"Don't believe the hype!" The words from Public Enemy's hit song title rang true once again last week when the Commerce Department reported the Gross Domestic Product (GDP) for the 3rd Quarter. As you can see from the chart below, GDP rose by 3.5% for the first gain in a year and the strongest reading in two years.
While most media outlets were giddy about the news and started the hype that the recession is behind us, it's important to remember that there's more to the economic data than just the headlines.
The temporary "Cash for Clunkers" program has now expired, but was a big part of last quarter's GDP gain. If we remove it from the total, the reading would have been a more modest 1.9%. But there is even more to the rise in the latest GDP number that is just temporary...
Also bolstering the economy has been the $8,000 first-time homebuyer tax credit - which is set to expire at the end of this month. Many home buyers have been taking advantage of this program - and wisely so.
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New Home Sales were reported last week, showing a 7.5-month supply of inventory. While that number is slightly worse than last month's 7.3 reading, it's still a big improvement from where we were in January. Back in January, inventory levels reached a high of 12.4-month supply! The improvement in housing inventories has been due in large part to the $8,000 First Time Homebuyer Tax Credit, which is set to expire on November 30.
There is a real possibility of an extension of this program through a proposed Bill, but it is not yet a certainty. The extension Bill still must be reconciled between the House and Senate, and then voted on for final approval. Under the current extension proposal, sales with signed purchase agreements by April 30th that close before June 30th, 2010 would qualify for the credit.
Another positive element would be the possible addition of $6,500 tax credit for other primary home purchasers, meaning the tax credit would no longer be limited only to first-time homebuyers. There is also a possibility that qualifying income limits could increase from $75,000 to $125,000 for singles, and from $150,000 to $250,000 for joint tax filers.
I will be keeping an eye on this for you, so stay tuned.
After all last week's news and movement in the markets, Bonds and rates ended the week slightly better than where they began.
This week brings us new employment numbers...and a chance to see if the labor market is showing signs of recovery. The employment news begins Wednesday with the ADP National Employment Report. Sandwiched between that report and Friday's Jobs Report, is the Initial Jobless Claims report on Thursday.
The big news comes on Friday, when the all-important Jobs Report will be released. Last month's report underscored the struggling labor market, as the Labor Department reported 263,000 jobs lost in September and an increase in the unemployment rate to 9.8%. The report due out this week is expected to show 166,000 jobs lost in October, which would be significantly better than the previous month if it happens. However, the Unemployment Rate is expected to continue its climb to 9.9%.
In addition to employment news, we'll also see the ISM Index on Monday. This is the king of all manufacturing indices and is considered the single best snapshot of the factory sector.
Finally, the Federal Open Market Committee (FOMC) holds its two-day meeting this week, with an announcement of the Fed Rate Decision and Policy Statement due on Wednesday at 2:15 p.m. (ET).
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Mortgage Bonds were able to bounce back last week with help from weakness in the Stock markets.
Monday, November 2, 2009
Tuesday, September 22, 2009
Short Sales Leave Homebuyers Frustrated
CHICAGO – Sept. 21, 2009 – A few years ago, few people in the housing market had ever heard of a short sale.
Mention the term today and people, whether they are homeowners or real estate agents, just roll their eyes.
The practice, which involves selling a property for less than the amount owed on the mortgage, has grown in popularity as an exit strategy for financially strapped homeowners because it doesn’t ding a credit report as deeply as a foreclosure. But because the transactions have to be approved by first and second lien holders, they are languishing. Some real estate agents try to steer clear of them entirely and even specify in their listings that a property is not a short sale.
The Obama administration is aware of the frustrations. In mid-May, Treasury Secretary Tim Geithner announced plans to streamline the process by offering financial incentives to mortgage servicers and investors that accept short sales, much in the same way that they are rewarded for refinancing or modifying troubled mortgages.
Four months later, homeowners, real estate agents and lenders are still waiting for specific details of how the plan would work. A Treasury Department spokeswoman said an update on the program is expected in a few weeks.
Meanwhile, homeowners like Dallas O’Day are in limbo.
O’Day, a Chicago attorney, and his family relocated from California in June 2004 and bought a Mediterranean-style home in Chicago’s Beverly neighborhood for $395,000. They rewired the house, stripped and refinished the wood floors and the woodwork and did other work to restore its charm.
Last year, personal circumstances prompted them to list the home for sale just as the housing industry’s meltdown was picking up steam. With no takers and no longer even expecting to break even on his investment, O’Day relisted the 2,700-square-foot home in January as a short sale.
Four months and three price reductions brought the house down to $384,900, at which point a potential buyer made an offer in late May. O’Day accepted it and submitted the paperwork to the lenders holding first and second mortgages on the home.
He has yet to receive a response. Meanwhile, the family has moved into a North Side apartment, the refrigerator has broken in the home and there’s evidence of mold in the basement.
“The only thing we keep hearing is they keep wanting current payroll stubs, bank statements and taxes,” said O’Day’s real estate agent, Pam Decker at Prudential Biros Real Estate in Evergreen Park.
“What has astonished me is that in the presence of one of the softest housing markets I can remember, we’re hitting up on four months and they’ve just had a person assigned to look at it, that they would move at such a glacial pace,” O’Day said. “My expectation is I’ll be renting until whatever blemish is gone. I’ve just accepted the fact that at some point it’ll be foreclosed upon because I just don’t think the banks will pull it together. I feel like I’ve done everything I can do.”
During the second quarter, 14 percent of all home sales were short sales and they were made primarily to first-time buyers who may have more flexibility to deal with the long wait times, according to a survey by Campbell Communications. The sales volume could be much greater. Two out of three short sales never close.
“In general, you have to have three offers for every completed short sale,” said survey designer Thomas Popik. “The first offer, the buyer walks before they get a yes or no. On the second offer they walk a good part of the time. The third offer is the charm because it’s been in process long enough at the lender that [the lender] knows they want to do this.
“Home buyers are now putting in half a dozen verbal offers, hoping that on one of them the lender will say yes. What this is doing is bogging down the approval [process] at the mortgage servicers. It’s just gotten to the point that everyone has started engaging in unproductive behavior. It’s a vicious cycle.”
The process of getting a short sale approved involves a packet of documents that includes bank statements, tax returns, letters explaining any other sources of income and a hardship letter explaining why a short sale is being sought.
After the packet is submitted to a mortgage servicer, it has to be entered into the system, a person has to be assigned to it, and an appraisal has to be ordered for the property. On average, it took loan servicers 9 1/2 weeks to respond to a short sale offer, Campbell’s survey found.
“You’ve got to stay on top of these banks,” said James Orrico, a real estate agent at Professional Residential Brokerage LLC in Oak Brook. “I call on my files every day. If you don’t stay on top of them, you’ll lose it.”
But not every real estate agent is willing to deal with the process. Online realty company Redfin doesn’t show or write offers on short sale properties “because of the slim chance that you’ll get the home,” according to its Web site.
A number of factors are contributing to the delay. Lenders say their top priority is keeping people in their homes, and their own and the government’s loan modification programs are taking the bulk of their resources.
“The modification [program] was just like an atom bomb that dropped on [servicers],” said Matt McCabe of National Short Sale Center, a company that acts as a negotiator between borrowers and mortgage lenders. “They had a really hard time reacting to that increased demand.”
Wells Fargo Home Mortgage, which services more than 8 million mortgages, said it has cut the average 60-day response time on short sale offers to 30 to 45 days.
“We’re not satisfied with that number,” said Tamara Swain, senior vice president of real estate owned and short sales at the lender. “The current goal is 15 to 20 days. This has been a big learning process of a function that wasn’t very prominent a couple years ago.”
Also delaying the process is that if a home can’t be saved, servicers are keen on trying to recover as much as possible for what could be multiple investors and that requires a fair amount of due diligence.
“The challenge is buyers always want to pay as little as possible and sellers want to receive as much as possible,” said Tom Kelly, a spokesman for JPMorgan Chase, which services 10.3 million mortgages. “The bank is the server in the middle.”
From a prospective buyer’s standpoint, purchasing a short sale property can be preferable to a foreclosure because if the borrower stills owns the home, he or she is likely to take better care of it.
However, with so many distressed properties for sale, and other homes selling conventionally at drastically reduced prices, there’s a wealth of inventory available allowing buyers to get a quick yea or nay to their offer. Some buyers make offers on multiple short sales or write the offers so they can walk away if a lender doesn’t respond within a certain time frame.
Xia Zhao and her family thought they’d found their next home when they walked into a Jefferson Park townhouse that was listed as a short sale. It was large and near her son’s school. However, they walked away from the offer after a month because they still hadn’t received a response and were worried they wouldn’t be moved in by the time school started.
Instead the family bought a new town home with a price that was cut by the developer in the city’s Old Irving neighborhood.
“I guess we’re not people with extreme patience,” Zhao said. “What if you wait for a couple months and this goes away? You have to start all over again.”
“Most people really aren’t in a situation where they can deal with the uncertainty,” said Zhao’s real estate agent, Eric Rojas at Prudential Rubloff. “Even when you explain that it’s not accepted until the bank accepts it and you build these safeguards into the contract, people are dropping out, left and right. These sales would get done, but people just can’t wait.”
Chicagoan Marie Cabrera, a real estate agent at Baird & Warner, is hoping she has found a purchaser with some patience.
After being unable to sell her own condo in the luxury Palmolive Building, Cabrera decided she didn’t want to simply wait for her lender to foreclosure on it. Earlier this month she listed it as a short sale, priced at $1.15 million. Within a week, she had a cash offer of $1 million that she sent to her lender.
“I have no idea whether the bank will take it,” Cabrera said. “I have an offer that’s solid and they’re willing to wait.”
Mention the term today and people, whether they are homeowners or real estate agents, just roll their eyes.
The practice, which involves selling a property for less than the amount owed on the mortgage, has grown in popularity as an exit strategy for financially strapped homeowners because it doesn’t ding a credit report as deeply as a foreclosure. But because the transactions have to be approved by first and second lien holders, they are languishing. Some real estate agents try to steer clear of them entirely and even specify in their listings that a property is not a short sale.
The Obama administration is aware of the frustrations. In mid-May, Treasury Secretary Tim Geithner announced plans to streamline the process by offering financial incentives to mortgage servicers and investors that accept short sales, much in the same way that they are rewarded for refinancing or modifying troubled mortgages.
Four months later, homeowners, real estate agents and lenders are still waiting for specific details of how the plan would work. A Treasury Department spokeswoman said an update on the program is expected in a few weeks.
Meanwhile, homeowners like Dallas O’Day are in limbo.
O’Day, a Chicago attorney, and his family relocated from California in June 2004 and bought a Mediterranean-style home in Chicago’s Beverly neighborhood for $395,000. They rewired the house, stripped and refinished the wood floors and the woodwork and did other work to restore its charm.
Last year, personal circumstances prompted them to list the home for sale just as the housing industry’s meltdown was picking up steam. With no takers and no longer even expecting to break even on his investment, O’Day relisted the 2,700-square-foot home in January as a short sale.
Four months and three price reductions brought the house down to $384,900, at which point a potential buyer made an offer in late May. O’Day accepted it and submitted the paperwork to the lenders holding first and second mortgages on the home.
He has yet to receive a response. Meanwhile, the family has moved into a North Side apartment, the refrigerator has broken in the home and there’s evidence of mold in the basement.
“The only thing we keep hearing is they keep wanting current payroll stubs, bank statements and taxes,” said O’Day’s real estate agent, Pam Decker at Prudential Biros Real Estate in Evergreen Park.
“What has astonished me is that in the presence of one of the softest housing markets I can remember, we’re hitting up on four months and they’ve just had a person assigned to look at it, that they would move at such a glacial pace,” O’Day said. “My expectation is I’ll be renting until whatever blemish is gone. I’ve just accepted the fact that at some point it’ll be foreclosed upon because I just don’t think the banks will pull it together. I feel like I’ve done everything I can do.”
During the second quarter, 14 percent of all home sales were short sales and they were made primarily to first-time buyers who may have more flexibility to deal with the long wait times, according to a survey by Campbell Communications. The sales volume could be much greater. Two out of three short sales never close.
“In general, you have to have three offers for every completed short sale,” said survey designer Thomas Popik. “The first offer, the buyer walks before they get a yes or no. On the second offer they walk a good part of the time. The third offer is the charm because it’s been in process long enough at the lender that [the lender] knows they want to do this.
“Home buyers are now putting in half a dozen verbal offers, hoping that on one of them the lender will say yes. What this is doing is bogging down the approval [process] at the mortgage servicers. It’s just gotten to the point that everyone has started engaging in unproductive behavior. It’s a vicious cycle.”
The process of getting a short sale approved involves a packet of documents that includes bank statements, tax returns, letters explaining any other sources of income and a hardship letter explaining why a short sale is being sought.
After the packet is submitted to a mortgage servicer, it has to be entered into the system, a person has to be assigned to it, and an appraisal has to be ordered for the property. On average, it took loan servicers 9 1/2 weeks to respond to a short sale offer, Campbell’s survey found.
“You’ve got to stay on top of these banks,” said James Orrico, a real estate agent at Professional Residential Brokerage LLC in Oak Brook. “I call on my files every day. If you don’t stay on top of them, you’ll lose it.”
But not every real estate agent is willing to deal with the process. Online realty company Redfin doesn’t show or write offers on short sale properties “because of the slim chance that you’ll get the home,” according to its Web site.
A number of factors are contributing to the delay. Lenders say their top priority is keeping people in their homes, and their own and the government’s loan modification programs are taking the bulk of their resources.
“The modification [program] was just like an atom bomb that dropped on [servicers],” said Matt McCabe of National Short Sale Center, a company that acts as a negotiator between borrowers and mortgage lenders. “They had a really hard time reacting to that increased demand.”
Wells Fargo Home Mortgage, which services more than 8 million mortgages, said it has cut the average 60-day response time on short sale offers to 30 to 45 days.
“We’re not satisfied with that number,” said Tamara Swain, senior vice president of real estate owned and short sales at the lender. “The current goal is 15 to 20 days. This has been a big learning process of a function that wasn’t very prominent a couple years ago.”
Also delaying the process is that if a home can’t be saved, servicers are keen on trying to recover as much as possible for what could be multiple investors and that requires a fair amount of due diligence.
“The challenge is buyers always want to pay as little as possible and sellers want to receive as much as possible,” said Tom Kelly, a spokesman for JPMorgan Chase, which services 10.3 million mortgages. “The bank is the server in the middle.”
From a prospective buyer’s standpoint, purchasing a short sale property can be preferable to a foreclosure because if the borrower stills owns the home, he or she is likely to take better care of it.
However, with so many distressed properties for sale, and other homes selling conventionally at drastically reduced prices, there’s a wealth of inventory available allowing buyers to get a quick yea or nay to their offer. Some buyers make offers on multiple short sales or write the offers so they can walk away if a lender doesn’t respond within a certain time frame.
Xia Zhao and her family thought they’d found their next home when they walked into a Jefferson Park townhouse that was listed as a short sale. It was large and near her son’s school. However, they walked away from the offer after a month because they still hadn’t received a response and were worried they wouldn’t be moved in by the time school started.
Instead the family bought a new town home with a price that was cut by the developer in the city’s Old Irving neighborhood.
“I guess we’re not people with extreme patience,” Zhao said. “What if you wait for a couple months and this goes away? You have to start all over again.”
“Most people really aren’t in a situation where they can deal with the uncertainty,” said Zhao’s real estate agent, Eric Rojas at Prudential Rubloff. “Even when you explain that it’s not accepted until the bank accepts it and you build these safeguards into the contract, people are dropping out, left and right. These sales would get done, but people just can’t wait.”
Chicagoan Marie Cabrera, a real estate agent at Baird & Warner, is hoping she has found a purchaser with some patience.
After being unable to sell her own condo in the luxury Palmolive Building, Cabrera decided she didn’t want to simply wait for her lender to foreclosure on it. Earlier this month she listed it as a short sale, priced at $1.15 million. Within a week, she had a cash offer of $1 million that she sent to her lender.
“I have no idea whether the bank will take it,” Cabrera said. “I have an offer that’s solid and they’re willing to wait.”
Monday, September 21, 2009
Possible Extension of First Time Homebuyer Tax Credit
New Bi-Partisan Senate Bill to Extend First-Time Homebuyer Tax Credit for 6 Months
RISMEDIA, September 21, 2009—Realogy Corporation, a global provider of real estate and relocation services, announced its support of a bi-partisan Senate bill (S. 1678) recently introduced that would create a six-month extension of the $8,000 federal tax credit for first-time homebuyers and move the current expiration date forward to June 1, 2010.
“This is an important next step for maintaining positive momentum toward a recovery in the housing markets and the overall U.S. economy,” said Realogy President & CEO Richard A. Smith, who also serves as chair of the Business Roundtable’s Housing Working Group. “While we applaud this effort and support passage of this prudent and necessary legislation, we also want to make it clear that we will continue to work with Congress to broaden the scope of the credit.
“Specifically, Realogy supports expanding the existing first-time homebuyer tax credit to all homebuyers of a principal residence, increasing the size of the tax credit, and eliminating the existing income eligibility caps, all of which we believe are critical to the ‘move-up’ or repeat buyers who we expect will drive the essential second phase of a housing recovery.
“We believe that stimulating demand for housing – particularly in the repeat buyer or ‘move-up’ market – is the most effective way for Congress to truly accelerate a broader economic recovery,” said Smith.
The bill was introduced by U.S. Senator Benjamin L. Cardin (D-MD), along with Senators John Ensign (R-NV), Harry Reid (D-NV), Johnny Isakson (R-GA) and Debbie Stabenow (D-MI). The current tax credit provision for first-time homebuyers, passed as part of the American Recovery and Reinvestment Act, expires December 1, 2009. According to the most recent data from the Department of the Treasury, nearly 530,000 Americans have applied for the tax cut to help them purchase their first home. About 40% of all homebuyers this year will be eligible for the tax credit.
For more information, visit www.Realogy.com.
Wednesday, September 16, 2009
Interesting statistics
Did you know?
87 % of recent homebuyers in the U.S. say they used the internet as an informational resource during their home buying process.
Home shoppers search the internet for an average of 55 hours before picking up the phone to call a real estate professional.
78% of all buyers work with a Realtor when they are ready to make an offer on a property.
87 % of recent homebuyers in the U.S. say they used the internet as an informational resource during their home buying process.
Home shoppers search the internet for an average of 55 hours before picking up the phone to call a real estate professional.
78% of all buyers work with a Realtor when they are ready to make an offer on a property.
Friday, July 17, 2009
Check out this choice listing in beautiful Plantation Bay- click on home picture to see interior shots
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June housing construction rises unexpectedly
July 17, 2009 – Construction of new U.S. homes rose in June to the highest level in seven months, a sign builders are starting to regain confidence as they emerge from the housing bust.
The Commerce Department said Friday that construction of new homes and apartments jumped 3.6 percent last month to a seasonally adjusted annual rate of 582,000 units, from an upwardly revised rate of 562,000 in May.
That was better than the 530,000-unit pace economists expected, and the second straight increase after April's record low of 479,000 units.
In another encouraging sign, applications for building permits, seen as a good indicator of future activity, rose 8.7 percent in June to an annual rate of 563,000 units. Economists polled by Thomson Reuters expected an annual rate of 520,000 units.
The jump in housing starts reflected a more than 14 percent rise in construction of single-family homes.
Over the past three years, the collapse in the housing market led to soaring loan losses, a severe banking system crisis and the longest recession since World War II. Even with the better-than-expected figures, analysts don’t expect a quick rebound in housing. That's because the economy is still shedding jobs and home prices are falling, making people hesitant to commit to buying a new home.
The National Association of Home Builders said Thursday that its housing market index rose two points to 17 in July, the highest level in nearly a year. Readings below 50 indicate negative sentiment about the market. The last time it was above 50 was April 2006.
While housing normally leads the economy out of a recession, a glut of unsold homes and a record wave of mortgage foreclosures dumping more properties on the market is expected to temper demand. Despite the rise in housing construction for June, activity still was 46 percent below the year-ago level.
The Commerce Department said Friday that construction of new homes and apartments jumped 3.6 percent last month to a seasonally adjusted annual rate of 582,000 units, from an upwardly revised rate of 562,000 in May.
That was better than the 530,000-unit pace economists expected, and the second straight increase after April's record low of 479,000 units.
In another encouraging sign, applications for building permits, seen as a good indicator of future activity, rose 8.7 percent in June to an annual rate of 563,000 units. Economists polled by Thomson Reuters expected an annual rate of 520,000 units.
The jump in housing starts reflected a more than 14 percent rise in construction of single-family homes.
Over the past three years, the collapse in the housing market led to soaring loan losses, a severe banking system crisis and the longest recession since World War II. Even with the better-than-expected figures, analysts don’t expect a quick rebound in housing. That's because the economy is still shedding jobs and home prices are falling, making people hesitant to commit to buying a new home.
The National Association of Home Builders said Thursday that its housing market index rose two points to 17 in July, the highest level in nearly a year. Readings below 50 indicate negative sentiment about the market. The last time it was above 50 was April 2006.
While housing normally leads the economy out of a recession, a glut of unsold homes and a record wave of mortgage foreclosures dumping more properties on the market is expected to temper demand. Despite the rise in housing construction for June, activity still was 46 percent below the year-ago level.
Mortgage rates fall again
July 17, 2009 – Rates for 30-year home loans dropped for the third-straight week, inching toward a record low reached earlier this year, Freddie Mac said Thursday.
The average rate for 30-year fixed mortgages was 5.14 percent this week, down from 5.2 percent last week. Last year at this time, the rate for a 30-year mortgage averaged 6.26 percent, Freddie Mac said.
Falling mortgage rates can spur refinance activity, which increased as rates on 30-year mortgages fell to a record low of 4.78 percent in April.
But rates then rose as high as 5.6 percent in June after yields on long-term government debt – closely tied to mortgage rates – climbed as investors worried that the huge surplus of government debt hitting the market could trigger inflation.
Since then, the yield on the 10-year Treasury note has fallen back from an eight-month high of 4.01 percent reached in June to 3.53 percent on Thursday.
Frank Nothaft, Freddie Mac’s chief economist, said rate reductions over the past five weeks translate into monthly savings of $56 on a $200,000 mortgage.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
This week, the average rate on a 15-year fixed-rate mortgage fell to 4.63 percent, down from 4.69 percent last week, according to Freddie Mac.
Average rates on five-year, adjustable-rate mortgages were 4.83 percent, up just a bit from 4.82 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.76 percent from 4.82 percent.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point for 30-year and 15-year fixed rate mortgages, and five year adjustable rate mortgages. The fee for one-year adjustable rate mortgages was 0.5 point.
The average rate for 30-year fixed mortgages was 5.14 percent this week, down from 5.2 percent last week. Last year at this time, the rate for a 30-year mortgage averaged 6.26 percent, Freddie Mac said.
Falling mortgage rates can spur refinance activity, which increased as rates on 30-year mortgages fell to a record low of 4.78 percent in April.
But rates then rose as high as 5.6 percent in June after yields on long-term government debt – closely tied to mortgage rates – climbed as investors worried that the huge surplus of government debt hitting the market could trigger inflation.
Since then, the yield on the 10-year Treasury note has fallen back from an eight-month high of 4.01 percent reached in June to 3.53 percent on Thursday.
Frank Nothaft, Freddie Mac’s chief economist, said rate reductions over the past five weeks translate into monthly savings of $56 on a $200,000 mortgage.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
This week, the average rate on a 15-year fixed-rate mortgage fell to 4.63 percent, down from 4.69 percent last week, according to Freddie Mac.
Average rates on five-year, adjustable-rate mortgages were 4.83 percent, up just a bit from 4.82 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.76 percent from 4.82 percent.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point for 30-year and 15-year fixed rate mortgages, and five year adjustable rate mortgages. The fee for one-year adjustable rate mortgages was 0.5 point.
Monday, May 25, 2009
HUD: FHA buyer downpayment still on track
WASHINGTON – May 22, 2009 – News reports that the federal government is backing away from its plan to permit eligible borrowers to monetize the first-time homebuyer tax credit are off the mark, a spokesperson for the U.S. Department of Housing and Urban Development (HUD) says.
“The technical details are still being finalized and will soon be published in a mortgagee letter and posted on our Web site,” Lemar Wooley, a HUD spokesperson, told Realtor® Magazine Wednesday afternoon.
Under the guidance that’s under development, state agencies and other HUD-approved entities would be able to provide short-term bridge loans that households could use to help with their downpayment. The loans would be repaid with the proceeds from the households’ federal tax credit.
The loans were announced on the opening day of NAR’s 2009 Midyear Legislative Meetings in Washington, D.C., last week. In his announcement, HUD Secretary Shaun Donovan said guidance would be issued shortly.
When the guidance is released, it’s expected to cover eligible lenders and set parameters for loan terms and repayment.
Monday, May 4, 2009
PENDING HOME SALES
NAR's Pending Home Sales Index rose 3.2 percent in March, an increase NAR credits largely to first-time homebuyers taking advantage of low-interest rates and the $8,000 federal tax credit. According to NAR, the upswing would have to repeat over the next few months to consider it an official rebound.
NAR's Pending Home Sales Index rose 3.2 percent in March, an increase NAR credits largely to first-time homebuyers taking advantage of low-interest rates and the $8,000 federal tax credit. According to NAR, the upswing would have to repeat over the next few months to consider it an official rebound.
Thursday, April 30, 2009
FLOOD INSURANCE
The Atlantic hurricane season starts June 1 - 30 days from now. Since flood insurance takes 30 days to become effective after a homeowner applies, today marks Floridians last chance to get flood insurance by the June 1 debut. So check those renewal dates, coverages, and deductables! Document as much personal property as possible - get it on video if you can. It's not what you know - it's what you can prove (should that day come).
The Atlantic hurricane season starts June 1 - 30 days from now. Since flood insurance takes 30 days to become effective after a homeowner applies, today marks Floridians last chance to get flood insurance by the June 1 debut. So check those renewal dates, coverages, and deductables! Document as much personal property as possible - get it on video if you can. It's not what you know - it's what you can prove (should that day come).
Consumers give spark of new hope for econ revival
WASHINGTON – April 30, 2009 – Consumers are snapping back to life, kindling springtime hopes that the recession is losing steam.
Even though the economy shrank again in the first three months of the year – and by a lot – Americans stepped up their purchases of cars, furniture and appliances. The surge in consumer spending, which accounts for about 70 percent of the economy, could set the stage for a rebound later this year.
Hopes for revival depend on those consumers, who have been fortified by fatter paychecks from tax cuts and smaller mortgage payments from refinancings. If they keep buying, businesses will need to boost production, feeding yet more economic activity.
Against that backdrop, many analysts think the economy is sinking less now than it did from January through March. Most believe it could start growing again by summer or, more likely, by the final quarter of this year.
Federal Reserve Chairman Ben Bernanke and his colleagues, opting against further action Wednesday to shore up the economy, detected glimmers that the recession might be easing.
“The pace of contraction appears to be somewhat slower,” Fed policymakers said in a statement a few hours after the government released its report showing a second straight big quarterly drop in the nation’s gross domestic product.
On Wall Street, stocks jumped higher. The Dow Jones industrials gained nearly 170 points.
At the start of his news conference Wednesday night, President Barack Obama praised recent gains but said much was left to do.
“Even as we clear away the wreckage of this recession, I have also said that we cannot go back to an economy that is built on a pile of sand – on inflated home prices and maxed-out credit cards, on overleveraged banks and outdated regulations that allowed the recklessness of a few to threaten the prosperity of us all,” he said.
The American consumer is still a wild card in any recovery scenario.
Though the Federal Reserve noted that spending “has shown signs of stabilizing,” it also said people’s buying is still constrained by rising unemployment, falling home values and hard-to-get credit.
Those negative forces – or the emergence of new ones, like the swine flu outbreak – could cause consumers to do an about-face and ratchet back spending, throwing the economy into another tailspin.
“The economy is definitely not out of the woods yet,” said Brian Bethune, economist at IHS Global Insight. But, he added: “The good news ... is that the most severe phase of the recession is behind us.”
The economy logged a worse-than-expected 6.1 percent annualized drop in the first three months of the year despite the rebound by consumers, the Commerce Department reported. The culprits behind the poor overall performance: sharp cutbacks by businesses, especially in inventories of unsold goods, and the biggest drop in U.S. exports in 40 years.
The decline was nearly as sharp as in the final three months of last year. That’s when the economy shrank at a 6.3 percent pace, the worst showing in a quarter-century. The biggest pullback by consumers in 28 years figured prominently in that downward spiral.
All told, the economy logged its poorest six-month performance since the late 1950s.
The bleak picture underscores the damage caused by the housing, credit and financial crises – the worst since the 1930s. The recession, which began in December 2007, has battered the national economy and wiped out a net total of 5.1 million jobs.
The economy totaled $11.3 trillion at an annual rate in the first quarter, compared with $11.7 trillion in the second quarter of 2008.
Still, consumers roared back in the first quarter of this year. They boosted their spending at an annual rate of 2.2 percent, the most in two years. Gains in disposable income helped by tax refunds and government benefit checks like Social Security helped allow the spending gains.
Much stronger demand for long-lasting “durable” goods, including cars, furniture and household appliances, led the increase. That spending rose at a 9.4 percent pace, the most in a year.
Consumers also boosted spending on clothing, shoes, recreation services, medical care, gasoline and other energy products. One exception was food, on which spending dipped slightly.
Americans’ higher consumption, though, was swamped by deep spending cuts in virtually every other area of the economy.
Businesses cut back on home building, commercial construction, equipment and software, and inventories of goods. Sales of U.S. goods to foreign buyers sank in the face of economic troubles abroad. Even the government trimmed spending. It was the first time that’s happened since the end of 2005.
The Federal Reserve cited some of these negative forces in warning that the economy is likely to remain weak for a time. The Fed said it hopes the aggressive action it’s taken so far will lead to a gradual resumption of sustainable economic growth – though it didn’t say when.
To brace the economy, the Fed on Wednesday pledged anew to keep its key lending rate at a record low level for an extended period. Economists predict the Fed will keep rates there well into next year.
Even if the recession were to end this year, the economy is likely to remain feeble and unemployment will keep climbing, government officials and analysts say.
The Labor Department on Wednesday said all 372 metropolitan areas that are tracked saw their jobless rates rise in March from a year earlier. The national jobless rate is now at a quarter-century high of 8.5 percent and is expected to hit 10 percent by the end of this year. It will probably rise a bit higher in early 2010 before starting to slowly drift downward.
Most analysts don’t think it will return to normal – around 5 percent –56 until 2013.
More layoffs were announced this week. Textron Inc. said it will eliminate 8,300 jobs, or 20 percent, of its global work force, as the recession weakens demand for corporate planes. The maker of Cessna planes, Bell helicopters and turf-maintenance equipment earlier this year said it would reduce its work force by 6,200 jobs, or 15 percent, mostly at Wichita, Kan.-based Cessna.
General Motors Corp. laid out a restructuring plan that includes cutting 21,000 U.S. factory jobs by next year. Clear Channel Communications Inc., the largest owner of U.S. radio stations, said it’s cutting 590 jobs in its second round of layoffs this year amid pressure from the recession and evaporating advertising budgets. And bearings and specialty steels maker Timken Co. indicated it will cut about 4,000 more jobs by the end of this year after earlier suggesting about 3,000 jobs already had been targeted.
WASHINGTON – April 30, 2009 – Consumers are snapping back to life, kindling springtime hopes that the recession is losing steam.
Even though the economy shrank again in the first three months of the year – and by a lot – Americans stepped up their purchases of cars, furniture and appliances. The surge in consumer spending, which accounts for about 70 percent of the economy, could set the stage for a rebound later this year.
Hopes for revival depend on those consumers, who have been fortified by fatter paychecks from tax cuts and smaller mortgage payments from refinancings. If they keep buying, businesses will need to boost production, feeding yet more economic activity.
Against that backdrop, many analysts think the economy is sinking less now than it did from January through March. Most believe it could start growing again by summer or, more likely, by the final quarter of this year.
Federal Reserve Chairman Ben Bernanke and his colleagues, opting against further action Wednesday to shore up the economy, detected glimmers that the recession might be easing.
“The pace of contraction appears to be somewhat slower,” Fed policymakers said in a statement a few hours after the government released its report showing a second straight big quarterly drop in the nation’s gross domestic product.
On Wall Street, stocks jumped higher. The Dow Jones industrials gained nearly 170 points.
At the start of his news conference Wednesday night, President Barack Obama praised recent gains but said much was left to do.
“Even as we clear away the wreckage of this recession, I have also said that we cannot go back to an economy that is built on a pile of sand – on inflated home prices and maxed-out credit cards, on overleveraged banks and outdated regulations that allowed the recklessness of a few to threaten the prosperity of us all,” he said.
The American consumer is still a wild card in any recovery scenario.
Though the Federal Reserve noted that spending “has shown signs of stabilizing,” it also said people’s buying is still constrained by rising unemployment, falling home values and hard-to-get credit.
Those negative forces – or the emergence of new ones, like the swine flu outbreak – could cause consumers to do an about-face and ratchet back spending, throwing the economy into another tailspin.
“The economy is definitely not out of the woods yet,” said Brian Bethune, economist at IHS Global Insight. But, he added: “The good news ... is that the most severe phase of the recession is behind us.”
The economy logged a worse-than-expected 6.1 percent annualized drop in the first three months of the year despite the rebound by consumers, the Commerce Department reported. The culprits behind the poor overall performance: sharp cutbacks by businesses, especially in inventories of unsold goods, and the biggest drop in U.S. exports in 40 years.
The decline was nearly as sharp as in the final three months of last year. That’s when the economy shrank at a 6.3 percent pace, the worst showing in a quarter-century. The biggest pullback by consumers in 28 years figured prominently in that downward spiral.
All told, the economy logged its poorest six-month performance since the late 1950s.
The bleak picture underscores the damage caused by the housing, credit and financial crises – the worst since the 1930s. The recession, which began in December 2007, has battered the national economy and wiped out a net total of 5.1 million jobs.
The economy totaled $11.3 trillion at an annual rate in the first quarter, compared with $11.7 trillion in the second quarter of 2008.
Still, consumers roared back in the first quarter of this year. They boosted their spending at an annual rate of 2.2 percent, the most in two years. Gains in disposable income helped by tax refunds and government benefit checks like Social Security helped allow the spending gains.
Much stronger demand for long-lasting “durable” goods, including cars, furniture and household appliances, led the increase. That spending rose at a 9.4 percent pace, the most in a year.
Consumers also boosted spending on clothing, shoes, recreation services, medical care, gasoline and other energy products. One exception was food, on which spending dipped slightly.
Americans’ higher consumption, though, was swamped by deep spending cuts in virtually every other area of the economy.
Businesses cut back on home building, commercial construction, equipment and software, and inventories of goods. Sales of U.S. goods to foreign buyers sank in the face of economic troubles abroad. Even the government trimmed spending. It was the first time that’s happened since the end of 2005.
The Federal Reserve cited some of these negative forces in warning that the economy is likely to remain weak for a time. The Fed said it hopes the aggressive action it’s taken so far will lead to a gradual resumption of sustainable economic growth – though it didn’t say when.
To brace the economy, the Fed on Wednesday pledged anew to keep its key lending rate at a record low level for an extended period. Economists predict the Fed will keep rates there well into next year.
Even if the recession were to end this year, the economy is likely to remain feeble and unemployment will keep climbing, government officials and analysts say.
The Labor Department on Wednesday said all 372 metropolitan areas that are tracked saw their jobless rates rise in March from a year earlier. The national jobless rate is now at a quarter-century high of 8.5 percent and is expected to hit 10 percent by the end of this year. It will probably rise a bit higher in early 2010 before starting to slowly drift downward.
Most analysts don’t think it will return to normal – around 5 percent –56 until 2013.
More layoffs were announced this week. Textron Inc. said it will eliminate 8,300 jobs, or 20 percent, of its global work force, as the recession weakens demand for corporate planes. The maker of Cessna planes, Bell helicopters and turf-maintenance equipment earlier this year said it would reduce its work force by 6,200 jobs, or 15 percent, mostly at Wichita, Kan.-based Cessna.
General Motors Corp. laid out a restructuring plan that includes cutting 21,000 U.S. factory jobs by next year. Clear Channel Communications Inc., the largest owner of U.S. radio stations, said it’s cutting 590 jobs in its second round of layoffs this year amid pressure from the recession and evaporating advertising budgets. And bearings and specialty steels maker Timken Co. indicated it will cut about 4,000 more jobs by the end of this year after earlier suggesting about 3,000 jobs already had been targeted.
Tuesday, April 28, 2009
CONSUMER CONFIDENCE INCREASE FOR APRIL
NEW YORK AP WIRE 4/28/09 – Hopeful signs that the worst may be over for the economy boosted Americans' moods in April, sending a closely watched barometer of sentiment to the highest level since November.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index rose more than 12 points to 39.2, up from a revised 26.9 in March. The reading marks the highest level since November's 44.7 and well surpasses economists' expectations for 29.5.
The consumer confidence survey showed a substantial improvement in consumers' short-term outlook, including even their assessment of the job picture.
Some encouraging news in areas like retail sales and housing have helped fuel a recent stock rally. Earlier Tuesday, a housing index showed that home prices dropped sharply in February, but for the first time in 25 months the decline was not a record — another sign the housing crisis could be bottoming.
Economists closely monitor consumer sentiment because consumer spending accounts for more than two-thirds of economic activity.
The huge jump in confidence follows a small increase in March, following a freefall in February. Still, the index remains well below year-ago levels of 62.8.
The April gains were fueled by "a significant improvement in the short-term outlook," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.
She added that the index measuring how shoppers feel now, which posted a moderate gain, offered "a sign that conditions have not deteriorated further and may even moderately improve in the second quarter."
The Present Situation rose slightly to 23.7 from 21.9 last month. The Expectations Index, which measures how shoppers feel about the economy over the next six months, skyrocketed to 49.5 from 30.2 in March.
That sharp increase — which marked the largest jump since a 13-point gain in November 2005 when the economy was recovering from Hurricanes Katrina and Rita — suggests that people believe the economy is nearing a bottom, Franco said. Still, she noted that the index remains well below the level associated with strong economic growth.
"It looks like the worst is behind us, but clearly we are not out of the woods," said Franco.
With companies continuing to lay off workers, a major fear is that people will cut back their spending even more, and that could plunge the economy further into a downward spiral. Economists expect the unemployment rate — now at 8.5 percent and the highest since late 1983 — will hit 10 percent by the end of the year and keep climbing next year before it starts coming down.
Meanwhile, investors are becoming more unsettled by the possibility of a major swine flu outbreak, which could stall economic recovery — particularly in regions that depend on travel and tourism. Adam York, an economist at Wachovia Securities, said such a development could dampen confidence levels for May, but it's still early to tell.
The consumer confidence survey showed that those anticipating business conditions will worsen over the next six months declined to 25.3 percent from 37.8 percent, while those expecting conditions to improve increased to 15.6 percent from 9.6 percent in March.
The employment outlook was also considerably less pessimistic. The percentage of consumers anticipating fewer jobs in the months ahead declined to 33.6 percent from 41.6 percent, while those expecting more jobs increased to 13.9 percent from 7.3 percent.
Monday, April 27, 2009
HAVE WE HIT THE TRUE BOTTOM OF THE MARKET?
NO ONE REALLY KNOWS
Housing has hit bottom, says economist one. Housing will hit bottom this summer, says economist two. Housing won't hit bottom until 2010, says economist three. Some liken housing data to the weather: If you don't like today's statistics, wait until tomorrow. The "facts" will change. Here are some mixed signals:
• The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, reported that home prices rose 0.7 percent from January to February 2009.
• The February 2009 RPX Monthly Housing Market Report said home sales increased month-over-month in 22 of 25 key metropolitan statistical areas and 13 of these areas posted the largest gain in February 2009 since 2006.
• The National of Association of Realtors® reported that existing home sales dropped in March 2009, and median prices fell 12 percent from a year earlier.
• First American CoreLogic announced that national housing prices declined 12.2 percent in February from a year earlier and have been in decline for 24 straight months. It predicted that home prices would continue to decline through 2010.
Housing has hit bottom, says economist one. Housing will hit bottom this summer, says economist two. Housing won't hit bottom until 2010, says economist three. Some liken housing data to the weather: If you don't like today's statistics, wait until tomorrow. The "facts" will change. Here are some mixed signals:
• The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, reported that home prices rose 0.7 percent from January to February 2009.
• The February 2009 RPX Monthly Housing Market Report said home sales increased month-over-month in 22 of 25 key metropolitan statistical areas and 13 of these areas posted the largest gain in February 2009 since 2006.
• The National of Association of Realtors® reported that existing home sales dropped in March 2009, and median prices fell 12 percent from a year earlier.
• First American CoreLogic announced that national housing prices declined 12.2 percent in February from a year earlier and have been in decline for 24 straight months. It predicted that home prices would continue to decline through 2010.
Tuesday, April 21, 2009
ECONOMY
Steadier consumer spending, more home sales and favorable earnings results from some banks may indicate a U.S. economic rebound and gradual recovery later this year, says Federal Reserve Vice Chairman Donald L. Kohn.
Read the full story:
http://www.floridarealtors.org/NewsAndEvents/n3-042109.cfm
Steadier consumer spending, more home sales and favorable earnings results from some banks may indicate a U.S. economic rebound and gradual recovery later this year, says Federal Reserve Vice Chairman Donald L. Kohn.
Read the full story:
http://www.floridarealtors.org/NewsAndEvents/n3-042109.cfm
RECOVERY ON THE WAY?
Housing Predictor - which monitors over 250 residential property markets nationwide - says Florida appears to be emerging from the realty slump before any other state, including California. The Sunshine State is seeing population growth, and single-family home and condominium sales have been on the rise for more than six months. Foreclosures and short sales presently account for approximately 67 percent of all sales and often are not included in real estate agents' tallies. Additionally, banks in many Florida housing markets are cranking out more home loans, and sellers finance almost 20 percent of all sales.
Housing Predictor - which monitors over 250 residential property markets nationwide - says Florida appears to be emerging from the realty slump before any other state, including California. The Sunshine State is seeing population growth, and single-family home and condominium sales have been on the rise for more than six months. Foreclosures and short sales presently account for approximately 67 percent of all sales and often are not included in real estate agents' tallies. Additionally, banks in many Florida housing markets are cranking out more home loans, and sellers finance almost 20 percent of all sales.
Monday, April 20, 2009
Meltdown 101: Is there a downside to mortgage aid?
April 20, 2009 – It’s welcome relief for homeowners struggling with mortgage payments.
The new federal program to let people refinance or modify their mortgages is expected to help millions of Americans lower monthly payments and avoid foreclosure. So what strings are attached?
You might be concerned about the impact to your credit report or the tax implications, for instance. Others who are still paying low introductory rates might fear their monthly bills could skyrocket.
Here are some questions and answers on concerns people might have about the Making Home Affordable program.
Q: How will my credit profile be affected?
A: Refinancing generally doesn’t affect your score since it’s simply a rewritten mortgage, according to Norm Magnuson of the Consumer Data Industry Association, a trade group based in Washington.
This is especially true of refinancing under the federal program, since one of the terms of eligibility is that homeowners can’t have missed a payment in the past year.
It’s not yet clear what impact a federal loan modification – an adjustment to terms of an existing mortgage, rather than a new one – will have on credit profiles, however, Magnuson said. Regulators haven’t yet determined how the loan modifications will be reported, if at all.
If you’re applying for a loan modification under Making Home Affordable, it means you’ve already missed payments and hurt your credit profile. A loan modification should improve your credit profile in the long run since the idea is to get you on track for meeting payments.
It might also free up money to pay off other debts.
Q: Is it possible my payments will be higher?
A: If you’re still paying a low, introductory rate, it’s possible your monthly mortgage payment will increase slightly under the federal refinancing program. But the idea is to avoid the big interest rate spikes that typically come with adjustable-rate mortgages.
After applying for the Making Home Affordable program, your lender should give you a “good faith estimate” that includes your new interest rate, mortgage payment and the total cost of the loan. Compare the numbers with your current loan; you might decide that refinancing isn’t an improvement.
You can also check out the payment reduction estimator on the government’s Web site at http://www.makinghomeaffordable.gov.
Q: Should I wait to see if mortgage interest rates come down in a couple of months before applying?
A: Probably not, since mortgage rates are at historic lows.
Last week, rates on 30-year mortgages stood at 4.82 percent, and that’s still close to the lowest level in decades. Waiting for the rate to go any lower might backfire, said Ken Inadomi, director of the New York Mortgage Coalition.
Even introductory rates shouldn’t be that much lower than fixed rates these days – in some cases, they may even be higher. So it’s probably in your best interest to apply for refinancing now.
In case you decide to wait: The Making Home Affordable program expires on June 10, 2010.
Q: What are the tax implications?
A: Charges for refinancing a mortgage are tax deductible. That cost should be evenly divided to be deducted over the life of the mortgage, Inadomi said. Other costs, such as attorney or appraisal fees, are not deductible.
You’ll also have to adjust your mortgage interest deduction if you get a lower rate.
Q: Can I try to refinance or modify my mortgage on my own, without going through the program?
A: Working directly with a lender shouldn’t be a problem if you think you’re not eligible for the federal program. Just beware of getting a third party involved, especially if they ask for an upfront fee.
Last week, government officials warned homeowners of scammers that charge fees of $1,000 to $3,000 to help with loan modifications. Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.
Officials said the scams often go by official-sounding names designed to make borrowers think they are using the Obama administration’s program.
April 20, 2009 – It’s welcome relief for homeowners struggling with mortgage payments.
The new federal program to let people refinance or modify their mortgages is expected to help millions of Americans lower monthly payments and avoid foreclosure. So what strings are attached?
You might be concerned about the impact to your credit report or the tax implications, for instance. Others who are still paying low introductory rates might fear their monthly bills could skyrocket.
Here are some questions and answers on concerns people might have about the Making Home Affordable program.
Q: How will my credit profile be affected?
A: Refinancing generally doesn’t affect your score since it’s simply a rewritten mortgage, according to Norm Magnuson of the Consumer Data Industry Association, a trade group based in Washington.
This is especially true of refinancing under the federal program, since one of the terms of eligibility is that homeowners can’t have missed a payment in the past year.
It’s not yet clear what impact a federal loan modification – an adjustment to terms of an existing mortgage, rather than a new one – will have on credit profiles, however, Magnuson said. Regulators haven’t yet determined how the loan modifications will be reported, if at all.
If you’re applying for a loan modification under Making Home Affordable, it means you’ve already missed payments and hurt your credit profile. A loan modification should improve your credit profile in the long run since the idea is to get you on track for meeting payments.
It might also free up money to pay off other debts.
Q: Is it possible my payments will be higher?
A: If you’re still paying a low, introductory rate, it’s possible your monthly mortgage payment will increase slightly under the federal refinancing program. But the idea is to avoid the big interest rate spikes that typically come with adjustable-rate mortgages.
After applying for the Making Home Affordable program, your lender should give you a “good faith estimate” that includes your new interest rate, mortgage payment and the total cost of the loan. Compare the numbers with your current loan; you might decide that refinancing isn’t an improvement.
You can also check out the payment reduction estimator on the government’s Web site at http://www.makinghomeaffordable.gov.
Q: Should I wait to see if mortgage interest rates come down in a couple of months before applying?
A: Probably not, since mortgage rates are at historic lows.
Last week, rates on 30-year mortgages stood at 4.82 percent, and that’s still close to the lowest level in decades. Waiting for the rate to go any lower might backfire, said Ken Inadomi, director of the New York Mortgage Coalition.
Even introductory rates shouldn’t be that much lower than fixed rates these days – in some cases, they may even be higher. So it’s probably in your best interest to apply for refinancing now.
In case you decide to wait: The Making Home Affordable program expires on June 10, 2010.
Q: What are the tax implications?
A: Charges for refinancing a mortgage are tax deductible. That cost should be evenly divided to be deducted over the life of the mortgage, Inadomi said. Other costs, such as attorney or appraisal fees, are not deductible.
You’ll also have to adjust your mortgage interest deduction if you get a lower rate.
Q: Can I try to refinance or modify my mortgage on my own, without going through the program?
A: Working directly with a lender shouldn’t be a problem if you think you’re not eligible for the federal program. Just beware of getting a third party involved, especially if they ask for an upfront fee.
Last week, government officials warned homeowners of scammers that charge fees of $1,000 to $3,000 to help with loan modifications. Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.
Officials said the scams often go by official-sounding names designed to make borrowers think they are using the Obama administration’s program.
Monday, April 13, 2009
More on FHA Loans
FHA
The FHA plays a key role in helping bring stability to the housing market, NAR told the Senate Appropriations Subcommittee Friday. NAR also pushed for FHA program improvements, including more staff and technology investment, increased oversight and the ability to use the $8,000 first-time homebuyer tax credit toward a downpayment.
The FHA plays a key role in helping bring stability to the housing market, NAR told the Senate Appropriations Subcommittee Friday. NAR also pushed for FHA program improvements, including more staff and technology investment, increased oversight and the ability to use the $8,000 first-time homebuyer tax credit toward a downpayment.
VACANT HOMES
One in nine homes across the U.S. is empty, according to the Census Bureau. Experts predict that the current overstock will change the real estate landscape for years, though some areas may see real estate values stabilize by the end of this year as buyers seeking bargains begin to reduce the backlog of homes.
One in nine homes across the U.S. is empty, according to the Census Bureau. Experts predict that the current overstock will change the real estate landscape for years, though some areas may see real estate values stabilize by the end of this year as buyers seeking bargains begin to reduce the backlog of homes.
Wednesday, April 8, 2009
Government cracking down on mortgage scams
WASHINGTON (AP) – April 7, 2009 –
Federal and state officials are cracking down on mortgage modification scams, accusing “criminal actors” of preying on desperate borrowers caught up in the nation’s housing crisis.Government officials said Monday that scammers are seeking to take advantage of borrowers in danger of default by charging them upfront fees of $1,000 to $3,000 for help with loan modifications that rarely, if ever, pay off.The frauds often involve companies with official-sounding names designed to make borrowers think they are using the Obama administration’s efforts to help modify or refinance 7 million to 9 million mortgages.“If you are struggling to make your mortgage payment, or if you are facing foreclosure, stay away from anyone who says that they will save your home for money upfront,” Illinois Attorney General Lisa Madigan told reporters in Washington.Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.“These are predatory schemes designed to rob Americans of their savings and potentially their homes,” Treasury Secretary Timothy Geithner said. “We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.”The Federal Trade Commission has sent warning letters to 71 companies it says were running suspicious advertisements. The agency also said it filed three new complaints against Irvine, Calif.-based Federal Loan Modification Law Center, Newport Beach, Calif.-based Bailout.hud-gov.us, and Clearwater, Fla.-based Home Assure LLC, and the operators of those companies.Bill Anz, founding partner of Federal Loan Modification Law Center, defended his operation, saying he will offer a refund to anyone who doesn’t get a modification. About 20 percent of the 5,000 customers have received a modification so far, he said, with more in the works.“People might not like it,” Anz said, but “realistically, the problem is so large that the private sector must step in.”Still, Anz, who advertises on television and radio stations nationwide, said he would be willing to changing his company’s name. He conceded the name “might be aggressive.”Thomas Ryan, the operator of Bailout.hud-gov.us, has agreed to take the Web site down. Ryan said he still operates another site — which he would not name — that generates leads for foreclosure rescue operations. “They’re providing a legitimate service,” he said.A federal judge last month granted the FTC’s request for a temporary restraining order against two New Jersey-based companies: Hope Now Modifications LLC and New Hope Modifications LLC. The government said the companies mimicked the Hope Now alliance, which runs the mortgage industry’s foreclosure prevention effort.The FBI is investigating about 2,100 mortgage fraud cases, a 400 percent increase from five years ago, Attorney General Eric Holder said Monday.“If you prey on vulnerable homeowners with fraudulent mortgage schemes or discriminate against borrowers, we will find you and we will punish you,” Holder said.Homeowners do not have to pay to participate in the administration’s Making Home Affordable program, which seeks to prevent foreclosures by making mortgages affordable through refinancing or modified terms.The FTC said other signs of a mortgage scam are: promises to stop foreclosure or modify a loan; guarantees that your home will be saved and claims of a “97 percent success rate;” and use of official-sounding names.One Internet ad uses an image of President Barack Obama with the text “Avoid Foreclosure. Qualify For Obama’s New Housing Rescue Plan.” Only by reading a fine print disclaimer can the consumer learn that the site is not sponsored by the government.Over the past year homeowners have been flooding state attorneys general with complaints about for-profit loan modification consultants. Roadside billboards in places like Las Vegas scream, “Save my property!” and radio ads promise “expert help.” Some companies comb property records and send mail designed to look like it is from the homeowner’s lender.Some of those offering help are former brokers, agents and appraisers who’ve seen their previous business evaporate. But consumer advocates say the legitimate consultants are no more effective than nonprofit credit counselors who also work with lenders at no charge.The shadiest operators, consumer advocates say, can actually force borrowers out of their homes by persuading them to sign over the title or grant power of attorney.While not every loan modification business is fraudulent, “swimming around in those waters are a lot of sharks,” said Jim Carr, chief operating officer at the National Community Reinvestment Coalition in Washington.Some states recently have toughened penalties for perpetrating foreclosure scams, and some prosecutors have used existing fraud statutes to bring criminal charges. But many state prosecutors have not filed criminal cases, instead proceeding with civil lawsuits.Homeowners can locate free housing counselors at www.makinghomeaffordable.gov or by calling (888) 995-HOPE.
WASHINGTON (AP) – April 7, 2009 –
Federal and state officials are cracking down on mortgage modification scams, accusing “criminal actors” of preying on desperate borrowers caught up in the nation’s housing crisis.Government officials said Monday that scammers are seeking to take advantage of borrowers in danger of default by charging them upfront fees of $1,000 to $3,000 for help with loan modifications that rarely, if ever, pay off.The frauds often involve companies with official-sounding names designed to make borrowers think they are using the Obama administration’s efforts to help modify or refinance 7 million to 9 million mortgages.“If you are struggling to make your mortgage payment, or if you are facing foreclosure, stay away from anyone who says that they will save your home for money upfront,” Illinois Attorney General Lisa Madigan told reporters in Washington.Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.“These are predatory schemes designed to rob Americans of their savings and potentially their homes,” Treasury Secretary Timothy Geithner said. “We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.”The Federal Trade Commission has sent warning letters to 71 companies it says were running suspicious advertisements. The agency also said it filed three new complaints against Irvine, Calif.-based Federal Loan Modification Law Center, Newport Beach, Calif.-based Bailout.hud-gov.us, and Clearwater, Fla.-based Home Assure LLC, and the operators of those companies.Bill Anz, founding partner of Federal Loan Modification Law Center, defended his operation, saying he will offer a refund to anyone who doesn’t get a modification. About 20 percent of the 5,000 customers have received a modification so far, he said, with more in the works.“People might not like it,” Anz said, but “realistically, the problem is so large that the private sector must step in.”Still, Anz, who advertises on television and radio stations nationwide, said he would be willing to changing his company’s name. He conceded the name “might be aggressive.”Thomas Ryan, the operator of Bailout.hud-gov.us, has agreed to take the Web site down. Ryan said he still operates another site — which he would not name — that generates leads for foreclosure rescue operations. “They’re providing a legitimate service,” he said.A federal judge last month granted the FTC’s request for a temporary restraining order against two New Jersey-based companies: Hope Now Modifications LLC and New Hope Modifications LLC. The government said the companies mimicked the Hope Now alliance, which runs the mortgage industry’s foreclosure prevention effort.The FBI is investigating about 2,100 mortgage fraud cases, a 400 percent increase from five years ago, Attorney General Eric Holder said Monday.“If you prey on vulnerable homeowners with fraudulent mortgage schemes or discriminate against borrowers, we will find you and we will punish you,” Holder said.Homeowners do not have to pay to participate in the administration’s Making Home Affordable program, which seeks to prevent foreclosures by making mortgages affordable through refinancing or modified terms.The FTC said other signs of a mortgage scam are: promises to stop foreclosure or modify a loan; guarantees that your home will be saved and claims of a “97 percent success rate;” and use of official-sounding names.One Internet ad uses an image of President Barack Obama with the text “Avoid Foreclosure. Qualify For Obama’s New Housing Rescue Plan.” Only by reading a fine print disclaimer can the consumer learn that the site is not sponsored by the government.Over the past year homeowners have been flooding state attorneys general with complaints about for-profit loan modification consultants. Roadside billboards in places like Las Vegas scream, “Save my property!” and radio ads promise “expert help.” Some companies comb property records and send mail designed to look like it is from the homeowner’s lender.Some of those offering help are former brokers, agents and appraisers who’ve seen their previous business evaporate. But consumer advocates say the legitimate consultants are no more effective than nonprofit credit counselors who also work with lenders at no charge.The shadiest operators, consumer advocates say, can actually force borrowers out of their homes by persuading them to sign over the title or grant power of attorney.While not every loan modification business is fraudulent, “swimming around in those waters are a lot of sharks,” said Jim Carr, chief operating officer at the National Community Reinvestment Coalition in Washington.Some states recently have toughened penalties for perpetrating foreclosure scams, and some prosecutors have used existing fraud statutes to bring criminal charges. But many state prosecutors have not filed criminal cases, instead proceeding with civil lawsuits.Homeowners can locate free housing counselors at www.makinghomeaffordable.gov or by calling (888) 995-HOPE.
Online real estate brokers retool
NEW YORK – April 7, 2009 – Silicon Valley once thought it could replace the old-fashioned Realtor, touring would-be buyers around town in a well-worn Mercedes, with online agents working remotely for cut-rate commissions. It hasn’t worked out that way. ZipRealty and privately held Redfin, two firms slugging it out in the online realty business, are posting some better numbers recently. But both have had to change their business models radically, making them look a lot more like the traditional real estate agencies they once hoped to put out of business.The first of the dot-home contenders was Zip, which was launched in 1999 with funding from Benchmark Capital, one of the early backers of eBay. Zip, like Redfin, is a discount broker, meaning it shares some of its sales commissions with its clients. This is a different business from that of real estate search sites, such as Zillow.com, Yahoo Real Estate, and MSN Real Estate, which list homes for sale and sell advertising on their sites but don’t actually try to handle the sale.
**The lesson-- Buyer beware, use your best judgement, do your research. Network with friends and relatives and ask about positive experiences with local Realtors. Meet with them, interview them, let them evaluate your property and show you the current market. Choose a professional Realtor with a customer service centered approach. Any 'licensee' can show you a few properties. Go with a pro like you would in any other endeavor (would you go to a cut rate animal hospital for a tooth ache so you can save a few bucks?). Go with a Realtor.
NEW YORK – April 7, 2009 – Silicon Valley once thought it could replace the old-fashioned Realtor, touring would-be buyers around town in a well-worn Mercedes, with online agents working remotely for cut-rate commissions. It hasn’t worked out that way. ZipRealty and privately held Redfin, two firms slugging it out in the online realty business, are posting some better numbers recently. But both have had to change their business models radically, making them look a lot more like the traditional real estate agencies they once hoped to put out of business.The first of the dot-home contenders was Zip, which was launched in 1999 with funding from Benchmark Capital, one of the early backers of eBay. Zip, like Redfin, is a discount broker, meaning it shares some of its sales commissions with its clients. This is a different business from that of real estate search sites, such as Zillow.com, Yahoo Real Estate, and MSN Real Estate, which list homes for sale and sell advertising on their sites but don’t actually try to handle the sale.
**The lesson-- Buyer beware, use your best judgement, do your research. Network with friends and relatives and ask about positive experiences with local Realtors. Meet with them, interview them, let them evaluate your property and show you the current market. Choose a professional Realtor with a customer service centered approach. Any 'licensee' can show you a few properties. Go with a pro like you would in any other endeavor (would you go to a cut rate animal hospital for a tooth ache so you can save a few bucks?). Go with a Realtor.
Housing may have hit bottom in February
The chief economist of Mesirow Financial, a $31.4 billion asset financial services firm in Chicago founded in 1937, announced that the housing market probably bottomed out in February and is now on the road to recovery. “An unexpected jump in new and existing home sales, a fairly sharp increase in mortgage applications, and a surprise increase in pending home sales prompted many to declare the bottom in housing in the month of February,” says Swonk. “Even home prices, which had been falling like a rock, showed some signs of stabilizing during the month. Moreover, speculators appear to be re-entering the market, picking up properties on the cheap.”“The housing market is still a long way from healthy: home sales are still down substantially from the lows they hit during the turbulence of the fourth quarter; pending sales were at such low levels, there was really nowhere to go but up; and more than 70 percent of the mortgage applications we saw in March were refinances instead of purchases,” notes Swonk.Swonk says a number of housing market shifts suggest a turnaround has started, including: • Starts of single-family home sales, in particular, are already close to zero and cannot fall much further. Multi-family starts are also exceedingly low and off more than 50 percent from their 2005 high. On net, overall starts are expected to decline again in the second quarter and then begin a gradual rebound in the second half of the year.Regional differences: The West and the South are expected to remain the weakest markets when it comes to construction activity, since they still suffer from the greatest overhang of vacant new properties.• Home sales are expected to bottom sooner than starts, which may have also hit their turning point in February, although a safer bet is probably May. Swonk says that’s not surprising given the fact that it’s easier to get a mortgage to buy a home than to get funding to build a housing development.Regional differences: The hardest hit areas in the West, which includes California and Nevada, are expected to post the strongest gains, as they currently offer buyers the best deals from short sales and foreclosures. The Midwest is expected to perform close to the national average, while the South and the Northeast remain laggards.• Prices. Home values plummeted as the economy slipped deeper into recession and credit markets seized last fall. By January, most indices were showing double-digit declines from a year ago. The best bet is that prices will end the year lower than during the bulk of 2008, but will come up slightly from the lows of the first quarter.Regional differences: The Northeast is expected to experience the greatest downward pressure on prices, as it was late into the correction. Declines in New York could be particularly large as the number of foreclosures balloons. The downward pressure on prices in the South, particularly in Florida, is also expected to remain fairly intense, given the overhang of vacant homes.“Housing is expected to swing from a drag to a push on overall GDP growth in 2009, for the first time in four years,” says Swonk. “That shift, coupled with tax incentives to lower the carbon footprint of individual homes, is expected to provide a boost to spending on everything from furniture and appliances to building materials. Any gains that we do see in housing and housing-related activity, however, will pale when compared against previous recoveries.”
The chief economist of Mesirow Financial, a $31.4 billion asset financial services firm in Chicago founded in 1937, announced that the housing market probably bottomed out in February and is now on the road to recovery. “An unexpected jump in new and existing home sales, a fairly sharp increase in mortgage applications, and a surprise increase in pending home sales prompted many to declare the bottom in housing in the month of February,” says Swonk. “Even home prices, which had been falling like a rock, showed some signs of stabilizing during the month. Moreover, speculators appear to be re-entering the market, picking up properties on the cheap.”“The housing market is still a long way from healthy: home sales are still down substantially from the lows they hit during the turbulence of the fourth quarter; pending sales were at such low levels, there was really nowhere to go but up; and more than 70 percent of the mortgage applications we saw in March were refinances instead of purchases,” notes Swonk.Swonk says a number of housing market shifts suggest a turnaround has started, including: • Starts of single-family home sales, in particular, are already close to zero and cannot fall much further. Multi-family starts are also exceedingly low and off more than 50 percent from their 2005 high. On net, overall starts are expected to decline again in the second quarter and then begin a gradual rebound in the second half of the year.Regional differences: The West and the South are expected to remain the weakest markets when it comes to construction activity, since they still suffer from the greatest overhang of vacant new properties.• Home sales are expected to bottom sooner than starts, which may have also hit their turning point in February, although a safer bet is probably May. Swonk says that’s not surprising given the fact that it’s easier to get a mortgage to buy a home than to get funding to build a housing development.Regional differences: The hardest hit areas in the West, which includes California and Nevada, are expected to post the strongest gains, as they currently offer buyers the best deals from short sales and foreclosures. The Midwest is expected to perform close to the national average, while the South and the Northeast remain laggards.• Prices. Home values plummeted as the economy slipped deeper into recession and credit markets seized last fall. By January, most indices were showing double-digit declines from a year ago. The best bet is that prices will end the year lower than during the bulk of 2008, but will come up slightly from the lows of the first quarter.Regional differences: The Northeast is expected to experience the greatest downward pressure on prices, as it was late into the correction. Declines in New York could be particularly large as the number of foreclosures balloons. The downward pressure on prices in the South, particularly in Florida, is also expected to remain fairly intense, given the overhang of vacant homes.“Housing is expected to swing from a drag to a push on overall GDP growth in 2009, for the first time in four years,” says Swonk. “That shift, coupled with tax incentives to lower the carbon footprint of individual homes, is expected to provide a boost to spending on everything from furniture and appliances to building materials. Any gains that we do see in housing and housing-related activity, however, will pale when compared against previous recoveries.”
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