MIAMI – May 29, 2009 – Hurricanes may flood entire cities, rip off roofs and level trees every year, but when it comes to overcoming public apathy, they’re stunningly powerless.
Two-thirds of residents in coastal states feel no threat from storms. More than half don’t have a hurricane survival kit or know whether their homeowner’s insurance covers storm damage.
Those are some of the key findings from a new poll to be released Thursday at Florida International University in Miami.
The six-month hurricane season starts Monday, but the Mason-Dixon poll of residents from Maine to Texas found that most remain unprepared, even unconcerned, about a strike from a major hurricane.
“It seems Americans need an urgent reminder every year about something that we ought to get by now,” said Ron Sachs, a Tallahassee, Fla.-based media consultant who is national coordinator for the National Hurricane Survival Initiative, which commissioned the poll. “It’s not called the mean season for nothing.”
The initiative, a coalition of government and relief organizations and corporations that promote hurricane awareness and safety planning, will release the complete poll at FIU’s International Hurricane Research Center.
It shows that while the number of hurricanes has jumped upward over the last decade, public preparation has not followed course.
Despite five major hurricanes last year, for instance, the number of people who feel no threat from storms actually rose – to 62 from 54 percent the previous year.
Some other results:
• 83 percent of respondents have taken no steps to make their homes stronger
• 55 percent have no family disaster plan
• 13 percent said they would not evacuate even if ordered to do so
The poll surveyed 1,100 adults from 18 Gulf and Atlantic coast states who were interviewed May 6-11. The margin of error is plus or minus 3 percentage points.
Florida Lt. Gov. Jeff Kottkamp is scheduled to join weather forecasters and emergency managers, insurance executives and others to provide the full results and urge residents to prepare for hurricane season.
Partners in the initiative include the National Hurricane Center, the Salvation Army, the National Emergency Management Agency and FIU’s International Hurricane Research Center. Corporate sponsors include Travelers Insurance and Plylox.
© 2009 The Miami Herald
Sunday, May 31, 2009
Saturday, May 30, 2009
11% of Florida homes in some state of foreclosure
ORLANDO, Fla. – May 29, 2009 – The faltering economy and falling home prices plunged an additional 99,000 Florida borrowers into foreclosure in the first three months of the year, bringing the total number of home loans in some stage of the foreclosure process to 374,134.
With 11 percent of its home loans in foreclosure, Florida ranked first in the country for defaults and was the only state in double digits. The rate was up roughly 2 percent from the previous quarter, according to figures released Thursday by the Mortgage Bankers Association.
As job losses mounted and incomes dwindled, more and more homeowners fell behind on their loans, with payment problems socking greater numbers of previously credit-worthy borrowers who have traditional mortgages.
The delinquency rates for loans 30 days or more past due stood at 10.67 percent in Florida, or about 378,000 of some 3.54 million loans.
The rate dipped slightly from the previous quarter, but that is always the case at the start of the year, said Jay Brinkmann, chief economist for the MBA. The rate nationally was 9.12 percent. Florida’s crisis is particularly acute because of the staggering run-up in real estate values during the housing boom. People rushed to get loans to buy property that, in many cases, they could not afford. When prices collapsed, homeowners were stuck, unable to sell or refinance. Others were caught in adjustable-rate mortgages with payments that soared.
With Florida home values continuing to fall, Brinkmann predicted foreclosures would continue to rise through the rest of the year. A large oversupply of new property makes stabilizing home prices in the state likely a distant prospect.
“It’s going to take getting demand even with supply just to put a floor under prices. Even then, it may not get it up to a point where it gets buyers back above water,” Brinkmann said.
At the end of March, roughly 71 percent of owners who bought in Miami-Dade and Broward counties in the past five years were underwater, or owed more than their homes were worth, according to Web-based real estate services firm Zillow.com.
Analysts have said so-called negative equity is one of the biggest reasons why borrowers fall into foreclosure – if they need to sell, they can’t, at least not for enough to cover the debt, or they choose to throw in the towel, thinking it’s better to take their losses and rent.
While most lenders have established loan modification programs and are helping borrowers reduce their monthly payments through things like interest rate reductions and extended terms, many homeowners are falling back into default. A recent study by Fitch Ratings projected that as many as 75 percent of subprime loan modifications would fall behind by 60 days or more within a year. Brinkmann said that so-called redefaults could show up in the new foreclosure statistics: “There may be repeat visitors coming back into the numbers.”
Copyright © 2009 The Miami Herald
With 11 percent of its home loans in foreclosure, Florida ranked first in the country for defaults and was the only state in double digits. The rate was up roughly 2 percent from the previous quarter, according to figures released Thursday by the Mortgage Bankers Association.
As job losses mounted and incomes dwindled, more and more homeowners fell behind on their loans, with payment problems socking greater numbers of previously credit-worthy borrowers who have traditional mortgages.
The delinquency rates for loans 30 days or more past due stood at 10.67 percent in Florida, or about 378,000 of some 3.54 million loans.
The rate dipped slightly from the previous quarter, but that is always the case at the start of the year, said Jay Brinkmann, chief economist for the MBA. The rate nationally was 9.12 percent. Florida’s crisis is particularly acute because of the staggering run-up in real estate values during the housing boom. People rushed to get loans to buy property that, in many cases, they could not afford. When prices collapsed, homeowners were stuck, unable to sell or refinance. Others were caught in adjustable-rate mortgages with payments that soared.
With Florida home values continuing to fall, Brinkmann predicted foreclosures would continue to rise through the rest of the year. A large oversupply of new property makes stabilizing home prices in the state likely a distant prospect.
“It’s going to take getting demand even with supply just to put a floor under prices. Even then, it may not get it up to a point where it gets buyers back above water,” Brinkmann said.
At the end of March, roughly 71 percent of owners who bought in Miami-Dade and Broward counties in the past five years were underwater, or owed more than their homes were worth, according to Web-based real estate services firm Zillow.com.
Analysts have said so-called negative equity is one of the biggest reasons why borrowers fall into foreclosure – if they need to sell, they can’t, at least not for enough to cover the debt, or they choose to throw in the towel, thinking it’s better to take their losses and rent.
While most lenders have established loan modification programs and are helping borrowers reduce their monthly payments through things like interest rate reductions and extended terms, many homeowners are falling back into default. A recent study by Fitch Ratings projected that as many as 75 percent of subprime loan modifications would fall behind by 60 days or more within a year. Brinkmann said that so-called redefaults could show up in the new foreclosure statistics: “There may be repeat visitors coming back into the numbers.”
Copyright © 2009 The Miami Herald
Friday, May 29, 2009
Details of FHA’s $8K downpayment advance released
WASHINGTON – May 29, 2009 – The U.S. Department of Housing and Urban Development (HUD) released more details today about its program to help first-time homebuyers use a tax credit as part of a downpayment.
HUD announced the program on May 12 at the National Association of Realtors® Housing Summit. In the interim, HUD posted an announcement and then immediately took it down, leading to speculation that the program would be pulled. In response, HUD said the rules had simply not been finalized, and the original announcement had been posted in error.
“We’ve been eager for word from the federal government since the new FHA downpayment assistance plan was announced, and even more so after the program details were first published and then quickly pulled,” says John Sebree, FAR vice president of public policy. “Luckily, that turns out to be a minor setback and there will be a federal downpayment program to complement the $30 million we were successful in securing in the Florida budget.”
The most significant change involves the amount of downpayment required by qualified first-time homebuyers. FHA mortgages require a 3.5 percent downpayment, and the $8,000 tax credit cannot be used to override that requirement. Once the 3.5 percent downpayment requirement has been met, however, the tax credit can be applied to additional costs, including a higher downpayment, paying points to lower the mortgage rate, and/or closing costs. Lenders will treat the tax credit money as a second lien on the home until it’s paid back.
“Mortgage industry leaders have indicated that this type of product may not be immediately available to consumers,” says Sebree. Since lenders will oversee the tax credit loan, they must create internal programs to handle the process.
Lenders have some flexibility on payback requirements for the upfront loan of the tax credit, though HUD also created rules to protect homebuyers from onerous terms. To read the complete overview in Mortgagee Letter 2009-15, go here.
© 2009 FLORIDA ASSOCIATION OF REALTORS®
HUD announced the program on May 12 at the National Association of Realtors® Housing Summit. In the interim, HUD posted an announcement and then immediately took it down, leading to speculation that the program would be pulled. In response, HUD said the rules had simply not been finalized, and the original announcement had been posted in error.
“We’ve been eager for word from the federal government since the new FHA downpayment assistance plan was announced, and even more so after the program details were first published and then quickly pulled,” says John Sebree, FAR vice president of public policy. “Luckily, that turns out to be a minor setback and there will be a federal downpayment program to complement the $30 million we were successful in securing in the Florida budget.”
The most significant change involves the amount of downpayment required by qualified first-time homebuyers. FHA mortgages require a 3.5 percent downpayment, and the $8,000 tax credit cannot be used to override that requirement. Once the 3.5 percent downpayment requirement has been met, however, the tax credit can be applied to additional costs, including a higher downpayment, paying points to lower the mortgage rate, and/or closing costs. Lenders will treat the tax credit money as a second lien on the home until it’s paid back.
“Mortgage industry leaders have indicated that this type of product may not be immediately available to consumers,” says Sebree. Since lenders will oversee the tax credit loan, they must create internal programs to handle the process.
Lenders have some flexibility on payback requirements for the upfront loan of the tax credit, though HUD also created rules to protect homebuyers from onerous terms. To read the complete overview in Mortgagee Letter 2009-15, go here.
© 2009 FLORIDA ASSOCIATION OF REALTORS®
Thursday, May 28, 2009
Repeat buyers boost home sales
WASHINGTON – May 28, 2009 – More repeat buyers appear to be buying homes, contributing to a slight uptick in existing-home sales this spring. First-time buyers’ share of existing-home sales in April declined to 40 percent from over half in March, according to the National Association of Realtors® (NAR).
The majority of buyers are now repeat buyers, which includes owner-occupants who are moving up to larger or more expensive homes. Investors make up the rest of the market.
Sales of existing homes last month rose 2.9 percent to a seasonally adjusted annual rate of 4.68 million units from 4.55 million in March, the NAR reported Wednesday. Still, that was 3.5 percent below April 2008 levels. Home sales are rising in areas that have had a large number of foreclosures, such as California, Nevada and Florida.
Activity from repeat buyers is important for increasing sales of midprice homes and for clearing out inventory of unsold homes. At the end of April there were 3.97 million existing homes for sale, a 10.2-month supply at the current sales pace, compared with a 9.6-month supply in March. Economists say a six-month supply is healthy.
“During the spring season we see existing-home owners put their homes on the market,” says Lawrence Yun, chief economist at NAR. “First-time buyers are releasing the existing-home owners, who are then able to sell to make their purchases. It’s a chain reaction.”
But the market may not yet be drawing large numbers of repeat buyers who are trading up to larger or more expensive homes.
“The move-up buyers aren’t there. People are sitting on the sidelines trying to judge the market,” says Coldwell Banker CEO Jim Gillespie. “I believe it’s more investors.”
Some economists say that even with more repeat buyers and a tax credit for first-time home buyers, the housing market’s recovery is still faltering because of the economy and job losses.
“Sales will continue to drop in the second half of the year, because the economy is losing so many jobs and the GDP (gross domestic product) is still dropping,” says Patrick Newport at IHS Global Insight.
The national median price for existing homes was $170,200 in April, 15.4 percent below 2008.
Sales of foreclosed properties and others that sold for less than their mortgage balance continue to pull down the median price because they generally sell at discounts. They represented 45 percent of all existing-home sales in April.
2009 © USA TODAY. All rights reserved.
The majority of buyers are now repeat buyers, which includes owner-occupants who are moving up to larger or more expensive homes. Investors make up the rest of the market.
Sales of existing homes last month rose 2.9 percent to a seasonally adjusted annual rate of 4.68 million units from 4.55 million in March, the NAR reported Wednesday. Still, that was 3.5 percent below April 2008 levels. Home sales are rising in areas that have had a large number of foreclosures, such as California, Nevada and Florida.
Activity from repeat buyers is important for increasing sales of midprice homes and for clearing out inventory of unsold homes. At the end of April there were 3.97 million existing homes for sale, a 10.2-month supply at the current sales pace, compared with a 9.6-month supply in March. Economists say a six-month supply is healthy.
“During the spring season we see existing-home owners put their homes on the market,” says Lawrence Yun, chief economist at NAR. “First-time buyers are releasing the existing-home owners, who are then able to sell to make their purchases. It’s a chain reaction.”
But the market may not yet be drawing large numbers of repeat buyers who are trading up to larger or more expensive homes.
“The move-up buyers aren’t there. People are sitting on the sidelines trying to judge the market,” says Coldwell Banker CEO Jim Gillespie. “I believe it’s more investors.”
Some economists say that even with more repeat buyers and a tax credit for first-time home buyers, the housing market’s recovery is still faltering because of the economy and job losses.
“Sales will continue to drop in the second half of the year, because the economy is losing so many jobs and the GDP (gross domestic product) is still dropping,” says Patrick Newport at IHS Global Insight.
The national median price for existing homes was $170,200 in April, 15.4 percent below 2008.
Sales of foreclosed properties and others that sold for less than their mortgage balance continue to pull down the median price because they generally sell at discounts. They represented 45 percent of all existing-home sales in April.
2009 © USA TODAY. All rights reserved.
Wednesday, May 27, 2009
How to research the foreclosure market
ORLANDO, Fla. – May 26, 2009 – Anyone – real estate professional or not – has an array of online resources for researching the foreclosure market. Three fee-based sites specialize in listing both foreclosures and pre-foreclosures: foreclosures.com, $49.95 per month; foreclosure.com, $39.95 per month; and RealtyTrac.com, $49.95 per month, with a four-month minimum. All offer a free trial period. Cyberhomes.com provides a search engine for bank-owned properties that have been listed with a real estate practitioner.
Sites with useful online discussion forums on foreclosures include Trulia.com, the “Answers” feature at Yahoo! Real Estate (realestate.yahoo.com), BiggerPockets.com and ForeclosureTruth.com.
Source: San Jose Mercury News
Sites with useful online discussion forums on foreclosures include Trulia.com, the “Answers” feature at Yahoo! Real Estate (realestate.yahoo.com), BiggerPockets.com and ForeclosureTruth.com.
Source: San Jose Mercury News
Tuesday, May 26, 2009
U.S. eyes Saudi investors in real estate
JEDDAH, Saudi Arabia – May 26, 2009 – The benefits of investing in the U.S. real estate sector were in focus at a seminar held in Jeddah on Tuesday night. “The U.S. real estate sector has become an attractive buy for investors in Saudi Arabia and Gulf, in the context of the recent developments brought about by global economic downturn and weak U.S. currency,” Robert Koch, founder and chairman of the Florida-based Fugleberg Koch Inc., told a meeting attended by a large number of investors at Laylaty hall.
“In this phase, investing in the U.S. real estate offers a lot of opportunities, notwithstanding affordable prices, due to its incredibly sound investment policies,” he said and emphasized on strong returns and reduced risks in U.S. real estate investments even after correcting for the higher taxes, transaction costs and management fees.
Based on recent data, land, income property, and repositioned assets are the three preferred acquisitions in strategic markets in the U.S. now, according to Koch.
Copyright © 2009 Arab News
“In this phase, investing in the U.S. real estate offers a lot of opportunities, notwithstanding affordable prices, due to its incredibly sound investment policies,” he said and emphasized on strong returns and reduced risks in U.S. real estate investments even after correcting for the higher taxes, transaction costs and management fees.
Based on recent data, land, income property, and repositioned assets are the three preferred acquisitions in strategic markets in the U.S. now, according to Koch.
Copyright © 2009 Arab News
Saturday, May 23, 2009
Florida’s BankUnited fails, will cost FDIC $4.9B
WASHINGTON (AP) – May 22, 2009 – The federal seizure of struggling Florida thrift BankUnited FSB is expected to cost the Federal Deposit Insurance Corp. $4.9 billion, representing the second-largest hit to the FDIC’s insurance fund since the financial crisis began felling banks last year.
The costliest was last year’s seizure of California lender IndyMac Bank, on which the bank insurance fund is estimated to have lost $10.7 billion.
The Office of Thrift Supervision, a Treasury Department agency, said Thursday that BankUnited FSB reported $1.2 billion in losses last year as defaults on loans piled up. The thrift “was critically undercapitalized and in an unsafe condition to conduct business,” the agency said in a statement.
Coral Gables, Fla.-based BankUnited FSB is the 34th federally insured institution to be closed this year, and the biggest. Florida’s largest banking institution with about $13 billion in assets as of May 2 was sold for $900 million to an investor group led by former North Fork Bancorp Chairman and CEO John Kanas. It will reopen as a newly chartered savings bank called BankUnited on Friday, with Kanas at the helm.
The investor group includes several prominent firms: the Blackstone Group, the Carlyle Group, Centerbridge Partners and WL Ross & Co., the private-equity firm run by billionaire investor Wilbur Ross.
The new bank will assume $12.7 billion in assets and $8.3 billion of its total $8.6 billion in deposits. In addition, the FDIC and the new bank agreed to share losses on about $10.7 billion in assets.
The FDIC will insure deposits, and customers can continue to use BankUnited FSB checks, ATM cards and debit cards, the FDIC said.
The failed bank’s parent was BankUnited Financial Corp. It had 1,083 employees and 85 branches, all in Florida, mostly located along the state’s southeast coast.
The 34 bank failures this year in the U.S. compare with 25 in 2008 and just three in 2007. As the economy nationwide has soured, amid rising unemployment, tumbling home prices and soaring loan defaults, bank failures have cascaded and sapped billions out of the deposit insurance fund. According to the most recent data available, the fund now stands at its lowest level in nearly a quarter-century – $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.
The FDIC expects that bank failures will cost the insurance fund around $65 billion through 2013.
The FDIC has planned to impose a new emergency fee on U.S. banks to replenish the fund. Legislation passed by Congress this week boosts the FDIC’s authority to borrow from the Treasury Department if needed from $30 billion to $100 billion, allowing the agency to reduce the amount of the insurance fees.
The failure of IndyMac, which had $32 billion in assets, was the second-largest last year, trailing only the September collapse of Washington Mutual Inc.
Thrifts have been the most troubled regulated institutions during the financial crisis and among the most spectacular failures. By law, they must have at least 65 percent of their lending in mortgages and other consumer loans – making them particularly vulnerable to the housing downturn. Seattle-based thrift Washington Mutual was the biggest bank to collapse in U.S. history, with around $307 billion in assets. It was later acquired by JPMorgan Chase & Co. for $1.9 billion.
Copyright © 2009 The Associated Press
The costliest was last year’s seizure of California lender IndyMac Bank, on which the bank insurance fund is estimated to have lost $10.7 billion.
The Office of Thrift Supervision, a Treasury Department agency, said Thursday that BankUnited FSB reported $1.2 billion in losses last year as defaults on loans piled up. The thrift “was critically undercapitalized and in an unsafe condition to conduct business,” the agency said in a statement.
Coral Gables, Fla.-based BankUnited FSB is the 34th federally insured institution to be closed this year, and the biggest. Florida’s largest banking institution with about $13 billion in assets as of May 2 was sold for $900 million to an investor group led by former North Fork Bancorp Chairman and CEO John Kanas. It will reopen as a newly chartered savings bank called BankUnited on Friday, with Kanas at the helm.
The investor group includes several prominent firms: the Blackstone Group, the Carlyle Group, Centerbridge Partners and WL Ross & Co., the private-equity firm run by billionaire investor Wilbur Ross.
The new bank will assume $12.7 billion in assets and $8.3 billion of its total $8.6 billion in deposits. In addition, the FDIC and the new bank agreed to share losses on about $10.7 billion in assets.
The FDIC will insure deposits, and customers can continue to use BankUnited FSB checks, ATM cards and debit cards, the FDIC said.
The failed bank’s parent was BankUnited Financial Corp. It had 1,083 employees and 85 branches, all in Florida, mostly located along the state’s southeast coast.
The 34 bank failures this year in the U.S. compare with 25 in 2008 and just three in 2007. As the economy nationwide has soured, amid rising unemployment, tumbling home prices and soaring loan defaults, bank failures have cascaded and sapped billions out of the deposit insurance fund. According to the most recent data available, the fund now stands at its lowest level in nearly a quarter-century – $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.
The FDIC expects that bank failures will cost the insurance fund around $65 billion through 2013.
The FDIC has planned to impose a new emergency fee on U.S. banks to replenish the fund. Legislation passed by Congress this week boosts the FDIC’s authority to borrow from the Treasury Department if needed from $30 billion to $100 billion, allowing the agency to reduce the amount of the insurance fees.
The failure of IndyMac, which had $32 billion in assets, was the second-largest last year, trailing only the September collapse of Washington Mutual Inc.
Thrifts have been the most troubled regulated institutions during the financial crisis and among the most spectacular failures. By law, they must have at least 65 percent of their lending in mortgages and other consumer loans – making them particularly vulnerable to the housing downturn. Seattle-based thrift Washington Mutual was the biggest bank to collapse in U.S. history, with around $307 billion in assets. It was later acquired by JPMorgan Chase & Co. for $1.9 billion.
Copyright © 2009 The Associated Press
Friday, May 22, 2009
Concern, scrutiny on Capitol Hill over Chinese drywall
WASHINGTON – May 22, 2009 – Senators and federal regulators joined hands Thursday in efforts to resolve health and structural problems linked to the use of Chinese drywall in thousands of new homes.
“We’ve got to get to the bottom of this because our people are potentially in danger,” said Sen. Bill Nelson, D-Fla., whose state has 35,000 to 50,000 potentially affected homes.
“We are all homeowners and we understand the urgency of the issue,” concurred Lori Saltzman, the division director of the Office of Health Services for the Consumer Product Safety Commission, the agency that’s heading the drywall investigation.
Members of the Subcommittee on Consumer Protection, Product Safety and Insurance said they’d seek $2 million in emergency help mainly to make the research go faster. Saltzman said her agency and others would move quickly without waiting for the money.
The urgent cooperation follows complaints from residents in 16 states – principally Florida and Louisiana, where substantial rebuilding has occurred in the aftermath of severe hurricanes – of a “rotten egg” smell, corroding metals and ailments such as persistent coughs and itchy eyes. Residents and Consumer Product Safety Commission investigators think that these problems are linked to drywall produced in China.
Most of the affected homes were built in 2006 and 2007 after hurricanes resulted in U.S. drywall supplies being exhausted. Builders turned to China, buying enough drywall to cover the state of Rhode Island, according to Sen. Jay Rockefeller, D-W.Va., the subcommittee’s chairman.
Environmental Protection Agency lab findings released Tuesday showed that the Chinese drywall contained sulfur compounds and other chemicals that aren’t in U.S.-made drywall. The next step, EPA officials said, is to see whether the compounds and the complaints are linked.
Saltzman said the research included testing domestic and Chinese drywall under climate conditions like those in the affected states. A strategy for identifying and measuring chemicals in the air under those conditions will be completed by June, she said.
In the meantime, her agency will set up a Web site as soon as possible at www.cpsc.gov/drywall to provide homeowners with updates and answer questions related to Chinese drywall.
The commission is also in talks with China to trace suspect drywall back to its manufacturers, Saltzman said.
Nelson said the solution was to ban the imports, continue testing and ultimately remove Chinese drywall.
Removal could cost $100,000 per home, said Randy Noel, the president of Reve Inc., a Louisiana homebuilder.
Witness Richard J. Kampf of Cape Coral, Fla., a retiree suffering from respiratory problems that he said began when he moved into a new $315,000 home built with Chinese drywall, was asked how much the house was worth now. He answered, “Zero.”
© 2009 McClatchy-Tribune Information Services
“We’ve got to get to the bottom of this because our people are potentially in danger,” said Sen. Bill Nelson, D-Fla., whose state has 35,000 to 50,000 potentially affected homes.
“We are all homeowners and we understand the urgency of the issue,” concurred Lori Saltzman, the division director of the Office of Health Services for the Consumer Product Safety Commission, the agency that’s heading the drywall investigation.
Members of the Subcommittee on Consumer Protection, Product Safety and Insurance said they’d seek $2 million in emergency help mainly to make the research go faster. Saltzman said her agency and others would move quickly without waiting for the money.
The urgent cooperation follows complaints from residents in 16 states – principally Florida and Louisiana, where substantial rebuilding has occurred in the aftermath of severe hurricanes – of a “rotten egg” smell, corroding metals and ailments such as persistent coughs and itchy eyes. Residents and Consumer Product Safety Commission investigators think that these problems are linked to drywall produced in China.
Most of the affected homes were built in 2006 and 2007 after hurricanes resulted in U.S. drywall supplies being exhausted. Builders turned to China, buying enough drywall to cover the state of Rhode Island, according to Sen. Jay Rockefeller, D-W.Va., the subcommittee’s chairman.
Environmental Protection Agency lab findings released Tuesday showed that the Chinese drywall contained sulfur compounds and other chemicals that aren’t in U.S.-made drywall. The next step, EPA officials said, is to see whether the compounds and the complaints are linked.
Saltzman said the research included testing domestic and Chinese drywall under climate conditions like those in the affected states. A strategy for identifying and measuring chemicals in the air under those conditions will be completed by June, she said.
In the meantime, her agency will set up a Web site as soon as possible at www.cpsc.gov/drywall to provide homeowners with updates and answer questions related to Chinese drywall.
The commission is also in talks with China to trace suspect drywall back to its manufacturers, Saltzman said.
Nelson said the solution was to ban the imports, continue testing and ultimately remove Chinese drywall.
Removal could cost $100,000 per home, said Randy Noel, the president of Reve Inc., a Louisiana homebuilder.
Witness Richard J. Kampf of Cape Coral, Fla., a retiree suffering from respiratory problems that he said began when he moved into a new $315,000 home built with Chinese drywall, was asked how much the house was worth now. He answered, “Zero.”
© 2009 McClatchy-Tribune Information Services
Housing: Recovering or not?
WASHINGTON – May 21, 2009 – Hopes are high that the deeply troubled U.S. housing sector has finally seen the worst of the recession and financial crisis.
But new data on May 19 raised questions about that optimism. U.S. housing starts hit a record low, dropping 12.8 percent in April, to an annual pace of 458,000. Housing starts are down 79.8 percent from their peak in January 2006.
A sharp drop in construction of multifamily dwellings drove the reading, with single-family starts actually up 2.8 percent.
However, the overall record low disappointed economists and investors, who had seen signs in recent months that housing might have hit bottom.
With housing starts at a record low, “it’s early to pop the cork,” says Michael R. Englund, chief economist for Action Economics. Yet, Englund and other economists told BusinessWeek, the data don’t contradict hopes that housing might be near a bottom.
“In the process of bottoming out”
A drop in construction activity is certainly troubling for the overall economy and for unemployment trends. But a drop in housing starts might actually be good news for the sector’s eventual rebound, says Gary Wolfer, chief economist at Univest Wealth Management (UVSP).
One of the housing market’s main problems is a glut of supply – too many homes for sale. Idle homebuilders mean fewer new homes coming onto the market, thus hastening a bottom for the market. “We’re getting there in a brutal fashion,” Wolfer says, but at least we’re “in the process of bottoming out.”
Keith Hembre, chief economist at First American Funds, worries that further home foreclosures could continue to drive the proliferation of “for sale” signs across the country.
However, he does see reasons to hope for a revival in demand. The government is helping: Low interest rates make mortgages more easily affordable (if you can qualify for one) and the federal government is providing an $8,000 tax credit in 2009 for first-time home buyers. “The signs are there that demand has generally hit bottom,” Hembre says – and it may even be improving somewhat.
A recovery start for homebuilders?
First-quarter earnings reports from homebuilders have bolstered the case for guarded optimism.
“For the homebuilding industry, we think that probably the worst is over,” says Kenneth Leon, a Standard & Poor’s equity analyst who covers the homebuilders. Key metrics seemed to improve in the homebuilders’ first-quarter earnings reports, Leon says, including net orders, backlog, and the pace of homebuilder write-offs.
Still, industry players continue to post quarterly losses.
Investors had a mixed reaction to the April housing starts data. Though the record decline was cited by some market observers as a troubling sign for the overall economy, shares of the largest homebuilders were mixed.
On May 19, Pulte Homes (PHM dropped 2.6 percent, to 10.03, but Toll Brothers (TOL) slipped just 0.7 percent, to 19.51, and D.R. Horton (DHI) gained 1.8 percent, to 9.96.
Homebuilders: Not out of the woods
After two very difficult years, homebuilders are trading solidly higher so far this year. The S&P Homebuilding index rose almost 19 percent in the first four months of 2009.
S&P’s Leon doesn’t expect “a full sustained recovery” for the housing sector until the end of 2010. And several factors could derail or delay the housing market’s recovery, experts say.
Fresh foreclosures could flood the market with supply, even as homebuilders cancel new projects. Credit troubles could make it hard for buyers to get mortgages. Right now, “affordability is very attractive – if you can qualify and get a mortgage,” Leon says.
Even if activity returns to the housing sector, home prices could continue to fall for some time.
“While we are well into the housing bottoming process, we are a long way from recovery,” Stifel Nicolaus (SF) analyst Michael R. Widner wrote May 19. “Our math suggests we have a couple years to go before excess inventory clears and paves the way for significant housing sector improvement,” he added.
Watch “the broader financial crisis”
Englund of Action Economics warns that there may be too much focus on foreclosures, government incentives, or individual data points.
Those aren’t the key drivers of a revival for housing, he says. As demonstrated by the “roller coaster of the last 2 1/2 years,” he says: “It’s the broader financial crisis that (is) really driving this process.”
While worries linger about the next potential financial disaster or an unforeseen economic meltdown, many home buyers are reluctant to take a risk on a major home purchase. “No one wants to jump headlong into this environment,” Englund says.
In other words, no matter what the data say from month to month, it’s hard to imagine the housing sector bouncing back until the big picture significantly improves.
Copyright © 2009 The McGraw-Hill Cos., Ben Steverman. All rights reserved.
But new data on May 19 raised questions about that optimism. U.S. housing starts hit a record low, dropping 12.8 percent in April, to an annual pace of 458,000. Housing starts are down 79.8 percent from their peak in January 2006.
A sharp drop in construction of multifamily dwellings drove the reading, with single-family starts actually up 2.8 percent.
However, the overall record low disappointed economists and investors, who had seen signs in recent months that housing might have hit bottom.
With housing starts at a record low, “it’s early to pop the cork,” says Michael R. Englund, chief economist for Action Economics. Yet, Englund and other economists told BusinessWeek, the data don’t contradict hopes that housing might be near a bottom.
“In the process of bottoming out”
A drop in construction activity is certainly troubling for the overall economy and for unemployment trends. But a drop in housing starts might actually be good news for the sector’s eventual rebound, says Gary Wolfer, chief economist at Univest Wealth Management (UVSP).
One of the housing market’s main problems is a glut of supply – too many homes for sale. Idle homebuilders mean fewer new homes coming onto the market, thus hastening a bottom for the market. “We’re getting there in a brutal fashion,” Wolfer says, but at least we’re “in the process of bottoming out.”
Keith Hembre, chief economist at First American Funds, worries that further home foreclosures could continue to drive the proliferation of “for sale” signs across the country.
However, he does see reasons to hope for a revival in demand. The government is helping: Low interest rates make mortgages more easily affordable (if you can qualify for one) and the federal government is providing an $8,000 tax credit in 2009 for first-time home buyers. “The signs are there that demand has generally hit bottom,” Hembre says – and it may even be improving somewhat.
A recovery start for homebuilders?
First-quarter earnings reports from homebuilders have bolstered the case for guarded optimism.
“For the homebuilding industry, we think that probably the worst is over,” says Kenneth Leon, a Standard & Poor’s equity analyst who covers the homebuilders. Key metrics seemed to improve in the homebuilders’ first-quarter earnings reports, Leon says, including net orders, backlog, and the pace of homebuilder write-offs.
Still, industry players continue to post quarterly losses.
Investors had a mixed reaction to the April housing starts data. Though the record decline was cited by some market observers as a troubling sign for the overall economy, shares of the largest homebuilders were mixed.
On May 19, Pulte Homes (PHM dropped 2.6 percent, to 10.03, but Toll Brothers (TOL) slipped just 0.7 percent, to 19.51, and D.R. Horton (DHI) gained 1.8 percent, to 9.96.
Homebuilders: Not out of the woods
After two very difficult years, homebuilders are trading solidly higher so far this year. The S&P Homebuilding index rose almost 19 percent in the first four months of 2009.
S&P’s Leon doesn’t expect “a full sustained recovery” for the housing sector until the end of 2010. And several factors could derail or delay the housing market’s recovery, experts say.
Fresh foreclosures could flood the market with supply, even as homebuilders cancel new projects. Credit troubles could make it hard for buyers to get mortgages. Right now, “affordability is very attractive – if you can qualify and get a mortgage,” Leon says.
Even if activity returns to the housing sector, home prices could continue to fall for some time.
“While we are well into the housing bottoming process, we are a long way from recovery,” Stifel Nicolaus (SF) analyst Michael R. Widner wrote May 19. “Our math suggests we have a couple years to go before excess inventory clears and paves the way for significant housing sector improvement,” he added.
Watch “the broader financial crisis”
Englund of Action Economics warns that there may be too much focus on foreclosures, government incentives, or individual data points.
Those aren’t the key drivers of a revival for housing, he says. As demonstrated by the “roller coaster of the last 2 1/2 years,” he says: “It’s the broader financial crisis that (is) really driving this process.”
While worries linger about the next potential financial disaster or an unforeseen economic meltdown, many home buyers are reluctant to take a risk on a major home purchase. “No one wants to jump headlong into this environment,” Englund says.
In other words, no matter what the data say from month to month, it’s hard to imagine the housing sector bouncing back until the big picture significantly improves.
Copyright © 2009 The McGraw-Hill Cos., Ben Steverman. All rights reserved.
Thursday, May 21, 2009
Interest in purchasing foreclosed homes rises
SAN FRANCISCO – May 21, 2009 – Consumers appear to be more willing to buy foreclosures, with 55 percent of U.S. adults indicating that they are at least somewhat likely to consider a foreclosed home in the future, compared to the 47 percent of U.S. adults who indicated the same in November 2008, according to a new study. Harris Interactive conducted the survey for Trulia.com and RealtyTrac.
In the current market, adults in the U.S. believe foreclosed properties offer an even greater bargain opportunity than before, the study found. Forty percent expect to pay at least 50 percent less for a foreclosed home, compared to only 31 percent of U.S. adults surveyed in November 2008.
The May 2009 survey also found that 74 percent of U.S. adults familiar with President Barack Obama’s mortgage relief program are at least somewhat confident it will give homeowners the incentive to renegotiate with mortgage lenders in order to prevent their homes from going into foreclosure.
While overall consumer interest in buying foreclosed homes has increased, the current wave of the study also found higher levels of negative sentiment about forecloses. In November 2008, 80 percent of U.S. adults felt that there were negative aspects to purchasing a foreclosed home. In the current survey, the number of U.S. adults concerned with negative aspects rose to 85 percent.
Among the 85 percent, 71 percent cite hidden costs as their top concern, 46 percent believe the process is risky and 31 percent are concerned that the home will lose value. Not surprisingly, consumers expect hefty discounts on foreclosed homes, with 83 percent believing they should pay at least 25 percent less for a foreclosed property, perhaps to compensate for perceived risks.
“As interest in purchasing foreclosed homes increases, competition is heating up with traditional sellers competing with bank-owned prices,” said Pete Flint, co-founder and CEO of Trulia. “Across the U.S., 24 percent of existing homes for sale on the market have seen at least one price reduction in order to stay competitive, creating a tremendous opportunity for consumers to buy homes at significantly lower prices. Competition amongst sellers, along with the newly created economic incentives, has created the most significant discounts that we’ve seen in decades, presenting opportunities for first-time homebuyers and families looking to trade up to a bigger home.”
“Although consumers are aware that there may be some challenges involved in purchasing a foreclosed home, they are very interested in the bargain opportunities available in the foreclosure market,” said Rick Sharga, senior vice president of RealtyTrac. “People want the best deals they can find and they are willing to go outside their comfort zones if it means they can buy more home for less money. Consumers who educate themselves on the opportunities available will likely be rewarded.”
Most likely to buy foreclosures
• Two-thirds of U.S. adults between the ages 18-44 (66 percent) would consider purchasing a foreclosed home, compared to a little more than one-third of those ages 55 and older (38 percent). Respondents aged 45-54 fell in between, with 53 percent indicating that they would be at least somewhat likely to consider a foreclosed property.
• Current renters (68 percent) are more likely to consider purchasing a foreclosed home than current homeowners (49 percent).
• U.S. adults with children under 18 living in their household also show an increased likelihood to consider foreclosure properties, with 66 percent indicating they would be at least somewhat likely to purchase one, compared to 49 percent of those without children under 18 in the household.
Confidence in mortgage relief plan
• 74 percent of U.S. adults familiar with President Obama’s mortgage relief program are at least somewhat confident it will give homeowners the incentive to renegotiate with mortgage lenders in order to prevent their homes from going into foreclosure.
• U.S. adults aged 18-34 familiar with the program have the highest confidence level in the mortgage relief program.
• 84 percent are least somewhat confident in the plan, compared to 71 percent of those aged 35-44, 69 percent of those aged 45-54, and 71 percent of those aged 55-plus.
• Interestingly, women familiar with the program are more likely to be at least somewhat confident in its ability to give homeowners the incentive to renegotiate with their mortgage lender in order to prevent their home from going into foreclosure than men familiar with the program (79 percent vs. 69 percent, respectively).
The May 2009 survey was conducted online within the United States by Harris Interactive via its QuickQuery online omnibus service on behalf of Trulia between May 1-5, 2009 among 2,397 U.S. adults aged 18 years and older.
© 2009 FLORIDA ASSOCIATION OF REALTORS
In the current market, adults in the U.S. believe foreclosed properties offer an even greater bargain opportunity than before, the study found. Forty percent expect to pay at least 50 percent less for a foreclosed home, compared to only 31 percent of U.S. adults surveyed in November 2008.
The May 2009 survey also found that 74 percent of U.S. adults familiar with President Barack Obama’s mortgage relief program are at least somewhat confident it will give homeowners the incentive to renegotiate with mortgage lenders in order to prevent their homes from going into foreclosure.
While overall consumer interest in buying foreclosed homes has increased, the current wave of the study also found higher levels of negative sentiment about forecloses. In November 2008, 80 percent of U.S. adults felt that there were negative aspects to purchasing a foreclosed home. In the current survey, the number of U.S. adults concerned with negative aspects rose to 85 percent.
Among the 85 percent, 71 percent cite hidden costs as their top concern, 46 percent believe the process is risky and 31 percent are concerned that the home will lose value. Not surprisingly, consumers expect hefty discounts on foreclosed homes, with 83 percent believing they should pay at least 25 percent less for a foreclosed property, perhaps to compensate for perceived risks.
“As interest in purchasing foreclosed homes increases, competition is heating up with traditional sellers competing with bank-owned prices,” said Pete Flint, co-founder and CEO of Trulia. “Across the U.S., 24 percent of existing homes for sale on the market have seen at least one price reduction in order to stay competitive, creating a tremendous opportunity for consumers to buy homes at significantly lower prices. Competition amongst sellers, along with the newly created economic incentives, has created the most significant discounts that we’ve seen in decades, presenting opportunities for first-time homebuyers and families looking to trade up to a bigger home.”
“Although consumers are aware that there may be some challenges involved in purchasing a foreclosed home, they are very interested in the bargain opportunities available in the foreclosure market,” said Rick Sharga, senior vice president of RealtyTrac. “People want the best deals they can find and they are willing to go outside their comfort zones if it means they can buy more home for less money. Consumers who educate themselves on the opportunities available will likely be rewarded.”
Most likely to buy foreclosures
• Two-thirds of U.S. adults between the ages 18-44 (66 percent) would consider purchasing a foreclosed home, compared to a little more than one-third of those ages 55 and older (38 percent). Respondents aged 45-54 fell in between, with 53 percent indicating that they would be at least somewhat likely to consider a foreclosed property.
• Current renters (68 percent) are more likely to consider purchasing a foreclosed home than current homeowners (49 percent).
• U.S. adults with children under 18 living in their household also show an increased likelihood to consider foreclosure properties, with 66 percent indicating they would be at least somewhat likely to purchase one, compared to 49 percent of those without children under 18 in the household.
Confidence in mortgage relief plan
• 74 percent of U.S. adults familiar with President Obama’s mortgage relief program are at least somewhat confident it will give homeowners the incentive to renegotiate with mortgage lenders in order to prevent their homes from going into foreclosure.
• U.S. adults aged 18-34 familiar with the program have the highest confidence level in the mortgage relief program.
• 84 percent are least somewhat confident in the plan, compared to 71 percent of those aged 35-44, 69 percent of those aged 45-54, and 71 percent of those aged 55-plus.
• Interestingly, women familiar with the program are more likely to be at least somewhat confident in its ability to give homeowners the incentive to renegotiate with their mortgage lender in order to prevent their home from going into foreclosure than men familiar with the program (79 percent vs. 69 percent, respectively).
The May 2009 survey was conducted online within the United States by Harris Interactive via its QuickQuery online omnibus service on behalf of Trulia between May 1-5, 2009 among 2,397 U.S. adults aged 18 years and older.
© 2009 FLORIDA ASSOCIATION OF REALTORS
Uniform process for short sales will help struggling homeowners, say Realtors
WASHINGTON – May 20, 2009 – Help is on the way for many homeowners facing foreclosure, thanks to new details under the Making Home Affordable Program announced by the U.S. Treasury and the U.S. Department of Housing and Urban Development (HUD).
The Making Home Affordable Program is designed to help homeowners modify their loan so they can afford to stay in their home. Where a modification is not possible, new incentives encourage the “quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future,” according to U.S. Treasury Secretary Timothy Geithner. The National Association of Realtors® (NAR) believes that a uniform process for handling short sales will facilitate the process.
“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” says NAR President Charles McMillan. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s homeowners in a challenging economy.”
Short sales occur when a bank agrees to let homeowners who have fallen behind on their mortgage to sell their home for less than they owe on the mortgage. Go to www.treasury.gov for detailed information on the program changes.
“Many families are finding themselves with a mortgage that is higher than their current home value, and they are struggling,” says McMillan. “As Secretary Geithner noted, and as NAR has been advocating for many months, stemming the foreclosure crisis and stabilizing the housing market are critical to our economic recovery.”
“We have heard from Realtors that the extensive delay in the short sale process caused many buyers to go elsewhere and left many would-be sellers with no option but foreclosure. We are all pleased that the government has stepped in to help homeowners and those wishing to buy a home,” McMillan says.
© FLORIDA ASSOCIATION OF REALTORS
The Making Home Affordable Program is designed to help homeowners modify their loan so they can afford to stay in their home. Where a modification is not possible, new incentives encourage the “quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future,” according to U.S. Treasury Secretary Timothy Geithner. The National Association of Realtors® (NAR) believes that a uniform process for handling short sales will facilitate the process.
“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” says NAR President Charles McMillan. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s homeowners in a challenging economy.”
Short sales occur when a bank agrees to let homeowners who have fallen behind on their mortgage to sell their home for less than they owe on the mortgage. Go to www.treasury.gov for detailed information on the program changes.
“Many families are finding themselves with a mortgage that is higher than their current home value, and they are struggling,” says McMillan. “As Secretary Geithner noted, and as NAR has been advocating for many months, stemming the foreclosure crisis and stabilizing the housing market are critical to our economic recovery.”
“We have heard from Realtors that the extensive delay in the short sale process caused many buyers to go elsewhere and left many would-be sellers with no option but foreclosure. We are all pleased that the government has stepped in to help homeowners and those wishing to buy a home,” McMillan says.
© FLORIDA ASSOCIATION OF REALTORS
Wednesday, May 20, 2009
Congress passes anti-foreclosure bill
WASHINGTON – May 20, 2009 – Congress on Tuesday sent the president legislation that encourages banks to spare homeowners from foreclosure, after the industry helped scuttle a tougher measure that would have forced lenders to reduce monthly payments of owners in bankruptcy.
The House voted 367-54 to pass the Helping Families Save Their Homes Act. The Senate had voted 91-5 in favor of the bill and approved the final version by unanimous consent.
“In the last few weeks, we have cracked down on corporate and mortgage scams and helped more struggling homeowners keep their homes,” said Senate Majority Leader Harry Reid, D-Nev. “And in the coming weeks, we will continue to protect people ... who keep our economy moving, and we will restore their confidence.”
The bill would expand an existing $300 billion program that encourages lenders to write down an individual’s mortgage if the homeowner agrees to pay an insurance premium. The program, set to expire in 2011, would swap out a homeowner’s high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration.
Because of strict eligibility requirements, only 50-some homeowners are refinancing through the program compared to the 400,000 people it was estimated to help.
The legislation would expand eligibility. For example, the program currently bans participants who intentionally defaulted on the mortgage or other substantial debt. The Senate bill would narrow that prohibition to defaults within the last five years.
Not included in the final bill is a measure by Sen. Dick Durbin, D-Ill., that would have allowed bankruptcy judges to reduce a person’s mortgage payment. President Barack Obama included the proposal as a key piece of his housing plan and promised to push it through Congress.
But facing stiff opposition from banks, Obama did little to pressure lawmakers who worried it would encourage bankruptcy filings and spike interest rates. The Senate defeated the measure, 45-51.
The bill also would potentially give banks a break on fees they pay to the Federal Deposit Insurance Corporation to insure customers’ deposits. The bill increases FDIC borrowing authority from $30 billion to $100 billion, which would allow the agency to reduce the insurance premiums.
In addition, the bill extends through 2013 an increase in deposit insurance by the FDIC from $100,000 to $250,000.
Copyright 2009 The Associated Press
The House voted 367-54 to pass the Helping Families Save Their Homes Act. The Senate had voted 91-5 in favor of the bill and approved the final version by unanimous consent.
“In the last few weeks, we have cracked down on corporate and mortgage scams and helped more struggling homeowners keep their homes,” said Senate Majority Leader Harry Reid, D-Nev. “And in the coming weeks, we will continue to protect people ... who keep our economy moving, and we will restore their confidence.”
The bill would expand an existing $300 billion program that encourages lenders to write down an individual’s mortgage if the homeowner agrees to pay an insurance premium. The program, set to expire in 2011, would swap out a homeowner’s high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration.
Because of strict eligibility requirements, only 50-some homeowners are refinancing through the program compared to the 400,000 people it was estimated to help.
The legislation would expand eligibility. For example, the program currently bans participants who intentionally defaulted on the mortgage or other substantial debt. The Senate bill would narrow that prohibition to defaults within the last five years.
Not included in the final bill is a measure by Sen. Dick Durbin, D-Ill., that would have allowed bankruptcy judges to reduce a person’s mortgage payment. President Barack Obama included the proposal as a key piece of his housing plan and promised to push it through Congress.
But facing stiff opposition from banks, Obama did little to pressure lawmakers who worried it would encourage bankruptcy filings and spike interest rates. The Senate defeated the measure, 45-51.
The bill also would potentially give banks a break on fees they pay to the Federal Deposit Insurance Corporation to insure customers’ deposits. The bill increases FDIC borrowing authority from $30 billion to $100 billion, which would allow the agency to reduce the insurance premiums.
In addition, the bill extends through 2013 an increase in deposit insurance by the FDIC from $100,000 to $250,000.
Copyright 2009 The Associated Press
Tuesday, May 19, 2009
Bank of America revises short sale policy
NEW YORK – May 19, 2009 – Bank of America, one of the country’s largest mortgage lenders, says it is loosening its policies on short sales in response to the U.S. Treasury Department’s announcement last week that it would increase incentives for lenders to work out short sale deals.
The government’s plan is a boon to banks, says David Sunline, BofA’s real estate management executive, because it provides guidance when there are multiple liens, a potentially litigious issue for lenders.
In the past, the bank followed Fannie Mae’s policy of giving second lien holders about 10 percent of the second mortgage balance in a short sale. Now when it holds the second lien, BofA will accept 5 percent of the net proceeds of the short sale, Sunline says. When it is the first lien holder, it will offer 5 percent to the holder of the second lien.
Sunline says homeowners considering short sales should contact the bank within five days of getting an offer on the home and expect its cooperation as long as the offer is within the range of other sales in the area and the borrower can demonstrate financial hardship.
Source: The New York Times, Bob Tedeschi (05/15/2009)
The government’s plan is a boon to banks, says David Sunline, BofA’s real estate management executive, because it provides guidance when there are multiple liens, a potentially litigious issue for lenders.
In the past, the bank followed Fannie Mae’s policy of giving second lien holders about 10 percent of the second mortgage balance in a short sale. Now when it holds the second lien, BofA will accept 5 percent of the net proceeds of the short sale, Sunline says. When it is the first lien holder, it will offer 5 percent to the holder of the second lien.
Sunline says homeowners considering short sales should contact the bank within five days of getting an offer on the home and expect its cooperation as long as the offer is within the range of other sales in the area and the borrower can demonstrate financial hardship.
Source: The New York Times, Bob Tedeschi (05/15/2009)
Monday, May 18, 2009
Investor flipping makes FHA mortgage difficult
TAMPA, Fla. – May 18, 2009 – Ray White thought now was the perfect time to help his daughter buy her first home.
Home prices are more affordable than they have been in years, interest rates are low, there are plenty of homes on the market, and the federal government is offering an $8,000 tax credit.
But because of one problem after another, every house they find seems out of her reach – even though she’s approved for a loan and has a downpayment.
“The other night, she just broke down and cried,” White said, noting that they’ve looked at more than 100 homes. “I actually have this feeling right now that it’s almost impossible for her to buy a house.”
That’s partly because the Whites are competing with investors who often pay cash and then flip the property for big profit. They typically won’t sell to those getting an FHA loan, which are very popular among first-time homebuyers.
Situations like this are becoming commonplace, real estate agents and buyers say. And that could be a serious problem.
In the midst of the worst housing downturn since the Great Depression, the real estate market desperately needs buyers to gobble up homes that have been sitting on the market for months.
The median home sales price in the Tampa metro area was $130,800 during the first quarter. Compare that to the market’s peak median sales price of $239,600 in June 2006.
Meanwhile, the area’s foreclosure rate climbs and many homeowners find themselves trying to make deals to persuade lenders to agree to a short sale instead of losing them in foreclosure. This means the lender allows the home to sell for less than the mortgage.
The lower prices and desperate homeowners have lured buyers off the fence. Many of the buyers, though, are investors.
One way for them to make cash quickly is to file a notice of option to purchase the property at a low price at the county courthouse. This gives the investor time to market the home for sale while they negotiate the short sale with a lender.
Once a buyer willing to pay more is found, the investor buys the home and sells it, usually on the same day.
The problem occurs when so many of the investor’s potential buyers are seeking loans that forbid flips. More and more lenders say they won’t approve such deals.
Good deals out of reach
In the Whites’ case, home after home is locked up in an option contract. The Whites’ real estate agent has tried to negotiate with some of the investors but have found that FHA won’t fund loans on homes that are being flipped.
“We keep reading about all the good deals out there,” White said. “But that’s not true if you can’t buy the homes.”
While it’s clear this is frustrating for first-time homebuyers, what does this mean for the health of the Tampa Bay area’s troubled housing market? If investors are buying the homes and selling them, isn’t that a good thing – no matter who’s buying them?
Not necessarily, says Chris Lafakis, an economist with Moody’s Economy.com.
Recovery may take longer
If willing and able buyers are turned away while investors search for other buyers, homes could sit on the market much longer. That could make the housing recovery process much longer, Lafakis said.
“The faster we can work off inventory, the better,” he said.
Anybody watching our housing market knows that.
And that makes it all the more frustrating for buyers, such as George Russell. He recently found the perfect home in Valrico. It’s a short sale, and the asking price was just right.
He offered to pay the full price only to learn it was locked up by an investor with an option contract. Russell is obtaining FHA financing and therefore can’t buy the home.
“At first, I thought someone had beat us to it,” he said.
“But when I found out about the investor, it kind of made us mad, disgusted. It was very puzzling.”
Copyright © 2009 Tampa Tribune
Home prices are more affordable than they have been in years, interest rates are low, there are plenty of homes on the market, and the federal government is offering an $8,000 tax credit.
But because of one problem after another, every house they find seems out of her reach – even though she’s approved for a loan and has a downpayment.
“The other night, she just broke down and cried,” White said, noting that they’ve looked at more than 100 homes. “I actually have this feeling right now that it’s almost impossible for her to buy a house.”
That’s partly because the Whites are competing with investors who often pay cash and then flip the property for big profit. They typically won’t sell to those getting an FHA loan, which are very popular among first-time homebuyers.
Situations like this are becoming commonplace, real estate agents and buyers say. And that could be a serious problem.
In the midst of the worst housing downturn since the Great Depression, the real estate market desperately needs buyers to gobble up homes that have been sitting on the market for months.
The median home sales price in the Tampa metro area was $130,800 during the first quarter. Compare that to the market’s peak median sales price of $239,600 in June 2006.
Meanwhile, the area’s foreclosure rate climbs and many homeowners find themselves trying to make deals to persuade lenders to agree to a short sale instead of losing them in foreclosure. This means the lender allows the home to sell for less than the mortgage.
The lower prices and desperate homeowners have lured buyers off the fence. Many of the buyers, though, are investors.
One way for them to make cash quickly is to file a notice of option to purchase the property at a low price at the county courthouse. This gives the investor time to market the home for sale while they negotiate the short sale with a lender.
Once a buyer willing to pay more is found, the investor buys the home and sells it, usually on the same day.
The problem occurs when so many of the investor’s potential buyers are seeking loans that forbid flips. More and more lenders say they won’t approve such deals.
Good deals out of reach
In the Whites’ case, home after home is locked up in an option contract. The Whites’ real estate agent has tried to negotiate with some of the investors but have found that FHA won’t fund loans on homes that are being flipped.
“We keep reading about all the good deals out there,” White said. “But that’s not true if you can’t buy the homes.”
While it’s clear this is frustrating for first-time homebuyers, what does this mean for the health of the Tampa Bay area’s troubled housing market? If investors are buying the homes and selling them, isn’t that a good thing – no matter who’s buying them?
Not necessarily, says Chris Lafakis, an economist with Moody’s Economy.com.
Recovery may take longer
If willing and able buyers are turned away while investors search for other buyers, homes could sit on the market much longer. That could make the housing recovery process much longer, Lafakis said.
“The faster we can work off inventory, the better,” he said.
Anybody watching our housing market knows that.
And that makes it all the more frustrating for buyers, such as George Russell. He recently found the perfect home in Valrico. It’s a short sale, and the asking price was just right.
He offered to pay the full price only to learn it was locked up by an investor with an option contract. Russell is obtaining FHA financing and therefore can’t buy the home.
“At first, I thought someone had beat us to it,” he said.
“But when I found out about the investor, it kind of made us mad, disgusted. It was very puzzling.”
Copyright © 2009 Tampa Tribune
Friday, May 15, 2009
Rates on 30-year mortgages up slightly
WASHINGTON – May 15, 2009 – Rates on 30-year fixed mortgages rose slightly for the second straight week, but still remained below 5 percent, Freddie Mac said Thursday.
The average rate for a 30-year fixed mortgage was 4.86 percent, up from 4.84 percent last week. Rates have been below 5 percent for nine straight weeks. Last year at this time, the average rate for a 30-year fixed mortgage – the most popular loan among homebuyers - was 6.01 percent.
A record low of 4.78 percent for a 30-year fixed rate mortgage was first recorded on the week of April 2, and again on the week of April 30. Freddie Mac’s survey dates back to 1971.
Mortgage rates fell significantly over the winter. They slid again after the Federal Reserve said in March that it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate, even within a given day. The low rates have spurred refinancing activity, though consumers must have solid credit to get the best rates.
The mortgage finance giant said the average rate on a 15-year fixed-rate mortgage averaged 4.52 percent, up just slightly from 4.51 percent last week.
Rates on five-year, adjustable-rate mortgages averaged 4.82 percent this week, down from 4.9 percent last week, Freddie Mac said. Rates on one-year, adjustable-rate mortgages fell to 4.71 percent, compared with an average of 4.78 percent last week.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.6 point for the loans covered in Freddie Mac’s report.
Copyright © 2009 The Associated Press
The average rate for a 30-year fixed mortgage was 4.86 percent, up from 4.84 percent last week. Rates have been below 5 percent for nine straight weeks. Last year at this time, the average rate for a 30-year fixed mortgage – the most popular loan among homebuyers - was 6.01 percent.
A record low of 4.78 percent for a 30-year fixed rate mortgage was first recorded on the week of April 2, and again on the week of April 30. Freddie Mac’s survey dates back to 1971.
Mortgage rates fell significantly over the winter. They slid again after the Federal Reserve said in March that it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate, even within a given day. The low rates have spurred refinancing activity, though consumers must have solid credit to get the best rates.
The mortgage finance giant said the average rate on a 15-year fixed-rate mortgage averaged 4.52 percent, up just slightly from 4.51 percent last week.
Rates on five-year, adjustable-rate mortgages averaged 4.82 percent this week, down from 4.9 percent last week, Freddie Mac said. Rates on one-year, adjustable-rate mortgages fell to 4.71 percent, compared with an average of 4.78 percent last week.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.6 point for the loans covered in Freddie Mac’s report.
Copyright © 2009 The Associated Press
Climatologists predict 12 named storms’ this hurricane season
FORT LAUDERDALE, Fla. – May 14, 2009 – Two climatologists from Colorado State University, both scorned and respected for their hurricane season forecasts, took to the podium Wednesday to discuss their prediction for 2009: 12 named storms, six hurricanes and two major hurricanes of Category 3 or worse.
“Basically, an average hurricane season,” Phil Klotzbach told attendees at Florida’s Governor’s Hurricane Conference.
Klotzbach and colleague William Gray issue periodic prognostications before and during the six-month hurricane season, which begins June 1. Some years the pair’s forecasts have been spot-on; other seasons, their figures have skewed sharply from the actual number of tropical storms that developed.
According to Klotzback and Gray, Florida and the U.S. East Coast have less than a 1-in-3 chance, or 32 percent, of experiencing a hurricane landfall this year.
The odds are roughly similar – 31 percent – for the states along the Gulf of Mexico, and 54 percent for the entire U.S. coastline.
Klotzbach explained to conference attendees, mostly scientists and emergency management professionals, how he and Gray use “hindcasting,” the study of past weather activity, to predict the future.
“You don’t see the dartboard model,” he joked, pointing to a projected chart. “We do actually use science in our forecasts.”
The Colorado-based researchers examine ocean temperature, barometric pressure and wind shear to forecast the number and strength of the coming season’s storms.
Warmer water, for example, fuels stronger hurricanes. So far this year, Klotzbach said, the Atlantic Ocean’s temperature has been cooler than in decades. But he said it could warm up during storm season.
El Nino, a large atmospheric condition that affects weather patterns, can cause an increase in wind shear, which inhibits a storm’s intensity, Klotzbach said.
“We have a bit of a challenge ahead of us because we don’t know what El Nino will do,” he said.
Regardless of the overall seasonal prediction, the researchers urged Americans at risk to be prepared for a hurricane.
“If you have one storm and it comes over you, it’s a very active season,” Gray said.
© 2009 Sun Sentinel. Distributed by McClatchy-Tribune News Service.
“Basically, an average hurricane season,” Phil Klotzbach told attendees at Florida’s Governor’s Hurricane Conference.
Klotzbach and colleague William Gray issue periodic prognostications before and during the six-month hurricane season, which begins June 1. Some years the pair’s forecasts have been spot-on; other seasons, their figures have skewed sharply from the actual number of tropical storms that developed.
According to Klotzback and Gray, Florida and the U.S. East Coast have less than a 1-in-3 chance, or 32 percent, of experiencing a hurricane landfall this year.
The odds are roughly similar – 31 percent – for the states along the Gulf of Mexico, and 54 percent for the entire U.S. coastline.
Klotzbach explained to conference attendees, mostly scientists and emergency management professionals, how he and Gray use “hindcasting,” the study of past weather activity, to predict the future.
“You don’t see the dartboard model,” he joked, pointing to a projected chart. “We do actually use science in our forecasts.”
The Colorado-based researchers examine ocean temperature, barometric pressure and wind shear to forecast the number and strength of the coming season’s storms.
Warmer water, for example, fuels stronger hurricanes. So far this year, Klotzbach said, the Atlantic Ocean’s temperature has been cooler than in decades. But he said it could warm up during storm season.
El Nino, a large atmospheric condition that affects weather patterns, can cause an increase in wind shear, which inhibits a storm’s intensity, Klotzbach said.
“We have a bit of a challenge ahead of us because we don’t know what El Nino will do,” he said.
Regardless of the overall seasonal prediction, the researchers urged Americans at risk to be prepared for a hurricane.
“If you have one storm and it comes over you, it’s a very active season,” Gray said.
© 2009 Sun Sentinel. Distributed by McClatchy-Tribune News Service.
Thursday, May 14, 2009
Obama administration to expand housing plan
WASHINGTON – May 14, 2009 – The Obama administration is expected to expand its mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a blemished credit record even if they don’t qualify for other assistance.
The new initiatives are expected to include ways to allow borrowers to avoid foreclosure by selling their properties or giving them back to lenders, according to people briefed on the plan who declined to be identified because it has yet to be announced.
One way would be to encourage a “short sale,” in which the home is sold for less than the amount owed on the mortgage but the lender considers the debt paid off. Another option is a deed-in-lieu of foreclosure – in which the borrower gives the property to the lender to satisfy a delinquent loan and to avoid foreclosure proceedings.
Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan are scheduled to appear Thursday morning with some borrowers who have benefited from the government’s housing aid program launched in March. An administration official said more than 55,000 offers have been made to modify borrowers’ loans in its first two months.
Short sales are often seen as preferable to foreclosure because they don’t harm a borrowers’ credit record as much as a foreclosure, but real estate agents have complained that the process can drag out for months.
“The problem is it’s never clear who in a bank has the authority to approve a short sale,” said Howard Glaser, a mortgage industry consultant in Washington and a former HUD official. Federal standards “would speed the process for buyers and sellers by making it more efficient.”
The administration estimated earlier this year that as many as 9 million borrowers will be helped through its “Making Home Affordable” initiative, including up to 5 million borrowers who are refinancing loans and 4 million who are modifying mortgages at lower monthly payments.
So far, 14 companies representing about three quarters of the mortgage market have signed up and are in line to pocket a portion of $50 billion in incentives to lower borrowers’ monthly payments so they can stay in their homes.
“We are confident that banks and servicers will move as quickly as possible to modify these loans to avert additional foreclosures in the coming months,” Donovan said earlier this week.
Meanwhile, the pace of the foreclosure crisis continues to accelerate.
The number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates, foreclosure listing service RealtyTrac Inc. said Wednesday.
More than 342,000 households received at least one foreclosure-related notice in April. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since Irvine, Calif.-based RealtyTrac began its report in January 2005.
April was the second straight month that more than 300,000 households received a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.
The April number, however, was less than 1 percent above that posted in March, when more than 340,000 properties were affected.
Copyright © 2009 The Associated Press
The new initiatives are expected to include ways to allow borrowers to avoid foreclosure by selling their properties or giving them back to lenders, according to people briefed on the plan who declined to be identified because it has yet to be announced.
One way would be to encourage a “short sale,” in which the home is sold for less than the amount owed on the mortgage but the lender considers the debt paid off. Another option is a deed-in-lieu of foreclosure – in which the borrower gives the property to the lender to satisfy a delinquent loan and to avoid foreclosure proceedings.
Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan are scheduled to appear Thursday morning with some borrowers who have benefited from the government’s housing aid program launched in March. An administration official said more than 55,000 offers have been made to modify borrowers’ loans in its first two months.
Short sales are often seen as preferable to foreclosure because they don’t harm a borrowers’ credit record as much as a foreclosure, but real estate agents have complained that the process can drag out for months.
“The problem is it’s never clear who in a bank has the authority to approve a short sale,” said Howard Glaser, a mortgage industry consultant in Washington and a former HUD official. Federal standards “would speed the process for buyers and sellers by making it more efficient.”
The administration estimated earlier this year that as many as 9 million borrowers will be helped through its “Making Home Affordable” initiative, including up to 5 million borrowers who are refinancing loans and 4 million who are modifying mortgages at lower monthly payments.
So far, 14 companies representing about three quarters of the mortgage market have signed up and are in line to pocket a portion of $50 billion in incentives to lower borrowers’ monthly payments so they can stay in their homes.
“We are confident that banks and servicers will move as quickly as possible to modify these loans to avert additional foreclosures in the coming months,” Donovan said earlier this week.
Meanwhile, the pace of the foreclosure crisis continues to accelerate.
The number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates, foreclosure listing service RealtyTrac Inc. said Wednesday.
More than 342,000 households received at least one foreclosure-related notice in April. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since Irvine, Calif.-based RealtyTrac began its report in January 2005.
April was the second straight month that more than 300,000 households received a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.
The April number, however, was less than 1 percent above that posted in March, when more than 340,000 properties were affected.
Copyright © 2009 The Associated Press
Wednesday, May 13, 2009
Federal program to help first-time buyers use tax credit for downpayment
Two programs will allow first-time buyers (those who have not owned a home for at least three years) to use their income tax credit toward a downpayment. Neither the Florida program nor the HUD program has been fully fleshed out, however, and it’s unclear how soon money will become available under either program. FAR will report on all details as they’re released through the floridarealtors.org Web site and FAR’s daily EarlyBird e-newsletter.
WASHINGTON – May 13, 2009 – First-time homebuyers will soon have another option if they want to use their $8,000 tax credit toward a downpayment. On the tails of a Florida-created program that Gov. Charlie Crist is expected to sign into law, the federal government announced its own downpayment assistance program at the National Association of Realtors® Midyear Legislative Meetings & Trade Expo taking place this week in Washington, D.C.
While the tax credit applies to “first-time homebuyers,” the term is misleading. In general, anyone who hasn’t owned a home for the past three years is considered a first-timer under the program. Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development (HUD), hopes to have additional details available within a few days, though it’s still unclear how soon homebuyers can apply for the credit.
Donovan said that the Federal Housing Administration (FHA) would allow its lenders to credit homeowners up to $8,000. He made the announcement to several thousand Realtors yesterday at a special daylong session called, The Real Estate Summit: Advancing the U.S. Economy.
“We all want to enable FHA consumers to access the homebuyer tax credit funds when they close on their home loans, so that the cash can be used as a downpayment,” Donovan said. According to Donovan, FHA approved lenders will be permitted to “monetize” the tax credit by using short-term bridge loans. Donovan also said that more will be done, and the Obama administration plans to further stabilize the housing market.
“I do think we have some early signs that the market overall is stabilizing,” said Donovan. “Since January, we’ve seen both home sales moving up and down around a relatively stable number, and we are seeing the first signs that the rapid decline in home prices is starting to abate.”
© 2009 FLORIDA ASSOCIATION OF REALTORS®
WASHINGTON – May 13, 2009 – First-time homebuyers will soon have another option if they want to use their $8,000 tax credit toward a downpayment. On the tails of a Florida-created program that Gov. Charlie Crist is expected to sign into law, the federal government announced its own downpayment assistance program at the National Association of Realtors® Midyear Legislative Meetings & Trade Expo taking place this week in Washington, D.C.
While the tax credit applies to “first-time homebuyers,” the term is misleading. In general, anyone who hasn’t owned a home for the past three years is considered a first-timer under the program. Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development (HUD), hopes to have additional details available within a few days, though it’s still unclear how soon homebuyers can apply for the credit.
Donovan said that the Federal Housing Administration (FHA) would allow its lenders to credit homeowners up to $8,000. He made the announcement to several thousand Realtors yesterday at a special daylong session called, The Real Estate Summit: Advancing the U.S. Economy.
“We all want to enable FHA consumers to access the homebuyer tax credit funds when they close on their home loans, so that the cash can be used as a downpayment,” Donovan said. According to Donovan, FHA approved lenders will be permitted to “monetize” the tax credit by using short-term bridge loans. Donovan also said that more will be done, and the Obama administration plans to further stabilize the housing market.
“I do think we have some early signs that the market overall is stabilizing,” said Donovan. “Since January, we’ve seen both home sales moving up and down around a relatively stable number, and we are seeing the first signs that the rapid decline in home prices is starting to abate.”
© 2009 FLORIDA ASSOCIATION OF REALTORS®
RealtyTrac: April foreclosures rise 32 percent
MIAMI (AP) -- The number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates, according to data released Wednesday.
More than 342,000 households received at least one foreclosure-related notice in April, RealtyTrac Inc. said. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since the Irvine, Calif.-based foreclosure listing firm began its report in January 2005.
April was the second straight month with more than 300,000 households receiving a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.
The April number, however, was less than one percent above that posted in March, when more than 340,000 properties were affected. The March data was up 17 percent from February and 46 percent from a year earlier.
"We've never seen two consecutive months like this," said Rick Sharga, RealtyTrac's senior vice president for marketing. "It's the volume that's surprising."
While total foreclosure activity was up, the number of repossessions by banks was down on a monthly and annual basis to their lowest level since March of last year, RealtyTrac said.
But that's far from positive news. Because much of the foreclosure activity in April was in the default and auction stages -- the first parts of the foreclosure process -- it's likely that repossessions will increase in coming months, RealtyTrac said.
About 63,900 homes were repossessed in April, down 11 percent from about 71,700 in March, RealtyTrac said. But the mortgage industry has resumed cracking down on delinquent borrowers after foreclosures were temporarily halted by mortgage finance companies Fannie Mae and Freddie Mac, together with many other lenders.
"All of these loans are now being processed pretty rapidly by the servers," Sharga said.
Help might be on the way. The Obama administration announced a plan in March to provide $75 billion in incentive payments for the mortgage industry to modify loans to help up to 9 million borrowers avoid foreclosure. But the extent of the relief remains unclear, with questions lingering about how much the lending industry will cooperate in modifying loans.
After banks take over foreclosed homes, they usually put them up for sale at deep discounts. Nationwide, sales of foreclosures and other distressed properties made up about half of the market in the first quarter, the National Association of Realtors reported.
First-quarter home sales fell in all but six states -- Nevada, California, Arizona, Florida, Virginia and Minnesota -- where buyers have been able to grab foreclosed homes at discounts, the realtors group said Tuesday.
On a state-by-state basis, Nevada had one in every 68 households receive a foreclosure filing, down 18 percent from March but still the nation's highest rate. In Florida, one in every 135 households received a filing in April. For California, the rate was one in every 138 households.
Rounding out the top 10 were Arizona, Idaho, Utah, Georgia, Illinois, Colorado and Ohio.
Among large cities, Las Vegas led the way with one in every 56 households receiving a filing. That was a slightly higher rate than the southwest Florida metro area of Cape Coral-Fort Myers, which saw one in 57 housing units receive a filing.
Cities in California took the next six spots: Merced, Modesto, Riverside-San Bernardino, Bakersfield, Vallejo-Fairfield and Stockton. The Florida cities of Miami and Orlando were ninth and 10th, respectively.
More than 342,000 households received at least one foreclosure-related notice in April, RealtyTrac Inc. said. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since the Irvine, Calif.-based foreclosure listing firm began its report in January 2005.
April was the second straight month with more than 300,000 households receiving a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.
The April number, however, was less than one percent above that posted in March, when more than 340,000 properties were affected. The March data was up 17 percent from February and 46 percent from a year earlier.
"We've never seen two consecutive months like this," said Rick Sharga, RealtyTrac's senior vice president for marketing. "It's the volume that's surprising."
While total foreclosure activity was up, the number of repossessions by banks was down on a monthly and annual basis to their lowest level since March of last year, RealtyTrac said.
But that's far from positive news. Because much of the foreclosure activity in April was in the default and auction stages -- the first parts of the foreclosure process -- it's likely that repossessions will increase in coming months, RealtyTrac said.
About 63,900 homes were repossessed in April, down 11 percent from about 71,700 in March, RealtyTrac said. But the mortgage industry has resumed cracking down on delinquent borrowers after foreclosures were temporarily halted by mortgage finance companies Fannie Mae and Freddie Mac, together with many other lenders.
"All of these loans are now being processed pretty rapidly by the servers," Sharga said.
Help might be on the way. The Obama administration announced a plan in March to provide $75 billion in incentive payments for the mortgage industry to modify loans to help up to 9 million borrowers avoid foreclosure. But the extent of the relief remains unclear, with questions lingering about how much the lending industry will cooperate in modifying loans.
After banks take over foreclosed homes, they usually put them up for sale at deep discounts. Nationwide, sales of foreclosures and other distressed properties made up about half of the market in the first quarter, the National Association of Realtors reported.
First-quarter home sales fell in all but six states -- Nevada, California, Arizona, Florida, Virginia and Minnesota -- where buyers have been able to grab foreclosed homes at discounts, the realtors group said Tuesday.
On a state-by-state basis, Nevada had one in every 68 households receive a foreclosure filing, down 18 percent from March but still the nation's highest rate. In Florida, one in every 135 households received a filing in April. For California, the rate was one in every 138 households.
Rounding out the top 10 were Arizona, Idaho, Utah, Georgia, Illinois, Colorado and Ohio.
Among large cities, Las Vegas led the way with one in every 56 households receiving a filing. That was a slightly higher rate than the southwest Florida metro area of Cape Coral-Fort Myers, which saw one in 57 housing units receive a filing.
Cities in California took the next six spots: Merced, Modesto, Riverside-San Bernardino, Bakersfield, Vallejo-Fairfield and Stockton. The Florida cities of Miami and Orlando were ninth and 10th, respectively.
Tuesday, May 12, 2009
First-Time Home Buyer Tax Credit $8000 Available for FHA Financing
At the morning session of the Real Estate Summit at the 2009 NAR Midyear Meetings, comments about improving short sales and foreclosures and driving a turnaround in the housing market and the economy generally with home buyer tax credits drew the biggest applause.
The biggest news was HUD Secretary Shaun Donovan’s announcement that funds from the $8,000 First-Time Home Buyer Tax Credit would be available for FHA financing, which would permit home buyers to monetize their tax credits for down payments. He promised additional details about this in his keynote address. Stay tuned for more info!
Relating to the that, another point that met with audience approval was a comment from Robert Sibcy, president of Sibcy Cline Realtors®, about enhancing the $8,000 tax credit. He said that amount should be doubled, and expanded to include as many people as possible.
“Every American should be able to take part in this economic recovery,” Sibcy said.
Also, Ron Phipps, Broker, Phipps Realty, and NAR’s First Vice President, got a warm reception from the crowd when he talked about improving the procedures for transactions on distressed properties.
“There are fundamental problems with short sales and foreclosures in terms of process,” he said to considerable applause. His comments come at a time when the industry is starting to push for a more formal method for such transactions.
By Brian Summerfield, Online Editor, Realtor® Magazine
The biggest news was HUD Secretary Shaun Donovan’s announcement that funds from the $8,000 First-Time Home Buyer Tax Credit would be available for FHA financing, which would permit home buyers to monetize their tax credits for down payments. He promised additional details about this in his keynote address. Stay tuned for more info!
Relating to the that, another point that met with audience approval was a comment from Robert Sibcy, president of Sibcy Cline Realtors®, about enhancing the $8,000 tax credit. He said that amount should be doubled, and expanded to include as many people as possible.
“Every American should be able to take part in this economic recovery,” Sibcy said.
Also, Ron Phipps, Broker, Phipps Realty, and NAR’s First Vice President, got a warm reception from the crowd when he talked about improving the procedures for transactions on distressed properties.
“There are fundamental problems with short sales and foreclosures in terms of process,” he said to considerable applause. His comments come at a time when the industry is starting to push for a more formal method for such transactions.
By Brian Summerfield, Online Editor, Realtor® Magazine
Friday, May 8, 2009
Crist says he’ll sign sweeping insurance measure
TALLAHASSEE, Fla. (AP) – May 7, 2009 – Gov. Charlie Crist said Tuesday he’ll sign legislation that boosts property insurance rates by 10 percent on more than 1 million customers of the state-backed Citizens Property Insurance Corp.
“It’s trying to make sure that we stabilize the insurance market and the viability of Citizens Property,” he said. “I think their incremental approach is prudent.”
Supporters of the legislation (HB 1495) said Citizens customers would have been looking at rate increases between 40 percent and 55 percent on Jan. 1 if lawmakers didn’t produce legislation for 10 percent increases spread over several years.
The bill also reduces the state’s $20 billion exposure on the Florida Hurricane Catastrophe Fund by phasing out the upper levels of a state backup pool by $2 billion a year over a six-year period.
“That’s wonderful,” said Sam Miller, executive director of the Florida Insurance Council. “We need to be able to rely on the ‘Cat’ fund again.”
He said it also lifts Citizens’ rate freeze done by the Legislature in 2007.
The Office of Insurance Regulation, which makes decisions on rate filings, also applauded the legislation.
“The need, obviously, is there for Citizens to increase its rates,” OIR spokesman Ed Domansky said Tuesday. “It’s important that Citizens’ rates reflect actuarial soundness to better ensure its customers that claims will be paid.”
Copyright © 2009 The Associated Press.
“It’s trying to make sure that we stabilize the insurance market and the viability of Citizens Property,” he said. “I think their incremental approach is prudent.”
Supporters of the legislation (HB 1495) said Citizens customers would have been looking at rate increases between 40 percent and 55 percent on Jan. 1 if lawmakers didn’t produce legislation for 10 percent increases spread over several years.
The bill also reduces the state’s $20 billion exposure on the Florida Hurricane Catastrophe Fund by phasing out the upper levels of a state backup pool by $2 billion a year over a six-year period.
“That’s wonderful,” said Sam Miller, executive director of the Florida Insurance Council. “We need to be able to rely on the ‘Cat’ fund again.”
He said it also lifts Citizens’ rate freeze done by the Legislature in 2007.
The Office of Insurance Regulation, which makes decisions on rate filings, also applauded the legislation.
“The need, obviously, is there for Citizens to increase its rates,” OIR spokesman Ed Domansky said Tuesday. “It’s important that Citizens’ rates reflect actuarial soundness to better ensure its customers that claims will be paid.”
Copyright © 2009 The Associated Press.
Thursday, May 7, 2009
Senate moves toward easing mortgage terms
WASHINGTON – May 7, 2009 – Trying to curb home foreclosures, the Senate voted on Wednesday to make it easier for homeowners with risky credit to switch to a lower-cost mortgage backed by the government.
The bill, passed 91-5, also would give banks a break by reducing fees they must pay for the government to insure deposits.
While both steps put taxpayer money on the line, lawmakers say the legislation is needed to prevent the economy from getting worse.
“Given the size and scope of the struggles too many Nevadans and Americans endure, it will take more time before housing normalizes again,” said Senate Majority Leader Harry Reid, D-Nev. “But with this bill, we are working to hasten that day so that no family will ever accept losing its home as the way it is.”
Also on Wednesday, Democratic leaders in the House and Senate hashed out a plan to establish a $5 million, independent commission that would investigate the cause of the financial crisis and chart a path forward.
The Senate bill would expand an existing $300 billion program called “Hope for Homeowners,” which encourages lenders to write down an individual’s mortgage if the homeowner agrees to pay an insurance premium. The program, which is set to expire in 2011, is intended to swap out a homeowner’s high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration.
So far, the program has been a dud.
When it was established last year, Congress envisioned helping some 400,000 troubled homeowners. But because eligibility requirements were so strict, one borrower has completed the refinancing process and only 51 more are in the works, according to statistics released last week.
The program also has been stymied by high fees, complex regulations and a requirement that banks volunteering to participate absorb large losses. The Obama administration supports easing restrictions.
Republicans also have swung behind the latest proposal to expand the program using $2 billion from the $700 billion Wall Street bailout fund. Sen. Richard Shelby of Alabama, the top Republican on the Banking Committee, co-sponsored the bill with panel chairman Sen. Chris Dodd, D-Conn.
Still, some Republicans warned that increasing the burden of the government to insure risky mortgages – even if it saves people from foreclosure – could backfire. Sen. David Vitter, R-La., who called the Federal Housing Administration a potential “ticking time bomb,” proposed letting the administration suspend any programs that threaten its solvency.
His effort was defeated 36-56.
Another issue is whether Hope for Homeowners will be enough to keep people in their homes, considering other voluntary efforts haven’t worked that well. According to a report released last month by federal regulators, fewer than half of the loan modifications made by lenders at the end of last year reduced payments by more than 10 percent.
Without a guaranteed steep discount, homeowners are still considered at risk of defaulting.
Instead, the Senate bill focuses on expanding eligibility. For example, the program currently bans participants who intentionally defaulted on a mortgage or other substantial debt. The Senate bill would narrow that prohibition to defaults within the last five years.
The government also could waive the requirement that the home be an individual’s primary residence. And, the bill allows for the homeowner to pay lower insurance premiums associated with the modified loan.
The bill also would permanently increase the borrowing authority for the Federal Deposit Insurance Corporation from $30 billion to $100 billion. Increasing the FDIC’s credit would allow the agency to reduce large new premiums it has begun charging banks to insure deposits.
Lawmakers also want to soothe investor fears by keeping an increase in government insurance for bank deposits. Under the Senate bill, deposits up to $250,000 would be insured by the Federal Deposit Insurance Corporation through 2013.
The House in March had approved a similar version of the bill; the two chambers will have to work out their differences before a final bill is sent to the president to sign.
Copyright © 2009 The Associated Press
The bill, passed 91-5, also would give banks a break by reducing fees they must pay for the government to insure deposits.
While both steps put taxpayer money on the line, lawmakers say the legislation is needed to prevent the economy from getting worse.
“Given the size and scope of the struggles too many Nevadans and Americans endure, it will take more time before housing normalizes again,” said Senate Majority Leader Harry Reid, D-Nev. “But with this bill, we are working to hasten that day so that no family will ever accept losing its home as the way it is.”
Also on Wednesday, Democratic leaders in the House and Senate hashed out a plan to establish a $5 million, independent commission that would investigate the cause of the financial crisis and chart a path forward.
The Senate bill would expand an existing $300 billion program called “Hope for Homeowners,” which encourages lenders to write down an individual’s mortgage if the homeowner agrees to pay an insurance premium. The program, which is set to expire in 2011, is intended to swap out a homeowner’s high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration.
So far, the program has been a dud.
When it was established last year, Congress envisioned helping some 400,000 troubled homeowners. But because eligibility requirements were so strict, one borrower has completed the refinancing process and only 51 more are in the works, according to statistics released last week.
The program also has been stymied by high fees, complex regulations and a requirement that banks volunteering to participate absorb large losses. The Obama administration supports easing restrictions.
Republicans also have swung behind the latest proposal to expand the program using $2 billion from the $700 billion Wall Street bailout fund. Sen. Richard Shelby of Alabama, the top Republican on the Banking Committee, co-sponsored the bill with panel chairman Sen. Chris Dodd, D-Conn.
Still, some Republicans warned that increasing the burden of the government to insure risky mortgages – even if it saves people from foreclosure – could backfire. Sen. David Vitter, R-La., who called the Federal Housing Administration a potential “ticking time bomb,” proposed letting the administration suspend any programs that threaten its solvency.
His effort was defeated 36-56.
Another issue is whether Hope for Homeowners will be enough to keep people in their homes, considering other voluntary efforts haven’t worked that well. According to a report released last month by federal regulators, fewer than half of the loan modifications made by lenders at the end of last year reduced payments by more than 10 percent.
Without a guaranteed steep discount, homeowners are still considered at risk of defaulting.
Instead, the Senate bill focuses on expanding eligibility. For example, the program currently bans participants who intentionally defaulted on a mortgage or other substantial debt. The Senate bill would narrow that prohibition to defaults within the last five years.
The government also could waive the requirement that the home be an individual’s primary residence. And, the bill allows for the homeowner to pay lower insurance premiums associated with the modified loan.
The bill also would permanently increase the borrowing authority for the Federal Deposit Insurance Corporation from $30 billion to $100 billion. Increasing the FDIC’s credit would allow the agency to reduce large new premiums it has begun charging banks to insure deposits.
Lawmakers also want to soothe investor fears by keeping an increase in government insurance for bank deposits. Under the Senate bill, deposits up to $250,000 would be insured by the Federal Deposit Insurance Corporation through 2013.
The House in March had approved a similar version of the bill; the two chambers will have to work out their differences before a final bill is sent to the president to sign.
Copyright © 2009 The Associated Press
Wednesday, May 6, 2009
More houses get multiple offers
ORLANDO, Fla. – May 6, 2009 – More homes for sale are attracting multiple offers as buyers pursue lower-price homes and banks low-ball asking prices to attract competing bids on foreclosures.
Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say.
“If a house is in a good neighborhood, is maintained and is a good value, it’ll get multiple offers,” says Julie Holt, owner of Anclote Title Services in Tarpon Springs, Fla. One in 10 homes now draw multiple offers, up from one in 30 last fall, she says.
Multiple bids usually signify a market in which prices are rising and buyers outnumber sellers. That’s not true now, given rampant foreclosures, still-falling prices in many regions and low demand for higher-price homes. Multiple offers on distressed properties are also not new, but their recent frequency offers hope for the real estate market, says Beth Peerce, treasurer of the California Association of Realtors (CAR).
“When you begin to see people willing to fight for a property, that’s a good sign,” she says. “We are beginning to see the beginning of the end of a disaster time.”
The competition is driven by prices – California’s are down 39 percent from a year ago, CAR says – low mortgage rates and a new federal tax credit of up to $8,000 for some first-time buyers.
Other hard-hit regions are also seeing more multiple offers, mainly on:
• Lower-end homes. In Phoenix, where prices have dropped 50 percent from their 2006 peak, competition has heated up for homes under $150,000, says Realtor Michael Orr, who publishes the Cromford Report on the Phoenix-area market. He recently considered bidding on one house for $70,000. It had received 14 offers, and Orr was told to bid $110,000 to be considered.
• Good values. Holt just handled a closing on a Tarpon Springs home close to schools that was listed at $185,000. It won three bids and sold at $192,000. Three years ago, the home would have sold for $280,000, Holt says. Higher-price homes are also getting more multiple bids. “People who always wanted to live on the water are realizing it is time to buy before prices go up,” Holt says.
Some bidders may think foreclosure bargains are waning, says Mike Lyon, CEO of Lyon Real Estate in Sacramento. That market has 1,600 bank-owned properties for sale, vs. 2,800 a year ago, he says.
He says banks have lured multiple bids by setting below-market prices. Lyon cautions that government steps to curb foreclosures have delayed some.
“People are perceiving that they are running out. But there will be more,” he says.
2009 © USA TODAY. All rights reserved.
Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say.
“If a house is in a good neighborhood, is maintained and is a good value, it’ll get multiple offers,” says Julie Holt, owner of Anclote Title Services in Tarpon Springs, Fla. One in 10 homes now draw multiple offers, up from one in 30 last fall, she says.
Multiple bids usually signify a market in which prices are rising and buyers outnumber sellers. That’s not true now, given rampant foreclosures, still-falling prices in many regions and low demand for higher-price homes. Multiple offers on distressed properties are also not new, but their recent frequency offers hope for the real estate market, says Beth Peerce, treasurer of the California Association of Realtors (CAR).
“When you begin to see people willing to fight for a property, that’s a good sign,” she says. “We are beginning to see the beginning of the end of a disaster time.”
The competition is driven by prices – California’s are down 39 percent from a year ago, CAR says – low mortgage rates and a new federal tax credit of up to $8,000 for some first-time buyers.
Other hard-hit regions are also seeing more multiple offers, mainly on:
• Lower-end homes. In Phoenix, where prices have dropped 50 percent from their 2006 peak, competition has heated up for homes under $150,000, says Realtor Michael Orr, who publishes the Cromford Report on the Phoenix-area market. He recently considered bidding on one house for $70,000. It had received 14 offers, and Orr was told to bid $110,000 to be considered.
• Good values. Holt just handled a closing on a Tarpon Springs home close to schools that was listed at $185,000. It won three bids and sold at $192,000. Three years ago, the home would have sold for $280,000, Holt says. Higher-price homes are also getting more multiple bids. “People who always wanted to live on the water are realizing it is time to buy before prices go up,” Holt says.
Some bidders may think foreclosure bargains are waning, says Mike Lyon, CEO of Lyon Real Estate in Sacramento. That market has 1,600 bank-owned properties for sale, vs. 2,800 a year ago, he says.
He says banks have lured multiple bids by setting below-market prices. Lyon cautions that government steps to curb foreclosures have delayed some.
“People are perceiving that they are running out. But there will be more,” he says.
2009 © USA TODAY. All rights reserved.
Tuesday, May 5, 2009
Pending home sales up 3.2%, housing affordability near record
WASHINGTON – May 4, 2009 – Pending home sales rose in March with many first-time buyers taking advantage of historically good housing affordability conditions, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, increased 3.2 percent to 84.6 from a level of 82.0 in February, and it’s 1.1 percent higher than March 2008’s 83.7.
“This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a downpayment,” says Lawrence Yun, NAR chief economist. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.”
NAR’s Housing Affordability Index remained near record highs. The affordability index was 166.7 in March – down from an upwardly revised record of 174.4 in February due to higher home prices in March. The index remains 30.8 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income. Tracking began in 1970.
The Pending Home Sales Index in the South rose 8.5 percent to 93.2 in March and is 7.7 percent above a year ago. In the West the index increased 3.9 percent to 93.1 and is 1.7 percent higher than March 2008. The index in the Northeast fell 5.7 percent to 59.5 in March and is 24.1 percent below a year ago. In the Midwest the index slipped 1.0 percent to 82.3 but is 8.2 percent higher than March 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the increase in buying power is quite remarkable. “Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” he said. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable. Homeownership has always offered immediate benefits and long-term value, but the advantages in today’s market are unique.”
A median-income family, earning $61,100, could afford a home costing $291,600 in March with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was notably higher than the median existing single-family home price in March, which was $174,900.
© 2009 FLORIDA ASSOCIATION OF REALTORS®
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, increased 3.2 percent to 84.6 from a level of 82.0 in February, and it’s 1.1 percent higher than March 2008’s 83.7.
“This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a downpayment,” says Lawrence Yun, NAR chief economist. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.”
NAR’s Housing Affordability Index remained near record highs. The affordability index was 166.7 in March – down from an upwardly revised record of 174.4 in February due to higher home prices in March. The index remains 30.8 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income. Tracking began in 1970.
The Pending Home Sales Index in the South rose 8.5 percent to 93.2 in March and is 7.7 percent above a year ago. In the West the index increased 3.9 percent to 93.1 and is 1.7 percent higher than March 2008. The index in the Northeast fell 5.7 percent to 59.5 in March and is 24.1 percent below a year ago. In the Midwest the index slipped 1.0 percent to 82.3 but is 8.2 percent higher than March 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the increase in buying power is quite remarkable. “Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” he said. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable. Homeownership has always offered immediate benefits and long-term value, but the advantages in today’s market are unique.”
A median-income family, earning $61,100, could afford a home costing $291,600 in March with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was notably higher than the median existing single-family home price in March, which was $174,900.
© 2009 FLORIDA ASSOCIATION OF REALTORS®
Monday, May 4, 2009
NO SWINE FLU FOR YOU
Florida has had few cases of swine flu and the danger is minimal. However, Realtors conduct business primarily through face-to-face contact, and that's the way swine flu spreads. To minimize problems, the Florida Department of Health established a toll-free helpline for swine flu questions at: (800) 342-3557. The line will be staffed from 8 a.m. to 8 p.m. daily, and after-hours calls will be handled by an automated service. The Department also offered the following recommendations:
• Avoid close contact with people who appear ill
• Avoid touching your eyes, nose and mouth
• Wash hands frequently
For more information, visit the Florida Department of Health Web page at www.doh.state.fl.us, or the U.S. Centers for Disease Control (CDC) at www.cdc.gov/swineflu.
• Avoid close contact with people who appear ill
• Avoid touching your eyes, nose and mouth
• Wash hands frequently
For more information, visit the Florida Department of Health Web page at www.doh.state.fl.us, or the U.S. Centers for Disease Control (CDC) at www.cdc.gov/swineflu.
A return to basics: buy low, fix, rent
MANASSAS, Va. – May 4, 2009 – While it may seem crazy to bet on real estate for a steady retirement income these days, that is exactly what Edward and Olivia Green are doing.
With their golden years fast approaching – he is 64 and she is 60 – the husband and wife have snapped up five investment homes in the past three years. They hope to buy more as the struggling real estate market continues to produce cheap properties. Their portfolio includes a condominium apartment in Manassas; two houses in Prince William County; and two houses in Memphis, Tenn. Their goal is to buy cheap foreclosure properties, fix them up and rent them out.
The Greens said they prefer real estate to stocks and bonds because they can touch it, drive by it on a weekend and look at it – which gives them a level of comfort in the midst of a volatile economy.
Buyers such as the Greens seeking long-term cash flow from their holdings are emerging as the new investors of the bust. In many ways, they are reclaiming the term “investor” from the speculators who bought homes during the boom years with intentions to flip them for quick gains.
“At the peak of the bubble, you had a lot of people who called themselves investors but were really only buying a property with the hopes of selling it at a higher price to a greater fool later,” said Michael D. Larson, a real estate and interest rate analyst at Weiss Research in Florida. “The long-term way to invest in real estate is to buy cheap and buy at a level where it is profitable to rent; traditionally, anything you got from appreciation was icing on the cake, not the cake itself.”
In areas such as Prince William County, where sales of foreclosure properties have dragged down home prices but rents remain relatively strong, the Greens’ strategy has become particularly popular, local real estate agents said. Nevertheless, these are not easy times for those looking to profit from the bust. Lending standards have tightened, making mortgages for investors harder to come by. There is also no guarantee that home prices will end their free-fall. Buying a foreclosed-on home, fixing it up and then becoming a landlord requires patience, vigilance and capital, and success is not certain.
The Greens have had their stumbles. Their first investment property was a two-bedroom, two-bath condominium apartment not far from Interstate 66 in Manassas that they bought from their daughter in 2006 for $250,000. At the time, they anticipated that the housing market would take only a mild hit, and so they financed the property with a mortgage but rented it out for less than their costs. They expected to sell as home prices appreciated. That didn’t work out, so they’re taking a hit to their cash flow – a mistake they don’t intend to repeat with the other places they own.
Glenn Kelman, chief executive of Redfin.com, an online brokerage based in Seattle, said one of the first questions to consider as a potential investor is whether you want to become a hands-on landlord.
“If they don’t want to become a landlord, then they have to hire a property management professional, and that is going to cut into their investment,” Kelman said. “That is the fundamental decision that somebody has to make when going from a very liquid asset [such as stocks] to something that is not all that liquid – and will make their phone ring in the middle of the night when the toilet clogs up.”
While rental income ideally provides a steady stream of cash, a tenant’s finances can fall prey to the souring job market. With the recent wave of foreclosures, potential tenants may also have shoddy credit ratings, meaning landlords need to decide whether they’re worth the risk.
Kelman said the best investors are often the “fix-it” types who can quickly size up how much they need to spend on a property to make it rentable. They are also the ones who are willing to spend their weekends and evenings making those repairs and maintaining the homes over time.
“They are often wearing a tool belt on the weekend and doing it all themselves,” he said.
Last month, Michael McNally of Chantilly paid $53,000 for a three-bedroom, 2 1/2 -bath house in Dumfries. To make the purchase, he cashed in a $60,000 certificate of deposit that was earning interest at about 3 percent, he said.
McNally initially estimated that he would need about $7,000 to get the property in shape. He now expects to come in about $1,500 over that by his self-imposed deadline of June 1. He has already redone some walls, added fresh paint, gutted and refurbished all three bathrooms, and put down new carpet.
McNally, an information technology manager for a government contracting firm, said he was inspired to get into real estate investment by his 85-year-old grandfather, who started buying properties as a side job in Pennsylvania in the 1970s. He now owns about 45 such homes that have been paid off, McNally said.
“He just rakes in all kinds of money,” he said.
Danielle Babb, a real estate investor and a co-author of the book “Finding Foreclosures,” said she has been approached in recent weeks by many people looking for such properties. Many are getting discouraged, she said, because banks are taking a long time to close on offers and finding financing has grown increasingly difficult.
Banks are turning down some would-be buyers, even those with pristine credit, if they have risky loans on their credit reports. Credit card debts are also causing problems at closing, with some banks asking buyers to pay off such accounts, she said.
The best way to close a deal quickly is to pay cash, Babb said. If you need financing, make sure you’re satisfied with the mortgages you have on the properties you already own – your residence and any vacation homes – because it will become difficult to refinance once you start borrowing for other properties, she said.
The Greens bought their second property in 2007 using cash from a home-equity loan on the house where they live. The property is a three-bedroom townhouse in the Lake Ridge subdivision of Woodbridge that had gone into foreclosure. Olivia, who is a real estate agent, had been showing the home to a military client who was interested in buying foreclosures.
“We opened the door, and it was a disaster inside,” she recalled. “Even though she was looking for a foreclosure, she couldn’t see the potential in that one; she couldn’t see what could be done.”
That evening, Olivia spoke with her husband, who runs a home repair business. They went together to view the property. They decided that with some work, the home could fetch a good rent, so they paid $235,000 in cash for it. Edward undertook about $16,000 worth of improvements – new paint, appliances, countertops, hardwood floors and more. Once the work was done, Green called her client and told her about the improvements. The buyer who originally balked agreed to rent it for $1,695 a month, Green said. That translates to a monthly profit.
In search of cheaper properties, the Greens researched other hard-hit parts of the country. They considered Detroit, looked into some communities in upstate New York and settled on Memphis. They hired a local real estate agent through a family friend. The agent e-mailed photographs and descriptions of homes.
During a week-long trip last year, the couple selected two houses. They bought one for $16,000; it needed another $16,000 in repairs. They paid $35,000 for the other; it needed just minor touch-ups. Given the distance, they hired a property manager to rent those homes.
Their latest purchase was a three-bedroom, 2 1/2 -bathroom townhouse in Dumfries they bought out of foreclosure for $60,000. They are making some repairs and hope to rent it this month.
“We are baby boomers, and we are looking for another way to have income,” Edward Green said. “It provides good cash flow if you have income coming in from rent, and with what is out there now, this is probably our best bet.”
Copyright washingtonpost.com
With their golden years fast approaching – he is 64 and she is 60 – the husband and wife have snapped up five investment homes in the past three years. They hope to buy more as the struggling real estate market continues to produce cheap properties. Their portfolio includes a condominium apartment in Manassas; two houses in Prince William County; and two houses in Memphis, Tenn. Their goal is to buy cheap foreclosure properties, fix them up and rent them out.
The Greens said they prefer real estate to stocks and bonds because they can touch it, drive by it on a weekend and look at it – which gives them a level of comfort in the midst of a volatile economy.
Buyers such as the Greens seeking long-term cash flow from their holdings are emerging as the new investors of the bust. In many ways, they are reclaiming the term “investor” from the speculators who bought homes during the boom years with intentions to flip them for quick gains.
“At the peak of the bubble, you had a lot of people who called themselves investors but were really only buying a property with the hopes of selling it at a higher price to a greater fool later,” said Michael D. Larson, a real estate and interest rate analyst at Weiss Research in Florida. “The long-term way to invest in real estate is to buy cheap and buy at a level where it is profitable to rent; traditionally, anything you got from appreciation was icing on the cake, not the cake itself.”
In areas such as Prince William County, where sales of foreclosure properties have dragged down home prices but rents remain relatively strong, the Greens’ strategy has become particularly popular, local real estate agents said. Nevertheless, these are not easy times for those looking to profit from the bust. Lending standards have tightened, making mortgages for investors harder to come by. There is also no guarantee that home prices will end their free-fall. Buying a foreclosed-on home, fixing it up and then becoming a landlord requires patience, vigilance and capital, and success is not certain.
The Greens have had their stumbles. Their first investment property was a two-bedroom, two-bath condominium apartment not far from Interstate 66 in Manassas that they bought from their daughter in 2006 for $250,000. At the time, they anticipated that the housing market would take only a mild hit, and so they financed the property with a mortgage but rented it out for less than their costs. They expected to sell as home prices appreciated. That didn’t work out, so they’re taking a hit to their cash flow – a mistake they don’t intend to repeat with the other places they own.
Glenn Kelman, chief executive of Redfin.com, an online brokerage based in Seattle, said one of the first questions to consider as a potential investor is whether you want to become a hands-on landlord.
“If they don’t want to become a landlord, then they have to hire a property management professional, and that is going to cut into their investment,” Kelman said. “That is the fundamental decision that somebody has to make when going from a very liquid asset [such as stocks] to something that is not all that liquid – and will make their phone ring in the middle of the night when the toilet clogs up.”
While rental income ideally provides a steady stream of cash, a tenant’s finances can fall prey to the souring job market. With the recent wave of foreclosures, potential tenants may also have shoddy credit ratings, meaning landlords need to decide whether they’re worth the risk.
Kelman said the best investors are often the “fix-it” types who can quickly size up how much they need to spend on a property to make it rentable. They are also the ones who are willing to spend their weekends and evenings making those repairs and maintaining the homes over time.
“They are often wearing a tool belt on the weekend and doing it all themselves,” he said.
Last month, Michael McNally of Chantilly paid $53,000 for a three-bedroom, 2 1/2 -bath house in Dumfries. To make the purchase, he cashed in a $60,000 certificate of deposit that was earning interest at about 3 percent, he said.
McNally initially estimated that he would need about $7,000 to get the property in shape. He now expects to come in about $1,500 over that by his self-imposed deadline of June 1. He has already redone some walls, added fresh paint, gutted and refurbished all three bathrooms, and put down new carpet.
McNally, an information technology manager for a government contracting firm, said he was inspired to get into real estate investment by his 85-year-old grandfather, who started buying properties as a side job in Pennsylvania in the 1970s. He now owns about 45 such homes that have been paid off, McNally said.
“He just rakes in all kinds of money,” he said.
Danielle Babb, a real estate investor and a co-author of the book “Finding Foreclosures,” said she has been approached in recent weeks by many people looking for such properties. Many are getting discouraged, she said, because banks are taking a long time to close on offers and finding financing has grown increasingly difficult.
Banks are turning down some would-be buyers, even those with pristine credit, if they have risky loans on their credit reports. Credit card debts are also causing problems at closing, with some banks asking buyers to pay off such accounts, she said.
The best way to close a deal quickly is to pay cash, Babb said. If you need financing, make sure you’re satisfied with the mortgages you have on the properties you already own – your residence and any vacation homes – because it will become difficult to refinance once you start borrowing for other properties, she said.
The Greens bought their second property in 2007 using cash from a home-equity loan on the house where they live. The property is a three-bedroom townhouse in the Lake Ridge subdivision of Woodbridge that had gone into foreclosure. Olivia, who is a real estate agent, had been showing the home to a military client who was interested in buying foreclosures.
“We opened the door, and it was a disaster inside,” she recalled. “Even though she was looking for a foreclosure, she couldn’t see the potential in that one; she couldn’t see what could be done.”
That evening, Olivia spoke with her husband, who runs a home repair business. They went together to view the property. They decided that with some work, the home could fetch a good rent, so they paid $235,000 in cash for it. Edward undertook about $16,000 worth of improvements – new paint, appliances, countertops, hardwood floors and more. Once the work was done, Green called her client and told her about the improvements. The buyer who originally balked agreed to rent it for $1,695 a month, Green said. That translates to a monthly profit.
In search of cheaper properties, the Greens researched other hard-hit parts of the country. They considered Detroit, looked into some communities in upstate New York and settled on Memphis. They hired a local real estate agent through a family friend. The agent e-mailed photographs and descriptions of homes.
During a week-long trip last year, the couple selected two houses. They bought one for $16,000; it needed another $16,000 in repairs. They paid $35,000 for the other; it needed just minor touch-ups. Given the distance, they hired a property manager to rent those homes.
Their latest purchase was a three-bedroom, 2 1/2 -bathroom townhouse in Dumfries they bought out of foreclosure for $60,000. They are making some repairs and hope to rent it this month.
“We are baby boomers, and we are looking for another way to have income,” Edward Green said. “It provides good cash flow if you have income coming in from rent, and with what is out there now, this is probably our best bet.”
Copyright washingtonpost.com
Friday, May 1, 2009
Rates on 30-year mortgages tie record low
Mortgage Rate Trend Index
Mortgage industry experts polled by Bankrate.com this week are divided on what’s going to happen to mortgage rates over the next 30 to 45 days. Forty-five percent of the panelists believe mortgage rates will rise; 46 percent believe they’ll stay about the same; and 9 percent think that rates will fall further.
WASHINGTON (AP) – May 1, 2009 – Rates on 30-year mortgages tied a record low this week, spurring refinancing activity as the troubled housing market moves closer to possibly hitting the bottom, Freddie Mac said Thursday.
Average rates on 30-year fixed mortgages, the most popular loan among home buyers, slid to 4.78 percent from 4.8 percent last week, Freddie Mac said. Last year at this time, the average rate on a 30-year mortgage was 6.06 percent.
The all-time low of 4.78 percent was recorded the week of April 2. Freddie Mac’s annual survey dates back to 1971.
Low mortgage rates have led to more refinancing activity since rates first fell dramatically in the winter. Rates slid again after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Frank Nothaft, Freddie Mac’s chief economist, said the low rate means that those who refinance a $200,000 loan would save almost $212 in monthly mortgage payments and more than $2,500 per year.
Borrowers who refinanced during this year’s first quarter reduced their mortgage payments by about $2.5 billion over the coming year, and half of borrowers who refinanced lowered their annual interest rate by at least 20 percent, according to Freddie Mac’s quarterly Refinance Report.
With inventories apparently dropping and affordability rising, there are some positive signs, Freddie Mac said.
“The housing market may be edging toward a bottom,” Nothaft said.
Freddie Mac also said the average rate on a 15-year fixed-rate mortgage was 4.48 percent this week, unchanged for the third straight week.
Rates on five-year, adjustable-rate mortgages fell to 4.80 percent from 4.85 percent last week – the lowest since Freddie Mac began tracking it in January 2005.
Average rates on one-year, adjustable-rate mortgages fell to 4.77 percent from 4.82 percent last week.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for every type of mortgage mentioned in Freddie Mac’s survey except for the five-year adjustable rate mortgage, which averaged 0.6 point.
Freddie Mac collects mortgage rates from lenders around the country. Rates can fluctuate significantly.
Copyright 2009 The Associated Press.
Mortgage industry experts polled by Bankrate.com this week are divided on what’s going to happen to mortgage rates over the next 30 to 45 days. Forty-five percent of the panelists believe mortgage rates will rise; 46 percent believe they’ll stay about the same; and 9 percent think that rates will fall further.
WASHINGTON (AP) – May 1, 2009 – Rates on 30-year mortgages tied a record low this week, spurring refinancing activity as the troubled housing market moves closer to possibly hitting the bottom, Freddie Mac said Thursday.
Average rates on 30-year fixed mortgages, the most popular loan among home buyers, slid to 4.78 percent from 4.8 percent last week, Freddie Mac said. Last year at this time, the average rate on a 30-year mortgage was 6.06 percent.
The all-time low of 4.78 percent was recorded the week of April 2. Freddie Mac’s annual survey dates back to 1971.
Low mortgage rates have led to more refinancing activity since rates first fell dramatically in the winter. Rates slid again after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Frank Nothaft, Freddie Mac’s chief economist, said the low rate means that those who refinance a $200,000 loan would save almost $212 in monthly mortgage payments and more than $2,500 per year.
Borrowers who refinanced during this year’s first quarter reduced their mortgage payments by about $2.5 billion over the coming year, and half of borrowers who refinanced lowered their annual interest rate by at least 20 percent, according to Freddie Mac’s quarterly Refinance Report.
With inventories apparently dropping and affordability rising, there are some positive signs, Freddie Mac said.
“The housing market may be edging toward a bottom,” Nothaft said.
Freddie Mac also said the average rate on a 15-year fixed-rate mortgage was 4.48 percent this week, unchanged for the third straight week.
Rates on five-year, adjustable-rate mortgages fell to 4.80 percent from 4.85 percent last week – the lowest since Freddie Mac began tracking it in January 2005.
Average rates on one-year, adjustable-rate mortgages fell to 4.77 percent from 4.82 percent last week.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for every type of mortgage mentioned in Freddie Mac’s survey except for the five-year adjustable rate mortgage, which averaged 0.6 point.
Freddie Mac collects mortgage rates from lenders around the country. Rates can fluctuate significantly.
Copyright 2009 The Associated Press.
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