From Realty Times of July 13, 2009
Washington Report: Home Affordable Refinance Program by Kenneth R. Harney
The Obama administration's latest expansion of its "home affordable" refinance program, outlined just before the July 4 holiday, could be huge news for tens of thousands of owners whose houses are seriously "underwater," or where they're worth a lot less than the mortgage balance owed on them.
Under the new rules, even where borrowers have negative equities of as much as 25 percent, they may be able to refinance into better loan terms, provided their mortgage is owned or guaranteed by Fannie Mae or Freddie Mac.
Under the original rules for the program, the cutoff point was just five percent negative equity -- or a "loan to value" (LTV) ratio of 105 percent.
Though an estimated 80,000 owners already have been refinanced by Fannie and Freddie, HUD Secretary Shaun Donovan and Treasury Secretary Tim Geithner decided that the 105% LTV limit left too many borrowers out of reach.
In some parts of California, Nevada, Arizona and Florida, 40 to 50 percent of home owners are now stuck with negative equities, according to industry estimates. In Las Vegas, 67 percent of owners are underwater.
Zillow.com estimates that nationwide, 22 percent of all owners have negative equity in their properties - many of them by more than five percent.
The newly-expanded "home affordable" program opens the door not only to lower monthly payments for seriously underwater borrowers, but also to the possibility of shorter loan pay-off terms to reduce mortgage principal debts much faster.
Here's an example of how the expanded program could work:
Say your house is currently valued at $240,000, but your mortgage balance is $300,000.
You are underwater by 25 percent.
If your loan is owned or guaranteed by Fannie or Freddie, and you're not behind on your payments, you should be eligible for a "home affordable" refi.
Say your current payments are eighteen hundred sixty dollars a month. By refinancing into a new 30-year, $300,000 loan at five and a quarter percent, you could cut your principal and interest payment to about sixteen hundred sixty a month - a $200 saving.
Or you could shorten your loan term from 30 years to say, 15 years or 20 years at five and an eighth percent. If you could handle the slightly higher monthly payments, you'd accelerate your principal paydown speed, build equity and go from underwater to above water much faster, even without local market value appreciation.
To take advantage, contact your loan servicer to see if your mortgage is owned by Freddie or Fannie. Or you can check online at either fanniemae.com/loanlook, or freddiemac.com/mymortgage.
Copyright © 2009 Realty Times. All Rights Reserved.
Monday, July 13, 2009
Tuesday, July 7, 2009
Real Estate Outlook
From Realty Times of July 7, 2009
Real Estate Outlook: Gains Versus Gloom by Kenneth R. Harney
(Note Phoenix comments!)
When even the Case-Shiller index, which ranks as the gloomiest of all the measures of house price movements, starts reporting gains then you know something is stirring out there in real estate.
In its latest monthly survey, Standard & Poor's Case-Shiller index found prices up in a number of key markets: Dallas prices gained 1.7 percent, Denver 1.5 percent and other cities -- Washington DC, Seattle, San Francisco, Atlanta, Boston and Cleveland -- registered smaller increases.
Nationally, the Case-Shiller index came in slightly negative for the month overall, as did the Federal Housing Finance Agency's home purchase price index.
But even the most bearish researchers now agree: Prices are bottoming out, even in some of the hardest-hit areas.
Home sales are also up in many local markets, sometimes dramatically so. Take metropolitan Phoenix. According to the latest MDA DataQuick survey, sales in the Phoenix market grew at their fastest pace in two years during May.
Resales of detached houses were up by 56 percent over year ago levels, and condo sales were up by 30 percent.
Even prices in the Phoenix area, a market still weighed down by a high percentage of distressed sales and foreclosures, gained by 3.5 percent in May over April levels.
That's an important turnaround, but the sobering fact is that even with that gain, prices in Phoenix are still down 38 percent compared with the same period in 2008.
Other important developments this week pointing to improvements in the housing sector:
Mortgage rates continue to drop, and are now approaching the lows we saw a few months back. According to the Mortgage Bankers Association, average 30 year fixed rates hit 5.3 percent last week-the third straight weekly decline. Fifteen year fixed rates already have pushed below the 5 percent mark - and averaged just 4.8 percent last week.
Consumer sentiment, as measured by the University of Michigan's survey, was up slightly again, with more consumers indicating confidence in making “big ticket” purchases, which of course include houses.
Now none of this is to suggest that real estate is in great shape and happy days are here again.
That's not the case -- not with hundreds of thousands of workers losing their jobs every month and the national unemployment rate projected to approach 10 percent. And not with lenders continuing to impose tough credit and underwriting standards on all home purchase mortgage applications.
But after so many months of negative news, we think it's important to acknowledge the positive signs popping up on home sales, pricing and interest rates - even if we still have a long way to go to full recovery.
Copyright © 2009 Realty Times. All Rights Reserved.
Real Estate Outlook: Gains Versus Gloom by Kenneth R. Harney
(Note Phoenix comments!)
When even the Case-Shiller index, which ranks as the gloomiest of all the measures of house price movements, starts reporting gains then you know something is stirring out there in real estate.
In its latest monthly survey, Standard & Poor's Case-Shiller index found prices up in a number of key markets: Dallas prices gained 1.7 percent, Denver 1.5 percent and other cities -- Washington DC, Seattle, San Francisco, Atlanta, Boston and Cleveland -- registered smaller increases.
Nationally, the Case-Shiller index came in slightly negative for the month overall, as did the Federal Housing Finance Agency's home purchase price index.
But even the most bearish researchers now agree: Prices are bottoming out, even in some of the hardest-hit areas.
Home sales are also up in many local markets, sometimes dramatically so. Take metropolitan Phoenix. According to the latest MDA DataQuick survey, sales in the Phoenix market grew at their fastest pace in two years during May.
Resales of detached houses were up by 56 percent over year ago levels, and condo sales were up by 30 percent.
Even prices in the Phoenix area, a market still weighed down by a high percentage of distressed sales and foreclosures, gained by 3.5 percent in May over April levels.
That's an important turnaround, but the sobering fact is that even with that gain, prices in Phoenix are still down 38 percent compared with the same period in 2008.
Other important developments this week pointing to improvements in the housing sector:
Mortgage rates continue to drop, and are now approaching the lows we saw a few months back. According to the Mortgage Bankers Association, average 30 year fixed rates hit 5.3 percent last week-the third straight weekly decline. Fifteen year fixed rates already have pushed below the 5 percent mark - and averaged just 4.8 percent last week.
Consumer sentiment, as measured by the University of Michigan's survey, was up slightly again, with more consumers indicating confidence in making “big ticket” purchases, which of course include houses.
Now none of this is to suggest that real estate is in great shape and happy days are here again.
That's not the case -- not with hundreds of thousands of workers losing their jobs every month and the national unemployment rate projected to approach 10 percent. And not with lenders continuing to impose tough credit and underwriting standards on all home purchase mortgage applications.
But after so many months of negative news, we think it's important to acknowledge the positive signs popping up on home sales, pricing and interest rates - even if we still have a long way to go to full recovery.
Copyright © 2009 Realty Times. All Rights Reserved.
Tuesday, June 30, 2009
Real Estate Market Conditions
Realty Times of June 30, 2009
Market Conditions by Realty Times Staff
The National Association of Realtors is reporting that May saw a gain in the sale of existing homes -- up by 2.4 percent.
Regionally, existing-home sales varied:
Northeast: rose 3.9 percent
Midwest: rose 9.0 percent
South: unchanged
West: down 0.9 percent
Are we out of the woods? Dr. Lawrence Yun said the appraisal problem is serious. "Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales," he said. "In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected."
Copyright © 2009 Realty Times. All Rights Reserved.
Market Conditions by Realty Times Staff
The National Association of Realtors is reporting that May saw a gain in the sale of existing homes -- up by 2.4 percent.
Regionally, existing-home sales varied:
Northeast: rose 3.9 percent
Midwest: rose 9.0 percent
South: unchanged
West: down 0.9 percent
Are we out of the woods? Dr. Lawrence Yun said the appraisal problem is serious. "Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales," he said. "In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected."
Copyright © 2009 Realty Times. All Rights Reserved.
Thursday, June 25, 2009
New Loan Modification, Short Sale Options
I can only hope none of you need this information, but if you do:
From Realty Times of June 25, 2009
New Loan Modification, Short Sale Options by Broderick Perkins
Now, mortgage modifications can include second mortgages -- not just first mortgages -- and cash incentives are sweetening short sale deals, thanks to new efforts by the Obama Administration.
The new efforts give some homeowners a second shot at a home-saving loan modification, especially if they were originally turned down -- or turned off -- because the second mortgage (piggy back, home equity loan or line of credit, etc.) impeded the process.
Other homeowners may now be able to take the short sale escape route from unaffordable mortgages that could otherwise wind up in foreclosure.
Second mortgage modifications
Loan modifications are designed to make the home loan more affordable, typically by reducing the interest rate, extending the term of the loan and, less often, by reducing the principal. They are not refinanced mortgages, which pay off the old mortgage with a new mortgage.
Under Making Home Affordable's new second-lien program, borrowers whose first mortgages are modified will automatically have payments reduced on their second mortgages as well, provided the first and second-mortgage lender participates in the program.
Twelve mortgage servicers currently do. Among them are large banks including, Bank of America, Wells Fargo, Countrywide, Citibank, Chase and others.
Eligible homeowners looking to modify their first mortgage must be an owner-occupant of the home; have an unpaid principal balance that is no more than $729,750; have a loan that was originated on or before January 1, 2009; have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31 percent of their gross monthly income; and have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.
Under the new second mortgage program, in addition to lowering the payment, lenders can also opt to erase a borrower's second mortgage in exchange for a lump-sum payment from the government.
New short sale incentives
Short sale incentives were among recent refinements to the Obama administration's housing rescue programs.
In a short sale, the lender closes the mortgage in return for whatever sale price the homeowner can net. However, the difference is sometimes considered income for which the selling homeowner may be taxed. It's important to include a tax professional's advice in the deal.
Under the new short sale incentive, lenders can receive a $1,000 payment from the U.S. Treasury for allowing the owner to sell the house for less than the amount owed on the mortgage and for accepting the proceeds as full repayment, rather than treat it as a short sale.
Lenders can also receive $1,000 for accepting a deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.
Homeowners who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. To help stop second mortgages from blocking the deal, the Treasury will pay second lien holders up to $1,000 to relinquish their claims in such transactions.
To learn more about these options visit MakingHomeAffordable.gov
Copyright © 2009 Realty Times. All Rights Reserved.
From Realty Times of June 25, 2009
New Loan Modification, Short Sale Options by Broderick Perkins
Now, mortgage modifications can include second mortgages -- not just first mortgages -- and cash incentives are sweetening short sale deals, thanks to new efforts by the Obama Administration.
The new efforts give some homeowners a second shot at a home-saving loan modification, especially if they were originally turned down -- or turned off -- because the second mortgage (piggy back, home equity loan or line of credit, etc.) impeded the process.
Other homeowners may now be able to take the short sale escape route from unaffordable mortgages that could otherwise wind up in foreclosure.
Second mortgage modifications
Loan modifications are designed to make the home loan more affordable, typically by reducing the interest rate, extending the term of the loan and, less often, by reducing the principal. They are not refinanced mortgages, which pay off the old mortgage with a new mortgage.
Under Making Home Affordable's new second-lien program, borrowers whose first mortgages are modified will automatically have payments reduced on their second mortgages as well, provided the first and second-mortgage lender participates in the program.
Twelve mortgage servicers currently do. Among them are large banks including, Bank of America, Wells Fargo, Countrywide, Citibank, Chase and others.
Eligible homeowners looking to modify their first mortgage must be an owner-occupant of the home; have an unpaid principal balance that is no more than $729,750; have a loan that was originated on or before January 1, 2009; have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31 percent of their gross monthly income; and have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.
Under the new second mortgage program, in addition to lowering the payment, lenders can also opt to erase a borrower's second mortgage in exchange for a lump-sum payment from the government.
New short sale incentives
Short sale incentives were among recent refinements to the Obama administration's housing rescue programs.
In a short sale, the lender closes the mortgage in return for whatever sale price the homeowner can net. However, the difference is sometimes considered income for which the selling homeowner may be taxed. It's important to include a tax professional's advice in the deal.
Under the new short sale incentive, lenders can receive a $1,000 payment from the U.S. Treasury for allowing the owner to sell the house for less than the amount owed on the mortgage and for accepting the proceeds as full repayment, rather than treat it as a short sale.
Lenders can also receive $1,000 for accepting a deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.
Homeowners who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. To help stop second mortgages from blocking the deal, the Treasury will pay second lien holders up to $1,000 to relinquish their claims in such transactions.
To learn more about these options visit MakingHomeAffordable.gov
Copyright © 2009 Realty Times. All Rights Reserved.
Tuesday, June 16, 2009
Real Estate Outlook
From Realty Times of June 16, 2009
Real Estate Outlook: Mortgage Rates and Inflation
by Kenneth R. Harney
Most of the key economic indicators for real estate continue to be at least moderately positive -- home sales are up, prices are stabilizing or up, unsold inventories are down, and even new unemployment filings are down slightly.
But there's a storm cloud looming on the near horizon that everybody needs to keep an eye on: Mortgage rates have been moving up -- fast. Bond market investors are spooked by the federal government's massive borrowings to pay for the stimulus and the deficit.
They're worried that serious inflation may be coming and they're demanding higher rates on the ten year Treasury bonds that are the benchmark used to price mortgages.
But let's focus first on the positive side of the ledger: A key housing price index released last week suggests that the long-awaited turnaround may be underway. The Integrated Asset Services Index - which is based on data from 15,000 local market segments around the U.S. -- went flat on a national basis in May for the first time in a year.
Prices in the Northeast were up by six tenths of a percent for the month. In the Midwest they rose by one tenth of a percent, they were down slightly in the South, and flat in the Western region.
Now that might not impress you, but David McCarthy, CEO of the research and services firm, said flat means bottoming out - and in his words, "that's encouraging (for housing) for the long term."
In some California markets that had experienced severe hits during the darkest days of the bust, the price changes for the month were larger than the national numbers.
San Bernadino prices gained 1.1 percent between April and May. Monterey saw a 3.7 percent increase and Sacramento homes were up four tenths of a percent.
Meanwhile, ZIP Realty's monthly national survey of unsold housing inventories found the number of MLS listings in 28 major markets down by 4 percent in May, and by 24 percent from year-earlier levels.
Now on to the sobering news on mortgage rates: No one can predict precisely how high rates are headed, but in the past two weeks they've jumped by more than a percentage point. The Mortgage Bankers Association reports that last week alone average 30-year fixed rate jumped to 5.6 percent from five and a quarter the week before.
Some analysts project rates to hit and surpass the 6 percent mark if current trends continue.
Bottom line: Given that house prices have turned around, and interest costs are soaring, value-conscious shoppers need to get their contracts and loan applications in -- quick!
Copyright © 2009 Realty Times. All Rights Reserved.
Real Estate Outlook: Mortgage Rates and Inflation
by Kenneth R. Harney
Most of the key economic indicators for real estate continue to be at least moderately positive -- home sales are up, prices are stabilizing or up, unsold inventories are down, and even new unemployment filings are down slightly.
But there's a storm cloud looming on the near horizon that everybody needs to keep an eye on: Mortgage rates have been moving up -- fast. Bond market investors are spooked by the federal government's massive borrowings to pay for the stimulus and the deficit.
They're worried that serious inflation may be coming and they're demanding higher rates on the ten year Treasury bonds that are the benchmark used to price mortgages.
But let's focus first on the positive side of the ledger: A key housing price index released last week suggests that the long-awaited turnaround may be underway. The Integrated Asset Services Index - which is based on data from 15,000 local market segments around the U.S. -- went flat on a national basis in May for the first time in a year.
Prices in the Northeast were up by six tenths of a percent for the month. In the Midwest they rose by one tenth of a percent, they were down slightly in the South, and flat in the Western region.
Now that might not impress you, but David McCarthy, CEO of the research and services firm, said flat means bottoming out - and in his words, "that's encouraging (for housing) for the long term."
In some California markets that had experienced severe hits during the darkest days of the bust, the price changes for the month were larger than the national numbers.
San Bernadino prices gained 1.1 percent between April and May. Monterey saw a 3.7 percent increase and Sacramento homes were up four tenths of a percent.
Meanwhile, ZIP Realty's monthly national survey of unsold housing inventories found the number of MLS listings in 28 major markets down by 4 percent in May, and by 24 percent from year-earlier levels.
Now on to the sobering news on mortgage rates: No one can predict precisely how high rates are headed, but in the past two weeks they've jumped by more than a percentage point. The Mortgage Bankers Association reports that last week alone average 30-year fixed rate jumped to 5.6 percent from five and a quarter the week before.
Some analysts project rates to hit and surpass the 6 percent mark if current trends continue.
Bottom line: Given that house prices have turned around, and interest costs are soaring, value-conscious shoppers need to get their contracts and loan applications in -- quick!
Copyright © 2009 Realty Times. All Rights Reserved.
Monday, June 8, 2009
Arizona Home Market
I spoke with 3 of the large Title Companies this last week All told basically the same story -
May closing were 3 times the April closings!
Urban legend or is it happening?
May closing were 3 times the April closings!
Urban legend or is it happening?
Reshaping Fannie and Freddie
Realty Times of June 8, 2009
Washington Report: Reshaping Fannie and Freddie
by Kenneth R. Harney
Congress took its first step last week on a mission that could totally reshape the American mortgage market.
A House financial services subcommittee held the first hearing on what to do with Fannie Mae and Freddie Mac -- the failed, trillion-dollar mortgage giants that are now operating under direct federal control.
The ultimate answers are likely to determine the types of loans and interest rates that home buyers will have in the future. That's because Fannie and Freddie have dominated the real estate market for decades, writing the rulebook on everything from loan sizes, credit requirements, downpayments and underwriting standards.
Among the idea floated at last week's Capitol Hill hearing were a “utility” concept, where Fannie and Freddie might be merged into a single, privately-owned, federally-regulated superstore for mortgage money.
The model would be along the lines of the water, power and sewage utilities we see all over the country, but there'd just be one mega-utility to fund mortgages. The utility concept was first proposed last year by former Treasury Secretary Hank Paulson. The Obama Administration has not spoken out publicly on it yet.
Another idea floated at the hearing was to broaden the mortgage menus of whatever agency or agencies replace Fannie and Freddie to include types of mortgages they currently can't touch -- especially jumbo home loans and commercial real estate mortgages.
Frances Martinez Myers, representing the National Association of Realtors, said jumbos and commercial real estate loans are suffering in the credit crunch and need more support. Commercial and investment property owners in particular, said Myers, find themselves unable to refinance because there is neither a private nor public secondary market for their loans at the moment.
The Mortgage Bankers Association came to the hearing with a white paper listing various alternative futures for Fannie and Freddie, including turning them into a government-owned version of the FHA and Ginnie Mae, but targeted on conventional mortgages.
Without endorsing any particular alternative, the MBA also suggested consideration be given to a private “cooperative” model, in which banks and other mortgage industry players would pool their assets and provide secondary market services in addition to mortgage originations.
Under this scenario, the federal government would provide back-up insurance against “catastrophic losses” that exceed the private cooperative's capital and pledged assets.
Where's the debate over Fannie and Freddie headed? Look for Congress to hold more exploratory hearings this year. Then, maybe as early as next year if the recession is over and the market is healthier , the Obama administration might begin drafting its preferred solution - which almost certainly will not involve total privatization.
Copyright © 2009 Realty Times. All Rights Reserved.
Washington Report: Reshaping Fannie and Freddie
by Kenneth R. Harney
Congress took its first step last week on a mission that could totally reshape the American mortgage market.
A House financial services subcommittee held the first hearing on what to do with Fannie Mae and Freddie Mac -- the failed, trillion-dollar mortgage giants that are now operating under direct federal control.
The ultimate answers are likely to determine the types of loans and interest rates that home buyers will have in the future. That's because Fannie and Freddie have dominated the real estate market for decades, writing the rulebook on everything from loan sizes, credit requirements, downpayments and underwriting standards.
Among the idea floated at last week's Capitol Hill hearing were a “utility” concept, where Fannie and Freddie might be merged into a single, privately-owned, federally-regulated superstore for mortgage money.
The model would be along the lines of the water, power and sewage utilities we see all over the country, but there'd just be one mega-utility to fund mortgages. The utility concept was first proposed last year by former Treasury Secretary Hank Paulson. The Obama Administration has not spoken out publicly on it yet.
Another idea floated at the hearing was to broaden the mortgage menus of whatever agency or agencies replace Fannie and Freddie to include types of mortgages they currently can't touch -- especially jumbo home loans and commercial real estate mortgages.
Frances Martinez Myers, representing the National Association of Realtors, said jumbos and commercial real estate loans are suffering in the credit crunch and need more support. Commercial and investment property owners in particular, said Myers, find themselves unable to refinance because there is neither a private nor public secondary market for their loans at the moment.
The Mortgage Bankers Association came to the hearing with a white paper listing various alternative futures for Fannie and Freddie, including turning them into a government-owned version of the FHA and Ginnie Mae, but targeted on conventional mortgages.
Without endorsing any particular alternative, the MBA also suggested consideration be given to a private “cooperative” model, in which banks and other mortgage industry players would pool their assets and provide secondary market services in addition to mortgage originations.
Under this scenario, the federal government would provide back-up insurance against “catastrophic losses” that exceed the private cooperative's capital and pledged assets.
Where's the debate over Fannie and Freddie headed? Look for Congress to hold more exploratory hearings this year. Then, maybe as early as next year if the recession is over and the market is healthier , the Obama administration might begin drafting its preferred solution - which almost certainly will not involve total privatization.
Copyright © 2009 Realty Times. All Rights Reserved.
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