More frustrated homeowners turned to federal court this week for help with their mortgages, saying Bank of America and Wells Fargo failed to provide promised payment modifications.
The two cases, filed Tuesday in Massachusetts, seek class-action status.
Three specific families are identified, one with a loan serviced by Bank of America and two by Wells Fargo – the nation’s two largest mortgage servicers. They were granted trial modifications, according to court documents, but haven’t received long-term modifications despite having submitted all required documents and made timely payments for more than three months.
The claims are simple, the two filings say: “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.”
The Home Affordable Modification Program (HAMP) is the main federal plan for reducing mortgage payments, part of a $75 billion plan to stem the national foreclosure crisis. The program calls for a three-month trial period, intended to give time for the homeowner to demonstrate an ability to keep up with the lower payments. However, there are growing reports of homeowners in trial plans ultimately being rejected for modifications despite making their trial payments or even being foreclosed on during the process.
The modification process has generated so many complaints that regulators and lawmakers are pressuring lenders to improve.
The Massachusetts cases, which are not open to borrowers in other states, say homeowners are “living in limbo” and spending scarce resources on payments that might ultimately not save their homes.
“Some are in fact continuing to receive foreclosure notices,” said Stuart Rossman, a lawyer with the National Consumer Law Center in Boston, which brought the lawsuit, along with a law firm and another advocacy group.
Bank of America said it couldn’t comment on the lawsuit because it hadn’t yet been served. The Charlotte bank has said its “extraordinary measures” include sending workers to borrowers’ homes to help them fulfill requirements for long-term modifications.
A Wells Fargo spokeswoman said the company “will respond to the lawsuit once we have a chance to review it.”
The San Francisco bank, which bought Wachovia late in 2008, has been “diligently working to convert – from trial to completed modifications – customers who meet the HAMP guidelines,” Debora Blume said in an e-mail. “Unfortunately, not all customers who enter a HAMP trial do ultimately qualify for the program. In these instances, we work to determine if another foreclosure prevention option is available to them.”
Earlier this month, 10 Ohio homeowners filed a civil case in federal court against Bank of America, also saying the bank broke promises to modify their payments.
The circumstances differ, in that the Ohio homeowners say they were promised modifications during a federally sponsored event last year. As of the filing date, they hadn’t received documents or had their payments reduced, meaning they are not as far along in the process as the Massachusetts families.
© 2010 The Charlotte Observer (Charlotte, N.C.), Stella M. Hopkins
Friday, February 26, 2010
HAFA home sale rules impact some commissions
A federal program designed to help owners losing their homes – those owners who cannot hold onto their property even with existing federal aid – also impacts allowable commissions for Realtors and a licensee’s ability to offer commission rebates to buyers and sellers.
The U.S. Treasury Department’s Home Affordable Modification Program (HAMP) was designed to help owners stay in homes by lowering principal, lowering interest rates and/or extending the payment period. However, some homeowners still don’t have the ability to hold onto their property under HAMP, and will inevitably lose their homes, either through foreclosure or deed-in-lieu of foreclosure (homeowners voluntarily cede ownership to the lender by mailing in their keys). To help these owners, the Home Affordable Foreclosure Alternatives (HAFA) was created.
HAFA created a standardized process for short sales. It benefits real estate licensees, homeowners and lenders in some ways – including a faster short sale process – but it also creates rules that impact some real estate company policies. If dealing with HAFA short sales, however, buyers, sellers and real estate licensees must accept the terms.
For licensees, a contract that does not follow the law could be illegal; more importantly, however, a contract that does not adhere to the terms of HAFA won’t be accepted by a lender, further bogging down the slow short sale process even more and further frustrating buyers and sellers.
HAFA does not impact all short sales. Created to help only the most needy homeowners, the rules apply only under the following conditions:
• The property must be the borrower’s principal residence.
• The loan was originated on or before Jan. 1, 2009.
• The loan is delinquent or a default is reasonably foreseeable.
• The unpaid balance on the mortgage is less than $729,750 (higher for two-to-four unit properties).
• The total monthly mortgage payment exceeds 31 percent of a borrower’s gross income.
For properties that qualify under HAFA rules, real estate licensees and brokers must adhere to the following limitations:
• There can be no agreements to share any portion of a commission after the deal closes to the buyer or seller. This negates any form of commission rebate offered by some licensees.
• The transaction must be “arm’s length,” meaning the buyer, seller and Realtor cannot have a personal or familial relationship.
• A real estate licensee cannot earn a commission through the sale of his or her own house.
• A buyer must agree to not resell the home within 90 calendar days.
• A seller cannot have any expectation of buying or renting the property back after the sale.
HAFA also offers positive changes for real estate licensees. A prime complaint in the past focused on commission changes. Since lenders were not a party to the original contract between buyer and seller, they were free to change the commission percentage as they negotiated a short sale rate.
Under HAFA, lenders cannot reduce a commission if it is 6 percent or less. It also offers other benefits such as pre-approved short sale terms before listing. For sellers, a HAFA sale fully releases them from future liability for the first mortgage debt. The program also offers financial incentives to some participants.
HAFA becomes effective April 5, 2010, but servicers may implement HAFA earlier, providing the servicer is able to collect and report all required information described in the reporting requirements. Borrowers may be accepted into HAFA if the short sale agreement is fully executed by the borrower and received by the servicer on or before Dec. 31, 2012.
For more information on HAFA rules, visit the National Association of Realtors’ website at: http://www.realtor.org/realtors/basics_short_sales?wt.mc_id=rd0041.
© 2010 Florida Realtors®
The U.S. Treasury Department’s Home Affordable Modification Program (HAMP) was designed to help owners stay in homes by lowering principal, lowering interest rates and/or extending the payment period. However, some homeowners still don’t have the ability to hold onto their property under HAMP, and will inevitably lose their homes, either through foreclosure or deed-in-lieu of foreclosure (homeowners voluntarily cede ownership to the lender by mailing in their keys). To help these owners, the Home Affordable Foreclosure Alternatives (HAFA) was created.
HAFA created a standardized process for short sales. It benefits real estate licensees, homeowners and lenders in some ways – including a faster short sale process – but it also creates rules that impact some real estate company policies. If dealing with HAFA short sales, however, buyers, sellers and real estate licensees must accept the terms.
For licensees, a contract that does not follow the law could be illegal; more importantly, however, a contract that does not adhere to the terms of HAFA won’t be accepted by a lender, further bogging down the slow short sale process even more and further frustrating buyers and sellers.
HAFA does not impact all short sales. Created to help only the most needy homeowners, the rules apply only under the following conditions:
• The property must be the borrower’s principal residence.
• The loan was originated on or before Jan. 1, 2009.
• The loan is delinquent or a default is reasonably foreseeable.
• The unpaid balance on the mortgage is less than $729,750 (higher for two-to-four unit properties).
• The total monthly mortgage payment exceeds 31 percent of a borrower’s gross income.
For properties that qualify under HAFA rules, real estate licensees and brokers must adhere to the following limitations:
• There can be no agreements to share any portion of a commission after the deal closes to the buyer or seller. This negates any form of commission rebate offered by some licensees.
• The transaction must be “arm’s length,” meaning the buyer, seller and Realtor cannot have a personal or familial relationship.
• A real estate licensee cannot earn a commission through the sale of his or her own house.
• A buyer must agree to not resell the home within 90 calendar days.
• A seller cannot have any expectation of buying or renting the property back after the sale.
HAFA also offers positive changes for real estate licensees. A prime complaint in the past focused on commission changes. Since lenders were not a party to the original contract between buyer and seller, they were free to change the commission percentage as they negotiated a short sale rate.
Under HAFA, lenders cannot reduce a commission if it is 6 percent or less. It also offers other benefits such as pre-approved short sale terms before listing. For sellers, a HAFA sale fully releases them from future liability for the first mortgage debt. The program also offers financial incentives to some participants.
HAFA becomes effective April 5, 2010, but servicers may implement HAFA earlier, providing the servicer is able to collect and report all required information described in the reporting requirements. Borrowers may be accepted into HAFA if the short sale agreement is fully executed by the borrower and received by the servicer on or before Dec. 31, 2012.
For more information on HAFA rules, visit the National Association of Realtors’ website at: http://www.realtor.org/realtors/basics_short_sales?wt.mc_id=rd0041.
© 2010 Florida Realtors®
Thursday, February 25, 2010
Bernanke sees low rates amid signs of weak rebound
New signs emerged Wednesday that the economic rebound is sputtering. Sales of new homes hit a record low last month. And mortgage giant Freddie Mac signaled it will need more federal aid – and might never repay it.
Against that backdrop, the government is trying to prop up the housing and job markets. Federal Reserve Chairman Ben Bernanke reiterated the need to continue record-low interest rates for “an extended period.” And the Senate passed a bill to give tax breaks to companies that hire the jobless.
Bernanke told Congress that low rates will help ensure that the recovery will last and help ease the sting of high unemployment. Asked what else Congress could do to stimulate job creation, he hesitated to say.
“I’m sure you know the menu of things that you could do which could create jobs,” he said. “Unfortunately there’s no – there’s no silver bullet here.”
Investors seemed buoyed by Bernanke’s commitment to low rates, despite the news on home sales and Freddie Mac. The Dow Jones industrial average gained about 91 points, roughly 0.9 percent.
Yet economists cautioned that the government’s ability to help is limited.
“Our view is that it will be a long, tough slog for U.S. consumers in particular and for the economy overall,” said Sal Guatieri, senior economist at BMO Capital Markets.
Bernanke, in his twice-a-year report to the House Financial Services Committee, said the rebound would endure. But he also sought to restrain hopes. He said the Fed sees moderate growth that will cause only a slow decline in the nearly double-digit jobless rate.
He offered no new clues about when the Fed would eventually raise interest rates. Most economists think it’s months away.
Bernanke faces more pressure than usual from lawmakers in an election year. Their constituents are struggling, while bailed-out Wall Street banks are profitable again. Unemployment stands at 9.7 percent, home foreclosures are at record highs and people and businesses are having trouble getting loans.
Underscoring the fragility of the housing market, the government said new-home sales dropped 11 percent last month, to a seasonally adjusted annual pace of 309,000 units. That’s the lowest level in the nearly 50 years records have been kept.
Winter storms were partly to blame. But sales have dropped for three straight months despite vast government support. Economists had already been worrying about how the housing market would respond once government aid programs are withdrawn.
One such program has lowered mortgage rates and bolstered the housing market but is slated to end March 31. Under the program, the Fed has committed $1.25 trillion to buying mortgage securities and debt from Freddie Mac and its sister mortgage finance firm Fannie Mae.
Bernanke said that program’s end would have only a “modest effect” on raising mortgage rates. He left the door open to extending the program if the housing market or the economy worsened.
Freddie Mac’s earnings report was grim news for taxpayers, who have had to rescue the company and Fannie Mae. The company lost nearly $26 billion last year and nearly $80 billion since 2007. A record proportion of its borrowers – 4 percent – face foreclosure. And its chief executive warned of many more foreclosures still to come.
And Freddie Mac said it will likely need more federal aid beyond the $51 billion it’s already received and may not be able to repay it.
Fannie and Freddie are vital players in the industry. They buy loans from lenders and sell them to investors. Combined, they own or guarantee about half of all residential mortgages. Had they gone broke in 2008, millions of people would have been unable to get mortgages.
Freddie and Fannie have already soaked up $111 billion from the government, which seized control of them in September 2008. That number is expected to hit $188 billion by the fall of 2011.
“We now have unlimited taxpayer exposure to the bailout of Fannie and Freddie, a bailout nation where the big get bigger, the small get smaller and the taxpayer gets poorer,” Rep. Jeb Hensarling said at a House hearing.
The Obama administration had been expected to announce plans to overhaul Freddie Mac and Fannie Mae this month when it submitted its 2011 budget request. But Treasury Secretary Timothy Geithner said Wednesday that won’t happen until next year.
“We want to make sure that we are proposing these changes at a time when we have a little bit more distance from the worst housing crisis in generations,” told the House Budget Committee.
Geithner also defended the administration’s stimulus plan, saying that before the government can shrink its budget deficit, it must help create jobs and aid the recovery.
Bernanke and Geithner testified as President Barack Obama struggles to manage both high unemployment and rising budget deficits. Under Obama’s budget plan, unemployment would still hover near double digits, and this year’s deficit would reach $1.56 trillion.
The Fed chairman reiterated a pledge that the Fed will keep its main rate at an all-time low near zero for an “extended period.” Low inflation has given the Fed room to keep rates low. Consumer prices excluding food and energy fell in January - the first time such prices have fallen in any month since 1982.
At the same time, Bernanke sought to stress that once the economy is on firmer footing and the Fed needs to reverse course and tighten credit for millions of Americans, he will do so.
Deciding when to boost rates is a high-risk calculation. Acting too soon could derail the recovery. But waiting too long could trigger inflation and feed a speculative bubble in some financial asset. That, too, could threaten the economy, along with Americans’ pocketbooks and nest eggs.
Bernanke would only say that “at some point,” the Fed will need to move to tighten credit. Whenever it does, consumers and businesses would have to pay more for loans.
Potentially complicating the U.S. rebound is the debt crisis in Greece, which has already sent jitters through Wall Street and could spread to other European Union countries with troubled finances such as Portugal, Spain and Italy. Standard & Poor’s warned Wednesday it might further downgrade Greece’s credit rating within a month. A downgrade would make it harder and costlier for Greece to borrow.
Pressed by Rep. Ron Paul on whether the Fed has discussed a bailout of Greece, which is suffering a debt crisis, Bernanke said no.
Another threat comes from the banking industry. The number of U.S. banks considered troubled jumped above 700 last quarter. And loan defaults could escalate the wave of bank failures that totaled 140 last year, the most since 1992.
Also, despite evidence that the thrift industry may be stabilizing, the Office of Thrift Supervision noted Wednesday that 20 thrifts failed last year and that the number is expected to rise this year because of delinquencies and foreclosures.
Lawmakers who questioned Geithner on Wednesday expressed concern about record-high federal budget deficits, which Bernanke and Geithner both said must be reduced over time.
The deficits are the “elephant in the room,” said Rep. Spencer Bachus of Alabama, the committee’s senior Republican.
Copyright © 2010 The Associated Press, Jeannine Aversa, AP economics writer.
Against that backdrop, the government is trying to prop up the housing and job markets. Federal Reserve Chairman Ben Bernanke reiterated the need to continue record-low interest rates for “an extended period.” And the Senate passed a bill to give tax breaks to companies that hire the jobless.
Bernanke told Congress that low rates will help ensure that the recovery will last and help ease the sting of high unemployment. Asked what else Congress could do to stimulate job creation, he hesitated to say.
“I’m sure you know the menu of things that you could do which could create jobs,” he said. “Unfortunately there’s no – there’s no silver bullet here.”
Investors seemed buoyed by Bernanke’s commitment to low rates, despite the news on home sales and Freddie Mac. The Dow Jones industrial average gained about 91 points, roughly 0.9 percent.
Yet economists cautioned that the government’s ability to help is limited.
“Our view is that it will be a long, tough slog for U.S. consumers in particular and for the economy overall,” said Sal Guatieri, senior economist at BMO Capital Markets.
Bernanke, in his twice-a-year report to the House Financial Services Committee, said the rebound would endure. But he also sought to restrain hopes. He said the Fed sees moderate growth that will cause only a slow decline in the nearly double-digit jobless rate.
He offered no new clues about when the Fed would eventually raise interest rates. Most economists think it’s months away.
Bernanke faces more pressure than usual from lawmakers in an election year. Their constituents are struggling, while bailed-out Wall Street banks are profitable again. Unemployment stands at 9.7 percent, home foreclosures are at record highs and people and businesses are having trouble getting loans.
Underscoring the fragility of the housing market, the government said new-home sales dropped 11 percent last month, to a seasonally adjusted annual pace of 309,000 units. That’s the lowest level in the nearly 50 years records have been kept.
Winter storms were partly to blame. But sales have dropped for three straight months despite vast government support. Economists had already been worrying about how the housing market would respond once government aid programs are withdrawn.
One such program has lowered mortgage rates and bolstered the housing market but is slated to end March 31. Under the program, the Fed has committed $1.25 trillion to buying mortgage securities and debt from Freddie Mac and its sister mortgage finance firm Fannie Mae.
Bernanke said that program’s end would have only a “modest effect” on raising mortgage rates. He left the door open to extending the program if the housing market or the economy worsened.
Freddie Mac’s earnings report was grim news for taxpayers, who have had to rescue the company and Fannie Mae. The company lost nearly $26 billion last year and nearly $80 billion since 2007. A record proportion of its borrowers – 4 percent – face foreclosure. And its chief executive warned of many more foreclosures still to come.
And Freddie Mac said it will likely need more federal aid beyond the $51 billion it’s already received and may not be able to repay it.
Fannie and Freddie are vital players in the industry. They buy loans from lenders and sell them to investors. Combined, they own or guarantee about half of all residential mortgages. Had they gone broke in 2008, millions of people would have been unable to get mortgages.
Freddie and Fannie have already soaked up $111 billion from the government, which seized control of them in September 2008. That number is expected to hit $188 billion by the fall of 2011.
“We now have unlimited taxpayer exposure to the bailout of Fannie and Freddie, a bailout nation where the big get bigger, the small get smaller and the taxpayer gets poorer,” Rep. Jeb Hensarling said at a House hearing.
The Obama administration had been expected to announce plans to overhaul Freddie Mac and Fannie Mae this month when it submitted its 2011 budget request. But Treasury Secretary Timothy Geithner said Wednesday that won’t happen until next year.
“We want to make sure that we are proposing these changes at a time when we have a little bit more distance from the worst housing crisis in generations,” told the House Budget Committee.
Geithner also defended the administration’s stimulus plan, saying that before the government can shrink its budget deficit, it must help create jobs and aid the recovery.
Bernanke and Geithner testified as President Barack Obama struggles to manage both high unemployment and rising budget deficits. Under Obama’s budget plan, unemployment would still hover near double digits, and this year’s deficit would reach $1.56 trillion.
The Fed chairman reiterated a pledge that the Fed will keep its main rate at an all-time low near zero for an “extended period.” Low inflation has given the Fed room to keep rates low. Consumer prices excluding food and energy fell in January - the first time such prices have fallen in any month since 1982.
At the same time, Bernanke sought to stress that once the economy is on firmer footing and the Fed needs to reverse course and tighten credit for millions of Americans, he will do so.
Deciding when to boost rates is a high-risk calculation. Acting too soon could derail the recovery. But waiting too long could trigger inflation and feed a speculative bubble in some financial asset. That, too, could threaten the economy, along with Americans’ pocketbooks and nest eggs.
Bernanke would only say that “at some point,” the Fed will need to move to tighten credit. Whenever it does, consumers and businesses would have to pay more for loans.
Potentially complicating the U.S. rebound is the debt crisis in Greece, which has already sent jitters through Wall Street and could spread to other European Union countries with troubled finances such as Portugal, Spain and Italy. Standard & Poor’s warned Wednesday it might further downgrade Greece’s credit rating within a month. A downgrade would make it harder and costlier for Greece to borrow.
Pressed by Rep. Ron Paul on whether the Fed has discussed a bailout of Greece, which is suffering a debt crisis, Bernanke said no.
Another threat comes from the banking industry. The number of U.S. banks considered troubled jumped above 700 last quarter. And loan defaults could escalate the wave of bank failures that totaled 140 last year, the most since 1992.
Also, despite evidence that the thrift industry may be stabilizing, the Office of Thrift Supervision noted Wednesday that 20 thrifts failed last year and that the number is expected to rise this year because of delinquencies and foreclosures.
Lawmakers who questioned Geithner on Wednesday expressed concern about record-high federal budget deficits, which Bernanke and Geithner both said must be reduced over time.
The deficits are the “elephant in the room,” said Rep. Spencer Bachus of Alabama, the committee’s senior Republican.
Copyright © 2010 The Associated Press, Jeannine Aversa, AP economics writer.
Geithner: No change to Fannie, Freddie until 2011
The Obama administration will wait until 2011 to propose an overhaul of mortgage giants Fannie Mae and Freddie Mac, Treasury Secretary Timothy Geithner said Wednesday, arguing that he wanted to put some distance between a new system and what he called “the worst housing crisis in generations.”
Geithner also told lawmakers the administration had no intention of including the two entities in the federal budget, even though they were taken over by the government in 2008 as they faced mounting losses from mortgage defaults.
“That’s going to be a difficult set of reforms, but we do not believe it’s necessary to consolidate the full obligations of those entities onto the balance sheet of the federal government at this stage,” Geithner told the House Budget Committee.
Fannie Mae and Freddie Mac are vital players in the mortgage industry, purchasing home loans from lenders and selling them to investors. They own or guarantee about half of all residential mortgages. Had they gone broke in 2008, millions of people would have been unable to get mortgages.
The administration’s Republican critics have argued that President Barack Obama should have proposed sweeping changes to Fannie Mae and Freddie Mac last year, when he demanded an overhaul of financial regulations. The administration had been expected to announce its plans this month when it submitted its 2011 budget request.
“We want to make sure that we are proposing these changes at a time when we have a little bit more distance from the worst housing crisis in generations,” Geithner said.
That argument is exactly the opposite of the case Geithner is making for new financial regulations. Geithner is pressing Congress to move swiftly on new Wall Street rules, saying action must occur before memories of the financial crisis recede.
“We can’t do everything right away,” he said.
But Congress may move faster on the future of the mortgage giants. House Financial Services Chairman Barney Frank plans a hearing within two weeks on their future. And Federal Reserve Chairman Ben Bernanke, testifying before that committee on Wednesday, urged a swift response.
“The sooner you get some clarity about where the ultimate objective is, the better,” he said.
In a way, Geithner’s delay could give Frank room to devise his own plan.
“I think he’s going to move forward, perhaps with a bit of pique at not having the administration’s guidance, but with a lot more freedom,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a consulting firm that advises financial institutions.
Geithner called for measures that make sure “the government is playing a less risky, but more constructive, role in supporting housing markets in the future.”
Republican lawmakers have also called for the administration to begin including Fannie and Freddie in the federal budget, saying that would give a more accurate picture of the government’s fiscal condition. Last month, the Congressional Budget Office estimated the operation of Fannie and Freddie would add $99 billion to the federal deficit projected for the 10-year period ending in 2019.
Geithner also sought to assure lawmakers that stimulus spending to spur the economy now isn’t in conflict with a need for longer-term austerity. Before the federal government can begin attacking soaring deficits and a massive national debt, it needs to increase jobs and ensure economic growth, he said.
“If you care about future deficits – and you have to care about these future deficits – you need to care about economic growth today,” the secretary said. He offered a forceful endorsement of administration policies, ranging from expanded health care to tougher banking regulations.
Geithner’s testimony came as Obama faces growing pressure to both address stubbornly high unemployment and to confront a rising pool of red ink. But even under Obama’s ambitious budget blueprint, unemployment would still be pushing double digits at 9.8 percent, and this year’s deficit would increase to $1.56 trillion under the administration’s accounting. The Senate voted 70-28 Wednesday in favor of legislation to address chronic joblessness by providing tax breaks to businesses that expand their payrolls.
Copyright © 2010 The Associated Press, Jim Kuhnhenn, Associated Press writer
Geithner also told lawmakers the administration had no intention of including the two entities in the federal budget, even though they were taken over by the government in 2008 as they faced mounting losses from mortgage defaults.
“That’s going to be a difficult set of reforms, but we do not believe it’s necessary to consolidate the full obligations of those entities onto the balance sheet of the federal government at this stage,” Geithner told the House Budget Committee.
Fannie Mae and Freddie Mac are vital players in the mortgage industry, purchasing home loans from lenders and selling them to investors. They own or guarantee about half of all residential mortgages. Had they gone broke in 2008, millions of people would have been unable to get mortgages.
The administration’s Republican critics have argued that President Barack Obama should have proposed sweeping changes to Fannie Mae and Freddie Mac last year, when he demanded an overhaul of financial regulations. The administration had been expected to announce its plans this month when it submitted its 2011 budget request.
“We want to make sure that we are proposing these changes at a time when we have a little bit more distance from the worst housing crisis in generations,” Geithner said.
That argument is exactly the opposite of the case Geithner is making for new financial regulations. Geithner is pressing Congress to move swiftly on new Wall Street rules, saying action must occur before memories of the financial crisis recede.
“We can’t do everything right away,” he said.
But Congress may move faster on the future of the mortgage giants. House Financial Services Chairman Barney Frank plans a hearing within two weeks on their future. And Federal Reserve Chairman Ben Bernanke, testifying before that committee on Wednesday, urged a swift response.
“The sooner you get some clarity about where the ultimate objective is, the better,” he said.
In a way, Geithner’s delay could give Frank room to devise his own plan.
“I think he’s going to move forward, perhaps with a bit of pique at not having the administration’s guidance, but with a lot more freedom,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a consulting firm that advises financial institutions.
Geithner called for measures that make sure “the government is playing a less risky, but more constructive, role in supporting housing markets in the future.”
Republican lawmakers have also called for the administration to begin including Fannie and Freddie in the federal budget, saying that would give a more accurate picture of the government’s fiscal condition. Last month, the Congressional Budget Office estimated the operation of Fannie and Freddie would add $99 billion to the federal deficit projected for the 10-year period ending in 2019.
Geithner also sought to assure lawmakers that stimulus spending to spur the economy now isn’t in conflict with a need for longer-term austerity. Before the federal government can begin attacking soaring deficits and a massive national debt, it needs to increase jobs and ensure economic growth, he said.
“If you care about future deficits – and you have to care about these future deficits – you need to care about economic growth today,” the secretary said. He offered a forceful endorsement of administration policies, ranging from expanded health care to tougher banking regulations.
Geithner’s testimony came as Obama faces growing pressure to both address stubbornly high unemployment and to confront a rising pool of red ink. But even under Obama’s ambitious budget blueprint, unemployment would still be pushing double digits at 9.8 percent, and this year’s deficit would increase to $1.56 trillion under the administration’s accounting. The Senate voted 70-28 Wednesday in favor of legislation to address chronic joblessness by providing tax breaks to businesses that expand their payrolls.
Copyright © 2010 The Associated Press, Jim Kuhnhenn, Associated Press writer
Wednesday, February 24, 2010
What you should know about home foreclosure
After more than six months of wrangling with her bank to get a reduced mortgage payment through a federal loan modification program, Debra Jacobs has had enough.
The West Palm Beach resident is walking away from her home of 14 years.
“I’m just going to wait here until they put a padlock on the door,” said Jacobs, 58. “I’m so over it, I have to let it go. It’s too painful.”
As homeowners grow increasingly frustrated by the nation’s struggling foreclosure prevention programs, more may consider walking away as a viable alternative.
But there’s more to it than just stopping your mortgage payments and handing over the keys.
Boca Raton real estate attorney Marlyn Wiener says there’s no “right way” to walk away from a home.
Knowing the consequences, however, will at least help the borrower make an informed decision, she said.
“There is an analysis that each homeowner should do to find the best way for them to proceed,” Wiener said. “There isn’t a speed lane.”
The biggest gamble in walking away is whether a lender will try to seize a borrower’s assets to pay for its losses, Wiener said. Lenders have up to 20 years in Florida to collect a deficiency judgment.
But banks are more likely to go after borrowers who strategically default – a term meaning the homeowner can afford the mortgage but decides to stop paying because the home is no longer a good investment.
Moral dilemmas aside, Wiener said it can make financial sense in some situations to “pull the plug and regroup” if the mortgage is underwater.
Scott Haft, who oversees the mortgage modification and foreclosure defense division at the law firm LaBovick & LaBovick, said some lenders are willing to forgive a mortgage debt if a borrower voluntarily turns over the home without going through a lengthy court foreclosure.
“We say, ‘We’ll give you the keys on Monday, but you have to waive your right to pursue my client in the future for deficiencies,’ “ said Haft, whose company has offices in West Palm Beach, Boynton Beach and Palm Beach Gardens. “Many times, the lender is only interested in regaining the property.”
Another concern is whether the homeowner will have to claim forgiveness of debt on tax returns for the amount of money owed the lender.
The Mortgage Debt Relief Act of 2007 temporarily exempts people who lose their primary residence from having to claim the canceled debt, but the act is scheduled to sunset Dec. 31, 2012, and can’t be applied to investment properties.
“Everybody’s relationship with their properties and their loans is different,” Wiener said. “People need to take a look at where they are in life before they decide to walk away.”
One thing Wiener asks clients is whether they will need good credit in the near future to secure a car or student loan. A foreclosure can knock up to 300 points off a credit score – damage that can take years to repair and will stay on your report for seven years.
Lenders have recently stepped up efforts to ease the foreclosure process and avoid the complications when a homeowner walks away.
Citigroup launched a program this month that allows some borrowers to stay in their homes for six months without paying. In return, the homeowner turns in the keys at the end of the time period and keeps the home in good shape.
The federal Home Affordable Foreclosure Alternatives Program, announced in November, gives lenders incentives for offering deed-in-lieu of foreclosure and for approving short sales.
But for Jacobs, the alternatives are “too little too late.”
“Not only do I not know the options, I don’t care anymore,” she said. “It’s really sad it’s come to this.”
Copyright © 2010 The Palm Beach Post, Fla
The West Palm Beach resident is walking away from her home of 14 years.
“I’m just going to wait here until they put a padlock on the door,” said Jacobs, 58. “I’m so over it, I have to let it go. It’s too painful.”
As homeowners grow increasingly frustrated by the nation’s struggling foreclosure prevention programs, more may consider walking away as a viable alternative.
But there’s more to it than just stopping your mortgage payments and handing over the keys.
Boca Raton real estate attorney Marlyn Wiener says there’s no “right way” to walk away from a home.
Knowing the consequences, however, will at least help the borrower make an informed decision, she said.
“There is an analysis that each homeowner should do to find the best way for them to proceed,” Wiener said. “There isn’t a speed lane.”
The biggest gamble in walking away is whether a lender will try to seize a borrower’s assets to pay for its losses, Wiener said. Lenders have up to 20 years in Florida to collect a deficiency judgment.
But banks are more likely to go after borrowers who strategically default – a term meaning the homeowner can afford the mortgage but decides to stop paying because the home is no longer a good investment.
Moral dilemmas aside, Wiener said it can make financial sense in some situations to “pull the plug and regroup” if the mortgage is underwater.
Scott Haft, who oversees the mortgage modification and foreclosure defense division at the law firm LaBovick & LaBovick, said some lenders are willing to forgive a mortgage debt if a borrower voluntarily turns over the home without going through a lengthy court foreclosure.
“We say, ‘We’ll give you the keys on Monday, but you have to waive your right to pursue my client in the future for deficiencies,’ “ said Haft, whose company has offices in West Palm Beach, Boynton Beach and Palm Beach Gardens. “Many times, the lender is only interested in regaining the property.”
Another concern is whether the homeowner will have to claim forgiveness of debt on tax returns for the amount of money owed the lender.
The Mortgage Debt Relief Act of 2007 temporarily exempts people who lose their primary residence from having to claim the canceled debt, but the act is scheduled to sunset Dec. 31, 2012, and can’t be applied to investment properties.
“Everybody’s relationship with their properties and their loans is different,” Wiener said. “People need to take a look at where they are in life before they decide to walk away.”
One thing Wiener asks clients is whether they will need good credit in the near future to secure a car or student loan. A foreclosure can knock up to 300 points off a credit score – damage that can take years to repair and will stay on your report for seven years.
Lenders have recently stepped up efforts to ease the foreclosure process and avoid the complications when a homeowner walks away.
Citigroup launched a program this month that allows some borrowers to stay in their homes for six months without paying. In return, the homeowner turns in the keys at the end of the time period and keeps the home in good shape.
The federal Home Affordable Foreclosure Alternatives Program, announced in November, gives lenders incentives for offering deed-in-lieu of foreclosure and for approving short sales.
But for Jacobs, the alternatives are “too little too late.”
“Not only do I not know the options, I don’t care anymore,” she said. “It’s really sad it’s come to this.”
Copyright © 2010 The Palm Beach Post, Fla
New home sales hit record low in January
Sales of new U.S. homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.
The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who had expected sales would rise about 5 percent over December’s pace.
While winter storms were partly to blame, home sales have fallen for three straight months despite sweeping government support. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.
“There is no doubt that January and February are going to be messy months for housing, given the severe weather conditions, but that doesn’t take away from the fact that the housing sector has taken another big step back, even with the government aid,” Jennifer Lee, a senior economist at BMO Capital Markets, said in a research note.
January’s weakness was evident in all regions except the Midwest, where sales posted a 2.1 percent increase. Sales were down 35 percent in the Northeast, 12 percent in the West and almost 10 percent in the South.
The drop in sales pushed the median sales price down to $203,500. That was down 5.6 percent from December’s median sales price of $215,600, and off 2.4 percent from year-ago prices.
New home sales for all of 2009 had fallen by almost 23 percent to 374,000, the worst year on record. The National Association of Home Builders is forecasting that sales will rise to more than 500,000 sales this year, an improvement from 2009 but still far below the boom years of 2003 through 2006 when builders clocked more than 1 million new home sales per year.
January’s data will increase concerns that the housing rebound could falter in coming months as the government withdraws the support it has used to try to bolster the housing market, which stood at the epicenter of the country’s overall recession, the worst downturn since the 1930s.
A $1.25 trillion program from the Federal Reserve that has held down mortgage rates is set to end March 31 and tax credits to bolster homebuying are scheduled to expire at the end of April.
First-time homebuyers could qualify for a credit of up to $8,000 while homeowners who have lived in their current properties for at least five years could claim a tax credit of up to $6,500 if they decided to move into another home.
Though the overall economy started growing again this past summer, economists are worried because unemployment remains high. This weakness is causing consumers to shy away from spending, especially on big-ticket items such as homes.
The Conference Board reported Tuesday that its Consumer Confidence Index fell almost 11 points to 46 in February, pushing the index down to its lowest reading since last April. At 46, the index is a long way from the 90 reading that economists generally view as depicting healthy consumer attitudes.
Copyright © 2010 The Associated Press
The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who had expected sales would rise about 5 percent over December’s pace.
While winter storms were partly to blame, home sales have fallen for three straight months despite sweeping government support. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.
“There is no doubt that January and February are going to be messy months for housing, given the severe weather conditions, but that doesn’t take away from the fact that the housing sector has taken another big step back, even with the government aid,” Jennifer Lee, a senior economist at BMO Capital Markets, said in a research note.
January’s weakness was evident in all regions except the Midwest, where sales posted a 2.1 percent increase. Sales were down 35 percent in the Northeast, 12 percent in the West and almost 10 percent in the South.
The drop in sales pushed the median sales price down to $203,500. That was down 5.6 percent from December’s median sales price of $215,600, and off 2.4 percent from year-ago prices.
New home sales for all of 2009 had fallen by almost 23 percent to 374,000, the worst year on record. The National Association of Home Builders is forecasting that sales will rise to more than 500,000 sales this year, an improvement from 2009 but still far below the boom years of 2003 through 2006 when builders clocked more than 1 million new home sales per year.
January’s data will increase concerns that the housing rebound could falter in coming months as the government withdraws the support it has used to try to bolster the housing market, which stood at the epicenter of the country’s overall recession, the worst downturn since the 1930s.
A $1.25 trillion program from the Federal Reserve that has held down mortgage rates is set to end March 31 and tax credits to bolster homebuying are scheduled to expire at the end of April.
First-time homebuyers could qualify for a credit of up to $8,000 while homeowners who have lived in their current properties for at least five years could claim a tax credit of up to $6,500 if they decided to move into another home.
Though the overall economy started growing again this past summer, economists are worried because unemployment remains high. This weakness is causing consumers to shy away from spending, especially on big-ticket items such as homes.
The Conference Board reported Tuesday that its Consumer Confidence Index fell almost 11 points to 46 in February, pushing the index down to its lowest reading since last April. At 46, the index is a long way from the 90 reading that economists generally view as depicting healthy consumer attitudes.
Copyright © 2010 The Associated Press
Tuesday, February 23, 2010
Read the fine print in a short sale
With so many distressed homeowners owing more than their homes are worth, short sales have become lifelines.
These types of sales make up more than half of the homes on the market in the Tampa Bay area. Generally, this means the mortgage lender has agreed to allow the home to sell for market value. The lender writes off the rest of the debt, and the homeowner walks away.
But is it really this simple?
Lenders are increasingly adding language to the approval package, reserving the right to pursue the deficiency later – that is, the difference between what you owed on the house and what it sold for.
Some homeowners, so anxious to get out of a pending foreclosure, skip right over that part of the letter. Some understand but opt to take their chances, betting they won’t hear from the lender again.
For some lucky buyers, this has been the case – so far. They’ve sold their home as a short sale, moved on, and haven’t had any problems. But other lenders require the seller to agree upfront to pay back a set amount.
‘It seems fair’
Realtor Paul De La Torre, of Keller Williams, said lenders almost always ask his clients to agree to pay at least some of the debt back. Lenders’ requests, he said, range from 15 percent of the balance to agreeing to a payment plan – such as $80 a month for 15 years.
“It’s seems fair,” De La Torre said. “Some of these people are walking away from a huge amount. More folks need to consider it could be much worse if the lender comes back for the full deficiency later.”
Lenders don’t always go after short sale homeowners. But in Florida, lenders can wait up to five years to file for a court judgment to make the borrower pay. After the judgment is granted, the lender has 20 years to collect the cash.
This is particularly frightening because lenders could wait until the debtor is back on their feet to act. The homeowner could recover financially only to discover years later that they owe the bank tens of thousands of dollars.
Insurance companies
De La Torre said homeowners are even more likely to be required to pay a deficiency if they have mortgage insurance. (Borrowers who have less than 20 percent equity in their homes typically are required by their lenders to cover this insurance in case they default.)
Mortgage insurance companies “are getting pretty strict about short sales,” he said. “They have to sign off on the short sale, too, and many are not only asking for promissory notes but are ordering their own appraisals.”
Deficiency judgments aren’t only a problem in short sale cases. They can happen following a foreclosure, too.
A lender can take back the home, sell it and then come back after the borrower for the difference between that amount and the balance on the old mortgage. This is allowed in Florida and most other states.
So what can a homeowner do?
Not much, in the case of a foreclosure. But when negotiating a short sale, the homeowner must sign off on the paperwork, too, said Jim Davis, a real estate agent with Century 21 A&M Realty.
Borrowers can ask to be released from the debt, and sometimes that works. In the past three to six months, though, Davis said he’s seen many lenders require some form of payment.
That’s where negotiation can kick in.
Some lenders detail how much money they might come after later. Others don’t specify, and that may mean the full amount. Davis recommends anyone signing a short sale agreement insist the lenders be specific about deficiency plans. Read the fine print, he said, and ask lots of questions.
If they don’t, it may haunt them later.
Copyright © 2010 Tampa Tribune, Fla.,
These types of sales make up more than half of the homes on the market in the Tampa Bay area. Generally, this means the mortgage lender has agreed to allow the home to sell for market value. The lender writes off the rest of the debt, and the homeowner walks away.
But is it really this simple?
Lenders are increasingly adding language to the approval package, reserving the right to pursue the deficiency later – that is, the difference between what you owed on the house and what it sold for.
Some homeowners, so anxious to get out of a pending foreclosure, skip right over that part of the letter. Some understand but opt to take their chances, betting they won’t hear from the lender again.
For some lucky buyers, this has been the case – so far. They’ve sold their home as a short sale, moved on, and haven’t had any problems. But other lenders require the seller to agree upfront to pay back a set amount.
‘It seems fair’
Realtor Paul De La Torre, of Keller Williams, said lenders almost always ask his clients to agree to pay at least some of the debt back. Lenders’ requests, he said, range from 15 percent of the balance to agreeing to a payment plan – such as $80 a month for 15 years.
“It’s seems fair,” De La Torre said. “Some of these people are walking away from a huge amount. More folks need to consider it could be much worse if the lender comes back for the full deficiency later.”
Lenders don’t always go after short sale homeowners. But in Florida, lenders can wait up to five years to file for a court judgment to make the borrower pay. After the judgment is granted, the lender has 20 years to collect the cash.
This is particularly frightening because lenders could wait until the debtor is back on their feet to act. The homeowner could recover financially only to discover years later that they owe the bank tens of thousands of dollars.
Insurance companies
De La Torre said homeowners are even more likely to be required to pay a deficiency if they have mortgage insurance. (Borrowers who have less than 20 percent equity in their homes typically are required by their lenders to cover this insurance in case they default.)
Mortgage insurance companies “are getting pretty strict about short sales,” he said. “They have to sign off on the short sale, too, and many are not only asking for promissory notes but are ordering their own appraisals.”
Deficiency judgments aren’t only a problem in short sale cases. They can happen following a foreclosure, too.
A lender can take back the home, sell it and then come back after the borrower for the difference between that amount and the balance on the old mortgage. This is allowed in Florida and most other states.
So what can a homeowner do?
Not much, in the case of a foreclosure. But when negotiating a short sale, the homeowner must sign off on the paperwork, too, said Jim Davis, a real estate agent with Century 21 A&M Realty.
Borrowers can ask to be released from the debt, and sometimes that works. In the past three to six months, though, Davis said he’s seen many lenders require some form of payment.
That’s where negotiation can kick in.
Some lenders detail how much money they might come after later. Others don’t specify, and that may mean the full amount. Davis recommends anyone signing a short sale agreement insist the lenders be specific about deficiency plans. Read the fine print, he said, and ask lots of questions.
If they don’t, it may haunt them later.
Copyright © 2010 Tampa Tribune, Fla.,
Gov’t to add consumer protections to mortgage plan
The Obama administration is soon expected to unveil additional protections to ensure homeowners are treated fairly and consistently under its mortgage relief program.
The policies, outlined in a draft Treasury Department document obtained by the Associated Press, would address long-standing complaints from housing counselors. They have cited cases of lenders continuing with foreclosures while homeowners were being evaluated for help. That practice would be banned under the new rules.
Government officials acknowledge treatment of homeowners has been a problem under the $75 billion mortgage relief effort.
Some lenders, for example, continue foreclosure proceedings while evaluating a borrower for help under the program. Under the new policies, mortgage companies would have to stop all legal action once a borrower enrolls in the program.
Borrowers rejected from the program would also have 30 days to appeal the decision. In that time, lenders could schedule a foreclosure sale but not conduct it.
And mortgage companies would be required to consider applications from homeowners in bankruptcy. That’s optional under the current rules.
Treasury spokeswoman Meg Reilly confirmed the document was authentic, but wrote in an e-mail that it “has not been approved and there are no immediate planned announcements on the issue.”
The $75 billion program is designed to lower borrowers’ monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years.
To complete the process, homeowners need to make three payments and provide proof of their income, plus a letter documenting their financial hardship.
But experts warn that hundreds of thousands of borrowers will not be eligible or will not complete the process. So far, only 116,300 borrowers out 1 million enrolled have had the terms of their mortgages changed permanently.
Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer
The policies, outlined in a draft Treasury Department document obtained by the Associated Press, would address long-standing complaints from housing counselors. They have cited cases of lenders continuing with foreclosures while homeowners were being evaluated for help. That practice would be banned under the new rules.
Government officials acknowledge treatment of homeowners has been a problem under the $75 billion mortgage relief effort.
Some lenders, for example, continue foreclosure proceedings while evaluating a borrower for help under the program. Under the new policies, mortgage companies would have to stop all legal action once a borrower enrolls in the program.
Borrowers rejected from the program would also have 30 days to appeal the decision. In that time, lenders could schedule a foreclosure sale but not conduct it.
And mortgage companies would be required to consider applications from homeowners in bankruptcy. That’s optional under the current rules.
Treasury spokeswoman Meg Reilly confirmed the document was authentic, but wrote in an e-mail that it “has not been approved and there are no immediate planned announcements on the issue.”
The $75 billion program is designed to lower borrowers’ monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years.
To complete the process, homeowners need to make three payments and provide proof of their income, plus a letter documenting their financial hardship.
But experts warn that hundreds of thousands of borrowers will not be eligible or will not complete the process. So far, only 116,300 borrowers out 1 million enrolled have had the terms of their mortgages changed permanently.
Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer
Monday, February 22, 2010
Report: Fewer people behind on home loans
The end of the foreclosure crisis is finally in sight. For the first time in almost three years, the number of homeowners falling behind on their loans is declining.
The drop means the number of people losing their homes will start to fall. But some pain from the crisis is sure to persist. Because millions of people are already in foreclosure, deeply discounted houses will put pressure on home prices for years.
“Housing is on a path to recovery,” said Mike Larson, a real estate analyst with Weiss Research. “It’s going to be a very long, gradual process.”
In high-foreclosure cities like Las Vegas, Phoenix and Miami, homes have lost roughly half their values from their peaks. But a report Friday from the Mortgage Bankers Association showed Nevada, Arizona and Florida had some of the biggest declines in new delinquencies.
The figures probably mark “the beginning of the end” of the crisis, said Jay Brinkmann, the trade group’s chief economist.
However, more than 15 percent of homeowners with a mortgage have missed at least one payment or are in foreclosure, a record. Worse, nearly half of all delinquent borrowers were at least three months behind on their payments, up from a typical level of less than 20 percent.
“The bad news is that we still have a big problem,” Brinkmann said. “The good news is it looks like it may not get much bigger.”
That’s because the percentage of borrowers who missed just one payment on their home loans fell to 3.6 percent in the October-to-December quarter from 3.8 percent in the third quarter, according to the Mortgage Bankers Association. That decline was even more surprising because delinquencies usually rise at that time of year due to higher heating bills and holiday spending.
In another encouraging sign, the number of borrowers who had missed at least one payment but were not yet in foreclosure also fell for the first time since the beginning of 2007.
Banks are delaying the foreclosure process, traditionally between four and six months, as they evaluate borrowers for help under the Obama administration’s $75 billion mortgage-relief effort. It lowers borrowers payments to as low as 2 percent for five years and extends loan terms to as long as 40 years.
But experts warn that hundreds of thousands of borrowers will not be eligible or will not complete the process. So far, only 116,300 borrowers out of 1 million who enrolled have had the terms of their mortgages changed permanently.
Despite the government’s efforts, there may be 6 million foreclosed homes that are put on the market over the next three years, according to Barclays Capital.
Timing is key. If banks unload them suddenly, “it will be much more detrimental to the housing recovery than if it’s a slow, gradual bleed,” said Michelle Meyer, a Barclays economist.
On Friday, Obama announced that housing agencies in the five hardest-hit states of Arizona, California, Florida, Michigan and Nevada will receive $1.5 billion in financial rescue money.
It will go to local programs to help unemployed homeowners, “under water” borrowers who owe more than their home is worth, or to give lenders incentives to assist borrowers with second mortgages. The programs will need to be approved by the Treasury Department.
“Government alone can’t solve this problem,” Obama said. “But government can make a difference.”
In a briefing with reporters, administration officials acknowledged that the effort was just a small one. But they said it could help develop broader national solutions. “What we’re trying to do here is foster innovation,” said Herbert Allison, an assistant Treasury secretary.
Copyright © 2010 The Associated Press
The drop means the number of people losing their homes will start to fall. But some pain from the crisis is sure to persist. Because millions of people are already in foreclosure, deeply discounted houses will put pressure on home prices for years.
“Housing is on a path to recovery,” said Mike Larson, a real estate analyst with Weiss Research. “It’s going to be a very long, gradual process.”
In high-foreclosure cities like Las Vegas, Phoenix and Miami, homes have lost roughly half their values from their peaks. But a report Friday from the Mortgage Bankers Association showed Nevada, Arizona and Florida had some of the biggest declines in new delinquencies.
The figures probably mark “the beginning of the end” of the crisis, said Jay Brinkmann, the trade group’s chief economist.
However, more than 15 percent of homeowners with a mortgage have missed at least one payment or are in foreclosure, a record. Worse, nearly half of all delinquent borrowers were at least three months behind on their payments, up from a typical level of less than 20 percent.
“The bad news is that we still have a big problem,” Brinkmann said. “The good news is it looks like it may not get much bigger.”
That’s because the percentage of borrowers who missed just one payment on their home loans fell to 3.6 percent in the October-to-December quarter from 3.8 percent in the third quarter, according to the Mortgage Bankers Association. That decline was even more surprising because delinquencies usually rise at that time of year due to higher heating bills and holiday spending.
In another encouraging sign, the number of borrowers who had missed at least one payment but were not yet in foreclosure also fell for the first time since the beginning of 2007.
Banks are delaying the foreclosure process, traditionally between four and six months, as they evaluate borrowers for help under the Obama administration’s $75 billion mortgage-relief effort. It lowers borrowers payments to as low as 2 percent for five years and extends loan terms to as long as 40 years.
But experts warn that hundreds of thousands of borrowers will not be eligible or will not complete the process. So far, only 116,300 borrowers out of 1 million who enrolled have had the terms of their mortgages changed permanently.
Despite the government’s efforts, there may be 6 million foreclosed homes that are put on the market over the next three years, according to Barclays Capital.
Timing is key. If banks unload them suddenly, “it will be much more detrimental to the housing recovery than if it’s a slow, gradual bleed,” said Michelle Meyer, a Barclays economist.
On Friday, Obama announced that housing agencies in the five hardest-hit states of Arizona, California, Florida, Michigan and Nevada will receive $1.5 billion in financial rescue money.
It will go to local programs to help unemployed homeowners, “under water” borrowers who owe more than their home is worth, or to give lenders incentives to assist borrowers with second mortgages. The programs will need to be approved by the Treasury Department.
“Government alone can’t solve this problem,” Obama said. “But government can make a difference.”
In a briefing with reporters, administration officials acknowledged that the effort was just a small one. But they said it could help develop broader national solutions. “What we’re trying to do here is foster innovation,” said Herbert Allison, an assistant Treasury secretary.
Copyright © 2010 The Associated Press
President announces $1.5 billion plan to help struggling homeowners
A plan to channel $1.5 billion to housing agencies in five states hit hardest by the real estate crash has Florida officials hopeful they can keep more people in their homes and out of foreclosure.
President Obama announced the program Friday while in Nevada for a town hall meeting and campaign push for Senate Majority Leader Harry Reid. The states included in the new program are Nevada, California, Arizona, Florida and Michigan, all of which consistently rank high on any measure of mortgage woe.
But with more than 20 percent of its home loans seriously delinquent or in foreclosure, Florida tops the nation for defaults, according to a Mortgage Bankers Association report also released Friday.
Obama administration officials called the $1.5 billion “modest” considering the depth of the nation’s housing crisis but said they hope it will lead states to come up with innovative solutions tailored to their own needs.
Those solutions are expected to plug holes in the administration’s earlier Making Home Affordable Program, which has struggled to help unemployed homeowners who don’t have the income to qualify for a loan modification.
It also attempts to tackle one of the thorniest issues to come out of the market meltdown – how to cope with upside-down loans where the homeowner owes more than what the property is worth.
About 41 percent of South Florida borrowers, and 55 percent of Treasure Coast borrowers were underwater in December, according to analysts at Zillow.com.
The $1.5 billion in taxpayer money, which is coming from the federal Troubled Asset Relief Program, can be used to help negotiate with lenders to write down mortgages on underwater loans.
“This really could be extraordinary relief that will be very welcome in Florida,” said Jaimie Ross, president of the Florida Housing Coalition. “It’s pretty clear this is a program designed to keep homeowners from losing their homes.”
The money will be doled out to states based on a formula that considers home price declines and unemployment. Officials couldn’t say Friday how many people it might help.
There was some optimism Friday that the national housing market has begun to make a turn for the better.
The Mortgage Bankers Association survey showed that despite continued record foreclosures, there was a small decrease in the number of loans 30-days late in the last quarter of 2009.
That means fewer homes entered the foreclosure pipeline.
“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures,” said Jay Brinkman, chief economist for the association.
Brinkman said he usually sees an increase in 30-day delinquencies in the last quarter of the year because of holiday spending and home heating costs.
Instead, national 30-day delinquencies fell from 3.79 percent to 3.63 percent. In Florida, the 30-day delinquencies fell from 4 percent to 3.67 percent.
The drop off may also be attributed, in part, to foreclosure rescue plans such as the Making Home Affordable Program.
The program offers incentives to banks to reduce mortgage payments by cutting interest rates or principal amounts, but has been panned by critics for not reaching enough people.
A year into the program, 116,297 permanent loan modifications, including 14,598 in Florida, have been completed. But that’s only a fraction of the estimated 3.4 million loans nationwide that are 60 or more days delinquent.
Boynton Beach resident Lenore Cohen, 81, said she’s been overwhelmed by the loan modification process, which she said has included harassing letters from her bank and notices of non-payment, even when she paid.
“They said it could take eight months,” Cohen said. “I have two huge folders filled with paperwork. It’s been very disturbing.”
Copyright © 2010 The Palm Beach Post, Fla
President Obama announced the program Friday while in Nevada for a town hall meeting and campaign push for Senate Majority Leader Harry Reid. The states included in the new program are Nevada, California, Arizona, Florida and Michigan, all of which consistently rank high on any measure of mortgage woe.
But with more than 20 percent of its home loans seriously delinquent or in foreclosure, Florida tops the nation for defaults, according to a Mortgage Bankers Association report also released Friday.
Obama administration officials called the $1.5 billion “modest” considering the depth of the nation’s housing crisis but said they hope it will lead states to come up with innovative solutions tailored to their own needs.
Those solutions are expected to plug holes in the administration’s earlier Making Home Affordable Program, which has struggled to help unemployed homeowners who don’t have the income to qualify for a loan modification.
It also attempts to tackle one of the thorniest issues to come out of the market meltdown – how to cope with upside-down loans where the homeowner owes more than what the property is worth.
About 41 percent of South Florida borrowers, and 55 percent of Treasure Coast borrowers were underwater in December, according to analysts at Zillow.com.
The $1.5 billion in taxpayer money, which is coming from the federal Troubled Asset Relief Program, can be used to help negotiate with lenders to write down mortgages on underwater loans.
“This really could be extraordinary relief that will be very welcome in Florida,” said Jaimie Ross, president of the Florida Housing Coalition. “It’s pretty clear this is a program designed to keep homeowners from losing their homes.”
The money will be doled out to states based on a formula that considers home price declines and unemployment. Officials couldn’t say Friday how many people it might help.
There was some optimism Friday that the national housing market has begun to make a turn for the better.
The Mortgage Bankers Association survey showed that despite continued record foreclosures, there was a small decrease in the number of loans 30-days late in the last quarter of 2009.
That means fewer homes entered the foreclosure pipeline.
“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures,” said Jay Brinkman, chief economist for the association.
Brinkman said he usually sees an increase in 30-day delinquencies in the last quarter of the year because of holiday spending and home heating costs.
Instead, national 30-day delinquencies fell from 3.79 percent to 3.63 percent. In Florida, the 30-day delinquencies fell from 4 percent to 3.67 percent.
The drop off may also be attributed, in part, to foreclosure rescue plans such as the Making Home Affordable Program.
The program offers incentives to banks to reduce mortgage payments by cutting interest rates or principal amounts, but has been panned by critics for not reaching enough people.
A year into the program, 116,297 permanent loan modifications, including 14,598 in Florida, have been completed. But that’s only a fraction of the estimated 3.4 million loans nationwide that are 60 or more days delinquent.
Boynton Beach resident Lenore Cohen, 81, said she’s been overwhelmed by the loan modification process, which she said has included harassing letters from her bank and notices of non-payment, even when she paid.
“They said it could take eight months,” Cohen said. “I have two huge folders filled with paperwork. It’s been very disturbing.”
Copyright © 2010 The Palm Beach Post, Fla
Friday, February 19, 2010
State cracks down on five South Florida home loan rescue companies
State regulators took the first step Thursday in what they said will be an ongoing effort against unlawful mortgage modifiers, ordering several South Florida operations to immediately stop doing business.
The Florida Office of Financial Regulation cited five companies Thursday morning: Foreclosure Solution Specialists Inc., of Tamarac; the Federal Housing Assistance Program, west of Fort Lauderdale; Liberty Home Solutions, of West Palm Beach; Keep Living in Your Home, of Boca Raton; and Saving Your Home, of Miami.
They were alleged to have violated two state laws by taking money upfront for mortgage modifications and by not being licensed to perform those services.
Sharon Dawes, an area financial manager with Financial Regulation in Broward County, said this sweep will be the first of many, as the department looks to ensure foreclosure rescue operations follow the new licensure law.
As of Jan 1, loan modifiers, loan originators and mortgage lenders were required to have a state mortgage broker’s license. Previously, modifiers were largely unregulated.
Upfront fees have been prohibited, in most cases, for almost a year under a 2008 law.
Last year, legislators narrowed an earlier exemption given to attorneys, allowing advance fees only when they handle modifications in relation to an existing case, like a bankruptcy.
Dawes said the state sent out about 1,000 letters to mortgage companies statewide late last year, notifying them of the licensure change.
State officials started following up with visits to their offices in January, Dawes said.
Officials will go back to the ones they said still aren’t in line with the regulations, Dawes said. Those companies will be ordered to stop doing business until they are in compliance, Dawes said.
Lisa Wright, owner of Foreclosure Solutions – one of two Broward businesses cited Thursday – said she is scheduled to take her broker’s exam Friday and has taken no new clients since she learned about the law change.
“I’ve been talking with the state all along,” Wright said. “They knew I was going to take the test.”
She also said she stopped taking upfront fees, averaging about $1,200 per case, last year and thought she would be allowed to continue working with the 16 clients whose modifications are in the pipeline.
“I am trying to help people keep their homes,” Wright said.
Tyrone Copper, who said he was the manager of Liberty Home Solutions, called his visit from state officials “a little miscommunication.” Copper said his business was “not doing loan modifications” after Jan. 1 and did not take money in advance.
But he also complained about the state law banning upfront fees.
“It is totally absurd, when you are working with people facing foreclosure, not to be able to get the money in advance,” Copper said. “How are you going it collect it later?”
Attorney Sanford Chevlin, the registered agent for Federal Housing Assistance, refused to talk to the Sun Sentinel when he accepted the state’s stop-business order.
The owners of Keep Living in Your Home and Saving Your Home could not be reached to comment.
Many modification companies are taking licensure seriously, state officials said.
An average of 203 people a month applied for a mortgage broker’s license in the first eight months of 2009, according to the Office of Financial Regulation.
In the last four months of the year, the average rose to 1,217 a month.
Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla.,
The Florida Office of Financial Regulation cited five companies Thursday morning: Foreclosure Solution Specialists Inc., of Tamarac; the Federal Housing Assistance Program, west of Fort Lauderdale; Liberty Home Solutions, of West Palm Beach; Keep Living in Your Home, of Boca Raton; and Saving Your Home, of Miami.
They were alleged to have violated two state laws by taking money upfront for mortgage modifications and by not being licensed to perform those services.
Sharon Dawes, an area financial manager with Financial Regulation in Broward County, said this sweep will be the first of many, as the department looks to ensure foreclosure rescue operations follow the new licensure law.
As of Jan 1, loan modifiers, loan originators and mortgage lenders were required to have a state mortgage broker’s license. Previously, modifiers were largely unregulated.
Upfront fees have been prohibited, in most cases, for almost a year under a 2008 law.
Last year, legislators narrowed an earlier exemption given to attorneys, allowing advance fees only when they handle modifications in relation to an existing case, like a bankruptcy.
Dawes said the state sent out about 1,000 letters to mortgage companies statewide late last year, notifying them of the licensure change.
State officials started following up with visits to their offices in January, Dawes said.
Officials will go back to the ones they said still aren’t in line with the regulations, Dawes said. Those companies will be ordered to stop doing business until they are in compliance, Dawes said.
Lisa Wright, owner of Foreclosure Solutions – one of two Broward businesses cited Thursday – said she is scheduled to take her broker’s exam Friday and has taken no new clients since she learned about the law change.
“I’ve been talking with the state all along,” Wright said. “They knew I was going to take the test.”
She also said she stopped taking upfront fees, averaging about $1,200 per case, last year and thought she would be allowed to continue working with the 16 clients whose modifications are in the pipeline.
“I am trying to help people keep their homes,” Wright said.
Tyrone Copper, who said he was the manager of Liberty Home Solutions, called his visit from state officials “a little miscommunication.” Copper said his business was “not doing loan modifications” after Jan. 1 and did not take money in advance.
But he also complained about the state law banning upfront fees.
“It is totally absurd, when you are working with people facing foreclosure, not to be able to get the money in advance,” Copper said. “How are you going it collect it later?”
Attorney Sanford Chevlin, the registered agent for Federal Housing Assistance, refused to talk to the Sun Sentinel when he accepted the state’s stop-business order.
The owners of Keep Living in Your Home and Saving Your Home could not be reached to comment.
Many modification companies are taking licensure seriously, state officials said.
An average of 203 people a month applied for a mortgage broker’s license in the first eight months of 2009, according to the Office of Financial Regulation.
In the last four months of the year, the average rose to 1,217 a month.
Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla.,
Thursday, February 18, 2010
Housing bargains abound, but try closing the deal quickly
Matt and Brenda Wehrly can’t wait to move out of their cramped apartment and into their first home. The couple, expecting their second child, plan to close on a three-bedroom home in Gibsonton this month.
The house sold in late 2005 for $222,800, and the Wehrlys are ecstatic about their contract to snatch it up for $97,000. Sweetening the pot even more, the couple will be eligible for an $8,000 federal tax credit.
“We wanted to buy something that would allow us to live on one income,” said Brenda Wehrly, who plans to eventually stay at home with her children. “We wouldn’t have been able to do that a few years ago.”
Tampa Bay sales prices have plummeted more than 40 percent since the peak of the housing boom in 2006. That, coupled with federal tax incentives, is motivating buyers like the Wehrlys to get off the fence and purchase a home. This, real estate professionals say, has given a needed boost to Tampa Bay’s struggling housing market.
That’s exactly what the federal government had in mind in November when it extended tax credits and expanded the program to include some buyers who already own homes.
The Tampa area has a full measure of hard-to-pass-up deals, but closing on them is sometimes a challenge. Many of the best bargains are on distressed properties, and lenders are painfully slow to approve offers. With tax credits set to expire in April, some buyers won’t be able to close in time and may not be interested in buying after the credit expires.
Experts worry about what will happen to the market then. But for now, all of this is keeping real estate agents busy and causing some interesting things to happen, said Ken Brownlee, an agent with Keller Williams Realty.
“If a house is under $100,000, you probably have a bidding war,” said Brownlee, who said he hasn’t seen that happen in years. “The prices are even starting to go up in some areas. I’m telling buyers who want to stay under $150,000 that they don’t always have time to go home and sleep on it anymore.”
Home sales in the Tampa-St. Petersburg-Clearwater area rose 28 percent in the fourth quarter of 2009, and the median sales price hit $138,800. That’s down 42 percent since prices peaked at $239,600 in June 2006.
As home sales rise, inventory of unsold homes is slowly dwindling, but there are still more homes for sale than there are buyers. Real estate agents estimate that as many as 60 percent of homes for sale are listed as short sales. That means the seller is trying to get their lender to accept less than the loan amount and write off the rest.
Lenders are doing this, but the process can take months, and many frustrated buyers are walking away.
“I’ve had two cases where the customer changed their mind by the time the lender approved the deal,” said Mike Lindquist, an agent with Century 21 AMN Realty.
Such was the case with one buyer who wanted to purchase one of Lindquist’s short sale listings for $159,000. The buyer offered full price, but the lender took too long to respond.
“The buyer got tired of waiting, and I ended up selling him a non-short sale home for less money,” Lindquist said.
In that case, an investor had purchased the home for $112,000 last year, which was a bargain considering the home had originally sold for more than $200,000. The investor renovated it, putting in hardwood floors and new cabinets and expected to make a profit. Lindquist’s buyer offered $150,000, and the investor accepted. But when the home appraised for $124,000, the investor reluctantly agreed to that price.
“It was a great deal,” he said.
First-time homebuyers aren’t the only ones taking advantage of discounts. Homeowners wanting to move up to a bigger house or downsize are in the market, too. Jon and Seiry Colley of Keller Williams said that while it’s difficult for homeowners to sell their houses, they’re making up for losses on the new houses they buy.
The short sales are bringing down prices, but they’re also making regular sales more attractive to buyers who want to close quickly.
“The good properties are commanding a higher price,” Jon Colley said.
Meanwhile, the Wehrlys are looking forward to getting into their new home, and they’re thankful they found something they can afford.
“It’s funny, my husband is most excited about the granite countertops, and I’m excited about the indoor laundry room – which has a window,” Brenda Wehrly said. “But the mortgage payment is the best thing.”
Copyright © 2010 Tampa Tribune, Fla.
The house sold in late 2005 for $222,800, and the Wehrlys are ecstatic about their contract to snatch it up for $97,000. Sweetening the pot even more, the couple will be eligible for an $8,000 federal tax credit.
“We wanted to buy something that would allow us to live on one income,” said Brenda Wehrly, who plans to eventually stay at home with her children. “We wouldn’t have been able to do that a few years ago.”
Tampa Bay sales prices have plummeted more than 40 percent since the peak of the housing boom in 2006. That, coupled with federal tax incentives, is motivating buyers like the Wehrlys to get off the fence and purchase a home. This, real estate professionals say, has given a needed boost to Tampa Bay’s struggling housing market.
That’s exactly what the federal government had in mind in November when it extended tax credits and expanded the program to include some buyers who already own homes.
The Tampa area has a full measure of hard-to-pass-up deals, but closing on them is sometimes a challenge. Many of the best bargains are on distressed properties, and lenders are painfully slow to approve offers. With tax credits set to expire in April, some buyers won’t be able to close in time and may not be interested in buying after the credit expires.
Experts worry about what will happen to the market then. But for now, all of this is keeping real estate agents busy and causing some interesting things to happen, said Ken Brownlee, an agent with Keller Williams Realty.
“If a house is under $100,000, you probably have a bidding war,” said Brownlee, who said he hasn’t seen that happen in years. “The prices are even starting to go up in some areas. I’m telling buyers who want to stay under $150,000 that they don’t always have time to go home and sleep on it anymore.”
Home sales in the Tampa-St. Petersburg-Clearwater area rose 28 percent in the fourth quarter of 2009, and the median sales price hit $138,800. That’s down 42 percent since prices peaked at $239,600 in June 2006.
As home sales rise, inventory of unsold homes is slowly dwindling, but there are still more homes for sale than there are buyers. Real estate agents estimate that as many as 60 percent of homes for sale are listed as short sales. That means the seller is trying to get their lender to accept less than the loan amount and write off the rest.
Lenders are doing this, but the process can take months, and many frustrated buyers are walking away.
“I’ve had two cases where the customer changed their mind by the time the lender approved the deal,” said Mike Lindquist, an agent with Century 21 AMN Realty.
Such was the case with one buyer who wanted to purchase one of Lindquist’s short sale listings for $159,000. The buyer offered full price, but the lender took too long to respond.
“The buyer got tired of waiting, and I ended up selling him a non-short sale home for less money,” Lindquist said.
In that case, an investor had purchased the home for $112,000 last year, which was a bargain considering the home had originally sold for more than $200,000. The investor renovated it, putting in hardwood floors and new cabinets and expected to make a profit. Lindquist’s buyer offered $150,000, and the investor accepted. But when the home appraised for $124,000, the investor reluctantly agreed to that price.
“It was a great deal,” he said.
First-time homebuyers aren’t the only ones taking advantage of discounts. Homeowners wanting to move up to a bigger house or downsize are in the market, too. Jon and Seiry Colley of Keller Williams said that while it’s difficult for homeowners to sell their houses, they’re making up for losses on the new houses they buy.
The short sales are bringing down prices, but they’re also making regular sales more attractive to buyers who want to close quickly.
“The good properties are commanding a higher price,” Jon Colley said.
Meanwhile, the Wehrlys are looking forward to getting into their new home, and they’re thankful they found something they can afford.
“It’s funny, my husband is most excited about the granite countertops, and I’m excited about the indoor laundry room – which has a window,” Brenda Wehrly said. “But the mortgage payment is the best thing.”
Copyright © 2010 Tampa Tribune, Fla.
Homes worth more than owners think
American homeowners’ confidence in their own homes’ value during the fourth quarter fell to its lowest level in seven quarters, with just one in five (20 percent) believing their own homes’ values increased during 2009, according to the Zillow Q4 Homeowner Confidence Survey.
However, the survey finds that 28 percent of homes increased in value during 2009. The disconnect between rising values and lower homeowner expectations led a Home Value Misperception Index of negative two (-2).
A Misperception Index of zero would mean homeowners’ perceptions were in line with their homes’ actual values. A positive index means homes are worth less than owners think; a negative index indicates that homeowners are overly cynical about their own homes’ value.
One year ago, nearly half (47 percent) of homeowners believed values in their local market would decrease in the next six months. However, when asked about their own home, fewer than one in three (30 percent) believed that their own home’s value would decrease.
Today 22 percent of homeowners believe their local market will lose value over the next six months and 14 percent believing their own home will lose value.
“Homeowners are finally succumbing to the notion that, in most areas, declining home values over the past year are no longer the exception, they are the rule,” said Dr. Stan Humphries, Zillow chief economist. “Almost three times as many people believe their home’s value will increase over the next six months as believe it will decrease in value, a level of optimism that is likely to outpace actual performance in the near-term. Given recent news about the stabilization of home values in some markets, I can see why homeowners are so optimistic. However, home values in many markets are still under substantial downward pressure from high levels of foreclosures, and we don’t believe we’ll see a definitive bottom nationally until the second quarter of this year.”
Top read the complete survey, visit Zillow’s website.
© 2010 Florida Realtors®
However, the survey finds that 28 percent of homes increased in value during 2009. The disconnect between rising values and lower homeowner expectations led a Home Value Misperception Index of negative two (-2).
A Misperception Index of zero would mean homeowners’ perceptions were in line with their homes’ actual values. A positive index means homes are worth less than owners think; a negative index indicates that homeowners are overly cynical about their own homes’ value.
One year ago, nearly half (47 percent) of homeowners believed values in their local market would decrease in the next six months. However, when asked about their own home, fewer than one in three (30 percent) believed that their own home’s value would decrease.
Today 22 percent of homeowners believe their local market will lose value over the next six months and 14 percent believing their own home will lose value.
“Homeowners are finally succumbing to the notion that, in most areas, declining home values over the past year are no longer the exception, they are the rule,” said Dr. Stan Humphries, Zillow chief economist. “Almost three times as many people believe their home’s value will increase over the next six months as believe it will decrease in value, a level of optimism that is likely to outpace actual performance in the near-term. Given recent news about the stabilization of home values in some markets, I can see why homeowners are so optimistic. However, home values in many markets are still under substantial downward pressure from high levels of foreclosures, and we don’t believe we’ll see a definitive bottom nationally until the second quarter of this year.”
Top read the complete survey, visit Zillow’s website.
© 2010 Florida Realtors®
Wednesday, February 17, 2010
Three Fla. home warranty companies shut down
The Florida Office of Insurance Regulation issued cease and desist orders to three home warranty companies yesterday, including their subsidiaries, for the unauthorized sale of warranty products and service agreements. The companies include National Home Protection, National Home Warranty and National Automotive Services.
Office investigators determined National Home Protection and National Home Warranty conducted home and service warranty transactions in Florida without a license. Investigators also found National Automotive Services Inc. and its subsidiaries – Warranty Financial Inc., Warranty Financial O.R.G. Inc., Warranty U.S.A., and Warranty Services – sold motor vehicle service agreements without a license.
“The Office is committed to protecting Florida consumers from purchasing products that are sold by unlicensed entities that do not comply with Florida law,” Florida Insurance Commissioner Kevin McCarty said in a statement.
The affected companies must submit letters of certification, within 30 days, stating their company no longer provides services in Florida. The orders also require that the companies honor and fully service all valid claims and fulfill their contractual obligations.
Consumers may make sure an insurer or warranty company is licensed in Florida through the “Company Search” tool on the Florida Office of Insurance Regulation website, www.floir.com.
© 2010 Florida Realtors®
Office investigators determined National Home Protection and National Home Warranty conducted home and service warranty transactions in Florida without a license. Investigators also found National Automotive Services Inc. and its subsidiaries – Warranty Financial Inc., Warranty Financial O.R.G. Inc., Warranty U.S.A., and Warranty Services – sold motor vehicle service agreements without a license.
“The Office is committed to protecting Florida consumers from purchasing products that are sold by unlicensed entities that do not comply with Florida law,” Florida Insurance Commissioner Kevin McCarty said in a statement.
The affected companies must submit letters of certification, within 30 days, stating their company no longer provides services in Florida. The orders also require that the companies honor and fully service all valid claims and fulfill their contractual obligations.
Consumers may make sure an insurer or warranty company is licensed in Florida through the “Company Search” tool on the Florida Office of Insurance Regulation website, www.floir.com.
© 2010 Florida Realtors®
Refinancing unavailable for many borrowers
The refinancing wave that swept the nation when mortgage rates hit historic lows last year is petering out, leaving behind millions of homeowners who could not qualify for the best rates.
Half of the nation’s borrowers have mortgages with rates above 6 percent even though the average rate on 30-year, fixed-rate mortgages has been about 5 percent for most of the past year, according to research firm First American CoreLogic.
More refinancing activity would have helped household budgets, but also the national economy because homeowners might have spent some of the extra cash they pocketed, giving the recovery an added lift.
Many borrowers who tried to refinance have found they’re stuck because the value of their homes has tumbled and their equity has melted away. Others have been shut out because lenders tightened their requirements, demanding stellar credit and low debt.
An effort by the Obama administration to overcome some of these challenges has fallen flat, frustrating many homeowners – especially with mortgage rates expected to rise by year’s end, if not sooner.
“We’ve reached the point of burnout,” said Amy Crews Cutts, deputy chief economist at Freddie Mac. “Most of the people who can refinance today have done so already.”
Usually, borrowers refinance if they can save at least one percentage point on the interest rate, mortgage experts say, and even a savings of as little as half a point may make sense under some circumstances. Ultimately, the decision depends on whether the savings come in a time frame that makes sense for the borrower.
Elaine Lewis and her husband are among those who were shut out. They could not refinance their Silver Spring house this month because it was appraised at $448,000 – $60,000 less than they paid in 2004. They still have equity in the house. But because that equity is less than 20 percent, they are required to pay private mortgage insurance.
As they see it, their options are to pay the mortgage insurance and related upfront costs or come up with enough cash to pay down their principal, beefing up their equity so insurance won’t be necessary.
“Neither of those choices made financial sense since people refinance to save money, not to spend money,” Lewis said. “It was terribly disappointing.”
Other borrowers have no equity, or they owe more than their homes are worth, making it nearly impossible to refinance. These “underwater” borrowers make up about a quarter of all households now that national home prices have plunged an average of 30 percent from their peak in 2006.
Refinancing activity took off after the Federal Reserve committed to buying a huge chunk of mortgage-backed securities in late 2008 to help loosen consumer lending. Mortgage rates immediately dropped below 6 percent and stayed there through 2009. They dipped below 5 percent last spring, and then hit an all-time low of 4.71 percent in early December, Freddie Mac reported. They have hovered around 5 percent since.
Freddie Mac estimated that 5.8 million borrowers have refinanced since the start of 2009, saving $140 a month on average.
The flurry of activity came nowhere close to matching the unprecedented refinancing boom in 2003, when rates dropped below 6 percent for the first time in decades. The economy was flourishing, and home prices were rising.
“But context is everything,” said Cutts, of Freddie Mac. “In many ways it’s surprising that with the financial markets in disarray and home prices falling across the country and eight-million-plus jobs lost that we’d have people taking out new loans in 2009.”
Still the numbers are not as impressive as they could have been, many economists said.
“There are quite a few mortgages that are in the money, meaning they are well within the zone where refinancing makes sense,” said Sam Khater, a senior economist with First American CoreLogic. “Given where rates are right now, refinance activity should be quite a bit higher than it is.”
If the bulk of those people were to refinance, that would goose consumer spending, giving the wider economy a boost. Instead, refinance activity has dropped 60 percent from its peak in the spring, according to the Mortgage Bankers Association. This year, refinances should total $500 billion of all loan originations, down from $1.4 trillion last year, the group predicted.
Larry F. Pratt, chief executive of First Savings Mortgage, said he has witnessed the challenges up close. “Historically, our rejection rate is less than 5 percent of all our refinance applications,” Pratt said. “For 2009, it was nearly 25 percent.”
To help borrowers, the Obama administration launched the Home Affordable Refinance Program nearly a year ago. The initiative aimed to help refinance the loans of borrowers with little or no equity in their homes but who are on track with their mortgages. These underwater borrowers are at greater risk of foreclosure, and the administration hoped that lowering their payments would decrease their chances of falling behind.
The program was limited to borrowers whose loans were backed by mortgage financiers Fannie Mae and Freddie Mac. Originally it targeted borrowers whose loan balances were slightly higher than the property’s value. The program was later expanded to include borrowers who owe up to 25 percent more than their homes are worth.
Yet fewer than 200,000 borrowers have refinanced through this program since its launch in March – nowhere near the up to 5 million the administration projected to reach by June, when the initiative is to end. A Federal Housing Finance Agency official said refinancing under the program picked up in the final months of last year. Treasury officials have said the initiative has helped many borrowers.
Some people probably abandoned it for a separate government-led program that also aimed to prevent foreclosures but offered even lower rates, according to housing advocates. But the refinancing initiative was also dogged by delays as lenders struggled to update their computer systems to accommodate the program. Another obstacle was that many homeowners have second mortgages or private mortgage insurance, which can get in the way of refinancing a primary loan.
Thomas Fox, a well-paid government contractor with excellent credit and relatively little debt, should have been the perfect candidate. He made a 17 percent downpayment when he bought his home in Ashburn in 2007. Now he owes at least 5 percent more than the house is worth.
Fox tried to refinance under the federal program, but his private mortgage insurance policy could not be reissued on a new loan, said his mortgage broker, Devon Segal of Apex Home Loans.
“If the government’s program won’t work for this guy, someone with great credit scores and a strong income,” Segal said, “it won’t work for anybody.”
Copyright © 2010 washingtonpost.com.
Half of the nation’s borrowers have mortgages with rates above 6 percent even though the average rate on 30-year, fixed-rate mortgages has been about 5 percent for most of the past year, according to research firm First American CoreLogic.
More refinancing activity would have helped household budgets, but also the national economy because homeowners might have spent some of the extra cash they pocketed, giving the recovery an added lift.
Many borrowers who tried to refinance have found they’re stuck because the value of their homes has tumbled and their equity has melted away. Others have been shut out because lenders tightened their requirements, demanding stellar credit and low debt.
An effort by the Obama administration to overcome some of these challenges has fallen flat, frustrating many homeowners – especially with mortgage rates expected to rise by year’s end, if not sooner.
“We’ve reached the point of burnout,” said Amy Crews Cutts, deputy chief economist at Freddie Mac. “Most of the people who can refinance today have done so already.”
Usually, borrowers refinance if they can save at least one percentage point on the interest rate, mortgage experts say, and even a savings of as little as half a point may make sense under some circumstances. Ultimately, the decision depends on whether the savings come in a time frame that makes sense for the borrower.
Elaine Lewis and her husband are among those who were shut out. They could not refinance their Silver Spring house this month because it was appraised at $448,000 – $60,000 less than they paid in 2004. They still have equity in the house. But because that equity is less than 20 percent, they are required to pay private mortgage insurance.
As they see it, their options are to pay the mortgage insurance and related upfront costs or come up with enough cash to pay down their principal, beefing up their equity so insurance won’t be necessary.
“Neither of those choices made financial sense since people refinance to save money, not to spend money,” Lewis said. “It was terribly disappointing.”
Other borrowers have no equity, or they owe more than their homes are worth, making it nearly impossible to refinance. These “underwater” borrowers make up about a quarter of all households now that national home prices have plunged an average of 30 percent from their peak in 2006.
Refinancing activity took off after the Federal Reserve committed to buying a huge chunk of mortgage-backed securities in late 2008 to help loosen consumer lending. Mortgage rates immediately dropped below 6 percent and stayed there through 2009. They dipped below 5 percent last spring, and then hit an all-time low of 4.71 percent in early December, Freddie Mac reported. They have hovered around 5 percent since.
Freddie Mac estimated that 5.8 million borrowers have refinanced since the start of 2009, saving $140 a month on average.
The flurry of activity came nowhere close to matching the unprecedented refinancing boom in 2003, when rates dropped below 6 percent for the first time in decades. The economy was flourishing, and home prices were rising.
“But context is everything,” said Cutts, of Freddie Mac. “In many ways it’s surprising that with the financial markets in disarray and home prices falling across the country and eight-million-plus jobs lost that we’d have people taking out new loans in 2009.”
Still the numbers are not as impressive as they could have been, many economists said.
“There are quite a few mortgages that are in the money, meaning they are well within the zone where refinancing makes sense,” said Sam Khater, a senior economist with First American CoreLogic. “Given where rates are right now, refinance activity should be quite a bit higher than it is.”
If the bulk of those people were to refinance, that would goose consumer spending, giving the wider economy a boost. Instead, refinance activity has dropped 60 percent from its peak in the spring, according to the Mortgage Bankers Association. This year, refinances should total $500 billion of all loan originations, down from $1.4 trillion last year, the group predicted.
Larry F. Pratt, chief executive of First Savings Mortgage, said he has witnessed the challenges up close. “Historically, our rejection rate is less than 5 percent of all our refinance applications,” Pratt said. “For 2009, it was nearly 25 percent.”
To help borrowers, the Obama administration launched the Home Affordable Refinance Program nearly a year ago. The initiative aimed to help refinance the loans of borrowers with little or no equity in their homes but who are on track with their mortgages. These underwater borrowers are at greater risk of foreclosure, and the administration hoped that lowering their payments would decrease their chances of falling behind.
The program was limited to borrowers whose loans were backed by mortgage financiers Fannie Mae and Freddie Mac. Originally it targeted borrowers whose loan balances were slightly higher than the property’s value. The program was later expanded to include borrowers who owe up to 25 percent more than their homes are worth.
Yet fewer than 200,000 borrowers have refinanced through this program since its launch in March – nowhere near the up to 5 million the administration projected to reach by June, when the initiative is to end. A Federal Housing Finance Agency official said refinancing under the program picked up in the final months of last year. Treasury officials have said the initiative has helped many borrowers.
Some people probably abandoned it for a separate government-led program that also aimed to prevent foreclosures but offered even lower rates, according to housing advocates. But the refinancing initiative was also dogged by delays as lenders struggled to update their computer systems to accommodate the program. Another obstacle was that many homeowners have second mortgages or private mortgage insurance, which can get in the way of refinancing a primary loan.
Thomas Fox, a well-paid government contractor with excellent credit and relatively little debt, should have been the perfect candidate. He made a 17 percent downpayment when he bought his home in Ashburn in 2007. Now he owes at least 5 percent more than the house is worth.
Fox tried to refinance under the federal program, but his private mortgage insurance policy could not be reissued on a new loan, said his mortgage broker, Devon Segal of Apex Home Loans.
“If the government’s program won’t work for this guy, someone with great credit scores and a strong income,” Segal said, “it won’t work for anybody.”
Copyright © 2010 washingtonpost.com.
Former Countrywide borrowers get cash
More than 2,700 people will receive checks from a 2008 settlement Florida negotiated with Countrywide Financial Corporation. As part of the settlement, Countrywide is offering foreclosure relief payments to eligible borrowers who returned valid and timely claim forms and releases under a program administered by the Countrywide settlement administrator.
More than $16.9 million will be distributed this week, and each check will be written for just over $6,000.
In July 2008, Attorney General Bill McCollum filed a lawsuit against Countrywide, one of the nation’s largest mortgage companies, for allegedly engaging in deceptive and unfair trade practices. The lawsuit claimed Countrywide put borrowers into mortgages they couldn’t afford or loans with rates and penalties that were misleading. That lawsuit was resolved in October 2008, and the settlement agreement included a foreclosure relief payment program for Florida homeowners with qualifying Countrywide mortgages.
Eligible homeowners should consider the following:
• Important information: The checks must be cashed on or before May 13, 2010.
• A payment under this settlement may be taxable, and recipients should consult a tax advisor if they have any questions concerning possible tax liabilities.
• Recipients with any questions should contact the settlement administrator, Rust Consulting, toll free at (866) 411‐6987, or http://www.countrywidesettlementinfo.com.
The settlement also includes $4 million to fund a foreclosure defense assistance program. The money will be provided to organizations over the course of two years, and the first funds were distributed in late 2009. The organizations that receive the grants agree to provide free legal assistance to eligible homeowners who face foreclosure but cannot afford an attorney to review their case.
“These resources, both the checks to homeowners and the grants to fund pro bono foreclosure defense assistance, are substantial assets to Floridians,” says Heather Rodriguez of Holland & Knight law firm and president of the Legal Aid Society of the Orange County Bar Association, one of the organizations that received grant funding and has an attorney dedicated to foreclosure defense assistance. “Orange and Osceola counties are both high in foreclosures, and homeowners are struggling.”
Countrywide Chief Executive Angelo Mozilo was also named in the Countrywide lawsuit and the civil case against him is still pending in Broward County Circuit Court. McCollum has also called on Bank of America, the company that acquired Countrywide after the lawsuit was filed, to be more responsive to consumers trying to modify loans and save their home from foreclosure.
© 2010 Florida Realtors®
More than $16.9 million will be distributed this week, and each check will be written for just over $6,000.
In July 2008, Attorney General Bill McCollum filed a lawsuit against Countrywide, one of the nation’s largest mortgage companies, for allegedly engaging in deceptive and unfair trade practices. The lawsuit claimed Countrywide put borrowers into mortgages they couldn’t afford or loans with rates and penalties that were misleading. That lawsuit was resolved in October 2008, and the settlement agreement included a foreclosure relief payment program for Florida homeowners with qualifying Countrywide mortgages.
Eligible homeowners should consider the following:
• Important information: The checks must be cashed on or before May 13, 2010.
• A payment under this settlement may be taxable, and recipients should consult a tax advisor if they have any questions concerning possible tax liabilities.
• Recipients with any questions should contact the settlement administrator, Rust Consulting, toll free at (866) 411‐6987, or http://www.countrywidesettlementinfo.com.
The settlement also includes $4 million to fund a foreclosure defense assistance program. The money will be provided to organizations over the course of two years, and the first funds were distributed in late 2009. The organizations that receive the grants agree to provide free legal assistance to eligible homeowners who face foreclosure but cannot afford an attorney to review their case.
“These resources, both the checks to homeowners and the grants to fund pro bono foreclosure defense assistance, are substantial assets to Floridians,” says Heather Rodriguez of Holland & Knight law firm and president of the Legal Aid Society of the Orange County Bar Association, one of the organizations that received grant funding and has an attorney dedicated to foreclosure defense assistance. “Orange and Osceola counties are both high in foreclosures, and homeowners are struggling.”
Countrywide Chief Executive Angelo Mozilo was also named in the Countrywide lawsuit and the civil case against him is still pending in Broward County Circuit Court. McCollum has also called on Bank of America, the company that acquired Countrywide after the lawsuit was filed, to be more responsive to consumers trying to modify loans and save their home from foreclosure.
© 2010 Florida Realtors®
Tuesday, February 16, 2010
Justices adopt Fla. foreclosure mediation rules
Lenders will be required to pick up the tab for investigating and verifying ownership and then try mediation before foreclosing Florida home mortgages under new rules approved Thursday by the Florida Supreme Court.
The rules are designed to help Florida’s judicial system better cope with a flood of foreclosures. They follow a December administrative order by Chief Justice Peggy A. Quince telling local judges to adopt a uniform mediation program.
Florida has the nation’s fourth-highest foreclosure rate. Almost 400,000 cases were filed in Florida’s courts last year.
The rules and corresponding legal forms were proposed by a pair of Florida Bar panels.
“They found that many cases were being filed by plaintiffs that didn’t’ own the mortgages any more,” said Miami lawyer Mark Romance, who chairs the Civil Procedures Rules Committee.
Romance said other cases were being filed against people who no longer owned the homes.
“I don’t think there was any ill will or intent to harm someone,” Romance said.
The investigate-and-verify rule should help prevent those kinds of errors and give judges greater authority to sanction lenders who do make false allegations, the justices wrote.
“It’s just going to be another hoop to jump through,” said Anthony DiMarco, executive vice president for public affairs for the Florida Bankers Association, which opposed that provision. “It’s making us find a document we’re already supposed to find.”
The decision was unanimous except for a rule that will require prior approval of a judge before a foreclosure sale can be canceled. Justices Charles Canady and Ricky Polston dissented.
Last-minute cancelations have needlessly delayed other sales, again clogging the system, Romance said.
The Bankers Association did not object to that provision, but DiMarco said borrowers and lenders often cannot reach a settlement until just before the sale date.
“It’s the last chance and people get more serious at the last chance,” he said.
Copyright © 2010 The Associated Press
The rules are designed to help Florida’s judicial system better cope with a flood of foreclosures. They follow a December administrative order by Chief Justice Peggy A. Quince telling local judges to adopt a uniform mediation program.
Florida has the nation’s fourth-highest foreclosure rate. Almost 400,000 cases were filed in Florida’s courts last year.
The rules and corresponding legal forms were proposed by a pair of Florida Bar panels.
“They found that many cases were being filed by plaintiffs that didn’t’ own the mortgages any more,” said Miami lawyer Mark Romance, who chairs the Civil Procedures Rules Committee.
Romance said other cases were being filed against people who no longer owned the homes.
“I don’t think there was any ill will or intent to harm someone,” Romance said.
The investigate-and-verify rule should help prevent those kinds of errors and give judges greater authority to sanction lenders who do make false allegations, the justices wrote.
“It’s just going to be another hoop to jump through,” said Anthony DiMarco, executive vice president for public affairs for the Florida Bankers Association, which opposed that provision. “It’s making us find a document we’re already supposed to find.”
The decision was unanimous except for a rule that will require prior approval of a judge before a foreclosure sale can be canceled. Justices Charles Canady and Ricky Polston dissented.
Last-minute cancelations have needlessly delayed other sales, again clogging the system, Romance said.
The Bankers Association did not object to that provision, but DiMarco said borrowers and lenders often cannot reach a settlement until just before the sale date.
“It’s the last chance and people get more serious at the last chance,” he said.
Copyright © 2010 The Associated Press
Friday, February 12, 2010
Lots of bargains? Not so, Fla. homebuyers say
Think there are all kinds of crazy deals to be had in today’s real estate market?
That’s what 31-year-old Jason Bellak thought, too – a year ago. He’s been searching that long for something in the $150,000 price range in Palm Beach County. Short sale, condo, townhouse, foreclosure – he’s looked at them all, made offers on several, but is still living with his parents in Royal Palm Beach.
Despite a perception that three-bedroom, two-bath beauties with granite countertops and good schools can be yours for a song – or at least for 20 percent down – it’s not a market reality, say frustrated homebuyers and their Realtors.
Cash investors, sluggish banks and thorny financing are limiting the options for your average homebuyer, who, by the way, is sick of hearing, “It’s a buyers’ market.”
“I was like most people, thinking there were a lot of deals out there,” Bellak said. “But it quickly became apparent that it wasn’t going to be such an easy process.”
Competition is highest now in the $150,000 to $250,000 price range, said market analyst Jack McCabe of McCabe Research and Consulting in Deerfield Beach.
The median single-family home in Palm Beach County sold for $238,000 in January – 9 percent higher than in 2009, according to the Realtors Association of the Palm Beaches. Inventory in January was down to eight months, less than half of what it was in January 2009.
“Most people still think we’re in this terrible market, but the inventory tells a different story,” said Realtor Scott Smith, who has clients struggling to find homes in the Jupiter and Palm Beach Gardens area even though they’re willing to spend between $350,000 and $400,000.
Bellak can’t even recall the details of all the offers he’s made on homes in the past year. He bid on a three-bedroom townhouse in foreclosure but lost. He made an offer on a short sale condo – meeting the $141,000 asking price – waited three months, but then couldn’t get financing because the homeowners association had too many delinquent accounts.
In most cases, for a buyer to get a Federal Housing Administration-backed loan for a condominium, no more than 15 percent of the units can be more than 30 days past due on association fees.
Now Bellak has his heart set on a two-bedroom Jupiter townhouse.
“I think if this one doesn’t go through, I may hold off for now,” said Bellak, who has been working with Realtor Craig Fialkowski of Herman Group Real Estate in Palm Beach Gardens.
Realtors say part of the problem is that people hear the hype about the down market and expect to find a steal in a great neighborhood.
Last year, more than 500,000 Florida homes received some type of foreclosure notice, according to the Irvine, Calif.-based company RealtyTrac.
But while foreclosures are usually priced low, they’re not always good deals. They could be tagged with liens, have missing appliances or be in general disrepair.
“It’s not like everything just became half-price overnight with no repercussions,” said Realtor Shannon Brink of Re/Max Prestige Realty in downtown West Palm Beach. “Plus, many banks still sell homes off at auction or to capital investors, so not everything even hits the open market.”
Crystal Paul and her fiancé, Antonio Hester, both 25, have been working with Brink since December to find a home for about $150,000.
They’ve looked at a dozen or more properties and have made some offers. But they’ve lost out to investors with ready cash, which is more attractive to banks.
“You find a house you think you can live in, but then you lose it,” Paul said. “The cash investors have the upper hand and here we are just trying to get started.”
When a short sale off Military Trail popped up last week for $139,900, Paul and Hester made an offer that the homeowner accepted. But he owes more than $230,000 on the house, and in the end it’s up to the bank to OK the sale.
Brink said banks will sometimes set a low asking price on a short sale to attract buyers, but with no plans to actually settle for that price.
While short sales have traditionally taken months to settle, new federal guidelines that go into effect in April require banks to respond to short sale offers within 10 days.
More good news for buyers this year is the prediction of an increase in foreclosures that could further reduce prices.
G. Stacy Sirmans, a real estate professor at Florida State University, said the market hasn’t hit bottom and won’t for at least another year.
“It’s definitely a buyers’ market,” Sirmans said.
Copyright © 2010 The Palm Beach Post, Fla.,
That’s what 31-year-old Jason Bellak thought, too – a year ago. He’s been searching that long for something in the $150,000 price range in Palm Beach County. Short sale, condo, townhouse, foreclosure – he’s looked at them all, made offers on several, but is still living with his parents in Royal Palm Beach.
Despite a perception that three-bedroom, two-bath beauties with granite countertops and good schools can be yours for a song – or at least for 20 percent down – it’s not a market reality, say frustrated homebuyers and their Realtors.
Cash investors, sluggish banks and thorny financing are limiting the options for your average homebuyer, who, by the way, is sick of hearing, “It’s a buyers’ market.”
“I was like most people, thinking there were a lot of deals out there,” Bellak said. “But it quickly became apparent that it wasn’t going to be such an easy process.”
Competition is highest now in the $150,000 to $250,000 price range, said market analyst Jack McCabe of McCabe Research and Consulting in Deerfield Beach.
The median single-family home in Palm Beach County sold for $238,000 in January – 9 percent higher than in 2009, according to the Realtors Association of the Palm Beaches. Inventory in January was down to eight months, less than half of what it was in January 2009.
“Most people still think we’re in this terrible market, but the inventory tells a different story,” said Realtor Scott Smith, who has clients struggling to find homes in the Jupiter and Palm Beach Gardens area even though they’re willing to spend between $350,000 and $400,000.
Bellak can’t even recall the details of all the offers he’s made on homes in the past year. He bid on a three-bedroom townhouse in foreclosure but lost. He made an offer on a short sale condo – meeting the $141,000 asking price – waited three months, but then couldn’t get financing because the homeowners association had too many delinquent accounts.
In most cases, for a buyer to get a Federal Housing Administration-backed loan for a condominium, no more than 15 percent of the units can be more than 30 days past due on association fees.
Now Bellak has his heart set on a two-bedroom Jupiter townhouse.
“I think if this one doesn’t go through, I may hold off for now,” said Bellak, who has been working with Realtor Craig Fialkowski of Herman Group Real Estate in Palm Beach Gardens.
Realtors say part of the problem is that people hear the hype about the down market and expect to find a steal in a great neighborhood.
Last year, more than 500,000 Florida homes received some type of foreclosure notice, according to the Irvine, Calif.-based company RealtyTrac.
But while foreclosures are usually priced low, they’re not always good deals. They could be tagged with liens, have missing appliances or be in general disrepair.
“It’s not like everything just became half-price overnight with no repercussions,” said Realtor Shannon Brink of Re/Max Prestige Realty in downtown West Palm Beach. “Plus, many banks still sell homes off at auction or to capital investors, so not everything even hits the open market.”
Crystal Paul and her fiancé, Antonio Hester, both 25, have been working with Brink since December to find a home for about $150,000.
They’ve looked at a dozen or more properties and have made some offers. But they’ve lost out to investors with ready cash, which is more attractive to banks.
“You find a house you think you can live in, but then you lose it,” Paul said. “The cash investors have the upper hand and here we are just trying to get started.”
When a short sale off Military Trail popped up last week for $139,900, Paul and Hester made an offer that the homeowner accepted. But he owes more than $230,000 on the house, and in the end it’s up to the bank to OK the sale.
Brink said banks will sometimes set a low asking price on a short sale to attract buyers, but with no plans to actually settle for that price.
While short sales have traditionally taken months to settle, new federal guidelines that go into effect in April require banks to respond to short sale offers within 10 days.
More good news for buyers this year is the prediction of an increase in foreclosures that could further reduce prices.
G. Stacy Sirmans, a real estate professor at Florida State University, said the market hasn’t hit bottom and won’t for at least another year.
“It’s definitely a buyers’ market,” Sirmans said.
Copyright © 2010 The Palm Beach Post, Fla.,
Foreclosures down in January, but surge on way?
The number of U.S. households facing foreclosure in January increased 15 percent from the same month last year, and a surge in cash-strapped homeowners who’ve fallen behind on mortgages could be on the way.
More than 315,000 households received a foreclosure-related notice in January, RealtyTrac Inc. reported Thursday. That number is down nearly 10 percent from 349,000 in December, which saw the third highest total since the company began tracking foreclosure data in 2005.
In January, one in 409 homes was sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions. Banks repossessed more than 87,000 homes last month, down 5 percent from December but still up 31 percent from January 2009.
January marked the 11th straight month with more than 300,000 properties receiving a foreclosure filing. The numbers could stay above that level as unemployed homeowners who have tried to keep up with their mortgages finally start missing monthly payments.
Mortgage financier Fannie Mae reported in late January that the rate of borrowers who have a conventional loan on a house and are seriously delinquent was 5.29 percent in November, more than doubling the rate of 2.13 percent in November 2008. Borrowers are considered seriously delinquent if they are past due by three months or more, or are in foreclosure.
“There’s a lot of foreclosures in the pipeline, and the number is going to continue to get bigger,” said Patrick Newport, an economist with IHS Global Insight.
Last month’s foreclosure activity followed a pattern similar to that of a year ago, when a double-digit percentage increase in December was followed by a 10 percent drop in January.
The dip in January’s numbers may be due to processing delays by lenders during the end-of-year holidays, said Rick Sharga, senior vice president of RealtyTrac, which is based in Irvine, Calif.
“I don’t think it’s an early sign of the coming of the end of the foreclosure crisis,” Sharga said.
A record 2.8 million households were threatened with foreclosure last year, and the numbers are expected to rise to between 3 and 3.5 million homes this year, RealtyTrac said.
Slowing the foreclosure rate is a key step in the recovery of the real estate market and the overall economy. The foreclosure crisis forced the federal government and several states to come up with plans to prevent or delay the process to help delinquent borrowers.
Foreclosed homes are usually sold at steep discounts, so they often lower the value of surrounding properties. Cities lose property tax dollars from foreclosure homes that sit empty and from declining home values, straining local economies. Home prices have stabilized in some cities but are still down 30 percent nationally from mid-2006.
Economic issues, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year. Initially, subprime mortgages were mostly the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.
Among states, Nevada posted the nation’s highest foreclosure rate, followed by Arizona, California, Florida and Utah. Rounding out the top 10 were Idaho, Michigan, Illinois, Oregon and Georgia.
The metro area with the highest foreclosure rate in January was Las Vegas, with one in every 82 homes receiving a foreclosure filing. It was followed by Phoenix and the California cities of Modesto, Stockton, and Riverside-San Bernardino-Ontario.
Copyright © 2010 The Associated Press, Adrian Sainz, AP real estate writer
More than 315,000 households received a foreclosure-related notice in January, RealtyTrac Inc. reported Thursday. That number is down nearly 10 percent from 349,000 in December, which saw the third highest total since the company began tracking foreclosure data in 2005.
In January, one in 409 homes was sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions. Banks repossessed more than 87,000 homes last month, down 5 percent from December but still up 31 percent from January 2009.
January marked the 11th straight month with more than 300,000 properties receiving a foreclosure filing. The numbers could stay above that level as unemployed homeowners who have tried to keep up with their mortgages finally start missing monthly payments.
Mortgage financier Fannie Mae reported in late January that the rate of borrowers who have a conventional loan on a house and are seriously delinquent was 5.29 percent in November, more than doubling the rate of 2.13 percent in November 2008. Borrowers are considered seriously delinquent if they are past due by three months or more, or are in foreclosure.
“There’s a lot of foreclosures in the pipeline, and the number is going to continue to get bigger,” said Patrick Newport, an economist with IHS Global Insight.
Last month’s foreclosure activity followed a pattern similar to that of a year ago, when a double-digit percentage increase in December was followed by a 10 percent drop in January.
The dip in January’s numbers may be due to processing delays by lenders during the end-of-year holidays, said Rick Sharga, senior vice president of RealtyTrac, which is based in Irvine, Calif.
“I don’t think it’s an early sign of the coming of the end of the foreclosure crisis,” Sharga said.
A record 2.8 million households were threatened with foreclosure last year, and the numbers are expected to rise to between 3 and 3.5 million homes this year, RealtyTrac said.
Slowing the foreclosure rate is a key step in the recovery of the real estate market and the overall economy. The foreclosure crisis forced the federal government and several states to come up with plans to prevent or delay the process to help delinquent borrowers.
Foreclosed homes are usually sold at steep discounts, so they often lower the value of surrounding properties. Cities lose property tax dollars from foreclosure homes that sit empty and from declining home values, straining local economies. Home prices have stabilized in some cities but are still down 30 percent nationally from mid-2006.
Economic issues, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year. Initially, subprime mortgages were mostly the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.
Among states, Nevada posted the nation’s highest foreclosure rate, followed by Arizona, California, Florida and Utah. Rounding out the top 10 were Idaho, Michigan, Illinois, Oregon and Georgia.
The metro area with the highest foreclosure rate in January was Las Vegas, with one in every 82 homes receiving a foreclosure filing. It was followed by Phoenix and the California cities of Modesto, Stockton, and Riverside-San Bernardino-Ontario.
Copyright © 2010 The Associated Press, Adrian Sainz, AP real estate writer
Fed’s plans bode well for homebuyers
WASHINGTON – Feb. 11, 2010 – Federal Reserve Chairman Ben Bernanke said Wednesday he doesn’t expect the central bank to sell its huge trove of mortgage securities anytime soon, easing fears the move would raise borrowing costs for home buyers.
“I currently do not anticipate that the Federal Reserve will sell any of its security holdings in the near term, at least until after policy tightening has gotten underway and the economy is clearly in a sustainable recovery,” he said in testimony prepared for a congressional hearing Wednesday that was postponed due to a snowstorm.
But Bernanke provided his most detailed blueprint yet for draining the massive reserves of cash the Fed pumped into credit markets after the financial crisis.
That cooled the markets. The Dow Jones industrial average closed down 20.26 points at 10,038. The Fed’s purchase of $1.25 trillion of mortgage-backed securities has pushed down mortgage rates and stoked home sales.
But some fear the massive liquidity will spark inflation. Bernanke said the most drastic option – selling securities – isn’t imminent, and interest rates will stay low for “an extended period.” Conrad DeQuadros of RDQ Economics doesn’t expect the Fed to raise rates until next year. The Fed plans to end purchases of mortgage securities by March 31. Economists such as DeQuadros say that will lead to modestly higher mortgage rates.
Bernanke reiterated that the Fed has other tools to drain reserves from credit markets to stave off inflation. It could boost the interest rate it pays banks to keep excess cash at the Fed, and offer a “term deposit” that would pay an even higher rate for a bank to park cash for a longer period. Both would discourage lending. The Fed also could sell its securities with an agreement to buy them back in the future. Such reverse repurchase agreements, or “reverse repos,” would temporarily siphon cash from markets.
Bernanke said under a possible scenario, the Fed would use various tools to remove small amounts of cash from credit markets, then increase the interest rate it pays on bank reserves to reclaim larger amounts. But if cash must be withdrawn rapidly, it would also offer term deposits and conduct reverse repos.
Bernanke said the Fed plans soon to raise the discount rate it charges banks for emergency loans, a rate it lowered amid the financial crisis. Economists say that does not herald higher interest rates for consumers.
“It’s consistent with the Fed saying … the crisis is past us,” says James O’Sullivan, chief economist of MF Global.
© Copyright 2010 USA TODAY
“I currently do not anticipate that the Federal Reserve will sell any of its security holdings in the near term, at least until after policy tightening has gotten underway and the economy is clearly in a sustainable recovery,” he said in testimony prepared for a congressional hearing Wednesday that was postponed due to a snowstorm.
But Bernanke provided his most detailed blueprint yet for draining the massive reserves of cash the Fed pumped into credit markets after the financial crisis.
That cooled the markets. The Dow Jones industrial average closed down 20.26 points at 10,038. The Fed’s purchase of $1.25 trillion of mortgage-backed securities has pushed down mortgage rates and stoked home sales.
But some fear the massive liquidity will spark inflation. Bernanke said the most drastic option – selling securities – isn’t imminent, and interest rates will stay low for “an extended period.” Conrad DeQuadros of RDQ Economics doesn’t expect the Fed to raise rates until next year. The Fed plans to end purchases of mortgage securities by March 31. Economists such as DeQuadros say that will lead to modestly higher mortgage rates.
Bernanke reiterated that the Fed has other tools to drain reserves from credit markets to stave off inflation. It could boost the interest rate it pays banks to keep excess cash at the Fed, and offer a “term deposit” that would pay an even higher rate for a bank to park cash for a longer period. Both would discourage lending. The Fed also could sell its securities with an agreement to buy them back in the future. Such reverse repurchase agreements, or “reverse repos,” would temporarily siphon cash from markets.
Bernanke said under a possible scenario, the Fed would use various tools to remove small amounts of cash from credit markets, then increase the interest rate it pays on bank reserves to reclaim larger amounts. But if cash must be withdrawn rapidly, it would also offer term deposits and conduct reverse repos.
Bernanke said the Fed plans soon to raise the discount rate it charges banks for emergency loans, a rate it lowered amid the financial crisis. Economists say that does not herald higher interest rates for consumers.
“It’s consistent with the Fed saying … the crisis is past us,” says James O’Sullivan, chief economist of MF Global.
© Copyright 2010 USA TODAY
Fed’s plans bode well for homebuyers
WASHINGTON – Feb. 11, 2010 – Federal Reserve Chairman Ben Bernanke said Wednesday he doesn’t expect the central bank to sell its huge trove of mortgage securities anytime soon, easing fears the move would raise borrowing costs for home buyers.
“I currently do not anticipate that the Federal Reserve will sell any of its security holdings in the near term, at least until after policy tightening has gotten underway and the economy is clearly in a sustainable recovery,” he said in testimony prepared for a congressional hearing Wednesday that was postponed due to a snowstorm.
But Bernanke provided his most detailed blueprint yet for draining the massive reserves of cash the Fed pumped into credit markets after the financial crisis.
That cooled the markets. The Dow Jones industrial average closed down 20.26 points at 10,038. The Fed’s purchase of $1.25 trillion of mortgage-backed securities has pushed down mortgage rates and stoked home sales.
But some fear the massive liquidity will spark inflation. Bernanke said the most drastic option – selling securities – isn’t imminent, and interest rates will stay low for “an extended period.” Conrad DeQuadros of RDQ Economics doesn’t expect the Fed to raise rates until next year. The Fed plans to end purchases of mortgage securities by March 31. Economists such as DeQuadros say that will lead to modestly higher mortgage rates.
Bernanke reiterated that the Fed has other tools to drain reserves from credit markets to stave off inflation. It could boost the interest rate it pays banks to keep excess cash at the Fed, and offer a “term deposit” that would pay an even higher rate for a bank to park cash for a longer period. Both would discourage lending. The Fed also could sell its securities with an agreement to buy them back in the future. Such reverse repurchase agreements, or “reverse repos,” would temporarily siphon cash from markets.
Bernanke said under a possible scenario, the Fed would use various tools to remove small amounts of cash from credit markets, then increase the interest rate it pays on bank reserves to reclaim larger amounts. But if cash must be withdrawn rapidly, it would also offer term deposits and conduct reverse repos.
Bernanke said the Fed plans soon to raise the discount rate it charges banks for emergency loans, a rate it lowered amid the financial crisis. Economists say that does not herald higher interest rates for consumers.
“It’s consistent with the Fed saying … the crisis is past us,” says James O’Sullivan, chief economist of MF Global.
© Copyright 2010 USA TODAY
“I currently do not anticipate that the Federal Reserve will sell any of its security holdings in the near term, at least until after policy tightening has gotten underway and the economy is clearly in a sustainable recovery,” he said in testimony prepared for a congressional hearing Wednesday that was postponed due to a snowstorm.
But Bernanke provided his most detailed blueprint yet for draining the massive reserves of cash the Fed pumped into credit markets after the financial crisis.
That cooled the markets. The Dow Jones industrial average closed down 20.26 points at 10,038. The Fed’s purchase of $1.25 trillion of mortgage-backed securities has pushed down mortgage rates and stoked home sales.
But some fear the massive liquidity will spark inflation. Bernanke said the most drastic option – selling securities – isn’t imminent, and interest rates will stay low for “an extended period.” Conrad DeQuadros of RDQ Economics doesn’t expect the Fed to raise rates until next year. The Fed plans to end purchases of mortgage securities by March 31. Economists such as DeQuadros say that will lead to modestly higher mortgage rates.
Bernanke reiterated that the Fed has other tools to drain reserves from credit markets to stave off inflation. It could boost the interest rate it pays banks to keep excess cash at the Fed, and offer a “term deposit” that would pay an even higher rate for a bank to park cash for a longer period. Both would discourage lending. The Fed also could sell its securities with an agreement to buy them back in the future. Such reverse repurchase agreements, or “reverse repos,” would temporarily siphon cash from markets.
Bernanke said under a possible scenario, the Fed would use various tools to remove small amounts of cash from credit markets, then increase the interest rate it pays on bank reserves to reclaim larger amounts. But if cash must be withdrawn rapidly, it would also offer term deposits and conduct reverse repos.
Bernanke said the Fed plans soon to raise the discount rate it charges banks for emergency loans, a rate it lowered amid the financial crisis. Economists say that does not herald higher interest rates for consumers.
“It’s consistent with the Fed saying … the crisis is past us,” says James O’Sullivan, chief economist of MF Global.
© Copyright 2010 USA TODAY
Mortgage officials try exits softer than foreclosures
Seeking alternatives to the nation’s struggling foreclosure prevention efforts, federal and mortgage industry officials increasingly are looking for ways to get distressed borrowers to leave their homes voluntarily, without going through the expensive foreclosure process or a messy eviction.
Citigroup, for instance, plans to announce a pilot program on Thursday that would allow delinquent borrowers who don’t qualify for or decline mortgage relief the opportunity to stay in their homes without making payments for up to six months before turning over the keys, in return for keeping the property in good condition. The bank estimates that up to 20,000 borrowers in Texas, Florida, Illinois, Michigan, New Jersey and Ohio could be eligible.
The program is just the latest amid a growing acknowledgment that foreclosure prevention efforts will fail to reach millions of borrowers over the next few years.
“This is a graceful way to move on with their lives instead of being foreclosed on and being evicted from their homes,” said Sanjiv Das, chief executive of CitiMortgage.
The Citigroup plan attempts to address some common industry complaints, including borrowers who leave their homes in disarray after foreclosure, requiring lenders to spend thousands of dollars fixing up the property before putting it on the market. Also, homeowners who owe far more than their homes are worth increasingly are choosing to “strategically default,” even though they can afford to pay their mortgage. The new program gives CitiMortgage more control over when distressed homes are put up for sale, bypassing clogged courthouses that have slowed the foreclosure process in many parts of the country.
By avoiding a glut of foreclosures that could hit the housing market within the next 16 to 18 months, the program – if it is replicated throughout the industry – could help prevent another dip in home prices, Das said.
It would be a more orderly process “than if all of the foreclosed properties came crashing at some point in the cycle,” he said.
Other initiatives have also emerged for borrowers likely to lose their homes. Fannie Mae and Freddie Mac, the mortgage financing companies, developed programs allowing former homeowners to become renters after a foreclosure or other proceedings. As part of its federal foreclosure prevention program, known as Making Home Affordable, the Treasury Department announced late last year that lenders would be eligible for $1,000 in exchange for allowing borrowers to sell their home in a short sale. In such deals, the borrower sells the home for less than the outstanding mortgage, and the lender forgives the difference.
Moody’s Economy.com has forecast that the number of short sales and transactions in which borrowers surrender their deed in lieu of foreclosure will increase more than 50 percent, to about 490,000, this year. That is just a fraction of the 1.9 million homeowners Moody’s has forecast will lose their homes to foreclosure this year, up from 1.7 million last year.
But lenders have struggled to make many of these programs effective. The short sale is often lengthy and cumbersome for homeowners. In some cases, borrowers have second liens on the property, which can hang up the process. And lenders are sometimes suspicious of the potential for fraud if the home is sold cheap to a friend or family member of the borrower.
It’s unclear how rental programs for former homeowners are working. Fannie Mae launched its “Deed for Lease” program in November, offering borrowers a 12-month lease in return for turning over the keys to their former home and maintaining the property. A company spokeswoman said that it was too early to judge the program’s success, but that former homeowners who surrender their deed to avoid foreclosure – numbering nearly 2,000 through the third quarter of last year – would be eligible. Freddie Mac’s year-old program targets former homeowners after their foreclosure, offering them a month-to-month lease. It has not released specific data on how many homeowners have chosen this option.
Citigroup’s program goes further. It targets delinquent homeowners who do not qualify for mortgage relief. During the time the borrower is still in the home, they must continue to pay utilities, but in some cases, the bank may help cover some of the taxes, insurance or homeowner association fees. The borrower would also be eligible for transition counseling to help find a new home, and a minimum of $1,000 to help offset moving costs.
If there is significant demand for the program, Citigroup will expand it, Das said. “There might be complications that we haven’t thought about,” he said. “What happens if they don’t turn over the keys after six months or they don’t maintain their house like we would like them to maintain their house?”
Copyright © 2010 washingtonpost.com
Citigroup, for instance, plans to announce a pilot program on Thursday that would allow delinquent borrowers who don’t qualify for or decline mortgage relief the opportunity to stay in their homes without making payments for up to six months before turning over the keys, in return for keeping the property in good condition. The bank estimates that up to 20,000 borrowers in Texas, Florida, Illinois, Michigan, New Jersey and Ohio could be eligible.
The program is just the latest amid a growing acknowledgment that foreclosure prevention efforts will fail to reach millions of borrowers over the next few years.
“This is a graceful way to move on with their lives instead of being foreclosed on and being evicted from their homes,” said Sanjiv Das, chief executive of CitiMortgage.
The Citigroup plan attempts to address some common industry complaints, including borrowers who leave their homes in disarray after foreclosure, requiring lenders to spend thousands of dollars fixing up the property before putting it on the market. Also, homeowners who owe far more than their homes are worth increasingly are choosing to “strategically default,” even though they can afford to pay their mortgage. The new program gives CitiMortgage more control over when distressed homes are put up for sale, bypassing clogged courthouses that have slowed the foreclosure process in many parts of the country.
By avoiding a glut of foreclosures that could hit the housing market within the next 16 to 18 months, the program – if it is replicated throughout the industry – could help prevent another dip in home prices, Das said.
It would be a more orderly process “than if all of the foreclosed properties came crashing at some point in the cycle,” he said.
Other initiatives have also emerged for borrowers likely to lose their homes. Fannie Mae and Freddie Mac, the mortgage financing companies, developed programs allowing former homeowners to become renters after a foreclosure or other proceedings. As part of its federal foreclosure prevention program, known as Making Home Affordable, the Treasury Department announced late last year that lenders would be eligible for $1,000 in exchange for allowing borrowers to sell their home in a short sale. In such deals, the borrower sells the home for less than the outstanding mortgage, and the lender forgives the difference.
Moody’s Economy.com has forecast that the number of short sales and transactions in which borrowers surrender their deed in lieu of foreclosure will increase more than 50 percent, to about 490,000, this year. That is just a fraction of the 1.9 million homeowners Moody’s has forecast will lose their homes to foreclosure this year, up from 1.7 million last year.
But lenders have struggled to make many of these programs effective. The short sale is often lengthy and cumbersome for homeowners. In some cases, borrowers have second liens on the property, which can hang up the process. And lenders are sometimes suspicious of the potential for fraud if the home is sold cheap to a friend or family member of the borrower.
It’s unclear how rental programs for former homeowners are working. Fannie Mae launched its “Deed for Lease” program in November, offering borrowers a 12-month lease in return for turning over the keys to their former home and maintaining the property. A company spokeswoman said that it was too early to judge the program’s success, but that former homeowners who surrender their deed to avoid foreclosure – numbering nearly 2,000 through the third quarter of last year – would be eligible. Freddie Mac’s year-old program targets former homeowners after their foreclosure, offering them a month-to-month lease. It has not released specific data on how many homeowners have chosen this option.
Citigroup’s program goes further. It targets delinquent homeowners who do not qualify for mortgage relief. During the time the borrower is still in the home, they must continue to pay utilities, but in some cases, the bank may help cover some of the taxes, insurance or homeowner association fees. The borrower would also be eligible for transition counseling to help find a new home, and a minimum of $1,000 to help offset moving costs.
If there is significant demand for the program, Citigroup will expand it, Das said. “There might be complications that we haven’t thought about,” he said. “What happens if they don’t turn over the keys after six months or they don’t maintain their house like we would like them to maintain their house?”
Copyright © 2010 washingtonpost.com
Wednesday, February 10, 2010
Fla. Legislature: Foreclosure fight develops
The Main Street versus Wall Street fight that has consumed national politics for much of the last year has made its way to Florida with two lawmakers pushing a proposed “Foreclosure Bill of Rights” while bankers are shopping a bill to do away with legal proceedings in foreclosures altogether.
The battle is playing out on the watch of Senate President Jeff Atwater, a banker by trade, who suggested that any pro-bank legislation that puts people out of homes more quickly would likely be a long shot.
Sen. Dave Aronberg, D-Greenacres, and Rep. Darren Soto, D-Orlando, announced Tuesday their “homeowners’ defense legislation” (SB 1778), which they say would pre-empt the possible eviction of tens of thousands of Floridians from their homes by requiring mediation, and for home loans to be renegotiated at current values. They said they filed the measure in response to an initiative, backed by the Florida Bankers Association, which would create a non-judicial foreclosure system that speeds up foreclosures to 90 days.
“It is fundamental to our economic recovery that we resolve the foreclosure crisis in the state of Florida and there are two vastly different visions out there,” Soto said during a news conference at the Capitol. “While the banks seek to avoid judicial process altogether, allow 90 days and show our Floridians the door with no incentive to settle, we’re here to say, ‘no.’ We will not allow a half million Floridians to be kicked out on the street. We will not allow bailout, spend-happy banks to dictate our agenda here in Tallahassee, and we will not allow the trampling of the rights of Floridians for mere convenience.”
Aronberg, who is running for attorney general, agreed, saying that removing judges from foreclosure proceedings would hurt vulnerable populations in Florida, particularly seniors and residents who don’t speak English.
“It’s something that’s very dangerous, especially with the language barrier,” Aronberg said during the news conference. “You could get a letter and not understand the letter, or you could be a senior citizen and have someone as your caretaker, and you would never even have been notified of that letter. And within 90 days, your home is gone.”
He said that the right to go to court is “something that is engrained, not in our culture here in Florida, but in our constitution,” and added that the bill would help the record number of residents who faced foreclosure last year in the state.
“This will help homeowners who have deflated home values and inflated mortgages, (those) who are at the mercy of these large institutions who helped create the economic crisis through their own reckless behaviors,” Aronberg said.
Separate analyses found recently that foreclosure court filings across the state rose last year by just more than 30,000 and overall foreclosures in Florida leaped 34 percent in 2009. The state posted the third highest rate in the nation for the year.
Numbers such as those are why Florida Bankers Association Director of Government Affairs Anthony DiMarco said the organization was proposing a move to a non-judicial foreclosure process, which he said is used in 37 states.
“Foreclosures are taking way to long,” DiMarco said in a telephone interview. “Courts are taking some 12 months to 24 months to get a foreclosure done. In the meantime, the houses may be sitting there becoming eyesores, and neighbors don’t like that (and) the condo associations and homeowners associations don’t like that because they’re not getting paid. Courts are backlogged because there are so many foreclosure cases sitting on the books.”
DiMarco said the association has not found a sponsor for its bill yet. He added that bankers are feeling the brunt of the foreclosure crisis from all sides, citing pressure from consumer advocates to ease up on evictions.
“We’re getting squeezed because people say we shouldn’t foreclose too fast and people like the condo associations and local governments say we’re taking too long because they don’t want to take care of property,” he said.
But Senate President Atwater, who is running for chief financial officer in part on his experience as a banker, indicated Tuesday that the foreclosure fight might be premature. Atwater said in an interview with the News Service that he’s wary of any idea that doesn’t give homeowners a chance to keep their house, though he didn’t rule out a system that tries to find ways to speed the process up.
“One of the first things any banker is taught is, you never want to take back the collateral. … You’re in the business to work with someone,” said Atwater, R-North Palm Beach. He rejected the idea that because of his profession the bankers may get more consideration.
If anything is done, “it will not be done in the spirit of benefiting the bankers,” the president said. “We’re not going to try to accelerate someone losing their home” without “some measure of fairness” to the homeowner.
However, Atwater also noted that condominium and homeowners associations have concerns, and they’re pelting lawmakers with complaints about delinquent or foreclosed units that no longer pay association dues, overburdening everyone else in the community.
Source: News Service of Florida,
The battle is playing out on the watch of Senate President Jeff Atwater, a banker by trade, who suggested that any pro-bank legislation that puts people out of homes more quickly would likely be a long shot.
Sen. Dave Aronberg, D-Greenacres, and Rep. Darren Soto, D-Orlando, announced Tuesday their “homeowners’ defense legislation” (SB 1778), which they say would pre-empt the possible eviction of tens of thousands of Floridians from their homes by requiring mediation, and for home loans to be renegotiated at current values. They said they filed the measure in response to an initiative, backed by the Florida Bankers Association, which would create a non-judicial foreclosure system that speeds up foreclosures to 90 days.
“It is fundamental to our economic recovery that we resolve the foreclosure crisis in the state of Florida and there are two vastly different visions out there,” Soto said during a news conference at the Capitol. “While the banks seek to avoid judicial process altogether, allow 90 days and show our Floridians the door with no incentive to settle, we’re here to say, ‘no.’ We will not allow a half million Floridians to be kicked out on the street. We will not allow bailout, spend-happy banks to dictate our agenda here in Tallahassee, and we will not allow the trampling of the rights of Floridians for mere convenience.”
Aronberg, who is running for attorney general, agreed, saying that removing judges from foreclosure proceedings would hurt vulnerable populations in Florida, particularly seniors and residents who don’t speak English.
“It’s something that’s very dangerous, especially with the language barrier,” Aronberg said during the news conference. “You could get a letter and not understand the letter, or you could be a senior citizen and have someone as your caretaker, and you would never even have been notified of that letter. And within 90 days, your home is gone.”
He said that the right to go to court is “something that is engrained, not in our culture here in Florida, but in our constitution,” and added that the bill would help the record number of residents who faced foreclosure last year in the state.
“This will help homeowners who have deflated home values and inflated mortgages, (those) who are at the mercy of these large institutions who helped create the economic crisis through their own reckless behaviors,” Aronberg said.
Separate analyses found recently that foreclosure court filings across the state rose last year by just more than 30,000 and overall foreclosures in Florida leaped 34 percent in 2009. The state posted the third highest rate in the nation for the year.
Numbers such as those are why Florida Bankers Association Director of Government Affairs Anthony DiMarco said the organization was proposing a move to a non-judicial foreclosure process, which he said is used in 37 states.
“Foreclosures are taking way to long,” DiMarco said in a telephone interview. “Courts are taking some 12 months to 24 months to get a foreclosure done. In the meantime, the houses may be sitting there becoming eyesores, and neighbors don’t like that (and) the condo associations and homeowners associations don’t like that because they’re not getting paid. Courts are backlogged because there are so many foreclosure cases sitting on the books.”
DiMarco said the association has not found a sponsor for its bill yet. He added that bankers are feeling the brunt of the foreclosure crisis from all sides, citing pressure from consumer advocates to ease up on evictions.
“We’re getting squeezed because people say we shouldn’t foreclose too fast and people like the condo associations and local governments say we’re taking too long because they don’t want to take care of property,” he said.
But Senate President Atwater, who is running for chief financial officer in part on his experience as a banker, indicated Tuesday that the foreclosure fight might be premature. Atwater said in an interview with the News Service that he’s wary of any idea that doesn’t give homeowners a chance to keep their house, though he didn’t rule out a system that tries to find ways to speed the process up.
“One of the first things any banker is taught is, you never want to take back the collateral. … You’re in the business to work with someone,” said Atwater, R-North Palm Beach. He rejected the idea that because of his profession the bankers may get more consideration.
If anything is done, “it will not be done in the spirit of benefiting the bankers,” the president said. “We’re not going to try to accelerate someone losing their home” without “some measure of fairness” to the homeowner.
However, Atwater also noted that condominium and homeowners associations have concerns, and they’re pelting lawmakers with complaints about delinquent or foreclosed units that no longer pay association dues, overburdening everyone else in the community.
Source: News Service of Florida,
Clients access MLS through iPhone app
Realtor.com offers an iPhone app that allows mobile users to access home listings nearby, thanks, in part, to the iPhone’s built-in GPS. One Florida broker, however, says that he has taken the iPhone application (app) a step further by allowing users to tap into the local MLS.
The National Association of Realtors spent a number of years developing its Virtual Office Website (VOW) (http://www.realtor.org/law_and_policy/doj/nar_doj) policy, based in part on a lawsuit filed against it by the U.S. Department of Justice. The issue raised a number of legal questions as existing MLS rules clashed with emerging technology. Now that websites are engrained in the fabric of daily business, the introduction of an MLS iPhone app represents newer technology, and a new way to access MLS listings.
The Florida broker’s iPhone app is free to download. Once loaded into an iPhone, the broker claims users can review his featured listings and access his website in addition to searching the entire MLS (Multiple Listing Service). Searches can be personalized based on price range, area, number of bedrooms and other criteria, including foreclosures and short sales. Users can save listings and review them later on their personal computer.
The app includes information about local architecture, tourism, travel and relocation. Users can contact the broker directly about all listings by using the app.
© 2010 Florida Realtors®
The National Association of Realtors spent a number of years developing its Virtual Office Website (VOW) (http://www.realtor.org/law_and_policy/doj/nar_doj) policy, based in part on a lawsuit filed against it by the U.S. Department of Justice. The issue raised a number of legal questions as existing MLS rules clashed with emerging technology. Now that websites are engrained in the fabric of daily business, the introduction of an MLS iPhone app represents newer technology, and a new way to access MLS listings.
The Florida broker’s iPhone app is free to download. Once loaded into an iPhone, the broker claims users can review his featured listings and access his website in addition to searching the entire MLS (Multiple Listing Service). Searches can be personalized based on price range, area, number of bedrooms and other criteria, including foreclosures and short sales. Users can save listings and review them later on their personal computer.
The app includes information about local architecture, tourism, travel and relocation. Users can contact the broker directly about all listings by using the app.
© 2010 Florida Realtors®
Underwater mortgages halt some move-up buyers
Chris and Candice Basso would like to move up to a larger home this spring, taking advantage of a federal tax credit worth up to $6,500 for repeat home buyers. But even a big tax credit won’t be enough to lift them into a bigger, better home. The Centreville, Va., couple are trapped in a two-bedroom townhouse that’s worth less than their unpaid mortgage.
They face the same predicament with a condo that they own and rent out. Unable to sell either property for what they owe and with their equity wiped out, a new mortgage is out of the question. Chris Basso fears it may be years before they can buy a bigger place – a real concern, because Candice is scheduled to give birth to their first child in August, and their townhouse already feels cramped.
“I’ll have a teenager by the time housing values come back up and I can get out of my house,” says Basso. With a baby coming, “We’re trying to figure out where to fit all the furniture. We still scour the home listings every day just to see what we could afford now. It’s heartbreaking to see what we could get today with our housing dollar now, but we’re stuck.”
Stuck, like millions of other homeowners, also underwater on their mortgages, thanks to sinking home prices.
The plight of people such as the Bassos is a big worry for the housing industry as the crucial spring season nears, when nearly a third of the year’s sales are made. Despite the tax credit – which expires April 30 – and 30-year fixed mortgage rates that are still hovering around 5 percent, it’s an open question whether enough move-up buyers will enter the market this spring to bolster housing’s fledgling recovery and energize a broader economic rebound.
“For a well-functioning market, you have to have that trade-up buyer,” says Mark Zandi, chief economist at Moody’s Economy.com. Zandi estimates that more than 15 million homeowners are underwater – about one in five, he says. First American CoreLogic, using a different methodology, estimates 10.7 million residential properties had negative equity at the end of September, or almost one in four, by its reckoning. Either way, a substantial number of homeowners are financially unable to enter the homebuying market just now.
“Trade-up buyers are normally a big chunk of the market,” Zandi says. “We’re going into (the spring market) with less steam.” Move-up buyers made up 53 percent of 2009’s shrunken market, down from about 60 percent in recent years, according to the National Association of Realtors (NAR). If they don’t return in larger numbers, the inventory of mid- to high-price homes will remain high – dragging down home values overall.
Congress recognized the importance of move-up homebuyers when it renewed and expanded last year’s popular first-time buyers credit to cover people who have bought homes before. Under the credit’s rules, people who owned the home being sold or vacated as their primary residence for five-consecutive years in the past eight are eligible for a credit of up to $6,500 on the purchase of a replacement home. The deadlines are tight: Purchase contracts must be signed by April 30, and closings have to occur by June 30. The NAR estimates 1.5 million homeowners will take advantage of the credit, but there’s no way to tell how many deals would have occurred without the credit.
Underwater homeowners aren’t the only ones unable to benefit from the credit. Many potential buyers in higher-price markets such as New York, Boston, Hawaii and San Francisco won’t qualify because their incomes are too high. Under the income limits, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
“Here in New York and a lot of major metro areas, they will blow that income cap,” says Edward Ades, a vice president with mortgage brokerage Universal Mortgage.
Some real estate professionals say buyers who expected to benefit from the tax credit are frustrated when they discover they aren’t eligible. “A lot of people think it will be great, and then they look into it and find out they won’t get it. A lot of these people are young professionals,” says Janice Leis, a broker in Boca Raton, Fla. “It’s like false advertising. They get out with their hopes up, and they get their hopes dashed.”
Good times for first-timers
The past year has been good for first-time homebuyers. The collapse in home prices, low interest rates and last year’s first-time buyers tax credit made buying a home more affordable than it’s been in years. But for people who bought homes at or near the market peak in 2005, moving out and up to more expensive houses has been harder. Local market figures bear this out: Sales of entry-level homes are booming, while sales of pricier homes are sliding.
In the Los Angeles metro area, sales of entry-level homes at a median price of $248,737 soared from 28 percent of transactions in November 2007 to nearly 46 percent in 2009, according to Zillow.com. Buyers are flocking to snatch up homes in that price range, which include 900-square-foot homes in the heart of the city with palm trees in the front yard, and two-bedroom, 890-square-foot condos in the beachside neighborhood of Playa del Rey.
“At the low end, there is absolutely activity,” says Carol Grogan, with Prudential California Realty. “It’s amazing. If it’s under $500,000, especially if it’s a house, there’s high demand. It’s crazy.”
But sales of mid- and high-price homes have dropped sharply. From November 2007 to November 2009, homes at a median price of $408,417 have slid from 37 percent of transactions to about 32 percent. Homes priced at a median of $707,543 have fallen from about 35 percent to 23 percent, according to Zillow. About a fifth of the homes in the Los Angeles metro area, covering Long Beach and Glendale, are underwater, Moody’s Economy.com’s data show.
It’s a similar situation in the Seattle metro area, where a fifth of the homes are underwater. “We’re seeing more activity in the lower level,” says Cathy Millan, a Realtor with Windermere Real Estate in Seattle. “There have been a lot of first-time homebuyers coming through, but the higher end is sitting.” Sales of entry-level homes at a median price of $209,952 jumped from 37 percent in November 2007 to 40 percent in November 2009, according to Zillow.com. Those priced at a median of $478,282 slipped from 32 percent in November 2007 to 30 percent in November 2009.
Signs of interest
Despite its shortcomings, the tax credit may be having some impact. Realtors say buyers are talking about both the move-up tax credit, as well as the credit of up to $8,000 for first-time buyers, when they look at homes. Some say the tax credit is launching the spring buying season unusually early this year.
Charlie Russo, a sales counselor with Plantation Homes, a home builder in Firethorne, Texas, says there’s no question the credits have pulled some buyers into the market.
“The low interest rates really have people in the market, and then the money (from the tax credit) is a huge incentive for people who weren’t looking right now,” Russo says. “It’s a perfect storm of incentives for them. No one ever paid me to buy a house.”
The tax credit is a motivator for Marifran Manzo-Ritchie, who says now seems like the perfect time for her to sell her home and buy another place. It seems perfect because the home she bought in Phoenixville, Pa., for $150,000 seven years ago is now worth about $280,000 following the revitalization of the former steel town. Plus, her family, with three children, needs more space. If she closes on a new home by June 30 as she believes she’ll be able to, she’ll qualify for the move-up home buyer tax credit. She and her husband are already working with a Realtor to list the house this month.
“Our home, which once seemed so big, seems very, very small now. And our property value has increased, so we have the equity,” says Manzo-Ritchie, 34, who runs a marketing agency from home. “But it’s the tax credit that really lit the fire under us.”
© Copyright 2010 USA TODAY, a division of Gannett Co. Inc
They face the same predicament with a condo that they own and rent out. Unable to sell either property for what they owe and with their equity wiped out, a new mortgage is out of the question. Chris Basso fears it may be years before they can buy a bigger place – a real concern, because Candice is scheduled to give birth to their first child in August, and their townhouse already feels cramped.
“I’ll have a teenager by the time housing values come back up and I can get out of my house,” says Basso. With a baby coming, “We’re trying to figure out where to fit all the furniture. We still scour the home listings every day just to see what we could afford now. It’s heartbreaking to see what we could get today with our housing dollar now, but we’re stuck.”
Stuck, like millions of other homeowners, also underwater on their mortgages, thanks to sinking home prices.
The plight of people such as the Bassos is a big worry for the housing industry as the crucial spring season nears, when nearly a third of the year’s sales are made. Despite the tax credit – which expires April 30 – and 30-year fixed mortgage rates that are still hovering around 5 percent, it’s an open question whether enough move-up buyers will enter the market this spring to bolster housing’s fledgling recovery and energize a broader economic rebound.
“For a well-functioning market, you have to have that trade-up buyer,” says Mark Zandi, chief economist at Moody’s Economy.com. Zandi estimates that more than 15 million homeowners are underwater – about one in five, he says. First American CoreLogic, using a different methodology, estimates 10.7 million residential properties had negative equity at the end of September, or almost one in four, by its reckoning. Either way, a substantial number of homeowners are financially unable to enter the homebuying market just now.
“Trade-up buyers are normally a big chunk of the market,” Zandi says. “We’re going into (the spring market) with less steam.” Move-up buyers made up 53 percent of 2009’s shrunken market, down from about 60 percent in recent years, according to the National Association of Realtors (NAR). If they don’t return in larger numbers, the inventory of mid- to high-price homes will remain high – dragging down home values overall.
Congress recognized the importance of move-up homebuyers when it renewed and expanded last year’s popular first-time buyers credit to cover people who have bought homes before. Under the credit’s rules, people who owned the home being sold or vacated as their primary residence for five-consecutive years in the past eight are eligible for a credit of up to $6,500 on the purchase of a replacement home. The deadlines are tight: Purchase contracts must be signed by April 30, and closings have to occur by June 30. The NAR estimates 1.5 million homeowners will take advantage of the credit, but there’s no way to tell how many deals would have occurred without the credit.
Underwater homeowners aren’t the only ones unable to benefit from the credit. Many potential buyers in higher-price markets such as New York, Boston, Hawaii and San Francisco won’t qualify because their incomes are too high. Under the income limits, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
“Here in New York and a lot of major metro areas, they will blow that income cap,” says Edward Ades, a vice president with mortgage brokerage Universal Mortgage.
Some real estate professionals say buyers who expected to benefit from the tax credit are frustrated when they discover they aren’t eligible. “A lot of people think it will be great, and then they look into it and find out they won’t get it. A lot of these people are young professionals,” says Janice Leis, a broker in Boca Raton, Fla. “It’s like false advertising. They get out with their hopes up, and they get their hopes dashed.”
Good times for first-timers
The past year has been good for first-time homebuyers. The collapse in home prices, low interest rates and last year’s first-time buyers tax credit made buying a home more affordable than it’s been in years. But for people who bought homes at or near the market peak in 2005, moving out and up to more expensive houses has been harder. Local market figures bear this out: Sales of entry-level homes are booming, while sales of pricier homes are sliding.
In the Los Angeles metro area, sales of entry-level homes at a median price of $248,737 soared from 28 percent of transactions in November 2007 to nearly 46 percent in 2009, according to Zillow.com. Buyers are flocking to snatch up homes in that price range, which include 900-square-foot homes in the heart of the city with palm trees in the front yard, and two-bedroom, 890-square-foot condos in the beachside neighborhood of Playa del Rey.
“At the low end, there is absolutely activity,” says Carol Grogan, with Prudential California Realty. “It’s amazing. If it’s under $500,000, especially if it’s a house, there’s high demand. It’s crazy.”
But sales of mid- and high-price homes have dropped sharply. From November 2007 to November 2009, homes at a median price of $408,417 have slid from 37 percent of transactions to about 32 percent. Homes priced at a median of $707,543 have fallen from about 35 percent to 23 percent, according to Zillow. About a fifth of the homes in the Los Angeles metro area, covering Long Beach and Glendale, are underwater, Moody’s Economy.com’s data show.
It’s a similar situation in the Seattle metro area, where a fifth of the homes are underwater. “We’re seeing more activity in the lower level,” says Cathy Millan, a Realtor with Windermere Real Estate in Seattle. “There have been a lot of first-time homebuyers coming through, but the higher end is sitting.” Sales of entry-level homes at a median price of $209,952 jumped from 37 percent in November 2007 to 40 percent in November 2009, according to Zillow.com. Those priced at a median of $478,282 slipped from 32 percent in November 2007 to 30 percent in November 2009.
Signs of interest
Despite its shortcomings, the tax credit may be having some impact. Realtors say buyers are talking about both the move-up tax credit, as well as the credit of up to $8,000 for first-time buyers, when they look at homes. Some say the tax credit is launching the spring buying season unusually early this year.
Charlie Russo, a sales counselor with Plantation Homes, a home builder in Firethorne, Texas, says there’s no question the credits have pulled some buyers into the market.
“The low interest rates really have people in the market, and then the money (from the tax credit) is a huge incentive for people who weren’t looking right now,” Russo says. “It’s a perfect storm of incentives for them. No one ever paid me to buy a house.”
The tax credit is a motivator for Marifran Manzo-Ritchie, who says now seems like the perfect time for her to sell her home and buy another place. It seems perfect because the home she bought in Phoenixville, Pa., for $150,000 seven years ago is now worth about $280,000 following the revitalization of the former steel town. Plus, her family, with three children, needs more space. If she closes on a new home by June 30 as she believes she’ll be able to, she’ll qualify for the move-up home buyer tax credit. She and her husband are already working with a Realtor to list the house this month.
“Our home, which once seemed so big, seems very, very small now. And our property value has increased, so we have the equity,” says Manzo-Ritchie, 34, who runs a marketing agency from home. “But it’s the tax credit that really lit the fire under us.”
© Copyright 2010 USA TODAY, a division of Gannett Co. Inc
4 reasons to sell now
Selling a property in this tough market can seem like a challenge. Here are four factors that actually make this a good time to post a For-Sale sign:
• Sell low and buy low. Because all property values are down, the loss on the property a homeowner sells is really only a paper loss because the next property he buys also will be a bargain. If he buys smartly, when prices come back up in a few years, he’ll be in better shape.
• Downpayment help is widely available. While nothing-down loans have disappeared, it’s easy to find downpayment assistance for lower-income and first-time homebuyers. Programs vary all over the country, but one good way to find them is to search online for “downpayment assistance programs” and the name of your region.
• Your Uncle Sam has money to share. Besides the $8,000 first-time homebuyer tax credit and the $6,500 move-up credit, there are an array of energy tax credits that can make home improvements pay off in cash.
• Good help is available. Really talented real estate practitioners, contractors and designers are available and eager for business.
Source: McClatchy Tribune, Kate Forgach (02/07/2010)
© Copyright 2010 INFORMATION, INC. Bethesda, MD
• Sell low and buy low. Because all property values are down, the loss on the property a homeowner sells is really only a paper loss because the next property he buys also will be a bargain. If he buys smartly, when prices come back up in a few years, he’ll be in better shape.
• Downpayment help is widely available. While nothing-down loans have disappeared, it’s easy to find downpayment assistance for lower-income and first-time homebuyers. Programs vary all over the country, but one good way to find them is to search online for “downpayment assistance programs” and the name of your region.
• Your Uncle Sam has money to share. Besides the $8,000 first-time homebuyer tax credit and the $6,500 move-up credit, there are an array of energy tax credits that can make home improvements pay off in cash.
• Good help is available. Really talented real estate practitioners, contractors and designers are available and eager for business.
Source: McClatchy Tribune, Kate Forgach (02/07/2010)
© Copyright 2010 INFORMATION, INC. Bethesda, MD
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