Daily Real Estate News, October 29, 2010
The 30-year fixed mortgage rate rose slightly to 4.23 percent this week compared to 4.21 percent a week ago, Freddie Mac reports.
Interest on 15-year fixed loans also rose, moving to 3.66 percent from 3.64 percent, while the five-year adjustable-rate mortgage fell to 3.41 percent from 3.45 percent and the one-year ARM remained unchanged at 3.30 percent.
Freddie Mac chief economist Frank Nothaft attributed the flat rates to mixed economic data released this week.
Source: Risk Center, Eileen Fitzpatrick (10/29/10)
Friday, October 29, 2010
Thursday, October 28, 2010
Existing Home Sales on the Rise
Existing home sales climbed for the second month in a row in September, fueling some hope that a housing recovery is underway.
The median price of an existing, single-family detached home sold in California during September was $309,900, down 2.7 percent from August’s $318,660 median price, but up 4.5 percent from the $296,610 median price recorded for the same period a year ago, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) September sales and price report. September also marked 11 consecutive months of year-over-year price gains.
C.A.R.’s report also showed that, contrary to the national picture, the housing supply in California has been below normal throughout 2010.
C.A.R.’s Unsold Inventory Index for existing, single-family detached homes remained relatively unchanged in September at 6.2 months but was up from the 4.5 months recorded in September 2009. The index was 6.1 months in August. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
The median price of an existing, single-family detached home sold in California during September was $309,900, down 2.7 percent from August’s $318,660 median price, but up 4.5 percent from the $296,610 median price recorded for the same period a year ago, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) September sales and price report. September also marked 11 consecutive months of year-over-year price gains.
C.A.R.’s report also showed that, contrary to the national picture, the housing supply in California has been below normal throughout 2010.
C.A.R.’s Unsold Inventory Index for existing, single-family detached homes remained relatively unchanged in September at 6.2 months but was up from the 4.5 months recorded in September 2009. The index was 6.1 months in August. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
Orange County Detached Home Prices Move Above $500,000
The median price of an existing Orange County home moved back above the $500,000 mark in September, while the pace of sales here remained sluggish, the California Association of Realtors said Friday.
The median price for an existing stand-alone OC home sold in September was $510,530, a nearly $11,000 or 2.2% increase from August, and a 2.8% increase from the prices homes here were selling at a year earlier.
The area’s median sales price now is up about 21% from the recent bottom of the market, seen in January 2009, according to the association’s figures.
Prices here are still off more than 31% from the peak of the market, when the median sales price for an OC home topped $747,000 in April 2007.
The number of OC home sales in September was up 1.6% from a month earlier, the Realtor association said.
Sales were down 10.4% from a year earlier.
The median sales price of an existing home in California was $309,900 in September, a 2.7% decrease from August and a 4.5% increase from a year ago, according to the association.
Sales in California were up about 3.8% from August’s levels, but were off nearly 12% from a year earlier. The inventory of homes priced under $500,000 remains “lean,” according to the association.
The association excludes condominiums from its figures.
Including condos, the median price of an OC home sold in September was $445,000, a jump of more than $16,000 or 3.7% from a year earlier, according to a report earlier this week from San Diego-based MDA DataQuick, a unit of Canada’s MacDonald, Dettwiler and Associates.
The median price for an existing stand-alone OC home sold in September was $510,530, a nearly $11,000 or 2.2% increase from August, and a 2.8% increase from the prices homes here were selling at a year earlier.
The area’s median sales price now is up about 21% from the recent bottom of the market, seen in January 2009, according to the association’s figures.
Prices here are still off more than 31% from the peak of the market, when the median sales price for an OC home topped $747,000 in April 2007.
The number of OC home sales in September was up 1.6% from a month earlier, the Realtor association said.
Sales were down 10.4% from a year earlier.
The median sales price of an existing home in California was $309,900 in September, a 2.7% decrease from August and a 4.5% increase from a year ago, according to the association.
Sales in California were up about 3.8% from August’s levels, but were off nearly 12% from a year earlier. The inventory of homes priced under $500,000 remains “lean,” according to the association.
The association excludes condominiums from its figures.
Including condos, the median price of an OC home sold in September was $445,000, a jump of more than $16,000 or 3.7% from a year earlier, according to a report earlier this week from San Diego-based MDA DataQuick, a unit of Canada’s MacDonald, Dettwiler and Associates.
The Price of a “No-Cost” Loan
Some home buyers who may be concerned about paying high closing costs might be tempted by a “zero-cost” or “no-cost” loan option, which requires no cash outlay, but typically adds a half percentage point to the rate. However, some financial consultants say these loans tend to be most beneficial to buyers planning to have the loan for less than five years.
MAKING SENSE OF THE STORY FOR CONSUMERS
One of the primary differences between a no-cost loan and similar loans is that no-cost loans do not tack on closing costs to the balance, but instead increase the rate.
With no-cost loans, third-party fees including the appraisal, credit report, title insurance, recording, and the use of a mortgage broker are paid by the lender. The fees, including the amount the broker is being paid, are disclosed on the closing statement.
Home buyers who bypass a broker and work directly with a lender may encounter less transparency, as loan officers are not required to disclose the amount the bank is making on the loan.
Borrowers weighing their loan options are advised to use a mortgage amortization calculator to compare the costs for a conventional loan compared with a no-cost loan. The Federal Reserve provides an amortization calculator on its Web site at http://www.federalreserve.gov/.
MAKING SENSE OF THE STORY FOR CONSUMERS
One of the primary differences between a no-cost loan and similar loans is that no-cost loans do not tack on closing costs to the balance, but instead increase the rate.
With no-cost loans, third-party fees including the appraisal, credit report, title insurance, recording, and the use of a mortgage broker are paid by the lender. The fees, including the amount the broker is being paid, are disclosed on the closing statement.
Home buyers who bypass a broker and work directly with a lender may encounter less transparency, as loan officers are not required to disclose the amount the bank is making on the loan.
Borrowers weighing their loan options are advised to use a mortgage amortization calculator to compare the costs for a conventional loan compared with a no-cost loan. The Federal Reserve provides an amortization calculator on its Web site at http://www.federalreserve.gov/.
Mortgage Bankers Predict Rising Rates in 2011
Daily Real Estate News, October 28, 2010
Barring any big announcement from the Federal Reserve, rates on 30-year fixed–rate mortgages will climb to 5.1 percent by the end of 2011, the Mortgage Bankers Association predicts.
Jay Brinkmann, chief economist of the MBA, said he expects applications for mortgages to purchase homes to stay about the same as they were in 2009, higher than 2010, but refinances should drop.
Total mortgage volume is expected to be nearly $1 trillion in 2011, down from an anticipated $1.4 trillion this year and nearly $2 trillion in 2009.
Source: The Wall Street Journal, Amy Hoak (10/28/2010)
Barring any big announcement from the Federal Reserve, rates on 30-year fixed–rate mortgages will climb to 5.1 percent by the end of 2011, the Mortgage Bankers Association predicts.
Jay Brinkmann, chief economist of the MBA, said he expects applications for mortgages to purchase homes to stay about the same as they were in 2009, higher than 2010, but refinances should drop.
Total mortgage volume is expected to be nearly $1 trillion in 2011, down from an anticipated $1.4 trillion this year and nearly $2 trillion in 2009.
Source: The Wall Street Journal, Amy Hoak (10/28/2010)
New Credit Score Tailored for Lenders
Daily Real Estate News, October 28, 2010
The three major U.S. credit reporting agencies are offering a new FICO score for prescreening, originating, and servicing home loans that better predicts the likelihood of default.
The FICO 8 Mortgage Score from Fair Isaac Corp. uses the same 300-850 scoring range but more effectively flags accounts 90 days or more past due, which corrals more risky borrowers into the lower levels.
The new product also includes additional codes that help lenders understand and explain the ratings to applicants.
Source: Inman News (10/28/10)
The three major U.S. credit reporting agencies are offering a new FICO score for prescreening, originating, and servicing home loans that better predicts the likelihood of default.
The FICO 8 Mortgage Score from Fair Isaac Corp. uses the same 300-850 scoring range but more effectively flags accounts 90 days or more past due, which corrals more risky borrowers into the lower levels.
The new product also includes additional codes that help lenders understand and explain the ratings to applicants.
Source: Inman News (10/28/10)
Wednesday, October 20, 2010
Why Big Banks Won't Give HAMP Modifications
Lawyers for homeowners who have been denied mortgage modifications under the Obama administration's Home Affordable Modification Program make a straightforward argument when they sue banks. As a class-action suit in Massachusetts puts it, "when a large financial institution promises to modify an eligible loan to prevent foreclosure, homeowners who live up to their end of the bargain expect that promise to be kept. This is especially true when the financial institution is acting under the aegis of a federal program specifically targeted at preventing foreclosure."
Under HAMP, a program funded with $50 billion from the Wall Street bailout, eligible homeowners at risk of falling behind on their mortgages can ask their mortgage servicers for a modification that reduces monthly payments to 31 percent of their monthly income. If they make their monthly payments during a "Trial Period Plan" that's supposed to last for three or four months, then the modification is supposed to be made "permanent" for five years. Most trial periods drag on for longer than three months, however, and more homeowners have been bounced from the program than have been granted permanent mods.
The banks' broadest legal counterargument against unhappy HAMPers' lawsuits has been that homeowners can't sue to enforce the Servicer Participation Agreements between mortgage servicers and the Treasury Department, which administers HAMP. It's an argument to which judges have been receptive. But servicers are now also responding to legal arguments that they've acted in bad faith. When homeowners argue that they should be granted permanent modifications because they've successfully made their trial payments, banks say homeowners actually don't know what they're talking about.
In motions to dismiss suits seeking class-action status in Massachusetts and Arizona, for instance, JPMorgan Chase and Bank of America first point out that the Treasury Department has made a lot of changes to HAMP, which Bank of America calls "a constantly evolving new federal program" with near-monthly supplemental directives from the government.
The most important change to the program has been the Treasury Department's late-January requirement that as of June 2010, borrowers would be required to provide documentation before being put in a trial plan. Before June, servicers could put borrowers into trial plans with a mere phone conversation.
Even before Treasury required it, servicers typically asked borrowers to provide some solid documentation. For instance, Troy Taliancich of New Orleans was put in a HAMP trial after a phone call in January. He submitted tax forms and pay stubs -- the very material required by the supplemental directive. But even though he'd already sent that stuff, the bank told him he'd have to start over anyway because of the new guideline. "We changed the procedure and you are one of the homeowners that fell into the middle of when the process changed," he was told.
"Not all mortgage loans are eligible for HAMP, and a participating servicer is not required to modify every HAMP-eligible loan," Bank of America's lawyers argued in August in response to a lawsuit in Arizona. "If borrower eligibility is satisfied, the servicer is obligated to consider the borrower for a HAMP modifiation, assuming it is not precluded from doing so by its other contractual arrangements or investor requirements."
Chase's lawyers argue that borrowers should know that even if they qualify for a Chase Trial Period Plan under the most recent guidelines, there's still a trap door: "The cover letter accompanying the TPPs also makes it clear that the borrower may not ultimately qualify for a permanent modification: 'We have enclosed a customized Home Affordable Modification Trial Period Plan ('Trial Period Plan'). If you qualify under the federal government's Home Affordable Modification program and comply with the terms of the Trial Period Plan, we will modify your mortgage loan.'" (Emphasis in original.)
A federal judicial panel recently consolidated several class-action HAMP lawsuits against Bank of America (including the one from Arizona) and the class-action against Chase in Massachusetts will have a hearing in November.
Chris Peterson, a law professor at the University of Utah law, said the recent revelations about bogus documentation that led both Bank of America and Chase to briefly halt foreclosures could give homeowners an advantage in their HAMP lawsuits.
"If there are fraudulent affidavits being filed, it gives the whole situation the patina of bad faith that makes their arguments more plausible," he said. "It's hard not to feel sympathy for the homeowners' argument. Their efforts to get their mortgages modified reflective of a reasonable interest rate and principal amount feels like some sort of a bizarre Kafka parable."
Under HAMP, a program funded with $50 billion from the Wall Street bailout, eligible homeowners at risk of falling behind on their mortgages can ask their mortgage servicers for a modification that reduces monthly payments to 31 percent of their monthly income. If they make their monthly payments during a "Trial Period Plan" that's supposed to last for three or four months, then the modification is supposed to be made "permanent" for five years. Most trial periods drag on for longer than three months, however, and more homeowners have been bounced from the program than have been granted permanent mods.
The banks' broadest legal counterargument against unhappy HAMPers' lawsuits has been that homeowners can't sue to enforce the Servicer Participation Agreements between mortgage servicers and the Treasury Department, which administers HAMP. It's an argument to which judges have been receptive. But servicers are now also responding to legal arguments that they've acted in bad faith. When homeowners argue that they should be granted permanent modifications because they've successfully made their trial payments, banks say homeowners actually don't know what they're talking about.
In motions to dismiss suits seeking class-action status in Massachusetts and Arizona, for instance, JPMorgan Chase and Bank of America first point out that the Treasury Department has made a lot of changes to HAMP, which Bank of America calls "a constantly evolving new federal program" with near-monthly supplemental directives from the government.
The most important change to the program has been the Treasury Department's late-January requirement that as of June 2010, borrowers would be required to provide documentation before being put in a trial plan. Before June, servicers could put borrowers into trial plans with a mere phone conversation.
Even before Treasury required it, servicers typically asked borrowers to provide some solid documentation. For instance, Troy Taliancich of New Orleans was put in a HAMP trial after a phone call in January. He submitted tax forms and pay stubs -- the very material required by the supplemental directive. But even though he'd already sent that stuff, the bank told him he'd have to start over anyway because of the new guideline. "We changed the procedure and you are one of the homeowners that fell into the middle of when the process changed," he was told.
"Not all mortgage loans are eligible for HAMP, and a participating servicer is not required to modify every HAMP-eligible loan," Bank of America's lawyers argued in August in response to a lawsuit in Arizona. "If borrower eligibility is satisfied, the servicer is obligated to consider the borrower for a HAMP modifiation, assuming it is not precluded from doing so by its other contractual arrangements or investor requirements."
Chase's lawyers argue that borrowers should know that even if they qualify for a Chase Trial Period Plan under the most recent guidelines, there's still a trap door: "The cover letter accompanying the TPPs also makes it clear that the borrower may not ultimately qualify for a permanent modification: 'We have enclosed a customized Home Affordable Modification Trial Period Plan ('Trial Period Plan'). If you qualify under the federal government's Home Affordable Modification program and comply with the terms of the Trial Period Plan, we will modify your mortgage loan.'" (Emphasis in original.)
A federal judicial panel recently consolidated several class-action HAMP lawsuits against Bank of America (including the one from Arizona) and the class-action against Chase in Massachusetts will have a hearing in November.
Chris Peterson, a law professor at the University of Utah law, said the recent revelations about bogus documentation that led both Bank of America and Chase to briefly halt foreclosures could give homeowners an advantage in their HAMP lawsuits.
"If there are fraudulent affidavits being filed, it gives the whole situation the patina of bad faith that makes their arguments more plausible," he said. "It's hard not to feel sympathy for the homeowners' argument. Their efforts to get their mortgages modified reflective of a reasonable interest rate and principal amount feels like some sort of a bizarre Kafka parable."
Saturday, October 16, 2010
All Bets are Off.
If the current foreclosure problems block the government and industry from getting the many real estate sectors back in shape -- and even worse, if they provoke a new crisis of confidence -- all bets on the wider economic recovery are off.
Some members of Congress have called for a moratorium on foreclosures until the issue is settled, but that seems unlikely to happen because the government and the banks have based their hope of reviving the housing market and the related financial mess on saving the homes that can be saved while cleansing lost mortgages from the market. The government has already fallen far short of its goals to help modify troubled mortgage loans that might be salvageable.
The Obama administration this month vetoed a bill that would have helped banks accelerate the foreclosure process, but officials fear a moratorium would prevent valid foreclosures from going forward.
Some members of Congress have called for a moratorium on foreclosures until the issue is settled, but that seems unlikely to happen because the government and the banks have based their hope of reviving the housing market and the related financial mess on saving the homes that can be saved while cleansing lost mortgages from the market. The government has already fallen far short of its goals to help modify troubled mortgage loans that might be salvageable.
The Obama administration this month vetoed a bill that would have helped banks accelerate the foreclosure process, but officials fear a moratorium would prevent valid foreclosures from going forward.
Friday, October 15, 2010
30-Year Mortgage Rates Plumb New Depths
Daily Real Estate News, October 15, 2010
Freddie Mac reports that the average interest on 30-year fixed mortgages slipped to an all-time low, for the third consecutive week, to 4.19 percent.
At the same time, 15-year fixed-rate loans and the five-year adjustable-mortgage rate both also hit record lows. Rates on the former were 3.62 percent, while the latter averaged just 3.47 percent.
Source: The Wall Street Journal, Nathan Becker (10/15/10)
Freddie Mac reports that the average interest on 30-year fixed mortgages slipped to an all-time low, for the third consecutive week, to 4.19 percent.
At the same time, 15-year fixed-rate loans and the five-year adjustable-mortgage rate both also hit record lows. Rates on the former were 3.62 percent, while the latter averaged just 3.47 percent.
Source: The Wall Street Journal, Nathan Becker (10/15/10)
Thursday, October 14, 2010
California to join multistate inquiry of foreclosures by banks
From The L.A. Times
California to join multistate inquiry of foreclosures by banks
In late September and early October several major lending institutions began voluntarily halting foreclosures in select states while they reviewed their foreclosure processes. This action is in response to findings that questioned whether some lenders/servicers were following the correct procedures to foreclose on a property.
MAKING SENSE OF THE STORY FOR CONSUMERS
To date, Bank of America is the only lender that has extended its foreclosure moratorium to California, where the vast majority of foreclosures are conducted without a court order.
Non-judicial foreclosures in California, however, do have legal requirements that lenders must follow. For example, California law requires that lenders for certain mortgage loans made between Jan. 1, 2003, and Dec. 31, 2007, attempt to make contact with borrowers to discuss options for avoiding foreclosure at least 30 days before filing a notice of default. Lenders also must sign a declaration in the notice of default stating that they tried to contact the borrower, made contact with the borrower, or fall within an exception (such as a bankruptcy filing).
This halting of foreclosures is a voluntary action taken on the part of these lenders/servicers and has not been mandated by either the states or the federal government. The participating lenders and servicers believe their internal review processes should take anywhere from a few weeks to 30 days to complete.
It is important to note that Bank of America is temporarily suspending foreclosure sales, but not necessarily halting its actions during other stages of the foreclosure process.
California to join multistate inquiry of foreclosures by banks
In late September and early October several major lending institutions began voluntarily halting foreclosures in select states while they reviewed their foreclosure processes. This action is in response to findings that questioned whether some lenders/servicers were following the correct procedures to foreclose on a property.
MAKING SENSE OF THE STORY FOR CONSUMERS
To date, Bank of America is the only lender that has extended its foreclosure moratorium to California, where the vast majority of foreclosures are conducted without a court order.
Non-judicial foreclosures in California, however, do have legal requirements that lenders must follow. For example, California law requires that lenders for certain mortgage loans made between Jan. 1, 2003, and Dec. 31, 2007, attempt to make contact with borrowers to discuss options for avoiding foreclosure at least 30 days before filing a notice of default. Lenders also must sign a declaration in the notice of default stating that they tried to contact the borrower, made contact with the borrower, or fall within an exception (such as a bankruptcy filing).
This halting of foreclosures is a voluntary action taken on the part of these lenders/servicers and has not been mandated by either the states or the federal government. The participating lenders and servicers believe their internal review processes should take anywhere from a few weeks to 30 days to complete.
It is important to note that Bank of America is temporarily suspending foreclosure sales, but not necessarily halting its actions during other stages of the foreclosure process.
Subscribe to:
Posts (Atom)
.jpg)