The Arizona Republic, by Catherine Reagor - Oct. 25, 2011 12:00 AM
More Arizona homeowners may soon be able to refinance to current low mortgage-interest rates, no matter how far underwater they are in their homes. The Obama administration on Monday announced long-awaited details of an expansion of a program that helps homeowners refinance to reduce their payments.
Mortgage rates have fallen to record lows, and many homeowners would save hundreds of dollars a month if they could reduce the amount of interest they pay. But the housing crash has created a huge barrier.
A refinanced loan typically requires the home have enough value to cover the entire amount of the new loan. But plunging home values means many owners owe far more on their loans than their homes are worth. An estimated 40 percent of metro Phoenix homeowners are currently underwater.
The federal Home Affordable Refinancing Program has allowed certain loans to be refinanced if the borrower owed up to 125 percent of the home's value. But many underwater borrowers in Arizona owe more.
The plan announced Monday would lift the value requirement completely; allowing some borrowers to refinance no matter how much their home's value has dropped, if their mortgage is backed by one of the two largest federal mortgage agencies and they meet other requirements.
Borrowers can start to apply as soon as December, according to the few details released Monday, and the program would run through the end of 2013.
Speaking on a temporary stage in a Las Vegas neighborhood, Obama touted the plan as a way to allow struggling homeowners to save money. "Probably the single greatest cause of the financial crisis and this brutal recession has been the housing bubble that burst four years ago," he said. "And as long as this goes on, our recovery can't take off as quickly as it would after a normal recession."
The plan
The HARP program has helped about 900,000 homeowners nationally to refinance. Arizona figures aren't available.
The plan described by Obama and the Federal Housing Finance Agency on Monday would expand HARP by changing the rules and costs associated and extending the time period in which borrowers can apply. Among the key elements:
- Refinancing will be available to homeowners with loans backed by Fannie Mae or Freddie Mac in 2009 or earlier.
As with the current refinancing program, the option would be open only to borrowers with mortgages backed by the two largest federal mortgage agencies. Borrowers whose banks hold their loans privately would not qualify. Still, federally backed loans make up a majority of the existing mortgages in the state and the country.
The federal government did not give an official count of how many people will be able to refinance, but U.S. Housing and Urban Development head Shaun Donovan estimated 4 million families could be eligible.
Current federal programs have encouraged lenders to refinance such loans or modify loan-payment amounts for borrowers in financial trouble, but the banks that handle the payments in many cases have been slow to respond. Obama said the new program will allow other lenders to compete to make the new loans.
"Some lenders, frankly, just refuse to refinance," he said Monday. "So, these changes are going to encourage other lenders to compete for that business by offering better terms and rates, and eligible homeowners are going to be able to shop around."
The program is designed to help borrowers who took loans before the housing crash, and only applies to loans backed by the federal agencies on or before May 31, 2009. Market-watchers say the key will be to see whether banks and the mortgage giants actually follow through.
"The new refinancing program sounds like a good idea, but it has to have teeth," said John Smith, president of the Mesa-based non-profit Housing Our Communities, which counsels homeowners on avoiding foreclosure. "The government has to make Fannie and Freddie go through with these deals."
- Refinancing will be available to homeowners who are current on their mortgage payments.
To qualify, homeowners must not have missed more than one payment in the past year.
The plan differs from other programs that were meant to help borrowers who could no longer afford their mortgages. The federal loan-modification program was open only to borrowers who were already late on making their payments.
Instead, the refinancing is open to borrowers who have made their payments. Although it could help some people who have struggled to make those payments avoid foreclosure, it also could simply help other homeowners free up more money each month.
- Refinancing will be available no matter how much the home is currently worth.
The loan simply must be backed by Fannie or Freddie and be within standard sizes - for example, oversize "jumbo" loans will not qualify.
Borrowers who meet the financial requirements could refinance no matter how much the amount of the loan exceeds the home's current value, known as the loan-to-value ratio.
The previous HARP plan called for a 105 percent loan-to-value ratio, meaning homeowners who owed 5 percent more than their houses were worth could refinance under the plan. That ratio was quickly criticized for helping few in the hardest-hit housing markets of Arizona, California, Nevada, Florida and Michigan. It was raised to 125 percent but still wasn't enough for many homeowners who bought during the past decade in metro Phoenix.
"If the limit is lifted completely, then that will make a big difference for Arizona," said housing analyst Michael Orr, who publishes an online daily analysis of metro Phoenix's housing market called the "Cromford Report." "Many people have a loan-to-value of over 200 percent."
- Refinancing will cost less.
The changes announced Monday would also limit fees associated with refinancing, in hopes of making the move more affordable. Homeowners who qualify don't have to pay additional excessive fees for an appraisal or processing.
Jay Luber, president of Phoenix-based Galaxy Lending, knows many homeowners who will qualify for this program. He believes it could "accelerate the stabilization of values in metro Phoenix by decreasing foreclosures and short sales."
The doubts
Housing advocates point to past programs that have garnered bad reputations. The Housing Affordable Modification Program, HAMP, was announced in conjunction with the original refinancing program two years ago.
Tens of thousands of homeowners in Arizona alone were promised loan modifications and put in trial programs. These borrowers made the trial payments for more than a year in some cases only later to be denied a permanent modification.
Overall, the federal housing plan called for helping 7 million to 9 million homeowners. Fewer than 2.5 million have been helped with all of the plan's programs.
Phoenix real-estate agent Kevin Kaufman is skeptical of the new plan. "I'm honestly very, very pessimistic about any government program actually helping people," he said. "Having been in the trenches for four years now and seen so many empty promises. I don't believe the government will actually help."
Too late?
When Obama unveiled federal efforts to stem foreclosures two years ago, he traveled to Mesa to make the announcement. At the time, foreclosures were surging.
Today, foreclosures have been steadily slowing in metro Phoenix. So the latest move has been criticized as coming too late.
Also, many market observers note that for many homeowners, the real problem is not just their monthly payment but the fact that they will still owe so much more than their houses are worth, making them unable to sell or move.
The Obama administration is hinting about more aid for people who have lost homes to foreclosure and neighborhoods with many empty foreclosure homes.
But this expansion of HARP does help the homeowners who continued to pay as others walked away. Tom Schroder was turned down for a refinance last year because he owes at least 40 percent more than his Scottsdale home is worth. He said he is angry because he feels like he's being penalized for other people's foreclosures and bad decisions.
"I keep paying my mortgage on time and watching others buy homes at 5 or now even 4 percent (interest rates)," he said. "The changes to the refinancing program sound good. I just want to see some action on it from lenders and fast."
Patricia Garcia Duarte, president of the Phoenix-based non-profit homeownership counseling service Neighborhood Housing Services, said the new refinancing plan rewards homeowners with good credit who have not missed many payments.
"Owing more on a property than it is worth is still problematic for many in Arizona," she said. "Revamping HARP is a good thing, not the entire solution."
Read more: http://www.azcentral.com/business/realestate/articles/2011/10/25/20111025arizona-homeowners-underwater-help-obama.html#ixzz1boN5j8yf
Tuesday, October 25, 2011
Saturday, August 13, 2011
Tracking The Market And Economic Trends That Shape Your Finances
The typical rate on a 30-year fixed mortgage fell this week to 4.39%, the lowest level since November, according to home finance giant Freddie Mac, while other popular loans were at all-time lows in Freddie's weekly survey of lenders.
While that's welcome news for anyone willing and able to buy or refinance a home, the cause is the sputtering economy, which had investors bailing out of stocks and seeking protection in U.S. Treasury securities.
That trend drove the yield on the 10-year Treasury note to 2.58% Thursday morning -- it had been above 3.7% in February -- and home lending rates followed suit.
FRE-sign-AP-Pablo Martinez Monsivais "The first half of this year was the worst six-month period since the economic recovery began in June 2009," Freddie Mac economist Frank Nothaft said.
He noted that consumer spending fell 0.2% in June, the first decline since September 2009.
The record lows were for 15-year fixed mortgages, a popular option for people refinancing their homes, and for loans with a fixed rate for five years that then become variable. The previous records for these mortgages also were set in November.
Lenders were offering the 15-year loan at an average of 3.54%, down from last week's 3.66% and eclipsing the previous low of 3.57% in the Freddie Mac survey.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.18% this week, down from 3.25% a week earlier, which had tied the previous low.
The average offering rate for 30-year fixed-rate mortgages had briefly dropped below 4.2% in the survey last fall. The 4.39% rate that Freddie reported Thursday was sharply below last week's 4.55%.
Borrowers would have paid less than 1% of the loan amount in upfront lender fees to obtain the rates, Freddie Mac said. Solid borrowers often can find slightly better rates by shopping around, and it's also possible to lower mortgage rates by paying more upfront.
Indeed, experts said this week that it was possible for the lowest-risk borrowers to obtain 30-year home loans with rates fixed at less than 4% -- as long as they were willing to fork over 3% or more of the loan amount in upfront fees and discount points to certain lenders.
The Freddie Mac survey asks lenders what terms they are offering to borrowers with good credit ratings who have 20% down payments or 20% equity in their homes.
The above article is from the LA Times written on August 4, 2011
Since this article was written, Standard & Poors downgraded the U.S. Economy to A++ and now the current administration says that rates will be low for the next 2 years. Nothing makes sense any more!
While that's welcome news for anyone willing and able to buy or refinance a home, the cause is the sputtering economy, which had investors bailing out of stocks and seeking protection in U.S. Treasury securities.
That trend drove the yield on the 10-year Treasury note to 2.58% Thursday morning -- it had been above 3.7% in February -- and home lending rates followed suit.
FRE-sign-AP-Pablo Martinez Monsivais "The first half of this year was the worst six-month period since the economic recovery began in June 2009," Freddie Mac economist Frank Nothaft said.
He noted that consumer spending fell 0.2% in June, the first decline since September 2009.
The record lows were for 15-year fixed mortgages, a popular option for people refinancing their homes, and for loans with a fixed rate for five years that then become variable. The previous records for these mortgages also were set in November.
Lenders were offering the 15-year loan at an average of 3.54%, down from last week's 3.66% and eclipsing the previous low of 3.57% in the Freddie Mac survey.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.18% this week, down from 3.25% a week earlier, which had tied the previous low.
The average offering rate for 30-year fixed-rate mortgages had briefly dropped below 4.2% in the survey last fall. The 4.39% rate that Freddie reported Thursday was sharply below last week's 4.55%.
Borrowers would have paid less than 1% of the loan amount in upfront lender fees to obtain the rates, Freddie Mac said. Solid borrowers often can find slightly better rates by shopping around, and it's also possible to lower mortgage rates by paying more upfront.
Indeed, experts said this week that it was possible for the lowest-risk borrowers to obtain 30-year home loans with rates fixed at less than 4% -- as long as they were willing to fork over 3% or more of the loan amount in upfront fees and discount points to certain lenders.
The Freddie Mac survey asks lenders what terms they are offering to borrowers with good credit ratings who have 20% down payments or 20% equity in their homes.
The above article is from the LA Times written on August 4, 2011
Since this article was written, Standard & Poors downgraded the U.S. Economy to A++ and now the current administration says that rates will be low for the next 2 years. Nothing makes sense any more!
Wednesday, August 3, 2011
Real-estate expert sees disconnect in lending
by J. Craig Anderson - Jul. 31, 2011 12:00 AM
The Arizona Republic
Read more: http://www.azcentral.com/business/articles/2011/07/31/20110731real-estate-disconnect-lending.html#ixzz1TyZd8t4H
Arizona State University professor and real-estate development veteran Mark Stapp sees a troubling disconnect between local efforts to build sustainable communities and the globalized mechanisms through which those efforts are funded.
The Phoenix-area commercial real-estate market's problems, which include but are not limited to $3.5 billion of securitized commercial mortgage loans currently in default, are largely the result of that disconnect, he said.
Stapp, still active as a developer, is executive director of the Master of Real Estate Development program at ASU's W. P. Carey School of Business.
He said communities need to get away from relying on massive, corporate lending institutions to fund the development of local real-estate projects. In other words, go back to the way things used to work: local investors funding local development.
Stapp explained the problem this way:
"Real estate is location-specific, unique and small, which makes it really hard to trade and value on a significant scale. Still, the financial world took properties with fundamental differences and bundled them together, in order to create a larger scale, offset transaction costs and trade a bunch of properties together (as commercial mortgage-backed securities)."
Each pool of disparate real-estate assets then was assigned a single investment rating, Stapp said.
"This overlooked the nuances of the individual properties," he said.
Stapp said it's not too late for areas such as metro Phoenix to turn back the clock by setting up local real-estate funds that would finance local development on a project-by-project basis. Everyone involved would benefit, he said, because investors would have more control over where their money was being spent, and developers would know that a project was being financed on its merits, not some financial algorithm devised hundreds of miles away.
The Arizona Republic
Read more: http://www.azcentral.com/business/articles/2011/07/31/20110731real-estate-disconnect-lending.html#ixzz1TyZd8t4H
Arizona State University professor and real-estate development veteran Mark Stapp sees a troubling disconnect between local efforts to build sustainable communities and the globalized mechanisms through which those efforts are funded.
The Phoenix-area commercial real-estate market's problems, which include but are not limited to $3.5 billion of securitized commercial mortgage loans currently in default, are largely the result of that disconnect, he said.
Stapp, still active as a developer, is executive director of the Master of Real Estate Development program at ASU's W. P. Carey School of Business.
He said communities need to get away from relying on massive, corporate lending institutions to fund the development of local real-estate projects. In other words, go back to the way things used to work: local investors funding local development.
Stapp explained the problem this way:
"Real estate is location-specific, unique and small, which makes it really hard to trade and value on a significant scale. Still, the financial world took properties with fundamental differences and bundled them together, in order to create a larger scale, offset transaction costs and trade a bunch of properties together (as commercial mortgage-backed securities)."
Each pool of disparate real-estate assets then was assigned a single investment rating, Stapp said.
"This overlooked the nuances of the individual properties," he said.
Stapp said it's not too late for areas such as metro Phoenix to turn back the clock by setting up local real-estate funds that would finance local development on a project-by-project basis. Everyone involved would benefit, he said, because investors would have more control over where their money was being spent, and developers would know that a project was being financed on its merits, not some financial algorithm devised hundreds of miles away.
Tuesday, July 19, 2011
Housing and Economic Forecast Points to Rising Activity
Walter Molony
WASHINGTON, May 12, 2011
Home sales are expected to stay on an uptrend through 2012, although the performance will be uneven with mortgage constraints weighing on the market, according to experts at a residential real estate forum today at the Realtors® Midyear Legislative Meetings & Trade Expo here.
Lawrence Yun, NAR chief economist, said existing-home sales have been underperforming by historical standards and will rise gradually but unevenly. “If we just hold at the first-quarter sales pace of 5.1 million, sales this year would rise 4 percent, but the remainder of the year looks better,” Yun said. “We expect 5.3 million existing-home sales this year, up from 4.9 million in 2010, with additional gains in 2012 to about 5.6 million – that’s a sustainable level given the size of our population.”
Mortgage interest rates should rise gradually to 5.5 percent by the end of the year and average 6.0 percent in 2012 – still relatively affordable by historic standards.
“A huge volume of cash sales, supported by the recovery in the stock market, show that smart money is chasing real estate. This implies that there could be a sizeable pent-up demand if mortgages become more readily accessible for qualified buyers,” Yun said. “The problem isn’t with interest rates, but with the continuation of unnecessarily tight credit standards that are keeping many creditworthy buyers from getting a loan despite extraordinarily low default rates over the past two years.”
Yun said that if credit requirements returned to normal, safe standards, home sales would be 15 to 20 percent higher. He added that some parents are buying homes with cash for their children, and offering them loans which provide better returns than bank accounts or CDs.
Yun projects the Gross Domestic Product to grow 2.5 percent this year and 2.7 percent in 2012, adding 1.5 million to 2 million jobs yearly over the next two years. The unemployment rate should decline to 8.8 percent by the end of 2011 and average 8.6 percent next year, returning to a normal level of 6 percent around 2015.
Housing starts are forecast to rise but remain below long-term trends, reaching 603,000 in 2011, up from 595,000 last year, and continue growing to 908,000 in 2012. New-home sales are seen at a record low 320,000 this year, rising to 487,000 in 2012. “A recovery in new homes will be slow because of the extra price discount in the existing home market,” Yun noted. In March, the typical new single-family home cost $53,300 more than an existing home.
Inflation appears to be relatively modest for now, with the Consumer Price Index rising 2.9 percent this year. “We’ll be closely watching the impact of fuel costs on consumer spending and inflation – that would slow economic growth, job creation and home sales,” Yun said.
Apartment rents are trending up, and are likely to rise at faster rates as vacancies decline. Following the correction in home prices, it has now become more affordable to buy in most of the country. “Twice as many renters had enough income to buy a home in 2010 in comparison with 2005, so we have a much larger pool of financially qualified renters,” Yun said. “Rising rents and excellent housing affordability conditions will encourage potential buyers who’ve been on the sidelines.”
Yun expects the median existing-home price to remain near $170,000 over the next two years, which would mark four consecutive years of essentially no meaningful price change.
Frank Nothaft, chief economist at Freddie Mac, holds similar views on the outlook. “Economic activity will accelerate this year – there will be no double dip in the economy,” he said. Nothaft is more optimistic on job growth, expecting 2.0 million to 2.5 million jobs created in 2011 with unemployment dropping to 8.4 percent by the end of the year.
Nothaft expects the 30-year fixed-rate mortgage to trend up to 5.25 percent by the end of the year, and for home sales to rise 5 percent. “National home price indices are close to a bottom and prices are likely to bottom sometime this year,” he said.
Refinancing activity in 2011 will be only half of what it was last year. “As a result, banks may become more willing to lend to home buyers,” Nothaft said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
WASHINGTON, May 12, 2011
Home sales are expected to stay on an uptrend through 2012, although the performance will be uneven with mortgage constraints weighing on the market, according to experts at a residential real estate forum today at the Realtors® Midyear Legislative Meetings & Trade Expo here.
Lawrence Yun, NAR chief economist, said existing-home sales have been underperforming by historical standards and will rise gradually but unevenly. “If we just hold at the first-quarter sales pace of 5.1 million, sales this year would rise 4 percent, but the remainder of the year looks better,” Yun said. “We expect 5.3 million existing-home sales this year, up from 4.9 million in 2010, with additional gains in 2012 to about 5.6 million – that’s a sustainable level given the size of our population.”
Mortgage interest rates should rise gradually to 5.5 percent by the end of the year and average 6.0 percent in 2012 – still relatively affordable by historic standards.
“A huge volume of cash sales, supported by the recovery in the stock market, show that smart money is chasing real estate. This implies that there could be a sizeable pent-up demand if mortgages become more readily accessible for qualified buyers,” Yun said. “The problem isn’t with interest rates, but with the continuation of unnecessarily tight credit standards that are keeping many creditworthy buyers from getting a loan despite extraordinarily low default rates over the past two years.”
Yun said that if credit requirements returned to normal, safe standards, home sales would be 15 to 20 percent higher. He added that some parents are buying homes with cash for their children, and offering them loans which provide better returns than bank accounts or CDs.
Yun projects the Gross Domestic Product to grow 2.5 percent this year and 2.7 percent in 2012, adding 1.5 million to 2 million jobs yearly over the next two years. The unemployment rate should decline to 8.8 percent by the end of 2011 and average 8.6 percent next year, returning to a normal level of 6 percent around 2015.
Housing starts are forecast to rise but remain below long-term trends, reaching 603,000 in 2011, up from 595,000 last year, and continue growing to 908,000 in 2012. New-home sales are seen at a record low 320,000 this year, rising to 487,000 in 2012. “A recovery in new homes will be slow because of the extra price discount in the existing home market,” Yun noted. In March, the typical new single-family home cost $53,300 more than an existing home.
Inflation appears to be relatively modest for now, with the Consumer Price Index rising 2.9 percent this year. “We’ll be closely watching the impact of fuel costs on consumer spending and inflation – that would slow economic growth, job creation and home sales,” Yun said.
Apartment rents are trending up, and are likely to rise at faster rates as vacancies decline. Following the correction in home prices, it has now become more affordable to buy in most of the country. “Twice as many renters had enough income to buy a home in 2010 in comparison with 2005, so we have a much larger pool of financially qualified renters,” Yun said. “Rising rents and excellent housing affordability conditions will encourage potential buyers who’ve been on the sidelines.”
Yun expects the median existing-home price to remain near $170,000 over the next two years, which would mark four consecutive years of essentially no meaningful price change.
Frank Nothaft, chief economist at Freddie Mac, holds similar views on the outlook. “Economic activity will accelerate this year – there will be no double dip in the economy,” he said. Nothaft is more optimistic on job growth, expecting 2.0 million to 2.5 million jobs created in 2011 with unemployment dropping to 8.4 percent by the end of the year.
Nothaft expects the 30-year fixed-rate mortgage to trend up to 5.25 percent by the end of the year, and for home sales to rise 5 percent. “National home price indices are close to a bottom and prices are likely to bottom sometime this year,” he said.
Refinancing activity in 2011 will be only half of what it was last year. “As a result, banks may become more willing to lend to home buyers,” Nothaft said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
Saturday, July 16, 2011
ARIZONA DEPARTMENT OF REAL ESTATE-INFORMATIONAL ALERT
July 15, 2011
COMMISSIONER LOWE ANNOUNCES CHANGES TO MARS RULING-
The Department has been monitoring closely the Federal Trade Commission (FTC) Mortgage Assistance Relief Services (MARS) Rule and its affect on the real estate licensees. Today, the FTC issued a press release- FTC WILL NOT ENFORCE MANY OF THE PROVISIONS OF MARS RULE AGAINST REAL ESTATE PROFESSIONALS HELPING CONSUMERS OBTAIN SHORT SALES”.
The direct link to the FTC Press release/enforcement policy: http://www.ftc.gov/opa/2011/07/mars.shtm
Remember- the Arizona “Short Sale Negotiator Regulations” issued by the ADRE on February 15, 2011 remains in effect, as well as the requirements of A.R.S. §32-2155 which states: Restriction on employment or compensation of person as broker or salesperson
C. A real estate broker or real estate salesperson shall not collect compensation for rendering services in negotiating loans secured by real property unless all of the following apply:
1. The broker or salesperson is licensed pursuant to title 6, chapter 9 or is an employee, officer or partner of a corporation or partnership licensed pursuant to title 6, chapter 9.
2. The broker or salesperson has disclosed to the person from whom the compensation is collected that the broker or salesperson is receiving compensation both for real estate brokerage, when applicable, and for mortgage broker services.
3. The compensation does not violate any other state or federal law.
To review these Regulations, the direct link is: http://www.azre.gov/PublicInfo/Documents/Short_Sale_Negotiator_Regulations.pdf
COMMISSIONER LOWE ANNOUNCES CHANGES TO MARS RULING-
The Department has been monitoring closely the Federal Trade Commission (FTC) Mortgage Assistance Relief Services (MARS) Rule and its affect on the real estate licensees. Today, the FTC issued a press release- FTC WILL NOT ENFORCE MANY OF THE PROVISIONS OF MARS RULE AGAINST REAL ESTATE PROFESSIONALS HELPING CONSUMERS OBTAIN SHORT SALES”.
The direct link to the FTC Press release/enforcement policy: http://www.ftc.gov/opa/2011/07/mars.shtm
Remember- the Arizona “Short Sale Negotiator Regulations” issued by the ADRE on February 15, 2011 remains in effect, as well as the requirements of A.R.S. §32-2155 which states: Restriction on employment or compensation of person as broker or salesperson
C. A real estate broker or real estate salesperson shall not collect compensation for rendering services in negotiating loans secured by real property unless all of the following apply:
1. The broker or salesperson is licensed pursuant to title 6, chapter 9 or is an employee, officer or partner of a corporation or partnership licensed pursuant to title 6, chapter 9.
2. The broker or salesperson has disclosed to the person from whom the compensation is collected that the broker or salesperson is receiving compensation both for real estate brokerage, when applicable, and for mortgage broker services.
3. The compensation does not violate any other state or federal law.
To review these Regulations, the direct link is: http://www.azre.gov/PublicInfo/Documents/Short_Sale_Negotiator_Regulations.pdf
Tuesday, July 5, 2011
HUD To Give Away $1 Billion To Struggling Homeowners
From the Washington Post
By Cezary Podkul, Published: July 4
Sandra Allwine has been pleading with her bank for more than two years to modify the mortgage on her Arlington County home. Despite exhausting all her savings and having her daughter move in to help with her $3,000 mortgage payment, Allwine, 65 and unable to find work, is struggling to save her home from foreclosure.
In June, a potential lifeline opened up. The newly launched $1 billion Emergency Homeowners’ Loan Program, or EHLP, is targeting homeowners who are among the most difficult to help: those who fell behind on their payments because of job loss or unexpected medical bills. For many of them, it might be the last chance to save their homes.
During the housing boom, millions of homeowners got easy access to mortgages. Now, some mortgage lenders and government officials have taken action after discovering that many mortgage documents were mishandled.
“We were normal middle-class Americans who had saved and lived very carefully and frugally . . . and still wound up getting kicked in the teeth,” Allwine said. She applied as soon as she heard about the program.
If she is approved, the government will subsidize Allwine’s mortgage payments for a maximum of $50,000 over two years. After that, the interest-free loan will be forgiven over five years if she stays in her home and stays current on her payments.
EHLP is the latest government program targeting the nearly 1.8 million homeowners like Allwine facing foreclosure. It is going to have to move fast: The program was supposed to start last year, but implementation delays mean that the Department of Housing and Urban Development must spend all its $1 billion by the end of the federal government’s fiscal year, Sept. 30.
That gives homeowners in 27 states, including Virginia, until July 22 to complete their applications. If demand outstrips available funds, HUD will run a lottery to pick successful applicants. Five additional states, including Maryland, are subject to slightly different rules, which gave them more time to spend the funds, because they started taking EHLP applications earlier under similar state-run programs.
Terri Ware of Greenbelt applied for the program in May after she was unable to get her bank to modify the $238,000 mortgage on her condominium. Her daughter Micah was born last year with a heart defect that requires around-the-clock care. So Ware, 43 and a single mom, left her job as an emergency room nurse at Prince George’s Hospital Center in Cheverly so she could care for her. But with her income shrinking and medical expenses escalating, she quickly burned through all her savings and her 401(k) and fell five months behind on her mortgage. Foreclosure loomed.
“I said, ‘I can’t be homeless — my baby needs help,’ ” Ware recalled.
Within a month, Ware was approved for $29,608 in aid through EHLP. The interest-free loan will repay $8,636 worth of mortgage payments that she owes in arrears to J.P. Morgan Chase and then pay about half her $1,727 mortgage payment for the next 24 months.
Ware was ecstatic when she found out. “I picked my daughter up and said, ‘We’re going to keep our home,’ ” she said with tears in her eyes. She plans to resume working and making mortgage payments on her own as soon as her daughter’s health improves.
Maryland has committed $4.2 million in EHLP loans to 121 homeowners, Maryland Department of Housing and Community Development Deputy Secretary Clarence Snuggs said, and “we’re going to be working up until the last minute” to spend the $40 million that the state has been allocated under EHLP.
Nationwide, HUD is hoping to help 30,000 homeowners through the program, including 1,120 in Maryland and 1,223 in Virginia, which received $46.6 million in funding. The District is hoping to assist as many as 1,000 homeowners under a separate program for which it has $20 million, said D.C. Housing Finance Agency Executive Director Harry Sewell.
But not everyone sees the merits of programs such as these during lean fiscal times.
“The best foreclosure mitigation program in America is a job. It’s not a government check, it’s a paycheck,” Rep. Jeb Hensarling (R-Tex.) said in a statement. In February, Hensarling sponsored a bill to kill the EHLP, calling the program “an act of fiscal child abuse.” By a vote of 242 to 177, the House agreed. But the Senate didn’t act on it.
Rep. Barney Frank (D-Mass.) fought to include the program in the 2010 financial reform bill. “If you took out a reasonable mortgage in the first place and the only reason you can’t pay it is because you became unemployed, there’s reason to help,” he said in an interview.
Frank proposed taxing large financial firms to fund EHLP, but House Republicans opposed that proposal. Some analysts say that leaves Congress with difficult moral questions.
“What’s the moral superiority of the borrower who did nothing wrong versus the taxpayer who did nothing wrong?” said Mark Calabria, director of financial regulation studies at the Cato Institute, a free-market think tank. In the end, he thinks EHLP will amount to “a drop in the bucket” for America’s foreclosure problem, while future generations will have to pick up its $1 billion tab.
By Cezary Podkul, Published: July 4
Sandra Allwine has been pleading with her bank for more than two years to modify the mortgage on her Arlington County home. Despite exhausting all her savings and having her daughter move in to help with her $3,000 mortgage payment, Allwine, 65 and unable to find work, is struggling to save her home from foreclosure.
In June, a potential lifeline opened up. The newly launched $1 billion Emergency Homeowners’ Loan Program, or EHLP, is targeting homeowners who are among the most difficult to help: those who fell behind on their payments because of job loss or unexpected medical bills. For many of them, it might be the last chance to save their homes.
During the housing boom, millions of homeowners got easy access to mortgages. Now, some mortgage lenders and government officials have taken action after discovering that many mortgage documents were mishandled.
“We were normal middle-class Americans who had saved and lived very carefully and frugally . . . and still wound up getting kicked in the teeth,” Allwine said. She applied as soon as she heard about the program.
If she is approved, the government will subsidize Allwine’s mortgage payments for a maximum of $50,000 over two years. After that, the interest-free loan will be forgiven over five years if she stays in her home and stays current on her payments.
EHLP is the latest government program targeting the nearly 1.8 million homeowners like Allwine facing foreclosure. It is going to have to move fast: The program was supposed to start last year, but implementation delays mean that the Department of Housing and Urban Development must spend all its $1 billion by the end of the federal government’s fiscal year, Sept. 30.
That gives homeowners in 27 states, including Virginia, until July 22 to complete their applications. If demand outstrips available funds, HUD will run a lottery to pick successful applicants. Five additional states, including Maryland, are subject to slightly different rules, which gave them more time to spend the funds, because they started taking EHLP applications earlier under similar state-run programs.
Terri Ware of Greenbelt applied for the program in May after she was unable to get her bank to modify the $238,000 mortgage on her condominium. Her daughter Micah was born last year with a heart defect that requires around-the-clock care. So Ware, 43 and a single mom, left her job as an emergency room nurse at Prince George’s Hospital Center in Cheverly so she could care for her. But with her income shrinking and medical expenses escalating, she quickly burned through all her savings and her 401(k) and fell five months behind on her mortgage. Foreclosure loomed.
“I said, ‘I can’t be homeless — my baby needs help,’ ” Ware recalled.
Within a month, Ware was approved for $29,608 in aid through EHLP. The interest-free loan will repay $8,636 worth of mortgage payments that she owes in arrears to J.P. Morgan Chase and then pay about half her $1,727 mortgage payment for the next 24 months.
Ware was ecstatic when she found out. “I picked my daughter up and said, ‘We’re going to keep our home,’ ” she said with tears in her eyes. She plans to resume working and making mortgage payments on her own as soon as her daughter’s health improves.
Maryland has committed $4.2 million in EHLP loans to 121 homeowners, Maryland Department of Housing and Community Development Deputy Secretary Clarence Snuggs said, and “we’re going to be working up until the last minute” to spend the $40 million that the state has been allocated under EHLP.
Nationwide, HUD is hoping to help 30,000 homeowners through the program, including 1,120 in Maryland and 1,223 in Virginia, which received $46.6 million in funding. The District is hoping to assist as many as 1,000 homeowners under a separate program for which it has $20 million, said D.C. Housing Finance Agency Executive Director Harry Sewell.
But not everyone sees the merits of programs such as these during lean fiscal times.
“The best foreclosure mitigation program in America is a job. It’s not a government check, it’s a paycheck,” Rep. Jeb Hensarling (R-Tex.) said in a statement. In February, Hensarling sponsored a bill to kill the EHLP, calling the program “an act of fiscal child abuse.” By a vote of 242 to 177, the House agreed. But the Senate didn’t act on it.
Rep. Barney Frank (D-Mass.) fought to include the program in the 2010 financial reform bill. “If you took out a reasonable mortgage in the first place and the only reason you can’t pay it is because you became unemployed, there’s reason to help,” he said in an interview.
Frank proposed taxing large financial firms to fund EHLP, but House Republicans opposed that proposal. Some analysts say that leaves Congress with difficult moral questions.
“What’s the moral superiority of the borrower who did nothing wrong versus the taxpayer who did nothing wrong?” said Mark Calabria, director of financial regulation studies at the Cato Institute, a free-market think tank. In the end, he thinks EHLP will amount to “a drop in the bucket” for America’s foreclosure problem, while future generations will have to pick up its $1 billion tab.
Sunday, July 3, 2011
California Investors To Plead Guilty In Bid-Rigging
June 30, 2011
(06-30) 16:55 PDT Sacramento, Calif. (AP) --
Eight California real estate investors have agreed to plead guilty in a bid-rigging scheme to buy foreclosed real estate at public auctions in two San Francisco Bay area counties, the U.S. Department of Justice said Thursday.
The men were charged with bid-rigging and conspiracy to commit mail fraud as part of a joint investigation by the FBI and the antitrust division of the Justice Department.
Investigators say the men conspired or made payoffs from 2008 through 2011 so they would not bid against each other for properties sold at foreclosure auctions in Alameda and Contra Costa counties. After one bought a property at an artificially low price, they would hold a private auction among themselves to resell it and split the extra money paid by the winning bidder.
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"While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors," said Christine Varney, assistant attorney general in charge of the antitrust division, in a prepared statement.
The felony charges were filed in U.S. District Court for the Northern District of California, in Oakland. Court records did not list attorneys for the defendants or indicate whether they were in custody; court personnel said the cases were newly filed and they could not provide any information about them.
The men charged were:
_ Thomas Franciose, of San Francisco
_ William Freeborn, of Alamo
_ Robert Kramer, of Oakland
_ Thomas Legault, of Clayton
_ David Margen, of Berkeley
_ Brian McKinzie, of Hayward
_ Jaime Wong, of Dublin
_ Jorge Wong, of San Leandro
No Justice Department spokesperson could be reached to clarify whether the men were in custody, when they might enter a plea, their ages or other details. An FBI spokeswoman referred questions to the Justice Department.
Investigators said in a prepared statement that the charges were part of an ongoing investigation into collusion by real estate investors in foreclosure sales, both in Northern California and elsewhere.
In March, federal prosecutors said Yama Marifat of Pleasanton had pleaded guilty to conspiring to rig bids at foreclosure auctions in San Joaquin County, about 50 miles east of the Bay Area and one of the areas hardest hit by the housing bust. The scheme described was similar to that cited in the charges filed Thursday.
At the time, investigators said Marifat was the fifth person to plead guilty in connection with the probe, and he faced up to 10 years in prison for bid rigging and 30 years for conspiracy to commit mail fraud, plus fines of as much as $2 million.
It was unclear whether the new case was related to the earlier investigation.
(06-30) 16:55 PDT Sacramento, Calif. (AP) --
Eight California real estate investors have agreed to plead guilty in a bid-rigging scheme to buy foreclosed real estate at public auctions in two San Francisco Bay area counties, the U.S. Department of Justice said Thursday.
The men were charged with bid-rigging and conspiracy to commit mail fraud as part of a joint investigation by the FBI and the antitrust division of the Justice Department.
Investigators say the men conspired or made payoffs from 2008 through 2011 so they would not bid against each other for properties sold at foreclosure auctions in Alameda and Contra Costa counties. After one bought a property at an artificially low price, they would hold a private auction among themselves to resell it and split the extra money paid by the winning bidder.
advertisement | your ad here
"While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors," said Christine Varney, assistant attorney general in charge of the antitrust division, in a prepared statement.
The felony charges were filed in U.S. District Court for the Northern District of California, in Oakland. Court records did not list attorneys for the defendants or indicate whether they were in custody; court personnel said the cases were newly filed and they could not provide any information about them.
The men charged were:
_ Thomas Franciose, of San Francisco
_ William Freeborn, of Alamo
_ Robert Kramer, of Oakland
_ Thomas Legault, of Clayton
_ David Margen, of Berkeley
_ Brian McKinzie, of Hayward
_ Jaime Wong, of Dublin
_ Jorge Wong, of San Leandro
No Justice Department spokesperson could be reached to clarify whether the men were in custody, when they might enter a plea, their ages or other details. An FBI spokeswoman referred questions to the Justice Department.
Investigators said in a prepared statement that the charges were part of an ongoing investigation into collusion by real estate investors in foreclosure sales, both in Northern California and elsewhere.
In March, federal prosecutors said Yama Marifat of Pleasanton had pleaded guilty to conspiring to rig bids at foreclosure auctions in San Joaquin County, about 50 miles east of the Bay Area and one of the areas hardest hit by the housing bust. The scheme described was similar to that cited in the charges filed Thursday.
At the time, investigators said Marifat was the fifth person to plead guilty in connection with the probe, and he faced up to 10 years in prison for bid rigging and 30 years for conspiracy to commit mail fraud, plus fines of as much as $2 million.
It was unclear whether the new case was related to the earlier investigation.
Tuesday, June 28, 2011
Freddie Mac: Better Days Ahead in Housing
Freddie Mac’s chief economist is optimistic that the housing market and economy will improve in the second half of 2011.
Freddie Mac Chief Economist Frank Nothaft said mortgage rates will likely remain historical lows of between 4.5 percent and 5 percent for the remainder of the year. Also, he expects more buyers to stop waiting on the sidelines as recent price drops in home prices have improved affordability.
Nothaft said consumers’ uncertainty about the economy has caused them to delay home purchases and other “big-ticket items.”
"Some potential buyers who have the means to buy are awaiting clearer signs that home values have firmed," Nothaft says.
But Nothaft says they should be getting their signs in the second half of the year, with projected job gains, and a growing, improved economy.
"Even though near-term concerns over income and sales growth are restraining consumer spending, business hiring, and new building, a number of positive signs in the economy indicate that growth will continue and is likely to accelerate in the second half of this year," Nothaft said. "Look for a gradual improvement in housing activity in the coming year.”
Source: “Freddie Mac Economist Sees Sunny Economy in Second Half,” HousingWire (June 27, 2011)
Freddie Mac Chief Economist Frank Nothaft said mortgage rates will likely remain historical lows of between 4.5 percent and 5 percent for the remainder of the year. Also, he expects more buyers to stop waiting on the sidelines as recent price drops in home prices have improved affordability.
Nothaft said consumers’ uncertainty about the economy has caused them to delay home purchases and other “big-ticket items.”
"Some potential buyers who have the means to buy are awaiting clearer signs that home values have firmed," Nothaft says.
But Nothaft says they should be getting their signs in the second half of the year, with projected job gains, and a growing, improved economy.
"Even though near-term concerns over income and sales growth are restraining consumer spending, business hiring, and new building, a number of positive signs in the economy indicate that growth will continue and is likely to accelerate in the second half of this year," Nothaft said. "Look for a gradual improvement in housing activity in the coming year.”
Source: “Freddie Mac Economist Sees Sunny Economy in Second Half,” HousingWire (June 27, 2011)
Tuesday, June 21, 2011
Existing-Home Sales Decline in May with Market Constraints, Temporary Conditions
Article from NAR (National Association of Realtors)
Washington, DC, June 21, 2011
Existing-home sales were down in May as temporary factors and financing problems weighed on the market, according to the National Association of Realtors®.
Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 3.8 percent to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5.00 million in April, and are 15.3 percent below a 5.68 million pace in May 2010 when sales were surging to beat the deadline for the home buyer tax credit.
Lawrence Yun, NAR chief economist, said temporary factors held back the market in May, as implied from prior data on contract signings. “Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,” he said. “Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year.”
Yun said the market also is being constrained by the lending community. “Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards,” he said. “There’s been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction – this overreaction is clearly holding back the recovery.”
There were notable regional differences in home sales. “A large decline in Midwestern existing-home sales can be attributed partly to the flooding and other severe weather patterns that occurred, but this also implies a temporary nature of soft market activity,” Yun explained.
The national median existing-home price2 for all housing types was $166,500 in May, down 4.6 percent from May 2010. Distressed homes3 – typically sold at a discount of about 20 percent – accounted for 31 percent of sales in May, down from 37 percent in April; they were 31 percent in May 2010.
“The price decline could be diminishing, as buyers recognize great bargain prices and the highest affordability conditions in 40 years; this will help mitigate further price drops,” Yun said.
“Home prices are rising or very stable in local markets with improved employment conditions, such as in North Dakota, Alaska, Washington, D.C., and many parts of Texas,” Yun noted.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a number of proposals being considered in Washington could further jeopardize the housing recovery. “We’re concerned about the flow of available capital, including a possible rule that would effectively raise minimum downpayment requirements to 20 percent,” he said. “We don’t need to throw the baby out with the bath water – increasing downpayment requirements would effectively shut many qualified families out of the market. What we critically need is a return to the basics of providing safe mortgages to creditworthy buyers willing to stay well within their budget.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.64 percent in May, down from 4.84 percent in April; the rate was 4.89 percent in May 2010. “Although low mortgage interest rates are welcome, they are less meaningful compared to the tightness of loan underwriting standards,” Yun noted.
Total housing inventory at the end of May fell 1.0 percent to 3.72 million existing homes available for sale, which represents a 9.3-month supply4 at the current sales pace, up from a 9.0-month supply in April.
All-cash transactions stood at 30 percent in May, down from 31 percent in April; they were 25 percent in May 2010; investors account for the bulk of cash purchases.
First-time buyers purchased 35 percent of homes in May, down from 36 percent in April; they were 46 percent in May 2010 when the tax credit was in place. Investors accounted for 19 percent of purchase activity in May compared with 20 percent in April; they were 14 percent in May 2010.
Single-family home sales declined 3.2 percent to a seasonally adjusted annual rate of 4.24 million in May from 4.38 million in April, and are 15.4 percent below a surge to 5.01 million one year ago. The median existing single-family home price was $166,700 in May, down 4.5 percent from May 2010.
Existing condominium and co-op sales fell 8.1 percent to a seasonally adjusted annual rate of 570,000 in May from 620,000 in April, and are 14.7 percent below the 668,000-unit pace in May 2010. The median existing condo price5 was $165,400 in May, which is 5.8 percent below a year ago.
Regionally, existing-home sales in the Northeast declined 2.5 percent to an annual level of 770,000 in May and are 13.5 percent below May 2010. The median price in the Northeast was $241,500, up 6.1 percent from a year ago.
Existing-home sales in the Midwest dropped 6.4 percent in May to a pace of 1.02 million and are 22.7 percent below a year ago. The median price in the Midwest was $136,400, which is 8.5 percent below May 2010.
In the South, existing-home sales fell 5.1 percent to an annual level of 1.85 million in May and are 14.4 percent below May 2010. The median price in the South was $149,200, down 3.1 percent from a year ago.
Existing-home sales in the West were unchanged at an annual pace of 1.17 million in May but are 10.0 percent lower than a year ago. The median price in the West was $192,300, which is 12.6 percent below May 2010.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
# # #
NOTE: NAR also tracks monthly comparisons of existing single-family home sales and median prices for select metropolitan statistical areas, which is posted with other tables at: www.realtor.org/research/research/ehsdata. For information on areas not included in the report, please contact the local association of Realtors®.
1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 to 90 percent of total home sales, are based on a much larger sample – more than 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
Benchmark Revisions: All major statistical data series go through periodic reviews and revisions to ensure that sampling and methodology keep up with changes in the market, such as population changes in sampled areas, to ensure accuracy. NAR began its normal process for benchmarking sales earlier this year; there will be no change to median prices. In the past we’ve benchmarked to the decennial Census, most recently to the 2000 Census, because it included home sales data. However, the data are no longer included in the Census, so we’re looking at more frequent benchmarking using a new approach with independent sources to improve our process and modeling. As always, we are consulting with various outside housing economists, government agencies and academic experts for a consensus on the methodology; NAR is committed to providing accurate, reliable data. Publication of the revisions is expected this summer; we will notify a month in advance of the publication date.
2The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.
3Distressed sales, first-time buyers, investors, contract cancellations and all-cash transactions are from a survey for the Realtors® Confidence Index, posted at Realtor.org.
4Total inventory and month’s supply data are available back through 1999, while single-family inventory and month's supply are available back to 1982 (prior to 1999, condos were measured quarterly while single-family sales accounted for more than 90 percent of transactions).
5Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.
The Pending Home Sales Index for May will be released June 29, and existing-home sales for June is scheduled for July 20; release times are 10:00 a.m. EDT.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data in this release, other tables and surveys also may be found by clicking on Research.
REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.
Washington, DC, June 21, 2011
Existing-home sales were down in May as temporary factors and financing problems weighed on the market, according to the National Association of Realtors®.
Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 3.8 percent to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5.00 million in April, and are 15.3 percent below a 5.68 million pace in May 2010 when sales were surging to beat the deadline for the home buyer tax credit.
Lawrence Yun, NAR chief economist, said temporary factors held back the market in May, as implied from prior data on contract signings. “Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,” he said. “Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year.”
Yun said the market also is being constrained by the lending community. “Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards,” he said. “There’s been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction – this overreaction is clearly holding back the recovery.”
There were notable regional differences in home sales. “A large decline in Midwestern existing-home sales can be attributed partly to the flooding and other severe weather patterns that occurred, but this also implies a temporary nature of soft market activity,” Yun explained.
The national median existing-home price2 for all housing types was $166,500 in May, down 4.6 percent from May 2010. Distressed homes3 – typically sold at a discount of about 20 percent – accounted for 31 percent of sales in May, down from 37 percent in April; they were 31 percent in May 2010.
“The price decline could be diminishing, as buyers recognize great bargain prices and the highest affordability conditions in 40 years; this will help mitigate further price drops,” Yun said.
“Home prices are rising or very stable in local markets with improved employment conditions, such as in North Dakota, Alaska, Washington, D.C., and many parts of Texas,” Yun noted.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a number of proposals being considered in Washington could further jeopardize the housing recovery. “We’re concerned about the flow of available capital, including a possible rule that would effectively raise minimum downpayment requirements to 20 percent,” he said. “We don’t need to throw the baby out with the bath water – increasing downpayment requirements would effectively shut many qualified families out of the market. What we critically need is a return to the basics of providing safe mortgages to creditworthy buyers willing to stay well within their budget.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.64 percent in May, down from 4.84 percent in April; the rate was 4.89 percent in May 2010. “Although low mortgage interest rates are welcome, they are less meaningful compared to the tightness of loan underwriting standards,” Yun noted.
Total housing inventory at the end of May fell 1.0 percent to 3.72 million existing homes available for sale, which represents a 9.3-month supply4 at the current sales pace, up from a 9.0-month supply in April.
All-cash transactions stood at 30 percent in May, down from 31 percent in April; they were 25 percent in May 2010; investors account for the bulk of cash purchases.
First-time buyers purchased 35 percent of homes in May, down from 36 percent in April; they were 46 percent in May 2010 when the tax credit was in place. Investors accounted for 19 percent of purchase activity in May compared with 20 percent in April; they were 14 percent in May 2010.
Single-family home sales declined 3.2 percent to a seasonally adjusted annual rate of 4.24 million in May from 4.38 million in April, and are 15.4 percent below a surge to 5.01 million one year ago. The median existing single-family home price was $166,700 in May, down 4.5 percent from May 2010.
Existing condominium and co-op sales fell 8.1 percent to a seasonally adjusted annual rate of 570,000 in May from 620,000 in April, and are 14.7 percent below the 668,000-unit pace in May 2010. The median existing condo price5 was $165,400 in May, which is 5.8 percent below a year ago.
Regionally, existing-home sales in the Northeast declined 2.5 percent to an annual level of 770,000 in May and are 13.5 percent below May 2010. The median price in the Northeast was $241,500, up 6.1 percent from a year ago.
Existing-home sales in the Midwest dropped 6.4 percent in May to a pace of 1.02 million and are 22.7 percent below a year ago. The median price in the Midwest was $136,400, which is 8.5 percent below May 2010.
In the South, existing-home sales fell 5.1 percent to an annual level of 1.85 million in May and are 14.4 percent below May 2010. The median price in the South was $149,200, down 3.1 percent from a year ago.
Existing-home sales in the West were unchanged at an annual pace of 1.17 million in May but are 10.0 percent lower than a year ago. The median price in the West was $192,300, which is 12.6 percent below May 2010.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
# # #
NOTE: NAR also tracks monthly comparisons of existing single-family home sales and median prices for select metropolitan statistical areas, which is posted with other tables at: www.realtor.org/research/research/ehsdata. For information on areas not included in the report, please contact the local association of Realtors®.
1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 to 90 percent of total home sales, are based on a much larger sample – more than 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
Benchmark Revisions: All major statistical data series go through periodic reviews and revisions to ensure that sampling and methodology keep up with changes in the market, such as population changes in sampled areas, to ensure accuracy. NAR began its normal process for benchmarking sales earlier this year; there will be no change to median prices. In the past we’ve benchmarked to the decennial Census, most recently to the 2000 Census, because it included home sales data. However, the data are no longer included in the Census, so we’re looking at more frequent benchmarking using a new approach with independent sources to improve our process and modeling. As always, we are consulting with various outside housing economists, government agencies and academic experts for a consensus on the methodology; NAR is committed to providing accurate, reliable data. Publication of the revisions is expected this summer; we will notify a month in advance of the publication date.
2The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.
3Distressed sales, first-time buyers, investors, contract cancellations and all-cash transactions are from a survey for the Realtors® Confidence Index, posted at Realtor.org.
4Total inventory and month’s supply data are available back through 1999, while single-family inventory and month's supply are available back to 1982 (prior to 1999, condos were measured quarterly while single-family sales accounted for more than 90 percent of transactions).
5Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.
The Pending Home Sales Index for May will be released June 29, and existing-home sales for June is scheduled for July 20; release times are 10:00 a.m. EDT.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data in this release, other tables and surveys also may be found by clicking on Research.
REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.
Thursday, June 16, 2011
Investors Moving Foreclosures Faster Than Banks Along West Coast
From: DSNews.com
Written by: Carrie Bay
Third-party investors are reselling foreclosure properties they’ve scooped up at auction at a rapid pace in states along the country’s Western seaboard. In fact, they’re moving distressed homes faster than lenders, according to a local tracking firm.
ForeclosureRadar, based out of Discovery Bay, California, keeps tabs on every foreclosure and provides daily auction updates for its coverage area, which encompasses Arizona, California, Nevada, Oregon, and Washington.
The company says the one consistent market statistic in all five states during the month of May was a drop in how long it’s taking foreclosure auction investors to offload properties.
“While we believe this is partially due to finally seeing some spring selling activity, we think it has more to do with an overall lack of quality, affordable homes for sale,” said Sean O’Toole, CEO of ForeclosureRadar.
Based on the firm’s market data, the average number of days between an investor’s purchase of the property at foreclosure auction in Arizona, and when the property was resold, was 95 days in May. That’s a drop of more than 10 percent from the month before, and contrasts with the average resell timeline of 150 days for banks.
In California, investors are offloading foreclosed homes in 134 days on average, versus 227 for banks.
In the foreclosure hotbed of Nevada, it’s taking investors an average of 102 days to resell homes, while banks are holding onto a property for 177 days before it sells.
In Oregon, time-to-resell is 122 days for foreclosure investors, compared to 208 days for banks.
Washington saw a similar divergence, though its investor timeline was the longest of all five states. There, investors are able to turn around and sell foreclosure properties in 164 days on average, versus 212 days for banks.
Looking at ForeclosureRadar’s historical data, the resell timelines for investors and banks were separated by fewer than 8 days as recently as February in Washington and Oregon, and fewer than 20 days in Nevada as recently as January.
According to O’Toole, investors have become better at turning a foreclosure into a marketable property that attracts buyer interest. He also points to the fact that delays in the foreclosure process from recent robo-signing reviews and moratoriums have left fewer affordable homes available for sale.
“Foreclosure investors may be the only winner so far,” O’Toole said, “benefitting by being able to resell homes purchased at foreclosure auction a little more quickly.”
Overall foreclosure filing activity along the West Coast was down in May, according to ForeclosureRadar.
The company tracked fewer filings in all states except California, where there was an increase in notices of trustee sale and likely signals more foreclosure sales in the state in the months ahead.
Activity on the courthouse steps was mixed, with California the only state to have increases in foreclosure sales both back to the bank and sold to third-party investors.
After recording a jump in foreclosure cancellations across the board in April, ForeclosureRadar says there was a reversal of this trend in May. Cancellations dropped significantly last month in California, Nevada, and Washington. They declined moderately declined in Arizona, and increased in Oregon.
Time-to-foreclose set a record in California last month, taking an average of 344 days. However the length of the foreclosure process declined in Nevada, Oregon, and Washington, and was up just two days in Arizona.
Written by: Carrie Bay
Third-party investors are reselling foreclosure properties they’ve scooped up at auction at a rapid pace in states along the country’s Western seaboard. In fact, they’re moving distressed homes faster than lenders, according to a local tracking firm.
ForeclosureRadar, based out of Discovery Bay, California, keeps tabs on every foreclosure and provides daily auction updates for its coverage area, which encompasses Arizona, California, Nevada, Oregon, and Washington.
The company says the one consistent market statistic in all five states during the month of May was a drop in how long it’s taking foreclosure auction investors to offload properties.
“While we believe this is partially due to finally seeing some spring selling activity, we think it has more to do with an overall lack of quality, affordable homes for sale,” said Sean O’Toole, CEO of ForeclosureRadar.
Based on the firm’s market data, the average number of days between an investor’s purchase of the property at foreclosure auction in Arizona, and when the property was resold, was 95 days in May. That’s a drop of more than 10 percent from the month before, and contrasts with the average resell timeline of 150 days for banks.
In California, investors are offloading foreclosed homes in 134 days on average, versus 227 for banks.
In the foreclosure hotbed of Nevada, it’s taking investors an average of 102 days to resell homes, while banks are holding onto a property for 177 days before it sells.
In Oregon, time-to-resell is 122 days for foreclosure investors, compared to 208 days for banks.
Washington saw a similar divergence, though its investor timeline was the longest of all five states. There, investors are able to turn around and sell foreclosure properties in 164 days on average, versus 212 days for banks.
Looking at ForeclosureRadar’s historical data, the resell timelines for investors and banks were separated by fewer than 8 days as recently as February in Washington and Oregon, and fewer than 20 days in Nevada as recently as January.
According to O’Toole, investors have become better at turning a foreclosure into a marketable property that attracts buyer interest. He also points to the fact that delays in the foreclosure process from recent robo-signing reviews and moratoriums have left fewer affordable homes available for sale.
“Foreclosure investors may be the only winner so far,” O’Toole said, “benefitting by being able to resell homes purchased at foreclosure auction a little more quickly.”
Overall foreclosure filing activity along the West Coast was down in May, according to ForeclosureRadar.
The company tracked fewer filings in all states except California, where there was an increase in notices of trustee sale and likely signals more foreclosure sales in the state in the months ahead.
Activity on the courthouse steps was mixed, with California the only state to have increases in foreclosure sales both back to the bank and sold to third-party investors.
After recording a jump in foreclosure cancellations across the board in April, ForeclosureRadar says there was a reversal of this trend in May. Cancellations dropped significantly last month in California, Nevada, and Washington. They declined moderately declined in Arizona, and increased in Oregon.
Time-to-foreclose set a record in California last month, taking an average of 344 days. However the length of the foreclosure process declined in Nevada, Oregon, and Washington, and was up just two days in Arizona.
Monday, June 13, 2011
Short Sales and TALL Lies!
One of the biggest problems we run into, as Realtors, is other Realtors listing homes at ridiculously low prices with the appearance that someone can actually purchase the home at an extremely LOW price. This creates many problems that hurt the market:
1. Price expectations in neighborhoods are lowered causing lower offers and drives the market down even further.
2. Buyers are afraid to buy homes listed at value because of 1 short sale home in the area that is advertising an unrealistic low price.
3. Buyers have the impression that they can buy a home for a price advertised on the MLS. Many buyers don't realize that the price listed on a short sale is a "pie in the sky" hope that maybe the bank will accept the offer. In reality, when an offer is placed on a short sale, the bank may take several months to respond to the offer. Once the bank responds, many times the banks demand a higher price. For example, an agent lists a home in a neighborhood for $200,000 (even though similar homes are selling for $300,000). A buyer makes an offer of $200,000 and waits 6 months for the bank to respond to the offer. The bank comes back with a counter offer of $300,000. The buyer has wasted 6 months waiting for a response and then the bank responds with a price more in line with the market. The disappointed buyer can start the process all over on another short sale home or chose to buy a home that is not a short sale with a "real" price.
3. Listing Agents are so tired of spending months trying to sell a short sale home and then the deal falls through because the buyer is tired of waiting for a response from the bank. Many listing agents are now requiring a non-refundable earnest money to be deposited for 90 days in case the buyer chooses to buy a different home than the home they put an offer on. This ties up the buyer so if a really good deal (not a short sale) comes on the market, they cannot put an offer on it without losing their earnest money.
To be honest, I think the best way to make an offer on a home is by putting an offer on a home with a real price! Buy a new home or a resale home or a foreclosed home that you know the price is realistic. Don't waste your time playing games with the banks that they might actually be reasonable (well... what you think is reasonable). Banks are in business to make money- not help you get a screaming deal on a home. Go with something real and enjoy the home buying process!
Matt Carter did a great job explaining in his article below about some of the false appearances some real estate agents give in selling real estate.
Washington short-sale brokers could lose licenses
Real estate team accused of false advertising, underpricing listings
Matt Carter
Inman News™
A prominent short-sale broker and his wife could be barred from practicing real estate for 10 years, after an administrative law judge affirmed six of 10 alleged license violations filed against them by the state of Washington's Department of Licensing.
Washington regulators suspended the licenses of designated broker Michael Hellickson, his wife Tara Hellickson, also a broker, and their Pierce County-based brokerage, Hellickson.com Inc., without a hearing in September after receiving more than two dozen complaints about their practices.
A superior court judge reinstated all three licenses in October, pending the outcome of a hearing by an administrative law judge.
After a 10-day hearing in February and March in which the Department of Licensing called more than two dozen witnesses, Administrative Law Judge Terry A. Schuh affirmed six of the 10 alleged violations filed against the Hellicksons, and half of the 10 alleged violations lodged against their firm.
An attorney for the Hellicksons has filed a petition for review of Schuh's May 11 initial order. The Hellicksons' licenses remain in force while Schuh considers the issues raised in the petition and the Department of Licensing's response.
If the Hellicksons' petition is unsuccessful, the Department of Licensing will have 90 days from the May 11 initial order to revoke their licenses.
Michael and Tara Hellickson would then have the option of going back to Superior Court to challenge their license suspensions.
Schuh found that the Hellicksons and their firm engaged in a "pattern and practice" of listing homes at artificially reduced prices that didn't accurately reflect what the owner was willing to accept, in the hopes of generating multiple offers.
The Hellicksons misrepresented that they would buy homes listed with them that did not sell within 30 days, and that Michael Hellickson engaged in false advertising when he claimed to be the No. 1 agent in Washington, Oregon and Hawaii, Schuh ruled.
The Hellickson Team also "engaged in a pattern and practice of negligent and dilatory communications with homeowners, potential buyers, and lenders" by not responding to phone calls and e-mails in a timely fashion, resulting in unreasonable risk of harm to their clients, according to the ruling.
The administrative law judge also affirmed findings that Michael and Tara Hellickson drafted addendums to purchase and sale agreements requiring that buyers prequalify with one of two or three specific lenders, even though their clients had not requested or authorized such a requirement. Although the agreements were signed or initialed by sellers, Schuh found that such authorization was "uninformed," because the addendums were not requested by homeowners or discussed with them.
On the other hand, Schuh found that the Department of Licensing had not proved allegations that the Hellicksons encouraged homeowners to stop making their mortgage payments, or told them they were required to vacate their homes before they were legally required to do so.
The Department of Licensing also failed to prove allegations that the Hellicksons instituted automatic price reductions without authorization by the sellers, Schuh said in a May 11 initial order, setting those findings aside.
Although Schuh ruled that the Hellicksons had, in fact, failed to provide copies of executed listing agreements to homeowners as alleged, he set aside charges that the couple engaged in a "pattern and practice" of misrepresenting the contents of listing agreements, such as their term.
Hellickson, who's also known for the short-sale and REO (bank-owned property) coaching seminars he offers nationwide through another company, Club Wealth Inc., said he expects to prevail in his two-year battle with the Department of Licensing.
His refusal to turn over records sought by the Department of Licensing, he said, "stirred up the hornet's nest," and department staff seemed determined "to dig up anything I'd done wrong."
Clients, agents testify at hearings
To make its case against the Hellicksons, the Department of Licensing filed 296 exhibits and called 27 witnesses to testify, including former Hellickson Team employees and nearly a dozen past clients. Also testifying were several real estate agents who represented prospective buyers, and a Wells Fargo liquidation manager.
When the department brought charges against the Hellicksons and suspended their licenses in September, they had 400-500 listings, more than 200 of which were pending, Michael Hellickson testified.
In 2009 and 2010, about half the listings represented by the Hellicksons -- who conducted their business as "The Hellickson Team" -- were short sales, and the other half REOs.
The department received 37 complaints about the Hellicksons -- about 10 of which were filed after the department filed charges. The complaints referenced either Michael Hellickson or his team, but the Department of Licensing said it also sought to revoke Tara Hellickson's license because she was the co-listing agent on all of the listing agreements.
The department stopped communicating with the Hellicksons after receiving a Dec. 2, 2009, letter from their attorney, Douglas Tingvall, informing the department that the couple would no longer provide information or documents to the department because such requests allegedly violated their Fourth Amendment protections against unlawful search and seizure.
In his petition for review of Schuh's initial order, Tingvall said Michael Hellickson is "an innovator and a leader" in the short-sale business, and that innovators "become targets for competitors and regulators, who often do not understand or lag behind a rapidly changing environment." In the past, license revocations of five years or more have been the result of "criminal acts, serious moral turpitude, fraud, theft or other intentional mishandling of client funds," he said. The Hellicksons "were not found to have done any of these things."
A "disinterested observer" could conclude that regulators went on a "witch hunt" only to retaliate for the Hellicksons' refusal to provide records without a warrant or determination of probable cause, Tingvall argued.
The Department of Licensing, meanwhile, maintained that a 10-year license suspension, although "severe" and "rare," was justified because the Hellicksons allegedly committed a large number of violations, many violations were repeated, and they did not cooperate with the investigation or acknowledge or attempt to correct their conduct. Listing homes at artificially low prices was a serious enough violation that it, alone, might have resulted in a 10-year revocation, the administrator of the department's real estate unit, Jerry McDonald, testified.
30-day sale program
The Hellicksons' radio advertisements, for-sale signs, and website promised that they would purchase their clients' homes or sell them at no commission if they did not sell within 30 days. Although the ads noted that some restrictions applied, no ad said the 30-day program did not apply to short sales, Schuh found.
Schuh found that the purpose of the ads was to generate leads and listing agreements. The Hellickson Team, he determined, "had no intention of buying homes at anything close to market price."
Two agents employed by the Hellickson Team, Joe Toner and Jon Ryan Geersten, testified that they used a script when scheduling listing appointments that mentioned the 30-day offer. Geersten testified that when he expressed reservations about the offer, Michael Hellickson told him that the offer was contingent on the seller accepting a sale price that was 50 percent of market value.
Hellickson testified that the 30-day offer could not apply to short sales, because lenders would not accept such a low offer. He also testified that he had not purchased any homes under the 30-day sale program since 2008.
In his petition for review, Tingvall argued that there was "nothing false, deceptive or misleading" about the Hellicksons' 30-day sale program. The Department of Licensing offered no evidence that any consumers relied on it, Tingvall said, or that the Hellicksons refused to purchase any eligible homes.
The Hellicksons were under no legal obligation to post the restrictions that applied to the program on their website or in their newsletter, their lawyer maintained. "Obviously, (the Hellicksons) hoped that prospective clients would call them to ask about their services," the Hellicksons' lawyer argued in the petition for review. "The purpose of any advertising by a real estate broker is to generate calls and personal appointments."
False advertising
Tingvall noted that the Department of Licensing offered no evidence to refute Michael Hellickson's claim that no other agent did more business in Washington, Oregon or Hawaii in 2009 or 2010, or that he was not the leading expert on short sales in those states.
But Schuh found that the Hellickson was never licensed in Oregon or Hawaii, and would simply refer business in those states to someone who was. The Hellickson Team also advertised a loan company that "was not functional," and Michael Hellickson's license to originate loans and the license of the mortgage firm it was associated with had both expired.
Listing prices
Schuh said it was undisputed that the Hellicksons obtained authorization from their clients to make "substantial, arbitrary price reductions, usually every two weeks, simply because the home had not generated offers." The price reductions were "aggressive and frequent," and "apparently the prices were below what the lender would accept," Schuh wrote. "The implication is that (the defendants) were more interested in generating offers than they were in realistic pricing."
In November 2008, for example, The Hellickson Team listed the home of Dan and Kathleen Streight for $275,000. The asking price was then reduced at two-week intervals in increments of $25,000, to $175,000 by the week before Christmas.
"When Dan Streight learned from a real estate agent that the price on his home had dropped to $175,000, he and his wife were shocked because the lien holder had told Mr. Streight that (the lender) would not accept less than $240,000," Schuh wrote, citing Streight's testimony at the hearing.
Schuh found that the Hellicksons "engaged in a pattern and practice of listing homes at artificially reduced prices" in order to generate "multiple lowball offers." But he also determined that the preponderance of the evidence showed that the Hellicksons were authorized to do so by sellers through signed, preauthorized, price-reduction forms.
The Streights testified that they had verbally agreed to a series of $20,000 price reductions every two weeks. Although they did not discuss a bottom price, the Streights said they understood they would be notified in advance of any price reduction. They also claimed a price-reduction authorization form they signed was blank. The form, introduced as evidence at the hearing, called for price reductions of $25,000 every two weeks.
Michael Hellickson testified that the price-reduction authorizations he provided to short-sale clients were always completed at listing appointments. The Streights did not ask him to provide advance notice of price reductions, he testified, and he had not offered to do so. Schuh said he found Hellickson's testimony credible.
In another instance, the asking price on a condo the Hellicksons listed at $175,000 in September 2008 was reduced several times in two months, to $75,000, before bouncing back to $117,000 by the following February. The owner, Richard Smith, testified that he had agreed to lesser price reductions, that the form he signed authorizing price reductions was blank, and that his calls to the Hellickson Team office about price reductions were not returned.
Toner, the former Hellickson Team agent, testified that he was instructed to convince sellers to sign price-reduction forms with reductions of at least $25,000 every two weeks, but said he was never told to have clients sign blank price-reduction forms. Toner testified that when he started working with the Hellicksons in August 2009, listing prices were determined using comparative market analyses (CMAs) produced by Tara Hellickson.
But after a few months, Toner testified at the hearing, he was told to list homes for the amount owed to the lender. He said he continued to prepare his own CMAs to fulfill his responsibilities to the seller. Toner said no additional market research was done before preapproved price reductions were applied.
Michael Hellickson testified that he took a comparative market analysis (CMA) with him to each listing appointment, but that it was not his practice to perform a CMA before every price reduction.
An expert witness for the Department of Licensing, real estate agent Allison Ybarra, said preapproved price-reduction agreements are not, in themselves, violations of state licensing law.
The Hellicksons' pricing practices generated a number of complaints to their multiple listing service, Northwest Multiple Listing Service (NWMLS), most alleging that the asking price of a listing was not a good faith reflection of what the seller would accept, or that the lender would approve.
Justin Haag, NWMLS' director of policy and forms, testified that the MLS did not add the term "good faith" to rules governing the pricing of listings until the summer of 2009.
Haag testified that NWMLS had received 40 complaints about the Hellickson Team since 2004, most of them regarding pricing. A total of 18 complaints resulted in disciplinary action by the MLS against the Hellickson Team in 2009 and 2010 -- or about 3 percent of the Hellickson Team's sales in those years.
In his petition for review of Schuh's initial order, Tingvall said nothing in real estate licensing law prohibits preapproval for price reductions, and the department "has no business interfering with private contracts between brokers and competent adults." He also argued, "Short sales are different than typical retail sales … The department is out of touch with current trends and practices. Doing things differently is not the same as doing things negligently," he argued.
Listing agreements
The Hellickson Team office "was disorganized and inefficient," Schuh said in explaining how he was "persuaded that it repeatedly failed to provide clients with copies of the executed listing agreement" -- a breach of reasonable skill and care.
In his petition for review, Tingvall said evidence presented by the Department of Licensing on whether the Hellicksons failed to provide copies of listing agreements to sellers was "equivocal and unpersuasive."
And Schuh was not convinced that the Hellickson Team engaged in a pattern and practice of misrepresenting the terms of the listing agreement to clients, as alleged by the Department of Licensing.
One couple who had originally wanted a three- to six-month listing agreement, William and Kathleen Cody, said they were later surprised when a buyer's agent informed them that the listing agreement they signed in March 2009 would not expire until Dec. 31, 2013. William Cody said he did not read the listing agreement before signing it, but that parts were left blank -- a claim also made by other clients.
Michael Hellickson testified that any handwritten additions to listing agreements were added at the time of the listing appointment, and that nothing was added later. Hellickson said his listing agreements were typically for three to four years, to give him enough time to complete a short sale. Hellickson testified that he didn't want to make an investment in marketing a house only to have the seller relist with another agent.
In an audio recording advertising Hellickson's coaching seminars, which was introduced as evidence at the hearing, Hellickson said his listing appointments typically lasted 32 to 37 minutes, and that by the end of each appointment he had obtained a signed listing agreement, preapproved price-reduction form, and disclosure and other documents.
In the recording, Hellickson said he was able to obtain 50 to 75 listings a month, exercising "dominance" over clients using an approach he compared to "a trainer whacking a dog as hard as possible." Hellickson said he would bring four pens to listing appointments, because that would save eight minutes.
Michael Hellickson's former personal assistant, Theresa Jenkins, testified at the hearing that listing agreements and price-reduction authorizations were not always completed at appointments. Jenkins said she regularly saw signed listing agreements with blanks that had not been filled in.
There were several agents working for the Hellickson Team, she said, and she did not know which agents were not having clients complete documents at listing appointments.
Schuh found that while it was the Hellickson Team's "best practice" to complete listing agreements before obtaining clients' signatures, "compliance with this practice was not 100 percent."
Explanations of what was in the listing agreements was "likely sparse because Michael Hellickson had neither the time nor the inclination to volunteer to do so," Schuh wrote. "However, the sellers must take some responsibility to review a document for blanks before signing and to ask to be shown where provisions of particular concern to them were addressed."
Communication with clients
Schuh also found that the Hellickson Team's poor communications with clients, potential buyers, and lenders placed their clients "at unreasonable risk of harm or prejudice."
Toner testified that the Hellickson Team office was disorganized and hectic, causing delays in response to purchase offers and complaints from clients that office staff members were rude and nonresponsive.
Jenkins testified that files would go missing and that documents were not properly maintained, labeled and stored.
Joyce Watts, a real estate agent formerly employed by the Hellicksons, testified that she was under the impression that the Hellickson Team's office was understaffed and overwhelmed by the volume of business it did.
Monika Peltz, a Wells Fargo liquidations manager who was involved in the attempted short sale of the Streight's home, testified that the lender did not get offers on the home until they were nearly two months old, and never received all of the documents it needed.
Kathleen Streight testified that she was told by other Realtors that there were five or six offers on her home, but that buyer's agents could not get any information from the Hellickson Team on the status of their offers. Streight said that at one point, she left 10 voice mail messages with the Hellickson Team but did not receive a callback. Condo owner Richard Smith, too, testified that communication was spotty and his frequent calls were not returned.
Washington's real estate licensing law requires that real estate brokers "present all written offers, written notices and other written communications" between parties "in a timely manner."
But Tingvall noted that the Hellicksons were not accused of violating that provision of the licensing law. Instead, the Hellicksons were accused of violating more general statutes that address incompetence and negligence over their alleged failure to return phone calls in a timely fashion.
Returning phone calls might be a courtesy to the client, as Ybarra testified, "but it is not a legal requirement of real estate licensing law," Tingvall argued.
Wells Fargo could have lost or misplaced the short-sale packet they were originally sent, Tingvall said in his petition for review. The Streights, he said, ultimately elected to pursue a loan modification and "were not harmed by any alleged delay in presenting offers" to the bank, he said.
For short-sale specialists, communications with sellers and banks are among the biggest challenges, Tingvall said, as banks are backlogged with files and may take months to respond to an offer, and homeowners may themselves be unresponsive.
Preferred lenders
Schuh also affirmed the Department of Licensing's findings that without being asked to do so or authorized by their clients, the Hellicksons, through addendums to purchase and sale agreements, required that buyers prequalify with one of two or three specific lenders.
Michael Hellickson testified that the purpose of the requirement was to get a quick determination from a reliable lender that the buyer would qualify for a loan, before investing resources in a transaction that would only fall through. Hellickson said his brokerage did not receive any compensation for referring buyers to certain lenders for prequalification. Hellickson said the prequalification of buyers by preferred lenders was explained at listing appointments. But several clients said they had not discussed the requirement with Hellickson and did not read prequalification addendums they signed or initialed.
Failing to discuss any addendum with the client -- or representing that a requirement has been requested by the seller, when it has not -- is a violation of "reasonable skill and care" provisions of state licensing law, Ybarra and another real estate agent, Rebecca Beaty, testified.
But the federal Real Estate Settlement Procedures Act (RESPA) doesn't bar sellers or brokers from asking borrowers to prequalify with a preferred lender, Tingvall noted, as long as buyers aren't required to obtain loans from those lenders, and pay no fee for prequalification. Sellers or brokers can even require such prequalification by lenders that they have an affiliated business arrangement with, Tingvall said.
The Hellicksons would simply recommend that sellers request buyers to prequalify with one of the Hellicksons' preferred lenders, "a perfectly lawful and prudent request," Tingvall said.
In the Hellicksons' view, Tingvall said, prequalification by a known lender was "was more reliable and provided better security for their sellers."
1. Price expectations in neighborhoods are lowered causing lower offers and drives the market down even further.
2. Buyers are afraid to buy homes listed at value because of 1 short sale home in the area that is advertising an unrealistic low price.
3. Buyers have the impression that they can buy a home for a price advertised on the MLS. Many buyers don't realize that the price listed on a short sale is a "pie in the sky" hope that maybe the bank will accept the offer. In reality, when an offer is placed on a short sale, the bank may take several months to respond to the offer. Once the bank responds, many times the banks demand a higher price. For example, an agent lists a home in a neighborhood for $200,000 (even though similar homes are selling for $300,000). A buyer makes an offer of $200,000 and waits 6 months for the bank to respond to the offer. The bank comes back with a counter offer of $300,000. The buyer has wasted 6 months waiting for a response and then the bank responds with a price more in line with the market. The disappointed buyer can start the process all over on another short sale home or chose to buy a home that is not a short sale with a "real" price.
3. Listing Agents are so tired of spending months trying to sell a short sale home and then the deal falls through because the buyer is tired of waiting for a response from the bank. Many listing agents are now requiring a non-refundable earnest money to be deposited for 90 days in case the buyer chooses to buy a different home than the home they put an offer on. This ties up the buyer so if a really good deal (not a short sale) comes on the market, they cannot put an offer on it without losing their earnest money.
To be honest, I think the best way to make an offer on a home is by putting an offer on a home with a real price! Buy a new home or a resale home or a foreclosed home that you know the price is realistic. Don't waste your time playing games with the banks that they might actually be reasonable (well... what you think is reasonable). Banks are in business to make money- not help you get a screaming deal on a home. Go with something real and enjoy the home buying process!
Matt Carter did a great job explaining in his article below about some of the false appearances some real estate agents give in selling real estate.
Washington short-sale brokers could lose licenses
Real estate team accused of false advertising, underpricing listings
Matt Carter
Inman News™
A prominent short-sale broker and his wife could be barred from practicing real estate for 10 years, after an administrative law judge affirmed six of 10 alleged license violations filed against them by the state of Washington's Department of Licensing.
Washington regulators suspended the licenses of designated broker Michael Hellickson, his wife Tara Hellickson, also a broker, and their Pierce County-based brokerage, Hellickson.com Inc., without a hearing in September after receiving more than two dozen complaints about their practices.
A superior court judge reinstated all three licenses in October, pending the outcome of a hearing by an administrative law judge.
After a 10-day hearing in February and March in which the Department of Licensing called more than two dozen witnesses, Administrative Law Judge Terry A. Schuh affirmed six of the 10 alleged violations filed against the Hellicksons, and half of the 10 alleged violations lodged against their firm.
An attorney for the Hellicksons has filed a petition for review of Schuh's May 11 initial order. The Hellicksons' licenses remain in force while Schuh considers the issues raised in the petition and the Department of Licensing's response.
If the Hellicksons' petition is unsuccessful, the Department of Licensing will have 90 days from the May 11 initial order to revoke their licenses.
Michael and Tara Hellickson would then have the option of going back to Superior Court to challenge their license suspensions.
Schuh found that the Hellicksons and their firm engaged in a "pattern and practice" of listing homes at artificially reduced prices that didn't accurately reflect what the owner was willing to accept, in the hopes of generating multiple offers.
The Hellicksons misrepresented that they would buy homes listed with them that did not sell within 30 days, and that Michael Hellickson engaged in false advertising when he claimed to be the No. 1 agent in Washington, Oregon and Hawaii, Schuh ruled.
The Hellickson Team also "engaged in a pattern and practice of negligent and dilatory communications with homeowners, potential buyers, and lenders" by not responding to phone calls and e-mails in a timely fashion, resulting in unreasonable risk of harm to their clients, according to the ruling.
The administrative law judge also affirmed findings that Michael and Tara Hellickson drafted addendums to purchase and sale agreements requiring that buyers prequalify with one of two or three specific lenders, even though their clients had not requested or authorized such a requirement. Although the agreements were signed or initialed by sellers, Schuh found that such authorization was "uninformed," because the addendums were not requested by homeowners or discussed with them.
On the other hand, Schuh found that the Department of Licensing had not proved allegations that the Hellicksons encouraged homeowners to stop making their mortgage payments, or told them they were required to vacate their homes before they were legally required to do so.
The Department of Licensing also failed to prove allegations that the Hellicksons instituted automatic price reductions without authorization by the sellers, Schuh said in a May 11 initial order, setting those findings aside.
Although Schuh ruled that the Hellicksons had, in fact, failed to provide copies of executed listing agreements to homeowners as alleged, he set aside charges that the couple engaged in a "pattern and practice" of misrepresenting the contents of listing agreements, such as their term.
Hellickson, who's also known for the short-sale and REO (bank-owned property) coaching seminars he offers nationwide through another company, Club Wealth Inc., said he expects to prevail in his two-year battle with the Department of Licensing.
His refusal to turn over records sought by the Department of Licensing, he said, "stirred up the hornet's nest," and department staff seemed determined "to dig up anything I'd done wrong."
Clients, agents testify at hearings
To make its case against the Hellicksons, the Department of Licensing filed 296 exhibits and called 27 witnesses to testify, including former Hellickson Team employees and nearly a dozen past clients. Also testifying were several real estate agents who represented prospective buyers, and a Wells Fargo liquidation manager.
When the department brought charges against the Hellicksons and suspended their licenses in September, they had 400-500 listings, more than 200 of which were pending, Michael Hellickson testified.
In 2009 and 2010, about half the listings represented by the Hellicksons -- who conducted their business as "The Hellickson Team" -- were short sales, and the other half REOs.
The department received 37 complaints about the Hellicksons -- about 10 of which were filed after the department filed charges. The complaints referenced either Michael Hellickson or his team, but the Department of Licensing said it also sought to revoke Tara Hellickson's license because she was the co-listing agent on all of the listing agreements.
The department stopped communicating with the Hellicksons after receiving a Dec. 2, 2009, letter from their attorney, Douglas Tingvall, informing the department that the couple would no longer provide information or documents to the department because such requests allegedly violated their Fourth Amendment protections against unlawful search and seizure.
In his petition for review of Schuh's initial order, Tingvall said Michael Hellickson is "an innovator and a leader" in the short-sale business, and that innovators "become targets for competitors and regulators, who often do not understand or lag behind a rapidly changing environment." In the past, license revocations of five years or more have been the result of "criminal acts, serious moral turpitude, fraud, theft or other intentional mishandling of client funds," he said. The Hellicksons "were not found to have done any of these things."
A "disinterested observer" could conclude that regulators went on a "witch hunt" only to retaliate for the Hellicksons' refusal to provide records without a warrant or determination of probable cause, Tingvall argued.
The Department of Licensing, meanwhile, maintained that a 10-year license suspension, although "severe" and "rare," was justified because the Hellicksons allegedly committed a large number of violations, many violations were repeated, and they did not cooperate with the investigation or acknowledge or attempt to correct their conduct. Listing homes at artificially low prices was a serious enough violation that it, alone, might have resulted in a 10-year revocation, the administrator of the department's real estate unit, Jerry McDonald, testified.
30-day sale program
The Hellicksons' radio advertisements, for-sale signs, and website promised that they would purchase their clients' homes or sell them at no commission if they did not sell within 30 days. Although the ads noted that some restrictions applied, no ad said the 30-day program did not apply to short sales, Schuh found.
Schuh found that the purpose of the ads was to generate leads and listing agreements. The Hellickson Team, he determined, "had no intention of buying homes at anything close to market price."
Two agents employed by the Hellickson Team, Joe Toner and Jon Ryan Geersten, testified that they used a script when scheduling listing appointments that mentioned the 30-day offer. Geersten testified that when he expressed reservations about the offer, Michael Hellickson told him that the offer was contingent on the seller accepting a sale price that was 50 percent of market value.
Hellickson testified that the 30-day offer could not apply to short sales, because lenders would not accept such a low offer. He also testified that he had not purchased any homes under the 30-day sale program since 2008.
In his petition for review, Tingvall argued that there was "nothing false, deceptive or misleading" about the Hellicksons' 30-day sale program. The Department of Licensing offered no evidence that any consumers relied on it, Tingvall said, or that the Hellicksons refused to purchase any eligible homes.
The Hellicksons were under no legal obligation to post the restrictions that applied to the program on their website or in their newsletter, their lawyer maintained. "Obviously, (the Hellicksons) hoped that prospective clients would call them to ask about their services," the Hellicksons' lawyer argued in the petition for review. "The purpose of any advertising by a real estate broker is to generate calls and personal appointments."
False advertising
Tingvall noted that the Department of Licensing offered no evidence to refute Michael Hellickson's claim that no other agent did more business in Washington, Oregon or Hawaii in 2009 or 2010, or that he was not the leading expert on short sales in those states.
But Schuh found that the Hellickson was never licensed in Oregon or Hawaii, and would simply refer business in those states to someone who was. The Hellickson Team also advertised a loan company that "was not functional," and Michael Hellickson's license to originate loans and the license of the mortgage firm it was associated with had both expired.
Listing prices
Schuh said it was undisputed that the Hellicksons obtained authorization from their clients to make "substantial, arbitrary price reductions, usually every two weeks, simply because the home had not generated offers." The price reductions were "aggressive and frequent," and "apparently the prices were below what the lender would accept," Schuh wrote. "The implication is that (the defendants) were more interested in generating offers than they were in realistic pricing."
In November 2008, for example, The Hellickson Team listed the home of Dan and Kathleen Streight for $275,000. The asking price was then reduced at two-week intervals in increments of $25,000, to $175,000 by the week before Christmas.
"When Dan Streight learned from a real estate agent that the price on his home had dropped to $175,000, he and his wife were shocked because the lien holder had told Mr. Streight that (the lender) would not accept less than $240,000," Schuh wrote, citing Streight's testimony at the hearing.
Schuh found that the Hellicksons "engaged in a pattern and practice of listing homes at artificially reduced prices" in order to generate "multiple lowball offers." But he also determined that the preponderance of the evidence showed that the Hellicksons were authorized to do so by sellers through signed, preauthorized, price-reduction forms.
The Streights testified that they had verbally agreed to a series of $20,000 price reductions every two weeks. Although they did not discuss a bottom price, the Streights said they understood they would be notified in advance of any price reduction. They also claimed a price-reduction authorization form they signed was blank. The form, introduced as evidence at the hearing, called for price reductions of $25,000 every two weeks.
Michael Hellickson testified that the price-reduction authorizations he provided to short-sale clients were always completed at listing appointments. The Streights did not ask him to provide advance notice of price reductions, he testified, and he had not offered to do so. Schuh said he found Hellickson's testimony credible.
In another instance, the asking price on a condo the Hellicksons listed at $175,000 in September 2008 was reduced several times in two months, to $75,000, before bouncing back to $117,000 by the following February. The owner, Richard Smith, testified that he had agreed to lesser price reductions, that the form he signed authorizing price reductions was blank, and that his calls to the Hellickson Team office about price reductions were not returned.
Toner, the former Hellickson Team agent, testified that he was instructed to convince sellers to sign price-reduction forms with reductions of at least $25,000 every two weeks, but said he was never told to have clients sign blank price-reduction forms. Toner testified that when he started working with the Hellicksons in August 2009, listing prices were determined using comparative market analyses (CMAs) produced by Tara Hellickson.
But after a few months, Toner testified at the hearing, he was told to list homes for the amount owed to the lender. He said he continued to prepare his own CMAs to fulfill his responsibilities to the seller. Toner said no additional market research was done before preapproved price reductions were applied.
Michael Hellickson testified that he took a comparative market analysis (CMA) with him to each listing appointment, but that it was not his practice to perform a CMA before every price reduction.
An expert witness for the Department of Licensing, real estate agent Allison Ybarra, said preapproved price-reduction agreements are not, in themselves, violations of state licensing law.
The Hellicksons' pricing practices generated a number of complaints to their multiple listing service, Northwest Multiple Listing Service (NWMLS), most alleging that the asking price of a listing was not a good faith reflection of what the seller would accept, or that the lender would approve.
Justin Haag, NWMLS' director of policy and forms, testified that the MLS did not add the term "good faith" to rules governing the pricing of listings until the summer of 2009.
Haag testified that NWMLS had received 40 complaints about the Hellickson Team since 2004, most of them regarding pricing. A total of 18 complaints resulted in disciplinary action by the MLS against the Hellickson Team in 2009 and 2010 -- or about 3 percent of the Hellickson Team's sales in those years.
In his petition for review of Schuh's initial order, Tingvall said nothing in real estate licensing law prohibits preapproval for price reductions, and the department "has no business interfering with private contracts between brokers and competent adults." He also argued, "Short sales are different than typical retail sales … The department is out of touch with current trends and practices. Doing things differently is not the same as doing things negligently," he argued.
Listing agreements
The Hellickson Team office "was disorganized and inefficient," Schuh said in explaining how he was "persuaded that it repeatedly failed to provide clients with copies of the executed listing agreement" -- a breach of reasonable skill and care.
In his petition for review, Tingvall said evidence presented by the Department of Licensing on whether the Hellicksons failed to provide copies of listing agreements to sellers was "equivocal and unpersuasive."
And Schuh was not convinced that the Hellickson Team engaged in a pattern and practice of misrepresenting the terms of the listing agreement to clients, as alleged by the Department of Licensing.
One couple who had originally wanted a three- to six-month listing agreement, William and Kathleen Cody, said they were later surprised when a buyer's agent informed them that the listing agreement they signed in March 2009 would not expire until Dec. 31, 2013. William Cody said he did not read the listing agreement before signing it, but that parts were left blank -- a claim also made by other clients.
Michael Hellickson testified that any handwritten additions to listing agreements were added at the time of the listing appointment, and that nothing was added later. Hellickson said his listing agreements were typically for three to four years, to give him enough time to complete a short sale. Hellickson testified that he didn't want to make an investment in marketing a house only to have the seller relist with another agent.
In an audio recording advertising Hellickson's coaching seminars, which was introduced as evidence at the hearing, Hellickson said his listing appointments typically lasted 32 to 37 minutes, and that by the end of each appointment he had obtained a signed listing agreement, preapproved price-reduction form, and disclosure and other documents.
In the recording, Hellickson said he was able to obtain 50 to 75 listings a month, exercising "dominance" over clients using an approach he compared to "a trainer whacking a dog as hard as possible." Hellickson said he would bring four pens to listing appointments, because that would save eight minutes.
Michael Hellickson's former personal assistant, Theresa Jenkins, testified at the hearing that listing agreements and price-reduction authorizations were not always completed at appointments. Jenkins said she regularly saw signed listing agreements with blanks that had not been filled in.
There were several agents working for the Hellickson Team, she said, and she did not know which agents were not having clients complete documents at listing appointments.
Schuh found that while it was the Hellickson Team's "best practice" to complete listing agreements before obtaining clients' signatures, "compliance with this practice was not 100 percent."
Explanations of what was in the listing agreements was "likely sparse because Michael Hellickson had neither the time nor the inclination to volunteer to do so," Schuh wrote. "However, the sellers must take some responsibility to review a document for blanks before signing and to ask to be shown where provisions of particular concern to them were addressed."
Communication with clients
Schuh also found that the Hellickson Team's poor communications with clients, potential buyers, and lenders placed their clients "at unreasonable risk of harm or prejudice."
Toner testified that the Hellickson Team office was disorganized and hectic, causing delays in response to purchase offers and complaints from clients that office staff members were rude and nonresponsive.
Jenkins testified that files would go missing and that documents were not properly maintained, labeled and stored.
Joyce Watts, a real estate agent formerly employed by the Hellicksons, testified that she was under the impression that the Hellickson Team's office was understaffed and overwhelmed by the volume of business it did.
Monika Peltz, a Wells Fargo liquidations manager who was involved in the attempted short sale of the Streight's home, testified that the lender did not get offers on the home until they were nearly two months old, and never received all of the documents it needed.
Kathleen Streight testified that she was told by other Realtors that there were five or six offers on her home, but that buyer's agents could not get any information from the Hellickson Team on the status of their offers. Streight said that at one point, she left 10 voice mail messages with the Hellickson Team but did not receive a callback. Condo owner Richard Smith, too, testified that communication was spotty and his frequent calls were not returned.
Washington's real estate licensing law requires that real estate brokers "present all written offers, written notices and other written communications" between parties "in a timely manner."
But Tingvall noted that the Hellicksons were not accused of violating that provision of the licensing law. Instead, the Hellicksons were accused of violating more general statutes that address incompetence and negligence over their alleged failure to return phone calls in a timely fashion.
Returning phone calls might be a courtesy to the client, as Ybarra testified, "but it is not a legal requirement of real estate licensing law," Tingvall argued.
Wells Fargo could have lost or misplaced the short-sale packet they were originally sent, Tingvall said in his petition for review. The Streights, he said, ultimately elected to pursue a loan modification and "were not harmed by any alleged delay in presenting offers" to the bank, he said.
For short-sale specialists, communications with sellers and banks are among the biggest challenges, Tingvall said, as banks are backlogged with files and may take months to respond to an offer, and homeowners may themselves be unresponsive.
Preferred lenders
Schuh also affirmed the Department of Licensing's findings that without being asked to do so or authorized by their clients, the Hellicksons, through addendums to purchase and sale agreements, required that buyers prequalify with one of two or three specific lenders.
Michael Hellickson testified that the purpose of the requirement was to get a quick determination from a reliable lender that the buyer would qualify for a loan, before investing resources in a transaction that would only fall through. Hellickson said his brokerage did not receive any compensation for referring buyers to certain lenders for prequalification. Hellickson said the prequalification of buyers by preferred lenders was explained at listing appointments. But several clients said they had not discussed the requirement with Hellickson and did not read prequalification addendums they signed or initialed.
Failing to discuss any addendum with the client -- or representing that a requirement has been requested by the seller, when it has not -- is a violation of "reasonable skill and care" provisions of state licensing law, Ybarra and another real estate agent, Rebecca Beaty, testified.
But the federal Real Estate Settlement Procedures Act (RESPA) doesn't bar sellers or brokers from asking borrowers to prequalify with a preferred lender, Tingvall noted, as long as buyers aren't required to obtain loans from those lenders, and pay no fee for prequalification. Sellers or brokers can even require such prequalification by lenders that they have an affiliated business arrangement with, Tingvall said.
The Hellicksons would simply recommend that sellers request buyers to prequalify with one of the Hellicksons' preferred lenders, "a perfectly lawful and prudent request," Tingvall said.
In the Hellicksons' view, Tingvall said, prequalification by a known lender was "was more reliable and provided better security for their sellers."
Thursday, June 9, 2011
40% of Underwater Borrowers Took Cash Out of Homes
DAILY REAL ESTATE NEWS
Produced by Inman News
June 9, 2011
Sponsored by Lowe's
40% of underwater borrowers took cash out of homes
CoreLogic: Owners with home equity loans more than twice as likely to be upside down
By Inman News
Inman News™
Share This
Homeowners with home equity loans are more than twice as likely to be "underwater" as those who didn't take cash out of their homes, according to statistics compiled by real estate and loan data aggregator CoreLogic.
CoreLogic estimates that at the end of March, 22.7 percent of homeowners with mortgages -- about 10.9 million borrowers -- owed more on their mortgage than their home was worth. That's down slightly from an estimated 11.1 million underwater borrowers at the end of December.
Falling home prices can put borrowers who have little equity in their homes underwater. By allowing homeowners to convert equity they have in their homes into cash, home equity loans reduce the cushion borrowers have against price declines.
CoreLogic said that 38 percent of borrowers with home equity loans were underwater at the end of March, compared with 18 percent of homeowners who had no home equity loan. More than 40 percent of all underwater homeowners (4.5 million) have home equity loans, CoreLogic said.
As might be expected, CoreLogic found that the presence of a home equity loan also increased the amount of negative equity. Underwater homeowners who had taken out home equity loans owed $83,000 more than their home was worth, on average, compared with $52,000 for those who hadn't taken cash out of their home.
Past studies have shown that the higher a borrower's combined loan-to-value ratio (CLTV), the more likely they are to stop making payments on their loan. In many cases, borrowers will opt for a "strategic default" -- not because they can't afford the monthly payments, but because they don't believe their home will regain its value anytime soon.
CoreLogic found that borrowers with home equity loans were slightly more likely to default at "moderate" levels of negative equity, up to 115 percent CLTV. Beyond that point, the relationship reverses, and default rates were slightly higher among homeowners without home equity loans.
Among all underwater borrowers nationwide, the average amount of negative equity was $65,000. In states with higher-cost housing, the average was considerably higher. In New York, underwater borrowers had an average of $129,000 in negative equity, followed by Massachusetts ($120,000), Connecticut ($111,000), Hawaii ($98,000), and California ($93,000).
At the other end of the scale, underwater borrowers in Ohio had the lowest negative equity -- $31,000, on average -- followed by Indiana ($34,000), and Minnesota ($38,000).
Nevada led all states in the proportion of underwater borrowers -- 63 percent of Silver State homeowners with mortgages owed more than their home was worth -- followed by Arizona (50 percent), Florida (46 percent), Michigan (36 percent), and California (31 percent).
At the metro level, Las Vegas led the nation, with 66 percent of mortgaged properties underwater, followed by Stockton (56 percent), Phoenix and Modesto (55 percent), and Reno (54 percent).
Metropolitan markets located outside of the five states with the highest negative equity shares include Greeley, Colo. (38 percent); Boise (36 percent); and Atlanta (35 percent).
Produced by Inman News
June 9, 2011
Sponsored by Lowe's
40% of underwater borrowers took cash out of homes
CoreLogic: Owners with home equity loans more than twice as likely to be upside down
By Inman News
Inman News™
Share This
Homeowners with home equity loans are more than twice as likely to be "underwater" as those who didn't take cash out of their homes, according to statistics compiled by real estate and loan data aggregator CoreLogic.
CoreLogic estimates that at the end of March, 22.7 percent of homeowners with mortgages -- about 10.9 million borrowers -- owed more on their mortgage than their home was worth. That's down slightly from an estimated 11.1 million underwater borrowers at the end of December.
Falling home prices can put borrowers who have little equity in their homes underwater. By allowing homeowners to convert equity they have in their homes into cash, home equity loans reduce the cushion borrowers have against price declines.
CoreLogic said that 38 percent of borrowers with home equity loans were underwater at the end of March, compared with 18 percent of homeowners who had no home equity loan. More than 40 percent of all underwater homeowners (4.5 million) have home equity loans, CoreLogic said.
As might be expected, CoreLogic found that the presence of a home equity loan also increased the amount of negative equity. Underwater homeowners who had taken out home equity loans owed $83,000 more than their home was worth, on average, compared with $52,000 for those who hadn't taken cash out of their home.
Past studies have shown that the higher a borrower's combined loan-to-value ratio (CLTV), the more likely they are to stop making payments on their loan. In many cases, borrowers will opt for a "strategic default" -- not because they can't afford the monthly payments, but because they don't believe their home will regain its value anytime soon.
CoreLogic found that borrowers with home equity loans were slightly more likely to default at "moderate" levels of negative equity, up to 115 percent CLTV. Beyond that point, the relationship reverses, and default rates were slightly higher among homeowners without home equity loans.
Among all underwater borrowers nationwide, the average amount of negative equity was $65,000. In states with higher-cost housing, the average was considerably higher. In New York, underwater borrowers had an average of $129,000 in negative equity, followed by Massachusetts ($120,000), Connecticut ($111,000), Hawaii ($98,000), and California ($93,000).
At the other end of the scale, underwater borrowers in Ohio had the lowest negative equity -- $31,000, on average -- followed by Indiana ($34,000), and Minnesota ($38,000).
Nevada led all states in the proportion of underwater borrowers -- 63 percent of Silver State homeowners with mortgages owed more than their home was worth -- followed by Arizona (50 percent), Florida (46 percent), Michigan (36 percent), and California (31 percent).
At the metro level, Las Vegas led the nation, with 66 percent of mortgaged properties underwater, followed by Stockton (56 percent), Phoenix and Modesto (55 percent), and Reno (54 percent).
Metropolitan markets located outside of the five states with the highest negative equity shares include Greeley, Colo. (38 percent); Boise (36 percent); and Atlanta (35 percent).
Monday, June 6, 2011
Mortgage Rates Down Again
Typically this time of year, we see mortgage rates climb higher during the peak time of the season to buy (April through August). With the crisis in Japan and our economy in the U.S. growing at a snails pace, mortgage rates which spiked in early Spring are falling again.
The massive earthquake and subsequent tsunami in Japan and violent uprising in Libya might seem a world away from U.S. home loans, but in fact, these international events have a significant though circuitous and indirect effect on mortgage interest rates, says Jim Pomposelli, a mortgage banker at Mortgage Direct in Chicago.
Here's how it works: Negative events trigger fears about adverse impacts on the global and U.S. economies. Those fears prompt investors to leave the stock market and move their money into U.S. Treasuries and mortgage-backed securities. This behavior, called a "flight to quality," increases the demand for Treasuries, which results in higher prices and lower yields, or rates.
This week, investors behaved exactly that way. Then seemingly realizing their fears might have been overblown, they ditched the safer investments and returned to equities, only to regroup again and start the cycle over.
Meanwhile, lenders lowered and raised rates, sometimes within the course of a single day.
"It's all event-driven," Pomposelli says. "It's all a flight to quality and then it's unwinding that flight to quality as investors start to realize that the long-term economic impact, when they really look at it all, is not as bad."
Fed wants more jobs
In related news, the Federal Reserve this week announced that it will keep its target range for the federal funds rate between zero percent to 0.25 percent and stick with its plan, known as quantitative easing, or "QE2," to purchase $600 billion of longer-term Treasury securities by the end of June.
This stay-the-course mentality might have more to do with job creation than inflation, Pomposelli says. That has given investors, rather than the Fed, a greater influence over longer-term interest rates such as those on mortgage loans.
"I would argue that it's investors who are driving the 10-year Treasury, and subsequently, mortgage-backed securities because they are more concerned about inflation than the Fed is," he says. "But all this goes out the window when -- just think of the events that we've had -- (you have) something in Saudi Arabia, something in Bahrain, and then, you have Tokyo now. There's a lot of knee-jerk reaction and tremendous volatility."
Low rates help housing
Housing, which depends largely on employment, also may be on the Fed's mind, says Don Frommeyer, senior vice president of Amtrust Mortgage Funding in Indianapolis.
"The federal government understands that part of the (economic) recovery is housing and to keep things rolling, they have to keep housing affordable," he says. "Remember, every time that rates go up half a point, you just lost a huge percentage of the people who can buy a house."
Indeed, the Fed's statement noted that "the housing sector continues to be depressed."
Taken together, the global crises, jobless recovery and weak home sales hint that lower mortgage interest rates may stick around for a while, though the strengthening U.S. economy augers exactly the opposite.
Marcie Geffner supplied most of the information for this article.
The massive earthquake and subsequent tsunami in Japan and violent uprising in Libya might seem a world away from U.S. home loans, but in fact, these international events have a significant though circuitous and indirect effect on mortgage interest rates, says Jim Pomposelli, a mortgage banker at Mortgage Direct in Chicago.
Here's how it works: Negative events trigger fears about adverse impacts on the global and U.S. economies. Those fears prompt investors to leave the stock market and move their money into U.S. Treasuries and mortgage-backed securities. This behavior, called a "flight to quality," increases the demand for Treasuries, which results in higher prices and lower yields, or rates.
This week, investors behaved exactly that way. Then seemingly realizing their fears might have been overblown, they ditched the safer investments and returned to equities, only to regroup again and start the cycle over.
Meanwhile, lenders lowered and raised rates, sometimes within the course of a single day.
"It's all event-driven," Pomposelli says. "It's all a flight to quality and then it's unwinding that flight to quality as investors start to realize that the long-term economic impact, when they really look at it all, is not as bad."
Fed wants more jobs
In related news, the Federal Reserve this week announced that it will keep its target range for the federal funds rate between zero percent to 0.25 percent and stick with its plan, known as quantitative easing, or "QE2," to purchase $600 billion of longer-term Treasury securities by the end of June.
This stay-the-course mentality might have more to do with job creation than inflation, Pomposelli says. That has given investors, rather than the Fed, a greater influence over longer-term interest rates such as those on mortgage loans.
"I would argue that it's investors who are driving the 10-year Treasury, and subsequently, mortgage-backed securities because they are more concerned about inflation than the Fed is," he says. "But all this goes out the window when -- just think of the events that we've had -- (you have) something in Saudi Arabia, something in Bahrain, and then, you have Tokyo now. There's a lot of knee-jerk reaction and tremendous volatility."
Low rates help housing
Housing, which depends largely on employment, also may be on the Fed's mind, says Don Frommeyer, senior vice president of Amtrust Mortgage Funding in Indianapolis.
"The federal government understands that part of the (economic) recovery is housing and to keep things rolling, they have to keep housing affordable," he says. "Remember, every time that rates go up half a point, you just lost a huge percentage of the people who can buy a house."
Indeed, the Fed's statement noted that "the housing sector continues to be depressed."
Taken together, the global crises, jobless recovery and weak home sales hint that lower mortgage interest rates may stick around for a while, though the strengthening U.S. economy augers exactly the opposite.
Marcie Geffner supplied most of the information for this article.
Saturday, June 4, 2011
Track Crime Through Trulia!
This is great news from Trulia on Crime Maps...
TRULIA LAUNCHES CRIME MAPS TO ADD INSIGHTS AND MORE COMPLETE DATA TO AMERICAN NEIGHBORHOODS
Crime Maps Launch Provides Data on Neighborhoods Block-by-Block and adds Social Commenting to Aid Buying and Renting Decisions
SAN FRANCISCO, June 2, 2011 – Trulia, a top resource for homebuyers, sellers and renters, today expanded its product suite with the launch of Crime Maps, a innovative and proprietary social crime mapping technology that allows consumers to view, explore, compare, interact and comment on crime data across the US. With Crime Maps, Trulia gives consumers hyper-local visibility into the good, bad and ugly dynamics of neighborhoods, enabling them to make better decisions about where to buy or rent a home.
Crime Maps leverages geodata from multiple partners, including CrimeReports.com, EveryBlock.com and SpotCrime.com, who work with hundreds of police agencies, crime feeds and news outlets to create a curated map of criminal activity in many metropolitan areas. Users can view crimes in a specific area, toggle between multiple neighborhoods, and directly compare the crime statistics of two different regions. Trulia also enables users to add insights, comments, and advice via Facebook’s Social Comments for additional context and information on top of the geodata.
“Historically, detailed and easy-to-decipher crime reports haven’t been easily accessible to the average citizen, and Trulia aims to bring that data to light at the most important moment – when people are deciding where they should live,” said Pete Flint, co-founder and CEO, Trulia. “As a business, Trulia continues to move beyond public record data to in order to add more depth and details about what it’s like to live in a neighborhood. We’re leveraging the acquisition of the Movity team to build visual and innovative mapping platforms and integrate social features into the core of our user experience.”
Upon launch, Trulia’s Crime Maps will be available in 50 counties, with plans to quickly expand nationwide. Trulia provides a visual heat map analysis of historical data. To ensure that the crime-related information on each map is as accurate as possible, Crime Maps automatically displays the last 2,500 crimes committed in a given area.
“With the democratization of data, now we are capable of building a product like Crime Maps,” said Eric Wu, Head of Geo/Social Products at Trulia. “We’ll continue to not only aggregate this valuable geodata, but help users understand and consume it through beautiful products. Ultimately, we want to help paint a complete picture of location on a hyper-local basis, and we believe coupling data with social comments is a very powerful combination.”
In creating Crime Maps, Trulia has unearthed some interesting statistics about crime in America based on the 50 metros that are available at launch. Some highlights include:
Crime in America
* The top 5 most common crimes reported are (in order from most to least):
· Theft
· Assault
· Burglary
· Arrest
· Vandalism
* Time of day and type of crime are linked:
o Thieves typically strike while people are at work. Most thefts and burglaries are reported once people go home at noon around lunchtime or after work around 5pm.
o Vandalism is typically reported in the morning around 9-10am when it’s easier for people to see criminals in the act.
o Violent crimes such as assault and robberies typically happen at night around 9-10pm while people are out on the town or on their way home from an event.
TRULIA CRIMEMAPS:
* Neighborhood Crime Insights: Learn more about a neighborhood’s crime statistics using large interactive maps to view where and what types of crimes occur in neighborhoods across America. Compare time-of-day data, stack statistics of one neighborhood against another and dig in deeper to the details of crimes.
* Heatmaps – shows historical crime during the past twelve months
* Social Commenting: Via Facebook’s social plug-in, users can leave detailed comments about areas, providing local, personal and relevant context to the Crime Maps data.
ADDITIONAL ASSETS
· To view and explore Crime Maps
· To view a video about Crime Maps
· To view a slideshow of the findings
· To view Crime Maps methodology
· To download high-resolution screenshots of Trulia’s Crime Maps
About Trulia, Inc.
Trulia is the fastest growing online real estate resource, empowering buyers, sellers and renters with smarter tools to help them find the right home. Trulia helps you find the home that best meets your specific needs. Our smart and personalized real estate search experience brings together local information, community insights, market data and national listings all in one place. Trulia is headquartered in downtown San Francisco and is backed by Accel Partners and Sequoia Capital.
TRULIA LAUNCHES CRIME MAPS TO ADD INSIGHTS AND MORE COMPLETE DATA TO AMERICAN NEIGHBORHOODS
Crime Maps Launch Provides Data on Neighborhoods Block-by-Block and adds Social Commenting to Aid Buying and Renting Decisions
SAN FRANCISCO, June 2, 2011 – Trulia, a top resource for homebuyers, sellers and renters, today expanded its product suite with the launch of Crime Maps, a innovative and proprietary social crime mapping technology that allows consumers to view, explore, compare, interact and comment on crime data across the US. With Crime Maps, Trulia gives consumers hyper-local visibility into the good, bad and ugly dynamics of neighborhoods, enabling them to make better decisions about where to buy or rent a home.
Crime Maps leverages geodata from multiple partners, including CrimeReports.com, EveryBlock.com and SpotCrime.com, who work with hundreds of police agencies, crime feeds and news outlets to create a curated map of criminal activity in many metropolitan areas. Users can view crimes in a specific area, toggle between multiple neighborhoods, and directly compare the crime statistics of two different regions. Trulia also enables users to add insights, comments, and advice via Facebook’s Social Comments for additional context and information on top of the geodata.
“Historically, detailed and easy-to-decipher crime reports haven’t been easily accessible to the average citizen, and Trulia aims to bring that data to light at the most important moment – when people are deciding where they should live,” said Pete Flint, co-founder and CEO, Trulia. “As a business, Trulia continues to move beyond public record data to in order to add more depth and details about what it’s like to live in a neighborhood. We’re leveraging the acquisition of the Movity team to build visual and innovative mapping platforms and integrate social features into the core of our user experience.”
Upon launch, Trulia’s Crime Maps will be available in 50 counties, with plans to quickly expand nationwide. Trulia provides a visual heat map analysis of historical data. To ensure that the crime-related information on each map is as accurate as possible, Crime Maps automatically displays the last 2,500 crimes committed in a given area.
“With the democratization of data, now we are capable of building a product like Crime Maps,” said Eric Wu, Head of Geo/Social Products at Trulia. “We’ll continue to not only aggregate this valuable geodata, but help users understand and consume it through beautiful products. Ultimately, we want to help paint a complete picture of location on a hyper-local basis, and we believe coupling data with social comments is a very powerful combination.”
In creating Crime Maps, Trulia has unearthed some interesting statistics about crime in America based on the 50 metros that are available at launch. Some highlights include:
Crime in America
* The top 5 most common crimes reported are (in order from most to least):
· Theft
· Assault
· Burglary
· Arrest
· Vandalism
* Time of day and type of crime are linked:
o Thieves typically strike while people are at work. Most thefts and burglaries are reported once people go home at noon around lunchtime or after work around 5pm.
o Vandalism is typically reported in the morning around 9-10am when it’s easier for people to see criminals in the act.
o Violent crimes such as assault and robberies typically happen at night around 9-10pm while people are out on the town or on their way home from an event.
TRULIA CRIMEMAPS:
* Neighborhood Crime Insights: Learn more about a neighborhood’s crime statistics using large interactive maps to view where and what types of crimes occur in neighborhoods across America. Compare time-of-day data, stack statistics of one neighborhood against another and dig in deeper to the details of crimes.
* Heatmaps – shows historical crime during the past twelve months
* Social Commenting: Via Facebook’s social plug-in, users can leave detailed comments about areas, providing local, personal and relevant context to the Crime Maps data.
ADDITIONAL ASSETS
· To view and explore Crime Maps
· To view a video about Crime Maps
· To view a slideshow of the findings
· To view Crime Maps methodology
· To download high-resolution screenshots of Trulia’s Crime Maps
About Trulia, Inc.
Trulia is the fastest growing online real estate resource, empowering buyers, sellers and renters with smarter tools to help them find the right home. Trulia helps you find the home that best meets your specific needs. Our smart and personalized real estate search experience brings together local information, community insights, market data and national listings all in one place. Trulia is headquartered in downtown San Francisco and is backed by Accel Partners and Sequoia Capital.
Saturday, May 21, 2011
NAR Ignores Members To Promote Political Agenda
It is a sad day when the people are once again ignored. Despite the overwhelming number of Realtor's that do NOT agree with NAR raising their dues by 50% to support NAR's political agenda; NAR is not listening to its' members and raising dues. See partial article from Inman News here...
NAR to hike dues by $40
Board of directors approves 'Realtor Political Party Survival Initiative'
By Matt Carter, Monday, May 16, 2011.
Inman News™
The National Association of Realtors board of directors has approved a $40-a-year dues increase to boost political activities, despite polls showing members overwhelmingly opposed it, and warnings from local association executives that a dues increase would accelerate membership declines.
In march, NAR floated the idea of raising the national association's dues by 50 percent, from $80 to $120, in order to increase spending on political advocacy in light of last year's U.S. Supreme Court decision striking down restrictions on independent campaign expenditures by corporations.
An advisory group formed by NAR's then-president, Vicki Cox Golder, concluded in a November report that the Supreme Court's decision in Citizens United v. FEC would open the floodgates for independent campaign expenditures, requiring NAR to step up spending to maintain its voice.
The dues increase approved Saturday "will allow NAR to provide millions of dollars in additional support to state and local boards, which are facing a cadre of policy proposals that would restrict private property rights and drain homeowners' pocketbooks," NAR President Ron Phipps said in a statement.
NAR to hike dues by $40
Board of directors approves 'Realtor Political Party Survival Initiative'
By Matt Carter, Monday, May 16, 2011.
Inman News™
The National Association of Realtors board of directors has approved a $40-a-year dues increase to boost political activities, despite polls showing members overwhelmingly opposed it, and warnings from local association executives that a dues increase would accelerate membership declines.
In march, NAR floated the idea of raising the national association's dues by 50 percent, from $80 to $120, in order to increase spending on political advocacy in light of last year's U.S. Supreme Court decision striking down restrictions on independent campaign expenditures by corporations.
An advisory group formed by NAR's then-president, Vicki Cox Golder, concluded in a November report that the Supreme Court's decision in Citizens United v. FEC would open the floodgates for independent campaign expenditures, requiring NAR to step up spending to maintain its voice.
The dues increase approved Saturday "will allow NAR to provide millions of dollars in additional support to state and local boards, which are facing a cadre of policy proposals that would restrict private property rights and drain homeowners' pocketbooks," NAR President Ron Phipps said in a statement.
Tuesday, May 17, 2011
Find Your Dream Home
What are the most important issues in finding your dream home?
1. Neighborhood: Finding which neighborhood you desire is tricky. You should consider your wants and needs. Do you have children and need to live within the boundaries of a specific school district? You might want a short commute, a neighborhood with historic homes, or homes that are near night life and restaurants.
2. Square footage: What size of home fits your needs? The average home in the United States is 2,195 square feet. Thirty years ago the average size was just 1,645. The trend has been for larger and larger homes, with special purpose spaces, such as exercise rooms, offices, studies, and media rooms. This trend is now receding.
3. Floor Plan: Architectural styles offer a wide range of choices! Open floor plans might appeal to you, with their great flow for entertaining. Or you may have a more traditional aesthetic, preferring cozy rooms. Think about how you live your life and what style best fits your needs.
4. Finishes: There are different grades of homes. Take your kitchen, for example. You can find a wide range of beautiful laminate counters, just as you can find a wide range of beautiful granite ones. These choices dramatically affect price. Think carefully about what you want in your dream home. Do you want stone floors or will ceramic suffice?
5. Amenities: Our homes extend past the borders of our property. We live in the parks, shopping, and restaurants that surround us. Be sure to think outside the "box" of your house when you buy.
6. Landscaping: A large yard can mean lots of entertaining potential, but it can also mean a lot of work. Be sure to consider your needs now and down the road when it comes to yard maintenance. Many buyers prefer a townhouse or condo as their "dream home". These options afford buyers with much less responsibility when it comes to upkeep! Just be careful to buy in an area where 30% of the units or less are owned by investors or it might be hard to sell when you need to move. If more than 30% of the units are owned by investors, a new buyer may not be able to get a loan and you will have to hold out for a cash buyer.
Be sure to visit our website when searching for your dream home at www.DreamHomesInAZ.com You can sign up to receive MLS listings within 24 hours of homes being listed on the MLS absolutely FREE! You can also get coupons from over 100 vendors that will help you save lots of money on purchases for your new home.
1. Neighborhood: Finding which neighborhood you desire is tricky. You should consider your wants and needs. Do you have children and need to live within the boundaries of a specific school district? You might want a short commute, a neighborhood with historic homes, or homes that are near night life and restaurants.
2. Square footage: What size of home fits your needs? The average home in the United States is 2,195 square feet. Thirty years ago the average size was just 1,645. The trend has been for larger and larger homes, with special purpose spaces, such as exercise rooms, offices, studies, and media rooms. This trend is now receding.
3. Floor Plan: Architectural styles offer a wide range of choices! Open floor plans might appeal to you, with their great flow for entertaining. Or you may have a more traditional aesthetic, preferring cozy rooms. Think about how you live your life and what style best fits your needs.
4. Finishes: There are different grades of homes. Take your kitchen, for example. You can find a wide range of beautiful laminate counters, just as you can find a wide range of beautiful granite ones. These choices dramatically affect price. Think carefully about what you want in your dream home. Do you want stone floors or will ceramic suffice?
5. Amenities: Our homes extend past the borders of our property. We live in the parks, shopping, and restaurants that surround us. Be sure to think outside the "box" of your house when you buy.
6. Landscaping: A large yard can mean lots of entertaining potential, but it can also mean a lot of work. Be sure to consider your needs now and down the road when it comes to yard maintenance. Many buyers prefer a townhouse or condo as their "dream home". These options afford buyers with much less responsibility when it comes to upkeep! Just be careful to buy in an area where 30% of the units or less are owned by investors or it might be hard to sell when you need to move. If more than 30% of the units are owned by investors, a new buyer may not be able to get a loan and you will have to hold out for a cash buyer.
Be sure to visit our website when searching for your dream home at www.DreamHomesInAZ.com You can sign up to receive MLS listings within 24 hours of homes being listed on the MLS absolutely FREE! You can also get coupons from over 100 vendors that will help you save lots of money on purchases for your new home.
Wednesday, May 11, 2011
Why Do Canadians Like To Buy Homes In Phoenix?
The collapse in housing prices and a strong Canadian dollar are luring north-of-the-border buyers to Arizona and other states where the weather is warm and the housing cheap.
Canadians surpassed Californians in 2010 as top out-of-state buyers of Phoenix-area real estate. The Canadian dollar gained, up from an average of 80 cents on the U.S. dollar in 2005. At the same time, home prices in the Phoenix area have dropped 50-60 percent from their peak in early 2007.
Some U.S. lenders who will work with Canadians, but most of those buyers still pay cash. About half buy for investment, capitalizing on soaring demand for rental housing in Arizona because many families are lost their homes to foreclosures. Other Canadian buyers want vacation homes.
Many Canadian buyers like Arizona because they don't worry about earthquakes, tornado's, hurricanes and harsh winter weather. Florida has hurricanes, which have jacked up homeowners' insurance rates. In California, where earthquakes are a threat, areas that offer the greatest housing bargains are not vacation spots.
Currently homes priced under $150,000 are selling quickly in the Phoenix market. Things are tightening up which is good news for homeowners. It is a great time to buy homes with low interest rates.
Canadians surpassed Californians in 2010 as top out-of-state buyers of Phoenix-area real estate. The Canadian dollar gained, up from an average of 80 cents on the U.S. dollar in 2005. At the same time, home prices in the Phoenix area have dropped 50-60 percent from their peak in early 2007.
Some U.S. lenders who will work with Canadians, but most of those buyers still pay cash. About half buy for investment, capitalizing on soaring demand for rental housing in Arizona because many families are lost their homes to foreclosures. Other Canadian buyers want vacation homes.
Many Canadian buyers like Arizona because they don't worry about earthquakes, tornado's, hurricanes and harsh winter weather. Florida has hurricanes, which have jacked up homeowners' insurance rates. In California, where earthquakes are a threat, areas that offer the greatest housing bargains are not vacation spots.
Currently homes priced under $150,000 are selling quickly in the Phoenix market. Things are tightening up which is good news for homeowners. It is a great time to buy homes with low interest rates.
Saturday, April 9, 2011
2011 Housing Shortage?
From what I see, we have a housing surplus but I hope this guy is right so the housing market can recover and we see home prices rising instead of falling...
Economist: Housing shortage coming in 2011
He says that if new houses aren't built soon in the U.S., there won't be enough next year.
By Alexandra Zendrian of Forbes
Economist: Housing shortage coming in 2011 (© Kevin Cooley/Getty Images)
more on Forbes.com
* America's new housing crisis capitals
* 10 cities to go from renting to buying
* Cities with the fastest-falling home prices
The focus of the U.S. real-estate market lately has been the number of foreclosures and people trying to purchase cheap housing. But Brian Wesbury, chief economist at First Trust Advisors, says that if Americans don’t start focusing on building new houses, the market will have a much bigger problem on its hands.
“We need one and a half million houses per year just to keep up with population growth,” Wesbury said in an interview with Steve Forbes. “And then if you throw in, you know, fires and tear-downs and just worn-out properties, we need 1.6 million or more per year. Right now, we’re down to about six and a half, seven months’ inventory whether you look at new homes or existing homes.”
Privately owned housing starts in December 2009 were at a seasonally adjusted annual rate of 557,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4% less than where it was in November, which had 580,000 housing starts.
* Video: Is stimulus enough? Real-estate trends
Housing completion numbers also contribute to this dire picture, with privately owned housing completions reaching a seasonally adjusted annualized rate of 768,000 in December 2009. That was down 11.2% from the 865,000 completions in November and down 25.3% from the 1.03 million completions in December 2008.
* MSN Money: Find a mortgage under 5%
Some people might shrug these statistics off, considering the number of foreclosures on the market. “Yes there’s foreclosures coming into the market, but we’re only starting right now,” Wesbury says. “... We’re starting one-third of the houses we need just to keep up with population growth, and that can’t last.”
* On our blog, 'Listed': Rent is cheap now, but a shortage looms
There were 315,716 properties last month with foreclosure filings, according to RealtyTrac. These filings include default notices, scheduled auctions and bank repossessions. Though last month’s filings were 15% more than a year ago, they were 10% less than in December.
More Real Estate Deals Ahead?
View more MSN videosGo to CNBC
Jason Thomas, chief investment officer for Aspiriant, a California wealth-management firm, says he doesn’t see the foreclosure situation getting better until the labor market picks up. “So many people are getting to a point where they just can’t hold on anymore, and we may see another wave of that if we don’t see a pretty robust turnaround in the labor market,” he says.
The unemployment rate is currently 9.7%, down from 10% at the end of 2009, according to the Bureau of Labor Statistics.
Thesis Fund Management portfolio manager Stephen Roseman says the likelihood of a housing shortage is slim to none. “You need to have an accurate housing turnover number, and right now we have anything but that,” he says.
There is some demand, though, from companies that are scooping up whole floors or housing developments because they have the cash on hand, Roseman says.
And for those people who can get a mortgage, homes are very affordable. The median price for U.S. existing single-family homes in metropolitan areas was $173,200 in 2009, according to the National Association of Realtors, compared with $198,100 in 2008.
* Find foreclosures in your area
Mortgage rates are also very low. For instance, both JPMorgan Chase and Wells Fargo are offering 30-year fixed mortgages at 5%, and some can be found for a hair less.
“A mortgage is not difficult to get if you have the right income stream,” says Margaret Starner, senior vice president for the financial services firm Raymond James.
But even if you can get a mortgage, maintaining the income to pay for that mortgage isn’t easy. “There’s a lot of potential problems that can come out if unemployment continues to drag; people deplete their savings and their credit card,” says Michael Ervolini, head of behavioral finance at Cabot Research. “It appears to be more of an income issue than a housing issue that we’re going to be looking at for the next couple of years.”
Economist: Housing shortage coming in 2011
He says that if new houses aren't built soon in the U.S., there won't be enough next year.
By Alexandra Zendrian of Forbes
Economist: Housing shortage coming in 2011 (© Kevin Cooley/Getty Images)
more on Forbes.com
* America's new housing crisis capitals
* 10 cities to go from renting to buying
* Cities with the fastest-falling home prices
The focus of the U.S. real-estate market lately has been the number of foreclosures and people trying to purchase cheap housing. But Brian Wesbury, chief economist at First Trust Advisors, says that if Americans don’t start focusing on building new houses, the market will have a much bigger problem on its hands.
“We need one and a half million houses per year just to keep up with population growth,” Wesbury said in an interview with Steve Forbes. “And then if you throw in, you know, fires and tear-downs and just worn-out properties, we need 1.6 million or more per year. Right now, we’re down to about six and a half, seven months’ inventory whether you look at new homes or existing homes.”
Privately owned housing starts in December 2009 were at a seasonally adjusted annual rate of 557,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4% less than where it was in November, which had 580,000 housing starts.
* Video: Is stimulus enough? Real-estate trends
Housing completion numbers also contribute to this dire picture, with privately owned housing completions reaching a seasonally adjusted annualized rate of 768,000 in December 2009. That was down 11.2% from the 865,000 completions in November and down 25.3% from the 1.03 million completions in December 2008.
* MSN Money: Find a mortgage under 5%
Some people might shrug these statistics off, considering the number of foreclosures on the market. “Yes there’s foreclosures coming into the market, but we’re only starting right now,” Wesbury says. “... We’re starting one-third of the houses we need just to keep up with population growth, and that can’t last.”
* On our blog, 'Listed': Rent is cheap now, but a shortage looms
There were 315,716 properties last month with foreclosure filings, according to RealtyTrac. These filings include default notices, scheduled auctions and bank repossessions. Though last month’s filings were 15% more than a year ago, they were 10% less than in December.
More Real Estate Deals Ahead?
View more MSN videosGo to CNBC
Jason Thomas, chief investment officer for Aspiriant, a California wealth-management firm, says he doesn’t see the foreclosure situation getting better until the labor market picks up. “So many people are getting to a point where they just can’t hold on anymore, and we may see another wave of that if we don’t see a pretty robust turnaround in the labor market,” he says.
The unemployment rate is currently 9.7%, down from 10% at the end of 2009, according to the Bureau of Labor Statistics.
Thesis Fund Management portfolio manager Stephen Roseman says the likelihood of a housing shortage is slim to none. “You need to have an accurate housing turnover number, and right now we have anything but that,” he says.
There is some demand, though, from companies that are scooping up whole floors or housing developments because they have the cash on hand, Roseman says.
And for those people who can get a mortgage, homes are very affordable. The median price for U.S. existing single-family homes in metropolitan areas was $173,200 in 2009, according to the National Association of Realtors, compared with $198,100 in 2008.
* Find foreclosures in your area
Mortgage rates are also very low. For instance, both JPMorgan Chase and Wells Fargo are offering 30-year fixed mortgages at 5%, and some can be found for a hair less.
“A mortgage is not difficult to get if you have the right income stream,” says Margaret Starner, senior vice president for the financial services firm Raymond James.
But even if you can get a mortgage, maintaining the income to pay for that mortgage isn’t easy. “There’s a lot of potential problems that can come out if unemployment continues to drag; people deplete their savings and their credit card,” says Michael Ervolini, head of behavioral finance at Cabot Research. “It appears to be more of an income issue than a housing issue that we’re going to be looking at for the next couple of years.”
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