Article of the Day

FHA Raises Insurance Premiums

02/28/2012 By: Carrie Bay 

The Federal Housing Administration (FHA) has seen its capital reserves quickly dissipate over the past few years amid a growing number of mortgage defaults and payouts on insurance claims. In an effort to bolster its capital cushion, the federal agency has announced a new premium structure for FHA-insured single-family mortgage loans.

FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500, effective for new loans insured by FHA beginning in April. The agency is increasing the annual MIP by 0.35 percent for loans above that amount, effective in June. Upfront premiums (UFMIP) will also increase by 0.75 percent, beginning April 1. Existing borrowers who are already part of an FHA insurance program will not be impacted by the pricing changes.
Acting FHA Commissioner Carol Galante says the agency’s premium increases will help to encourage the return of

private capital to the housing market, as well as protect FHA’s capital reserves.
FHA’s Mutual Mortgage Insurance Fund slipped below the congressionally mandated threshold in 2009 for the first time in the agency’s history (going back to 1934), and it has fallen farther and farther ever since. The FHA insures lenders against defaults on home mortgages, and this fund pays for any losses the agency may have to cover.
“These modest [premium] increases are one of several measures we are taking towards meeting the congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers,” Galante said.
FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.
HUD Secretary Shaun Donovan stood before a Senate subcommittee on Tuesday and presented testimony on deficiencies in the foreclosure process and the recently announced settlement between state and federal officials and the nation’s largest mortgage servicers.
Inevitably, questioning from lawmakers turned to FHA’s financial state and Donovan was asked directly if the federal mortgage insurer would be the next big bailout shouldered by taxpayers.
Donovan assured the senators that the agency was taking steps to avert such action. He said the new premium changes for FHA insured mortgages would allow the agency to increase revenues and contribute more than $1 billion to the depleted Mutual Mortgage Insurance Fund through fiscal year 2013.

Article of the Day

Real Estate Debt, Delinquencies Decline: Report

02/27/2012 By: Krista Franks Brock 

Real estate-related debts are on the decline, as are overall delinquencies, according to a quarterly report from the Federal Reserve Bank of New York.

Debt maintained through mortgages and home equity lines of credit (HELOC) declined $146 billion during the fourth quarter of last year. Mortgages made up a majority of the decline – $134 billion – while HELOCs made up the remaining $12 billion.

Mortgage debt is now 11 percent below its peak, while HELOC debt is now 11.7 percent below its peak.
Also in the fourth quarter, the delinquency rate on consumer debt was reduced from 10 percent to 9.8 percent.
About $1.12 trillion of the total $11.53 trillion in consumer debt was delinquent. About $824 billion in debt was seriously delinquent (90 or more days past due).
While overall delinquency declined, about 2.2 percent of mortgage loans became delinquent in the last quarter of the year.
Foreclosures increased 9.5 percent over the quarter as 289,000 homes received foreclosure filings. However, the foreclosure rate is still 35.3 percent below the level recorded in the fourth quarter of 2010.
Also, despite the rise in foreclosure filings, the rate of loans that became seriously delinquent declined, corresponding with a rising cure rate, which reached 27.2 percent at the end of last year.
“Overall it appears that delinquency rates are stabilizing at levels that remain significantly higher than pre-crisis levels,” said Andrew Haughwout, VP and economist at the Federal Reserve Bank of New York.

Article of the Day

Short Sales Bring 24% Greater Returns than Foreclosures

02/24/2012 By: Krista Franks Brock 

The real estate professionals at Massachusetts-based McGeough Lamacchia Realty have been proponents of short sales for quite some time, insisting that everyone comes out ahead when a short sale is achieved as opposed to a foreclosure. Now they’re sharing the facts that back up their claim.

On average a home sold through short sale brings a 24 percent greater return than a foreclosed property, according to recent findings from McGeough Lamacchia Realty.
“This means the banks are losing an average of $43,000 for every foreclosure sale compared to what they would have made in a short sale,” said a blog post on the company’s website.
The firm reviewed prices for short sale and foreclosure sale properties in 2010 and 2011 in Boston, Phoenix, Tuscon, Southern California, and Southwest Florida.
While banks often offer incentives to homeowners who pursue a short sale, “more needs to be done to promote short sales,” McGeough Lamacchia said.
Specifically, the firm points out that Fannie Mae and Freddie Mac are not offering the cash incentives for short sales that are now standard through the Home Affordable Foreclosure Alternatives program.
“Fannie Mae and Freddie Mac need to do more to promote short sales and make it easier for distressed homeowners to do a short sale and avoid foreclosure,” McGeough Lamacchia said in their blog post.

Article of the Day

After Hitting Record Low, 30-Year Fixed Rate Inches Up

02/23/2012 By: Esther Cho

After hitting near record lows last week, the 30-year fixed-rate mortgage moved up for the first time in three weeks, according to the Primary Mortgage Market Survey from Freddie Mac.

The 30-year rate averaged 3.95 percent (0.8 point) for the week ending February 23, up from last week’s average at 3.87. The rate is still lower than the average of 4.95 percent from a year ago at this time.
Amid the slight hike after continuing declines for the 30-year rate were reports that the housing market is on a slow road to recovery.

“New data releases this week suggest the housing market is continuing to gradually improve,” said Frank Nothaft, VP and chief economist for Freddie Mac, in a statement. “Loans that were seriously delinquent (90 days or more past due plus the foreclosure inventory) fell to 5.3 percent of prime mortgages at the end of 2011, representing the lowest quarterly share since the start of 2009, according to the Mortgage Bankers Association.”
Northaft also mentioned data from the National Association of Realtors that showed existing-home sales were at the strongest pace in January since May 2010.
The 15-year fixed rate mortgage averaged 3.19 percent (0.8 point), up from 3.16 percent. At this time last year, the 15-year rate was 4.22 percent.
The 5-year adjustable rate mortgage (ARM) saw a slight decrease at 2.80 percent (0.7 point) this week compared to 2.82 percent last week. A year ago this time, the 5-year ARM was at 3.80 percent.
The 1-year ARM also continued to drop at 2.73 percent (0.6 point), down from 2.84 percent last week. During this time last year, the average was 3.40 percent.

Article of the Day

Freddie Forecast: Housing and Economy Getting Warmer

02/22/2012 By: Krista Franks Brock 

Freddie Mac sees “cautious signs” of improvement in the housing market and overall economy and expects “more warmth” in 2013, according to its latest monthly outlook.

“The US economy continues to build on the momentum from the end of last year,” said Freddie Mac VP and chief economist, Frank Nothaft. “Our outlook anticipates gradual, but steady, improvement in the economy and the housing market, supported by low interest rates and brightening job market prospects.”

Positive signs Freddie cites include job gains, declining unemployment, and high affordability.
For the past two months, job gains have surpassed market predictions, while unemployment has fallen to 8.3 percent, and according to the GSE, unemployment benefits applications are now at levels not seen since March 2008.
Another positive indicator, home prices increased 5 percent in December, and rose 1.7 percent over the year in 2011, according to the National Association of Realtors.
While Freddie points out that home prices declined in 19 of the 20 cities in S&P/Case-Shiller Home Price Indices, the GSE also notes that affordability remains high and mortgage rates low, making for a buyer-friendly market.
“At the end of 2011, a family earning the median family income had almost double the income necessary to qualify for a conventional loan covering 80 percent of a median-priced existing single-family home, according to the NAR Housing Affordability Index,” according to Freddie’s February outlook.
Amid the mostly positive indicators Freddie Mac cites, consumer outlook lost some of its positive movement over the previous two months in January. However, Freddie notes that builders were more optimistic.

Article of the Day

Plans to Involve Private Investors Lessen Role of Fannie and Freddie

02/21/2012 By: Esther Cho 

The Federal Housing Finance Agency (FHFA) released a three-part goal Tuesday to phase out the dominant role of Fannie Mae and Freddie Mac and allow for more private investors into the mortgage industry.

The first part of the goal involves building a new infrastructure to allow the private sector to participate in the secondary market. The goal includes national standards for the mortgage securitization process that Congress and participants can use to develop the mortgage market, according to a letter from the FHFA explaining the strategic plan. The letter also states that the GSEs securitize $100 billion per month in new mortgages, and today, no private sector infrastructure exists that is capable of doing this.
The second goal would contract work to the private sector, gradually moving mortgage credit risk from the GSEs to private investors, according to the letter.

The last goal is to continue with programs and initiatives to prevent foreclosures and ensure mortgage credit is available.
In September of 2008, the GSEs were placed into a conservatorship by the U.S Treasury amidst the housing market crises to keep the two mortgage giants in operation. The conservatorship for the GSEs meant the government would oversee their operations temporarily.
Since that time, the GSEs have received more than $180 billion in taxpayer support, according to the letter.
“With the conservatorships operating for more than three years and no near-term resolution in sight, it is time to update and extend the goals and directions of the conservatorships,” said Edward J. DeMarco, acting director of the FHFA.
In order to shift mortgage credit risk from the GSEs to private investors, several plans are being considered or are already implemented, according to the letter.
One includes a gradual increase in guarantee fee pricing so that the price may become closer to the level expected if mortgage credit risk was based on private capital. In September 2011, the FHFA announced plans to continue towards gradual price increases based on risk and the cost of capital, and in December of that year, Congress required the FHFA to increase guarantee fees by at least an average of 10 basis points, according to the letter.
Currently, most GSE mortgage securities are fully guaranteed, but one idea proposes to establish loss-sharing arrangements and have private investors bear some or all of the credit risk.
Another plan under consideration is to expand mortgage insurance coverage on loans.

Article of the Day

Proposed Bill to Speed Up Short Sale Process and Prevent Foreclosure

02/20/2012 By: Esther Cho 

To avoid losing homes to foreclosure due to long response times for short sale transactions, three senators introduced legislation to speed up the short sale process.

Senators Lisa Murkowski (R-Arkansas), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the bill addressing the issue of short sales timelines on February 17. A short sale is a real estate transaction where the homeowner sells the property for less than the unpaid balance with the lender’s approval.
“There are neighborhoods across the country full of empty homes and underwater owners that have legitimate offers, but unresponsive banks,” said Murkowski. “What we have here is a failure to communicate. Why don’t we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is ‘yes,’ ‘no’ or ‘maybe?’”
The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.
The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer

will be limited to one extension of no more than 21 days.
The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.
According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.
“The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure,” said Moe Veissi, president of the National Association of Realtors. “As the leading advocate for homeownership, realtors are supportive of any effort to improve the process for approving short sales.”
Equi-Trax released a survey last year on the issues real estate agents face when completing short sales. Guy Taylor, CEO at Equi-Trax, said 71.9 percent of respondents reported that a short sale can take four to nine months to complete, and they think that is simply too long.”
The survey also found that 18.2 percent of deals require less than three months to complete, with 10 percent requiring more than 10 months.
When agents in the survey were asked to how the short sale process can be improved, 57.6 percent said lenders should take less time to close transactions, 14 percent said borrowers should be better educated about short sales, and 40.4 percent said both of these changes are necessary to improve the process.
In April 2011, a similar bill was introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), but this version requested a response deadline of 45 days instead of 75 from lenders. The legislation never came up for debate before a House committee

Article of the Day

Realtor.com Lists Top 10 Turnaround Towns

02/17/2012 By: Esther Cho 

Realtor.com released its list of the top 10 turnaround towns for the 2011 fourth quarter. While the 10 towns listed – eight of which are in Florida – suffered from high foreclosure rates, they are now rebounding.

The current list was developed based on market rankings on year-over-year median price appreciation, reduction in year-over-year median age of inventory, and inventory reduction levels from Realtor.com, as well as unemployment rates on a year-over-year basis, according to a release from Move.com

1. Miami, Florida, at number one, had sales of existing single-family homes shoot up 51 percent in the third quarter compared to a year ago, according to the Miami Association of Realtors. The median age of inventory is down 30 percent from a year ago.
2. Phoenix, Arizona is returning to stability, with median list prices up 15.38 percent compared to a year ago.
3. Orlando, Florida saw its median age of inventory go down to 73 days, a 36 percent drop from a year ago and inventory also declined 44 percent compared to a year ago.
4. Fort Myers-Cape Coral, Florida saw its sale price increase 20 percent over the past year, more than any other Florida market, though sales are down 13 percent.
5. Sarasota-Bradenton, Florida saw an increase in sales by 17 percent over last year. Median list prices were also up 2 percent.
6. Boise City, Idaho experienced a reduction in foreclosures, helping the town also see a 40 percent year-over-year decline in inventory. This reduction in inventory also led to drop a 23.42 drop in the median age of inventory.
7. Naples, Florida had a13.38 percent year-over-year increase in median list prices, and a 35.94 percent reduction in for sale inventory.
8. Fort Lauderdale, Florida reduced its inventory by 41.63 percent since last year, and sales were up up 18 percent year-over-year.
9. Lakeland-Winter Haven, Florida increased by 9.09 percent increase in median list prices compared to a year ago. Inventory declined 35.28 percent since last year.
10. Punta Gorda, Florida made the 10th spot with median price appreciation up 17.79 percentcompared to a year ago.

Article of the Day

Report Reveals Delinquency and Foreclosure Rates Down in 4th Quarter

02/16/2012 By: Esther Cho 

A recent Mortgage Bankers Association (MBA) report revealed that overall, delinquencies and foreclosures are on a decline, and when gauging where the U.S. housing market stands in terms of recovery, Jay Brinkmann, MBA’s chief economist and SVP for research and education, said we are about halfway to the pre-recession days.

The MBA released its 2011 4th quarter national delinquency survey results Thursday. Delinquency in the report is defined as loans that are at least one payment past due but not in the process of foreclosure.
Overall, the delinquency rate for mortgage loans on one-to-four unit residential properties decreased to 7.58 percent, compared to 7.99 percent for the third quarter, and 8.25 percent a year ago during the fourth quarter in 2010.
“The total delinquency rate peaked at 10.1 percent in the first quarter of 2010. It now stands at 7.6 percent, about half way to the longer-term pre-recession average of roughly 5 percent,” Brinkmann.
With the exception of the 30-day bucket, which increased from 3.19 percent last quarter to 3.22 percent this quarter, all delinquencies were down. More notably, loans delinquent 90 or more days decreased from 3.50 percent last quarter to 3.11 percent, a 39 point decrease.
Brinkmann said the improvement in mortgage performance reflects the improvements seen in the job market and broader economy, and added that the mortgage delinquency rate is actually falling faster than the unemployment rate is declining.
Delinquency rates for problematic loans had significant decreases, with prime ARM loans at 9.22 percent this quarter, compared to 10.73 percent last quarter, and subprime loans dropping 157 points, ending at 19.67 percent, compared to 21.24 percent last quarter.
The exception to this downward trend were FHA loans,

which saw an increase in delinquency rates at 12.36 percent this quarter, compared to 12.09 percent last quarter.
“Part of the reason is that the FHA book of business has shown rapid growth, and purchase loans originated in 2008 and 2009 are only now entering the peaks of a normal delinquency curve,” said Brinkmann.
Another exception to the notable trends seen in the report is the percentage of loans in foreclosure inventory. While the percentage is down this quarter at 4.38 percent compared to 4.43 percent last quarter, it is still far from the halfway mark on the road to recovery.
Brinkmann said the longer-term average is roughly 1.2 percent for foreclosure inventory.
Foreclosure starts, loans on which foreclosure actions were initiated, were down at 0.99 percent, compared to 1.08 percent for the third quarter, and 1.27 percent a year ago. Seriously delinquent loans – loans that are 90 days or more past due or in foreclosure – were at 7.73 percent this quarter compared to 7.89 percent last quarter, and 8.60 percent a year ago.
Foreclosure inventory in judicial states actually increased and was significantly higher at 6.80 percent, compared to inventory in non-judicial states, which was at 2.79 percent and saw a decrease over time. Data also revealed that foreclosure starts for both types of states were relatively similar.
Michael Fratantoni, MBA’s VP of research and economics, explained that the issue is not the rates at which non-judicial versus judicial states enter into foreclosure, but the rates at which these loans exit out of foreclosure.
Data from the report also revealed that top five states with the highest share of loans in foreclosure were judicial, with the exception of California. The five states – Florida (24.2 percent), California (10.2 percent), Illinois (6.6 percent), New York (6.2 percent), and New Jersey (5.4 percent), make up 52.6 percent of the share of loans in foreclosure.
Though, Fratantoni noted that California is turning around more quickly than other states.
California, which held 12.8 percent of the share of loans in foreclosure last year, dropped 2.6 percent this quarter, compared to the 0.8 and 1 percent drop for the other four states over the year.
When asked about the impact of the AG settlement on the foreclosure process during a conference call, Brinkmann, said that he thinks we will see a drop in foreclosure inventory numbers, and when moving into foreclosure sale or REO, we might see some speed up eventually.

Article of the Day

Deadline to Request Foreclosure Review Extended Three Months

02/15/2012 By: Carrie Bay 

Consumers who want their foreclosure cases checked by a third party as part of federal regulators’ independent foreclosure review directive now have until July 31, 2012, to submit their requests.

The Federal Reserve and the Office of the Comptroller of the Currency (OCC) announced Wednesday that the deadline has been pushed out by three months to give consumers more time to file for a case assessment if they believe they suffered financial injury as a result of errors in foreclosure actions in 2009 or 2010. The original deadline was April 30.
The independent foreclosure reviews, as mandated and enforced by the federal regulatory agencies, only apply to the mortgage servicers and their subsidiaries that were subject to the enforcement actions handed down by the OCC and Fed on April 13th of last year.
Participating servicers include:

• America’s Servicing Company
• Aurora Loan Services

• BAC Home Loans Servicing
• Bank of America
• Beneficial
• Chase
• Citibank
• CitiFinancial
• CitiMortgage
• Countrywide
• EMC
• Everbank/Everhome Mortgage Company
• Financial Freedom
• GMAC Mortgage
• HFC
• HSBC
• IndyMac Mortgage Services
• MetLife Bank
• National City Mortgage
• PNC Mortgage
• Sovereign Bank
• U.S. Bank
• Wachovia Mortgage
• Washington Mutual
• Wells Fargo
• Wilshire Credit Corporation

Borrowers are eligible for a foreclosure review if their loan is serviced by one of the participating companies above, the mortgage loan was subject to foreclosure between January 1, 2009 and December 31, 2010, and the property securing the mortgage was the borrower’s primary residence.
There are no costs associated with the foreclosure reviews. These case evaluations performed by independent third parties began in November. Eligible borrowers should have received a letter by the end of 2011 detailing the process.

Article of the Day

CFPB Issues Proposal to Place New Standards on Mortgage Statements

02/14/2012 By: Esther Cho 

The Consumer Financial Protection Bureau (CFPB) is looking to propose a rule to standardize monthly mortgage statements to make them easier for customers to understand.

The CFPB recently released an early draft of a statement and is seeking feedback.
“This draft statement shows consumers the breakdown of their mortgage payments – what money goes to the loan principal, interest, and fees,” CFPB director Richard Cordray said in a statement. “This information will help consumers stay on top of their mortgage costs and hold their mortgage servicers accountable for fixing errors that crop up.”

The draft is available online, and opinions on the draft can be shared by emailing MortgageStatement@cfpb.gov.
Under section 1420 of the Dodd-Frank Act, statements must include certain information including:

• Principal loan amount
• Current interest rate
• Date on the interest rate may next reset
• Description of any late payment fees and any prepayment fee
• Information about housing counselors
• Phone number and email address for borrower to obtain information about the mortgage
• Other information the CFPB may prescribe in regulation

“Most servicers have spent years customizing the mortgage statements they send to their customers,” Ghazale Johnston, senior executive of Accenture Credit Services, said in an email. “Moving to a new set of statement standards may require them to make a significant investment in changing their core systems.”
Once a refined prototype is available, the CFPB said in statement that it will propose a rule to specify what needs to be on statements, but creditors, assignees, and servicers will have some flexibility to tweak the form after final publication of the rule and form.

Article of the Day

Home Values Declined 1.1 Percent in Fourth Quarter

02/10/2012 By: Esther Cho

Zillow forecasts home values will be on the decline through December 2012, but the decrease will be smaller than in 2011.

Home values in the U.S. fell in the fourth quarter, with the Zillow Home Value Index (ZHVI) sinking 1.1 percent after a less significant decline for the two previous quarters.
The Seattle-based company’s forecast also predicts that hardest hit cities such as Los Angeles; Riverside, California; and Phoenix, Arizona, will reach bottom and then stabilize or increase in value in 2012. Baltimore and Washington D.C. are also expected to reach bottom and see an increase or remain flat in 2012.
In the fourth quarter, the rate of homes foreclosed on increased slightly to 8.2 out of every 10,000 in December, compared to 8 out of every 10,000 homes in November. The rate was lower than the end of the third quarter, when it was 8.6 out of every 10,000 homes. Foreclosure re-sales made up 19.1 percent of all December sales, which is an increase from August, when 17.1 percent of all sales were foreclosure re-sales.

Article of the Day

Senate's Housing Chairman Pushes for More Principal Writedowns

02/10/2012 By: Carrie Bay 

Sen. Robert Menendez (D-New Jersey) says the $25 billion settlement struck between federal and state officials and the nation’s five largest mortgage servicers “helps homeowners but it’s a long way from healing the grievous wounds left by the crisis.”

Those wounds have been made deeper by the continuing decline in home prices that has put millions of homeowners in the hole on their mortgage, owing far more on their loan than the home is now worth.
Menendez, who is chairman of the Senate’s housing subcommittee, has introduced a bill that he describes as “innovative,” which would encourage lenders to reduce principal for underwater borrowers with a shared-appreciation modification.
Menendez’s Preserving American Homeownership Act would establish a program through which banks would write down the principal balance of the mortgage to 95 percent of the re-assessed value of the home. This reduction would take place over a three-year period in

one-third increments per year, provided the homeowner remains current on their payments.
In exchange, the bank would receive a fixed share – not to exceed 50 percent – of the increase in the home’s value when the home is sold or later refinanced. The percentage of shared appreciation would depend on how much the bank reduces the principal. For example, if the bank reduced the principal by 20 percent, they would receive a 20 percent share of any later increase in the home price.
Homeowners would be eligible for the program no matter how far underwater they are. Homeowners who are in default or foreclosure would also be eligible, but they would be required to make timely payments on the modified mortgage going forward or the principal reduction would be retracted. Only primary residences would qualify for assistance under the program.
“When you owe more than your house is worth through no fault of your own, relief can be hard to come by,” said Sen. Menendez.
“More and more people are choosing to walk away, since they feel that’s their only viable option, which only exacerbates the problem. My bill aims to break this cycle and give homeowners the relief they are looking for by working with banks to find acceptable solutions for everyone,” Menendez added.
The number of homeowners underwater on their mortgage is currently estimated to be more than 10 million, or approximately 22 percent of all homeowners. On average, these homeowners owe anywhere from $40,000 to $65,000 more than their home is currently worth.

Article of the Day

Anticipation for Market Begins at Close of Settlement

02/09/2012 By: Esther Cho 

While the $25 billion robo-signing settlement concludes 16 months of intense negotiations, questions still remain on how this will impact borrowers and the larger economy.

Capital Economics stated that while it is good that the settlement has been finalized and will offer principal reductions and refinancing schemes to borrowers, the bigger picture is that the settlement is not large enough to dramatically alter the outlook for the housing market or the wider economy.
Looking at the economy, $25 billion is worth 0.2 percent of gross domestic product (GDP), and if the deal expands to $40 billion, that would be 0.3 percent of GDP, according to the Capital Economics report.
When assessing the housing market, the report projects little impact. While $10 billion will be set aside for principal forgiveness, close to 11 million borrowers are underwater, totaling about 700 billion in negative equity.
The settlement also doesn’t include Fannie Mae or Freddie Mac mortgages, which represents roughly half of American homeowners.
“It’s a start, but it’s a drop in the bucket. There is still a long way for banks to go in repairing families, communities and the housing market,” said Mark Seifert, executive director of Empowering and Strengthening Ohio’s People (ESOP).
While the relief provided to homeowners is said to be immediate, ESOP questioned exactly how homeowners will be notified of the relief they can receive, especially those already in foreclosure.
“[The] devil is in the details. In our experience, the industry has never done anything voluntarily to repair the damage they wreaked over the last decade, and we have no reason to believe this settlement will be any different,” said Seifert.
In addition to the $25 billion, new servicing standards were set for the top five servicers – Bank of America,

JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial – to address robo-signing, lost paperwork, and problematic modifications.
Some of the standards include an end to robo-signing practices and improved communication between servicers and borrowers, such as notifying customers 14 days before referring loans to a foreclosure attorney. Again, while market participants acknowledge this a direction towards recovery, impact is still in question.
“A final agreement can play an important role stabilizing and providing certainty and confidence to the housing and mortgage markets,” said David H. Stevens, President and CEO of Mortgage Bankers Association (MBA). “With all the rumors and speculation surrounding these negotiations behind us, it is now imperative that policymakers, lenders, servicers, and other stakeholders work together on policies and initiatives that will allow us to get the housing market on the road to recovery. I would caution, though, that, while a positive step, this will not be a panacea for all that ails housing.”
Oklahoma, the only state that did not sign onto the agreement, reached an independent mortgage settlement agreement with the five banks. The servicers agreed to pay Oklahoma $18.6 million.
“This settlement will provide damages to those Oklahomans who did fall victim to unfair and unlawful misconduct of mortgage servicing companies, while not exceeding the appropriate role and authority of state attorneys general,” Pruitt said.
When Iowa Attorney General Tom Miller announced in March that the settlement expanded beyond investigating fraud and unlawful practices and into the restructuring of the mortgage industry, Pruitt sent a letter to Miller, voicing strong concerns, according to a release issued by the Oklahoma attorney general’s office.
“We had concerns that what started as an effort to correct specific practices harmful to consumers, morphed into an attempt by President Obama to establish an overarching regulatory scheme, which Congress had previously rejected, to fundamentally restructure the mortgage industry in the United States,” Pruitt said.
Another concern stated in the letter to Miller was that the terms might encourage more homeowners to default.
When addressing the settlement, President Obama argued it would help millions of people affected by the housing market crises.
“These practices were plainly irresponsible and we refused to let them go unanswered,” Obama said at the White House. “This settlement is a start. We’re going to make sure that the banks live up to their end of the bargain.”

Article of the Day

Report Reveals Number of Foreclosures Down From Last Year

02/08/2012 By: Esther Cho 

A foreclosure report released by CoreLogic Wednesday revealed that the number of homes in foreclosure is decreasing nationwide. The report included monthly data on foreclosures, foreclosure inventory, and 90-plus delinquency rates.

Completed foreclosures for 2011 totaled 830,000, compared to 1.1 million in 2010. The December 2011 completed foreclosures figure was also down to 55,000, compared to 67,000 in December 2010.
Nationally, the number of loans in the foreclosure inventory decreased 8.4 percent in December 2011, compared to December 2010, which is a decline of about 130,000 properties. Data from the report revealed 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure inventory as of December 2011.
A property is counted as foreclosure inventory when the mortgage servicer places the property into the foreclosure process. Foreclosure inventory is only measured against homes with an outstanding mortgage. About one-third of homeowners nationwide own their homes.
“The inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing. While foreclosure filings are being curtailed by a variety of judicial and regulatory constraints, mortgage servicers are completing REO sales faster than they are completing foreclosures,” Mark

Fleming, chief economist with CoreLogic, said in the release. “This is the first time in a year that REO sales have outpaced completed foreclosures, and part of the reason for the decrease in the foreclosure inventory.”
In December 2011, servicers increased the rate at which they were able to process distressed assets, also known as distressed clearing ratio, according to the CoreLogic report.
The distressed clearing ratio is found by dividing the number of REO sales by completed foreclosures. A higher ratio means faster clearing of REO inventory. The distressed clearing ratio was 1.03 in December, up from 0.94 in November.
The share of borrowers nationally that were 90 days or more delinquent decreased to 7.3 percent in December 2011, compared to 7.8 percent in December 2010.
From the start of the financial crisis in September 2008, there have been approximately 3.2 million completed foreclosures, according to the report.
CoreLogic, headquartered in California, provides information, analytics, and services to the private and public sectors.
December 2011 Highlights From the Report
The five states with the highest foreclosure inventory:

• Florida (11.9 percent)
• New Jersey (6.4 percent)
• Illinois (5.4 percent)
• Nevada (5.3 percent)
• New York (4.6 percent)

The five states with the lowest foreclosure inventory:

• Wyoming (0.7 percent)
• Alaska (0.8 percent)
• North Dakota (0.8 percent)
• Nebraska (1.0 percent)
• Washington (1.3 percent)

Of the top 100 markets measured by Core Based Statistical Areas (CBSAs) population, 34 are showing an increase in the foreclosure inventory in December 2011, compared to 46 in November 2011.

Article of the Day

Fannie Mae Now Accepting Online Offers for REOs

02/07/2012 By: Carrie Bay 

Fannie Mae announced Tuesday that it has expanded its online system to accept purchase offers for all its REOs listed for sale.

Real estate agents will now submit offers online on behalf of clients, receive receipt confirmation, and track the status of submitted offers through the HomePath.com website. HomePath is the GSE’s REO disposition operation.
In November 2010, Fannie Mae launched the HomePath Online Offers pilot in Orlando, Florida; San Diego, California; and Detroit, Michigan. Active Data Technologies, Inc., the developer of the offer platform, commented just five months after the launch that the technology was seeing positive results in these three test markets.
Now, the Online Offers feature is available for all Fannie Mae-owned properties across the nation through HomePath.com.

“Collecting offers online through HomePath.com will provide greater transparency for homebuyers and their agents,” said Jay Ryan, VP for REO at Fannie Mae. “Our online platform will make it easier to sell properties to owner occupants, which is a major factor in helping to stabilize communities across the nation.”
George Philbeck, a real estate professional with Keller Williams Advantage II Realty in Orlando, has been using Online Offers since the pilot launched in 2010.
“As an agent, I believe Online Offers is efficient, informative and user-friendly,” Philbeck said. “With Online Offers, my clients’ offers are guaranteed to make it to the right person at Fannie Mae for review. It has worked very well for me and for my clients.”
Real estate professionals representing buyers are able to connect directly with Fannie Mae’s listing agents through the HomePath website. The buyer’s agent can also find information on the site regarding financing and incentive options offered through HomePath.
The HomePath site offers a wide selection of properties, including single-family homes, condominiums, and town houses.
Brad Geisen, president and CEO of Active Data Technologies, called HomePath Online Offers a “step in the right direction” by automating the transaction process to move inventory quicker and get the housing market on the road to recovery faster.

Article of the Day

Number of 'Improving' Housing Markets Expands to Nearly 100

02/06/2012 By: Carrie Bay

The number of housing markets showing measurable improvement expanded by 29 metros in February to include a total of 98 markets listed on the Improving Markets Index published monthly by First American and the National Association of Home Builders (NAHB). Thirty-six states are now represented by at least one market on the list.

The index tracks those housing markets that are showing signs of improvement in overall economic health, based on growth in employment, home price appreciation, and increases in single-family housing permits. The index identifies metropolitan areas that have shown improvement in each of these three areas for at least six consecutive months.
The 29 metros added to the index in February include:

• Napa, California
• Deltona, Florida
• Miami, Florida
• North Port, Florida
• Tampa, Florida
• Augusta, Georgia
• Shreveport, Louisiana
• Boston, Massachusetts
• Springfield, Massachusetts
• Cumberland, Maryland
• Lewiston, Maine
• Detroit, Michigan
• Duluth, Minnesota

• Rochester, Minnesota
• Jefferson City, Missouri
• Kansas City, Missouri
• Hattiesburg, Mississippi
• Omaha, Nebraska
• Ocean City, New Jersey
• Syracuse, New York
• Springfield, Ohio
• Youngstown, Ohio
• Portland, Oregon
• Memphis, Tennessee
• Longview, Texas
• Provo, Utah
• Salt Lake City, Utah
• Bellingham, Washington
• Kennewick, Washington

In releasing the new list, First American and NAHB noted that the additions include some metros that have been “particularly weak” in terms of the index measurements, which assess improvements from cycle troughs in employment, home prices, and housing permits.
Some of the hardest hit markets are showing signs of coming off of extreme lows, according to the index’s creators. They highlighted notable new entrants to the list as Miami, Boston, Detroit, Kansas City, Portland, Memphis, and Salt Lake City.
“The fact that there are nearly 100 markets now on the improving list shows that the momentum is building for a housing recovery and that more buyers and sellers are starting to feel confident enough to return to the market,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.
Seven markets dropped from the Improving Markets Index in February as they experienced softening house prices. These metros include San Jose, California; Washington, D.C.; Kankakee, Illinois; New Orleans, Louisiana; Worcester, Massachusetts; Jackson, Mississippi; and Sherman, Texas.
A complete list of all 98 metropolitan areas currently on the Improving Markets Index is available at: NAHB.org/imi.

Article of the Day

Rates Give Back Last Week's Increases, Setting New Record Lows

02/02/2012 By: Carrie Bay 

Average mortgage interest rates have reversed from the upward blip reported last week.

Declines this week completely erased the previous week’s increases, as the average rate attached to the 30-year fixed-rate mortgage, 15-year fixed-rate mortgage, and 5-year adjustable-rate mortgage all settled in at new record lows, Freddie Mac reported Thursday.
The GSE attributed the about-face to the fact that recent data on economic growth fell short of market projections.
Freddie Mac’s weekly market survey shows the 30-year fixed mortgage averaged 3.87 percent (0.8 point) for the week ending February 2. It plunged 11 basis points from 3.98 percent the week prior, which saw a 10 basis point

jump in one week’s time. Last year at this time, the 30-year rate averaged 4.81 percent.
The 15-year fixed-rate mortgage this week averaged 3.14 percent (0.8 point), down from 3.24 percent last week. A year ago, the 15-year rate was averaging 4.08 percent.
The 5-year adjustable-rate mortgage (ARM) came in at 2.80 percent (0.7 point) this week. It was 2.85 percent last week and 3.69 percent this time last year.
The 1-year ARM was the only product in Freddie Mac’s study that did not set a new low. It averaged 2.76 percent (0.6 point) this week, which represents an increase from 2.74 percent last week. At this time last year, the 1-year ARM was 3.26 percent.
Commenting on the latest survey results, Frank Nothaft, Freddie’s chief economist, noted that most mortgage rates eased to all-time record lows as fourth quarter growth in the economy came in well under market expectations.
“Gross Domestic Product rose 2.8 percent in the final three months of 2011, below the market consensus forecast of 3.0 percent, while consumer spending in December was flat,” Nothaft explained.
The one bright spot in the latest economic data, Nothaft says, was that fixed residential investment increased for the third consecutive quarter and residential construction spending rebounded in December, rising 0.7 percent.

First Time Buyer Class | Scott County Downpayment Assistance

First Time Buyer Class | Scott County Downpayment Assistance

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National Servicing Standards Emerge in New Homeowner Bill of Rights

02/01/2012 By: Carrie Bay 

“The administration believes that the mortgage servicing system is badly broken and would benefit from a single set of strong federal standards,” the White House said in a document outlining President Obama’s vision for how a servicing shop should be run.

The president on Wednesday introduced what he’s termed the Homeowner Bill of Rights – plainly defined principles that Obama says will ensure borrowers and lenders are playing by the same common-sense rules.
At the top of that list is a simple, straightforward mortgage disclosure form so borrowers have a clear understanding of their loan. Obama told constituents in Falls Church, Virginia, where he unveiled the new Bill of Rights, that the Consumer Financial Protection Bureau is already making headway in its effort to replace overlapping and complex mortgage forms with a new shorter, simpler form to be used for all home loans.
Obama’s new set of standards mandate servicers provide homeowners with full and clear disclosure of all fees and penalties upfront, with any changes disclosed before they go into effect.
It also requires servicers and investors to implement standards that minimize conflicts of interest and facilitate communication between multiple investors and junior lien holders, so that loss mitigation efforts are not hindered.
Carved out within the Homeowner Bill of Rights is a series of rules to ensure homeowners at risk of foreclosure are provided with the assistance they need to save their homes.
Obama’s proposal calls for early intervention by servicers to contact every homeowner who has demonstrated hardship or fallen behind on their payments, and provide them with a comprehensive set of options to avoid foreclosure. The president’s directive states that every distressed homeowner must be given “a reasonable time” to apply for a modification.

It also requires servicers to provide all homeowners who have requested assistance of become delinquent with access to a customer service employee who has 1) a complete record of previous communications; 2) access to all documentation and payments submitted by the homeowner; and 3) access to personnel with decision-making authority on loss mitigation options.
The new servicing standards would prohibit servicers from initiating a foreclosure action unless they are unable to establish contact with the homeowner after reasonable efforts, or the homeowner has shown a clear inability or lack of interest in pursuing alternatives to foreclosure.
Any foreclosure action already under way must stop prior to sale once the servicer has received the required documentation and cannot be restarted unless the homeowner fails to complete a mod application within a reasonable period, is denied a modification after evaluation, or fails to comply with the terms of the modification received.
The Bill of Rights also establishes protections for homeowners against wrongful foreclosures. Servicers must explain to all homeowners any decision to take action based on their failure to meet payment obligations, and provide the homeowner with the opportunity to appeal that decision in a formal review process.
In addition, prior to a foreclosure sale, servicers must certify in writing to the foreclosure attorney or trustee that appropriate loss mitigation alternatives have been considered and that proceeding to foreclosure sale is consistent with applicable law. A copy of this certification must be provided to the borrower.
“As we have learned over the past few years, the nation is not well served by the inconsistent patchwork of standards in place today, which fails to provide the needed support for both homeowners and investors,” Obama said. “A fair set of rules will allow lenders to be transparent about options and allow borrowers to meet their responsibilities to understand the terms of their commitments.”
The agencies of the executive branch with authority over servicing practices – including the Federal Housing Administration, the U.S. Department of Agriculture, the Department of Veterans Affairs, and Treasury – will each begin implementing rules in the coming months that are consistent with the standards outlined by the Homeowner Bill of Rights, according to the White House.
In announcing the new set of national servicing standards, President Obama said, “Government must take responsibility for rules that are fair and fairly enforced. Banks and lenders must be held accountable for ending the practices that helped cause this crisis in th

Article of the Day

Homeownership and Vacancy Rates Drop

01/31/2012 By: Carrie Bay

The national vacancy rate among single-family non-rental homes fell to 2.3 percent in the fourth quarter of 2011, according to data released Tuesday by the U.S. Census Bureau.

That’s down from 2.7 percent at the beginning of last year, and the lowest homeowner vacancy rate since early 2006.
Undoubtedly, the decline in vacancies is an offshoot of fewer foreclosures in 2011 combined with a slight uptick in home sales for the year.
RealtyTrac reports foreclosure starts were down 39 percent from 2010. And while new home sales had their worst showing in recorded history, the National Association of Realtors tracked a 1.7 percent annual increase in existing-home sales.
Paul Diggle, property economist with Capital Economics, says it’s another sign that excess inventory – at least the visible inventory – is slowly but surely being cleared. It

“leaves the visible inventory at a level consistent with house prices bottoming out later in the year,” according to Diggle.
The Census Bureau also reported that the nation’s homeownership rate dropped to 66.0 percent – its lowest level in nearly 14 years – as the housing downturn has eaten away at the share of Americans who are willing and able to own their own home.
The fourth-quarter homeownership rate gave up almost all of the previous quarter’s gain, Diggle noted.
“What’s more, despite median mortgage costs being more affordable than ever and early signs that mortgage credit is becoming more available…the seven-year downturn in homeownership may still have further to run,” he warns.
The flipside, Diggles says, is there are more households in the rented sector and fewer properties lacking tenants, which is helping to drive rents, and therefore landlords’ returns, higher.
He expects rental value growth is to hit 3 percent this year and average rental yields to rise to around 5.5 percent.
With house prices still falling for now, Diggles says it will be a while yet before homeownership is once again seen as an essential part of the American Dream, and that’s despite the fact that owning now seems to make greater financial sense than renting.
The drop in the homeownership rate pushed the share of households in rented accommodations up, from 33.6 percent at the beginning of 2011 to 34.0 percent in the fourth quarter. The ratio of homes in the rental sector that were vacant also fell, to 9.4 percent.