gain momentum in the second half of the year with first-time buyers absorbing a lot of the excess inventory,” he says. “Under these conditions, we should see price stabilization in most markets by the end of the year.”
Source: NAR (04/01/2009)
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