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Fewer Home Owners Report Equity in Homes

Friday, July 22nd, 2011

DAILY REAL ESTATE NEWS | FRIDAY, JULY 22, 2011

With falling property values, more home owners are reporting being underwater, owing more on their home than it’s currently worth.

One in three home owners — or 33 percent — say that their home is worth less than the amount they still owe on their mortgage, while another 18 percent aren’t even sure if they’re underwater, according to the latest Rasmussen Report of 676 home owners.

Upper-income home owners tend to be more confident about their home’s value than those who earn less, according to the study. Also, investors were found to be more confident than noninvestors about their home’s equity.

Overall, for the second straight month, less than half of home owners — 49 percent — say the value of their home is worth more than the amount they still owe on their mortgage. While that’s up from June’s all-time low of 45 percent, analysts are still concerned.

For comparison, in December 2008, 61 percent of home owners surveyed said they believed their home was worth more than their mortgage. While that number has fallen since, this is the first time the number of home owners believing they had equity in their home stayed below 50 percent for two months in a row.

Source: “Just 49% Say Home Is Worth More Than Mortgage,” Rasmussen Reports (July 21, 2011)

Some MARS Stipulations No Longer Enforced

Tuesday, July 19th, 2011

By: Kristie Franks

The Federal Trade Commission will no longer enforce most provisions set forth in the Mortgage Assistance Relief Services (MARS) Rule, according to a statement released Friday.

The MARS Rule required real estate agents to make several disclosures when assisting distressed homeowners in obtaining short sales from their lenders or servicers.

The rule also banned advance fee collection and prohibited false or misleading statements.

After the Rule was enacted by Congress in 2009, several real estate agents complained that the disclosures often confused homeowners or misled them.

“As more and more American homeowners seek short sales, it is especially important that the Rule not inadvertently discourage real estate professionals from helping consumers with these types of transactions,” the FTC stated.

The MARS Rule required real estate agents to state that they are not associated with the government, nor have their services been approved by the government or the homeowner’s lender; the lender may choose not to alter the homeowner’s loan; and if a company tells a homeowner to stop making mortgage payments, they must warn them that they could lose their home or damage their credit rating.

Real estate agents who are in good standing under state licensing requirements, in compliance with state real estate laws, and assisting homeowners in obtaining short sales are no longer required to provide the MARS disclosures.

These agents may also collect advance fees.

Deceptive practices and false statements will still be prohibited by the FTC.

The FTC’s stay only applies to short sales and does not affect agents providing assistance with other types of relief such as loan modifications.

Forecast: 15 top-performing real estate markets for remainder of 2011

Friday, July 8th, 2011

Despite Q2 uptick, overall home prices expected to dip further by year’s end

BY INMAN NEWS, FRIDAY, JULY 8, 2011.

U.S. home prices rose slightly in the second quarter, but ultimately fell in the first half of the year and are likely to fall further in the second half, according to a report from data and valuation firm Clear Capital, released today.

The firm’s Home Data Index fell 3.2 percent between fourth-quarter 2010 and second-quarter 2011, despite a 0.9 percent increase in the second quarter from the first quarter. Prices are expected to fall another 2.4 percent by year-end. Since June 2010, home prices have fallen 8 percent overall, the report said.

Clear Capital attributed the price declines to downward pressure from high unemployment and a high share of foreclosure sales. Bank-owned properties (REOs) accounted for 31.4 percent of overall sales at the end of the second quarter, a slight dip from 33.1 percent at the end of the first quarter.

“While varying according to each local market, it is unlikely national home prices have reached a true and sustainable bottom,” the report said.

Nonetheless, “it is clear prices have begun to level off and are not exhibiting as much volatility as we’ve seen since the downturn began,” said Alex Villacorta, director of research and analytics at Clear Capital, in a statement.

The Midwest and the West are expected to see the biggest price drops in the second half of the year: 4.1 percent and 4 percent, respectively. The Northeast and the South will stay relatively flat with declines of 0.8 percent and 1.3 percent, respectively.

Of 50 major metro areas, only five are forecast to see home-price gains in the second half of the year: Washington, D.C.; New York; Orlando; Dallas; and San Francisco. Among the 15 markets expected to perform best in the second half of the year, 11 are expected

to see either gains or smaller rates of decline.

The Virginia Beach-Norfolk-Newport News, Va., metro area is expected to see the biggest price drop, down 8.6 percent, among the 15 lowest-performing major markets. Clear Capital predicts nine out of the 15 will either maintain or slow their price declines compared to the first half of 2011.

BofA Reaches Settlement With Investors Over Legacy Countrywide Deals

Thursday, June 30th, 2011

by Carrie Bay

Bank of America has agreed to pay investors $8.5 billion to compensate them for Countrywide’s dealings years before the subprime lender was acquired by BofA.

The company said in a statement Wednesday that the settlement resolves “nearly all” of its repurchase exposure stemming from legacy first-lien residential mortgage-backed securities (RMBS) issued by Countrywide.

The agreement involves 530 trusts, five of which are second-lien trusts, and covers RMBS that carry a total original principal balance of $424 billion.

As part of the settlement, Bank of America has also agreed to implement certain servicing changes, including transferring high-risk loans owned by the trusts to subservicers and paying additional fees to the investors if benchmarked default-servicing timelines are not met.

The company estimates the costs associated with the supplementary servicing obligations to be approximately $400 million, and notes that the agreed upon actions are consistent with the consent orders issued in April by federal regulators.

In addition to the arrangement, which settles claims from 22 private institutional investors and is subject to final court approval, BofA says it will also be making a $5.5 billion provision to address expected loan buyback liability for both GSE and non-GSE exposures in the second quarter.

Bank of America acquired Countrywide, once the largest subprime lender in the country, in July of 2008. The company has paid out billions of dollars to settle lawsuits related to Countrywide’s business prior to the acquisition, including a multi-state settlement involving mandatory modifications and restitution for homeowners with Countrywide loans.

“This is another important step we are taking in the interest of our shareholders to minimize the impact of future economic uncertainty and put legacy issues behind us,” said Brian Moynihan, Bank of America’s CEO. “We will continue to act aggressively, and in the best interest of our shareholders, to clean up the mortgage issues largely stemming from our purchase of Countrywide.”

Bank of America says Wednesday’s settlement will eat into its second-quarter earnings, scheduled for release on July 19. Company officials are advising investors that the bank will report a loss for Q2 in the range of $8.6 billion to $9.1 billion, or 88 cents to 93 cents per share, as opposed to net income of 28 cents to 33 cents per share without the settlement outlay.

Still, financial markets and the investment community see the settlement agreement as a positive. Analysts say it eliminates a serious cloud of uncertainty that’s been hanging over one of the nation’s most prominent financial fixtures.

BofA’s stock price reportedly rose more than 5 percent in pre-market trading and has seen a steady rally throughout the day, with other shares of financials following suit on its coattails.

Fitch Ratings said it views the settlement as a “favorable development,” adding that the recognition of the cost associated with the agreement in the second quarter “decreases future financial uncertainty and considerably reduces the drag on future earnings from this issue.”

Report: Slow Foreclosures and Oversupply Fuel Market Declines

Monday, June 27th, 2011

by Heather Hill Cernoch

Backlogged foreclosures, severe oversupply, and negative equity triggered a further decline in home prices in April, according to the latest RPX Monthly Housing Market Report from Radar Logic.

The New York-based real estate data and analytics company tracks home prices in 25 major metropolitan areas across the country. Its latest index recorded a decline in the composite reading of 5.1 percent in April when compared to April 2010.

“Clearly, the very large supply of homes for sale or potentially for sale is weighing heavily on the market,” said Michael Feder, president and CEO of Radar Logic.

“Perhaps more worrisome,” Feder continued, “is the clearly established discount on distressed properties. Reason would suggest this discount reflects the level at which buyers are comfortable they can achieve a reasonable rate of return. We expect this situation will continue for some time and will deter any truly robust economic recovery.”

Housing expert sees another price plunge

Friday, June 10th, 2011

by Les Christie

NEW YORK (CNNMoney) — In an off-hand remark before cameras and microphones, economist and housing market guru Robert Shiller opined earlier this year that he would not be shocked if there was another 10% to 25% in the nation’s home price plunge — and he’s not backing down from that statement.

At a S&P Housing Summit in New York, Shiller on Thursday reiterated his fears of falling home prices. It’s not a forecast, he said, just a comment on his understanding of housing market trends.

He explained that speculative markets, like stocks or commodities, act like random walks. They go up and down all the time. Housing market direction tends to be more consistent.

“I worry that this is a real and continuing downturn, like in Japan,” Shiller said. “It had a boom in the 1980s that peaked in 1991. Prices declined in the major cities for 15 straight years after that.”

The U.S. housing market is hard to predict because the boom and bust it went through was unique. Shiller has studied historical price data back to the 1890s and found nothing like it.

“This is the biggest housing boom and bust in U.S. history,” he said. “The bubble was unique. “That makes it impossible for statisticians to forecast because they deal with things that repeat themselves. You see a pattern and expect it to repeat.”

It’s even different from the Great Depression, when the home price plunge was at about the same rate. The big difference, however, was that prices of nearly everything else cratered in the 1930s as well — which has not been true during the housing bust.

LPS Reports an About-Face in Delinquency and Foreclosure Movement

Wednesday, May 18th, 2011

By: Carrie Bay

Lender Processing Services (LPS) says market data it’s pulled through the end of April reveals an increase in the national mortgage delinquency rate and a drop in the industry’s foreclosure inventory.

Both stats did a complete u-turn from the trajectory they were on the prior month. At March month-end, LPS reported a sharp drop in delinquencies and a smaller, but notable increase in the foreclosure inventory.

Based on performance analysis conducted on its loan-level database of nearly 40 million mortgage loans, LPS says the ratio of mortgages 30 or more days past due but not yet in

foreclosure rose to 7.97 percent in April, an increase of 2.4 percent from March. That follows a 12 percent decline between February and March.

For April, the nation’s foreclosure inventory – which LPS defines as past dues that have been referred to an attorney but have not yet reached the final stage of foreclosure sale – dropped to 4.14 percent, down 1.6 percent from March. Pre-sale foreclosures between February and March had risen 1.4 percent.

Altogether, LPS says there were 6,388,000 mortgages 30 or more days delinquent or in foreclosure as of the end of April. That’s up from 6,333,000 at the end of March.

At April month-end 2,184,000 properties were in the midst of the foreclosure process, and 4,204,000 were at least one payment overdue but not yet referred to a foreclosure attorney. Of the latter, 1,961,000 were 90 or more days delinquent.

According to LPS’ analysis, the states with highest percentage of non-current loans – which combines foreclosures and delinquencies – are Florida, Nevada, Mississippi, New Jersey, and Georgia.

States with the lowest percentage of non-current loans include Montana, Wyoming, Alaska, South Dakota, and North Dakota.

FREE EVENT FOR ARIZONA HOMEOWNERS IN CRISIS

Wednesday, May 4th, 2011

IN-PERSON ADVICE FROM ATTORNEYS AND EXPERTS

–The Consumer Awareness Expo is free but attendance is limited, so register today–

 EVENT INFO:

Saturday May 21, 9:30am-12:30pm

Mesquite Library (4525 E. Paradise Village Parkway N., Phoenix, AZ  85032)

FREE! LIMITED seating! RSVP by May 18th to chicagotitlearizona@gmail.com

The Consumer Awareness Expo will provide homeowners with information about the full spectrum of options available if they are underwater with their mortgage, experiencing financial hardship due to job loss, medical expenses, divorce or other life events. Some of the experts available include:

  • Attorneys from Nagle Law Group and Scottsdale Law Group will assist homeowners with information and options about short sales, foreclosure and bankruptcy options
  • Attorneys from Nelson Law Firm will provide information about tax consequences of short sales or foreclosures on income taxes
  • Real Property Management North Valley will provide information about finding a rental home or apartment, including application information
  • Representatives from Nova Home Loans will be at the event to consult with homeowners who are ready to purchase again and take advantage of these low housing prices
  • Home Affordable Modification Assistance Group will be available to discuss loan modification possibilities
  • Instant Settle Consultants will discuss debt settlement and credit repair options

 “We want to provide consumers with options and answers they can live and move forward with during difficult times,” said event organizer Lisa Capes, Chicago Title Insurance Company. “This event is being held by a group of real estate professionals who are dedicated to educating the public with facts and options for underwater homeowners.”

 This EXPO is FREE to the public and the law firms and agencies are providing their expertise at no charge. Participants must register (by May 18th at http://consumerawarenessexpo.eventbrite.com

Distressed Properties Claim 40% of Existing-Home Sales

Wednesday, April 20th, 2011

By: Carrie Bay

Distressed homes – typically REOs and short sales – accounted for 40 percent of the existing homes sold in March, the National Association of Realtors (NAR) reported Wednesday.

The trade group notes that these properties generally sell at discounts in the vicinity of 20 percent. Their large market share served to dampen the median existing-home price. For all housing types, it came in at $159,600 last month, down 5.9 percent from March 2010.

Overall, sales of previously owned homes rose 3.7 percent last month as the spring buying season began to take hold. NAR described March’s reading as “continuing an uneven recovery,” following the 9.6 drop recorded in February.

Lawrence Yun, NAR’s chief economist, expects the improving sales pattern to continue.

“Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain – primarily because some buyers are finding it too difficult to obtain a mortgage.”

“For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows,” Yun added.

The March numbers put the annual sales rate at 5.10 million in March, up from a revised 4.92 million in February, but below the 5.44 million pace in March 2010.

NAR notes that sales were at elevated levels from March through June of 2010 in response to the federal homebuyer tax credit. Immediately following its expiration, existing-home sales bottomed last July, and been on a slow but fairly steady path ever since.

“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago – before the loose lending practices that created the unprecedented boom and bust cycle,” Yun said.

He says given that the Federal Housing Administration (FHA) and Veterans Affairs (VA) government-backed loan programs turned a modest profit over to Treasury last year, and have never required a taxpayer bailout, low down payment loans should continue to be made available for consumers who have demonstrated financial responsibility.

A parallel NAR practitioner survey shows first-time buyers purchased 33 percent of homes in March, compared with 34 percent in February. They were 44 percent in March 2010.

All-cash sales were at a record market share of 35 percent last month, up from 33 percent in February and 27 percent in March 2010.

Investors accounted for 22 percent of sales activity in March, up from 19 percent both the month before and a year earlier.

FTC to Collect $2.2M from Banned Loan Mod Companies

Wednesday, April 13th, 2011

By: Heather Hill Cernoch

The Federal Trade Commission (FTC) reached a settlement this week with two companies and three individuals, who are now banned from the mortgage relief services business and must pay $2.2 million in assets for consumer refunds.

The FTC filed the proposed consent order in the U.S. District Court for the Southern District of Florida.

As part of its efforts to thwart scams targeting homeowners seeking mortgage relief, the FTC alleged in

November 2009 that Kirkland Young LLC and its manager, David Botton, misrepresented themselves as consumer mortgage lenders, servicers, or their affiliates.

According to the FTC, they falsely promised to modify consumers’ loans and make their mortgage payments more affordable. The FTC added Botton’s sister, April Botton Krawiecki, their father, Samy Botton, and Attorney Aid LLC as defendants in December 2009.

The settlement also permanently prohibits these companies and individuals from misleading consumers about financial-related goods and services and bars the defendants from selling or disclosing customers’ personal information.

The FTC did not allege any violations of the Mortgage Assistance Relief Services Rule in this case because the defendants’ claims predated the rule.

The rule bans providers of mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they decide is acceptable.