Homeowners seek class-action status in suits against banks
CHARLOTTE, N.C. – Feb. 26, 2010 – More frustrated homeowners turned to federal court this week for help with their mortgages, saying Bank of America and Wells Fargo failed to provide promised payment modifications.
The two cases, filed Tuesday in Massachusetts, seek class-action status.
Three specific families are identified, one with a loan serviced by Bank of America and two by Wells Fargo – the nation’s two largest mortgage servicers. They were granted trial modifications, according to court documents, but haven’t received long-term modifications despite having submitted all required documents and made timely payments for more than three months.
The claims are simple, the two filings say: “When a large financial institution promises to modify an eligible loan to prevent foreclosure, homeowners who live up to their end of the bargain expect that promise to be kept.”
The Home Affordable Modification Program (HAMP) is the main federal plan for reducing mortgage payments, part of a $75 billion plan to stem the national foreclosure crisis. The program calls for a three-month trial period, intended to give time for the homeowner to demonstrate an ability to keep up with the lower payments. However, there are growing reports of homeowners in trial plans ultimately being rejected for modifications despite making their trial payments or even being foreclosed on during the process.
The modification process has generated so many complaints that regulators and lawmakers are pressuring lenders to improve.
The Massachusetts cases, which are not open to borrowers in other states, say homeowners are “living in limbo” and spending scarce resources on payments that might ultimately not save their homes.
“Some are in fact continuing to receive foreclosure notices,” said Stuart Rossman, a lawyer with the National Consumer Law Center in Boston, which brought the lawsuit, along with a law firm and another advocacy group.
Bank of America said it couldn’t comment on the lawsuit because it hadn’t yet been served. The Charlotte bank has said its “extraordinary measures” include sending workers to borrowers’ homes to help them fulfill requirements for long-term modifications.
A Wells Fargo spokeswoman said the company “will respond to the lawsuit once we have a chance to review it.”
The San Francisco bank, which bought Wachovia late in 2008, has been “diligently working to convert – from trial to completed modifications – customers who meet the HAMP guidelines,” Debora Blume said in an e-mail. “Unfortunately, not all customers who enter a HAMP trial do ultimately qualify for the program. In these instances, we work to determine if another foreclosure prevention option is available to them.”
Earlier this month, 10 Ohio homeowners filed a civil case in federal court against Bank of America, also saying the bank broke promises to modify their payments.
The circumstances differ, in that the Ohio homeowners say they were promised modifications during a federally sponsored event last year. As of the filing date, they hadn’t received documents or had their payments reduced, meaning they are not as far along in the process as the Massachusetts families.
© 2010 The Charlotte Observer
Friday, February 26, 2010
Thursday, February 25, 2010
Fraud didn’t cause housing meltdown
WASHINGTON – Feb. 25, 2010 – The financial crisis was the result of homebuyers’ rational reactions to misaligned incentives – not fraud, argues Todd Zywicki, a George Mason University law professor and a Mercatus Center senior scholar.
Zywicki, who has studied the financial meltdown, argues that taking out a risky bank loan looks like a foolish choice today, but at the height of the housing boom was actually a smart decision for many people.
He says the crisis began when the Federal Reserve pushed interest rates to extreme lows from 2001 to 2004, making adjustable rate loans very attractive. It wasn’t until the Fed pushed rates back up that people walked away from their loans.
In the next phase of the crisis, Zywicki says, the availability of foreclosed properties pushed down home prices, which led to more homeowners walking away from their properties. Now in the current phase of the decline, unemployment has led to even more foreclosures.
Zywicki writes: “The problem isn’t consumer gullibility or ignorance. Borrowers have shown they understand, and act on, the incentives they face all too well.”
Source: The Wall Street Journal
WASHINGTON – Feb. 25, 2010 – The financial crisis was the result of homebuyers’ rational reactions to misaligned incentives – not fraud, argues Todd Zywicki, a George Mason University law professor and a Mercatus Center senior scholar.
Zywicki, who has studied the financial meltdown, argues that taking out a risky bank loan looks like a foolish choice today, but at the height of the housing boom was actually a smart decision for many people.
He says the crisis began when the Federal Reserve pushed interest rates to extreme lows from 2001 to 2004, making adjustable rate loans very attractive. It wasn’t until the Fed pushed rates back up that people walked away from their loans.
In the next phase of the crisis, Zywicki says, the availability of foreclosed properties pushed down home prices, which led to more homeowners walking away from their properties. Now in the current phase of the decline, unemployment has led to even more foreclosures.
Zywicki writes: “The problem isn’t consumer gullibility or ignorance. Borrowers have shown they understand, and act on, the incentives they face all too well.”
Source: The Wall Street Journal
Wednesday, February 24, 2010
What you should know about home foreclosure
WEST PALM BEACH, Fla. – Feb. 24, 2010 – After more than six months of wrangling with her bank to get a reduced mortgage payment through a federal loan modification program, Debra Jacobs has had enough.
The West Palm Beach resident is walking away from her home of 14 years.
“I’m just going to wait here until they put a padlock on the door,” said Jacobs, 58. “I’m so over it, I have to let it go. It’s too painful.”
As homeowners grow increasingly frustrated by the nation’s struggling foreclosure prevention programs, more may consider walking away as a viable alternative.
But there’s more to it than just stopping your mortgage payments and handing over the keys.
Boca Raton real estate attorney Marlyn Wiener says there’s no “right way” to walk away from a home.
Knowing the consequences, however, will at least help the borrower make an informed decision, she said.
“There is an analysis that each homeowner should do to find the best way for them to proceed,” Wiener said. “There isn’t a speed lane.”
The biggest gamble in walking away is whether a lender will try to seize a borrower’s assets to pay for its losses, Wiener said. Lenders have up to 20 years in Florida to collect a deficiency judgment.
But banks are more likely to go after borrowers who strategically default – a term meaning the homeowner can afford the mortgage but decides to stop paying because the home is no longer a good investment.
Moral dilemmas aside, Wiener said it can make financial sense in some situations to “pull the plug and regroup” if the mortgage is underwater.
Scott Haft, who oversees the mortgage modification and foreclosure defense division at the law firm LaBovick & LaBovick, said some lenders are willing to forgive a mortgage debt if a borrower voluntarily turns over the home without going through a lengthy court foreclosure.
“We say, ‘We’ll give you the keys on Monday, but you have to waive your right to pursue my client in the future for deficiencies,’ “ said Haft, whose company has offices in West Palm Beach, Boynton Beach and Palm Beach Gardens. “Many times, the lender is only interested in regaining the property.”
Another concern is whether the homeowner will have to claim forgiveness of debt on tax returns for the amount of money owed the lender.
The Mortgage Debt Relief Act of 2007 temporarily exempts people who lose their primary residence from having to claim the canceled debt, but the act is scheduled to sunset Dec. 31, 2012, and can’t be applied to investment properties.
“Everybody’s relationship with their properties and their loans is different,” Wiener said. “People need to take a look at where they are in life before they decide to walk away.”
One thing Wiener asks clients is whether they will need good credit in the near future to secure a car or student loan. A foreclosure can knock up to 300 points off a credit score – damage that can take years to repair and will stay on your report for seven years.
Lenders have recently stepped up efforts to ease the foreclosure process and avoid the complications when a homeowner walks away.
Citigroup launched a program this month that allows some borrowers to stay in their homes for six months without paying. In return, the homeowner turns in the keys at the end of the time period and keeps the home in good shape.
The federal Home Affordable Foreclosure Alternatives Program, announced in November, gives lenders incentives for offering deed-in-lieu of foreclosure and for approving short sales.
But for Jacobs, the alternatives are “too little too late.”
“Not only do I not know the options, I don’t care anymore,” she said. “It’s really sad it’s come to this.”
Copyright © 2010 The Palm Beach Post
WEST PALM BEACH, Fla. – Feb. 24, 2010 – After more than six months of wrangling with her bank to get a reduced mortgage payment through a federal loan modification program, Debra Jacobs has had enough.
The West Palm Beach resident is walking away from her home of 14 years.
“I’m just going to wait here until they put a padlock on the door,” said Jacobs, 58. “I’m so over it, I have to let it go. It’s too painful.”
As homeowners grow increasingly frustrated by the nation’s struggling foreclosure prevention programs, more may consider walking away as a viable alternative.
But there’s more to it than just stopping your mortgage payments and handing over the keys.
Boca Raton real estate attorney Marlyn Wiener says there’s no “right way” to walk away from a home.
Knowing the consequences, however, will at least help the borrower make an informed decision, she said.
“There is an analysis that each homeowner should do to find the best way for them to proceed,” Wiener said. “There isn’t a speed lane.”
The biggest gamble in walking away is whether a lender will try to seize a borrower’s assets to pay for its losses, Wiener said. Lenders have up to 20 years in Florida to collect a deficiency judgment.
But banks are more likely to go after borrowers who strategically default – a term meaning the homeowner can afford the mortgage but decides to stop paying because the home is no longer a good investment.
Moral dilemmas aside, Wiener said it can make financial sense in some situations to “pull the plug and regroup” if the mortgage is underwater.
Scott Haft, who oversees the mortgage modification and foreclosure defense division at the law firm LaBovick & LaBovick, said some lenders are willing to forgive a mortgage debt if a borrower voluntarily turns over the home without going through a lengthy court foreclosure.
“We say, ‘We’ll give you the keys on Monday, but you have to waive your right to pursue my client in the future for deficiencies,’ “ said Haft, whose company has offices in West Palm Beach, Boynton Beach and Palm Beach Gardens. “Many times, the lender is only interested in regaining the property.”
Another concern is whether the homeowner will have to claim forgiveness of debt on tax returns for the amount of money owed the lender.
The Mortgage Debt Relief Act of 2007 temporarily exempts people who lose their primary residence from having to claim the canceled debt, but the act is scheduled to sunset Dec. 31, 2012, and can’t be applied to investment properties.
“Everybody’s relationship with their properties and their loans is different,” Wiener said. “People need to take a look at where they are in life before they decide to walk away.”
One thing Wiener asks clients is whether they will need good credit in the near future to secure a car or student loan. A foreclosure can knock up to 300 points off a credit score – damage that can take years to repair and will stay on your report for seven years.
Lenders have recently stepped up efforts to ease the foreclosure process and avoid the complications when a homeowner walks away.
Citigroup launched a program this month that allows some borrowers to stay in their homes for six months without paying. In return, the homeowner turns in the keys at the end of the time period and keeps the home in good shape.
The federal Home Affordable Foreclosure Alternatives Program, announced in November, gives lenders incentives for offering deed-in-lieu of foreclosure and for approving short sales.
But for Jacobs, the alternatives are “too little too late.”
“Not only do I not know the options, I don’t care anymore,” she said. “It’s really sad it’s come to this.”
Copyright © 2010 The Palm Beach Post
Tuesday, February 23, 2010
Read the fine print in a short sale
TAMPA, Fla. – Feb. 23, 2010 – With so many distressed homeowners owing more than their homes are worth, short sales have become lifelines.
These types of sales make up more than half of the homes on the market in the Tampa Bay area. Generally, this means the mortgage lender has agreed to allow the home to sell for market value. The lender writes off the rest of the debt, and the homeowner walks away.
But is it really this simple?
Lenders are increasingly adding language to the approval package, reserving the right to pursue the deficiency later – that is, the difference between what you owed on the house and what it sold for.
Some homeowners, so anxious to get out of a pending foreclosure, skip right over that part of the letter. Some understand but opt to take their chances, betting they won’t hear from the lender again.
For some lucky buyers, this has been the case – so far. They’ve sold their home as a short sale, moved on, and haven’t had any problems. But other lenders require the seller to agree upfront to pay back a set amount.
‘It seems fair’
Realtor Paul De La Torre, of Keller Williams, said lenders almost always ask his clients to agree to pay at least some of the debt back. Lenders’ requests, he said, range from 15 percent of the balance to agreeing to a payment plan – such as $80 a month for 15 years.
“It’s seems fair,” De La Torre said. “Some of these people are walking away from a huge amount. More folks need to consider it could be much worse if the lender comes back for the full deficiency later.”
Lenders don’t always go after short sale homeowners. But in Florida, lenders can wait up to five years to file for a court judgment to make the borrower pay. After the judgment is granted, the lender has 20 years to collect the cash.
This is particularly frightening because lenders could wait until the debtor is back on their feet to act. The homeowner could recover financially only to discover years later that they owe the bank tens of thousands of dollars.
Insurance companies
De La Torre said homeowners are even more likely to be required to pay a deficiency if they have mortgage insurance. (Borrowers who have less than 20 percent equity in their homes typically are required by their lenders to cover this insurance in case they default.)
Mortgage insurance companies “are getting pretty strict about short sales,” he said. “They have to sign off on the short sale, too, and many are not only asking for promissory notes but are ordering their own appraisals.”
Deficiency judgments aren’t only a problem in short sale cases. They can happen following a foreclosure, too.
A lender can take back the home, sell it and then come back after the borrower for the difference between that amount and the balance on the old mortgage. This is allowed in Florida and most other states.
So what can a homeowner do?
Not much, in the case of a foreclosure. But when negotiating a short sale, the homeowner must sign off on the paperwork, too, said Jim Davis, a real estate agent with Century 21 A&M Realty.
Borrowers can ask to be released from the debt, and sometimes that works. In the past three to six months, though, Davis said he’s seen many lenders require some form of payment.
That’s where negotiation can kick in.
Some lenders detail how much money they might come after later. Others don’t specify, and that may mean the full amount. Davis recommends anyone signing a short sale agreement insist the lenders be specific about deficiency plans. Read the fine print, he said, and ask lots of questions.
If they don’t, it may haunt them later.
Copyright © 2010 Tampa Tribune, Fla
TAMPA, Fla. – Feb. 23, 2010 – With so many distressed homeowners owing more than their homes are worth, short sales have become lifelines.
These types of sales make up more than half of the homes on the market in the Tampa Bay area. Generally, this means the mortgage lender has agreed to allow the home to sell for market value. The lender writes off the rest of the debt, and the homeowner walks away.
But is it really this simple?
Lenders are increasingly adding language to the approval package, reserving the right to pursue the deficiency later – that is, the difference between what you owed on the house and what it sold for.
Some homeowners, so anxious to get out of a pending foreclosure, skip right over that part of the letter. Some understand but opt to take their chances, betting they won’t hear from the lender again.
For some lucky buyers, this has been the case – so far. They’ve sold their home as a short sale, moved on, and haven’t had any problems. But other lenders require the seller to agree upfront to pay back a set amount.
‘It seems fair’
Realtor Paul De La Torre, of Keller Williams, said lenders almost always ask his clients to agree to pay at least some of the debt back. Lenders’ requests, he said, range from 15 percent of the balance to agreeing to a payment plan – such as $80 a month for 15 years.
“It’s seems fair,” De La Torre said. “Some of these people are walking away from a huge amount. More folks need to consider it could be much worse if the lender comes back for the full deficiency later.”
Lenders don’t always go after short sale homeowners. But in Florida, lenders can wait up to five years to file for a court judgment to make the borrower pay. After the judgment is granted, the lender has 20 years to collect the cash.
This is particularly frightening because lenders could wait until the debtor is back on their feet to act. The homeowner could recover financially only to discover years later that they owe the bank tens of thousands of dollars.
Insurance companies
De La Torre said homeowners are even more likely to be required to pay a deficiency if they have mortgage insurance. (Borrowers who have less than 20 percent equity in their homes typically are required by their lenders to cover this insurance in case they default.)
Mortgage insurance companies “are getting pretty strict about short sales,” he said. “They have to sign off on the short sale, too, and many are not only asking for promissory notes but are ordering their own appraisals.”
Deficiency judgments aren’t only a problem in short sale cases. They can happen following a foreclosure, too.
A lender can take back the home, sell it and then come back after the borrower for the difference between that amount and the balance on the old mortgage. This is allowed in Florida and most other states.
So what can a homeowner do?
Not much, in the case of a foreclosure. But when negotiating a short sale, the homeowner must sign off on the paperwork, too, said Jim Davis, a real estate agent with Century 21 A&M Realty.
Borrowers can ask to be released from the debt, and sometimes that works. In the past three to six months, though, Davis said he’s seen many lenders require some form of payment.
That’s where negotiation can kick in.
Some lenders detail how much money they might come after later. Others don’t specify, and that may mean the full amount. Davis recommends anyone signing a short sale agreement insist the lenders be specific about deficiency plans. Read the fine print, he said, and ask lots of questions.
If they don’t, it may haunt them later.
Copyright © 2010 Tampa Tribune, Fla
Monday, February 22, 2010
President announces $1.5 billion plan to help struggling homeowners
LAS VEGAS – Feb. 22, 2010 – A plan to channel $1.5 billion to housing agencies in five states hit hardest by the real estate crash has Florida officials hopeful they can keep more people in their homes and out of foreclosure.
President Obama announced the program Friday while in Nevada for a town hall meeting and campaign push for Senate Majority Leader Harry Reid. The states included in the new program are Nevada, California, Arizona, Florida and Michigan, all of which consistently rank high on any measure of mortgage woe.
But with more than 20 percent of its home loans seriously delinquent or in foreclosure, Florida tops the nation for defaults, according to a Mortgage Bankers Association report also released Friday.
Obama administration officials called the $1.5 billion “modest” considering the depth of the nation’s housing crisis but said they hope it will lead states to come up with innovative solutions tailored to their own needs.
Those solutions are expected to plug holes in the administration’s earlier Making Home Affordable Program, which has struggled to help unemployed homeowners who don’t have the income to qualify for a loan modification.
It also attempts to tackle one of the thorniest issues to come out of the market meltdown – how to cope with upside-down loans where the homeowner owes more than what the property is worth.
About 41 percent of South Florida borrowers, and 55 percent of Treasure Coast borrowers were underwater in December, according to analysts at Zillow.com.
The $1.5 billion in taxpayer money, which is coming from the federal Troubled Asset Relief Program, can be used to help negotiate with lenders to write down mortgages on underwater loans.
“This really could be extraordinary relief that will be very welcome in Florida,” said Jaimie Ross, president of the Florida Housing Coalition. “It’s pretty clear this is a program designed to keep homeowners from losing their homes.”
The money will be doled out to states based on a formula that considers home price declines and unemployment. Officials couldn’t say Friday how many people it might help.
There was some optimism Friday that the national housing market has begun to make a turn for the better.
The Mortgage Bankers Association survey showed that despite continued record foreclosures, there was a small decrease in the number of loans 30-days late in the last quarter of 2009.
That means fewer homes entered the foreclosure pipeline.
“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures,” said Jay Brinkman, chief economist for the association.
Brinkman said he usually sees an increase in 30-day delinquencies in the last quarter of the year because of holiday spending and home heating costs.
Instead, national 30-day delinquencies fell from 3.79 percent to 3.63 percent. In Florida, the 30-day delinquencies fell from 4 percent to 3.67 percent.
The drop off may also be attributed, in part, to foreclosure rescue plans such as the Making Home Affordable Program.
The program offers incentives to banks to reduce mortgage payments by cutting interest rates or principal amounts, but has been panned by critics for not reaching enough people.
A year into the program, 116,297 permanent loan modifications, including 14,598 in Florida, have been completed. But that’s only a fraction of the estimated 3.4 million loans nationwide that are 60 or more days delinquent.
Boynton Beach resident Lenore Cohen, 81, said she’s been overwhelmed by the loan modification process, which she said has included harassing letters from her bank and notices of non-payment, even when she paid.
“They said it could take eight months,” Cohen said. “I have two huge folders filled with paperwork. It’s been very disturbing.”
Copyright © 2010 The Palm Beach Post
LAS VEGAS – Feb. 22, 2010 – A plan to channel $1.5 billion to housing agencies in five states hit hardest by the real estate crash has Florida officials hopeful they can keep more people in their homes and out of foreclosure.
President Obama announced the program Friday while in Nevada for a town hall meeting and campaign push for Senate Majority Leader Harry Reid. The states included in the new program are Nevada, California, Arizona, Florida and Michigan, all of which consistently rank high on any measure of mortgage woe.
But with more than 20 percent of its home loans seriously delinquent or in foreclosure, Florida tops the nation for defaults, according to a Mortgage Bankers Association report also released Friday.
Obama administration officials called the $1.5 billion “modest” considering the depth of the nation’s housing crisis but said they hope it will lead states to come up with innovative solutions tailored to their own needs.
Those solutions are expected to plug holes in the administration’s earlier Making Home Affordable Program, which has struggled to help unemployed homeowners who don’t have the income to qualify for a loan modification.
It also attempts to tackle one of the thorniest issues to come out of the market meltdown – how to cope with upside-down loans where the homeowner owes more than what the property is worth.
About 41 percent of South Florida borrowers, and 55 percent of Treasure Coast borrowers were underwater in December, according to analysts at Zillow.com.
The $1.5 billion in taxpayer money, which is coming from the federal Troubled Asset Relief Program, can be used to help negotiate with lenders to write down mortgages on underwater loans.
“This really could be extraordinary relief that will be very welcome in Florida,” said Jaimie Ross, president of the Florida Housing Coalition. “It’s pretty clear this is a program designed to keep homeowners from losing their homes.”
The money will be doled out to states based on a formula that considers home price declines and unemployment. Officials couldn’t say Friday how many people it might help.
There was some optimism Friday that the national housing market has begun to make a turn for the better.
The Mortgage Bankers Association survey showed that despite continued record foreclosures, there was a small decrease in the number of loans 30-days late in the last quarter of 2009.
That means fewer homes entered the foreclosure pipeline.
“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures,” said Jay Brinkman, chief economist for the association.
Brinkman said he usually sees an increase in 30-day delinquencies in the last quarter of the year because of holiday spending and home heating costs.
Instead, national 30-day delinquencies fell from 3.79 percent to 3.63 percent. In Florida, the 30-day delinquencies fell from 4 percent to 3.67 percent.
The drop off may also be attributed, in part, to foreclosure rescue plans such as the Making Home Affordable Program.
The program offers incentives to banks to reduce mortgage payments by cutting interest rates or principal amounts, but has been panned by critics for not reaching enough people.
A year into the program, 116,297 permanent loan modifications, including 14,598 in Florida, have been completed. But that’s only a fraction of the estimated 3.4 million loans nationwide that are 60 or more days delinquent.
Boynton Beach resident Lenore Cohen, 81, said she’s been overwhelmed by the loan modification process, which she said has included harassing letters from her bank and notices of non-payment, even when she paid.
“They said it could take eight months,” Cohen said. “I have two huge folders filled with paperwork. It’s been very disturbing.”
Copyright © 2010 The Palm Beach Post
Thursday, February 18, 2010
Homes worth more than owners think
SEATTLE – Feb. 18, 2010 – American homeowners’ confidence in their own homes’ value during the fourth quarter fell to its lowest level in seven quarters, with just one in five (20 percent) believing their own homes’ values increased during 2009, according to the Zillow Q4 Homeowner Confidence Survey.
However, the survey finds that 28 percent of homes increased in value during 2009. The disconnect between rising values and lower homeowner expectations led a Home Value Misperception Index of negative two (-2).
A Misperception Index of zero would mean homeowners’ perceptions were in line with their homes’ actual values. A positive index means homes are worth less than owners think; a negative index indicates that homeowners are overly cynical about their own homes’ value.
One year ago, nearly half (47 percent) of homeowners believed values in their local market would decrease in the next six months. However, when asked about their own home, fewer than one in three (30 percent) believed that their own home’s value would decrease.
Today 22 percent of homeowners believe their local market will lose value over the next six months and 14 percent believing their own home will lose value.
“Homeowners are finally succumbing to the notion that, in most areas, declining home values over the past year are no longer the exception, they are the rule,” said Dr. Stan Humphries, Zillow chief economist. “Almost three times as many people believe their home’s value will increase over the next six months as believe it will decrease in value, a level of optimism that is likely to outpace actual performance in the near-term. Given recent news about the stabilization of home values in some markets, I can see why homeowners are so optimistic. However, home values in many markets are still under substantial downward pressure from high levels of foreclosures, and we don’t believe we’ll see a definitive bottom nationally until the second quarter of this year.”
Top read the complete survey, visit Zillow’s website.
© 2010 Florida Realtors®
SEATTLE – Feb. 18, 2010 – American homeowners’ confidence in their own homes’ value during the fourth quarter fell to its lowest level in seven quarters, with just one in five (20 percent) believing their own homes’ values increased during 2009, according to the Zillow Q4 Homeowner Confidence Survey.
However, the survey finds that 28 percent of homes increased in value during 2009. The disconnect between rising values and lower homeowner expectations led a Home Value Misperception Index of negative two (-2).
A Misperception Index of zero would mean homeowners’ perceptions were in line with their homes’ actual values. A positive index means homes are worth less than owners think; a negative index indicates that homeowners are overly cynical about their own homes’ value.
One year ago, nearly half (47 percent) of homeowners believed values in their local market would decrease in the next six months. However, when asked about their own home, fewer than one in three (30 percent) believed that their own home’s value would decrease.
Today 22 percent of homeowners believe their local market will lose value over the next six months and 14 percent believing their own home will lose value.
“Homeowners are finally succumbing to the notion that, in most areas, declining home values over the past year are no longer the exception, they are the rule,” said Dr. Stan Humphries, Zillow chief economist. “Almost three times as many people believe their home’s value will increase over the next six months as believe it will decrease in value, a level of optimism that is likely to outpace actual performance in the near-term. Given recent news about the stabilization of home values in some markets, I can see why homeowners are so optimistic. However, home values in many markets are still under substantial downward pressure from high levels of foreclosures, and we don’t believe we’ll see a definitive bottom nationally until the second quarter of this year.”
Top read the complete survey, visit Zillow’s website.
© 2010 Florida Realtors®
Wednesday, February 17, 2010
Housing construction up 2.8 percent in January
WASHINGTON (AP) – Feb. 17, 2010 – Housing construction posted a better-than-expected increase in January, which pushed activity to the highest level in six months. The solid gain raised hopes that the construction industry is beginning to mount a sustained rebound from its worst slump in decades.
The Commerce Department said Wednesday that construction of new homes and apartments rose 2.8 percent last month to a seasonally adjusted annual rate of 591,000 units. That was better than the 580,000 annual pace that economists were forecasting.
Applications for building permits, considered a good barometer of future activity, fell 4.9 percent to a rate of 621,000, but that was after two months of large increases.
In another sign of strength, Wednesday’s report revised activity upwards in December to show builders were starting construction at an annual pace of 575,000 units during that month, much stronger than the 557,000 originally reported. Even with the upward revision, activity fell a slight 0.7 percent in December, a dip that was blamed on severe weather in many parts of the country that depressed construction activity.
Economists are hoping that housing is beginning to recover and a rebound in this area will help support the economy as it struggles to mount a sustained recovery from the deepest recession since the 1930s.
The strength last month was led by a 10 percent jump in activity in the Northeast and an 8.9 percent increase in the West. Construction was up a smaller 1 percent in the South and 3.2 percent in the Midwest.
The strength in January pushed construction activity up by 21.1 percent from the pace in January 2009. Last month’s building rate was the fastest pace since July.
Construction of single-family homes rose by 1.5 percent to a seasonally adjusted annual rate of 484,000 units while construction of multi-family units increased 9.2 percent to an annual rate of 107,000 units.
The National Association of Home Builders said Tuesday that its housing market index rose by two points to 17 in February after having fallen for two consecutive months.
That increase in sentiment was likely influenced by a number of favorable developments including a report earlier this month that the nation’s unemployment rate fell in January to 9.7 percent – still high, but lower than the 10 percent of the previous month.
In other favorable developments, mortgage rates are hovering around 5 percent, pushed down by a Federal Reserve program to buy mortgage-backed securities. And builders say they are also seeing a boost in the demand for homes coming from a government stimulus program. That program provides tax credits of up to $8,000 for first-time homebuyers and up to $6,500 for current homeowners who decide to move.
Bob Jones, chairman of the home builders, said builders were “slightly more optimistic that the housing recovery is finally beginning to take root.”
Copyright © 2010 The Associated Press
WASHINGTON (AP) – Feb. 17, 2010 – Housing construction posted a better-than-expected increase in January, which pushed activity to the highest level in six months. The solid gain raised hopes that the construction industry is beginning to mount a sustained rebound from its worst slump in decades.
The Commerce Department said Wednesday that construction of new homes and apartments rose 2.8 percent last month to a seasonally adjusted annual rate of 591,000 units. That was better than the 580,000 annual pace that economists were forecasting.
Applications for building permits, considered a good barometer of future activity, fell 4.9 percent to a rate of 621,000, but that was after two months of large increases.
In another sign of strength, Wednesday’s report revised activity upwards in December to show builders were starting construction at an annual pace of 575,000 units during that month, much stronger than the 557,000 originally reported. Even with the upward revision, activity fell a slight 0.7 percent in December, a dip that was blamed on severe weather in many parts of the country that depressed construction activity.
Economists are hoping that housing is beginning to recover and a rebound in this area will help support the economy as it struggles to mount a sustained recovery from the deepest recession since the 1930s.
The strength last month was led by a 10 percent jump in activity in the Northeast and an 8.9 percent increase in the West. Construction was up a smaller 1 percent in the South and 3.2 percent in the Midwest.
The strength in January pushed construction activity up by 21.1 percent from the pace in January 2009. Last month’s building rate was the fastest pace since July.
Construction of single-family homes rose by 1.5 percent to a seasonally adjusted annual rate of 484,000 units while construction of multi-family units increased 9.2 percent to an annual rate of 107,000 units.
The National Association of Home Builders said Tuesday that its housing market index rose by two points to 17 in February after having fallen for two consecutive months.
That increase in sentiment was likely influenced by a number of favorable developments including a report earlier this month that the nation’s unemployment rate fell in January to 9.7 percent – still high, but lower than the 10 percent of the previous month.
In other favorable developments, mortgage rates are hovering around 5 percent, pushed down by a Federal Reserve program to buy mortgage-backed securities. And builders say they are also seeing a boost in the demand for homes coming from a government stimulus program. That program provides tax credits of up to $8,000 for first-time homebuyers and up to $6,500 for current homeowners who decide to move.
Bob Jones, chairman of the home builders, said builders were “slightly more optimistic that the housing recovery is finally beginning to take root.”
Copyright © 2010 The Associated Press
Tuesday, February 16, 2010
Refinancing unavailable for many borrowers
NEW YORK – Feb. 16, 2010 – The refinancing wave that swept the nation when mortgage rates hit historic lows last year is petering out, leaving behind millions of homeowners who could not qualify for the best rates.
Half of the nation’s borrowers have mortgages with rates above 6 percent even though the average rate on 30-year, fixed-rate mortgages has been about 5 percent for most of the past year, according to research firm First American CoreLogic.
More refinancing activity would have helped household budgets, but also the national economy because homeowners might have spent some of the extra cash they pocketed, giving the recovery an added lift.
Many borrowers who tried to refinance have found they’re stuck because the value of their homes has tumbled and their equity has melted away. Others have been shut out because lenders tightened their requirements, demanding stellar credit and low debt.
An effort by the Obama administration to overcome some of these challenges has fallen flat, frustrating many homeowners – especially with mortgage rates expected to rise by year’s end, if not sooner.
“We’ve reached the point of burnout,” said Amy Crews Cutts, deputy chief economist at Freddie Mac. “Most of the people who can refinance today have done so already.”
Usually, borrowers refinance if they can save at least one percentage point on the interest rate, mortgage experts say, and even a savings of as little as half a point may make sense under some circumstances. Ultimately, the decision depends on whether the savings come in a time frame that makes sense for the borrower.
Elaine Lewis and her husband are among those who were shut out. They could not refinance their Silver Spring house this month because it was appraised at $448,000 – $60,000 less than they paid in 2004. They still have equity in the house. But because that equity is less than 20 percent, they are required to pay private mortgage insurance.
As they see it, their options are to pay the mortgage insurance and related upfront costs or come up with enough cash to pay down their principal, beefing up their equity so insurance won’t be necessary.
“Neither of those choices made financial sense since people refinance to save money, not to spend money,” Lewis said. “It was terribly disappointing.”
Other borrowers have no equity, or they owe more than their homes are worth, making it nearly impossible to refinance. These “underwater” borrowers make up about a quarter of all households now that national home prices have plunged an average of 30 percent from their peak in 2006.
Refinancing activity took off after the Federal Reserve committed to buying a huge chunk of mortgage-backed securities in late 2008 to help loosen consumer lending. Mortgage rates immediately dropped below 6 percent and stayed there through 2009. They dipped below 5 percent last spring, and then hit an all-time low of 4.71 percent in early December, Freddie Mac reported. They have hovered around 5 percent since.
Freddie Mac estimated that 5.8 million borrowers have refinanced since the start of 2009, saving $140 a month on average.
The flurry of activity came nowhere close to matching the unprecedented refinancing boom in 2003, when rates dropped below 6 percent for the first time in decades. The economy was flourishing, and home prices were rising.
“But context is everything,” said Cutts, of Freddie Mac. “In many ways it’s surprising that with the financial markets in disarray and home prices falling across the country and eight-million-plus jobs lost that we’d have people taking out new loans in 2009.”
Still the numbers are not as impressive as they could have been, many economists said.
“There are quite a few mortgages that are in the money, meaning they are well within the zone where refinancing makes sense,” said Sam Khater, a senior economist with First American CoreLogic. “Given where rates are right now, refinance activity should be quite a bit higher than it is.”
If the bulk of those people were to refinance, that would goose consumer spending, giving the wider economy a boost. Instead, refinance activity has dropped 60 percent from its peak in the spring, according to the Mortgage Bankers Association. This year, refinances should total $500 billion of all loan originations, down from $1.4 trillion last year, the group predicted.
Larry F. Pratt, chief executive of First Savings Mortgage, said he has witnessed the challenges up close. “Historically, our rejection rate is less than 5 percent of all our refinance applications,” Pratt said. “For 2009, it was nearly 25 percent.”
To help borrowers, the Obama administration launched the Home Affordable Refinance Program nearly a year ago. The initiative aimed to help refinance the loans of borrowers with little or no equity in their homes but who are on track with their mortgages. These underwater borrowers are at greater risk of foreclosure, and the administration hoped that lowering their payments would decrease their chances of falling behind.
The program was limited to borrowers whose loans were backed by mortgage financiers Fannie Mae and Freddie Mac. Originally it targeted borrowers whose loan balances were slightly higher than the property’s value. The program was later expanded to include borrowers who owe up to 25 percent more than their homes are worth.
Yet fewer than 200,000 borrowers have refinanced through this program since its launch in March – nowhere near the up to 5 million the administration projected to reach by June, when the initiative is to end. A Federal Housing Finance Agency official said refinancing under the program picked up in the final months of last year. Treasury officials have said the initiative has helped many borrowers.
Some people probably abandoned it for a separate government-led program that also aimed to prevent foreclosures but offered even lower rates, according to housing advocates. But the refinancing initiative was also dogged by delays as lenders struggled to update their computer systems to accommodate the program. Another obstacle was that many homeowners have second mortgages or private mortgage insurance, which can get in the way of refinancing a primary loan.
Thomas Fox, a well-paid government contractor with excellent credit and relatively little debt, should have been the perfect candidate. He made a 17 percent downpayment when he bought his home in Ashburn in 2007. Now he owes at least 5 percent more than the house is worth.
Fox tried to refinance under the federal program, but his private mortgage insurance policy could not be reissued on a new loan, said his mortgage broker, Devon Segal of Apex Home Loans.
“If the government’s program won’t work for this guy, someone with great credit scores and a strong income,” Segal said, “it won’t work for anybody.”
Copyright © 2010 washingtonpost.com.
NEW YORK – Feb. 16, 2010 – The refinancing wave that swept the nation when mortgage rates hit historic lows last year is petering out, leaving behind millions of homeowners who could not qualify for the best rates.
Half of the nation’s borrowers have mortgages with rates above 6 percent even though the average rate on 30-year, fixed-rate mortgages has been about 5 percent for most of the past year, according to research firm First American CoreLogic.
More refinancing activity would have helped household budgets, but also the national economy because homeowners might have spent some of the extra cash they pocketed, giving the recovery an added lift.
Many borrowers who tried to refinance have found they’re stuck because the value of their homes has tumbled and their equity has melted away. Others have been shut out because lenders tightened their requirements, demanding stellar credit and low debt.
An effort by the Obama administration to overcome some of these challenges has fallen flat, frustrating many homeowners – especially with mortgage rates expected to rise by year’s end, if not sooner.
“We’ve reached the point of burnout,” said Amy Crews Cutts, deputy chief economist at Freddie Mac. “Most of the people who can refinance today have done so already.”
Usually, borrowers refinance if they can save at least one percentage point on the interest rate, mortgage experts say, and even a savings of as little as half a point may make sense under some circumstances. Ultimately, the decision depends on whether the savings come in a time frame that makes sense for the borrower.
Elaine Lewis and her husband are among those who were shut out. They could not refinance their Silver Spring house this month because it was appraised at $448,000 – $60,000 less than they paid in 2004. They still have equity in the house. But because that equity is less than 20 percent, they are required to pay private mortgage insurance.
As they see it, their options are to pay the mortgage insurance and related upfront costs or come up with enough cash to pay down their principal, beefing up their equity so insurance won’t be necessary.
“Neither of those choices made financial sense since people refinance to save money, not to spend money,” Lewis said. “It was terribly disappointing.”
Other borrowers have no equity, or they owe more than their homes are worth, making it nearly impossible to refinance. These “underwater” borrowers make up about a quarter of all households now that national home prices have plunged an average of 30 percent from their peak in 2006.
Refinancing activity took off after the Federal Reserve committed to buying a huge chunk of mortgage-backed securities in late 2008 to help loosen consumer lending. Mortgage rates immediately dropped below 6 percent and stayed there through 2009. They dipped below 5 percent last spring, and then hit an all-time low of 4.71 percent in early December, Freddie Mac reported. They have hovered around 5 percent since.
Freddie Mac estimated that 5.8 million borrowers have refinanced since the start of 2009, saving $140 a month on average.
The flurry of activity came nowhere close to matching the unprecedented refinancing boom in 2003, when rates dropped below 6 percent for the first time in decades. The economy was flourishing, and home prices were rising.
“But context is everything,” said Cutts, of Freddie Mac. “In many ways it’s surprising that with the financial markets in disarray and home prices falling across the country and eight-million-plus jobs lost that we’d have people taking out new loans in 2009.”
Still the numbers are not as impressive as they could have been, many economists said.
“There are quite a few mortgages that are in the money, meaning they are well within the zone where refinancing makes sense,” said Sam Khater, a senior economist with First American CoreLogic. “Given where rates are right now, refinance activity should be quite a bit higher than it is.”
If the bulk of those people were to refinance, that would goose consumer spending, giving the wider economy a boost. Instead, refinance activity has dropped 60 percent from its peak in the spring, according to the Mortgage Bankers Association. This year, refinances should total $500 billion of all loan originations, down from $1.4 trillion last year, the group predicted.
Larry F. Pratt, chief executive of First Savings Mortgage, said he has witnessed the challenges up close. “Historically, our rejection rate is less than 5 percent of all our refinance applications,” Pratt said. “For 2009, it was nearly 25 percent.”
To help borrowers, the Obama administration launched the Home Affordable Refinance Program nearly a year ago. The initiative aimed to help refinance the loans of borrowers with little or no equity in their homes but who are on track with their mortgages. These underwater borrowers are at greater risk of foreclosure, and the administration hoped that lowering their payments would decrease their chances of falling behind.
The program was limited to borrowers whose loans were backed by mortgage financiers Fannie Mae and Freddie Mac. Originally it targeted borrowers whose loan balances were slightly higher than the property’s value. The program was later expanded to include borrowers who owe up to 25 percent more than their homes are worth.
Yet fewer than 200,000 borrowers have refinanced through this program since its launch in March – nowhere near the up to 5 million the administration projected to reach by June, when the initiative is to end. A Federal Housing Finance Agency official said refinancing under the program picked up in the final months of last year. Treasury officials have said the initiative has helped many borrowers.
Some people probably abandoned it for a separate government-led program that also aimed to prevent foreclosures but offered even lower rates, according to housing advocates. But the refinancing initiative was also dogged by delays as lenders struggled to update their computer systems to accommodate the program. Another obstacle was that many homeowners have second mortgages or private mortgage insurance, which can get in the way of refinancing a primary loan.
Thomas Fox, a well-paid government contractor with excellent credit and relatively little debt, should have been the perfect candidate. He made a 17 percent downpayment when he bought his home in Ashburn in 2007. Now he owes at least 5 percent more than the house is worth.
Fox tried to refinance under the federal program, but his private mortgage insurance policy could not be reissued on a new loan, said his mortgage broker, Devon Segal of Apex Home Loans.
“If the government’s program won’t work for this guy, someone with great credit scores and a strong income,” Segal said, “it won’t work for anybody.”
Copyright © 2010 washingtonpost.com.
Monday, February 15, 2010
Are principal reductions the answer?
NEW YORK – Feb. 15, 2010 – Real estate investors are coming to the same conclusion that housing activists reached at the beginning of the crisis – forgiving principal on underwater loans may be the best way to deal with the problem.
“Principal reduction is the only answer,” says Laurie Goodman, a senior managing director at mortgage-bond trader Amherst Securities Group L.P.
Some activists and investors are asking banks to consider principal reductions so that the amount borrowers owe on underwater loans can be sharply reduced. They say this offers the best incentive for borrowers to continue to make their monthly mortgage payments.
Even though principal reductions are complicated transactions for lenders, even the largest of them are beginning to accept the idea.
“Everybody’s realizing there is a place for principal reductions to a much greater extent than before,” says Jack Schakett, a senior Bank of America Corp. executive involved in loan workouts.
Micah Green, a partner at law firm Patton Boggs LLP, who represents some of the largest investors in mortgages, shrugs the idea that write-downs are unfair to those who continue to make their payments. “Everybody’s going to have to give a little for it to work,” he says.
Source: The Wall Street Journal,
NEW YORK – Feb. 15, 2010 – Real estate investors are coming to the same conclusion that housing activists reached at the beginning of the crisis – forgiving principal on underwater loans may be the best way to deal with the problem.
“Principal reduction is the only answer,” says Laurie Goodman, a senior managing director at mortgage-bond trader Amherst Securities Group L.P.
Some activists and investors are asking banks to consider principal reductions so that the amount borrowers owe on underwater loans can be sharply reduced. They say this offers the best incentive for borrowers to continue to make their monthly mortgage payments.
Even though principal reductions are complicated transactions for lenders, even the largest of them are beginning to accept the idea.
“Everybody’s realizing there is a place for principal reductions to a much greater extent than before,” says Jack Schakett, a senior Bank of America Corp. executive involved in loan workouts.
Micah Green, a partner at law firm Patton Boggs LLP, who represents some of the largest investors in mortgages, shrugs the idea that write-downs are unfair to those who continue to make their payments. “Everybody’s going to have to give a little for it to work,” he says.
Source: The Wall Street Journal,
Friday, February 12, 2010
Median home prices show signs of stability
WASHINGTON – Feb. 12, 2010 – Home prices rose in more than 40 percent of U.S. cities in the fourth quarter of last year, as massive federal spending helped the housing market show signs of stability.
The National Association of Realtors said Thursday that the median sales price for previously occupied homes rose in 67 out of 151 metropolitan areas in the October-December quarter versus a year ago. That’s a sharp improvement from the third quarter, when prices rose in only 20 percent of cities.
The national median price was $172,900, or 4.1 percent below the fourth quarter last year. That was the smallest year-over-year price decline in more than two years.
Home sales surged in the quarter, outpacing the third quarter and the previous year’s figures. A federal tax credit of up to $8,000 for first-time homebuyers that was originally due to expire Nov. 30 but was extended through April provided much of the fuel. Sales for the quarter hit a seasonally adjusted annual rate of 6 million, up 27 percent from a year earlier.
The big question hanging over the housing market this year is whether the tentative recovery will stumble after the government pulls back support. The Federal Reserve’s $1.25 trillion program to push down mortgage rates is scheduled to expire at the end of March. A month later, the newly extended tax credit for first-time homebuyers runs out.
Economists are also concerned about a huge backlog of homeowners facing foreclosure. If those homes go up for sale at deeply discounted prices, median prices could turn downward again. Indeed, prices in some severely depressed areas are still falling.
The largest price decline by percentage in the fourth quarter was in Ocala, Fla., where the median sale price plunged 23.4 percent to $93,000. Foreclosure-plagued Las Vegas saw its median price tumble 23.3 percent to $139,400 versus a year ago.
The largest price gain was in Saginaw, Mich., where prices rose more than 50 percent to a median of $67,400. Cleveland followed with an increase of 25 percent to $110,000.
Copyright © 2010 The Associated Press
WASHINGTON – Feb. 12, 2010 – Home prices rose in more than 40 percent of U.S. cities in the fourth quarter of last year, as massive federal spending helped the housing market show signs of stability.
The National Association of Realtors said Thursday that the median sales price for previously occupied homes rose in 67 out of 151 metropolitan areas in the October-December quarter versus a year ago. That’s a sharp improvement from the third quarter, when prices rose in only 20 percent of cities.
The national median price was $172,900, or 4.1 percent below the fourth quarter last year. That was the smallest year-over-year price decline in more than two years.
Home sales surged in the quarter, outpacing the third quarter and the previous year’s figures. A federal tax credit of up to $8,000 for first-time homebuyers that was originally due to expire Nov. 30 but was extended through April provided much of the fuel. Sales for the quarter hit a seasonally adjusted annual rate of 6 million, up 27 percent from a year earlier.
The big question hanging over the housing market this year is whether the tentative recovery will stumble after the government pulls back support. The Federal Reserve’s $1.25 trillion program to push down mortgage rates is scheduled to expire at the end of March. A month later, the newly extended tax credit for first-time homebuyers runs out.
Economists are also concerned about a huge backlog of homeowners facing foreclosure. If those homes go up for sale at deeply discounted prices, median prices could turn downward again. Indeed, prices in some severely depressed areas are still falling.
The largest price decline by percentage in the fourth quarter was in Ocala, Fla., where the median sale price plunged 23.4 percent to $93,000. Foreclosure-plagued Las Vegas saw its median price tumble 23.3 percent to $139,400 versus a year ago.
The largest price gain was in Saginaw, Mich., where prices rose more than 50 percent to a median of $67,400. Cleveland followed with an increase of 25 percent to $110,000.
Copyright © 2010 The Associated Press
Thursday, February 11, 2010
Mortgage officials try exits softer than foreclosures
NEW YORK – Feb. 11, 2010 – Seeking alternatives to the nation’s struggling foreclosure prevention efforts, federal and mortgage industry officials increasingly are looking for ways to get distressed borrowers to leave their homes voluntarily, without going through the expensive foreclosure process or a messy eviction.
Citigroup, for instance, plans to announce a pilot program on Thursday that would allow delinquent borrowers who don’t qualify for or decline mortgage relief the opportunity to stay in their homes without making payments for up to six months before turning over the keys, in return for keeping the property in good condition. The bank estimates that up to 20,000 borrowers in Texas, Florida, Illinois, Michigan, New Jersey and Ohio could be eligible.
The program is just the latest amid a growing acknowledgment that foreclosure prevention efforts will fail to reach millions of borrowers over the next few years.
“This is a graceful way to move on with their lives instead of being foreclosed on and being evicted from their homes,” said Sanjiv Das, chief executive of CitiMortgage.
The Citigroup plan attempts to address some common industry complaints, including borrowers who leave their homes in disarray after foreclosure, requiring lenders to spend thousands of dollars fixing up the property before putting it on the market. Also, homeowners who owe far more than their homes are worth increasingly are choosing to “strategically default,” even though they can afford to pay their mortgage. The new program gives CitiMortgage more control over when distressed homes are put up for sale, bypassing clogged courthouses that have slowed the foreclosure process in many parts of the country.
By avoiding a glut of foreclosures that could hit the housing market within the next 16 to 18 months, the program – if it is replicated throughout the industry – could help prevent another dip in home prices, Das said.
It would be a more orderly process “than if all of the foreclosed properties came crashing at some point in the cycle,” he said.
Other initiatives have also emerged for borrowers likely to lose their homes. Fannie Mae and Freddie Mac, the mortgage financing companies, developed programs allowing former homeowners to become renters after a foreclosure or other proceedings. As part of its federal foreclosure prevention program, known as Making Home Affordable, the Treasury Department announced late last year that lenders would be eligible for $1,000 in exchange for allowing borrowers to sell their home in a short sale. In such deals, the borrower sells the home for less than the outstanding mortgage, and the lender forgives the difference.
Moody’s Economy.com has forecast that the number of short sales and transactions in which borrowers surrender their deed in lieu of foreclosure will increase more than 50 percent, to about 490,000, this year. That is just a fraction of the 1.9 million homeowners Moody’s has forecast will lose their homes to foreclosure this year, up from 1.7 million last year.
But lenders have struggled to make many of these programs effective. The short sale is often lengthy and cumbersome for homeowners. In some cases, borrowers have second liens on the property, which can hang up the process. And lenders are sometimes suspicious of the potential for fraud if the home is sold cheap to a friend or family member of the borrower.
It’s unclear how rental programs for former homeowners are working. Fannie Mae launched its “Deed for Lease” program in November, offering borrowers a 12-month lease in return for turning over the keys to their former home and maintaining the property. A company spokeswoman said that it was too early to judge the program’s success, but that former homeowners who surrender their deed to avoid foreclosure – numbering nearly 2,000 through the third quarter of last year – would be eligible. Freddie Mac’s year-old program targets former homeowners after their foreclosure, offering them a month-to-month lease. It has not released specific data on how many homeowners have chosen this option.
Citigroup’s program goes further. It targets delinquent homeowners who do not qualify for mortgage relief. During the time the borrower is still in the home, they must continue to pay utilities, but in some cases, the bank may help cover some of the taxes, insurance or homeowner association fees. The borrower would also be eligible for transition counseling to help find a new home, and a minimum of $1,000 to help offset moving costs.
If there is significant demand for the program, Citigroup will expand it, Das said. “There might be complications that we haven’t thought about,” he said. “What happens if they don’t turn over the keys after six months or they don’t maintain their house like we would like them to maintain their house?”
Copyright © 2010 washingtonpost.com
NEW YORK – Feb. 11, 2010 – Seeking alternatives to the nation’s struggling foreclosure prevention efforts, federal and mortgage industry officials increasingly are looking for ways to get distressed borrowers to leave their homes voluntarily, without going through the expensive foreclosure process or a messy eviction.
Citigroup, for instance, plans to announce a pilot program on Thursday that would allow delinquent borrowers who don’t qualify for or decline mortgage relief the opportunity to stay in their homes without making payments for up to six months before turning over the keys, in return for keeping the property in good condition. The bank estimates that up to 20,000 borrowers in Texas, Florida, Illinois, Michigan, New Jersey and Ohio could be eligible.
The program is just the latest amid a growing acknowledgment that foreclosure prevention efforts will fail to reach millions of borrowers over the next few years.
“This is a graceful way to move on with their lives instead of being foreclosed on and being evicted from their homes,” said Sanjiv Das, chief executive of CitiMortgage.
The Citigroup plan attempts to address some common industry complaints, including borrowers who leave their homes in disarray after foreclosure, requiring lenders to spend thousands of dollars fixing up the property before putting it on the market. Also, homeowners who owe far more than their homes are worth increasingly are choosing to “strategically default,” even though they can afford to pay their mortgage. The new program gives CitiMortgage more control over when distressed homes are put up for sale, bypassing clogged courthouses that have slowed the foreclosure process in many parts of the country.
By avoiding a glut of foreclosures that could hit the housing market within the next 16 to 18 months, the program – if it is replicated throughout the industry – could help prevent another dip in home prices, Das said.
It would be a more orderly process “than if all of the foreclosed properties came crashing at some point in the cycle,” he said.
Other initiatives have also emerged for borrowers likely to lose their homes. Fannie Mae and Freddie Mac, the mortgage financing companies, developed programs allowing former homeowners to become renters after a foreclosure or other proceedings. As part of its federal foreclosure prevention program, known as Making Home Affordable, the Treasury Department announced late last year that lenders would be eligible for $1,000 in exchange for allowing borrowers to sell their home in a short sale. In such deals, the borrower sells the home for less than the outstanding mortgage, and the lender forgives the difference.
Moody’s Economy.com has forecast that the number of short sales and transactions in which borrowers surrender their deed in lieu of foreclosure will increase more than 50 percent, to about 490,000, this year. That is just a fraction of the 1.9 million homeowners Moody’s has forecast will lose their homes to foreclosure this year, up from 1.7 million last year.
But lenders have struggled to make many of these programs effective. The short sale is often lengthy and cumbersome for homeowners. In some cases, borrowers have second liens on the property, which can hang up the process. And lenders are sometimes suspicious of the potential for fraud if the home is sold cheap to a friend or family member of the borrower.
It’s unclear how rental programs for former homeowners are working. Fannie Mae launched its “Deed for Lease” program in November, offering borrowers a 12-month lease in return for turning over the keys to their former home and maintaining the property. A company spokeswoman said that it was too early to judge the program’s success, but that former homeowners who surrender their deed to avoid foreclosure – numbering nearly 2,000 through the third quarter of last year – would be eligible. Freddie Mac’s year-old program targets former homeowners after their foreclosure, offering them a month-to-month lease. It has not released specific data on how many homeowners have chosen this option.
Citigroup’s program goes further. It targets delinquent homeowners who do not qualify for mortgage relief. During the time the borrower is still in the home, they must continue to pay utilities, but in some cases, the bank may help cover some of the taxes, insurance or homeowner association fees. The borrower would also be eligible for transition counseling to help find a new home, and a minimum of $1,000 to help offset moving costs.
If there is significant demand for the program, Citigroup will expand it, Das said. “There might be complications that we haven’t thought about,” he said. “What happens if they don’t turn over the keys after six months or they don’t maintain their house like we would like them to maintain their house?”
Copyright © 2010 washingtonpost.com
Wednesday, February 10, 2010
Clients access MLS through iPhone app
KEY WEST, Fla. – Feb. 10, 2010 – Realtor.com offers an iPhone app that allows mobile users to access home listings nearby, thanks, in part, to the iPhone’s built-in GPS. One Florida broker, however, says that he has taken the iPhone application (app) a step further by allowing users to tap into the local MLS.
The National Association of Realtors spent a number of years developing its Virtual Office Website (VOW) (http://www.realtor.org/law_and_policy/doj/nar_doj) policy, based in part on a lawsuit filed against it by the U.S. Department of Justice. The issue raised a number of legal questions as existing MLS rules clashed with emerging technology. Now that websites are engrained in the fabric of daily business, the introduction of an MLS iPhone app represents newer technology, and a new way to access MLS listings.
The Florida broker’s iPhone app is free to download. Once loaded into an iPhone, the broker claims users can review his featured listings and access his website in addition to searching the entire MLS (Multiple Listing Service). Searches can be personalized based on price range, area, number of bedrooms and other criteria, including foreclosures and short sales. Users can save listings and review them later on their personal computer.
The app includes information about local architecture, tourism, travel and relocation. Users can contact the broker directly about all listings by using the app.
© 2010 Florida Realtors®
KEY WEST, Fla. – Feb. 10, 2010 – Realtor.com offers an iPhone app that allows mobile users to access home listings nearby, thanks, in part, to the iPhone’s built-in GPS. One Florida broker, however, says that he has taken the iPhone application (app) a step further by allowing users to tap into the local MLS.
The National Association of Realtors spent a number of years developing its Virtual Office Website (VOW) (http://www.realtor.org/law_and_policy/doj/nar_doj) policy, based in part on a lawsuit filed against it by the U.S. Department of Justice. The issue raised a number of legal questions as existing MLS rules clashed with emerging technology. Now that websites are engrained in the fabric of daily business, the introduction of an MLS iPhone app represents newer technology, and a new way to access MLS listings.
The Florida broker’s iPhone app is free to download. Once loaded into an iPhone, the broker claims users can review his featured listings and access his website in addition to searching the entire MLS (Multiple Listing Service). Searches can be personalized based on price range, area, number of bedrooms and other criteria, including foreclosures and short sales. Users can save listings and review them later on their personal computer.
The app includes information about local architecture, tourism, travel and relocation. Users can contact the broker directly about all listings by using the app.
© 2010 Florida Realtors®
Tuesday, February 9, 2010
4 reasons to sell now
ORLANDO, Fla. – Feb. 9, 2010 – Selling a property in this tough market can seem like a challenge. Here are four factors that actually make this a good time to post a For-Sale sign:
• Sell low and buy low. Because all property values are down, the loss on the property a homeowner sells is really only a paper loss because the next property he buys also will be a bargain. If he buys smartly, when prices come back up in a few years, he’ll be in better shape.
• Downpayment help is widely available. While nothing-down loans have disappeared, it’s easy to find downpayment assistance for lower-income and first-time homebuyers. Programs vary all over the country, but one good way to find them is to search online for “downpayment assistance programs” and the name of your region.
• Your Uncle Sam has money to share. Besides the $8,000 first-time homebuyer tax credit and the $6,500 move-up credit, there are an array of energy tax credits that can make home improvements pay off in cash.
• Good help is available. Really talented real estate practitioners, contractors and designers are available and eager for business.
Source: McClatchy Tribune
ORLANDO, Fla. – Feb. 9, 2010 – Selling a property in this tough market can seem like a challenge. Here are four factors that actually make this a good time to post a For-Sale sign:
• Sell low and buy low. Because all property values are down, the loss on the property a homeowner sells is really only a paper loss because the next property he buys also will be a bargain. If he buys smartly, when prices come back up in a few years, he’ll be in better shape.
• Downpayment help is widely available. While nothing-down loans have disappeared, it’s easy to find downpayment assistance for lower-income and first-time homebuyers. Programs vary all over the country, but one good way to find them is to search online for “downpayment assistance programs” and the name of your region.
• Your Uncle Sam has money to share. Besides the $8,000 first-time homebuyer tax credit and the $6,500 move-up credit, there are an array of energy tax credits that can make home improvements pay off in cash.
• Good help is available. Really talented real estate practitioners, contractors and designers are available and eager for business.
Source: McClatchy Tribune
Monday, February 8, 2010
Cash for caulkers: Appealing to home shoppers?
WASHINGTON – Feb. 8, 2010 – Congress is about to approve a program to put contractors back to work doing energy retrofits.
If the program nicknamed “Cash for Caulkers” passes, homeowners will be eligible for a tax credit worth up to $12,000 or half the cost of the retrofits, whichever is lower.
A homeowner who spends $24,000 to cut his energy use in half will save an average of $100 per month, estimates Lane Burt, manager of building energy policy at the Natural Resources Defense Council. With a $12,000 tax rebate from the government, the payback will take 10 years.
Some real estate practitioners point out that energy retrofits might be a hard sell because they don’t raise a home’s sale value. “It sounds good on paper, but it’s just not how the American consumer makes choices,” says Jeff Geoghan, a Coldwell Banker Realtor® in Lancaster, Pa. “If you’re buying a house, and you see a furnace has a 95 percent efficiency rating, are you really going to make your decision based on that?”
Source: CNNMoney.com
WASHINGTON – Feb. 8, 2010 – Congress is about to approve a program to put contractors back to work doing energy retrofits.
If the program nicknamed “Cash for Caulkers” passes, homeowners will be eligible for a tax credit worth up to $12,000 or half the cost of the retrofits, whichever is lower.
A homeowner who spends $24,000 to cut his energy use in half will save an average of $100 per month, estimates Lane Burt, manager of building energy policy at the Natural Resources Defense Council. With a $12,000 tax rebate from the government, the payback will take 10 years.
Some real estate practitioners point out that energy retrofits might be a hard sell because they don’t raise a home’s sale value. “It sounds good on paper, but it’s just not how the American consumer makes choices,” says Jeff Geoghan, a Coldwell Banker Realtor® in Lancaster, Pa. “If you’re buying a house, and you see a furnace has a 95 percent efficiency rating, are you really going to make your decision based on that?”
Source: CNNMoney.com
Friday, February 5, 2010
Fla. property taxes down 7.5 percent over 3 years
TALLAHASSEE, Fla. (AP) – Feb. 5, 2010 – Florida property taxes dropped by $2.28 billion, or 7.5 percent, over the past three years because of tax-cutting measures approved by the Legislature and voters as well as falling real estate values, according to figures presented to a legislative panel Thursday.
“I would classify that as dropping like a rock,” said Senate Finance and Taxation Committee Chairman Thad Altman, R-Viera.
Gov. Charlie Crist famously said he wanted taxes to “drop like a rock” as lawmakers began considering tax relief in 2007. They passed the law to roll back and cap property taxes later that year and then put a constitutional amendment on the January 2008 ballot that voters adopted for additional tax savings.
While taxes have come down significantly, the savings have been much less than the $24 billion over the first five years expected from the two measures before Florida’s housing bubble burst. That sent property values on a downward skid and knocked the tax savings forecast for a loop.
Crist spokesman Sterling Ivey said the governor is not disappointed.
“Any reduction in property tax is good news,” Ivey said. “There’s more money in people’s pockets. That’s the bottom line.”
Officials cannot be sure exactly how much of the tax reduction is due to the new law and amendment and how much has resulted from the real estate collapse, said James McAdams, the Department of Revenues property tax oversight program director.
Taxable values for school purposes, though, declined less than 1 percent from 2006 through 2009, which would indicate the law and amendment are mostly responsible.
Overall property tax collections nearly doubled from 2000 through 2006, triggering an outcry from taxpayers that resulted in the tax-cutting measures.
Collections increased again in 2007 to a peak of $31 billion but the growth that year slowed to just 2 percent as the tax-limiting law began to go into effect. All of the increase was due to school taxes, which were spared from many of the tax-limiting provisions.
School taxes increased by 7.6 percent in 2007, but they dropped by 1.2 percent in 2008 and 6.8 percent in 2009 for a three-year decline of just under 1 percent and $100 million.
Non-school taxes, including levies by cities, counties and special districts, declined by 12 percent over the same period for a three-year savings of $2.18 billion.
“One of the biggest problems we have on this is we have not gotten the word out to the constituents,” said Sen. Bennett, R-Bradenton. “Every time you go to a protest, every time you go to a speech, ‘When are you going to do something about property tax?’”
One reason property taxes haven’t dropped even more is what’s known as the “recapture rule” the state has applied to the Save Our Homes Amendment voters adopted during the 1990s. The amendment limits annual assessment increases to no more than 3 percent when values are going up. The rule, though, increases assessments by up to 3 percent if values go down.
What’s known as the portability provision of the 2008 amendment has not produced as much saving as predicted due to falling values. It lets primary homeowners take at least part of their accumulated Save Our Homes benefits with them when they move to another house.
That can offset all or most of the difference between the market and taxable value of the new home, but that gap has narrowed by more than half over the past three years because of falling home prices, said Bob McKee, the committee’s staff director.
The depressed market also has meant fewer people are moving and, thus, less savings from portability, McKee said.
The value decline also has meant few if any savings from a 10 percent cap on annual assessments for businesses and other non-homestead property in the 2008 amendment.
The 2007 law allowed local government bodies to exceed the rollbacks and caps by votes of more than a simple majority but relatively few did so. The only way they can raise taxing rates is with voter approval, but no such referendums have been held.
Copyright © 2010 The Associated Press
TALLAHASSEE, Fla. (AP) – Feb. 5, 2010 – Florida property taxes dropped by $2.28 billion, or 7.5 percent, over the past three years because of tax-cutting measures approved by the Legislature and voters as well as falling real estate values, according to figures presented to a legislative panel Thursday.
“I would classify that as dropping like a rock,” said Senate Finance and Taxation Committee Chairman Thad Altman, R-Viera.
Gov. Charlie Crist famously said he wanted taxes to “drop like a rock” as lawmakers began considering tax relief in 2007. They passed the law to roll back and cap property taxes later that year and then put a constitutional amendment on the January 2008 ballot that voters adopted for additional tax savings.
While taxes have come down significantly, the savings have been much less than the $24 billion over the first five years expected from the two measures before Florida’s housing bubble burst. That sent property values on a downward skid and knocked the tax savings forecast for a loop.
Crist spokesman Sterling Ivey said the governor is not disappointed.
“Any reduction in property tax is good news,” Ivey said. “There’s more money in people’s pockets. That’s the bottom line.”
Officials cannot be sure exactly how much of the tax reduction is due to the new law and amendment and how much has resulted from the real estate collapse, said James McAdams, the Department of Revenues property tax oversight program director.
Taxable values for school purposes, though, declined less than 1 percent from 2006 through 2009, which would indicate the law and amendment are mostly responsible.
Overall property tax collections nearly doubled from 2000 through 2006, triggering an outcry from taxpayers that resulted in the tax-cutting measures.
Collections increased again in 2007 to a peak of $31 billion but the growth that year slowed to just 2 percent as the tax-limiting law began to go into effect. All of the increase was due to school taxes, which were spared from many of the tax-limiting provisions.
School taxes increased by 7.6 percent in 2007, but they dropped by 1.2 percent in 2008 and 6.8 percent in 2009 for a three-year decline of just under 1 percent and $100 million.
Non-school taxes, including levies by cities, counties and special districts, declined by 12 percent over the same period for a three-year savings of $2.18 billion.
“One of the biggest problems we have on this is we have not gotten the word out to the constituents,” said Sen. Bennett, R-Bradenton. “Every time you go to a protest, every time you go to a speech, ‘When are you going to do something about property tax?’”
One reason property taxes haven’t dropped even more is what’s known as the “recapture rule” the state has applied to the Save Our Homes Amendment voters adopted during the 1990s. The amendment limits annual assessment increases to no more than 3 percent when values are going up. The rule, though, increases assessments by up to 3 percent if values go down.
What’s known as the portability provision of the 2008 amendment has not produced as much saving as predicted due to falling values. It lets primary homeowners take at least part of their accumulated Save Our Homes benefits with them when they move to another house.
That can offset all or most of the difference between the market and taxable value of the new home, but that gap has narrowed by more than half over the past three years because of falling home prices, said Bob McKee, the committee’s staff director.
The depressed market also has meant fewer people are moving and, thus, less savings from portability, McKee said.
The value decline also has meant few if any savings from a 10 percent cap on annual assessments for businesses and other non-homestead property in the 2008 amendment.
The 2007 law allowed local government bodies to exceed the rollbacks and caps by votes of more than a simple majority but relatively few did so. The only way they can raise taxing rates is with voter approval, but no such referendums have been held.
Copyright © 2010 The Associated Press
Thursday, February 4, 2010
Lifeline needed for underwater homeowners
NEW YORK – Feb. 4, 2010 – An estimated 4.5 million homeowners owe more than their homes are worth. That number is likely to peak at 5.1 million in June, affecting 10 percent of homeowners and making them increasingly likely to just walk away.
“We’re now at the point of maximum vulnerability,” says Sam Khater, a senior economist with First American CoreLogic, the firm that conducted the recent research. “People’s emotional attachment to their property is melting into the air.”
Consultants at Oliver Wyman calculated that 17 percent of owners defaulting in 2008 –about 588,000 – chose to default even though they could pay.
First American estimates that it would cost around $745 billion – about the same as the original 2008 bank bailout – to restore all underwater borrowers to the break-even point.
Doing so would be seen as highly unfair by many taxpayers, says Michael S. Barr, assistant Treasury secretary for financial institutions, but doing nothing would be another blow to a fragile economy.
Source: The New York Times
NEW YORK – Feb. 4, 2010 – An estimated 4.5 million homeowners owe more than their homes are worth. That number is likely to peak at 5.1 million in June, affecting 10 percent of homeowners and making them increasingly likely to just walk away.
“We’re now at the point of maximum vulnerability,” says Sam Khater, a senior economist with First American CoreLogic, the firm that conducted the recent research. “People’s emotional attachment to their property is melting into the air.”
Consultants at Oliver Wyman calculated that 17 percent of owners defaulting in 2008 –about 588,000 – chose to default even though they could pay.
First American estimates that it would cost around $745 billion – about the same as the original 2008 bank bailout – to restore all underwater borrowers to the break-even point.
Doing so would be seen as highly unfair by many taxpayers, says Michael S. Barr, assistant Treasury secretary for financial institutions, but doing nothing would be another blow to a fragile economy.
Source: The New York Times
Wednesday, February 3, 2010
FHA relaxes anti-flipping rule
WASHINGTON – Feb. 2, 2010 – Effective yesterday, the Federal Housing Administration (FHA) started providing mortgage insurance for some home purchases in which the seller bought the property and held it for less than 90 days.
The agency changed what is known as the “anti-flipping rule” to speed up sales of renovated homes in communities with too many bank-owned and foreclosed homes, says FHA Commissioner David H. Stevens. Waiving the 90-day rule encourages private investors to buy vacant properties, fix them up, and quickly sell them to buyers who are eligible to buy them using FHA financing.
FHA’s change “is going to be absolutely terrific” for first-time homebuyers hoping to take advantage of the tax credit, says Bobby Taylor, an associate with Coldwell Banker Mountain West Real Estate in Salem, Ore.
The waiver is limited to sales that meet the following general conditions:
• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
• Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf.
Source: Washington Post
WASHINGTON – Feb. 2, 2010 – Effective yesterday, the Federal Housing Administration (FHA) started providing mortgage insurance for some home purchases in which the seller bought the property and held it for less than 90 days.
The agency changed what is known as the “anti-flipping rule” to speed up sales of renovated homes in communities with too many bank-owned and foreclosed homes, says FHA Commissioner David H. Stevens. Waiving the 90-day rule encourages private investors to buy vacant properties, fix them up, and quickly sell them to buyers who are eligible to buy them using FHA financing.
FHA’s change “is going to be absolutely terrific” for first-time homebuyers hoping to take advantage of the tax credit, says Bobby Taylor, an associate with Coldwell Banker Mountain West Real Estate in Salem, Ore.
The waiver is limited to sales that meet the following general conditions:
• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
• Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf.
Source: Washington Post
Monday, February 1, 2010
It’s not if interest rates will rise but when
COLLEGE STATION, Texas – Feb. 1, 2010 – According to Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University, mortgage interest rates are low right now but don’t expect that to last. When the government quits buying mortgage-backed securities, rates will head up and away.
Dotzour says that mortgage rates were low at the end of 2009 because “the global consensus among bondholders appeared to be that inflation will remain low in the United States for an extended period. This caused the ten-year U.S. Treasury rate to fall to between 3.2 and 3.6 percent for much of the second half of 2009.”
With extraordinary levels of federal deficit spending, Dotzour says it is unlikely that the low-inflation scenario will be popular when the economy starts to rebound. Consumers should expect mortgage rates to rise when signs of improvement appear.
A second factor contributing to the low mortgage rates is the Federal Reserve Bank’s unprecedented purchase of nearly all the mortgage-backed securities issued by Fannie Mae and Freddie Mac in 2009, he adds. Totaling more than $1 trillion for the year, this program has been extended through the end of March 2010.
“The Fed has never done this before in its history,” says Dotzour. “They are doing this to stimulate the economy by keeping mortgage rates as low as possible. When the Fed stops buying these securities from Fannie and Freddie, mortgage rates are likely to increase, and possibly quite abruptly.”
How far will rates go up when the Fed terminates its buying program? Dotzour says that question is difficult to answer precisely because this has never been done before; but many experts think that rates could move up one-half to 1 percent.
“The combination of extraordinarily low mortgage rates and current price levels are making homes extremely affordable to American families. In fact, national and Texas housing affordability indices indicate that homes are more affordable than ever. But this will not last. When the economy recovers and the Fed stops purchasing mortgages, rates will rise.”
To read more on the subject, see Dotzour’s article “Rate Expectations” in the January 2010 issue of Tierra Grande magazine at http://recenter.tamu.edu/tgrande/.
© 2010 Florida Realtors®
COLLEGE STATION, Texas – Feb. 1, 2010 – According to Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University, mortgage interest rates are low right now but don’t expect that to last. When the government quits buying mortgage-backed securities, rates will head up and away.
Dotzour says that mortgage rates were low at the end of 2009 because “the global consensus among bondholders appeared to be that inflation will remain low in the United States for an extended period. This caused the ten-year U.S. Treasury rate to fall to between 3.2 and 3.6 percent for much of the second half of 2009.”
With extraordinary levels of federal deficit spending, Dotzour says it is unlikely that the low-inflation scenario will be popular when the economy starts to rebound. Consumers should expect mortgage rates to rise when signs of improvement appear.
A second factor contributing to the low mortgage rates is the Federal Reserve Bank’s unprecedented purchase of nearly all the mortgage-backed securities issued by Fannie Mae and Freddie Mac in 2009, he adds. Totaling more than $1 trillion for the year, this program has been extended through the end of March 2010.
“The Fed has never done this before in its history,” says Dotzour. “They are doing this to stimulate the economy by keeping mortgage rates as low as possible. When the Fed stops buying these securities from Fannie and Freddie, mortgage rates are likely to increase, and possibly quite abruptly.”
How far will rates go up when the Fed terminates its buying program? Dotzour says that question is difficult to answer precisely because this has never been done before; but many experts think that rates could move up one-half to 1 percent.
“The combination of extraordinarily low mortgage rates and current price levels are making homes extremely affordable to American families. In fact, national and Texas housing affordability indices indicate that homes are more affordable than ever. But this will not last. When the economy recovers and the Fed stops purchasing mortgages, rates will rise.”
To read more on the subject, see Dotzour’s article “Rate Expectations” in the January 2010 issue of Tierra Grande magazine at http://recenter.tamu.edu/tgrande/.
© 2010 Florida Realtors®
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