We will posting the latest real estate industry news on a regular basis. Check back often to access information about the latest trends in our ever changing real estate market.
May 19, 2010
HAMP Permanant Loan Modifications Total 300K
Mortgage servicers participating in the Home Affordable Modification Program (HAMP) converted more than 68,000 trial modifications into permanent status in April, pushing the total to 299,092.
Servicers conducted almost 13% more conversions in April than the 57,000 in March. The Treasury Department launched HAMP in March 2009 to provide incentives to servicers for the modification of loans on the verge of foreclosure. Borrowers must make three monthly payments in the trial stages of a HAMP modification before it is converted to a permanent status.
The Obama Administration initially targeted 3m to 4m homeowners to receive assistance under HAMP.
“The number of homeowners receiving significant relief through a mortgage modification continues to rise,” said Chief of Treasury’s Homeownership Preservation Office (HPO) Phyllis Caldwell. “Our focus now is on improving the homeowner experience and holding servicers accountable for their performance. Increased transparency through more robust reporting of servicer-specific data will contribute handily to those efforts.”
Servicers reduced payments under a permanent modification at a 36% median, translating to more than $500 a month.
For the first time, the Treasury included conversion rates for each of the participating servicers. HomeEq Servicing and Ocwen Financial held the highest conversion rates at 83%.
The big-four banks all held conversion rates in the same range. Bank of America (BAC: 15.86 -0.56%) and Wells Fargo (WFC: 29.87 -2.35%) both converted 25% of their trial modifications into permanent status. JPMorgan Chase (JPM: 38.53 -1.26%) converted 22% of its trials, and the Citigroup (C: 3.7105 -0.52%) servicing arm CitiMortgage had a 21% conversion rate.
BofA had a total of 56,398 permanent modifications since HAMP launched, the most of any servicer. JPMorgan was second with 39,507. Wells Fargo had 36,094 for third, and CitiMortgage had 28,556 permanent modifications.
May 17, 2010
Loan Modification Dropouts Rise
The number of homeowners dropping out of the Obama administration's main mortgage assistance plan is growing, and is now almost equal to the number who have received permanent relief.
The Treasury Department's report Monday was the latest evidence of problems in the administration's $75 billion program. While officials insist the program is helping the housing market turn around, critics say it is merely delaying an inevitable surge in foreclosures.
More than 299,000 homeowners had received permanent loan modifications as of last month, Treasury said. That's about 25 percent of the 1.2 million who started the program since its March 2009 launch. They are paying, on average, $516 less each month.
However, the number of people who started the process but failed to get their mortgages permanently modified rose dramatically in April.
To complete the program, borrowers must make at least three payments on time. About 277,000 homeowners, or 23 percent of those enrolled, have dropped out during this trial phase. That's up from about 155,000 a month earlier, or a 79 percent increase.
Many borrowers are still stuck in limbo, unable to complete the process and caught up in an often-bewildering bureaucracy.
"These mortgage companies have to get it together," said Henrietta Thompson, housing coordinator with United Family Services in Charlotte, N.C. "We're not getting anything done."
Treasury officials acknowledge that long delays have been a problem.
"Homeowners are waiting. We want them to get answers as rapidly as possible," said Herbert Allison, an assistant Treasury secretary.
After a one-year struggle with JPMorgan Chase & Co., Giselle Embry, 56, of Escondido, was finally able to get a loan modification through the program.
"They kept calling me and asking me to send the same things," she said. "I felt like they just wanted to run me around until I got so frustrated that I gave up."
Embry fell behind on her mortgage. An illness forced her to go on disability for six months and her hours as a career adviser were shortened because of state budget cuts. Her new loan payment is $622 a month, more than half of her initial payment.
A Chase spokeswoman declined to comment on Embry's case. She said the bank has hired 9,000 workers to handle foreclosure cases, opened 51 centers around the country where borrowers can meet with bank officials and held foreclosure prevention events around the country.
The program is designed to lower borrowers' monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years.
There have been problems from the start. One of the big ones: Initially, many of the participating banks allowed borrowers to state their income verbally and provide proof of their income later. That jammed up the system as many borrowers didn't provide a complete set of documents, and some complained that their information was lost.
The mortgage companies that required homeowners to provide proof of their incomes have had a much better track record. HomEq Servicing Inc. and Ocwen Financial Corp. were able to convert more than 80 percent of their participating borrowers to permanent status, according to the Treasury Department.
By contrast, the four largest banks in the program have been far less successful. Bank of America Corp. and Wells Fargo & Co. have successfully processed about 25 percent of their applications. JPMorgan Chase and Citigroup Inc. have been able to convert 22 percent and 21 percent, respectively, of their applicants to permanent status.
Treasury officials have directed lenders to shift to a new system. Starting with loan modifications that go into effect June 1, they are required to collect two recent pay stubs at the start of the process.
Housing analysts are also watching the number of borrowers who drop out after completing the program.
April 26, 2010
5 Costly Mistakes First-Time Buyers Make
Buying a first home can be a daunting experience. Here are five common and costly mistakes that novice home buyers make:
1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan.
2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan.
3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating.
4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates.
5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise.
Source: CNNMoney.com
April 23, 2010
Home Sales Rise on Tax Credit, Favorable Market
Buyers responding to the home buyer tax credit and favorable affordability conditions boosted existing-home sales in March, marking the beginning of an expected spring surge, according to the National Association of REALTORS®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million units in March from 5.01 million in February, and are 16.1 percent above the 4.61 million-unit level in March 2009.
Lawrence Yun, NAR chief economist, said it is encouraging to see a broad home sales recovery in nearly every part of the country, with two important underlying trends. “Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running,” he said. “The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices. This is preserving perhaps $1 trillion in largely middle-class housing wealth that may have been wiped out without the housing stimulus measure.”
Rise in Inventories, Prices
Total housing inventory at the end of March rose 1.5 percent to 3.58 million existing homes available for sale, which represents an 8.0-month supply at the current sales pace, down from an 8.5-month supply in February. Raw unsold inventory is 1.8 percent below a year ago, and is 21.7 percent below the record of 4.58 million in July 2008.
“Foreclosures have been feeding into the inventory pipeline at a fairly steady pace and are being absorbed manageably,” Yun said. “In fact, foreclosures are selling quickly, especially in the lower-price ranges that are attractive to first-time home buyers.”
A parallel NAR practitioner survey shows first-time buyers purchased 44 percent of homes in March, up from 42 percent in February. Investors accounted for 19 percent of transactions in March, unchanged from February; the remaining sales were to repeat buyers. All-cash sales remain elevated at 27 percent in March, the same as in February.
The national median existing-home price for all housing types was $170,700 in March, up 0.4 percent from March 2009. Distressed homes, typically sold at a 15 percent discount, accounted for 35 percent of sales last month – unchanged from February.
“With home values stabilizing, a revival in home buying confidence will likely help the housing market get back on its feet even as the tax credit impact disappears,” Yun said.
A Great Time to Buy
NAR President Vicki Cox Golder said buying conditions are in near-perfect alignment. “Even with tougher loan standards, historically low mortgage interest rates with affordable prices and a sense that the market is turning have created optimal conditions in much of the country,” she said.
“With the fast-approaching April 30 deadline to get a contract in place for the tax credit, REALTORS® are working harder than ever to negotiate transactions, arrange services and complete paperwork,” Golder said. “Because many repeat buyers need to sell their current home first, many will be purchasing later without the tax credit but now have the benefit of a more buoyant housing market.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dipped to 4.97 percent in March from 4.99 percent in February; the rate was 5.00 percent in March 2009.
Single-family home sales rose 7.3 percent to a seasonally adjusted annual rate of 4.68 million in March from a level of 4.36 million in February, and are 13.3 percent above the 4.13 million level a year ago. The median existing single-family home price was $170,700 in March, up 0.6 percent from March 2009.
Regional, Metro Area Performances
Single-family median prices rose in 14 out of 20 metropolitan statistical areas reported in March in comparison with a year earlier. Five metro areas experienced double-digit increases, including San Diego, St. Louis, and Boston.
Existing condominium and co-op sales increased 3.1 percent to a seasonally adjusted annual rate of 670,000 in March from 650,000 in February, and are 39.3 percent higher than the 481,000-unit level in March 2009. The median existing condo price was $170,600 in March, which is 0.7 percent below a year ago.
Regionally, existing-home sales in the Northeast increased 6.0 percent to an annual level of 890,000 in March and are 25.4 percent higher than a year ago. The median price in the Northeast was $249,800, up 8.9 percent from March 2009.
Existing-home sales in the Midwest rose 7.2 percent in March to a pace of 1.19 million and are 15.5 percent above March 2009. The median price in the Midwest was $139,300, up 0.2 percent from a year ago.
In the South, existing-home sales increased 7.1 percent to an annual level of 1.97 million in March and are 13.9 percent higher than a year ago. The median price in the South was $154,800, up 5.2 percent from March 2009.
Existing-home sales in the West rose 6.6 percent to an annual rate of 1.30 million in March and are 14.0 percent above March 2009. The median price in the West was $209,400, down 7.9 percent from a year ago.
Source: NAR