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Banks Lose Pivotal Foreclosure Case

2011-01-10T10:00:00.000-08:00

Daily Real Estate News, January 10, 2011

A recent decision by the Massachusetts Supreme Judicial Court is expected to have sweeping implications for the nation’s banking industry when it comes to how they’ve approved foreclosures and may even invalidate thousands of foreclosures across the country.

The court, in affirming a lower court’s ruling, invalidated two mortgage foreclosure sales because the banks failed to prove the home owners actually owed the mortgages at the time of foreclosure.

In recent months, the industry has been under fire across the country for using “robo signing” to review foreclosure affidavits, a process in which low-level employees went through hundreds of foreclosure affidavits a day without verifying any of the documents. Such blanket procedures have hurt the banks’ ability to prove that they owned the mortgages.

In the Massachusetts case, the court found that the banks — who were not the original mortgagee — failed to show that they held the mortgages at the time of foreclosure, which called into question whether the foreclosure sale was valid.

"There is no dispute that the mortgagors of the properties in question had defaulted on their obligations, and that the mortgaged properties were subject to foreclosure,” wrote Justice Robert Cordy about the court’s decision. “Before commencing such an action, however, the holder of an assigned mortgage needs to take care to ensure that his legal paperwork is in order.”

Attorney Paul Collier III, who represents Antonio Ibanez, one of the home owners in the case, said the ruling stands to affect thousands of mortgages across the country.

"For home owners and foreclosures in general, it means that any mortgage foreclosure which was initiated by a securitized trust at a time when the trust had not obtained a mortgage assignment which gave it the lawful right to do so is void," Collier told the Associated Press. "Those home owners, like Mr. Ibanez, still own the property."

Source: “Highest Massachusetts Court Rules Against 2 Big Banks in Pivotal Mortgage Foreclosure Case,” Associated Press (Jan. 7, 2011)

Pricing: Finding the Magic Number

2011-01-05T16:53:00.000-08:00

Pricing strategies can help you market your listings and generate offers that turn into closed deals.

By Katherine Tarbox
January 2011

"Once you get a real estate license, you can start telling consumers what their homes are worth," says Melanie McLane, ABR, CRB, owner of the Melanie Group in Jersey Shore, Pa. She’s a certified appraiser with more than 30 years’ experience in real estate. "But I find many people aren’t prepared or haven’t done their homework to know what the market will support before giving price estimates."

And just doing your homework isn’t the end of setting a price; it’s also important to have a pricing strategy that works for your market and your clients. Here are four techniques:

•Employ shock and awe.

Remember Economics 101—the simple law of supply and demand? Adam Smith, the grandfather of modern economics, said when an asset is undervalued, the "invisible hand of the market" corrects the pricing to fair market value. It’s a principle that Amanda DiVito Parle, ABR, CRS, broker associate with RE/MAX Alliance of Arvada, Colo., has used to her sellers’ advantage. By drastically lowering the price on some of her luxury listings—a process she calls "shocking and awing the market"—she creates instant demand. "I listed a $1 million–plus property for $599,000, and a sales professional called and asked if it was correct," she says.

Often, properties can end up selling for more what you’d have originally listed them at. "You need to the drop the price so dramatically that buyers think it’s outrageous," she says. "They’ll determine the price. They’ll be eager to see the property and create a competitive bidding war."

•Set a market-leading price.

"Do your homework on the local market and price the home to lead the market, not chase the market," says Rick Lawrence, e-PRO, SFR, a sales associate with RE/MAX Professionals Select in Naperville, Ill. He recommends showing sellers virtual tours of comparables to get them on the same page about setting a price that will lead the market.

•Pick an exact number.

Ben Kinney, founder of the Home4Investment real estate team in Bellingham, Wash., assesses a listing’s value, setting a price to the dollar: $137,368 or $213,348, for example. "Consumers assume that even prices aren’t carefully calculated and probably just a home price thrown out for the sake of it." At least with Kinney, that notion is correct. He considers all the features of the home to reach a precise number.

•Don’t get counted out.

It’s not uncommon to price a house slightly under an even price point, say at $199,000 instead of $200,000, to give the home a competitive edge. The trouble is, buyers who search for homes online (and virtually all do) are typically searching a range of prices, Kinney says. So a buyer looking for a $200,000–$250,000 house wouldn’t even see your $199,000 listing. By knowing the range buyers usually use for a neighborhood, you can price your listing for maximum exposure, Kinney says.

When the offers do start rolling in, take them seriously, McLane says. Sellers sometimes make the mistake of refusing reasonable offers early in the listing period. Help your clients understand that the longer their house sits, the less desirable it may become to active house hunters.

What Qualifies as a Short Sale Hardship?

2011-01-05T16:42:00.000-08:00

Daily Real Estate News, January 5, 2011

Sellers aren’t entitled to a short sale just because they’ve lost equity in their home. Lenders look for other hardships when approving short sale transactions. Lisa Udy, a real estate professional with Logan Real Estate in Utah, notes in a recent article the following hardships often qualify:

Job loss
Illness
Divorce
Death of spouse
Natural disasters
Bankruptcy

However, besides a hardship, lenders also consider whether the home’s value has dropped, the mortgage is near or in default (you don’t have to default to qualify but you must prove that if something isn’t done soon, you will default, Udy notes), and the seller has no other assets.

What doesn’t qualify as a hardship? Udy says:

Bad purchase decision or over-bought on the home
Unhappy with location
Purchased another home
Pregnancy
Walk away
Home value declined

Source: “Short Sale Hardships -- Qualifying for a Short Sale,” Tempe Real Estate Agent (Jan. 4, 2011)

'Secret' Way to Lower Mortgage Payments

2011-01-05T16:36:00.000-08:00

Daily Real Estate News, January 5, 2011

Home owners can trim their monthly mortgage payments by “recasting” or “re-amortizing” their loan, without having to refinance and face hefty closing cost fees, experts say.

When recasting, the borrower pays off a lump sum of the loan’s principal and then resets monthly payments at the loan’s original interest rate and terms.

Here’s one scenario: $230,449 is left on a 30-year fixed rate loan for a $300,000 mortgage taken out at 7.93 percent in 1995. The borrower pays $20,000 toward the principal and asks the lender to reamortize their payments over the remaining 15 years of the loan. The monthly payment then drops by $52, from $2,187 to $2,135 per month. ($100,000 toward the lump sum would save $730 a month.)

Since borrowers are not asking for a new loan, they will not have to pay closing costs or submit to another credit check. (Note: “Recasting” is often used in the mortgage industry to refer to interest rate resets on adjustable-rate mortgages. In this case, the interest rate and loan term remain the same. )

“People don’t really know about it, but it’s become more common recently,” Alan Rosenbaum, founder and chief executive of the Guardhill Financial Corporation in New York, said about recasting.

Borrowers who just make extra payments toward the loan’s principal but do not ask the bank to recast the loan will keep monthly payments the same and just shorten the overall time it takes to pay off the loan. Recasting, on the other hand, reduces the principal but then, in turn, lowers monthly payments and interest over the life of the loan.

Some recent buyers may find recasting a good option, particularly when it makes little financial sense to refinance so soon after purchasing a home but are expecting a large sum of money. For example, buyers who expect to receive a tax refund or other substantial money after closing on their property, such as proceeds from the sale of another property or stocks, may want to look into recasting to lower monthly payments, says Edward Ades, the owner of Universal Mortgage in Brooklyn, N.Y.
Source: “A Little-Known Strategy for Cutting Mortgage Payments,” New York Times (Dec. 30, 2010)

Kiss 4% Mortgage Rates Goodbye

2011-01-03T16:28:00.000-08:00

NEW YORK (CNNMoney.com) -- The era of near 4% mortgage rates has ended after a quick rate rise since early November. But some industry experts think that may be a good thing for the flagging housing market.

The average 30-year fixed mortgage rate has risen to 4.86% from 4.17%, according to Freddie Mac's weekly mortgage market survey. In the Bankrate.com weekly survey, the rate has risen to 5.02% -- crossing the 5% mark for the second time in three weeks -- after being as low as 4.42% as recently as early November.

Rates haven't been this high since May and forecasters now predict them to remain between 5% and 6% for all of 2011.

"You can kiss those record lows goodbye," said Greg McBride, chief economist for Bankrate.com.

Keith Gumbinger of HSH Associates, a provider of mortgage information said that the market reached a new plateau.

"I don't think we're going back to a 50-year low anytime soon without an economic collapse," he said. "Rates will probably never revisit those levels."

The increase will push mortgage payments higher for homebuyers. When rates rise from 4.25% to 5% it takes away about 9% of buying power, according to McBride.

"That's nothing to sneeze at," he said. "But it's still small relative to the steep drop in home prices over the past few years."

Good for the market?

Higher interest rates may even prove stimulating to the still quiet housing market in which sales volume and prices are scraping near their bottoms.

"The initial phase of an interest rate increase generally does not hurt markets," said Lawrence Yun, chief economist for the National Association of Realtors. "In fact, it can help."

The rapid rise introduces an element of urgency for potential homebuyers. They may now rush to buy before rates spurt even more.

The strength of the economic recovery will have far more impact on the housing market that this relatively modest increase in mortgage rates, according to Yun. If hiring gains momentum, housing markets should revive.

"If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume," said Yun.

Gumbinger said that demand for homes may be tempered somewhat by the increased mortgage costs and so affect home prices a bit but the improving job picture and better consumer confidence matter much more.

"If the other factors are aligned," he said, "interest rates are not a big thing."

The real mortgage challenge, according to Yun, is to increase the number of loan applicants winning approvals. Too many potential homebuyers are still finding it difficult to qualify for loans.

"The current mortgage market is a unique situation" he said. "It's less about rates than it is about underwriting standards, which are, in my opinion, still too stringent."

"If lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy."

California Real Estate 2011 Outlook

2011-01-03T16:20:00.000-08:00

From Los Angeles Times

When will housing come back in California? Five experts offer their views.

Foreclosures in the state are still high. Sales of new homes are at historic lows. And millions of homeowners are underwater on their mortgages. So what's the outlook for 2011 and beyond?

Real estate historically has helped give a boost to economies exiting a recession, but the severity of this bust is nearly unprecedented: Californians have lost $1.73 trillion worth of equity in their homes since prices peaked in 2007, according to Moody's Economy.com.

• Richard Green, director of the USC Lusk Center for Real Estate, predicts home prices will remain flat in 2011.

California's recovery will hinge on location, said Green, who held professorships at several universities and worked as a principal economist at Freddie Mac before becoming director of the Lusk center.

"Draw a line from El Centro up to Sacramento and think of all the towns up and down that line. Unless we have hyperinflation in general in the economy — prices going up a lot — I would guess that in my lifetime we will not see a return to the prices that we had at the peak," Green said.

"Now, places like La Jolla, Malibu, Laguna, Huntington Beach, Atherton, Palo Alto, the city of San Francisco, Marin County, those are places where within the next five years I could easily imagine prices returning to their peak."

"The markets in the Central Valley were much more bubbly than the markets on the coast," he said. "You have very few people who make a lot of money in these places."

"Whereas a place like Silicon Valley, or a place like West Los Angeles, there is a critical mass of very high-income people.… That means you have a large number of people who can afford to spend in the neighborhood of $1 million on a house, and these are desirable places."

"The more a property is a commodity that you can easily substitute for something else, the less the chance it will ever come back to its peak. The rarer a property is, the more likely it's going to come back quickly."

• Leslie Appleton-Young, chief economist for the California Assn. of Realtors, predicts home prices will rise 2% in 2011.

There are few professionals who would like more to see the housing market bounce back to the heady days of old than Realtors. Real estate agents made a killing when the housing market soared and then took a pounding when it tanked.

During the boom years, Appleton-Young said, she espoused the theory that rising prices mattered more than making solid loans. That theory appeared correct as long as values kept rising.

"What happened this time was prices plummeted and everyone was in trouble," she said.

These days, the economist sees little chance of the market returning to its previous heights anytime soon.

"We are in a very slow-moving recovery with prices stabilized at the moderate and low end," Appleton-Young said. "We are still seeing price attrition and price softening at the upper ends of the market."

2011 will be lackluster, she said, but that does not mean California is not improving.

"We are almost two years into a price recovery. The problem is not to look at 2007 as the normal market that you are moving back up to, because it wasn't a normal market. We are back in an underwriting environment that actually makes sense."

"You are seeing prices recovering throughout the state," she added. "It is just going to take time."

• Bruce Norris, president of Norris Group in Riverside, expects home prices to fall 5% in 2011.

The real estate slump has been good to Norris, an investor in foreclosed homes. But he believes the market is being artificially boosted by government programs and is set to fall further this year.

"We are in an artificial recovery," Norris said. "It's government controlled and manipulated. We have extremely favorable interest rates that we really should not have, based on our debt. We have supported real estate with tax rebates, and we have prevented inventory from showing up by allowing people to be two and three years behind on their mortgages."

Foreclosed homes, in particular, are being kept off the market through loan modification attempts and other policies.

"You've had a slew of programs trying to prevent inventory from showing up, and that prevents reality from happening," Norris said. "It's definitely standing in the way of the natural process."

What does the housing market need most?

"Demand for houses," Norris said. "Somebody able to qualify for a loan and actually being able to get it. And that's why it is not going to happen."

• Emile Haddad, chief executive of FivePoint Communities Inc., expects home prices to "stabilize" in 2011 but declined to make a specific price prediction.

Determining whether the housing market is on steady footing is essential to developers such as Haddad, the former chief investment officer for Lennar Corp. Haddad, along with Lennar, is now part owner of FivePoint, which is managing the development of the Valencia community in Los Angeles County and other high-profile projects. He believes a recovery has yet to take hold in California.

"We are bumping along the bottom," Haddad said. "And that is a good thing, because that is the first thing that you need in order to start seeing a housing recovery. You need to have a period where values are not going down and the trend is moving in a different direction."

California's coastal markets will come back once the job market returns, he said, lifting consumer confidence. But California's inland areas are more likely to lag behind, and builders will have to reconsider the kind of product they offer in such places.

"In the Central Valley, values have changed a lot," Haddad said. "You are not going to be able to really have enough depth in the market to sell large, expensive homes, because the ceiling of value is way down."

"If you pick on a market like Orange County," he said, "it is still a place that once people feel confident.... I believe people will be out buying homes."

Affordability is working in the market's favor.

"We have a mortgage environment that is more favorable — the rates are down — but people are not able to get mortgages, and that is not helping. The most important thing we need is jobs and job creation."

"Affordability is something I look at, and obviously that is a very attractive metric right now.... There is a value proposition out there right now that is very attractive, that we haven't seen in four decades."

• Christopher Thornberg, founding principal of Beacon Economics, predicts home prices will remain flat in 2011.

Once a senior economist for the UCLA Anderson Forecast, Thornberg was one of the first to predict the housing crash, pointing to prices that were way out of line with what people earned.

In that vein, he views the plunge in home values as its own recovery of sorts "because that is when prices went from stupid-high levels to levels that made sense again," Thornberg said. "Now we are in a post-recovery recovery, if you will."

"This is not the bust. A bust implies that prices have fallen to levels that are too low. And I would argue that prices today are relatively high. It's interest rates that have given us this degree of affordability, and from that perspective that is why I don't expect prices to come down."

Since helping found Beacon in 2006, Thornberg has become chief economist for state Controller John Chiang and chair of the Controller's Council of Economic Advisors. He serves on the advisory board of New York hedge fund Paulson & Co. He has been a forceful critic of the Obama administration's policy attempts to right the market.

"The administration has tried, through a variety of policy methods, to try and spike the market," he said.

Growing Economy Big Factor for Buyers

2010-12-20T13:29:00.000-08:00

Daily Real Estate News, December 20, 2010

Economists are surprisingly positive about the impact of rising interest rates on home sales.

The consensus is that while rates are up from where they were, they are still at historically low levels and rock bottom rates are only a part of what encourages people to buy homes. More important factors could be jobs and other financial issues, which appear to be improving.

“Since the recent rate increases have essentially just undone the declines from earlier months, it is hard to see why sales should drop significantly further from current levels,” wrote Goldman Sachs economist Ed McKelvey in a research note published Thursday evening.

Source: The Wall Street Journal, Nick Timiraos (12/17/2010)

Commercial Real Estate on the Mend

2010-12-20T13:25:00.000-08:00

Daily Real Estate News, December 20, 2010

Despite predictions of Armageddon in the commercial real estate industry, the segment remains a moneymaker.

Commercial Mortgage Backed Securities (CMBS) were among the top-performing assets classes this year. "A year or two ago these were priced for the second Depression and then some," said Arne Espe, vice president of fixed income research at USAA Investment Management in San Antonio. "We haven't seen the huge defaults a lot of people were expecting."

Analysts counsel patience. "If you can give it some time, employment will bounce back and then commercial real estate will start rising," said Greg Michaud, who heads real estate finance at ING Investment Management.
Source: Fortune.com, Colin Barr (12/20/2010)

Job Market Keeping Real Estate Down

2010-12-17T17:38:00.000-08:00

Daily Real Estate News, December 17, 2010

The University of San Diego's 11th annual residential real estate conference this week was focused on jobs and how unemployment is preventing people from buying homes.

Leslie Appleton-Young, chief economist at the California Association of REALTORS®, said, "Jobs are really the key. That's where the focus needs to be."

University of San Diego economist Alan Gin said companies of all sorts, including those in the real estate industry, are poised to expand. “They’re waiting for signs that the economy is firming before jumping in,” he said.

Source: The San Diego Union-Tribune (12/15/2010)

10 States Losing the Most Residents

2010-12-17T17:35:00.000-08:00

Daily Real Estate News, December 17, 2010

Using data from Moody’s Economy.com, Forbes identified the top-10 states where more residents are leaving than arriving.

The factors that encourage outbound migration from these states are mostly economic — high employment and high cost of living — although both Louisiana and Mississippi have been affected by natural disasters.

The 10 states that have said goodbye to the most residents are:

1. New York
2. Illinois
3. Ohio
4. Nebraska
5. Kansas
6. Iowa
7. Louisiana
8. North Dakota
9. South Dakota
10. Mississippi

Source: Forbes, Jenna Goudreau (12/08/2010)

Rise in Yields Pushes Up Rates

2010-12-17T17:32:00.000-08:00

Daily Real Estate News, December 17, 2010

A sudden and unexpectedly quick bounce in Treasury yields has jolted the financial markets — including mortgage rates, which have risen rapidly in response.

Freddie Mac puts 30-year home loan interest at an average of 4.83 percent for the week ended Dec. 16, up from a record bottom of 4.17 percent a month ago.

Although the rate is still favorable by historical norms, any jump in borrowing costs is certain to pinch housing demand, prevent refinancing, and motivate sellers to reduce asking prices.

Source: The Wall Street Journal, Nick Timiraos and Mark Gongloff (12/17/10)

Fed Leaves "Rates" Unchanged (as expected)

2010-12-15T09:22:00.000-08:00

from Mortgage Market Guide

As anticipated, the Fed Announcement yesterday didn't contain any surprises. The Fed Funds Rate was left unchanged - and we don't see that changing until early 2012. Additionally, the language in the Policy Statement was virtually identical to the one following the prior meeting. So what happened? Why did Bonds, which went into the Meeting down sharply, plummet further on the announcement?

Here's the story.

Although they are stating that inflation is not a present concern, which is good news for Bonds their continued pledge of economic support prompted Stocks to move higher in response. In fact, the Dow reached levels not seen since Lehman collapsed over two years ago and this all came at great expense to Bonds.

Negative economic news serves to help Bond prices improve and rates decline, including home loan rates and this is all helpful to have when the economy is struggling, as buyers of all products - including homes - need the extra incentive of a low interest rate to be encouraged to buy. But now, the sharply higher expectations for future economic growth has caused rates to climb - particularly including home loan rates, as you well know - and all at a time when the housing market recovery is still on somewhat wobbly legs. This is one of the negative unintended consequences of QE2.

In this morning's news, the Empire State Manufacturing Index was reported at 10.57, far above expectations of 3.0. This was a very nice manufacturing reading, and a whole lot better than what economists were expecting. While this is just one report - it again underscores that the economy is on the mend. The Bond market reacted negatively to this release.

The inflation measuring Consumer Price Index was tame on a month over month basis, showing a climb of 0.1%. With volatile food and energy prices removed, the Core CPI also rose 0.1% for it's first gain since July. The year-over-year headline CPI rose 1.1% - still below the Fed's target - but it is worth noting that this is the fifth consecutive month of increases in the headline CPI number. For now - deflation fears have left the building, and the Fed appears to be on track with their goal of stimulating a bit more inflation.

Where will rates go from here?

In the short-run, the Bond is attempting to hold at support at $98.03 - and only time will tell if that floor will hold. But there is an extremely negative sentiment towards Bonds right now. Look no further than the major outflows being seen from Bond mutual funds. The amount of money leaving the Bond market over the past two months is the most in a few years and what this means is that investors are not only not adding to their Bond positions but they are also selling off current holdings. This is another reason why the selloff in Bonds has been so significant over the past several weeks.

Number of Underwater Mortgages Declines

2010-12-14T12:32:00.000-08:00

Daily Real Estate News, December 14, 2010

The number of people with underwater mortgages has fallen to 10.8 million, representing 22.5 percent of Americans with a mortgage at the end of September, down from 11.3 million at the beginning of 2010, according to CoreLogic, a real estate research firm.

If home prices decline again, as some analysts believe they will, the number of underwater mortgages will climb again.

"It's a giant anchor that's holding back the economy," says Sam Khater, senior economist at CoreLogic. "Until that negative equity recedes, the housing market is not going to recover. It's as simple as that."

Source: The Wall Street Journal, Nick Timiraos and S. Mitra Kalita (12/14/2010)

No Correlation between Fed Funds Rate & 30 Year Fixed Rates

2010-12-14T08:36:00.000-08:00

The FOMC in Layman Terms

The Federal Open Market Committee is a government group that makes monetary policy. It's job is akin to the gas-and-brake pedals on a car -- speed up or slow down the vehicle that is the U.S. economy. The FOMC has 12 members and is headed by Chairman Ben Bernanke. 8 times annually, the Fed gets together to discuss a host of economic issues and, when the meeting is done, the members vote on whether to raise, lower, or leave unchanged an interest rate called the Fed Funds Rate. The Fed Funds Rate is the prescribed interest rate at which banks lend money to each other overnight. Simplified, when the Fed Funds Rate is high, banks end up paying a lot of money in interest payments and are less inclined to borrow from one another, thereby slowing down the economy. When the Fed Funds Rate is low, borrowing is cheap, and the economy is spurred forward. Because the Fed Funds Rate is directly related to Prime Rate, the basis of business and consumer borrowing, the FOMC's vote carries huge implications for the economy as a whole.

The FOMC Does NOT Vote on Mortgage Rates

The FOMC usually meets on a Tuesday and adjourns at 2:15 PM ET. This week, thee group is expected to leave the Fed Funds Rate unchanged within its current range of 0.000-0.250 percent. This is the lowest Fed Funds Rate is history and the Fed has said that the Fed Funds Rate will stay near zero for "an extended period". However, by 2:30 PM, news stories will surface about how the Fed voted to "leave rates unchanged", or "raised rates" today.

The proper verbiage from the press would be "the Fed voted to leave the Fed Funds Rate unchanged today", but they'll just say "rates". This is a big deal only because most Americans think that the Federal Reserve controls daily mortgage rates. It doesn't. But because of this misconception, when Americans read about the FOMC and "rates", they just assume the story is about mortgage rates. It's not. The FOMC doesn't control mortgage rates.

The Fed Funds Rate is untied from mortgage rates because the Fed Funds Rate is an short-term "overnight" rate while the 30-year fixed rate is a long-term rate. Borrowing money is much different over 8 hours as compared to 263,000 hours.

Despite the near-universal belief that the Fed Funds Rate will not be changed, there's always the chance that the Fed says something "good" for the economy, causing mortgage rates to spike. It's happened in the past and it could happen again. So, if you're shopping for a mortgage, talk to your loan officer in advance of the Fed's 2:15 P.M. ET announcement on a Tuesday because from here on out, inflation will result in rising mortgage rates and you should want to "lock-in" the most favorable rate BEFORE they rise, again.

Sellers: Price to Your Market

2010-12-13T13:07:00.000-08:00

Daily Real Estate News, December 13, 2010

In this tough market, price reductions are more acceptable than they used to be, real estate broker and author Dian Hymer says.

Certainly, they are more common because sellers have more difficulty setting reasonable prices, especially when prices change frequently.

With buyers ignoring properties they believe are overpriced, it is especially important for sellers to quickly correct noncompetitive pricing, according to Hymer.

Sellers should be prepared to lower their price more than once if they are out of sync with the market. The best measure is the sale prices of comparably priced properties that closed after the house was put on the market.

Source: Inman News, Dian Hymer (12/07/2010)

Condos Face FHA Deadlines

2010-12-13T12:50:00.000-08:00

Daily Real Estate News, December 13, 2010

An estimated 2,200 condominium projects nationwide last week lost their eligibility for Federal Housing Administration-guaranteed sales and refinancing.

Unless condo officials take action, another 23,000 residential condos with housing units numbering in the tens of thousands will lose their eligibility by spring. That means that buyers of units in these buildings won’t be eligible for FHA financing.

This situation was the result of an effort by the FHA to guarantee that condos and their underlying home owners associations have adequate budgets, legal documents, and other things that lead to financial stability.

In 2009, the FHA spelled out tough standards that required that condo projects approved for FHA financial before 2007 have their approvals renewed by Dec. 7, 2010. About 25,000 projects missed the cutoff. Because there were so many, the FHA extended the deadline, setting new deadlines through out 2011. The only losers were the 2,200 projects that had the oldest approvals.

The FHA urges all condominium owners to get in touch with their associations and push them to meet the revised deadlines.

For more information, or to check the status of a condo project, visit (select by state): https://entp.hud.gov/idapp/html/condlook.cfm.

Source: Charlotte Observer, Kenneth R. Harney (12/11/2010)

Rising Rates Could Get Buyers Moving

2010-12-13T12:44:00.000-08:00

Daily Real Estate News, December 13, 2010

Ironically, it could be rising interest rates that finally push home buyers off the fence and into the market.

While Congress is debating the tax-cut compromise, the financial markets have interpreted the proposal as a development that will likely push mortgage interest rates higher than they have been for months.

Analysts are predicting that buyers will move quickly when it looks like rates are going up and are unlikely to come down. "Once people see this might actually be the bottom, they’ll go for it," says Paul Dales of Capital Economics.

The average rate for a 30-year fixed loan increased to 4.61 percent in the week ended Thursday, Dec. 9, from 4.46 percent the previous week. The average 15-year rate rose to 3.96 percent from 3.81 percent.

Source: Fortune, Nin-Hai Tseng (12/10/2010)

Purchase Applications Rose for Third Week

2010-12-08T12:57:00.000-08:00

Daily Real Estate News, December 8, 2010

Applications for mortgages to purchase homes rose 1.8 percent last week compared to the previous week on a seasonally adjusted basis. On an unadjusted basis, purchase applications rose 21.3 percent compared to the previous week, which included Thanksgiving. Applications were up 12 percent compared to the same week a year ago.

This is the third week that applications to purchase homes have increased, reaching the highest level since early May.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.66 percent from 4.56 percent, while 15-year fixed-rate mortgages increased to 3.98 percent from 3.91 percent.

Source: Mortgage Bankers Association (12/08/2010)

U.S. Orders End to Dual-Track Process

2010-12-06T11:57:00.000-08:00

Daily Real Estate News, December 6, 2010

Acting Comptroller of the Currency John Walsh last week told banks to stop foreclosure proceedings if the borrower is starting or in the midst of a loan-modification program.

This dual-track system has hastened foreclosure for many borrowers who were caught between instructions to pay lower payments during a loan-modification trial period and punishing fines for failure to pay the full amount if the loan mod failed.

One regulator disagreed with the change, saying that lenders needed to be able to press forward with foreclosures, especially when borrowers clearly weren’t going to meet loan-modification standards.

Source: Associated Press, Alan Zibel (12/01/2010)

Mortgage Rates Continue Upward Climb

2010-12-03T12:27:00.000-08:00

Daily Real Estate News, December 3, 2010

Freddie Mac reported that fixed-rate mortgages rose for a third consecutive week during the period ended Dec. 2.

· Interest on 30-year loans inched up to 4.46 percent from 4.4 percent.
· Rates on 15-year mortgages averaged 3.81 percent, an increase from 3.77 percent a week ago.

Adjustable-rate mortgages were slightly higher as well:

· One-year ARM rose up to 3.25 percent from 3.23 percent
· Five-year ARM moved up to 3.49 percent compared to 3.45 percent.

Source: Inman News (12/03/10)

Deep in Debt? Focus on Repayment, Not Credit Scores

2010-11-24T14:11:00.000-08:00

Fox Business, Nov 24, 2010

Dear __,

I am a full-time student and full-time worker living on my own. I am only 24, but I have about $13,000 in credit card debt. I make the minimum payments -- and more, if possible -- but I don't really make enough money to pay a lot. I have recently gotten my credit score checked, and it is 870. So my questions are: Why do I keep getting denied a consolidated credit card? And with my credit score being what it is, does that give me a better chance of maybe getting a loan to pay off my debt? -- Anonymous

Dear Anonymous,

That 870 number you're quoting is rather mysterious. You see, the range of a FICO score -- by far the credit score lenders use most in lending decisions -- is between 300 and 850, with higher numbers indicating less risk to a lender. My guess is that you are not looking at FICO, but instead a different credit assessing model. There are plenty of others, such as VantageScore (which tops out at 900) and others that banks themselves develop.

I believe your actual FICO score is lower than you think. This is not to say you haven't been a good credit customer in some ways. It appears you've been making larger-than-required payments steadily. This is fabulous because you've satisfied the most heavily weighted section of the FICO score -- payment history. That slice makes up 35 percent of the credit scoring pie. The next most important factor, though, is outstanding debt. That's 30 percent of the equation. If you're maxed out, your score will decline. So unless you have very high limits, your balance is, well, out of balance.

While it's smart to keep excellent scores, I'd like you just to concentrate on repaying the debt right now. By reducing that obligation, your score -- no matter which mathematical model is used -- is bound to increase. Also, stop applying for consolidation loans or lines of credit. Such inquiries comprise only 10 percent of a FICO score, but an abundance of them will have a negative effect.

So that more of your payment goes to the principal rather than finance charges, you'll want to have the lowest interest rate possible. Appeal to your current credit card companies and request they lower your rates. Since you've demonstrated responsibility, they may give you a break with just a phone call.

Another option: Check out a credit counseling agency. These nonprofit organizations will help you develop a budget to free up the maximum amount of cash that you can apply to the debt. They'll also discuss their debt management plan (DMP). With these arrangements, you pay them once a month and they distribute the funds to your creditors. The advantage is their prenegotiated interest rate reductions. Some creditors even waive all finance charges while you're on the plan. DMPs are set up for a payoff time frame of three to five years, but you are encouraged to pay it off faster, if you can.

There is much confusion about how DMPs affect credit reports and credit scores. To clear it up, know that a notation of participation may show up on a report, but a DMP has no impact whatsoever on a score. It's simply not a factor. That said, someone who views your report and notices that you're using a service may formulate an opinion -- which can be negative or positive.

Does this mean credit counseling is your best bet? No! You can create your own DMP. Here's how:

* Figure out what you can pay each month and never send less than that amount.
* Prioritize accounts by APR. Send more to the one with the highest rate, then work your way down.
* Send extra cash whenever possible.
* Don't charge another penny during your plan.

Use a credit card debt payoff calculator to see how much you can pay and how long it will take to become debt free. Some sample numbers: If you paid $643 each month and your average APR is 17 percent, it would take two years.

Finally, consider how you got so over your head in the first place. It's all well and good to pay the debt down, but chances are it will creep up again if you don't solve underlying spending issues.

For more helpful tips and valuable information, try CreditCards.com.

The Long Process of Foreclosure Gets Longer

2010-11-18T13:49:00.000-08:00

Daily Real Estate News, November 18, 2010

The foreclosure process is getting longer and longer. According to statistics from LPS Applied Analytics:

· Delinquent loans in five judicial-process states spend more than 500 days in the foreclosure pipeline with the average time in process at 358 days, a week short of a full year.

· In the case of loans where the borrower is delinquent for 90 days or more, on average no payments have been made for 16 months.

· States that take the longest time to process delinquent loans are Florida and New York among the judicial process states, and Maryland, California, Virginia, Nevada, Massachusetts, Rhode Island, and Arizona, among the non-judicial states.

Source: Bankrate.com, Marcie Geffner (11/17/2010)

Credit Score Requirements Stifling Borrowers

2010-11-18T13:45:00.000-08:00

Daily Real Estate News, November 18, 2010

Despite record-low interest rates, an increasing number of Americans can’t afford to buy a house.

The nation’s two largest mortgage lenders, Wells Fargo & Co. and Bank of America Corp., have raised the minimum required credit score on FHA-insured loans to 640 from 620.

Requiring a 640 credit score excludes about 15 percent of FHA borrowers, FHA commissioner David Stevens said.

Such a high limit will further delay a recovery in the real estate market, says Ron Phipps, president of the National Association of REALTORS®.

Source: Bloomberg, Jody Shenn and John Gittelsohn (11/17/2010)

Mortgage Rates Continue Record Slide

2010-11-12T10:55:00.000-08:00

Daily Real Estate News, November 12, 2010

Freddie Mac reports that rates on fixed mortgages again fell to their lowest levels in decades this past week, with the average interest on 15-year loans dipping to 3.57 percent from 3.63 percent a week earlier, and the average interest for 30-year loans sliding to 4.17 percent from 4.24 percent. That is the lowest since 1971.

The impact of the favorable borrowing costs is being muted somewhat, however, by a high rate of joblessness, foreclosures, and tight credit.

Source: Boston Globe (11/12/10)

Jumbo Loans Come Out of Hiding

2010-11-12T10:51:00.000-08:00

Daily Real Estate News, November 12, 2010

Jumbo mortgages are more readily available than they have been for the last two years. Both small and regional banks are beginning to offer them again.

In the second quarter of this year, jumbo lending rose 30 percent compared to the first quarter, according to Inside Mortgage Finance Publication, which provides industry data.

J.P. Morgan Chase home lending unit has increased jumbo lending by 146 percent in the first six months of this year. Wells Fargo’s jumbo lending is up 47.5 percent in the same time period.

Securing these loans continues to be difficult. Borrowers need excellent credit scores, verification of income and a down payment of somewhere between 20 percent and 40 percent. Some borrowers report that approval time can be faster at smaller banks.

Source: The Wall Street Journal, M.P. McQueen (11/06/2010)

Mortgage Rates Inch Up Again

2010-10-29T10:44:00.000-07:00

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)

Existing Home Sales on the Rise

2010-10-28T12:15:00.000-07:00

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.

Orange County Detached Home Prices Move Above $500,000

2010-10-28T12:08:00.001-07:00

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 Price of a “No-Cost” Loan

2010-10-28T12:07:00.000-07:00

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/.

Mortgage Bankers Predict Rising Rates in 2011

2010-10-28T12:01:00.000-07:00

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)

New Credit Score Tailored for Lenders

2010-10-28T11:58:00.000-07:00

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)

Why Big Banks Won't Give HAMP Modifications

2010-10-20T16:44:00.000-07:00

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."

All Bets are Off.

2010-10-16T14:56:00.000-07:00

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.

30-Year Mortgage Rates Plumb New Depths

2010-10-15T18:50:00.000-07:00

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)

California to join multistate inquiry of foreclosures by banks

2010-10-14T22:16:00.000-07:00

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.

Applications for Loans Fall

2010-09-23T11:40:00.000-07:00

Daily Real Estate News, September 23, 2010

Applications to purchase homes declined 3.3 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 increased 18.9 percent compared to the previous week, which included Labor Day, but was 38 percent lower than the same week a year ago.

Mortgage rates declined slightly compared to the previous week:

· 30-year fixed-rate mortgages decreased to 4.44 percent from 4.47 percent;
· 15-year fixed-rate mortgages decreased to 3.88 percent from 3.96 percent;
· 1-year ARMs increased to 6.96 percent from 6.89 percent.

Source: Mortgage Bankers Association (09/22/2010)

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Higher Conforming Loan Limits Due to Expire

2010-09-23T11:36:00.000-07:00

Daily Real Estate News, September 23, 2010

Unless Congress intervenes, the maximum amount the Federal Housing Administration as well as loans backed by Fannie Mae and Freddie Mac can back will return to $417,000 in most areas and $625,500 in a high-cost areas.

Over the last two years, the government raised the limits in some high-cost areas to $729,750.

If Congress doesn’t extend higher limits, home prices would "drop precipitously" because it would be "impossible to finance homes in most parts of Los Angeles and certain other major cities," said Rep. Brad Sherman, a California Democrat and member of the House Financial Services Committee,

But many economists support the end to higher limits. "We need to think how we are going to exit from a Fannie-and-Freddie world, and this is a very small step toward that exit," said Richard K. Green, director of the University of Southern California's Lusk Center for Real Estate. "Dialing it back to $625,500 is a perfectly reasonable thing to do."

Source: The Wall Street Journal, Nick Timiraos (09/23/2010)

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GOP Hopes to End Support for Fannie and Freddie

2010-09-23T11:30:00.000-07:00

Daily Real Estate News, September 23, 2010

The House Republicans said Wednesday that they hope to include on the party’s policy platform a plank that will end government support for mortgage guarantee agencies Fannie Mae and Freddie Mac.

The Republicans also would end the Troubled Asset Relief Program, the program created at the peak of the crisis to deal with the financial meltdown.

Unless the Republicans succeed in retaking the House, they're unlikely to achieve success in these goals, observers say.

Source: the Wall Street Journal, Corey Boles (09/22/2010)

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Federal Reserve Leaves Rates Alone

2010-09-22T12:16:00.000-07:00

Daily Real Estate News, September 22, 2010

The Federal Reserve issued a statement on Tuesday saying that it will hold off on further efforts to stimulate the economy and keep the federal funds rate at or near zero, but signaled that it was ready to step in with further action if necessary.

The Open Market Committee said in a release,“The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”

The Fed apparently debated resuming securities purchases aimed at driving long-term interest rates even lower. Those who were opposed said it is likely this approach won’t work.

Source: Bloomberg, Craig Torres (09/21/2010)

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GSEs Eye Standards Shift for Appraisals

2010-09-22T12:06:00.000-07:00

Daily Real Estate News, September 22, 2010

Recently enacted Wall St. reforms require the Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, to come up with appraisal standards to replace the Home Valuation Code of Conduct by Oct. 21.

The law retains the basic intent of HVCC, which is for lenders to keep an arm's length distance between them and the appraiser, and it continues to allow appraisal decisions to be left in the hands of appraisal management companies, if lenders so choose.

But it attempts to prevent abuses by, among other things, blocking AMCs from negotiating fees with appraisers. Lenders and AMCs must pay appraisers at the market rate.

Source: American Banker, Brian Collins (09/22/10).

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Owners, Practitioners Think Prices Will Fall

2010-09-22T11:58:00.000-07:00

Daily Real Estate News, September 22, 2010

About 48 percent of real estate professionals and 33 percent of homeowners believe home prices will decline over the next six months, according to a survey by HomeGain.

Only 10 percent of real estate professionals and 18 percent of homeowners believe home prices will increase in the next six months.

Sellers continue to doubt the accuracy of prices recommended by practitioners, with 79 percent believing that their homes are worth more than professional appraisals.

On the other side of the fence, 69 percent of practitioners say that their home-buying clients think homes for sale are overpriced.

Source: Real Estate Economy Watch, Steve Cook (09/21/2010)

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30-Year Mortgage Rates Rise

2010-09-10T10:45:00.000-07:00

Daily Real Estate News, September 10, 2010

Average interest on 30-year fixed mortgages rose for the first time since June, lifting to 4.35 percent this week from 4.32 percent last week and 5.07 percent a year ago, reports Freddie Mac. Rates for 15-year fixed loans held at 3.83 percent, the record low set last week.

Also, the five-year adjustable-rate mortgage averaged 3.56 percent, compared to 3.54 percent last week and 4.51 percent a year ago; and the one-year ARM fell to 3.46 percent from 3.5 percent last week and 4.64 percent a year ago.

Source: The Wall Street Journal, Amy Hoak (09/10/10)

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California Movers Are Nation's Busiest

2010-09-08T11:02:00.000-07:00

Daily Real Estate News, September 8, 2010

SiteSelection.com, a publication for corporate real estate and economic development, reports that more people are moving into and out of California than any other state.

In the Golden State, the number of outbound moves by the 700 or so moving companies in the movers.com network rose 10.3 percent, while incomers increased 9.4 percent.

In terms of population changes, SiteSelection states that New York lost 33 percent more people than it gained. Texas, meanwhile, gained 50 percent more people than moved out.

Source: Orange County Register, Jan Norman (09/05/2010)

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Inventories Climb in ZipRealty's 26 Markets

2010-09-08T10:58:00.000-07:00

Daily Real Estate News, September 8, 2010

Housing inventories rose an average 0.4 percent in August, the eighth-straight month they have increased in the major 26 metropolitan areas served by ZipRealty Inc.

Compared to August of 2009, inventories are up an average of 10.6 percent, ZipRealty reports. Western markets’ inventories rose the most year-over-year with increases of 59 percent in San Diego, 43 percent in Orange County, Calif., and 25 percent in Los Angeles.

Inventories fell year-over-year in Miami by 8.6 percent, in Chicago by 2.2 percent, and in Orlando, Fla., by 2.2 percent.

Pat Lashinsky, CEO of ZipRealty, attributes the declines to sellers taking their homes off the market. “Sellers have realized, ‘I just can’t get the price I want. Instead, I’m going to stay here,’” Lashinsky says.

Source: The Wall Street Journal, Nick Timiraos (09/07/2010)

Home, James! ® Ocean View Beach Homes & Condos - San Diego & Orange County - Newport Beach, Corona del Mar, Newport Coast, Laguna Beach, Laguna Niguel, Monarch Beach-Dana Point, Coto de Caza, San Juan Capistrano, San Clemente, Oceanside, Bonsall, Fallbrook, Temecula, Pala, Pauma Valley, Valley Center, Carlsbad, Encinitas, Cardiff, Solana Beach, Rancho Santa Fe, Carmel Valley, Del Mar, La Jolla, Pacific Beach, Point Loma, Downtown San Diego and Coronado Island. If you are seeking a traditional sale, or information about short sales or REO-foreclosures, or for anything "real estate" along the entire California Riviera from Orange County to the Mexican Border just say, "Home, James!®". (www.homejames-usa.com, www.homejames-california.com, www.homejames-sandiego.com, www.homejames-lajolla.com, www.homejames-ranchosantafe.com, www.homejames-orangecounty.com, http://www.invest-in-california-property.com/)

Home Purchase Applications Rise 6.3%

2010-09-08T10:54:00.000-07:00

Daily Real Estate News, September 8, 2010

Applications to purchase homes increased 6.3 percent last week compared to the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association weekly survey.

On an unadjusted basis, purchases rose 4 percent compared to the previous week, but were down 38.8 percent from the same week a year ago.The Refinance Index decreased 3.1 percent from the previous week.

“Purchase applications increased last week, reaching the highest level since the end of May. However, purchase activity remains well below levels seen prior to the expiration of the homebuyer tax credit, and is almost 40 percent below the level recorded one year ago,” said Michael Fratantoni, MBA’s vice president of research and economics.

Mortgage rates rose slightly last week:

* 30-year fixed-rate mortgages increased to 4.5 percent from 4.43 percent.
* 15-year fixed-rate mortgages increased to 4 percent from 3.88 percent.
*1-year ARMs increased to 7 percent from 6.95 percent.

Source: Mortgage Bankers Association (09/08/2010)

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Mortgage Rates Continue to Fall

2010-08-27T10:14:00.000-07:00

Daily Real Estate News, August 27, 2010

Average interest on long-term mortgages slid to a record low for the eighth time in nine weeks and could dip more. Freddie Mac reports that 30-year fixed loans averaged 4.36 percent this week, down from 4.42 percent a week ago; the 15-year fixed rate fell to a new low of 3.86 percent from 3.90 percent; and adjustable-rate mortgages were also below 4 percent.

The Mortgage Bankers Association's Michael Fratantoni said the group expects that rates "will begin to rise as the economic situation improves along with jobs."

Source: Pittsburgh Tribune-Review, Sam Spatter (08/27/10)

Buying Is a Good Investment, If You Choose Right

2010-08-24T13:20:00.000-07:00

Daily Real Estate News, August 24, 2010

Pessimists are implying that the housing market will never get any better and housing will always be a lousy investment.

Are they right? Of course not, say experts at the Motley Fool finance Web site. In fact, the Fools predict that pretty soon housing will be a great investment because prices will have fallen to the point where homes are cheap.

Then as now, the Fools say the key to buying a home that is a good deal will be:

• Location
• Don’t overpay
• Buy what you can afford

If the price goes up, great, the Fools say. If not, buyers will be OK because they have picked a great place to live.

Source: The Motley Fool (08/23/2010)

How Slow Is Your Short Sale Lender?

2010-08-22T08:59:00.000-07:00

HousingWire magazine reports:

The Quickest: GMAC with an average of 6 months to approve.

The next Fastest: CitiMorrgage with an average of 7.5 months to approve.

The next-next Fastest: Wells Fargo with an average of 8 months to approve.

LAST PLACE (SLOWEST) goes to Countywide (Bank of America) with an average of 13 months to approve.

20 Metros That Could See Price Declines

2010-08-20T10:09:00.000-07:00

Daily Real Estate News, August 20, 2010

Some 198 of the 384 markets tracked by PMI Mortgage Insurance Co. in the first quarter of this year continue to face significant risk of further price declines, the company reported Thursday.

Among the 50 most populous metros, the risk of further declines was 70 percent. These areas typically also were faced with higher unemployment and foreclosure rates, as well as excess housing supply and more volatile home prices.

The 20 riskiest markets, along with the probability of further price declines in the next two years as identified by PMI were:

1. Miami-Miami Beach-Kendall, Fla. (99.9 percent)
2. Las Vegas-Paradise, Nev. (99.9)
3. Ft. Lauderdale-Pompano-Deerfield, Fla. (99.9)
4. Riverside-San Bernardino-Ontario, Calif. (99.9)
5. Tampa-St. Petersburg-Clearwater, Fla. (99.9)
6. Orlando-Kissimmee-Sanford, Fla. (99.9)
7. Jacksonville, Fla. (99.9)
8. Los Angeles-Long Beach-Glendale, Calif. (99.9)
9. Santa Ana-Anaheim-Irvine, Calif. (99.7)
10. Phoenix-Mesa-Glendale, Ariz. (99.4)
11. San Diego-Carlsbad-San Marcos, Calif. (98.8)
12. Detroit-Livonia-Dearborn, Mich. (98.7)
13. Sacramento-Arden-Rovesville, Calif. (98)
14. Newark-Union, N.J.-Penn. (94.7)
15. Edison-New Brunswick, N.J. (94.7)
16. Providence-New Bedford-Fall River, R.I.-Mass. (93.6)
17. Oakland-Fremont-Hayward, Calif. (91.9)
18. Nassau-Suffolk, N.Y. (91.5)
19. New York-White Plains-Wayne N.Y.-N.J. (90.4)
20. San Jose-Sunnyvale-Santa Clara, Calif. (90)

Source: Inman News (08/19/2010)

Mortgage Rates Drop to New Lows

2010-08-20T10:05:00.000-07:00

Daily Real Estate News, August 20, 2010

Fixed mortgage rates have maintained recent lows or set new ones for more than two months now, sinking to 4.42 percent on 30-year loans for the week ended Aug. 19. The rate is down from 4.44 percent last week and is the lowest ever recorded since Freddie Mac launched its survey almost 40 years ago.

The fixed 15-year average also hit a new low, at 3.9 percent; while five- and one-year adjustable-rate mortgages remained flat at 3.56 percent and 3.53 percent, respectively.
Source: The Wall Street Journal, Amy Hoak (08/20/10)

5 Most Affordable Housing Markets

2010-08-20T10:03:00.000-07:00

Daily Real Estate News, August 20, 2010

The most affordable city in the United States is Syracuse, N.Y., according to the latest Housing Affordability Index from the National Association of Home Builders and Wells Fargo.

The index considers a home affordable if a family would have to pay no more than 28 percent of take-home pay for housing expenses.

Here are the five areas where housing exceeds this benchmark and the median property prices:

• Syracuse, N.Y., $88,000
• Indianapolis, $113,000
• Detroit, $85,000
• Youngstown, Ohio, $74,000
• Buffalo, N.Y., $112,000

Source: CNNMoney.com, Les Christie (08/20/2010)

Three Reasons to Buy a Home Now

2010-08-19T12:57:00.000-07:00

Daily Real Estate News, August 19, 2010

Stocks are up 50 percent from the March 2009 bottom. Some commodities have risen dramatically. The only asset class left in the cellar is real estate, says Michael Murphy, editor of the New World Investor stock newsletter.

As a result, Murphy is advising investors to buy now for these three reasons:

• Desperate sellers: Both home owners and lenders are eager to unload a flood of foreclosed and underwater properties. Buyers with the patience to push through these complex deals can save a bundle.

• Little competition. Because most people don’t have what it takes to negotiate their way through short sales and REOs, patient investors are winners.

• Low rates. Mortgage rates are at their lowest level in 40 years. If you believe inflation is inevitable, lock in now.

Source: MarketWatch, Michael Murphy (08/19/2010)

10 Steps to Win Over Sellers

2010-08-04T11:02:00.000-07:00

Daily Real Estate News, August 4, 2010

Helping eager buyers get the home of their dreams isn’t so easy in this unsettled market. Here are 10 tips for making sure sellers won’t turn up their nose at an offer:

1. Make sure the buyers are pre-approved for a mortgage (not to be confused with being pre-qualified) so they can close in about 10 days.
2. Study the buyer. Have they made an offer on another home or are they working against any other kind of deadline?
3. Make a clean offer – no requests for help with closing costs or other contingencies.
4. Include an automatic escalation clause – say $500 over the highest competing bid. (Insist that seller show the offers in writing.)
5. Sweeten the offer with a bonus if the deal gets done quickly.
6. Offer 10 percent of the purchase price in earnest money.
7. Waive the appraisal. The buyer will have to be willing to pay any difference between the selling price and what the bank is willing to lend.
8. Consider waiving the inspection.
9. Offer the full list price, preferably in cash.
10. Write a love letter to sellers, telling them all the things your client loves about their home.

Source: MSN Real Estate, Marilyn Lewis (08/03/2010)

Home Purchase Applications Rise

2010-08-04T10:57:00.000-07:00

Daily Real Estate News, August 4, 2010

Applications to purchase homes rose 1.5 percent last week compared to the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association.

The unadjusted purchase index also rose 1.5 percent, and it was up 7.1 percent compared to four weeks ago. Compared to the same week a year ago, it was down 33.7 percent. For the third straight week, government-backed loans, especially Federal Housing Administration loans, drove the increase, with government loan volume rising 3.4 percent compared to last week.

Mortgage rates were remarkably low:

* 30-year fixed-rate mortgages decreased to 4.60 percent from 4.69 percent.
* 15-year fixed-rate mortgages decreased to 4.03 percent from 4.12 percent.
* 1-year ARMs decreased to 7.10 percent from 7.15 percent.

Source: Mortgage Bankers Association (08/04/2010)

REIT Funds Are Flying High

2010-08-04T10:54:00.000-07:00

Daily Real Estate News, August 4, 2010

Analysts report that the surprising outperformance of exchange-traded funds that track real estate stocks since the first of the year suggests improvement in the economy and the battered commercial-property sector.

In their second-quarter earnings outlook, analysts at Keefe, Bruyette & Woods write that REITs have outperformed the broader market "in anticipation of upcoming growth opportunities, internally, through improving fundamentals, and externally via acquisitions." The hottest REIT stocks so far in 2010 have been apartment sector ones, specifically Apartment Investment and Management Co. and Equity Residential Properties Trust.

Both companies posted quarterly earnings a week ago and the stocks have gained more than 30 percent since Jan. 1. A solid quarterly report from Equity Residential coupled with improving market conditions "should have a positive impact on the overall apartment sector," reports Stifel Nicolaus analyst Rod Petrik. "The company appears well positioned to take advantage of positive market trends in the apartment industry."

Source: MarketWatch, John Spence (08/01/10)

Five Surprising Reasons to Buy a Home Now

2010-08-03T11:26:00.000-07:00

Daily Real Estate News, August 3, 2010

Low mortgage rates serve as an equity shock absorber. When buyers borrow at today's record-low rates, they start building equity as soon as they close. That means they can absorb a few ups and downs as the still-recovering housing market gains traction.

Houses are in move-in condition. Home owners have continued to spend on maintenance and repair, according to the Harvard Joint Center on Housing. As these houses enter the market, they are in marked contrast to tattered foreclosures.

Terrific houses are coming on the market. Foreclosures are finally starting to clear the system, and they are being replaced by some very attractive properties.

Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the current market.

Plenty of programs. Many programs that encourage middle-class families to buy homes continue to exist, despite market downturns. Buyers who qualify can get a big boost by combining one of these programs with today's low mortgage rates.

Luxury Rental Owners Turn to Section 8

2010-08-02T10:46:00.000-07:00

Daily Real Estate News, August 2, 2010

Some landlords who own high-end properties in cities where prices fell dramatically are renting them to Section 8, low-income tenants.

On the Web site GoSection8.com, the largest rental listing service for Section 8 housing program tenants, landlords woo tenants with descriptions of swimming pools, great rooms and luxury master baths. "More and more, I'm seeing tenants turn down places," says Arman Davtyan, who owns seven Section 8 properties.

The reason owners of high-end properties are seeking Section 8 tenants is financial. The government guarantees at least partial payment — enough for a landlord to make a tidy profit.

For instance, Davtyan purchased a four-bedroom home in North Las Vegas last year for $60,000 cash. He charges the government $1,436 in rent, giving him an annual profit of $15,000 per year after insurance and property taxes, he calculates.

"It's the most lucrative way to go right now," he says. "Nowhere else does your money make that kind of return."

Source: The Wall Street Journal (08/02/2010)

Home Price Drop May Trigger Second Recession

2010-08-02T10:43:00.000-07:00

Daily Real Estate News, August 2, 2010

Economic recovery could be choked by a drop in home prices, according to former Federal Reserve head Alan Greenspan.

On the Aug.1 edition of NBC's "Meet the Press," the economist warned that falling residential values could send the country into a double-dip recession. His successor at the Fed, Ben Bernanke, told Congress last week that the economy remains "unusually uncertain" and that the central bank was prepared to act if the economy loses momentum.

Source: National Mortgage Professional, Andrew T. Berman (08/02/10)

Ex-Treasury Head: Dismantle Fannie and Freddie

2010-08-02T10:41:00.000-07:00

Daily Real Estate News, August 2, 2010

In an op-ed in Friday’s Washington Post, former Treasury Secretary Hank Paulson called for a reduction in government support for homeownership.

His proposals included dismantling and replacing Fannie Mae and Freddie Mac and shrinking the Federal Housing Administration to limit it to serving low-income buyers of low-priced homes.

“The price the government charges this new private-sector entity for its credit guarantee must be high enough to leave room for a robust private-sector mortgage market that serves taxpayers and home owners equally,” Paulson wrote.

Source: Washington Post, Hank Paulson (07/30/2010)

'Strategic Defaults' Can Damage Credit for Years

2010-08-02T10:39:00.000-07:00

Daily Real Estate News, August 2, 2010

Home owners who choose to default on their mortgage even though they can afford the monthly payments can expect to take a significant hit to their creditworthiness, some credit rating firms say.

A record of the default — initially as much as 200 points — stays on a credit report for seven years. This will have an impact on the defaulter’s ability to get credit of all kinds and potentially his or her ability to buy insurance and even get a job.

The debt that foreclosure erases may be considered income, and Uncle Sam may want to collect taxes.

"It's by no means a move to be undertaken lightly," says Maxine Sweet, vice president of public education for Experian.

Source: ARA Content (07/30/2010)

Homeownership Falls to Lowest Level Since 1999

2010-07-28T20:06:00.000-07:00

Daily Real Estate News, July 28, 2010

The homeownership rate fell to 66.9 percent in the second quarter, down from 67.1 percent in the first quarter, according to the U.S. Census Bureau. This was the lowest level since 1999.

The homeownership rate reached a record high of 69.2 percent in the second and fourth quarters of 2004.

Rising foreclosures are driving the decline. A record 4.6 percent of U.S. mortgages were in foreclosure in the first three months of 2010, the Mortgage Bankers Association reported in May.

Source: Bloomberg, Kathleen M. Howley (07/27/2010)

More Buyers Pleased With Real Estate Firms

2010-07-28T20:03:00.000-07:00

Daily Real Estate News, July 28, 2010

Satisfaction with national real estate companies among home buyers has improved while satisfaction among home sellers has declined in the last year, according to the J.D. Power and Associates 2010 Home Buyer/Seller Study, released Thursday.

J.D. Powers collected 3,000 evaluations from 2,817 respondents who bought or sold a home between March 2009 and April 2010. Overall satisfaction with the buying experience is determined by rating satisfaction with the practitioner, the office they represent, and a variety of additional services. Four factors are examined for the home-selling experience: the quality of the practitioner’s performance, marketing, the office they represent, and other services.
"Among both home buyers and home sellers, the importance of [practitioners] and salespersons has increased substantially in 2010, compared with 2009," said Jim Howland, senior director of the real estate and construction practice at J.D. Power, in a statement.

"Buyers are increasingly relying upon negotiating skills of [practitioners] and seem to be satisfied with the purchase prices they are obtaining. Despite the fact that sales practitioners appear to be doing a good job of negotiating and marketing on behalf of home sellers, the tough economic conditions are negatively impacting their overall satisfaction with real estate companies," Howland added.

On a 1,000-point scale here are the scores in the home buyer segment:

1. Keller Williams, 817
2. Prudential, 811
3. Coldwell Banker, 805
4. Home-Buyer Segment Average, 803
5. RE/MAX, 801
6. Century 21, 798
7. ERA, 785
8. GMAC/Real Living, 765

Satisfaction ratings on a 1,000-point scale from home sellers:

1. Prudential, 760
2. Keller Williams, 751
3. RE/MAX, 744
4. Coldwell Banker, 743
5. Home-Seller Segment Average, 742
6. Century 21, 727

Source: J.D. Power and Associates (07/28/2010)

Six Months to Go Until the Largest Tax Hike in History

2010-07-06T08:44:00.000-07:00

Six Months to Go Until the Largest Tax Hikes in History

In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:

- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.

The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.

Second Wave: Obamacare

There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.

Many HAMP Modifications May Fail

2010-07-02T11:03:00.000-07:00

Daily Real Estate News, July 2, 2010

Fitch Ratings Ltd. forecasts that borrowers whose loans are modified under the federal Home Affordable Modification Program, or HAMP, are 65 percent to 75 percent likely to re-default within a year.

Fitch says the failure rate is high because borrowers have too much other debt, including car loans, credit cards, and other obligations.

Officials defend the program, saying that if HAMP saves the homes of one-third of the borrowers, it is a success.

Source: The Wall Street Journal, James R. Hagerty (06/16/2010)

Mortgage Bonds Boom Drives Rates Down

2010-07-02T11:00:00.000-07:00

Daily Real Estate News, July 2, 2010

Residential mortgage bonds backed by the U.S. government have become a safe haven for investors again, helping to drive mortgage rates to record lows.

The average interest on 30-year fixed loans fell this week to 4.58 percent, down from 4.69 percent a week ago, reports Freddie Mac.

Relatively few home owners are refinancing at the bargain rates, however, in large part because many eligible borrowers did so when rates were almost as low last year.

Source: The Wall Street Journal, Mark Gongloff (07/02/10)

States Attract Retirees With Favorable Taxes

2010-07-02T10:57:00.000-07:00

Daily Real Estate News, July 2, 2010

States are wooing retirees with tax breaks. On average, retirees pay only half the state income tax levied on working-age people, according to researchers at the University of New Hampshire and Georgia State.

Seven states — Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming — don't tax personal income at all. New Hampshire and Tennessee tax interest and dividends but not other income. Still, these states may not offer the best total deal for seniors because other states have crafted special programs that reduce taxes and fees across the board.

Considering everything, here are the states that tax experts say offer the best deals for residents older than 65:

1. Georgia
2. Pennsylvania
3. Mississippi
4. Illinois
5. Michigan
6. Kentucky
7. New York
8. South Carolina
9. Delaware
10. Louisiana

Source: Forbes, Ashlea Ebeling (06/28/2010)

Housing Expert: 'The Suburban Century Is Over'

2010-06-24T15:18:00.000-07:00

From Daily Real Estate News, June 24, 2010

At a recent meeting of the Urban Land Institute of Minnesota, Senior Fellow John McIlwain said "a new normal" will be created in the housing market over the next 10 years, and he marked the end of "the suburban century."

He noted that markets offering "a vibrant 24/7 lifestyle" will see the most robust activity, "net-zero-energy" units will become the norm, and the rental market will expand as homeownership rates fall to more historic levels.

Suburban town centers will gain popularity among those wanting an urban lifestyle without living in a big city.

Over the next decade, McIlwain said four demographic groups will fuel the housing market. He said older baby boomers increasingly are moving back to the central city, while younger baby boomers are finding it more difficult to relocate for jobs because they cannot sell their suburban houses. Meanwhile, millennials are more environmentally aware and will seek urban lifestyles, and immigrants who cannot afford large suburban houses to shelter multiple generations will increase demand for rentals.

With 1.5 million housing units per year needed to accommodate the shift to normal levels of household formation, McIlwain said zoning, financing, and regulations need to be rethought to meet housing demand.

Source: minnpost.com, Brad Allen (06/21/2010)

Area's Median Home Prices Rise 22.5%

2010-06-18T12:34:00.000-07:00

The median home price in Southern California last month rose 22.5 percent from a year earlier and topped $300,000 for the first time in 20 months, as sales continued shifting from low-priced inland areas to higher-end coastal regions, a tracking firm reported Tuesday.

San Diego-based MDA DataQuick reported that last month's median of $305,000 in the six-county region was up from $249,000 in May 2009 and up 7 percent from $285,000 in April.

The May median, which marked a sixth consecutive month of year-over-year increases, was at its highest level since October 2008, DataQuick said.

"Last month's jump in the regional median sale price is the flip side of what we saw a year ago, when low-cost inland foreclosures dominated and sales in the costlier coastal towns struggled for a pulse," DataQuick President John Walsh said.

Sales last month of homes costing $500,000 or more made up 21.6 percent of all transactions in the region, up from 17.4 percent a year ago, DataQuick said.

Foreclosures, meanwhile, which typically account for the lowest-price homes, comprised 33.9 percent of resales last month, down from 49.8 percent a year ago, the firm said.

May sales surged on the coast over last year's numbers, increasing 22.1 percent in Orange County and 19.6 percent in San Diego County, while they declined inland, dropping 9.5 percent in San Bernardino County and 5.7 percent in Riverside County.

Bob Hamidi, who oversees Prudential California Realty offices in Orange and Riverside counties, said his agents also are witnessing a shift toward the higher priced areas.

By Jacob Adelman The Associated Press

Foreclosures Drop Dramatically in San Diego County

2010-06-18T12:25:00.000-07:00

From SignOn San Diego, Union-Tribune, June 17, 2010

Foreclosure filings and notices of default fell dramatically last month in San Diego County, but analysts did not see this as evidence of less distress in the housing market.

Default notices totaled 1,623, down 22.9 percent from April and 46.9 percent from a year ago, MDA DataQuick reported Thursday. Foreclosures numbered 1,021, down 15.8 percent from April, but up 3.7 percent year-over-year, because of a moratorium on foreclosures in place at the time.

Analysts said the declines might represent further signs that lenders are shifting from taking legal action against homeowners who can’t pay their mortgages.

“We’ve been talking for a year now how a growing amount of distress will be handled outside the formal foreclosure process,” said DataQuick analyst Andrew LePage, “mainly through short sales (homes sold for less than the mortgage balance) and to some extent loan modifications and other methods.”

He said the short-term trend has been uneven, sometimes up, sometimes down month to month.

“If you look at quarters, the general trend has been less going into the formal foreclosure process,” LePage said. “We know short-sales are up significantly, as are loan modifications, and some would argue there have not been nearly enough loan modifications, but there are more than there were a couple years back.”

Sean O’Toole, founder and CEO of ForeclosureRadar.com in Discovery Bay, said lenders seem to be timing their actions to coincide with changing economic conditions. Earlier this year, he noted, foreclosures and defaults increased as the stock market improved and home sales and prices stabilized. But in recent weeks, as those markets have faltered, distress actions have fallen back.

“I don’t believe in conspiracies, but at some point it becomes a sensible strategy to manage the books,” O’Toole said.

He and other economists doubt that short sales and loan modifications will solve most homeowners’ problems, which are exacerbated by the sluggish economy and lower home values that make refinancing all but impossible.

“We’ve got an awful lot in the pipeline and at this pace, it’s going to take years to work through this,” he said. “It’s a question of do you rip off the Band-Aid fast and have a sharp sting or rip it off really, really slowly.”

The good news is that various reports show delinquencies rising at a slower pace — an indication that distress is easing and various housing submarkets are stabilizing. The Mortgage Bankers Association put California’s first-quarter delinquencies at 10.9 percent of all homes with mortgages last month, down from 11.3 percent in the fourth quarter.

But that still leaves some 1 million homeowners in California who are not making their payments, O’Toole said.

“If you were to foreclose on those folks en masse, it would certainly create panic and fear,” he said.

There are no delinquency estimates at the local or city level.

Did you miss these?

SoCal home prices rise at fastest pace in 5 years

County home prices at highest since August 2008

Rates on 5-Year ARM Hit Record Low

2010-06-18T11:59:00.000-07:00

From Daily Real Estate News, June 18, 2010

Interest on five-year adjustable-rate mortgages averaged 3.89 percent for the week ended June 17, the lowest level since Freddie Mac began tracking the statistic in January 2005.

One-year Treasury-indexed ARMs also fell, dipping from 3.91 percent to 3.82 percent, the lowest average in more than 10 years. Also, 30-year fixed loans settled at 4.75 percent, a slight gain from 4.72 percent last week.

Source: The Wall Street Journal, Amy Hoak (06/18/2010)

Home Prices in California Jump in May

2010-06-18T11:56:00.000-07:00

From Daily Real Estate News, June 18, 2010

Median home prices in California rose to $278,000 in May, up 20.9 percent from May 2009, according to MDA DataQuick, which tracks real estate data in the state.

Low mortgage rates and the tax credits encouraged the sales of lower- and higher-priced homes, pushing up the median price, says DataQuick President John Walsh.

Walsh cautioned that there are many homes in foreclosure that haven’t been repossessed by lenders. If lenders take control of these properties and put them on the market, those sales will have a very negative effect on prices, he says.

Source: Associated Press, Jacob Adelman (06/17/2010)

Consumer Sentiment Strengthens in June

2010-06-17T19:32:00.000-07:00

U.S. consumer sentiment improved in early June to its strongest level in nearly 2-1/2 years, bolstered by hopes of better job and credit conditions, a recently released survey showed.

UCLA Economist: "Sluggish CA Recovery This Year"

2010-06-17T19:30:00.000-07:00

California’s unemployment rate, currently at 12.4 percent, will not return to single-digit levels until 2012 and the state’s inland areas will continue to be impaired by excess housing inventory and state budget cuts, according to a forecast released Tuesday by UCLA’s Anderson School of Business.

California’s economic recovery is contingent on consumer shopping behavior nationwide, as retail spending drives traffic at California’s ports and logistics centers, which are both substantial employers throughout the state, the report said. However, consumers are unlikely to increase spending until businesses begin hiring again, which many economists believe will only happen gradually over time.

The coastal areas of the state will benefit from growth in health care, education, and technology, while inland areas will be constrained by excess housing inventory and state budget cuts, impacting rural inland areas where government workers account for a significant percentage of the workforce, according to the forecast.

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) recently issued its mid-year housing market forecast. Based on C.A.R.’s forecast, the median home price in California is expected to rise 9.1 percent this year compared with last year, while sales of existing, single-family homes will decline 4.7 percent. Rates on 30-year, fixed-rate mortgages will rise to 5.3 percent compared with 5.1 percent in 2009 and 15-year mortgages will average 4.2 percent compared with 4.7 percent last year, according to the forecast.

Fitch: Mortgage Mods Unlikely to Stick

2010-06-17T12:08:00.000-07:00

From Daily Real Estate News, June 17, 2010

Most borrowers whose loans are modified under federal programs will likely default within a year, Fitch Ratings forecasts.

Among those mortgages modified without backing by a federal agency, the foreclosure rate within a year is likely to be 65 percent to 75 percent.

Fitch based its predictions on the performance of loans modified in the first quarter of 2009.

Fitch Managing Director Diane Pendley says the failure rate is likely to be high because borrowers are saddled with credit-card debt, car loans, and other obligations they can’t afford.

Source: The Wall Street Journal, James R. Hagerty (06/16/2010)

Senate Extends Tax Credit Closing Deadline

2010-06-17T12:03:00.000-07:00

From Daily Real Estate News, June 17, 2010

The U.S. Senate voted Wednesday to extend the home buyer tax credit closing deadline to Sept. 30, giving an estimated 180,000 buyers who met the contract deadline of April 30 extra time to close the transaction.

The extension was added to a bill to pay for jobless benefits.

The NATIONAL ASSOCIATION OF REALTORS® estimates that one-third of qualified applicants have been notified that they will be unable to close by the deadline. The Mortgage Bankers Association says delays are caused largely by the volume of transactions.

The measure still must be approved by the House.

Source: Associated Press, Andrew Taylor (06/16/2010)

Foreclosure Activity Continues to Decline in May

2010-06-16T13:05:00.000-07:00

Foreclosure filings – notices of default, scheduled auctions, and bank repossessions – declined 3 percent in May compared with April, but increased less than 1 percent compared with the same period a year ago, RealtyTrac reported. Properties receiving a notice of default declined 7 percent in May compared with April and 22 percent compared with May 2009. Foreclosure auctions decreased 4 percent in May compared with the prior month, while bank repossessions increased 1 percent during the same period, according to the report.

California accounted for more than 22 percent of the total number of properties receiving a foreclosure notice in May, an increase of 3 percent from April, but a decrease of nearly 22 percent compared with a year ago.

The top 10 cities with declining foreclosure activity on a year-over-year basis in May included: Las Vegas, nearly 18 percent; Merced, 7 percent; Modesto, nearly 28 percent; Cape Coral-Fort Myers, Fla., nearly 19 percent; Stockton, 33 percent; Riverside-San Bernardino-Ontario, 29 percent; Bakersfield, 19 percent; Reno-Sparks, Nev., 18 percent; and Phoenix, 9 percent.

California Consumer Confidence Rises in May

2010-06-16T13:03:00.000-07:00

The California Composite Index of Consumer Confidence increased to 82.7 in May, slightly higher than the February reading of 81.1, according to a survey conducted by the Anderson Center for Economic Research at Chapman University. May marked the third consecutive monthly increase. An index level lower than 100 reflects a higher percentage of pessimistic consumers compared with those who are optimistic. The survey was unchanged in consumer confidence at the national level during the same time period, according to a similar survey conducted by the University of Michigan.

The index measuring consumers’ spending plans declined nearly 18 points from May to February, while the indices measuring current economic conditions and future economic conditions both increased to readings of 66 and 105.1, respectively. The index measuring consumers’ planned spending on big-ticket items decreased to 71.4, the lowest reading since the first quarter of 2009.

Mortgage Applications Rise

2010-06-16T10:30:00.000-07:00

From Daily Real Estate News, June 16, 2010

For the first time in more than a month, the number of mortgage applications to purchase homes rose last week.

On an adjusted basis, the Mortgage Bankers Association purchase index increased 7.3 percent compared to the previous week. On an unadjusted basis it was up 17.4 percent. Compared to the same week last year, applications declined 31.3 percent.

Michael Fratantoni, MBA’s vice president of research and economics, was reluctant to declare this a trend. “While it is clear that purchase applications in May dropped sharply as a result of the tax credit induced increase in applications in April, it is unclear whether we are seeing the beginnings of a rebound now,” he said.

Mortgage rates were up slightly last week:

* 30-year fixed-rate mortgages increased to 4.82 percent from 4.81 percent.
* 15-year fixed-rate mortgages decreased to 4.23 percent from 4.26 percent.
* 1-year ARMs increased to 7.07 percent from 6.94 percent.

Source: Mortgage Bankers Association 06/16/2010)

O.C. Home Buying in May Fastest Since '06

2010-06-15T22:46:00.000-07:00

From Orange County Register, June 15, 2010

DataQuick’s May homebuying report shows Orange County shoppers were at their busiest since August 2006 with 3,257 residences purchases in the month, up 22 percent from a year ago.

May Resale houses, Resale condos. New homes, All homes

Sales 2,015, 942, 300, 3,257
Year’s change +13.1%, +24.3%, +136.2%, +22.1%
Price $515,000, $305,000, $645,000, $450,000
Year’s change +8.4%, +15.7%, +21.1%, +9.8%
Median selling price was $450,000, up 9.8 percent from a year ago.

DataQuick details …

* $450,000 median selling price is 30% below June 2007’s peak of $645,000.
* The most recent median is 22% above the cyclical low hit in January 2009 at $370,000 — a current bottom that was 43% below the peak.
* Single-family homes resell for 30% less than their peak pricing (June ‘07) while condos sell 35% below their peak in March 2006.
* Builder prices for new homes are 25% below their February ‘05 top.
* Single-family homes were 69% more expensive than condos in this period vs. 80% a year ago. From 1990-2008, the average house/condo gap was 57%.

In this most recent period, O.C. shoppers bought 3,257 residences — that is +22.1% vs. year-ago buying activity. (From 1997-2006, monthly sales averaged 4,304 per month.) This was best month for new homes since December 2007. Builder’s new homes sales were 9% of all residences sold in the period vs. 5% a year ago. From 1990-2008, builders did 15% of the selling.

By region …

North O.C. homebuying up 18%

South County homebuying up 46%

Beach town homebuying up 40%

Mid-County homebuying off 1%

PS: Any excitement should be tempered by a report from Altera showing a 20 percent drop in new escrows opened since the April 30 deadline for a federal tax break for buyers. That signals the recent homebuying binge is temporary.

A little context …

MARKET TRENDS

SoCal home price up 22.5% in year

Home sales, prices up in 40 O.C. ZIPs

O.C. homebuying in May fastest since ‘06

Real estate adds 900 jobs, best in 3 years

Portola Hills homes quickest to sell

Home demand off 20% without tax break

INDUSTRY NEWS

China boom lets O.C. architects hire 5

Buy a home in 1 hour

Costa Mesa condos restart sales, again

O.C. buyers grab 56% more new homes

Big builder's best-selling homes in Irvine

O.C. builder home sales up 76%

Orange County Beach Town Home Buying Up 40% in May

2010-06-15T22:34:00.000-07:00

From Orange County Register, June 15, 2010

For calendar month May – DataQuick’s latest stats — the 17 ZIPs located in beach towns communities showed …568 homes sold, that is +39.9% vs. a year ago.

The median selling price of these ZIPs was $719,000 – that is +2.4% vs. a year ago.

The beach towns ZIPs comprised 18.0% of the recent home sales in Orange county vs. 15.6% a year ago.

Elsewhere, click for details …

North O.C. homebuying up 18%

South County homebuying up 46%

Mid-County homebuying off 1%

A little geographical context …

36 ZIP codes in beach towns and inland South County communities had 1,515 homes sales. That’s up 43.7% vs. a year ago.

47 ZIP codes in mid-county and inland North County communities had 1,648 homes sales. That’s up 6.6% vs. a year ago.

Thus, the share of Orange County homes sold in mid-county and inland North County neighborhoods was 52% vs. 59% a year ago.

The ZIP-by-ZIP results for beach towns communities …

Town ZIP Price Yr. chg. Sales Yr. chg.

Corona del Mar 92625 $1,660,000 +47.6% 18 +100.0%

Dana Point 92624 $542,500 +2.4% 14 +16.7%

Dana Point 92629 $562,500 -18.5% 44 +46.7%

Huntington Beach 92646 $530,000 -1.1% 71 +42.0%

Huntington Beach 92647 $514,500 +9.5% 36 +2.9%

Huntington Beach 92648 $805,000 +15.0% 42 +0.0%

Huntington Beach 92649 $560,000 +9.6% 34 +36.0%

Laguna Beach 92651 $960,000 -8.6% 43 +53.6%

Newport Beach 92660 $1,000,000 +41.8% 41 +20.6%

Newport Beach 92661 $1,610,000 -4.6% 10 +66.7%

Newport Beach 92662 $1,917,500 +0.0% 6 +0.0%

Newport Beach 92663 $775,000 +31.9% 25 +78.6%

Newport Coast 92657 $1,900,000 +38.0% 26 +136.4%

San Clemente 92672 $550,000 +0.0% 38 +18.8%

San Clemente 92673 $622,500 -2.9% 51 +70.0%

San Juan Capistrano 92675 $450,000 +57.9% 50 +66.7%

Seal Beach 90740 $719,000 -2.8% 19 +58.3%

Total O.C.

$450,000 +9.8% 3,257 +22.1%

Green Power

2010-06-15T17:19:00.001-07:00

Thanks to government incentives and changing public sentiment, clean energy is the most popular kid on the green movement block. The stimulus plan poured billions into renewable energy, automakers are all but predicting electric gridlock within the next few years, and everyone who's anyone in the electric power industry is investing in the "smart grid."

If the money being thrown around is any indication, that's just the tip of the slowly melting iceberg. Cleantech Group, an industry research firm, reports venture capital investment in clean technology--including solar, biofuels, batteries and the smart grid--overtook IT and biotech for the biggest piece of the VC pie. The sector swiped 27 percent of all investment dollars in the third quarter--that's $1.6 billion.

Economic Turmoil = OPPORTUNITY

2010-06-15T17:17:00.001-07:00

It's not the $700 billion bank bailout. And no, it's not the $787 billion American Recovery and Reinvestment Act of 2009. The real economic stimulus is ... wait for it ... the recession. That's right, the Great Recession. This upside-down economy is creating entrepreneurial opportunities aplenty, so long as you can deal with a situation about as stable as a lava flow.

Results from Challenger, Gray & Christmas' job market index revealed that 8.7 percent of job seekers gained employment by starting their own businesses in second quarter 2009--way, way up from the record low of 2.7 percent during the last quarter of 2008.

Even in finance, confidence and risk tolerance are on the rise. IbisWorld, an industry market research firm, expects that after a great purge, loan brokerage services will see 40 percent growth in 2010.

Fiserv Study Says Markets Are Improving

2010-06-15T13:09:00.000-07:00

From Daily Real Estate News, June 15, 2010

Fiserv on Monday released a report that analyzed housing financial data from fourth quarter 2009, which seemed to suggest real estate could be improving.

“Optimism that a sustainable economic recovery is underway and is driving increases in home prices across many U.S. metro areas. More and more, consumers have confidence that buying a home doesn’t mean catching a falling knife,” says David Stiff, chief economist for global financial technology firm Fiserv.

Among the conclusions of the report were:

California markets collapsed about one year before much of the rest of the U.S., creating increased affordability. Year-over-year prices are up in eight of 28 California metro areas and prices have increased from recent lows in 24 of 28 metro areas. The strongest rebounds were in coastal markets, including the Bay Area, Los Angeles, Orange County, and San Diego, where there are decreasing levels of foreclosed homes. Markets in the interior have also experienced a price bounce, mainly due to strong investor demand.

In Washington, D.C., home prices were up 5.2 percent year-over-year. Since the market bottomed in early 2009, prices in this metro area have risen more than 9 percent. Washington boasts a relatively strong local economy with 6.8 percent unemployment compared to 9.9 percent for the U.S. The earlier rapid decline in prices also substantially improved affordability.

Ohio and Michigan, two states hit hard by the recession and loss of manufacturing jobs, are seeing signs of stabilization. Housing is very affordable across metro areas in these states. There is less uncertainty about the future of the U.S. auto industry and jobs in auto and auto parts manufacturing have been increasing since December 2009.

Other markets where investor purchases of foreclosed homes have dominated housing sales are also coming back into balance. This includes metro areas such as Minneapolis, Detroit, and Memphis, where recent sales have included more regular, non-distressed homes.

Source: Fiserv (06/14/2010)

Is a Housing Shortage Coming?

2010-06-15T13:07:00.000-07:00

From Daily Real Estate News, June 15, 2010

Some experts are saying that the next big real estate problem could be a shortage of homes.

Only 672,000 new homes were started in April. That’s less than half the number needed to meet the country’s average population growth.

In the past, an average of more than 1.3 million households have been built each year, creating demand for 1.5 million new homes. In 2009, only 398,000 new households were formed, according to the Census Bureau.

"The decline in household formation is artificial," says James Gaines, a real estate economist with Texas A&M. "The young are moving in with their parents. There's even doubling up among working-class people. There's a pent-up demand coming if and when the economy recovers."

Some economists believe this analysis fails to take into account the changing economy or the large inventory of vacant properties. But Gaines and others say these factors are unlikely to significantly drive down demand.

Source: CNNMoney.com, Les Christie (06/15/2010)

Top 10 Cities: Rent vs. Buy & Buy vs. Rent

2010-06-15T13:03:00.000-07:00

Top 10 Cities to Buy vs. Rent

Interpretation Key -

Price-to-Rent Ratio of 1-15: It is much less expensive to own than to rent a home in this city Price-to-Rent Ratio of 16-20: It is more expensive to own a home in this city are The total costs of ownership of a home in this city are greater than the costs of renting, but it might still make financial sense depending on the situation. Price-to-Rent Ratio of 21+: The total costs of owning a home in this city are much greater than the costs of renting.

Definitions: Total costs of home ownership include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing HOA dues and private mortgage insurance, where applicable. Total costs of homeownership include an offset for the tax advantages of homeownership, including mortgage interest, property tax and closing cost deductions.

Total costs of renting include rent and renter’s insurance.
City Price-to-Rent Ratio

1. Minneapolis, Minnesota 8
2. Arlington, Texas 8
3. Miami, Florida 8
4. Fresno, California 8
5. San Antonio, Texas 8
6. Mesa, Arizona 9
7. Jacksonville, Florida 9
8. Phoenix, Arizona 10
9. El Paso, Texas 10
10. Las Vegas, Nevada 11

“At the peak of the real estate bubble, cities like Miami, Phoenix and Las Vegas were not affordable for many. Now the opposite is true,” said Pete Flint, co-founder and CEO of Trulia. “Home sellers in these hard hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result , these unattainable markets are so affordable it makes better financial sense to buy than rent.”

Top 10 Cities to Rent vs. Buy

City Price-to-Rent Ratio

1. New York, New York 33
2. Omaha, Nebraska 26
3. Seattle, Washington 25
4. Portland, Oregon 22
5. San Francisco, California 22
6. Oklahoma City, Oklahoma 21
7. Kansas City, Missouri 20
8. San Diego, California 20
9. Cleveland, Ohio 20
10. Dallas, Texas 19

Many Small Banks Wary of Lending

2010-06-09T12:22:00.000-07:00

From Daily Real Estate News, June 9, 2010

Smaller banks used to be a great source for home buyers and those looking to refinance their loan into a better deal, but with more small and regional banks facing financial problems, this resource is disappearing.

More than 700 banks are on the FDIC’s confidential “troubled bank” list, up from 50 troubled banks a few years ago.

John Dugan, U.S. Treasury’s comptroller of the currency, says that the banks that are in trouble have similar issues -- excessive concentrations in commercial real estate lending, especially construction and development lending. Smaller banks held about half of the defaulting commercial real estate loans.

Source: HousingWatch.com, Bendix Anderson (06/08/2010)

Mortgage Applications Drop, Rates Stay Low

2010-06-09T12:20:00.000-07:00

From Daily Real Estate News, June 9, 2010

Applications for mortgages to purchase homes declined 5.7 percent last week compared to the previous week on an adjusted basis that takes into account Memorial Day, according to the Mortgage Bankers Association weekly survey.

On an unadjusted basis, the purchase index decreased 16.3 percent compared with the previous week and was down 30.4 percent from Memorial Day week last year. This is the fifth straight week mortgage applications have declined.

“Purchase applications are now 35 percent below their level of four weeks ago, as home buyers have not yet returned to the market following the expiration of the home buyer tax credit at the end of April,” says Michael Fratantoni, MBA’s vice president of research and economics.

Mortgage rates continue to be historically low:

* 30-year fixed-rate mortgages decreased to 4.81 percent from 4.83 percent;
* 15-year fixed-rate mortgages increased to 4.26 percent from 4.24 percent;
* 1-year ARMs decreased to 6.94 percent from 6.96 percent.

Source: Mortgage Bankers Association (06/09/2010)

Lenders Warn Foreclosure May End in Lawsuit

2010-06-09T12:16:00.000-07:00

From Daily Real Estate News, June 9, 2010

The housing crisis will spark a wave of lawsuits filed by lenders seeking to recoup loses on home sales and foreclosure auctions that do not return enough money to pay the mortgages in full, according to real estate and legal experts.
Experts predict that mortgage companies will begin to sue home owners in the next two years, including borrowers who ransack a house that has been lost to foreclosure and those who walk away from "underwater mortgages," with hopes of discouraging others from such behavior.

Lenders are unlikely to target borrowers who negotiate in good faith or have defaulted on their home due to job loss or other unforeseen circumstances; other borrowers could be hounded by collection agencies that have purchased their mortgage debt from their lender.

Source: RISMedia (06/08/10)

Mortgage Fraud Rises: Who's at Risk?

2010-06-09T12:13:00.000-07:00

From Daily Real Estate News, June 9, 2010

A report analyzing national mortgage fraud risk in the first quarter of 2010 says it has increased by 4 percent compared to the fourth quarter of 2009 and is up 11 percent from the first quarter a year ago.

Other findings from risk analytics company Interthinx included:

* Arizona surpassed California as the state with the highest fraud risk. Nevada, California, Florida and Michigan rounded out the top five.

* Property valuation fraud risk was the primary driver of the index.

* Identity fraud risk and employment/income fraud risk both increased 10 percent from the fourth quarter of 2009.

* Occupancy fraud risk is down by 11 percent compared to the fourth quarter of 2009, but analysts believe it may trend upward if shadow foreclosure inventory is released for sale.

Source: Interthinx (06/08/2010)

Bernanke Forecasts a Fitful Recovery

2010-06-08T12:17:00.000-07:00

From Daily Real Estate News, June 8, 2010

In a June 7 question-and-answer session at the Woodrow Wilson International Center for Scholars, Federal Reserve Chairman Ben Bernanke predicted a slow economic recovery, with unemployment rates in the double digits for the near term.

He said interest rate increases likely would resume before the job market fully recovers. "Even though technically we'll be in recovery and the economy will be growing, unemployment will still be high for a while and that means that a lot of people will be under financial stress," Bernanke explained.

Source: The New York Times, Sewell Chan (06/08/10)

How to Buy a Home in Under an Hour

2010-06-08T12:12:00.000-07:00

From Daily Real Estate News, June 8, 2010

The next technological trend in the real estate world will be the ability to buy property in little more than an hour, predicts Pat Lashinsky, CEO of ZipRealty.

Lashinsky foresees it working something like this:

1. A home shopper drives by a property and calls a Realtor practitioner on his cell phone.
2. The Realtor practitioner qualifies the buyer through banking contacts, then sends him an electronic key that allows him to tour the home.
3. An electronic tracking system monitors his tour while the Realtor practitioner answers questions via cell phone.
4. Closing will be managed through an electronic meeting.

Lashinsky believes the real estate industry has been slow to embrace change, but customers will demand it. “Those [Realtor practitioners] who don’t make it happen are going to fall by the wayside,” he says.

Source: Orange County Register, Jeff Collins (06/08/2010)

Builders Report Improving Spring Sales

2010-06-08T12:09:00.000-07:00

From Daily Real Estate News, June 8, 2010

Home builders are seeing their sales improve after the slowdown that followed the end of the home buyer tax credits.

JMP Securities analyst James Wilson says sales activities in California, Texas, and Arizona are approaching pre-April numbers in many markets. In some markets, builders are able to continue to raise prices and homes are selling at the strongest pace since before spring 2009, he says.

Wilson said he expects home sales to continue to be up and down, but he believes that the market has already hit bottom and is on the upswing.

Source: Associated Press (06/07/2010)

BofA to Settle More Countrywide Charges

2010-06-08T12:06:00.000-07:00

From Daily Real Estate News, June 8, 2010

Bank of America has agreed to pay $108 million to settle charges that Countrywide Financial Corp., which it acquired two years ago, charged large and unfair fees to borrowers facing foreclosure.

The settlement, which will refund money to about 200,000 borrowers, was announced Monday by the Federal Trade Commission.

FTC Chair Jon Leibowitz said Countrywide engaged in “callous conduct that took advantage of consumers already at the end of their financial rope.”

Source: Associated Press, Alan Zibel (06/07/2010)

5 U.S. Cities Where It's Cheaper to Buy Than Rent

2010-06-07T22:52:00.000-07:00

From Huffington Post, June 8, 2010

If you're looking for a quick and easy calculation about whether you should finally buy your dream home, you'll likely want to first check out your area's price-to-rent ratio.

By comparing the average purchase price of a 2-bedroom home --including mortgage fees and maintenance expenses -- with the average rental price for 2-bedroom apartments, condos, and townhouses, Trulia calculated the price-to-rent ratio to determine whether it is better to rent or buy in a particular city.

Cities with low price-to-rent ratios (under 15) indicate that is cheaper to own a home than rent.

"At the peak of the real estate bubble, cities like Miami, Phoenix and Las Vegas were not affordable for many. Now the opposite is true," said Pete Flint, co-founder and CEO of Trulia. "Home sellers in these hard hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result, these unattainable markets are so affordable it makes better financial sense to buy than rent."

Dallas, TX
Price-to-Rent Ratio: 19
Average list price: $293,767
Average rent: $1,324

San Diego, CA
Price-to-Rent Ratio: 20
Average list price: $396,409
Average rent: $1,670

Cleveland, OH
Price-to-Rent Ratio: 20
Average list price: $246,895
Average rent: $1,046

Kansas City, MO
Price-to-Rent Ratio: 20
Average list price: $240,076
Average rent: $992

Oklahoma City, OK
Price-to-Rent Ratio: 21
Average list price: $195,663
Average rent: $763

To learn more about outstanding opportunities to purchase your home or condo in San Diego or Orange County, call Tim James (909) 702-3220 or email at drtimjames@usa.net. To search the entire Southern California MLS, go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/.

Costs of Owning Surprises Some Buyers

2010-06-07T16:15:00.000-07:00

From Daily Real Estate News, June 7, 2010

A small survey of first-time home buyers found that more than half of the families were surprised at how expensive it was to own a home, even though 88 percent believed they had done a good estimate of the costs.

The study for BBVA Compass, a lender based in Alabama, concluded that most lenders don’t warn buyers that there will be costs beyond principal, interest, taxes, and insurance.

Among those costs are utilities. The U.S. Department of Energy reported that the typical family spends $1,900 a year – $158 per month – on things like heat, air conditioning and power.

The National Association of Home Builders calculated that the typical buyer of a new home spends about $8,640 within the first 12 months for furnishings, appliances, and home repairs and fix-ups, while the typical buyer of a resale home spends $6,540.

Source: United Feature Syndicate, Lew Sichelman (06/06/2010)

Home Builder Grows Its Solar Options

2010-06-07T16:11:00.000-07:00

From Daily Real Estate News, June 7, 2010

PulteGroup, the nation’s largest home builder, is selling homes in 10 communities that offer solar as a standard or an option, according to Walter Cuculic, the company’s director of sustainability.

“With solar more affordable than ever before, tax credits available for purchasing solar options, and the ability to roll the cost into a home mortgage, solar is a great investment for new home buyers looking to hedge against rising energy costs,” Cuculic says.

So far, all of the Pulte solar communities have been west of the Mississippi, but in June, Pulte will introduce a community in New Jersey.

Typically solar options range in price from $14,000 to $25,000, before local incentives, rebates and tax credits, says Matt Brost, general manager of new homes division for the SunPower Corp.

The typical Pulte solar customer is between the ages of 29 and 45 and committed to doing the environmentally correct thing, the company says.

Source: PulteGroup (06/04/2010)

FHA Delinquencies Decline for Third Month

2010-06-07T16:06:00.000-07:00

From Daily Real Estate News, June 7, 2010

For the third consecutive month, the number of delinquent home mortgages insured by the Federal Housing Administration has declined.

The delinquency rate is still high – 8.5 percent in April – but that is down from 9.4 percent in January.

The FHA was unwilling to applaud this as good news. "We're not declaring victory by any stretch," says David Stevens, the FHA's commissioner. "There's plenty of room for caution."

But outside analysts were more positive. "It's a very important trend to the extent that we're not continuing to get worse," says Thomas Lawler, an independent housing economist in Leesburg, Va.

Source: The Wall Street Journal, Nick Timiraos (06/07/2010)

How to Help a Family Member Buy a Home

2010-06-04T15:00:00.000-07:00

Now we won't find any real estate in Southern California for $50,000, but the example below can be helpful. There are many ways parents or others can help a younger person make their first purchase. Call Tim James if you would like to schedule time for a consultation. Or consult your tax accountant or attorney for the best approach for your specific situation...

From Daily Real Estate News, June 4, 2010

Helping someone close to you buy a low-cost property – $50,000 or less – is a fairly straight-forward transaction, although it may require specific legal advice, says Charles Carter, an attorney and a consultant at Haint Blue Realty in Mount Pleasant, S.C.

Carter suggests that buying a property outright, using the gift exclusion ($13,000 for singles; $26,000 for married couples) to pay for a down payment and closing costs and then giving the recipient a 30-year mortgage on the remaining amount at 5 percent interest is a good way to go.

There won’t be any gift taxes. And the mortgage holder may later cancel the mortgage and gift what remains on the loan as another annual gift-tax exclusion.

Source: McClatchy-Tribune News Service, Charles Carter (06/03/2010)

15-Year Mortgage Hits a Record Low

2010-06-04T14:54:00.000-07:00

From Daily Real Estate News, June 4, 2010

Interest on 30-year fixed home loans averaged 4.79 percent this week -- up slightly from 4.78 percent a week ago but still near historic lows.

The average rate on 15-year fixed loans hit a record low of 4.2 percent, down from 4.21 percent; while interest on one-year adjustable-rate mortgages was unchanged at 3.95 percent, and the five-year ARM fell to 3.94 percent from 3.97 percent.

Source: Wall Street Journal (06/04/10)

FHA: Loan of Choice for Most Buyers

2010-06-04T14:50:00.000-07:00

From Daily Real Estate News, June 4, 2010

The vast majority of potential home buyers – 87 percent – plan to use a Federal Housing Administration home loan to finance their purchases, according to a new survey from the Home Buying Institute, a consulting service.
In a survey of 12,000 home shoppers, two-thirds first-time buyers – nearly 54 percent – said they preferred an FHA loan because it requires a small down payment. The remainder chose an FHA loan for these reasons:
* 19.2 percent thought the qualification process would be easier.
* 13.5 percent said they didn’t think they could qualify for a conventional mortgage loan.
* 7.7 percent said they had bad credit.
* 5.8 percent said their income was too low to qualify for a conventional loan.

Source: Home Buying Institute (06/04/10)