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| HUD enforces job creation 03.10.2010 HUD has initiated a campaign amongst state and local governments to increase the number of jobs for low-income persons. More than 3,100 agencies have responded to the call to expand hiring and contracting opportunities for the low-income. In 2008 HUD funding generated more than 17,000 new employment and training opportunities. |
| Purchase Applications Increased 03.10.2010 The weekly application survey by the Mortgage Bankers Association (MBA) showed that for the week ending March 5, 2010, the Market Composite Index increased 0.5% from the previous week. This index measures the loan application volume in the US. The same survey indicated that the Refinance Index decreased 1.5% from the week before. The refinance share of applications is at its lowest since October 2009 when it was at 66.1%. The latest figures had it at 67.2%. ARMs were up in the survey to 5.1% of the total applications. This was the highest ARM share since November 2009. The MBA is the national association representing the real estate finance industry. |
| Appraisal Institute opposes plan for "Short Sales" 03.10.2010 The Appraisal Institute, which is 25,000 national members strong, and four other appraisal organizations have opposed the Obama's Administration's plan for short sales. The main objection centers around Broker Price Opinions (BPOs). With a broker price opinion, a realtor gives his or her opinion of what the property is worth. A full appraisal is not conducted. This in itself is very subjective. It is cheaper. But in the long run it could end up being very expensive. A letter raising the concern of potential mortgage fraud was sent to Treasury Secretary, Timothy Geithner. It was signed by the Appraisal Institute, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and by the National Association of Independent Fee Appraisers. The big question is "how do we prevent fraud and protect the homeowner who has just lost a home?". Let's say a house has a market value of $400,000. The realtor issues a BPO for $375,000. The bank accepts this and approves the short sale for this amount. The bank doesn't know that the buyer is a relative of a friend of the realtor, and that they are all in on the "flop". A few weeks later the house is resold at the market price of $400,000. There's a profit of $25,000 which is split three ways. This is just one of the problems facing the new plan. |
| Foreclosure Rate Getting Better 03.11.2010 A report issued by RealtyTrac, showed that house foreclosures were down 2.3% in February, when compared to January. This is the second straight month that we saw a drop in foreclosures. There were 308,524 properties that received a foreclosure notice. According to the report Nevada had the highest foreclosure rate for the 38th consecutive month. One in every 102 properties in the state received a foreclosure notice. Foreclosures seem to be slowing, however the housing crisis is not in recovery yet. Homeowners who choose strategic default as their option are on the increase. What choices do they have? If you have lost 40% equity in your house, do you want to wait for another 10 to 15 years to get back to where you were 20 years ago? Strategic defaults will possibly be the next tidal wave to hit the US housing market. |
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| Inmates File Fraudulent Tax Credit Claims The $8,000 first time home buyer tax credit was designed to boost the housing market and more importantly, to help Americans buy their first home. So, how is it that inmates, behind bars, in prison, were able to receive checks? Apparently the cons found loopholes in the system and took advantage of the situation. A report prepared by a Treasury Inspector General, estimated that 1,295 prisoners filed fraudulent claims. The claims totaled about $9.1 million. More than 2.6 million home buyers were able to benefits from tax credit program. However, if one criminal benefited from the program, it's one to many. The IRS is taking steps to recover the money, and hopefully gather some information on just how this scam was done. The report also discovered that the IRS approved several claims that were filed on the same house. Initially, in the early days of the program,the IRS did not require documentation to prove that a person actually purchased a house. In credit to the IRS over 400,000 questionable claims were denied. The savings to the American taxpayers was more than $4 billion. According to the National Association of Realtors (NAR) an estimated 44% of buyer would not have closed their transactions without this tax credit. |
| Fannie Mae Gets Tough With Defaulters Fannie Mae will increase penalties for borrowers who simply walk away from their mortgages. Fannie Mae would like to see more borrowers work with their lender and loan servicers. If you can pay the mortgage and refuses to do so, then you will be ineligible for a Fannie Mae mortgage for a period of seven years. Fannie Mae will also seek legal action to recover some of the outstanding mortgage balances in jurisdictions that allow deficiency judgments. If a homeowner works with the lender and there is no solution and ends up losing the house, he or she will be eligible for a Fannie Mae mortgage in about 2 to 3 years. Fannie Mae had to say something to deter homeowners who are underwater with their mortgages. Strategic defaults are increasing. The question is "will Fannie Mae be around in 7 years?". The company is on a crumbling foundation. |
| Tax Credit Extended Until Sept 30th President Obama has won another victory for homeowners. They have until September 30th to take advantage of the first time homebuyers tax credit. The U.S. House of Representatives approved the plan to give homebuyers more time to get their closings completed. This is a relief for thousands of buyers who had contracts signed by the April 30 deadline. Industry experts had said all along that more time was required due to the backlog of paperwork at the lenders and also at the closing agents. |
| National Flood Insurance Program Extended temporarily The U.S. Senate voted to extend the National Flood Insurance Program until September 30th. Timing couldn't have been better. Hurricane Alex is wreaking havoc along the Gulf Coast. This is a huge relief to residents in flood prone locations. The legislation was passed unanimously and simply has to get the President's signature. It would be retroactive to June 1st. |
| Home Loan Delinquencies Rise July 7, 2010 According to Lender Processing Services there are currently more than 7.3 million loans in some stage of delinquency or REO. The delinquency rate in May increased to 9.2%. The report also showed that it is taking longer for banks to evict delinquent homeowners. It is now at an all time high of 449 days. This leads to an increased number of 'shadow inventory' houses. What does all this mean for someone looking to buy a house? Look for a good foreclosure house and make an offer. Rates are in your favor. |
| Foreclosures increased in 75% of the top U.S. cities July 29, 2010 Foreclosures continue to plague the housing market. The Midyear 2010 Metropolitan Foreclosure Market Report, published by RealtyTrac, shows that 154 of the 206 U.S. metropolitan areas with a population of 200,000 or more posted a year over year increase in foreclosure activity. As if to add insult to injury, bank repossessions increased 5% in the second quarter of 2010. The hardest hit cities have not changed much. Las Vegas had the highest rate at 6.6% of homes receiving foreclosure notices. The cities with the highest foreclosure rates tend to match the cities with the highest unemployment figures. Unemployment in Las Vegas stands at 14.4%. The national average is 9.6%. When we look at the top 20 metropolitan cities for foreclosure, eight were in California and nine were in Florida. A decline in manufacturing and construction jobs in these major cities has made the housing recovery almost impossible. |
| Sellers Cut Prices But No Buyers July 14, 2010 We know that the tax credit brought a flood of buyers into the housing market. But now what can we do for act two? According to Trulia.com as of July 1st, 24% of sellers cut the listing price of their houses. And yet, there has been no activity. No buyers, period. Rates can't get much lower. So what is the problem? I think that people are scared to make that leap of faith into homeownership. There is still job uncertainty. According to ADP the private sector added 13,000 non-farm workers in June, bring the total to 106,917,000 workers. This is still not enough jobs. We have millions of young people graduating from colleges and universities. What choices do they have? One choice is to stay in school and add to their already high student loans. If you live in Nevada where the unemployment rate is around 14% or California (12.4%) it is a really gut wrenching decision to buy a house. It's a different story if you live in North Dakota where the jobless rate sits around 3.6%. The solution might be another first time homebuyer's tax credit. And this time make it only for the purchase of foreclosure properties. And give the purchasers one full year to get the deal done. The amount should be $6,000. |
| New Mortgage Rules Approved By Senate July 16, 2010 The financial reform bill was passed yesterday by the U.S. Senate. The bill was previously approved by the House. The bill will give consumers and investors extra protection. Part of the bill will establish a consumer financial protection agency with authority over mortgages and credit cards. The bill will eliminate "liar loans". Borrowers will have to fully document their incomes before a mortgage loan can be issued. In addition, a $1 billion fund will be established to provide low-interest loans to unemployed homeowners with good credit. This program will help avoid foreclosures among homeowners in this group. The cherry on this bill is a simplified mortgage loan disclosure form. Such a form is long overdue. And finally, the bill requires lenders to provide a copy of the borrower's credit score to the borrower free of charge. |
| 5 States Get $600m From Hardest Hit Fund...Is Your State Included? August 4, 2010 The Obama Administration has shifted $600 from the HAMP budget to the Hardest Hit Fund. This fund will help distressed homeowners in 5 states with foreclosure mitigation. The states are Ohio, North Carolina, South Carolina, Oregon and Rhode Island. Unemployment in these states hovered around 12 percent. In February the Federal Government gave $1.5 billion to 5 other States where house prices had declined drastically. Those states were California, Nevada, Arizona, Florida and Michigan. This money was badly needed in these states as the foreclosure rates, which are around 14%, continue to devastate families. Some states, such as Ohio, will help unemployed workers keep current with their mortgage payments beyond the national program limits of 3 months. Ohio will receive $172 million. Other states will use the money in short sales programs to help homeowners avoid the stigma of foreclosure. The money can also be used to reduce the principal of the mortgage. |
| Banks Must Buy Back Their Bad Mortgage Loans August 5, 2010 The Federal Reserve Bank of New York is trying to get banks to take back mortgage loans which were flawed. Fannie Mae and Freddie Mac hve been successful so far in getting banks to buy back loans. For the first quarter this year they have collected more than $1.3 billion. There is still about $3.7 billion outstanding. Investors are enforcing their rights regarding the quality of mortgages that were placed in residential mortgage backed securities (RMBS) and collateralized debt obligations (CDO). These investment products were popular on Wall Street during the housing boom. As we know today, all the glitters is not gold. There were serious misrepresentations on many contracts. Some people mig even go as far as to call this fraud. Success in the courts by several investor groups could further delay the housing recovery. Banks are bracing for the attack by boosting reserves and tightening credit. Overseas investors will be watching these court cases carefully. Investors in China and Europe had bet the house on RMBS and CDOs. Now they might be able to recover their initial investments. |
| More Bailout for Unemployed Homeowners August 11, 2010 So many mortgage programs to fix the housing crisis, when will we get ONE that does the complete, total job? There will be $1 billion going to unemployed homeowners to help them pay their mortgages. The program complements the Hardest Hit Fund, which is currently at $4 billion. The program offers a loan of $50,000 for 2 years and zero percent interest. |
| Refinancing Home Volume 81% Of All Mortgage Applications August 18, 2010 Last week mortgage applications showed an big increase. This was fueled by a surge in refinancing activity. However, purchase application remain the lowest in over a decade. Refinance applications were up 17.1%. You would think that all those who can refinance, had done so by now. But there are still a large number of homeowners sitting on the fence and waiting for rates to drop even further. I believe that the 30 year fixed rate will go as low as 3.99% by the end of 2010. There have to be some stimulus to move the real estate inventory that accumulated over the last 4 years. Another $8,000 from Washington is out of the question. So lower rates will have to be the savior. |
| Housing supply at 12.5 months. Why build more? August 27, 2010 July supply of existing homes stood at 12.5 months worth, or 3.98 million houses. In other words it would take over a full year to sell every house on the market without having to build one single house. This is alarming news. The record number for homes for sales was 4.58 million in July 2008. This level of unsold inventory puts downward pressure on house prices. |