Article of the Day

Homeowner Satisfaction Rate at 72%, Highest for Short Sale Purchasers

01/30/2012 By: Krista Franks 

Seventy-two percent of homeowners say they are satisfied with homeownership, according to a recent survey of more than 1,400 homeowners conducted by HomeGain, a provider of online marketing programs that connect agents and brokers with home buyers and sellers.

Among the 28 percent who said they were dissatisfied, 63 percent cited price depreciation as the main reason for their dissatisfaction.
Other dissatisfied homeowners cited the costs of owning and maintaining a home as major reasons for their dissatisfaction.
HomeGain also assessed satisfaction levels by sales type and found that homeowners who purchased a home through a short sale were the most likely to be pleased with their choice.
Eighty-three percent of short sale purchasers were satisfied homeowners.
Homeowners who purchased foreclosed homes were the group next likely to be satisfied with owning a home. The group reported a 79 percent satisfaction rate.
Existing-home and new home purchasers were least likely to be satisfied, though a majority of these homeowners

were still satisfied. Seventy-one percent of existing home purchasers and 73 percent of new home purchasers said they were satisfied.
Homeownership satisfaction varied somewhat by region with the highest satisfaction rates in the Northeast – 77 percent – and the lowest in the Midwest – 68 percent.
The Southeast and West fell in between at 73 percent and 71 percent, respectively.
When comparing satisfaction among homeowners of different age groups, HomeGain found that satisfaction was greatest among older homeowners and least prevalent among the youngest homeowners.
Homeowners ages 18 to 25 were the only homeowner to report more than a 50 percent dissatisfaction rate.
Fifty-five percent of homeowners ages 18 to 25 were dissatisfied with homeownership, while 24 percent of those 55 and older expressed dissatisfaction with being a homeowner.
The survey also found that home value was inversely related to homeownership satisfaction. Those whose homes are valued at less than $75,000 are 77 percent likely to be satisfied homeowners.
The rate trends steadily down as prices rise, with the highest category in the survey – homes valued at more than $801,000 – bringing in the lowest satisfaction rate – 69 percent.
Sixty-seven percent of dissatisfied homeowners with homes valued more than $801,000 cited price depreciation as a primary source of their discontent.
For those with homes valued less than $75,000, price appreciation was not a major factor in their outlook. Fewer than 40 percent of these homeowners cited price appreciation or depreciation as the primary reason for their position on homeownership.

Article of the Day

Processing Delays Manifested: 39% Fewer Foreclosure Starts in 2011

01/27/2012 By: Carrie Bay 

The number of foreclosure actions initiated in 2011 was down 38.7 percent compared to 2010, according to a new report from Lender Processing Services (LPS).

The company also reported that delinquencies at the end of 2011 were down nearly 8 percent from the previous year and were 25 percent below their peak in January 2010.
The foreclosure inventory, on the other hand, remains near historic highs, at 4.11 percent as of the end of December.

The numbers illustrate the impact of foreclosure processing delays brought on by the robo-signing controversy that surfaced in the fall of 2010, the impact of which remains strong in judicial states.
LPS says foreclosure inventories in judicial states remain 2.5 times that of non-judicial, while foreclosure sale rates in non-judicial states stood at approximately four times that of their judicial counterparts in December.
The company also found that half of all loans in foreclosure in judicial states have not made a payment in more than two years compared to 28 percent in non-judicial states.
Still, on average, LPS says pipeline ratios – which is the amount of time it would take to clear the inventory of loans seriously delinquent and in foreclosure at the current rate – have declined significantly from earlier this year.
The company’s data show that the states with the largest declines in non-current loans are all non-judicial, including Nevada, Arizona, Michigan, and California.

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Article of the Day

Mortgage Rates Reverse Course

01/26/2012 By: Carrie Bay 

Freddie Mac reported Thursday that mortgage interest rates have done a 180 and are now starting to climb, buoyed by positive housing data over recent weeks which show the market ended 2011 on a high note. Still, interest rates on home loans remain extremely low by historical standards.

For the week ending January 26, the 30-year fixed-rate mortgage averaged 3.98 percent (0.7 point), reversing its previous three-week trend of setting all-time record lows. Despite the jump, this marks the eighth consecutive week the 30-year fixed rate has remained below 4.00 percent.
The 30-year rate jumped 10 basis points over the past week, up from 3.88 percent reported by the GSE last Thursday. As a point of comparison, though, last year at this time the 30-year averaged 4.80 percent.

Freddie Mac’s study puts the 15-year fixed-rate mortgage at 3.24 percent (0.8 point) this week, up from last week’s average of 3.17 percent. A year ago at this time, the 15-year rate was averaging 4.09 percent.
The 5-year adjustable-rate mortgage (ARM) averaged 2.85 percent (0.7 point) this week. It was 2.82 percent last week and 3.70 percent this time last year.
The 1-year ARM was the only loan product in Freddie’s study that did not show upward movement, but there was no downward movement either. It came in at 2.74 percent (0.6 point), matching last week’s average. A year ago, the 1-year ARM averaged 3.26 percent.
Frank Nothaft, Freddie Mac’s chief economist, cited several pieces of positive housing data that point to improvements in the marketplace.
New construction of single-family homes rose 4.4 percent in December to an annualized rate of 470,000. That’s the most since April 2010, Nothaft noted.
Existing home sales increased 5.0 percent at the end of 2011 to an annualized sales pace of 4.61 million units – the largest amount since May 2010.
In addition, Nothaft points out that pending home sales in November and December averaged the highest reading since the March and April 2010 period.
Freddie Mac’s weekly mortgage rate survey averages data gathered from 125 lenders across the country.

Article of the Day

Obama Announces New Refi Program in State of the Union Address

01/25/2012 By: Krista Franks 

Despite rumors earlier in the week that President Barack Obama would announce a settlement between the state attorneys general and the nation’s top servicers in his State of the Union address, the president made no such announcement Tuesday night.

However, he did announce his intention to save millions of homeowners approximately $3,000 annually on their mortgages by allowing them to refinance at today’s low interest rates.
Obama also plans to create a Financial Crimes Unit to protect consumers from fraud schemes.
“[I]f you’re a mortgage lender or a payday lender or a credit card company, the days of signing people up for products they can’t afford with confusing forms and deceptive practices are over,” Obama said. “Today, American consumers finally have a watchdog in Richard Cordray with one job: To look out for them.”
Obama will also enlist the help of the nation’s attorney general to assemble a team to investigate “the abusive lending and packaging of risky mortgages that led to the housing crisis.”
“This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans,” the President stated.
While Obama did not go into detail on his refinance proposal, it appears the major difference in his new

proposal and the government’s Home Affordable Refinance Program (HARP) is that the new program would allow homeowners with loans not guaranteed by Fannie Mae, Freddie Mac, of the FHA to refinance.
The program would be funded by a “a small fee on the largest financial institutions,” which would “ensure that it won’t add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust,” Obama stated.
“In short the President is suggesting that the banks permanently pay a chunk of some households’ monthly mortgage payments,” said Paul Dales, senior economist at Capital Economics.
Dales called Obama’s proposal “another policy that tinkers at the margins rather than striking at the heart of the problems that are holding back housing and the wider economy.”
If the proposal is not staved off by Republicans, who according to Dales, “already think the government is too involved in housing,” it will likely have little effect on the market, Dales said.
It is projected to increase GDP by 0.1 percent at most – “even smaller if, much like previous policies, it fails to live up to expectations,” Dales said.
As with HARP, some homeowners may not be able to take advantage of the program because of up-front fees, and the program would do nothing to aid struggling homeowners who have fallen behind on payments, according to Dales.
While Dales suggested Republicans are unlikely to support the refinance program, Barclays points out that the program would not necessarily require Congressional approval.
“For example, the government (through the GSEs) could announce a blanket one-time waiver of reps and warranties for agency-backed loans that banks refinanced,” Barclays said.
“Banks would be only too happy to get out of the putback risk and would aggressively refi the borrowers they can.”
Such a plan would not require congressional approval.

Article of the Day

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

01/24/2012 By: Krista Franks 

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

Article of the Day

Investors With Cash Place Downward Pressure on Home Prices

01/23/2012 By: Carrie Bay 

Homebuyers with enough cash in hand to cover their offer price in full are able to bid significantly lower on properties and according to a new industry report released Monday, because they offer a shorter and more reliable closing timeline without the impediments of a mortgage, they often win out with that lower bid.

The study, provided by Campbell Surveys and Inside Mortgage Finance as part of the companies’ monthly HousingPulse Tracking Survey, found that this low-bid-winning dynamic is particularly true for distressed properties because mortgage servicers selling foreclosed or REO homes generally prefer transactions that can settle within 30 days.
The total share of distressed properties in the housing market in December, as represented by the HousingPulse Distressed Property Index (DPI), continued at a high level of 47.2 percent, based on a three-month moving average. December marked the 24th month in a row that the DPI has been above 40 percent.
Cash buyers, many of them investors, are putting downward pressure on home prices across the board, according to the HousingPulse Survey.

In December 2011, data collected for the HousingPulse Survey shows that the overall proportion of cash buyers in the housing market surged to a record 33.2 percent, up from 29.6 percent a year earlier.
Among investor homebuyers, however, the proportion of cash buyers was much higher, with 74 percent of investors laying down the money to purchase homes outright last month.
The latest survey results indicate investors accounted for 22.8 percent of all home purchase transactions in December 2011, up from 22.2 percent a month earlier.
Despite their relatively small share among homebuyers, investors have an outsize effect on home values because their bids bring down market prices, according to the HousingPulse survey report.
While investor bids may not be the first offers accepted, the report notes that they often end up winning properties after other homebuyers are eliminated because of mortgage approval or timeline problems.
Real estate agents responding to the HousingPulse Survey commented on low bids from investors.
“Investors usually offer 10 percent – 20 percent below list up to a price of $250K. First-time homebuyers are [offering] close to list [price] as are current homeowners. Investors want 2-4 weeks to close…Financing buyers end up with 6- 8 weeks plus,” reported an agent in Arizona.
“In competitive offer situations, cash offers prevail for the most part because of the common knowledge of lender closing issues,” noted an agent in New Jersey. “Cash sales close in 21-30 days. FHA sales close in 45 to 60 days.”
The HousingPulse Tracking Survey from Campbell Surveys and Inside Mortgage Finance polls 2,500 real estate agents nationwide each month to assess market trends surrounding homes sales and mortgage lending

Article of the Day

Rise in Home Sales Signifies Strengthening Market: Economists

01/20/2012 By: Krista Franks 

The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.

While admitting home sales “are still very low,” Paul Dales, chief economist at Capital Economics, says “it is clear that housing recovery is now well underway.”
The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December.
Lawrence Yun, chief economist for the National Association of Realtors (NAR), concurs with Dales’ assessment, saying “The pattern of home sales in recent months demonstrates a market in recovery.”
Yun suggests consumers are gaining confidence from “record low mortgage interest rates, job growth and bargain home prices.”
In addition to the 5 percent increase in December, NAR reported a 1.7 percent annual increase in existing-home sales in 2011, a total of 4.26 million homes for the year.

Distressed homes made up 32 percent of sales in December, according to NAR’s existing home sales report for the month.
Foreclosed home sales closed at about 22 percent below market rate in December, a discount 2 percent higher than that recorded a year earlier.
Investor demand remains steady with 21 percent of homes sold in December going to investors after this category of buyers took 19 percent of purchases in November and 20 percent one year ago.
Cash sales – commonly linked to investors – made up 31 percent of December’s existing-home sales. This rate was 28 percent in November and 29 percent a year ago.
Purchases by first-time home buyers declined in December – both from the previous month and the previous year. First-time home buyers accounted for 31 percent of purchases in December, down from 35 percent in November and 33 percent in December 2010.
Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently.
“The inventory supply suggests many markets will continue to see prices stabilize or grow moderately in the near future,” Yun said.
However, listed inventory is only part of the equation, and according to CoreLogic’s latest numbers, shadow inventory stands at about 1.6 million.
Regardless, Dales believes sales will rise this year. “Housing still won’t contribute much to GDP growth over the next few years, but at least it will no longer subtract from it,” Dales says.

Article of the Day

Delinquency and Foreclosure Rates Down From a Year Ago: LPS

01/19/2012 By: Carrie Bay 

Lender Processing Services (LPS) has provided the media with a sneak peek at the results of its mortgage performance data through 2011.

As of the end of December, the company counted 6,167,000 borrowers behind on their mortgage payments, including those already in the process of foreclosure.
That tally is the culmination of a steady decline over the last year, with both the national delinquency rate and foreclosure rate down when compared to their December 2010 readings.

Delinquencies were unchanged between the months of November and December, but declined 7.7 percent from December 2010. LPS puts the mortgage delinquency rate, including loans 30 or more days past due but not in foreclosure, at 8.15 percent.
Foreclosures declined by 1.3 percent from November to December and are 1.0 percent below the level reported at the end of 2010. By LPS’ calculations, the national foreclosure inventory rate is 4.11 percent.
Of the 6,167,000 mortgages going unpaid in the United States, LPS says 2,066,000 are in foreclosure. The remaining 4,101,000 haven’t made it that far down the pipeline, even though 1,792,000 are 90 or more days delinquent.
States with the highest percentage of non-current loans, combining delinquencies and foreclosures, included Florida, Mississippi, Nevada, New Jersey, and Illinois as of the end of December.
The lowest percentage of non-current loans can be found in Montana, Wyoming, South Dakota, Alaska, and North Dakota.

Article of the Day

Housing May Turn the Corner in 2012: CoreLogic

01/18/2012 By: Carrie Bay 

CoreLogic’s chief economist Mark Fleming says housing statistics and the duration of the downturn to date indicate 2012 may be the year the housing market begins to turn the corner.

In the first release of CoreLogic’s new MarketPulse newsletter Wednesday, Fleming explained his rationale for such an assessment.
He notes that housing is an industry with long business cycles. Regional housing recessions have typically taken anywhere from three to five years to find their bottom, and Fleming says the national housing recession has behaved similarly in that it has bounced along a bottom for the past two years.
Fleming points out that housing affordability is rising dramatically due to a combination of home price deflation and rock-bottom mortgage rates. In fact, he says, after adjusting for inflation, this has been a “lost decade” for housing as prices are the same as at the beginning of the millennium.
“The time is right in 2012 for prices to begin growing again,” Fleming said, “and housing affordability will put a floor under any further significant declines.”
Fleming says he will be watching the spring and summer buying season closely for positive signs of demand.

He points out that households are paying off their debts and at the same time accessing credit more easily, with some even adding Home Equity Lines of Credit in the third quarter of last year – the first such movement for these second-lien mortgage products since the financial crisis began.
Fleming cites a quarterly survey by the New York Federal Reserve Bank, which shows total household debt continues to decline. At the same time, consumer sentiment rebounded strongly in the latter part of 2011, posting a six-month high in December – an indication that consumers’ confidence in the strength of the economy is growing, according to Fleming.
Most housing statistics basically moved sideways in the latter part of 2011, but Fleming finds several positives in the numbers. Although market indicators are coming off of very low levels, he notes that both existing-home sales and single-family housing starts have begun to increase, homebuilder confidence is improving, and affordability is at an all-time high.
Putting all of these statistics together suggests that while there is a very long way to go, the housing market is likely to sustain these upward movements in 2012, according to Fleming.
“While we cannot say with a high degree of certainty what 2012 has in store for us, indications based on the latter part of 2011 are that both the broad economy and the housing market are moving toward positive growth in 2012,” Fleming said.
He concedes that some impediments do exist, including slower global economic growth, a recession in Europe, and fiscal and political uncertainty in the United States.
But Fleming says when you look at the big picture, “we are bullish on the prospect of improving economic performance in 2012 from 2011.”

Article of the Day

Fannie Mae Predicts 'Moderate Growth' in 2012

01/17/2012 By: Krista Franks 

The U.S. economy is projected to grow 2.3 percent for the year, according to Fannie Mae’s Economics & Mortgage Market Analysis Group.

Growth will be affected by “fiscal policy issues and political economic uncertainty,” according to Fannie Mae.
The upcoming presidential election, the healthcare debate, and the sovereign debt crisis in the euro zone are three wild cards causing concern for Americans.
Recent improvements in employment have elevated consumers from their “summer rut,” and the housing market is showing some positive indicators, though movement is slow.
“We’re entering 2012 with decent momentum, especially on the employment side,” said Doug Duncan, Fannie Mae’s chief economist.
However, Duncan suggests this momentum will fade over the first half of this year amid “policy changes and challenges that involve the global economy, the domestic economy, and the housing sector.”
Duncan predicts “a year of moderate growth edging away from the 2011 threat of a double dip.”

Article of the Day

Fannie Mae Extends Mortgage Relief for Unemployed Borrowers

01/11/2012 By: Carrie Bay 

Fannie Mae issued new guidelines to its servicers Wednesday, introducing an unemployment forbearance program which provides servicers the flexibility to assist borrowers who have a financial hardship due to job loss, including those facing imminent default.

With unemployment forbearance, the servicer reduces or suspends monthly payments for a specified period for a borrower who is unemployed.
With the new guidelines, the servicer can approve an unemployment forbearance term of six months without

obtaining Fannie Mae’s approval, provided that all borrower eligibility requirements are met.
If during the final month of the initial unemployment forbearance period, the borrower remains unemployed, the servicer must determine if the borrower is eligible for an extension no more than six additional months.
Forbearance extensions may be recommended on a case-by-case basis and must be submitted to Fannie Mae for review and a final decision.
The new directive from Fannie Mae mirrors the unemployed forbearance guidelines issued by Freddie Mac last week.
Fannie Mae says the program “simplifies and streamlines the use of forbearance options” for the GSE’s servicers.
The new guidelines prohibit the servicer from proceeding with foreclosure during the forbearance period.
Servicers are required to implement Fannie Mae’s unemployment forbearance policies and procedures no later than March 1, 2012, for borrowers who become eligible for such assistance on or after that date. However, the D.C.-based GSE is encouraging all servicers to adapt their processes to the program guidelines immediately.

Article of the Day

Foreclosures in Most of Top 20 Metros Decline From Past Two Years

01/12/2012 By: Krista Franks 

With Atlanta as the exception, all of the metro areas on RealtyTrac’s top 20 list for foreclosure rates in 2011 demonstrated declines in foreclosures from both of the previous two years.

Foreclosure filings in the Atlanta area in 2011 were 2 percent higher than in 2009.
Atlanta took the No. 12 spot on the top 20 list for the year with a 3.69 percent foreclosure rate.

Half of the metros in RealtyTrac’s list top 20 foreclosure rates for 2011 were located in California. The California metro with the highest foreclosure rate for the year was Stockton, which came in second on the top 20 list with a rate of 5.43 percent.
California metros also took the third, fourth, and fifth spots on the top 20 list: Modesto (5.20 percent), Vallejo-Fairfield (5.2 percent), and Riverside-San Bernardino (5.16 percent).
Las Vegas had the highest foreclosure rate in 2011 among metro areas with populations of at least 200,000. About one in 14 homes – 7.38 percent – received at least one foreclosure filing in the Las Vegas area over the year.
However, Nevada’s foreclosures declined sharply from the third quarter to the fourth quarter after the implementation of a law mandating lenders file an additional affidavit in order to initiate the foreclosure process.
With Arizona posting the second-highest foreclosure rates among the states, Phoenix also maintained an elevated foreclosure rate of 3.69 percent, earning it the No. 6 spot on the top 20 list

Article of the Day

Congress and Fed Disagree on Best Path to Economic Recovery

01/11/2012 By: Krista Franks 

With a common goal of economic recovery, Congress and the Federal Reserve diverge on the best means to that end. Should the housing sector serve as a financer of the government’s economic policies, or should the government help boost the housing sector?

Federal Reserve Chairman Ben Bernanke submitted a white paper to Congress last week to “provide a framework for thinking about directions policymakers might take to help the housing market.”
Bernanke expressed support of an REO rental program and stressed the importance of credit access.
Bernanke stated that in order to fund these initiatives, “losses must ultimately be allocated among homeowners, lenders, guarantors, investors and taxpayers.”
In addition, he stated, “some actions that cause greater losses to be sustained by the GSEs in the near term might be in the interest of taxpayers to pursue if those actions result in a quicker and more vigorous economic recovery.”
Following the white paper, two other Fed members spoke out in favor of Bernanke’s suggestions.

Congress, on the other hand, has already taken action to use funding from the GSEs to fuel its economic policies.
The extension of the Temporary Payroll Tax Cut relies on housing for its financing. The law calls on the Federal Housing Finance Agency to raise the GSEs’ guarantee fees
Additionally, one member of Congress believes Bernanke has overstepped his bounds by releasing his white paper last week.
“I believe that your recent housing white paper, and recent advocacy by Federal Reserve officials for further taxpayer-funded government ‘intervention’ in housing and mortgage markets, intrudes too far into fiscal policy advice and advocacy,” stated Sen. Orrin Hatch (R-Utah) in a letter Tuesday to Bernanke.
After what Hatch called the Fed’s “extraordinary interventions in the economy” during the financial crisis, Hatch hopes to restore the “distinction between monetary policy and fiscal policy.”
Speaking out on the debate, Paul Dales, senior economist at Capital Economics says, “It is not clear which side will win this tug of war, but it seems unlikely that policymakers will agree to any action big enough to generate a significant housing recovery.”
Dales suggests one compromise between the divergent views of Congress and the Fed would be for Treasury to designate TARP funds for housing policy implementation.
While Treasury would not require Congressional approval to do so, Dales says Treasury may be reluctant to begin allocating TARP funds “when there has been no obvious return from the money it has already spent on HAMP.”
Regardless, Dales says without investment in housing policies, “the best that can be hoped for is a fairly modest and very protracted housing recovery.”

Article of the Day

Home Prices Down in 2011, but Market Stability Forecast for 2012

01/08/2012 By: Carrie Bay

While year-over-year home price measurements notched down in 2011, prices are expected to see a slight uptick in 2012, according to Clear Capital.

Should the valuation company’s predictions ring true, it would be the first time since 2006 that the change in annual home prices has landed in positive territory.
Data released by Clear Capital Monday shows year-over-year, national home prices were down 2.1 percent in 2011. The company says movement in home prices began to stabilize somewhat during the latter half of the year and REO sales as a percentage of total home sales began to decline, which helped to moderate depreciation for the year overall.
In 2012, Clear Capital is forecasting U.S. home prices to show continued stabilization with a slight gain of 0.2 percent across all markets. That would put national home prices near levels not seen since 2001.
“Overall, 2011 was a relatively quiet year for U.S. home prices compared to the last five years,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “With national prices down a little more than two percent for the year and sitting at their lowest point since 2001, our projections show that the current balance the market has found will continue through 2012.”
According to Clear Capital, the importance of micro-market analysis becomes plainly apparent as the 2012 forecast is for a flat U.S. market, but only 40 percent of individual markets (20 of 50) are projected to be stable.
Individual markets reacting to their local economic drivers will exhibit a wide range of performance levels, Dr. Villacorta explained.
When looking at distinct metro market areas, it turns out only 24 percent showed signs of stabilization in 2011, while the others are still moving more dramatically higher or lower, Villacorta explained.
“What’s most interesting is that the lower segments of appreciating markets are driving much of the current price growth,” Villacorta said. “In places like Florida, which have historically been hard hit, we are now seeing

considerable activity in lower-end properties as demand continues to heat up.”
Clear Capital’s report shows U.S. prices declined 0.4 percent in December on a quarter-over-quarter basis as markets gave back some of the gains of the summer buying season.
December’s quarterly assessment is the first cooling off after six monthly reports from Clear Capital showed minimal quarterly gains. In fact, the company says the most recent six months of the year saw national home prices flat, posting a decline of just 0.1 percent over the second half of 2011.
The 2.1 percent price decline over 2011 marked the smallest year-end change in either direction since the market gained 1.7 percent in 2006, according to Clear Capital.
Regional trends revealed a bit more price variability. The Northeast’s meager 0.1 percent yearly gain led the nation, comparing favorably to declines of 1.3 percent, 3.0 percent, and 4.4 percent turned in by the South, Midwest, and West, respectively.
While changes in prices across the U.S. were mild for 2011, there were notable extremes at the positive and negative sides of the market, Clear Capital says.
Four metros posted price declines greater than 10 percent. Atlanta, Georgia, led the way with 18.3 percent shaved off its home values in 2011, followed by Seattle, Washington, which posted a 15.1 percent annual decline. Birmingham, Alabama, and Detroit, Michigan, also rode the markets down with 11.1 percent and 10.8 percent price drops, respectively.
On the positive side, Dayton, Ohio, enjoyed 11.5 percent annual price growth in 2011. The next two strongest performers came from Florida, with Orlando and Miami laying claim to 6.7 percent and 5.6 percent price gains, respectively.
Each of the markets with double digit declines saw an increase in the percentage of sales that were REOs, while declines in REO saturation helped buoy the top performing markets to positive price growth in 2011.
Nationally, Clear Capital says REO saturation reached a new yearly low at the end of 2011 at 24.8 percent.
Clear Capital expects 2012 to play out much like the last half of 2011, with only a very subtle price change at the national level. A minimal decline in the beginning of the year is expected to turn into a meager gain by year’s end, the company explained.
At a more granular level, half of the 50 major metro markets included in Clear Capital’s study are expected to post gains for the year, with individual metros experiencing the full gamut of price movement, from double-digit growth to double-digit drop

Article of the Day

Freddie Mac Extends Forbearance for Unemployed Homeowners

01/06/2012 By: Krista Franks 

 

Freddie Mac announced Friday an extension in forbearance for unemployed borrowers. Some unemployed homeowners may now receive up to 12 months forbearance.

According to Freddie Mac, almost 10 percent of delinquencies in the GSE’s portfolio are linked to unemployment.
Previously, servicers could offer up to three months of forbearance without payment on Freddie Mac loans or up

to six months of forbearance with reduced payments without prior approval from the GSE.
Extended forbearance plans were only permitted with prior approval and often only applied to natural disasters or medical emergencies.
Under the new directive, servicers may offer up to six months of forbearance to unemployed homeowners without prior approval, and with prior approval servicers may offer up to six months more totaling a possible one year available in some cases.
“These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies.,” said Tracy Mooney, SVP of single-family servicing and REO at Freddie Mac.
“We believe this will put more families back on track to successful long-term homeownership,” Mooney said.
Servicers may evaluate borrowers already in an active forbearance plan to consider extending the terms according to the new directive from Freddie M

Article of the Day

Unemployment Rate Falls to 8.5%

01/06/2012 By: Carrie Bay

The nation’s unemployment rate continues to trend down. It slipped to 8.5 percent during the month of December as the economy added 200,000 new jobs, the U.S. Department of Labor said Friday morning.

The reported rate is down from 8.6 percent in November. The change in total nonfarm payroll employment for November was revised downward from +120,000 to +100,000. October’s data was revised upward from +100,000 to +112,000.
December’s results were better than expected, with the consensus forecast among analysts looking for the rate to

inch up to 8.7 percent and net job growth over the month to tally 150,000.
December marks the sixth consecutive month of 100,000-plus job gains and the first such stretch employers have been able to string together since 2006.
The number of long-term unemployed – those jobless for 27 weeks or more – was little changed in December at 5.6 million and accounted for 42.5 percent of the unemployed.
The unemployment rate has declined by 0.6 percentage point since August, according to the Labor Department. At 8.5 percent, the rate ended 2011 at its lowest level in nearly three years.
Over the 2011 calendar year, nonfarm payroll employment rose by 1.6 million, up sharply from the 940,000 jobs added in 2010.
Employment in the private sector rose by 212,000 in December and by 1.9 million over the year.
Government employment changed little over the month but fell by 280,000 over the year.
The national unemployment rate averaged 8.9 percent in 2011, compared to 9.6 percent in 2010.

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Pending Home Sales Highest in Over a Year-and-a-Half

01/04/2012 By: Carrie Bay

Pending home sales continued to rise in November, reaching their highest level in 19 months, the National Association of Realtors (NAR) reported late last week.

The trade group’s index of signed sales contracts jumped 7.3 percent between October and November and is 5.9 percent above its level a year earlier. The last time the index was higher was in April 2010 as buyers rushed to beat the deadline for the homebuyer tax credit.
James Frischling, president and co-founder of NewOak Capital, says the latest results are likely to feed the view that there is a recovery going on in the housing market.
“This was an unexpected jump-up, with every region showing gains including a 15 percent increase out west, which has been the hardest hit area since the housing bubble burst,” Frischling noted.
Despite the strong gains atypical of the season, Frischling remains cautious. He says with contract cancellations above 30 percent, Realtors are keenly aware that it’s premature to conclude a housing recovery is underway based on November’s strong pending sales report.
Lawrence Yun, NAR’s chief economist, agrees that contract failures have been running unusually high.

“Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,” he said.
Still, Yun described November sales activity as “doing reasonably well in comparison with the past year.”
“The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.
According to Frischling, the overarching question is whether there are a sufficient number of buyers to absorb the supply of homes which will inevitably hit the market.
With the foreclosure pipeline still growing and over 6 million borrowers behind on their mortgage payments, he says the inventory of homes available for sale will continue to build up, putting downward pressure on home prices and holding back any meaningful recovery.
“Yet with the rental market on fire, an improving jobs picture, and with interest rates being so low, the spike in contracts signed was a welcomed way to finish the year,” Frischling said. “The follow-through on these pending home sales will tell whether the positive factors facing the housing market outweigh the negative and if this market has finally turned the corner.”
NAR acknowledged last month that it over-estimated actual sales closings for existing homes, going back to 2007. The trade group has adjusted sales and inventory figures for the last four years downward by 14.3 percent, citing discrepancies between sales reported by multiple listing services (MLSs) and sales included in its U.S. Census benchmark.
Pending home sales, however, are not affected by the recently published re-benchmarking of existing-home sales, according to NAR, namely because the pending sales index uses a different methodology based directly on contract signings and is adjusted for seasonality.

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HUD Offers REO Homes for $100 Down in Select States

10/24/2011 By: Carrie Bay

HUD has approved a program aimed at putting foreclosed homes back into the hands of owner-occupant buyers.

In select states, from now into October of next year, buyers need a down payment of only $100 to purchase a HUD-owned REO home.
The buyer must be an owner-occupant, utilizing financing insured by the Federal Housing Administration (FHA). Standard FHA underwriting guidelines apply, and the sale must be for the full amount of the current list price.
The $100 down payment incentive program has been approved for two of HUD’s four national regions – the regions managed by the Denver Homeownership Center and the Atlanta Homeownership Center. HUD homes in the states listed, as well as the Caribbean are currently eligible for the program.
Denver Homeownership Center’s Jurisdiction:

• Arkansas
• Colorado
• Iowa
• Kansas
• Louisiana
• Missouri
• Minnesota
• Montana
• Nebraska
• New Mexico
• North Dakota

• Oklahoma
• South Dakota
• Texas
• Wisconsin
• Wyoming
• Utah

Atlanta Homeownership Center’s Jurisdiction:

• Alabama
• Florida
• Georgia
• Kentucky
• Illinois
• Indiana
• Mississippi
• North Carolina
• South Carolina
• Tennessee
• Caribbean

HUD’s $100 down payment incentive program can also be applied to an FHA 203k loan, which can be used to fund repairs and renovations on the home. The 203k program allows buyers to finance both the mortgage and additional money for rehabilitation needs with a single government-insured loan.
Matt Martin, CEO of Matt Martin Real Estate Management (MMREM), says this is one of the most exciting features of the new incentive program and should drive a lot of exposure to FHA’s 203k offering.
MMREM is under contract with HUD to assist with disposition sales of its repossessed homes. MMREM handles properties throughout 16 states, or about a third of HUD’s REO portfolio.
With an FHA 203k loan, “buyers can find a property that needs some TLC, fix it up however they want to, and finance the whole thing for $100,” Martin explained.
“MMREM is excited to work with this recent initiative, in a way that it supports putting HUD homes back into the hands of homeowners,” Martin said.
In addition to $100 down instead of FHA’s typical 3.5 percent down payment, HUD says it will also cover up to 3 percent of the closing costs in most cases.