From Daily Real Estate News April 27, 2010
Housing has slowed to the point where demand is again outstripping supply, says Metrostudy founder Mike Castleman.
Metrostudy, which researches the housing industry, says demand is forcing up prices in some markets, including Washington, D.C. and Indianapolis, but it remains stagnant in Houston, Naples, Fla., Charlotte, and Denver.
Overall, Metrostudy and Castleman believe the worst is over. "The good news is that builders will need to build a lot more houses than last year to keep up with demand. That will help the economy by creating jobs," Castleman says.
Source: Fortune, Shawn Tully (04/26/2010)
Tuesday, April 27, 2010
Economist Says It's Time to Raise Rates
From Daily Real Estate News April 27, 2010
Some economists are saying that it’s time for the Federal Reserve to raise interest rates.
Ken Rosen, chair of the University of California Fisher Center for Real Estate, says the financial crisis is over and short-term rates today should be 2 to 3 percent. By keeping rates so low, “We are encouraging asset bubbles in the stock market, bond markets, and global real estate,” Rosen says.
Demand for housing will increase as employers hire more workers, Rosen adds.
Rosen predicts construction of new homes will remain well below the historical norm of 1.1 million homes a year for at least two or three years and foreclosures will set records in 2010. “The shadow inventory is real,” he says.
Source: Inman News, Matt Carter (04/26/2010)
Some economists are saying that it’s time for the Federal Reserve to raise interest rates.
Ken Rosen, chair of the University of California Fisher Center for Real Estate, says the financial crisis is over and short-term rates today should be 2 to 3 percent. By keeping rates so low, “We are encouraging asset bubbles in the stock market, bond markets, and global real estate,” Rosen says.
Demand for housing will increase as employers hire more workers, Rosen adds.
Rosen predicts construction of new homes will remain well below the historical norm of 1.1 million homes a year for at least two or three years and foreclosures will set records in 2010. “The shadow inventory is real,” he says.
Source: Inman News, Matt Carter (04/26/2010)
Reverse Mortgage Trend Line Drops
From Daily Real Estate News April 27, 2010
Lenders originated a record 114,641 HUD-insured reverse mortgages in fiscal 2009, reports HUD. However, just 41,375 of the loans have been written in the first six months of fiscal 2010, and the pace of origination is about three-quarters the level a year ago.
HUD's Erica Jessup says production is down because seniors cannot borrow as much against their homes, consumers continue to misunderstand the loans, and because appraisals are lower.
Source: American Banker, Lew Sichelman (04/27/10)
Lenders originated a record 114,641 HUD-insured reverse mortgages in fiscal 2009, reports HUD. However, just 41,375 of the loans have been written in the first six months of fiscal 2010, and the pace of origination is about three-quarters the level a year ago.
HUD's Erica Jessup says production is down because seniors cannot borrow as much against their homes, consumers continue to misunderstand the loans, and because appraisals are lower.
Source: American Banker, Lew Sichelman (04/27/10)
Monday, April 26, 2010
New Home Sales Jump in March
From Daily Real Estate News April 26, 2010
Sales of new homes rose 27 percent in March compared to February, the U.S. Commerce Department announced Friday. It was the largest monthly increase since April 1963, when sales jumped 31.2 percent.
In addition, the National Association of REALTORS® reported last week that sales of previously owned homes rose 6.8 percent.
Economists attribute the figures to buyers taking advantage of the $8,000 tax credit scheduled to expire at the end of this month.
“In simple terms, housing is a bargain again, and buyers are responding,” Michael D. Larson, a real estate and interest rate analyst at Weiss Research, wrote in a research note. “That is unambiguously good news for the market going forward.”
Source: The New York Times, Christine Hauser (04/23/2010)
Sales of new homes rose 27 percent in March compared to February, the U.S. Commerce Department announced Friday. It was the largest monthly increase since April 1963, when sales jumped 31.2 percent.
In addition, the National Association of REALTORS® reported last week that sales of previously owned homes rose 6.8 percent.
Economists attribute the figures to buyers taking advantage of the $8,000 tax credit scheduled to expire at the end of this month.
“In simple terms, housing is a bargain again, and buyers are responding,” Michael D. Larson, a real estate and interest rate analyst at Weiss Research, wrote in a research note. “That is unambiguously good news for the market going forward.”
Source: The New York Times, Christine Hauser (04/23/2010)
HUD to Broaden Help for U.S. Cities
From Daily Real Estate News April 26, 2010
Cities hoping to tap into the Neighborhood Stabilization Program are being stymied by investors who pay cash for distressed housing units and rent them out — a trend that worries those who believe homeownership is key to stronger communities and higher property values.
In response, HUD will broaden the pool of foreclosures that municipalities can purchase to help them buy and resell homes at affordable rates.
Banks, meanwhile, are issuing new guidelines to real estate practitioners, requiring them to give priority to local governments using federal funds to acquire bank-owned residences.
Source: San Francisco Chronicle, Robert Selna (04/26/10)
Cities hoping to tap into the Neighborhood Stabilization Program are being stymied by investors who pay cash for distressed housing units and rent them out — a trend that worries those who believe homeownership is key to stronger communities and higher property values.
In response, HUD will broaden the pool of foreclosures that municipalities can purchase to help them buy and resell homes at affordable rates.
Banks, meanwhile, are issuing new guidelines to real estate practitioners, requiring them to give priority to local governments using federal funds to acquire bank-owned residences.
Source: San Francisco Chronicle, Robert Selna (04/26/10)
Fannie Adds Incentive to Avoid Foreclosure
From Daily Real Estate News April 26, 2010
Beginning in July, Fannie Mae will allow financially troubled home owners to complete a “deed in lieu of foreclosure” or a short sale and be eligible to apply for a new Fannie-backed mortgage in two years.
Currently, borrowers who have completed a deed-in-lieu must wait four years to apply for a loan that Fannie will purchase. Home buyers who go through foreclosure must wait five years.
All these waiting periods can be reduced further, if the potential buyer can show extenuating circumstances. "We are beginning to think about post-recession, how you address borrowers who became unemployed through no fault of their own ... and now deserve the right to re-enter the housing-finance system," said Federal Housing Association Commissioner David Stevens.
Source: The Wall Street Journal, Nick Timiraos (04/26/2010)
Beginning in July, Fannie Mae will allow financially troubled home owners to complete a “deed in lieu of foreclosure” or a short sale and be eligible to apply for a new Fannie-backed mortgage in two years.
Currently, borrowers who have completed a deed-in-lieu must wait four years to apply for a loan that Fannie will purchase. Home buyers who go through foreclosure must wait five years.
All these waiting periods can be reduced further, if the potential buyer can show extenuating circumstances. "We are beginning to think about post-recession, how you address borrowers who became unemployed through no fault of their own ... and now deserve the right to re-enter the housing-finance system," said Federal Housing Association Commissioner David Stevens.
Source: The Wall Street Journal, Nick Timiraos (04/26/2010)
Jumbo Market Inching Back to Hea
From Daily Real Estate News April 26, 2010
The jumbo mortgage market is taking small steps toward normalcy.
In the first few months of 2010, Wells Fargo, Bank of America, and U.S. Bank have become more aggressive in originating jumbo mortgages, says A.W. Pickel, president of LeaderOne Financial, a mortgage lender in Overland Park, Kan. "If you underwrite carefully and cautiously, a jumbo loan is a very good money maker for a bank," he says.
Last week, Redwood Trust Inc. announced plans to sell mortgage-backed securities based on high-quality jumbo loans, one of the first private firms to do so since 2008.
If the program is successful, it could lead to more investors taking the leap and a loosening of the jumbo market, says Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association.
Source: MarketWatch, Amy Hoak (04/26/2010)
The jumbo mortgage market is taking small steps toward normalcy.
In the first few months of 2010, Wells Fargo, Bank of America, and U.S. Bank have become more aggressive in originating jumbo mortgages, says A.W. Pickel, president of LeaderOne Financial, a mortgage lender in Overland Park, Kan. "If you underwrite carefully and cautiously, a jumbo loan is a very good money maker for a bank," he says.
Last week, Redwood Trust Inc. announced plans to sell mortgage-backed securities based on high-quality jumbo loans, one of the first private firms to do so since 2008.
If the program is successful, it could lead to more investors taking the leap and a loosening of the jumbo market, says Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association.
Source: MarketWatch, Amy Hoak (04/26/2010)
Friday, April 23, 2010
30-Year Rate Just Over 5 Percent
From Daily Real Estate News April 23, 2010
The 30-year fixed mortgage rate stayed flat this week, averaging 5.07 percent to remain near historically low levels, reported Freddie Mac.
Here’s how other rates performed:
• 15-year fixed loans fell to 4.39 percent from 4.4 percent last week.
• Five-year hybrid adjustable-rate mortgage averaged 4.03 percent, down from 4.08 percent.
• One-year ARMs rose to 4.22 percent from 4.13 percent last week.
Source: Wall Street Journal, Nathan Becker (04/23/10)
The 30-year fixed mortgage rate stayed flat this week, averaging 5.07 percent to remain near historically low levels, reported Freddie Mac.
Here’s how other rates performed:
• 15-year fixed loans fell to 4.39 percent from 4.4 percent last week.
• Five-year hybrid adjustable-rate mortgage averaged 4.03 percent, down from 4.08 percent.
• One-year ARMs rose to 4.22 percent from 4.13 percent last week.
Source: Wall Street Journal, Nathan Becker (04/23/10)
ZIPs Where Homes Sell Above List Price
From Daily Real Estate News April 23, 2010
Nine of the best-selling ZIP codes in the U.S. during the first quarter of 2010 — where homes sold for more than the asking price — were in California, according to a report released Wednesday by ZipRealty.
The market with the highest percentage of sales above asking price was in Chicago.
In some markets, sellers in move-up neighborhoods are putting homes up for sale, but there is still not a lot of inventory, so the market in those attractive ZIPs can be competitive, says ZipRealty Marketing Director John Oldham.
Here are the 10 ZIP codes where homes sold for more than the asking price in the first three months of 2010:
1. Chicago-Loop, 60603
2. Emeryville-Oakland, Calif., 94608
3. Oakland, Calif., 94621
4. Los Angeles, 90063
5. San Jose-East Valley, Calif., 95122
6. San Pablo, Calif., 94806
7. Los Angeles-Compton, Calif., 90222
8. Lathrop (San Joaquin County), Calif. 95330
9. Oakland, Calif., 94606
10. Oakland, Calif., 94603
Source: San Francisco Chronicle (04/22/2010)
Nine of the best-selling ZIP codes in the U.S. during the first quarter of 2010 — where homes sold for more than the asking price — were in California, according to a report released Wednesday by ZipRealty.
The market with the highest percentage of sales above asking price was in Chicago.
In some markets, sellers in move-up neighborhoods are putting homes up for sale, but there is still not a lot of inventory, so the market in those attractive ZIPs can be competitive, says ZipRealty Marketing Director John Oldham.
Here are the 10 ZIP codes where homes sold for more than the asking price in the first three months of 2010:
1. Chicago-Loop, 60603
2. Emeryville-Oakland, Calif., 94608
3. Oakland, Calif., 94621
4. Los Angeles, 90063
5. San Jose-East Valley, Calif., 95122
6. San Pablo, Calif., 94806
7. Los Angeles-Compton, Calif., 90222
8. Lathrop (San Joaquin County), Calif. 95330
9. Oakland, Calif., 94606
10. Oakland, Calif., 94603
Source: San Francisco Chronicle (04/22/2010)
Thursday, April 22, 2010
How Delinquencies Impair Credit Scores
From Daily Real Estate News April 22, 2010
Fair Isaac, which developed FICO scores, used a comparison between two people to explain how mortgage delinquencies affect credit scores.
Fair Isaac derived these numbers from a theoretical calculation based on hypothetical borrowers – one with an initial score of 680 and one with an initial score of 780. FICO scores range from 300 to 850.
The hypothetical person behind the 680 score had six credit accounts, while the person with the 780 score had 10. The consumer with the 780 score had no missed payments other than the mortgage; the 680 example had two late payments before they failed to pay the mortgage.
After a mortgage delinquency, the two scores would look like this:
• After 30-day delinquency, 680 score drops to 620 to 640; 780 score declines to 670 to 690.
• After 90-day delinquency, 680 score falls to 595 to 610; 780 score goes to 645 to 665.
• After foreclosure, short sale, or deed-in-lieu, 680 goes to 575 to 595 and 780 drops to 620 to 640.
• After bankruptcy, 680 drops to 530 to 550; 780 declines to 540 to 560.
Source: CNN, Les Christie (04/22/2010)
Fair Isaac, which developed FICO scores, used a comparison between two people to explain how mortgage delinquencies affect credit scores.
Fair Isaac derived these numbers from a theoretical calculation based on hypothetical borrowers – one with an initial score of 680 and one with an initial score of 780. FICO scores range from 300 to 850.
The hypothetical person behind the 680 score had six credit accounts, while the person with the 780 score had 10. The consumer with the 780 score had no missed payments other than the mortgage; the 680 example had two late payments before they failed to pay the mortgage.
After a mortgage delinquency, the two scores would look like this:
• After 30-day delinquency, 680 score drops to 620 to 640; 780 score declines to 670 to 690.
• After 90-day delinquency, 680 score falls to 595 to 610; 780 score goes to 645 to 665.
• After foreclosure, short sale, or deed-in-lieu, 680 goes to 575 to 595 and 780 drops to 620 to 640.
• After bankruptcy, 680 drops to 530 to 550; 780 declines to 540 to 560.
Source: CNN, Les Christie (04/22/2010)
Wednesday, April 21, 2010
Foreclosure Backlog Helps Troubled Borrowers
Daily Real Estate News April 21, 2010
An estimated 1.4 million borrowers have failed to pay their mortgages in more than a year, but continue to live in the properties, according to Lender Processing Services, which tracks mortgages on 40 million homes.
Under the new government regulations, it takes banks 14 months to evict nonpaying borrowers – longer in some states. "Many of these people are gaming the system," said Ted Jadlos, a managing director at Lender Processing.
Also, banks aren’t in a hurry because once they take possession of a property they must write down its value to reflect market price. Plus, unoccupied homes are more likely to fall into disrepair or be vandalized.
Some analysts predict that this shadow inventory will cause prices to slide further, but so far it’s not happening.
Source: Financial Times, Suzanne Kapner (04/21/2010)
An estimated 1.4 million borrowers have failed to pay their mortgages in more than a year, but continue to live in the properties, according to Lender Processing Services, which tracks mortgages on 40 million homes.
Under the new government regulations, it takes banks 14 months to evict nonpaying borrowers – longer in some states. "Many of these people are gaming the system," said Ted Jadlos, a managing director at Lender Processing.
Also, banks aren’t in a hurry because once they take possession of a property they must write down its value to reflect market price. Plus, unoccupied homes are more likely to fall into disrepair or be vandalized.
Some analysts predict that this shadow inventory will cause prices to slide further, but so far it’s not happening.
Source: Financial Times, Suzanne Kapner (04/21/2010)
Builders Snapping Up Land at Brisk Pace
Daily Real Estate News April 21, 2010
Home builders are vying actively to buy land to buy in anticipation of a market turnaound.
"There's been an absolute land rush," says Gregor Watson, a partner with McKinley Partners, a California-based real-estate fund.
Builders prefer land with improvements, including sewers and streets because it allows homes to be constructed quickly. Especially attractive are suburban lots in neighborhoods that are easy commutes.
Nationally, the price of finished lots are up about 20 percent from early 2009. Prices for attractive lots in Phoenix and Southern California have risen 60 percent. Nationwide, the best-located lots are fetching twice as much as they would a year ago, said Greg Vogel, CEO of Land Advisors Organization, a land brokerage firm based in Scottsdale, Ariz.
Source: The Wall Street Journal, Dawn Wotapka (04/21/2010)
Home builders are vying actively to buy land to buy in anticipation of a market turnaound.
"There's been an absolute land rush," says Gregor Watson, a partner with McKinley Partners, a California-based real-estate fund.
Builders prefer land with improvements, including sewers and streets because it allows homes to be constructed quickly. Especially attractive are suburban lots in neighborhoods that are easy commutes.
Nationally, the price of finished lots are up about 20 percent from early 2009. Prices for attractive lots in Phoenix and Southern California have risen 60 percent. Nationwide, the best-located lots are fetching twice as much as they would a year ago, said Greg Vogel, CEO of Land Advisors Organization, a land brokerage firm based in Scottsdale, Ariz.
Source: The Wall Street Journal, Dawn Wotapka (04/21/2010)
Mortgage Applications Spike
Daily Real Estate News April 21, 2010
Mortgage applications to buy homes rose 10.1 percent last week on a seasonally adjusted basis compared to the previous week, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the purchase index rose 11 percent compared with the previous week, but was down 5.2 percent from the same week a year ago.
“Purchase applications continued to increase coming out of the Easter holiday, as we approach the end of the home buyer tax credit, and are up modestly over last month.” said Michael Fratantoni, MBA’s vice president of research and economics.
Declining Treasury rates pushed loan rates down from the previous week:
30-year fixed-rate mortgages decreased to 5.04 percent from 5.17 percent.
15-year fixed-rate mortgages decreased to 4.34 percent from 4.45 percent.
1-year ARMs decreased to 6.95 percent from 7.02 percent.
Source: Mortgage Bankers Association (04/21/2010)
Mortgage applications to buy homes rose 10.1 percent last week on a seasonally adjusted basis compared to the previous week, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the purchase index rose 11 percent compared with the previous week, but was down 5.2 percent from the same week a year ago.
“Purchase applications continued to increase coming out of the Easter holiday, as we approach the end of the home buyer tax credit, and are up modestly over last month.” said Michael Fratantoni, MBA’s vice president of research and economics.
Declining Treasury rates pushed loan rates down from the previous week:
30-year fixed-rate mortgages decreased to 5.04 percent from 5.17 percent.
15-year fixed-rate mortgages decreased to 4.34 percent from 4.45 percent.
1-year ARMs decreased to 6.95 percent from 7.02 percent.
Source: Mortgage Bankers Association (04/21/2010)
Buyers Rush to Meet Tax Credit Deadline
From Daily Real Estate News April 21, 20
Nearly half the homes sold in March – 48.2 percent – were purchased by first-time buyers, according to a survey of more than 1,500 real estate practitioners by Campbell/Inside Mortgage Finance.
"Many observers had felt that the pool of first time home buyers had been depleted last fall," Thomas Popik, research director for Campbell Surveys, said in a statement. "Instead, the normal spring-summer buying season is combining with the tax credit to produce blow-out results for first-time home buyers."
Source: Reuters news (04/19/2010)
Nearly half the homes sold in March – 48.2 percent – were purchased by first-time buyers, according to a survey of more than 1,500 real estate practitioners by Campbell/Inside Mortgage Finance.
"Many observers had felt that the pool of first time home buyers had been depleted last fall," Thomas Popik, research director for Campbell Surveys, said in a statement. "Instead, the normal spring-summer buying season is combining with the tax credit to produce blow-out results for first-time home buyers."
Source: Reuters news (04/19/2010)
Monday, April 19, 2010
Number of Delinquent Mortgages Declines
From Daily Real Estate News April 19, 2010
The number of delinquent mortgages declined 8.6 percent in March, says LPS Applied Analytics, which tracks the performance of loans for investors. Totals also declined in February.
The biggest decline was in loans more than 30 days past due, which are now at about the same level as they were in spring 2008.
"We're not out of the woods, but this appears to be a turning point," says LPS Applied Analytics President Ted Jadlos. "This is the first time we've seen improvement across all stages of mortgage delinquency."
Source: The Wall Street Journal, Ruth Simon (04/19/2010)
The number of delinquent mortgages declined 8.6 percent in March, says LPS Applied Analytics, which tracks the performance of loans for investors. Totals also declined in February.
The biggest decline was in loans more than 30 days past due, which are now at about the same level as they were in spring 2008.
"We're not out of the woods, but this appears to be a turning point," says LPS Applied Analytics President Ted Jadlos. "This is the first time we've seen improvement across all stages of mortgage delinquency."
Source: The Wall Street Journal, Ruth Simon (04/19/2010)
Lenders Unload Mortgages to Collection Agencies
From Daily Real Estate News April 19, 2010
Lenders are selling second mortgages and home-equity lines in default to collection agencies that have the right to collect this money potentially for decades."
It's a big business, and investors are coming out of the woodwork," says Sylvia Alayon, a vice president for Consumer Mortgage Audit Center, which analyzes mortgage documents for lenders, advocacy groups, and attorneys.
Real estate professionals will be doing their short-sale clients a big favor if they urge them to get professional advice before they sign agreements, Alayon says.
A new government short-sale program, which takes effect Monday, aims to prevent banks from reselling this debt. Sellers covered under the program will receive notice that secondary lien holders have received part of the proceeds of the sale "in exchange for release and full satisfaction of their liens."
Source McClatchy/Tribune News, Jim Wasserman (04/19/2010)
Lenders are selling second mortgages and home-equity lines in default to collection agencies that have the right to collect this money potentially for decades."
It's a big business, and investors are coming out of the woodwork," says Sylvia Alayon, a vice president for Consumer Mortgage Audit Center, which analyzes mortgage documents for lenders, advocacy groups, and attorneys.
Real estate professionals will be doing their short-sale clients a big favor if they urge them to get professional advice before they sign agreements, Alayon says.
A new government short-sale program, which takes effect Monday, aims to prevent banks from reselling this debt. Sellers covered under the program will receive notice that secondary lien holders have received part of the proceeds of the sale "in exchange for release and full satisfaction of their liens."
Source McClatchy/Tribune News, Jim Wasserman (04/19/2010)
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