Tuesday, May 19, 2009
What's Delaying the Mortgage Rescue Plan?
Daily Real Estate NewsThe Obama administration’s foreclosure prevention plan is struggling even with $75 billion to spend.The program has been mired in legal and administrative glitches:- The biggest problem so far is the confusing paperwork that has flummoxed and overwhelmed loan servicers. Many servicers are only now able to roll out their version of the program. That has limited the number of distressed homeowners enrolled in the program to about 55,000 instead of millions.
- The second issue is angry investors who are lobbying hard and in some cases are suing to prevent changes to agreements that will cost them significant amounts of money.
- The third problem is rising unemployment. No loan modification can help when a borrower doesn’t have a job.
Source: CNNMoney.com, Tami Lubby (05/18/2009)
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Practitioners Say Homes Prices Have Hit Bottom
Daily Real Estate News Real estate professionals are optimistic that home prices will hit bottom in the next six months, according to a survey from listing and home-pricing site HomeGain.com.About half of practitioners surveyed expect home prices to stay the same in the next six months, 29 percent expect them to drop, and 22 percent believe they will increase. More than 84 percent of practitioners believe their clients’ homes lost value in the last year, while 12 percent say values had stayed the same. Only 3 percent believe homes had gained value.Meanwhile, sellers were skeptical of their real estate professional’s analysis, with 69 percent believing their homes were worth more than the practitioner recommended. About 35 percent of home sellers thought their home was worth 10 percent to 20 percent more, and 10 percent thought their home was worth at least 21 percent more than their real estate professional suggested.Source: Inman News (05/18/2009)Scott Chappell and Brian Bean
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Friday, May 15, 2009
Rates Below 5% for Ninth Week Straight
Daily Real Estate NewsFreddie Mac reports a slight rise this week in the 30-year fixed mortgage rate to 4.86 percent from 4.84 percent in the previous week.Rates have been below 5 percent for nine weeks in a row. Last year at this time, the average 30-year rate was 6.01 percent.The 15-year fixed mortgage rate climbed to 4.52 percent from 4.51 percent. Meanwhile, the five-year adjustable mortgage rate slipped to 4.82 percent from 4.9 percent; and the one-year ARM fell to 4.71 percent from 4.78 percent. Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country.Source: Freddie Mac
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Homes May Be Undervalued Today
Daily Real Estate NewsAfter dropping for two years, home prices appear to be bottoming out, and any further declines would be an overcorrection, NAR Chief Economist Lawrence Yun told thousands of practitioners at the REALTORS® Midyear Legislative Meetings in Washington, D.C., on Thursday.The median national home price today is about $169,000, down almost 14 percent from a year ago and an estimated 30 percent from its peak. Today’s prices are justified by the fundamentals of the economy and may even represent an undervaluation, Yun said.Lender Policies Hinder RecoveryDistressed sales, which today comprise about 50 percent of transactions nationwide, are creating market distortions in otherwise stable neighborhoods. “We’re only capturing transaction prices,” he said, and those prices might be 20 percent to 25 percent below actual values. For that reason, it’s possible that widely cited projections that a third or more of homeowners are underwater might be off the mark, he said. The consequences of these missed projections could be huge. Lenders, shying away from refinancing mortgages of troubled owners, exacerbate the downward spiral of homeowners’ financial position and that, by extension, hurts the broader economy.Contributing to the problem is the lack of reasonably priced financing for higher-cost homes at a time when declining prices, low rates, and the home buyer tax credit are helping the entry-level market. Indeed, while housing overall is at a 9.5 month supply, down from double digits not that long ago, homes above $729,750—the threshold for jumbo loans—face a 40-month supply.Key TestBy summer, all of the incentives that have been put into place by the government will have had several months to work, Yun said. If sales start picking up significantly, then prices should stabilize and trigger a broader economic recovery. If sales don’t show a significant response, then the federal government might have to look at another big injection of funds into the economy, something no one has an appetite for.Yun’s forecast reflects the brighter scenario: “My projection is home sales will be 10 to 20 percent higher the second half of this year than last year and we will come out of this recession in 2010,” he said. —Robert Freedman, REALTOR® MagazineScott Chappell and Brian Bean
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Monday, May 11, 2009
The Basics: 2009 First-Time Home Buyer Tax Credit
Bringing the Dream of Homeownership Within ReachNational Association of RealtorsAs part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.
Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.
Who Qualifies?
First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
Which Properties Are Eligible?
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
How Much Will the Credit Be?
The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:
The price of the home — the credit is equal to 10% of the purchase price of the home, up to $8,000.
The buyer's income — single buyers with incomes up to $75,000 and married couples with incomes up to $150,000 — may receive the maximum tax credit.
If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income — over $95,000 for singles and over $170,000 for couples are not eligible for the credit.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.Scott Chappell and Brian Bean
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After Stress Test, Banks May Loosen Up
Daily Real Estate News Bank stress tests, which assess how banks would handle it if the economy were to sour further, may make some banks more prone to lend if the results were good, analysts say.But don’t expect a miracle turnaround."In reality, it is still a weak economy out there," said analyst Joe Morford of RBC Capital Markets. "Whether they have the capital or not, banks are going to be cautious making loans — commercial real estate, commercial business or even residential mortgages."Some banks have been frozen by their fear of falling capital levels, holding onto bad loans and reluctant to sell foreclosed homes at a loss. "Now they're not as concerned," said Stuart Plesser, bank analyst with Standard & Poor's. "If they are able to raise capital, I would assume they would get more aggressive.”Source: Investor’s Business Daily, Marilyn Alva (05/07/2010)
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Putting Mortgages into 'Plain Language'
Daily Real Estate NewsBank of America has debuted www.BankOfAmerica.com/HomeLoans, a new Website for borrowers that includes a calculator that determines not just what size loan people can qualify for, but how much they can spend without being stretched too thin.“We wanted to change the conversation to ‘How much house can I comfortably afford?’ rather than ‘What’s the maximum I can buy?’ ” said Aditya Bhasin, the product, pricing and strategy executive for Bank of America Home Loans.The site was designed to be easy to read, spelling out a variety of contingencies, including the maximum payment that an adjustable rate mortgage could potentially cost. The new site also offers what BofA calls Flat Fee Mortgage Plus, which has no application fee and a single closing fee that includes processing costs and fees for third-party services like appraisals.It doesn’t include other standard costs like property taxes, homeowners’ insurance and prepaid interest.Craig Focardi, a senior research director at the Tower Group, a financial consulting firm, said the idea for the plan is nothing new – it’s been tried by others. But the prominence of the programs could persuade competitors to adopt the features.Source: The New York Times, Bob Tedeschi (05/08/2009)Scott Chappell and Brian Bean
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Friday, May 08, 2009
Buyers Shouldn't Dismiss All ARMs
Daily Real Estate NewsPotential home buyers in search of a mortgage are wary of all kinds of adjustable rate loans these days, but hybrid ARMs can be really good deals even in these times of historically low interest rates, some lending experts insist.Hybrids are "a great product at a great rate," says Christopher Cruise, a mortgage broker in Silver Spring, Md.Currently, starting rates are under 4 percent, generally a full percentage point lower than traditional, 30-year, fixed-rate mortgages. Hybrids are locked in at that starting rate for five, seven, or sometimes even 10 years, then they adjust—usually a maximum of 2 points a year with an overall cap of 6 or 8 points.In the meantime, the savings on a hybrid ARM can be thousands of dollars and make sense for a buyer who doesn’t expect to be in a home for more than five or six years.Even if they stay in the same house, it’s likely they’ll have an opportunity to refinance. "Seven years for a mortgage is an eternity these days," Cruise says.He recommends that buyers do the math, considering the worst-case scenario. In many cases, particularly with jumbo loans, the savings will still be substantial even if the loan adjusts to the maximum for a couple of years.Source: United Features Syndicate, Lew Sichelman (05/03/09)Scott Chappell and Brian Bean
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House Passes Bill to Protect Borrowers
Daily Real Estate NewsA bill passed by the U.S. House of Representatives on Thursday requires mortgage lenders to take borrowers' repayment ability into account. It also makes it possible for borrowers to take legal action against entities that pool mortgages and sell them as securities on the secondary market.The bill also will force lenders to retain a 5 percent interest in mortgages other than standard 30-year fixed and adjustable-rate loans. However, adjustable-rate mortgages that carry prepayment penalties or fees greater than 2 percent do not qualify for the exemption.Source: Washington Post, Dina ElBoghdady (05/08/09)
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Thursday, May 07, 2009
Market Shift: More Houses Get Multiple Offers
Daily Real Estate News Julie Holt of Tarpon Springs, Fla.-based Anclote Title Services says 10 percent of the homes for sale are generating more than one bid. Experts say markets hit hard by foreclosure are seeing more multiple offers, as residential price declines make homes more affordable and banks low-ball asking prices on distressed properties. "If a house is in a good neighborhood, is maintained and is a good value, it'll get multiple offers," says Holt.Although many markets are far from fully shaking off the downturn, the pick-up in multiple offers is a reason for optimism. "When you begin to see people willing to fight for a property, that's a good sign," says Beth Peerce, treasurer of the CALIFORNIA ASSOCIATION OF REALTORS®. "We are beginning to see the beginning of the end of a disaster time."Source: USA Today, Julie Schmit (5/6/09)
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Senate OKs Foreclosure Bill Minus Cramdown
Daily Real Estate News The U.S. Senate on Wednesday approved a version of the latest foreclosure-prevention plan.The bill shields mortgage servicers from lawsuits if they participate in federal loan modification programs, making it potentially easier for home owners with a second lien to refinance.The bill also gives renters of foreclosed properties at least a 90-day grace period before they have to move. Plus, it modifies the Hope for Homeowners program to provide better incentives for lenders to adjust mortgages. The bill also extends through 2013 an increase in deposit insurance by the FDIC from $100,000 to $250,000.The Senate version of the bill didn’t include a provision allowing bankruptcy judges to modify primary mortgages. This cramdown legislation passed the House in March and is considered a key to the Obama administration’s foreclosure prevention plan. Lawmakers consider it dead in the water.The Senate and House versions must now be reconciled before President Barack Obama can sign the bill into law.Source: The Associated Press, Ann Flaherty (05/06/2009)Scott Chappell and Brian Bean
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Wednesday, May 06, 2009
Five Maintenance Issues Owners Shouldn't Ignore
Daily Real Estate NewsConsumer Reports magazine advises home owners not to put off important maintenance projects, noting that waiting until the economy rebounds could end up making the repairs more costly while putting a family's health at risk.The magazine identifies five crucial maintenance issues: - Check the gutters: Clogged gutters, broken fasteners and separations where the gutters meet the fascia board will lead to roof leaks if they haven’t already.
- Inspect the roof: Cracked, curled and mussing shingles mean a roof is nearing the end of its useful life. Cracks around chimneys, skylights, and roof valleys can also suggest the roof might be leaking.
- Look for bugs: Termites and carpenter ants can bore through a home in a few short years. Probe the sill plate on top of the foundation with a screwdriver to check for rotten wood. Also look for carpenter ants and termites along windowsills and walls.
- Avoid mold: Mold and mildew can cause musty odors, dank air, and make residents sick. Check under carpets and around windows for visible mold or mildew.
- Don’t ignore cracks: Foundation cracks wider than 3/16 of an inch can be a problem. These require examination by a structural engineer.
Source: Consumer Reports (05/04/2009)
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Bernanke Cites Improving Housing Data
Daily Real Estate NewsFederal Reserve Chairman Ben Bernanke said Tuesday that the economy appeared to be stabilizing, but warned that a real recovery is still months away.“We continue to expect economic activity to bottom out, then to turn up later this year,” Bernanke told the congressional Joint Economic Committee, according to a prepared statement.Bernanke cited improved sales of existing homes as evidence that things are improving. He said sales have been “fairly stable” since late last year, in part because moderating prices have made homes more affordable.Bernanke also said credit markets have stabilized in recent weeks, allowing homeowners to refinancing mortgages, which is a good sign for future stabilization.Source: The New York Times, Edmund L. Andrews (05/05/2009)
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Tuesday, May 05, 2009
Prime Mortgage Demand Is Up
Daily Real Estate NewsDemand for prime mortgages was up substantially in the first quarter of this year for the first time since early 2007, according to a Federal Reserve survey of loan officers released Monday. The rise in demand comes at a time when rates are low, but about 50 percent of banks say they are tightening lending standards.More than 65 percent of the banks tightened standards on the kinds of loans available to borrowers with blemished credit. Only two of the 53 domestic banks and 23 branches of foreign parent banks surveyed reported that they were offering adjustable-rate loans.Banks also reported that they were tightening standards for commercial lending, credit cards, and other consumer loans.Source: The Associated Press, Jeannine Aversa and Reuters News, Mark Felsenthal (05/04/2009)
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Bargains Hard to Find In Attractive Areas
Daily Real Estate NewsPotential buyers in areas that were hard hit by the housing downturn have read about bargains, but only find it disappointing when they go shopping."Every open house I've been to has been a zoo," says first-time homebuyer Sam Rivero, who has looked at 35 properties during the last three months. "If you follow what the media say, you'd think sellers are desperate to sell a house, but when you get there it's totally the opposite."When the real estate bubble burst, it didn’t affect the mid-priced market, said real estate information firm MDA DataQuick. Instead, it created opportunities in troubled neighborhoods and slowed sales in the market of homes priced above $1 million. But in areas where most of the homes sell for $400,000 to $800,000, there are few discounts to be found.Even the foreclosure market has slowed, says University of Southern California Professor of Real Estate Tracey Seslen. Seslen said lenders with foreclosures are supporting market stabilization and releasing only a few homes at a time to avoid flooding the markets."The biggest problem," says Phyllis Harb, an associate with RE/Max Tri City in La Canada, "is that people are overreacting to housing statistics, thinking they can come in and make an offer 20 percent below price."Source: Los Angeles Times, Chip Jacobs (05/03/2009)Scott Chappell and Brian Bean
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Friday, May 01, 2009
Small Businesses Face Big Mortgage Loans
Daily Real Estate News The housing bust is hitting entrepreneurs the hardest.During the boom times, many small business owners pulled money out of their homes to start or expand their enterprises. Today, many are scrambling because it is next to impossible to get a small business loan, and the loans they took out on their homes are resetting and triggering higher payments.California is particularly hard-hit by the problem because small businesses account for more than 50 percent of all jobs there. "Small business [owners] are hurting, and they're scared," says Chad Moutray, chief economist in the U.S. Small Business Administration's Office of Advocacy.Source: BusinessWeek.com, Mara Der Hovanesian, with John Tozzi (04/22/2009)
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Senate Defeats Mortgage Cramdown Bill
Daily Real Estate NewsThe proposed law allowing bankruptcy judges to modify mortgages, known as the cramdown bill, was voted down Thursday by the U.S. Senate.The financial industry opposed the bill, arguing that the change would drive up interest rates and make the market less stable. Some senators also were concerned that their constituents who pay their bills on time would resent this measure.Minority Leader Mitch McConnell, who led the opposition, says the vote "ensures that homeowners who pay their bills and follow the rules won't see an interest-rate hike at the whim of a bankruptcy judge."The reform was a key part of President Obama’s foreclosure prevention plan, leaving some to question ultimate likelihood of its success."It won't render the loan modification program useless, but it removed an important ingredient that would have helped realign everybody's interests," says Barry Zigas, director of housing policy for the Consumer Federation of America.Source: CNNMoney.com, Tami Lubby (04/30/2009)Scott Chappell and Brian Bean
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