Source: Fannie Mae Website
The Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac have announced enhancements to the Home Affordable Refinance Program (HARP) that are intended to make it easier for lenders to refinance the mortgages of eligible borrowers. Guidelines for Fannie Mae Seller/Servicers will be available November 15, 2011.
FHFA Announcement
Friday, October 28, 2011
Underwater Refinance Program Expanded
Courtesy of Keeping Current Matters/The KCM Blog
At a campaign stop in Nevada on Monday, President Obama announced an expansion of the HARP (Home Affordable Refinance Program) which would eliminate the current maximum LTV of 125%. The initiative is being looked at as a way to reward those homeowners who have been good payers of their mortgages but, because of declining home values, they could not take advantage of today’s lower interest rates.
While the actual details on the program will not be released until next month, here’s the buzz:
The original HARP was expected to help 5 million families. After two years, it has yet to reach 900,000; therefore, estimates ranging from 800,000 to 1.6 million borrowers who may benefit need to be taken with a grain of salt.
Whether the Administration is looking for purely political rhetoric points or not, my advice to underwater homeowners is too keep an eye out for the final guidelines because you just might be able to lower your payments.
Posted: 27 October 2011
At a campaign stop in Nevada on Monday, President Obama announced an expansion of the HARP (Home Affordable Refinance Program) which would eliminate the current maximum LTV of 125%. The initiative is being looked at as a way to reward those homeowners who have been good payers of their mortgages but, because of declining home values, they could not take advantage of today’s lower interest rates.While the actual details on the program will not be released until next month, here’s the buzz:
- It will only pertain to loans currently being serviced by Fannie Mae or Freddie Mac
- Because of the removal of the LTV cap, appraisals may not be required
- With the only qualifying criteria announced being that the last six payments be on time, it is possible that income documentation may be streamlined and credit scores might be more forgiving
- Fees allegedly will be reduced
- Incentives may be offered to people who shorten their repayment time
- It also sounds that the banks may be given some incentive by not holding them liable for the underwater portion of the new loan (a major incentive for sure).
The original HARP was expected to help 5 million families. After two years, it has yet to reach 900,000; therefore, estimates ranging from 800,000 to 1.6 million borrowers who may benefit need to be taken with a grain of salt.
Whether the Administration is looking for purely political rhetoric points or not, my advice to underwater homeowners is too keep an eye out for the final guidelines because you just might be able to lower your payments.
Thursday, October 20, 2011
House Prices: Where Will They Be in the Spring?
Courtesy of Keeping Current Matters/the KCM Blog
Posted 10/18/11
Posted 10/18/11
Many sellers want to wait until the spring before putting their home on the market. This might be for any of several reasons:- They don’t want to be inconvenienced during the holiday season.
- They believe that they will see more potential buyers and as a result will get a higher price.
- In the northern part of the country, they might not want people walking through the snow and then into their house.
- All of the above
In a normal real estate market, this may make sense. However, this market has been anything but normal. This spring will also see some abnormalities. The biggest difference will be the direction prices will take.
In years past, the spring market would favor the seller because increased demand would outpace any increase in supply: the number of houses coming onto the market would not be as great as the number of buyers newly entering the market. In most situations, when demand is greater than supply, prices increase.
The reason this spring will be different is that the supply of homes coming to the market will be dramatically impacted by foreclosure properties being released by the banks. Many believe this increase in inventory will far outweigh buyer demand. In situations where supply is greater than demand, prices decrease.
Will This Actually Happen?
RealtyTrac, in their latest foreclosure report, explained:
“U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork. While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up.
This will impact prices.
What Do Experts Believe the Impact Will Be?
Here are the pricing projections by several major entities:
- Zillow believes we will not see a bottom in prices until the first quarter of 2012.
- Standard & Poors thinks prices will drop 5% in the next few months.
- JP Morgan Chase believes prices will depreciate 6 to 7% over the next six months.
- Barclays says prices will fall 7% by the end of the first quarter of 2012.
Bottom Line
You may pay a hefty price for the convenience of not having your property on the market right now.
Should I Buy or Should I Rent?
Courtesy of Keeping Current Matters
We believe very strongly that now is the time to buy a home. Some will say we are just saying this to create real estate transactions and commissions. Because of that, today we will quote what those outside the real estate profession are saying to the people who look to them for financial advice.
The Wall Street Journal
Last week, in an article entitled It’s Time to Buy That House, the WSJ told their subscribers:
“It’s an excellent time to buy a house, either to live in for the long term or for investment income…Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”
In an article two weeks ago, MarketWatch.com (the on-line blog for WSJ) told their readers:
“Now could be the best time in history to buy a home.”
Forbes.com
In a report to their subscribers, Capital Economics reported that:
“The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment.”
Why is this important? Last week, Forbes explained to their readers:
“If rents simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation).”
They went on to explain the advantages of homeownership during retirement:
“Even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement…
At a time when retirement is becoming much more challenging, an extra $400,000 (or likely more) can make a major difference not to mention the impact of NOT having to pay a mortgage. How much less would you have to save for retirement if you didn’t pay the mortgage?”
Bottom Line
When the iconic financial newspaper and the iconic financial magazine say that it now makes financial sense to purchase a house, perhaps it’s time to buy a home.
Forebearance Period Extended For FHA Home Loans
Courtesy of Bill Kamboukos of Strategic Mortgage
The Obama administration recently announced it will require servicers of mortgages insured by the Federal Housing Administration to extend the forbearance period provided to unemployed homeowners because of the unusually long time it is taking for people to find new jobs in this economic downturn.
The new program puts in place that servicers of FHA-insured mortgages must allow qualified homeowners to go without making a monthly payment for 12 months before the foreclosure process begins. Previously, the minimum forbearance required of FHA loan servicers was four months.
In addition, the administration said mortgage servicers who participate in the federal Making Home Affordable Program also will be required to give their delinquent and unemployed mortgage borrowers at least 12 months forbearance when that is possible under regulator and investor guidelines. That is an increase from the previously mandated three months forbearance.
While the Making Home Affordable forbearance has been limited to jobless borrowers who are no more than three months behind on mortgage payments, the administration said the assistance also will be extended to unemployed homeowners who are more seriously delinquent.
HUD said details of the revised forbearance program, including exactly how many months delinquent a borrower may be when filing for help, are still being drafted.
"The current unemployment forbearance programs have mandatory periods that are inadequate for the majority of unemployed borrowers," said U.S. Housing and Urban Development Secretary Shaun Donovan in announcing the changes.
He noted that 60 percent of the unemployed have been out of work more than three months and 45 percent have been out of work more than six months.
The decision to extend forbearance periods for out-of-work borrowers is meant to "allow homeowners to stay in their homes while they look for a job," he told reporters.
Donovan said 3,500 families become 90 days delinquent on their mortgages each month because of unemployment, and extending the forbearance period would increase the likelihood of repayment.
The new program does not apply to houses purchased through loans provided through Fannie Mae or Freddie Mac, who own or guarantee about half of the nation's mortgages.
Fannie Mae and Freddie Mac currently offer three to six months forbearance to unemployed borrowers, with the possibility of a further extension of up to a year on a case by case basis, according to Corinne Russell, spokeswoman for the Federal Housing Finance Agency that regulates them.
The Obama administration said it hopes the changes initiated for the federal foreclosure prevention programs will set a standard for Fannie Mae, Freddie Mac and the rest of the mortgage industry, including banks that have their own forbearance programs, said U.S. Treasury spokeswoman Andrea Risotto.
As additional information on the actual implementation of this program becomes available we will provide additional information.In the mean time, if you have an FHA home loan and you feel you will qualify for this program; your first step may be to contact your current home loan servicer directly.
The Obama administration recently announced it will require servicers of mortgages insured by the Federal Housing Administration to extend the forbearance period provided to unemployed homeowners because of the unusually long time it is taking for people to find new jobs in this economic downturn.
The new program puts in place that servicers of FHA-insured mortgages must allow qualified homeowners to go without making a monthly payment for 12 months before the foreclosure process begins. Previously, the minimum forbearance required of FHA loan servicers was four months.
In addition, the administration said mortgage servicers who participate in the federal Making Home Affordable Program also will be required to give their delinquent and unemployed mortgage borrowers at least 12 months forbearance when that is possible under regulator and investor guidelines. That is an increase from the previously mandated three months forbearance.
While the Making Home Affordable forbearance has been limited to jobless borrowers who are no more than three months behind on mortgage payments, the administration said the assistance also will be extended to unemployed homeowners who are more seriously delinquent.
HUD said details of the revised forbearance program, including exactly how many months delinquent a borrower may be when filing for help, are still being drafted.
"The current unemployment forbearance programs have mandatory periods that are inadequate for the majority of unemployed borrowers," said U.S. Housing and Urban Development Secretary Shaun Donovan in announcing the changes.
He noted that 60 percent of the unemployed have been out of work more than three months and 45 percent have been out of work more than six months.
The decision to extend forbearance periods for out-of-work borrowers is meant to "allow homeowners to stay in their homes while they look for a job," he told reporters.
Donovan said 3,500 families become 90 days delinquent on their mortgages each month because of unemployment, and extending the forbearance period would increase the likelihood of repayment.
The new program does not apply to houses purchased through loans provided through Fannie Mae or Freddie Mac, who own or guarantee about half of the nation's mortgages.
Fannie Mae and Freddie Mac currently offer three to six months forbearance to unemployed borrowers, with the possibility of a further extension of up to a year on a case by case basis, according to Corinne Russell, spokeswoman for the Federal Housing Finance Agency that regulates them.
The Obama administration said it hopes the changes initiated for the federal foreclosure prevention programs will set a standard for Fannie Mae, Freddie Mac and the rest of the mortgage industry, including banks that have their own forbearance programs, said U.S. Treasury spokeswoman Andrea Risotto.
As additional information on the actual implementation of this program becomes available we will provide additional information.In the mean time, if you have an FHA home loan and you feel you will qualify for this program; your first step may be to contact your current home loan servicer directly.
7 Best Cities for Retirement
Courtesy of REALTOR®Mag/National Association of REALTORS®
Daily Real Estate News | Tuesday, October 18, 2011
U.S. News & World Report released its 2012 report on the top places to retire, taking into account lifestyle, cost of living, and home prices, among other factors.
Some of the publication’s top picks for retirees:
- Flagstaff, Ariz.: Pleasant year-round weather and one of the sunniest places in the nation.
- Boone, N.C.: Views of the Blue Ridge Mountains at an affordable price: The median home sales price was $215,250 in 2010.
- Traverse City, Mich.: Plenty of shore line for lake houses and an affordable median home price of $155,715.
- Walnut Creek, Calif.: Abundant green space mixed in with city amenities.
- Ithaca, N.Y.: College town with Cornell University and Ithaca College that also boasts plenty of nearby scenery.
- Lincoln, Neb.: A place for second careers with one of the country’s lowest unemployment rates (3.5 percent in 2010).
- Pittsburgh: Lots of amenities but low-cost living (median home sales price was $97,900 in 2010).
Source: “The 10 Best Places to Retire in 2012,” U.S. News & World Report (Oct. 17, 2011)
Monday, October 10, 2011
Market Summary for the Beginning of October
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| Article Courtesy of Michael Orr The Cromford Report |
Looking into the ARMLS data across all areas and types we see the following:
Sales per Month: 7,832 in September - down 11% from August but up 17% from this time last year.
Active Listings (including AWC): 26,869 on October 1 - up 0.2% from September 1 but down 40% from this time last year.
Active Listings (excluding AWC): 19,327 on October 1 - up 0.6% from September 1 but down 50% from this time last year.
Pending Sales: 10,841 on October 1, down 5.8% from August 1, but up 12.4% compared with this time last year.
Listing Success Rate: 75.7% on October 1 - up from 74.5% on September 1 and up significantly from 56.9% on October 1, 2010.
Contract Ratio: 95.2 on October 1, down from 99.5 on September 1 but dramatically up from 40.0 last year at this time.
Days Inventory: 99 on October 1, the same as September 1 but dramatically down from 179 at this time last year.
Cromford Market Index™: 159.3 on October 1, up from 155.6 on September 1 and 85.4 on October 1, 2010.
Sales Price as a Percentage of List: 96.70% on October 1, almost the same as 96.72% on September 1 but up from 95.43% on October 1, 2010.
We can see that all these numbers are far better than 12 months ago but most are not as good as last month. However the Cromford Report Index™ continued to improve. This is because this index is a seasonally adjusted measure and it is normal for inventory to increase between September and October. In fact the inventory increased only 0.2%, far less than in an average year and causing most of the improvement in the index.
It is also normal for sales volume and pending listings to decline between September and October. This year sales volumes fell faster than pending sales, which is partly due to the decline in REO listings. With fewer lender-owned and HUD properties available, last year's sales volume for REOs is no longer sustainable. We now see demand in slight decline and expect to see the Cromford Market Index™ fall back from its recent highs as a result.
REOs are losing market share very quickly now. Fewer trustee sales are taking place. There were 2,689 residential trustee sales in Maricopa County during September 2011, 44% fewer than the 4,808 of September 2010. In addition a larger percentage of these auctions are now won by third parties (42% in September 2011 versus 20% a year ago). So the quantity of homes reverting to the beneficiary is dropping extremely fast. Only 1,280 single family homes went back to the lenders in Maricopa County in September 2011. This is the lowest total since November 2007. It is also 61% lower than the 3,289 that they received in September 2010. They are selling far more than this number through ARMLS each month and so the lenders' inventory is being rapidly depleted.
It is a clear sign of the strength and dominance of negative sentiment that this remarkable turn round is mostly overlooked. At the same time, a completely irrelevant increase in foreclosures between July and August (due entirely to August having 23 trustee sale days instead of July's 20) managed to make headlines in the local papers. When bad news is amplified like this and good news is ignored we know sentiment has swung too far.
For the housing doom fans who like foreclosures, September 2011 was a pretty dismal month. There were a total of 4,544 new notices issued in Maricopa County of which 4,335 were residential. This is 39% lower than September 2010. This new number is actually slightly higher than April through July 2011, but 15% lower than last month and lower than every month prior to April until we get all the way back to December 2007. The downward trend has slowed but remains in place. The bigger news is that there were only 2,840 trustee sales of all property types. This is 44% down from September 2010. This is also the lowest number since March 2008 (except for November 2010 when Bank of America completely halted its trustee sales). Foreclosures are clearly well past their peak and the short sale is looking likely to overtake the foreclosure in the coming months as the primary mechanism to resolve homeowners' financial distress.
Pricing
After hitting a low point in late August and again in mid September, pricing is on a slight upward trend again. The monthly median sales price has climbed from $107,000 on August 18 to $114,950 on October 3 (all areas & types). That's a 7.4% increase in less than 7 weeks and illustrates how violently the monthly median sales price reacts when REOs start disappearing from the mix and increasing in price at the same time. For Greater Phoenix REOs the monthly median sales price has jumped from $80,000 to $86,400 in the same period, an 8% increase. Pricing for short sales and foreclosures has not followed suit and neither have sales prices for normal sales. In fact pricing has been a little weaker at the higher price points cancelling out some of the gains at the bottom of the market. The overall average price per sq. ft. is up only modestly. Having hit a decade low of $78.51 per sq. ft on September 15, we are now looking at $79.81 per sq. ft. for October 3, a bounce but not a very convincing one. The most encouraging sign is that the pending $/SF has finally started to change direction and is moving up again after trending downward for a prolonged 15 month period since May 2010. We wait with bated breath to see if it can keep this up throughout October.
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