Housing Market Performs Well Despite Rise in Interest Rates

10/24/2013 By: Krista Franks Brock 

Mortgage rates are inching higher and higher, but the market does not seem to be paying any heed as it continues to show signs of improvement, according to the HousingPulse Tracking Survey released Wednesday by Campbell Surveys and Inside Mortgage Finance.

Home sales were down somewhat in September, but other indicators—such as distressed sales, time on market, sales-to-list-price ratio, and purchase offers—remained positive, according to the survey.
“The emerging slowdown in home purchases appears to be largely seasonal,” said Thomas Popik, research director for

the HousingPulse survey. “September is yet another month where higher mortgage rates have had only a moderate effect on the housing market.”
HousingPulse also tracks distressed property sales, finding the share of home purchases involving REOs and short sales decreased to 24.6 percent over the three-month period ending in September, marking a four-year low.
Time on market also fell to a four-year low last month, according to HousingPulse. Homes spent an average of 8.6 weeks on the market, based on the September data gathered. Notably, this is down from the spring homebuying season when time on market was about 10 weeks.
Homes are not only selling quickly, but they are also selling for a high percentage of their list price, according to HousingPulse. The sales-to-list-price ratio in September was 97.5 percent, up from 96.1 percent in September 2012.
The average number of purchase offers on non-distressed properties was 2.2 over the three months ending in September, down just slightly from a four-year high of 2.3 reached in early summer.

FHFA: August Marks 19 Months of Home Price Gains

10/23/2013 By: Krista Franks Brock 

Marking 19 consecutive months of appreciation, the Federal Housing Finance Agency’s (FHFA) House Price Index rose 0.3 percent on a seasonally adjusted monthly basis in August. On a yearly basis, the index is up 8.5 percent.

Prices are now 9.4 percent below their April 2007 peak, according to FHFA.

Of the nine census divisions, FHFA detected the greatest monthly price increase in the Mountain division, where prices increased 1.3 percent in August.
The greatest monthly decrease took place in the South Atlantic division, where prices declined 0.5 percent.
On a yearly basis, prices in all nine divisions were up, with the greatest increase taking place in the Pacific region, where prices rose 18.2 percent over the year.
The Pacific division was followed by the Mountain division—the only other region to report a double-digit gain over the year—at 13.8 percent.
Price appreciation was lowest in the Middle Atlantic and New England regions, where prices increased 4 percent and 4.2 percent, respectively.
The FHFA relies on price data from homes sold to or guaranteed by the GSEs for its House Price Index each month.

FHA Makes Concessions for Those Impacted by Shutdown

10/15/2013 By: Carrie Bay 

The Federal Housing Administration (FHA) called on all approved mortgagees and lenders to be sensitive to the financial hardships some borrowers are facing as a result of the federal government shutdown, including borrowers subject to furlough, layoff, or a reduction in income.
In a notice to its industry partners, FHA said it expects all approved mortgagees and lenders to “make every effort” to communicate with and assist affected borrowers “to the greatest extent possible” by extending informal forbearance plans and fully evaluating borrowers for

available loss mitigation options to avoid foreclosure whenever possible.
“These dedicated public servants, through no fault of their own, are now forced to find a way to meet their ongoing financial obligations without their usual salaries,” said FHA Commissioner Carol Galante in a letter to FHA-approved lenders and mortgagees. “In many instances these are the same employees who have already lost pay during recent sequestration related furloughs.”
The agency is also strongly encouraging all approved mortgagees and lenders to waive late fees for affected borrowers and to suspend credit reporting on borrowers nationwide who have been affected by the shutdown.
“FHA is working to ensure that the hard-won improvement in the housing market is not substantially compromised by the government shutdown and, in particular, that responsible FHA borrowers impacted by the shutdown receive the support they need,” Galante said.
FHA joins Fannie Mae, Freddie Mac, and the Veterans’ Administration in urging lenders to take action to protect those federal workers impacted by the shutdown.

Mortgage Rates Hold Steady Amid Stalemate on Capitol Hill

10/11/2013 By: Tory Barringer 

Fixed mortgage rates held more or less steady this week as Capitol Hill remained locked in debate over budgetary concerns.

According to data in Freddie Mac’s Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 4.23 percent (0.7 point) for the week ending October 10, just up from 4.22 percent last week. A year ago at this time, the 30-year FRM averaged 3.39 percent.
The 15-year FRM this week averaged 3.31 percent (0.7 point), up from 3.29 percent previously.

News was similar for adjustable rates. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.05 percent (0.4 point), rising from 3.03 percent. The 1-year ARM averaged 2.64 percent (0.4 point), increasing a single basis point.
In addition to putting markets into a “wait and see” position, the federal debt impasse made for a “light week of economic data releases”-giving investors little to react to, explained Frank Nothaft, VP and chief economist for Freddie Mac.
Meanwhile, Bankrate.com recorded a fifth consecutive week of declines for fixed rates in its weekly national survey. According to the site, the 30-year fixed averaged 4.39 percent this week-down from 4.41 percent-while the 15-year fixed was flat at 3.47 percent.
The 5/1 ARM experienced the greatest movement, falling 6 basis points to 3.34 percent.
“The ongoing government shutdown and the looming debt ceiling deadline have made investors cautious. The prospect for slower economic growth has investors moving into longer-term government and mortgage-backed bonds, bringing yields lower,” Bankrate said in a release. “This has been good for mortgage rates, which are closely related to yields on long-term government bonds.”

Housing Market Running at 85% of Normal, Pre-Recession Activity

10/09/2013 By: Tory Barringer 

A new index from First American and the National Association of Home Builders (NAHB) suggests that about one in seven housing markets have returned to or surpassed their pre-recessionary levels of activity.

The new Leading Market Index (LMI), released for the first time this week, measures employment growth data from the Bureau of Labor Statistics, home price appreciation data from Freddie Mac, and single-family housing permit growth from the Census Bureau to measure overall improvements in each market.
While the LMI helps illustrate how far the recovery has come in the last several years, NAHB chairman Rick Judson said it also measures “how much further it has to go as we continue to face some significant headwinds in terms of credit availability, rising costs for lots and labor, and uncertainties regarding Washington policymaking.”

According to the association, the index registered a score of 0.85 nationwide, indicating that the national housing market is running at 85 percent of normal activity.
Of the nearly 350 metro markets examined, 52 have reported levels of activity at least equal to those before the recession hit. What’s more, housing markets in 118 metros scored 0.9 or higher, which Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., described as “a very encouraging sign of things to come.”
Baton Rouge, Louisiana, ranked highest on the list of improved major markets, posting an index score of 1.41-41 percent better than its last normal market level. Other major metros reporting growth include Honolulu, Hawaii; Oklahoma City, Oklahoma; Harrisburg, Pennsylvania; and Austin and Houston, Texas.
Widening the scope to include smaller metros, both Odessa and Midland, Texas, scored 2.0 or better, meaning their markets have doubled in strength compared to pre-recession years. Also topping the list of smaller metros are Casper, Wyoming; Bismarck, North Dakota; and Florence, Alabama.
“Smaller metros are leading the way to a housing recovery, accounting for 43 of the top 50 markets on the current LMI,” said NAHB chief economist David Crowe. “This is very much in keeping with the results of our previous index for improving markets, and is an indication of the extent to which local economic conditions dictate the strength of individual housing markets.”

Delinquencies Plummet to Lowest Level Since Crisis

10/08/2013 By: Ashley R. Harris 

Delinquent mortgages dropped to their lowest level since November 2008 according to recent research by CoreLogic.

At the end of August, the company found there were approximately 2.1 million mortgages, or 5.3 percent of all outstanding home loans, in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or REO). The rate of seriously delinquent mortgages is at its lowest level since December 2008.
CoreLogic also reported a drop in completed foreclosures in August of 34 percent year-over-year. Foreclosures were only 1.3 percent higher from the previous month. The data shows 48,000 foreclosures were completed in August.

The news is no surprise to analysts who continue to see improving foreclosure inventory numbers industry-wide. Since the genesis of the financial crisis, approximately 4.5 million foreclosures have been completed.
“A surge in completed foreclosures and a rise in the foreclosure inventory is unlikely given continued house price improvements and shortages of supply in many markets,” said Dr. Mark Fleming, chief economist for CoreLogic.
In the middle of Q3, approximately 939,000 homes in the U.S. were in some stage of foreclosure, a 33 percent decline from the 1.4 million households facing foreclosure in August 2012. This decline lowered the foreclosure inventory by 454,000 homes in August year-over-year.
“The foreclosure inventory continues to improve, as exhibited by these recent numbers,” Fleming said.
Florida led the nation in both volume of foreclosure inventory (7.9 percent) and highest number of completed foreclosures (111,000).
According to CoreLogic’s research, Florida, Michigan, California, Texas, and Georgia account for almost half of all U.S. completed foreclosures.
Wyoming had the lowest foreclosure inventory levels (0.4 percent) and D.C. had the lowest number of completed foreclosures (94) during the 12 months ending in August.

FHFA and Zillow Talk HARP

10/03/2013 By: Tory Barringer 

Zillow partnered with the Federal Housing Finance Agency (FHFA) Thursday to review eligibility requirements for the Home Affordable Refinance Program (HARP) and respond to borrowers confused about the program.

Meg Burns, senior associate director for housing and regulatory policy for FHFA, joined Zillow for a Google+ Hangout session to field questions from underwater homeowners and explain HARP’s finer points. Hosting the call was Erin Lantz, Zillow’s director of mortgages.
Responding to borrowers’ worries about their financial situations, Burns reiterated that HARP has no minimum income or credit score requirements (though different lenders may have their own criteria).
“It’s a very streamlined product, which means lenders don’t do traditional underwriting. They don’t assess the borrowers’ income amount nor look at the credit report,” she said. “Most lenders really like that feature of the product because it makes it much easier for them to qualify a borrower for participation.”
Instead, borrowers are required to have a solid payment history, with no missed payments in the six months prior to refinancing and up to one missed payment in the 12 months prior. That history is used instead as a proxy for a borrower’s ability to pay.
“One of the great things about HARP is, if you continue to make payments on time, you ultimately will meet the payment history requirement,” Burns remarked.

She also stressed that the program can also be used for second homes and for investment properties, though the fees may be slightly higher.
Also discussed were several enhancements to the program (sometimes dubbed as “HARP 2.0”) that went into effect in 2012 and expanded eligibility to more borrowers. Because those changes went into effect well after HARP’s inception, Burns urged borrowers who applied prior to March 2012 to try again.
One of the biggest changes was the removal of the original HARP’s 125 percent ceiling on loan-to-value (LTV) ratios.
The elimination of that cap has been especially helpful for borrowers in states like Nevada, which has seen a significant boost in HARP refinances since eligibility opened up, Burns said.
In the second quarter of 2013 alone, loans with LTVs of 125 percent or higher made up nearly 20 percent of all HARP activity, FHFA revealed in its latest quarterly report.
Finally, answering a Realtor’s question regarding dubious advice offered by some companies to struggling borrowers, Burns warned consumers to be careful of who they trust—especially if that person recommends deliberately missing payments.
“Don’t ever go delinquent on your mortgage if you want to qualify for a program,” she said. “It’s highly likely, for one thing, that you’ll be rejected anyway, and it’s really bad for your credit score.”
Thursday’s question and answer session represented one way in which FHFA is working to spread knowledge of HARP and get more borrowers involved. In addition to loosening eligibility requirements last year, the agency has extended the program for an additional two years, bringing the expiration date to December 31, 2015. In addition, FHFA recently announced the launch of a public awareness campaign that has it partnering with HGTV personality Mike Aubrey.
Through the end of this year, FHFA will be working with Zillow on a HARP-specific blog created to answer questions about the program’s specifics and offer advice. More information can be found at Zillow.com/education/HARP.

Wells Fargo Predicts Market Rebound

10/02/2013 By: Hugh Moore 

Wells Fargo announced Tuesday that it anticipates a market rebound.

“The housing market is transitioning away from a rebound driven primarily by speculative forces to one where the underlying fundamentals will be much more important,” Wells Fargo said in a report. “Over the past few years investor purchases have been the primary driver of the housing recovery, helping clear inventories of foreclosed and lender-owned properties and pulling home prices dramatically higher. Home prices, which tumbled 33.7 percent from peak to trough using the S&P/Case-Shiller Home Price Index, have since rebounded 16.3 percent and are up 12.4 percent over the past year alone. The swing in prices exaggerates the extent of improvement and likely reflects the whipsaw effect of prices overshooting to the downside during the worst of the housing bust.”

Moody's Predicts Strong Market Despite Slowdown

09/27/2013 By: Hugh Moore 

 

Despite some softening housing indicators, Moody’s Analytics predicted this week that the housing market will remain strong through 2014 and 2015.

“The fundamental drivers of housing remain solid,” Moody’s reported in its monthly ResiLandscape report. “Employers are adding jobs, housing is still affordable and inventories of homes are low. Home sales, homebuilding and house prices will all head up this year and strengthen further in 2014 and 2015 as housing helps to fuel the broader economy’s expansion. These positive factors will offset the dampening impact of rising mortgage interest rates on demand for housing, although a faster than

expected run-up in rates could derail the housing rebound.”
Moody’s predicted that rising interest rates will cause a drop in refinancing, which in turn will prompt banks to loosen credit and underwriting requirements in an effort to generate new business. Pending home sales are still high and supplies of new homes are tight.
“The rapid price gains of the last year cannot be sustained and we expect the pace to decline substantially in the second half of this year,” Moody’s reported. “Strong investor demand helped to fuel those gains and investors are starting to
pull back as the supply of inexpensive distressed homes has dried up. A slower pace is a positive for housing demand and will help to keep affordability from further eroding.”
These conditions should “ignite a virtuous cycle,” in which homebuilding stimulates other sectors of the economy, including the manufacturing, retail and financial sectors, the report predicted. “Stronger job growth will in turn generate stronger housing demand. Indeed, despite some softening during the second quarter, housing is already a driver of broader economic growth.”
Moody’s warned that the greatest threat to this growth could come in the form of rapidly increasing mortgage rates that disrupt the housing recovery.