Housing Problem Solvers Company
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Housing Problem Solvers
Housing Problem Solvers
|Posted on October 26, 2013 at 12:10 AM||comments (1)|
Fixed mortgage rates dropped to their lowest levels since this summer, giving a lift this week to the housing recovery. "Mortgage rates slid this week as the partial government shutdown led to market speculation that the Federal Reserve will not alter its bond purchases this year,” says Frank Nothaft, Freddie Mac’s chief economist. Mortgage rates have been dropping since September when the Federal Reserve decided to delay tapering its $85-billion per month bond purchasing program, which has been keeping rates low. Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 24:
|Posted on October 15, 2013 at 10:44 PM||comments (1)|
The Federal Housing Finance Agency is pushing Fannie and Freddie to chase down borrowers who can make home loan payments but choose not to.
Anyone thinking of skating on mortgages owned by eitherFannie Mae or Freddie Mac may want to think again. As a result of new government reports, the two companies say they are going to do a better job of going after so-called strategic defaulters.Fannie and Freddie can pursue judgments against borrowers who walk away from their loans even though they have the ability to make their payments. That's called a strategic default, and many borrowers are taking that step — typically throwing in the towel because their homes are no longer worth as much as they owe.But when their homes are sold at foreclosure and the proceeds are not enough to cover their outstanding loan balances, it creates a deficiency for which many defaulters either don't realize they are liable or don't care.To date, the two government-sponsored enterprises, which are now highly profitable after five years of running in the red, haven't done a particularly good job at pursuing deficiency judgments, according to scathing reports from the Office of the Inspector General at the Federal Housing Finance Agency.But the FHFA says it is going to make the GSEs clean up their acts. And that should serve as fair warning to those who can pay but fail to do so.As the inspector general's office says time and again in the reports, chasing down strategic defaulters can not only cut the enterprises' losses on bad loans but can also "serve as a deterrent to those who would chose to strategically default on their mortgage obligations."Going after strategic defaulters is big money. According to the report by the inspector general's office criticizing Freddie Mac's lax practices, the company has left billions on the table.The report found that Freddie Mac, which has received some $71 billion in taxpayer assistance since it was taken into conservatorship by the FHFA in September 2008, did not refer nearly 58,000 foreclosures with estimated deficiencies of some $4.6 billion for collection by its vendors.Of course, only a percentage of that amount might have been recoverable because some borrowers are simply tapped out. But because the bad loans weren't even considered for recovery, Freddie Mac "eliminated any possibility" for collecting what is owed, the report said.Now extrapolate that to Freddie Mac's entire holdings and you can see we're talking some really big money here. As of December, the big secondary mortgage market company had nearly 50,000 foreclosures still on its books, carrying a value of some $4.3 billion. And as of March 31, it held 364,000 mortgages that were 60 days or more delinquent and were, therefore, likely foreclosure candidates.Fannie Mae's portfolio of troubled assets is much larger. At the end of last year, it owned more than 105,000 foreclosed properties valued at $9.5 billion and carried a "substantial" shadow inventory of 576,000 seriously delinquent mortgages that were 90 days late or more and likely to end up in foreclosure.It does a better job than the smaller Freddie Mac, according to the inspector general's office. But in a separate report, Fannie Mae earned a slap on the wrist for not taking any action on nearly 30,000 accounts because statutes of limitation had expired or were about to. For the same reason, the report says, it failed to pursue deficiencies of some 15,000 accounts that already had been reviewed for collection by its vendors.Several factors influence the decision to pursue deficiency recoveries. But most important, state laws dictate timelines for filing claims. Some states do not allow deficiency judgments at all, but they are fair game in more than 30 states and the District of Columbia. But 10 have short windows — only 30 to 180 days in which collections are allowed.But not going after defaulters where it is permissible to do so not only reduces the chances of recovering potentially billions, the reports point out, it "incentivizes" other borrowers to walk away from mortgages they can afford to pay.The new inspector general reports are a follow-up to one issued a year ago that called the FHFA, the agency that oversees Fannie and Freddie, on the carpet for failing to provide enough guidance about effectively pursuing and collecting deficiency judgments wherever and whenever possible.In September, in response to a draft of these latest reports, the agency set down requirements for both enterprises to maintain formal policies and procedures for managing their deficiency collection processes, establish a set of controls to monitor their collection vendors and comply with state laws in an effort to preserve their ability to pursue collections.And by the first of the year, the FHFA said it will begin to more closely monitor the effectiveness of Fannie Mae and Freddie Mac's deficiency judgment processes. That's government-speak for "We'll be watching you from now on, so you'd better get your collection house in order."
|Posted on October 5, 2013 at 11:24 PM||comments (0)|
Oct 1 (Reuters) - Finding an apartment to rent got even harder in the third quarter, as the U.S. apartment vacancy rate fell to its lowest level in more than a decade, according to an industry report released on Tuesday.The national apartment vacancy rate fell 0.1 percentage point to 4.2 percent in the third quarter from the second quarter, according to a preliminary report by real estate research firm Reis Inc.It was the lowest vacancy rate since the third quarter of 2001 when it was 3.9 percent. Some 47 out of 79 markets that Reis tracks posted vacancy decreases.Despite the decline in the vacancy rate, a weak job market and stagnant wages have prevented a commensurate rise in rents, Reis said.While the average U.S. effective rent in the third quarter grew by 1 percent sequentially, and 3 percent year-over-year, the increase in rent was less than what would have been expected in such a tight market, Reis said.Effective rent is the rent landlords receive after months of free rent and other perks."Demand has been so strong to push vacancy rates to such a low level, yet we haven't seen rent growth of the magnitude we would normally expect," Reis Senior Economist Ryan Severino said.With such a low vacancy rate, effective rent would have been expected to grow by about 4 percent to 5 percent year-over-year but was stymied by lack of job and income growth, Severino said."If median household income is growing at somewhere about 2 percent a year, give or take, once you back out inflation how much money is left for increased spending on rent? Not a lot," he said.Net absorption, the number of apartments rented over those that are unoccupied, reached 40,392, the most so far this year and 54 percent higher than a year earlier.New construction that is expected to come on line next year may fuel a rise in the vacancy rate and could slow the increase in rental rates, Severino said.Over the past five years, the apartment sector has been the beneficiary of the U.S. housing bust, the economic recovery, high mortgage requirements, and a constrained supply of new apartments.Those factors have pushed down the vacancy rate and allowed apartment owners, such as Equity Residential, Essex Property Trust Inc and AvalonBay Communities Inc to raise rents.Rising mortgage rates in the third quarter also dampened homeownership, forcing people to rent longer.The 4.2 percent average vacancy rate in the third quarter was down from 4.3 percent in the prior quarter and from 8 percent in late 2009.At 2 percent, New Haven, Connecticut had the lowest vacancy. Memphis, Tennessee had the highest vacancy rate, at 8.2 percent.The average asking rent rose 0.9 percent in the third quarter to $1,121.16 per month. The average effective rent was $1,073.29.San Francisco and San Jose, U.S. capitals of the technology industry, saw the highest effective rent increase, both up 2.2 percent to $2,043.02 per month for San Francisco and $1,685.72 for San Jose.New York remained the most expensive place to rent in the United States with an average effective rent of $3,049.37 per month, up 0.9 percent. The cheapest was Wichita, Kansas, at $528.95 per month, up 0.8 percent.
|Posted on October 3, 2013 at 11:58 PM||comments (1)|
Realtor.com® recently released a list of the top rental markets in the country, based on the most-searched markets at its site the last month. Among the top 10 markets:
1. Las Vegas
Median rent: $1,100.
Median rent: $1,450
3. Charlotte, N.C.
Median rent: $1,195
4. San Antonio, Texas
Median rent: $1,100
5. Orlando, Fla.
Median rent: $1,195
6. Raleigh, N.C.
Median rent: $1,095
Median rent: $1,550
8. Los Angeles
Median rent: $2,650
Median rent: $1,353
Median rent: $1,355
|Posted on October 3, 2013 at 11:45 PM||comments (28)|
The foreclosure crisis has been a four-year nightmare for many homeowners, more than 3 million of whom have lost their homes. Many of these ex-homeowners are middle class people with jobs and safety nets, and have become renters or traded down for more inexpensive homes after losing their primary residences.But for the very poor, options are limited, and the situation is dire, according to a report out Wednesday from the National Low Income Housing Coalition.Using data from the Commerce Department’s American Community Survey, the advocacy group found that for every 100 extremely low income families, there are only 30 affordable units available for rent nationwide. The number of these ELI renters grew by 200,000 between 2009 and 2010, to 9.8 million, or nearly a quarter of all the renters in the U.S. Extremely low income renters are defined as families that earn less than 30% of the median income in their metropolitan area. These people typically depend on government assistance to buy food and health care as well. But the danger with these types of renters is that after paying their rent, these households will have less than 50% of their income remaining to spend on food, medicine, transportation and childcare.“What we’ve seen is a decline in the homeownership rate since 2008, and we’ve seen rent being pushed up,” pushing market-rate housing out of reach for an increasing number of people, said NLIHC chief executive Sheila Crowley in an interview. The gap between supply of affordable rental housing and demand from extremely-low income borrowers exists in all 50 states, but the problem is worst in Arizona, California, Florida, Nevada, Oregon, Texas, Utah and Michigan. “Where you have the biggest problems is where you have the biggest difference between rich and poor,” Ms. Crowley said.The imbalance comes at a time when the federal government, hobbled by budget deficits and deadlocks in Congress, is unlikely to increase its support for poor renters. In its projected 2013 budget, the U.S. Department of Housing and Urban Development showed that it was requesting just $2 billion for the production of affordable housing for low- to extremely low-income families and disabled people, and reported that there is a $26 billion shortfall in the agency’s capital needs.“There’s no doubt that there’s a gap, and it’s significant, and it’s getting worse,” said Becky Koepnick, an advisor to HUD Secretary Shaun Donovan. About 2 million low-income renters have gotten housing through the Low Income Housing Tax Credit, a Treasury and IRS program launched in the mid-1980s, Ms. Koepnick noted, but that program is not targeted at the lowest-income renters that the NLIHC is focusing on.The bottom line is, as more and more low-income people demand inexpensive rental housing, the market and the government are increasingly unable to meet their needs, the NLIHC says.Of course, many low-income people turn to government programs other than publicly-built housing, such as rental assistance and housing voucher programs. But the other big fear is that more people will fall into homelessness or be forced to double up with family members or live in substandard conditions.The NLIHC also called for funding to be given to the National Housing Trust Fund, a HUD program established in 2008 to produce more low-income housing that has yet to be funded.
|Posted on September 25, 2013 at 4:25 PM||comments (3)|
MultimediaGraphicHousing’s Rise and Fall in 20 CitiesEnlarge This ImageSteven Senne/Associated PressA house in Walpole, Mass. Home values rose 12.4 percent in July.Enlarge This ImageJustin Sullivan/Getty ImagesAn open house at a home for sale in San Francisco. Home prices soared 24.8 percent in San Francisco from July 2012 to this July.For now, though, builders are building, sellers are selling and mortgage lenders are less nervous about extending credit to buyers.The heady price increases in the first half of the year slowed a bit in July, according to data released on Tuesday.But in the face of pent-up demand and emboldened consumers, home values were still heading upward at a healthy pace, rising 12.4 percent from July 2012 to July 2013, according to the Standard & Poor’s Case/Shiller home price index, which tracks sales in 20 cities.A separate index of mortgages backed by Fannie Mae and Freddie Mac showed an 8.8 percent gain in prices over the same time period.Two national homebuilders, Lennar and KB Home, reported significant revenue growth and profits in the third quarter. Lennar said its third-quarter earnings rose 39 percent over the third quarter of last year, and KB said its profit had increased sevenfold.“We still have a lot of young people that are going to start moving out and forming households and we’re going to have to find housing for them,” said Patrick Newport, the chief United States economist for IHS Global Insight. “There are shortages of homes just about everywhere.”Higher home prices help the economy not just by strengthening the construction and real estate industries, but by making homeowners feel wealthier and more likely to spend.While the number of Americans who lost the equity in their homes in the housing crash set records, rebounding prices have helped nudge more and more households back above water. According to CoreLogic, 2.5 million households regained equity in their homes in the second quarter.Mr. Newport said the full effects of higher mortgage rates had probably not shown up in the numbers yet.Rates increased from about 3.4 percent on 30-year fixed-rate loans in January to about 4.4 percent in July, according to a survey by Freddie Mac, and many loans were written at even higher rates this summer. But they remain well below typical rates in recent decades, and mortgage borrowing costs have already eased a bit from their recent peak now that the Federal Reserve opted last week not to begin a wind-down of stimulus measures.Rising rates may not torpedo the housing market recovery, but they have made refinancing much less appealing.The number of mortgage applications for purchases has climbed by 7 percent over the last year, according to the Mortgage Bankers Association, but refinance requests have fallen by 70 percent since early May.As a result, banks have laid off thousands of workers in their mortgage units. Citigroup laid off 1,000 workers from its mortgage business, it said on Monday, following Wells Fargo and Bank of America, which have both done layoffs in recent months.Refinancing also gave households more spending power as it lowered monthly payments.Analysts offered a cornucopia of reasons for the continuing strength of the housing market: people rushing to buy before prices and interest rates increased further, a gradual relaxation of lending standards, an uptick in inventory, a smaller share of foreclosures in the sales stream and large-scale buying by investors looking to put houses on the rental market.Still, some analysts questioned whether fundamental factors like job and wage growth would sustain the market and restore first-time buyers to the market. Others warned of a lurking shadow inventory.“While recent results have been considerably better than those seen earlier in the cycle, and also better than we had anticipated, we have not given up on the argument that a large supply overhang of existing homes (factoring in all those in foreclosure or soon to be) promises to keep pressure on prices for some time,” Joshua Shapiro, the chief United States economist for MFR, wrote in a note to investors.Once the backlog of demand is absorbed, continued strength will depend heavily on consumer confidence. That’s where politics, including a looming battle over federal spending and the debt ceiling, could stall improvement.“The real test will come over the next few months, given the sharp drop in mortgage demand and the potential for a rollover in consumers’ confidence as Congress does its worst,” wrote Ian Shepherdson, an economist with Pantheon Macroeconomics.On Tuesday, the Conference Board, a New York-based private research group, reported that Americans’ confidence in the economy fell slightly in September from August, as many became less optimistic about hiring and pay increases over the next six months. The September reading dropped to 79.7, down from 81.8 the previous month, but remained only slightly below June’s reading of 82.1, the highest in five and a half years.Year-over-year prices were up in all 20 cities tracked by Case/Shiller, but the gains varied widely, from 3.5 percent in New York and 3.9 percent in Cleveland on the low end to a frothy 24.8 percent in San Francisco and 27.5 percent in Las Vegas.The month-to-month increase in the Case/Shiller index slowed to 0.6 percent, after gains of 1.7 percent in April, 0.9 percent in May and 0.9 percent in June.Asked if the slowdown in growth was alarming, Robert Shiller, the Yale economist who helped develop the home price index, said no. “I’m not worried,” he said in an interview with CNBC. “I think that would be a good thing.”His greater worry, he said, was “more about a bubble — in some cities, it’s looking bubbly now.”Still, Mr. Shiller said, even the bubbliest markets were still well below their peak.Other analysts raised the same point. Prices in San Francisco are still only at 2004 levels, cautioned Steve Blitz, chief economist for ITG Investment Research. “For those who bought and still hold homes in 2005, ’06 and ’07, they may still be in a negative equity position, depending on the terms of their mortgage,” Mr. Blitz wrote. “Don’t let those double-digit year-over-year percentage gains bias opinion to believe all is all right.”A
|Posted on September 25, 2013 at 4:18 PM||comments (45)|
Many of the nation’s largest builders are raising their prices, even as existing-home prices are beginning to moderate. For example, homebuilder KB Home has had average prices for its new homes soar 23 percent annually. Lennar has raised the average price on its new homes by 16 percent annually in the third quarter, now averaging $291,000. The average price of all existing homes was $258,000, according to the National Association of REALTORS®. "The big picture is that new-build house prices fell less than existing house prices during the crash and have risen more during the recovery," says Paul Diggle at Capital Economics. While prices are up for new homes, both Lennar and KB Home announced this week a weaker pace for new orders. Lennar officials blamed the slowdown on rising mortgage rates and the double-digit percentage increases in home prices this year. “We see strong, viable, fundamental demand out there, but it has cooled a little bit,” Rick Beckwitt, Lennar’s president, said during a recent earnings call. “As a result, from a pricing standpoint, we have selected some of our inventory and increased incentives associated with that inventory.”Analyst Ivy Zelman doesn’t believe new home prices are inflated or priced at an abnormal premium over existing homes. "In Arizona, California, Florida, and Nevada, we conclude that prices are still 15 percent lower than the 2006 peak, which excludes an adjustment for an increasing size of new homes and would be further compounded by seven years of inflation,” Zelman says.
|Posted on September 10, 2013 at 9:54 PM||comments (42)|
List of Improving Housing Markets Hits Record HighDAILY REAL ESTATE NEWS | TUESDAY, SEPTEMBER 10, 2013The number of housing markets listed as "improving" on the National Association of Home Builders/First American Improving Markets Index reached a record high this month of 291. The index, which started two years ago, gained 44 markets from August to September. The measure of improving housing markets had been declining for several months, but a change in the method to compile the index's data may partially explain this month's rise. "The dramatic increase in markets qualifying for the [improving market index] in September was partly due to a recent improvement in the way that Freddie Mac measures home prices, which resulted in stronger gains than previously reported," says NAHB chief economist David Crowe. "Even so, the broadened list of metros on the [index] continues to demonstrate the slow but steady gains that individual housing markets are making to bolster the national outlook."NAHB Chairman Rick Judson says slightly more than 80 percent of the 361 metros tracked by the index have shown consistent growth in three key measures for at least six consecutive months: housing permits, employment, and home prices."While there is still plenty of room for growth, this is an excellent indication of how the housing recovery has begun to take hold across more geographic areas,” Judson says.Among some of the metros added to the list in September were Macon, Ga.; St. Cloud, Minn.; Brownsville, Texas; Spokane, Wash.; and Milwaukee. All 50 states have at least one metro on the list.
|Posted on September 6, 2013 at 8:38 PM||comments (1)|
In the wake of last year’s multiple foreclosure fraud and abuse settlements and ongoing dispersion of housing assistance funds from the Troubled Asset Relief Program (TARP), many former homeowners thought that they would be receiving some form of compensation for wrongful foreclosures and poorly-conducted foreclosures, loan modification attempts, and short sales. Many others hoped that the money would be used, as directed by the settlements and TARP itself, to help them work out a way to keep their homes. Few have received such compensation or assistance, however, and even fewer should continue to look for it thanks to a recent decision from the U.S. Treasury Department that will allow states to use monies from these massive settlements and programs to demolish homes instead of helping people stay in their distressed homes.Michigan and Ohio have already altered their contracts with the Treasury so that they can use foreclosure prevention funds for demolition. Mary Townley, director of homeownership at the Michigan State Housing Development Authority, said that the diversion of funds will actually help more homeowners remain in their homes since “many of these communities had so many blighted properties that homeowners would throw their arms up and say… ‘Why am I doing this?’” Michigan has diverted $100 million (20 percent of its Hardest Hit Fund money) to demolishing 7,000 houses.Over protests from housing advocates who insist the money should have gone to help homeowners who did care about staying in their homes, the demolition process has already begun in Detroit, Michigan, where areas that still have potential for growth are being targeted for demolition funds. “You’ve got to remove blight in order to bring in new growth,” said state senator Carl Levin, adding that in his view, “supporting homeowners means you’ve got to remove the blight in their neighborhood.” Levin admitted that demolition is a “creative use” of the Hardest Hit funds, but said that in his mind, it is a necessary and “very positive use”. Homeowners living in the areas targeted for demolition hope that removing blighted homes will encourage builders to erect new structures in the area and new homeowners to buy.
|Posted on August 27, 2013 at 11:44 AM||comments (51)|
When Fifth Third Bank, Fifth Third Mortgage Company, and Cranbrook Mortgage Corporation required a couple on disability to prove, via physician’s letter, that they could be expected to continue to receive the disability payments that enabled them to pay their mortgage, the lenders say they were simply doing due diligence on a refinancing application. The U.S. Department of Housing and Urban Development (HUD) says that they may actually have been engaged in discrimination against persons with disabilities and in violation of the Fair Housing Act, however, because they required the couple to provide more and different evidence of their ability to pay than they would have had to had they not been disabled. The couple ultimately did not provide a physician’s letter and were denied the refi. HUD believes that the lenders were unjustified in denying the refinancing application because at the time of the couple’s loan application Fifth Third’s underwriting policy “explicitly specified a physician’s statement as appropriate evidence for establishing continuance of disability income.” This, HUD argues, goes beyond the requirements placed on other applicants for verifying an applicant’s income amount and source.Fifth Third declined to comment on the charges. HUD’s acting assistant secretary for fair housing and equal opportunity, Bryan Greene, said regarding the lawsuit that “persons with disabilities should not have to meet higher mortgage qualification standards because they rely on disability insurance payments as a source of income”. Do you think Fifth Third should be facing a lawsuit? How should disability income be verified fairly?