Home prices post smallest drop in 3 years
NEW YORK – March 31, 2010 – Home prices showed the smallest annual decline in almost three years in January, indicating there are surprising areas of strength in the housing market.
The Standard & Poor’s/Case-Shiller 20-city home price index fell just 0.7 percent from last year on a seasonally adjusted basis. The index reading of 146.32 was almost in line with analysts’ expectations, according to a survey by Thomson Reuters.
“There was some positive momentum in home prices in January,” wrote Ian Pollick, a portfolio strategist with TD Securities.
Better still, prices rose 0.3 percent from December to January, the eighth consecutive monthly gain. Among the 20 cities in the index, 12 rose.
The index, released Tuesday, is up nearly 4 percent from its bottom in May 2009, but still almost 30 percent below its May 2006 peak.
Still, there are signs that last year’s housing rebound won’t last. Home sales sank during the winter, and government incentives that have propped up the market are ending.
Another reason for the positive news is simply that the Case-Shiller index measures a three-month average of home prices. So January’s report includes November’s strong home sales.
Many analysts expect that the Case Shiller number will eventually turn downward.
“It is only a matter of time before the index records a double-dip in prices,” wrote Paul Dales, U.S. economist with Capital Economics, who forecasts a 5 percent drop. The market will be tested in the second half of the year, he wrote, when a tax credit that has boosted sales is gone.
Copyright © 2010 The Associated Press
Wednesday, March 31, 2010
Tuesday, March 30, 2010
Answers to questions about new mortgage aid plan
WASHINGTON – March 30, 2010 – The Obama administration on Friday announced a major reworking of its troubled $75 billion plan to prevent foreclosures. The revamped program is now designed to aid jobless homeowners and people who owe more on their mortgages than their homes are worth.
Here’s a look at the details:
Q. How many homeowners will this help?
A. The effort is designed to enable the government to reach its original goal of helping 3 million to 4 million homeowners avoid foreclosure by the end of 2012. That benchmark has so far proved impossible to approach. Only 170,000 homeowners have completed loan modifications, out of 1.1 million who began the government’s Home Affordable Modification Program (HAMP) since it started last year.
Q. How many borrowers are in trouble?
A. About 6 million homeowners have missed at least two months of payments. And experts warn that 10 million to 12 million borrowers are in danger of foreclosure over the next three years. A growing risk is among homeowners who are “under water”: They owe more on their loans than their homes are worth.
Q. How does the new plan work?
A. Borrowers will get help in three ways: Jobless homeowners can get a three-to-six-month break on their mortgage payments. Banks will get financial incentives to reduce mortgage balances for under-water borrowers. And lenders can offer refinanced loans backed by the Federal Housing Administration to these borrowers.
Q. When will all these programs be available?
A. Government officials didn’t specify but said they should become available in the coming months.
Q. I’m unemployed. How do I get help?
A. That piece of the program is designed to give homeowners more time to find a job. Borrowers will have three to six months in which they’ll have to spend no more than 31 percent of their monthly income on their mortgages. If you do find a job during that time, you will be evaluated for a loan modification that could permanently reduce your payments. To qualify, you need to live in your home, have a mortgage below $729,750 and receive unemployment benefits.
Q. What happens if I don’t get a job after the time is up?
A. Lenders will encourage you to consider a short sale, in which you sell your home for less than the mortgage amount. Another option is a deed-in-lieu of foreclosure, in which you agree to hand back the property to your lender.
Q. I owe more on my mortgage than my house is worth. Will this help me?
A. Maybe. The program depends on the willingness of mortgage companies to participate. Their track record has been shaky at best.
Q. How does it work?
A. Mortgage companies that already participate in the government’s foreclosure prevention program will have to consider reducing the mortgage amount for borrowers who owe at least 15 percent more than their home’s current value. Those reductions will happen gradually over three years and apply only if you miss no payments. Those companies will receive expanded incentives to do so.
Q. What kind of incentives?
A. For every dollar of principal the lender reduces, they will receive a subsidy of 10 to 21 cents. The larger subsidies will help reduce principal of borrowers who are less under water.
Q. How do I qualify?
A: You must have a mortgage of less than $729,750. You also must show that you are in financial trouble. And you have to be spending at least 31 percent of your pretax income on your mortgage payment.
Q. So how do I apply?
A. Call the company that sends your mortgage bill, also known as your mortgage servicer, to see if you qualify. If you can’t get hold of someone, try a nonprofit housing counselor. NeighborWorks America runs a national network of foreclosure counseling agencies. Try: http://www.findaforeclosurecounselor.org/
Q. How does the refinancing program work?
A. Some borrowers will be able to refinance into loans backed by the Federal Housing Administration, which insures loans against default. The FHA will get $14 billion in incentive money from the federal bailout fund to make this happen. Lenders will have to reduce the homeowners’ primary mortgages by at least 10 percent.
Q. How do I qualify?
A. Homeowners must not have missed any payments on their home loans, must live in their home as a primary residence and must provide proof of income.
Q. How do I apply for the FHA plan?
A. You don’t. It’s voluntary for mortgage companies. They’ll evaluate whether they want to offer this option to homeowners.
Copyright © 2010 The Associated Press
WASHINGTON – March 30, 2010 – The Obama administration on Friday announced a major reworking of its troubled $75 billion plan to prevent foreclosures. The revamped program is now designed to aid jobless homeowners and people who owe more on their mortgages than their homes are worth.
Here’s a look at the details:
Q. How many homeowners will this help?
A. The effort is designed to enable the government to reach its original goal of helping 3 million to 4 million homeowners avoid foreclosure by the end of 2012. That benchmark has so far proved impossible to approach. Only 170,000 homeowners have completed loan modifications, out of 1.1 million who began the government’s Home Affordable Modification Program (HAMP) since it started last year.
Q. How many borrowers are in trouble?
A. About 6 million homeowners have missed at least two months of payments. And experts warn that 10 million to 12 million borrowers are in danger of foreclosure over the next three years. A growing risk is among homeowners who are “under water”: They owe more on their loans than their homes are worth.
Q. How does the new plan work?
A. Borrowers will get help in three ways: Jobless homeowners can get a three-to-six-month break on their mortgage payments. Banks will get financial incentives to reduce mortgage balances for under-water borrowers. And lenders can offer refinanced loans backed by the Federal Housing Administration to these borrowers.
Q. When will all these programs be available?
A. Government officials didn’t specify but said they should become available in the coming months.
Q. I’m unemployed. How do I get help?
A. That piece of the program is designed to give homeowners more time to find a job. Borrowers will have three to six months in which they’ll have to spend no more than 31 percent of their monthly income on their mortgages. If you do find a job during that time, you will be evaluated for a loan modification that could permanently reduce your payments. To qualify, you need to live in your home, have a mortgage below $729,750 and receive unemployment benefits.
Q. What happens if I don’t get a job after the time is up?
A. Lenders will encourage you to consider a short sale, in which you sell your home for less than the mortgage amount. Another option is a deed-in-lieu of foreclosure, in which you agree to hand back the property to your lender.
Q. I owe more on my mortgage than my house is worth. Will this help me?
A. Maybe. The program depends on the willingness of mortgage companies to participate. Their track record has been shaky at best.
Q. How does it work?
A. Mortgage companies that already participate in the government’s foreclosure prevention program will have to consider reducing the mortgage amount for borrowers who owe at least 15 percent more than their home’s current value. Those reductions will happen gradually over three years and apply only if you miss no payments. Those companies will receive expanded incentives to do so.
Q. What kind of incentives?
A. For every dollar of principal the lender reduces, they will receive a subsidy of 10 to 21 cents. The larger subsidies will help reduce principal of borrowers who are less under water.
Q. How do I qualify?
A: You must have a mortgage of less than $729,750. You also must show that you are in financial trouble. And you have to be spending at least 31 percent of your pretax income on your mortgage payment.
Q. So how do I apply?
A. Call the company that sends your mortgage bill, also known as your mortgage servicer, to see if you qualify. If you can’t get hold of someone, try a nonprofit housing counselor. NeighborWorks America runs a national network of foreclosure counseling agencies. Try: http://www.findaforeclosurecounselor.org/
Q. How does the refinancing program work?
A. Some borrowers will be able to refinance into loans backed by the Federal Housing Administration, which insures loans against default. The FHA will get $14 billion in incentive money from the federal bailout fund to make this happen. Lenders will have to reduce the homeowners’ primary mortgages by at least 10 percent.
Q. How do I qualify?
A. Homeowners must not have missed any payments on their home loans, must live in their home as a primary residence and must provide proof of income.
Q. How do I apply for the FHA plan?
A. You don’t. It’s voluntary for mortgage companies. They’ll evaluate whether they want to offer this option to homeowners.
Copyright © 2010 The Associated Press
Monday, March 29, 2010
Expanded mortgage aid program should cut foreclosures
WASHINGTON – March 29, 2010 – The Obama administration’s revamped mortgage program may help more borrowers keep their homes, but economists say it could also delay foreclosures that can’t be prevented.
The program requires lenders to reduce mortgage payments for three to six months for unemployed homeowners. It also encourages mortgage servicers to consider reducing principal for borrowers who stay current on their loans.
In addition, some homeowners who owe more than their homes are worth may be able to refinance into loans backed by the Federal Housing Administration. The changes are designed to offer help to more borrowers than are getting aid under the existing program. But unemployed homeowners, for example, could still find themselves facing foreclosure if they remain unemployed when their forbearance period runs out.
“In six months, the lender will still have a non-performing loan and the borrower will still have a loan they can’t pay,” says Sylvia Alayon, vice president of operations for the Consumer Mortgage Audit Center, which does audits for lenders. “Foreclosures are still going to rise.”
About 2.8 million households received a foreclosure notice in 2009, and the number is projected to top 3 million this year, according to RealtyTrac. Close to 4.5 million first mortgage loans are in the foreclosure process or are at least 90 days delinquent.
But there is an upside. By spreading foreclosures over a longer period, home prices decline over a longer stretch, says Mark Zandi, at Moody’s Economy.com.
If a flood of foreclosures hit at once, prices would drop more drastically. Without changes to the government’s program, only an estimated 500,000 foreclosures would be avoided.
Zandi estimates that the changes could spare between 1 million and 1.5 million homeowners from foreclosure. Other economists agree that the Home Affordable Modification Program (HAMP) delays some foreclosures, but that’s not necessarily a bad policy.
“What policymakers are doing is telling lenders they have to look at every loan through the lens of HAMP, and all that does is buy us time,” say Ajay Rajadhyaksha, head of U.S. fixed income strategy at Barclays Capital. “It’s probably the right policy perspective ... the price drop is less.”
Copyright © 2010 USA TODAY
WASHINGTON – March 29, 2010 – The Obama administration’s revamped mortgage program may help more borrowers keep their homes, but economists say it could also delay foreclosures that can’t be prevented.
The program requires lenders to reduce mortgage payments for three to six months for unemployed homeowners. It also encourages mortgage servicers to consider reducing principal for borrowers who stay current on their loans.
In addition, some homeowners who owe more than their homes are worth may be able to refinance into loans backed by the Federal Housing Administration. The changes are designed to offer help to more borrowers than are getting aid under the existing program. But unemployed homeowners, for example, could still find themselves facing foreclosure if they remain unemployed when their forbearance period runs out.
“In six months, the lender will still have a non-performing loan and the borrower will still have a loan they can’t pay,” says Sylvia Alayon, vice president of operations for the Consumer Mortgage Audit Center, which does audits for lenders. “Foreclosures are still going to rise.”
About 2.8 million households received a foreclosure notice in 2009, and the number is projected to top 3 million this year, according to RealtyTrac. Close to 4.5 million first mortgage loans are in the foreclosure process or are at least 90 days delinquent.
But there is an upside. By spreading foreclosures over a longer period, home prices decline over a longer stretch, says Mark Zandi, at Moody’s Economy.com.
If a flood of foreclosures hit at once, prices would drop more drastically. Without changes to the government’s program, only an estimated 500,000 foreclosures would be avoided.
Zandi estimates that the changes could spare between 1 million and 1.5 million homeowners from foreclosure. Other economists agree that the Home Affordable Modification Program (HAMP) delays some foreclosures, but that’s not necessarily a bad policy.
“What policymakers are doing is telling lenders they have to look at every loan through the lens of HAMP, and all that does is buy us time,” say Ajay Rajadhyaksha, head of U.S. fixed income strategy at Barclays Capital. “It’s probably the right policy perspective ... the price drop is less.”
Copyright © 2010 USA TODAY
Friday, March 26, 2010
BofA to start reducing mortgage principal
CHARLOTTE, N.C. – March 26, 2010 – Bank of America Corp. is giving some of its most troubled mortgage borrowers relief from the threat of foreclosure.
The bank, the largest mortgage servicer in the country, said Wednesday it will forgive up to 30 percent of some customers’ total mortgage balances. The homeowners must have missed at least two months of mortgage payments and owe at least 20 percent more than their home is currently worth.
The plan is the newest provision of an agreement the Charlotte, N.C.-based bank reached 18 months ago with state attorneys general to settle charges over high-risk loans made by Countrywide Financial Corp.
The loans were made before Bank of America acquired the mortgage lender in mid-2008. The bank has since stopped making those loans.
Although the motivation for Bank of America’s announcement was to resolve legal problems, it has the potential of putting pressure on other banks to also forgive principal on loans that are in danger of failing. Bank of America is the nation’s largest bank, and it’s among the first to take a systematic approach to reducing mortgage principal when home values drop well below the amount owed.
The Treasury Department, which already has a mortgage modification program, is developing similar plans for principal reductions at other mortgage servicers, according to industry officials speaking on condition of anonymity because they were not authorized to discuss the conversations. They said an announcement could come in the next few months.
“They’re talking about doing something and talking seriously about it,” Julia Gordon, senior policy counsel at the Center for Responsible Lending, a consumer group, said of Treasury officials. “I think the concern now is fairness and making sure that the public understands the importance of principal reductions toward stabilizing the housing market and helping everybody.”
Bank of America estimates that about 45,000 customers will qualify for its plan. The offer will cut total reduced principal by about $3 billion.
Some banks said they have already reduced principal on some mortgages. Wells Fargo & Co. said Wednesday it has modified more than 52,000 adjustable-rate mortgages that it inherited through its acquisition of Wachovia Corp. in late 2008. As of the fourth quarter, the bank also had reduced the principal on those mortgages by more than $2.6 billion.
Citigroup Inc. would not say whether it planned a similar program, but it did issue a statement that said in part, “Citi does reduce principal for borrowers on a case-by-case basis after other options to address affordability are exhausted.”
A spokeswoman from JPMorgan Chase & Co. declined to comment on whether it planned a similar program.
Millions of homes have gone into foreclosure since the housing market collapsed in late 2007. The loans affected by Bank of America’s announcement include certain subprime and option adjustable rate mortgages. Option ARMs allow borrowers to start with minimal monthly payments that actually increase the loan’s balance.
The borrowers who can take advantage of the Bank of America program must also qualify for the Obama administration’s $75 billion mortgage loan modification program.
The program announced Wednesday could lower the bank’s earnings, which have already been hurt by consumers’ continuing defaults on mortgage and credit card loans. Bank of America was among the hardest hit by the credit crisis and recession.
It’s not clear how big a financial hit Bank of America will take by reducing mortgages. But the move will likely be less costly than having homeowners walk out on their mortgages or opt to do a short sale, banking analyst Bert Ely said. A short sale happens when a seller owes more than the house is worth, and the lender is willing to accept less than the mortgage balance.
“This is about loss minimization,” Ely said. “There’s going to be losses (for Bank of America). The question is what’s the easiest way out.”
The plan does carry risks. For starters, borrowers who aren’t 60 days behind on their mortgages may stop making payments so they can qualify. The more borrowers who try to qualify, the bigger the potential loss for Bank of America. The bank will also have to absorb the costs of renegotiating the loans.
Even so, “the move helps create the best prospect of avoiding a further downward home price spiral, which would result in even deeper losses” for the bank, said Howard Glaser, a mortgage industry consultant, in an e-mail.
Investors appeared pleased with the news, and sent Bank of America shares up 44 cents, or 2.6 percent, to close Wednesday at $17.57.
According to new plan, which begins in May, Bank of America will first offer to set aside a portion of the principal balance, interest free. That principal can be forgiven over five years, if homeowners don’t miss any payments. The maximum decrease in principal will be 30 percent.
The forgiveness allows a homeowner to bring a mortgage balance back down to 100 percent of the home’s value, the bank said.
Glaser said that if the Obama administration launches a similar effort for the entire industry, that would be a “major shift in loan modification efforts.”
Lenders including Bank of America have been criticized for not helping enough borrowers to complete the Obama administration’s $75 billion mortgage modification program, which is widely viewed as a disappointment. Only 170,000 homeowners have completed the program so far.
As of last month, Bank of America had completed modifications for about 22,000 homeowners, or about 8 percent of those signed up. That compares with about 12 percent for Wells Fargo and 11 percent for both JPMorgan Chase and Citigroup.
The mortgage modification program does not address the problems of borrowers who are considered underwater, or owing more than their homes are worth.
The Treasury Department estimates that 1.5 million to 2 million homeowners will complete the program by the end of 2012, about half of the original goal. A report issued late Tuesday by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, says numerous changes to government guidelines “caused confusion and delay” and said the government did not do enough to advertise the program.
Copyright © 2010 The Associated Press
CHARLOTTE, N.C. – March 26, 2010 – Bank of America Corp. is giving some of its most troubled mortgage borrowers relief from the threat of foreclosure.
The bank, the largest mortgage servicer in the country, said Wednesday it will forgive up to 30 percent of some customers’ total mortgage balances. The homeowners must have missed at least two months of mortgage payments and owe at least 20 percent more than their home is currently worth.
The plan is the newest provision of an agreement the Charlotte, N.C.-based bank reached 18 months ago with state attorneys general to settle charges over high-risk loans made by Countrywide Financial Corp.
The loans were made before Bank of America acquired the mortgage lender in mid-2008. The bank has since stopped making those loans.
Although the motivation for Bank of America’s announcement was to resolve legal problems, it has the potential of putting pressure on other banks to also forgive principal on loans that are in danger of failing. Bank of America is the nation’s largest bank, and it’s among the first to take a systematic approach to reducing mortgage principal when home values drop well below the amount owed.
The Treasury Department, which already has a mortgage modification program, is developing similar plans for principal reductions at other mortgage servicers, according to industry officials speaking on condition of anonymity because they were not authorized to discuss the conversations. They said an announcement could come in the next few months.
“They’re talking about doing something and talking seriously about it,” Julia Gordon, senior policy counsel at the Center for Responsible Lending, a consumer group, said of Treasury officials. “I think the concern now is fairness and making sure that the public understands the importance of principal reductions toward stabilizing the housing market and helping everybody.”
Bank of America estimates that about 45,000 customers will qualify for its plan. The offer will cut total reduced principal by about $3 billion.
Some banks said they have already reduced principal on some mortgages. Wells Fargo & Co. said Wednesday it has modified more than 52,000 adjustable-rate mortgages that it inherited through its acquisition of Wachovia Corp. in late 2008. As of the fourth quarter, the bank also had reduced the principal on those mortgages by more than $2.6 billion.
Citigroup Inc. would not say whether it planned a similar program, but it did issue a statement that said in part, “Citi does reduce principal for borrowers on a case-by-case basis after other options to address affordability are exhausted.”
A spokeswoman from JPMorgan Chase & Co. declined to comment on whether it planned a similar program.
Millions of homes have gone into foreclosure since the housing market collapsed in late 2007. The loans affected by Bank of America’s announcement include certain subprime and option adjustable rate mortgages. Option ARMs allow borrowers to start with minimal monthly payments that actually increase the loan’s balance.
The borrowers who can take advantage of the Bank of America program must also qualify for the Obama administration’s $75 billion mortgage loan modification program.
The program announced Wednesday could lower the bank’s earnings, which have already been hurt by consumers’ continuing defaults on mortgage and credit card loans. Bank of America was among the hardest hit by the credit crisis and recession.
It’s not clear how big a financial hit Bank of America will take by reducing mortgages. But the move will likely be less costly than having homeowners walk out on their mortgages or opt to do a short sale, banking analyst Bert Ely said. A short sale happens when a seller owes more than the house is worth, and the lender is willing to accept less than the mortgage balance.
“This is about loss minimization,” Ely said. “There’s going to be losses (for Bank of America). The question is what’s the easiest way out.”
The plan does carry risks. For starters, borrowers who aren’t 60 days behind on their mortgages may stop making payments so they can qualify. The more borrowers who try to qualify, the bigger the potential loss for Bank of America. The bank will also have to absorb the costs of renegotiating the loans.
Even so, “the move helps create the best prospect of avoiding a further downward home price spiral, which would result in even deeper losses” for the bank, said Howard Glaser, a mortgage industry consultant, in an e-mail.
Investors appeared pleased with the news, and sent Bank of America shares up 44 cents, or 2.6 percent, to close Wednesday at $17.57.
According to new plan, which begins in May, Bank of America will first offer to set aside a portion of the principal balance, interest free. That principal can be forgiven over five years, if homeowners don’t miss any payments. The maximum decrease in principal will be 30 percent.
The forgiveness allows a homeowner to bring a mortgage balance back down to 100 percent of the home’s value, the bank said.
Glaser said that if the Obama administration launches a similar effort for the entire industry, that would be a “major shift in loan modification efforts.”
Lenders including Bank of America have been criticized for not helping enough borrowers to complete the Obama administration’s $75 billion mortgage modification program, which is widely viewed as a disappointment. Only 170,000 homeowners have completed the program so far.
As of last month, Bank of America had completed modifications for about 22,000 homeowners, or about 8 percent of those signed up. That compares with about 12 percent for Wells Fargo and 11 percent for both JPMorgan Chase and Citigroup.
The mortgage modification program does not address the problems of borrowers who are considered underwater, or owing more than their homes are worth.
The Treasury Department estimates that 1.5 million to 2 million homeowners will complete the program by the end of 2012, about half of the original goal. A report issued late Tuesday by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, says numerous changes to government guidelines “caused confusion and delay” and said the government did not do enough to advertise the program.
Copyright © 2010 The Associated Press
Tuesday, March 23, 2010
Real estate agents unsure about home prices
TAMPA, Fla. – March 23, 2010 – It’s the big question: Will home prices stabilize or drop?
About half of Florida’s real estate agents think prices are staying where they are over the next six months, according to a survey released Monday by California-based HomeGain, an online real estate company.
The state’s agents are slightly more pessimistic than agents in other states, said Louis Cammarosano, general manager of HomeGain.
“It was a little surprising given that Florida has been suffering for quite some time already,” Cammarosano said. “A lot of the pain in Florida has already worked its way through.”
Fifty percent of Florida agents said prices will stay the same, and 33 percent thought prices would decrease.
In the Tampa Bay area, home prices have plummeted more than 40 percent since 2006. That includes homes in the Tampa-St. Petersburg-Clearwater areas.
In the past year, home prices generally have increased month to month and have hovered in the high $130s for the past several months. The average median price for the year was $137,500, according to Florida Realtors.
Nationally, most agents said they think home prices will stay the same or decrease over the next months.
“Many real estate professionals expressed concern over five factors that could potentially impact home prices adversely: rising interest rates, expiration of the homebuyer tax credit, persistent unemployment, continued foreclosures and the release of shadow inventory held by the banks,” Cammarosano said.
Texas agents were the most optimistic about the direction of home prices in their state. Those in Minnesota appear to be the least optimistic.
Copyright © 2010, Tampa Tribune
TAMPA, Fla. – March 23, 2010 – It’s the big question: Will home prices stabilize or drop?
About half of Florida’s real estate agents think prices are staying where they are over the next six months, according to a survey released Monday by California-based HomeGain, an online real estate company.
The state’s agents are slightly more pessimistic than agents in other states, said Louis Cammarosano, general manager of HomeGain.
“It was a little surprising given that Florida has been suffering for quite some time already,” Cammarosano said. “A lot of the pain in Florida has already worked its way through.”
Fifty percent of Florida agents said prices will stay the same, and 33 percent thought prices would decrease.
In the Tampa Bay area, home prices have plummeted more than 40 percent since 2006. That includes homes in the Tampa-St. Petersburg-Clearwater areas.
In the past year, home prices generally have increased month to month and have hovered in the high $130s for the past several months. The average median price for the year was $137,500, according to Florida Realtors.
Nationally, most agents said they think home prices will stay the same or decrease over the next months.
“Many real estate professionals expressed concern over five factors that could potentially impact home prices adversely: rising interest rates, expiration of the homebuyer tax credit, persistent unemployment, continued foreclosures and the release of shadow inventory held by the banks,” Cammarosano said.
Texas agents were the most optimistic about the direction of home prices in their state. Those in Minnesota appear to be the least optimistic.
Copyright © 2010, Tampa Tribune
Monday, March 22, 2010
Investors are buying houses again
NEW YORK – March 22, 2010 – More home buyers are snapping up properties with cash, a trend driven in large part by investors returning to the market after four years of falling prices around the country.
The share of home sales involving all-cash transactions was 26 percent in January, up from 18 percent a year earlier, according to the National Association of Realtors. The figures come from a survey of members about their most recent transactions.
Many home buyers also are paying cash, but investors are largely using cash so they can avoid paying interest charges on loans and get a larger return on their investment.
NAR data also show a pickup in investment activity. Home purchases made by buyers identified as investors climbed to 17 percent in January, up from 15 percent in December and 12 percent in November.
“We bottomed out in 2008, and in late 2009, prices stabilized and investors have returned,” says Mark Fleming, chief economist at First American CoreLogic. “It’s a different type of investor going after foreclosed properties and expecting to hold on for longer time frames.”
Many investors say they’re financing their purchases with cash on hand, rather than borrowing. Evan Spinrod of San Francisco bought three rental properties in November and February and now owns 21 in four states. The rent he collects gives him an 8.5 percent annual return on his investment. Some of his homes are worth about $165,000.
“I’m still looking,” Spinrod says. “You can’t build these houses for the prices they’re selling them. I’ve always seen that the real wealth was in real estate. People have been sitting on cash, and there’s no interest from the bank (to pay).”
Leonard Baron, a real estate professor at San Diego State University, has bought three homes with cash in the San Diego area in the past eight months, ranging in price from $100,000 to $130,000. He rents the properties. Baron says now is an ideal time to make such purchases. “It’s because prices have dropped so much and rents really haven’t,” he says. “The deals were unbelievable.”
Some Realtors also say they’re seeing increased investor activity. “Flippers, rehabbers, investors ... are, in fact, buying,” says Lisa Johnson, with Coldwell Banker Residential Brokerage in Haverhill, Mass. “I’m getting builders who have stopped building and are instead buying up condos and single-family homes to fix them up and sell them. It’s a neat change I haven’t seen in four years.”
All-cash purchases also reflect a growing number of investors buying higher-end properties without credit, says NAR spokesman Walter Molony. That’s a sign that some investors see real estate prices as having nowhere to go but up. All-cash offers give buyers a competitive edge on rival offers – even higher ones – that are dependent on financing. Cash deals can close faster and are less likely to fall through.
“You have to have cash to be able to close quickly and have negotiating power. Cash is king,” says Tanya Marchiol, president of Phoenix-based Team Investments, which buys about 70 properties a month with cash it raises from investors. “We do want to flip it or generate cash flow (through renting it out). Now is the time to buy for cash flow. We know the market is going to rebound.”
Some investors say the current real estate market is an ideal time to buy because homes are so low priced, they are bound to hold their value. That’s the philosophy of Jim McClelland of Tinley Park, Ill. He is buying about 120 to 150 entry-level homes in the Chicago area this year and owns a total of about 300 properties. He says now is a good time to buy because properties going into foreclosure are no longer just one-bedroom, fixer-uppers but nicer, split-level brick homes with more bedrooms that will probably appreciate to a higher value.
That’s because so many prime-rate borrowers who bought more expensive homes have gone into foreclosure. He puts about $60,000 into upgrading a property, then rents it out.
“Do I think this year will be a better time to invest than in 2009? Yes,” McClelland says. “There have always been foreclosures. The difference now is you get a better home for the same kind of money. You’re sitting on better inventory. People get into real estate for financial independence. It’s not a quick fix. It appreciates. It doesn’t happen overnight.”
Copyright © 2010 USA TODAY
NEW YORK – March 22, 2010 – More home buyers are snapping up properties with cash, a trend driven in large part by investors returning to the market after four years of falling prices around the country.
The share of home sales involving all-cash transactions was 26 percent in January, up from 18 percent a year earlier, according to the National Association of Realtors. The figures come from a survey of members about their most recent transactions.
Many home buyers also are paying cash, but investors are largely using cash so they can avoid paying interest charges on loans and get a larger return on their investment.
NAR data also show a pickup in investment activity. Home purchases made by buyers identified as investors climbed to 17 percent in January, up from 15 percent in December and 12 percent in November.
“We bottomed out in 2008, and in late 2009, prices stabilized and investors have returned,” says Mark Fleming, chief economist at First American CoreLogic. “It’s a different type of investor going after foreclosed properties and expecting to hold on for longer time frames.”
Many investors say they’re financing their purchases with cash on hand, rather than borrowing. Evan Spinrod of San Francisco bought three rental properties in November and February and now owns 21 in four states. The rent he collects gives him an 8.5 percent annual return on his investment. Some of his homes are worth about $165,000.
“I’m still looking,” Spinrod says. “You can’t build these houses for the prices they’re selling them. I’ve always seen that the real wealth was in real estate. People have been sitting on cash, and there’s no interest from the bank (to pay).”
Leonard Baron, a real estate professor at San Diego State University, has bought three homes with cash in the San Diego area in the past eight months, ranging in price from $100,000 to $130,000. He rents the properties. Baron says now is an ideal time to make such purchases. “It’s because prices have dropped so much and rents really haven’t,” he says. “The deals were unbelievable.”
Some Realtors also say they’re seeing increased investor activity. “Flippers, rehabbers, investors ... are, in fact, buying,” says Lisa Johnson, with Coldwell Banker Residential Brokerage in Haverhill, Mass. “I’m getting builders who have stopped building and are instead buying up condos and single-family homes to fix them up and sell them. It’s a neat change I haven’t seen in four years.”
All-cash purchases also reflect a growing number of investors buying higher-end properties without credit, says NAR spokesman Walter Molony. That’s a sign that some investors see real estate prices as having nowhere to go but up. All-cash offers give buyers a competitive edge on rival offers – even higher ones – that are dependent on financing. Cash deals can close faster and are less likely to fall through.
“You have to have cash to be able to close quickly and have negotiating power. Cash is king,” says Tanya Marchiol, president of Phoenix-based Team Investments, which buys about 70 properties a month with cash it raises from investors. “We do want to flip it or generate cash flow (through renting it out). Now is the time to buy for cash flow. We know the market is going to rebound.”
Some investors say the current real estate market is an ideal time to buy because homes are so low priced, they are bound to hold their value. That’s the philosophy of Jim McClelland of Tinley Park, Ill. He is buying about 120 to 150 entry-level homes in the Chicago area this year and owns a total of about 300 properties. He says now is a good time to buy because properties going into foreclosure are no longer just one-bedroom, fixer-uppers but nicer, split-level brick homes with more bedrooms that will probably appreciate to a higher value.
That’s because so many prime-rate borrowers who bought more expensive homes have gone into foreclosure. He puts about $60,000 into upgrading a property, then rents it out.
“Do I think this year will be a better time to invest than in 2009? Yes,” McClelland says. “There have always been foreclosures. The difference now is you get a better home for the same kind of money. You’re sitting on better inventory. People get into real estate for financial independence. It’s not a quick fix. It appreciates. It doesn’t happen overnight.”
Copyright © 2010 USA TODAY
Friday, March 19, 2010
Years after loan default, homeowners may still owe
SACRAMENTO, Calif. – March 19, 2010 – Homeowners defaulting on mortgages today may be surprised to learn years from now that they still owe thousands of dollars – and a collection agency is coming after them to get it. That’s because lenders have been quietly selling second mortgages and home equity lines left unpaid after foreclosures and short sales. The buyers: collection agencies, which in some states have years to make a claim.
If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, and even garnish their wages, said Scott CoBen, a Sacramento bankruptcy attorney.
“The only relief a consumer will have is entering into a debt negotiating plan or filing for bankruptcy,” said Sylvia Alayon, a vice president with the New York-based Consumer Mortgage Audit Center. The firm provides mortgage analysis to lenders, advocacy groups and attorneys.
The phenomenon suggests an ominous, looming echo of today’s real estate meltdown. As debt collectors surely seek at least partial repayment of millions of dollars in unpaid home loans, some say renewed financial stresses on tens of thousands of local consumers could dampen the economic recovery.
“I think there will be a lot of unhappy people when it hits,” said CoBen. “We saw this in the ‘90s. This is not really new. Just when you think you’re back on your feet, you’re making money and the economy’s good, they hit you with this.”
Alayon said most people are so stressed out and exhausted by trying to save their homes today that they are unaware they could face another hit later. And many who are losing homes don’t get the advice necessary to prevent future fallout, say nonprofit loan counselors.
“You’ve got tens of thousands of people in California who have this hanging over their heads who don’t even know it,” said Scott Thompson, principal at for-profit Mortgage Resolution Services in Carmichael, Calif. He fears a new wave of bankruptcies might flatten people just starting to recover from losing their homes.
“So many of these are people with 750 or 800 credit scores who made a bad decision,” said Thompson. “Or they’re people who suffered income cuts. These are people, in terms of the economy, whom we need to participate.”
But an entire industry is gearing up to buy their debt at deep discounts and collect what they can, Alayon said. “It’s a big business and investors are coming out of the woodwork. It’s a very lucrative business,” she said.
Real estate insiders and financial players know it as “scratch and dent.” One of the biggest players in the business, Texas-based Real Time Resolutions, did not respond to an inquiry on the subject from McClatchy Newspapers. Neither did Bank of America, which holds many defaulted loans made by its Countrywide affiliate during the real estate boom.
Regionally, no one knows for sure how much unpaid debt is on the line. CoBen said people who used their borrowings for a traditional loan on a house in which they lived generally have little to worry about. But borrowers may be vulnerable in years ahead – generally, those who defaulted not only on their first mortgage but also on a home equity loan or second mortgage.
In California, banks can’t collect from borrowers for primary, so-called “first-lien,” loans that go unpaid. When a house is foreclosed or sold through a short sale, the lender of the first loan gets the house back or the proceeds from another buyer. But banks also made thousands of “second-lien” loans, including those used to finance 20 percent downpayments during the housing boom. A separate category of “seconds” includes home equity loans and home equity lines of credit.
Nationally, about 3.4 percent of those loans are currently delinquent, according to Foresight. Owners are generally, but not always, on the hook for the second loans left over from a foreclosure or short sale. Most investor mortgages, too, leave the borrower liable for potential unpaid debt. In many short sales, experienced real estate agents or attorneys can negotiate away debt obligations for the second-lien loan. But many inexperienced borrowers don’t know that, and sign final-hour agreements giving lenders the right to pursue them later.
“Seek advice,” counseled Doug Robinson, spokesman for national nonprofit mortgage counselor NeighborWorks America. He said nonprofit counselors can help. “Often when you work with a real estate agent, they’re not really equipped to handle the repercussions. They’re set up to make the sale,” he said.
Government forces are already moving to limit potential damage to millions now struggling with home loans. A new Obama administration short sale program aims to prevent banks that hold second-lien loans from pursuing collections from homeowners after the short sale. It goes into effect April 5 and works this way: Sellers will receive notice that their servicer has steered part of the sales proceeds to secondary lien holders “in exchange for release and full satisfaction of their liens.”
This release would apply only to short sales done through the administration’s Home Affordable Foreclosure Alternatives program.
In California, Democratic state Sen. Ellen Corbett recently introduced SB 1178, which would expand California’s protections for some people who refinance and take on a second mortgage. People who refinance, but use the funds to improve their homes or to stay in their homes with a better interest rate, would be protected. Lenders could not seek court judgments to collect from these borrowers in the event of foreclosure or short sales.
“If you refinance a property and aren’t using the money for personal reasons, you shouldn’t lose your personal protections,” said California Association of Realtors lobbyist Alex Creel. He said the idea has been around for years but has become more urgent as thousands lose income and fall into mortgage trouble.
The bill would apply to all foreclosures or short sales that occur after it becomes law. It doesn’t matter when the loan was made, Creel said. SB 1178 is still in the early stages of consideration. It must clear both houses of the Legislature and be signed by Gov. Arnold Schwarzenegger by Sept. 30 in order to take effect.
Copyright © 2010 The Sacramento Bee
SACRAMENTO, Calif. – March 19, 2010 – Homeowners defaulting on mortgages today may be surprised to learn years from now that they still owe thousands of dollars – and a collection agency is coming after them to get it. That’s because lenders have been quietly selling second mortgages and home equity lines left unpaid after foreclosures and short sales. The buyers: collection agencies, which in some states have years to make a claim.
If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, and even garnish their wages, said Scott CoBen, a Sacramento bankruptcy attorney.
“The only relief a consumer will have is entering into a debt negotiating plan or filing for bankruptcy,” said Sylvia Alayon, a vice president with the New York-based Consumer Mortgage Audit Center. The firm provides mortgage analysis to lenders, advocacy groups and attorneys.
The phenomenon suggests an ominous, looming echo of today’s real estate meltdown. As debt collectors surely seek at least partial repayment of millions of dollars in unpaid home loans, some say renewed financial stresses on tens of thousands of local consumers could dampen the economic recovery.
“I think there will be a lot of unhappy people when it hits,” said CoBen. “We saw this in the ‘90s. This is not really new. Just when you think you’re back on your feet, you’re making money and the economy’s good, they hit you with this.”
Alayon said most people are so stressed out and exhausted by trying to save their homes today that they are unaware they could face another hit later. And many who are losing homes don’t get the advice necessary to prevent future fallout, say nonprofit loan counselors.
“You’ve got tens of thousands of people in California who have this hanging over their heads who don’t even know it,” said Scott Thompson, principal at for-profit Mortgage Resolution Services in Carmichael, Calif. He fears a new wave of bankruptcies might flatten people just starting to recover from losing their homes.
“So many of these are people with 750 or 800 credit scores who made a bad decision,” said Thompson. “Or they’re people who suffered income cuts. These are people, in terms of the economy, whom we need to participate.”
But an entire industry is gearing up to buy their debt at deep discounts and collect what they can, Alayon said. “It’s a big business and investors are coming out of the woodwork. It’s a very lucrative business,” she said.
Real estate insiders and financial players know it as “scratch and dent.” One of the biggest players in the business, Texas-based Real Time Resolutions, did not respond to an inquiry on the subject from McClatchy Newspapers. Neither did Bank of America, which holds many defaulted loans made by its Countrywide affiliate during the real estate boom.
Regionally, no one knows for sure how much unpaid debt is on the line. CoBen said people who used their borrowings for a traditional loan on a house in which they lived generally have little to worry about. But borrowers may be vulnerable in years ahead – generally, those who defaulted not only on their first mortgage but also on a home equity loan or second mortgage.
In California, banks can’t collect from borrowers for primary, so-called “first-lien,” loans that go unpaid. When a house is foreclosed or sold through a short sale, the lender of the first loan gets the house back or the proceeds from another buyer. But banks also made thousands of “second-lien” loans, including those used to finance 20 percent downpayments during the housing boom. A separate category of “seconds” includes home equity loans and home equity lines of credit.
Nationally, about 3.4 percent of those loans are currently delinquent, according to Foresight. Owners are generally, but not always, on the hook for the second loans left over from a foreclosure or short sale. Most investor mortgages, too, leave the borrower liable for potential unpaid debt. In many short sales, experienced real estate agents or attorneys can negotiate away debt obligations for the second-lien loan. But many inexperienced borrowers don’t know that, and sign final-hour agreements giving lenders the right to pursue them later.
“Seek advice,” counseled Doug Robinson, spokesman for national nonprofit mortgage counselor NeighborWorks America. He said nonprofit counselors can help. “Often when you work with a real estate agent, they’re not really equipped to handle the repercussions. They’re set up to make the sale,” he said.
Government forces are already moving to limit potential damage to millions now struggling with home loans. A new Obama administration short sale program aims to prevent banks that hold second-lien loans from pursuing collections from homeowners after the short sale. It goes into effect April 5 and works this way: Sellers will receive notice that their servicer has steered part of the sales proceeds to secondary lien holders “in exchange for release and full satisfaction of their liens.”
This release would apply only to short sales done through the administration’s Home Affordable Foreclosure Alternatives program.
In California, Democratic state Sen. Ellen Corbett recently introduced SB 1178, which would expand California’s protections for some people who refinance and take on a second mortgage. People who refinance, but use the funds to improve their homes or to stay in their homes with a better interest rate, would be protected. Lenders could not seek court judgments to collect from these borrowers in the event of foreclosure or short sales.
“If you refinance a property and aren’t using the money for personal reasons, you shouldn’t lose your personal protections,” said California Association of Realtors lobbyist Alex Creel. He said the idea has been around for years but has become more urgent as thousands lose income and fall into mortgage trouble.
The bill would apply to all foreclosures or short sales that occur after it becomes law. It doesn’t matter when the loan was made, Creel said. SB 1178 is still in the early stages of consideration. It must clear both houses of the Legislature and be signed by Gov. Arnold Schwarzenegger by Sept. 30 in order to take effect.
Copyright © 2010 The Sacramento Bee
Thursday, March 18, 2010
Mortgage rates could spike as Federal Reserve program expires
PHILADELPHIA – March 18, 2010 – As the spring real estate season kicks in and the tax-credit deadline for sale agreements approaches, the government is ending a program that has kept interest rates low and housing-affordability levels high for months.
On March 31, the Federal Reserve will stop buying mortgage-backed securities from Fannie Mae and Freddie Mac, returning control of interest rates to private investors. For months, industry observers have predicted that once government supports are removed, interest rates will rise quickly, pushing many of the first-time buyers critical to housing’s recovery out of the market.
In late summer and fall 2009, lured by fixed 30-year mortgage rates under 5 percent and the first $8,000 tax credit, which expired Nov. 30, first-timers pushed sales of previously owned homes to the highest levels in at least three years, reducing record inventories and braking price declines. That tax credit was renewed Nov. 5 and expanded to buyers who had not purchased a property in five years, although the credit for repeat buyers is $6,500.
The second credit expires April 30, is unlikely to be renewed, and remains the engine moving buyers.
“Not a single (buyer) has expressed concern about interest rates,” said Cheryl Miller of Long & Foster Real Estate in Blue Bell, Pa., acknowledging that “there is, I suppose, a false sense of security regarding rates remaining low.”
As the date for the Fed pullout approaches, analysts now generally agree that an immediate rate spike is no longer the likely result.
“We think there will be a significant increase in private demand (for mortgage-backed securities) to take the place of the Fed,” said David Berson, chief economist at PMI Group in Walnut Creek, Calif. Not enough to offset the Fed’s departure, he said, with rates possibly increasing a quarter of a percentage point, “but a significant one.”
Bankrate.com columnist Holden Lewis said rates are so low now – averaging 4.87 percent for a 30-year fixed this week – that an increase “is inevitable. But maybe they’ll rise gradually instead of jumping” April 1. The Fed says it will stop buying “by” March 31 instead of “at” the end of the month, meaning that it likely has reduced its purchases and rates haven’t risen, Lewis said.
Moody’s Economy.com chief economist Mark Zandi said rates will “drift” higher in summer and fall, with the half a percentage point the Fed’s action cut working its way back in – mainly because investors believe the government would return if they got too high.
For that reason, Philadelphia mortgage broker Fred Glick said rates wouldn’t change. “If the old buyers don’t come back, the Fed will intercede again to ensure rates during a continued slowly recovering economy will not go so high as to stymie a positive direction,” Glick said. Buyers of these securities “now see that the lenders have instituted rigorous standards to ensure that the Fannie Mae and Freddie Mac paper they are buying are very good loans,” he said.
On the other hand, said Holland, Pa.-based economist Joel L. Naroff, low rates are not sustainable, and “the only way to get the market to stand on its own is to get people to become realistic again about prices and rates.” Rates will likely rise, but “the level will still be historically low,” Naroff said.
When rates do rise, likely by year’s end, it won’t be because of the Fed’s action, but “natural macroeconomic forces” like a recovering economy and the high budget deficit, said Lawrence Yun, National Association of Realtors chief economist.
The possibility of renewed Fed intervention will likely prevent rate increases resulting from private investors demanding large risk spreads, said economist Brian Bethune of IHS Global Insight in Lexington, Mass. As a result, Bethune and IHS economist Patrick Newport believe, the rate will be at only 5.25 percent by the fourth quarter.
Many Fed officials have emphasized that “high unemployment and tame inflation warrant a continued promise to hold rates very low for a long time,” said Peter Buchsbaum, of Arlington Capital Mortgage in Horsham, Pa. Some analysts expect the expansion to ease, “and I am sure the Fed does not want to extinguish the fragile recovery,” Buchsbaum said.
Treasury bond yields “did not move much after the Fed completed its $300 billion in purchases in November,” said Jerome Scarpello, of Leo Mortgage in Spring House, Pa., “meaning they were able to exit and not disrupt that market.” Rates will rise, he said, but not as high as the one percentage point others predict.
“With unemployment high and foreclosures an issue, a significant rate increase can push home prices down,” Scarpello said, “and hamper the slight recovery we now have.”
© 2010 The Philadelphia Inquirer.
PHILADELPHIA – March 18, 2010 – As the spring real estate season kicks in and the tax-credit deadline for sale agreements approaches, the government is ending a program that has kept interest rates low and housing-affordability levels high for months.
On March 31, the Federal Reserve will stop buying mortgage-backed securities from Fannie Mae and Freddie Mac, returning control of interest rates to private investors. For months, industry observers have predicted that once government supports are removed, interest rates will rise quickly, pushing many of the first-time buyers critical to housing’s recovery out of the market.
In late summer and fall 2009, lured by fixed 30-year mortgage rates under 5 percent and the first $8,000 tax credit, which expired Nov. 30, first-timers pushed sales of previously owned homes to the highest levels in at least three years, reducing record inventories and braking price declines. That tax credit was renewed Nov. 5 and expanded to buyers who had not purchased a property in five years, although the credit for repeat buyers is $6,500.
The second credit expires April 30, is unlikely to be renewed, and remains the engine moving buyers.
“Not a single (buyer) has expressed concern about interest rates,” said Cheryl Miller of Long & Foster Real Estate in Blue Bell, Pa., acknowledging that “there is, I suppose, a false sense of security regarding rates remaining low.”
As the date for the Fed pullout approaches, analysts now generally agree that an immediate rate spike is no longer the likely result.
“We think there will be a significant increase in private demand (for mortgage-backed securities) to take the place of the Fed,” said David Berson, chief economist at PMI Group in Walnut Creek, Calif. Not enough to offset the Fed’s departure, he said, with rates possibly increasing a quarter of a percentage point, “but a significant one.”
Bankrate.com columnist Holden Lewis said rates are so low now – averaging 4.87 percent for a 30-year fixed this week – that an increase “is inevitable. But maybe they’ll rise gradually instead of jumping” April 1. The Fed says it will stop buying “by” March 31 instead of “at” the end of the month, meaning that it likely has reduced its purchases and rates haven’t risen, Lewis said.
Moody’s Economy.com chief economist Mark Zandi said rates will “drift” higher in summer and fall, with the half a percentage point the Fed’s action cut working its way back in – mainly because investors believe the government would return if they got too high.
For that reason, Philadelphia mortgage broker Fred Glick said rates wouldn’t change. “If the old buyers don’t come back, the Fed will intercede again to ensure rates during a continued slowly recovering economy will not go so high as to stymie a positive direction,” Glick said. Buyers of these securities “now see that the lenders have instituted rigorous standards to ensure that the Fannie Mae and Freddie Mac paper they are buying are very good loans,” he said.
On the other hand, said Holland, Pa.-based economist Joel L. Naroff, low rates are not sustainable, and “the only way to get the market to stand on its own is to get people to become realistic again about prices and rates.” Rates will likely rise, but “the level will still be historically low,” Naroff said.
When rates do rise, likely by year’s end, it won’t be because of the Fed’s action, but “natural macroeconomic forces” like a recovering economy and the high budget deficit, said Lawrence Yun, National Association of Realtors chief economist.
The possibility of renewed Fed intervention will likely prevent rate increases resulting from private investors demanding large risk spreads, said economist Brian Bethune of IHS Global Insight in Lexington, Mass. As a result, Bethune and IHS economist Patrick Newport believe, the rate will be at only 5.25 percent by the fourth quarter.
Many Fed officials have emphasized that “high unemployment and tame inflation warrant a continued promise to hold rates very low for a long time,” said Peter Buchsbaum, of Arlington Capital Mortgage in Horsham, Pa. Some analysts expect the expansion to ease, “and I am sure the Fed does not want to extinguish the fragile recovery,” Buchsbaum said.
Treasury bond yields “did not move much after the Fed completed its $300 billion in purchases in November,” said Jerome Scarpello, of Leo Mortgage in Spring House, Pa., “meaning they were able to exit and not disrupt that market.” Rates will rise, he said, but not as high as the one percentage point others predict.
“With unemployment high and foreclosures an issue, a significant rate increase can push home prices down,” Scarpello said, “and hamper the slight recovery we now have.”
© 2010 The Philadelphia Inquirer.
Wednesday, March 17, 2010
Getting a mortgage without perfect credit
WASHINGTON – March 17, 2010 – The government keeps promoting programs designed to help existing homeowners refinance their mortgages at a lower rate, as well as get perspective buyers into homes. In other words, Uncle Sam says he’s here to help.
“Phooey,” say homeowners and prospective homeowners, who keep complaining that it is ridiculously hard to get a mortgage or refinance one.
Can both sides be right?
Unfortunately, yes. But if you are willing to do a bit more work than in the past, it is possible to lower your mortgage rate to 5 percent or arrange to buy your first home. It is clear that there is pent-up demand to do both.
Seemingly qualified buyers keep telling me they can’t get a mortgage. According to Credit Suisse (CS) and others, more than one-third of homeowners hold a 30-year conventional mortgage at 6 percent or higher. I will tell you what you need to do, but first we must understand what is going on in the marketplace.
A demanding lending landscape
Today it is unquestionably more complicated and difficult to get a home loan than it used to be. Burned by the recent housing meltdown they helped to create, lenders currently go over every requirement with a fine-tooth comb. They are looking for higher credit scores and more money down.
Still, the situation is far from hopeless: Loans at attractive rates are still available for those with less-than-perfect credit and minimal-to-no equity.
How should one negotiate the landscape? I checked with industry experts and here’s what I learned: Banks and mortgage brokers can still get you a mortgage of $417,000 or less at the best rates through Fannie Mae (FNM) and Freddie Mac (FRE) programs if you have a credit score as low as 660 and can put 20 percent down. Jumbo loans, those greater than $417,000, remain more expensive.
What about more complicated scenarios? I checked on a number of specific situations – for example, people who can put 20 percent down but have a credit score of only 630, or people who have a score of 630 and only 10 percent to put down. I found these deals can get done but, not surprisingly, you will pay an additional quarter- or half-point. This means that instead of getting a 30-year mortgage at 5 percent, you would have to pay from 5.25 percent to 5.5 percent. Not too bad.
What about tougher scenarios, such as trying to buy or refinance with average credit, but zero to negative equity? According to expert Brian Fishman of Illinois-based DB Diamond Mortgage Group, the zero-down days are over, apart from incentives such as the soon-to-expire homebuyer credits.
Refinancing is possible, however. Freddie Mac has refinance opportunities for those with mortgages of up to 105 percent of their appraised value. Fannie has them for up to 95 percent. The lower credit and low-or-zero-equity deals will cost at least a point or more above published rates. But it might get done.
Don’t assume your hands are tied
Believe it or not, even if your first and second mortgages total 125 percent of the appraised value, Fannie or Freddie may yet have programs that will refinance the first mortgage at a reasonable rate, as long as the second-mortgage holder doesn’t object. Since every scenario is different, I’m not suggesting that you refinance this type. I’m simply suggesting you weigh all reasonable options vs. assume that you have no choices.
How can you determine which opportunities are available to you and which best suit your particular circumstances? I’m still a big fan of doing homework. I recommend that you consider seeking input from multiple sources, such as your current servicer, your local bank and your mortgage broker, and your local real estate professional.
To start, I’d suggest a reputable mortgage broker. While they are being paid a commission by lenders to help place you with them, they will often get you an equal or possibly better rate by shopping for you. You are also more likely to know where you stand among the various options before you get bogged down with paperwork.
In a nutshell, if you have credit scores in the low 600s or higher, 10 percent or greater equity in your home, and you’re paying above 6 percent, you should be shopping to refinance. If you’re in the market to buy a home, set these levels as your minimum standards, understanding that the better your credit and the more you can put down, the better your chances of getting the lowest mortgage rate available.
No matter what you do, remember that you have options and should do your homework. If you find that you’re so far under water that nothing seems to make sense, maybe it’s time to seek an alternative strategy, such as a short sale.
Copyright © 2010 The McGraw-Hill Cos
WASHINGTON – March 17, 2010 – The government keeps promoting programs designed to help existing homeowners refinance their mortgages at a lower rate, as well as get perspective buyers into homes. In other words, Uncle Sam says he’s here to help.
“Phooey,” say homeowners and prospective homeowners, who keep complaining that it is ridiculously hard to get a mortgage or refinance one.
Can both sides be right?
Unfortunately, yes. But if you are willing to do a bit more work than in the past, it is possible to lower your mortgage rate to 5 percent or arrange to buy your first home. It is clear that there is pent-up demand to do both.
Seemingly qualified buyers keep telling me they can’t get a mortgage. According to Credit Suisse (CS) and others, more than one-third of homeowners hold a 30-year conventional mortgage at 6 percent or higher. I will tell you what you need to do, but first we must understand what is going on in the marketplace.
A demanding lending landscape
Today it is unquestionably more complicated and difficult to get a home loan than it used to be. Burned by the recent housing meltdown they helped to create, lenders currently go over every requirement with a fine-tooth comb. They are looking for higher credit scores and more money down.
Still, the situation is far from hopeless: Loans at attractive rates are still available for those with less-than-perfect credit and minimal-to-no equity.
How should one negotiate the landscape? I checked with industry experts and here’s what I learned: Banks and mortgage brokers can still get you a mortgage of $417,000 or less at the best rates through Fannie Mae (FNM) and Freddie Mac (FRE) programs if you have a credit score as low as 660 and can put 20 percent down. Jumbo loans, those greater than $417,000, remain more expensive.
What about more complicated scenarios? I checked on a number of specific situations – for example, people who can put 20 percent down but have a credit score of only 630, or people who have a score of 630 and only 10 percent to put down. I found these deals can get done but, not surprisingly, you will pay an additional quarter- or half-point. This means that instead of getting a 30-year mortgage at 5 percent, you would have to pay from 5.25 percent to 5.5 percent. Not too bad.
What about tougher scenarios, such as trying to buy or refinance with average credit, but zero to negative equity? According to expert Brian Fishman of Illinois-based DB Diamond Mortgage Group, the zero-down days are over, apart from incentives such as the soon-to-expire homebuyer credits.
Refinancing is possible, however. Freddie Mac has refinance opportunities for those with mortgages of up to 105 percent of their appraised value. Fannie has them for up to 95 percent. The lower credit and low-or-zero-equity deals will cost at least a point or more above published rates. But it might get done.
Don’t assume your hands are tied
Believe it or not, even if your first and second mortgages total 125 percent of the appraised value, Fannie or Freddie may yet have programs that will refinance the first mortgage at a reasonable rate, as long as the second-mortgage holder doesn’t object. Since every scenario is different, I’m not suggesting that you refinance this type. I’m simply suggesting you weigh all reasonable options vs. assume that you have no choices.
How can you determine which opportunities are available to you and which best suit your particular circumstances? I’m still a big fan of doing homework. I recommend that you consider seeking input from multiple sources, such as your current servicer, your local bank and your mortgage broker, and your local real estate professional.
To start, I’d suggest a reputable mortgage broker. While they are being paid a commission by lenders to help place you with them, they will often get you an equal or possibly better rate by shopping for you. You are also more likely to know where you stand among the various options before you get bogged down with paperwork.
In a nutshell, if you have credit scores in the low 600s or higher, 10 percent or greater equity in your home, and you’re paying above 6 percent, you should be shopping to refinance. If you’re in the market to buy a home, set these levels as your minimum standards, understanding that the better your credit and the more you can put down, the better your chances of getting the lowest mortgage rate available.
No matter what you do, remember that you have options and should do your homework. If you find that you’re so far under water that nothing seems to make sense, maybe it’s time to seek an alternative strategy, such as a short sale.
Copyright © 2010 The McGraw-Hill Cos
Tuesday, March 16, 2010
Tax credit extended for active duty military
WASHINGTON – March 16, 2010 – U.S. servicemen out of the country for 90 days (since 2008) may have an extra year to get the tax credit, up to $8,000, for buying a home.
The active-duty rule is not new. It’s part of the current tax credit law, though its use is limited. The qualification must be for “official extended duty outside the United States for at least 90 days after 2008 and before May 1, 2010.”
Should that be the case, however, the homebuyer has an extra year to buy a home. He or she has until April 30, 2011, to secure a binding contract, and until June 30, 2011 to close on the home. Other conditions such as a maximum $8,000 for first-time buyers and $6,500 for move-up buyers still apply.
For advice in any specific case, consult a qualified tax advisor. The applicable IRS publication is posted online (PDF format) at: http://www.irs.gov/pub/irs-pdf/p3.pdf
© 2010 Florida Realtors
WASHINGTON – March 16, 2010 – U.S. servicemen out of the country for 90 days (since 2008) may have an extra year to get the tax credit, up to $8,000, for buying a home.
The active-duty rule is not new. It’s part of the current tax credit law, though its use is limited. The qualification must be for “official extended duty outside the United States for at least 90 days after 2008 and before May 1, 2010.”
Should that be the case, however, the homebuyer has an extra year to buy a home. He or she has until April 30, 2011, to secure a binding contract, and until June 30, 2011 to close on the home. Other conditions such as a maximum $8,000 for first-time buyers and $6,500 for move-up buyers still apply.
For advice in any specific case, consult a qualified tax advisor. The applicable IRS publication is posted online (PDF format) at: http://www.irs.gov/pub/irs-pdf/p3.pdf
© 2010 Florida Realtors
Tuesday, March 9, 2010
Tax credit has Realtors’ phones ringing as deadline looms
Tax credit resources
Download brochures, watch videos and get answers at Florida Realtors’ Homebuyer Center.
TAMPA, Fla. – March 9, 2010 – Kim and Al Langevin were ecstatic Friday to close on a new home in St. Petersburg. And they’re pretty excited, too, about thousands in government money they plan to use to spruce up the house.
The Langevins are among a growing number of buyers rushing to find a home in time to cash in on the federal government’s tax-credit program. The couple, who moved from Lakeland, is eligible for up to $6,500.
They plan to put the money toward a swimming pool.
“We were worried we wouldn’t be able to close on time,” said Kim Langevin. “Getting that tax credit was a huge motivation.”
Real estate agents say their phones are ringing a lot more in recent weeks as folks scurry to sell and or buy homes before next month’s tax credit deadline.
“It’s been absolutely nuts,” said Paul De La Torre, a real estate agent with Keller Williams Tampa Properties. “I have showings galore and contracts are coming in left and right. I had 15 requests for showings yesterday.”
To qualify for the credit, buyers must have fully executed sales contracts in place by April 30 and the deal must close by June 30.
First-time homebuyers are eligible for up to $8,000. Buyers who have owned a home for five consecutive years within the past eight years can get a credit of up to $6,500.
Greg Armstrong, a broker with Coldwell Banker in Pasco County, said his agents’ phones are ringing, too. He credits most of the increase in traffic to improvements in the economy, but says the tax credit is also helping business.
“We’re seeing more people retiring to Pasco County,” Armstrong said. “I’ve had four or five retirees close in one week. In the past three years, I hadn’t seen that many. We had some retirement communities that went a full year without a sale.
“People are no longer afraid to do something. They were afraid for so long.”
Prices are indeed enticing buyers to pull the trigger, and more homeowners are putting their houses on the market in hopes of selling in time to buy another home. Some are trading up to bigger homes while others are downsizing.
Vernon Taylor, president of the Greater Tampa Association of Realtors, said he’s noticed more “serious” inquiries from potential sellers. In addition, he said, homeowners are more realistic about their house’s value.
Tampa Bay area sales prices have plummeted more than 40 percent since the peak of the housing boom. Home sales in Tampa-St. Petersburg-Clearwater rose 28 percent in the fourth quarter of 2009, and the median sales price hit $138,800. That’s down 42 percent since prices peaked at $239,600 in June 2006.
For those seeking to cash in on the tax credit, one challenge is closing in time. This is especially true for those trying to buy a home listed as a short sale.
Short sales often offer a buyer more bang for the buck because lenders allow the home to sell for less than the homeowner owes on the mortgage. Lenders sometimes cut the price deeply to sell the home so they can avoid foreclosing on the property.
Real estate agents estimate that as many as 60 percent of homes for sale are listed as short sales. However, lenders are often slow to approve deals, and real estate agents report buyers walking away in frustration.
That’s actually helping sellers who are not distressed, real estate agents say. That’s because they are able to close quickly and before the tax credits expire.
Some buyers, agents say, are even willing to pay a little higher purchase price to ensure they’ll get the tax credit.
Copyright © 2010 Tampa Tribune
Tax credit resources
Download brochures, watch videos and get answers at Florida Realtors’ Homebuyer Center.
TAMPA, Fla. – March 9, 2010 – Kim and Al Langevin were ecstatic Friday to close on a new home in St. Petersburg. And they’re pretty excited, too, about thousands in government money they plan to use to spruce up the house.
The Langevins are among a growing number of buyers rushing to find a home in time to cash in on the federal government’s tax-credit program. The couple, who moved from Lakeland, is eligible for up to $6,500.
They plan to put the money toward a swimming pool.
“We were worried we wouldn’t be able to close on time,” said Kim Langevin. “Getting that tax credit was a huge motivation.”
Real estate agents say their phones are ringing a lot more in recent weeks as folks scurry to sell and or buy homes before next month’s tax credit deadline.
“It’s been absolutely nuts,” said Paul De La Torre, a real estate agent with Keller Williams Tampa Properties. “I have showings galore and contracts are coming in left and right. I had 15 requests for showings yesterday.”
To qualify for the credit, buyers must have fully executed sales contracts in place by April 30 and the deal must close by June 30.
First-time homebuyers are eligible for up to $8,000. Buyers who have owned a home for five consecutive years within the past eight years can get a credit of up to $6,500.
Greg Armstrong, a broker with Coldwell Banker in Pasco County, said his agents’ phones are ringing, too. He credits most of the increase in traffic to improvements in the economy, but says the tax credit is also helping business.
“We’re seeing more people retiring to Pasco County,” Armstrong said. “I’ve had four or five retirees close in one week. In the past three years, I hadn’t seen that many. We had some retirement communities that went a full year without a sale.
“People are no longer afraid to do something. They were afraid for so long.”
Prices are indeed enticing buyers to pull the trigger, and more homeowners are putting their houses on the market in hopes of selling in time to buy another home. Some are trading up to bigger homes while others are downsizing.
Vernon Taylor, president of the Greater Tampa Association of Realtors, said he’s noticed more “serious” inquiries from potential sellers. In addition, he said, homeowners are more realistic about their house’s value.
Tampa Bay area sales prices have plummeted more than 40 percent since the peak of the housing boom. Home sales in Tampa-St. Petersburg-Clearwater rose 28 percent in the fourth quarter of 2009, and the median sales price hit $138,800. That’s down 42 percent since prices peaked at $239,600 in June 2006.
For those seeking to cash in on the tax credit, one challenge is closing in time. This is especially true for those trying to buy a home listed as a short sale.
Short sales often offer a buyer more bang for the buck because lenders allow the home to sell for less than the homeowner owes on the mortgage. Lenders sometimes cut the price deeply to sell the home so they can avoid foreclosing on the property.
Real estate agents estimate that as many as 60 percent of homes for sale are listed as short sales. However, lenders are often slow to approve deals, and real estate agents report buyers walking away in frustration.
That’s actually helping sellers who are not distressed, real estate agents say. That’s because they are able to close quickly and before the tax credits expire.
Some buyers, agents say, are even willing to pay a little higher purchase price to ensure they’ll get the tax credit.
Copyright © 2010 Tampa Tribune
Monday, March 8, 2010
Foreclosed borrowers may get loans again
NEW YORK – March 8, 2010 – Will people who currently face foreclosure or short sales or who walk away from their underwater properties ever be able to get financing to buy another home down the road?
Banks haven’t been very forthcoming on this issue. However, knowledgeable observers of the situation say that while it may take some time, the situation will right itself for most people.
Because bankrupt borrowers have eliminated their debts, they should “constitute attractive fodder for mortgage lenders,” says University of Michigan law professor John Pottow, whose specialty is bankruptcy.
As home prices and the mortgage market stabilize, lenders will be motivated to lend to people who previously had financial troubles if they look like they can pay the next time around, says Alan Riegler, a consultant with CCG Catalyst, which advises banks.
“The lender who figures out how to do more of this case-by-case stuff cost-effectively is going to end up ahead of the pack,” Riegler says.
Source: Inman News
NEW YORK – March 8, 2010 – Will people who currently face foreclosure or short sales or who walk away from their underwater properties ever be able to get financing to buy another home down the road?
Banks haven’t been very forthcoming on this issue. However, knowledgeable observers of the situation say that while it may take some time, the situation will right itself for most people.
Because bankrupt borrowers have eliminated their debts, they should “constitute attractive fodder for mortgage lenders,” says University of Michigan law professor John Pottow, whose specialty is bankruptcy.
As home prices and the mortgage market stabilize, lenders will be motivated to lend to people who previously had financial troubles if they look like they can pay the next time around, says Alan Riegler, a consultant with CCG Catalyst, which advises banks.
“The lender who figures out how to do more of this case-by-case stuff cost-effectively is going to end up ahead of the pack,” Riegler says.
Source: Inman News
Sunday, March 7, 2010
Giant bank, giant struggle: Foreclosure-assistance pipeline clogged for Bank of America
NEW YORK – March 5, 2010 – Two years after swallowing the troubled mortgage giant Countrywide Financial, Bank of America trails other major U.S. lenders in resolving troubled home loans through short sales or modified loan terms.
The lender, one of the nation’s biggest banks, holds more than a million mortgages that are months behind on their payments – twice as many defaulting home loans as any other lender in the country. But it has given permanent mortgage modifications to only about 1 percent of those borrowers – one of the lowest rates among lenders nationally, according to a report released last month on the federal government’s Home Affordable Modification Program.
The issue is key in Metropolitan Orlando, which has the nation’s 11th-highest rate of mortgage modifications, with 18,000 homeowners in trial modifications and 2,468 in permanent ones, the report stated.
Loan modifications aren’t the only way of out a foreclosure. In January, about a quarter of all Orlando-area home closings were short sales, which occur when the lender allows a homeowner to sell the property for less than what’s owed on the mortgage.
But when it comes to short sales, Bank of America also lags other lenders, real-estate agents say, by taking too long to respond to offers.
“Realtors that I work with, if they hear Bank of America, they won’t even show the property,” said David Pruett, a broker for D.A. Pruett Properties.
The chairman of the Orlando Regional Realtor Association, Kathleen Gallagher McIver, said recently that Bank of America has the worst record for expediting short sales, “and there’s not anyone out there who will tell you otherwise.”
Bank of America acknowledges it needs help with its short sales.
“We clearly recognize the need to improve the short-sale process for both our customers and the real-estate professionals who are critical to a successful transaction,” said Jumana Bauwen, a bank spokeswoman.
The company said it has updated its training, enhanced its technology and established a short-sale team to help customers and real-estate agents navigate the process. It is piloting a short-sale program for owners who don’t qualify for new mortgage terms. And it has established a 24-hour phone line so agents, buyers and sellers can track the status of their short sales.
Bank of America is not alone in its struggles to deal with the avalanche of defaulting home mortgages, according to the February modification report by the U.S. Treasury Department and the U.S. Department of Housing and Urban Development.
Wachovia Corp., now owned by Wells Fargo & Co., has approved permanently modified terms for fewer than 1 percent of its 86,461 defaulting mortgage customers. American Home Mortgage Servicing Inc. has a similar track record with the 127,521 mortgages headed toward foreclosure that it holds. Among the nation’s largest lenders, GMAC Mortgage Inc. had the best rate: 17 percent of its 65,751 defaulting home loans have been permanently modified.
Bank of America, which inherited much of its mortgage portfolio from Countrywide, says part of the problem is that many homeowners have not been diligent about submitting the documents needed to convert a trial mortgage modification into a permanent one.
Clermont resident George Simmons said he is now totally frustrated, having tried for more than a year to get Bank of America to convert a series of trial modifications into something permanent.
“Let’s see, the last correspondence I had from them said they didn’t have my income-tax return and my Social Security records,” Simmons said. “I sent it to them so many times. I’ve got my fax receipts and my certified postal receipts. They just keep asking for the same paperwork over and over and over again.”
Overall, about a fifth of Bank of America’s defaulting-mortgage customers have received temporary, three-month trial modifications. To address the huge volume of troubled loans needing permanent solutions, the company has hired about 15,000 staffers. Workers knock on doors and call homeowners with trial modifications at least 10 times before the temporary terms expire in three months.
At one point, Bauwen said, Bank of America was behind in getting homeowners into trial loan modifications. But it has ramped up those efforts, she said, and many of those trials will be converted into permanent modifications.
More importantly, Bauwen added, the company is not ramping up its foreclosure efforts unnecessarily.
Copyright © 2010 The Orlando Sentinel
NEW YORK – March 5, 2010 – Two years after swallowing the troubled mortgage giant Countrywide Financial, Bank of America trails other major U.S. lenders in resolving troubled home loans through short sales or modified loan terms.
The lender, one of the nation’s biggest banks, holds more than a million mortgages that are months behind on their payments – twice as many defaulting home loans as any other lender in the country. But it has given permanent mortgage modifications to only about 1 percent of those borrowers – one of the lowest rates among lenders nationally, according to a report released last month on the federal government’s Home Affordable Modification Program.
The issue is key in Metropolitan Orlando, which has the nation’s 11th-highest rate of mortgage modifications, with 18,000 homeowners in trial modifications and 2,468 in permanent ones, the report stated.
Loan modifications aren’t the only way of out a foreclosure. In January, about a quarter of all Orlando-area home closings were short sales, which occur when the lender allows a homeowner to sell the property for less than what’s owed on the mortgage.
But when it comes to short sales, Bank of America also lags other lenders, real-estate agents say, by taking too long to respond to offers.
“Realtors that I work with, if they hear Bank of America, they won’t even show the property,” said David Pruett, a broker for D.A. Pruett Properties.
The chairman of the Orlando Regional Realtor Association, Kathleen Gallagher McIver, said recently that Bank of America has the worst record for expediting short sales, “and there’s not anyone out there who will tell you otherwise.”
Bank of America acknowledges it needs help with its short sales.
“We clearly recognize the need to improve the short-sale process for both our customers and the real-estate professionals who are critical to a successful transaction,” said Jumana Bauwen, a bank spokeswoman.
The company said it has updated its training, enhanced its technology and established a short-sale team to help customers and real-estate agents navigate the process. It is piloting a short-sale program for owners who don’t qualify for new mortgage terms. And it has established a 24-hour phone line so agents, buyers and sellers can track the status of their short sales.
Bank of America is not alone in its struggles to deal with the avalanche of defaulting home mortgages, according to the February modification report by the U.S. Treasury Department and the U.S. Department of Housing and Urban Development.
Wachovia Corp., now owned by Wells Fargo & Co., has approved permanently modified terms for fewer than 1 percent of its 86,461 defaulting mortgage customers. American Home Mortgage Servicing Inc. has a similar track record with the 127,521 mortgages headed toward foreclosure that it holds. Among the nation’s largest lenders, GMAC Mortgage Inc. had the best rate: 17 percent of its 65,751 defaulting home loans have been permanently modified.
Bank of America, which inherited much of its mortgage portfolio from Countrywide, says part of the problem is that many homeowners have not been diligent about submitting the documents needed to convert a trial mortgage modification into a permanent one.
Clermont resident George Simmons said he is now totally frustrated, having tried for more than a year to get Bank of America to convert a series of trial modifications into something permanent.
“Let’s see, the last correspondence I had from them said they didn’t have my income-tax return and my Social Security records,” Simmons said. “I sent it to them so many times. I’ve got my fax receipts and my certified postal receipts. They just keep asking for the same paperwork over and over and over again.”
Overall, about a fifth of Bank of America’s defaulting-mortgage customers have received temporary, three-month trial modifications. To address the huge volume of troubled loans needing permanent solutions, the company has hired about 15,000 staffers. Workers knock on doors and call homeowners with trial modifications at least 10 times before the temporary terms expire in three months.
At one point, Bauwen said, Bank of America was behind in getting homeowners into trial loan modifications. But it has ramped up those efforts, she said, and many of those trials will be converted into permanent modifications.
More importantly, Bauwen added, the company is not ramping up its foreclosure efforts unnecessarily.
Copyright © 2010 The Orlando Sentinel
Tuesday, March 2, 2010
Mortgage delinquencies hit new record
NEW YORK – March 2, 2010 – TransUnion said Monday that customers at least 60 days past due on their mortgage payments rose to a new record in the fourth quarter.
The credit data provider said 6.89 percent of mortgage borrowers were at least two months behind on payments during the fourth quarter. It was the 12th straight quarter the delinquency rate rose.
The delinquency rate, which is seen as a precursor to foreclosures, was 6.25 percent during the third quarter and 4.58 percent during the final quarter in 2008.
Mortgage delinquencies and defaults remain a major problem facing the economy. A collapse in home sales and prices, as well as rising defaults, helped push the country into recession. Signs of a recovery in the market have been slow and uneven in recent months.
As customers struggled to repay mortgages, they also fell further behind on paying off credit cards. Customers at least three months late on making a credit card payment rose to 1.21 percent during the final three months of 2009. However, average credit card debt fell to $5,434 from $5,729 during the same quarter a year earlier.
While mortgage and credit card delinquencies continued to worsen, auto delinquencies actually improved. The 60-day delinquency rate on auto loans fell 6 percent in the fourth quarter to 0.81 percent, compared with the same quarter a year earlier. The delinquency rate was unchanged from the third quarter.
Auto loan delinquencies could be improving because of more favorable terms and deals in recent months for new cars, including the government's Cash for Clunkers program, Peter Turek, TransUnion's automotive vice president in its financial services business unit, said in a release.
TransUnion tracks the data by randomly sampling 27 million anonymous consumer records every quarter from its national consumer credit database.
Copyright © 2010 The Associated Press
NEW YORK – March 2, 2010 – TransUnion said Monday that customers at least 60 days past due on their mortgage payments rose to a new record in the fourth quarter.
The credit data provider said 6.89 percent of mortgage borrowers were at least two months behind on payments during the fourth quarter. It was the 12th straight quarter the delinquency rate rose.
The delinquency rate, which is seen as a precursor to foreclosures, was 6.25 percent during the third quarter and 4.58 percent during the final quarter in 2008.
Mortgage delinquencies and defaults remain a major problem facing the economy. A collapse in home sales and prices, as well as rising defaults, helped push the country into recession. Signs of a recovery in the market have been slow and uneven in recent months.
As customers struggled to repay mortgages, they also fell further behind on paying off credit cards. Customers at least three months late on making a credit card payment rose to 1.21 percent during the final three months of 2009. However, average credit card debt fell to $5,434 from $5,729 during the same quarter a year earlier.
While mortgage and credit card delinquencies continued to worsen, auto delinquencies actually improved. The 60-day delinquency rate on auto loans fell 6 percent in the fourth quarter to 0.81 percent, compared with the same quarter a year earlier. The delinquency rate was unchanged from the third quarter.
Auto loan delinquencies could be improving because of more favorable terms and deals in recent months for new cars, including the government's Cash for Clunkers program, Peter Turek, TransUnion's automotive vice president in its financial services business unit, said in a release.
TransUnion tracks the data by randomly sampling 27 million anonymous consumer records every quarter from its national consumer credit database.
Copyright © 2010 The Associated Press
Monday, March 1, 2010
Hundreds of desperate homeowners line up for mortgage help
WEST PALM BEACH, Fla. – March 1, 2010 – The extent of the nation’s housing crisis was tangible Thursday morning. It stretched the length of one side of Palm Beach County’s Convention Center as hundreds of homeowners, wrapped in blankets and travel-weary after flying from as far away as California, waited for the salvation of a mortgage modification.
Welcome to the “Save-a-Thon” – five days of around-the-clock loan woe turnarounds sponsored by the Boston-based Neighborhood Assistance Corporation of America, or NACA.
The non-profit group is offering free help with lowering monthly payments through federal programs and agreements it has with many of the nation’s major lenders.
It brought an army of bank representatives – at least 100 from Bank of America alone – and NACA counselors who meet face-to-face with troubled borrowers.
And while the event seemed at times like a church revival as homeowners with success stories were brought to a microphone to testify, there were sincere solutions occurring on the convention center floor.
Teresa Holston, a registered nurse who traveled from Los Angeles for the event, started crying when she spoke of her new 2 percent interest rate, a reduction from 9 percent.
“It’s like a new lease on life,” said Holton, who got in trouble when she refinanced her home and broke up with a boyfriend who was paying part of the mortgage. “I am just so grateful.”
For many homeowners, NACA’s event was the last attempt in a months-long struggle to work with their banks through the Obama administration’s Making Home Affordable Program.
The program offers incentives to banks to lower monthly payments by reducing – sometimes temporarily – interest rates and principal amounts, or offering a principal forbearance, which cuts the principal balance on the front end, but tacks it onto the end of the life of the loan.
NACA founder and CEO Bruce Marks pushes for even better terms. He asks lenders to permanently reduce interest rates. If there is a principal forbearance, he asks that a mandatory repayment be made only if there is a profit made on the sale of the home.
He doesn’t always get his way. Many of the loans modified Thursday had reduced interest rates that will adjust at the end of five years. Still, the reduction helps the borrower now with making monthly payments.
“Frankly, it makes business sense for them to be working with us now,” Marks said about lenders. “These servicers have very good machinery to foreclose on people, but not to modify a loan.”
Marks has been criticized for his guerilla-style tactics, which include rallying outside bank executives’ homes. His operation is paid for partly with federal grants, having received $25 million last year, Marks said. Detractors complain he is not forthcoming with his success rates and should be more transparent since he is getting taxpayer dollars. He says about 30 percent of clients receive a same-day modification. Up to 80 percent eventually get their payments reduced, Marks said.
Bully or not, Marks has persuaded many major lenders to send representatives to his unconventional “Save the Dream” workshops.
Thursday’s event began with pep rally-style cheers from NACA counselors.
“We are NACA,” a man screamed into a microphone.
“We are NACA,” more than 200 counselors echoed.
“Mighty, mighty NACA.”
“Mighty, mighty NACA.”
But not everyone walked away satisfied. An L-shaped table in the corner of the room had signs posted that read “No Solution.”
That’s where Martine and Daillant Edouard, from Brooklyn, N.Y., found themselves. A private investor owns their loan serviced by Bank of America, and they needed more information about the terms the investor allows for modifications.
“What are you going to do?” Martine Edouard said, her eyes starting to tear. “You have to try and keep your composure.”
NACA will remain open 24-hours-a-day until midnight Monday.
It’s the first time the group will pull all-nighters.
“We’re going to do 100 hours straight,” Marks said. “Why? Because it’s the right thing to do.”
Copyright © 2010 The Palm Beach Post
WEST PALM BEACH, Fla. – March 1, 2010 – The extent of the nation’s housing crisis was tangible Thursday morning. It stretched the length of one side of Palm Beach County’s Convention Center as hundreds of homeowners, wrapped in blankets and travel-weary after flying from as far away as California, waited for the salvation of a mortgage modification.
Welcome to the “Save-a-Thon” – five days of around-the-clock loan woe turnarounds sponsored by the Boston-based Neighborhood Assistance Corporation of America, or NACA.
The non-profit group is offering free help with lowering monthly payments through federal programs and agreements it has with many of the nation’s major lenders.
It brought an army of bank representatives – at least 100 from Bank of America alone – and NACA counselors who meet face-to-face with troubled borrowers.
And while the event seemed at times like a church revival as homeowners with success stories were brought to a microphone to testify, there were sincere solutions occurring on the convention center floor.
Teresa Holston, a registered nurse who traveled from Los Angeles for the event, started crying when she spoke of her new 2 percent interest rate, a reduction from 9 percent.
“It’s like a new lease on life,” said Holton, who got in trouble when she refinanced her home and broke up with a boyfriend who was paying part of the mortgage. “I am just so grateful.”
For many homeowners, NACA’s event was the last attempt in a months-long struggle to work with their banks through the Obama administration’s Making Home Affordable Program.
The program offers incentives to banks to lower monthly payments by reducing – sometimes temporarily – interest rates and principal amounts, or offering a principal forbearance, which cuts the principal balance on the front end, but tacks it onto the end of the life of the loan.
NACA founder and CEO Bruce Marks pushes for even better terms. He asks lenders to permanently reduce interest rates. If there is a principal forbearance, he asks that a mandatory repayment be made only if there is a profit made on the sale of the home.
He doesn’t always get his way. Many of the loans modified Thursday had reduced interest rates that will adjust at the end of five years. Still, the reduction helps the borrower now with making monthly payments.
“Frankly, it makes business sense for them to be working with us now,” Marks said about lenders. “These servicers have very good machinery to foreclose on people, but not to modify a loan.”
Marks has been criticized for his guerilla-style tactics, which include rallying outside bank executives’ homes. His operation is paid for partly with federal grants, having received $25 million last year, Marks said. Detractors complain he is not forthcoming with his success rates and should be more transparent since he is getting taxpayer dollars. He says about 30 percent of clients receive a same-day modification. Up to 80 percent eventually get their payments reduced, Marks said.
Bully or not, Marks has persuaded many major lenders to send representatives to his unconventional “Save the Dream” workshops.
Thursday’s event began with pep rally-style cheers from NACA counselors.
“We are NACA,” a man screamed into a microphone.
“We are NACA,” more than 200 counselors echoed.
“Mighty, mighty NACA.”
“Mighty, mighty NACA.”
But not everyone walked away satisfied. An L-shaped table in the corner of the room had signs posted that read “No Solution.”
That’s where Martine and Daillant Edouard, from Brooklyn, N.Y., found themselves. A private investor owns their loan serviced by Bank of America, and they needed more information about the terms the investor allows for modifications.
“What are you going to do?” Martine Edouard said, her eyes starting to tear. “You have to try and keep your composure.”
NACA will remain open 24-hours-a-day until midnight Monday.
It’s the first time the group will pull all-nighters.
“We’re going to do 100 hours straight,” Marks said. “Why? Because it’s the right thing to do.”
Copyright © 2010 The Palm Beach Post
Subscribe to:
Posts (Atom)