AUSTIN (Austin Business Journal) – RealtyTrac’s annual foreclosure report, released yesterday, revealed Texas metro rates to be under the national average of 2.21 percent.
Austin and Round Rock area foreclosure rates increased 39.5 percent between 2008 and 2009. About 1.25 percent of all housing units, or one in every 80 homes, foreclosed last year, and 8,002 homeowners filed. This was an increase of 54.6 percent from 2007. Of the 203 metros ranked nationwide for foreclosures, the area was ranked 117th.
Dallas–Fort Worth ranked 94th with a 1.5 percent foreclosure rate, and Houston was 111th with 1.3 percent of its area homes foreclosed upon. San Antonio ranked 109th in RealtyTrac’s report, with a 1.31 percent foreclosure rate.
Texas Foreclosure Properties
Sunday, January 31, 2010
Thursday, January 28, 2010
NEW YORK (CNNMoney.com) -- It's going to be harder to get a government-backed mortgage from now on.
Looking to shore up its weakening finances, the Federal Housing Administration is set to announce stricter standards on Wednesday.
The agency, which insured nearly a third of new mortgages in 2009, will increase the premium it charges for its mortgage insurance and require those with weaker credit scores to come up with larger downpayments.
The FHA will also reduce the amount of money a seller can provide a homebuyer for closing costs, as well as tighten its enforcement of lenders.
"Striking the right balance between managing the FHA's risk, continuing to provide access to underserved communities, and supporting the nation's economic recovery is critically important," FHA Commissioner David Stevens said in a statement. "Importantly, FHA will remain the largest source of home purchase financing for underserved communities."
FHA loans have skyrocketed in popularity during the mortgage crisis since the agency backstops banks if borrowers stop paying. But housing experts are growing increasingly concerned about the agency's ability to handle rising numbers of defaults. (Cash cushion shrivels for FHA.)
In November, the agency reported that its reserve fund has dropped to .53% of its insurance guarantees, well below the 2% ratio mandated by Congress and the 3% ratio it had last fall. The fund covers losses on the mortgages the agency insures.
Federal housing officials, who took several steps to shore up the agency's finances last year, promised to do more at a congressional hearing in December. The new announcement is the latest set of changes to FHA policies.
What the new rules mean
FHA is making these changes in order to bring its reserve fund up back up to the 2% ratio, Stevens said in a conference call with reporters. However, the agency also wants to make sure that the new rules don't disrupt the housing market and don't hurt FHA's ability to assist the underserved.
The agency will increase its up-front mortgage insurance premium to 2.25%, from 1.75%. It will also ask Congress for the right to hike its ongoing premium, currently as much as .55% monthly. The agency will then shift some of the increase in the up-front premium to the ongoing charge.
Raising the premium is the best way to add to the reserve fund, Stevens said.
The move isn't likely to hurt borrowers much, said Thomas Lawler, founder of Lawler Economic & Housing Consulting. Most homebuyers will likely finance it so it will only bump up their monthly payments by a little.
"This doesn't increase the amount they need to bring to the closing table," Lawler said.
The FHA will also require borrowers to have at least a credit score of 580 to qualify for the agency's 3.5% downpayment program. Those with lower scores will have to pay at least 10%. However, this rule may have little practical effect since Stevens recently said the average borrower score is 693.
The new policy also will reduce the amount of money sellers can provide to homebuyers at closing to 3%, down from 6%, of the home's price. That change will bring the agency in line with industry standards and remove the incentive to inflate appraisals.
Finally, officials plan to clamp down on lenders offering FHA mortgages. The agency will more closely monitor their performance, as well as seek legislative authority to require mortgage firms to assume liability for all loans they originate and underwrite. It will also publicly report lender performance data.
One thing the agency did not do is to broadly increase the downpayment requirement. Many industry observers said such a step is necessary to reduce FHA loans' high delinquency rates. Borrowers with little equity in their homes are more likely to default or walk away.
The agency has seen a spike in delinquencies amid the mortgage meltdown. Some 14.36% of FHA loans were past due in the third quarter, according to the Mortgage Bankers Association. This compares to 9.64% of all loans.
"They are not addressing the fundamental issue -- that FHA loans are too risky," said real estate finance consultant Edward Pinto, former chief credit officer for Fannie Mae (FNM, Fortune 500) in the late 1980s. Borrowers "need more skin in the game."
FHA did not increase minimum downpayments more broadly because its borrowers with credit scores above 580 were generally timely with their payments.
"The reason why we drew the line at 580 is that there are clear performance drop offs as you drop down credit score tiers," Stevens said.
Agency plays crucial role
As banks have clamped down on mortgage lending, the FHA program has emerged as one of the few ways people can buy a home.
Banks are more willing to make FHA loans because they come with a federal guarantee to cover losses if the borrower defaults. And borrowers can more easily qualify for FHA loans because they only need 3.5% down and can have lower credit scores.
As a result, demand for FHA loans has exploded. The agency guaranteed more than $360 billion in single-family mortgages in fiscal 2009, which ended Sept. 30, more than four times the volume in 2007.
The agency insured about 30% of home purchases and 20% of refinanced mortgages in 2009. Nearly 50% of first-time homebuyers go through the agency.
Source: CNNMoney.com
McKinney Foreclosures
Looking to shore up its weakening finances, the Federal Housing Administration is set to announce stricter standards on Wednesday.
The agency, which insured nearly a third of new mortgages in 2009, will increase the premium it charges for its mortgage insurance and require those with weaker credit scores to come up with larger downpayments.
The FHA will also reduce the amount of money a seller can provide a homebuyer for closing costs, as well as tighten its enforcement of lenders.
"Striking the right balance between managing the FHA's risk, continuing to provide access to underserved communities, and supporting the nation's economic recovery is critically important," FHA Commissioner David Stevens said in a statement. "Importantly, FHA will remain the largest source of home purchase financing for underserved communities."
FHA loans have skyrocketed in popularity during the mortgage crisis since the agency backstops banks if borrowers stop paying. But housing experts are growing increasingly concerned about the agency's ability to handle rising numbers of defaults. (Cash cushion shrivels for FHA.)
In November, the agency reported that its reserve fund has dropped to .53% of its insurance guarantees, well below the 2% ratio mandated by Congress and the 3% ratio it had last fall. The fund covers losses on the mortgages the agency insures.
Federal housing officials, who took several steps to shore up the agency's finances last year, promised to do more at a congressional hearing in December. The new announcement is the latest set of changes to FHA policies.
What the new rules mean
FHA is making these changes in order to bring its reserve fund up back up to the 2% ratio, Stevens said in a conference call with reporters. However, the agency also wants to make sure that the new rules don't disrupt the housing market and don't hurt FHA's ability to assist the underserved.
The agency will increase its up-front mortgage insurance premium to 2.25%, from 1.75%. It will also ask Congress for the right to hike its ongoing premium, currently as much as .55% monthly. The agency will then shift some of the increase in the up-front premium to the ongoing charge.
Raising the premium is the best way to add to the reserve fund, Stevens said.
The move isn't likely to hurt borrowers much, said Thomas Lawler, founder of Lawler Economic & Housing Consulting. Most homebuyers will likely finance it so it will only bump up their monthly payments by a little.
"This doesn't increase the amount they need to bring to the closing table," Lawler said.
The FHA will also require borrowers to have at least a credit score of 580 to qualify for the agency's 3.5% downpayment program. Those with lower scores will have to pay at least 10%. However, this rule may have little practical effect since Stevens recently said the average borrower score is 693.
The new policy also will reduce the amount of money sellers can provide to homebuyers at closing to 3%, down from 6%, of the home's price. That change will bring the agency in line with industry standards and remove the incentive to inflate appraisals.
Finally, officials plan to clamp down on lenders offering FHA mortgages. The agency will more closely monitor their performance, as well as seek legislative authority to require mortgage firms to assume liability for all loans they originate and underwrite. It will also publicly report lender performance data.
One thing the agency did not do is to broadly increase the downpayment requirement. Many industry observers said such a step is necessary to reduce FHA loans' high delinquency rates. Borrowers with little equity in their homes are more likely to default or walk away.
The agency has seen a spike in delinquencies amid the mortgage meltdown. Some 14.36% of FHA loans were past due in the third quarter, according to the Mortgage Bankers Association. This compares to 9.64% of all loans.
"They are not addressing the fundamental issue -- that FHA loans are too risky," said real estate finance consultant Edward Pinto, former chief credit officer for Fannie Mae (FNM, Fortune 500) in the late 1980s. Borrowers "need more skin in the game."
FHA did not increase minimum downpayments more broadly because its borrowers with credit scores above 580 were generally timely with their payments.
"The reason why we drew the line at 580 is that there are clear performance drop offs as you drop down credit score tiers," Stevens said.
Agency plays crucial role
As banks have clamped down on mortgage lending, the FHA program has emerged as one of the few ways people can buy a home.
Banks are more willing to make FHA loans because they come with a federal guarantee to cover losses if the borrower defaults. And borrowers can more easily qualify for FHA loans because they only need 3.5% down and can have lower credit scores.
As a result, demand for FHA loans has exploded. The agency guaranteed more than $360 billion in single-family mortgages in fiscal 2009, which ended Sept. 30, more than four times the volume in 2007.
The agency insured about 30% of home purchases and 20% of refinanced mortgages in 2009. Nearly 50% of first-time homebuyers go through the agency.
Source: CNNMoney.com
McKinney Foreclosures
$8 Million in Assets Can't Get Mortgage
NEW YORK (CNNMoney.com) -- The wealthy have money problems, too -- yeah they do.
Even refinancing a mortgage for their fancy digs or getting a new loan can be near impossible these days thanks to skittish lenders. And the higher the loan value, the more they worry.
Still, that people with high six-figure incomes, stellar credit histories and gobs of assets get mortgage requests turned down seems weird.
"It's amazing really," said Susan Bruno, a financial planner with Beacon Wealth Consulting in Rowayton, Conn., "but it makes sense when you think about it."
For one thing, many rich folks have fallen behind on their loans. About 12% of U.S. mortgages of $1 million and larger were late this fall, twice the rate for loans under $250,000 and nearly triple the default rate on million dollar mortgages 12 months earlier, according to First American CoreLogic Inc., a California-based research firm.
Hard to get jumbos
It was so simple to get jumbo loans just a few years ago. The wealthy barely had to pay a 0.2 percentage point premium over a conforming loan, according to Keith Gumbinger of HSH Associates, a publisher of mortgage information.
Lenders made the loans more expensive because they are too large to be bought or backed by the government through Fannie Mae and Freddie Mac. Today the increased risk is worth about 0.8 percentage points, although that is down from the high of about 1.8 points in late 2008.
"The pendulum has swung from one extreme to the other. Banks are going overboard," said Lyle Benson, a financial planner and member of the executive board of the American Institute of Certified Public Accountants.
That includes asking the affluent for down payments well in excess of the traditional 20%, according to Bruno. Some lenders want loan-to-value ratios to be closer to 60%, even 50%, which means putting 40% or 50% down. Or, on a million-dollar home, having $500,000 ready to hand over.
And all the other underwriting aspects of the loan have to be in place as well, something that can be difficult to demonstrate with some wealthy clients, whose income and assets can be complicated.
They could always buy a $24 million condo on Utopia
One client of Benson's, with $8 million in assets, wanted to refinance the mortgage on his primary residence.
A self-made man, he had sold a business and put much of the proceeds in a charitable remainder unitrust that paid him $150,000 a year. He took paper losses in his stock portfolio against that income, however, which lowered his taxable income. The cash flow stayed intact but the income he showed was much lower.
"The loan officer didn't understand it," said Benson, "and the bank declined the loan."
Double decline for second home
Susan Bruno has a client who was turned down for a mortgage twice -- despite an 800 credit score, more than adequate down payment and plenty of income.
The problem was that the client wanted to buy a second home. And because the client would not, could not, swear that he would occupy the home at least 75% of the time, lenders weren't interested.
"Mortgages for second homes have been tough to get the past couple of years," said Gumbinger. "A lot of second-home areas, like in Florida and Arizona, are among the most challenging markets."
Plus, defaults on second-home mortgages are often handled differently than those of primary homes. The mortgage balances, for instance, can be reduced in bankruptcy court -- "crammed down" in industry parlance -- to their market values. That can wipe out a good portion of what borrowers owe, which banks hate. As a result, they often require a 50% down payment for second homes.
All in all, the wealthy simply have financial problems that we ordinary mortals can only dream of. Take the doctor client of Bruno's with a home on 19 expensive acres of Connecticut countryside. He had more land than he needed and some time ago toyed with the idea of subdividing and selling it off.
Well, the market changed and he shelved the idea -- but only after taking some preliminary steps. Last year, when he tried to refinance his mortgage, this rose up to bite him. His bank wouldn't count the sub-dividable land, worth $8 million, as collateral because it was now a separate parcel.
"[His bank] only counted the house and a small piece of land," said Bruno. "His lenders limited him to a loan of $1.3 million."
For Bruno, that's part of a trend of lenders falling back on rules and guidelines that make little sense sometimes when dealing with the individual cases presented by some high net-worth individuals.
"There's no appropriate business judgment these days," she said.
Aren't you glad you're not rich?
Source: CNNMoney.com
Luxury Homes Dallas
Even refinancing a mortgage for their fancy digs or getting a new loan can be near impossible these days thanks to skittish lenders. And the higher the loan value, the more they worry.
Still, that people with high six-figure incomes, stellar credit histories and gobs of assets get mortgage requests turned down seems weird.
"It's amazing really," said Susan Bruno, a financial planner with Beacon Wealth Consulting in Rowayton, Conn., "but it makes sense when you think about it."
For one thing, many rich folks have fallen behind on their loans. About 12% of U.S. mortgages of $1 million and larger were late this fall, twice the rate for loans under $250,000 and nearly triple the default rate on million dollar mortgages 12 months earlier, according to First American CoreLogic Inc., a California-based research firm.
Hard to get jumbos
It was so simple to get jumbo loans just a few years ago. The wealthy barely had to pay a 0.2 percentage point premium over a conforming loan, according to Keith Gumbinger of HSH Associates, a publisher of mortgage information.
Lenders made the loans more expensive because they are too large to be bought or backed by the government through Fannie Mae and Freddie Mac. Today the increased risk is worth about 0.8 percentage points, although that is down from the high of about 1.8 points in late 2008.
"The pendulum has swung from one extreme to the other. Banks are going overboard," said Lyle Benson, a financial planner and member of the executive board of the American Institute of Certified Public Accountants.
That includes asking the affluent for down payments well in excess of the traditional 20%, according to Bruno. Some lenders want loan-to-value ratios to be closer to 60%, even 50%, which means putting 40% or 50% down. Or, on a million-dollar home, having $500,000 ready to hand over.
And all the other underwriting aspects of the loan have to be in place as well, something that can be difficult to demonstrate with some wealthy clients, whose income and assets can be complicated.
They could always buy a $24 million condo on Utopia
One client of Benson's, with $8 million in assets, wanted to refinance the mortgage on his primary residence.
A self-made man, he had sold a business and put much of the proceeds in a charitable remainder unitrust that paid him $150,000 a year. He took paper losses in his stock portfolio against that income, however, which lowered his taxable income. The cash flow stayed intact but the income he showed was much lower.
"The loan officer didn't understand it," said Benson, "and the bank declined the loan."
Double decline for second home
Susan Bruno has a client who was turned down for a mortgage twice -- despite an 800 credit score, more than adequate down payment and plenty of income.
The problem was that the client wanted to buy a second home. And because the client would not, could not, swear that he would occupy the home at least 75% of the time, lenders weren't interested.
"Mortgages for second homes have been tough to get the past couple of years," said Gumbinger. "A lot of second-home areas, like in Florida and Arizona, are among the most challenging markets."
Plus, defaults on second-home mortgages are often handled differently than those of primary homes. The mortgage balances, for instance, can be reduced in bankruptcy court -- "crammed down" in industry parlance -- to their market values. That can wipe out a good portion of what borrowers owe, which banks hate. As a result, they often require a 50% down payment for second homes.
All in all, the wealthy simply have financial problems that we ordinary mortals can only dream of. Take the doctor client of Bruno's with a home on 19 expensive acres of Connecticut countryside. He had more land than he needed and some time ago toyed with the idea of subdividing and selling it off.
Well, the market changed and he shelved the idea -- but only after taking some preliminary steps. Last year, when he tried to refinance his mortgage, this rose up to bite him. His bank wouldn't count the sub-dividable land, worth $8 million, as collateral because it was now a separate parcel.
"[His bank] only counted the house and a small piece of land," said Bruno. "His lenders limited him to a loan of $1.3 million."
For Bruno, that's part of a trend of lenders falling back on rules and guidelines that make little sense sometimes when dealing with the individual cases presented by some high net-worth individuals.
"There's no appropriate business judgment these days," she said.
Aren't you glad you're not rich?
Source: CNNMoney.com
Luxury Homes Dallas
States urge action on foreclosures
NEW YORK (CNNMoney.com) -- Cut loan principal for borrowers whose homes are worth much less than their mortgages. Attack the problem of option adjustable rate mortgages. Cut down on red tape.
Those are some of the ideas in a plan issued Wednesday by a group of state officials who have been working for more than two years to stem the foreclosure tide.
The state attorneys general and banking regulators urged the Obama administration and loan servicing firms to step up their efforts.
"Potential foreclosures are being built up in the system, said Tom Miller, Iowa's attorney general. "The efforts really need to be more efficient more effective more timely on behalf of the servicers."
Under the administration's program, eligible borrowers can see their monthly mortgage payments reduced to no more than 31% of pre-tax income. So far, the effort has helped about 66,500 people, with another 787,200 homeowners in trial modifications.
Reduce loan principal: State officials say that servicers should cut the loan balances of homeowners, in addition to reducing interest rates and extending the terms of the loan. This is especially true in places where property values have plummeted. Reducing principal will make it less likely that homeowners will default on their modified loans.
Pay attention to option ARMs: More than 40% of these complex mortgages are delinquent. Even worse, over the next two years, many will adjust, driving up borrowers' monthly payments. Servicers need to address these loans before they fall into foreclosure.
Limit required paperwork: Many homeowners are not receiving permanent modifications under the president's plan because they haven't submitted all their documents. Treasury Department officials should reduce the amount of paperwork borrowers are required to file and speed up the debut of a central portal where homeowners can submit the forms. The portal is currently set to launch at the end of March.
Expand counseling and mediation efforts: State should expand their housing counseling and mediation programs, which require homeowners and servicers to meet before the completion of the foreclosure process.
Suspend foreclosure proceedings: Treasury officials should amend the president's program so that the entire foreclosure process is halted when a borrower applies for the president's program. Currently, only the sale is stopped.
Help the unemployed: Treasury officials and servicers should do more to assist the unemployed so they do not fall into foreclosure. A growing number of borrowers with good credit backgrounds are behind in their payments because of the weak economy.
Source: CNNMoney.com
Those are some of the ideas in a plan issued Wednesday by a group of state officials who have been working for more than two years to stem the foreclosure tide.
The state attorneys general and banking regulators urged the Obama administration and loan servicing firms to step up their efforts.
"Potential foreclosures are being built up in the system, said Tom Miller, Iowa's attorney general. "The efforts really need to be more efficient more effective more timely on behalf of the servicers."
Under the administration's program, eligible borrowers can see their monthly mortgage payments reduced to no more than 31% of pre-tax income. So far, the effort has helped about 66,500 people, with another 787,200 homeowners in trial modifications.
Reduce loan principal: State officials say that servicers should cut the loan balances of homeowners, in addition to reducing interest rates and extending the terms of the loan. This is especially true in places where property values have plummeted. Reducing principal will make it less likely that homeowners will default on their modified loans.
Pay attention to option ARMs: More than 40% of these complex mortgages are delinquent. Even worse, over the next two years, many will adjust, driving up borrowers' monthly payments. Servicers need to address these loans before they fall into foreclosure.
Limit required paperwork: Many homeowners are not receiving permanent modifications under the president's plan because they haven't submitted all their documents. Treasury Department officials should reduce the amount of paperwork borrowers are required to file and speed up the debut of a central portal where homeowners can submit the forms. The portal is currently set to launch at the end of March.
Expand counseling and mediation efforts: State should expand their housing counseling and mediation programs, which require homeowners and servicers to meet before the completion of the foreclosure process.
Suspend foreclosure proceedings: Treasury officials should amend the president's program so that the entire foreclosure process is halted when a borrower applies for the president's program. Currently, only the sale is stopped.
Help the unemployed: Treasury officials and servicers should do more to assist the unemployed so they do not fall into foreclosure. A growing number of borrowers with good credit backgrounds are behind in their payments because of the weak economy.
Source: CNNMoney.com
Home prices: First drop in 7 months
NEW YORK (CNNMoney.com) -- Home prices fell in November for the first time in seven months, according to a industry report released Tuesday.
The S&P/Case-Shiller 20-city home price index recorded a non-seasonally adjusted decline of 0.2% from October. Prices were down 5.3% compared with 12 months ago.
The loss was unexpectedly large. Experts had forecast that prices would be off by only 5% compared with last November, according to Briefing.com. The lone good news is that the rate of year-over-year declines have continued to shrink.
"While we continue to see broad improvement in home prices as measured by the annual rate, the latest data show a far more mixed picture when you look at other details." said David M. Blitzer, spokesman for Standard & Poor's. "Only five of the markets saw price increases in November versus Ocotber."
Four markets covered by the index -- Charlotte, Las Vegas, Seattle and Tampa -- hit their lowest index levels in four years, according to Blitzer. Any gains they recorded in recent months have been erased.
The five markets that showed month-over-month gains were led by Phoenix, where prices rose 1.1%. Thirteen markets had declines, with Chicago being the biggest loser at 1.1% down. Miami and Dallas showed no change.
Blitzer cautioned, however, that November is a weak time of year for home sales so this might not be a harbinger. In fact, when the data are adjusted for seasonal variations, 14 of the markets recorded gains.
Several markets have been on a strong positive run. Prices have risen in Los Angeles, Phoenix, San Diego and San Francisco for at least six consecutive months. Year over year, Dallas, Denver, San Diego and San Francisco have all entered positive territory, something not seen in at least two years in most markets.
The report failed to stir much passion on the part of industry observers, one way or another. Stuart Hoffman, chief economist with PNC Financial Services called it "not disappointing, considering the big run-up in prices for months before."
He expects continued weakness in home prices through the slow winter months followed by some gains in the spring when the current homebuyer tax credit is scheduled to expire. That should bring out a rush of house hunters looking to beat the deadline. Overall, Hoffman forecasts a flat 2010 -- not a bad thing after the steep drops of the past three years.
"The furious ride down on home sales and prices is pretty much behind us," he said. "I don't think we're going up anytime soon. We've hit the flat part of the roller-coaster ride."
Pat Newport, a real estate analyst for IHS Global Insight pointed out the fall had very favorable buying conditions. Not only was the first-time homebuyer tax credit boosting demand for homes, but mortgage rates were at extreme lows with 30-year, fixed-rate loans available for under 5%.
"It was a good time to buy, and we saw that in the sales numbers," he said.
He doesn't believe we have hit the price bottom, yet. "Most experts think prices are going to drop more, 5% or so, by the end of 2010," he said.
The S&P/Case-Shiller 20-city home price index recorded a non-seasonally adjusted decline of 0.2% from October. Prices were down 5.3% compared with 12 months ago.
The loss was unexpectedly large. Experts had forecast that prices would be off by only 5% compared with last November, according to Briefing.com. The lone good news is that the rate of year-over-year declines have continued to shrink.
"While we continue to see broad improvement in home prices as measured by the annual rate, the latest data show a far more mixed picture when you look at other details." said David M. Blitzer, spokesman for Standard & Poor's. "Only five of the markets saw price increases in November versus Ocotber."
Four markets covered by the index -- Charlotte, Las Vegas, Seattle and Tampa -- hit their lowest index levels in four years, according to Blitzer. Any gains they recorded in recent months have been erased.
The five markets that showed month-over-month gains were led by Phoenix, where prices rose 1.1%. Thirteen markets had declines, with Chicago being the biggest loser at 1.1% down. Miami and Dallas showed no change.
Blitzer cautioned, however, that November is a weak time of year for home sales so this might not be a harbinger. In fact, when the data are adjusted for seasonal variations, 14 of the markets recorded gains.
Several markets have been on a strong positive run. Prices have risen in Los Angeles, Phoenix, San Diego and San Francisco for at least six consecutive months. Year over year, Dallas, Denver, San Diego and San Francisco have all entered positive territory, something not seen in at least two years in most markets.
The report failed to stir much passion on the part of industry observers, one way or another. Stuart Hoffman, chief economist with PNC Financial Services called it "not disappointing, considering the big run-up in prices for months before."
He expects continued weakness in home prices through the slow winter months followed by some gains in the spring when the current homebuyer tax credit is scheduled to expire. That should bring out a rush of house hunters looking to beat the deadline. Overall, Hoffman forecasts a flat 2010 -- not a bad thing after the steep drops of the past three years.
"The furious ride down on home sales and prices is pretty much behind us," he said. "I don't think we're going up anytime soon. We've hit the flat part of the roller-coaster ride."
Pat Newport, a real estate analyst for IHS Global Insight pointed out the fall had very favorable buying conditions. Not only was the first-time homebuyer tax credit boosting demand for homes, but mortgage rates were at extreme lows with 30-year, fixed-rate loans available for under 5%.
"It was a good time to buy, and we saw that in the sales numbers," he said.
He doesn't believe we have hit the price bottom, yet. "Most experts think prices are going to drop more, 5% or so, by the end of 2010," he said.
Bank of America steps up foreclosure prevention efforts
NEW YORK (CNNMoney.com) -- One roadblock slowing President Obama's foreclosure prevention program seems to be clearing away. Bank of America, the nation's largest mortgage lender, said Tuesday that it was the first lender to agree to lower or eliminate payments on second mortgages.
This federal initiative, called the Second Lien Modification Program, pays incentives to second mortgage holders to work closely with first mortgage holders under the Home Affordable Modification Program.
First mortgage holders have been reluctant to lower payments when there was a second lien involved because they did not want to take on losses while leaving payments on the second mortgages intact.
The lack of an agreement with second lien holders "has been a major impediment to getting successful modifications done," said John Taylor, CEO of the National Community Reinvestment Coalition, a group whose members include foreclosure prevention counselors.
Without alteration to the terms of second mortgages, first mortgage holders often have to lower their payments even more to hit the HAMP target requiring that borrowers' total mortgage payments represent no more than 31% of their pre-tax income.
"For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment," said Barbara Desoer, president of Bank of America (BAC, Fortune 500) Home Loans.
The second lien plan has been in the works since last spring, shortly after HAMP was initiated, but implementing it proved difficult.
HAMP itself has been a disappointment. Originally designed to help as many as 4 million borrowers obtain mortgage workouts, it had produced fewer than 70,000 permanent modifications as of Dec. 31. Another 800,000 or so homeowners were in a trial-modification phase.
The Treasury Department hopes the second lien program will make a big difference. It's estimated that as many as half of at-risk mortgages are burdened with second liens.
Signing on Bank of America was an important first step because it is the nation's top mortgage lender with 14 million loans outstanding, including 3 million second loans.
The lender said it has all systems in place to begin implementing the program as soon as the final program policies and guidelines are released by federal regulatory agencies. That is expected to happen soon.
More banks are expected to sign on to the program very quickly, according to a Treasury spokeswoman.
"They need a lot more of the major banks to sign up," Taylor said.
McKinney Foreclosures
Source: CNNMoney.com
This federal initiative, called the Second Lien Modification Program, pays incentives to second mortgage holders to work closely with first mortgage holders under the Home Affordable Modification Program.
First mortgage holders have been reluctant to lower payments when there was a second lien involved because they did not want to take on losses while leaving payments on the second mortgages intact.
The lack of an agreement with second lien holders "has been a major impediment to getting successful modifications done," said John Taylor, CEO of the National Community Reinvestment Coalition, a group whose members include foreclosure prevention counselors.
Without alteration to the terms of second mortgages, first mortgage holders often have to lower their payments even more to hit the HAMP target requiring that borrowers' total mortgage payments represent no more than 31% of their pre-tax income.
"For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment," said Barbara Desoer, president of Bank of America (BAC, Fortune 500) Home Loans.
The second lien plan has been in the works since last spring, shortly after HAMP was initiated, but implementing it proved difficult.
HAMP itself has been a disappointment. Originally designed to help as many as 4 million borrowers obtain mortgage workouts, it had produced fewer than 70,000 permanent modifications as of Dec. 31. Another 800,000 or so homeowners were in a trial-modification phase.
The Treasury Department hopes the second lien program will make a big difference. It's estimated that as many as half of at-risk mortgages are burdened with second liens.
Signing on Bank of America was an important first step because it is the nation's top mortgage lender with 14 million loans outstanding, including 3 million second loans.
The lender said it has all systems in place to begin implementing the program as soon as the final program policies and guidelines are released by federal regulatory agencies. That is expected to happen soon.
More banks are expected to sign on to the program very quickly, according to a Treasury spokeswoman.
"They need a lot more of the major banks to sign up," Taylor said.
McKinney Foreclosures
Source: CNNMoney.com
Las Vegas: Most foreclosures of any city in 2009
NEW YORK (CNNMoney.com) -- Cities in the so-called Sand States dominated the foreclosure rankings in 2009, with the 20 worst-hit metro areas residing in Nevada, Florida, California and Arizona.
Las Vegas had the largest number of foreclosure filings of any city last year, with 12% of its households receiving at least one during the year, according to RealtyTrac, the online marketer of foreclosed homes. That was more than five times the national average.
Cape Coral, Fla., was a close second with 11.9% of its households; Merced, Calif., was third with 10.1%.
The good news is that all top 20 cities recorded declines in foreclosure filings in the last three months of the year.
The bad news is that the foreclosure plague is spreading beyond these usual trouble spots, according to RealtyTrac's CEO, James Saccacio. And, nationwide, foreclosures grew 21.2% during the year.
"Areas like Provo, Utah, Fayetteville, Ark., Portland, Ore., and Rockford, Ill., all posted foreclosure rates above the U.S. average in 2009," he said. "And markets like Honolulu, Minneapolis and Seattle saw foreclosure activity increase at more than twice the national pace over the past 12 months."
He added that the new foreclosure wave seems more grounded in traditional foreclosure causes, such as job losses, than those recorded in the Sand States, where they were much more "bubble related."
In cities such as Las Vegas, Phoenix, Miami and Bakersfield, Calif., soaring home prices of the mid 2000s drove homebuyers to desperate measures, such as taking on hybrid adjustable rate mortgages, also called toxic ARMS. These products only remained affordable as long as home prices grew; once prices stopped rising, borrowers began to default.
New hotspots
Some cites that had escaped the worst of the default demon in prior years saw foreclosure filings -- default notices, auction sales and bank repossessions -- soar. The Gulfport area of Mississippi recorded a year-over-year spike of 784%. Houma, La., recorded a 379% gain, and Roanoke, Va., filings jumped 352%.
Source: CNN Money
Las Vegas had the largest number of foreclosure filings of any city last year, with 12% of its households receiving at least one during the year, according to RealtyTrac, the online marketer of foreclosed homes. That was more than five times the national average.
Cape Coral, Fla., was a close second with 11.9% of its households; Merced, Calif., was third with 10.1%.
The good news is that all top 20 cities recorded declines in foreclosure filings in the last three months of the year.
The bad news is that the foreclosure plague is spreading beyond these usual trouble spots, according to RealtyTrac's CEO, James Saccacio. And, nationwide, foreclosures grew 21.2% during the year.
"Areas like Provo, Utah, Fayetteville, Ark., Portland, Ore., and Rockford, Ill., all posted foreclosure rates above the U.S. average in 2009," he said. "And markets like Honolulu, Minneapolis and Seattle saw foreclosure activity increase at more than twice the national pace over the past 12 months."
He added that the new foreclosure wave seems more grounded in traditional foreclosure causes, such as job losses, than those recorded in the Sand States, where they were much more "bubble related."
In cities such as Las Vegas, Phoenix, Miami and Bakersfield, Calif., soaring home prices of the mid 2000s drove homebuyers to desperate measures, such as taking on hybrid adjustable rate mortgages, also called toxic ARMS. These products only remained affordable as long as home prices grew; once prices stopped rising, borrowers began to default.
New hotspots
Some cites that had escaped the worst of the default demon in prior years saw foreclosure filings -- default notices, auction sales and bank repossessions -- soar. The Gulfport area of Mississippi recorded a year-over-year spike of 784%. Houma, La., recorded a 379% gain, and Roanoke, Va., filings jumped 352%.
Source: CNN Money
Wednesday, January 27, 2010
New Home Sales Hit 9 Month Low
New home sales plunged to a 9-month low in December, according to a government report issued Wednesday.
The seasonally adjusted annual rate of new home sales dropped 7.6% to 342,000 last month, compared with a revised rate of 370,000 in November, the Census Bureau said.
Analysts surveyed by Briefing.com had expected December sales of new homes to hit an annual rate of 366,000.
"This is not a very encouraging number," said Mike Larson, a real estate analyst with Weiss Research. "You've got aggressive competition from banks and lenders trying to unload foreclosures, and many people are going to the existing home market because that's where the bargains are."
Full Story Money.com
Prescott Arizona Real Estate
The seasonally adjusted annual rate of new home sales dropped 7.6% to 342,000 last month, compared with a revised rate of 370,000 in November, the Census Bureau said.
Analysts surveyed by Briefing.com had expected December sales of new homes to hit an annual rate of 366,000.
"This is not a very encouraging number," said Mike Larson, a real estate analyst with Weiss Research. "You've got aggressive competition from banks and lenders trying to unload foreclosures, and many people are going to the existing home market because that's where the bargains are."
Full Story Money.com
Prescott Arizona Real Estate
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