Originally known as Making Home Affordable, HARP aims to help homeowners refinance their mortgage who may otherwise be ineligible because of falling home values.
There are 4 basic HARP criteria every borrower must meet:
The existing home loan must be guaranteed by Fannie Mae or Freddie Mac.
Your home must be a 1- to 4-unit property
You must have a perfect mortgage payment history going back 12 months. No 30-day lates allowed.
Your first mortgage balance must be 125% or less of your home's market value
If you're not sure whether Fannie Mae or Freddie Mac back your mortgage, you can look it up. Fannie's website is http://www.fanniemae.com/loanlookup; Freddie's is http://freddiemac.com/mymortgage. If you don't locate your loan on either website, your mortgage is backed by a third-party and is not HARP-eligible.
For homeowners that meet HARP's criteria, there are some underwriting details of which to be aware.
First, if your original mortgage does not require mortgage insurance, your HARP mortgage will not require it, either -- regardless of your new loan-to-value.
Second, all HARP refinances require income verification. It doesn't matter if your original mortgage was a stated income or no income verification loan. You should expect to produce 1040s and W-2s for your HARP refinance and asset statements, too.
And, lastly, second (and third) mortgages may not be "rolled in" to a new first mortgage loan balance. Junior lien holders must agree to remain in a junior lien position, regardless of combined loan-to-value.
There is a thorough HARP FAQ section on the government's website, but it's for general questions only. For specific Home Affordable Refinance Program information, first make sure you're program-eligible, then pick up the phone to call your loan officer.
HARP is complex enough that you'll want to talk with a human before taking a proper next step.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
Originally known as Making Home Affordable, HARP aims to help homeowners refinance their mortgage who may otherwise be ineligible because of falling home values.
There are 4 basic HARP criteria every borrower must meet:
The existing home loan must be guaranteed by Fannie Mae or Freddie Mac.
Your home must be a 1- to 4-unit property
You must have a perfect mortgage payment history going back 12 months. No 30-day lates allowed.
Your first mortgage balance must be 125% or less of your home's market value
If you're not sure whether Fannie Mae or Freddie Mac back your mortgage, you can look it up. Fannie's website is http://www.fanniemae.com/loanlookup; Freddie's is http://freddiemac.com/mymortgage. If you don't locate your loan on either website, your mortgage is backed by a third-party and is not HARP-eligible.
For homeowners that meet HARP's criteria, there are some underwriting details of which to be aware.
First, if your original mortgage does not require mortgage insurance, your HARP mortgage will not require it, either -- regardless of your new loan-to-value.
Second, all HARP refinances require income verification. It doesn't matter if your original mortgage was a stated income or no income verification loan. You should expect to produce 1040s and W-2s for your HARP refinance and asset statements, too.
And, lastly, second (and third) mortgages may not be "rolled in" to a new first mortgage loan balance. Junior lien holders must agree to remain in a junior lien position, regardless of combined loan-to-value.
There is a thorough HARP FAQ section on the government's website, but it's for general questions only. For specific Home Affordable Refinance Program information, first make sure you're program-eligible, then pick up the phone to call your loan officer.
HARP is complex enough that you'll want to talk with a human before taking a proper next step.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
According to foreclosure-tracking firm RealtyTrac, foreclosure filings topped 300,000 for the 12th straight month last month as 1 in every 418 U.S. homes received a foreclosure filing.
It's a small improvement from January and a just 6 percent increase over February 2009.
On a per-capita basis, foreclosure density varied by state:
Nevada : 1 foreclosure filing per 102 homes
Florida : 1 foreclosure filing per 163 homes
Arizona : 1 foreclosure filing per 163 homes
California : 1 foreclosure filing per 195 homes
Also, as in January 2010, foreclosures across the country were concentrated. 10 states beat the national Foreclosure Per Capita average; 40 states fell below. Like everything else is real estate, it seems, foreclosures are local.
For today's home buyers, foreclosures represent an interesting opportunity.
Homes bought in various stages of foreclosure are often less expensive than other, non-foreclosure homes. It's one reason why distressed home sales account for 38 percent of all resales. However, less expensive doesn't always mean less costly. A foreclosed home may be in various stages of disrepair and they're often sold as-is, as policy.
Buying new or used can be cheaper than buying broken-down.
Therefore, if you're in the market for a bank-owned home, make sure you know what you're buying before you sign a contract. Have qualified professionals review and inspect the property, as needed. Damage to pipes or the property's structure, for example, may not be so obvious on a walk-though and you'll want to know about it before you buy.
Also, foreclosed homes are federal tax credit-eligible. Buyers must be under contract by April 30, 2010 and closed by June 30, 2010.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
If your mortgage is set to adjust this year, the smart move may be to let it. Today's conforming mortgages are adjusting lower than ever before -- as low as 3 percent. It may not be what you expected when you signed for your ARM several years ago.
The reason why ARMs are adjusting lower is because of how they're made.
When conforming adjustable-rate mortgages adjust, they adjust according to a pre-determined formula. The formula is the sum of a constant and a variable. The constant is usually 2.25 percent and the variable is a daily-changing interest rate called LIBOR.
The formula looks like this:
New Mortgage Rate = LIBOR + 2.250 percent
LIBOR is an acronym for London Interbank Offered Rate. It's an interest rate at which banks borrow money from each other. In Fall 2008, when Lehman Brothers fell and sparked a global banking fear, LIBOR spiked as the risk of inter-bank borrowing jumped.
Since then, however, LIBOR is down.
Normalcy is returning to banking and the timing couldn't be better for homeowners with ARMs. 15 months ago, a homeowner's ARM may have adjusted to 6 1/2 percent. Today, that same ARM falls to just above 3.
As a strategy play, it might make sense to let your ARM adjust. Or, because fixed rates are still near 5 percent, converting that ARM to a long-term fixed-rate product might make sense, too. The decision is a balance between how low do you want your payment, and how long might you live in your home.
The longer you stay, the more it might make sense to switch to fixed-rate, even though ARM rates are so low.
If you've got an adjusting ARM, talk to your loan officer about your choices. Once March ends and the Fed withdraws its mortgage market support, mortgage rates may rise and the fixed-rate option may be gone.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
In November, Congress extended and expanded the First-Time Home Buyer Tax Credit program to include a subset of "move-up" buyers -- homeowners that have owned and lived in their home for 5 of the last 8 years.
The credit ranges up to $8,000 per buyer. There's now just 7 weeks left to take advantage.
To be eligible, home buyers must be under contract for a new home no later than April 30, 2010, and must be closed no later than June 30, 2010.
In addition to meeting the deadline dates, there's a basic set of requirements to be tax credit-eligible:
You can't purchase the home from a parent, spouse, or child
You can't purchase the home from an entity in which the seller is a majority owner
You can't acquire the home by gift or inheritance
Each buyer in the purchase must meet eligibility requirements
There's other criteria, too.
For one, the sales price on the subject property cannot exceed $800,000. Homes sold for more than $800,000 are ineligible for the tax credit. Furthermore, households earning more than $125,000 as single-filers, or $225,500 for joint-filers, are ineligible.
You can read the complete eligibility requirements at the IRS website, or, you may just find it simpler to speak with your accountant about it. There are some nuances in qualifying for and claiming the tax credit on your returns and getting a professional's opinion is always wise.
And lastly, don't forget that government's tax credit program is a true tax credit. It's not a tax deduction. This means that a tax filer whose "normal" tax liability is $3,500 and who is eligible for $8,000 in credit will receive a $4,500 refund from the U.S. Treasury.
If you're currently in the House Hunt, mark your calendar for April 30, 2010. It's 7 weeks away and you can be sure that as the date gets closer, buyer traffic is going to increase. You may find sellers more willing to negotiate today than several weeks from now.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
Mortgage markets improved last week in low-volume trading.
Between Monday to Thursday, Wall Street focused on the upcoming jobs reports and mortgage markets gained while traders jockeyed for position. Mortgage rates drifted lower through Thursday afternoon. But, then, after a better-than-expected Non-Farm Payrolls report Friday morning, mortgage markets -- and mortgage rates -- reversed.
Overall, mortgage rates dropped last week, but only by a small margin. Rates were best Thursday afternoon.
It was the second consecutive week in which mortgage rates fell.
Last week was also interesting in that both stock markets and bond markets improved, proving that rates don't always rise when stock prices do. 455 of the S&P 500 companies posted gains last week.
If you're shopping for a home or a refinance, though, don't rest on your laurels. After Friday's big sell-off, this week opens into a major headwind and, plus, the Federal Reserve's support for mortgage markets ends in just 3 weeks.
This week, without much data to influence traders, the upward momentum in rates may have little cause to temper. We'll see the Consumer Confidence numbers on Tuesday and Retail Sales on Friday. Beyond that, there's not much else.
After last week’s performance, conforming mortgage rates may be poised to rise rather sharply. If you're waiting for the right time to lock your rate, it may have been this past Thursday. Consider locking your rate early this week to protect against further rate hikes.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
Conforming and FHA mortgage rates have improved over the last 10 days, but that could all change this Friday with the release of February's Non-Farm Payrolls report.
Non-Farm Payrolls is the official name of the government's monthly jobs report and, given the fragile state of the U.S. economy, Wall Street will be watching it closely.
Mortgage rates could spike come Friday morning.
Jobs are an important part of the nation's recovery. Among other concerns, unemployed Americans don't spend as much money on goods and services, and are more likely to default on a mortgage. This retards economic growth and increases the potential for foreclosures.
When jobs numbers worsen, therefore, it follows that economic projections worsen, too.
Poor employment figures draw money away from the stock markets and into less-risky bond markets, including mortgage-backed bonds. Mortgage rates improve as a result. Conversely, when jobs numbers improve, stock markets gain and bond markets worsen.
Analysts expect that a net 30,000 jobs were lost in February.
The Bureau of Labor Statistics press release hits at 8:30 A.M. ET, roughly an hour before Friday's mortgage pricing will be available to consumers. If you're worried about rates rising on the heels of a strong jobs report, therefore, be sure to get your rate lock in today instead. Once Friday gets here, it may be too late.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
According to the the National Association of Realtors®, "distressed homes" represented nearly 2 of every fifth home sold in January 2010. Clearly, real estate investors are taking advantage of good deals on cheap property. But there's risk involved.
This NBC Today Show interview first ran in March 2009, featuring real estate expert Barbara Corcoran. Despite its age, the message remains relevant. Today may be a terrific time to buy a bank-owned home -- just make sure you do your research first. There's plenty of ways for investors to get burned.
Corcoran also gives pointers on how to evaluate a prospective tenant.
Foreclosures should represent a large number of 2010's total home sales and will offer interesting opportunities to bona fide real estate investors. Before you jump in, make sure to watch the video. The rents you save may be your own.
Remember, the stats and the data are from 12 months ago, but the advice stays meaningful.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
The Home
Affordable Refinance Program (HARP) has been extended until June 30, 2011,
according to the Federal Housing Finance Agency (FHFA).
“FHFA has
reviewed the current market situation and the state of mortgage insurance
availability and has determined that the market conditions that necessitated
the actions taken last year have not materially changed,” said FHFA Acting
Director Ed DeMarco, in a statement on its website.
“Accordingly,
to support and promote market stability, and to encourage lenders and other
mortgage market participants to fully adopt the HARP program, including the
implementation of the October 2009 expansion of loan-to-value
ratios (LTVs) to 125 percent, FHFA is authorizing the extension of
HARP until June 30, 2011.”
The
program is one portion of the government’s Making Home
Affordable Program, which also includes the Home Affordable
Modification Program (HAMP).
It began
in April 2009 and was set to expire on June 10 of this year; HAMP is expected
to run until December 31, 2012.
Apparently
things are worse than anticipated, what with more than 11.3 million, or 24
percent, of all residential properties with mortgages in the United Statesunderwater as of
year-end.
Of the
more than four million refinanced mortgages purchased or guaranteed by Fannie
Mae and Freddie Mac in 2009, 190,180 were HARP refinances with loan-to-value ratios
between 80 percent and 125 percent.
Mortgage markets improved last week as economic reports painted a less-than-stellar portrait of the U.S. economy and concerns of a looming monetary policy change eased. Mortgage pricing improved dramatically, despite a late-Friday retreat.
Mortgage rates are now at their lowest levels since early-February.
In addition, both the Case-Shiller and Home Price Indices showed a slight pullback in the housing sector.
The impact of these statistics was muted, however. This is because Fed Chairman Ben Bernanke gave his semi-annual outlook to Congress and markets focused more on the chairman verbiage than hard data, looking for clues about the future of Fed policy.
Bernanke stayed on message -- the Fed Funds Rate will stay low for an extended period of time.
Mortgage rates were also helped by a strengthening U.S. dollar and demand for U.S.-denominated bonds. When demand for mortgage-backed bonds is strong, mortgage rates fall.
This week, mortgage rates will jockey around Friday's Non-Farm Payrolls report.
Jobs are playing a large role in mortgage bond trading and markets expect that 30,000 jobs were lost in February. If the actual figure is better than 30,000 jobs lost, mortgage rates will rise. If it's worse, rates will rise.
Other important data this week include Personal Consumption Expenditures -- the Fed's preferred inflation gauge -- plus the Fed's Beige Book release. Mortgage rates remain in flux so float with caution.
Mortgage rates look good today, but by Friday, they could be much, much worse.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
This, from Jon Lansner, in today’s
Orange County Register:
For the 22 business days ending
February 5 – freshest numbers from DataQuick — our region-by-region analysis of
homebuying shows Orange County slices up geographically speaking this way …
DataQuick identified 570 homes selling in Orange
County’s north-inland ZIP codes in this most recent period, +12% from a
year ago. Median selling price? $450,000 in these 23 ZIPs. This most recent
median price change was +8.4% vs. a year ago.
Mid-county ZIPs — median selling price $352,500 – had
630 sales, -12% from a year ago. In these 24 ZIPs, the freshets median
price change was +4.9% vs. a year ago.
Combined, total homes sales in ZIPs in the north and
mid-section of Orange County were -2.2% vs. a year ago as homebuying in
the rest of the county ran +31.3% vs. 12 months earlier.
North/mid-county homes accounted for 57% of residences
sold in the most recent period vs. 64% a year ago.
325 homes sold in beach cities’ 17 ZIP codes in the
most recent period, +16% from a year ago. Median selling price? $722,500
in these 17 ZIPs. Newest median price change was +4.9% vs. a year ago.
South inland ZIPs — median selling price $493,250 – had
578 sales, +41% from a year ago. In these 19 ZIPs, the latest median price
change was +16.7% vs. a year ago. (
This is the area where I’ve done most of my business, for the past 33+
years.)
All told, countywide sales were +8% vs. a year ago. The
median selling price was +15% in the past year.
End of Jon’s article.
I can feel the hubbub of activity,
and see the multiple offers on properties, but it feels good to see it in
print.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
Earlier this week, the private-sector Case-Shiller Index showed home prices slightly lower between November and December. Thursday, the public-sector Home Price Index showed the same.
Publishing on a 2-month lag, the Federal Home Finance Agency said home prices fell by 1.6 percent nationally in December. And that's an average, of course. Some regions performed well in December as compared to November, others didn't.
Values in the Middle Atlantic states improved slightly
Values in New England were essentially unchanged
Values in the Mountain states sagged, down 3.5%
These aren't just footnotes. They're an important piece toward understanding what national real estate statistics really mean. In short, "national statistics" are just a compilation of a bunch of local statistics.
For example, if we dig deeper into the FHFA Home Price Index 70-page report, we find that cities like Terre Haute, IN, Buffalo, NY, and Amarillo, TX posted year-over-year home price gains. You won't see that in a "national" report.
Furthermore, it's a sure bet that those same cities, you could find neighborhoods that are thriving, and others that are not. Just because the city shows higher home values overall, it won't necessarily be the case for every home in the city.
Every street in every neighborhood of every town in America has its own "local real estate market" and, in the end, that's what should be most important to today's buyers and sellers. National data helps identify trends and shape government policy but, to the layperson, it's somewhat irrelevant.
So, when you need to know whether your home is gaining or losing value, you can't look at the national data. You have to look at your block -- what's selling and not selling -- and start your valuations from there.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
The meltdown sent interest rates soaring and availability shrinking, but rates are declining and lenders are more willing to make loans that top the limits for Freddie Mac, Fannie Mae and the FHA.
By E. Scott Reckard The Los Angeles Times February 24, 2010
Phil Kelly had 18 more months to go before the fixed rate on his $2.5-million mortgage became adjustable.
But when Kelly, a former computer executive living in Rancho Santa Fe,learned he could knock his interest rate down by a full percentagepoint by refinancing, he went for it.
"It's always tough to pick the exact bottom or top of anything," Kellysaid. "But I think this rate is about as low as you're going to get."
Rates on jumbo mortgages -- loans of more than $729,750 in countieswith the highest-cost housing -- shot up during the financial crisis aslenders and loan investors shunned anything tainted with even a whiffof higher risk. Rates on big mortgages were especially high relative tothose on smaller loans.
But in a boon for borrowers in California's expensive housing markets, the jumbo-loan market is starting to return to normal.
Two weeks ago, the average interest rate on 30-year fixed-rate jumbosdropped to 5.79%, a nearly five-year low, according to rate trackerInforma Research Services of Calabasas. It edged up to 5.88% onTuesday, still very attractive by historical standards. The average isdown from well above 7% in late 2008.
Rates are even lower on so-called hybrid adjustable mortgages, on whichthe rate is fixed for, say, five years and then adjusts annually.Kelly's new loan is a five-year hybrid adjustable identical to his oldone, except that he's paying about 5%, down from 6%.
Banks are also relaxing slightly some of their requirements for jumboloans. That's an encouraging sign because the market for jumbos, incontrast with the rest of the mortgage business, isn't being propped upby Uncle Sam.
The lower rates and somewhat easier terms reflect newfound confidenceamong banks in the housing market. That's because, by definition,jumbos are too big to be bought by Freddie Mac and Fannie Mae or to beinsured by the Federal Housing Administration. Plus, the private marketfor mortgage-backed bonds dried up when the meltdown hit. So lendersmaking jumbo loans these days must be willing to take the risk ofkeeping them in their portfolios.
The maximum amounts for Freddie Mac and Fannie Mae "conforming"mortgages, and for FHA mortgages, are set by Congress. The cutoff forsingle-family homes was $417,000 from 2006 until February 2008, whenlawmakers increased it temporarily to $729,750 in certain high-costareas, including Los Angeles, Orange and Ventura counties. Conformingloans top out at $500,000 in Riverside and San Bernardino counties and$697,500 in San Diego County.
The increased upper limits, which have been extended until the end ofthis year, have created a three-tier system in expensive areas,mortgage professionals say: loans of up to $417,000, which are theeasiest to obtain and carry the lowest rates; "conforming jumbos" from$417,000 to $729,750, which are somewhat harder to get and haveslightly higher rates; and true jumbos, with the toughest standards andhighest rates.
In the boom years of 2005 and 2006, interest rates were typically nomore than a quarter of a percentage point higher on jumbo loans than onconforming loans, according to Informa Research. That widened as themortgage meltdown intensified and home prices dropped in late 2007. Thespread ballooned to nearly 1.7 percentage points in early 2009 afterthe entire credit system froze.
But this year the rate spread has narrowed to less than a percentagepoint. It could shrink more if conforming-loan rates rise as expectedafter the Federal Reserve wraps up a $1-trillion-plus program tosupport the market for conforming loans next month.
In addition to lower rates, down-payment requirements are being relaxedin some cases. For example, to write a jumbo loan in coastal areas ofLos Angeles and Orange counties, Wells Fargo Home Mortgage looks for a20% down payment or that percentage of equity, down from 25% last year,said Brad Blackwell, a national mortgage sales manager at the lender.
The reason: Wells believes high-end home prices are stabilizing inthose coastal counties. But the bank still requires higher downpayments in the Inland Empire and other battered housing markets suchas Florida, Nevada and Arizona, where prices for jumbo-size homes don'tappear to be stabilizing, he said.
Jumbo loans remain much harder to get than before the credit crunch andrecession. Borrowers typically must have a credit score of at least700, compared with boom-era minimums in the 600s, though Laguna Niguelmortgage broker Jeff Lazerson said at least one lender was again makingsub-700 jumbos available.
What's more, unless their down payments are very large, borrowers mustprovide evidence of high income, have sizable bank accounts as acushion against the unforeseen and occupy the houses themselves.
But there are clear signs that the jumbo market has loosened. One is anincreasing availability of "stated income" loans -- those that don'trequire proof of income -- of as much as $2 million to borrowers withat least a 40% down payment, said mortgage broker Gary Bluman, owner ofReal Estate Resources in Brentwood.
Also, instead of a true jumbo loan, some "piggyback" second loans areavailable again to help certain borrowers with 25% down payments payfor high-priced homes, Lazerson said.
Of course, adjustable, stated-income and piggyback loans were bigcontributors to the mortgage meltdown. But such provisions are lessrisky if a borrower has 25% to 40% equity.
Despite the confidence in the market that such terms imply, lenders andmortgage investors are still dealing with piles of bad jumbos madeduring the boom.
Delinquencies of 60 days or more on prime jumbo loans that werepackaged into securities jumped to 9.6% in January, up from 3.7% a yearearlier, Fitch Ratings reported this month.
The jumbo delinquency rate in California climbed to 11.3% from 4.1% a year earlier.
For now, the jumbo market remains limited to the volume of loans thatbanks are willing and able to keep on their books. But there is hopefor a return to private outside funding.
Although no jumbos have been turned into securities for at least twoyears, packages of delinquent jumbos have begun to be sold again to"vulture" investors, a sign that the secondary market for the loans mayrevive, said Michael Fratantoni, vice president of research at theMortgage Bankers Assn.
"The ice sheet," he said, "is starting to crack here and there."
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
Saving Face, If Not the House( From
Tuesday’s American Banker Internet.)
After years of talking about
"preserving homeownership," the mortgage servicing industry has a new
buzzword: finding a "graceful exit" for seriously delinquent homeowners
who do not qualify for loan modifications.
To move these borrowers out of their homes with a minimum of
delay, friction or embarrassment,Fannie Mae and Freddie Mac are telling
servicers to increase the use of alternatives to foreclosure such as short
sales and deeds-in-lieu.
"Some people just are unwilling
or unable to be helped," Eric Schuppenhauer, a Fannie senior vice
president, said Wednesday at a Mortgage Bankers Association servicing
conference in San Diego. "They now must go to some form of liquidation and
hopefully a graceful exit from the home."
Foreclosure timetables "got a
little crazy last year," he said, as servicers held off on filing default
notices or taking title to properties while offering borrowers a chance to
rework loan terms through the government's Home Affordable Modification
Program.
Ingrid Beckles, Freddie's senior
vice president of default asset management, told the conference there is
greater "recognition that we need to come to some closure on the
decisioning process."
More than 30% of the seriously
delinquent loans held by Freddie are backed by vacant homes, she said. Many
states have courts clogged with foreclosure filings.
"We're standing in line in
Florida," Beckles said.
MBA Asks for a 'Bridge' Loan.
None of this is to say the industry
has given up on keeping borrowers in their homes — or on getting more
government assistance in that endeavor.
The MBA unveiled a proposal Tuesday
to have the Treasury Department lend money to servicers so they can grant
forbearances to homeowners who have involuntarily lost their jobs. Such
borrowers could get their payments reduced for as long as two years (though
their situations would be periodically re-evaluated). The MBA called the plan a
"bridge to Hamp": borrowers would be considered for the loan-mod
program once they found new jobs or when the forbearance period ended.
During that period servicers would
need to advance principal and interest to mortgage investors, taxes to
municipalities and premiums to insurers. That's where the Treasury financing
would come in. "There are hundreds of smaller servicers who won't have the
cash or capital to make pass-throughs over a prolonged period," said John
Courson, the MBA's president. The size of the proposed facility is yet to be
determined.
Can such a plan fly given the public
rage over government assistance to the financial industry and to delinquent
homeowners? "This is not a bailout," Courson said. "This is a
loan" that servicers would repay with interest. And while "strategic
defaulters" who walk away from their homes are raising hackles, "I
don't sense any pushback to trying to help the unemployed."
John Denney, the MBA's associate
vice president of public policy, said the Treasury had not yet committed to the
proposal.
Quotable …
"If we don't get a suicide threat once a week, it's a good week."
— John Parres, the first vice
president of customer service and collections at OneWest Bank FSB, at the
conference, on dealing with distressed homeowners. OneWest, built from the
ashes of IndyMac, has recently outperformed most other servicers in this
rough-and-tumble business. ( End of article.)
This is just one additional factor ensuring
that the alleged “shadow inventory” will disappear for good – in the shadows.Any buyers waiting for that prediction of a “tsunami
of foreclosures” is going to have a v e r y l o n gwait. At least here in South Orange County, California.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
The housing recovery showed particular weakness in the New Homes Sales category last month -- good news for homebuyers around the country.
A "new home" is a home for which there's no previous owner.
New Home Sales fell 11 percent from the month prior and posted the fewest units sold in a month since 1963 -- the year the government first started tracking New Home Sales data.
Right now, there are roughly 234,000 new homes for sale nationwide and, at the current sales pace, it would take 9.1 months to sell them all. This is nearly 2 months longer than at October 2009's pace.
The reasons for the spike in supply are varied:
The original home buyer tax credit expired in November
Weather conditions were awful in most of the country in January
Weak employment and consumer confidence continue to hinder big ticket sales
Now, these might be less-than-optimal developments for the economy as a whole, but for buyers of new homes, it's a welcome turn of events. Home prices are based on supply and demand, after all.
As a result, this season's home buyers may be treated to "free" upgrades from home builders, plus seller concessions and lower sales prices overall.
It's all a matter of timing, of course. New Home Sales reports on a 1-month lag so it's not necessarily reflective of the current, post-Super Bowl home buying season. And from market to market, sales activity varies.
That said, mortgage rates remain low, home prices are steady, and the federal tax credit gives two more months to go under contract. It's a favorable time to buy a new home.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
I
learned something interesting from my preferred lender this morning.
About
a year ago, enterprising people started a new phenomenon which later became
known as a “Buy and Bail”. Some, who were increasingly upside down in their
present home, saw how low prices were getting on a bigger or better house, (
maybe even across the street.) and so they made an offer on the new house,
stating to the lender that they would be renting out their former house – a common,
and valid tactic - until last year.
After
closing escrow on the new house, however, they simply stopped making the
payments on the old one, making that lender foreclose on the property. Hence buy, (
new.) then bail.( from the old property.)After about 6 months of this situation, lenders wised up and instituted
new tougher guidelines, wherein a buyer had to have at least 25% verifiable
clear equity in both properties – that qualification brought buy and bail
transactions to a screeching halt – and rightfully so.
This
new stricter policy has ended buy & bail, but it has also stopped a lot of
people who would really have rented their old place out, from being able to qualify
for such a transaction.Most move-up
buyers are pulling equity from their old place, to use as a down payment on the
new one, and in most cases, doing so didn’t leave at least 25% equity in the
old property, or provide a 25% down payment on the new property.
Stymied
by such a scenario?Here’s a different
thought, and possible solution.
If you move out of your present house, and put a tenant in it, say on a year’s
lease - after 6 months, the buy & bail policy no longer applies – meaning
you DON’T need 25% equity in the house you moved out of – in order to obtain
your financing on a new house.
So,
where do you live for the 6 to 9 months it takes to establish that “seasoning”?
Well, you can either lease a house for a year, and after the obligatory 6
months have passed, be in a perfect position to purchase the new house with no
such restriction - and NO contingencies.
OR,
if you’re really lucky, you could find a house that is suitable, now, and if
it’s on both the rental and for sale markets – as many houses are, these days –
make them a lease option offer, planning to close escrow well after the 6
months of renting the old house.
You
could also put a stipulation into a regular one year lease, that, towards the
end of the lease, if the owner was interested in selling, they would give you
the first opportunity to buy the property. That happens more frequently than
you might imagine.
Looking
for a Realtor capable of thinking outside the box?With over 33 years of successful local
experience, it would be my extreme pleasure to add your name to my list of
happy clients.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
Using data compiled in December, Standard & Poors released its Case-Shiller Index Tuesday. The report shows home prices down just 2.5% on an annual basis, a figure much lower than the 8.7% annual drop reported after Q3.
According to Case-Shiller representatives, the housing market is "in better shape than it was this time last year", but some of the summer's momentum has been lost. 15 of 20 tracked markets declined in value between November and December 2009.
Meanwhile, it's interesting to note the 5 markets that didn't decline -- Detroit, Los Angeles, Las Vegas, Phoenix and San Diego. Each of these metro regions were among the hardest hit nationwide when home prices first broke. Now, they're leading the pack in price recovery.
For some real estate investors, that's a positive signal. But we also have to consider the Case-Shiller Index's flaws because they're big ones.
As examples:
Case-Shiller data is reported on a 2-month lag
The Case-Shiller sample set includes just 20 U.S. cities
There's no "national real estate market" -- real estate is local
That said, the Case-Shiller Index is still important. As the most widely-used private sector housing index, Case-Shiller helps to identify broader housing trends and many people believe housing is a key element in the economic recovery.
If the markets that led the housing decline will lead the housing resurgence, December's data shows that full recovery is right around the corner.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
The story behind the headline was sourced from the Freddie Mac Primary Mortgage Market Survey, am industry-wide mortgage rate poll of more than 100 lenders. The PMMS has reported mortgage rate data to markets since 1971 and is the largest of its kind.
Unfortunately, rate shoppers can't rely on it.
See, unlike governments and private-sector firms, when consumers are in need mortgage rate information, they need the information delivered in real-time; for making decisions on-the-spot. Consumers need to know what rates are doing right now.
The Freddie Mac survey can't offer that.
According to Freddie Mac, the survey's methodology is to collect mortgage rates from lenders between Monday and Wednesday and to publish that data Thursday morning. The survey results are an average of all reported mortgage rates. The problem is that mortgage rates change all day, every day. The PMMS results are skewed, therefore, by methodology.
And, meanwhile, the issue was compounded last week because mortgage rates shot higher Wednesday afternoon -- after the survey had "closed". The market deterioration ran into Thursday, too -- again, unable to be captured by Freddie Mac's PMMS.
Although the newspapers reported mortgage rates down last week, they weren't. Conforming mortgage rates were higher by at least 1/8 percent, or roughly $11 per $100,000 borrowed per month. In some cases, rates were up by even more.
Newspapers and websites can give a lot of good information, but pricing is far too fluid to rely on a reporter. When you need to know what mortgage rates are doing in real-time, make sure you're talking to a loan officer. Otherwise, you may just be getting yesterday's news.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
Here is the latest Orange County Market Report from my friend Steven Thomas, the President of Altera Real Estate:
"Short
sales, sales of homes for less than what is owed on the mortgage, are creating
a backlog of pending sales that seem to take forever to close. Here’s
a definite fact:2010
is rapidly becoming the year of the short sale.
With an enormous glut of
foreclosures in 2008, the Federal government stepped in and in 2009 virtually
strong armed big lenders to modify loans. The problem is that not everybody
qualifies for a loan modification and many successful loan modifications
default again on their loans down the road. Yet, there are still a tremendous
number of homeowners in trouble. Both the government and banks are in
agreement, that they don’t want to foreclose unless there is virtually no other
alternative. And, there is a better alternative - short sales.
There are many advantages to short
sales for the homeowner; including, the ability to purchase again sooner. For
the lender, they get to take advantage of pride in homeownership, the homes are
not dilapidated and, unlike foreclosures, do not require thousands of dollars
to fix nor do they have significant holding costs. So, at the end of November
2009, the US Treasury put together a short sale directive that outlines a new
process that begins on April 5, 2010, for all Fannie Mae and Freddie Mac loans.
In the interim, lenders have been scrambling to address the new program and
modify their current processes that have been ineffective thus far.
Currently, the short sale process is
NOT working and has resulted in a deluge of pending sales that take forever to
close. There are currently 6,706 outstanding pending sales in all of Orange
County. Of those, 4,154, or 62%, are short sales. The problem is that almost
70% have been pending for over one month. Many have been pending for months.
The reason these do not close within a short period of time is because they
require lender approval. And, if there is a second loan, the process is even
longer. Throw in the fact that many short sale homeowners have stopped paying
their homeowner association dues, and they too have to sign off on the deal if
they are obtaining less than what is owed.
Often, the buyer of a pending short
sale grows so frustrated that they cancel and look elsewhere. The short sale is
then placed back on the market and is often placed right back into pending
status in a short period of time, and the wait for lender approval continues.
With short sales, the buyer, seller and offer must all qualify. The buyer must
qualify for the new loan. The seller must qualify to obtain the short sale -
there must truly be a hardship. Finally, the offer to purchase must be at or
near fair market value. With demand so hot, lenders are taking a closer look at
value and not willing to sell at a major discount.
The current process for short sales
is an absolute crapshoot. Real estate agents, buyers and sellers enter into a
pending sale with no definitive timeline. Some lenders are better than others.
Some second lenders are better than others. Some Realtors® are better than
others. 2010 promises to be the year of the short sale.
It is the year where a lot of the distressed
backlog, often referred to as the “shadow inventory,” will finally be properly
diminished in the form of short sales. Yes, there will still be foreclosures.
Some short sales simply will not go together. Some homeowners will just walk
away from their obligations. But, banks and the government have their sights
set on going the short sale route. It is in everybody’s best interest. Buyers,
sellers and agents have had their sights set on short sales for about a year
and half now.
As 2010 rolls along, the process is going to get better and
better. It will not be perfect, but it will be better than it is right now.
Short sales will finally result in more successful closed sales.
So, how do the rest of the Orange County numbers look? The active inventory increased over the past two weeks
by 278 homes, or 4%, to 8,135. The active inventory last year was at 11,541,
3,406 additional homes compared to today. Two years ago it was at 15,392, 7,257
additional homes. Demand, the number of new pending sales over the prior
30-days, decreased by 4 to 3,244.
There are 425 additional pending sales compared to last year
and 1,424 compared to two years ago. Demand typically rises at a quicker pace
in the middle of February, so we will have to see if this trend continues. Part
of the problem is that there simply is not a lot of new inventory coming on the
market. The biggest complaint from agents down in the trenches is that they
need fresh inventory for the many buyers that they are working. The expected
market time for all price ranges in Orange County increased slightly from 2.42
months two weeks ago to 2.51 months today. At the current pace, the overall
market is a seller’s market without much appreciation at all. The number of
distressed homes within the Orange County housing market is keeping a lid on
appreciation.
On the other hand, the higher end price ranges are
experiencing a deep buyer’s market, the higher the price range, the deeper the
buyer’s market. The hottest price range is homes priced between $250,000 and
$500,000, with an expected market time of 1.75 months. Contrast that with homes
priced above $4 million with an expected market time of 33.89 months. The
active distressed home market, all short sales and foreclosures combined,
increased by 54 homes to 2,705. The number of foreclosures within the active
listing inventory increased in the past two weeks from 377 to 380, a gain of
only three.
The expected market time for foreclosures is a sizzling 0.95
months, a deep seller’s market. Foreclosures are HOT. The number of short sales
within the active listing inventory increased by 54 and now totals 2,705. The
expected market time for short sales is 1.68 months, also a deep seller’s market.
There are a lot more short sales than foreclosures. In 2010, short sales are
going to be KING." ( End of Steven's report.)
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
Mortgage markets had a terrible, holiday-shortened week last week as Wall Street responded to worse-than-expected inflation data and action from the Federal Reserve. Mortgage bonds sold off with force, causing mortgage rates to rise for the second week in a row.
Last week was a bad week to float a mortgage, to say the least. Rates rose by the largest margin in any week since late-2009.
The two biggest stories from last week both came from the Federal Reserve. The first was the release of the FOMC January meeting minutes which showed more confidence in the U.S. economy than Wall Street expected, and the second was the Fed's surprise announcement to raise the nation's Discount Rate to 0.75%. Both sparked risk-taking on Wall Street and bonds sold-off as a result.
Now, the Fed Funds Rate won't climb anytime soon and neither will Prime Rate, but the Fed has sent a clear message to the markets -- The Era of Loose Monetary Policy is over.
This week, there's a lot of economic data set for release.
Tuesday : Case-Shiller Home Price Index, Consumer Confidence
Wednesday : New Home Sales
Thursday : FHFA Home Price Index, Initial Jobless Claims
Friday : Existing Home Sales, Personal Consumption Expenditures
With markets already on edge, any better-than-expected results should be bad for mortgage rates.
After last week's performance, conforming mortgage rates have now unwound most their January gains. If you're waiting for the right time to lock, it may have been 2 weeks ago. Consider locking in this week to protect against any further deterioration in price.
Bob Phillips - (949) 643-2100 - BobPhillipsRE@gmail.com - Realty Executives
Serving South Orange County, in Southern California since 1976, over 33 years! My office is just outside the gates of Coto de Caza. My California DRE license # is 00581357
The Federal Housing Finance Agency has extended the government's Home Affordable Refinance Program by 12 months.
In November, Congress extended and expanded the First-Time Home Buyer Tax Credit program to include a subset of "move-up" buyers -- homeowners that have owned and lived in their home for 5 of the last 8 years.
Mortgage markets improved last week in low-volume trading.
Conforming and FHA mortgage rates have improved over the last 10 days, but that could all change this Friday with the release of February's Non-Farm Payrolls report.
Mortgage markets improved last week as economic reports painted a less-than-stellar portrait of the U.S. economy and concerns of a looming monetary policy change eased. Mortgage pricing improved dramatically, despite a late-Friday retreat.
Mortgage markets had a terrible, holiday-shortened week last week as Wall Street responded to worse-than-expected inflation data and action from the Federal Reserve. Mortgage bonds sold off with force, causing mortgage rates to rise for the second week in a row.
