A now-expired homebuyer tax credit and low mortgage rates helped boost sales of previously occupied homes in April. The improvements aren't likely to last.
The tax credit is now gone. And economists caution that Americans are facing so many financial obstacles that falling rates alone won't be enough to lift the housing market.
"Although mortgage rates have fallen sharply, the combination of high unemployment, heavy indebtedness and tight credit suggest to us that demand will stumble," said Paul Dales, an economist at Capital Economics.
Sales of previously owned homes rose 7.6 percent to a seasonally adjusted annual rate of 5.77 million, the National Association of Realtors said Monday.
The sales increase sparked a rise in home prices. The median price for a new home rose to $173,100, up 4 percent from a year ago.
Mortgage rates fell last week to the lowest level for the year. The average rate on a 30-year loan ticked up slightly to 4.87 percent on Monday, according to financial publisher HSH Associates. That was just above the record low of 4.83 percent last December,
Worries over the European debt crisis have sent investors rushing into the safety of U.S. government bonds, whose yields affect some mortgage rates.
Rates had been expected to rise after the Federal Reserve ended a mortgage-buying program that pushed rates down to record lows last year. But the uncertainty in Europe has helped drive rates down for anyone who's closing a home purchase or looking to refinance. Rates on 30-year home loans are generally tied to the yield on 10-year Treasury bonds.
Still, Americans with adjustable rate mortgages could see slightly higher rates. About 70 percent of such loans reset based on the London Interbank Offered Rate. That's the rate large international banks use when extending short-term loans to each other. This rate has been rising because of the turmoil in Europe. It's still well below year-ago levels.
In a healthier economy, extraordinarily low mortgage rates would pump up demand for homes. But economists say the job market is too weak and credit too tight.
"Having a good mortgage rate helps affordability, but we've had low mortgage rates for a long time now and sales have stayed below 5 million, except when the tax credit was involved," said Patrick Newport, an economist at IHS Global Insight.
The tax credit's impact is expected to linger for a couple of months. Buyers had to have a signed sales contract by April 30. But they have until the end of June to complete their sales. First-time buyers were eligible for a tax credit of up to $8,000. Current owners who bought and moved into another home could qualify for a credit of up to $6,500.
The first-time buyer's credit was a boon to Tiffani Burleson, 29, and her husband Tony. They are on track to buy a four-bedroom $202,000 home outside Portland, Ore., by the end of June.
The couple saved for nearly a year to afford the 3.5 percent downpayment required by their Federal Housing Administration-backed mortgage. They even moved in with friends for several months.
Without the tax credit, she said, "We would have eventually done it, but we would have waited a lot longer."
The annual rate of home sales remains 20 percent below its peak in September 2005. But it's 27 percent above the bottom, set at the start of last year.
April's sales rose in all parts of the country except the West. The gains were led by a 21 percent jump in the Northeast and a 10 percent rise in the Midwest. Sales also rose nearly 9 percent in the South. Sales in the West dropped by 6.2 percent from March.
The big question facing the housing market is what happens now that the government's tax credits have expired.
"What really matters right now is consumer confidence and job growth and home prices not going down much from here," said Josh Levin, a homebuilding analyst at Citigroup Inc. "That really matters a lot more than rates."
Even with April's rise in sales, the market is saturated with homes and growing. It would take 8.4 months to sell all the homes on the market at last month's sales pace. By contrast, a healthy supply would take six months to sell.
The number of homes on the market is expected to grow further as banks put more foreclosed properties up for sale.
"With supply growing and demand expected to fade, it is a bad picture for prices," wrote Tim Quinlan, an economist with Wells Fargo Securities.
AP Real Estate Writers J.W. Elphinstone in New York and Alex Veiga in Los Angeles contributed to this report.
Source: Copyright © 2010 The Associated Press, Alan Zibel and Martin Crutsinger, AP business writers. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Tuesday, May 25, 2010
Financial legislation could bailout 5M homeowners
The Senate version of the Wall Street Reform Act includes a provision to help the 5.5 million homeowners facing foreclosure. The House had a similar provision in its version of the Act, and the two versions must now be reconciled before a final vote. The Obama Administration has also backed the homeowner aid.
The plan, which provides $3 billion in TARP funds to unemployed homeowners, is patterned after the Pennsylvania's Homeowner's Emergency Mortgage Assistance Program (HEMAP), which has provided $236 million to help unemployed workers to stave off the foreclosure process.
Under the Senate-passed bill, homeowners would be able to borrow up to $50,000 to assist them with mortgage payments, providing the homeowner has a reasonable prospect of resuming mortgage payments within 24 months.
"Americans need help, 8 percent of all mortgage holders are currently at risk of losing their homes and that is unacceptable," says Congressman Chaka Fattah (D-Pa.), who introduced HEMA in the House. "I'm encouraged … that families won't be faced with the double blow of being unemployed and homeless.
"The additional funds will certainly be welcomed by the nation's mayors who work daily to prevent mortgage foreclosures that are still ravaging too many families and neighborhoods in our nation," says John Cochran, CEO and executive director of the U.S. Conference of Mayors.
Lawmakers hope to have a final measure to the president for his signature before Congress' July 4 recess.
Source: © 2010 Florida Realtors®
The plan, which provides $3 billion in TARP funds to unemployed homeowners, is patterned after the Pennsylvania's Homeowner's Emergency Mortgage Assistance Program (HEMAP), which has provided $236 million to help unemployed workers to stave off the foreclosure process.
Under the Senate-passed bill, homeowners would be able to borrow up to $50,000 to assist them with mortgage payments, providing the homeowner has a reasonable prospect of resuming mortgage payments within 24 months.
"Americans need help, 8 percent of all mortgage holders are currently at risk of losing their homes and that is unacceptable," says Congressman Chaka Fattah (D-Pa.), who introduced HEMA in the House. "I'm encouraged … that families won't be faced with the double blow of being unemployed and homeless.
"The additional funds will certainly be welcomed by the nation's mayors who work daily to prevent mortgage foreclosures that are still ravaging too many families and neighborhoods in our nation," says John Cochran, CEO and executive director of the U.S. Conference of Mayors.
Lawmakers hope to have a final measure to the president for his signature before Congress' July 4 recess.
Source: © 2010 Florida Realtors®
Florida justices refuse to hear homeowner tax case
A pair of state constitutional amendments that give tax breaks to primary homeowners survived another legal challenge Monday as the Florida Supreme Court refused to hear the case.
That decision, though, may not be the end of the issue.
An appeal to the U.S. Supreme Court is likely, said Florida State University President Emeritus Talbot "Sandy" D'Alemberte, a lawyer for taxpayers who filed the lawsuit.
"The Supreme Court does not take jurisdiction in very many cases, but that's probably where this issue ought to be decided," he said. D'Alemberte said he hadn't yet discussed an appeal with his clients.
The Florida justices' unanimous decision lets stand rulings by a trial judge and appeal court upholding the Save Our Homes Amendment, which took effect in 1995, and Amendment 1, which was effective in 2008.
Save Our Homes limits annual property tax assessment increases to 3 percent for primary homeowners. Amendment 1 has a "portability' provision letting those homeowners take at least part of their accumulated tax break to a new home.
Four recently arrived Florida homeowners – Robert and Katherine Bruner of Tallahassee, Deborah Plitnick of Port Charlotte and Stanley Chamberlin of North Palm Beach – filed the challenge.
They get Save Our Home benefits, but their tax savings are significantly smaller than those of longtime homeowners.
The amendments discriminate against newcomers and those who own other types of property including second homes and businesses, argued D'Alemberte, also a former American Bar Association president.
The lawsuit is one of three that have challenged Save Our Homes, which got on the ballot through a petition drive.
Lee County Property Appraiser Ken Wilkinson, who led the petition campaign, said he was not surprised by the latest ruling.
"I don't think they've had one victory in any of the cases," Wilkinson said. "I think a lot of their arguments have lost wind due to recapture."
Save Our Homes limits tax increases when real estate values go up, but the state's recapture rule has the opposite effect. It raises assessments by up to 3 percent when values drop, which they've been doing in recent years. That's reduced some of the advantage longtime primary homeowners received from Save Our Homes.
Another case that focuses on Save Our Homes and was filed by out-of-state property owners also is awaiting a Florida Supreme Court decision. The third case, attacking both amendments and also filed by out-of-state residents, is back in trial court after the 1st District Court of Appeal ruled it had been improperly dismissed.
Source: Copyright © 2010 The Associated Press, Bill Kaczor, Associated Press writer.
That decision, though, may not be the end of the issue.
An appeal to the U.S. Supreme Court is likely, said Florida State University President Emeritus Talbot "Sandy" D'Alemberte, a lawyer for taxpayers who filed the lawsuit.
"The Supreme Court does not take jurisdiction in very many cases, but that's probably where this issue ought to be decided," he said. D'Alemberte said he hadn't yet discussed an appeal with his clients.
The Florida justices' unanimous decision lets stand rulings by a trial judge and appeal court upholding the Save Our Homes Amendment, which took effect in 1995, and Amendment 1, which was effective in 2008.
Save Our Homes limits annual property tax assessment increases to 3 percent for primary homeowners. Amendment 1 has a "portability' provision letting those homeowners take at least part of their accumulated tax break to a new home.
Four recently arrived Florida homeowners – Robert and Katherine Bruner of Tallahassee, Deborah Plitnick of Port Charlotte and Stanley Chamberlin of North Palm Beach – filed the challenge.
They get Save Our Home benefits, but their tax savings are significantly smaller than those of longtime homeowners.
The amendments discriminate against newcomers and those who own other types of property including second homes and businesses, argued D'Alemberte, also a former American Bar Association president.
The lawsuit is one of three that have challenged Save Our Homes, which got on the ballot through a petition drive.
Lee County Property Appraiser Ken Wilkinson, who led the petition campaign, said he was not surprised by the latest ruling.
"I don't think they've had one victory in any of the cases," Wilkinson said. "I think a lot of their arguments have lost wind due to recapture."
Save Our Homes limits tax increases when real estate values go up, but the state's recapture rule has the opposite effect. It raises assessments by up to 3 percent when values drop, which they've been doing in recent years. That's reduced some of the advantage longtime primary homeowners received from Save Our Homes.
Another case that focuses on Save Our Homes and was filed by out-of-state property owners also is awaiting a Florida Supreme Court decision. The third case, attacking both amendments and also filed by out-of-state residents, is back in trial court after the 1st District Court of Appeal ruled it had been improperly dismissed.
Source: Copyright © 2010 The Associated Press, Bill Kaczor, Associated Press writer.
Monday, May 24, 2010
Potential homebuyers eye oil slick
Buyers of second homes are watching the growing oil slick in the Gulf of Mexico and asking for guarantees before buying a Bay County beach home, Realtors say.
"They are trying to protect themselves," said Tom Neubauer, president of Neubauer Real Estate.
Several Realtors and brokers report homebuyers either are shying away from buying homes on the beach or requiring a 60-day guarantee that oil won't affect the beach before signing on the dotted line. The small trend – Realtors reported only a handful of cases – developed after the oil rig Deepwater Horizon sank and the well began leaking more than 210,000 gallons of oil daily into the gulf about a month ago. BP, the company responsible for the leak, is siphoning oil from the leak, but oil still is gushing into the water.
No traces of oil have washed up on Bay County's sugar-white sand. Still, some investors are canceling buys, especially of condominiums, Commander Century 21 Real Estate Realtor Charlie Commander said.
"Personally, I think I need to call BP and yell at them," Commander said.
Prudential Shimmering Sands Realty Realtor Art Lester said people are concerned about buying property on the beach, and his company is seeing more beach homes being listed for sale.
Even the St. Joe Co., the largest private property owner in Northwest Florida, seems concerned. Early this month, the company issued a press release announcing it has hired experts in the oil, environmental and engineering industries to develop a detailed plan to respond to any oil impact. About 70 percent of the company's property, or about 405,000 acres, is within 15 miles of the Gulf of Mexico. The company would not comment on whether the oil is affecting real estate sales and referred all questions to the company website, which includes an "Update on the Deepwater Horizon Incident."
Currently, everyone is looking at how their businesses and livelihoods are being affected by the oil slick. Homebuyers are just an extension of that, Neubauer said.
Even with some skittish buyers, Bay County's home sales are up about 7 percent over last year, Neubauer said. Realtors pointed out the oil might never affect the county.
"We've very lucky here," Commander said. "We're better situated to survive."
Source: Copyright © 2010 The News Herald, Panama City, Fla., Scarlet Sims. Distributed by McClatchy-Tribune Information Services.
"They are trying to protect themselves," said Tom Neubauer, president of Neubauer Real Estate.
Several Realtors and brokers report homebuyers either are shying away from buying homes on the beach or requiring a 60-day guarantee that oil won't affect the beach before signing on the dotted line. The small trend – Realtors reported only a handful of cases – developed after the oil rig Deepwater Horizon sank and the well began leaking more than 210,000 gallons of oil daily into the gulf about a month ago. BP, the company responsible for the leak, is siphoning oil from the leak, but oil still is gushing into the water.
No traces of oil have washed up on Bay County's sugar-white sand. Still, some investors are canceling buys, especially of condominiums, Commander Century 21 Real Estate Realtor Charlie Commander said.
"Personally, I think I need to call BP and yell at them," Commander said.
Prudential Shimmering Sands Realty Realtor Art Lester said people are concerned about buying property on the beach, and his company is seeing more beach homes being listed for sale.
Even the St. Joe Co., the largest private property owner in Northwest Florida, seems concerned. Early this month, the company issued a press release announcing it has hired experts in the oil, environmental and engineering industries to develop a detailed plan to respond to any oil impact. About 70 percent of the company's property, or about 405,000 acres, is within 15 miles of the Gulf of Mexico. The company would not comment on whether the oil is affecting real estate sales and referred all questions to the company website, which includes an "Update on the Deepwater Horizon Incident."
Currently, everyone is looking at how their businesses and livelihoods are being affected by the oil slick. Homebuyers are just an extension of that, Neubauer said.
Even with some skittish buyers, Bay County's home sales are up about 7 percent over last year, Neubauer said. Realtors pointed out the oil might never affect the county.
"We've very lucky here," Commander said. "We're better situated to survive."
Source: Copyright © 2010 The News Herald, Panama City, Fla., Scarlet Sims. Distributed by McClatchy-Tribune Information Services.
Freddie Mac: Mortgage rates hit yearly low
U.S. borrowers can get the cheapest mortgages this year, thanks to worries over European debt, and that could keep homebuyers active even after the expiration of a tax credit designed to lift sales.
Mortgage rates fell to their lowest level of the year this week as yields on U.S. government securities fell, Freddie Mac said Thursday. Fixed mortgage rates tend to follow the yield of 10-year Treasury notes.
Treasury yields sank after Germany's move this week to curtail certain kinds of short-selling spooked investors, who shifted money from risky European debt to safer U.S. securities.
A side effect of the lower Treasury rates was lower mortgage rates.
The average rate on a 30-year fixed rate mortgage dipped to 4.84 percent from 4.93 percent a week earlier, Freddie Mac said. It was the lowest level since mid-December, when rates averaged 4.81 percent.
"The timing is fortuitous," said Greg McBride, a senior financial analyst at Bankrate.com, "because home shoppers who rushed to sign their purchase contracts in late April to capture the tax credit are locking in their mortgage rates now."
New buyers were offered a credit worth up to $8,000, while current owners who bought and moved into another home could get one for up to $6,500. To receive them, buyers had to have a signed offer by April 30 and must close by the end of June.
Economists expected home sales to flag after the credit expired, but lower rates could help offset the falloff.
Pava Leyrer, president of Heritage National Mortgage in Michigan, hasn't seen buyer interest wane yet. "Rates are helping them buy more," she said.
However, strict credit requirements and negative home equity threaten to sideline borrowers hoping to refinance out of unaffordable loans. Refinancing activity isn't as robust as last year, when rates dipped below 5 percent.
"Everyone who could get in already got in," said Marc Demetriou of Residential Home Funding in Bloomingdale, N.J. The remaining borrowers may not be able to refinance under the stricter credit standards or don't have enough home equity to get approved. Mortgage delinquencies hit a record high in the first quarter, according to an industry report this week.
Could rates fall further? Yes, but that would likely be the result of further deterioration in the global economy. "Yeah, mortgage rates would drop further, but you may not have a job to qualify," Bankrate's McBride said.
Among other types of mortgages in Freddie Mac's survey, the average rate on a 15-year fixed-rate mortgage was 4.24 percent this week, down from 4.3 percent. Rates on five-year, adjustable-rate mortgages averaged 3.91 percent, down from 3.95 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4 percent from 4.02 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.
The nationwide fee for loans in Freddie Mac's survey averaged 0.7 of a point for 30-year and 15-year loans, and 0.6 of a point for 5-year and 1-year loans.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
Source: Copyright © 2010 The Associated Press, J.W. Elphinstone, AP real estate writer.
Mortgage rates fell to their lowest level of the year this week as yields on U.S. government securities fell, Freddie Mac said Thursday. Fixed mortgage rates tend to follow the yield of 10-year Treasury notes.
Treasury yields sank after Germany's move this week to curtail certain kinds of short-selling spooked investors, who shifted money from risky European debt to safer U.S. securities.
A side effect of the lower Treasury rates was lower mortgage rates.
The average rate on a 30-year fixed rate mortgage dipped to 4.84 percent from 4.93 percent a week earlier, Freddie Mac said. It was the lowest level since mid-December, when rates averaged 4.81 percent.
"The timing is fortuitous," said Greg McBride, a senior financial analyst at Bankrate.com, "because home shoppers who rushed to sign their purchase contracts in late April to capture the tax credit are locking in their mortgage rates now."
New buyers were offered a credit worth up to $8,000, while current owners who bought and moved into another home could get one for up to $6,500. To receive them, buyers had to have a signed offer by April 30 and must close by the end of June.
Economists expected home sales to flag after the credit expired, but lower rates could help offset the falloff.
Pava Leyrer, president of Heritage National Mortgage in Michigan, hasn't seen buyer interest wane yet. "Rates are helping them buy more," she said.
However, strict credit requirements and negative home equity threaten to sideline borrowers hoping to refinance out of unaffordable loans. Refinancing activity isn't as robust as last year, when rates dipped below 5 percent.
"Everyone who could get in already got in," said Marc Demetriou of Residential Home Funding in Bloomingdale, N.J. The remaining borrowers may not be able to refinance under the stricter credit standards or don't have enough home equity to get approved. Mortgage delinquencies hit a record high in the first quarter, according to an industry report this week.
Could rates fall further? Yes, but that would likely be the result of further deterioration in the global economy. "Yeah, mortgage rates would drop further, but you may not have a job to qualify," Bankrate's McBride said.
Among other types of mortgages in Freddie Mac's survey, the average rate on a 15-year fixed-rate mortgage was 4.24 percent this week, down from 4.3 percent. Rates on five-year, adjustable-rate mortgages averaged 3.91 percent, down from 3.95 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4 percent from 4.02 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.
The nationwide fee for loans in Freddie Mac's survey averaged 0.7 of a point for 30-year and 15-year loans, and 0.6 of a point for 5-year and 1-year loans.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
Source: Copyright © 2010 The Associated Press, J.W. Elphinstone, AP real estate writer.
Consumer watchdog eyes lenders in new bank rules
Congress is getting tougher on both borrowers and lenders blamed for inflating a housing bubble that, when it popped, plunged the nation into a severe recession two years ago.
Under sweeping financial overhauls that have now passed the House and Senate, homebuyers won't be able to get a mortgage without producing pay stubs or other evidence they can make their monthly payments. A new consumer watchdog will police lenders who offer impossible-to-resist subprime mortgages and then jack up the interest rates to impossible-to-pay levels.
The bills, which still have to be blended into one that could reach the president's desk this summer, also shine more light on complex but hidden financial instruments, the "derivatives" that made long-odds bets on whether Americans could make payments on mortgages they never should have qualified for.
The legislation takes aim at the credit and securities markets that collapsed when those bets turned out to be wrong, prompting Congress and the Federal Reserve to put up more than $2 trillion to prevent a panic that might well have triggered a global depression.
Still, for all their ambition, lawmakers left some gaping questions on how to tackle some of the most significant financial sector weaknesses exposed by the 2008 financial meltdown – from mortgage giants Fannie Mae and Freddie Mac to unsettled disputes over banks and their derivatives business, and requirements that they hold more capital. And in the rough and tumble give and take of writing laws, they rejected tougher measures that would have forced behemoth banks to downsize, required securitizers to retain some credit risk in their loans, and compelled homebuyers to put a downpayment on their loans.
If anything, however, the political environment has grown more populist since the House passed its legislation in December – a trend that will likely protect the tougher provisions in both bills.
Here's a broad look at elements of the bill and what they do and don't do to avoid a repeat of a financial crisis:
Lending
In passing its sweeping rewrite of financial regulations, the Senate does not embrace Shakespeare's admonition: "Neither a borrower nor a lender be."
But it makes it tougher.
Mortgage brokers won't be able to make money on high interest loans; buyers won't be able to lie about their ability to pay as loan officers look the other way.
The Senate rejected a proposal that would have required homebuyers to place a minimum 5 percent downpayment on their mortgages. It also rolled back a provision that would have required lenders who sell their mortgages to hold 5 percent of the credit risk as "skin in the game," designed to ensure they wrote safe loans. Instead, lenders who write loans that meet strict underwriting standards could sell their loans and avoid the risk retention requirement.
Lending would be overseen by a new agency. The House sets up a stand-alone Consumer Financial Protection Agency with rule writing powers. The Senate sets up an independent bureau within the Federal Reserve and its rules could be vetoed by the oversight council of regulators. House Financial Service Committee Chairman Barney Frank indicated the agency would not likely end up in the Fed, but otherwise said the authorities of the two entities were similar.
"I thought we'd have a major fight over the independence of the CFPA," he said. "Not a problem."
Fixing the government-sponsored mortgage giants Fannie Mae and Freddie Mac was put off for another day.
The two companies lowered their standards for borrowers during the housing boom and now those high-risk loans are defaulting at a record pace. The government has been forced to rescue them to the tune of $145 billion.
Administration officials have said an overhaul of the two will be a priority next year. And, as a Band-Aid measure, the Senate approved a provision ordering a study, which is already under way at Treasury.
"What we did - and I would be the first to admit it, being the author of the provision - is fairly anemic in light of what we need to be doing," Senate Banking Committee Chairman Christopher Dodd conceded.
Too big to fail
The legislation creates a liquidation system for large, interconnected firms, whereby the Federal Deposit Insurance Corp. would step in to wind down large firms that pose a risk to the system. Shareholders and unsecured creditors would be wiped out, management would be fired and counterparties in their complex transactions would not necessarily be made whole.
The Senate eliminated a $50 billion liquidation fund, prepaid by the largest financial institutions. The House has its own fund. Frank, no fan of the fund, said Thursday that it would come out during a House-Senate conference on the bill.
That means that taxpayers would have to front the costs of a liquidation. And though the Senate bill specifically says taxpayers will suffer no loses when a large firm fails, the Senate bill gives the FDIC up to five years to wind down a firm.
Both bills would require banks to hold more money to cover their debts. The House bill has a specific leverage cap on financial institutions of 15-1 debt-to-net capital ratio. The Senate requires banks with more than $250 billion in assets to meet capital standards at least as strict as those that apply to smaller banks. That provision passed unanimously, but policy makers are taking a second look, saying that standard could have unintended consequences. It could be altered or removed in negotiations with the House.
Markets
Both the House and the Senate require complex securities known as derivatives to lose their unregulated status and be traded or cleared through exchanges. That would provide a third party to help back up the bets in the event one of the two participants in the trade defaults. The House bill, however, grants more corporate exceptions from regulation than the Senate bill does.
The Senate bill has a provision that would force banks to spin off all their derivatives business. That means they would not only be unable to make their own derivatives bets, they also could not make derivatives markets for their clients. Bank regulators and administration officials fear that provision could drive derivatives into unregulated markets. They say that, too, will be altered or removed in discussions with the House.
Source: Copyright © 2010 The Associated Press, Jim Kuhnhenn, Associated Press writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Associated Press writers Charles Babington and Anne Sanner contributed to this report.
Under sweeping financial overhauls that have now passed the House and Senate, homebuyers won't be able to get a mortgage without producing pay stubs or other evidence they can make their monthly payments. A new consumer watchdog will police lenders who offer impossible-to-resist subprime mortgages and then jack up the interest rates to impossible-to-pay levels.
The bills, which still have to be blended into one that could reach the president's desk this summer, also shine more light on complex but hidden financial instruments, the "derivatives" that made long-odds bets on whether Americans could make payments on mortgages they never should have qualified for.
The legislation takes aim at the credit and securities markets that collapsed when those bets turned out to be wrong, prompting Congress and the Federal Reserve to put up more than $2 trillion to prevent a panic that might well have triggered a global depression.
Still, for all their ambition, lawmakers left some gaping questions on how to tackle some of the most significant financial sector weaknesses exposed by the 2008 financial meltdown – from mortgage giants Fannie Mae and Freddie Mac to unsettled disputes over banks and their derivatives business, and requirements that they hold more capital. And in the rough and tumble give and take of writing laws, they rejected tougher measures that would have forced behemoth banks to downsize, required securitizers to retain some credit risk in their loans, and compelled homebuyers to put a downpayment on their loans.
If anything, however, the political environment has grown more populist since the House passed its legislation in December – a trend that will likely protect the tougher provisions in both bills.
Here's a broad look at elements of the bill and what they do and don't do to avoid a repeat of a financial crisis:
Lending
In passing its sweeping rewrite of financial regulations, the Senate does not embrace Shakespeare's admonition: "Neither a borrower nor a lender be."
But it makes it tougher.
Mortgage brokers won't be able to make money on high interest loans; buyers won't be able to lie about their ability to pay as loan officers look the other way.
The Senate rejected a proposal that would have required homebuyers to place a minimum 5 percent downpayment on their mortgages. It also rolled back a provision that would have required lenders who sell their mortgages to hold 5 percent of the credit risk as "skin in the game," designed to ensure they wrote safe loans. Instead, lenders who write loans that meet strict underwriting standards could sell their loans and avoid the risk retention requirement.
Lending would be overseen by a new agency. The House sets up a stand-alone Consumer Financial Protection Agency with rule writing powers. The Senate sets up an independent bureau within the Federal Reserve and its rules could be vetoed by the oversight council of regulators. House Financial Service Committee Chairman Barney Frank indicated the agency would not likely end up in the Fed, but otherwise said the authorities of the two entities were similar.
"I thought we'd have a major fight over the independence of the CFPA," he said. "Not a problem."
Fixing the government-sponsored mortgage giants Fannie Mae and Freddie Mac was put off for another day.
The two companies lowered their standards for borrowers during the housing boom and now those high-risk loans are defaulting at a record pace. The government has been forced to rescue them to the tune of $145 billion.
Administration officials have said an overhaul of the two will be a priority next year. And, as a Band-Aid measure, the Senate approved a provision ordering a study, which is already under way at Treasury.
"What we did - and I would be the first to admit it, being the author of the provision - is fairly anemic in light of what we need to be doing," Senate Banking Committee Chairman Christopher Dodd conceded.
Too big to fail
The legislation creates a liquidation system for large, interconnected firms, whereby the Federal Deposit Insurance Corp. would step in to wind down large firms that pose a risk to the system. Shareholders and unsecured creditors would be wiped out, management would be fired and counterparties in their complex transactions would not necessarily be made whole.
The Senate eliminated a $50 billion liquidation fund, prepaid by the largest financial institutions. The House has its own fund. Frank, no fan of the fund, said Thursday that it would come out during a House-Senate conference on the bill.
That means that taxpayers would have to front the costs of a liquidation. And though the Senate bill specifically says taxpayers will suffer no loses when a large firm fails, the Senate bill gives the FDIC up to five years to wind down a firm.
Both bills would require banks to hold more money to cover their debts. The House bill has a specific leverage cap on financial institutions of 15-1 debt-to-net capital ratio. The Senate requires banks with more than $250 billion in assets to meet capital standards at least as strict as those that apply to smaller banks. That provision passed unanimously, but policy makers are taking a second look, saying that standard could have unintended consequences. It could be altered or removed in negotiations with the House.
Markets
Both the House and the Senate require complex securities known as derivatives to lose their unregulated status and be traded or cleared through exchanges. That would provide a third party to help back up the bets in the event one of the two participants in the trade defaults. The House bill, however, grants more corporate exceptions from regulation than the Senate bill does.
The Senate bill has a provision that would force banks to spin off all their derivatives business. That means they would not only be unable to make their own derivatives bets, they also could not make derivatives markets for their clients. Bank regulators and administration officials fear that provision could drive derivatives into unregulated markets. They say that, too, will be altered or removed in discussions with the House.
Source: Copyright © 2010 The Associated Press, Jim Kuhnhenn, Associated Press writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Associated Press writers Charles Babington and Anne Sanner contributed to this report.
Survey: 4 in 10 homeowners would consider walking away from ‘underwater’ mortgage
More than 40 percent of homeowners with a mortgage say they would consider abandoning an "underwater" property, according to a national online survey released Thursday.
The study conducted this month by Harris Interactive for real estate firms Trulia and RealtyTrac touched on a topic that affects many South Floridians.
More than 371,000 homes in Palm Beach, Broward and Miami-Dade counties were worth less than the mortgage amount at the end of the first quarter, Zillow.com said recently.
Pete Flint, chief executive of Trulia, said on a conference call with reporters he "absolutely expects" more homeowners to walk away in the coming years as the stigma of foreclosure fades.
This is the fifth such survey of consumer attitudes since 2008, but the first time questions about underwater mortgages were included, Flint said.
Because South Florida home prices have fallen by more than 40 percent since the peak of the housing boom in 2005, underwater borrowers here may have to stay put for a decade or more until they can break even in a sale, housing experts say.
Some of these homeowners say they're unwilling or unable to wait that long.
RealtyTrac executive Rick Sharga said many borrowers are disgusted with their lenders, feeling as though the banks are "stonewalling" their attempts to seek mortgage modifications and stay in the homes.
"There's a lot of visceral anger at the banks right now," Sharga said, adding that there may be fewer people walking away from homes if they felt lenders were negotiating in good faith.
Lenders insist they are, pointing to the mortgage modification offices they've set up across the country to help borrowers who can demonstrate actual need.
"With people who can afford their payments but their home is worth less than what they owe, that is not considered a hardship," said Nancy Norris, a spokeswoman for banking giant Chase.
Sharga says the nation's housing market is in the process of a "long, slow, relatively flat recovery that probably won't feel much better until about 2013."
The Mortgage Bankers Association issued a report Wednesday that sent mixed signals about delinquencies and foreclosures. Some figures indicating a drop in the rate of distressed loans weren't seasonally adjusted, but other numbers that were adjusted showed minor increases in late payments.
Jay Brinkmann, chief economist for the trade group, said in a statement that Florida is getting worse when it comes to delinquencies and foreclosures.
Meanwhile, Sharga and Flint said lenders are doing a good job of managing inventories of foreclosed homes.
RealtyTrac has as many as 800,000 bank-owned homes in its database, but less than 30 percent are for sale. Gradually putting those on the market helps prevent major price declines, Sharga said.
Source: Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune Information Services.
The study conducted this month by Harris Interactive for real estate firms Trulia and RealtyTrac touched on a topic that affects many South Floridians.
More than 371,000 homes in Palm Beach, Broward and Miami-Dade counties were worth less than the mortgage amount at the end of the first quarter, Zillow.com said recently.
Pete Flint, chief executive of Trulia, said on a conference call with reporters he "absolutely expects" more homeowners to walk away in the coming years as the stigma of foreclosure fades.
This is the fifth such survey of consumer attitudes since 2008, but the first time questions about underwater mortgages were included, Flint said.
Because South Florida home prices have fallen by more than 40 percent since the peak of the housing boom in 2005, underwater borrowers here may have to stay put for a decade or more until they can break even in a sale, housing experts say.
Some of these homeowners say they're unwilling or unable to wait that long.
RealtyTrac executive Rick Sharga said many borrowers are disgusted with their lenders, feeling as though the banks are "stonewalling" their attempts to seek mortgage modifications and stay in the homes.
"There's a lot of visceral anger at the banks right now," Sharga said, adding that there may be fewer people walking away from homes if they felt lenders were negotiating in good faith.
Lenders insist they are, pointing to the mortgage modification offices they've set up across the country to help borrowers who can demonstrate actual need.
"With people who can afford their payments but their home is worth less than what they owe, that is not considered a hardship," said Nancy Norris, a spokeswoman for banking giant Chase.
Sharga says the nation's housing market is in the process of a "long, slow, relatively flat recovery that probably won't feel much better until about 2013."
The Mortgage Bankers Association issued a report Wednesday that sent mixed signals about delinquencies and foreclosures. Some figures indicating a drop in the rate of distressed loans weren't seasonally adjusted, but other numbers that were adjusted showed minor increases in late payments.
Jay Brinkmann, chief economist for the trade group, said in a statement that Florida is getting worse when it comes to delinquencies and foreclosures.
Meanwhile, Sharga and Flint said lenders are doing a good job of managing inventories of foreclosed homes.
RealtyTrac has as many as 800,000 bank-owned homes in its database, but less than 30 percent are for sale. Gradually putting those on the market helps prevent major price declines, Sharga said.
Source: Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune Information Services.
Thursday, May 20, 2010
Survey: Homeowner confidence rises nationally
Homeowners across the country had mixed opinions about their own homes' values, according to the Zillow Q1 Homeowner Confidence Survey. Nationally, homeowners were overconfident, with only half (50 percent) believing their home's value declined in the past year. In reality, 65 percent of U.S. homes declined.
Meanwhile, 7 percent of homeowners, or 5.3 million homes, said they would be "very likely" to put their home on the market in the next 12 months if they see signs that the housing market is improving. That number surpasses 2009's total home sales of 5.2 million existing homes. An additional 8 percent said they would "likely" put their home on the market, and another 14 percent said they would be "somewhat likely."
Economists have worried about the shadow inventory of homes recently – homes not yet on the market but ripe for selling, perhaps because owners or banks are holding out for a higher potential selling price. A recovery could be delayed if a significant number of shadow inventory homes enter the market.
"We can expect to see a lot of new inventory entering the market via sidelined sellers," said Zillow Chief Economist Dr. Stan Humphries. "This added inventory, combined with current elevated inventory levels and continued high rates of foreclosure in many areas, will likely serve to keep home values treading near the bottom for several years. Inventory must come down for home values to go up."
The nation's most pessimistic homeowners reside in the West, even though home values in many California and Colorado metros stabilized over the past year. Eighteen percent of Western homeowners believe their home gained value over the past year, when in reality 31 percent of Western homes gained value.
On the other end of the spectrum were Southern homeowners, who were overly optimistic, even as many Southern markets continue to see decreases in home values. Thirty-four percent of Southern homeowners said that their home gained value over the past year when only 27 percent of homes gained value.
Source: © 2010 Florida Realtors®
Meanwhile, 7 percent of homeowners, or 5.3 million homes, said they would be "very likely" to put their home on the market in the next 12 months if they see signs that the housing market is improving. That number surpasses 2009's total home sales of 5.2 million existing homes. An additional 8 percent said they would "likely" put their home on the market, and another 14 percent said they would be "somewhat likely."
Economists have worried about the shadow inventory of homes recently – homes not yet on the market but ripe for selling, perhaps because owners or banks are holding out for a higher potential selling price. A recovery could be delayed if a significant number of shadow inventory homes enter the market.
"We can expect to see a lot of new inventory entering the market via sidelined sellers," said Zillow Chief Economist Dr. Stan Humphries. "This added inventory, combined with current elevated inventory levels and continued high rates of foreclosure in many areas, will likely serve to keep home values treading near the bottom for several years. Inventory must come down for home values to go up."
The nation's most pessimistic homeowners reside in the West, even though home values in many California and Colorado metros stabilized over the past year. Eighteen percent of Western homeowners believe their home gained value over the past year, when in reality 31 percent of Western homes gained value.
On the other end of the spectrum were Southern homeowners, who were overly optimistic, even as many Southern markets continue to see decreases in home values. Thirty-four percent of Southern homeowners said that their home gained value over the past year when only 27 percent of homes gained value.
Source: © 2010 Florida Realtors®
What to watch for when buying a vacant home
When it comes to the housing market for foreclosures – buyer beware.
"One mistake that we see all the time is buyers going in and assuming all the mechanicals are working," said Brandon T. Johnson, president of GTJ Consulting in Roseville, Mich. "You have to be careful you don't get burned that way."
Johnson's company maintains foreclosed homes for a number of lenders, Realtors and Freddie Mac. He said the term "as is" shouldn't scare buyers off as long as they know what it means. He recommends that buyers get private inspections on houses they want to buy to avoid surprises such as missing plumbing or water damage.
Here's a list of 10 things to watch for in foreclosed or vacant homes from Ross Kollenberg, mitigation and construction manager for On-Site Specialty Cleaning & Restoration in Troy, Mich:
1. Air quality. This tells a lot about the home's condition. Include air and surface testing in your home inspection. It is a few hundred dollars well spent.
2. Black cobwebs, greasy gray residue on walls and/or a strong oily odor. This is soot damage, which requires professional cleaning, and points to a malfunctioning furnace. It also could be a tip-off that the home had a fire.
3. Discolored subflooring. From the basement, check the subflooring above for stains and small holes, both caused by mold.
4. An older home with extensive renovations. Check with the city for permits: You'll get remodeling details. If asbestos or lead paint is present and has been disturbed, be sure it's been remediated by a certified specialist. It the home has four or five major changes, it may not be up to code, and that could mean extensive fixes for the next owner.
5. Peeling, bubbling, and discolored paint; swelling in walls or ceilings (especially around kitchens and bathrooms); a musty odor: All indicate water damage and, potentially, the presence of moisture and mold.
6. Missing sinks, toilets and other fixtures. Sometimes the previous owner will take the fixtures with them, but won't shut off the pipes or will rip fixtures from the wall. If a pipe was cracked during the fixture removal, it could start a slow leak in the wall that isn't easily seen. Make sure those fixtures have been properly removed and not ripped from walls and floors.
7. Fungus growth inside cabinets, behind drawers and built-ins. That could mean there has been water damage. Since water falls down, look for the source above the mold. One trick inspectors use to determine whether there could be hidden water damage is to pull out the kitchen drawers and look inside to see whether the back wall has been rebuilt. If it has, that could mean water damage has been covered up.
8. Excessive painting of every nook, cranny, door and floor. The seller may be covering up mold. "When you go do a home that is 'landlord white' and the trim is flat, we tell people there is a reason the house was painted this way," Kollenberg said. "When we see it is over everything, it is a tip-off that it is just covering something up."
9. Unheated house in winter months. If the home has been properly winterized, there's no need for heat. If not, pipes will burst and cause water damage.
10. Blocked drains or pipes. These will cause future problems and may have already created sewage backups. Check for a telltale water ring in the basement, Kollenberg said.
Source:Detroit Free Press. Distributed by McClatchy-Tribune Information Services.
"One mistake that we see all the time is buyers going in and assuming all the mechanicals are working," said Brandon T. Johnson, president of GTJ Consulting in Roseville, Mich. "You have to be careful you don't get burned that way."
Johnson's company maintains foreclosed homes for a number of lenders, Realtors and Freddie Mac. He said the term "as is" shouldn't scare buyers off as long as they know what it means. He recommends that buyers get private inspections on houses they want to buy to avoid surprises such as missing plumbing or water damage.
Here's a list of 10 things to watch for in foreclosed or vacant homes from Ross Kollenberg, mitigation and construction manager for On-Site Specialty Cleaning & Restoration in Troy, Mich:
1. Air quality. This tells a lot about the home's condition. Include air and surface testing in your home inspection. It is a few hundred dollars well spent.
2. Black cobwebs, greasy gray residue on walls and/or a strong oily odor. This is soot damage, which requires professional cleaning, and points to a malfunctioning furnace. It also could be a tip-off that the home had a fire.
3. Discolored subflooring. From the basement, check the subflooring above for stains and small holes, both caused by mold.
4. An older home with extensive renovations. Check with the city for permits: You'll get remodeling details. If asbestos or lead paint is present and has been disturbed, be sure it's been remediated by a certified specialist. It the home has four or five major changes, it may not be up to code, and that could mean extensive fixes for the next owner.
5. Peeling, bubbling, and discolored paint; swelling in walls or ceilings (especially around kitchens and bathrooms); a musty odor: All indicate water damage and, potentially, the presence of moisture and mold.
6. Missing sinks, toilets and other fixtures. Sometimes the previous owner will take the fixtures with them, but won't shut off the pipes or will rip fixtures from the wall. If a pipe was cracked during the fixture removal, it could start a slow leak in the wall that isn't easily seen. Make sure those fixtures have been properly removed and not ripped from walls and floors.
7. Fungus growth inside cabinets, behind drawers and built-ins. That could mean there has been water damage. Since water falls down, look for the source above the mold. One trick inspectors use to determine whether there could be hidden water damage is to pull out the kitchen drawers and look inside to see whether the back wall has been rebuilt. If it has, that could mean water damage has been covered up.
8. Excessive painting of every nook, cranny, door and floor. The seller may be covering up mold. "When you go do a home that is 'landlord white' and the trim is flat, we tell people there is a reason the house was painted this way," Kollenberg said. "When we see it is over everything, it is a tip-off that it is just covering something up."
9. Unheated house in winter months. If the home has been properly winterized, there's no need for heat. If not, pipes will burst and cause water damage.
10. Blocked drains or pipes. These will cause future problems and may have already created sewage backups. Check for a telltale water ring in the basement, Kollenberg said.
Source:Detroit Free Press. Distributed by McClatchy-Tribune Information Services.
More borrowers losing federal mortgage aid
Homeowners taking advantage of mortgage aid under a federal foreclosure-prevention plan are being dropped from the program at an increasing rate, potentially forcing more borrowers out of their homes as the program struggles to make an impact, according to Treasury data released Monday.
The program, known as Making Home Affordable, pays lenders to lower the mortgage payments of distressed borrowers, but it has struggled to have a significant effect on the country's foreclosure crisis. Now it is increasingly losing borrowers who didn't submit enough documentation to prove they qualified for the help or who fell behind on their new lower mortgage payments.
The number of borrowers who were dropped reached more than 280,000 in April, according to the Treasury data. That compares with about 157,000 borrowers who had lost their mortgage aid in March and means that more than one of every five borrowers who have entered the program eventually lost their aid.
Housing advocates have complained that lenders often don't provide a reason for cutting a borrower from the program and there is no clear process for appealing the decision. The cancellations could reflect a mistake on the part of the lender or that they lost the homeowner's documents, said Julia Gordon, a senior policy counsel at the Center for Responsible Lending. "There is no way to know what lies behind those numbers. . . . It could be that the person had reduced work hours" after entering the program, she said. "I think there are a lot of people at risk of foreclosure whose homes could still be saved who are not being helped fast enough."
Overall, more than 1 million borrowers have seen their mortgage payments lowered under the program, but the majority, 630,000, still have to prove they qualify for the program and are in limbo.
"These decisions are being made faster," Herbert Allison, an assistant Treasury secretary, said in a conference call with reporters. But "homeowners are waiting. We want them to get answers as rapidly as possible."
Still, the Treasury data showed that lenders did a better job in April of moving homeowners from the initial trial phase of the program into a permanent loan modification. The number of permanent loan modifications, which typically lower a borrower's payment by more than $500 a month, rose 13 percent to nearly 300,000.
The pace of borrowers moving into a permanent loan modification should continue to increase, Treasury officials said. The government's focus is on "improving the homeowner experience and holding servicers accountable for their performance," said Phyllis Caldwell, chief of Treasury's Homeownership Preservation Office.
In March, the Obama administration announced several changes to the federal program, which it hopes will help up to 4 million borrowers over the next few years. For the first time, for example, lenders can receive incentive payments for cutting the mortgage balance of homeowners who owe more than their home is worth, known as being underwater.
"It is going to be a tough one to make happen, but it could help a number of people caught in a bind of 'Do I continue to stay in a home that isn't worth what I paid?'," said Kimberly T. Henderson, director of housing and community development at the Greater Washington Urban League.
Most of the changes will not take effect until the fall, and housing advocates have questioned whether it goes far enough or is merely delaying an inevitable surge in foreclosures.
Source: Copyright © 2010 washingtonpost.com
The program, known as Making Home Affordable, pays lenders to lower the mortgage payments of distressed borrowers, but it has struggled to have a significant effect on the country's foreclosure crisis. Now it is increasingly losing borrowers who didn't submit enough documentation to prove they qualified for the help or who fell behind on their new lower mortgage payments.
The number of borrowers who were dropped reached more than 280,000 in April, according to the Treasury data. That compares with about 157,000 borrowers who had lost their mortgage aid in March and means that more than one of every five borrowers who have entered the program eventually lost their aid.
Housing advocates have complained that lenders often don't provide a reason for cutting a borrower from the program and there is no clear process for appealing the decision. The cancellations could reflect a mistake on the part of the lender or that they lost the homeowner's documents, said Julia Gordon, a senior policy counsel at the Center for Responsible Lending. "There is no way to know what lies behind those numbers. . . . It could be that the person had reduced work hours" after entering the program, she said. "I think there are a lot of people at risk of foreclosure whose homes could still be saved who are not being helped fast enough."
Overall, more than 1 million borrowers have seen their mortgage payments lowered under the program, but the majority, 630,000, still have to prove they qualify for the program and are in limbo.
"These decisions are being made faster," Herbert Allison, an assistant Treasury secretary, said in a conference call with reporters. But "homeowners are waiting. We want them to get answers as rapidly as possible."
Still, the Treasury data showed that lenders did a better job in April of moving homeowners from the initial trial phase of the program into a permanent loan modification. The number of permanent loan modifications, which typically lower a borrower's payment by more than $500 a month, rose 13 percent to nearly 300,000.
The pace of borrowers moving into a permanent loan modification should continue to increase, Treasury officials said. The government's focus is on "improving the homeowner experience and holding servicers accountable for their performance," said Phyllis Caldwell, chief of Treasury's Homeownership Preservation Office.
In March, the Obama administration announced several changes to the federal program, which it hopes will help up to 4 million borrowers over the next few years. For the first time, for example, lenders can receive incentive payments for cutting the mortgage balance of homeowners who owe more than their home is worth, known as being underwater.
"It is going to be a tough one to make happen, but it could help a number of people caught in a bind of 'Do I continue to stay in a home that isn't worth what I paid?'," said Kimberly T. Henderson, director of housing and community development at the Greater Washington Urban League.
Most of the changes will not take effect until the fall, and housing advocates have questioned whether it goes far enough or is merely delaying an inevitable surge in foreclosures.
Source: Copyright © 2010 washingtonpost.com
Guidelines for reporting oil on the beach
If you see pollution – a tar ball, a tar patch or an oil sheen – the state wants to know, even if it's not related to the Gulf leak.
Governor Charlie Crist asks residents and visitors to report evidence of oil along the state's shores by calling the State Warning Point at 1-877-2-SAVE-FL [877-272- 8335], or by dialing #DEP from a cell phone.
Oil reports through the State Warning Point will be investigated for verification. If oil impacts are found, Unified Command in Mobile will send out a Shoreline Cleanup and Assessment Technique (SCAT) team in coordination with state and local governments.
"Floridians and visitors can play an active role in minimizing any potential threats to Florida's beautiful beaches and coastline by reporting the impact of oil," says Gov. Crist. "There are no oil impacts to our coasts at this time, but it is important that we be prepared and informed about what to look for and what impacts may be associated with the spill."
A key component to reporting evidence of oil is recognizing the appearance of weathered oil. When crude oil is released into the environment, its composition changes as a result of "weathering," or exposure to the water and sun. Evaporation is one of the more significant weathering processes. Evaporation occurs mainly during the first 24 to 48 hours after release, and it greatly reduces the amount of the lighter components of crude oil. Some crude oils may lose up to 40 percent of their volume due to evaporation in the first days after a release. The composition of released material becomes substantially different from the originally released crude oil.
Oil on Florida's coastline will most likely be in the form of tar balls, oil sheen, tar patches or mats. Each has a different appearance.
To help Floridians identify the different types of oil pollution, the state created a PDF with photos. It can be downloaded online at: http://www.dep.state.fl.us/deepwaterhorizon/files/news_gov_oil_spill_reporting.pdf
To learn more about Florida's response to the Deepwater Horizon oil spill, visit www.dep.state.fl.us/deepwaterhorizon, follow www.Twitter.com/FLDEPalert or call the Florida Oil Spill Information Line at (888) 337- 3569.
Source: © 2010 Florida Realtors®
Governor Charlie Crist asks residents and visitors to report evidence of oil along the state's shores by calling the State Warning Point at 1-877-2-SAVE-FL [877-272- 8335], or by dialing #DEP from a cell phone.
Oil reports through the State Warning Point will be investigated for verification. If oil impacts are found, Unified Command in Mobile will send out a Shoreline Cleanup and Assessment Technique (SCAT) team in coordination with state and local governments.
"Floridians and visitors can play an active role in minimizing any potential threats to Florida's beautiful beaches and coastline by reporting the impact of oil," says Gov. Crist. "There are no oil impacts to our coasts at this time, but it is important that we be prepared and informed about what to look for and what impacts may be associated with the spill."
A key component to reporting evidence of oil is recognizing the appearance of weathered oil. When crude oil is released into the environment, its composition changes as a result of "weathering," or exposure to the water and sun. Evaporation is one of the more significant weathering processes. Evaporation occurs mainly during the first 24 to 48 hours after release, and it greatly reduces the amount of the lighter components of crude oil. Some crude oils may lose up to 40 percent of their volume due to evaporation in the first days after a release. The composition of released material becomes substantially different from the originally released crude oil.
Oil on Florida's coastline will most likely be in the form of tar balls, oil sheen, tar patches or mats. Each has a different appearance.
To help Floridians identify the different types of oil pollution, the state created a PDF with photos. It can be downloaded online at: http://www.dep.state.fl.us/deepwaterhorizon/files/news_gov_oil_spill_reporting.pdf
To learn more about Florida's response to the Deepwater Horizon oil spill, visit www.dep.state.fl.us/deepwaterhorizon, follow www.Twitter.com/FLDEPalert or call the Florida Oil Spill Information Line at (888) 337- 3569.
Source: © 2010 Florida Realtors®
5 fixes to gain more clients
Real estate pros can make quick fixes to instantly attract buyers who are serious about a transaction, according to Errol Samuelson, president of Realtor.com® who spoke at the National Association of Realtors recent Midyear Legislative Meetings & Expo.
Samuelson offered solutions for building a web audience, making contact with leads, developing meaningful communication, cultivating leads and clients, and following up after the transaction.
Here are his top five:
1. Audience: A changing dynamic between the buyer and real estate pro is evident in NAR statistics: In 2001, 48 percent of buyers purchased properties their practitioners found for them. That figure dropped to 36 percent last year.
"You have a larger audience out there of people finding homes themselves and bringing them to their agents," Samuelson said.
The Problem: Finding content and resources to add to your website that meet the needs of the audience you're trying to connect with.
The Fix: You can look at real estate sites in three distinct ways. A "type A" site publishes content and news stories. It generates lots of traffic, but visitors tend to read one article of interest and leave the site. "It's a great way to build brand; a great place to build awareness," Samuelson said.
The "type B" website offers a lot of market stats and trends. Again, this site will get hits, but visitors may not always be potential buyers.
A "type C" site specializes in searches and listings. These sites tend to keep visitors engaged for longer periods of time – often the visitors are in the early stages of looking for a home.
Samuelson says the key is to know what to expect from these sites and create a blend of all three.
2. Contact: People are twice as likely to phone an agent rather than use e-mail when looking at homes online, Samuelson said. With a mobile app, the potential client is 10 times more likely to call vs. e-mail.
Why is mobile so important? "This is one of the fastest product adoptions ever," Samuelson said. There were more than 1 billion app downloads in the fourth quarter of 2009 alone.
The Problem: When a potential client does make a call, Samuelson said statistics show agents only answer 30 percent of the time. Furthermore, 45 percent of the calls go to voicemail (over half won't leave a message), 17 percent ring but voicemail never picks up, and 8 percent get the wrong number.
The Fix: With the shift to mobile devices, answering the phone becomes more important than ever, Samuelson said. If you can't be there to answer, make sure someone can. And be responsive to voicemails right away.
3. Communication: First-time buyers made up 47 percent of the market last year. Your job is to communicate with relevance to the people who are buying.
The Problem: Call reluctance. The main reasons for call reluctance, Samuelson said, is that practitioners don't know who they are calling or what to say.
The Fix: Approach communication as a way to help potential clients understand the home buying process. Realtor.com offers a first-time homebuyers' guide you can find at http://www.realtor.com/freetraining/midyear.
Don't forget to put your contacts into a database – it's too hard to do it any other way, Samuelson said. Track who opens your e-mails; list interest signs and personal interests, too. This way you'll feel more comfortable engaging them on topics they prefer, Samuelson said.
4. Cultivation: To cultivate is to grow.
The Problem: Not tailoring your approach to grow relationships with potential clients in ways that are lasting and meaningful.
The Fix: Samuelson said that mixing up your forms of communication can make a huge impact on interest level. Sure, use regular phone calls and e-mails, but also send quick messages on personal matters. Use market trends as a conversation starter. Meet in person for coffee; introduce the human element.
And don't forget to ask for feedback on the job you're doing. The idea of authenticity is important when providing relevant information that's fact-based.
5. Transaction: The close of a sale is not the end of an agent-client relationship – it's just another phase.
The Problem: Practitioners get overwhelmed dealing with the transaction or don't have a system in place to continue their interaction with a client. According to the 2009 NAR Buyers and Sellers Survey, 21 percent of homeowners don't hear from their agent again. Approximately 43 percent hear from their agent occasionally, 13 percent monthly and 9 percent weekly.
The Fix: Continue your cultivation after the sale, which is becoming easier than ever with social networks and blogs.
Source: Erica Christoffer, Realtor® Magazine
Source: INFORMATION, INC. Bethesda, MD
Samuelson offered solutions for building a web audience, making contact with leads, developing meaningful communication, cultivating leads and clients, and following up after the transaction.
Here are his top five:
1. Audience: A changing dynamic between the buyer and real estate pro is evident in NAR statistics: In 2001, 48 percent of buyers purchased properties their practitioners found for them. That figure dropped to 36 percent last year.
"You have a larger audience out there of people finding homes themselves and bringing them to their agents," Samuelson said.
The Problem: Finding content and resources to add to your website that meet the needs of the audience you're trying to connect with.
The Fix: You can look at real estate sites in three distinct ways. A "type A" site publishes content and news stories. It generates lots of traffic, but visitors tend to read one article of interest and leave the site. "It's a great way to build brand; a great place to build awareness," Samuelson said.
The "type B" website offers a lot of market stats and trends. Again, this site will get hits, but visitors may not always be potential buyers.
A "type C" site specializes in searches and listings. These sites tend to keep visitors engaged for longer periods of time – often the visitors are in the early stages of looking for a home.
Samuelson says the key is to know what to expect from these sites and create a blend of all three.
2. Contact: People are twice as likely to phone an agent rather than use e-mail when looking at homes online, Samuelson said. With a mobile app, the potential client is 10 times more likely to call vs. e-mail.
Why is mobile so important? "This is one of the fastest product adoptions ever," Samuelson said. There were more than 1 billion app downloads in the fourth quarter of 2009 alone.
The Problem: When a potential client does make a call, Samuelson said statistics show agents only answer 30 percent of the time. Furthermore, 45 percent of the calls go to voicemail (over half won't leave a message), 17 percent ring but voicemail never picks up, and 8 percent get the wrong number.
The Fix: With the shift to mobile devices, answering the phone becomes more important than ever, Samuelson said. If you can't be there to answer, make sure someone can. And be responsive to voicemails right away.
3. Communication: First-time buyers made up 47 percent of the market last year. Your job is to communicate with relevance to the people who are buying.
The Problem: Call reluctance. The main reasons for call reluctance, Samuelson said, is that practitioners don't know who they are calling or what to say.
The Fix: Approach communication as a way to help potential clients understand the home buying process. Realtor.com offers a first-time homebuyers' guide you can find at http://www.realtor.com/freetraining/midyear.
Don't forget to put your contacts into a database – it's too hard to do it any other way, Samuelson said. Track who opens your e-mails; list interest signs and personal interests, too. This way you'll feel more comfortable engaging them on topics they prefer, Samuelson said.
4. Cultivation: To cultivate is to grow.
The Problem: Not tailoring your approach to grow relationships with potential clients in ways that are lasting and meaningful.
The Fix: Samuelson said that mixing up your forms of communication can make a huge impact on interest level. Sure, use regular phone calls and e-mails, but also send quick messages on personal matters. Use market trends as a conversation starter. Meet in person for coffee; introduce the human element.
And don't forget to ask for feedback on the job you're doing. The idea of authenticity is important when providing relevant information that's fact-based.
5. Transaction: The close of a sale is not the end of an agent-client relationship – it's just another phase.
The Problem: Practitioners get overwhelmed dealing with the transaction or don't have a system in place to continue their interaction with a client. According to the 2009 NAR Buyers and Sellers Survey, 21 percent of homeowners don't hear from their agent again. Approximately 43 percent hear from their agent occasionally, 13 percent monthly and 9 percent weekly.
The Fix: Continue your cultivation after the sale, which is becoming easier than ever with social networks and blogs.
Source: Erica Christoffer, Realtor® Magazine
Source: INFORMATION, INC. Bethesda, MD
Housing starts rise 5.8% in April
Nationwide housing starts rose 5.8 percent to a seasonally adjusted annual rate of 672,000 units in April as the deadline for an important homebuyer tax incentive arrived, according to figures released today by the U.S. Commerce Department.
"While some of the starts activity noted in today's report reflected homes for which buyers had just signed a contract at the tail-end of the tax credit program, the rest was probably tied to builders replenishing their inventories in preparation for the post-tax credit era," says Bob Jones, Chairman of the National Association of Home Builders (NAHB). "That said, builders are maintaining a cautious attitude with regard to new building as the economy and housing markets slowly recover."
On the down side, building permits, an indicator of future building activity, slid 11.5 percent in April to a seasonally adjusted annual rate of 606,000 units. It reflected a 10.7 percent decline on the single-family side and a 14.7 percent decline on the multifamily side.
"The drop-off in building permits in April indicates that builders are working down the inventory of permits pulled in the previous month and taking care not to get ahead of the market," says NAHB Chief Economist David Crowe. "Builders also continue facing difficulty in obtaining project financing, which will limit the pace of a housing recovery."
Single-family housing starts surged 10.2 percent to a seasonally adjusted annual rate of 593,000 units in April, the strongest rate since August 2008. Meanwhile, multifamily starts posted an 18.6 percent decline to a 79,000-unit rate, offsetting a big gain posted by that sector in the previous month.
Three out of four regions posted solid gains in new housing production in April. Combined single- and multifamily starts rose 23.9 percent in the Northeast, 16.7 percent in the Midwest and 7 percent in the South. The West registered a 13.3 percent decline.
Conversely, permit issuance was down in three out of four regions in April. The Northeast posted a 7.4 percent decline, the South registered a 14.3 percent decline and the West posted a 16 percent decline. Permit issuance remained unchanged from the previous month in the Midwest.
Source: © 2010 Florida Realtors®
"While some of the starts activity noted in today's report reflected homes for which buyers had just signed a contract at the tail-end of the tax credit program, the rest was probably tied to builders replenishing their inventories in preparation for the post-tax credit era," says Bob Jones, Chairman of the National Association of Home Builders (NAHB). "That said, builders are maintaining a cautious attitude with regard to new building as the economy and housing markets slowly recover."
On the down side, building permits, an indicator of future building activity, slid 11.5 percent in April to a seasonally adjusted annual rate of 606,000 units. It reflected a 10.7 percent decline on the single-family side and a 14.7 percent decline on the multifamily side.
"The drop-off in building permits in April indicates that builders are working down the inventory of permits pulled in the previous month and taking care not to get ahead of the market," says NAHB Chief Economist David Crowe. "Builders also continue facing difficulty in obtaining project financing, which will limit the pace of a housing recovery."
Single-family housing starts surged 10.2 percent to a seasonally adjusted annual rate of 593,000 units in April, the strongest rate since August 2008. Meanwhile, multifamily starts posted an 18.6 percent decline to a 79,000-unit rate, offsetting a big gain posted by that sector in the previous month.
Three out of four regions posted solid gains in new housing production in April. Combined single- and multifamily starts rose 23.9 percent in the Northeast, 16.7 percent in the Midwest and 7 percent in the South. The West registered a 13.3 percent decline.
Conversely, permit issuance was down in three out of four regions in April. The Northeast posted a 7.4 percent decline, the South registered a 14.3 percent decline and the West posted a 16 percent decline. Permit issuance remained unchanged from the previous month in the Midwest.
Source: © 2010 Florida Realtors®
Florida had second highest number of mortgage modifications
Florida's borrowers in trial and permanent loan modification, represent 12.3 percent of the nation's total.
For the second month in a row, Florida had the second highest number of loan-mortgage modifications among the states under the Obama administration's Making Home Affordable program in April.
California was No. 1, with 198,382 loans in trial or permanent modifications, the April report from the Treasury Department says. Florida had 114,486.
Much of that activity is concentrated in South and Central Florida. The combined number of loan modifications reported in April for three Florida metro areas – Orlando, Tampa-St. Petersburg and Miami-Fort Lauderdale-Pompano Beach – is 76,861.
By comparison, the nation's top-ranked metro area, Los Angeles, had 57,758 loan modifications; second-ranked New York had 57,097.
On the other hand, the number of people starting the process has declined.
The Treasury does not report how many Florida residents were eligible for loan modifications, but the national figure is 1.7 million borrowers. Of that, about 17 percent had received a permanent loan modification by April, more than a year after the program began.
Source: Sun Sentinel, Fort Lauderdale, Fla., Harriet Johnson Brackey. Distributed by McClatchy-Tribune Information Services.
For the second month in a row, Florida had the second highest number of loan-mortgage modifications among the states under the Obama administration's Making Home Affordable program in April.
California was No. 1, with 198,382 loans in trial or permanent modifications, the April report from the Treasury Department says. Florida had 114,486.
Much of that activity is concentrated in South and Central Florida. The combined number of loan modifications reported in April for three Florida metro areas – Orlando, Tampa-St. Petersburg and Miami-Fort Lauderdale-Pompano Beach – is 76,861.
By comparison, the nation's top-ranked metro area, Los Angeles, had 57,758 loan modifications; second-ranked New York had 57,097.
On the other hand, the number of people starting the process has declined.
The Treasury does not report how many Florida residents were eligible for loan modifications, but the national figure is 1.7 million borrowers. Of that, about 17 percent had received a permanent loan modification by April, more than a year after the program began.
Source: Sun Sentinel, Fort Lauderdale, Fla., Harriet Johnson Brackey. Distributed by McClatchy-Tribune Information Services.
Monday, May 17, 2010
Economists: Improved housing market but timing uncertain
Two top housing economists forecast some encouraging but tempered predictions for the housing market over the next few years during an economic session at the National Association of Realtors® Midyear Legislative Meetings & Expo today.
Lawrence Yun, NAR chief economist, and Mark Zandi, chief economist and co-founder of Moody's Economy.com, agreed that job creation is key to an economic and housing recovery, with job creation expected as the year progresses. But they differed somewhat on the impact that foreclosures will have on home price stabilization. Both project that mortgage interest rates will remain historically low, the availability of jumbo loans will improve, and home sales will rise over the next few years.
On the effect of the homebuyer tax credit, Yun said that the broader view would assert that the credit added 1 million buyers, reduced housing inventory by 1 million, and in turn, reduced the supply of housing by two to two-and-a-half months.
"This corresponded with a positive home price impact of 5 to 8 percent percentage points," Yun said. "Stabilizing home prices will limit future foreclosures. But those with a dimmer view would say that billions of dollars were wasted on people who would have bought anyway."
Yun expects a slightly stronger demand for housing and a fairly even level of foreclosures entering the inventory pipeline before easing in 2011. "We expect distressed home sales to account for 30 to 40 percent of transactions for the remainder of this year," he said.
Zandi also forecasts improving demand for housing, but with foreclosures rising later in 2010 before easing in 2011. He said home prices may weaken this year. "The housing crash is over – nearly. We are now near the bottom," he said. "There will be no real price growth in 2010 or 2011. Whether home prices weaken is unclear, but it will take two more years to work off excess housing inventory at the current sales pace. Of course, if demand picks up, it would take less time for prices to rise."
With improved market fundamentals and rising consumer confidence, Yun thinks home prices could rise 2 to 3 percent this year; but within the next two to three years, he suggests there could be stronger upward pressure on prices from a potential housing shortage because housing construction has fallen significantly below long-term demand.
Zandi said that the Fed won't raise interest rates until the unemployment rate is heading south, but that deficit spending is the greatest threat to the U.S. economy. "The debt-to-GDP (gross domestic product) ratio is extremely high and troubling, meaning we could have measurably higher interest rates in 2011 and 2012."
Source: © 2010 Florida Realtors®
Lawrence Yun, NAR chief economist, and Mark Zandi, chief economist and co-founder of Moody's Economy.com, agreed that job creation is key to an economic and housing recovery, with job creation expected as the year progresses. But they differed somewhat on the impact that foreclosures will have on home price stabilization. Both project that mortgage interest rates will remain historically low, the availability of jumbo loans will improve, and home sales will rise over the next few years.
On the effect of the homebuyer tax credit, Yun said that the broader view would assert that the credit added 1 million buyers, reduced housing inventory by 1 million, and in turn, reduced the supply of housing by two to two-and-a-half months.
"This corresponded with a positive home price impact of 5 to 8 percent percentage points," Yun said. "Stabilizing home prices will limit future foreclosures. But those with a dimmer view would say that billions of dollars were wasted on people who would have bought anyway."
Yun expects a slightly stronger demand for housing and a fairly even level of foreclosures entering the inventory pipeline before easing in 2011. "We expect distressed home sales to account for 30 to 40 percent of transactions for the remainder of this year," he said.
Zandi also forecasts improving demand for housing, but with foreclosures rising later in 2010 before easing in 2011. He said home prices may weaken this year. "The housing crash is over – nearly. We are now near the bottom," he said. "There will be no real price growth in 2010 or 2011. Whether home prices weaken is unclear, but it will take two more years to work off excess housing inventory at the current sales pace. Of course, if demand picks up, it would take less time for prices to rise."
With improved market fundamentals and rising consumer confidence, Yun thinks home prices could rise 2 to 3 percent this year; but within the next two to three years, he suggests there could be stronger upward pressure on prices from a potential housing shortage because housing construction has fallen significantly below long-term demand.
Zandi said that the Fed won't raise interest rates until the unemployment rate is heading south, but that deficit spending is the greatest threat to the U.S. economy. "The debt-to-GDP (gross domestic product) ratio is extremely high and troubling, meaning we could have measurably higher interest rates in 2011 and 2012."
Source: © 2010 Florida Realtors®
Friday, May 14, 2010
Ruling could get condo buyers off the hook
Condo buyers nationwide are watching a court case in suburban Washington, D.C., that could release them from their obligation to complete a transaction if the developer fails to live up to its original promises.
The law in question, the Interstate Land Sales Full Disclosure Act, or ILSA, requires developers of subdivisions with 100 or more units to provide buyers with a list of features and disclosures. If the developer fails to meet the requirements it has promised, buyers are entitled to back out of the deal and regain their deposits. The law was originally written to reduce fraud in situations like the sale of swampland in Florida.
The stumbling block for buyers has long been whether a development actually has 100 or more units. Earlier court cases have said that if fewer than 100 units were actually sold, the disclosure rules don't apply. But the current case in suburban Virginia argues that if the developer intended to market 100 or more condos, the law applies, no matter how many are actually sold.
If the court sides with that interpretation, disappointed condo buyers across the country could have an out. But some developers aren't too happy about the precedent the case would be setting.
Gary Barnett, CEO of Extell Development Co., which is embroiled in a similar dispute in New York, says, "Buyers are twisting a law intended for something completely different in an effort to obtain a terribly unfair result."
Source: The Wall Street Journal, Robbie Whelan (05/11/2010)
Source: INFORMATION, INC. Bethesda, MD
The law in question, the Interstate Land Sales Full Disclosure Act, or ILSA, requires developers of subdivisions with 100 or more units to provide buyers with a list of features and disclosures. If the developer fails to meet the requirements it has promised, buyers are entitled to back out of the deal and regain their deposits. The law was originally written to reduce fraud in situations like the sale of swampland in Florida.
The stumbling block for buyers has long been whether a development actually has 100 or more units. Earlier court cases have said that if fewer than 100 units were actually sold, the disclosure rules don't apply. But the current case in suburban Virginia argues that if the developer intended to market 100 or more condos, the law applies, no matter how many are actually sold.
If the court sides with that interpretation, disappointed condo buyers across the country could have an out. But some developers aren't too happy about the precedent the case would be setting.
Gary Barnett, CEO of Extell Development Co., which is embroiled in a similar dispute in New York, says, "Buyers are twisting a law intended for something completely different in an effort to obtain a terribly unfair result."
Source: The Wall Street Journal, Robbie Whelan (05/11/2010)
Source: INFORMATION, INC. Bethesda, MD
Fla. foreclosures dropped in April
The number of Florida foreclosures fell in April from a year earlier, mirroring a national trend that indicates a slowing of defaults on mortgages, according to data released Thursday by RealtyTrac.
Florida's foreclosure fell 18 percent from March and was down 25 percent compared to April 2009. Despite the improvement, the state still posted the second highest number of foreclosures in the nation, however, with 48,384 properties receiving a foreclosure filing during the month.
One in every 182 Florida properties received some type of foreclosure filing, the third highest rate (based on total population) in the country behind Nevada and Arizona. In Nevada, still the poster child of the housing bust, one in every 69 homes was in foreclosure.
Nationally, foreclosure filings fell 2 percent from April 2009, according to the Irvine, Calif.-based company that collects data from more than 2,200 counties nationwide.
The number of foreclosure notices issued fell nationally for the first time since the company began tracking foreclosures in 2005. April also marked an all-time high for bank repossessions, the company reported.
"We expect a similar pattern to continue for most of this year, with the overall numbers staying at a high level and ripples of activity hitting the various stages of the foreclosure process as lenders systematically work through the backlog of distressed properties." says James J. Saccacio, chief executive officer of RealtyTrac, in a statement.
The Fort Myers area posted the nation's fourth highest metro foreclosure rate, with one in every 105 housing units receiving a foreclosure filing. The region continues to dig out from under the housing collapse that followed an extraordinary boom in southwest Florida.
Orlando, meanwhile, dropped out of the top 10 to No. 11 in the monthly poll.
Easing credit and an uptick in economic activity are possible drivers to the lower figures. Federal programs have also helped.
Source: News Service of Florida, Michael Peltier
Florida's foreclosure fell 18 percent from March and was down 25 percent compared to April 2009. Despite the improvement, the state still posted the second highest number of foreclosures in the nation, however, with 48,384 properties receiving a foreclosure filing during the month.
One in every 182 Florida properties received some type of foreclosure filing, the third highest rate (based on total population) in the country behind Nevada and Arizona. In Nevada, still the poster child of the housing bust, one in every 69 homes was in foreclosure.
Nationally, foreclosure filings fell 2 percent from April 2009, according to the Irvine, Calif.-based company that collects data from more than 2,200 counties nationwide.
The number of foreclosure notices issued fell nationally for the first time since the company began tracking foreclosures in 2005. April also marked an all-time high for bank repossessions, the company reported.
"We expect a similar pattern to continue for most of this year, with the overall numbers staying at a high level and ripples of activity hitting the various stages of the foreclosure process as lenders systematically work through the backlog of distressed properties." says James J. Saccacio, chief executive officer of RealtyTrac, in a statement.
The Fort Myers area posted the nation's fourth highest metro foreclosure rate, with one in every 105 housing units receiving a foreclosure filing. The region continues to dig out from under the housing collapse that followed an extraordinary boom in southwest Florida.
Orlando, meanwhile, dropped out of the top 10 to No. 11 in the monthly poll.
Easing credit and an uptick in economic activity are possible drivers to the lower figures. Federal programs have also helped.
Source: News Service of Florida, Michael Peltier
Thursday, May 13, 2010
Homeowners fight to go green
Those wanting to install solar panels are often blocked by association rules that push conformity
Early last year, Larry Lohrman, a homeowner in Salem, Ore., decided to try to cut his energy consumption by installing solar panels on his roof. He researched the panels, hired an installer and put a downpayment on a 3,000-watt solar installation.
Lohrman's plans were interrupted abruptly by a letter from his homeowners association at Creekside Estates denying permission for the installation because it would violate the private community's covenants.
It's a scene that's being played out across the country. As homeowners increasingly seek to turn to green practices such as using clotheslines instead of dryers or moving to solar or wind power, they are finding those plans in conflict with the rules of homeowners associations that encourage conformity in order to maintain property values.
"Homeowners associations are charged with protecting the aesthetic look and feel of the community," said Robert DeNichilo, an Orange County, Calif., attorney who specializes in homeowner association law. "As energy costs rise and solar is becoming more of a viable option, you're seeing more and more associations having to deal with it."
Lohrman, who initially canceled his contract, eventually was able to work things out with his association. It turned out a 1979 state law prohibited homeowners associations from banning use of solar panels on property. Although Lohrman has not yet installed solar panels, he and neighbor Burt Bogart sat on a committee to develop guidelines for any solar panels going up in Creekside. The guidelines were approved in March.
Elsewhere, the issue is heating up and state legislatures are stepping in to assure homeowners have the right to go green.
Lawmakers in two states – Texas and Illinois – considered bills this year that would restrict homeowners associations from prohibiting solar panels, said Amy Heinemann, a policy analyst at the North Carolina Solar Center. The center is part of the College of Engineering at North Carolina State University and advocates for renewable energy and energy efficiency.
In Illinois, a bill passed both chambers and is awaiting a House vote on Senate amendments. The Texas measure passed the Senate but failed in the House. Its sponsor, Rep. Burt Solomons, R-Carrollton, said he will resurrect it next year.
Last year, Delaware, Maine, Vermont and Washington passed or strengthened laws restricting such actions by homeowners associations, Heinemann said. They followed California, Maryland, North Carolina and Virginia, which passed similar laws in 2008. Eleven others had laws in place before 2008, she said.
About 60 million people live in about 305,000 association-governed communities across the nation, according to the Community Associations Institute.
Those governing boards have a duty to maintain property values and to balance individual desires with the wishes of all residents, said Frank Rathbun, spokesman for the Virginia-based institute.
Earlier this year, a Michigan couple's lawsuit against their homeowners association was resolved after the pair was granted permission to install three solar collection panels. Daniel and Michelle Hall of Canton had been denied permission in April 2009 to install the panels by the Pheasant View Homeowners' Association's Architectural Review Committee. They sued, and the issue was resolved before the case went to court.
"The good part of the story is that my solar heating system is working," Daniel Hall said.
Rich Fry, a former Creekside association board member, said a board sometimes "gets a bad rap" about policies it didn't create. "You can't really go and change the rules," he said. "All you can do is interpret them and try to enforce them so they are equal across the board."
Solar energy accounts for less than 1 percent of the U.S. energy supply, said Monique Hanis, spokeswoman for the Solar Energy Industries Association, a national trade group for the industry. The Obama administration and many states have set new renewable energy goals and are offering tax incentives to help reach them.
Oregon, for example, has set a goal of ensuring that renewable resources meet 25 percent of the state's energy needs by 2025. The state offers homeowners a tax credit of as much as $1,500 a year for adding solar energy systems to their homes. Also, homeowners who install solar energy systems can get a federal tax credit of 30 percent of the cost, according to the federal Department of Energy.
A typical solar power system costs between $25,000 and $40,000, depending on the size and type of system, Hanis said. Savings would depend on a family's energy usage and utility rates, but typically run from 25 percent to 50 percent of monthly bills, she said.
Still, many homeowners don't even consider solar energy because they anticipate problems with their associations, said Rob McPherson, an area manager for Houston-based solar installer Standard Renewable Energy.
About 20 percent of McPherson's potential customers run into problems with associations, he said.
"It ends up being a frustrating battle for the customer and the company," McPherson said.
Source: Copyright © 2010 USA TODAY, a division of Gannett Co. Inc., Tracy Loew. Loew reports for the Statesman Journal in Salem, Ore. Contributing: Beth Casper, Statesman Journal, and Cecil Angel, Detroit Free Press.
Early last year, Larry Lohrman, a homeowner in Salem, Ore., decided to try to cut his energy consumption by installing solar panels on his roof. He researched the panels, hired an installer and put a downpayment on a 3,000-watt solar installation.
Lohrman's plans were interrupted abruptly by a letter from his homeowners association at Creekside Estates denying permission for the installation because it would violate the private community's covenants.
It's a scene that's being played out across the country. As homeowners increasingly seek to turn to green practices such as using clotheslines instead of dryers or moving to solar or wind power, they are finding those plans in conflict with the rules of homeowners associations that encourage conformity in order to maintain property values.
"Homeowners associations are charged with protecting the aesthetic look and feel of the community," said Robert DeNichilo, an Orange County, Calif., attorney who specializes in homeowner association law. "As energy costs rise and solar is becoming more of a viable option, you're seeing more and more associations having to deal with it."
Lohrman, who initially canceled his contract, eventually was able to work things out with his association. It turned out a 1979 state law prohibited homeowners associations from banning use of solar panels on property. Although Lohrman has not yet installed solar panels, he and neighbor Burt Bogart sat on a committee to develop guidelines for any solar panels going up in Creekside. The guidelines were approved in March.
Elsewhere, the issue is heating up and state legislatures are stepping in to assure homeowners have the right to go green.
Lawmakers in two states – Texas and Illinois – considered bills this year that would restrict homeowners associations from prohibiting solar panels, said Amy Heinemann, a policy analyst at the North Carolina Solar Center. The center is part of the College of Engineering at North Carolina State University and advocates for renewable energy and energy efficiency.
In Illinois, a bill passed both chambers and is awaiting a House vote on Senate amendments. The Texas measure passed the Senate but failed in the House. Its sponsor, Rep. Burt Solomons, R-Carrollton, said he will resurrect it next year.
Last year, Delaware, Maine, Vermont and Washington passed or strengthened laws restricting such actions by homeowners associations, Heinemann said. They followed California, Maryland, North Carolina and Virginia, which passed similar laws in 2008. Eleven others had laws in place before 2008, she said.
About 60 million people live in about 305,000 association-governed communities across the nation, according to the Community Associations Institute.
Those governing boards have a duty to maintain property values and to balance individual desires with the wishes of all residents, said Frank Rathbun, spokesman for the Virginia-based institute.
Earlier this year, a Michigan couple's lawsuit against their homeowners association was resolved after the pair was granted permission to install three solar collection panels. Daniel and Michelle Hall of Canton had been denied permission in April 2009 to install the panels by the Pheasant View Homeowners' Association's Architectural Review Committee. They sued, and the issue was resolved before the case went to court.
"The good part of the story is that my solar heating system is working," Daniel Hall said.
Rich Fry, a former Creekside association board member, said a board sometimes "gets a bad rap" about policies it didn't create. "You can't really go and change the rules," he said. "All you can do is interpret them and try to enforce them so they are equal across the board."
Solar energy accounts for less than 1 percent of the U.S. energy supply, said Monique Hanis, spokeswoman for the Solar Energy Industries Association, a national trade group for the industry. The Obama administration and many states have set new renewable energy goals and are offering tax incentives to help reach them.
Oregon, for example, has set a goal of ensuring that renewable resources meet 25 percent of the state's energy needs by 2025. The state offers homeowners a tax credit of as much as $1,500 a year for adding solar energy systems to their homes. Also, homeowners who install solar energy systems can get a federal tax credit of 30 percent of the cost, according to the federal Department of Energy.
A typical solar power system costs between $25,000 and $40,000, depending on the size and type of system, Hanis said. Savings would depend on a family's energy usage and utility rates, but typically run from 25 percent to 50 percent of monthly bills, she said.
Still, many homeowners don't even consider solar energy because they anticipate problems with their associations, said Rob McPherson, an area manager for Houston-based solar installer Standard Renewable Energy.
About 20 percent of McPherson's potential customers run into problems with associations, he said.
"It ends up being a frustrating battle for the customer and the company," McPherson said.
Source: Copyright © 2010 USA TODAY, a division of Gannett Co. Inc., Tracy Loew. Loew reports for the Statesman Journal in Salem, Ore. Contributing: Beth Casper, Statesman Journal, and Cecil Angel, Detroit Free Press.
Senate votes to rein in mortgage lenders
Taking aim at deceptive lending, the Senate on Wednesday voted to ban mortgage brokers and loan officers from getting greater pay for offering higher interest rates on loans, and to require that borrowers prove they can repay their loans.
The Senate, however, rejected a measure that would have required homebuyers to make a minimum downpayment of 5 percent on their loans. The votes were part of the Senate's deliberations on a broad overhaul of financial regulations designed to avoid a repeat of the crisis that struck Wall Street in 2008.
President Barack Obama weighed in on the Senate debate Wednesday, criticizing efforts to exclude auto dealerships that offer car loans from the oversight of a proposed consumer financial protection bureau. Auto dealers – influential figures in their communities – have been aggressively lobbying for an exemption from the law, and the amendment, offered by Republican Sen. Sam Brownback could win bipartisan backing.
"This amendment would carve out a special exemption for these lenders that would allow them to inflate rates, insert hidden fees into the fine print of paperwork, and include expensive add-ons that catch purchasers by surprise," Obama said in a statement.
The administration has fiercely tried to protect the consumer provisions of the bill. It has answered the political power of the auto dealers with an appeal on behalf of the military, arguing that soldiers and their families have been particularly targeted by deceptive dealers. On Wednesday, Holly Petraeus, wife of U.S. Central Command Chief Gen. David Petraeus, made a plea for the bill's consumer protections to apply to car buyers.
Petraeus, director of the Council of Better Business Bureau's Military Line Program, said financial counselors at military installations find many of their customers in financial trouble with their auto payments, locked into loans of 15 percent or higher.
In a statement, Brownback argued auto dealers are already regulated by the Federal Trade Commission and by local and state agencies. "If any service member is the victim of predatory lending while trying to buy a car," he said, "I encourage him or her to seek out local and state authorities which already handle these investigations and can take care of the problem."
Separately, the Senate overwhelmingly voted to let the Federal Reserve retain its supervision of smaller banks. The underlying regulation bill would have given the central bank oversight only over the largest financial institutions.
Regional Fed presidents have lobbied senators to allow them to continue watching over smaller bank holding companies and state-chartered community banks. Limiting the Fed's supervision only to bank holding companies with assets of more than $50 billion – as proposed by Senate Banking Chairman Christopher Dodd, a Democrat – would have left many of the Fed's 12 regional banks with few institutions under their oversight.
The lending-related measures attempted to respond to one of the issues at the heart of the financial crisis – the abundance of bad mortgage-backed securities that nearly toppled Wall Street and knocked some of the nation's largest financial institutions to their knees.
Senators voted 63-36 to amend an underlying financial regulation bill to place restrictions on how mortgage brokers and bank loan officers get compensated. The measure's lead sponsor, Democratic Sen. Jeff Merkley, argued that consumers were steered into higher rate mortgages that they were unable to pay, resulting in foreclosures and toxic mortgage-backed securities that poisoned the markets.
Borrowers would have to provide evidence of their income, either though tax returns, payroll receipts or bank documents. That provision seeks to eliminate so-called stated-income loans where borrowers offered no proof of their ability to pay.
But the Senate voted 57-42 against a Republican amendment that set tougher underwriting standards, including the downpayment requirement. That measure also would have eliminated a condition that mortgage lenders retain 5 percent of any mortgages they resell in the securities market.
Democrats opposed the plan, citing both their desire to have banks keep some of the risk of the mortgages they write and their concern that the downpayment mandate would hurt lower income families.
Mortgage brokers opposed Merkley's measure, arguing it would create a two-tiered system separating mortgage brokers from bank lenders. They noted that the amendment would permit banks to receive greater payments from investors, such as large Wall Street firms, for bundled mortgages with higher interest rates.
"It's a legal incentivizing payment for those very loans that put the industry in this mess," said Roy DeLoach, executive vice president of the National Association of Mortgage Brokers.
The Senate rejected 59-39 a Republican proposal to regulate the complex securities known as derivatives, which would have diluted provisions contained in the pending legislation. The amendment would still have increased government oversight of the previously unregulated instruments, but it would have provided greater exceptions for participants in derivatives contracts who use them primarily to hedge against market fluctuations.
But the debate over derivatives is hardly over. Dodd has said the underlying bill's derivatives section still needs work. One provision in the bill to require banks to spin off their derivatives business into subsidiaries, faces opposition from bank regulators and from former Federal Reserve Chairman Paul Volcker, an Obama economic adviser.
Source: Copyright © 2010 The Associated Press, Jim Kuhnhenn. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
The Senate, however, rejected a measure that would have required homebuyers to make a minimum downpayment of 5 percent on their loans. The votes were part of the Senate's deliberations on a broad overhaul of financial regulations designed to avoid a repeat of the crisis that struck Wall Street in 2008.
President Barack Obama weighed in on the Senate debate Wednesday, criticizing efforts to exclude auto dealerships that offer car loans from the oversight of a proposed consumer financial protection bureau. Auto dealers – influential figures in their communities – have been aggressively lobbying for an exemption from the law, and the amendment, offered by Republican Sen. Sam Brownback could win bipartisan backing.
"This amendment would carve out a special exemption for these lenders that would allow them to inflate rates, insert hidden fees into the fine print of paperwork, and include expensive add-ons that catch purchasers by surprise," Obama said in a statement.
The administration has fiercely tried to protect the consumer provisions of the bill. It has answered the political power of the auto dealers with an appeal on behalf of the military, arguing that soldiers and their families have been particularly targeted by deceptive dealers. On Wednesday, Holly Petraeus, wife of U.S. Central Command Chief Gen. David Petraeus, made a plea for the bill's consumer protections to apply to car buyers.
Petraeus, director of the Council of Better Business Bureau's Military Line Program, said financial counselors at military installations find many of their customers in financial trouble with their auto payments, locked into loans of 15 percent or higher.
In a statement, Brownback argued auto dealers are already regulated by the Federal Trade Commission and by local and state agencies. "If any service member is the victim of predatory lending while trying to buy a car," he said, "I encourage him or her to seek out local and state authorities which already handle these investigations and can take care of the problem."
Separately, the Senate overwhelmingly voted to let the Federal Reserve retain its supervision of smaller banks. The underlying regulation bill would have given the central bank oversight only over the largest financial institutions.
Regional Fed presidents have lobbied senators to allow them to continue watching over smaller bank holding companies and state-chartered community banks. Limiting the Fed's supervision only to bank holding companies with assets of more than $50 billion – as proposed by Senate Banking Chairman Christopher Dodd, a Democrat – would have left many of the Fed's 12 regional banks with few institutions under their oversight.
The lending-related measures attempted to respond to one of the issues at the heart of the financial crisis – the abundance of bad mortgage-backed securities that nearly toppled Wall Street and knocked some of the nation's largest financial institutions to their knees.
Senators voted 63-36 to amend an underlying financial regulation bill to place restrictions on how mortgage brokers and bank loan officers get compensated. The measure's lead sponsor, Democratic Sen. Jeff Merkley, argued that consumers were steered into higher rate mortgages that they were unable to pay, resulting in foreclosures and toxic mortgage-backed securities that poisoned the markets.
Borrowers would have to provide evidence of their income, either though tax returns, payroll receipts or bank documents. That provision seeks to eliminate so-called stated-income loans where borrowers offered no proof of their ability to pay.
But the Senate voted 57-42 against a Republican amendment that set tougher underwriting standards, including the downpayment requirement. That measure also would have eliminated a condition that mortgage lenders retain 5 percent of any mortgages they resell in the securities market.
Democrats opposed the plan, citing both their desire to have banks keep some of the risk of the mortgages they write and their concern that the downpayment mandate would hurt lower income families.
Mortgage brokers opposed Merkley's measure, arguing it would create a two-tiered system separating mortgage brokers from bank lenders. They noted that the amendment would permit banks to receive greater payments from investors, such as large Wall Street firms, for bundled mortgages with higher interest rates.
"It's a legal incentivizing payment for those very loans that put the industry in this mess," said Roy DeLoach, executive vice president of the National Association of Mortgage Brokers.
The Senate rejected 59-39 a Republican proposal to regulate the complex securities known as derivatives, which would have diluted provisions contained in the pending legislation. The amendment would still have increased government oversight of the previously unregulated instruments, but it would have provided greater exceptions for participants in derivatives contracts who use them primarily to hedge against market fluctuations.
But the debate over derivatives is hardly over. Dodd has said the underlying bill's derivatives section still needs work. One provision in the bill to require banks to spin off their derivatives business into subsidiaries, faces opposition from bank regulators and from former Federal Reserve Chairman Paul Volcker, an Obama economic adviser.
Source: Copyright © 2010 The Associated Press, Jim Kuhnhenn. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Big push on Capitol Hill for real estate reforms
Realtors are asking the U.S. Congress to strengthen the Federal Housing Administration (FHA), extend FHA's high-cost loan limits, and get flood and disaster insurance reforms passed. It's part of NAR's push on Capitol Hill this week during NAR 2010 Midyear Legislative Meetings & Trade Expo.
Several thousand Realtors will be meeting with members of Congress during the week.
Realtors' top legislative priorities include:
Support for small business. Realtors would like the government to help small businesses get financing by allowing federal credit unions to loan a higher percentage of their assets than they can now. The increase would help offset the difficulty small businesses now face when trying to get a bank loan.
Stronger commercial market. Extending the Term Asset-Backed Securities Loan Facility (TALF) would help improve commercial mortgage market liquidity and push Congress to act quickly on reauthorizing funds for the Rural Housing Service (RHS) Sec. 502 loan guarantee program, which is on the verge of running out of money.
Various FHA reforms. Legislation to strengthen the FHA would allow the agency to increase its annual mortgage insurance premium, which borrowers can fold into their loan. FHA Commissioner David Stevens says that if the agency has that authority, it will be able to reduce its upfront mortgage insurance premium, which it raised several months ago to meet congressionally mandated reserve requirements. The upfront premium hurts borrowers more because it must be paid at closing.
The FHA legislation would also give the agency more tools for enforcing rules against bad lenders. NAR hopes to fast-track bill passage in the House, and then get it introduced and passed in the Senate as soon as possible.
NAR also hopes to make FHA's high-cost loan limits permanent. The limits, now at $729,750, expire in the fall. If the limits aren't extended, they will drop to about $417,000 – too low to make the FHA a viable financing option in many larger metropolitan areas like Boston, San Francisco, Washington and New York.
Flood and disaster insurance. NAR wants the national flood insurance and disaster insurance programs to strengthen private insurers' role in handling most disasters, reserving federal involvement as a backstop. Realtors will be asking members of Congress to pass the legislation in the House before Memorial Day. If that happens, NAR will turn its attention to the Senate.
Helping the commercial securities market recover. The commercial mortgage-backed securities (CMBS) market, which has been the principal means for getting financing into commercial markets for years, is starting to come back. Yet new CMBS issues remain, limiting volume to only a fraction of the amount needed to meet demand. NAR hopes to extend the TALF program to the end of the year. Investors would then have access to low-cost loans and could invest in commercial securities at a time when there is a lot of uncertainty remains about market strength.
Preventing bad amendments. The big focus of Congress now is financial services reform, and only part of the massive bill moving through Congress directly concerns real estate. Realtors have successfully defeated some amendments as they were introduced, including one that would have required all borrowers to put down a minimum 5 percent. Amendments and other tough measures that could hurt housing will probably be introduced again at different junctures of the legislative process, and NAR will continue to stand vigilant in support of real estate industry concerns.
Careful treatment of Fannie Mae and Freddie Mac. NAR's position on Fannie Mae and Freddie Mac reform is that it must be taken up separately, next year, and it must be undertaken carefully. Realtors oppose ending federal control of the secondary-mortgage companies before a structure is in place to ensure the availability of mortgage financing in the market, in good times and bad – the role the two companies are playing today.
Source: Robert Freedman, REALTOR® Magazine
Source: © 2010 Florida Realtors®
Several thousand Realtors will be meeting with members of Congress during the week.
Realtors' top legislative priorities include:
Support for small business. Realtors would like the government to help small businesses get financing by allowing federal credit unions to loan a higher percentage of their assets than they can now. The increase would help offset the difficulty small businesses now face when trying to get a bank loan.
Stronger commercial market. Extending the Term Asset-Backed Securities Loan Facility (TALF) would help improve commercial mortgage market liquidity and push Congress to act quickly on reauthorizing funds for the Rural Housing Service (RHS) Sec. 502 loan guarantee program, which is on the verge of running out of money.
Various FHA reforms. Legislation to strengthen the FHA would allow the agency to increase its annual mortgage insurance premium, which borrowers can fold into their loan. FHA Commissioner David Stevens says that if the agency has that authority, it will be able to reduce its upfront mortgage insurance premium, which it raised several months ago to meet congressionally mandated reserve requirements. The upfront premium hurts borrowers more because it must be paid at closing.
The FHA legislation would also give the agency more tools for enforcing rules against bad lenders. NAR hopes to fast-track bill passage in the House, and then get it introduced and passed in the Senate as soon as possible.
NAR also hopes to make FHA's high-cost loan limits permanent. The limits, now at $729,750, expire in the fall. If the limits aren't extended, they will drop to about $417,000 – too low to make the FHA a viable financing option in many larger metropolitan areas like Boston, San Francisco, Washington and New York.
Flood and disaster insurance. NAR wants the national flood insurance and disaster insurance programs to strengthen private insurers' role in handling most disasters, reserving federal involvement as a backstop. Realtors will be asking members of Congress to pass the legislation in the House before Memorial Day. If that happens, NAR will turn its attention to the Senate.
Helping the commercial securities market recover. The commercial mortgage-backed securities (CMBS) market, which has been the principal means for getting financing into commercial markets for years, is starting to come back. Yet new CMBS issues remain, limiting volume to only a fraction of the amount needed to meet demand. NAR hopes to extend the TALF program to the end of the year. Investors would then have access to low-cost loans and could invest in commercial securities at a time when there is a lot of uncertainty remains about market strength.
Preventing bad amendments. The big focus of Congress now is financial services reform, and only part of the massive bill moving through Congress directly concerns real estate. Realtors have successfully defeated some amendments as they were introduced, including one that would have required all borrowers to put down a minimum 5 percent. Amendments and other tough measures that could hurt housing will probably be introduced again at different junctures of the legislative process, and NAR will continue to stand vigilant in support of real estate industry concerns.
Careful treatment of Fannie Mae and Freddie Mac. NAR's position on Fannie Mae and Freddie Mac reform is that it must be taken up separately, next year, and it must be undertaken carefully. Realtors oppose ending federal control of the secondary-mortgage companies before a structure is in place to ensure the availability of mortgage financing in the market, in good times and bad – the role the two companies are playing today.
Source: Robert Freedman, REALTOR® Magazine
Source: © 2010 Florida Realtors®
Foreclosures down 2 percent from last year
Millions of Americans are still likely to lose their homes in the coming years, but the foreclosure crisis is finally showing signs of subsiding.
The number of households facing foreclosure in April fell 2 percent from a year ago, the first annual decline in five years, RealtyTrac Inc. said Thursday.
But the data aren't all sunny. While the number of new delinquencies is dropping, the number of borrowers losing their homes is still rising. Banks seized a record 92,000 homes last month.
And there are millions more potential foreclosures ahead. Nearly 7.4 million borrowers, or 12 percent of all households with a mortgage, had missed at least one month of payments or were in foreclosure as of March, according to Lender Processing Services Inc., a mortgage data research firm.
RealtyTrac, a foreclosure-listing firm in Irvine, Calif., reported that nearly 334,000 households, or one in every 387 homes, received a foreclosure-related notice in April. That was down more than 9 percent from March.
Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures.
As the economy turns around, "you will see an improvement in housing markets and in foreclosure activity," said Rick Sharga, a RealtyTrac senior vice president. "The problem is that there's such a backlog right now."
Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can't qualify or fall back into default.
The Obama administration is managing a $75 billion program that so far has helped about 231,000 homeowners with permanent reductions to their monthly mortgage bills. That's about 20 percent of the 1.2 million borrowers who started the program over the past year.
Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. Cities lose property tax dollars from homes that sit empty and lower property values.
Among states, Nevada posted the highest foreclosure rate in April, with one in every 69 households receiving a foreclosure notice. Foreclosures there were up 10 percent from March, but unchanged from a year earlier. Next on the list were Arizona, Florida, California and Michigan.
Las Vegas continued to be the city with the nation's highest foreclosure rate, but activity there was down 3 percent from a year earlier.
And in another sign the problem is receding, nine out of the top 10 cities with the highest foreclosure rates posted annual declines. The exception was Reno, Nev., where foreclosures were up 16 percent from a year ago.
Source: Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
The number of households facing foreclosure in April fell 2 percent from a year ago, the first annual decline in five years, RealtyTrac Inc. said Thursday.
But the data aren't all sunny. While the number of new delinquencies is dropping, the number of borrowers losing their homes is still rising. Banks seized a record 92,000 homes last month.
And there are millions more potential foreclosures ahead. Nearly 7.4 million borrowers, or 12 percent of all households with a mortgage, had missed at least one month of payments or were in foreclosure as of March, according to Lender Processing Services Inc., a mortgage data research firm.
RealtyTrac, a foreclosure-listing firm in Irvine, Calif., reported that nearly 334,000 households, or one in every 387 homes, received a foreclosure-related notice in April. That was down more than 9 percent from March.
Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures.
As the economy turns around, "you will see an improvement in housing markets and in foreclosure activity," said Rick Sharga, a RealtyTrac senior vice president. "The problem is that there's such a backlog right now."
Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can't qualify or fall back into default.
The Obama administration is managing a $75 billion program that so far has helped about 231,000 homeowners with permanent reductions to their monthly mortgage bills. That's about 20 percent of the 1.2 million borrowers who started the program over the past year.
Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. Cities lose property tax dollars from homes that sit empty and lower property values.
Among states, Nevada posted the highest foreclosure rate in April, with one in every 69 households receiving a foreclosure notice. Foreclosures there were up 10 percent from March, but unchanged from a year earlier. Next on the list were Arizona, Florida, California and Michigan.
Las Vegas continued to be the city with the nation's highest foreclosure rate, but activity there was down 3 percent from a year earlier.
And in another sign the problem is receding, nine out of the top 10 cities with the highest foreclosure rates posted annual declines. The exception was Reno, Nev., where foreclosures were up 16 percent from a year ago.
Source: Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Wednesday, May 12, 2010
Democrats reject end to Fannie, Freddie support
Senate Democrats have rejected a Republican proposal to end the government's support of mortgage giants Fannie Mae and Freddie Mac.
The vote was 56-43. Instead, the Senate voted to instruct the Treasury to recommend how the government can end its relationship with the two housing finance companies.
The GOP plan also would have repealed the companies' mandate to promote affordable housing. Republicans said the Democratic plan simply put off a decision that should be addressed in conjunction with new financial regulations. The taxpayer bill for rescuing the two stands at $145 billion.
Under the adopted proposal, Treasury has to consider winding down and liquidating Fannie and Freddie, privatizing the two companies or breaking them up into smaller companies.
Source: Copyright © 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Associated Press writer Jeannine Aversa contributed to this report.
The vote was 56-43. Instead, the Senate voted to instruct the Treasury to recommend how the government can end its relationship with the two housing finance companies.
The GOP plan also would have repealed the companies' mandate to promote affordable housing. Republicans said the Democratic plan simply put off a decision that should be addressed in conjunction with new financial regulations. The taxpayer bill for rescuing the two stands at $145 billion.
Under the adopted proposal, Treasury has to consider winding down and liquidating Fannie and Freddie, privatizing the two companies or breaking them up into smaller companies.
Source: Copyright © 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Associated Press writer Jeannine Aversa contributed to this report.
Housing market is stabilizing, says FHA commissioner
The Federal Housing Administration (FHA) has played a fundamental role in helping stabilize the nation's housing market; however, FHA reform is critical for keeping the housing and economic recovery on the right track.
That's according to David H. Stevens, assistant secretary of the U.S. Department of Housing and Urban Development (HUD) and Federal Housing Administration commissioner. Stevens spoke to several thousand Realtors attending the National Association of Realtors® Midyear Legislative Meetings & Trade Expo in Washington, D.C. this week.
Stevens credited increased homebuyer demand, brought about by the federal buyer tax credits, and the federal government's purchase of mortgage-backed securities for helping restore consumer confidence and get the economy moving.
"Home prices and sales are beginning to recover, inventories are down, private capital is beginning to re-emerge, investor confidence is coming back and the job market is showing signs of improvement. These all show renewed confidence in the housing market. We need to finish the job now and make the housing recovery sustainable and keep the economy on the right track," said Stevens.
Despite the signs of improving stability, Stevens said that the housing market continues to face challenges, mainly from unemployment and homeowners with negative equity. "These issues need to be dealt with responsibly, we need solutions to help the most severely distressed homeowners – those most in need and at risk – and when we can't help them we need to make the transition as smooth as possible."
According to Stevens, helping underwater borrowers is critical to stemming the tide of foreclosures, and recently announced revisions to FHA and the Home Affordable Modification Program will help stabilize home prices and keep more people in their homes. FHA refinances will help homeowners write down principal balances or modify and restructure loans into safer, sustainable products. HAMP program changes include a forbearance, or temporary assistance, for unemployed homeowners while they look for work.
Stevens said FHA continues to play a pivotal role in housing recovery and reemphasized that reform is critical. "After the housing market crashed, FHA had to step in to play a vital role. Over the past three years, FHA reacted by increasing its market share dramatically. There would be no housing market recovery without FHA; however, the program is at risk. We cannot continue to operate under the current construct if we don't shore up its fiscal situation. We need to make FHA stronger," said Stevens.
Stevens asked Realtors at the meeting to lend their support for the passage of H.R. 5072, the "FHA Reform Act of 2010," which would allow FHA to hold lenders accountable for the loans they underwrite and originate, and give FHA the flexibility to respond to changes in the marketplace by granting additional authority to adjust the annual mortgage insurance premium and reduce borrowers' upfront mortgage insurance premiums.
"Adopting these changes during the current fiscal year would replenish FHA's capital reserves and strengthen its financial position," said Stevens.
Stevens ended the session by reaffirming his commitment to continue working with Realtors to fully rebuild the housing market. "Realtors are the face of the real estate industry and of the American dream. Realtors know the community better than anyone else; indeed, there is no group in America that better understands homeownership," said Stevens.
More than 7,000 Realtors are expected to attend the Midyear Legislative Meetings & Trade Expo. During the week, they will also meet with legislators on Capitol Hill to urge action toward stabilizing the U.S. mortgage finance delivery system, strengthening housing stability, and improving liquidity for the commercial real estate market.
Source: © 2010 Florida Realtors®
That's according to David H. Stevens, assistant secretary of the U.S. Department of Housing and Urban Development (HUD) and Federal Housing Administration commissioner. Stevens spoke to several thousand Realtors attending the National Association of Realtors® Midyear Legislative Meetings & Trade Expo in Washington, D.C. this week.
Stevens credited increased homebuyer demand, brought about by the federal buyer tax credits, and the federal government's purchase of mortgage-backed securities for helping restore consumer confidence and get the economy moving.
"Home prices and sales are beginning to recover, inventories are down, private capital is beginning to re-emerge, investor confidence is coming back and the job market is showing signs of improvement. These all show renewed confidence in the housing market. We need to finish the job now and make the housing recovery sustainable and keep the economy on the right track," said Stevens.
Despite the signs of improving stability, Stevens said that the housing market continues to face challenges, mainly from unemployment and homeowners with negative equity. "These issues need to be dealt with responsibly, we need solutions to help the most severely distressed homeowners – those most in need and at risk – and when we can't help them we need to make the transition as smooth as possible."
According to Stevens, helping underwater borrowers is critical to stemming the tide of foreclosures, and recently announced revisions to FHA and the Home Affordable Modification Program will help stabilize home prices and keep more people in their homes. FHA refinances will help homeowners write down principal balances or modify and restructure loans into safer, sustainable products. HAMP program changes include a forbearance, or temporary assistance, for unemployed homeowners while they look for work.
Stevens said FHA continues to play a pivotal role in housing recovery and reemphasized that reform is critical. "After the housing market crashed, FHA had to step in to play a vital role. Over the past three years, FHA reacted by increasing its market share dramatically. There would be no housing market recovery without FHA; however, the program is at risk. We cannot continue to operate under the current construct if we don't shore up its fiscal situation. We need to make FHA stronger," said Stevens.
Stevens asked Realtors at the meeting to lend their support for the passage of H.R. 5072, the "FHA Reform Act of 2010," which would allow FHA to hold lenders accountable for the loans they underwrite and originate, and give FHA the flexibility to respond to changes in the marketplace by granting additional authority to adjust the annual mortgage insurance premium and reduce borrowers' upfront mortgage insurance premiums.
"Adopting these changes during the current fiscal year would replenish FHA's capital reserves and strengthen its financial position," said Stevens.
Stevens ended the session by reaffirming his commitment to continue working with Realtors to fully rebuild the housing market. "Realtors are the face of the real estate industry and of the American dream. Realtors know the community better than anyone else; indeed, there is no group in America that better understands homeownership," said Stevens.
More than 7,000 Realtors are expected to attend the Midyear Legislative Meetings & Trade Expo. During the week, they will also meet with legislators on Capitol Hill to urge action toward stabilizing the U.S. mortgage finance delivery system, strengthening housing stability, and improving liquidity for the commercial real estate market.
Source: © 2010 Florida Realtors®
Home prices could sink again
Home prices are widely expected to fall now that a tax credit for homebuyers has expired.
That's raising concern about a possible double dip in home prices.
National housing prices stopped falling early last year and rose 0.3 percent over the 12 months ended in February, according to a study by real estate analytics firm CoreLogic.
The firm predicts prices will fall this year before starting to rise again in late 2010. Even so, next February's prices are likely to be 4.2 percent lower, it forecasts.
"Home prices will struggle for maybe another year," says Mark Fleming, CoreLogic's chief economist.
A shrunken pool of buyers due to the tax credit's expiration is one reason.
"The tax credit is the big reason home prices have been so buoyant, and sales will drop" with its expiration, says Paul Ashworth of Capital Economics. "You will see a double dip in housing prices."
Another reason is the number of distressed houses – including foreclosures and short sales – that are on the market or that will be in coming months.
Distressed homes, typically sold at discounted prices, accounted for 36 percent of first-quarter sales, the National Association of Realtors reported Tuesday. The first quarter's median single-family home price ($166,100) was roughly flat with a year earlier, despite gains in nearly two-thirds of 152 metro areas that the NAR surveys.
The NAR's survey isn't the first to show evidence of softening prices. The 20-city Standard & Poor's/Case-Shiller home price index has fallen for five-consecutive months through February.
"It is too early to say the housing market is recovering," David Blitzer, chairman of S&P's index committee, said when the Case-Shiller report for February was released last month.
There may be some good news for sellers in areas not hit so hard by foreclosures. When distressed sales are excluded, CoreLogic's home price index shows a 4.9 percent rise in U.S. prices from this February through next February.
While some economists expect home prices to weaken, they don't expect a major drop.
"I wouldn't expect anything like the meltdown we've had over the past couple years," says Jay Feldman, senior economist at Credit Suisse.
Source: Copyright © USA TODAY 2010, a division of Gannett Co. Inc. Stephanie Armour.
That's raising concern about a possible double dip in home prices.
National housing prices stopped falling early last year and rose 0.3 percent over the 12 months ended in February, according to a study by real estate analytics firm CoreLogic.
The firm predicts prices will fall this year before starting to rise again in late 2010. Even so, next February's prices are likely to be 4.2 percent lower, it forecasts.
"Home prices will struggle for maybe another year," says Mark Fleming, CoreLogic's chief economist.
A shrunken pool of buyers due to the tax credit's expiration is one reason.
"The tax credit is the big reason home prices have been so buoyant, and sales will drop" with its expiration, says Paul Ashworth of Capital Economics. "You will see a double dip in housing prices."
Another reason is the number of distressed houses – including foreclosures and short sales – that are on the market or that will be in coming months.
Distressed homes, typically sold at discounted prices, accounted for 36 percent of first-quarter sales, the National Association of Realtors reported Tuesday. The first quarter's median single-family home price ($166,100) was roughly flat with a year earlier, despite gains in nearly two-thirds of 152 metro areas that the NAR surveys.
The NAR's survey isn't the first to show evidence of softening prices. The 20-city Standard & Poor's/Case-Shiller home price index has fallen for five-consecutive months through February.
"It is too early to say the housing market is recovering," David Blitzer, chairman of S&P's index committee, said when the Case-Shiller report for February was released last month.
There may be some good news for sellers in areas not hit so hard by foreclosures. When distressed sales are excluded, CoreLogic's home price index shows a 4.9 percent rise in U.S. prices from this February through next February.
While some economists expect home prices to weaken, they don't expect a major drop.
"I wouldn't expect anything like the meltdown we've had over the past couple years," says Jay Feldman, senior economist at Credit Suisse.
Source: Copyright © USA TODAY 2010, a division of Gannett Co. Inc. Stephanie Armour.
Fueled by overseas buyers, condo sales soar
Nicola Schon, an Italian restaurateur with homes in Monte Carlo, Milan and New York, wanted the perfect pied-a-terre in Miami, with plenty of space, water views and amenities such as a spa, concierge and room service.
So he bought a $1.8 million condo at Epic in downtown Miami – and persuaded 19 friends from Italy to buy there, too.
"The building is half-Italian now," joked Schon, who owns eateries Quattro and Sosta in Miami Beach. "We should put an Italian flag on the roof!"
International buyers are quickly converting their currency into real estate in South Florida, snatching up property at floor-sweeping prices. At high-end Epic, Schon paid about 25 percent less than he would have at pre-construction prices a few years ago.
Add low interest rates and a deadline for federal tax credits, and overall sales of single-family homes and condominiums in South Florida soared during the first three months of 2010, according to quarterly figures released Tuesday by Florida Realtors. The association's April numbers will be out May 24.
In Miami-Dade, sales of condos skyrocketed 46 percent during the first quarter, to 1,920, compared to the same period of 2009. Median prices fell 9 percent to $136,100, figures from Florida Realtors show.
The numbers reflect a real estate market where prices have generally bottomed out, said analyst David Dabby, president of Coral Gables-based Dabby Group Advisors.
"It's a continuation of the trend that has been in place for close to a year now. Prices have been reduced by 50 percent over the 2006 highs, and that has increased sales significantly," Dabby said. "Hopefully it will continue, because since 55 percent of the sales are [short sales and foreclosures], the more sales we have, the quicker we will be able to clear the foreclosure pipeline."
In fact, real estate agents say that buyers who were on the fence before are signing contracts, and renters are realizing it now makes sense to own.
Another reason sales have picked up is federal tax incentives. Buyers had until April 30 to sign a contract to purchase a primary residence and until June 30 to close on it to be eligible for the federal tax credit of up to $8,000 for first-time buyers and up to $6,500 for repeat buyers.
In April, 907 condos sold in Miami-Dade, compared to 872 in April 2009, and 1,330 sold in April in Broward, compared to 1,003 the same month the previous year, according to figures from EWM Realtors, which compiles them from aggregated MLS data.
Veronica Cervera, president of Miami-based Cervera Real Estate, which specializes in condos on Brickell, downtown Miami, Miami Beach and Key Biscayne, said she has seen a surge in international buyers including those from Italy, Germany, Spain, Sweden, Greece and even China. Many are buying vacation homes, she said.
International clients tell her: "We know we'll never see prices like this in Miami again," said Cervera, who sold Schon his unit. "I know the market has turned – it's evident," she said. "We're in the process of negotiating more deals in the last two-week period than we did last year, in some of the buildings."
Fewer than 40,000 condominiums and town houses are now for resale in South Florida, the lowest number of available units on the market in the last 18 months, according to a new report from CondoVultures.com.
Resale units in Miami-Dade, Broward, and Palm Beach counties have dropped by 23 percent, compared to May 2009 when there were 52,000 on the market, the report said.
"As you look at inventory and what is being depleted, Dade is moving much faster than Broward," said Peter Zalewski, principal with Condo Vultures, a real estate advisory firm. "Miami is really ahead of the curve: it peaked first, it bottomed out first and it is now showing signs of stabilization – and the other counties are following behind."
During the first quarter, sales of single-family homes in Miami-Dade jumped 12 percent, to 1,530 homes, amid a drop in median prices of 6 percent to $191,200, Florida Realtors figures show.
In Broward, sales of condos rose 45 percent during the first quarter to 2,739, as median prices fell 15 percent to $71,900. Sales of single-family homes inched up by 7 percent to 1,756, as median prices dropped 6 percent to $196,700, the figures show.
Jeff Watts and his wife Najat, who had been renting in Fort Lauderdale and before that in Aventura, just bought a $360,000 townhome in downtown Fort Lauderdale's Rio Vista neighborhood for their growing family of four.
"When we ran the numbers of purchasing the townhome versus renting, it made economic sense to buy, because we had the money to put down," said Jeff Watts, 34, who works in banking. Luckily, they experienced a buyer's market, in terms of price negotiation and the amount of inventory, he said.
Liz Caldwell, the EWM Realtor who worked with Watts, said the townhome the Watts family purchased was priced at $550,000 to $600,000 at the peak of the market in 2006. She expects it to rise in value over time. "The worst is over probably in terms of values," said Caldwell, who specializes in Broward real estate from Weston to Fort Lauderdale.
"You will see some drop in value in the high-end, but for the average dual-income family looking to buy a $600,000-$700,000 house, those values have pretty much stabilized."
Source: Copyright © 2010 The Miami Herald, Ina Paiva Cordle. Distributed by McClatchy-Tribune Information Services.
So he bought a $1.8 million condo at Epic in downtown Miami – and persuaded 19 friends from Italy to buy there, too.
"The building is half-Italian now," joked Schon, who owns eateries Quattro and Sosta in Miami Beach. "We should put an Italian flag on the roof!"
International buyers are quickly converting their currency into real estate in South Florida, snatching up property at floor-sweeping prices. At high-end Epic, Schon paid about 25 percent less than he would have at pre-construction prices a few years ago.
Add low interest rates and a deadline for federal tax credits, and overall sales of single-family homes and condominiums in South Florida soared during the first three months of 2010, according to quarterly figures released Tuesday by Florida Realtors. The association's April numbers will be out May 24.
In Miami-Dade, sales of condos skyrocketed 46 percent during the first quarter, to 1,920, compared to the same period of 2009. Median prices fell 9 percent to $136,100, figures from Florida Realtors show.
The numbers reflect a real estate market where prices have generally bottomed out, said analyst David Dabby, president of Coral Gables-based Dabby Group Advisors.
"It's a continuation of the trend that has been in place for close to a year now. Prices have been reduced by 50 percent over the 2006 highs, and that has increased sales significantly," Dabby said. "Hopefully it will continue, because since 55 percent of the sales are [short sales and foreclosures], the more sales we have, the quicker we will be able to clear the foreclosure pipeline."
In fact, real estate agents say that buyers who were on the fence before are signing contracts, and renters are realizing it now makes sense to own.
Another reason sales have picked up is federal tax incentives. Buyers had until April 30 to sign a contract to purchase a primary residence and until June 30 to close on it to be eligible for the federal tax credit of up to $8,000 for first-time buyers and up to $6,500 for repeat buyers.
In April, 907 condos sold in Miami-Dade, compared to 872 in April 2009, and 1,330 sold in April in Broward, compared to 1,003 the same month the previous year, according to figures from EWM Realtors, which compiles them from aggregated MLS data.
Veronica Cervera, president of Miami-based Cervera Real Estate, which specializes in condos on Brickell, downtown Miami, Miami Beach and Key Biscayne, said she has seen a surge in international buyers including those from Italy, Germany, Spain, Sweden, Greece and even China. Many are buying vacation homes, she said.
International clients tell her: "We know we'll never see prices like this in Miami again," said Cervera, who sold Schon his unit. "I know the market has turned – it's evident," she said. "We're in the process of negotiating more deals in the last two-week period than we did last year, in some of the buildings."
Fewer than 40,000 condominiums and town houses are now for resale in South Florida, the lowest number of available units on the market in the last 18 months, according to a new report from CondoVultures.com.
Resale units in Miami-Dade, Broward, and Palm Beach counties have dropped by 23 percent, compared to May 2009 when there were 52,000 on the market, the report said.
"As you look at inventory and what is being depleted, Dade is moving much faster than Broward," said Peter Zalewski, principal with Condo Vultures, a real estate advisory firm. "Miami is really ahead of the curve: it peaked first, it bottomed out first and it is now showing signs of stabilization – and the other counties are following behind."
During the first quarter, sales of single-family homes in Miami-Dade jumped 12 percent, to 1,530 homes, amid a drop in median prices of 6 percent to $191,200, Florida Realtors figures show.
In Broward, sales of condos rose 45 percent during the first quarter to 2,739, as median prices fell 15 percent to $71,900. Sales of single-family homes inched up by 7 percent to 1,756, as median prices dropped 6 percent to $196,700, the figures show.
Jeff Watts and his wife Najat, who had been renting in Fort Lauderdale and before that in Aventura, just bought a $360,000 townhome in downtown Fort Lauderdale's Rio Vista neighborhood for their growing family of four.
"When we ran the numbers of purchasing the townhome versus renting, it made economic sense to buy, because we had the money to put down," said Jeff Watts, 34, who works in banking. Luckily, they experienced a buyer's market, in terms of price negotiation and the amount of inventory, he said.
Liz Caldwell, the EWM Realtor who worked with Watts, said the townhome the Watts family purchased was priced at $550,000 to $600,000 at the peak of the market in 2006. She expects it to rise in value over time. "The worst is over probably in terms of values," said Caldwell, who specializes in Broward real estate from Weston to Fort Lauderdale.
"You will see some drop in value in the high-end, but for the average dual-income family looking to buy a $600,000-$700,000 house, those values have pretty much stabilized."
Source: Copyright © 2010 The Miami Herald, Ina Paiva Cordle. Distributed by McClatchy-Tribune Information Services.
Tuesday, May 11, 2010
April delinquencies fall for ‘Alt-A’ mortgages
Fitch Ratings on Monday said late payments on high-risk residential mortgages known as 'Alt-A' loans fell last month for the first time in four years as more borrowers caught up on their payments and modified their loans.
Fitch said delinquencies on so-called 'Alt-A' residential mortgage-backed securities declined to 34.1 percent in April from 34.4 percent in March - marking the first month-over-month decline in that category since April 2006.
However, last month's delinquency rate was still up from 27.4 percent in April 2009. Fitch also cautioned that about 8 percent of current 'Alt-A' loans and 35 percent of subprime loans have been modified from their original terms, and consequently have a substantial risk of going back in default.
'Alt-A' mortgages required little or no documentation of the borrower's ability to pay. They were a key part of the surge in subprime mortgage delinquencies that helped trigger a broader downturn in the housing market starting in 2007. Mortgages in California and Florida represent more than 50 percent of the nationwide volume of 'Alt-A' loans outstanding.
Fitch said late payments on subprime mortgages offered to borrowers with shaky credit ratings fell for the second straight month in April, to 45.2 percent from 46.3 percent. However, prime jumbo delinquencies for those with more solid credit ratings rose slightly as unemployment benefits begin to run out for many and job openings are slow to return. After nearly tripling in 2009, those delinquencies are up another 98 basis points since the beginning of the year.
Vincent Barberio, a Fitch managing director, said April's month-to-month declines for Alt-A and subprime delinquencies "may be a signal that residential mortgage-backed securities performance is beginning to turn the corner."
"The next few months will be a better indicator of whether we're witnessing the beginnings of a legitimate turnaround or a short-term seasonal effect of tax refunds," Barberio said.
Also Monday, government-controlled lender Fannie Mae asked taxpayers for another $8.4 billion after reporting another steep loss for the first quarter. Though there have been some signs of stability in the housing market this year, Fannie Mae warned that mortgage defaults will remain elevated, foreclosures will increase and that home prices will decline slightly.
Source: Copyright © 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Fitch said delinquencies on so-called 'Alt-A' residential mortgage-backed securities declined to 34.1 percent in April from 34.4 percent in March - marking the first month-over-month decline in that category since April 2006.
However, last month's delinquency rate was still up from 27.4 percent in April 2009. Fitch also cautioned that about 8 percent of current 'Alt-A' loans and 35 percent of subprime loans have been modified from their original terms, and consequently have a substantial risk of going back in default.
'Alt-A' mortgages required little or no documentation of the borrower's ability to pay. They were a key part of the surge in subprime mortgage delinquencies that helped trigger a broader downturn in the housing market starting in 2007. Mortgages in California and Florida represent more than 50 percent of the nationwide volume of 'Alt-A' loans outstanding.
Fitch said late payments on subprime mortgages offered to borrowers with shaky credit ratings fell for the second straight month in April, to 45.2 percent from 46.3 percent. However, prime jumbo delinquencies for those with more solid credit ratings rose slightly as unemployment benefits begin to run out for many and job openings are slow to return. After nearly tripling in 2009, those delinquencies are up another 98 basis points since the beginning of the year.
Vincent Barberio, a Fitch managing director, said April's month-to-month declines for Alt-A and subprime delinquencies "may be a signal that residential mortgage-backed securities performance is beginning to turn the corner."
"The next few months will be a better indicator of whether we're witnessing the beginnings of a legitimate turnaround or a short-term seasonal effect of tax refunds," Barberio said.
Also Monday, government-controlled lender Fannie Mae asked taxpayers for another $8.4 billion after reporting another steep loss for the first quarter. Though there have been some signs of stability in the housing market this year, Fannie Mae warned that mortgage defaults will remain elevated, foreclosures will increase and that home prices will decline slightly.
Source: Copyright © 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
High-end homes fall prey to foreclosure
Heated pools, ocean views and media rooms are not what most people would expect to find in a foreclosed property, but more high-end homes – priced at more than a million dollars – have been falling into the hands of banks this year.
Foreclosures of homes worth more than $1 million began increasing at the end of 2009, according to data provided to CNBC.com by foreclosure tracking website RealtyTrac.
Foreclosures reached a high in February 2010, the last month data were available, when 4,169 high-end homes were somewhere in the foreclosure process; having received a foreclosure notice, had an auction scheduled or had ownership taken over by the lender. That's a 121 percent increase from a year ago.
The deterioration comes just as housing experts say that foreclosures in the low and middle ends of the housing market are showing signs of stabilization.
Owners of expensive homes "were able to stave off foreclosure longer," says independent real estate analyst Jack McCabe, CEO of McCabe Research and Consulting in South Florida. "Lower-end homeowners were the first ones to see the escalating foreclosures, because they generally do not have the cash reserves or credit available that the luxury homeowners do. They had the ability to take their credit cards and pull out thousands of dollars, while the lower-end buyers were already tapped out."
McCabe expects foreclosures in the high-end market will increase into 2011.
Though the RealtyTrac data on high-end homes are not available on a regional or metropolitan basis, anecdotal evidence indicates the problem is cropping up across the country. High-end and luxury categories vary widely from market to market. In some suburban areas, in the Northeast and California, for instance, million-dollar homes are fairly common; but nationwide, they represent 1.1 percent of overall housing stock.
"We have seen an increase, in the million-plus range, of the number of foreclosures and short sales in the greater Chicago area," says Jim Kinney, vice president of luxury home sales at Baird & Warner.
He says that of the 295 million-dollar, single-family properties sold in the first quarter this year, 37 were either a foreclosure or short sale, when a bank and homeowner agree to sell the home for less than the loan is worth. During the same period a year ago, 10 of 231 fell into those categories.
In the Fort Myers, Fla., area, Mike McMurray of McMurray and Nette and the VIP Realty Group says he has seen a few foreclosed high-end homes on the market compared with none last year. He's currently showing a 4,800-square-foot, $3.65 million home on Captiva Island, where foreclosures are usually rare. The bank-owned home has five bedrooms and access to 150 feet of Gulf Coast beachfront.
"There are more we see coming down the pipeline," McMurray says.
Data show that may be the case around the country. The 90-day delinquency rate on home loans worth more than a million dollars hit a high in February at 13.3 percent, above the overall rate of 8.6 percent, according to real estate data firm First American CoreLogic. Foreclosure proceedings generally start after a homeowner has been at least 90 days late on a mortgage payment, experts say.
One difference in the high-end market is that lenders are willing to do more to head off foreclosure by renegotiating the loan or accepting a short-sale transaction, which is essentially a last-ditch effort.
"Lenders are far more likely to go the short-sale route," says Andrew LePage, an analyst at real estate research firm DataQuick. "There's a lot more money at stake, and maintenance can be high if a foreclosure just sits there."
A $1.15 million condominium in Chicago in the landmark Palmolive Building was initially offered as a short sale, but after a buyer did not materialize, it's now owned by the bank, says Janice Corley, founder of Sudler Sotheby's International Realty, which is currently listing it. The condo has lake views and a long list of luxury-building amenities, including a steam room, doorman and gym.
The rise in luxury foreclosures has one Las Vegas real estate agent flying prospective buyers into the city via private jet. Luxury Homes of Las Vegas and JetSuite Air teamed to offer the complimentary trip for buyers flying from Los Angeles to view three foreclosed homes priced between $4.9 million and $6.1 million.
Agent Ken Lowman says he gave three tours over a one-week period and hopes to expand the offer to buyers from other West Coast cities.
There's just too much competition, Lowman says. "It takes an innovative approach like this to get results."
Source: Copyright © 2010 USA TODAY, a division of Gannett Co. Inc., Joseph Pisani
Foreclosures of homes worth more than $1 million began increasing at the end of 2009, according to data provided to CNBC.com by foreclosure tracking website RealtyTrac.
Foreclosures reached a high in February 2010, the last month data were available, when 4,169 high-end homes were somewhere in the foreclosure process; having received a foreclosure notice, had an auction scheduled or had ownership taken over by the lender. That's a 121 percent increase from a year ago.
The deterioration comes just as housing experts say that foreclosures in the low and middle ends of the housing market are showing signs of stabilization.
Owners of expensive homes "were able to stave off foreclosure longer," says independent real estate analyst Jack McCabe, CEO of McCabe Research and Consulting in South Florida. "Lower-end homeowners were the first ones to see the escalating foreclosures, because they generally do not have the cash reserves or credit available that the luxury homeowners do. They had the ability to take their credit cards and pull out thousands of dollars, while the lower-end buyers were already tapped out."
McCabe expects foreclosures in the high-end market will increase into 2011.
Though the RealtyTrac data on high-end homes are not available on a regional or metropolitan basis, anecdotal evidence indicates the problem is cropping up across the country. High-end and luxury categories vary widely from market to market. In some suburban areas, in the Northeast and California, for instance, million-dollar homes are fairly common; but nationwide, they represent 1.1 percent of overall housing stock.
"We have seen an increase, in the million-plus range, of the number of foreclosures and short sales in the greater Chicago area," says Jim Kinney, vice president of luxury home sales at Baird & Warner.
He says that of the 295 million-dollar, single-family properties sold in the first quarter this year, 37 were either a foreclosure or short sale, when a bank and homeowner agree to sell the home for less than the loan is worth. During the same period a year ago, 10 of 231 fell into those categories.
In the Fort Myers, Fla., area, Mike McMurray of McMurray and Nette and the VIP Realty Group says he has seen a few foreclosed high-end homes on the market compared with none last year. He's currently showing a 4,800-square-foot, $3.65 million home on Captiva Island, where foreclosures are usually rare. The bank-owned home has five bedrooms and access to 150 feet of Gulf Coast beachfront.
"There are more we see coming down the pipeline," McMurray says.
Data show that may be the case around the country. The 90-day delinquency rate on home loans worth more than a million dollars hit a high in February at 13.3 percent, above the overall rate of 8.6 percent, according to real estate data firm First American CoreLogic. Foreclosure proceedings generally start after a homeowner has been at least 90 days late on a mortgage payment, experts say.
One difference in the high-end market is that lenders are willing to do more to head off foreclosure by renegotiating the loan or accepting a short-sale transaction, which is essentially a last-ditch effort.
"Lenders are far more likely to go the short-sale route," says Andrew LePage, an analyst at real estate research firm DataQuick. "There's a lot more money at stake, and maintenance can be high if a foreclosure just sits there."
A $1.15 million condominium in Chicago in the landmark Palmolive Building was initially offered as a short sale, but after a buyer did not materialize, it's now owned by the bank, says Janice Corley, founder of Sudler Sotheby's International Realty, which is currently listing it. The condo has lake views and a long list of luxury-building amenities, including a steam room, doorman and gym.
The rise in luxury foreclosures has one Las Vegas real estate agent flying prospective buyers into the city via private jet. Luxury Homes of Las Vegas and JetSuite Air teamed to offer the complimentary trip for buyers flying from Los Angeles to view three foreclosed homes priced between $4.9 million and $6.1 million.
Agent Ken Lowman says he gave three tours over a one-week period and hopes to expand the offer to buyers from other West Coast cities.
There's just too much competition, Lowman says. "It takes an innovative approach like this to get results."
Source: Copyright © 2010 USA TODAY, a division of Gannett Co. Inc., Joseph Pisani
Monday, May 10, 2010
Fannie Mae seeks $8.4B in aid after 1Q loss
Fannie Mae has again asked taxpayers for more money after reporting a first-quarter loss of more than $13 billion.
The mortgage finance company, which was rescued by the government in September 2008, said it needs an additional $8.4 billion from the government to help cover mounting losses.
Fannie Mae says it lost $13.1 billion, or $2.29 per share, in the January-March period. That takes into account $1.5 billion in dividends paid to the Treasury Department. It compares with a loss of $23.2 billion, or $4.09 a share, in the year-ago period.
The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request for aid will bring Fannie Mae's total to $83.6 billion. The total bill for the duo will now be nearly $145 billion.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.
Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all mortgages.
The two companies, however, loosened their lending standards for borrowers during the real estate boom and are reeling from the consequences.
With the housing market still on shaky ground, Obama administration officials say it is still too early to draft any proposals to reform the two companies or the broader housing finance system.
But Republicans argue the sweeping financial overhaul currently before Congress is incomplete without a plan for Fannie and Freddie. They propose transforming Fannie and Freddie into private companies with no government subsidies, or shutting them down completely.
The legislation "touches nearly every corner of the economy," Alabama Sen. Richard Shelby said in the GOP weekly radio and Internet address over the weekend. "But these major contributors to the crisis are left unscathed," he added, singling out Fannie Mae and Freddie Mac.
Source: Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
The mortgage finance company, which was rescued by the government in September 2008, said it needs an additional $8.4 billion from the government to help cover mounting losses.
Fannie Mae says it lost $13.1 billion, or $2.29 per share, in the January-March period. That takes into account $1.5 billion in dividends paid to the Treasury Department. It compares with a loss of $23.2 billion, or $4.09 a share, in the year-ago period.
The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request for aid will bring Fannie Mae's total to $83.6 billion. The total bill for the duo will now be nearly $145 billion.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.
Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all mortgages.
The two companies, however, loosened their lending standards for borrowers during the real estate boom and are reeling from the consequences.
With the housing market still on shaky ground, Obama administration officials say it is still too early to draft any proposals to reform the two companies or the broader housing finance system.
But Republicans argue the sweeping financial overhaul currently before Congress is incomplete without a plan for Fannie and Freddie. They propose transforming Fannie and Freddie into private companies with no government subsidies, or shutting them down completely.
The legislation "touches nearly every corner of the economy," Alabama Sen. Richard Shelby said in the GOP weekly radio and Internet address over the weekend. "But these major contributors to the crisis are left unscathed," he added, singling out Fannie Mae and Freddie Mac.
Source: Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Fannie Mae seeks $8.4B in aid after 1Q loss
Fannie Mae has again asked taxpayers for more money after reporting a first-quarter loss of more than $13 billion.
The mortgage finance company, which was rescued by the government in September 2008, said it needs an additional $8.4 billion from the government to help cover mounting losses.
Fannie Mae says it lost $13.1 billion, or $2.29 per share, in the January-March period. That takes into account $1.5 billion in dividends paid to the Treasury Department. It compares with a loss of $23.2 billion, or $4.09 a share, in the year-ago period.
The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request for aid will bring Fannie Mae's total to $83.6 billion. The total bill for the duo will now be nearly $145 billion.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.
Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all mortgages.
The two companies, however, loosened their lending standards for borrowers during the real estate boom and are reeling from the consequences.
With the housing market still on shaky ground, Obama administration officials say it is still too early to draft any proposals to reform the two companies or the broader housing finance system.
But Republicans argue the sweeping financial overhaul currently before Congress is incomplete without a plan for Fannie and Freddie. They propose transforming Fannie and Freddie into private companies with no government subsidies, or shutting them down completely.
The legislation "touches nearly every corner of the economy," Alabama Sen. Richard Shelby said in the GOP weekly radio and Internet address over the weekend. "But these major contributors to the crisis are left unscathed," he added, singling out Fannie Mae and Freddie Mac.
Source: Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
The mortgage finance company, which was rescued by the government in September 2008, said it needs an additional $8.4 billion from the government to help cover mounting losses.
Fannie Mae says it lost $13.1 billion, or $2.29 per share, in the January-March period. That takes into account $1.5 billion in dividends paid to the Treasury Department. It compares with a loss of $23.2 billion, or $4.09 a share, in the year-ago period.
The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request for aid will bring Fannie Mae's total to $83.6 billion. The total bill for the duo will now be nearly $145 billion.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.
Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all mortgages.
The two companies, however, loosened their lending standards for borrowers during the real estate boom and are reeling from the consequences.
With the housing market still on shaky ground, Obama administration officials say it is still too early to draft any proposals to reform the two companies or the broader housing finance system.
But Republicans argue the sweeping financial overhaul currently before Congress is incomplete without a plan for Fannie and Freddie. They propose transforming Fannie and Freddie into private companies with no government subsidies, or shutting them down completely.
The legislation "touches nearly every corner of the economy," Alabama Sen. Richard Shelby said in the GOP weekly radio and Internet address over the weekend. "But these major contributors to the crisis are left unscathed," he added, singling out Fannie Mae and Freddie Mac.
Source: Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Late payments on mortgages show surprising 1Q drop
The rate of late mortgage payments dropped in the first quarter for the first time since 2006, according to credit reporting agency TransUnion.
The 60-day delinquency rate slipped to 6.77 percent, from 6.89 percent in the fourth quarter of 2009. That was the first decline after 12 consecutive quarters of steady increases, TransUnion said.
The first-quarter figure still represents a substantial jump from a year ago, when delinquencies were at 5.22 percent. But F.J. Guarrera, vice president in TransUnion's financial services business unit, said it's still good news.
"To see it turn down is a very, very strong sign," Guarrera said, adding that positive economic indicators like Friday's increase in job creation make the outlook even better.
"We cannot characterize it as a trend yet, but we anticipate that things will continue to improve." TransUnion expects another decrease for the current quarter, and then for the delinquency rate to stabilize for the rest of the year.
TransUnion measures the rate using mortgage payments that are 60 days late, or two skipped months. The figure is considered an important indicator of likely foreclosure, because of the difficulty someone in financial distress would have coming up with three payments to bring their mortgage current.
The company forecasts the delinquency rate will be about 6.3 percent by the end of the year.
In the first quarter of 2011, TransUnion expects late mortgage payments to start a significant decline. By the end of next year, the rate could be close to 5 percent, Guarrera said.
Historically, mortgage delinquencies hovered around 1.5 or 2 percent.
Delinquency rates remain the highest in the four states hit hardest by the housing market collapse: Nevada, at 15.98 percent, Florida, at 14.65 percent, Arizona, at 10.94 percent and California, at 10.68 percent.
TransUnion said the rate could top 18 percent in Florida by the end of the year. Nevada and Arizona will likely remain close to their current rates through 2011.
"I really do believe it will take longer in those states for improvement," Guarrera said. These states were left with a bigger surplus of housing that remained unsold during the recession. The surplus will likely keep pressure on housing prices, and make it harder for homeowners to refinance or get out from under mortgages that exceed the value of their homes. That increases the temptation to walk away from a mortgage and let the house slip into foreclosure.
California could see a slight decline in delinquencies by the end of 2010.
Delinquency rates remain the lowest in North Dakota, at just 1.76 percent, and South Dakota, at 2.44 percent.
The figures are culled from about 27 million randomly sampled credit files in TransUnion's database, representing about 10 percent of U.S. consumers who have active loans outstanding.
While the overall news is positive, Guarrera said it's still difficult to predict what might happen in coming months. "There's still a lot of uncertainty in the housing market," he said. "There's still a lot of delinquency out there, and home values have not started to improve."
Source: The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
The 60-day delinquency rate slipped to 6.77 percent, from 6.89 percent in the fourth quarter of 2009. That was the first decline after 12 consecutive quarters of steady increases, TransUnion said.
The first-quarter figure still represents a substantial jump from a year ago, when delinquencies were at 5.22 percent. But F.J. Guarrera, vice president in TransUnion's financial services business unit, said it's still good news.
"To see it turn down is a very, very strong sign," Guarrera said, adding that positive economic indicators like Friday's increase in job creation make the outlook even better.
"We cannot characterize it as a trend yet, but we anticipate that things will continue to improve." TransUnion expects another decrease for the current quarter, and then for the delinquency rate to stabilize for the rest of the year.
TransUnion measures the rate using mortgage payments that are 60 days late, or two skipped months. The figure is considered an important indicator of likely foreclosure, because of the difficulty someone in financial distress would have coming up with three payments to bring their mortgage current.
The company forecasts the delinquency rate will be about 6.3 percent by the end of the year.
In the first quarter of 2011, TransUnion expects late mortgage payments to start a significant decline. By the end of next year, the rate could be close to 5 percent, Guarrera said.
Historically, mortgage delinquencies hovered around 1.5 or 2 percent.
Delinquency rates remain the highest in the four states hit hardest by the housing market collapse: Nevada, at 15.98 percent, Florida, at 14.65 percent, Arizona, at 10.94 percent and California, at 10.68 percent.
TransUnion said the rate could top 18 percent in Florida by the end of the year. Nevada and Arizona will likely remain close to their current rates through 2011.
"I really do believe it will take longer in those states for improvement," Guarrera said. These states were left with a bigger surplus of housing that remained unsold during the recession. The surplus will likely keep pressure on housing prices, and make it harder for homeowners to refinance or get out from under mortgages that exceed the value of their homes. That increases the temptation to walk away from a mortgage and let the house slip into foreclosure.
California could see a slight decline in delinquencies by the end of 2010.
Delinquency rates remain the lowest in North Dakota, at just 1.76 percent, and South Dakota, at 2.44 percent.
The figures are culled from about 27 million randomly sampled credit files in TransUnion's database, representing about 10 percent of U.S. consumers who have active loans outstanding.
While the overall news is positive, Guarrera said it's still difficult to predict what might happen in coming months. "There's still a lot of uncertainty in the housing market," he said. "There's still a lot of delinquency out there, and home values have not started to improve."
Source: The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Friday, May 7, 2010
Reckless spending behind foreclosures
Did banks prey on unwitting consumers or did borrowers go into foreclosure because they stretched further than they should have?
Researchers at the University of Arkansas found that most households in foreclosure were relatively affluent and highly educated people with few or no children, living in geographical areas that experienced extremely rapid real estate appreciation.
The researchers divided U.S. households into 21 life-stage groups, using data from a variety of sources. Then they identified which groups experienced the most foreclosures. The group with the highest foreclosure percentage was one they dubbed "Cash & Careers" – affluent adults born between the mid-1960s and the early 1970s.
Members of this group had high household incomes, high education levels, high home values and none to only a few children. Also, members of this group were classified as aggressive investors, who mostly lived in areas – California, Nevada, Arizona, and Florida – with rapid real estate appreciation.
"The policy implication from our results is that strong consumer protection laws, though necessary to prevent Wall Street banks from offering high-risk loans to the most vulnerable – will not be sufficient to prevent another financial crisis like the one the U.S. economy experienced in 2007 and 2008," says Tim Yeager, associate professor of economics and lead author of the study.
Source: University of Arkansas (05/06/2010)
Source: INFORMATION, INC. Bethesda, MD
Researchers at the University of Arkansas found that most households in foreclosure were relatively affluent and highly educated people with few or no children, living in geographical areas that experienced extremely rapid real estate appreciation.
The researchers divided U.S. households into 21 life-stage groups, using data from a variety of sources. Then they identified which groups experienced the most foreclosures. The group with the highest foreclosure percentage was one they dubbed "Cash & Careers" – affluent adults born between the mid-1960s and the early 1970s.
Members of this group had high household incomes, high education levels, high home values and none to only a few children. Also, members of this group were classified as aggressive investors, who mostly lived in areas – California, Nevada, Arizona, and Florida – with rapid real estate appreciation.
"The policy implication from our results is that strong consumer protection laws, though necessary to prevent Wall Street banks from offering high-risk loans to the most vulnerable – will not be sufficient to prevent another financial crisis like the one the U.S. economy experienced in 2007 and 2008," says Tim Yeager, associate professor of economics and lead author of the study.
Source: University of Arkansas (05/06/2010)
Source: INFORMATION, INC. Bethesda, MD
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